<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
EVEREST MEDICAL CORPORATION
(Name of subject company)
GOLDEN ACQUISITION CORP. (Offeror)
GYRUS GROUP PLC (Affiliate of Offeror)
(Names of Filing Persons (identifying status as offeror, issuer or other
person))
------------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE;
SERIES A CONVERTIBLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE;
SERIES B 8% CONVERTIBLE PREFERRED SHARES, PAR VALUE $.01 PER SHARE;
SERIES C 6% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE;
and SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $.01 PER
SHARE.
(Title of classes of securities)
------------------------------
299806-10-9
(CUSIP number of common stock)
------------------------------
JOHN BRADSHAW, FINANCE DIRECTOR
GOLDEN ACQUISITION CORP.
C/O GYRUS GROUP PLC
FORTRAN ROAD
ST. MELLONS
CARDIFF CF3 0LT
UNITED KINGDOM
011-44-1222-300-110
(NAME, ADDRESS, AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF OFFERORS)
------------------------------
WITH COPIES TO:
GERALD J. KEHOE, ESQ.
BINGHAM DANA LLP
150 FEDERAL STREET
BOSTON, MA 02110
(617) 951-8000
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
aggregate of the cash offered by the offeror for the (.02) X (.01 X Transaction Valuation) ($9,376)
securities ($46,880,000)...................................
</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of (1) 7,728,965 shares of Common Stock, par value $.01 per
share (the "Common Shares"), at a price per Common Share of $4.85 in cash,
(2) 462,937 shares of Series A Convertible Preferred Stock (the "Series A
Preferred Stock") at a price per share of Series A Preferred Stock of $4.85
in cash, (3) 597,273 shares of Series B 8% Convertible Preferred Shares (the
"Series B Preferred Stock") at a price per share of Series B Preferred Stock
of $4.85 in cash, (4) 410,906 shares of Series C 6% Convertible Redeemable
Preferred Stock (the "Series C Preferred Stock") at a price per share of
Series C Preferred Stock of $4.85 in cash, and (5) 466,500 shares of
Series D 10% Convertible Redeemable Preferred Stock (the "Series D Preferred
Stock") at a price per share of Series D Preferred Stock of $4.85 in cash.
/ / Check the box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: None Filing Party: N/A
Form of Registration No.: N/A Date Filed: N/A
</TABLE>
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of the tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
/X/ third party tender offer subject to Rule 14d-1
/ / issuer tender offer subject to Rule 13e-4
/ / going private transaction subject to Rule 13e-3
/ / amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the
results of the tender offer: / /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE TO
This Tender Offer Statement on Schedule TO relates to the offer by Golden
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned
subsidiary of Gyrus Group PLC, a public limited company incorporated and
existing under the laws of England and Wales ("Parent"), to purchase all of the
outstanding shares of (1) Common Stock, par value $.01 per share, (2) Series A
Convertible Preferred Stock, (3) Series B 8% Convertible Preferred Shares,
(4) Series C 6% Convertible Redeemable Preferred Stock, and (5) Series D 10%
Convertible Redeemable Preferred Stock, of Everest Medical Corporation, a
Minnesota corporation (the "Company").
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the "Summary Term Sheet" of the Offer to
Purchase, attached as Exhibit 1 to this Schedule TO, is incorporated herein by
reference.
ITEM 2. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Everest Medical Corporation, which has
its principal executive offices at 13755 First Avenue North, Minneapolis,
Minnesota 55441, telephone number: (612) 473-6262.
This Schedule TO relates to the offer by the Purchaser to purchase all
outstanding shares, of (1) Common Stock, par value $.01 per share,
(2) Series A Convertible Preferred Stock, (3) Series B 8% Convertible Preferred
Shares, (4) Series C 6% Convertible Redeemable Preferred Stock, and
(5) Series D 10% Convertible Redeemable Preferred Stock (collectively, the
"Shares") upon the terms and subject to the conditions set forth in the Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments and supplements thereto, collectively constitute the "Offer"), copies
of which are attached hereto as Exhibits 1 and 2, respectively. Information
concerning the number of outstanding Shares is set forth in the "Introduction"
of the Offer to Purchase and is incorporated herein by reference.
Information concerning the principal market in which the Shares are traded
and the high and low sales prices of the Shares for each quarterly period during
the past two years is set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
This Schedule TO is being filed by the Purchaser and Parent. Information
concerning the principal businesses, principal offices and state or place of
organization of the Purchaser and Parent is set forth in Section 9 ("Certain
Information Concerning the Purchaser and Parent") of the Offer to Purchase and
is incorporated herein by reference.
The names, business addresses, current principal occupations or employment,
material occupations, positions, offices or employments during the last five
years and citizenship of the directors and executive officers of the Purchaser
and Parent are set forth in Schedule I to the Offer to Purchase and are
incorporated herein by reference. In addition, the information set forth in
Section 9 ("Certain Information Concerning the Purchaser and Parent") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
The information set forth in the "Summary Term Sheet", "Introduction",
Section 1 ("Terms of the Offer"), Section 2 ("Procedure for Tendering Shares"),
Section 3 ("Withdrawal Rights"), Section 4 ("Acceptance for Payment and Payment
for Shares"), Section 5 ("Certain Federal Income Tax Consequences") and
Section 7 ("Effect of the Offer on the Market for Shares; Stock Quotation;
Exchange Act Registration; Margin Regulations") of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PAST CONTACTS, TRANSACTIONS NEGOTIATIONS AND AGREEMENTS.
The information set forth in Section 11 ("Contacts with the Company;
Background of the Offer") and Section 12 ("Purpose of the Offer; The Merger
Agreement") of the Offer to Purchase is incorporated herein by reference.
2
<PAGE>
ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS.
The information set forth in Section 7 ("Effect of the Offer on the Market
for Shares; Stock Quotation; Exchange Act Registration; Margin Regulations") and
Section 12 ("Purpose of the Offer; The Merger Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Section 10 ("Source and Amount of Funds") of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
The information set forth in the "Introduction" and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 10. FINANCIAL STATEMENTS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 11. ADDITIONAL INFORMATION.
The information set forth in the Offer to Purchase for Cash, particularly in
Section 7 ("Effect of the Offer on the Market for the Shares; Stock Quotation;
Exchange Act Registration; Margin Regulations"), Section 12 ("Purpose of the
Offer; The Merger Agreement") and Section 15 ("Certain Legal Matters"), the
Letter of Transmittal, attached as Exhibit 2 to this Schedule TO and the
Agreement and Plan of Merger, dated as of February 23, 2000, among the
Purchaser, Parent and the Company, attached as Exhibit 9 to this Schedule TO, is
incorporated herein by reference.
ITEM 12. EXHIBITS.
1. Offer to Purchase for Cash
2. Letter of Transmittal
3. Notice of Guaranteed Delivery
4. Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees
5. Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Other Nominees
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
7. Summary Advertisement, dated March 16, 2000
8. Text of Press Release, dated March 16, 2000
9. Agreement and Plan of Merger, dated as of February 23, 2000, among the
Purchaser, Parent and the Company
10. Consulting Agreement, dated as of February 23, 2000, between Parent and
the Company
11. Form of Employment Agreement between Purchaser and certain employees of
the Company
12. Placing Agreement
3
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: March 16, 2000
GOLDEN ACQUISITION CORP.
By: /s/ JOHN BRADSHAW
--------------------------------------
NAME: JOHN BRADSHAW
TITLE: TREASURER AND SECRETARY
GYRUS GROUP PLC
By: /s/ JOHN BRADSHAW
--------------------------------------
NAME: JOHN BRADSHAW
TITLE: FINANCE DIRECTOR
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- ------------------------------------------------------------
<S> <C>
1. Offer to Purchase for Cash
2. Letter of Transmittal
3. Notice of Guaranteed Delivery
4. Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees
5. Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees
6. Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
7. Summary Advertisement, dated March 16, 2000
8. Text of Press Release, dated March 16, 2000
9. Agreement and Plan of Merger, dated as of February 23, 2000,
among the Purchaser, Parent and the Company
10. Consulting Agreement, dated as of February 23, 2000, between
Parent and the Company
11. Form of Employment Agreement between Parent and certain
employees of the Company
12. Placing Agreement
</TABLE>
5
<PAGE>
EXHIBIT 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK, PAR VALUE $.01 PER SHARE;
SERIES A CONVERTIBLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE;
SERIES B 8% CONVERTIBLE PREFERRED SHARES, PAR VALUE $.01 PER SHARE;
SERIES C 6% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE;
AND
SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE
OF
EVEREST MEDICAL CORPORATION
AT
$4.85 NET PER SHARE
BY
GOLDEN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GYRUS GROUP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 NOON, NEW YORK CITY TIME,
ON THURSDAY, APRIL 13, 2000, UNLESS EXTENDED.
THE BOARD OF DIRECTORS OF EVEREST MEDICAL CORPORATION, AFTER RECEIVING THE
UNANIMOUS RECOMMENDATION OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS, HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED
THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF EVEREST MEDICAL CORPORATION, AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS OF EVEREST MEDICAL CORPORATION ACCEPT THE OFFER AND
TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE DATE OF THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF AN AGGREGATE OF
THE (1) SHARES OF COMMON STOCK OF EVEREST MEDICAL CORPORATION (DETERMINED AS OF
THE DATE OF THE EXPIRATION OF THE OFFER ON A FULLY DILUTED BASIS FOR ALL
OUTSTANDING STOCK OPTIONS, WARRANTS, AND ANY OTHER RIGHTS TO ACQUIRE SHARES
OUTSTANDING ON THE DATE OF THE EXPIRATION OF THE OFFER), (2) SHARES OF SERIES A
CONVERTIBLE PREFERRED STOCK OF EVEREST MEDICAL CORPORATION, (3) SHARES OF
SERIES B 8% CONVERTIBLE PREFERRED SHARES OF EVEREST MEDICAL CORPORATION,
(4) SHARES OF SERIES C 6% CONVERTIBLE REDEEMABLE PREFERRED STOCK OF EVEREST
MEDICAL CORPORATION, AND (5) SHARES OF SERIES D 10% CONVERTIBLE REDEEMABLE
PREFERRED STOCK OF EVEREST MEDICAL CORPORATION.
------------------------
March 16, 2000
<PAGE>
SUMMARY TERM SHEET
The following is a summary of the material terms of our offer. The items in
this summary are described in more detail elsewhere in this Offer to Purchase
and the other tender offer documents delivered to you. This summary provides an
overview of selected information and does not contain all of the information you
should consider. You should also read the more detailed information set out in
this Offer to Purchase and the other tender offer documents delivered to you. We
have included additional information regarding our offer in our Schedule TO,
with attached exhibits, that we filed with the Securities and Exchange
Commission on March 16, 2000. References in this summary term sheet to "we",
"our", and "ours" refer to the offeror, Golden Acquisition Corp. References in
this summary term sheet to "you", "your" and "yours" refer to shareholders of
Everest Medical.
THE OFFEROR
- We, Golden Acquisition Corp., are a Delaware corporation and a
wholly-owned subsidiary of Gyrus Group PLC, a public limited company
incorporated and existing under the laws of England and Wales. For more
information about us, see Section 9 of this Offer to Purchase.
THE OFFER
- We are offering to purchase for cash all outstanding shares of:
- common stock of Everest Medical, for $4.85 per share;
- Series A Convertible Preferred Stock of Everest Medical for $4.85 per
share;
- Series B 8% Convertible Preferred Shares of Everest Medical for $4.85
per share;
- Series C 6% Convertible Redeemable Preferred Stock of Everest Medical
for $4.85 per share; and
- Series D 10% Convertible Redeemable Preferred Stock of Everest Medical
for $4.85 per share.
For more information about the offer, see Section 1 of this Offer to
Purchase.
THE MERGER
- Our offer is being made pursuant to the terms of a merger agreement
entered into by us, Gyrus Group and Everest Medical on February 23, 2000.
- Under the merger agreement, if the minimum condition to our offer is
satisfied (see "Conditions to the Offer" below), but we do not acquire all
of the shares of common and preferred stock of Everest Medical in the
offer, Everest Medical will be merged with us. This merger will ordinarily
require the prior approval of shareholders of Everest Medical at a meeting
called for that purpose. However, if we acquire at least 90% of the shares
of each class of common and preferred stock in the offer, we can complete
this merger without a meeting or otherwise seeking your approval. See
Section 12 of this Offer to Purchase.
For more information about the merger, see Section 12 of this Offer to
Purchase.
RECOMMENDATION OF YOUR BOARD OF DIRECTORS
- Your board of directors, after receiving the unanimous recommendation of
the special committee of the board of directors, has unanimously approved
our offer and the merger and has determined that the terms of our offer
and the merger are fair to you and in your best interests. Your board of
directors has unanimously recommended that you accept our offer and tender
your shares. This recommendation and other background information are
contained in the Solicitation/ Recommendation Statement of Everest Medical
simultaneously delivered to you with this Offer to
i
<PAGE>
Purchase and included as part of the Schedule 14D-9 filed by Everest
Medical with the Securities and Exchange Commission on March 16, 2000.
FAIRNESS OPINION
- Dougherty & Company LLC, Everest Medical's financial advisor, has
delivered to the special committee an opinion, dated as of February 22,
2000, that the per share offer price is fair to you from a financial point
of view. For more information about the background of our offer, see
Section 11 of this Offer to Purchase.
HOW WE INTEND TO FUND THE OFFER
- We expect to receive the funds necessary to pay you for your shares from
our parent, Gyrus Group. Gyrus Group intends to raise approximately
45 million pounds sterling (US $71 million) in a placing and open offer of
its ordinary shares. Gyrus Group will use a portion of the funds raised in
the placing and open offer to provide us with the funds required to
complete our offer. This placing and open offer is fully underwritten by
Nomura International plc. For more information regarding the funding of
our offer, see Section 10 of this Offer to Purchase.
WHEN YOU MUST TENDER
- You have until 12:00 noon, New York City time, on Thursday, April 13, 2000
to tender your shares in the offer.
EXTENSION OF THE OFFER
Please note, however, that we may extend our offer without the prior consent
of Everest Medical in the following circumstances:
- if, at the Expiration Date, any of the conditions to our obligations to
accept shares for payment are not satisfied or waived, until that time as
those conditions are satisfied or waived; and
- for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission or its staff applicable
to our offer or any period required by applicable law.
- If we decide to extend our offer, we will make a public announcement no
later than 9:00 a.m., New York City time, on Friday, April 14, 2000. For
more information regarding the extension of our offer, see Section 1 of
this Offer to Purchase.
SUBSEQUENT OFFERING PERIOD
- We may also decide to provide after the expiration date a subsequent
offering period of three business days to 20 business days. If we elect to
provide a subsequent offering period, we will immediately accept and
promptly pay for all shares of common and preferred stock as they are
tendered during that period, offering the same consideration offered by us
during the initial offering period. No withdrawal rights will apply during
this subsequent offering period. For more information regarding a
subsequent offering period, see Sections 1 and 3 of this Offer to Purchase
for Cash.
ii
<PAGE>
HOW YOU TENDER YOUR SHARES
- To validly tender your shares, Wilmington Trust Company, the depositary
for our offer, must receive, prior to 12:00 noon, New York City time, on
Thursday, April 13, 2000, either:
- a properly completed and signed letter of transmittal (or facsimile of
the letter of transmittal), together with any required signature
guarantees, the original certificates representing your shares and all
other documents required by the letter of transmittal; or
- in the case of a book-entry transfer of common stock, an Agent's
Message confirming that book-entry transfer of common stock. You may
not validly tender your preferred stock using book entry-transfer
procedures.
Alternatively, to validly tender your shares, you may comply with the
guaranteed delivery procedure set forth in our Offer to Purchase. For more
information regarding the procedure for tendering shares, see Section 2 of
this Offer to Purchase.
HOW TO WITHDRAW YOUR TENDER
- After you have tendered your shares, you may decide to withdraw your
shares. In order to withdraw your previously tendered shares, our
depositary must receive, at any time prior to 12:00 noon, New York City
time, on Thursday, April 13, 2000, and, unless previously accepted and
paid for by us pursuant to our offer, at any time prior to May 14, 2000, a
written or facsimile transmission notice of withdrawal from you that
specifies:
- the name of the person that tendered the shares to be withdrawn;
- the number of shares to be withdrawn; and
- the name of the registered holder of the shares to be withdrawn, if
different from the name of the person who tendered the shares.
- If you delivered or otherwise identified to the depositary certificates
for shares, or have tendered shares pursuant to book-entry transfer
procedures, you must follow some additional procedures in order to
properly withdraw previously tendered shares.
- No withdrawal rights will apply during any subsequent offering period that
we may elect to provide. For more information regarding a subsequent
offering period, see Sections 1 and 3 of this Offer to Purchase.
- We will determine, in our sole discretion, all questions regarding the
form and validity of any notices of withdrawal. Our determination will be
final and binding. For more information regarding your withdrawal rights,
see Section 3 of this Offer to Purchase.
CONDITIONS TO THE OFFER
- Our offer is subject to the terms and conditions set forth in this Offer
to Purchase. The most significant conditions to our offer are:
- there must be validly tendered and not withdrawn prior to the
expiration date that number of shares in Everest Medical that would
constitute at least a majority of an aggregate of the:
- shares of common stock (determined as of the date of the expiration
of our offer on a fully diluted basis for all outstanding stock
options and warrants);
- shares of Series A Convertible Preferred Stock;
- shares of Series B 8% Convertible Preferred Shares;
- shares of Series C 6% Convertible Redeemable Preferred Stock; and
iii
<PAGE>
- shares of Series D 10% Convertible Redeemable Preferred Stock;
- there must not be any governmental suit, action or proceeding, or
statute, rule, regulation, judgement or order or injunction:
- challenging our acquisition of any shares under our offer;
- seeking to restrain or prohibit the making or completion of our
offer or the merger of Everest Medical with and into us; or
- otherwise materially limiting our or Gyrus Group's ability to own
or control Everest Medical or the shares or assets of Everest
Medical;
- there must not be any events or changes since the commencement of our
offer that have had or that could reasonably be expected to have,
individually, or in the aggregate, a material adverse effect on Everest
Medical;
- all representations and warranties of Everest Medical set forth in the
merger agreement must be true and correct;
- Everest Medical must have performed or complied in all material
respects with all of its material obligations, agreements and covenants
provided in the merger agreement;
- the merger agreement must not have been terminated;
- Everest Medical must have obtained any necessary consents it is
required to obtain in connection with our offer, the merger agreement,
and the merger of Everest Medical with and into us;
- your board of directors must not withdraw, modify or change its
recommendation in favor of our offer, the merger agreement, and the
merger of Everest Medical with and into us, in a manner adverse to us
or Gyrus Group or recommend certain other acquisition proposals;
- no entity has acquired or announced its intention to acquire 30% or
more of the common stock of Everest Medical or 30% or more of an
aggregate of the common and preferred stock of Everest Medical; and
- we must have received the funds, or have the unconditional right to
draw funds, from the placing and open offer we are conducting in the
United Kingdom to fund our offer.
For more information regarding the conditions to our offer, see, in
particular, Section 14 of this Offer to Purchase.
CURRENT MARKET FOR SHARES
- Shares of common stock are traded on The Nasdaq SmallCap Market. On
March 14, 2000, the reported last sale price of common stock on The Nasdaq
SmallCap Market was $4.50 per share.
- Shares of Series A Convertible Preferred Stock are not publicly traded,
but have a liquidation value of $2.50.
- Shares of Series B 8% Convertible Preferred Shares are not publicly
traded, but have a liquidation value of $2.75.
- Shares of Series C 6% Convertible Redeemable Preferred Stock are not
publicly traded, but have a liquidation value of $2.75.
- Shares of Series D 10% Convertible Redeemable Preferred Stock are not
publicly traded, but have a liquidation value of $2.875.
- If you decide not to tender your shares of Everest Medical, our offer
could adversely affect the liquidity and market value of those shares.
iv
<PAGE>
For more information about trading in Everest Medical stock, see Section 8
of this Offer to Purchase.
CONSEQUENCES OF OUR OFFER
- Our purchase of shares of common stock pursuant to our offer will reduce
the number of holders of these shares and the number of shares that might
otherwise trade publicly. After the completion of our offer, common stock
may no longer qualify for inclusion in The Nasdaq Stock Market due to a
decrease in the number of holders of common stock to less than 300 or in
the number of publicly held shares to less than 100,000, among other
things. If the common stock no longer meets the requirements of the NASD
for continued inclusion in The Nasdaq Stock Market or The Nasdaq SmallCap
Stock Market, as the case may be, the market for your shares could be
adversely affected.
- We intend to seek to cause Everest Medical to apply for termination of
registration of its common stock under the Securities Exchange Act of 1934
as soon after the completion of our offer as the requirements for that
termination are met, that is, if there are fewer than 300 holders of
record of common stock and common stock is not listed on a national
securities exchange.
WHO TO CONTACT
- If you have questions about our offer, you may contact MacKenzie
Partners, Inc., the Information Agent for our offer, at 156 Fifth Avenue,
New York, NY 10010, (212) 929-5500 (Call Collect) or (800) 322-2885 (Toll
Free).
ADDITIONAL IMPORTANT INFORMATION
If you wish to tender all or any portion of your securities in Everest
Medical, you must do one of the following:
- If you are the record holder of your securities and hold certificates for
your securities, (1) complete and sign the Letter of Transmittal (or a
facsimile copy) following the instructions in the Letter of Transmittal,
(2) have your signature on the Letter of Transmittal guaranteed if
required by Instruction 1 to the Letter of Transmittal, and (3) mail or
deliver the Letter of Transmittal (or a facsimile copy), the certificates
for your shares and any other required documents to the Depositary,
Wilmington Trust Company.
- If you are the record holder of common stock and delivery of the common
stock is to be made by book-entry transfer, (1) transmit an agent's
message (as described in Section 2 below) and any other required
documents, to Wilmington Trust Company and (2) deliver your common stock
pursuant to the procedure for book-entry transfer set forth in Section 2
below.
- If your securities are registered in the name of a broker, dealer, bank,
trust company or other nominee, you must contact and request your broker,
dealer, bank, trust company or other nominee to tender your securities.
- If you desire to tender your securities and your certificates for your
securities are not immediately available or, in the case of common stock,
you cannot comply in a timely manner with the procedures for book-entry
transfer, or you cannot deliver all the required documents to Wilmington
Trust Company prior to the expiration of the offer, you may tender your
securities by following the procedure for guaranteed delivery described in
Section 2 below.
- If you have any questions or if you need assistance or additional copies
of this Offer to Purchase, the Letter of Transmittal or the Notice of
Guaranteed Delivery, please call the Information Agent, MacKenzie
Partners, Inc., at its address and telephone number set forth on the back
cover of this Offer to Purchase.
v
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INTRODUCTION................................................ 1
THE TENDER OFFER............................................ 3
1. Terms of the Offer...................................... 3
2. Procedure for Tendering Shares.......................... 4
3. Withdrawal Rights....................................... 7
4. Acceptance for Payment and Payment for Shares........... 8
5. Certain Federal Income Tax Consequences................. 9
6. Price Range of the Shares; Dividends on the Shares...... 10
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Exchange Act Registration; Margin
Regulations............................................. 10
8. Certain Information Concerning the Company.............. 12
9. Certain Information Concerning the Purchaser and
Parent.................................................... 15
10. Source and Amount of Funds.............................. 19
11. Contacts with the Company; Background of the Offer...... 20
12. Purpose of the Offer; The Merger Agreement.............. 23
13. Dividends and Distributions............................. 33
14. Certain Conditions of the Offer......................... 33
15. Certain Legal Matters................................... 34
16. Fees and Expenses....................................... 36
17. Miscellaneous........................................... 36
Schedule I-Directors and Executive Officers of Parent and
the Purchaser............................................. S-1
</TABLE>
vi
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To the Holders of Common Stock, Series A Convertible Preferred Stock, Series B
8% Convertible Preferred Shares, Series C 6% Convertible Redeemable Preferred
Stock and Series D 10% Convertible Redeemable Preferred Stock of Everest Medical
Corporation:
INTRODUCTION
Golden Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Gyrus Group PLC, a public limited company
incorporated and existing under the laws of England and Wales ("Parent"), is
offering to purchase the following securities of Everest Medical Corporation, a
Minnesota corporation (the "Company"), for the consideration provided below and
upon the terms and subject to the conditions set forth in this Offer to Purchase
for Cash dated March 16, 2000 and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"):
- all outstanding shares of common stock (the "Common Shares"), par value
$.01 per share, at $4.85 per Common Share (the "Common Share Offer
Price"), net to the seller, in cash;
- all outstanding shares of Series A Convertible Preferred Stock (the
"Series A Shares"), par value $.01 per share, at an amount per share equal
to the product of (1) the number of Common Shares into which each such
Series A Share is convertible multiplied by (2) the Common Share Offer
Price, or $4.85 per Series A Share ("the Series A Offer Price"), net to
the seller, in cash;
- all outstanding shares of Series B 8% Convertible Preferred Shares (the
"Series B Shares"), $.01 per share, at an amount per share equal to the
product of (1) the number of Common Shares into which each such Series B
Share is convertible multiplied by (2) the Common Share Offer Price, or
$4.85 per Series B Share ("the Series B Offer Price"), net to the seller,
in cash;
- all outstanding shares of Series C 6% Convertible Redeemable Preferred
Stock (the "Series C Shares"), par value $.01 per share, at an amount per
share equal to the product of (1) the number of Common Shares into which
each such Series C Share is convertible multiplied by (2) the Common Share
Offer Price, or $4.85 per Series C Share ("the Series C Offer Price"), net
to the seller, in cash; and
- all outstanding shares of Series D 10% Convertible Redeemable Preferred
Stock (the "Series D Shares", and collectively with the Common Shares, the
Series A Shares, the Series B Shares, and the Series C Shares, the
"Shares"), par value $.01 per share, at an amount per share equal to the
product of (1) the number of Common Shares into which each such Series D
Share is convertible multiplied by (2) the Common Share Offer Price, or
$4.85 per Series D Share ("the Series D Offer Price" and, together with
the Common Share Offer Price, the Series A Offer Price, the Series B Offer
Price and the Series C Offer Price, the "Offer Price"), net to the seller,
in cash.
If you have Shares registered in your name that you tender directly, you
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. If you hold your Shares through a
broker or bank, you should consult with them to determine if there are any fees
applicable to a tender of the Shares. The Purchaser will pay all fees and
expenses of Wilmington Trust Company, which is acting as the Depositary (the
"Depositary") and MacKenzie Partners, Inc., which is acting as Information Agent
(the "Information Agent"), incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY, AFTER RECEIVING THE UNANIMOUS
RECOMMENDATION OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS, HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED
THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
The Company has advised the Purchaser that Dougherty & Company LLC has
delivered to the Board of Directors of the Company its written opinion dated
February 22, 2000 to the effect that, subject to and
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based upon the matters described in the opinion, as of the date of such opinion,
the Offer Price to be received by the holders of the Common Shares, the
Series A Shares, the Series B Shares, the Series C Shares, and the Series D
Shares, respectively, pursuant to the Offer and the Merger is fair to such
holders from a financial point of view. That opinion is set forth in full as an
exhibit to the Company's Solicitation/ Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9" or the "Statement"), which is being mailed
to you with this Offer to Purchase. YOU ARE URGED TO, AND SHOULD, READ SUCH
OPINION CAREFULLY IN ITS ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1) THAT NUMBER OF SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF
THE OUTSTANDING SHARES (DETERMINED AS OF THE EXPIRATION DATE ON A FULLY DILUTED
BASIS, TAKING INTO ACCOUNT ALL SHARES ISSUABLE ON EXERCISE OR CONVERSION OF ALL
OPTIONS, WARRANTS AND ANY OTHER RIGHTS TO ACQUIRE SHARES OUTSTANDING ON THE
EXPIRATION DATE) (THE "MINIMUM CONDITION"). THE PURCHASER RESERVES THE RIGHT
(SUBJECT TO THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION")), WHICH IT PRESENTLY HAS NO INTENTION OF
EXERCISING, TO WAIVE OR REDUCE THE MINIMUM CONDITION AND TO ELECT TO PURCHASE,
PURSUANT TO THE OFFER, LESS THAN THE NUMBER OF SHARES REQUIRED TO SATISFY THE
MINIMUM CONDITION. SEE SECTIONS 1 AND 14.
The Company has informed the Purchaser that, as of February 23, 2000, there
were 7,728,965 Common Shares issued and outstanding, 462,937 Series A Shares
issued and outstanding, 597,273 Series B Shares issued and outstanding, 410,906
Series C Shares issued and outstanding, and 466,500 Series D Shares issued and
outstanding. The Company also has informed the Purchaser that, as of
February 23, 2000, there were 1,964,051 shares reserved for issuance upon the
exercise of outstanding options, warrants, and other rights to acquire Shares.
Accordingly, based on the foregoing assumptions, the Minimum Condition will be
satisfied if at least 5,826,947 Shares, or approximately 60.3% of the 9,666,581
outstanding Shares as of February 23, 2000, are validly tendered and not
withdrawn prior to the Expiration Date. Once the Minimum Condition has been
satisfied and the Purchaser accepts for payment Shares tendered pursuant to the
Offer, the Purchaser will be able to elect a majority of the members of the
Company's Board of Directors and approve the Merger at a meeting of shareholders
of the Company and, if the shares tendered pursuant to the Offer constitute at
least 90% of each class of Shares outstanding at such time, to effect the Merger
without holding a meeting of the shareholders of the Company.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of February 23, 2000 (the "Merger Agreement"), among Parent, the Purchaser
and the Company, pursuant to which, following the consummation of the Offer and
the satisfaction or waiver of certain conditions, the Company will be merged
with and into the Purchaser (the "Merger"), with the Purchaser surviving the
Merger (as such, the "Surviving Corporation") as a subsidiary of Parent. In the
Merger, each Share issued and outstanding immediately prior to the Merger (other
than Shares (1) owned by Parent or the Purchaser, (2) remaining outstanding held
by any subsidiary of Parent or (3) owned by shareholders, if any, who are
entitled to and who properly exercise dissenters' rights under Minnesota law)
will be converted into the right to receive $4.85 in cash, without interest, the
same per share consideration as the Offer Price (the "Merger Consideration").
See Section 12.
The Merger is subject to a number of conditions, including approval by
shareholders of the Company, if such approval is required by applicable law. If
the Purchaser acquires 90% or more of each class of the outstanding Shares
pursuant to the Offer or otherwise, the Purchaser will effect the Merger
pursuant to the short-form merger provisions of the Delaware General Corporation
Law (the "DGCL") and the Minnesota Business Corporation Act (the "MBCA"),
without any action by any other shareholder of the Company. See Section 12.
The Merger Agreement is more fully described in Section 12. Certain Federal
income tax consequences of the sale of Shares pursuant to the Offer are
described in Section 5.
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THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 3. The term "Expiration Date" means 12:00 noon, New York
City time, on April 13, 2000, unless the Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
Subject to applicable rules and regulations of the Securities and Exchange
Commission (the "Commission"), and the terms and conditions of the Merger
Agreement, the Purchaser expressly reserves the right, in its sole discretion,
at any time and from time to time, and regardless of whether or not any of the
events set forth in Section 14 hereof shall have occurred or shall have been
determined by the Purchaser to have occurred, (1) to extend the period of time
during which the Offer is open, and thereby delay acceptance for payment of and
the payment for any Shares, by giving oral or written notice of such extension
to the Depositary and (2) to amend the Offer in any other respect by giving oral
or written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If by 12:00 noon, New York City time, on April 13, 2000 (or any other date
or time then set as the Expiration Date), any or all conditions to the Offer
have not been satisfied or waived, the Purchaser reserves the right (but shall
not be obligated), subject to the terms and conditions contained in the Merger
Agreement and to the applicable rules and regulations of the Commission, (1) to
terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering shareholders, (2) to waive one or more of the
unsatisfied conditions and, subject to complying with the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not theretofore withdrawn, (3) to extend the Offer and, subject to the right of
shareholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended, (4) to amend the Offer, or (5) to accept for payment all Shares
validly tendered as of the Expiration Date and provide a subsequent offering
period of three business days to 20 business days after the completion of the
initial offering period of the Offer, as may be extended (the "Initial Offering
Period"), as defined and further described below.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, waiver, amendment or termination will be
followed as promptly as practicable by public announcement. In the case of an
extension, Rule 14e-l(d) under the Securities Exchange Act of 1934 (the
"Exchange Act") requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including
Rule 14d-4(d)(1) under the Exchange Act which requires that any material change
in the information published, sent or given to shareholders in connection with
the Offer be promptly disseminated to shareholders in a manner reasonably
designed to inform shareholders of such change), and without limiting the manner
in which the Purchaser may choose to make any public announcement, the Purchaser
currently intends to make such public announcement by issuing a press release to
the Dow Jones News Service and making any appropriate filing with the
Commission.
Pursuant to the Merger Agreement, the Purchaser may, without the prior
consent of the Company, extend the Offer, particularly, but not exclusively
(1) if at the Expiration Date any of the conditions to the Purchaser's
obligations to accept Shares for payment are not satisfied or waived, until such
time as such conditions are satisfied or waived, (2) for any period required by
any rule, regulation, interpretation or position of the Commission or the staff
thereof applicable to the Offer or any period required by
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applicable law and (3) on one or more occasions for an aggregate period of not
more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (1) or (2) of this sentence, if on such
expiration date the Minimum Condition shall not be satisfied. For purposes of
the Offer, a "business day" means any day other than a Saturday, Sunday or a
Federal holiday and consists of the time period from 12:01 a.m. through 12:00
Midnight, New York City time.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
The Purchaser may also elect to provide a subsequent offering period of
three business days to 20 business days after the Expiration Date, pursuant to
Rule 14d-11 under the Exchange Act (a "Subsequent Offering Period"). If the
Purchaser elects to provide a Subsequent Offering Period, the subsequent offer
will be for all outstanding Shares and the Purchaser will immediately accept and
promptly pay for all Shares as they are tendered during such Subsequent Offering
Period, offering the same form and amount of consideration offered by the
Purchaser for validly tendered Shares during the initial offering period. No
withdrawal rights shall apply during any Subsequent Offering Period in
accordance with Rule 14d-7(a)(2) under the Exchange Act.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by the Exchange Act (including Rule 14d-4(d)(1) and
14e-1). The minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the offer,
other than a change in price or a change in the percentage of securities sought,
will depend upon the facts and circumstances then existing, including the
relative materiality of the changed terms or information. With respect to a
change in price or a change in the percentage of securities sought, a minimum
period of 10 business days is generally required to allow for adequate
dissemination to shareholders.
CONSUMMATION OF THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM
CONDITION AND THE OTHER CONDITIONS SET FORTH IN SECTION 14. Subject to the
terms and conditions contained in the Merger Agreement, the Purchaser reserves
the right (but shall not be obligated) to waive any or all such conditions. The
Company has provided the Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of the Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
VALID TENDER OF COMMON SHARES. For a shareholder to tender Common Shares
validly pursuant to the Offer, either (1) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees, or in the case of a book-entry transfer, an Agent's
Message (as defined in the second succeeding paragraph), and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date and either certificates for tendered Common Shares must be
received by the Depositary at one of such addresses or such Common Shares must
be delivered
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pursuant to the procedure for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined in the next paragraph) received by the
Depositary), in each case, prior to the Expiration Date, or (2) the tendering
shareholder must comply with the guaranteed delivery procedure set forth below.
The Depositary will establish an account with respect to the Common Shares
at The Depository Trust Company (the "Book-Entry Transfer Facility") for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of Common Shares by
causing the Book-Entry Transfer Facility to transfer such Common Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Common Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedure
described below. The confirmation of a book-entry transfer of Common Shares into
the Depositary's account at the Book-Entry Transfer Facility as described above
is referred to herein as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF
TRANSMITTAL OR ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Common Shares that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
VALID TENDER OF SERIES A SHARES, SERIES B SHARES, SERIES C SHARES AND
SERIES D SHARES. For a shareholder to tender Series A Shares, Series B Shares,
Series C Shares and Series D Shares validly pursuant to the Offer, either (1) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, any other documents
required by the Letter of Transmittal and certificates for tendered Series A
Shares, Series B Shares, Series C Shares and Series D Shares must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date or (2) the tendering shareholder must
comply with the guaranteed delivery procedure set forth below. A SHAREHOLDER MAY
NOT VALIDLY TENDER SERIES A SHARES, SERIES B SHARES, SERIES C SHARES, OR
SERIES D SHARES PURSUANT TO BOOK-ENTRY TRANSFER PROCEDURES.
METHOD OF DELIVERY OF SHARES. THE METHOD OF DELIVERY OF SHARES, THE LETTER
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING
SHAREHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility's system whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith unless such
registered holder has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the Letter
of Transmittal or (2) such Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each of the foregoing being
referred to as an "Eligible Institution"). In all other cases, all signatures on
the Letters of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the
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certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
issued, to a person other than the registered holder of the certificates
surrendered, the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name or names of
the registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as aforesaid. See Instruction 5
to the Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser is received by the
Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to such Shares), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal, are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A "trading
day" is any day on which the New York Stock Exchange, Inc. (the "NYSE") is open
for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (3) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing a Letter of Transmittal, the tendering
shareholder will irrevocably appoint designees of the Purchaser as such
shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after February 23, 2000. All such proxies shall be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such shareholder as provided herein. Upon such
acceptance for payment, all prior powers of attorney, proxies and consents given
by such shareholder with respect to such Shares or other securities or rights
will, without further action, be revoked and no subsequent powers of attorney,
proxies or consents may be given (and, if given, will not be deemed effective).
The designees of the Purchaser will thereby be empowered to exercise all voting
rights with
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respect to such Shares or other securities or rights in respect of any annual,
special or adjourned meeting of the Company's shareholders, or otherwise, and
may execute any written consent, and may otherwise act as an attorney-in-fact
and proxy concerning any matter as they in their sole discretion deem proper.
The Purchaser reserves the right to require that, in order for Shares to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of such Shares, the Purchaser must be able to exercise full voting rights with
respect to such Shares and other securities or rights, including voting at any
meeting of shareholders then scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser, in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of, or payment for, any Shares which acceptance or payment, in the
opinion of the Purchaser's counsel, may be unlawful. The Purchaser also reserves
the absolute right to waive any defect or irregularity in any tender with
respect to any particular Shares, whether or not similar defects or
irregularities are waived in the case of other Shares. No tender of Shares will
be deemed to have been validly made until all defects or irregularities relating
thereto have been cured or waived. None of the Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
BACKUP FEDERAL INCOME TAX WITHHOLDING. In order to avoid "backup
withholding" of federal income tax on payments of cash pursuant to the Offer, a
shareholder surrendering Shares in the Offer must, unless an exemption applies,
provide the Depositary with such Shareholder's correct Taxpayer Identification
Number ("TIN") on a Substitute Form W-9 and certify under penalty of perjury
that such TIN is correct and that such shareholder is not subject to backup
withholding. If a shareholder does not provide its correct TIN or fails to
provide the certifications described above, the Internal Revenue Service ("IRS")
may impose a penalty on such shareholder and payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 31%. All
shareholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proven in
a manner satisfactory to the Purchaser and the Depositary). Foreign shareholders
should complete and sign the main signature form of the Letter of Transmittal
and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained
from the Depositary, in order to avoid backup withholding. See instruction 9 to
the Letter of Transmittal and "Important Tax Information" in the Letter of
Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after May 14, 2000.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase and must specify the name
of the person having tendered the Shares to be withdrawn, the number and type of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Common Shares have been tendered pursuant to the procedures for book-entry
transfer set forth in Section 2, any notice of withdrawal must also specify the
7
<PAGE>
name and number of the account at the Book Entry Transfer Facility to be
credited with the withdrawn Common Shares and must otherwise comply with the
Book Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for any purposes of the Offer. However, withdrawn Shares
may be retendered by again following one of the procedures described in
Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
If the Purchaser elects to provide a Subsequent Offering Period of three
business days to 20 business days after the Expiration Date pursuant to
Rule 14d-11 of the Exchange Act, no withdrawal rights shall apply during such
period in accordance with Rule 14d-7(a)(2) under the Exchange Act.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and, promptly after the
Expiration Date, will pay for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 3. Upon
the terms and subject to the conditions of the Offer, if the Purchaser elects to
provide a Subsequent Offering Period, the Purchaser will immediately accept and
promptly pay for all Shares as they are validly tendered during such Subsequent
Offering Period. Any determination concerning the satisfaction of such terms and
conditions will be within the sole discretion of the Purchaser, and such
determination will be final and binding on all tendering shareholders. See
Sections 1 and 14. The Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply with any applicable law. Any such delays will be effected in compliance
with Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after the termination
or withdrawal of the Offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of Common Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
(3) any other documents required by the Letter of Transmittal. The per Share
consideration paid to any holder of a particular class of securities of the
Company pursuant to the Offer will be the highest per Share consideration paid
for that same class of securities to any other holder of that same class of
securities pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-l(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on
8
<PAGE>
behalf of the Purchaser, retain tendered Shares. Any such Shares may not be
withdrawn except to the extent tendering shareholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of an
invalid tender or otherwise, certificates for any such Shares will be returned,
without expense to the tendering shareholder (or, in the case of Common Shares
delivered by book-entry transfer of such Common Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedure set forth
in Section 2, such Common Shares will be credited to an account maintained at
the Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer. Any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer will constitute a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also constitute a taxable transaction
under applicable state, local, foreign and other tax laws. As a result, a
tendering shareholder will generally recognize gain or loss for Federal income
tax purposes in an amount equal to the difference between the amount of cash
received by the shareholder pursuant to the Offer and such shareholder's
aggregate adjusted tax basis in the Shares tendered and purchased pursuant to
the Offer. Gain or loss will be calculated separately for each block of Shares
tendered and purchased pursuant to the Offer. If tendered Shares are held by a
tendering shareholder as capital assets, any gain or loss recognized by the
tendering shareholder will constitute capital gain or loss, and will constitute
long-term capital gain or loss if the tendering shareholder held the underlying
Shares for more than 12 months as of the date of disposition. There are limits
on the deductibility of capital losses.
A shareholder (other than certain exempt shareholders including, among
others, some corporations and certain foreign individuals) that tenders Shares
may be subject to backup withholding at a rate of 31% unless the shareholder
provides its correct TIN (or certifies that it is awaiting a TIN) and certifies
as to no loss of exemption from backup withholding and otherwise complies with
the applicable requirements of the backup withholding rules. A shareholder that
does not furnish its correct TIN in the prescribed manner or that does not
otherwise establish a basis for an exemption from backup withholding may be
subject to a penalty imposed by the IRS, and the gross proceeds of the Offer
payable to such shareholder may be subject to backup withholding at a rate of
31%. Each shareholder should complete and sign the Substitute Form W-9 included
as part of the Letter of Transmittal so as to provide the information and
certification necessary to avoid backup withholding.
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the shareholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF SUCH PERSON'S INDIVIDUAL CIRCUMSTANCES.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER.
9
<PAGE>
6. PRICE RANGE OF THE COMMON SHARES; DIVIDENDS ON THE COMMON SHARES
The Common Shares are traded on The Nasdaq SmallCap Stock Market(SM) under
the symbol "EVMD". There is no established trading market for the Series A
Shares, the Series B Shares, the Series C Shares or the Series D Shares. The
following table sets forth, for each of the periods indicated, the high and low
reported sale prices per Common Share, as reported by The Nasdaq Stock Market.
<TABLE>
<CAPTION>
SHARES
-------------------
HIGH LOW
-------- --------
<S> <C> <C>
FISCAL YEAR ENDING DECEMBER 31, 2000
First Quarter (through March 14, 2000)...................... $4.500 $2.000
FISCAL YEAR ENDED DECEMBER 31,1999
First Quarter............................................... $1.813 $1.438
Second Quarter.............................................. $2.188 $1.469
Third Quarter............................................... $1.938 $1.563
Fourth Quarter.............................................. $2.250 $1.531
FISCAL YEAR ENDED DECEMBER 31,1998
First Quarter............................................... $2.875 $1.313
Second Quarter.............................................. $2.438 $1.563
Third Quarter............................................... $2.375 $1.250
Fourth Quarter.............................................. $2.250 $1.188
</TABLE>
On February 22, 2000, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported last sale
price of the Common Shares on The Nasdaq SmallCap Stock Market(SM) was $3.6875
per Common Share. On March 14, 2000, the reported last sale price of the Common
Shares on The Nasdaq SmallCap Stock Market(SM) was $4.50 per Common Share.
Shareholders are urged to obtain current market quotations for the Common
Shares.
According to the Company's Annual Report on Form 10-KSB, as amended, for the
fiscal year ended December 31, 1999 (the "Form 10-KSB"), the Company has not
paid cash dividends on its Common Shares or the Series A Shares since inception,
but the Company has paid the holders of the Series B Shares the current dividend
of $0.22 per share per annum (8% of the purchase price per share) plus its
dividends in arrears commencing in September 1994. Cash dividends paid on the
Series B Shares were $140,208 in 1999. The Company has paid holders of the
Series C Shares its current dividend of $0.165 per share per annum (6% of the
purchase price per share) plus its dividends in arrears commencing August 1995.
Cash dividends paid on the Series C Shares were $67,800 in 1999. Holders of the
Series D Shares are entitled to dividends of $0.2875 per share per annum (10% of
the purchase price per share) plus its dividend in arrears commencing
September 1995. Cash dividends paid on the Series D Shares were $135,556 in
1999. According to the Form 10-KSB, the Company is prohibited from paying
dividends on its Common Shares without the consent of the holders of (1) a
majority of the Series A Shares, Series B Shares, Series C Shares and Series D
Shares and (2) the Company's convertible promissory notes and the warrants
issued in connection therewith.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE COMMON SHARES; STOCK QUOTATION;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
The purchase of Common Shares pursuant to the Offer will reduce the number
of holders of Common Shares and the number of Common Shares that might otherwise
trade publicly and could adversely affect the liquidity and market value of the
remaining Common Shares held by the public.
MARKET FOR SHARES. Depending upon the number of Common Shares purchased
pursuant to the Offer, the Common Shares may no longer meet the requirements of
the National Association of Securities Dealers, Inc. (the "NASD") for continued
inclusion in The Nasdaq SmallCap Stock Market(SM). According to published
guidelines for the Nasdaq SmallCap Stock Market(SM), the Common Shares might no
longer be eligible for quotation on the Nasdaq SmallCap Stock Market(SM) if,
among other things, either (1) the
10
<PAGE>
Company's net tangible assets were less than $2,000,000, the Company's market
capitalization was less than $35,000,000, and the Company's net income (in
latest fiscal year or 2 of last 3 fiscal years) was less than $500,000, or
(2) the number of Common Shares publicly held was fewer than 500,000, there were
fewer than 300 holders of round lots, the aggregate market value of publicly
held Common Shares was less than $1,000,000, or there were fewer than two
registered and active market makers for the Common Shares. If these standards
are not met, the Common Shares might nevertheless continue to be included in The
Nasdaq Stock Market with quotations published in the Nasdaq "additional list" or
in one of the "local lists," but if the number of holders of the Common Shares
were to fall below 300, or if the number of publicly held Common Shares were to
fall below 100,000 or there were not at least two registered and active market
makers for the Common Shares, the NASD's rules provide that the Common Shares
would no longer be "qualified" for Nasdaq Stock Market reporting and The Nasdaq
Stock Market would cease to provide any quotations. Common Shares held directly
or indirectly by directors, officers or beneficial owners of more than 10% of
the Common Shares are not considered as being publicly held for this purpose.
According to the Company, as of December 31, 1999, there were approximately 283
holders of record of Common Shares, with approximately 2,600 beneficial holders
and 7,669,127 Common Shares outstanding. If, as a result of the purchase of
Common Shares pursuant to the Offer, the Common Shares no longer meet the
requirements of the NASD for continued inclusion in The Nasdaq Stock Market or
The Nasdaq SmallCap Stock Market(SM), as the case may be, the market for Common
Shares could be adversely affected.
If the Common Shares no longer meet the requirements of the NASD for
quotation through any tier of The Nasdaq Stock Market, it is possible that the
Common Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market for the Common Shares and the availability of such quotations would
depend, however, upon the number of holders of Common Shares remaining at such
time, the interest in maintaining a market in Common Shares on the part of
securities firms, the possible termination of registration of the Common Shares
under the Exchange Act, as described below, and other factors.
There is no trading market for any of the Series A Shares, Series B Shares,
Series C Shares or Series D Shares. As of December 31, 1999, there were
approximately 3 holders of record of the Series A Shares, 27 holders of record
of the Series B Shares, 14 holders of record of the Series C Shares and 31
holders of record of the Series D Shares.
EXCHANGE ACT REGISTRATION. The Common Shares are currently registered under
the Exchange Act. Registration of the Common Shares under the Exchange Act may
be terminated upon application of the Company to the Commission if the Common
Shares are neither listed on a national securities exchange nor held by 300 or
more holders of record. Termination of registration of the Common Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the Company,
such as the shortswing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with shareholders' meetings and
the related requirement of furnishing an annual report to shareholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, may be impaired or eliminated. The Purchaser intends to seek to cause the
Company to apply for termination of registration of the Common Shares under the
Exchange Act as soon after the completion of the Offer as the requirements for
such termination are met.
If registration of the Common Shares is not terminated prior to the Merger,
then the Common Shares will cease to be reported on The Nasdaq Stock Market and
the registration of the Common Shares under the Exchange Act will be terminated
following the consummation of the Merger.
MARGIN REGULATIONS. The Common Shares are currently "margin securities"
under the regulations of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), which has the
11
<PAGE>
effect, among other things, of allowing brokers to extend credit on the
collateral of the Common Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Common Shares would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers. If registration of Common Shares under the Exchange Act were
terminated, the Common Shares would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Minnesota corporation with its principal executive offices
at 13755 First Avenue North, Minneapolis, Minnesota 55441, telephone number:
(612) 473-6262. According to the Form 10-KSB, the Company is engaged primarily
in the development, manufacturing and marketing of innovative radio frequency
surgical solutions for use in minimally invasive surgical procedures. The
Company operates a U.S. sales force of independent medical professionals from
its headquarters in Minneapolis, Minnesota, where it also develops and
manufactures its proprietary bipolar instruments.
Set forth below is certain consolidated financial information with respect
to the Company excerpted or derived from the information contained in the
Form 10-KSB. More comprehensive financial information is included in those
reports and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to those reports and
such other documents and all the financial information (including any related
notes) contained therein. Those reports and such other documents are available
for inspection and copies thereof may be obtained in the manner set forth below
under "Available Information."
EVEREST MEDICAL CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Net revenues........................................... $12,608,863 $10,719,755 $7,365,380
Cost of goods sold..................................... 6,253,533 5,501,001 4,103,920
----------- ----------- ----------
Gross margin........................................... 6,355,330 5,218,754 3,261,460
Cost and expenses:
Sales and marketing.................................. 2,986,171 2,680,409 2,192,829
Research and development............................. 915,047 858,816 633,898
General and administrative........................... 1,071,081 937,494 784,203
----------- ----------- ----------
Total operating expenses............................... 4,972,299 4,476,719 3,610,930
Interest income........................................ (10,878) (8,018) (16,775)
Interest expense....................................... 20,427 79,737 52,146
----------- ----------- ----------
Income (loss) before income taxes (benefit)............ 1,373,482 670,316 (384,841)
Income tax (benefit) expense........................... (3,255,000) 10,000 --
----------- ----------- ----------
Net income (loss)...................................... 4,628,482 660,316 (384,841)
Less preferred stock dividends......................... 343,564 343,564 344,390
----------- ----------- ----------
Net income (loss) applicable to common stock........... $ 4,284,918 $ 316,752 $ (729,231)
----------- ----------- ----------
Basic and diluted net income (loss) per common share... $ 0.56 $ 0.04 $ (0.10)
=========== =========== ==========
Weighted average number of common shares outstanding
during the year...................................... 7,604,607 7,364,982 7,017,635
=========== =========== ==========
</TABLE>
12
<PAGE>
EVEREST MEDICAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 482,531 $ 217,488
Accounts receivable, less allowances (1999--$91,750;
1998--$61,750).......................................... 2,034,342 1,745,512
Inventories............................................... 1,892,034 1,751,946
Prepaid insurance and deposits............................ 125,098 76,689
------------ ------------
Total current assets........................................ 4,534,005 3,791,636
EQUIPMENT
Office and display equipment.............................. 513,925 414,315
Research and development equipment........................ 188,224 188,224
Production equipment...................................... 1,292,454 1,219,929
Equipment under capital lease............................. 115,235 115,235
------------ ------------
2,109,839 1,937,703
Less allowance for depreciation........................... (1,787,170) (1,632,198)
------------ ------------
322,669 305,505
Patents, net of amortization (1999--$172,337;
1998--$172,087)........................................... -- 250
------------ ------------
Deferred tax asset.......................................... 3,280,000 --
Total assets................................................ $ 8,136,674 $ 4,097,391
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Customer advances......................................... $ 12,280 $ 36,788
Accounts payable.......................................... 278,920 582,110
Accrued compensation and related taxes.................... 473,151 314,174
Other accrued liabilities................................. 190,081 189,875
Bank borrowings, short term............................... -- 125,000
------------ ------------
Total current liabilities................................... 954,432 1,247,947
SHAREHOLDERS' EQUITY
Convertible preferred stock series A, ($.01 par value,
$2.50 liquidation value) 1,400,000 authorized;
outstanding:
1999--462,937 shares; 1998--632,937 shares.............. 1,126,717 1,551,717
Convertible preferred stock series B, ($.01 par value,
$2.75 liquidation value) authorized and outstanding:
1999--637,273 shares; 1998--637,273 shares.............. 1,545,313 1,545,313
Convertible preferred stock series C, ($.01 par value,
$2.75 liquidation value) authorized and outstanding:
1999--410,906 shares; 1998--410,906 shares.............. 1,002,832 1,002,832
Convertible preferred stock series D, ($.01 par value,
$2.875 liquidation value) authorized and outstanding:
1999--471,500 shares; 1998--471,500 shares.............. 1,205,808 1,205,808
Common stock, ($.01 par value) 12,461,821 authorized;
outstanding:
1999--7,669,127; 1998--7,465,875........................ 76,691 74,659
Additional paid-in capital................................ 16,548,112 16,420,828
Accumulated deficit....................................... (14,323,231) (18,951,713)
------------ ------------
7,182,242 2,849,444
------------ ------------
Total liabilities and shareholders' equity.................. $ 8,136,674 $ 4,097,391
============ ============
</TABLE>
13
<PAGE>
EVEREST MEDICAL CORPORATION
STATEMENT OF CASHFLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
---------- -------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $4,628,482 $660,316 $(384,841)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization............................. 155,223 148,516 168,086
Provision for losses on accounts receivable............... 30,000 15,000 750
Value of warrants granted in connection with guarantee of
bank line............................................... 894 3,576 2,386
Recognition of deferred tax asset......................... (3,280,000) -- --
Changes in operating assets and liabilities
Accounts receivable..................................... (318,830) (197,446) (428,272)
Inventories............................................. (140,088) (696,135) (275,682)
Prepaid expenses........................................ (48,409) 22,839 68,210
Customer advances....................................... (24,508) (1,212) 20,000
Accounts payable and accrued expenses................... (143,471) 449,089 41,647
---------- -------- ---------
Net cash provided by (used in) operating activities......... 859,293 404,543 (787,716)
---------- -------- ---------
INVESTING ACTIVITIES
Purchases of equipment...................................... (172,136) (169,980) (187,629)
---------- -------- ---------
Net cash used in investing activities....................... (172,136) (169,980) (187,629)
---------- -------- ---------
FINANCING ACTIVITIES
Dividends paid.............................................. (343,564) (343,564) (344,390)
Principal payments on debt and capital leases............... (625,536) (477,496) (5,409)
Proceeds from issuance of debt.............................. 500,000 -- 600,000
Net proceeds from sale of common stock...................... 46,986 723,625 92,696
---------- -------- ---------
Net cash provided by (used in) financing activities......... (422,114) (97,435) 342,897
---------- -------- ---------
Increase (decrease) in cash and cash equivalents............ 265,043 137,128 (632,448)
Cash and cash equivalents at beginning of year.............. 217,488 80,362 712,810
---------- -------- ---------
Cash and cash equivalents at end of year.................... $ 482,531 $217,488 $ 80,362
========== ======== =========
Supplemental cash flow information:
Conversion of Series A and B preferred stock into common
stock..................................................... $ 425,000 $ -- $ 51,250
</TABLE>
AVAILABLE INFORMATION. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is required to file reports
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's shareholders and
filed with the Commission. Such reports, proxy statements and other information
is available for inspection at the public reference facilities of the Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located in the Northwestern Atrium Center, 500 West
Madison Street (Suite 1400), Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New
14
<PAGE>
York, New York 10048. Copies may be obtained, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a
web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
Such reports, proxy and information statements and other information may be
found on the Commission's web site, the address of which is: http://www.sec.gov.
Such information should also be on file at The Nasdaq Stock Market, 1735 K
Street, N.W., Washington, D.C. 20006.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information or disclosures made by the Company. Although the Purchaser
and Parent do not have any knowledge that any such information is untrue,
neither the Purchaser nor Parent takes any responsibility for the accuracy or
completeness of such information or for any failure by the Company to disclose
events that may have occurred and may affect the significance or accuracy of any
such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal office of the Purchaser is
located c/o the principal office of Parent. All outstanding shares of capital
stock of the Purchaser are owned by Parent.
Parent develops bipolar radio frequency technologies for the minimal access
surgery markets, with a particular concentration on the arthroscopic,
hysteroscopic and urology markets. Parent is a public limited company
incorporated and existing under the laws of England and Wales having its
principal place of business at Fortran Road, St. Mellons, Cardiff, CF3 0LT,
United Kingdom.
Neither the Purchaser nor Parent (together, the "Corporate Entities") or, to
the best knowledge of the Corporate Entities, any of the persons listed in
Schedule I or any associate or majority-owned subsidiary of the Corporate
Entities or any of the persons so listed, beneficially owns any equity security
of the Company. None of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the other persons referred to in the preceding
sentence, or any of the respective directors, executive officers or subsidiaries
of any of the foregoing, has effected any transaction in any equity security of
the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contacts, negotiations or transactions between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (2) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
During the last five years, none of the Corporate Entities or, to the best
knowledge of the Corporate Entities, any of the persons listed in Schedule I
(1) has been convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors) or (2) was a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws. The name, business
address, present principal occupation or employment, five-year employment
history and citizenship of each of the directors and executive officers of the
Purchaser and Parent are set forth in Schedule I.
15
<PAGE>
Set forth below is certain consolidated financial information with respect
to Parent and its subsidiaries extracted or derived from either the consolidated
audited financial statements of the Parent for each of the fiscal years ended
June 30, 1998 and 1999, or the unaudited consolidated interim financial
information of the Parent for the 6 months ended December 31, 1999.
GYRUS GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
<TABLE>
<CAPTION>
UNAUDITED
6 MONTHS YEAR YEAR
ENDED ENDED ENDED
31 DECEMBER 30 JUNE 30 JUNE
1999 1999 1998
L000 L000 L000
----------- -------- --------
<S> <C> <C> <C>
Turnover--continuing operations............................. 5,278 9,396 5,709
Cost of sales............................................... (2,633) (5,697) (4,043)
------ ------ ------
Gross profit................................................ 2,645 3,699 1,666
Operating expenses (including, in year ended 30 June 1999,
an exceptional item of L874,000).......................... (3,548) (6,535) (6,078)
------ ------ ------
Operating loss--continuing operations....................... (903) (2,836) (4,412)
Interest receivable and similar income...................... 81 441 506
Interest payable and similar charges........................ (17) (61) (100)
------ ------ ------
Loss on ordinary activities, before and after taxation,
being the loss for the financial period................... (839) (2,456) (4,006)
------ ------ ------
Loss per ordinary share
Basic and diluted (amounts in pence)........................ (2.7) (7.9) (14.9)
------ ------ ------
</TABLE>
There were no recognized gains or losses other than the loss for each of the
periods shown above.
16
<PAGE>
GYRUS GROUP PLC
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
AS AT AS AT
30 JUNE AS AT 30 JUNE
1999 31 DECEMBER 1998
000 1999 000 000
POUNDS POUNDS POUNDS
STERLING STERLING STERLING
--------- ------------ --------
<S> <C> <C> <C>
Fixed assets
Tangible assets........................................... 1,466 1,376 1,773
Current assets
Stocks.................................................... 2,562 2,376 1,550
Debtors................................................... 3,372 1,883 1,527
Investments............................................... 2,200 4,000 8,300
Cash at bank and in hand.................................. 89 972 378
------- ------ ------
8,223 9,231 11,755
Creditors: Amounts falling due within one year.............. (1,855) (2,403) (2,401)
------- ------ ------
Net current assets.......................................... 6,368 6,828 9,354
------- ------ ------
Total assets less current liabilities....................... 7,834 8,204 11,127
Creditors: Amounts falling due after more than one year..... (184) (198) (291)
Deferred income............................................. (357) -- (749)
------- ------ ------
Net assets.................................................. 7,293 8,006 10,087
------- ------ ------
Capital and reserves
Share capital............................................. 1,634 1,634 1,633
Share premium account..................................... 12,402 12,357 12,221
Merger reserve............................................ 3,561 3,561 3,561
Profit and loss account................................... (10,304) (9,546) (7,328)
------- ------ ------
Equity shareholders' funds.................................. 7,293 8,006 10,087
------- ------ ------
</TABLE>
17
<PAGE>
GYRUS GROUP PLC
CONSOLIDATED CASH FLOW STATEMENTS
<TABLE>
<CAPTION>
UNAUDITED
6 MONTHS YEAR YEAR
ENDED ENDED ENDED
31 DECEMBER 30 JUNE 30 JUNE
1999 1999 1998
L000 L000 L000
----------- -------- --------
<S> <C> <C> <C>
Net cash outflow from operating activities.................. (2,278) (3,729) (5,207)
Returns on investment and servicing of finance.............. 67 398 332
Taxation.................................................... -- -- --
Capital expenditure......................................... (466) (296) (958)
------ ------ -------
Cash outflow before use of liquid resources and financing... (2,677) (3,627) (5,833)
Management of liquid resources.............................. 1,800 4,300 (8,300)
------ ------ -------
(877) 673 (14,133)
Financing................................................... (6) (79) 13,577
------ ------ -------
Increase (decrease) in cash................................. (883) 594 (556)
====== ====== =======
</TABLE>
GYRUS GROUP PLC
RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
<TABLE>
<CAPTION>
UNAUDITED
6 MONTHS YEAR YEAR
ENDED ENDED ENDED
31 DECEMBER 30 JUNE 30 JUNE
1999 1999 1998
L000 L000 L000
----------- -------- --------
<S> <C> <C> <C>
Increase (decrease) in cash in period....................... (883) 594 (556)
Cash outflow from decrease in debt and lease financing...... 51 149 200
Increase (decrease) in liquid funds......................... (1,800) (4,300) 8,300
------ ------ -----
Change in net funds resulting from cash flows............... (2,632) (3,557) 7,944
Inception of new finance leases............................. -- (18) (71)
------ ------ -----
Change in net funds......................................... (2,632) (3,575) 7,873
Net funds at beginning of period............................ 4,678 8,253 380
------ ------ -----
Net funds at end of period.................................. 2,046 4,678 8,253
====== ====== =====
</TABLE>
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP FOLLOWED BY GYRUS GROUP
PLC AND US GAAP. The financial information set out above has been prepared under
UK GAAP which differs in certain significant respects from US GAAP. However,
there are no significant differences between UK GAAP and US GAAP which would
materially affect the net loss and shareholders' equity of Gyrus Group PLC ("the
Group") for each of the two years ended 30 June 1998 and 1999 and the unaudited
six month period to 31 December 1999.
Consequently, the net loss and shareholders' equity for each period shown in
the financial information above would not be affected by the application of US
GAAP.
The main differences resulting from the application of US GAAP would be the
reclassification of certain items within the balance sheet and cash flow
statements, as shown below.
CURRENT LIABILITIES. Deferred income (6 months ended 31 December 1999:
357,000 pounds sterling; year ended 30 June 1999: Nil pounds sterling and year
ended 30 June 1998: 749,000 pounds sterling), included for UK GAAP purposes as a
separate line after creditors falling due in more than one year,
18
<PAGE>
represents amounts that the Group expects to be utilised within one year, which
would be reclassified to current liabilities under US GAAP.
CONSOLIDATED STATEMENTS OF CASH FLOWS. The consolidated statements of cash
flows prepared under UK GAAP in accordance with Financial Reporting Standard No
1 (Revised 1996), "Cash flow statements", present substantially the same
information as that required under US GAAP: Statement of Financial Accounting
Standard Number 95, "Statements of Cash Flows". These standards differ, however,
with regard to classification of items within the statements and as regards the
definition of the cash and cash equivalents.
Under UK GAAP, cash does not include short term deposits and investments
which cannot be withdrawn without notice and without incurring a penalty. Such
items are shown as current asset investments. Under US GAAP deposits with a
maturity of less than three months at inception which are convertible into known
amounts of cash are included as cash and cash equivalents. Under UK GAAP, cash
flows are presented separately for operating activities, returns on investment
and servicing of finance, taxation, capital expenditure and financial
investment, acquisitions and disposals, management of liquid resources and
financing activities. US GAAP, however, requires only three categories of cash
flow activity to be reported; operating, investing and financing. Cash flows
from taxation and returns on investment and servicing of finance, shown under UK
GAAP, are included as operating activities under US GAAP.
Summarised consolidated cash flow statements under US GAAP would be as
follows:
<TABLE>
<CAPTION>
UNAUDITED
6 MONTHS YEAR YEAR
ENDED ENDED ENDED
31 DECEMBER 30 JUNE 30 JUNE
1999 1999 1998
L000 L000 L000
----------- -------- --------
<S> <C> <C> <C>
Cash outflow from operating activities...................... (2,211) (3,331) (4,875)
Cash outflow on investing activities........................ (466) (296) (958)
Cash (outflow) inflow from financing activities............. (6) (79) 13,577
------ ------ -------
(Decrease) increase in cash and cash equivalents............ (2,683) (3,706) 7,744
Cash and cash equivalents at beginning of period............ 4,972 8,678 934
------ ------ -------
Cash and cash equivalents at end of period.................. 2,289 4,972 8,678
====== ====== =======
</TABLE>
OTHER DIFFERENCES. Other minor differences exist between UK GAAP and US
GAAP in respect of certain items reflected in the financial information. Such
differences are immaterial to the reconciliation of net losses and shareholders'
equity and have been excluded accordingly.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $51.65 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution which will be made directly or indirectly by Parent to
the Purchaser.
Parent intends to provide to the Purchaser the funds required to consummate
the Offer and the Merger from the proceeds of a Placing and Open Offer (the
"Placing and Open Offer") of 12,907,447 new ordinary 1p shares of Parent (the
"New Ordinary Shares") at 350 pence each, to raise approximately 45 million
pounds sterling (US $71 million). The New Ordinary Shares will be listed on the
London Stock Exchange, and will be issued to certain institutional investors and
to Parent's existing shareholders. The Placing and Open Offer is being fully
underwritten by Nomura International plc ("Nomura").
The Placing and Open Offer is conditional, inter alia, on the following:
(1) the prospectus (the "UK Prospectus") relating to the Placing and Open
Offer being approved by the London Stock Exchange and filed with the
Registrar of Companies in England and Wales by 4:00 p.m., London time, on
April 17, 2000 (the "Launch Date");
19
<PAGE>
(2) the UK Prospectus, and associated documentation, being posted to
Parent's shareholders by 12:00 midnight, London time, on the Launch Date;
(3) satisfaction of all of the conditions to the Offer (Section 12);
(4) the approval and adoption of the Merger Agreement, the Merger and the
Placing and Open Offer by the requisite vote of the shareholders of
Parent by not later than April 6, 2000 at a duly convened extraordinary
general meeting ("EGM") of Parent (this EGM has been convened for
April 6, 2000);
(5) Nomura not having terminated the Placing Agreement (the "Placing
Agreement") between itself and Parent in accordance with its terms prior
to admission of the New Ordinary Shares to the London Stock Exchange's
Official List ("Admission"). Nomura's rights to terminate the Placing
Agreement include the right to terminate in the event of any material
breach of the Placing Agreement (or the warranties and indemnities
contained in it) occurring before Admission becomes effective; and
(6) admission of the New Ordinary Shares becoming effective by not later
than April 17, 2000 (or such later time as Parent and Nomura may agree).
The conditions to the Placing and Open Offer described in sub-paragraphs (1)
and (2) listed above have been satisfied as of the date of the Offer. Parent and
Purchaser have not established any alternative financing arrangements or plans
in the event that the Placing and Open Offer is not successfully completed.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
MERGER NEGOTIATIONS WITH THE COMPANY. In July 1998, an investment banking
firm contacted the Company on behalf of Parent to discuss the Company's interest
in pursuing potential synergies with Parent. On November 3, 1998,
representatives of Parent met with representatives of the Company in Minneapolis
to discuss a potential relationship.
In late November 1998, the Board of Directors of the Company directed
management of the Company to convey to Parent that the Company was not for sale
at that time. The Company's Board of Directors did not believe the Company's
current stock price was reflective of the Company's intrinsic value. Unless a
potential acquiror was in agreement with this assumption, the Company's Board of
Directors did not want to deter management's focus from executing its strategic
plan or incur the additional expense associated with the process of commencing
acquisition discussions, however preliminary. In late November 1998, this
statement was communicated to Parent. On December 11, 1998, Mark Goble, Chief
Executive Officer of Parent, authored a letter indicating continued interest in
discussions with the Company in the future.
In July 1999, Mr. Goble contacted the Company to determine if it had
interest in further discussions with Parent. On September 10, 1999, Mark Goble,
Brian Steer, Chairman, and Colin Goble, Chief Technical Officer of Parent,
visited the Company to tour its facility and make general corporate
presentations. Specifically, Mr. Steer discussed Parent's interest in having a
distribution partner in the United States. Mr. Steer indicated that Parent, due
to the strategic fit between the two companies, continued to be interested in
acquiring the Company. John L. Shannon, Chief Executive Officer of the Company
reiterated the position taken by the Board of Directors of the Company in late
November 1998 with respect to an acquisition of the Company.
On October 6, 1999, Mr. Steer telephoned Mr. Shannon to discuss an
acquisition of the Company by Parent, and proposed to hold a meeting
telephonically on October 21, 1999 to present an oral proposal to the Company
for consideration. On October 21, 1999, representatives of Parent, including
Nomura, had a telephone conference call with representatives of the Company,
including its corporate counsel, to discuss the structure and valuation range of
a potential acquisition of the Company by Parent.
After subsequent telephone conversations between the two companies, on
November 9, 1999, Parent forwarded a letter to the Company setting forth its
non-binding indication of interest regarding the
20
<PAGE>
possible acquisition of the Company's outstanding common stock, preferred stock,
options and warrants at a price range from $3 1/8 to $3 1/4, or approximately
$32 million, in cash, with standard conditions.
In response to Parent's November 9, 1999 letter and upon direction from the
Company's Board of Directors, Mr. Shannon informed Mr. Steer that the Company's
Board of Directors did not believe the stock price at that time ($2.00 per
share) was indicative of its value and that the Company was willing to wait for
its stock price to increase or alternatively for someone to recognize the true
value of the Company, which the Board of Directors deemed to be at least
$50 million. Mr. Steer requested that Mr. Shannon provide a written reply to his
letter of November 9, 1999. Mr. Shannon complied with this request and sent a
letter to Mr. Steer on November 24, 1999 expressing the position of the Board of
Directors.
On December 1, 1999, Nomura International plc, on behalf of Parent,
contacted the Company to continue the discussions. Mr. Shannon reiterated the
position of the Board of Directors regarding the valuation of the Company.
Following various conversations, Parent agreed to seriously consider the
valuation established by the Board of Directors and agreed to meet at Parent's
headquarters on January 7, 2000. Prior to this meeting, a confidentiality and
non-disclosure agreement was executed between the two parties. Various
representatives of Parent, including Nomura, and of the Company, participated in
this meeting.
On January 19, 2000, Parent provided the Company with a confirmation of
interest letter proposing to proceed with an acquisition of all outstanding
common stock, preferred stock, options and warrants of the Company for $4.85 per
share in cash in a transaction to be structured as a merger. This confirmation
of interest letter was subject to a variety of conditions, including
satisfactory completion of Parent's due diligence investigation of the Company.
After discussions with a Special Committee of the Company comprised of
independent directors and formed to evaluate the potential merger, Mr. Shannon
signed the confirmation of interest letter on January 24, 2000. Parent conducted
its due diligence review of the Company during the week of February 6, 2000.
On February 11, 2000, counsel for Parent delivered to the Company and its
legal representatives drafts of the definitive transaction documentation,
including a proposed merger agreement.
During the week of February 13, 2000, the Company and its legal
representatives and Parent and its legal representatives, continued to negotiate
the terms of the proposed merger agreement.
On February 22, 2000, Dougherty & Company LLC, financial advisor to the
Company, rendered to the Board of Directors of the Company and its Special
Committee an opinion that the proposed transaction was fair to and in the best
interest of the Company and its shareholders, from a financial point of view.
Based upon discussions, presentations and this opinion, the Board of Directors
of the Company has unanimously approved the Merger and determined that the terms
of the Merger are fair to, and in the best interests of, the shareholders of the
Company and unanimously recommends that shareholders of the Company accept the
Offer and tender their Shares to the Purchaser pursuant to the terms of the
Offer.
The merger agreement was signed and made effective as of February 23, 2000,
and a press release announcing the signing was issued in the morning of
February 23, 2000.
CONSULTING AGREEMENT WITH THE COMPANY. Parent and the Company executed a
Consulting Agreement, dated as of February 23, 2000 (the "Consulting
Agreement"), whereby Parent has retained the Company to provide to Parent
consulting and advisory services upon Parent's reasonable request from time to
time during the Consultancy Period (as defined below) in connection with
Parent's development of an independent sales network for the distribution of its
products in North America. The Consulting Agreement provides that the Company's
consultancy would commence on May 23, 2000 (the "Commencement Date") and is to
continue, unless the Consulting Agreement is terminated earlier in accordance
with its terms, through the fourth anniversary of the Commencement Date (the
"Consultancy Period"). The purpose of the Consulting Agreement is to provide for
an on-going relationship between the Company and Parent in the event that the
Merger Agreement is terminated under certain circumstances.
21
<PAGE>
The Consulting Agreement provides that in consideration of the Company's
performance of services during the Consultancy Period, Parent is to pay to the
Company a fee (the "Consultancy Fee") in the amount of one million dollars
($1,000,000.00), payable in four equal installments of $250,000 each, the first
such installment to be payable on the Commencement Date and each of the
remaining installments to be payable on each of the three subsequent anniversary
dates of the Commencement Date thereafter.
Parent may terminate the Consulting Agreement prior to the completion of the
Consultancy Period if the Merger Agreement is terminated, in which case, no
Consultancy Fee would be payable to the Company. However, if Parent terminates
the Consulting Agreement because the Merger Agreement has been terminated
because the Placing and Open Offer is not completed or because the shareholders
of Parent do not approve the Placing and Open Offer, the entire Consultancy Fee
is payable by Parent to the Company.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT
PURPOSE OF THE OFFER. The purpose of the Offer is to enable Parent to
acquire control of, and all of the equity interests in, the Company. Following
the consummation of the Offer, the Purchaser and Parent intend to acquire any
remaining equity interests in the Company not acquired in the Offer by
consummating the Merger. The Offer is subject to certain terms and conditions.
Notwithstanding anything to the contrary set forth in this Offer to Purchase,
any determination concerning the satisfaction of such terms and conditions will
be within the reasonable discretion of the Purchaser.
THE MERGER AGREEMENT. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
the Merger," the Company will be merged with and into the Purchaser, and each
then outstanding Share (other than Shares (1) owned by the Purchaser or Parent,
(2) remaining outstanding held by any subsidiary of Parent or (3) owned by
shareholders, if any, who are entitled to and who properly exercise dissenters'
rights under Minnesota law), will be converted into the right to receive an
amount in cash, without interest, equal to (a) in the case of the Common Shares,
the Common Share Offer Price, (b) in the case of the Series A Shares, the
Series A Offer Price, (c) in the case of the Series B Shares, the Series B Offer
Price, (d) in the case of the Series C Shares, the Series C Offer Price, and
(e) in the case of the Series D Shares, the Series D Offer Price, paid pursuant
to the Offer. Shares described in (1) and (2) of this paragraph will be
cancelled without the payment of any consideration.
VOTE REQUIRED TO APPROVE THE MERGER. The MBCA requires, among other things,
that the adoption of any plan of Merger or consolidation of the Company must be
approved by the Board of Directors of the Company and, if the "short form"
Merger procedure described below is not available, by the holders of a majority
of the Company's outstanding Shares, voting together as a single class. The
Board of Directors of the Company has approved the Offer, the Merger and the
Merger Agreement; consequently, the only additional corporate action of the
Company that may be necessary to effect the Merger is approval by the Company's
shareholders if the "short-form" Merger procedure described below is not
available. Under the MBCA, the affirmative vote of holders of a majority of the
outstanding Common Shares (including any Shares owned by the Purchaser), is
required to approve the Merger. In addition, holders of the Series A Shares,
Series B Shares, Series C Shares and Series D Shares will also have the right to
vote on the Merger, on the same basis as the holders of the Common Shares. If
the Purchaser acquires, through the Offer or otherwise, voting power with
respect to at least a majority of the outstanding Shares (which would be the
case if the Minimum Condition were satisfied and the Purchaser were to accept
for payment Shares tendered pursuant to the Offer), it would have sufficient
voting power to effect the Merger without the vote of any other shareholder of
the Company. The MBCA also provides, however, that if a parent company owns at
least 90% of each class of stock of a subsidiary, the parent company can effect
a "short-form" merger with that subsidiary without the action of the other
shareholders of the subsidiary. Accordingly, if, as a result of the Offer or
otherwise, the Purchaser acquires or controls the voting power of at least 90%
of the outstanding shares of each class (i.e., the Common Shares, Series A
Shares, Series B Shares, Series C Shares and Series D Shares), the Purchaser
could (and, under the Merger Agreement, is
22
<PAGE>
required to) effect the Merger using the "short-form" merger procedures without
any action by any other shareholder of the Company.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligations of Parent, the Purchaser and the Company to effect the Merger are
subject to the fulfillment at or prior to the effective time of the Merger of
each of the following conditions: (1) other than as described above with respect
to the "short-form merger procedures" the Merger Agreement and the Merger shall
have been approved and adopted by the requisite vote of the shareholders of the
Company in accordance with the MBCA, (2) the Merger Agreement, the Merger and
the Placing and Open Offer shall have been approved and adopted by the requisite
vote of the shareholders of Parent in accordance with the Articles of
Association of Parent and the Companies Act of 1985 (as amended) and (3) no
temporary restraining order, preliminary or permanent injunction judgment or
other order, decree or ruling nor any statute, rule, regulation or order shall
be in effect which prevents the consummation of the Merger.
The obligations of Parent and the Purchaser to effect the Merger are also
subject to the satisfaction at or prior to the closing date of the Merger of the
following conditions (unless any such condition is waived in writing by Parent
or the Purchaser):
(1) the representations and warranties of the Company set forth in the
Merger Agreement shall be true and correct in all material respects (without
giving duplicative effect to any materiality qualification contained in the
applicable representation or warranty) as of the closing date of the Merger with
the same force and effect as though made again at and as of the closing date of
the Merger, except for any representations and warranties that address matters
only as of a particular date (which shall remain true and correct in all
material respects (without giving duplicative effect to any materiality
qualification contained in the applicable representation or warranty) as of such
date) and Parent shall have received a certificate from the Company's chief
executive officer and chief financial officer to that effect;
(2) the Company shall have performed in all material respects all
obligations required to be performed by the Company under the Merger Agreement
at or prior to the closing date of the Merger and Parent shall have received a
certificate signed by the Company's president and chief executive officer and
chief financial officer to that effect;
(3) there shall not have occurred any change in the business, assets,
financial condition or results of operations of the Company which has had, or is
reasonably likely to have, individually or in the aggregate, a change or effect
that is materially adverse to the business, properties, assets, financial
condition, results of operations or condition of the Company taken as a whole or
the Company's ability to perform any of its obligations under the Merger
Agreement or which is expected to impede the Company's ability to consummate the
Merger (a "Material Adverse Effect");
(4) the Company shall have received all necessary consents or waivers
relating to the Merger, in form and substance satisfactory to Parent, from the
other parties to each contract, lease or agreement to which the Company is a
party, except where the failure to obtain such consent or waiver would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect;
(5) the receipt by Parent of funds, or the unconditional right to draw funds
from the Placing and Open Offer;
(6) the admittance of the New Ordinary Shares to the Official List of the
London Stock Exchange, subject to notice of admittance; and
(7) the execution and delivery of the Employment Agreements (as defined in
the Merger Agreement) with Purchaser by certain Designated Company Employees (as
defined in the Merger Agreement).
The obligations of the Company to effect the Merger are also subject to the
satisfaction at or prior to the closing date of the Merger of the following
conditions (unless any such condition is waived in writing by the Company):
(1) the representations and warranties of Parent set forth in the Merger
Agreement shall be true and correct in all material respects (without giving
duplicative effect to any materiality qualification contained
23
<PAGE>
in the applicable representation or warranty) as of the closing date of the
Merger with the same force and effect as though made again at and as of the
closing date of the Merger, except for any representations and warranties that
address matters only as of a particular date (which shall remain true and
correct in all material respects (without giving duplicative effect to any
materiality qualification contained in the applicable representation or
warranty) as of such date) and the Company shall have received a certificate to
that effect signed by Parent's president and chief executive officer and chief
financial officer; and
(2) Parent shall have performed in all material respects all obligations
required to be performed by it under the Merger Agreement at or prior to the
closing date of the Merger and the Company shall have received a certificate to
that effect signed by Parent's president and chief executive officer and chief
financial officer.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the effective time of the Merger, whether before or after
approval of the Merger Agreement by the shareholders of the Company:
(1) by mutual written agreement of the boards of directors of Parent and the
Company;
(2) by Parent or the Company if (a) any court of competent jurisdiction in
the United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree or ruling or other
action has become final and nonappealable, (b) there has been a material breach
by the other party of any representation, warranty, covenant or agreement set
forth in the Merger Agreement unless such breach is capable of being cured and
is cured prior to the closing date of the Merger, (c) the shareholders of Parent
shall fail to approve the Merger and the Placing and Open Offer, or (d) the
shareholders of the Company shall fail to approve the Merger Agreement and the
Merger;
(3) by Parent, if the Company or any of its directors or officers shall
(a) participate in discussions or negotiations in breach of the covenants of the
Company described under "No Solicitation by the Company; Acquisition Proposals"
in this Section 12, (b) have approved or recommended an acquisition proposal by
a third party (other than Parent) or withdrawn or modified in a manner adverse
to Parent its approval or recommendation of the Merger Agreement and the
transactions contemplated thereby, or (c) have failed to mail a proxy statement
to the shareholders in connection with the approval of the Merger by the
shareholders of the Company or failed to include in such proxy statement its
recommendation of the Merger Agreement and the transactions contemplated
thereby, or publicly resolved to do any of the foregoing;
(4) by Parent, if the Placing and Open Offer or the Placing Agreement shall
have been terminated without Parent having received the proceeds of the Placing
and Open Offer or any alternative financing;
(5) by the Company, if in response to an acquisition proposal which
constitutes a Superior Proposal (as defined in "No Solicitation by the Company;
Acquisition Proposals" in this Section 12 below) which was not solicited by the
Company and which did not otherwise result from a breach of the covenants of the
Company described under "No Solicitation by the Company; Acquisition Proposals"
in this Section 12, if, in effecting such termination, the Company complies with
the relevant provisions of the Merger Agreement; or
(6) by either Parent or the Company, in the event the effective time of the
Merger has not occurred by the latest to occur of (a) July 31, 2000 or
(b) 60 days after the clearance by the Commission of the proxy statement issued
in connection with approval of the Merger by the shareholders of the Company
(such date may thereafter be extended by mutual written agreement of Parent and
the Company),
NO SOLICITATION BY THE COMPANY,- ACQUISITION PROPOSALS. The Merger
Agreement provides that the Company shall not, nor will it authorize or permit
any of its, directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it to,
directly or indirectly, (1) solicit, initiate, entertain or encourage (including
by way of furnishing non-public information), any inquiries or the making of any
proposal which constitutes an Acquisition Proposal (as defined below) or
(2) participate in any discussions or negotiations regarding any Acquisition
Proposal.
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Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith, after consultation with and receipt of advice from
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the
Company, in response to a Superior Proposal (as defined below) which was not
solicited by it or which did not result from a breach by the Company of its
non-solicitation obligations, and subject to compliance with the Merger
Agreement, may furnish information with respect to the Company to any person
making a Superior Proposal pursuant to a confidentiality agreement entered into
between such person and the Company on terms no less favorable than the
confidentiality agreement between the Company and Parent and participate in
discussions or negotiations regarding such Superior Proposal.
For purposes of the Merger Agreement, an "Acquisition Proposal" means any
inquiry, proposal or offer from any person (1) relating to any direct or
indirect acquisition or purchase of (a) a business that constitutes 15% or more
of the net revenues, net income or the assets of the Company, taken as a whole,
or (b) 20% or more of any class of equity securities of the Company,
(2) relating to any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% or more of any class of equity
securities of the Company, or (3) relating to any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company, other than the transactions contemplated by
the Merger Agreement.
For purposes of the Merger Agreement, "Superior Proposal" means any proposal
made by a third party to acquire, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the Shares then outstanding or all or substantially all
the assets of the Company and otherwise on terms which the Board of Directors of
the Company determines in its good faith judgment is reasonably likely to be
consummated, taking into account the person making the proposal and all legal,
financial and regulatory aspects of the proposal, and would provide greater
value to the shareholders of the Company than the Merger.
The Merger Agreement provides further that neither the Board of Directors of
the Company nor any committee thereof may (1) withdraw or modify, or propose
publicly to withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by the Board of
Directors or such committee of the Offer, the Merger or the Merger Agreement,
(2) approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal or (3) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
related to any Acquisition Proposal, other than any such agreement entered into
concurrently with the termination of the Merger Agreement by the Company to
facilitate such action. See "Termination of the Merger Agreement" in this
Section 12.
The Merger Agreement provides that the Company must promptly advise Parent
orally and in writing of any request for non-public information, any Acquisition
Proposal, including all of the material proposed terms of such Acquisition
Proposal, the identity of the third party, or any decision by the company to
furnish information with respect to the Company to any person making such
request for non-public information or Acquisition Proposal pursuant to a
confidentiality agreement (as described in the Merger Agreement) or to
participate in discussions or negotiations with any person regarding an
Acquisition Proposal. The Company must promptly deliver such notice to Parent
(and in no event later than 24 hours) after the Company's receipt of any request
for non-public information or of any Acquisition Proposal and prior to the
Company taking any of the actions described above. The Company must also keep
Parent reasonably informed of the status of any such request or Acquisition
Proposal and will update the information required by the Merger Agreement to be
provided to Parent upon the request of Parent.
FEES AND EXPENSES; TERMINATION FEE. The Merger Agreement generally provides
that all fees and expenses incurred in connection with the Offer, the Merger,
the Merger Agreement and the transactions contemplated by the Merger Agreement
will be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated.
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The Merger Agreement also provides that the Company shall pay 7.0% of the
total aggregate Merger Consideration to Parent as reimbursement of Parent's
expenses and as liquidated damages (the "Company Break-Up Fee"), within three
business days after termination of the Merger Agreement by Parent or the
Company, as applicable, in the event that:
(1) there has been a material breach by the Company of any representation,
warranty, covenant or agreement set forth in the Merger Agreement unless such
breach is capable of being cured and is cured prior to the closing date of the
Merger;
(2) the Company or any of its directors or officers shall participate, or
have publicly resolved to participate, in discussions or negotiations in breach
of the Company's covenants described under "No Solicitation by the Company;
Acquisition Proposals" in this Section 12;
(3) the Board of Directors of the Company shall have approved or
recommended, or have publicly resolved to approve or recommend, an Acquisition
Proposal by a third party or withdrawn or modified in a manner adverse to Parent
its approval or recommendation of the Merger Agreement or the transactions
contemplated thereby;
(4) the Company failed to, or have publicly resolved to not, mail the proxy
statement regarding the Merger to its shareholders or failed to include in such
proxy statement the recommendation of the Board of Directors that the
shareholders of the Company vote in favor of the Merger; or
(5) the Company terminates the Merger Agreement in response to a Superior
Proposal which was not solicited by the Company and which does not otherwise
result from a breach of the non-solicitation or other covenants of the Company
described above under "No Solicitation by the Company; Acquisition Proposals" in
this Section 12.
The Merger Agreement further provides that the Company shall pay the Company
Break-Up Fee to Parent if the Company consummates an "Acquisition Transaction"
within 12 months after Parent or the Company's termination of the Merger
Agreement due to the failure of the shareholders of the Company to approve the
Merger Agreement and the Merger at a meeting of the Company's shareholders. In
such case, the Company Break-Up Fee is payable within three business days after
the consummation of such "Acquisition Transaction."
CONDUCT OF THE BUSINESS OF THE COMPANY. The Merger Agreement provides that
except as required or permitted by the Merger Agreement or as disclosed in the
Company's disclosure schedule attached to the Merger Agreement, the Company
shall not, from the date of the Merger Agreement until the effective time of the
Merger, without the prior written consent of Parent (which consent will be given
or denied within a reasonable time after any request for such consent):
(1) amend its articles of organization or other charter document or by-laws;
(2) authorize for issuance, issue, sell, deliver, pledge or agree or commit
to issue, sell, deliver or pledge (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any capital stock of any class or any debt or other securities convertible into
capital stock or equivalents (including, without limitation, stock appreciation
rights), or amend any of the terms of any of the foregoing, other than the
issuance of shares of capital stock upon the exercise of outstanding options or
rights in accordance with the terms of the Company's Incentive Stock Option
Plan, Nonqualified Stock Option Plan and Stock Bonus Plan (collectively, the
"Company Equity Plans");
(3) (a) split, combine or reclassify any shares of its capital stock, or
authorize or propose the issuance or authorization of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
adopt or approve any shareholder rights plan or agreement providing for the
issuance to holders of Shares of rights to purchase or receive stock, cash or
other assets upon the acquisition or proposed acquisition of Shares, or
repurchase, redeem or otherwise acquire any of its securities, or (b) make any
payment of cash or other property to terminate, cancel or otherwise settle any
outstanding options, other than in the case of clauses (a) or (b) above for the
issuance of Common Shares in connection with the exercise of options or rights
under the Company Equity Plans;
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(4) (a) incur or assume any long-term indebtedness or increase any amounts
outstanding under long-term credit facilities existing as of the date of the
Merger Agreement or grant, extend or increase the amount of a mortgage lien on
any leasehold or fee simple interest of the Company; or, except in the ordinary
course of business consistent with past practice in the case of clauses
(a) through (f) below, (b) incur or assume any short-term debt or increase
amounts outstanding under short-term credit facilities existing as of
December 31, 1999, (c) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other entity or individual, except for obligations of the Company or any
subsidiary of the Company, (d) make any loans, advances or capital contributions
to, or investments in, any other entity or individual, (e) pledge or otherwise
encumber shares of capital stock of the Company, or (f) mortgage or pledge any
of its assets, tangible or intangible, or create or suffer to exist any lien
thereon except as existing on the date of the Merger Agreement or as may be
required under agreements outstanding on the date of the Merger Agreement to
which the Company is party;
(5) except as expressly provided in the Merger Agreement, including the
acceleration of vesting of outstanding options under the Company Equity Plans
and termination of the Company's Employee Stock Purchase Plan, enter into, adopt
or amend in any manner or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance, change-in-control or
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee, or increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan or arrangement as in effect as of
the date of the Merger Agreement or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(6) sell, lease, license, pledge or otherwise dispose of or encumber any
material assets except in the ordinary course of business consistent with past
practice (including without limitation any indebtedness owed to it or any claims
held by it);
(7) acquire or agree to acquire by merging or consolidating with or by
purchasing any portion of the capital stock or assets of, or by any other
manner, any business or any corporation, partnership, limited liability company,
association or other business organization or division thereof, other than in
the ordinary course of business consistent with past practice;
(8) change any of the accounting principles or practices used by it
affecting its assets, liabilities or business, except for such changes required
by a change in generally accepted accounting principles;
(9) pay, discharge or satisfy any claims, liabilities or obligations
(whether absolute, accrued, fixed, contingent, liquidated, unliquidated or
otherwise), other than the payment, discharge or satisfaction of liabilities
(a) in the ordinary course of business consistent with past practices, (b) with
notice to Buyer, in an amount which does not exceed $50,000 in the aggregate,
(c) incurred pursuant to the terms of the engagement letter agreement between
the Company and Dougherty & Company LLC, the Company's financial advisor, in an
amount not to exceed $90,000 or (d) incurred in connection with the transactions
contemplated by Offer and the Merger Agreement, not to exceed the amounts
described in the Company's disclosure schedule attached to the Merger Agreement;
(10) except as required by their terms, enter into, terminate or breach (or
take or fail to take any action, that, with or without notice or lapse of time
or both, would become a breach) or materially amend any contract which is or
would be a material agreement, as defined in the Merger Agreement;
(11) without prior consultation with Parent (in addition to the consent
requirement described above) commence any litigation or arbitration other than
in accordance with past practice or settle any litigation or arbitration for
money damages or other relief in excess of $50,000 or if as part of such
settlement the Company would agree to any restrictions on its operations;
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(12) grant any license with respect to or otherwise convey any intellectual
property of the Company or take any action or fail to take any action that would
make certain representations and warranties made by the Company in the Merger
Agreement with respect to the Company's intellectual property to become untrue
in any respect;
(13) elect or appoint any new directors or officers of the Company;
(14) waive, release or amend its rights under any confidentiality,
"standstill" or similar agreement that the Company entered into in connection
with its consideration of a potential strategic transaction; provided, however,
that the Company may waive, release or amend its rights under any such
confidentiality, "standstill" or similar agreement if the Company's Board of
Directors determines, based on the advice of independent legal counsel that
failure to do so would be reasonably likely to constitute a breach of its
fiduciary duties to the Company's shareholders under applicable law;
(15) make or change any election, request permission of any tax authority or
to change any accounting method, file any amended federal, state, local, foreign
or other tax return, enter into any closing agreement, settle any federal,
state, local, foreign or other tax claim or assessment relating to the Company,
surrender any right to claim a refund of federal, state, local, foreign, or
other taxes, or consent to any extension or waiver of the limitation period
applicable to any federal, state, local, foreign or other tax claim or
assessment relating to the Company;
(16) settle or comprise any pending or threatened suit, action or claim
which is material or which relates to any of the transactions contemplated by
the Merger Agreement;
(17) take any action that would reasonably be expected to result in (a) any
of the representations and warranties of the Company set forth in the Merger
Agreement becoming untrue or (b) any of the conditions of the Offer not being
satisfied; or
(18) take, or agree in writing or otherwise to take, any of the actions
described in sub-paragraphs (1) through (17) listed above.
BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment for, Shares by the Purchaser pursuant to
the Offer, the Purchaser shall be entitled to designate such number of directors
on the Board of Directors of the Company as will give the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, representation on the
Company's Board of Directors equal to the product of (1) the total number of
directors on the Company's Board of Directors and (2) the percentage that the
number of Shares purchased by the Purchaser in the Offer bears to the number of
Shares outstanding, and the Company shall, at such time, cause the Purchaser's
designees to be selected by its existing Board of Directors. Subject to
applicable law, the Company has agreed to take all action requested by Parent
necessary to effect any such election, including mailing to its shareholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder. The Merger Agreement
further provides that in the event that the Purchaser's designees are elected to
the Board of Directors of the Company, until the effective time of the Merger,
the Board of Directors of the Company will have at least two independent
directors who were directors on the date of the Merger Agreement and who are not
officers of the Company. The Merger Agreement also provides that the Company
will promptly, at the option of Parent, either increase the size of the
Company's Board of Directors and/or obtain the resignation of such number of its
current directors as is necessary to enable the Purchaser's designees to be
elected or appointed to, and to constitute a majority of, the Company's Board of
Directors as provided above.
STOCK OPTIONS. The Merger Agreement provides that prior to the effective
time of the Merger, the Company shall terminate the Company Equity Plans and
shall provide written notice to each holder of a then outstanding stock option
or other right to purchase Common Shares pursuant to the Company Equity Plans
(whether or not such option is then vested or exercisable), that such option
shall be exercisable in full as of the date of such notice and that such option
shall terminate at the effective time of the Merger and that, if such option is
not exercised or otherwise terminated before the effective time of the Merger,
such holder shall be entitled to receive in cancellation of such option a cash
payment from Parent promptly after
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the effective time of the Merger, in an amount equal to the excess, if any, by
which the Common Share Offer Price exceeds the exercise price per share with
respect to such option, if any, multiplied by the number of shares represented
by such option immediately prior to such cancellation, subject to income tax
withholding as required by applicable law.
WARRANTS. The Merger Agreement also provides that, prior to the effective
time of the Merger, the Company shall take all actions necessary to procure, on
or before the Expiration Date, from each holder of an outstanding warrant to
purchase Common Shares an agreement that, as of the effective time of the
Merger, such warrant shall be converted into a right of such holder to receive
from Parent promptly after the effective time of the Merger an amount in cash,
without interest equal to the product of (1) the number of Common Shares subject
to such warrant immediately prior to the effective time of the Merger and
(2) the excess, if any, by which the Common Share Offer Price exceeds the
exercise price per share that was applicable with respect to such warrant.
EMPLOYEE MATTERS. The Merger Agreement provides that from and after the
effective time of the Merger, Parent will cause the Surviving Corporation to
provide to employees of the Company who remain employed after the effective time
of the Merger ("Company Employees") with the types and levels of employee
benefits which are in the aggregate at least as favorable as those maintained by
the Company prior to the effective time, provided that this obligation shall not
include the Company's employee stock purchase plan or the Company Equity Plans.
The Merger Agreement further provides that Parent will treat, and cause its
applicable benefit plans to treat, the service of Company Employees with the
Company as service rendered to the Surviving Corporation for purposes of
eligibility to participate, vesting and for other appropriate benefits but not
for benefit accrual.
In addition, the Merger Agreement also provides that the Company shall use
its reasonable best efforts to cause certain of its employees to enter into
employment agreements with the Surviving Corporation on the terms and conditions
set forth in attached exhibits to the Merger Agreement. In particular, it is
expected that each of Steven M. Blakemore, the Company's Vice President,
Operations and Engineering, Michael E. Geraghty, the Company's Vice President,
Sales and Marketing, Thomas F. Murphy, the Company's Vice President, Finance and
Administration and Assistant Secretary and David J. Parins, the Company's Vice
President, Technology, will enter into employment agreements with the Surviving
Corporation providing for their employment following the completion of the
Merger. None of Messrs. Blakemore, Geraghty, Murphy or Parins is party to an
employment agreement with the Company prior to the Merger. Under the terms of
these employment agreements, each of which is substantially identical, each
officer will be employed by the Surviving Corporation in their current
positions. Each agreement has a term of three years and provides for salary and
benefits substantially equivalent to that which each officer is paid prior to
the Merger.
INDEMNIFICATION. The Merger Agreement provides that from and after the
effective time of the Merger and for a period of six years thereafter, the
Surviving Corporation (1) will maintain all rights to indemnification (including
with respect to the advancement of expenses incurred in the defense of any
action or suit) existing on the date of the Merger Agreement in favor of the
present and former directors, officers, employees and agents of the Company as
provided in the Company's Articles of Incorporation and By-Laws, in each case as
in effect on the date of this Agreement, and that during such period, neither
the Articles of Incorporation nor the By-Laws of the Surviving Corporation shall
be amended to reduce or limit the rights of the indemnity afforded to the
present and former directors, officers, employees and agents of the Company, or
the ability of the Surviving Corporation to indemnify them, nor to hinder, delay
or make more difficult the exercise of such rights or the ability to indemnify
and (2) agrees to indemnify to the fullest extent permitted under its
Certificate of Incorporation, its By-Laws, and applicable law the present and
former directors, officers, employees and agents of the Company against all
losses, damages, liabilities or claims made against them arising from their
service in such capacities prior to and including the effective time of the
Merger, to at least the same extent as such persons are currently permitted to
be indemnified pursuant to the Company's Articles of Incorporation and By-Laws.
Furthermore, the Merger Agreement provides that Parent will cause to be
maintained for a period of four years from the effective
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time of the Merger the Company's current directors' and officers' insurance and
the indemnification policy to the extent that it provides coverage for events
occurring prior to the effective time of the Merger for all persons who were
directors and officers of the Company on February 23, 2000, so long as such
insurance is available on commercially reasonable terms and the annual premium
for such liability insurance would not be in excess of 200% of the last annual
premium paid prior to the date of the Merger Agreement. If the existing
officers' and directors' liability insurance expires, is terminated or cancelled
during such four-year period, Parent will use all reasonable efforts to cause to
be obtained as much officers' and directors' liability insurance as can be
obtained for the remainder of such period for an annualized premium as provided
in the Merger Agreement and on terms and conditions no less advantageous than
the existing officers' and directors' liability insurance.
COMMERCIALLY REASONABLE EFFORTS. Upon the terms and subject to the
conditions set forth in the Merger Agreement and Parent and the Company's
respective board of directors' fiduciary duties to their respective shareholders
under applicable law, each of Parent, the Purchaser and the Company have agreed
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to cooperate with each other in doing, all things necessary, proper or advisable
to consummate and make effective, as promptly as practicable, the Offer, the
Merger and the other transactions contemplated by the Merger Agreement,
including the use of their respective commercially reasonable efforts to
(1) obtain all necessary waivers, consents and approvals from other parties to
loan agreements, leases, licenses and other contracts, (2) obtain all necessary
consents, approvals and authorizations as required to be obtained under any
federal, state or foreign law or regulation, (3) defend all lawsuits or other
legal proceedings challenging the Merger Agreement or the consummation of the
transactions contemplated by the Merger Agreement, (4) lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated by the Merger
Agreement, (5) effect all necessary registrations and filings, including, but
not limited to, submissions of information requested by any foreign, federal,
state or local government, court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, and (6) fulfill
all conditions to this agreement. In connection with and without limiting the
foregoing, but subject to the terms and conditions of the Merger Agreement, the
Company and its Board of Directors will (1) take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Offer, the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement, and (2) if any state takeover
statute or similar statute or regulation becomes applicable to the Offer, the
Merger, the Merger Agreement or any other transaction contemplated by the Merger
Agreement, take all action necessary to ensure that the Offer, the Merger, the
Merger Agreement and the other transactions contemplated by the Merger Agreement
may be consummated as promptly as practicable on the terms contemplated by the
Offer and the Merger Agreement and otherwise to minimize the effect of such
statute or regulation on the Offer, the Merger, the Merger Agreement and the
other transactions contemplated by the Merger Agreement.
The Merger Agreement further provides that the Company will give prompt
notice to Parent, and Parent will give prompt notice to the Company, of (1) the
occurrence, or non-occurrence, of any event which would be likely to cause any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate in any material respect at any time from the date of the Merger
Agreement through the effective time of the Merger and (2) any material failure
of the Company or Parent to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under the Merger Agreement;
provided that no such notification will limit or otherwise affect the remedies
available to the party receiving the notice.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties. The foregoing summary of the Merger
Agreement is qualified in its entirety by reference to the Merger Agreement, a
copy of which is filed as Exhibit 9 to the Purchaser's Tender Offer Statement on
Schedule TO filed with the Commission on the date hereof (the "Schedule TO") and
incorporated by reference herein. The Merger Agreement should be read in its
entirety for a more complete description of the matters summarized above.
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APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated holders of Shares will have certain
rights pursuant to the provisions of Sections 302A.471 and 302A.473 of the MBCA
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures are complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. In determining the
fair value of the Shares, the court is required to take into account all
relevant factors. Accordingly, any such judicial determination of the fair value
of Shares could be based upon considerations other than or in addition to the
Common Share Offer Price, the Series A Offer Price, the Series B Offer Price,
the Series C Offer Price or the Series D Offer Price or the market value of the
Shares, including the asset value and investment value of the Shares. The value
so determined could be more or less than the Offer Price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 302A.471 and
302A.473 of the MBCA fails to perfect, or effectively withdraws or loses his
right to appraisal, as provided in the MBCA, the Shares of such shareholder will
be converted into the Merger Consideration in accordance with the Merger
Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the MBCA and is qualified in its entirety by the full
text of Section 302A.471 and 302A.473 of the MBCA.
FAILURE TO FOLLOW THE STEPS REQUIRED BY THE MBCA FOR PERFECTING APPRAISAL
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
GOING PRIVATE TRANSACTIONS. The Merger will have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the Commission and disclosed to minority shareholders
prior to consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, prior to the effective time
of the merger, unless approved in writing by the Purchaser, the Company may not
(1) declare, set aside, make or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, or (b) issue or sell any
shares of any class of its capital stock, or any securities convertible into or
exchangeable for any such shares, or issue, sell, grant or enter into any
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind, contingently or
otherwise to purchase or otherwise acquire any such shares or securities
convertible into or exchangeable for any such shares. Nothing herein shall
constitute a waiver by the Purchaser or Parent of any of its rights under the
Merger Agreement or a limitation of remedies available to the Purchaser or
Parent for any breach of the Merger Agreement, including termination thereof.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-l(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer unless the Minimum Condition shall
have been satisfied. Furthermore, the Purchaser will not be required to accept
for payment or, as described above, to pay for any Shares not previously
accepted for
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payment or paid for, if, upon the scheduled expiration date of the Offer (as
extended, if required, pursuant to the provisions discussed in Section 1 above),
any of the following conditions exists and is continuing:
(1) there shall be instituted or pending by any governmental entity any
suit, action or proceeding (a) challenging the acquisition by Parent or the
Purchaser of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any of
the other transactions contemplated by the Merger Agreement or seeking to obtain
from the Company, Parent or the Purchaser any damages that are material in
relation to the Company, (b) seeking to prohibit or materially limit the
ownership or operation by the Company, Parent or any of Parent's subsidiaries of
all or a portion of the business or assets of the Company or Parent and its
subsidiaries, taken as a whole, or to compel the Company or Parent and its
subsidiaries to dispose of or hold separate all or a portion of the business or
assets of the Company or Parent and its subsidiaries, taken as a whole, in each
case as a direct result of the Offer or any of the other transactions
contemplated by the Merger Agreement, (c) seeking to impose material limitations
on the ability of Parent or the Purchaser to acquire or hold, or exercise full
rights of ownership of, any Shares to be accepted for payment pursuant to the
Offer, including, without limitation, the right to vote such Shares on all
matters properly presented to the shareholders of the Company, (d) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of the
Company, (e) that could reasonably be expected to require the divestiture by
Parent or the Purchaser of Shares, in the case of any of the foregoing in
clauses (b), (c) or (d), which could reasonably be expected, individually or in
the aggregate, to have a material adverse effect on the business of the Company,
or (f) that could reasonably be expected to result in a material adverse effect
on the Company or Parent;
(2) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, by any governmental entity or court that would result in
any of the consequences referred to in clauses (a) through (f) of paragraph (1)
above;
(3) there shall have occurred any events or changes which have had or which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company;
(4) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality shall not be true and
correct or any such representations and warranties that are not so qualified
shall not be true and correct in any material respect, in each case, at the date
of the, Merger Agreement and at the scheduled or extended expiration of the
Offer;
(5) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under the Merger
Agreement, which failure to perform or comply cannot be cured, or has not been
cured within 15 business days after the Company receives written notice from
Parent of such breach or failure to perform;
(6) the Merger Agreement shall have been terminated in accordance with its
terms;
(7) any consent (other than the filing of the Certificate of Merger or
approval of the shareholders of the Company if required by the MBCA) required to
be filed, or to have occurred or been obtained by the Company in connection with
the execution and delivery of the Merger Agreement, the Offer and the
consummation of the transactions contemplated by the Merger Agreement shall not
have been filed or obtained or shall not have occurred, except where the failure
to obtain such consent could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company;
(8) the Company's Board of Directors (a) shall have withdrawn, or modified
or changed in a manner adverse to Parent or the Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement or the Merger, (b) shall have recommended a Superior Proposal, or
(c) shall have publicly resolved to do any of the foregoing;
32
<PAGE>
(9) Parent shall not have received the funds, or shall not have the
unconditional right to draw funds from the Placing and Open Offer; or
(10) any person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act), other than Parent, the Purchaser or their affiliates or any group
of which any of them is a member, shall have acquired or announced its intention
to acquire beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 30% or more of the Shares;
and, in the good faith judgment of Parent or the Purchaser, in its sole
discretion, make it inadvisable to proceed with such acceptance of Shares for
payment or the payment therefor.
The Merger Agreement provides that the foregoing conditions are for the sole
benefit of Parent and the Purchaser and may be waived by Parent and the
Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances and
each such right will be deemed an ongoing right that may be asserted at any time
and from time to time.
15. CERTAIN LEGAL MATTERS
Based on a review of publicly available filings made by the Company with the
Commission and other publicly available information concerning the Company and
representations made by representatives of the Company and the Company, neither
the Purchaser nor Parent is aware of any license or regulatory permit that
appears to be material to the business of the Company, that might be adversely
affected by the Purchaser's acquisition of Shares as contemplated herein or of
any approval or other action, except as otherwise described in this Section 15,
by any governmental entity that would be required for the acquisition or
ownership of Shares by the Purchaser as contemplated herein. Should any such
approval or other action be required, the Purchaser and Parent currently
contemplate that such approval or other action will be sought. Except as
otherwise expressly described in this Section 15, while the Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's business or that certain parts of the Company's
business might not have to be disposed of if such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser could decline to accept for payment or
pay for any Shares tendered. See Section 14 for certain conditions to the Offer.
MINNESOTA FILING. As the Offer involves a Minnesota company, many of whose
shareholders are Minnesota residents, the Offer may be subject to the provisions
of Chapter 80B of the Minnesota General Corporation Law, known as the Takeover
Disclosure Act. Under this Act, it is unlawful to make any takeover offer to
acquire any equity securities of a target company in Minnesota unless a
registration statement is filed with the Minnesota Commissioner of Commerce,
together with certain other documents. The information required to be included
in this registration statement is substantially identical to that contained in
the Schedule TO filed by the Purchaser with the Commission in connection with
the Offer. In addition, the Purchaser is required to file the Schedule TO and
exhibits, including this Offer to Purchase, with the registration statement.
This filing is required to be made simultaneously with the commencement of the
Offer. On March 16, 2000, simultaneously with the announcement of the Offer,
Purchaser made this filing. It is not expected that compliance with this Act
will delay the completion of the Offer.
ANTITRUST. Under the provisions of the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the regulations
thereunder applicable to the Offer, an acquiring person and the person whose
voting securities are being acquired in a tender offer must make an HSR filing
by filing a Notification and Report Form with respect to the tender offer if
each of the following three
33
<PAGE>
conditions are satisfied: (1) the acquiring person or the person whose voting
securities are being acquired are engaged in commerce or in any activity
affecting commerce, (2)(a) any voting securities or assets of a person engaged
in manufacturing which has annual net sales or total assets of $10,000,000 or
more are being acquired by any person which has total assets or annual net sales
of $100,000,000 or more, (b) any voting securities or assets of a person not
engaged in manufacturing which has total assets of $10,000,000 or more are being
acquired by any person which has total assets or annual net sales of
$100,000,000 or more or (c) any voting securities or assets of a person with
annual net sales or total assets of $100,000,000 or more are being acquired by
any person which has total assets or annual net sales of $10,000,000 or more,
and (3) as a result of such acquisition, the acquiring person would hold
(a) 15% or more of the voting securities or assets of the acquired person, or
(b) an aggregate total amount of the voting securities and assets of the
acquired person in excess of $15,000,000.
Although Parent, the Purchaser and the Company are engaged in commerce in
satisfaction of the first statutory condition to an HSR filing stated above, and
the consummation of the Offer will result in the acquisition by the Purchaser of
15% or more of the voting securities or assets of the Company in satisfaction of
the third statutory condition to an HSR filing stated above, none of Parent, the
Purchaser and the Company have total assets or annual net sales of $100,000,000
or more in satisfaction of the second statutory condition to an HSR filing.
Therefore, none of Parent, the Purchaser, or the Company is required to file a
Notification and Report Form with respect to the Offer under the HSR Act and
applicable regulations.
Nevertheless, the FTC and the Antitrust Division may scrutinize the legality
of transactions such as the Purchaser's proposed acquisition of the Company
under the antitrust laws. If the Antitrust Division or the FTC raises
substantive issues in connection with a proposed transaction, the parties may
engage in negotiations with the relevant governmental agency concerning possible
means of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue. At any time before or after the
Purchaser's purchase of Shares pursuant to the Offer, the Antitrust Division or
FFC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of Parent or its subsidiaries, or the Company. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
results thereof.
OTHER FOREIGN APPROVALS. The Company conducts business in a number of
foreign countries and jurisdictions. In connection with the acquisition of
Shares pursuant to the Offer, the laws of certain of those foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval of, governmental authorities in such countries and jurisdictions.
The governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
offer. There can be no assurance that the Purchaser will be able to cause the
Company to satisfy or comply with such laws or that compliance or non-compliance
will not have adverse consequences for the Company after purchase of the Shares
pursuant to the Offer.
16. FEES AND EXPENSES
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and Wilmington Trust Company to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary) in connection with the solicitation of tenders of Shares pursuant to
the Offer. Brokers, dealers, banks and trust companies will be reimbursed by
34
<PAGE>
the Purchaser upon request for customary mailing and handling expenses incurred
by them in forwarding materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser or Parent has filed with the Commission a Schedule TO pursuant
to Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer. In addition, the Company has filed with the
Commission a Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that they will not be available at the regional offices of the
Commission).
GOLDEN ACQUISITION CORP.
March 16, 2000
35
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business address,
present principal occupation or employment and five-year employment history of
each of the directors and executive officers of Parent are set forth below. Each
director and executive officer listed below is a citizen of the United Kingdom
and has a business address of Fortran Road, St. Mellons, Cardiff, CF3 0LT,
United Kingdom.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE YEAR-EMPLOYMENT HISTORY
- ---- ---------------------------------------------------------------------------
<S> <C>
Brian Steer Mr. Steer serves as Executive Chairman of Parent, a position which he has
held since April 1996. Mr. Steer joined Parent as a consultant in January
1994 and was appointed to the Board of Parent in November 1994. Mr. Steer
previously served until 1994 as President of Zimmer International, Inc.,
where he was employed for the previous ten years.
Mark Goble Dr. Goble serves as Group Managing Director of Parent and is one of its
founders. Mr. Goble is a qualified surgeon whose last appointment was
Senior Registrar in Urology at Bristol Royal Infirmary.
Colin Goble Mr. Goble serves as Group Technical Director of Parent and is one of its
founders. Prior to founding Parent in 1989, Mr. Goble was a Senior Lecturer
in Electronic Engineering at the University of Glamorgan.
John Bradshaw Mr. Bradshaw serves as Group Finance Director of Parent. Mr. Bradshaw
joined Parent in July 1997. Mr. Bradshaw served as an Audit and Business
Advisory Manager with Arthur Andersen from 1992 until joining Parent in
1997. Mr. Bradshaw was employed with Arthur Andersen since 1986.
Michael Garner Mr. Garner serves as a Non-Executive Director of Parent. Mr. Garner
previously served as Finance Director of TI Group PLC from 1979 to 1993.
Mr. Garner was also a founding member of the Accounting Standards Board and
has been a member of The Hundred Group of Finance Directors since 1978. Mr.
Garner currently serves as a Non-Executive Director of a number of other
companies, including C&J Clark Ltd. and Enterprise Inns PLC.
Gordon Roy Davis Mr. Davis serves as a Non-Executive Director of Parent. Mr Davis also
currently serves as Vice President, European Director and Head of the
European Operations Management Practice of Arthur D Little. Mr. Davis has
served as a Non-Executive Director of Osmetech PLC since February 2000. Mr.
Davis previously served as Operations Director of Tricom and Wyatts, two
electronics companies.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE YEAR-EMPLOYMENT HISTORY
- ---- ---------------------------------------------------------------------------
<S> <C>
Charles Goodson-Wickes Dr. Goodson-Wickes serves as a Non-Executive Director of Parent, a position
which he has held since 1997. Dr. Goodson-Wickes also serves as Chief
Executive of Medarc Ltd., a business consultancy, as a Director of Nestor
Healthcare Group PLC and holds a number of other non-executive
directorships. Dr. Goodson-Wickes previously served as a Member of the
British Parliament for ten years, serving as Parliamentary Private
Secretary in three government departments. Dr. Goodson-Wickes is also
qualified both as a physician and a barrister.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of the Purchaser are set
forth below. The business address of the directors and executive officers listed
below is Fortran Road, St. Mellons, Cardiff, CF3 0LT, United Kingdom. The
directors and executive officers listed below are citizens of the United
Kingdom.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE YEAR-EMPLOYMENT HISTORY
- ---- ---------------------------------------------------------------------------
<S> <C>
Brian Steer Mr. Steer serves as Chairman of the Board of Directors of the Purchaser.
For additional information regarding Mr. Steer, see the information
regarding Directors and Executive Officers of Parent above on page S-1.
John Bradshaw Mr. Bradshaw serves as a Director, Secretary, and Treasurer of the
Purchaser. For additional information regarding Mr. Bradshaw, see the
information regarding Directors and Executive Officers of Parent above on
page S-1.
Mark Goble Mr. Goble serves as a Director and President of the Purchaser. For
additional information regarding Mr. Goble, see the information regarding
Directors and Executive Officers of Parent above on page S-1.
</TABLE>
S-2
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE: BY HAND/OVERNIGHT COURIER:
<S> <C> <C>
Wilmington Trust Company (302) 651-1079 Wilmington Trust Company
1100 North Market Street 1105 North Market Street
Rodney Square North Wilmington, DE 19890
Wilmington, DE 19890 Attn: Corporate Trust Operations
Attn: Corporate Trust Operations
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A shareholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (Call Collect)
(800) 322-2885 (Toll Free)
<PAGE>
EXHIBIT 2
SHAREHOLDERS WISHING TO TENDER THEIR SHARES
SHOULD USE THIS LETTER OF TRANSMITTAL
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK, SERIES A CONVERTIBLE PREFERRED STOCK,
SERIES B 8% CONVERTIBLE PREFERRED SHARES, SERIES C 6% CONVERTIBLE REDEEMABLE
PREFERRED STOCK AND SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
EVEREST MEDICAL CORPORATION
PURSUANT TO THE OFFER TO PURCHASE FOR CASH DATED MARCH 16, 2000 BY
GOLDEN ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
GYRUS GROUP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 NOON, NEW YORK CITY
TIME, ON THURSDAY, APRIL 13, 2000, UNLESS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE: BY HAND/OVERNIGHT COURIER:
<S> <C> <C>
Wilmington Trust Company (302) 651-1079 Wilmington Trust Company
1100 North Market Street 1105 North Market Street
Rodney Square North Wilmington, DE 19890
Wilmington, DE 19890 Attn: Corporate Trust Operations
Attn: Corporate Trust Operations
</TABLE>
FOR CONFIRMATION TELEPHONE:
(302) 651-8869
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, WILL NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF THE REGISTERED HOLDER(S)
(IF BLANK, PLEASE FILL IN EXACTLY AS NAME APPEARS ON
SHARE CLASS OF SHARE CERTIFICATE(S) AND SHARES TENDERED
CERTIFICATE) SECURITY (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES
CERTIFICATE REPRESENTED BY NUMBER OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL SHARES:
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Common Stock holders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
herein are being tendered. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be used either if (a) certificates for
Shares (as defined below) are to be forwarded herewith or, (b) (unless an
Agent's Message (as defined in Section 2 of the Offer to Purchase) is utilized
in connection with the book-entry transfer of Common Shares) delivery of Common
Shares is to be made by book-entry transfer to an account maintained by the
Depositary at the Book-Entry Transfer Facility (as defined in and pursuant to
the procedures set forth in Section 2 of the Offer to Purchase). Shareholders
who deliver Common Shares by book-entry transfer are referred to herein as
"Common Share Book-Entry Shareholders" and other Shareholders are referred to
herein as "Certificate Shareholders." Shareholders whose certificates for Shares
are not immediately available or who cannot deliver either the certificates for,
or, in the case of Common Shares tendered pursuant to book-entry procedures, a
Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase) with
respect to, their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares in accordance with the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
/ / CHECK HERE IF TENDERED COMMON SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY COMMON SHARES MAY BE
DELIVERED BY BOOK-ENTRY TRANSFER AND ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER COMMON SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
The Depository Trust Company Account Number: _______________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
Check here if delivered by book-entry transfer: / /
The Depository Trust Company Account Number: _______________________________
Transaction Code Number: ___________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Golden Acquisition Corp., a Delaware
corporation (the "Purchaser"), which is a wholly owned subsidiary of Gyrus Group
PLC, a public limited company incorporated and existing under the laws of
England and Wales ("Parent"), the above-described shares of (1) Common Stock,
par value $.01 per share (the "Common Shares"), (2) Series A Convertible
Preferred Stock (the "Series A Shares"), (3) Series B 8% Convertible Preferred
Shares (the "Series B Shares"), (4) Series C 6% Convertible Redeemable Preferred
Stock (the "Series C Shares"), and (5) Series D 10% Convertible Redeemable
Preferred Stock (the "Series D Shares", collectively, with the Common Shares,
the Series A Shares, the Series B Shares and the Series C Shares, the "Shares"),
of Everest Medical Corporation, a Minnesota corporation (the "Company"), upon
the terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase for Cash, dated March 16, 2000 (the "Offer to Purchase"), and this
Letter of Transmittal (which, together with any amendments or supplements
thereto or hereto, collectively constitute the "Offer"), receipt of which is
hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities or rights issued or issuable in respect thereof on or after
February 23, 2000), and irrevocably constitutes and appoints Wilmington Trust
Company (the "Depositary"), the true and lawful agent and attorney-in-fact of
the undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of the undersigned's rights with respect to such Shares (and any such other
Shares or securities or rights in the Company), (1) to deliver certificates for
such Shares (and any such other Shares or securities or rights) or,
alternatively, in the case of Common Shares, transfer ownership of such Common
Shares (and any such other Common Shares or securities or rights) on the account
books maintained by the Book-Entry Transfer Facility together, in any such case,
with all accompanying evidences of transfer and authenticity to, or upon the
order of, the Purchaser, (2) to present such Shares (and any such other Shares
or securities or rights) for transfer on the Company's books and (3) to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any such other Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other shares or other securities or rights issued or issuable
in respect of such Shares on or after February 23, 2000) and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances, and
the same will not be subject to any adverse claim. The undersigned, upon
request, will execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any and all such other Shares or securities
or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Mark Goble and John Bradshaw,
and each of them acting singly, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's shareholders or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his or her sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, and to otherwise act as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, the Shares tendered hereby that have
been accepted for payment by the Purchaser prior to the time any such action is
taken and with respect to which the undersigned is entitled to vote (and any and
all other Shares or other securities or rights issued or issuable in respect of
such Shares on or after February 23, 2000). This appointment is effective when,
3
<PAGE>
and only to the extent that, the Purchaser accepts for payment such Shares as
provided in the Offer to Purchase. This power of attorney and proxy are
irrevocable and are granted in consideration of the acceptance for payment of
such Shares in accordance with the terms of the Offer. Upon such acceptance for
payment, all prior powers of attorney, proxies and consents given by the
undersigned with respect to such Shares (and any such other Shares or securities
or rights) will, without further action, be revoked and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will not
be deemed effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both "Special Delivery Instructions" and "Special
Payment Instructions" are completed, please issue the check for the purchase
price and/or return any certificates for Shares not tendered or accepted for
payment (and any accompanying documents, as appropriate) in the name of, and
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. Please credit
any Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book-Entry Transfer Facility. The
undersigned recognizes that the Purchaser has no obligation pursuant to "Special
Payment Instructions" to transfer any Shares from the name of the registered
holder thereof if the Purchaser does not accept for payment any of the Shares so
tendered.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed
certificates: ____________.
4
<PAGE>
PLEASE FILL IN THE REMAINDER OF THIS LETTER OF TRANSMITTAL.
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than the
undersigned or if Common Shares tendered by book-entry transfer which are
not accepted for payment are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account shown
above.
Issue: / / Check / / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
__________________________________________________________________________
Credit Shares tendered by book-entry transfer that are not accepted for
payment to:
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that above.
Mail: / / Check / / Certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
__________________________________________________________________________
__________________________________________________________________________
- -----------------------------------------------------
NOTE: IF EITHER BOX IS COMPLETED, SIGNATURE NEEDS TO BE GUARANTEED BY AN
ELIGIBLE INSTITUTION.
5
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------
IMPORTANT
SHAREHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
SIGN SIGN
HERE HERE
K X J
K X J
(SIGNATURE(S) OF STOCKHOLDER(S))
Daytime Telephone Number:( )
(AREA CODE)
Dated: ,
(Must be signed by registered holder(s) as name(s) appear(s) on the certificate(s) for the Shares
or on a security position listing or by person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information and see Instruction
5.)
Name(s):
(PLEASE PRINT)
Capacity (Full Title):
Address:
(INCLUDE ZIP CODE)
Daytime Telephone Number: ( )
(AREA CODE)
Tax Identification or Social Security Number:
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED-SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
Name(s):
(PLEASE PRINT)
Capacity (Full Title):
Address:
(INCLUDE ZIP CODE)
Daytime Telephone Number: ( )
(AREA CODE)
Dated: ,
---------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (1) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on a
security position listing as the owner of the Common Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (2) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(such participant, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
shareholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Common Shares is
to be made pursuant to the procedures for book-entry transfer set forth in
Section 2 of the Offer to Purchase
For a shareholder to validly tender Common Shares pursuant to the Offer,
either (1) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set forth
herein prior to the Expiration Date and either certificates for tendered Common
Shares must be received by the Depositary at one of such addresses or such
Common Shares must be delivered pursuant to the procedures for book-entry
transfer set forth herein (and a Book-Entry Confirmation received by the
Depositary), in each case prior to the Expiration Date, or (2) the tendering
shareholder must comply with the guaranteed delivery procedures set forth below
and in Section 2 of the Offer to Purchase.
For a shareholder to validly tender Series A Shares, Series B Shares,
Series C Shares or Series D Shares pursuant to the Offer, either (1) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees and any other documents required
by the Letter of Transmittal, and certificates for tendered Series A Shares,
Series B Shares, Series C Shares or Series D Shares, as the case may be, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date or (2) the tendering
shareholder must comply with the guaranteed delivery procedure set forth below.
A shareholder may not validly tender Series A Shares, Series B Shares, Series C
Shares, or Series D shares pursuant to book-entry transfer procedures.
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's certificates for Shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such shareholder's tender may be effected by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase.
Pursuant to such procedures, (1) such tender must be made by or through an
Eligible Institution, (2) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date and (3) the
certificates for all tendered Shares in proper form for transfer (or, if
applicable in the case of Common Shares, a Book-Entry Confirmation with respect
to all such Common Shares), together with a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed Delivery
as provided in Section 2 of the Offer to Purchase. A "trading day" is any day on
which the New York Stock Exchange, Inc. is open for business.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Common Shares that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
7
<PAGE>
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY OF COMMON SHARES THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER OF COMMON SHARES, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS. (Applicable to Certificate Shareholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered." In any such case, new certificate(s) for the remainder of
the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the acceptance for payment
of, and payment for, the Shares tendered herewith. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be guaranteed
by an Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered owner(s), or
if tendered certificates are registered in the name(s) of any person(s) other
than the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered owner(s) or such person(s))
payable on account of the transfer to such person(s) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not accepted for payment are to be
returned to, a person other than the signer of this Letter of Transmittal or
8
<PAGE>
if a check is to be sent and/or such certificates are to be returned to a person
other than the signer of this Letter of Transmittal or to an address other than
that shown above, the appropriate boxes on this Letter of Transmittal should be
completed.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right to waive
any of the specified conditions of the Offer, in whole or in part at any time
and from time to time in its sole discretion.
9. BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. In order to avoid backup
withholding of Federal income tax on payments of cash pursuant to the Offer, a
stockholder surrendering Shares in the Offer must, unless an exemption applies,
provide the Depositary with such stockholder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 below in this Letter of Transmittal and
certify under penalty of perjury that such TIN is correct and that such
stockholder is not subject to backup withholding. If a stockholder does not
provide such shareholder's correct TIN or fails to provide the certifications
described above, the Internal Revenue Service (the "IRS") may impose a penalty
on such stockholder and the payment of cash to such stockholder pursuant to the
Offer may be subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the U.S. federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares lost.
The stockholder will then be instructed as to the steps that must be taken in
order to replace the certificate. This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost or
destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE, PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a shareholder is required to provide the
Depositary such shareholder's TIN (i.e., social security number or employer
identification number) on Substitute Form W-9 (or otherwise establish a basis
for exemption from backup withholding) and certify under penalty of perjury that
such TIN is correct and that such shareholder is not subject to backup
withholding. If the Shares are held in more than one name or are not in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report. If the Depositary is not provided with a
shareholder's correct TIN, the shareholder or other payee may be subject to a
penalty imposed by the Internal Revenue Service. In addition, any amounts
payable to such shareholder in connection with the Offer may be subject to
backup withholding at a 31% rate.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary.
Foreign shareholders should complete and sign the main signature form and a
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for more instructions.
10
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(SEE INSTRUCTION 9 AND "IMPORTANT TAX INFORMATION" ABOVE)
PAYER'S NAME: WILMINGTON TRUST COMPANY, AS DEPOSITARY
<TABLE>
<C> <S> <C>
- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR Social Security Number
FORM W-9 TAXPAYER IDENTIFICATION NUMBER or ------------------------
Department of the Treasury IN THE BOX AT RIGHT AND CERTIFY Employer Identification Number
BY SIGNING AND DATING BELOW.
----------------------------------------------------------------------------
PART 2--CERTIFICATION Under penalties of perjury, I certify that:
INTERNAL REVENUE SERVICE PAYER'S (1) The number shown on this form is my correct taxpayer identification
REQUEST FOR TAXPAYER number (or I am waiting for a number to be issued to me) and
IDENTIFICATION NUMBER (TIN) (2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS You must cross out item(s) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding
because you have failed to report all interest or dividends on your tax
returns. However, if after being notified by the IRS that you were subject
to backup withholding you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out such
item (2). If you are exempt from backup withholding, check the box in Part 4
below.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
The Internal Revenue Service does not require your consent to any provision of this document other than the certifications
required to avoid backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------
SIGNATURE: PART 3--Awaiting TIN: / /
- ------------------------------------------------------------------------------------------------------------------------------
DATE: PART 4--Exempt TIN: / /
- ------------------------------------------------------------------------------------------------------------------------------
NAME:
- ------------------------------------------------------------------------------------------------------------------------------
ADDRESS:
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
11
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that, if I do not
provide a taxpayer identification number to the Depositary by the time of
payment, 31% of all reportable payments made to me thereafter will be withheld
until I provide a properly certified taxpayer identification number to the
Depositary.
- -------------------------------------------
- -------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York NY 10010
(212) 929-5500 (Call Collect)
(800) 322-2885 (Toll Free)
12
<PAGE>
Exhibit 3
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF SHARES OF
COMMON STOCK; SERIES A CONVERTIBLE PREFERRED STOCK; SERIES B 8% CONVERTIBLE
PREFERRED SHARES; SERIES C 6% CONVERTIBLE REDEEMABLE PREFERRED STOCK;
AND SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE
$.01 PER SHARE
EVEREST MEDICAL CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below), as set forth in Section 2
of the Offer to Purchase for Cash, dated March 16, 2000 (the "Offer to
Purchase") (1) if certificates ("Share Certificates") evidencing shares of
(A) Common Stock, par value $.01 per share, (B) Series A Convertible Preferred
Stock, par value $.01 per share, (C) Series B 8% Convertible Preferred Shares,
par value $.01 per share, (D) Series C 6% Convertible Redeemable Preferred
Stock, par value $.01 per share, and (E) Series D 10% Convertible Redeemable
Preferred Stock, par value $.01 per share (collectively, the "Shares"), of
Everest Medical Corporation, a Minnesota corporation (the "Company"), are not
immediately available, (2) if the procedure for book-entry transfer cannot be
completed on a timely basis or (3) time will not permit all required documents
to reach the Depositary prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase). This Notice of Guaranteed Delivery may be delivered by
hand to the Depositary or transmitted by facsimile transmission or mailed to the
Depositary and must include a guarantee by an Eligible Institution (as defined
in Section 2 of the Offer to Purchase). See Section 2 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE: BY HAND/OVERNIGHT COURIER:
Wilmington Trust Company (302) 651-1079 Wilmington Trust Company
1100 North Market Street 1105 North Market Street
Rodney Square North Wilmington, DE 19890
Wilmington, DE 19890 Attn: Corporate Trust Operations
Attn: Corporate Trust Operations
</TABLE>
FOR CONFIRMATION TELEPHONE:
(302) 651-8869
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Golden Acquisition Corp., a Delaware
corporation (the "Purchaser"), and a wholly-owned subsidiary of Gyrus Group PLC,
a public limited company incorporated and existing under the laws of England and
Wales, upon the terms and subject to the conditions set forth in the Offer to
Purchase for Cash, dated March 16, 2000, and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged,
the number of Shares set forth below, all pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares: ______________________________________________________________
Certificate Nos. (if available): _______________________________________________
/ / Check box if Shares will be tendered by book-entry transfer
Name of Tendering Institution: _____________________________________________
The Depository Trust Company Account Number: _______________________________
Signature(s) of Holder(s): _________________________________________________
Dated: ________________________
(Please Type or Print)
Name(s) of Record Holder(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es): ___________________________________________________________________
- --------------------------------------------------------------------------------
(Please include zip code)
Daytime Area Code and Tel. No.: ________________________________________________
2
<PAGE>
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to such Shares, in any such case together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and any other required documents, within
three trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
(Please Type or Print)
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Tel. No.:
Authorized Signature:___________________________________________________________
Name:___________________________________________________________________________
Title:__________________________________________________________________________
(Please Print)
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
Exhibit 4
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK, SERIES A CONVERTIBLE PREFERRED STOCK,
SERIES B 8% CONVERTIBLE PREFERRED SHARES, SERIES C 6% CONVERTIBLE REDEEMABLE
PREFERRED STOCK AND SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
EVEREST MEDICAL CORPORATION
FOR
$4.85 NET PER SHARE
BY
GOLDEN ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
GYRUS GROUP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 NOON, NEW YORK CITY
TIME, ON THURSDAY, APRIL 13, 2000, UNLESS EXTENDED.
March 16, 2000
To Brokers, Dealers, Banks, Trust Companies and Other Nominees:
We have been appointed by Golden Acquisition Corp., a Delaware corporation
(the "Purchaser"), and a wholly-owned subsidiary of Gyrus Group PLC, a public
limited company incorporated and existing under the laws of England and Wales
("Parent"), to act as Information Agent in connection with the Purchaser's offer
to purchase all outstanding shares of (1) Common Stock, par value $.01 per
share, (2) Series A Convertible Preferred Stock, (3) Series B 8% Convertible
Preferred Shares, (4) Series C 6% Convertible Redeemable Preferred Stock, and
(5) Series D 10% Convertible Redeemable Preferred Stock (collectively, the
"Shares"), of Everest Medical Corporation, a Minnesota corporation (the
"Company"), at $4.85 per Share, net to the seller, in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase for Cash, dated
March 16, 2000 and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase for Cash, dated March 16, 2000;
2. Letter of Transmittal to be used by shareholders of the Company
accepting the Offer;
3. The Letter to Shareholders of the Company from John L. Shannon, Jr., the
Chairman, President and Chief Executive Officer of the Company
accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9;
4. a printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to
the Offer;
<PAGE>
5. Notice of Guaranteed Delivery;
6. guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. return envelope addressed to Wilmington Trust Company, the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE OUTSTANDING SHARES
(DETERMINED AS OF THE DATE OF EXPIRATION OF THE OFFER ON A FULLY DILUTED BASIS
TAKING INTO ACCOUNT ALL SHARES ISSUABLE ON EXERCISE OR CONVERSION OF ALL
OPTIONS, WARRANTS AND ANY OTHER RIGHTS TO ACQUIRE SHARES OUTSTANDING ON THE DATE
OF THE EXPIRATION OF THE OFFER (THE "MINIMUM CONDITION").
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 NOON, NEW YORK CITY TIME, ON THURSDAY,
APRIL 13, 2000, UNLESS EXTENDED.
The Board of Directors of the Company, after receiving the unanimous
recommendation of the Special Committee of the Board of Directors, has
unanimously approved the Offer and the Merger and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
shareholders of the Company and unanimously recommends that shareholders of the
Company accept the Offer and tender their Shares. The Offer is being made
pursuant to the Agreement and Plan of Merger dated as of February 23, 2000 (the
"Merger Agreement"), among Parent, the Purchaser and the Company pursuant to
which, following the consummation of the Offer and the satisfaction or waiver of
certain conditions, the Company will be merged with and into the Purchaser, with
the Purchaser surviving the merger as a wholly owned subsidiary of Parent (the
"Merger"). In the Merger, each outstanding Share (other than Shares owned by
Parent, the Purchaser or any other subsidiary of Parent or by shareholders, if
any, who are entitled to and who properly exercise dissenters' rights under
Minnesota law) will be converted into the right to receive $4.85 per Share,
without interest, as set forth in the Merger Agreement and described in the
Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by Wilmington Trust Company (the
"Depositary"), of (1) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (2) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, an Agent's Message (as defined in the Offer to Purchase), and (3) any
other documents required by the Letter of Transmittal. Accordingly, tendering
shareholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may be
directed to the Information Agent at the address and telephone number set forth
on the back cover of the enclosed Offer to Purchase.
Very truly yours,
MACKENZIE PARTNERS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE>
Exhibit 5
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK, SERIES A CONVERTIBLE PREFERRED STOCK,
SERIES B 8% CONVERTIBLE PREFERRED SHARES, SERIES C 6% CONVERTIBLE REDEEMABLE
PREFERRED STOCK AND SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
EVEREST MEDICAL CORPORATION
FOR
$4.85 NET PER SHARE
BY
GOLDEN ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
GYRUS GROUP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 NOON, NEW YORK CITY
TIME, ON THURSDAY, APRIL 13, 2000, UNLESS EXTENDED.
March 16, 2000
To Our Clients:
Enclosed for your consideration are an Offer to Purchase for Cash, dated
March 16, 2000 (the "Offer to Purchase"), and a related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") relating to an offer to purchase by Golden Acquisition
Corp., a Delaware corporation (the "Purchaser"), and a wholly-owned subsidiary
of Gyrus Group PLC, a public limited company incorporated and existing under the
laws of England and Wales ("Parent"), all outstanding shares of (1) Common
Stock, par value $.01 per share, (2) Series A Convertible Preferred Stock,
(3) Series B 8% Convertible Preferred Shares, (4) Series C 6% Convertible
Redeemable Preferred Stock, and (5) Series D 10% Convertible Redeemable
Preferred Stock (collectively, the "Shares"), of Everest Medical Corporation, a
Minnesota corporation (the "Company"), at $4.85 per Share, net to the seller, in
cash, upon the terms and subject to the conditions set forth in the Offer. Also
enclosed is the Letter to Shareholders of the Company from John L. Shannon, Jr.,
Chairman, President and Chief Executive Officer of the Company accompanied by
the Company's Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any or all of the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The tender price is $4.85 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company, after receiving the unanimous
recommendation of the Special Committee of the Board of Directors, has
unanimously approved the Offer and the Merger and determined that the
terms of the Offer and the Merger are fair to, and in the best interests
of, the shareholders of the Company and unanimously recommends that the
shareholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
<PAGE>
4. The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of February 23, 2000 (the "Merger Agreement"), by and among
Parent, the Purchaser and the Company pursuant to which, following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Company will be merged with and into the Purchaser, with
the Purchaser surviving the merger as a wholly owned subsidiary of Parent
(the "Merger"). In the Merger, each outstanding Share (other than Shares
owned by Parent, the Purchaser or any other subsidiary of Parent or by
shareholders, if any, who are entitled to and who properly exercise
dissenters' rights under Minnesota law) will be converted into the right
to receive $4.85 per Share, without interest, as set forth in the Merger
Agreement and described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the date of the expiration of the
Offer that number of Shares that would constitute at least a majority of
the outstanding Shares (determined as of the date of the expiration of
the Offer on a fully diluted basis, taking into account all Shares
issuable on exercise or conversion of all options, warrants and any other
rights to acquire Shares outstanding on the date of the expiration of the
Offer) (the "Minimum Condition").
6. The Offer and withdrawal rights will expire at 12:00 noon, New York City
time, on Thursday, April 13, unless the Offer is extended by the
Purchaser.
7. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
If you wish to have us tender any of or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the
instruction form set forth below. An envelope to return your instructions to us
is enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise specified below. YOUR INSTRUCTIONS SHOULD BE FORWARDED
TO US PROMPTLY TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
EXPIRATION OF THE OFFER.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by Wilmington Trust Company (the
"Depositary"), of (1) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (2) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, an Agent's Message (as defined in the Offer to Purchase), and (3) any
other documents required by the Letter of Transmittal. Accordingly, tendering
shareholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK, SERIES A CONVERTIBLE PREFERRED STOCK,
SERIES B 8% CONVERTIBLE PREFERRED SHARES, SERIES C 6% CONVERTIBLE REDEEMABLE
PREFERRED STOCK AND SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
EVEREST MEDICAL CORPORATION
BY
GOLDEN ACQUISITION CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase for Cash, dated March 16, 2000 (the "Offer to Purchase"), and a
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") relating to an offer
to purchase by Golden Acquisition Corp., a Delaware corporation (the
"Purchaser"), and a wholly-owned subsidiary of Gyrus Group PLC, a public limited
company incorporated and existing under the laws of England and Wales
("Parent"), all outstanding shares of (1) Common Stock, par value $.01 per
share, (2) Series A Convertible Preferred Stock, (3) Series B 8% Convertible
Preferred Shares, (4) Series C 6% Convertible Redeemable Preferred Stock, and
(5) Series D 10% Convertible Redeemable Preferred Stock (collectively, the
"Shares"), of Everest Medical Corporation, a Minnesota corporation (the
"Company"), at $4.85 per Share, net to the seller, in cash, upon the terms and
subject to the conditions set forth in this Offer. This will instruct you to
tender the number of Shares indicated below held by you for the account of the
undersigned on the terms and conditions set forth in such Offer.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
----------------------------------------------
Number of Shares to be
Tendered*
----------------------------------------------
Date:
SIGN HERE K X
Signature(s)
Signature(s)
(Print Name(s))
(Print Address(es))
(Area Code and Telephone Number(s))
(Taxpayer Identification or Social Security
Number(s))
</TABLE>
- --------------------------------------------------------------------------------
(1) Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
Exhibit 6
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
GIVE THE TAXPAYER GIVE THE TAXPAYER
IDENTIFICATION IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, or The legal entity (Do not
2. Two or more individuals The actual owner of the pension trust furnish the pension trust
(joint account) account or, if combined identifying number of the
funds, any one of the personal representative or
individuals(1) trustee unless the legal
entity itself is not
designated in the account
title.)(5)
3. Husband and wife (joint The actual owner of the 10. Corporate account The corporation
account) account or, if joint funds,
either person(1)
11. Religious, charitable, The organization
or educational organization
account
4. Custodian account of a The minor(2) 12. Partnership account held The partnership
minor (Uniform Gift to in the name of the business
Minors Act)
5. Adult and minor (joint The adult or, if the minor 13. Association, club, or The organization
account) is the only contributor, the other tax-exempt
minor(1) organization
6. Account in the name of The ward, minor, or 14. A broker or registered The broker or nominee
guardian or committee for incompetent person(3) nominee
a designated ward, minor,
or incompetent person
7. a. The usual revocable The grantor-trustee(1) 15. Account with the The public entity
savings trust account The actual owner(1) Department of Agriculture in
(grantor is also trustee) the name of a public entity
b. So-called trust account (such as a State or local
that is not a legal or government, school district,
valid trust under State or prison) that receives
law agricultural program
payments
8. Sole proprietorship The owner(4)
account
</TABLE>
- --------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER
WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- An organization exempt from tax under section 501(a), an individual
retirement plan, or a custodial account under section 403(b)(7) if the
account satisfies the requirements of section 401(f)(2).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
Other payees that may be exempt from backup withholding include:
- A corporation.
- A financial institution.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities registered in the United States, the
District of Columbia or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
- A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
Payees described above should file Form W-9 to avoid possible erroneous
backup withholding. IF YOU BELIEVE THAT YOU ARE EXEMPT FROM BACKUP WITHHOLDING,
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO
THE PAYER.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 20% on any portion of
an underpayment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT
YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
2
<PAGE>
EXHIBIT 7
SUMMARY ADVERTISEMENT
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is being made solely by the Offer to Purchase
for Cash, dated March 16, 2000, and the related Letter of Transmittal, and is
not being made to (nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK, PAR VALUE $.01 PER SHARE;
SERIES A CONVERTIBLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE;
SERIES B 8% CONVERTIBLE PREFERRED SHARES, PAR VALUE $.01 PER SHARE;
SERIES C 6% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $.01 PER
SHARE; AND
SERIES D 10% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $.01 PER
SHARE
OF
EVEREST MEDICAL CORPORATION
AT
$4.85 NET PER SHARE
BY
GOLDEN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GYRUS GROUP PLC
Golden Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Gyrus Group PLC, a public limited company
incorporated and existing under the laws of England and Wales ("Parent"), is
offering to purchase all outstanding shares of (1) Common Stock, par value $.01
per share (the "Common Shares"), (2) Series A Convertible Preferred Stock, par
value $.01 per share (the "Series A Shares"), (3) Series B 8% Convertible
Preferred Shares, par value $.01 per share (the "Series B Shares"),
(4) Series C 6% Convertible Redeemable Preferred Stock, par value $.01 per share
(the "Series C Shares"), and (5) Series D 10% Convertible Redeemable Preferred
Stock, par value $.01 per share (the "Series D Shares" and, collectively with
the Series A Shares, the Series B Shares, the Series C Shares and the Common
Shares, the "Shares"), of Everest Medical Corporation, a Minnesota corporation
(the "Company"), at $4.85 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase for Cash, dated
March 16, 2000, and in the related Letter of Transmittal (which together with
any amendments or supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 NOON, NEW YORK CITY
TIME, ON THURSDAY, APRIL 13, 2000, UNLESS EXTENDED.
<PAGE>
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares that would constitute at least a majority of an aggregate of the
outstanding Shares (determined on a fully diluted basis for all outstanding
stock options and any other rights to acquire Shares on the date of purchase)
(the "Minimum Condition").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 23, 2000 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer, the
Company will be merged with and into the Purchaser (the "Merger"). On the
effective date of the Merger, each outstanding Share (other than Shares owned by
Parent, the Purchaser or any other subsidiary of Parent or by shareholders of
the Company, if any, who are entitled to and who properly exercise appraisal
rights under Minnesota law) will be converted into the right to receive $4.85,
in cash, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY, AFTER RECEIVING THE UNANIMOUS
RECOMMENDATION OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS, HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering shareholders whose Shares have been accepted
for payment. In all cases, payment for Common Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of
(i) certificates for such Common Shares or timely confirmation of book-entry
transfer of such Common Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined in the Offer to Purchase) pursuant to the
procedures set forth in Section 2 of the Offer to Purchase, (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees, or, in the case of a book-entry transfer of
Common Shares, an Agent's Message (as defined in the Offer to Purchase) and
(iii) any other documents required by the Letter of Transmittal. In all cases,
payment for Series A Shares, Series B Shares, Series C Shares or Series D Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Series A Shares, Series B Shares,
Series C Shares or Series D Shares pursuant to the procedures set forth in
Section 2 of the Offer to Purchase, (ii) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) with any required signature
guarantees and (iii) any other documents required by the Letter of Transmittal.
A shareholder may not validly tender Series A Shares, Series B Shares, Series C
Shares or Series D Shares using book-entry transfer procedures. Under no
circumstances will interest be paid by the Purchaser on the purchase price of
the Shares to be paid by the Purchaser, regardless of any extension of the Offer
or any delay in making such payment.
The term "Expiration Date" means 12:00 noon, New York City time, on
April 13, 2000, unless and until the Purchaser, in its sole discretion, but
subject to the terms of the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date on which the Offer, as so extended by the
Purchaser, shall expire. The Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, and regardless of whether or not
any of the events set forth in Section 14 of the Offer to Purchase shall have
occurred, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii) to
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. The Purchaser shall not have any obligation to pay
interest on the purchase
2
<PAGE>
price for tendered Shares, whether or not the Purchaser exercises its right to
extend the Offer. There can be no assurance that the Purchaser will exercise its
right to extend the Offer. Any such extension will be followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the right of a tendering shareholder to withdraw such
shareholder's Shares.
The Purchaser may also elect to provide a subsequent offering period of
three business days to 20 business days after the Expiration Date, pursuant to
Rule 14d-11 under the Exchange Act (a "Subsequent Offering Period"). If the
Purchaser elects to provide a Subsequent Offering Period, the subsequent offer
will be for all outstanding Shares and the Purchaser will immediately accept and
promptly pay for all Shares as they are tendered during such Subsequent Offering
Period, offering the same form and amount of consideration offered by the
Purchaser for validly tendered Shares during the initial offering period.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless previously accepted for payment and paid for by the
Purchaser pursuant to the Offer, Shares may also be withdrawn at any time after
May 14, 1999. For a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase and
must specify the name of the person having delivered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution (as defined in Section 2 of the Offer to Purchase), the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Common Shares have been tendered pursuant to the procedures for book-entry
transfer as set forth in Section 2 of the Offer to Purchase, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Common Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be re-tendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination will be final and binding. Notwithstanding
the foregoing, no withdrawal rights shall apply during any Subsequent Offering
Period in accordance with Rule 14d-7(a)(2) under the Exchange Act.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the shareholder lists or, if applicable, who
are listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owner of Shares.
The information required to be disclosed by Rule 14d-6(d)(1) of the
Securities Exchange Act of 1934 is contained in the Offer to Purchase and is
incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
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Requests for copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 FIFTH AVENUE
NEW YORK, NY 10010
CALL COLLECT (212) 929-5500
CALL TOLL FREE (800) 322-2885
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT COURIER:
(FOR ELIGIBLE INSTITUTIONS
ONLY)
Wilmington Trust Company (302) 651-1079 Wilmington Trust Company
Corporate Trust Operations Corporate Trust Operations
1100 North Market Street 1105 North Market Street
Rodney Square North Wilmington, DE 19890
Wilmington, DE 19890
</TABLE>
FOR CONFIRMATION TELEPHONE:
(302) 651-8869
<PAGE>
Exhibit 8
Contacts: Dr Mark Goble
John Bradshaw
Gyrus Group PLC
011-44-1222-300100
John L. Shannon Jr.
Thomas F. Murphy
Everest Medical Corporation
(612) 473-6262
FOR IMMEDIATE RELEASE
March 16, 2000
GYRUS GROUP PLC COMMENCES TENDER OFFER FOR ALL COMMON AND
PREFERRED STOCK OF EVEREST MEDICAL CORPORATION
Minneapolis, March 16 -- Gyrus Group PLC, a public limited company organized
under the laws of England and Wales, and Everest Medical Corporation (NASDAQ:
EVMD) today announced that Gyrus Group has commenced a tender offer for all
outstanding shares of common and preferred stock of Everest Medical. This tender
offer is being commenced as part of Gyrus Group PLC's proposed acquisition of
Everest Medical under the terms of a merger agreement signed and announced on
February 23, 2000. Gyrus Group PLC, a worldwide leader in RF surgical systems,
is located in the United Kingdom. Everest Medical is a leading developer,
manufacturer and marketer of innovative RF surgical solutions for less invasive
surgery markets.
Under the terms of the tender offer, a subsidiary of Gyrus Group is offering
to purchase all outstanding shares of common and preferred stock of Everest
Medical at a per share offer price of $4.85 per share in cash with an
aggregate purchase price of approximately $51.6 million. This per share offer
price is the same price shareholders of Everest Medical will receive in the
merger. If this tender offer is successful, Everest Medical will merge with a
subsidiary of Gyrus Group. The tender offer will commence today and is
scheduled to expire at 12:00 noon, Eastern Standard Time, on April 13, 2000,
unless extended. The tender offer is subject to certain customary conditions,
including that holders of at least a majority of an aggregate of the
outstanding shares of common and preferred stock agree to tender their
shares. In addition, the tender offer is subject to the completion of a
placing and offering of Gyrus Group shares in the United Kingdom. This
placing and open offer has been fully underwritten by Nomura International
plc. The proceeds of this placing and offering will be used to fund the
tender offer.
The Board of Directors of Everest Medical, upon the unanimous recommendation
of a Special Committee of the Board comprised of non-employee directors, has
unanimously approved the tender offer and the merger and recommends that
shareholders of Everest Medical tender their shares in the tender offer. The
Special Committee also received an opinion from Dougherty & Company LLC, its
financial advisor, that the Gyrus Group offer is fair to Everest Medical
shareholders from a financial point of view.
Gyrus Group has filed with the Securities and Exchange Commission and has mailed
to shareholders of Everest Medical an offer to purchase and other documents in
connection with the tender offer. Everest Medical has also filed with the
Securities and Exchange Commission and has mailed to its shareholders its
statement of recommendation of the tender offer.
<PAGE>
IMPORTANT INFORMATION: WE HAVE COMMENCED THE TENDER OFFER DESCRIBED IN THIS
ANNOUNCEMENT. THE OFFEROR HAS FILED A TENDER OFFER STATEMENT WITH THE SECURITIES
AND EXCHANGE COMMISSION. YOU SHOULD READ THE TENDER OFFER STATEMENT THAT HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECAUSE IT CONTAINS
IMPORTANT INFORMATION ABOUT THE TENDER OFFER. OR, YOU MAY OBTAIN THE TENDER
OFFER STATEMENT AND OTHER DOCUMENTS THAT HAVE BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT
http://www.sec.gov AT NO CHARGE. IF YOU REQUEST A COPY OF ANY OF THE TENDER
OFFER STATEMENT (EXCLUDING EXHIBITS), THE OFFER TO PURCHASE, THE LETTER OF
TRANSMITTAL AND THE NOTICE OF GUARANTEED DELIVERY THAT WE HAVE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, THEN WE WILL SEND TO YOU THE COPIES THAT YOU
REQUESTED AT NO CHARGE. YOU SHOULD DIRECT A REQUEST FOR SUCH COPIES TO MACKENZIE
PARTNERS, INC., 156 FIFTH AVENUE, NEW YORK, NY 10010, (212) 929-5500 (CALL
COLLECT) OR (800) 322-2885 (CALL TOLL FREE).
These materials do not constitute an offer of securities of Gyrus Group PLC for
sale in the United States. The securities of Gyrus Group PLC referred to herein
have not been and will not be registered under the U.S. Securities Act of 1933,
as amended, and may not be offered or sold in the United States absent
registration thereunder or an available exemption therefrom.
<PAGE>
Exhibit 9
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as
of this 23(rd) day of February, 2000, by and among GYRUS GROUP PLC, a public
limited company incorporated and existing under the laws of England and Wales
("Parent"), GOLDEN ACQUISITION CORP., a Delaware corporation, and a direct
wholly-owned subsidiary of Parent ("Newco"), and EVEREST MEDICAL CORPORATION, a
Minnesota corporation ("Company").
RECITALS
WHEREAS, Parent and Company have agreed that Parent shall acquire Company by
causing Newco, which has been formed for the express purpose of consummating the
transactions contemplated hereby, to merge with Company (the "Merger"), with
Newco as the surviving corporation of the Merger, upon the terms and subject to
the conditions set forth herein, all in accordance with the Delaware General
Corporation Law (the "DGCL") and the Minnesota Business Corporation Act (the
"MBCA").
WHEREAS, in furtherance of the acquisition of Company, Parent may complete
the acquisition of Company by causing Newco to make a tender offer (as it may be
amended from time to time, the "Tender Offer") to purchase all of the
outstanding shares of Company Common Stock and Company Preferred Stock, at a
purchase price of at least $4.85 per share (the "Offer Price"), without interest
thereon; provided, that, in the event that Parent does not elect to cause Newco
to make the Tender Offer, subject to the terms and conditions of this Agreement,
including the terms and conditions described in Articles VI and VII hereof,
Parent shall otherwise be obligated to complete the Merger in accordance with
the terms of this Agreement.
WHEREAS, the Boards of Directors of Parent and Newco and the Board of
Directors and a special committee (the "Special Committee") of the Board of
Directors of Company have determined that this Agreement and the Merger are
advisable and in the best interests of Parent, Newco and Company and their
respective shareholders. The Boards of Directors of Parent and Newco and the
Board of Directors and Special Committee of Company have approved this Agreement
and the Merger. The Board of Directors of Company has resolved to recommend to
the shareholders of Company to vote in favor of this Agreement and the
transactions contemplated hereby, including the Merger.
NOW, THEREFORE, in consideration of these premises and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Parent, Newco and Company hereby
agree as follows:
<PAGE>
ARTICLE I
THE TENDER OFFER
After the date hereof, Parent may elect to cause Newco to make the Tender
Offer, upon the terms and subject to the conditions set forth in this Agreement.
The decision by Parent to cause Newco to make the Tender Offer shall be in the
sole discretion of Parent and neither Parent nor Newco shall have any obligation
to make or commence the Tender Offer; PROVIDED THAT, if Parent elects not to
cause Newco to make the Tender Offer, Parent shall otherwise remain obligated to
complete the Merger in accordance with and subject to the terms and conditions
of this Agreement, including without limitation those terms and conditions
described in Articles VI and VII hereof. In the event that Parent elects to
cause Newco to make the Tender Offer, the provisions of Sections 1.01 and 1.02
shall govern such Tender Offer and the obligations of Parent, Newco and Company
with respect thereto. Company acknowledges that regardless of whether Parent
elects to cause Newco to make the Tender Offer, the obligations of Company
contained in Sections 1.02(a) and (c) have been or shall be satisfied.
1.01. THE TENDER OFFER.
(a) Subject to the provisions of this Agreement, in the event that Parent
elects to cause Newco to make the Tender Offer, as promptly as practicable
thereafter, Newco shall commence the Tender Offer in accordance with the rules
and regulations of the Securities and Exchange Commission (the "SEC"). The
obligation of Newco to accept for payment, and pay for, any shares of Company
Common Stock and Company Preferred Stock tendered pursuant to the Tender Offer
shall be subject to those terms and conditions determined by Parent and Newco in
their discretion in connection with such Tender Offer (any of which may be
waived in whole or in part by Newco in its sole discretion) (the "TENDER OFFER
CONDITIONS").
(b) Newco may, without the consent of Company, (A) extend the Tender Offer,
if at the scheduled or extended expiration date of the Tender Offer any of the
Tender Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (B) extend the Tender Offer for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Tender Offer or any period required by
applicable law, (C) extend the Tender Offer on one or more occasions for an
aggregate period of not more than ten (10) business days beyond the latest
expiration date described in clauses (A) and (B) of this sentence, if on such
expiration date there shall not have been tendered at least 90% of the
outstanding shares of each class of Company Common Stock and Company Preferred
Stock, or (D) extend the Tender Offer beyond the initial expiration date to
include a "SUBSEQUENT OFFERING PERIOD" as such term is defined in Rule 14d-11 of
the rules and regulations of the SEC; PROVIDED HOWEVER, that Newco may not
extend the Tender Offer beyond July 31, 2000 without the consent of Company.
Subject to the terms and conditions of the Tender Offer and this Agreement,
Newco shall accept for payment, and pay for, all shares of Company Common Stock
and Company Preferred Stock validly tendered and not withdrawn pursuant to the
Tender Offer that Newco becomes obligated to accept for payment and pay for,
pursuant to the Tender Offer.
(c) On the date of commencement of the Tender Offer, as determined pursuant
to Rule 14d-2 of the rules and regulations of the SEC, Newco shall file with the
SEC a Tender Offer Statement on Schedule TO (the "SCHEDULE TO") with respect to
the Tender Offer, which shall contain an offer to purchase and a related letter
of transmittal and summary advertisement (such Schedule TO and the documents
included therein pursuant to which the Tender Offer shall be made, together with
any supplements or amendments thereto, are referred to collectively, as the
"TENDER OFFER DOCUMENTS"). The Tender Offer Documents shall comply as to form in
all material respects with the requirements of the Exchange Act (as defined
herein) and the rules and regulations promulgated thereunder and the Tender
Offer Documents, on the date first published, sent or given to the holders of
shares of Company Common Stock and Company Preferred Stock, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of Parent, Newco and Company agree promptly to correct any
information provided by it for use in the Tender Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Newco shall take all steps
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<PAGE>
necessary to cause the Schedule TO as so corrected to be filed with the SEC and
the other Tender Offer Documents as so corrected to be disseminated to holders
of Company Common Stock and Company Preferred Stock, in each case as and to the
extent required by applicable federal securities laws. Company and its counsel
shall be given reasonable opportunity to review and comment upon the Tender
Offer Documents prior to their filing with the SEC or dissemination to the
holders of Company Common Stock and Company Preferred Stock. Newco shall provide
Company and its counsel any comments Parent, Newco or their counsel may receive
from the SEC or its staff with respect to the Tender Offer Documents promptly
after the receipt of such comments.
1.02. COMPANY ACTIONS.
(a) Company hereby approves of, and consents to, the Tender Offer and
represents that each of the Special Committee and the Board of Directors of
Company, at a meeting duly called and held, duly and unanimously adopted
resolutions approving this Agreement, the Tender Offer and the Merger,
determining, as of the date of such resolutions, that the terms of the Tender
Offer are fair to, and in the best interests of, each of the holders of Company
Common Stock and Company Preferred Stock, recommending that the holders of
Company Common Stock and Company Preferred Stock accept the Tender Offer, tender
their shares of Company Common Stock and Company Preferred Stock, as the case
may be, pursuant to the Tender Offer and approve this Agreement (if required)
and approving the acquisition of shares of Company Common Stock and Company
Preferred Stock by Newco pursuant to the Tender Offer and the other transactions
contemplated by this Agreement, including the Merger.
(b) On the date the Schedule TO is filed with the SEC, Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Tender Offer (such Schedule 14D-9, as supplemented or amended
from time to time is referred to herein as, the "SCHEDULE 14D-9") containing,
subject to the terms of this Agreement, the recommendation described in
paragraph (a) and shall mail the Schedule 14D-9 to each holder of shares of
Company Common Stock and Company Preferred Stock. The Schedule 14D-9 shall
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder and, on the date filed
with the SEC and on the date first published, sent or given to the holders of
Company Common Stock and Company Preferred Stock, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of Parent,
Newco and Company agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and Company further agrees
to take all steps necessary to amend or supplement the Schedule 14D-9 and to
cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC
and disseminated to the holders of shares of Company Common Stock and Company
Preferred Stock, in each case as and to the extent required by applicable
federal securities laws. Parent, Newco and their counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to the holders of Company Common Stock
and Company Preferred Stock. Company agrees to provide Parent, Newco and their
counsel any comments Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments.
(c) In connection with the Tender Offer and the Merger, Company shall cause
its transfer agent to furnish Newco promptly with mailing labels containing the
names and addresses of the record holders of Company Common Stock and Company
Preferred Stock (including non-objecting beneficial owners who are not record
holders) as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of shareholders,
security position listings and computer files and all other information in
Company's possession or control regarding the beneficial owners of shares of
Company Common Stock and Company Preferred Stock, and shall furnish to Newco
such information and assistance (including updated lists of shareholders,
security position listings and computer files) as Newco may reasonably request
in communicating the Tender Offer to the holders of shares of Company Common
Stock and Company Preferred Stock. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Tender Offer
Documents and any other documents necessary to
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<PAGE>
consummate the Merger, Newco and each of its agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Tender Offer and the Merger and, if this
Agreement shall be terminated, will deliver, and will use their best efforts to
cause their agents to deliver, to Company all copies and any extracts or
summaries from such information then in their possession or control.
ARTICLE II
THE MERGER
2.01. THE MERGER. At the Effective Time (as defined in Section 2.03
hereof), in accordance with this Agreement, the DGCL and the MBCA, Company shall
be merged with and into Newco, the separate existence of Company (except as may
be continued by operation of law) shall cease, and Newco shall continue as the
surviving corporation. Newco after the Merger hereinafter sometimes is referred
to as the "SURVIVING CORPORATION."
2.02. EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of this Agreement, the
DGCL and the MBCA. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the rights and property of Company and Newco
(the "CONSTITUENT CORPORATIONS") shall vest in the Surviving Corporation, and
all debts and liabilities of Company and Newco shall become the debts and
liabilities of the Surviving Corporation.
2.03. CONSUMMATION OF THE MERGER. In the event of, and as soon as is
practicable after, the satisfaction or waiver of the conditions set forth in
Article VI hereof, the parties hereto will cause the Merger to be consummated by
filing with (a) the Secretary of State of Delaware, a Certificate of Merger, and
(b) the Secretary of State of Minnesota, Articles of Merger (the time of
confirmation of such filings or such later time as is specified in such
Certificate of Merger and Articles of Merger being the "EFFECTIVE TIME").
Contemporaneous with the filings referred to in this Section 2.03, a closing
(the "CLOSING") will be held at the offices of Bingham Dana LLP, 150 Federal
Street, Boston, Massachusetts 02110 or at such other location as the parties may
establish for the purpose of confirming all the foregoing. The date and the time
of such Closing are referred to as the "CLOSING DATE."
2.04. CHARTER; BYLAWS; DIRECTORS AND OFFICERS. Unless otherwise determined
by Parent prior to the Effective Time, the Certificate of Incorporation and
Bylaws of the Surviving Corporation shall be the Certificate of Incorporation
and Bylaws of Newco, as in effect immediately prior to the Effective Time;
PROVIDED, HOWEVER, that Article I of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read as follows: "The name of the
corporation is Everest Medical Corporation." The directors of Newco immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation, and the officers of Newco immediately prior to the Effective Time
will be the initial officers of the Surviving Corporation, in each case until
their successors are elected and qualified.
2.05. EFFECT ON OUTSTANDING SECURITIES.
(a) NEWCO COMMON STOCK. By virtue of the Merger, automatically and without
any action on the part of any Person, including without limitation the holder
thereof, each share of common stock, par value $.01 per share, of Newco ("NEWCO
COMMON STOCK") issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding after the Merger as shares of the Surviving
Corporation, and thereafter, until changed, shall constitute all of the issued
and outstanding shares of capital stock of the Surviving Corporation.
(b) COMPANY COMMON STOCK. By virtue of the Merger, automatically and
without any action on the part of any Person, including without limitation the
holder thereof, each of the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares (as defined in Section 2.08)), shall be cancelled and extinguished and be
automatically converted into and become a right to receive an amount per share
in cash (the "COMMON STOCK MERGER CONSIDERATION") equal to $4.85, upon surrender
in the manner provided in Section 2.09 of the certificate that evidenced the
shares of Company Common Stock (a "COMMON STOCK CERTIFICATE").
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<PAGE>
(c) COMPANY PREFERRED STOCK.
(i) By virtue of the Merger, automatically and without any action on the
part of any Person, including without limitation the holder thereof, each of
the shares of Convertible preferred stock series A of Company ("SERIES A
PREFERRED STOCK") issued and outstanding immediately prior to the Effective
Time (other than any Dissenting Shares), shall be cancelled and extinguished
and be automatically converted into and become a right to receive an amount
per share in cash (the "SERIES A PREFERRED STOCK MERGER CONSIDERATION"),
equal to the product of (i) the number of shares of Company Common Stock
into which such share of Series A Preferred Stock is convertible MULTIPLIED
BY (ii) the Common Stock Merger Consideration, upon surrender in the manner
provided in Section 2.09 of the certificate that evidenced the shares of
Series A Preferred Stock (a "SERIES A PREFERRED STOCK CERTIFICATE").
(ii) By virtue of the Merger, automatically and without any action on
the part of any Person, including without limitation the holder thereof,
each of the shares of Convertible preferred stock series B of Company
("SERIES B PREFERRED STOCK") issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares), shall be cancelled and
extinguished and be automatically converted into and become a right to
receive an amount per share in cash (the "SERIES B PREFERRED STOCK MERGER
CONSIDERATION"), equal to the product of (i) the number of shares of Company
Common Stock into which such share of Series B Preferred Stock is
convertible MULTIPLIED BY (ii) the Common Stock Merger Consideration, upon
surrender in the manner provided in Section 2.09 of the certificate that
evidenced the shares of Series B Preferred Stock (a "SERIES B PREFERRED
STOCK CERTIFICATE").
(iii) By virtue of the Merger, automatically and without any action on
the part of any Person, including without limitation the holder thereof,
each of the shares of Convertible preferred stock series C of Company
("SERIES C PREFERRED STOCK") issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares), shall be cancelled and
extinguished and be automatically converted into and become a right to
receive an amount per share in cash (the "SERIES C PREFERRED STOCK MERGER
CONSIDERATION"), equal to the product of (i) the number of shares of Company
Common Stock into which such share of Series C Preferred Stock is
convertible MULTIPLIED BY (ii) the Common Stock Merger Consideration, upon
surrender in the manner provided in Section 2.09 of the certificate that
evidenced the shares of Series C Preferred Stock (a "SERIES C PREFERRED
STOCK CERTIFICATE").
(iv) By virtue of the Merger, automatically and without any action on
the part of any Person, including without limitation the holder thereof,
each of the shares of Convertible preferred stock series D of Company
("SERIES D PREFERRED STOCK") issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares), shall be cancelled and
extinguished and be automatically converted into and become a right to
receive an amount per share in cash (the "SERIES D PREFERRED STOCK MERGER
CONSIDERATION"), equal to the product of (i) the number of shares of Company
Common Stock into which such share of Series D Preferred Stock is
convertible multiplied by (ii) the Common Stock Merger Consideration, upon
surrender in the manner provided in Section 2.09 of the certificate that
evidenced the shares of Series D Preferred Stock (a "SERIES D PREFERRED
STOCK CERTIFICATE").
(v) The Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock are hereinafter
referred to together as the "COMPANY PREFERRED STOCK". The Series A
Preferred Stock Merger Consideration, the Series B Preferred Stock Merger
Consideration, the Series C Preferred Stock Merger Consideration and the
Series D Preferred Stock Merger Consideration are hereinafter referred to
together as the "PREFERRED STOCK MERGER CONSIDERATION" and, together with
the Common Stock Merger Consideration, as the "MERGER CONSIDERATION". The
Series A Preferred Stock Certificates, the Series B Preferred Stock
Certificates, the Series C Preferred Stock Certificates and the Series D
Preferred Stock Certificates are hereinafter
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<PAGE>
referred to together as the "PREFERRED STOCK CERTIFICATES" and, together
with the Common Stock Certificates, as the "CERTIFICATES".
(vi) Promptly after the date hereof, Company shall take all actions
necessary to procure, on or before the expiration of the Tender Offer, in
the event that Parent elects to cause Newco to make the Tender Offer, or, on
or before the Effective Time, in the event that Parent does not elect to
cause Newco to make the Tender Offer, from each holder of shares of Company
Preferred Stock an agreement, in form and substance satisfactory to Parent,
that, immediately prior to the Effective Time, such shares of Company
Preferred Stock shall be converted into a right of such holder to receive
from Parent the consideration described in this Section 2.05(c).
(d) DISSENTING SHARES. The holders of Dissenting Shares, if any, shall be
entitled to payment for such shares only to the extent permitted by and in
accordance with the provisions of the MBCA; PROVIDED, HOWEVER, that if, in
accordance with the applicable provisions of the MBCA, any holder of Dissenting
Shares shall forfeit such right to payment of the fair cash value of such
shares, such shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration applicable thereto as provided in Section 2.05(b) or (c),
as the case may be.
2.06. COMPANY EQUITY PLANS. Prior to the Effective Time, Company shall
terminate Company's 1986 Incentive Stock Option Plan, 1986 Non-Statutory Stock
Option Plan, 1992 Stock Option Plan and 1997 Stock Option Plan (collectively,
the "COMPANY EQUITY PLANS"), and, in connection therewith, shall provide written
notice to each holder of a then outstanding stock option or other right (each,
an "OPTION") to purchase shares of Company Common Stock pursuant to the Company
Equity Plans (whether or not such Option is then vested or exercisable), that
such Option shall be, as of the date of such notice, fully vested and
exercisable in full and that such Option shall terminate at the Effective Time
and that, if such Option is not exercised or otherwise terminated before the
Effective Time, such holder shall be entitled to receive in cancellation of such
Option a cash payment from Parent promptly after the Effective Time, in an
amount equal to the excess of the Common Stock Merger Consideration over the per
share exercise price of such Option, if any, multiplied by the number of shares
covered by such Option (the "OPTION SETTLEMENT AMOUNT"), subject to tax
withholding as required by applicable law. The Company Disclosure Schedule
includes a complete listing of Options held by each optionee (including the date
of grant, the number of shares issuable upon exercise of the Option, the
exercise price per share, and the Option Settlement Amount to which the Optionee
is entitled). Except as otherwise provided in this Section 2.06, Company shall
not grant or amend any Option after the date hereof. Company hereby represents
and warrants to Parent that the number of shares of Company Common Stock subject
to issuance pursuant to the exercise of Options issued and outstanding under the
Company Equity Plans is, and shall be as of the Effective Time, not in excess of
1,386,154. To the extent that the cancellation of any Option pursuant to this
Section 2.06(a) requires the agreement of the holder of such Option under a
Company Equity Plan, Company shall enter into an agreement with such holder
providing for the cancellation of such Option in consideration for the receipt
by such holder of the applicable Option Settlement Amount with respect to such
Option.
2.07. WARRANTS. Prior to the Effective Time, Company shall take all
actions necessary to procure, on or before the expiration of the Tender Offer,
in the event that Parent elects to cause Newco to make the Tender Offer, or, on
or before the Effective Time, in the event that Parent does not elect to cause
Newco to make the Tender Offer, from each holder of an outstanding warrant
(each, a "WARRANT") to purchase shares of Company Common Stock an agreement
that, as of the Effective Time, such Warrant shall be converted into a right of
such holder to receive from Parent promptly after the Effective Time the
consideration set forth in the next sentence. Each holder of a Warrant shall be
entitled to receive from Parent in respect of the shares of Company Common Stock
to be issued upon the exercise of such Warrant, an amount in cash, without
interest (the "WARRANT CONSIDERATION"), equal to the product of (i) the number
of shares of Company Common Stock subject to such Warrant immediately prior to
the Effective Time and (ii) the excess, if any, by which the Common Stock Merger
Consideration exceeds the exercise price per share applicable to such Warrant.
Company hereby represents and warrants to Parent that the number of
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shares of Company Common Stock subject to issuance pursuant to the Warrants is,
and shall be as of the Effective Time, 577,897.
2.08. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, holders
of Company Common Stock and Company Preferred Stock which are entitled to
dissenter's rights in connection with the Merger under the MBCA (collectively,
the "DISSENTING SHARES") shall not be converted into or represent the right to
receive the Merger Consideration applicable to such shares. Such shareholders
shall be entitled to receive payment of the fair market value of such Dissenting
Shares held by them in accordance with the provisions of the MBCA, except that
all Dissenting Shares held by shareholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to the payment of fair
market value for such shares under the MBCA shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration applicable to such shares,
without any interest thereon, upon surrender, in the manner provided in
Section 2.09, of the certificate or certificates that formerly evidenced such
shares.
(b) Company shall give Parent (i) prompt notice of any demand for payment of
fair market value received by Company, the withdrawals of any such demand, and
any other instrument served pursuant to the MBCA and received by Company and
(ii) the opportunity to direct all negotiations and proceedings with respect to
demands for payment of fair market value under the MBCA. Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for payment of fair market value or offer to settle or settle any
such demands.
2.09. EXCHANGE OF CERTIFICATES.
(a) From and after the Effective Time, a bank or trust company to be
designated by Parent (the "EXCHANGE AGENT") shall act as exchange agent in
effecting the exchange of the Merger Consideration for Certificates which, prior
to the Effective Time, represented shares of Company Common Stock or Company
Preferred Stock, as the case may be, entitled to payment pursuant to
Section 2.05 hereof. At or immediately prior to the Effective Time, Parent shall
deposit with the Exchange Agent the aggregate Merger Consideration necessary to
make the payments to be made as contemplated by Section 2.05 hereof on a timely
basis (the "DEPOSIT AMOUNT") in trust for the benefit of the holders of
Certificates. Upon the surrender of each such Certificate and the issuance and
delivery by the Exchange Agent of the Merger Consideration applicable thereto in
exchange therefor, such Certificate shall forthwith be cancelled. Until so
surrendered and exchanged, each such Certificate (other than Certificates
representing shares held by Parent or Company or any direct or indirect
Subsidiary of Parent and Dissenting Shares) shall represent solely the right to
receive the Merger Consideration applicable thereto, without interest,
multiplied by the number of shares represented by such Certificate. Promptly
after the Effective Time, the Exchange Agent shall mail to each record holder of
Certificates which immediately prior to the Effective Time represented shares a
form of letter of transmittal and instructions for use in surrendering such
Certificates and receiving the Merger Consideration applicable thereto. Upon the
surrender to the Exchange Agent of such an outstanding Certificate together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder shall receive the Merger Consideration
applicable thereto, without any interest thereon and such Certificate shall be
cancelled. If any Merger Consideration is to be paid to a name other than the
name in which the Certificate representing shares surrendered in exchange
therefor is registered, it shall be a condition to such payment or exchange that
the Person requesting such payment or exchange shall pay to the Exchange Agent
any transfer or other taxes required by reason of the payment of such Merger
Consideration to a name other than that of the registered holder of the
Certificate surrendered, or such Person shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of shares for any Merger Consideration delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
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(b) Parent shall not be entitled to the return of any of the Deposit Amount
in the possession of the Exchange Agent relating to the transactions described
in this Agreement until the date which is 180 days after the Effective Time.
Thereafter, each holder of a Certificate representing a share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration applicable thereto, without any interest thereon, but shall have
no greater rights against the Surviving Corporation than may be accorded to
general creditors of the Surviving Corporation.
(c) At and after the Effective Time, the holders of Certificates to be
exchanged for the Merger Consideration applicable thereto pursuant to this
Agreement shall cease to have any rights as shareholders of Company except for
the right to surrender such holder's Certificates in exchange for payment of the
Merger Consideration applicable thereto, and after the Effective Time there
shall be no transfers on the stock transfer books of the Surviving Corporation
of the shares which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent, they shall be cancelled and exchanged for the
Merger Consideration applicable thereto, as provided in this Article II, subject
to applicable law in the case of Dissenting Shares.
(d) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and subject to such other conditions as the Parent
may impose, the Exchange Agent shall pay in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration deliverable in respect of such
Certificate as determined in accordance herewith. When authorizing such payment
of the Merger Consideration in exchange for such Certificate, the Parent (or any
authorized officer thereof) may, in its reasonable discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to deliver to the Surviving Corporation a bond in such sum
as the Surviving Corporation may reasonably require as indemnity against any
claim that may be made against Parent, the Surviving Corporation or the Exchange
Agent with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(e) The provisions of this Section 2.09 shall also apply to Dissenting
Shares that lose their status as such, except that the obligations of Exchange
Agent under this Section 2.09 shall commence on the date of loss of such status.
2.10. SUPPLEMENTARY ACTION. If, at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either Company or Newco, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered, in
the name of and on behalf of Company and Newco, to execute and deliver any and
all things necessary or proper to vest or to perfect or confirm title to such
property or rights in the Surviving Corporation, and otherwise to carry out the
purposes and provisions of this Agreement.
2.11. POSSIBLE ALTERNATIVE STRUCTURE. Notwithstanding any other provision
of this Agreement to the contrary, prior to the Effective Time, Parent shall be
entitled to revise the structure of the transaction to provide that Newco shall
be merged with and into Company at the Effective Time, with Company as the
surviving corporation of the Merger. Notwithstanding the foregoing or any other
provision of this Agreement to the contrary, Parent and Company may jointly
elect prior to the Effective Time, to substitute an alternative structure for
the accomplishment of the transactions contemplated by this Agreement. Parent
and Company agree that this Agreement shall be appropriately amended in order to
reflect any alternative structure.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Newco that, except as
described in the applicable section of the Company Disclosure Schedule furnished
by Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") corresponding to the Sections set forth below:
3.01. ORGANIZATION AND QUALIFICATION. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota. Company has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as it is now being
conducted. Company is duly qualified as a foreign corporation, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, other than in jurisdictions where the failure to be so qualified,
individually and in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect. Company has no Subsidiaries and no
direct or indirect equity or related interest in any partnership, corporation,
limited liability company, joint venture, business association or other entity.
3.02. ARTICLES OF ORGANIZATION; BYLAWS; AND STOCK TRANSFER
RECORDS. Company has made available to Parent prior to the date of this
Agreement complete and correct copies of (i) the Articles of Organization (or
other charter document) and By-laws of Company, and (ii) a list of all holders
of capital stock of Company, in each case such copies are or will be accurate
and complete as of the date of this Agreement or when furnished.
3.03. CAPITALIZATION OF COMPANY.
(a) On the date of this Agreement, the authorized capital stock of Company
consists of (i) 11,987,594 shares of Company Common Stock, of which 7,728,965
shares are issued and outstanding and (ii) 3,012,406 shares of Company Preferred
Stock, of which (A) 1,400,000 shares have been designated Series A Preferred
Stock, of which 462,937 shares are issued and outstanding, (B) 730,000 shares
have been designated Series B Preferred Stock, of which 597,273 shares are
issued and outstanding, (C) 410,906 shares have been designated Series C
Preferred Stock, all of which are issued and outstanding, and (D) 471,500 shares
are designated Series D Preferred Stock, of which 466,500 are issued and
outstanding. Company Preferred Stock is convertible into Company Common Stock on
a one-for-one basis, and such conversion ratio has not required adjustment
(whether pursuant to the terms of such Company Preferred Stock or otherwise)
since the original issuance of such Company Preferred Stock.
(b) Except for (i) Options listed in the Company Disclosure Schedule which
were granted under the Company Equity Plans, (ii) 52,058 shares of Company
Common Stock reserved for issuance pursuant to the Company Employee Stock
Purchase Plan, (iii) the rights created pursuant to this Agreement, (iv) rights
created pursuant to the Warrants, (v) rights created pursuant to the Guidant
Stock Purchase Agreement, and (vi) those matters set forth in Section 3.03(b) of
Company Disclosure Schedule, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Company is a party or by
which it is bound obligating Company to issue, sell, deliver, repurchase or
redeem or cause to be issued, sold, delivered, repurchased or redeemed any
shares of capital stock of, or equity interests in, Company. Except as set forth
in Section 3.03(b) of the Company Disclosure Schedule, all outstanding shares
are, and all shares subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be, duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights or rights of first refusal. Company is not required to
redeem, repurchase or otherwise acquire shares of capital stock of Company.
Company has no shareholder rights plan or agreement in force providing for the
issuance to holders of shares of Company Common Stock or Company Preferred Stock
of rights to purchase or receive stock, cash or other assets upon the
acquisition or proposed acquisition of shares of Company Common Stock or Company
Preferred Stock by a Person (a "RIGHTS PLAN"), nor has Company's Board of
Directors or shareholders ever adopted a Rights Plan. Except as set forth in
Section 3.03(b) of the Company Disclosure Schedule, there are no voting trusts
or other agreements or understandings to which Company is a party or by which
Company may be bound with respect to the voting of the capital stock of Company.
All of the outstanding Company
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Common Stock and Company Preferred Stock was issued in compliance with
applicable federal and state securities laws and regulations.
(c) Company has never affected a stock split, stock dividend, reverse stock
split, combination, reclassification or other change to its capital stock since
the closing of its initial public offering of Company Common Stock, and Company
has never changed its corporate name since that date.
3.04. CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Company has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Company,
the performance by Company of its obligations hereunder and the consummation by
Company of the transactions contemplated hereby have been duly and validly
authorized by the Special Committee and Board of Directors of Company and no
other corporate action on the part of Company is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval and adoption of this Agreement by
holders of a majority of Company Common Stock and Company Preferred Stock,
voting together as a single class). This Agreement has been duly executed and
delivered by Company and is a legal, valid and binding obligation of Company,
enforceable against Company in accordance with its terms. The affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
and Company Preferred Stock (voting as if such Company Preferred Stock had been
converted to Company Common Stock) entitled to vote thereon, voting together as
a single class, is the only vote of any class of capital stock of Company
required by the MBCA, the Articles of Organization of Company or the Bylaws to
adopt this Agreement and approve the Merger.
3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming satisfaction of any applicable requirements referred to in
Section 3.05(b) below, the execution and delivery by Company of this Agreement,
the compliance by Company with the provisions hereof and the consummation by
Company of the transactions contemplated hereby:
(A) will not conflict with or violate any statute, law, ordinance, rule,
regulation, order, writ, judgment, award, injunction, decree or ruling
applicable to Company or any of its properties, or conflict with, violate or
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, cancellation or acceleration
of, or the loss of a benefit under, or result in the creation of a lien,
security interest, charge or encumbrance on any of the properties or assets
of Company pursuant to (i) the Articles of Organization (or other charter
document) or Bylaws of Company, or (ii) any contract, lease, agreement,
note, bond, mortgage, indenture, deed of trust, or other instrument or
obligation, or any license, authorization, permit, certificate or other
franchise, other than such conflicts, violations, breaches, defaults,
losses, rights of termination, amendment, cancellation or acceleration,
liens, security interests, charges or encumbrances as to which requisite
waivers have been obtained or which individually or in the aggregate would
not have a Material Adverse Effect; and
(B) do not and will not result in any grant of rights to any other party
under the Articles of Organization (or other charter document) or Bylaws of
Company or restrict or impair the ability of the Parent or any of its
Subsidiaries to vote, or otherwise exercise the rights of a shareholder with
respect to shares of Company that may be directly or indirectly acquired or
controlled by them.
(b) Other than in connection with or in compliance with the provisions of
the DGCL, the MBCA, state securities or "blue sky" laws, Chapter 80B of the
Minnesota statutes, NASDAQ and the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), (i) Company is not required to submit any notice, report,
registration, declaration or other filing with any foreign, federal, state or
local government, court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (collectively,
"GOVERNMENTAL ENTITIES"), in connection with the execution or delivery of this
Agreement by Company or the performance by Company of its obligations hereunder
or the consummation by Company of the transactions contemplated by this
Agreement and (ii) no waiver, consent, approval, order or authorization of any
Governmental Entity is required to be obtained in
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connection with the execution or delivery of this Agreement by Company or the
performance by Company of its obligations hereunder or the consummation by
Company of the transactions contemplated by this Agreement, other than such
notices, reports, registrations, declarations, filings, waivers, consents,
approvals, orders, or authorizations, the absence of which would not,
individually and in the aggregate, subject Company to any criminal penalties or
otherwise reasonably be expected to have a Material Adverse Effect.
3.06. SEC REPORTS; FINANCIAL STATEMENTS. Company has filed all required
reports, schedules, forms, statements, exhibits and other documents with the SEC
since December 6, 1990 (collectively, the "SEC REPORTS"). Company has delivered
to Parent copies of the consolidated balance sheets of Company as of
December 31 for the fiscal years 1998 and 1999, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1997 through 1999, inclusive, as reported in Company's Form 10-KSB
for the fiscal year ended December 31, 1999 filed with the SEC under the
Exchange Act, accompanied by the audit report of Ernst & Young LLP. The
December 31, 1999 consolidated balance sheet (the "COMPANY BALANCE SHEET") of
Company (including the related notes, where applicable) and the other financial
statements referred to herein were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved ("GAAP") (except as may be indicated in the notes or schedules
thereto) and present fairly in all material respects the consolidated financial
position of Company as of the dates thereof and the consolidated results of
their operations and cash flows as of the dates and for the fiscal periods
indicated therein. The books and records of Company have been, and are being,
maintained in accordance with GAAP and applicable legal and regulatory
requirements. Each SEC Report filed with the SEC complied in all material
respects with the then applicable requirements of the Exchange Act and the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules and
regulations of the SEC promulgated thereunder and as of the date of each such
SEC Report did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.07. NO DEFAULT. Company is not in default or violation (and no event has
occurred which with or without notice, the lapse of time or the happening or
occurrence of any other event would constitute a default or violation) of any
term, condition or provision of (i) its Articles of Organization (or other
charter document) or Bylaws, or (ii) any contract, lease, agreement, license,
note, bond, mortgage, indenture, deed of trust or other instrument or obligation
to which Company is a party or by which Company or any of its properties or
assets may be bound (nor to the knowledge of Company is any other party thereto
in breach thereof or default thereunder), except for defaults, violations or
breaches that would not, individually or in the aggregate, have a Material
Adverse Effect.
3.08. COMPLIANCE WITH LAW. Except as set forth in Section 3.08 of the
Company Disclosure Schedule, Company is in compliance, and has conducted its
business so as to comply with, all statutes, laws, ordinances, rules,
regulations, permits and approvals applicable to its operations, whether
domestic or foreign, except where the failure to be in compliance would not have
a Material Adverse Effect. Except as set forth in Section 3.08 of the Company
Disclosure Schedule or disclosed in the SEC Reports, as of the date hereof no
investigation or review by any Governmental Entity with respect to Company or
any property owned or leased by Company is pending or, to the knowledge of
Company, threatened.
3.09. PERMITS. Company has all permits, authorizations, licenses and
franchises from Governmental Entities required to conduct its business as now
being conducted, except where the failure to have any such permits,
authorizations, licenses or franchises would not have a Material Adverse Effect.
Section 3.09 of the Company Disclosure Schedule lists as of the date of this
Agreement all of Company's licenses and permits (collectively, the "LICENSES").
To the best of Company's knowledge, the Licenses are the only permits and
licenses required by Company to operate its business as currently conducted.
Company is not in material default with respect to any of the Licenses. The
consummation of the transactions contemplated by this Agreement will not cause
any default, cancellation or loss of a benefit under, or require any approval of
a Governmental Authority with respect to, any of the Licenses.
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3.10. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the 1999 10-KSB,
in Section 3.10 of the Company Disclosure Schedule, or incurred hereinafter in
the ordinary course of business consistent with past practice and with
Section 5.01 hereof, since December 31, 1999, (i) the business of Company has
been conducted only in the ordinary course consistent with past practices,
(ii) there has not been any change in the business, assets, financial condition
or results of operations of Company which has had or could reasonably be
expected to have a Material Adverse Effect, (iii) there has not been any change
in any policy or practice followed by Company in the ordinary course of business
except for changes which have not had and are not likely to have a Material
Adverse Effect, (iv) there has not been any material agreement, contract or
commitment entered into, or agreed to be entered into, except for those in the
ordinary course of business; (v) there has not been any increase in or
establishment of any bonus, insurance, severance (including severance after a
change in control), deferred compensation, pension, retirement, profit sharing,
life insurance or split dollar life insurance, retiree medical or life
insurance, or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
Company, except with respect to cash compensation, in the ordinary course of
business consistent with past practice; (vi) there has not been any change in
any of the accounting methods or practices of Company other than changes
required by applicable law or applicable accounting policies; and (vii) Company
has not declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities of Company.
3.11. NO UNDISCLOSED LIABILITIES. Except for liabilities and obligations
incurred since December 31, 1999 in the ordinary course of business, incurred in
connection with this Agreement or identified in Section 3.11 of the Company
Disclosure Schedule, Company has no liabilities or obligations of any nature
whatsoever (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise), required by generally accepted accounting principles
to be recognized or disclosed on a consolidated balance sheet of Company or in
the notes thereto, other than those recognized or disclosed in the Company
Balance Sheet or disclosed in the 1999 10-KSB.
3.12. LITIGATION. Except as set forth in Section 3.12 of the Company
Disclosure Schedule, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of Company, threatened against or
affecting, Company or any of its properties as to which there is a reasonable
possibility of an adverse determination and which if determined adversely to
Company could be expected to have a Material Adverse Effect and there is no
judgment, decree, writ, injunction, award, ruling or order of any Governmental
Entity or arbitrator outstanding against Company having, or which, insofar as
can reasonably be foreseen, in the future would have, a Material Adverse Effect.
Section 3.12 of the Company Disclosure Schedule includes a list of all
litigation pending against Company as of the date of this Agreement. Company has
made available to Parent correct and complete copies of all correspondence
prepared by its counsel for Company's auditors in connection with the last
completed audit of Company's financial statements and any such correspondence
since the date of the last such audit. As of the date of this Agreement, there
are no actions, suits or proceedings pending or, to the knowledge of Company,
threatened against Company arising out of or in any way related to this
Agreement, the Tender Offer, the Merger or any of the transactions contemplated
hereby or thereby.
3.13. ERISA.
(a) Section 3.13 of the Company Disclosure Schedule lists each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other written or oral plans
or agreements involving direct or indirect compensation (including any
employment agreements entered into between Company and any employee or former
employee of Company, but excluding worker's compensation, unemployment
compensation and other government-mandated programs) currently or previously
maintained, contributed to or entered into by Company or any ERISA Affiliate
thereof for the benefit of any employee or former employee of Company under
which Company or any ERISA Affiliate thereof has or may have any present or
future obligation or liability (collectively, the "COMPANY EMPLOYEE PLANS"). For
purposes of this Section 3.13, "ERISA AFFILIATE" shall mean any entity which is
a member of (i) a "controlled group of corporations," as defined in
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Section 414(b) of the Internal Revenue Code of 1986, as amended (the "CODE"),
(ii) a group of entities under "common control," as defined in Section 414(c) of
the Code or (iii) an "affiliated service group," as defined in Section 414(m) of
the Code or treasury regulations promulgated under Section 414(o) of the Code,
any of which includes Company. Section 3.13 of Company Disclosure Schedule
identifies the only Company Employee Plans which individually or collectively
would constitute an "employee pension benefit plan," as defined in Section 3(2)
of ERISA (collectively, the "COMPANY PENSION PLANS").
(b) No Company Pension Plan is subject to Title IV of ERISA, Part 3 of Title
I of ERISA or Section 412 of the Code. No Company Pension Plan constitutes or
has since the enactment of ERISA constituted a "multiemployer plan," as defined
in Section 3(37) of ERISA. To the best of Company's knowledge, nothing done or
omitted to be done and no transaction or holding of any asset under or in
connection with any Company Employee Plan has or is likely to make Company or
any officer or director of Company subject to any material liability under Title
I of ERISA or liable for any material tax pursuant to Section 4975 of the Code.
(c) Each Company Pension Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date. To the best of Company's knowledge, nothing
has occurred prior to or since the adoption of the Company Pension Plan to cause
the loss of such qualification under the Code, but such Plan has not been
resubmitted to the Internal Revenue Service with respect to any amendments
reflecting changes in the applicable law or other changes for which the remedial
amendment period has not expired as of the Closing Date. Each trust forming a
part of a Company Pension Plan is exempt from tax pursuant to Section 501(a) of
the Code. Each Company Employee Plan has been maintained in material compliance
with its terms and with the applicable requirements of ERISA and the Code.
(d) Each employment, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), vacation benefits, severance
or severance-type benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses,
stock options, stock purchase, phantom stock, stock appreciation or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
which (i) is not a Company Employee Plan, (ii) is entered into, maintained or
contributed to, as the case may be, by Company, and (iii) covers any employee or
former employee of Company, is herein referred to as a "COMPANY BENEFIT
ARRANGEMENT" and collectively as the "COMPANY BENEFIT ARRANGEMENTS." All Company
Benefit Arrangements are listed in Section 3.13 of the Company Disclosure
Schedule. Each Company Benefit Arrangement has been maintained in material
compliance with its terms and with the requirements prescribed by any and all
statutes (including but not limited to the Code), orders, rules and regulations
which are applicable to such Company Benefit Arrangements.
(e) There has been no amendment to, written interpretation or announcement
(whether or not written) by Company relating to, or change in employee
participation or coverage (other than as required under the terms of any such
plan) under, any Company Employee Plan or Company Benefit Arrangement which
would increase the expense of maintaining such Company Employee Plan or Company
Benefit Arrangement above the level of the expense incurred in respect thereof
for the fiscal year ended December 31, 1999.
(f) The Company has complied with the requirements of Section 4980B of the
Code with respect to any "qualifying event" (as defined in Section 4980B(f)(3)
of the Code) occurring prior to and including the Closing Date, except where
failure to be in compliance individually and in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect and, to
Company's knowledge, no tax payable on account of Section 4980B of the Code has
been incurred with respect to any current or former employees of Company.
(g) There is no term of any Company Employee Plan or Company Benefit
Arrangement covering a "disqualified individual" (as defined in Section 280G(c)
of the Code), or of any contract, instrument, agreement or arrangement with any
such disqualified individual, that individually or collectively could
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result in a disallowance of the deduction for any "excess parachute payment" (as
defined in Section 280G(b)(i) of the Code) or the imposition of the excise tax
provided in Section 4999 of the Code. The consummation of the transactions
contemplated by this Agreement will not result in any "excess parachute payment"
or the imposition of any such excise tax.
(h) Company has heretofore delivered to Parent copies of all of Company
Employee Plans, Company Pension Plans and Company Benefit Arrangements listed in
Section 3.13 of Company Disclosure Schedule.
(i) There is no pending or, to Company's knowledge, threatened legal action,
proceeding or investigation, other than routine claims for benefits, concerning
any Company Employee Plan, Company Pension Plan or Company Benefit Arrangement
or, to the knowledge of Company any fiduciary or service provider thereof and,
to the knowledge of Company, there is no basis for any such legal action or
proceeding.
(j) No Company Employee Plan or Company Benefit Arrangement provides health,
life or other similar welfare coverages after termination of employment except
to the extent required by applicable state insurance laws and Code
Section 4980B and Title I, Part 6 of ERISA.
(k) With respect to each Company Employee Plan, Company Pension Plan or
Company Benefit Arrangement for which a separate fund of assets is or is
required to be maintained, full payment has been made of all amounts required of
Company and ERISA Affiliates under the terms of each such Plan or Arrangement or
applicable law, through the Closing Date.
(l) Company has the power and authority under the terms of the Company
Employee Stock Purchase Plan to terminate that plan prior to the Effective Time
(as provided in Section 5.08) without the consent of any employee.
3.14. LABOR MATTERS. There is no labor strike, dispute, slowdown, stoppage
or lockout actually pending, or threatened against Company. Company is not a
party to or bound by any collective bargaining agreement with any labor
organization applicable to employees of Company. Company has not experienced any
material work stoppage or other material labor difficulty during the two-year
period ending on the date hereof.
3.15. TAX RETURNS AND REPORTS.
(a) Company has timely filed in correct form with the appropriate taxing
authorities all federal, state, county, local and foreign returns, estimates,
information statements, reports and other documents in respect of Taxes (as
defined in Article VIII) required to be filed by Company. All amounts shown due
on such returns have been paid as required by law.
(b) No assessment that has not been settled or otherwise resolved has been
made with respect to Taxes not shown on the Tax returns, other than such
additional Taxes as are being contested in good faith or which if determined
adversely to Company would not have a Material Adverse Effect. There are no
material disputes pending or written claims asserted for Taxes or assessments
upon Company, nor has Company been requested to give any currently effective
waivers extending the statutory period of limitation applicable to any Federal,
state, county, foreign or local income tax return for any period. No deficiency
in Taxes or other proposed adjustment that has not been settled or otherwise
resolved has been asserted in writing by any taxing authority against any of
Company. No Tax return of Company is now under examination by any applicable
taxing authority. There are no material liens for Taxes (other than current
Taxes not yet due and payable) on any of the assets of Company, except for such
liens for Taxes that would not have a Material Adverse Effect. During the past
five years, no jurisdiction has made any written claim or allegation, or made
any written inquiry pursuant to such a written claim or allegation, that Company
is required to file Tax returns in such jurisdiction for any Tax for which
Company does not presently filed Tax returns in such jurisdiction.
(c) Adequate provision has been made on the Company Balance Sheet for all
Taxes of Company in respect of all periods through the date hereof.
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(d) As of the date of this Agreement, Company has no ruling requests
currently pending with the Internal Revenue Service.
(e) Except as set forth in the SEC Reports, Company is not a party to (or
obligated under) any Tax allocation, tax sharing or tax indemnity agreement
which has as a party any Person other than Company.
(f) Company has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, consultant,
independent contractor, creditor, shareholder or other party.
3.16. COMPANY DEBT. Section 3.16 of the Company Disclosure Schedule lists
all outstanding Indebtedness of Company as of the date hereof, except for
individual items of indebtedness the principal amount of which do not exceed
$50,000. Section 3.16 of the Company Disclosure Schedule sets forth the amount
of principal and unpaid interest outstanding under each instrument evidencing
Indebtedness of Company, if any, that will accelerate or become due or result in
a right on the part of the holder of such indebtedness (with or without due
notice or lapse of time) to require prepayment, redemption or repurchase as a
result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
3.17. TRADEMARKS, PATENTS AND COPYRIGHTS.
(a) Section 3.17 of the Company Disclosure Schedule contains a true and
complete list of Company Intellectual Property and includes details of all due
dates for further filings, maintenance, payments or other actions falling due on
or before May 1, 2001. All of Company's patents, patent applications, registered
trademarks, trademark applications, and registered copyrights remain in good
standing with all fees and filings due as of May 1, 2000 duly made and the due
dates specified in the Company Disclosure Schedule are accurate and complete.
(b) The Company Intellectual Property consists solely of items and rights
which are: (i) owned by Company; or (ii) rightfully used by Company pursuant to
a valid license ("COMPANY LICENSED INTELLECTUAL PROPERTY"), the parties and date
of each such license agreement and each material agreement in which Company is
the licensor or owner of the subject rights in the agreement being set forth on
Section 3.17(b) of the Company Disclosure Schedule. To Company's best knowledge,
except as set forth in Section 3.17(b) of the Company Disclosure Schedule,
Company has all rights in Company Intellectual Property necessary to carry out
Company's current activities (and had all rights necessary to carry out its
former activities at the time such activities were being conducted), including
without limitation, rights to make, use, reproduce, modify, adopt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent and lease and, other than
with respect to the Company Licensed Intellectual Property, assign and sell, the
Company Intellectual Property.
(c) To Company's best knowledge, except for Company Licensed Intellectual
Property and except as set forth in Section 3.17(c) of the Company Disclosure
Schedule, the reproduction, development, manufacturing, distribution, licensing,
sublicensing or sale of any Company Intellectual Property, now used or offered
or proposed for use, licensing or sale by Company does not infringe on any
patent, copyright, trademark, service mark, trade name, trade dress, firm name,
Internet domain name, logo, trade dress, of any person and does not constitute a
misappropriation of any trade secret. Except as set forth in Section 3.17(c) of
the Company Disclosure Schedule, no claims (i) challenging the validity,
effectiveness or ownership by Company of any of the Company Intellectual
Property, or (ii) to the effect that the use, distribution, licensing,
sublicensing or sale of the Company Intellectual Property as now used or offered
or proposed for use, licensing, sublicensing or sale by Company infringes or
will infringe on any intellectual property or other proprietary right of any
person have been asserted or, to the knowledge of Company, are threatened by any
person or have been made or threatened by any person against the Company's
distributors. To the knowledge of Company, there is no unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property by
any third party, employee or former employee.
(d) Except as set forth in Section 3.17(d) of the Company Disclosure
Schedule, all Company Intellectual Property has been solely developed by full
time employees and consultants within the scope of
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his or her employment or consulting agreement with the Company. All employee
contribution or participation in the conception and development of the Company
Intellectual Property on behalf of Company constitutes work prepared by an
employee within the scope of his or her employment or by a consultant in the
scope of his or her consulting agreement, in each case, in accordance with
applicable federal and state law that has accorded Company ownership of all
tangible and intangible property thereby arising.
(e) Except for externally-developed software programs, Company is not, nor
as a result of the execution or delivery of this Agreement, performance of
Company's obligations hereunder, or consummation of the Merger, will Company or
the Surviving Corporation be, in violation of any material license, sublicense,
agreement or instrument to which Company is a party or otherwise bound, nor will
execution or delivery of this Agreement, or performance of Company's obligations
hereunder, cause the diminution, termination or forfeiture of any right to use,
license, sell, assign or any other rights with respect to any material Company
Intellectual Property.
(f) Section 3.17(f) of the Company Disclosure Schedule contains a true and
complete list of all of Company's internally-developed software programs
("COMPANY SOFTWARE PROGRAMS"). Except for Company Licensed Intellectual Property
and except as set forth in Section 3.17(f) of the Company Disclosure Schedule,
Company owns full and unencumbered right and good, valid and marketable title to
such Company Software Programs and all Company Intellectual Property free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements or encumbrances.
3.18. MATERIAL AGREEMENTS. Except as set forth in the 1999 10-KSB,
described in Section 3.18 of the Company Disclosure Schedule and except for this
Agreement and the agreements specifically referred to herein, Company is not a
party to or bound by any of the following agreements (with the following
agreements, and the agreements included as exhibits to the SEC Reports,
collectively referred to as the "MATERIAL AGREEMENTS"):
(a) any contract or agreement or amendment thereto that would be
required to be filed as an exhibit to a registration statement on Form S-1
filed by Company as of the date hereof;
(b) any confidentiality agreement, non-competition agreement or other
contract or agreement that contains covenants limiting Company's freedom to
compete in any line of business or in any location or with any Person; and
(c) any loan agreement, indenture, note, bond, debenture or any other
document or agreement evidencing a capitalized lease obligation or other
Indebtedness (as defined in Article VIII) to any Person, other than any
Indebtedness in a principal amount less than $50,000 individually or
$100,000 in the aggregate.
Company has delivered to Parent a correct and complete copy of each
Material Agreement and a written summary setting forth the terms and
conditions of each oral agreement, if any, referred to in the Company
Disclosure Schedule. Each such Material Agreement constitutes the legal,
valid and binding obligation of Company, and to the knowledge of Company,
the other party thereto, enforceable against such parties in accordance with
the terms thereof (except as enforcement may be limited by general
principles of equity whether applied in a court of law or equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally). Company is not in default under, or with the giving of
notice or the lapse of time, or both, would be in default under, any of the
material terms or conditions of any Material Agreement. To the knowledge of
Company, there has occurred no material default or event which, with the
giving of notice or the lapse of time, or both, would constitute a material
default by any other party to any Material Agreement.
3.19. INSURANCE. Company is presently insured, and during each of the past
five calendar years has been insured, against such risks as companies engaged in
a similar business would, in accordance with good business practice, customarily
be insured. The policies of fire, theft, liability and other insurance
maintained with respect to the assets or businesses of Company provide
reasonably adequate coverage against loss. Company has heretofore furnished to
Parent a complete and correct list as of the date hereof of all insurance
policies maintained by Company, and has made available to Parent complete and
correct
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copies of all such policies, together with all riders and amendments thereto.
All such policies are in full force and effect and all premiums due thereon have
been paid to the date hereof. Company has complied in all material respects with
the terms of such policies.
3.20. PROPERTIES. Except as set forth in Section 3.20 of the Company
Disclosure Schedule, Company does not own any real property. Company has good
and valid title, free and clear of all Encumbrances to all of its material
properties and assets, whether tangible or intangible, real, personal or mixed,
reflected in the 1999 10KSB as being owned by Company as of the date thereof,
other than (i) any properties or assets that have been sold or otherwise
disposed of in the ordinary course of business since the date of the Company
Balance Sheet, (ii) liens disclosed in the notes to the Company Balance Sheet
and (iii) liens arising in the ordinary course of business after the date of the
Company Balance Sheet. All buildings, and all fixtures, equipment and other
property and assets that are material to its business on a consolidated basis,
held under leases or sub-leases by Company are held under valid instruments
enforceable in accordance with their respective terms, subject to applicable
laws of bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a proceeding
in law or equity). Substantially all of Company's equipment in regular use has
been reasonably maintained and is in serviceable condition, reasonable wear and
tear excepted.
3.21. LEASES. Section 3.21 of the Company Disclosure Schedule lists all
outstanding leases, both capital and operating, or licenses, pursuant to which
Company has (i) obtained the right to use or occupy any real or tangible
personal property under arrangements where the remaining obligation is more than
$50,000, inclusive of any renewal rights or (ii) granted to any other Person the
right to use any material item of machinery, equipment, furniture, vehicle or
other personal property of Company having an original cost of $50,000 or more.
3.22. BUSINESS ACTIVITY RESTRICTION. Except as set forth in Section 3.22
of the Company Disclosure Schedule, there is no non-competition or other similar
agreement, commitment, judgment, injunction, order or decree to which Company is
a party or subject to that has or is expected to prohibit or impair the conduct
of business by Company. Company has not entered into any agreement under which
Company is restricted from selling, licensing or otherwise distributing any of
the Company Intellectual Property (other than Company Licensed Intellectual
Property) or any of its products to, or providing services to, customers or
potential customers or any class of customers, in any geographic area, during
any period of time or in any segment of the market or line of business.
3.23. ACCOUNTS RECEIVABLE; INVENTORY.
(a) Except as specifically set forth in Section 3.23(a) of the Company
Disclosure Schedule, hereto, all accounts and notes receivable reflected in the
Company Balance Sheet, and all accounts and notes receivable arising subsequent
to the date of the Company Balance Sheet, have arisen in the ordinary course of
business, represent valid obligations to Company and, subject only to an amount
of bad debts reasonable in the industry and not materially different than
Company's past experience, have been collected or are collectible in the
aggregate recorded amounts thereof in accordance with their terms.
(b) The inventories (and any reserves established with respect thereto) of
Company as of December 31, 1999 are described in Section 3.23(b) of the Company
Disclosure Schedule. Except as set forth in Section 3.23(b) of the Company
Disclosure Schedule, all such inventories (net of any such reserves) are
properly reflected on the Company Balance Sheet in accordance with GAAP and, to
the best knowledge of Company, are of such quality as to be useable and saleable
in the ordinary course of business (subject, in the case of work-in-process
inventory, to completion in the ordinary course of business).
3.24. CUSTOMERS AND SUPPLIERS. To the best of Company's knowledge, none of
Company's customers which individually accounted for more than 5% of Company's
gross revenues during the 12-month period preceding the date hereof has
terminated or threatened or indicated an intention to terminate any agreement
with Company. Except as set forth in Section 3.24 of the Company Disclosure
Schedule, as of the date hereof, no material supplier of Company has notified
Company in writing that it will stop, or decrease the rate of, supplying
materials, products or services to Company.
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3.25. GUIDANT AGREEMENT. Company has complied in all respects with the
terms of the Guidant Agreement in connection with the execution and delivery of
this Agreement and consummation of the Tender Offer and the Merger. Company is
not in breach of any other provision of the Guidant Agreement and to Company's
knowledge, no claim exists or may be asserted against Company by Guidant in
connection with the execution and delivery of this Agreement and consummation of
the Tender Offer and the Merger or for any other reason.
3.26. ENVIRONMENTAL MATTERS. Except as would not reasonably be expected to
have a Material Adverse Effect, (a) Company is in compliance with all applicable
Environmental Laws, (b) Company has not received any written notice with respect
to the business of, or any property owned or leased by, Company from any
governmental entity or third party alleging that Company is not in compliance
with any Environmental Law, and (c) there has been no "release" of a "hazardous
substance", as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., in
excess of a reportable quantity on any real property owned by Company that is
used for the business of Company.
3.27. PRIOR ACQUISITIONS AND DISPOSITIONS. Except as set forth in the 1999
10-KSB or in Section 3.27 of the Company Disclosure Schedule, no claims, amounts
owed, liabilities (contingent or otherwise), encumbrances, legal proceedings or
any other obligations of any kind are due or were incurred or outstanding in
connection with any acquisitions or dispositions made by Company prior to the
date of this Agreement.
3.28. ABSENCE OF CERTAIN BUSINESS PRACTICES. To the best of Company's
knowledge, no employee, consultant, agent or other representative of Company has
directly or indirectly within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other Person who is or may be in a position to help or hinder the business of
Company in connection with any actual or proposed transaction which (a) would
reasonably be expected to subject Company to any material damage or penalty in
any civil, criminal or governmental litigation or proceeding, (b) if not given
in the past, would reasonably be expected to have had a Material Adverse Effect,
or (c) if not continued in the future, would reasonably be expected to have a
Material Adverse Effect. Without limiting the generality of the foregoing,
Company has not committed, been charged with or to the knowledge of Company been
under investigation with respect to, nor does there exist, any violation by
Company of the Foreign Corrupt Practices Act, as amended (the "FCPA").
3.29. TAKEOVER LAWS. Except as described in Section 3.29 of the Company
Disclosure Schedule, no "fair price," "moratorium," "control share acquisition"
or other similar anti-takeover statute or regulation enacted under Minnesota or
federal laws in the United States including, without limitation, applicable to
Company is applicable to the execution, delivery and performance of this
Agreement or the consummation of the Tender Offer or the Merger.
3.30. OPINION OF FINANCIAL ADVISOR. Company has received the opinion of
Company's Financial Advisor, as of the date of this Agreement, to the effect
that the Merger Consideration is fair, from a financial point of view, to
Company's shareholders.
3.31. DISCLOSURE. To Company's knowledge, as of the date of this
Agreement, no representation or warranty by Company in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not false or
misleading.
3.32. BROKERS AND FINDERS. Company has furnished to Parent or its counsel
a true and complete copy of that certain letter agreement (the "DOUGHERTY &
COMPANY ENGAGEMENT LETTER") between Company and Dougherty & Company, LLC (the
"COMPANY'S FINANCIAL ADVISOR"), such letter agreement being the only agreement
pursuant to which such firm would be entitled to any payment relating to the
transactions contemplated hereunder. No broker, finder or investment banker
other than Company's Financial Advisor is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Company.
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3.33. PROXY STATEMENT, SCHEDULE TO AND SCHEDULE 14D-9. None of the
information supplied by Company for inclusion in the Proxy Statement, the
Schedule TO and Schedule 14D-9 will, at the respective time that the Proxy
Statement, the Schedule TO and Schedule 14D-9 or any amendments or supplements
thereto are filed with the SEC and are first published or sent to or given to
Company's shareholders, and in the case of the Proxy Statement, at the time that
any amendment or supplement thereto is mailed to the Company's shareholders and
at the time of the Company Special Meeting, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made not misleading. The Proxy Statement and
Schedule 14D-9 will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BIDDER
Parent and Newco, jointly and severally, represent and warrant to Company
that:
4.01. ORGANIZATION AND QUALIFICATION. Each of Parent and Newco is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted. Newco is a new corporation that was
formed for the purpose of consummating the transactions contemplated by this
Agreement and has conducted no business and engaged in no activities unrelated
to the transactions contemplated by this Agreement.
4.02. CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Each of Parent
and Newco has full corporate power and authority to enter into this Agreement
and to perform its obligations hereunder and to consummate all the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
Newco, the performance by each of Parent and Newco of their respective
obligations hereunder and the consummation by Parent and Newco of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Newco and the Board of Directors of the Parent and no
other corporate action on the part of Parent or Newco is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby (other than
the approval of the Merger by the shareholders of Parent and Newco and the
approval of the financing plan for the Merger by the shareholders of Parent).
This Agreement has been duly executed and delivered by each of Parent and Newco
and is a legal, valid and binding obligation of each of Parent and Newco,
enforceable against Parent and Newco in accordance with its terms.
4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming satisfaction of all applicable requirements referred to in
Section 4.03(b) below, the execution and delivery of this Agreement by Parent
and Newco, the compliance by Parent and Newco with the provisions hereof and the
consummation by Parent and Newco of the transactions contemplated hereby will
not conflict with or violate any statute, law, ordinance, rule, regulation,
order, writ, judgment, award, injunction, decree or ruling applicable to the
Parent or any of its Subsidiaries or any of their properties, or conflict with,
violate or result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, cancellation or acceleration of, or
the loss of a benefit under, or result in the creation of a lien, security
interest, charge or encumbrance on any of the properties or assets of the Parent
or any of its Subsidiaries pursuant to (i) the organizational documents of the
Parent or any of its Subsidiaries or (ii) any contract, lease, agreement, note,
bond, mortgage, indenture, deed of trust, or other instrument or obligation, or
any license, authorization, permit, certificate or other franchise, other than
such conflicts, violations, breaches, defaults, losses, rights of termination,
amendment, cancellation or acceleration, liens, security interests, charges or
encumbrances as to which requisite waivers have been obtained or which
individually or in the aggregate would not have a material adverse effect on the
ability of the Parent and Newco to perform their obligations under this
Agreement.
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(b) Other than in connection with or in compliance with the provisions of
the DGCL, the MBCA, the Companies Act 1985 (as amended), the Financial Services
Act 1986 (as amended) and the Listing Rules of the London Stock Exchange
Limited, (i) neither Parent nor Newco is required to submit any notice, report,
registration, declaration or other filing with any Governmental Entity in
connection with the execution or delivery of this Agreement by Parent and Newco
or the performance by Parent and Newco of their obligations hereunder or the
consummation by Parent and Newco of the transactions contemplated by this
Agreement and (ii) no waiver, consent, approval, order or authorization of any
Governmental Entity is required to be obtained by Parent or Newco in connection
with the execution or delivery of this Agreement by Parent and Newco or the
performance by Parent and Newco of their obligations hereunder or the
consummation by Parent and Newco of the transactions contemplated by this
Agreement.
4.04. BROKERS AND FINDERS. No broker, finder or investment banker other
than Nomura International plc and West LB Panmure, the fees and expenses of
which will be paid by Parent, is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Parent or any of
its Subsidiaries.
4.05. FINANCING. Parent or Newco has or will have at the Effective Time,
upon completion of the Share Issuance (as defined herein) sufficient funds to
consummate the transactions contemplated by this Agreement, including (i) the
payment by Parent or Newco of the aggregate Merger Consideration to be paid
pursuant to Section 2.05, and (ii) the payment by Parent or Newco of the amounts
to be paid with respect to outstanding Options and Warrants pursuant to Sections
2.06 and 2.07 (the amounts referred to in (i) and (ii) are hereinafter referred
to together as, the "AGGREGATE TRANSACTION CONSIDERATION").
4.06. PROXY STATEMENT, SCHEDULE TO AND SCHEDULE 14D-9. None of the
information supplied by Parent or Newco for inclusion in the Proxy Statement,
the Schedule TO or the Schedule 14D-9 will, at the respective time that the
Proxy Statement, the Schedule TO or the Schedule 14D-9 or any amendments or
supplements thereto are filed with the SEC and are first published or sent to or
given to Company's shareholders, and in the case of the Proxy Statement, at the
time that any amendment or supplement thereto is mailed to the Company's
shareholders and at the time of the Company Special Meeting, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made not misleading. The Schedule TO
will comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder.
ARTICLE V
COVENANTS
5.01. CONDUCT OF BUSINESS BY COMPANY. Except as required or permitted by
this Agreement or as disclosed in Section 5.01 of the Company Disclosure
Schedule, during the period from the date of this Agreement until the Effective
Time, Company agrees that (except to the extent that Parent shall otherwise
consent in writing) Company shall conduct its operations in the ordinary course
of business consistent with past practice, and Company will use its reasonable
efforts to preserve intact its present business organization, to keep available
the services of its present officers and employees and to maintain satisfactory
relationships with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, Company shall not, without the prior written consent of
Parent (which consent will be given or denied within a reasonable time after any
request for such consent):
(a) amend its Articles of Organization or other charter document or Bylaws;
(b) authorize for issuance, issue, sell, deliver, pledge or agree or commit
to issue, sell, deliver or pledge (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any capital stock of any class or any debt or other securities convertible into
capital stock or equivalents (including, without limitation, stock appreciation
rights), or amend any of the
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terms of any of the foregoing, other than the issuance of shares of capital
stock upon the exercise of options or rights outstanding on the date hereof
under the Company Equity Plans;
(c) (i) split, combine or reclassify any shares of its capital stock, or
authorize or propose the issuance or authorization of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
adopt or approve any Rights Plan, or repurchase, redeem or otherwise acquire any
of its securities, or (ii) make any payment of cash or other property to
terminate, cancel or otherwise settle any outstanding Options, other than in the
case of clauses (i) or (ii) above for the issuance of shares of Company Common
Stock in connection with the exercise of options or rights outstanding on the
date hereof under the Company Equity Plans;
(d) (i) incur or assume any long-term Indebtedness or increase any amounts
outstanding under long-term credit facilities existing as of the date of this
Agreement or grant, extend or increase the amount of a mortgage lien on any
leasehold or fee simple interest of Company; or, except in the ordinary course
of business consistent with past practice in the case of clauses (ii) through
(vi) below, (ii) incur or assume any short-term debt or increase amounts
outstanding under short-term credit facilities existing as of December 31, 1999;
(iii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person, except for obligations of Company; (iv) make any loans, advances or
capital contributions to, or investments in, any other Person; (v) pledge or
otherwise encumber shares of capital stock of Company; or (vi) mortgage or
pledge any of its assets, tangible or intangible, or create or suffer to exist
any lien thereon except as existing on the date of this Agreement or as may be
required under agreements outstanding on the date of this Agreement to which
Company is party;
(e) except as expressly provided in this Agreement, including the
acceleration of vesting of outstanding Options under the Company Equity Plans
and termination of the Company's Employee Stock Purchase Plan, enter into, adopt
or amend in any manner or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance, change-in-control or
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee, or increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan or arrangement as in effect as of
the date of this Agreement or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(f) sell, lease, license, pledge or otherwise dispose of or encumber any
material assets except in the ordinary course of business consistent with past
practice (including without limitation any indebtedness owed to it or any claims
held by it);
(g) acquire or agree to acquire by merging or consolidating with or by
purchasing any portion of the capital stock or assets of, or by any other
manner, any business or any corporation, partnership, limited liability company,
association or other business organization or division thereof, other than in
the ordinary course of business consistent with past practice;
(h) change any of the accounting principles or practices used by it
affecting its assets, liabilities or business, except for such changes required
by a change in generally accepted accounting principles;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(whether absolute, accrued, fixed, contingent, liquidated, unliquidated or
otherwise), other than the payment, discharge or satisfaction of liabilities
(i) in the ordinary course of business consistent with past practices,
(ii) with notice to Parent, in an amount which does not exceed $50,000 in the
aggregate, (iii) incurred pursuant to the terms of the Dougherty & Company
Engagement Letter, in an amount not to exceed $90,000, or (iv) incurred in
connection with the transactions contemplated hereby, not to exceed the amounts
specified in Section 5.01(i) of the Company Disclosure Schedule;
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(j) except as required by their terms, enter into, terminate or breach (or
take or fail to take any action, that, with or without notice or lapse of time
or both, would become a breach) or materially amend any contract which is or
would be a Material Agreement;
(k) without prior consultation with Parent (in addition to the consent
requirement described above) commence any litigation or arbitration other than
in accordance with past practice or settle any litigation or arbitration for
money damages or other relief in excess of $50,000 or if as part of such
settlement Company would agree to any restrictions on its operations;
(l) grant any license with respect to or otherwise convey any Company
Intellectual Property or take any action or fail to take any action which would
cause the representations and warranties of Company set forth in Section 3.17
hereof to become untrue in any respect;
(m) elect or appoint any new directors or officers of Company;
(n) waive, release or amend its rights under any confidentiality,
"standstill" or similar agreement that Company entered into in connection with
its consideration of a potential strategic transaction; provided, however, that
Company may waive, release or amend its rights under any such confidentiality,
"standstill" or similar agreement if Company's Board determines, based on the
advice of independent legal counsel, that failure to do so would be reasonably
likely to constitute a breach of its fiduciary duties to Company's shareholders
under applicable law;
(o) make or change any election, request permission of any Tax authority or
to change any accounting method, file any amended Tax return, enter into any
closing agreement, settle any Tax claim or assessment relating to Company,
surrender any right to claim a refund of Taxes, or consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment
relating to Company;
(p) settle or comprise any pending or threatened suit, action or claim which
is material or which relates to any of the transactions contemplated by this
Agreement;
(q) take any action that would reasonably be expected to result in (i) any
of the representations and warranties of Company set forth in this Agreement
becoming untrue or (ii) any of the Tender Offer Conditions not being satisfied;
or
(r) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.01(a) through 5.01(q).
5.02. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to and in accordance with the terms and conditions of that
certain letter agreement between Parent and Company regarding the
confidentiality of information exchanged by the parties prior to the date hereof
(the "CONFIDENTIALITY AGREEMENT"), from the date of this Agreement to the
Effective Time, Company shall, and shall cause its officers, directors,
employees and agents to, afford the officers, employees and agents of Parent and
its affiliates and the attorneys, accountants, banks, other financial
institutions and investment banks working with Parent and its officers,
employees and agents, reasonable access, at all reasonable times upon reasonable
notice and in such manner as will not unreasonably interfere with the conduct of
Company's business, to its officers, employees, agents, properties, books,
records and contracts, and shall furnish Parent and its affiliates and the
attorneys, banks, other financial institutions and investment banks working with
Parent, all financial, operating and other data and information as they
reasonably request.
(b) Subject to the requirements of law, Parent shall, and shall cause its
officers, employees, agents, consultants and affiliates and the attorneys,
banks, other financial institutions and investment banks who obtain such
information to, hold all information obtained pursuant to this Agreement or the
Confidentiality Agreement in confidence in accordance with the terms and
conditions of the Confidentiality Agreement and in the event of termination of
this Agreement for any reason, Parent shall promptly return or destroy all
nonpublic documents obtained from Company and any copies made of such
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documents for Parent and all documentation and other material prepared by Parent
or its advisors based on written nonpublic information furnished by Company or
its advisors shall be destroyed.
5.03. PROXY STATEMENT.
(a) Promptly after execution and delivery of this Agreement, Company shall
prepare and shall file with the SEC as soon as is reasonably practicable a
preliminary Proxy Statement, together with a form of proxy, with respect to the
Company Special Meeting (as defined in Section 5.04) and shall use all
reasonable efforts to have the Proxy Statement and form of proxy cleared by the
SEC as promptly as practicable, and promptly after request by Parent shall mail
the definitive Proxy Statement and form of proxy to shareholders of Company.
Subject to its fiduciary duties under applicable law, the Proxy Statement shall
contain the recommendation of the Board of Directors that the shareholders of
Company vote to adopt and approve the Merger and this Agreement. Parent, Newco
and their counsel shall be given reasonable opportunity to review and comment
upon the Proxy Statement prior to its filing with the SEC. Company agrees to
provide Parent, Newco and their counsel any comments Company or its counsel may
receive from the SEC or its staff with respect to the Proxy Statement promptly
after the receipt of such comments. The term "Proxy Statement" shall mean such
proxy or information statement at the time it initially is mailed to Company's
shareholders and all amendments or supplements thereto, if any, similarly filed
and mailed.
(b) Parent will provide Company with all information concerning Parent (or
its Affiliates) required to be included in, or otherwise reasonably requested by
Company in connection with the preparation of, the Proxy Statement. The
information provided and to be provided by Parent and Company, respectively, for
use in the Proxy Statement shall, on the date the Proxy Statement is first
mailed to Company's shareholders and on the date of the Company Special Meeting
(as hereinafter defined), not contain an untrue statement of a material fact or
omit to state any material fact necessary in order to make such information, in
light of the circumstances under which it was provided, not misleading, and
Company and Parent each agree to correct any information provided by it for use
in the Proxy Statement which shall have become false or misleading in any
material respect. The Proxy Statement shall comply as to form in all material
respects with all applicable requirements of federal securities laws.
5.04. MEETING OF SHAREHOLDERS OF COMPANY. If required under the MBCA and
Company's Articles of Incorporation, Company shall, as soon as practicable after
the date hereof, duly call, give notice of, convene and hold a meeting of its
shareholders (the "COMPANY SPECIAL MEETING") to consider and vote upon this
Agreement and the Merger and shall, through its Board of Directors, recommend to
its shareholders the approval and adoption of this Agreement, the Merger and the
other transactions contemplated hereby. Without limiting the generality of the
foregoing but subject to its rights to terminate this Agreement pursuant to
Section 7.01(d), Company agrees that its obligations pursuant to the first
sentence of this Section 5.04 shall not be affected by the commencement, public
proposal, public disclosure or communication to Company of any Acquisition
Proposal. Notwithstanding the foregoing, if Newco shall acquire at least 90% of
the outstanding shares of each class of Company Common Stock and Company
Preferred Stock in the Tender Offer, if Parent elects to cause Newco to commence
the Tender Offer, the parties shall take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the completion
of the Tender Offer without a Company Special Meeting in accordance with the
DGCL and the MBCA.
5.05. NO SOLICITATION BY COMPANY.
(a) Except as provided in Section 5.05(b), Company agrees that, from the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement pursuant to Section 7.01, Company shall not, nor
shall it authorize or permit any of its directors, officers or employees or any
representative retained by it (including Company's Financial Advisor) to,
directly or indirectly through another Person, (i) solicit, initiate, entertain
or encourage (including by way of furnishing non-public information) any
inquiries or the making of an Acquisition Proposal, or (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal; PROVIDED,
HOWEVER, that if, at any time, the Board of Directors of Company determines in
good faith, after consultation with and receipt of advice from outside
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counsel, that it is necessary to do so in order to act in a manner consistent
with its fiduciary duties to Company's shareholders under applicable law,
Company may, in response to a Superior Proposal (as defined below) and subject
to delivering a Company Notice (as defined in paragraph (c) below) and
compliance with the other provisions of paragraph (c) below, following delivery
of Company Notice (x) furnish information with respect to Company to any Person
making such Acquisition Proposal pursuant to a confidentiality agreement entered
into between such Person and Company with terms no less favorable to Company
than those contained in the Confidentiality Agreement and (y) participate in
discussions or negotiations regarding such Acquisition Proposal. For purposes of
this Agreement, an "Acquisition Proposal" means any inquiry, proposal or offer
from any Person (i) relating to any direct or indirect acquisition or purchase
of (A) a business that constitutes 15% or more of the net revenues, net income
or the assets of Company, or (B) 20% or more of any class of equity securities
of Company, (ii) relating to any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of any
class of equity securities of Company, or (iii) relating to any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Company, in each case, other than the
transactions contemplated by this Agreement. Immediately following the execution
and delivery of this Agreement by the parties hereto, Company will cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted with respect to the foregoing. Promptly following the
execution of this Agreement by the parties hereto, Company will request each
Person that has, prior to the date of this Agreement, executed a confidentiality
agreement in connection with its consideration of an Acquisition Proposal to
return or destroy all confidential information heretofore furnished to such
Person by or on behalf of Company.
(b) Except as expressly permitted by this Section 5.05, the Board of
Directors of Company shall not (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors of the Merger, the Tender Offer (if
Parent elects to cause Newco to make the Tender Offer) or this Agreement,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (iii) cause Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "COMPANY ACQUISITION AGREEMENT") related to any Acquisition Proposal, other
than any such agreement entered into concurrently with a termination pursuant to
the next sentence to facilitate such action. Notwithstanding the foregoing, if
at any time the Board of Directors of Company determines in good faith, after
consultation with and receipt of advice from outside counsel, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to Company's shareholders under applicable law, subject to compliance
with paragraph (c) below, the Board of Directors of Company may, in response to
a Superior Proposal which was not solicited by Company and which did not
otherwise result from a breach of this Section 5.05 (subject to this and the
following sentences of this Section 5.05), terminate this Agreement in
accordance with Section 7.01(d) (and concurrently with or after such
termination, if it so chooses, cause Company to enter into any Company
Acquisition Agreement with respect to any Superior Proposal) but only at a time
that is at least after the third business day after delivery of a Company
Notice. For purposes of this Agreement, a "Superior Proposal" means any proposal
made by a third party to acquire, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities or other property, more than
50% of the combined voting power of the shares of Company Common Stock and
Company Preferred Stock then outstanding or all or substantially all the assets
of Company which (i) the Board of Directors of Company determines in good faith
is reasonably likely to be consummated, taking into account the Person making
the proposal and all legal, financial and regulatory aspects of the proposal,
including any break-up fees, expense reimbursement provisions and conditions to
consummation, and (ii) the Board of Directors of Company determines in good
faith (after consultation with and based upon the advice of its outside
financial advisors) would, if consummated, provide greater value to Company's
shareholders than the transactions contemplated by this Agreement.
(c) In addition to the obligations of Company as set forth in paragraphs
(a) and (b) of this Section 5.05, Company shall advise the Parent orally and in
writing of any request for non-public
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information, any Acquisition Proposal, including all of the material proposed
terms of such Acquisition Proposal, the identity of the third party, or any
decision by Company to take any of the actions permitted in clauses (x) or
(y) of paragraph (a) above (with any such notice referred to as a "COMPANY
NOTICE"). Any such Company Notice will be delivered promptly after (and in no
event later than 24 hours after) receipt of any request for non-public
information or of any Acquisition Proposal and prior to Company taking any of
the actions permitted in clauses (x) or (y) of paragraph (a) above. In addition,
in the event Company intends to enter into a Company Acquisition Agreement
relating to a Superior Proposal, Company will deliver a Company Notice at least
24 hours prior to entering into such Company Acquisition Agreement, which
Company Notice will identify the third party and the material proposed terms of
such Superior Proposal. Company will keep Parent reasonably informed of the
status of any such request or Acquisition Proposal and will update the
information required to be provided in each Company Notice upon the request of
Parent.
5.06. PUBLIC ANNOUNCEMENTS. Parent and Company will consult with each
other before, but will not be required to obtain the other party's consent with
respect to, issuing any press release, any filing with the SEC on Form 8-K or
otherwise making any public statements with respect to this Agreement or the
Merger or the other transactions contemplated hereby, and shall not issue any
such press release, SEC Form 8-K filing or make any such public statement prior
to such consultation, except to the extent that compliance with legal
requirements requires a party to issue a press release or public announcement or
make an 8-K filing prior to such consultation. This Section 5.06 shall supersede
any conflicting provisions in the Confidentiality Agreement.
5.07. NOTIFICATION OF CERTAIN MATTERS.
(a) Company shall give prompt notice (which notice shall state that it is
delivered pursuant to Section 5.07 of this Agreement) in writing to Parent and
Parent shall give prompt notice in writing to Company, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
through the Effective Time and (ii) any material failure of Company or Parent,
as the case may be, or of any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, no such notification
shall affect the representations or warranties of the parties or the conditions
to the obligations of the parties hereunder.
(b) Company shall give prompt notice in writing (which notice shall state
that it is delivered pursuant to Section 5.07 of this Agreement) to Parent of
any occurrence that has had or is expected to have a Material Adverse Effect.
5.08. EMPLOYMENT AND BENEFIT MATTERS.
(a) From and after the Effective Time, Parent agrees to cause the Surviving
Corporation to provide the employees of Company (the "COMPANY EMPLOYEES") who
remain employed after the Effective Time with the types and levels of employee
benefits which are in the aggregate at least as favorable as those maintained by
Company prior to the Effective Time; PROVIDED, that this obligation shall not
include the Company Employee Stock Purchase Plan or the Company Equity Plans.
Parent will treat, and cause its applicable benefit plans to treat, the service
of Company Employees with Company as service rendered to the Surviving
Corporation for purposes of eligibility to participate, vesting and for other
appropriate benefits but not for benefit accrual.
(b) Company shall use its reasonable best efforts to cause the employees set
forth on Section 5.08 of the Company Disclosure Schedule (the "DESIGNATED
COMPANY EMPLOYEES") to enter into employment agreements with Parent and the
Surviving Corporation on the terms and conditions set forth in EXHIBIT A hereto
(the "EMPLOYMENT AGREEMENTS").
(c) The Company Employee Stock Purchase Plan shall be terminated prior to
the Effective Date and Company shall deliver evidence of such termination to
Parent.
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(d) Notwithstanding anything to the contrary contained herein, Parent shall
have sole discretion with respect to the determination as to whether or when to
terminate, merge or continue any employee benefit plans and programs of Company
after the Effective Time.
5.09. OFFICERS' AND DIRECTORS' INDEMNIFICATION; INSURANCE.
(a) The Surviving Corporation agrees that for a period ending on the sixth
anniversary of the Effective Time, the Surviving Corporation will maintain all
rights to indemnification (including with respect to the advancement of expenses
incurred in the defense of any action or suit) existing on the date of this
Agreement in favor of the present and former directors, officers, employees and
agents of Company as provided in Company's Articles of Incorporation and
By-laws, in each case as in effect on the date of this Agreement, and that
during such period, neither the Articles of Incorporation nor the By-laws of the
Surviving Corporation shall be amended to reduce or limit the rights of
indemnity afforded to the present and former directors, officers, employees and
agents of Company, or the ability of the Surviving Corporation to indemnify
them, nor to hinder, delay or make more difficult the exercise of such rights or
indemnity or the ability to indemnify.
(b) The Surviving Corporation agrees to indemnify to the fullest extent
permitted under its Certificate of Incorporation, its By-laws, and applicable
law the present and former directors, officers, employees and agents of Company
against all losses, damages, liabilities or claims made against them arising
from their service in such capacities prior to and including the Effective Time,
to at least the same extent as such persons are currently permitted to be
indemnified pursuant to Company's Articles of Incorporation and By-laws for a
period ending on the sixth anniversary of the Effective Time.
(c) Parent will cause to be maintained for a period of four years from the
Effective Time Company's current directors' and officers' insurance and
indemnification policy to the extent that it provides coverage for events
occurring prior to the Effective Time (the "D&O INSURANCE") for all persons who
are directors and officers of Company on the date of this Agreement, so long as
such insurance is available on commercially reasonable terms and the annual
premium therefor would not be in excess of 200% of the last annual premium paid
prior to the date of this Agreement (the "MAXIMUM PREMIUM"). If the existing D&O
Insurance expires, is terminated or cancelled during such three-year period,
Parent will use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and conditions no less
advantageous than the existing D&O Insurance.
5.10. ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions hereof, and Company's and Parent's
respective Board of Directors' fiduciary duties to their respective shareholders
under applicable law, each of the parties to this Agreement agrees to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement (including consummation of the Merger) and to
cooperate with each other in connection with the foregoing.
(b) Subject to the terms and conditions hereof, each of the parties to this
Agreement agrees to use commercially reasonable efforts to: (i) obtain all
necessary waivers, consents and approvals from other parties to loan agreements,
leases, licenses and other contracts, (ii) obtain all necessary consents,
approvals and authorizations as required to be obtained under any federal, state
or foreign law or regulations, (iii) defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby, (iv) lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) effect all necessary registrations and
filings, including, but not limited to, submissions of information requested by
Governmental Entities, and (vi) fulfill all conditions to this Agreement.
(c) In connection with and without limiting the foregoing, Company and its
Board of Directors shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
the Tender Offer, the Merger, this Agreement or any of the other transactions
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contemplated by this Agreement or the other agreements referred to herein and
(ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Tender Offer, the Merger, this Agreement or any of the other
transactions contemplated by this Agreement or the other agreements referred to
herein, take all action necessary to ensure that the Tender Offer, the Merger,
this Agreement, and any of the other transactions contemplated by this Agreement
or the other agreements referred to herein may be consummated as promptly as
practicable on the terms contemplated by the Tender Offer and this Agreement and
otherwise to minimize the effect of such statute or regulation on the Tender
Offer, the Merger, this Agreement or any of the other transactions contemplated
by this Agreement or the other agreements referred to herein.
5.11. COMPANY INDEBTEDNESS. Prior to the Effective Time, Company shall
cooperate with Parent in taking such actions requested by Parent as are
reasonably appropriate or necessary in connection with the redemption,
prepayment, modification, satisfaction or elimination of any outstanding
Indebtedness of Company with respect to which a consent is required to be
obtained to effectuate the Merger and the transactions contemplated by this
Agreement and has not been so obtained.
5.12. UPDATE OF DISCLOSURE SCHEDULES. Each party agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation (for notification purposes only)
until the Closing to supplement or amend promptly the Schedules hereto with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in the Schedules. For all purposes of this Agreement, including
without limitation for purposes of determining whether the conditions set forth
in Section 6.02(a) and 6.03(a) have been fulfilled, the Schedules shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude all information contained in any
supplement or amendment thereto.
5.13. FUTURE FILINGS. Company will deliver to Parent as soon as they
become available true and complete copies of any report or statement mailed by
it to its shareholders generally or filed by it with the SEC subsequent to the
date of this Agreement and prior to the Effective Time. As of their respective
dates, such reports and statements (excluding any information therein provided
by Parent, as to which Company makes no representation) will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading and will comply as to
form in all material respects with all applicable requirements of law. The
consolidated financial statements of Company to be included in such reports and
statements (excluding any information therein provided by Parent, as to which
Company makes no representation) will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except (i) as otherwise indicated in such financial statements
and the notes thereto or (ii) in the case of unaudited interim statements, to
the extent permitted under Form 10-QSB under the Exchange Act) and will present
fairly the consolidated financial position, results of operations and cash flows
of Company as of the dates thereof and for the periods indicated therein
(subject, in the case of any unaudited interim financial statements, to normal
year-end audit adjustments). Parent shall deliver to Company as soon as they
become available, true and complete copies of any report or statement mailed by
it to Company's shareholders generally or filed by it with the SEC subsequent to
the date of this Agreement and prior to the Effective Time.
5.14. FINANCING.
(a) Promptly upon execution, Parent will provide to Company a true and
correct copy of the Placing Agreement, between Parent and Nomura International
plc (the "PLACING AGREEMENT"), pursuant to which, prior to the Effective Time,
Parent will use its best efforts to complete a placing of ordinary shares ("NEW
PARENT SHARES") in Parent (the "SHARE ISSUANCE"), which placing is being
underwritten by Nomura International plc, and, which, if consummated shall
provide sufficient funds to consummate the transactions contemplated by this
Agreement, including the payment by Parent or Newco of the Aggregate Transaction
Consideration. Parent shall use its best efforts to execute and deliver the
Placing Agreement as soon as practicable after the date hereof. As soon as
practicable after the execution of the Placing
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Agreement, Parent shall use its best efforts to complete the Share Issuance
pursuant to which the New Parent Shares will be offered for sale to the public
in accordance with the Placing Agreement. Parent shall use its best efforts to
cause the New Parent Shares to be admitted to the London Stock Exchange's
Official List.
(b) Company will provide Parent with all information concerning Company
required to be included in, or otherwise reasonably requested by Parent in
connection with the preparation of, the press announcement of Parent in the
United Kingdom concerning the Merger and the Listing Particulars and Prospectus
and Investor Presentation for use by Parent in connection with the Share
Issuance; PROVIDED, THAT, Company shall not be required to provide any such
information which is beyond that which is required to be publicly disclosed by
Company under the Securities Act, the Exchange Act, rules and regulations of the
SEC under such acts and under the rules and regulations of NASDAQ. The
information provided and to be provided by Company for use in such press
release, Listing Particulars and Prospectus and Investor Presentation shall, on
the date such materials are first made publicly available and on the date of the
Parent Special Meeting (as defined below), not contain an untrue statement of a
material fact or omit to state any material fact necessary in order to make such
information, in light of the circumstances under which it was provided, not
misleading, and Company agrees to correct any information provided by it for use
in such materials which shall have become false or misleading in any material
respect.
5.15. MEETING OF SHAREHOLDERS OF PARENT. Promptly after the execution and
delivery of this Agreement, Parent shall duly call, give notice of, convene and
hold an extraordinary general meeting of its shareholders (the "PARENT SPECIAL
MEETING") to consider and vote upon this Agreement, the Merger and the Share
Issuance, and shall, through its Board of Directors, recommend to its
shareholders the approval and adoption of the Merger, this Agreement, and the
Share Issuance. Parent shall use its best efforts to solicit from shareholders
of Parent proxies in favor of such adoption and approval and, subject to the
rules of the London Stock Exchange and the duties of the directors of Parent
under applicable law, to take all other action necessary to secure the vote or
consent of shareholders required by the Companies Act of 1985 to effect the
Merger and the Share Issuance.
5.16. DIRECTORS. Promptly upon the acceptance for payment of shares of
Company Common Stock and Company Preferred Stock by Newco pursuant to the Tender
Offer, in the event that Parent elects to cause Newco to commence the Tender
Offer, Newco shall be entitled to designate such number of directors on the
Board of Directors of Company as will give Newco, subject to compliance with
Section 14(f) of the Exchange Act, representation on Company's Board of
Directors equal to the product of (i) the total number of directors on Company's
Board of Directors and (ii) the percentage that the number of shares of Company
Common Stock and Company Preferred Stock purchased by Newco in the Tender Offer
bears to the number of shares of Company Common Stock and Company Preferred
Stock outstanding at such time, and Company shall, at such time, cause Newco's
designees to be so elected by its existing Board of Directors; provided, that in
the event that Newco's designees are elected to the Board of Directors of
Company, until the Effective Time such Board of Directors shall have at least
two directors who are directors of Company on the date of this Agreement and who
are not officers or employees of Company (the "INDEPENDENT DIRECTORS") and;
provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall designate a person to fill such vacancy who shall be deemed to be
an Independent Director for purposes of this Agreement or, if no Independent
Directors then remain, the other directors of Company on the date hereof shall
designate two persons to fill such vacancies who shall not be officers or
employees of Company, or officers or affiliates of Newco, and such persons shall
be deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable law, Company shall take all action requested by Newco necessary to
effect any such election, including mailing to its shareholders the information
statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. In connection with the foregoing,
Company will promptly, at the option of Newco, either increase the size of the
Company's Board of Directors and/or obtain the resignation of such number of its
current directors as is necessary to enable Newco's designees to be elected or
appointed to, and to constitute a majority of, Company's Board of Directors as
provided above.
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ARTICLE VI
CONDITIONS OF MERGER
6.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions:
(a) COMPANY SHAREHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the shareholders of Company
in accordance with the MBCA.
(b) PARENT SHAREHOLDER APPROVAL. This Agreement, the Merger and the Share
Issuance shall have been approved and adopted by the requisite vote of the
shareholders of Parent in accordance with the Companies Act of 1985 (as amended)
and Parent's Articles of Association.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction, judgment or other order, decree or
ruling of any applicable court or regulatory authority nor any statute, rule,
regulation or order shall be in effect which prevents the consummation of the
Merger.
6.02. CONDITIONS PRECEDENT TO PARENT'S AND NEWCO'S OBLIGATIONS. Parent and
Newco shall be obligated to effect the Merger only if each of the following
conditions is satisfied at or prior to the Closing Date, unless any such
condition is waived in writing by Parent and Newco:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Company set forth in this Agreement shall be true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of the Closing Date
with the same force and effect as though made again at and as of the Closing
Date, except for any representations and warranties that address matters only as
of a particular date (which shall remain true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of such date). Parent
shall have received a certificate to the foregoing effect signed by the
president and chief executive officer and chief financial officer of Company.
(b) PERFORMANCE OF OBLIGATIONS OF COMPANY. Company shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date. Parent shall have received a
certificate to the foregoing effect signed by the president and chief executive
officer and chief financial officer of Company.
(c) ABSENCE OF MATERIAL ADVERSE CHANGES. There shall not have occurred any
change in the business, assets, financial condition or results of operations of
Company which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
(d) CONSENTS. Company shall have received all necessary consents or waivers
relating to the Merger, in form and substance satisfactory to Parent, from the
other parties to each contract, lease or agreement to which Company is a party,
except where the failure to obtain such consent or waiver would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(e) SHARE ISSUANCE. Parent shall either have received the funds, or shall
have the unconditional right to draw the funds, from the Share Issuance.
(f) ADMITTANCE OF NEW PARENT SHARES. The New Parent Shares shall have been
admitted to the London Stock Exchange's Official List, subject to notice of
admittance.
(g) EMPLOYMENT AGREEMENTS. The Designated Company Employees shall have
executed and delivered the Employment Agreements.
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6.03. CONDITIONS TO OBLIGATION OF COMPANY. Company shall be obligated to
effect the Merger only if each of the following conditions is satisfied at or
prior to the Closing Date, unless any such condition is waived in writing by
Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent set forth in this Agreement shall be true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of the Closing Date
with the same force and effect as though made again at and as of the Closing
Date, except for any representations and warranties that address matters only as
of a particular date (which shall remain true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of such date).
Company shall have received a certificate to the foregoing effect signed by the
president and chief executive officer and chief financial officer of Parent.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date. Company shall have received a
certificate to the foregoing effect signed by the president and chief executive
officer and chief financial officer of Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.01 TERMINATION. This Agreement may be terminated, at any time prior to the
Effective Time, whether before or after approval by the shareholders of Company:
(a) by mutual written agreement of the Boards of Directors of Parent and
Company;
(b) by either Parent or Company:
(i) if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(ii) if there has been a material breach by the other party of any
representation, warranty, covenant or agreement set forth in this
Agreement unless such breach is capable of being cured and is cured
prior to the Closing Date;
(iii) if the shareholders of Parent shall fail to approve the Merger and
the Share Issuance at the Parent Special Meeting; or
(iv) if the shareholders of Company shall fail to approve the Agreement
and the Merger at the Company Special Meeting;
(c) by Parent:
(i) if Company or any of its directors or officers shall participate in
discussions or negotiations in breach of Section 5.05 or if the
Board of Directors of Company shall have approved or recommended an
Acquisition Proposal by a third party, or withdrawn or modified in a
manner adverse to Parent its approval or recommendation of this
Agreement or the transactions contemplated hereby, or failed to mail
the Proxy Statement to its shareholders or failed to include in such
Proxy Statement such recommendation (including the recommendation
that the shareholders of Company vote in favor of the Merger), or
publicly resolved to do any of the foregoing; or
(ii) if the Parent Share Issuance or the Placing Agreement shall have
been terminated without Parent having received the proceeds of the
Parent Share Issuance or any alternative financing;
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(d) by Company, pursuant to Section 5.05(b); provided, that, in order for
the termination of this Agreement pursuant to this paragraph (d) to be
deemed effective, Company shall have complied with all provisions of
Section 5.05, including the notice provisions therein, and with
applicable requirements, including the payment of the Company Break-Up
Fee; and
(e) by either Company or Parent in the event the Effective Time has not
occurred by the latest to occur of (i) July 31, 2000 or (ii) 60 days
after the clearance by the SEC of the Proxy Statement (with such date, as
it may thereafter be extended by mutual written agreement of Parent and
Company, referred to as the "OUTSIDE DATE").
7.02. PROCEDURE AND EFFECT OF TERMINATION. In the event of the termination
of this Agreement by Company or Parent or both of them pursuant to
Section 7.01, the terminating party shall provide written notice of such
termination to the other party and this Agreement shall forthwith terminate and
there shall be no liability on the part of Parent, Newco or Company, except as
set forth in this Section 7.02 and in Sections 5.02(b) and 7.03 of this
Agreement. The foregoing shall not relieve any party for liability for damages
actually incurred as a result of any breach of this Agreement. The
Confidentiality Agreement and Sections 5.02(b), 7.02 and 7.03 of this Agreement
shall survive the termination of this Agreement.
7.03. FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement and whether or not the
transactions contemplated by this Agreement are consummated, all costs
and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
(b) In the event that Parent terminates this Agreement pursuant to
Section 7.01(b)(ii), (b)(iv), or (c)(i), or Company terminates this
Agreement pursuant to Section 7.01(b)(iv) or (d), then Company shall pay
to Parent the amount of 7.0% of the Total Aggregate Consideration as
reimbursement of Parent's expenses and as liquidated damages (the
"Company Break-Up Fee"); provided, however, that, in the case of a
termination pursuant to Section 7.01(b)(iv) hereof, the Company Break-Up
Fee shall be payable only if Company consummates an Acquisition
Transaction within twelve (12) months after such termination. Any such
payment shall be made within three (3) business days after a termination,
except in the case of a termination pursuant to Section 7.01(b)(iv), in
which case the Company Break-Up Fee shall be payable within three
(3) business days after consummation of such Acquisition Transaction.
7.04. AMENDMENT. This Agreement may be amended by each of the parties by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that (i) such amendment shall be
in writing signed by all of the parties, and (ii) after adoption of this
Agreement and the Merger by the shareholders of Company, no amendment may be
made without the further approval of the shareholders of Company to the extent
such approval is required by applicable law.
7.05. WAIVER. Subject to the requirements of applicable law, at any time
prior to the Effective Time, whether before or after the Company Special
Meeting, any party hereto, by action taken by its Board of Directors (or, in the
case of Parent, any similar body), may (i) extend the time for the performance
of any of the obligations or other acts of any other party hereto or (ii) waive
compliance with any of the agreements of any other party or with any conditions
to its own obligations. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party by a duly authorized officer of such party.
Notwithstanding the above, any waiver given shall not apply to any subsequent
failure of compliance with agreements of the other party or conditions to its
own obligations.
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ARTICLE VIII
DEFINITIONS
As used herein the following terms not otherwise defined have the following
respective meanings:
"ACQUISITION TRANSACTION" means any transaction, other than as contemplated
by this Agreement, pursuant to which a third party acquires, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities
or other property, more than 50% of the combined voting power of Company or all
or substantially all the assets of Company.
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. As used
in this definition the term "CONTROL" (including the terms "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"COMPANY INTELLECTUAL PROPERTY" means all trademarks, trade names, service
marks, trade dress, and all goodwill associated with any of the foregoing,
patents, Internet domain names, copyrights and any renewal rights therefor,
inventions, supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, technical documentation of
such software programs, registrations and applications for any of the foregoing
and all other tangible or intangible proprietary information or materials that
are or have been used in Company's business and/or in any product or process
(i) currently being or formerly manufactured, published or marketed by Company
or (ii) previously or currently under active development for possible future
manufacturing, publication, marketing or other use by Company.
"ENCUMBRANCES" shall mean any and all liens, charges, security interests,
options, claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements or other restrictions on title or
transfer of any nature whatsoever.
"ENVIRONMENTAL LAW" shall mean all foreign, federal, state or local laws
governing pollution or the protection of the environment.
"GUIDANT" shall mean Guidant Corporation.
"GUIDANT STOCK PURCHASE AGREEMENT" shall mean that certain Stock Purchase
Agreement, by and between Guidant and Company, dated as of March 6, 1998,
pursuant to which Company issued to Guidant, and Guidant purchased from Company,
shares of Company Common Stock.
"INDEBTEDNESS" as applied to any Person, means (i) all indebtedness of
Company for borrowed money, whether current or funded, or secured or unsecured,
(ii) all indebtedness of Company for the deferred purchase price of property or
services represented by a note or other security, (iii) all indebtedness of
Company created or arising under any conditional sale or other title retention
agreement with respect to property acquired by Company (even though the rights
and remedies of the Company or lender under such agreement in the event of
default are limited to repossession or sale of such property), (iv) all
indebtedness of Company secured by a purchase money mortgage or other lien to
secure all or part of the purchase price of property subject to such mortgage or
lien, (v) all obligations under leases which shall have been or must be, in
accordance with generally accepted accounting principles, recorded as capital
leases in respect of which Company is liable as lessee, (vi) any liability of
Company in respect of banker's acceptances or letters of credit, (vii) all
interest, fees and other expenses owed with respect to the indebtedness referred
to in clause (i), (ii), (iii), (iv), (v) or (vi) above, and (viii) all
indebtedness referred to in clause (i), (ii), (iii), (iv), (v), (vi) or
(vii) above which is directly or indirectly guaranteed by Company or which
Company has
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<PAGE>
agreed (contingently or otherwise) to purchase or otherwise acquire or in
respect of which it has otherwise assured a creditor against loss.
"MATERIAL ADVERSE EFFECT" means a change or effect that is materially
adverse to (a) the business, properties, assets, results of operations or
condition (financial or otherwise) of Company taken as a whole or (b) Company's
ability to perform any of its obligations under this Agreement or which is
expected to impede Company's ability to consummate the Merger.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"PERSON" means any corporation, association, partnership, limited liability
company, organization, business, individual, government or political subdivision
thereof or governmental agency.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, joint venture or other legal entity of which
such Person (either alone or through or together with any other subsidiary of
such person) owns, directly or indirectly, a majority of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"TAX" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy, of
any kind whatsoever, including any interest, penalties or additions to tax in
respect of any of the foregoing.
ARTICLE IX
MISCELLANEOUS
9.01. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
9.02. NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given, or made
as of the date delivered if sent via telecopier or delivered personally
(including, without limitation, delivery by commercial carrier warranting
next-day delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by similar notice, except that notices
of changes of address shall be effective upon receipt):
(a) If to Company:
Everest Medical Corporation
13755 First Avenue North
South 500
Minneapolis, MN 55441-5454
Attention: John L. Shannon
Chairman, President and Chief Executive Officer
Telecopy: (612) 473-6465
With copies to:
Fredrickson & Byron, P.A.
1100 International Centre
900 Second Avenue South
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<PAGE>
Minneapolis, MN 55402-3397
Attention: Thomas King, Esq.
and
Daniel A. Yarano, Esq.
Telecopy: (612) 347-7077
(b) If to Parent or Newco:
Gyrus Group Plc
Fortran Road, St. Mellons
Cardiff CF3 0LT
England
Attention: Dr. Mark Goble
Managing Director
Telecopy: 011-44-1222-776384
With copies to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Attention: Gerald J. Kehoe, Esq.
Telecopy: (617) 951-8736
9.03. 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.
9.04. REPRESENTATIONS AND WARRANTIES, ETC. The respective representations
and warranties of Company, Parent and Newco contained herein shall survive
until, and shall expire with, and be terminated and extinguished upon the
earlier to occur of (a) the termination of this Agreement pursuant to
Section 7.01 and (b) the Closing Date. This Section 9.04 shall have no effect
upon any other obligation of the parties hereto, whether to be performed before
or after the consummation of the Merger.
9.05. MISCELLANEOUS. This Agreement, the documents delivered pursuant hereto
or in connection herewith and the Confidentiality Agreement (i) constitute the
entire agreement and supersede all other prior agreements and undertakings, both
written and oral (including, without limitation, any agreement or proposed
agreement relating to the timing of execution of this Agreement and the payment
of any amount in connection therewith), among the parties, or any of them, with
respect to the subject matter hereof, (ii) are not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder,
(iii) may not be assigned without the prior written consent of the other parties
hereto, except that Newco may assign its rights hereunder in whole or in part to
one or more direct or indirect Subsidiaries or affiliates of Parent which, in
written instruments reasonably satisfactory to Company, shall agree to make all
representations and warranties of Newco set forth herein and shall agree to
assume all of such party's obligations hereunder and be bound by all of the
terms and conditions of this Agreement and Newco and Parent may assign this
Agreement to their lenders as collateral security; PROVIDED, HOWEVER, that no
such assignment shall relieve the assignor of its obligations hereunder, and
(iv) shall be governed by and construed in accordance with the laws of the State
of Minnesota (without reference to choice of law rules). This Agreement may be
executed in one or more counterparts which together shall constitute a single
agreement.
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IN WITNESS WHEREOF, Parent, Newco and Company have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
<TABLE>
<S> <C> <C>
GYRUS GROUP PLC
By: /s/ MARK GOBLE
-----------------------------------------
Name: Mark Goble
----------------------------------
Title: Group Managing Director
----------------------------------
GOLDEN ACQUISITION CORP.
By: /s/ MARK GOBLE
-----------------------------------------
Name: Mark Goble
----------------------------------
Title: President
----------------------------------
EVEREST MEDICAL CORPORATION
By: /s/ JOHN L. SHANNON, JR.
-----------------------------------------
Name: John L. Shannon, Jr.
----------------------------------
Title: Chairman, President and
Chief Executive Officer
----------------------------------
</TABLE>
35
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Exhibit 10
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), dated February 23, 2000, is by
and between Gyrus Group PLC, a public limited company incorporated and existing
under the laws of England and Wales ("GYRUS"), and Everest Medical Corporation,
a Minnesota corporation ("EVEREST").
RECITALS
WHEREAS, Gyrus desires to market and sell its products in North America.
WHEREAS, Everest, Gyrus and Golden Acquisition Corp., a Delaware corporation
("NEWCO") and a direct wholly-owned subsidiary of Gyrus, are entering into an
Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated on or about the
date hereof, providing for, among other things, the merger (the "MERGER") of
Everest with and into Newco.
WHEREAS, Gyrus and Everest recognize the complimentary nature of their
businesses, and the synergies that could be obtained if they could form a
business relationship.
WHEREAS, Gyrus and Everest wish to provide a basis for working together
whether or not the business combination contemplated by the Merger Agreement
occurs.
NOW, THEREFORE, in consideration of these premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Gyrus and Everest hereby agree as
follows:
Section1. EFFECTIVENESS. This Agreement shall become effective and binding
on the parties hereto from and after the date hereof.
Section2. APPOINTMENT. Subject to the terms and conditions of this
Agreement, beginning on the Commencement Date (as defined in Section4 hereof),
Gyrus hereby retains Everest to act as its consultant, and Everest hereby agrees
to its appointment as Gyrus' consultant (the "CONSULTANCY") to provide to Gyrus
consulting and advisory services in connection with Gyrus' development of an
independent sales network for the distribution of its products in North America
(the "MISSION").
Section3. CONSULTING SERVICES. During the Consultancy Period (as such term
is defined in Section4 hereof), Everest agrees to provide to Gyrus such
consulting and advisory services as Gyrus shall reasonably request from time to
time in connection with the Mission.
Section4. TERM. Subject to Section5 hereof, the Consultancy shall commence
on the date which is ninety (90) days after the date hereof (the "COMMENCEMENT
DATE") and shall continue, unless this Agreement is terminated earlier in
accordance with Section5 hereof, through the fourth anniversary of the
Commencement Date (the "CONSULTANCY PERIOD").
Section5. TERMINATION. Notwithstanding Section4 to the contrary, Gyrus may
terminate this Agreement and the Consultancy, in which case the parties shall
have no further rights or obligations hereunder (including the obligation to pay
the Consultancy Fee described in Section6), in the event that the Merger
Agreement is terminated in accordance with its terms, other than a termination
of the Merger Agreement (a) by Gyrus pursuant to Section 7.01(c)(ii) of the
Merger Agreement or (b) by Gyrus or Everest pursuant to
Section 7.01(b)(iii) of the Merger Agreement, but in the case of this subsection
(b) only in the event that the shareholders of Gyrus fail to approve the Share
Issuance contemplated by the Merger Agreement. In addition, this Agreement and
the Consultancy may be terminated by the mutual agreement of the parties hereto.
Section6. FEES. In consideration of Everest's performance of services during
the Consultancy Period, subject to Section5 hereof, Gyrus shall pay to Everest a
fee (the "CONSULTANCY FEE") in the amount of one million dollars
($1,000,000.00), such Consultancy Fee to be payable in the manner provided for
in the next sentence of this Section6. The Consultancy Fee shall be payable in
four equal installments of $250,000, the first such installment
1
<PAGE>
to be payable on the Commencement Date and each of the remaining installments to
be payable on each of the three subsequent anniversary dates of the Commencement
Date thereafter.
Section7. ACCESS TO INFORMATION; NOTIFICATION. The parties hereto agree to
provide each other, when requested, all information reasonably requested by such
requesting party in connection with the Consultancy pursuant to this Agreement.
All information provided by a party under this Agreement shall be received by
the requesting party in strict confidence, shall be used only for purposes of
the Consultancy and shall not be disclosed by the requesting party without the
prior written consent of the party providing such information.
Section8. SUCCESSORS AND ASSIGNS. This Agreement shall not be assigned by
the parties hereto, except that Gyrus may assign its rights and obligations
hereunder to any of its affiliates; provided, however, that Gyrus shall remain
subject to the rights and obligations of this Agreement. Subject to the
foregoing, this Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Section9. REPRESENTATIONS AND WARRANTIES.
(a) Gyrus represents and warrants that (a) it has the full corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder and to consummate all the transactions contemplated hereby,
(b) this Agreement is a valid and binding obligation of Gyrus and
(c) the performance of the transactions contemplated hereby does not
violate (i) Gyrus' organizational documents, (ii) any material agreement
or instrument to which Gyrus is a party or by which Gyrus is bound, or
(iii) any law or regulation applicable to Gyrus.
(b) Everest represents and warrants that (a) it has the full corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder and to consummate all the transactions contemplated hereby,
(b) this Agreement is a valid and binding obligation of Everest and
(c) the performance of the transactions contemplated hereby does not
violate (i) Everest's Articles of Organization or By-laws, (ii) any
material agreement or instrument to which Everest is a party or by which
Everest is bound, or (iii) any law or regulation applicable to Everest.
(c) The representations and warranties of Gyrus and Everest contained herein
shall survive until, and shall expire with, and be terminated and
extinguished upon, the termination of this Agreement.
Section10. NOTICE. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
shall be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by electronic facsimile transmission, cable, telegram, telex
or other standard form of telecommunications, by overnight courier or by
registered or certified mail, postage prepaid, addressed as follows:
if to Gyrus:
Gyrus Group Plc
Fortran Road, St. Mellons
Cardiff CF3 0LT
England
Attention: Dr. Mark Goble
Managing Director
Telecopy: 011-44-1222-776384
with copies to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Attention: Gerald J. Kehoe, Esq.
Telecopy:: (617) 951-8736
2
<PAGE>
if to Everest:
Everest Medical Corporation
13755 First Avenue North
South 500
Minneapolis, MN 55441-5454
Attention: John L. Shannon
Chairman, President and Chief Executive Officer
Telecopy: (612) 473-6465
with copies to:
Fredrickson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402-3397
Attention: Thomas King, Esq.
and
Daniel A. Yarano, Esq.
Telecopier No.: (612) 347-7077
or at such other address for a party as shall be specified by written
notice.
Section11. AMENDMENT. No waiver or modification to this Agreement will be
valid unless executed in writing by Gyrus and Everest.
Section12. WAIVER. No waiver of any right or obligation under this Agreement
by any party on any occasion will be deemed to operate as a waiver on any other
occasion.
Section13. ENTIRE AGREEMENT. This Agreement constitute the entire agreement
and understanding between the parties relating to the subject matter hereof.
Section14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of the State of Minnesota. The
parties hereby consent to the personal jurisdiction of the state and federal
courts located in the State of Minnesota in connection with any controversy
related to this Agreement, waive any argument that venue in such forums is not
convenient and agree that any litigation instigated by either party may be
brought in either the District Court of Hennipen County, Minnesota or the United
States Federal Court for the District of Minnesota, Fourth District.
Section15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement is invalid or unenforceable, the remainder of this
Agreement shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
Section16. LIQUIDATED DAMAGES. A breach of this Agreement on the part of
Gyrus shall allow Everest liquidated damages in the amount equal to one million
dollars ($1,000,000) minus the total amount of the Consultancy Fee paid. The
parties agree that the preceding formula for determining Everest's damages is
reasonable and is not a penalty.
Section17. INDEPENDENCE OF PARTIES. Everest shall have the status of and act
as an independent contractor with respect to Gyrus. Nothing herein shall be
construed to create a partnership, joint venture, or agent-principal
relationship between Everest and Gyrus.
Section18. 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 be deemed to be one and the same document.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized officers or directors.
<TABLE>
<S> <C>
EVEREST MEDICAL CORPORATION
By: /s/John L. Shannon, Jr.
Title: Chairman, President and Chief Executive
Officer
GYRUS GROUP PLC
By: /s/Mark Goble
Title: Group Managing Director
</TABLE>
4
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Exhibit 11
FORM OF EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated as of [the Closing
Date], is by and between GOLDEN ACQUISITION CORP., a Delaware corporation (the
"EMPLOYER") and [ ]("EXECUTIVE"). Capitalized terms used herein but
not otherwise defined herein shall have the meanings ascribed to them in that
certain Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated as of
February 23, 2000, by and among Gyrus Group Plc, a public limited company
existing under the laws of England and Wales ("PARENT"), the Employer and
Everest Medical Corporation, a Minnesota corporation (the "COMPANY").
WHEREAS, pursuant to the terms of the Merger Agreement, at the Effective
Time, the Company was merged (the "Merger") with and into the Employer, with the
Employer as the surviving corporation of the Merger;
WHEREAS, prior to the Effective Time, the Executive was the [ ]
of the Company;
WHEREAS, the Executive, in his role with the Company, had integral knowledge
of the Company's operations, policies, customers, personnel and community;
WHEREAS, the Employer believes that the Executive's services are necessary
to facilitate a smooth, sound and nondisruptive transition following the Merger
and to facilitate the effective operation of the Employer thereafter;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
Section1. FREEDOM TO CONTRACT. The Executive represents that he is free to
enter into this Agreement and that he has not made and will not make any
agreement in conflict with this Agreement.
Section2. EMPLOYMENT.
(a) The Employer hereby agrees to employ Executive as its
[ ], upon the terms and conditions set forth in this Agreement.
Executive agrees that he will, at all times, faithfully, industriously and,
to the best of his ability, experience and talents, perform all the duties
and responsibilities that may be required of him as [ ].
(b) Duties. Subject to the general direction of the Board of Directors
of the Employer (the "Board"), the Executive shall perform such duties
consistent with the Executive's position as [ ], as may be
requested from time to time by the President and Chief Executive Officer of
the Employer. While employed by the Employer hereunder, the Executive shall
devote his full business time and best efforts, judgment, skill and
knowledge exclusively to the advancement of the Employer's interests and to
the discharge of his duties and responsibilities for the Employer. While
employed by the Employer hereunder, the Executive shall not engage in any
other business activity, except as approved by the President and Chief
Executive Officer in writing. It is agreed, however, that the provisions of
this Section 2(b) shall not be violated by the Executive's holding of
directorships or related positions in charitable, educational or
not-for-profit organizations which do not involve substantial time
commitments or by passive personal investment activities, provided that such
positions and activities are not in conflict, and do not otherwise
interfere, with the Executive's duties and responsibilities to the Employer.
Section3. TERM OF EMPLOYMENT. Subject to early termination pursuant to
Section7 hereof, the term of employment of the Executive hereunder shall
commence on the Closing Date and shall continue until the third anniversary
thereafter (the "Term"), continuing thereafter on a month to month basis until
terminated by either party by written notice to the other given at least thirty
(30) days prior to such termination.
Section4. BASE COMPENSATION. The Employer shall pay the Executive, in
accordance with the Employer's payroll practices, a base salary (the "BASE
SALARY"). The Base Salary will be paid at an annual rate of
1
<PAGE>
$[ ] [TO BE 10% INCREASE OVER CURRENT SALARIES OF EACH EXECUTIVE WITH
COMPANY]. The Base Salary may be increased from time to time in the discretion
of the Board of Directors of the Employer and is in addition to the other
benefits set forth herein.
Section5. STOCK OPTION PLAN. During the Term, the Executive shall be
entitled to participate in a stock option plan adopted by Parent or the Employer
after the date hereof for employees of the Employer.
Section6. OTHER BENEFITS. During the term of his Agreement, Executive shall
be eligible to receive or participate in all of the insurance, vacation, benefit
plans and miscellaneous benefits received by other similarly-situated employees,
subject to the right of the Employer to make such changes in the benefits as it
may make for similarly-situated employees generally from time to time.
Section7. TERMINATION. Notwithstanding Section3 hereof, the Executive's
employment hereunder shall earlier terminate:
(a) Death or Disability. Upon the death of the Executive during the term
of his employment hereunder or, at the option of the Employer, in the event
of the Executive's disability, upon thirty (30) days' written notice from
the Employer. The Executive shall be deemed disabled if the Executive is
unable to perform his duties under this Agreement for ninety
(90) successive days.
(b) For Cause. For "Cause" immediately upon written notice by the
Employer to the Executive. For purposes of this Agreement, a termination
shall be for Cause if any one or more of the following has occurred:
(i) the Executive shall have been convicted by a court of competent
jurisdiction of, or pleaded guilty or nolo contendere to, any felony or
any crime involving moral turpitude;
(ii) commission of any act of fraud or dishonesty in connection with
the affairs of the Employer;
(iii) commission of any gross misdemeanor in connection with the
affairs of the Employer;
(iv) intentional disobedience with regard to, or failure to comply
with, courses of action or policies approved by the Employer which have
been communicated to Executive; or
(v) Executive's willful breach of the terms of this Agreement or
habitual neglect of his duties hereunder.
(c) WITHOUT CAUSE. Upon written notice by the Employer to the Executive
for any reason without Cause.
(d) RESIGNATION. Upon thirty (30) days' written notice by the Executive
to the Employer.
(e) RIGHTS AND REMEDIES ON TERMINATION.
(i) If the Executive's employment hereunder is terminated by the
Employer (A) pursuant to Section7(a), or (B) without Cause pursuant to
Section7(c), then in each case, the Executive shall be entitled to
receive payment, in accordance with the Employer's then current payroll
practices, of the Executive's Base Salary in effect at the time of such
termination until the date which is twelve (12) months after such
termination.
(ii) If the Executive's employment is terminated other than pursuant
to termination by the Employer (A) pursuant to Section7(a), or
(B) without Cause pursuant to Section7(c) hereof, the Executive shall
only be entitled to receive payment of his Base Salary through the date
of termination.
(iii) Except as otherwise set forth in this Section7(e), the Executive
shall not be entitled to any severance or other compensation after
termination.
8. CONFIDENTIAL INFORMATION.
(a) The Executive shall not, during or after his term of employment, use
or divulge or communicate to any person, other than with proper authority,
any of the trade secrets or other
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confidential information of, or relating to, the Employer or any of the
Employer's affiliates, including Parent, including but not limited to
details of customers, potential customers, consultants, suppliers, potential
suppliers, designs, product details, future product details, prices,
discounting arrangements, specific product applications, existing trade
arrangements, terms of business and those in the course of negotiation,
operating systems, pricing and fee structures, financial information,
inventions, research and development activities and surgical techniques
which the Executive may have created, developed, received, obtained or had
access to while employed by the Employer or Company.
(b) The Executive shall not during the term of his employment with the
Employer, make, other than for the benefit of the Employer, any records
(whether recorded on paper, computer memory or discs or otherwise) relating
to any matter within the scope of the business of the Employer or Parent or
concerning any of its or their operations nor, either during the term of his
employment with the Employer or thereafter, use or permit to be used any
such records otherwise than for the benefit of the Employer, it being
understood by the Executive that all such records (and copies thereof) in
the possession or control of the Executive shall be the property of the
Employer. In the event of the termination of his employment, whether
voluntary or involuntary and whether by the Employer or the Executive, the
Executive shall deliver to the Employer all such records (and copies
thereof).
9. NON-COMPETITION.
(a) In further consideration of the Employer's obligations hereunder,
during the term of the Executive's employment hereunder until the date which
is one (1) year after termination of the Executive's employment hereunder,
the Executive will not, directly or indirectly, alone or in any capacity
with another legal entity, (i) engage, contribute, assist or in any way
participate in any activity involving or connected with the manufacture or
distribution of electrosurgical medical devices that is directly competitive
with the Employer or Parent, wherever located, including products that are
in development for commercialization or identified in Employer's or Parent's
present or future business plan, (ii) contact or in any way interfere or
attempt to interfere with the relationship of the Employer with any current
or potential customer of the Employer, or (iii) solicit or encourage any
officer, employee or consultant of the Employer to leave its employ for
employment by or with any other employer.
(b) If at any time the provisions of this Section9 shall be determined
to be invalid or unenforceable, by reason of being vague or unreasonable as
to area, duration or scope of activity, this Section9 shall be considered
divisible and shall become and be immediately amended to only such area,
duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter;
and the Executive agrees that this Section9 as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been
included herein.
10. SPECIFIC PERFORMANCE. Executive acknowledges that a breach of this
Agreement would cause the Employer irreparable injury and damage which could not
be remedied or adequately compensated by damages at law; therefore, Executive
expressly agrees that the Employer shall be entitled, in addition to any other
remedies legally available, to injunctive and/or other equitable relief to
prevent a breach of this Agreement.
11. MISCELLANEOUS.
(a) Waiver by the Employer of a breach of any provision of this
Agreement by Executive shall not operate or be construed as a waiver of any
subsequent breach by Executive.
(b) This Agreement shall be binding upon and inure to the benefit of the
Employer, its successors and assigns, and, as to Executive, his heirs,
personal representatives, estate, legatees and assigns.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements whether written or oral relating hereto.
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<PAGE>
(d) This Agreement shall be governed by and construed under the laws of
the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
<TABLE>
<S> <C> <C>
GOLDEN ACQUISITION CORP.
By:
-----------------------------------------
Name:
Title:
-----------------------------------------
EXECUTIVE
</TABLE>
4
<PAGE>
Exhibit 12
14 MARCH 2000
GYRUS GROUP PLC
NOMURA INTERNATIONAL PLC
===================================================
PLACING AND OPEN OFFER AGREEMENT
===================================================
<PAGE>
CONTENTS
CLAUSE PAGE
1. DEFINITIONS................................................................2
2. CONDITIONS.................................................................8
3. THE LONDON STOCK EXCHANGE.................................................10
4. APPROVAL, RELEASE AND DELIVERY OF DOCUMENTS...............................11
5. APPOINTMENT OF NOMURA.....................................................12
6. THE PLACING AND THE OPEN OFFER............................................13
7. COMPLETION................................................................15
8. COMMISSIONS AND EXPENSES..................................................16
9. RESTRICTIONS ON ACTIONS AND ANNOUNCEMENTS.................................18
10. REPRESENTATIONS AND WARRANTIES............................................20
11. INDEMNITY.................................................................21
12. MISCELLANEOUS.............................................................24
13. RECEIVING AGENT...........................................................24
14. TIME OF THE ESSENCE.......................................................25
15. WAIVER....................................................................25
16. NOTICES...................................................................25
17. COUNTERPARTS..............................................................27
18. ENTIRE AGREEMENT..........................................................27
19. GOVERNING LAW.............................................................27
SCHEDULE 1....................................................................28
DELIVERY OF DOCUMENTS....................................................28
SCHEDULE 2....................................................................30
REPRESENTATIONS AND WARRANTIES...........................................30
Page 1
<PAGE>
THIS AGREEMENT is made on 14 March 2000
BETWEEN:
GYRUS GROUP PLC whose registered office is at Fortran Road, St. Mellons,
Cardiff, CF3 0LT (the COMPANY); and
NOMURA INTERNATIONAL PLC whose registered office is at Nomura House, 1 St.
Martin's-le-Grand, London EC1A 4NP (NOMURA).
WHEREAS:
(A) By a merger agreement dated 23 February 2000 between Gyrus Group PLC,
Everest Medical Corporation and Golden Acquisition Corporation (the MERGER
AGREEMENT), the parties thereto have agreed to merge Everest Medical Corporation
with and into Golden Acquisition Corporation pursuant to which each share of
common stock and Series A, Series B, Series C and Series D preferred stock of
Everest Medical Corporation will be exchanged for US$4.85 per share of common
stock (the ACQUISITION).
(B) Notwithstanding (A) above, under the Merger Agreement, the Company may elect
to complete the Acquisition by causing Golden Acquisition Corporation to make an
offer (the TENDER OFFER) to purchase all of the outstanding shares of Everest
common and preferred stock, at a purchase price of at least $4.85 per share,
without interest, in accordance with an Offer to Purchase For Cash to be
submitted by the Company to the Securities and Exchange Commission.
(C) The Company proposes to finance the Acquisition by means of the Placing and
Open Offer.
(D) The Company proposes, subject, inter alia, to the passing of the Resolution,
to invite Qualifying Shareholders to apply to subscribe for New Shares at the
Subscription Price by way of an Open Offer on the basis of:
19 New Shares for every 46 Ordinary Shares
held as at the close of business on the Record Date and otherwise on the terms
and subject to the conditions set out in the Circular and the Application Form.
(E) Subject to the passing of the Resolutions, there will be sufficient
authorised but unissued Ordinary Shares and the Directors will have authority
under Section 80 of the Companies Act to allot the New Shares, which allotment
will not be
<PAGE>
made on a pre-emptive basis by reason of the disapplication of Section 89 in
accordance with Section 95 of that Act.
(F) Nomura has agreed, on the terms and subject to the conditions referred to in
this Agreement, to:
(a) make the Open Offer on behalf of the Company;
(b) seek to procure subscribers for all of the New Shares at the Subscription
Price on the basis that some of such shares shall be placed firm (as
described in Recital (F) below), and some shall be subject to clawback to
the extent they are taken up under the Open Offer; and
(c) subscribe at the Subscription Price for any New Shares which are not taken
up under the Open Offer and for which subscribers are not procured as
referred to in paragraph (b) above.
(G) As described in the Circular, certain holders of Ordinary Shares have
irrevocably undertaken not to apply under the Open Offer for the New Shares to
which they will be entitled under the Open Offer, which will be conditionally
placed firm pursuant to the Placing.
NOW IT IS AGREED as follows:
DEFINITIONS
1.1 In this Agreement:
ACCEPTANCE DATE means 14 April 2000 or such later date as Nomura and the Company
may agree in writing;
ACCOUNTS DATE means 30 June 1999;
ACQUISITION PRESS ANNOUNCEMENT means the press announcement dated 23 February
2000 giving details of the Acquisition;
ADMISSION means the admission of the New Shares to the Official List becoming
effective in accordance with the Listing Rules;
APPLICATION FORM means the application form to be despatched to Qualifying
Shareholders for use in connection with the Open Offer;
AUDITORS means KPMG Audit Plc;
Page 2
<PAGE>
AUSTRALIAN HOLDERS means Qualifying Shareholders with registered addresses in
the Commonwealth of Australia, its territories or possessions who have not given
to the Company an address in the United Kingdom for the service of notices on
them;
BROKERS means WestLB Panmure;
BUSINESS IP means the registered (including applications for registration) and
material unregistered Intellectual Property Rights owned by a member of the
Group;
CERTIFICATED SHARES means those New Shares which will not be issued as
Uncertificated Shares;
CIRCULAR means the circular (comprising a prospectus for the purpose of the FSA
and the Listing Rules) to be published in connection with the Acquisition and
the Placing and Open Offer, giving details of the Acquisition and including a
notice convening the EGM;
COMMENCEMENT OF DEALINGS means the commencement of dealings in the New Shares on
the London Stock Exchange following Admission;
COMPANIES ACT means the Companies Act 1985;
CREST means the system for paperless settlement of trades and the holding of
uncertificated securities administered by CRESTCo Limited;
DEALING DAY means a day on which dealings in domestic equity market securities
may take place on the London Stock Exchange;
DIRECTORS means the directors of the Company;
EGM means the extraordinary general meeting of the Company convened for the EGM
Date at which resolutions will be put to approve certain matters in relation to
the Acquisition and the Placing and Open Offer;
EGM DATE means 6 April 2000;
ENFORCEMENT ACTION means, in respect of any Relevant Licence, any suspension or
revocation of that licence or any direction, injunction, order, notice, fine or
similar enforcement measure taken or made in respect of that licence;
Page 3
<PAGE>
FILINGS means all reports, notifications and documents, together with any
amendments or supplements required to be made with respect thereto, required to
be filed with any Relevant Regulatory Authority;
FIRM PLACED SHARES means the 4,289,460 New Shares which certain Qualifying
Shareholders of the Company have irrevocably undertaken to Nomura and the
Company not to subscribe for pursuant to the Open Offer;
FORM OF PROXY means the form of proxy to be sent to Ordinary Shareholders for
use in connection with the EGM;
FSA means the Financial Services Act 1986;
GROUP means the Company and its subsidiary undertakings as at the date hereof;
INTELLECTUAL PROPERTY RIGHTS means patents, trade marks, service marks, logos,
get-up, trade names, rights in designs, copyright (including rights in computer
software), internet domain names, moral rights, utility models, semi-conductor
topography rights, rights in know-how, rights in databases and other
intellectual property rights, in each case whether registered or unregistered
and including applications for the grant of any such rights and all rights or
forms of protection having equivalent or similar effect anywhere in the world;
INTERIM RESULTS means the unaudited interim results of the Group for the six
months ended 31 December 1999 and announced on 23 February 2000;
IRISH HOLDERS means Qualifying Shareholders with registered addresses in the
Republic of Ireland who have not given to the Company an address in the United
Kingdom for the service of notices on them;
JAPANESE HOLDERS means Qualifying Shareholders with registered addresses in
Japan who have not given to the Company an address in the United Kingdom for the
service of notices on them;
LICENCES IN means the licences of Intellectual Property Rights which have been
granted to a member of the Group;
LICENCES OUT means the licences of Intellectual Property Rights which have been
granted by a member of the Group to one or more third parties;
LISTING RULES means the Listing Rules of the London Stock Exchange;
LONDON STOCK EXCHANGE means London Stock Exchange Limited;
Page 4
<PAGE>
MERGER AGREEMENT has the meaning ascribed to it in Recital (A);
MEMORANDUM means the cash flow and working capital memorandum prepared by the
Company relating to the Group for the period to 31 December 2001 and dated 10
March 2000;
NEW SHARES means the 12,907,447 new Ordinary Shares which are to be allotted and
issued pursuant to the Placing and Open Offer;
NOMURA ENGAGEMENT LETTER means the letter dated 22 December 1999 between the
Company and Nomura relating to the appointment of Nomura as sponsor and in
respect of the underwriting of the Placing and Open Offer;
NORTH AMERICAN HOLDERS means Qualifying Shareholders with registered addresses
in the United States or Canada or any province of Canada who have not given the
Company an address in the United Kingdom for the service of notices on them;
OFFICIAL LIST means the Official List of the London Stock Exchange;
OPEN OFFER means the invitation by Nomura, as agent for the Company, to
Qualifying Shareholders to apply to subscribe for New Shares on the basis
referred to in Recital (B);
ORDINARY SHAREHOLDERS means holders of Ordinary Shares;
ORDINARY SHARES means ordinary shares of 1p each in the capital of the Company;
PLACEES means the persons (including, if applicable, Nomura or its nominees)
procured by Nomura to subscribe for New Shares pursuant to the Placing;
PLACING means the procurement of subscribers for the New Shares by Nomura
pursuant to Clause 6.1(a);
PLACING AND OPEN OFFER PRESS ANNOUNCEMENT means the announcement dated 14 March
2000 giving details of the Placing and Open Offer (together with the Acquisition
Press Announcement, the PRESS ANNOUNCEMENTS);
PLACING LETTER means the letter to be sent by Nomura to Placees by which the New
Shares are to be placed with Placees, subject (save in respect of Firm Placed
Shares) to a right of clawback in respect of any New Shares which are taken up
under the Open Offer;
Page 5
<PAGE>
POSTING DATE means the date of this Agreement or such later date as may be
agreed by Nomura in writing;
PREVIOUS ANNOUNCEMENTS means all documents issued and announcements (other than
the Press Announcement) made by or on behalf of the Company or any member of the
Group to the public or the press since the Accounts Date;
PROCEEDINGS means any proceedings, investigation, reviews or analogous action by
any Relevant Regulatory Authority, court or similar body in any jurisdiction;
QUALIFYING SHAREHOLDERS means Ordinary Shareholders on the register of members
of the Company as at the close of business on the Record Date;
RECEIVING AGENT means IRG PLC, Bourne House, 34 Beckenham Road, Beckenham, Kent
BR3 4TY;
RECEIVING AGENT AGREEMENT means the letter agreement between the Company and the
Receiving Agent;
RECORD DATE means 3 March 2000;
RELEVANT LICENCE has the meaning given in warranty 12.1 in Schedule 2;
RELEVANT REGULATORY AUTHORITY means any governmental, quasi-governmental or
other competent authority (whether at national, state, federal or other regional
level) in any jurisdiction responsible for the grant, enforcement, modification
or revocation (or any of them) of any Relevant Licence;
RELEVANT SUBSTANCE means any substance whatsoever in a solid or liquid form or
in the form of a gas or vapour and whether alone or in combination with any
other substance which is likely to cause harm to man or any other living
organism supported by the environment (which includes natural resources whether
pertaining to life or not, such as air, water, soil, fauna and flora and the
interaction between the same factors and also the built environment), or
damaging the environment or public health or welfare;
REPORT AND ACCOUNTS means the published consolidated balance sheet of the Group
as at, and the consolidated profit and loss account of the Group for the
financial period ended on, the Accounts Date (including the related directors'
and auditors' reports, the cash flow statement, all related notes and the
remainder of the annual report and accounts for that year);
Page 6
<PAGE>
RESOLUTIONS means the resolutions to be set out in the notice of the EGM to be
contained in the Circular to, inter alia, approve the Acquisition, increase the
authorised share capital of the Company and to authorise the Directors to allot
relevant shares, in each case so as to enable the Placing and Open Offer to be
implemented;
SUBSCRIPTION PRICE means 350 pence per New Share;
SUPPLEMENTARY PROSPECTUS means any supplementary prospectus published by the
Company pursuant to section 147 of the FSA;
TAKEN UP has the meaning ascribed to it in Clause 6.3;
TENDER OFFER has the meaning ascribed to it in Recital (B);
UNCERTIFICATED SHARES means those New Shares which will be issued in
Uncertificated form pursuant to the Uncertificated Securities Regulations 1995;
and
UNITED STATES means the United States of America, its territories and
possessions, any State of the United States of America and the District of
Columbia.
1.2 In this Agreement unless the context otherwise requires:
(a) words and expressions defined in the Companies Act shall bear the same
meaning;
(b) headings are for convenience only and shall not affect the construction of
this Agreement;
(c) any reference to an enactment is a reference to it as from time to time
amended, consolidated or re-enacted (with or without modification) and
includes all instruments or orders made under the enactment;
(d) any reference to Nomura approving or agreeing the form of the Circular or
any Supplementary Prospectus, shall be a reference to such approval or
agreement being given solely for the purposes of this Agreement; and
(e) the operation of the Contracts (Rights of Third Parties) Act 1999 is hereby
excluded in relation to this Agreement and no other person other than the
parties to this Agreement have the right to enforce any rights or benefits
that may expressly or impliedly be granted to such party under the terms of
this Agreement.
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<PAGE>
1.3 The following draft documents are in the agreed form and, for the purposes
of identification only, are initialled by or on behalf of the Company and Nomura
and are marked as shown below:
<TABLE>
<CAPTION>
DOCUMENT MARKED
<S> <C> <C>
(a) The Press Announcements A
(b) The Circular B
(c) The Application Form C
(d) The Form of Proxy D
(e) The Placing Letter E
(f) A document consisting of a record of questions prepared to assist F
with the verification of the Press Announcements, the Circular and
any Supplementary Prospectus together with the answers to those
questions and copies of all evidence supporting those answers (the
VERIFICATION NOTES); and
(g) The undertakings from certain shareholders to the Company and G
Nomura not to take up their entitlement on the Open Offer (the
UNDERTAKINGS).
</TABLE>
CONDITIONS
2.1 Nomura's obligations under this Agreement are conditional on:
(a) the passing of the Resolution (without amendment) at the EGM on the EGM
Date (and not, except with the written agreement of Nomura, at any
adjournment of such meeting);
(b) none of the statements in Schedule 2 being, to an extent material in the
context of the Placing and Open Offer, untrue or inaccurate or misleading:
(i) at the date of this Agreement; or
(ii) at any time before Commencement of Dealings if they had been
repeated by reference to the facts and circumstances then
existing;
Page 8
<PAGE>
(c) no circumstance having arisen which would require a Supplementary
Prospectus to be published by or on behalf of the Company prior to
Commencement of Dealings;
(d) the fulfilment by the Company of its obligations under Clauses 3.1, 3.2,
4.3, and 4.5 by the times specified therein and the Company not being in
breach of any other of its obligations under this Agreement prior to
Commencement of Dealings;
(e) the Company confirming in writing to Nomura in a form reasonably
satisfactory to it immediately prior to Admission that, apart from payment
of consideration, there are no circumstances of which it is aware which
entitle, or would, with the giving of notice, entitle the Company (or any
of its subsidiaries) under the Merger Agreement not to proceed with the
Acquisition or to terminate the Merger Agreement;
(f) either (i) all of the conditions to the Acquisition set forth in the Merger
Agreement have been satisfied (other than the Admission becoming effective)
or (ii) in the event that the Company elects to cause Golden Acquisition
Corporation to make the Tender Offer, all of the conditions to the Tender
Offer have been satisfied or waived (other than the Admission becoming
effective), in each case, and the Merger Agreement not having been
terminated in accordance with its terms;
(g) the Company having allotted the Placing Shares in accordance with Clause 7
(conditional only upon satisfaction of the Admission becoming effective and
this Agreement not being terminated in accordance with its terms before
such satisfaction); and
(h) Admission becoming effective in accordance with the Listing Rules by not
later than 8.30 a.m. on 17 April 2000.
2.2 Nomura may, in its absolute discretion:
(a) extend the time or date for satisfaction of any condition set out in Clause
2.1 but not beyond 8.30 a.m. on 25 April 2000, in which case, a reference
in this Agreement to the satisfaction of such condition shall be to its
satisfaction by the time or date as so extended; or
(b) waive the satisfaction of any such condition.
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<PAGE>
2.3 If any condition set out in Clause 2.1 is not satisfied (or waived by Nomura
in its absolute discretion), or becomes incapable of being satisfied, by the
required time and date then, without prejudice to any liability for any prior
breach of this Agreement or any of the representations and warranties contained
herein:
(a) Nomura's obligations under this Agreement shall cease and determine; and
(b) the Company's obligations and agreements under Clauses 8, 9, 11, 12, 14,
15, 16, 18 and 19 shall remain in full force and effect and the Company's
other obligations under this Agreement shall cease and determine.
THE LONDON STOCK EXCHANGE
3.1 The Company confirms that it has applied to the London Stock Exchange for
admission of the New Shares to the Official List. The Company shall use all
reasonable endeavours to obtain permission for the admission of the New Shares
to the Official List (subject only to the allotment of the New Shares) as soon
as practicable and, in any event, prior to the EGM Date.
3.2 The Company confirms that it has applied for formal approval of the Circular
for the purposes of, and in accordance with, the Listing Rules and shall use all
reasonable endeavours to obtain such approval as soon as practicable and in any
event before despatching the Circular.
3.3 The Company shall supply all information, give all undertakings, execute all
documents, pay all fees and do or procure to be done all things in each case as
may be necessary or required (a) by the London Stock Exchange for the purposes
of obtaining formal approval of the Circular and obtaining Admission, and (b) to
comply with the Listing Rules, the FSA and the Companies Act.
3.4 The Company shall notify Nomura immediately upon its becoming aware of any
matter referred to in paragraph (a) or (b) of section 147(1) of the FSA which
arises between publication of the Circular and Commencement of Dealings. The
Company shall deal with every such matter in accordance with section 147 of the
FSA and the Listing Rules (including paragraphs 5.14 to 5.16, 8.1, 8.14 and
8.20).
3.5 The Company shall, from time to time until Admission, procure (to the extent
that it lies in its power to do so) to be communicated or delivered to Nomura
all such information and documents (signed by the appropriate person where so
required) as Nomura may reasonably require to enable it to discharge its
obligations hereunder and pursuant to or in connection with the Placing or the
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Open Offer or as may be required to comply with the requirements of the FSA or
the London Stock Exchange.
3.6 Nomura shall provide reasonable assistance to the Company to enable it to
comply with its obligations under Clauses 3.1 and 3.2.
APPROVAL, RELEASE AND DELIVERY OF DOCUMENTS
4.1 The Company confirms to Nomura that a meeting or meetings of the board of
Directors (or a duly constituted and authorised committee of the board) has been
held which has:
(a) authorised the Company to enter into and perform its obligations under this
Agreement and the Merger Agreement;
(b) approved the form and release of the Press Announcements;
(c) approved the form of the Circular, the Application Form and the Form of
Proxy and authorised their publication and approved and authorised the
publication of other documents connected with the Acquisition, the Placing
and the Open Offer, as appropriate;
(d) approved the making of the Placing and Open Offer;
(e) approved the making of an application for admission of the New Shares to
the Official List; and
(f) authorised all necessary steps to be taken by the Company in connection
with each of the above matters.
4.2 The Company authorises Nomura to deliver an underwriting proof of the
Circular to any potential Placees.
4.3 Subject to the London Stock Exchange having formally approved the Circular
for the purpose of the Listing Rules, the Company shall:
(a) deliver one copy of the Circular to the Registrar of Companies in England
and Wales for registration in accordance with section 149 of the FSA prior
to despatch of the Circular;
(b) make further copies of the Circular available in accordance with paragraphs
8.4 to 8.6 of the Listing Rules and make available to Nomura such number
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of copies of the Circular and Application Form as it may reasonably
require; and
(c) subject to Clause 4.4, despatch the Circular, the Application Form and Form
of Proxy to Ordinary Shareholders, as soon as practicable and in any event
on the date of this Agreement.
4.4 The Company shall procure that North American Holders, Australian Holders,
Irish Holders and Japanese Holders are not sent Application Forms unless on or
prior to the Acceptance Date they have satisfied the Company that they are
permitted to take up their entitlements under the Open Offer without breach of
any applicable law.
4.5 Before despatching the Circular, the Company shall deliver the documents
referred to in Part 1 of Schedule 1 to Nomura.
4.6 Following the passing of the Resolutions, and in any event not later than
5.00 p.m. on the Dealing Day immediately preceding the date of Admission, the
Company shall deliver the documents referred to in Part 2 of Schedule 1 to
Nomura.
4.7 Each document referred to in this Clause 4 and in Schedule 1 and any
Supplementary Prospectus shall be in the form approved by Nomura for the
purposes only of underwriting the Placing and Open Offer.
4.8 If any meeting of the board of Directors referred to in this Clause 4 or in
Schedule 1 is a meeting of a committee of the board of Directors, the Company
shall deliver a certified copy of the minutes of the meeting of the board of
Directors appointing such committee with the minutes of the relevant meeting.
APPOINTMENT OF NOMURA
5.1 The Company hereby irrevocably appoints Nomura as its agent for the purposes
of making the Open Offer on the terms and subject to the conditions set out or
referred to in the Circular and the Application Form and Nomura accepts such
appointment.
5.2 The appointment referred to in Clause 5.1 confers on Nomura and its agents
all powers, authorities and discretions on behalf of the Company which Nomura or
such agents reasonably consider necessary or desirable in connection with the
Open Offer and the Company agrees to ratify and confirm everything
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which Nomura or such agents shall lawfully do on behalf of the Company in the
exercise of such appointment, powers, authorities and discretions.
5.3 The Company hereby irrevocably and unconditionally confirms the appointment
of Nomura as sponsor in connection with the admission of the New Shares to the
Official List of the London Stock Exchange and Nomura hereby accepts such
appointment. The Company hereby confirms that the foregoing appointment confers
on Nomura all powers, authorities and discretions on its behalf which are
necessary for, or reasonably incidental to, the performance of its functions as
sponsor and obtaining Admission and the Company hereby agrees to ratify and
confirm everything which Nomura shall lawfully and properly do in accordance
with the terms of this Agreement in the exercise of such appointment, powers,
authorities and discretions.
5.4 Notwithstanding that Nomura acts as agent of the Company in connection with
the Placing and Open Offer:
(a) it may receive and retain for its own benefit any commissions or brokerage
or other benefit paid to or lawfully and properly received by it or its
agent in connection with the Placing and Open Offer and shall not be liable
to account to the Company for any such commission, brokerage or other
benefit; and
(b) any New Shares which it or any such agent subscribes may be retained or
dealt in by it or such agent for its or such agent's own use and benefit.
THE PLACING AND THE OPEN OFFER
6.1 Subject to the conditions set out in Clause 2.1 and in reliance on the
covenants, indemnities, representations and warranties contained in this
Agreement, Nomura shall:
(a) use its reasonable endeavours to arrange Placees for the New Shares at the
Subscription Price on the basis of the information contained in the
Circular, subject (save in respect of Firm Placed Shares) to a right of
clawback in respect of any New Shares which are taken up under the Open
Offer; and
(b) as agent for the Company, by means of the Circular and the Application
Form, invite Qualifying Shareholders to apply to subscribe for the New
Shares at the Subscription Price and otherwise on the terms and conditions
set out therein.
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6.2 Neither the Open Offer nor any of its terms and conditions shall be varied,
extended, amended or withdrawn without the prior written consent of Nomura, such
consent not to be unreasonably withheld or delayed.
6.3 New Shares in respect of which Application Forms are (or are treated by the
Company pursuant to the provisions set out below as having been) lodged for
acceptance by 3.00 p.m. on the Acceptance Date (and which have not by that time
been rejected, whether as a result of the Money Laundering Regulations 1993 or
otherwise), in each case in accordance with the terms of the Circular and the
Application Form, and which are accompanied by:
(a) cheques which have not, before 3.00 p.m. on the Acceptance Date, been
notified to the Receiving Agent as not having been accepted by the drawee
on first presentation; or
(b) other remittances,
for the full amount payable in respect of such New Shares, are referred to in
this Agreement as having been TAKEN UP, PROVIDED THAT, at the absolute
discretion of the Company, New Shares shall for the purpose of this Agreement be
deemed to have been taken up by 3.00 p.m. on the Acceptance Date if a cheque or
other remittance for the full amount payable in respect of such New Shares (and
whether or not such cheque or other remittance shall be honoured) is received
prior to 3.00 p.m. on the Acceptance Date from an authorised person (as defined
in the FSA) who shall have specified the New Shares concerned and undertaken to
lodge the relevant Application Form duly completed in due course. The risk
attaching to any cheque or other remittance accompanying any Application Form
which has not been dishonoured prior to the Acceptance Date shall be borne by
the Company.
6.4 As soon as practicable after 3.00 p.m. on the Acceptance Date and by not
later than 8.00 a.m. on the first Dealing Day after the Acceptance Date, the
Company will (or will procure that the Receiving Agent will) notify Nomura in
writing of the number of New Shares which have not been taken up. Where cheques
or bankers' drafts in relation to an Application Form have been dishonoured
prior to 3.00 p.m. on the Acceptance Date the New Shares to which such
Application Form relates will be treated as not having been taken up and where
the relevant application has been rejected prior to 3.00 p.m. on the Acceptance
Date due to a failure to provide satisfactory evidence of identity in order to
comply with the Money Laundering Regulations 1993 in the manner contemplated in
the Circular and the Application Form, the New Shares to which
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such application relates will be treated as not having been taken up. The
obligations of Nomura shall cease in respect of any New Shares which are taken
up.
6.5 Nomura shall, in its absolute discretion, determine the identity of the
proposed Placees (if any) for the New Shares not taken up, the extent to which
each Placee is to subscribe for such shares and all other matters in respect of
the Placing including the last time at which Placing Letters may be despatched
and allocations pursuant thereto may be made.
6.6 Subject to the Company complying with Clause 6.4, if by 3.00 p.m. on the
Dealing Day immediately preceding the date of Admission, there are New Shares
which are not taken up and for which no Placees have been arranged, Nomura shall
itself subscribe (as principal) for such New Shares on the basis of the
information contained in the Circular and the Application Form (other than as to
the time and method of acceptance and payment).
6.7 Nomura will procure that the Company (or the Receiving Agent on behalf of
the Company) is notified of the names and registration details of the Placees
allocated New Shares which are not taken up together with details of any
subscription for such shares to be made by Nomura pursuant to Clause 6.6, and
shall specify whether such shares are to be issued in certificated or
uncertificated form as soon as reasonably practicable after the Company has
complied with its obligations under Clause 6.4.
COMPLETION
7.1 As soon as practicable after notification of the details referred to in
Clause 6.7, and in any event by 5.00 p.m. on the Dealing Day immediately
preceding the date of Admission, the Company shall allot the New Shares pursuant
to, a resolution of the Board of Directors (or a duly authorised committee
thereof) to:
(a) Qualifying Shareholders (or their nominee) who took up such shares under
the Open Offer; and
(b) in accordance with the details notified to the Company pursuant to Clause
6.7, to the Placees (or their nominee) and (to the extent so notified) to
Nomura.
7.2 The allotment of the New Shares will be made:
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(a) subject only to Admission;
(b) on the basis of the information set out in the Circular and the Application
Form; and
(c) on terms that, upon Admission they shall be issued as fully paid up and
will rank pari passu in all respects with the existing issued Ordinary
Shares and will be issued free from all liens, charges, encumbrances and
equities.
7.3 Following Admission, the Company shall forthwith procure the registration of
the details of the persons referred to in Clause 7.1 in the Company's register
of members in respect of the New Shares. In addition, the Company shall:
(a) in the case of the Certificated Shares to be issued pursuant to the Open
Offer and to the persons referred to in Clause 6.7, procure that the
Receiving Agent shall despatch definitive share certificates in the names
of the respective allottees by first class post to the persons entitled
thereto as soon as possible and in any event by no later than 3.00 p.m. on
the fourth Dealing Day after Admission; and
(b) in the case of the Uncertificated Shares, procure that the Receiving Agent
shall transfer such shares to the respective allottees through CREST by not
later than 3.00 p.m. on the date of Admission.
7.4 As soon as reasonably practicable following Admission (and in any event by
not later than 3.00 pm on the second Dealing Day thereafter), and subject to the
Company having complied with its obligations under Clauses 7.2 and 7.3, Nomura
shall procure payment of the Subscription Price for the New Shares which are not
taken up to the Company (or to the Receiving Agent) subject to deduction in
accordance with Clause 8.2, which payment shall constitute a complete discharge
to Nomura of its obligations to the Company under Clauses 6 and 7. It shall be
the responsibility of the Company to procure that the Receiving Agent pays to
the Company an amount representing the aggregate Subscription Price for the New
Shares taken up under the Open Offer.
COMMISSIONS AND EXPENSES
8.1 The Company shall pay Nomura in consideration for its services under this
Agreement:
(a) a commission of 2.625 per cent. of the value of the aggregate number of the
New Shares at the Subscription Price in respect of the period from (and
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including) the date of this Agreement to (but excluding) the date falling
thirty five days after the date of this Agreement; and
(b) a commission of 0.125 per cent. of the value of the aggregate number of the
New Shares at the Subscription Price in respect of each period of seven
days or part thereof from (and including) the date falling thirty five days
after the date of this Agreement to (and including) the second Dealing Day
after the Acceptance Date or, if earlier, the date on which Nomura's
obligations under this Agreement cease in accordance with Clause 2.3.
8.2 The Company shall pay such commissions to Nomura by not later than 3.00 p.m.
on the day upon which Nomura procures payment to the Company (or to the
Receiving Agent) pursuant to Clause 7.4 or, if earlier, on the first Dealing Day
after the date on which Nomura's obligations under this Agreement cease in
accordance with Clause 2.3. Without prejudice to its right to receive payment
directly from the Company pursuant to this Clause 8.2, Nomura shall be entitled
and is authorised to deduct some or all of such commissions and any fee and
expense which the Company has agreed to pay Nomura from any amount otherwise
payable by Nomura to the Company (or to the Receiving Agent) under this
Agreement.
8.3 Out of the commissions referred to in Clause 8.1, Nomura may pay commissions
to such persons (if any) as it may procure to subscribe for the New Shares.
8.4 In addition to the commissions referred to in Clause 8.1, the Company shall
pay (whether or not Nomura's obligations under this Agreement become
unconditional) all costs and expenses of, or in connection with, the Placing and
Open Offer, the EGM, the allotment and issue of the New Shares and this
Agreement. This shall include (but shall not be limited to) the London Stock
Exchange listing fees, other regulatory fees and expenses, printing and
advertising costs, postage, registrars' and the Receiving Agent's charges, its
own and Nomura's reasonable legal and other out-of-pocket expenses, all
accountancy and other professional fees, public relations fees and expenses and
all stamp duty and stamp duty reserve tax (if any) and other duties and taxes in
connection with the Placing and Open Offer, the EGM, the allotment and issue of
the New Shares and this Agreement. The Company shall immediately on request pay
or reimburse Nomura the amount of any expenses which are to be borne by the
Company and which Nomura (or any subscriber for New Shares) has paid.
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8.5 Where, pursuant to this Agreement, a sum is paid or reimbursed to Nomura,
the Company shall also pay to Nomura in respect of value added tax:
(a) where the payment or reimbursement constitutes the consideration or part of
it for any supply of services by Nomura to the Company, such amount as
equals any value added tax properly payable thereon and on such
irrecoverable value added tax, if any, as is referred to in (b) below;
(b) (except where (c) below applies) such amount as equals any value added tax
charged to Nomura in respect of any cost, charge or expense which gives
rise to the payment or reimbursement and which Nomura certifies is not
recoverable by it by repayment or credit, that certificate to be conclusive
save in the case of manifest error; and
(c) on any payment or reimbursement in respect of or indemnification for costs,
charges or expenses incurred by Nomura as agent for the Company, such
amount as equals the amount included in the costs, charges or expenses in
respect of value added tax.
RESTRICTIONS ON ACTIONS AND ANNOUNCEMENTS
9.1 Without Nomura's prior consent, the Company shall not, and shall procure
that no other member of the Group shall, and shall use its reasonable endeavours
to procure so far as it is in its power to do so that Everest Medical
Corporation will not, between the date of this Agreement and the date which is
twenty Dealing Days after, as appropriate, the Acceptance Date or the date that
the Nomura's obligations under this Agreement cease in accordance with Clause
2.3:
(a) enter into any commitment or agreement, or put itself in a position where
it is obliged to announce that any commitment or agreement may be entered
into, which is or may be material in the context of the Placing and Open
Offer or the underwriting of the New Shares;
(b) allot, issue or grant any rights in respect of any securities of the
Company (except for the grant of options under, and the allotment and issue
of Ordinary Shares pursuant to options granted under, the Company's Inland
Revenue approved share option schemes, in each case in accordance with
normal practice); or
(c) publish, file, make or despatch any announcement, document or other
communication which is or may be material in the context of the Placing and
Open Offer or the underwriting of the New Shares (save for the
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publication, filing, making or despatch, as the case may be, of the
Circular, the Form of Proxy, the Application Form and any Supplementary
Prospectus in accordance with the terms of this Agreement) and any
announcements or filings required to be filed by the Company, Golden
Acquisition Corporation or Everest under U.S. Securities Laws in
connection with the Tender Offer or any of the other transactions
contemplated by the Merger Agreement.
9.2 The Company undertakes to make all such announcements concerning the Placing
and Open Offer and/or the Acquisition as shall be necessary to comply with the
Listing Rules and/or section 47 of the FSA or which Nomura otherwise reasonably
considers to be necessary or desirable (including, without limitation, for the
purposes of procuring Placees or potential subscribers for any New Shares in
accordance with this Agreement) and Nomura shall be entitled (following
consultation with the Company where practicable) to make any such announcement
if the Company fails (in the opinion of Nomura acting in good faith) promptly to
fulfil its obligations under this Clause 9.2.
9.3 The Company undertakes to do all such reasonable acts and things as are
reasonably necessary to enable the provisions of this Agreement, the Placing,
and the Open Offer to be carried out and given full force and effect.
9.4 The Company agrees with and acknowledges to Nomura that neither Nomura nor
any of its advisers shall be responsible to the Company or any of its directors
for verifying the accuracy and/or fairness of any information published in the
Circular save in respect of the details of and information contained in the
Circular of the mechanics of the Placing and Open Offer or otherwise published
by the Company in connection with the Placing and Open Offer or the Acquisition,
unless (and only to the extent that) Nomura has taken specific responsibility
for such verification.
9.5 The Company undertakes that it will not agree to any material alteration,
revision or amendment of the terms or conditions of either the Tender Offer or
the Merger Agreement (or any document entered into pursuant thereto) or waive
(in whole or in part) or amend or extend any material condition thereof or grant
any material indulgence thereunder or, subject as aforesaid, proceed to
completion thereof without full satisfaction of all of the terms and conditions
of the Tender Offer or the Merger Agreement or in circumstances where the
Company is aware that it is entitled to rescind or terminate the Tender Offer or
the Merger Agreement without the prior written consent of Nomura.
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REPRESENTATIONS AND WARRANTIES
10.1 The Company represents, warrants and undertakes to Nomura in the terms set
out in Schedule 2. The Company acknowledges that Nomura is entering into this
Agreement in reliance on such representations, warranties and undertakings. Each
representation, warranty and undertaking shall be construed separately and shall
not be limited or restricted by reference to or inference from the terms of any
other representation, warranty and undertaking or any other term of this
Agreement.
10.2 The Company shall use its best endeavours not to (and shall use reasonable
endeavours to procure that no other member of the Group nor any of its or their
respective directors, officers, employees or agents shall) cause or (so far as
they are able, using reasonable endeavours) permit any event to occur or omit to
do anything between the date of this Agreement and the date which is five
Dealing Days after, as appropriate, the Acceptance Date or the date on which
Nomura's obligations under this Agreement cease in accordance with Clause 2.3
which would make any statement in Schedule 2 untrue, inaccurate or misleading if
such statement were repeated at such date by reference to the facts and
circumstances then existing.
10.3 The Company shall as soon as reasonably practicable notify Nomura (giving
reasonable details) if it comes to the knowledge of the Company or any Director
that any statement in Schedule 2 was untrue, inaccurate or misleading at the
date of this Agreement or would be untrue, inaccurate or misleading if repeated
by reference to the facts and circumstances existing at any time during the
period referred to in Clause 10.2 or if the Company is in breach of any of its
obligations under this Agreement.
10.4 The Company agrees that Nomura and each Placee shall be entitled (as
subscribers for New Shares) to the same remedies and rights of action against
the Company, and to the same extent, as any person who acquires any New Shares
pursuant to the Open Offer on the basis of the Circular.
10.5 References in this Agreement to a representation, warranty or undertaking
being (or not being) true and accurate or not being (or being) misleading IN ANY
MATERIAL RESPECT shall mean material in the context of the Placing and Open
Offer or the underwriting of the New Shares. In that connection and otherwise in
this Agreement in relation to references to a matter which would or might be
MATERIAL IN THE CONTEXT OF THE UNDERWRITING OF THE NEW SHARES, a matter shall,
without limitation, be deemed to be so material if it would have been material
for disclosure
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to potential Placees had such matter existed when Placees were sought for the
New Shares.
10.6 The representations, warranties and undertakings referred to in Clauses
10.1 to 10.5 shall remain in full force and effect notwithstanding completion of
all matters and arrangements referred to in, or contemplated by, this Agreement.
INDEMNITY
11.1 Nothing in this Clause 11 shall operate to exclude or restrict any duty or
liability of Nomura under the FSA or under the regulatory system (as defined in
the rules of The Securities and Futures Authority Limited) to an extent greater
than permitted by those rules.
11.2 No claim shall be made against Nomura or any subsidiary undertaking or
holding company of Nomura or any subsidiary undertaking of such holding company
or any of their respective shareholders, directors, officers, agents or
employees (each, together with Nomura, referred to in this clause 11 as an
INDEMNIFIED PERSON) to recover any loss, damage, cost, charge or expense which
any member of the Group or any of their respective directors, officers, agents
or employees or any other person may suffer or incur by reason of, or arising
out of, the carrying out by Nomura or on its behalf of its obligations and
services under this Agreement or otherwise in connection with the Placing and
Open Offer or the listing of the New Shares (the COMPANY LOSSES) unless and to
the extent that such loss, damage, cost, charge or expense arises from the
negligence or wilful default of Nomura or that Indemnified Person or any breach
by Nomura of its obligations under this Agreement.
11.3 Notwithstanding anything in Clause 11.2 above, where any Indemnified Person
is the subject of a claim alleging liability in respect of any Company Losses,
then the total amount of such Company Losses recoverable from any such
Indemnified Persons shall be limited to such proportion of the Company Losses as
is finally determined to be just and equitable, having regard to the relative
responsibility of (i) all Indemnified Persons taken together so liable and (ii)
any other person (including for the avoidance of doubt, both the Company (and
any director, employee, agent, subsidiary or affiliate of the Company) and any
other person unrelated to the Company) who is jointly or severally liable for
the Company Losses or any part thereof (a THIRD PARTY). For the avoidance of
doubt, any limitation or exclusion or restriction on the liability of any Third
Party under any jurisdiction, whether arising under statute or contract or
resulting from death,
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bankruptcy or insolvency shall be ignored for the purposes of determining the
extent of responsibility of that Third Party under (ii) above.
11.4 Without prejudice to Clause 11.3 above, insofar as the Company has engaged
any adviser (a CAPPED ADVISER) on the basis that its liability to the Company
arising out of any default by it or otherwise in connection with the Placing and
Open Offer is subject to any limitation, the liability of each Indemnified
Person to the Company or any other person in respect of the Company Losses shall
not exceed the amount for which that Indemnified Person would have been liable
after deducting any amount which that Indemnified Person would have been
entitled to recover from the capped adviser, in the absence of the limitation of
the capped adviser's liability, by way of contribution to that Indemnified
Person, in respect of the matter concerned.
11.5 The Company undertakes with Nomura for itself and as trustee for each other
Indemnified Person to keep each Indemnified Person indemnified against all
actions, claims or demands brought or made (or threatened to be brought or made)
in any jurisdiction against that Indemnified Person (whether or not successful,
compromised or settled) and against all losses, liabilities, costs, charges and
expenses in any jurisdiction which any Indemnified Person may suffer or incur
(including, without limitation, all such losses, liabilities, costs, charges and
expenses as the Indemnified Person suffers or incurs in investigating,
responding to, preparing for or disputing any actions, claims or demands or in
enforcing its rights under this Clause 11), and whether the same are made,
suffered or incurred (as the case may be) before or after the date of this
Agreement, and which in any case results from, is attributable to or arises in
connection with (directly or indirectly) the matters contemplated by this
Agreement including, without limitation:
(a) Nomura (or any person on its behalf) carrying out or performing its
obligations or services under this Agreement or in connection with the
Placing and Open Offer or the listing of the New Shares;
(b) the Placing and Open Offer, the allotment and issue of the New Shares, the
release, despatch, filing or publication (as the case may be) of the Press
Announcement, the Circular, the Form of Proxy, the Application Form, or any
Supplementary Prospectus; or
(c) any breach or alleged breach by the Company of any of its obligations under
this Agreement or any of the representations, warranties or undertakings
set out or referred to in this Agreement or otherwise in connection with
the Placing and Open Offer,
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unless and to the extent that the relevant action, claim, demand, loss,
liability, cost, charge or expense arises from the negligence or wilful default
of Nomura or that Indemnified Person or any breach by Nomura of its obligations
under this Agreement, PROVIDED THAT an Indemnified Person shall not be entitled
to be indemnified pursuant to this Clause 11.5 in respect of any relevant
action, claim, demand, loss, liability, cost, charge or expense suffered or
incurred which (i) is an unrealised or realised loss in respect of the value of
any New Shares subscribed by an Indemnified Person unless and to the extent that
the same arise or result from any breach by the Company of any of its
obligations under this Agreement, any breach of the representations, warranties
and undertakings referred to in Clause 10.1 or any other neglect or default on
the part of the Company or (ii) arises from the publication of any research note
produced by Nomura (in respect of which the Company shall have no liability).
11.6 Subject to the requirement of a relevant insurer, if any claim is made
against an Indemnified Person for which indemnity is sought under Clause 11.5,
Nomura shall notify the Company as soon as reasonably practicable and consult
with the Company with respect to the handling of the claim.
11.7 If the United Kingdom Inland Revenue or any other taxing authority in any
jurisdiction brings into charge to taxation any sum payable to Nomura or another
Indemnified Person under this Agreement (other than the commissions payable
pursuant to Clause 8.1), then (to the extent that the loss, damage, liability,
cost, charge or expense in respect of which the sum is payable is not allowable
to the relevant Indemnified Person as a deduction for tax purposes against the
sum so payable and in the same accounting period as that in which such sum is
brought into charge to tax) the sum so payable shall be grossed up by such
amount as will ensure that after deduction of the taxation so chargeable there
shall remain a sum equal to the amount that would otherwise be payable under
this Agreement.
11.8 All sums payable to Nomura or another Indemnified Person under this
Agreement shall be paid free and clear of all deductions or withholdings unless
the deduction or withholding is required by law, in which event the Company
shall pay such additional amount as shall be required to ensure that the net
amount received by the Indemnified Person concerned will equal the full amount
which would have been received by it had no such deduction or withholding been
made.
11.9 Notwithstanding any other provision of this Agreement, no Indemnified
Person shall be liable to the Company for, or lose the benefit of the provisions
of this Clause 11 as a result of, any delay in performance or non-performance of
its obligations arising under, out of, or in connection with, this Agreement
where such
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performance is delayed or prevented by circumstances beyond its reasonable
control.
11.10 The provisions of Clauses 11.1 to 11.9 will remain in full force and
effect notwithstanding the completion of all matters and arrangements referred
to in or contemplated by this Agreement.
11.11 The Company and Nomura undertake with each other that neither the Company
nor Nomura nor any of its employees or agents nor any person acting on its
instructions will engage in (i) any direct selling efforts as such term is
defined in Regulation S of the US Securities Act of 1933, as amended (the
SECURITIES ACT) or (ii) any form of general solicitation or general advertising
as such terms are used in Rule 502 of the Securities Act in respect of the New
Shares.
MISCELLANEOUS
12.1 For the avoidance of doubt, the Company acknowledges and agrees that it is
responsible for any due diligence carried out by the Company or its other
advisers in relation to the Acquisition and the Placing and Open Offer and that
neither Nomura nor any of its advisers shall be responsible to Company or any
Director for any such due diligence in relation thereto or for verifying the
accuracy or fairness of any information published by or on behalf of the Company
in connection with the Acquisition and the Placing and Open Offer save for the
description in such Circular of the mechanics of the Placing and Open Offer.
12.2 The Company agrees that for the purpose of the Placing and Open Offer
(including for the purposes of seeking to procure any Placees for the New
Shares) Nomura shall not be responsible for the provision of or obtaining advice
as to the requirements of applicable laws or regulations of jurisdictions other
than the United Kingdom nor shall it be responsible where it or the Company has
acted in reliance on any advice obtained by the Company in respect thereof.
12.3 The Company acknowledges that the representations, warranties, undertakings
and indemnities contained in this Agreement are given to Nomura in connection
with the Placing and Open Offer and the listing of the New Shares whether in its
capacity as underwriter, financial adviser or sponsor and references in this
Agreement to Nomura shall be construed accordingly.
RECEIVING AGENT
13. The Company confirms that it has instructed the Receiving Agent to act as
receiving agent in connection with the Placing and Open Offer and the EGM and
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to perform the obligations assigned to it under the Circular, the Form of Proxy,
the Application Forms and this Agreement as receiving agent.
TIME OF THE ESSENCE
14. Any time, date or period mentioned in this Agreement may be extended by
mutual agreement between the Company and Nomura but as regards any time, date or
period originally fixed, or any time, date or period so extended, time shall be
of the essence.
WAIVER
15.1 Any right or remedy of Nomura under this Agreement shall only be waived or
varied by an express waiver or variation in writing.
15.2 No failure or delay by Nomura in exercising any right or remedy under this
Agreement shall impair such right or remedy or operate or be construed as a
waiver or variation of the right or remedy or preclude its exercise at any
subsequent time. No single or partial exercise of any such right or remedy shall
preclude any other or further exercise of such right or remedy or the exercise
of any other right or remedy. The rights, powers and remedies of Nomura provided
in this Agreement are cumulative and not exclusive of any rights, powers and
remedies provided by law.
NOTICES
16.1 Any notice to be given under, or in connection with, this Agreement shall
be in writing and be signed by or on behalf of the party giving it. It shall be
served by sending it by fax to the number set out in Clause 16.2 or by
delivering it by hand, or sending it by pre-paid recorded delivery, special
delivery or registered post, to the address set out in Clause 16.2 marked for
the attention of the relevant party (or as otherwise notified from time to time
under this Agreement).
Any notice so served shall be deemed to have been duly received:
(a) in the case of delivery by hand, when delivered;
(b) in the case of fax, at the time of transmission; and
(c) in the case of pre-paid recorded delivery, special delivery or registered
post, on the Dealing Day following the date of posting;
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provided that if delivery by hand or fax occurs on a day which is not a Dealing
Day or after 6 p.m. on a Dealing Day, service shall be deemed to occur at 9 a.m.
on the following Dealing Day.
16.2 The addresses of Nomura and the Company for the purpose of Clause 16.1 are:
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(i) THE COMPANY: Fortran Road
St. Mellons
Cardiff CF3 0LT
Fax No. 01222 300 101
For the attention of: John Bradshaw,
Finance Director
cc: Ashurst Morris Crisp
Ref: PRVB/G85600001
(ii) NOMURA: Nomura House
1 St. Martin's-le-Grand
London EC1A 4NP
Fax No. 0207 521 3655
For the attention of: Graeme Muir
COUNTERPARTS
17. This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
ENTIRE AGREEMENT
18. This Agreement and the Nomura Engagement Letter, excluding any provisions in
the Nomura Engagement Letter relating to claims or indemnification of Nomura or
Indemnified Persons and any other obligations of the Company contained therein
in either case relating to the Placing and Open Offer, represent the entire
agreement between the parties in relation to the subject matter of this
Agreement and supersede any previous agreement whether written or oral between
the parties in relation to that subject matter. Accordingly, all other terms,
conditions, representations, warranties and other statements which would
otherwise be implied (by law or otherwise) shall not form part of this
Agreement.
GOVERNING LAW
19. This Agreement shall be governed by and interpreted in accordance with
English law and the parties hereto irrevocably submit to the exclusive
jurisdiction of the courts of England.
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SCHEDULE 1
DELIVERY OF DOCUMENTS
PART 1
Before despatching the Circular, the Company shall deliver to Nomura:
(a) a certified copy of the minutes of the meeting referred to in Clause 4.1;
(b) a signed copy of the Verification Notes relating to the Circular;
(c) a certified copy of the signed letters of responsibility to the Directors
and to Nomura from each Director accepting responsibility for the
information contained in the Circular and any Supplementary Listing
Particulars;
(d) a copy of the Memorandum;
(e) a letter to the Directors and to Nomura from the Auditors relating to the
working capital statements in the Circular;
(f) a letter to the Directors and to Nomura from the Auditors confirming the
correct extraction of financial information contained in the Circular;
(g) a copy of the letters to the London Stock Exchange from each Director under
paragraph 5.5 of the Listing Rules;
(h) a letter to Nomura from each Director relating to the matters referred to
in paragraph 2.9 of the Listing Rules;
(i) letters to Nomura from the Company relating to the matters referred to in
paragraphs 2.14, 2.15 and 2.15A of the Listing Rules;
(j) a letter to Nomura from each of the Company, the Auditors and the Company's
solicitors relating to the matters referred to in paragraph 2.8 of the
Listing Rules;
(k) a copy of the Circular bearing evidence of formal approval by the London
Stock Exchange; and
(l) evidence that the Circular has been delivered to the Registrar of Companies
in England and Wales for registration in accordance with section 149 of the
FSA.
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PART 2
Following the passing of the Resolution, the Company shall deliver to the
Nomura:
(a) a certified copy of the Resolution and any other ordinary or special
resolution of the Company in general meeting authorising the Directors
under section 80 of the Companies Act to allot the New Shares and
disapplying section 89 of the Companies Act in connection with allotments
made pursuant to the section 80 authority; and
(b) a certified copy of the resolution of the board of Directors allotting the
New Shares as referred to in Clause 7.1.
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SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
PUBLIC DOCUMENTATION
1.1 All statements of fact in the Tender Offer Documents, the Press
Announcements, the Circular, the Application Form and the Form of Proxy are true
and accurate in all material respects and are not misleading in any material
respect.
1.2 All estimates and all statements of opinion, intention or expectation in the
Tender Offer Documents, the Press Announcements, the Circular, the Application
Form and the Form of Proxy are made on reasonable grounds after due and careful
consideration, honestly held by the Directors and fairly based.
1.3 There are no facts or circumstances known, or which could on reasonable
enquiry have been known, to the Company or the Directors which are not stated in
the Press Announcement or the Circular (as the case may be) the omission of
which would make any statement or estimate therein misleading in any material
respect and which would or might be material in the context of the Placing and
Open Offer or the underwriting of the New Shares.
1.4 All statements of fact in any Supplementary Prospectus will be true and
accurate in all material respects and will not be misleading in any material
respect.
1.5 All estimates and all statements of opinion, intention or expectation in any
Supplementary Prospectus will be made on reasonable grounds after due and
careful consideration, honestly held by the Directors and fairly based.
1.6 There will be no facts or circumstances known, or which could on reasonable
enquiry have been known, to the Company or the Directors which are not stated in
any Supplementary Prospectus the omission of which would make any statement or
estimate therein misleading in any material respect and which would or might be
material in the context of the Placing and Open Offer or the underwriting of the
New Shares.
1.7 Each of the Circular, the Application Form and the Form of Proxy comply (and
any Supplementary Prospectus will comply) with the Company's Articles of
Association and with all relevant laws and regulations of the United Kingdom and
any other relevant jurisdiction including, without limitation, the Listing Rules
and
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the requirements of the London Stock Exchange, the Companies Act and the FSA.
1.8 Without prejudice to the generality of paragraphs 1.1 to 1.7, the Circular
contains (and any Supplementary Prospectus, when taken together with the
Circular, will contain) all such information as investors and their professional
advisers would reasonably require, and reasonably expect to find there, for the
purpose of making an informed assessment of the assets and liabilities,
financial position, profits and losses, and prospects of the Company and of the
rights attaching to the New Shares, having regard to the matters referred to in
section 146(3) of the FSA.
PREVIOUS ANNOUNCEMENTS
2.1 In the Report and Accounts, the Interim Results and all Previous
Announcements, save to the extent corrected in any announcement or public
document subsequently made or released by or on behalf of the Company through
the Regulatory News Service of the London Stock Exchange:
(a) all statements of fact were when made and remain true and accurate in all
material respects and not misleading in any material respect;
(b) all estimates and all statements of opinion, intention or expectation which
are or might be material in the context of the Placing and Open Offer or
the underwriting of the New Shares were made on reasonable grounds after
due and careful consideration, were and remain honestly held by the
Directors and were fairly based; and
(c) there were and are no other facts known, or which could on reasonable
enquiry have been known, to the Company or the Directors which were not
included in the relevant document or announcement, the omission of which
made or makes any statement or estimate in that document or announcement
misleading or which would or might be material in the context of the
Placing and Open Offer or the underwriting of the New Shares.
2.2 Each Previous Announcement complied with the Company's Articles of
Association and with all relevant laws and regulations of the United Kingdom and
any other relevant jurisdiction including, without limitation, the Listing Rules
and the requirements of the London Stock Exchange, the Companies Act and the
FSA.
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REPORT AND ACCOUNTS
3. The Report and Accounts:
(a) give a true and fair view of the state of affairs of the Group as at the
Accounts Date, of the loss of the Group for the financial year ended on
that date and of the results of the cash flows for the Group for the
financial year ended on that date; and
(b) have been prepared in accordance with the Companies Act and all applicable
statements of standard accounting practice and generally accepted
accounting principles and practices consistently applied.
INTERIM RESULTS
4. The Interim Results were prepared with reasonable care and attention and have
been properly compiled in accordance with the Listing Rules, all applicable
statements of standard accounting practice, with generally accepted accounting
principles and practices consistently applied and on a basis consistent with the
accounting policies and principles applied in the preparation of the Report and
Accounts except, in each case, in so far as inappropriate in respect of the
preparation of interim results.
POSITION SINCE ACCOUNTS DATE
5.1 Since the Accounts Date and save as subsequently disclosed in the Report and
Accounts, the Press Announcements and the Interim Results and any Previous
Announcement made before the date of this Agreement:
(a) the business of the Group has been carried on in the ordinary and usual
course;
(b) there has been no adverse change in the financial or trading position or
prospects of the Group; and
(c) no contracts or commitments of an unusual or unduly onerous nature have
been entered into by any member of the Group,
save, in each case, for matters which, individually or in aggregate, are not
material for disclosure in the context of the Placing and Open Offer and the
underwriting of the New Shares.
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LITIGATION AND PROCEEDINGS
6.1 Save as disclosed in the Circular, no member of the Group has any claims
outstanding against it or is engaged in, or has within the last twelve months
been engaged in, any litigation or arbitration or similar proceedings or in any
governmental, regulatory or similar investigation or enquiry, which individually
or collectively may have or, during the last twelve months, has had a
significant effect on the financial or trading position or prospects of the
Group. So far as the Company is aware there is no such claim, litigation,
proceeding, investigation or enquiry pending or threatened. There are no
circumstances known to the Company or the Directors which are likely to give
rise to any such claim, litigation, proceeding, investigation or enquiry.
6.2 No member of the Group has taken any action and no other steps have been
taken or legal proceedings started or threatened against any of them for any of
their administration, winding up or dissolution, or for any of them to enter
into any compromise, arrangement or composition for the benefit of creditors, or
for the appointment of a receiver, administrator, provisional liquidator,
trustee or similar officer of any of them, or of any of their respective
properties, revenues or assets and there are no circumstances known, or which
could on reasonable enquiry have been known, to the Company or the Directors
which are likely to give rise to any of the foregoing.
COMPLIANCE AND CAPACITY
7.1 The making of the Tender Offer and the Placing and Open Offer, the issue,
publication, despatch or filing (as the case may be) of the Tender Offer
Documents, the Press Announcements, the Circular, the Form of Proxy, the
Application Form and any Supplementary Prospectus, the entry into and
performance of this Agreement and, subject only to the passing of the
Resolution, the allotment and issue of the New Shares complies or will (as the
case may be) comply with:
(a) the Memorandum and Articles of Association of the Company and all
applicable laws and regulations of the United Kingdom and any other
relevant jurisdiction including, without limitation, the Listing Rules and
the requirements of the London Stock Exchange, the Companies Act and the
FSA; and
(b) all agreements to which any member of the Group is a party or by which any
of them or any of their respective properties or assets is bound and will
not infringe any restrictions or the terms of any contract, obligation or
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commitment of any member of the Group or give rise to any consequences
which are material in the context of the Placing and Open Offer or the
underwriting of the New Shares.
7.2 The Company and the Directors have all necessary powers and authority to
enter into and comply with the Company's obligations under this Agreement
(including without limitation to pay the commissions and expenses), to make the
Tender Offer and the Placing and Open Offer, to allot and issue the New Shares,
to issue the Press Announcement, the Circular, the Form of Proxy, the
Application Form and any Supplementary Prospectus, without (save for the passing
of the Resolution) any sanction or consent by members of the Company or any
class of them or any creditors or holders of any other securities of the
Company. Save as disclosed in the Circular, there are no other consents,
authorisations, approvals or licences required by the Company for any of the
foregoing which have not been unconditionally obtained and which are not in full
force and effect.
NEW SHARES
8.1 The New Shares will upon Admission be allotted and issued credited as fully
paid, will rank pari passu in all respects with the existing issued Ordinary
Shares including the right to receive all dividends and other distributions
declared, made or paid on such shares after the date of this Agreement and will
be free from all liens, charges, encumbrances and equities.
8.2 Except as disclosed in the Report and Accounts, any Previous Announcement or
the Circular, and except for options granted under the employees' share schemes
in accordance with normal practice, there are no arrangements which
(contingently or otherwise) may give rise to an obligation on the Company or any
other member of the Group to allot, issue or grant any relevant securities.
WORKING CAPITAL
9.1 The Group will have sufficient working capital for its present and
reasonably foreseeable future requirements having regard to existing bank
balances and facilities available and the proceeds of the Placing and Open
Offer.
9.2 The working capital forecast of the Group contained in the Memorandum has
been properly compiled, and has been made after due and careful inquiry and on
the bases and assumptions stated in the Memorandum. All statements of fact in
the Memorandum are true and accurate in all material respects and are not
misleading in any material respect, all estimates and all statements of opinion,
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intention or expectation contained therein are made on reasonable grounds and
are truly held by the Directors, are fairly based and have been made having
regard to all the information available to the Company and the Directors. There
are no other facts or circumstances known to the Company or the Directors not
included in the Memorandum the omission of which would make any such statement
or estimate in the Memorandum misleading in any material respect. All the
assumptions on which the forecast is based are reasonable assumptions and there
are no other assumptions on which that forecast ought to have been based which
have not been made in the Memorandum.
9.3 All information requested from the Company by the Auditors and Nomura for
the purpose of reviewing the working capital requirements of the Group has been
supplied to them and such information is true and accurate in all material
respects and not misleading in any material respect.
ENVIRONMENTAL RISKS
10.1 So far as the Company is aware, no member of the Group has any material
actual or contingent liability under applicable laws and regulations (whether of
the United Kingdom or any other jurisdiction), including any laws and
regulations with respect to health and safety of any person and the pollution or
the protection of the environment (collectively and individually, ENVIRONMENTAL
LEGISLATION) or otherwise in relation to any interest in land including all of
its freehold and leasehold properties (whether as owner, former owner, or as
tenant or former tenant, or as an original contracting party, or guarantor of
any party, to any deed, document, lease or licence connected therewith) (the
PROPERTIES).
10.2 No Property, as far as the Company is aware, is affected in any material
way, and/or in any material manner which may affect its value and/or may involve
any material expenditure, by the presence of asbestos in such Property; no
building or other structure on or forming part of the Properties or the ground
or groundwater at any Property, as far as the Company is aware having made
reasonable enquiries, is affected in any material way by or contains a Relevant
Substance.
10.3 Neither the Company nor any member of the Group has received notice of and
none of them is aware of any material breach or alleged breach of the
requirements of any Environmental Legislation or circumstances which may give
rise to the same.
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INTELLECTUAL PROPERTY RIGHTS
11.1 A member of the Group owns all of the rights and interests in, and has
title to, the Business IP.
11.2 A member of the Group is the registered proprietor of the registrations and
applications included in the Business IP, and the registrations and applications
are not, so far as the Company is aware, subject to, challenge, removal or
surrender. So far as the Company is aware having made reasonable enquiries,
there is nothing which might prevent the registrations and applications from
being granted or registered.
11.3 No compulsory licences or licences of right other than in relation to the
ArthoCare Settlement dated 28 June 1999 have been, or so far as the Company is
aware, having made reasonable enquiries, are likely to be, granted for the
Business IP.
11.4 All application, filing, registration, renewal and other fees for the
registrations and applications included in the Business IP have been paid.
11.5 As far as the Company is aware, the material Licences In and the material
Licences Out are binding and in force. As far as the Company is aware, none of
the parties to them is in default and there are no grounds on which they might
be terminated. As far as the Company is aware, no disputes have arisen or are
foreseeable in connection with them.
11.6 As far as the Company is aware, none of the operations of the Group
infringes the Intellectual Property Rights of a third party.
11.7 Save as disclosed in a Previous Announcement or the Circular, no claim has
been made by a third party which alleges that the current operations of the
Group infringe the Intellectual Property Rights of a third party or which
otherwise disputes the right of any member of the Group to use the Intellectual
Property Rights owned or used or proposed to be used by a member of the Group.
The Company is not aware of any circumstances likely to give rise to a claim.
11.8 As far as the Company is aware, no third party is infringing any Business
IP.
11.9 No claim has been made by any member of the Group which alleges that a
third party is infringing the Business IP owned by any member of the Group or
which otherwise disputes the right of a third party to use the Intellectual
Property Rights owned or used by it.
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11.10 As far as the Company is aware, no member of the Group has acquiesced in
the unauthorised use by a third party of the Intellectual Property Rights owned
or used by any member of the Group.
11.11 There have been no acts or omissions by any member of the Group which
would prejudice the rights of a member of the Group to enforce any Business IP.
In particular, transactions relating to it have been registered promptly, and
within applicable time limits.
11.12 Material confidential information of any member of the Group or of a third
party which has been made available to any member of the Group has been kept
confidential and has not been disclosed to third parties except in accordance
with the applicable terms of confidentiality.
11.13 As far as the Company is aware, none of the operations of the Group
involves the unauthorised use of confidential information disclosed in
circumstances which might entitle a third party to make a claim against a member
of the Group.
11.14 Except for agreements entered into in the ordinary course of business, no
member of the Group is subject to any obligation which restricts to any material
extent the free use or disclosure of confidential information used by the Group.
11.15 As far as the Company is aware, a member of the Group owns, or has
licensed to it, all Intellectual Property Rights which are required to carry on
the Group's business as it is presently carried on.
11.16 No Business IP is subject to any security interest, option, mortgage,
charge or lien.
REGULATORY MATTERS
12.1 The Group holds all the material permits, licences, consents,
authorisations, orders, approvals or similar permissions required by law to be
obtained from Relevant Regulatory Authorities for the conduct of the businesses
of each member of the Group in all jurisdictions as currently carried out (the
RELEVANT LICENCES).
12.2 All Relevant Licences are valid and in full force and effect and no member
of the Group has received any written communication that any Enforcement Action
in respect of any of them has been initiated or, so far as any member of the
Group is aware, threatened.
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12.3 So far as the Company is aware, as at the date of this Agreement, there are
no circumstances indicating that:
(i) any Enforcement Action could be taken in respect of any Relevant Licence;
or
(ii) any Relevant Licence might not be renewed.
12.4 Each member of the Group is and has been in compliance in all material
respects with, and has not violated in any material respect any of the
provisions of, and, so far as the Company is aware, as at the date of this
Agreement, the conduct of the business of any member of the Group in any
jurisdiction will not violate, in a manner which might have a material adverse
effect, any of the provisions of:
(i) any applicable law and regulation in any jurisdiction in force at any time
up to (and including) the date of this Agreement;
(ii) the Relevant Licences;
(iii) any rules, regulations, orders, decrees, judgments, directives, directions
and determinations of any Relevant Regulatory Authority, court of law or
other similar authority; and
(iv) any international bilateral or multilateral agreement or treaty to which
any member of the Group is subject.
12.5 No member of the Group has received any written communication of
Proceedings under any Relevant Licence or otherwise affecting any member of the
Group and, so far as the Company is aware, no previous actions or inactions by
any member of the Group could reasonably afford a basis for any such
Proceedings.
12.6 Each member of the Group has made all material Filings. As of their
respective dates, each of the Filings:
(i) was true and complete in all material respects (or was amended so as to be
so promptly following the discovery of any discrepancy); and
(ii) complied in all material respects with any applicable laws and regulations
in any jurisdiction and with all rules, regulations, orders, decrees and
directions of any Relevant Regulatory Authority (or was amended so as to
be so promptly following the discovery of any such non-compliance).
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PROFIT FORECAST
13. The forecast that the Group as enlarged by the Acquisition contained in the
Circular will make a loss in respect of the financial period ending 30 June 2000
(the FORECAST) has been made after due and careful inquiry and on the bases and
assumptions stated in the Circular. There are no other facts or circumstances
known to the Company or the Directors that make the Forecast inaccurate or
misleading. All the assumptions on which the Forecast is based are reasonable
and there are no other assumptions on which the Forecast ought to have been
based which have not been set out in the Circular. All information supplied by
the Company to the Auditors or Nomura for the purposes of reviewing the Forecast
is true and accurate in all material respects and not misleading in any material
respect.
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SIGNED by
for and on behalf of
GYRUS GROUP PLC
____________________
Director
SIGNED by
for and on behalf of
NOMURA INTERNATIONAL PLC
____________________
Director
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