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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CORVITA CORPORATION
(Name of Subject Company)
CORVITA CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
221 010 101
(CUSIP Number of Class of Securities)
NORMAN R. WELDON, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CORVITA CORPORATION
8210 N.W. 27TH STREET
MIAMI, FLORIDA 33122
(305) 599-3100
(Name, address and telephone number of person authorized to receive
notice and communication on behalf of the person(s) filing statement).
WITH A COPY TO:
LOWELL S. LIFSCHULTZ, ESQ.
EPSTEIN BECKER & GREEN, P.C.
250 PARK AVENUE
NEW YORK, NY 10177
(212) 351-4500
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Corvita Corporation, a Florida
corporation (the "Company"), and the address of the principal executive offices
of the Company is 8210 N.W. 27th Street, Miami, Florida 33122. The title of the
class of equity securities to which this statement relates is the common stock,
par value $0.001 per share (the "Common Stock" or the "Shares"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
The statement relates to the tender offer by HPG Acquisition Corp., a
Florida corporation (the "Merger Sub"), disclosed in a Tender Offer Statement on
Schedule 14D-1, dated Apri 17, 1996 (the "Schedule 14D-1"), to purchase all
outstanding Shares, at a price of $10.25 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated Apri 17, 1996 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together with the Offer to Purchase constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
April 11, 1996 (the "Merger Agreement"), among Pfizer Inc., a Delaware
corporation (the "Parent"), Merger Sub, a wholly owned subsidiary of the Parent,
and the Company. The Merger Agreement provides, among other things, that as soon
as practicable after the satisfaction or waiver of the conditions set forth in
the Merger Agreement, the Merger Sub will be merged with and into the Company
(the "Merger"), and the Company will continue as the surviving corporation (the
"Surviving Corporation"). A copy of the Merger Agreement is filed herewith as
Exhibit 1 and is incorporated herein by reference.
As set forth in the Schedule 14D-1, the principal executive offices of
Parent and the Merger Sub are located at 235 East 42nd Street, New York, New
York 10017.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between the Company or its affiliates
and: (i) the Company, its executive officers, directors or affiliates or (ii)
the Parent, its executive officers, directors or affiliates, is described in the
attached Schedule I (which information is incorporated herein by reference) or
is set forth below at Item 9.
STOCK OPTIONS
The Company maintains the 1995 Stock Option Plan, the 1995 Non-Employee
Director Stock Option Plan, and the 1988 Stock Option Plan (collectively, the
"Plans"), pursuant to which options (the "Options") to purchase Common Stock
have been granted and remain outstanding as of the date of this Schedule 14D-9.
Pursuant to the Merger Agreement, immediately after the Merger Sub has accepted
for payment, purchased and paid for all of the Shares that have been validly
tendered and not withdrawn pursuant to the Offer prior to its expiration date,
as it may be extended in accordance with the terms of the Offer (the "Acceptance
Date"), the Company will pay each holder of a then outstanding Option, whether
or not then exercisable, upon surrender and in settlement thereof, an amount
(subject to any applicable withholding tax) in cash equal to the product of (A)
the excess, if any, of $10.25 over the exercise price per Share of such Option
and (B) the number of Shares purchasable upon exercise of such Option. Upon
surrender of an Option and the receipt by its holder of the requisite amounts,
the Option will be cancelled. As of April 4, 1996, there were Options
outstanding to purchase 808,636 Shares with a per share exercise price of less
than $10.25, and the holders of such Options, in the aggregate, will be entitled
to receive approximately $5.07 million pursuant to the foregoing provisions of
the Merger Agreement. The Parent has agreed to cause sufficient funds to make
such payments to be provided to the Company.
WARRANTS
From time to time, the Company has issued warrants to purchase Common Stock,
and warrants to purchase Common Stock (the "Warrants") remain outstanding as of
the date of this Schedule
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14D-9. Pursuant to the Merger Agreement, immediately after the Acceptance Date,
the Parent will pay each holder of a Warrant, upon surrender and in settlement
thereof, an amount (subject to any applicable withholding tax) in cash equal to
the excess, if any, of $10.25 over the per Share exercise price of each Warrant.
Upon surrender of a warrant and receipt by its holder of the requisite amount,
the Warrant will be cancelled. As of April 4, 1996, there were Warrants
outstanding to purchase 491,699 Shares with a per share exercise price of less
than $10.25, and the holders of such Warrants, in the aggregate, will be
entitled to receive approximately $1.59 million pursuant to the foregoing
provisions of the Merger Agreement. The Parent has agreed to cause sufficient
funds to make such payments to be provided to the Company.
THE MERGER AGREEMENT
The summary of the Merger Agreement contained in the Offer to Purchase,
which has been filed with the Securities and Exchange Commission (the
"Commission") as an exhibit to the Schedule 14D-1, a copy of which is enclosed
with this Schedule 14D-9, is incorporated herein by reference. Such summary
should be read in its entirety for a more complete description of the terms and
provisions of the Merger Agreement. A copy of the Merger Agreement has been
filed as Exhibit 1 hereto and is incorporated herein by reference. The following
is a summary of certain portions of the Merger Agreement which relate to
arrangements among the Company, the Merger Sub, the Parent and the Company's
executive officers and directors and certain other significant provisions.
BOARD COMPOSITION. The Merger Agreement provides that, effective upon the
purchase by the Parent or Merger Sub of such number of Shares which represents a
majority of the outstanding Shares on a fully diluted basis, the Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this provision) and (ii)
the percentage (expressed as a decimal) that the number of Shares beneficially
owned by Parent bears to the total number of Shares outstanding; and the Company
shall, subject to the provisions of Section 14(f) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and Rule 14f-1 under the Exchange Act,
promptly use all reasonable efforts necessary to cause the Parent's designees to
be elected or appointed to the Board of Directors of the Company. From and after
the time, if any, that Parent's designees constitute a majority of the Company's
Board of Directors (the "Control Date"), any termination of the Merger Agreement
by the Company, any amendment of the Merger Agreement requiring action by the
Board of Directors of the Company, any extension of time for performance of any
of the obligations of the Parent or the Sub thereunder and any waiver of
compliance with any provision of the Merger Agreement for the benefit of the
Company shall require the approval of a majority of the directors of the Company
then in office who are not affiliates of Parent and who were not designated by
Parent (the "Company Designees"), which action shall be deemed to constitute the
action of the full Board of Directors even if such majority of the Company
Designees does not constitute a majority of all directors then in office;
provided that, if there are no Company Designees, such actions may be effected
by majority vote of the entire Board of Directors but no such action shall amend
the terms of the Merger Agreement in a manner adverse to the shareholders of the
Company. All of the current directors of the Company have indicated their
intention to resign as directors on the Control Date.
Section 14(f) of the Exchange Act requires the Company to mail to its
stockholders an Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. A copy
of the Information Statement is attached as Schedule I hereto and is
incorporated herein by reference.
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE. Pursuant to the Merger
Agreement, the Parent and the Surviving Corporation have agreed that all rights
to indemnification now existing in favor of the directors, officers, employees,
fiduciaries and agents of the Company as provided in articles of incorporation
or by-laws of the Company or otherwise in effect as of the date of the Merger
Agreement will survive the Merger and will continue in full force and effect
until six years from such time as the Merger becomes effective (the "Effective
Time") except that the Parent and the Surviving
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Corporation will not be obligated to continue any policy of directors' and
officers' liability insurance. The Parent and the Surviving Corporation have
agreed that the Surviving Corporation will indemnify, defend and hold harmless
each present and former director and officer, employee, fiduciary and agent of
the Company ("Indemnified Parties") to the fullest extent possible against any
threatened or actual claim, action, suit, proceeding or investigation made
against them from their service in such capacities (including service in such
capacities for another enterprise at the Company's request) occurring on or
prior to the Effective Time for at least six years from the Effective Time. The
Parent has agreed that, should the Surviving Corporation fail to perform the
foregoing obligations, the Parent shall assume and perform those obligations.
NO SOLICITATION OF OFFERS. The Company has agreed that from the date of the
Merger Agreement until the earlier of the Control Date or the termination of the
Merger Agreement, it will not, and will not permit any of its subsidiaries or
any of its or their officers, directors, employees, representatives, agents or
affiliates, to, directly or indirectly, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance) or take
any other action knowingly to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to an
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its or their officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or by any of its subsidiaries to take any such action; PROVIDED, HOWEVER, that
nothing in the Merger Agreement prohibits the Board of Directors of the Company
from furnishing information to, or entering into, maintaining or continuing
discussions or negotiations with, any person or entity that makes an unsolicited
Acquisition Proposal after the date of the Merger Agreement, if the Board of
Directors of the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that the failure to take
such action could create a reasonable possibility of a breach by the Board of
Directors of the Company of its fiduciary duties to shareholders under
applicable law and prior to taking such action, the Company (i) provides
reasonable notice to the Parent to the effect that it is taking such action and
(ii) receives from such person or entity an executed confidentiality agreement
in reasonably customary form. The Company has agreed to use reasonable efforts
to keep the Parent informed of the status of any such Acquisition Proposal. For
purposes of the Merger Agreement, "Acquisition Proposal" means an inquiry, offer
or proposal regarding any of the following (other than the transactions
contemplated by the Merger Agreement with the Parent or Merger Sub) involving
the Company or any of its subsidiaries: (w) any merger, consolidation, share
exchange, recapitalization, business combination or other similar transaction;
(x) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of all or substantially all the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of related transactions; (y)
any tender offer or exchange offer for 20 percent or more of the outstanding
shares of capital stock of the Company or the filing of a registration statement
under the Securities Act of 1933 in connection therewith; or (z) any public
announcement or a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
Prior to the Acceptance Date, if the Board of Directors of the Company
determines in good faith, after consultation with and based upon the advice of
independent legal counsel, that the failure to take such action could create a
reasonable possibility of breach by the Board of Directors of the Company of its
fiduciary duties to the Company's shareholders under applicable law, the Board
of Directors of the Company may withdraw or modify its approval or
recommendation of the Offer, the Merger Agreement and the Merger, approve or
recommend an Acquisition Proposal that is more favorable to the shareholders of
the Company than the Offer and Merger (a "Superior Proposal") or cause the
Company to enter into an agreement with respect to a Superior Proposal. The
Company shall provide reasonable notice to the Parent or Merger Sub to the
effect that it is taking such action. If the
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Company proposes to enter into an agreement with respect to any Superior
Proposal, it shall concurrently with proposing such an agreement pay, or cause
to be paid, the termination fee described in the next succeeding paragraph.
TERMINATION FEE. The Company has agreed to pay the Parent a fee in
immediately available funds equal to $4,000,000 upon the termination of the
Merger Agreement (i) by the Parent, if the Board of Directors of the Company
shall have withdrawn, modified or amended its recommendation or approval of the
Merger Agreement or the transactions contemplated thereby in a manner adverse to
the Parent, the Board of Directors of the Company shall have recommended an
Acquisition Proposal or the Board of Directors of the Company shall have
resolved to do any of the foregoing, (ii) by the Company to allow the Company to
enter into an agreement in respect of a Superior Proposal, or (iii) by the
Parent as a result of an intentional material breach of the Merger Agreement by
the Company following (but not prior to) the Company's receipt of an Acquisition
Proposal by any person or group other than Parent.
SHAREHOLDERS AGREEMENT
The following is a summary of the Shareholders Agreement, dated as of April
11, 1996 (the "Shareholders Agreement"), among the Parent, the Merger Sub, and
Norman R. Weldon, Ph.D., David C. MacGregor, M.D., Leonard Pinchuk, Ph.D.,
WestMed Venture Partners, L.P., Trinity Ventures II, L.P., Bruce A. Weber,
Herbert Kontges, Ph.D., John B. Martin, and Karen C. Vinjamuri (each a
"Shareholder" and collectively the "Shareholders"). Such summary is qualified in
its entirety by reference to the text of the Shareholders Agreement, a copy of
which, together with Schedule 1 thereto, is filed as Exhibit 2 hereto and is
incorporated herein by reference.
TENDER OF SHARES. Pursuant to the Shareholders Agreement, each Shareholder
has agreed to validly tender (and not withdraw) pursuant to and in accordance
with the Offer, not later than the fifth business day after commencement of the
Offer, the number of shares of Common Stock of the Company set forth opposite
that Shareholder's name on Schedule 1 to the Shareholders Agreement (the
"Existing Shares"), plus any Shares acquired by the Shareholder after the date
of the Shareholders Agreement and prior to its termination. The Existing Shares,
in the aggregate, constitute 1,487,291 Shares, or approximately 20.93% of the
outstanding Shares. The covenants and agreements contained in the Shareholders
Agreement with respect to tender of the Shareholders' Shares shall terminate
upon the earlier of (a) the Effective Time and (b) the first anniversary of the
date of the Shareholders Agreement, provided that restrictions in the
Shareholders Agreement on solicitation of or response to inquiries or any
Acquisition Proposal, and restrictions in the Shareholders Agreement on
specified transactions of transfer, encumbrance, or other disposition of
Shareholders' Shares or interests (including voting rights) in Shareholders'
Shares, shall terminate upon any earlier termination of the Merger Agreement.
VOTING OF SHARES. Each Shareholder has agreed that at any meeting of
shareholders of the Company or in connection with any written consent of
shareholders of the Company, that such Shareholder shall vote (or cause to be
voted) all the Shares beneficially owned by that Shareholder as of the
applicable record date (other than Shares that are not outstanding) (a) in favor
of the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms of the Merger Agreement; (b) against any action or
agreement that would result in a breach of any agreement of the Company under
the Merger Agreement; and (c) against transactions enumerated in the
Shareholders Agreement and any other action involving the Company or its
subsidiaries that is intended or that could reasonably be expected to interfere
with, delay or otherwise adversely affect the Merger and the transactions
contemplated by the Merger Agreement. The covenants and agreements contained in
the Shareholders Agreement with respect to the voting of the Shareholders'
Shares shall terminate upon the earlier of (i) the Effective Time and (ii) the
first anniversary of the date of the Shareholders Agreement, provided that
restrictions in the Shareholders Agreement on solicitation of or response to
inquiries or any Acquisition Proposal, and restrictions in the Shareholders
Agreement on specified transactions concerning the voting of or voting rights in
Shareholders' Shares, shall terminate upon any earlier termination of the Merger
Agreement.
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DISPOSITION OF ACQUIRED SHAREHOLDERS' SHARES. Each Shareholder has agreed
that (a) if the Merger Agreement is terminated (1) by the Parent, if the Board
of Directors of the Company shall have withdrawn, modified or amended its
recommendation or approval of the Merger Agreement or the transactions
contemplated thereby in a manner adverse to the Parent, the Board of Directors
of the Company shall have recommended an Acquisition Proposal or the Board of
Directors of the Company shall have resolved to do any of the foregoing, (2) by
the Company to allow the Company to enter into an agreement in respect of a
Superior Proposal, or (3) by the Parent as a result of an intentional material
breach of the Merger Agreement by the Company following (but not prior to) the
Company's receipt of an Acquisition Proposal by any person or group other than
Parent, and (b) during the period commencing on the date of such termination and
continuing until the first anniversary of the date of the Shareholders Agreement
such Shareholder's Shares are disposed of, transferred or sold to a person other
than Parent or Merger Sub in a transaction resulting in a direct or indirect
change in the ownership of a majority of the Common Stock or in a majority of
the individuals who constitute the Board of Directors of the Company on the date
of the Shareholders Agreement (a "Sale") and (c) the per share price for such
Sale exceeds the Offer price, then such Shareholder must pay to the Parent an
amount per share in cash equal to 50% of the difference between the gross per
share price for such Sale received or receivable by such Shareholder and the per
share Offer price. Any such payment required to be made to the Parent must be
made within three days of the Shareholder's receipt of the Sale proceeds. Any
such Sale must be made in an arm's length, bona fide transaction with an
unaffiliated person.
NO SOLICITATION. Each Shareholder has agreed that such Shareholder shall
not, in that Shareholder's capacity as such, directly or indirectly, initiate,
solicit (including by way of furnishing information) or respond to any inquiries
of the making of any proposal that constitutes an Acquisition Proposal, except
that a Shareholder who is a director of the Company may take actions in the
Shareholder's capacity as a director to the extent permitted by the Merger
Agreement. If any Shareholder receives any inquiry or proposal regarding any
Acquisition Proposal, that Shareholder shall promptly inform the Parent of that
inquiry or proposal. Each Shareholder must cease and cause to be terminated any
activities, discussions or negotiations with any parties commenced prior to the
date of the Shareholders Agreement with respect to such a solicitation or
response.
RESTRICTIONS ON TRANSFER, ETC. Except in connection with the transactions
contemplated in the Shareholders Agreement, no Shareholder shall, (a) directly
or indirectly offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to, or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of such Shareholder's Shares or any interest in those Shares; (b) grant
any proxies or powers of attorney, deposit any Shares into a voting trust or
enter into a voting agreement with respect to any Shares; or (c) take any action
that would make any representation or warranty of such Shareholder in the
Shareholders Agreement untrue or incorrect or have the effect of preventing or
disabling such Shareholder from performing such Shareholder's obligations under
the Shareholders Agreement.
CONFIDENTIALITY AGREEMENT
The Parent and the Company entered into a Confidentiality and Standstill
Agreement, dated August 16, 1995 (the "Confidentiality Agreement"), a copy of
which is filed as Exhibit 3 hereto and incorporated herein by reference.
Pursuant to the Confidentiality Agreement, the Parent agreed, among other
things, that it would keep confidential certain information ("Information")
furnished to it by the Company and to use the Information solely for the purpose
of evaluating a business transaction between the Parent and the Company.
AGREEMENTS FOR OWNERSHIP OF CORVITA CANADA, INC.
As a condition of the Merger Agreement, the Company entered into two stock
purchase agreements and other related transactions contemplated by such stock
purchase agreements, by which it agreed to purchase, directly and indirectly,
ownership of all of the issued and outstanding common
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stock of Corvita Canada, Inc., an Ontario, Canada corporation ("Corvita Canada")
that is not currently owned by the Company. Currently, the Company owns 115,000
shares of Corvita Canada common stock, 120,000 shares of Corvita Canada common
stock are owned by Cardiovascular Innovations Canada, Inc. ("CICI"), an Ontario,
Canada corporation, and 3,500 shares of Corvita Canada stock are owned by
Research Visions Canada, Inc., a Canadian corporation ("RVC").
CICI STOCK PURCHASE AGREEMENT. Pursuant to an agreement dated as of April
11, 1996 among George A. Adams, Ph.D., David C. MacGregor, M.D., Gregory J.
Wilson and Jennie M. Wilson as trustees for the Gregory Wilson Family Trust and
Jennie M. Wilson (collectively, the "CICI Sellers") and the Company, a copy of
which is filed as Exhibit 4 hereto and incorporated herein by reference, the
Company agreed to purchase all of the issued and outstanding common stock of
CICI, for an aggregate purchase price of US$1,943,320. The Company also agreed
to repay to the CICI Sellers the unpaid balance of outstanding shareholder loans
previously made by the CICI Sellers to CICI, together with accrued interest, in
the aggregate amount of CAN$16,320. The Company's purchase of the CICI common
stock is subject to the conditions, among others, that (a) the Company, Parent,
and the Merger Sub shall have entered into the Merger Agreement and (b) Merger
Sub shall have made the Offer and shall have accepted for payment and paid for
all of the Shares validly tendered and not withdrawn pursuant to the Offer.
RVC STOCK PURCHASE AGREEMENT. Pursuant to an agreement dated as of April
11, 1996, between RVC and the Company, a copy of which is filed as Exhibit 5
hereto and incorporated herein by reference, the Company agreed to purchase
3,500 shares of Corvita Canada common stock owned by RVC for an aggregate
purchase price of US$56,680.
RELATED AGREEMENTS. The other agreements related to the stock purchase
agreements described above are: (a) an escrow agreement whereby the certificates
for shares of CICI common stock will be held in escrow pending completion or
termination of the CICI stock purchase; (b) a trust deposit agreement whereby a
portion of the purchase price for CICI common stock being sold to the Company by
David C. MacGregor, M.D. will be held in trust for the payment of potential
Canadian withholding tax liability with respect to his stock sale (or,
alternatively, for release to Dr. MacGregor upon his provision of an appropriate
certificate issued by the Canadian Minister of National Revenue pursuant to
Section 116 of the Income Tax Act of Canada); (c) a letter agreement between the
Parent and Dr. MacGregor, whereby the Parent has agreed that it will not make or
cause to be made any election under Section 338 of the United States Internal
Revenue Code of 1986, as amended, with respect to the Merger Sub's acquisition
of the stock of the Company pursuant to the terms of the Merger Agreement, and
has further agreed that in the event the Parent does make or cause to be made
such a Section 338 election, the Parent will indemnify Dr. MacGregor for U.S.
federal income tax liability arising as a result of such election; (d) a letter
agreement between the Parent and Corvita Canada whereby the Parent agrees to
reimburse Corvita Canada an amount of up to US $250,000 for the loss of
preferential rates for certain refundable research and development tax credits,
in the event that the Merger Agreement is terminated by the Company in certain
specified circumstance and provided that such credits are actually lost by
Corvita Canada as a result of the execution of the CICI Stock Purchase Agreement
and the RVC Stock Purchase Agreement; and (e) a letter agreement between Corvita
Canada and the Parent whereby Corvita Canada agrees that from the date of the
letter agreement until the earlier of the completion of the purchase by the
Company of the common stock of CICI or the termination of the Merger Agreement,
Corvita Canada will conduct its operations and maintain its books and records in
its usual manner and consistently with past practice and will refrain from
entering into certain specified transactions and agreements without the prior
written consent of the Parent.
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LOAN AGREEMENT AND LICENSE AGREEMENT
The Parent and the Company entered into a loan agreement, dated April 11,
1996 (the "Loan Agreement"), whereby the Parent agreed to make advances to the
Company from time to time in an aggregate amount not to exceed $2,000,000 until
the earlier to occur of (a) the termination of the Merger Agreement and (b)
August 9, 1996. Borrowings under the Loan Agreement are evidenced by a
promissory note of the Company, dated April 11, 1995 (the "Promissory Note"), by
the terms of which outstanding principal amounts bear interest at a rate of
8.25% per annum, such interest is payable monthly in arrears, and outstanding
principal amounts are due and payable upon demand of the Parent at any time on
or after the earlier to occur of (i) August 9, 1996, (ii) the termination of the
Merger Agreement and (iii) the consummation of the Merger (I.E., the Effective
Time). Pursuant to the Loan Agreement and the Promissory Note, the Parent
advanced $550,000 to the Company on April 12, 1996, and agreed to advance up to
$150,000 every five business days upon the Company's request, after receiving
the Company's certificate to the effect that (x) the requested amount will be
used to pay obligations of the Company that were incurred in the ordinary course
of business and that are set forth in a schedule accompanying the request, or
that are obligations set forth in a schedule to the Loan Agreement, and (y) that
the Company is continuing to operate its business in the ordinary course
consistent with past practice.
In connection with the Loan Agreement and Promissory Note, the Parent and
the Company entered into a License Agreement, dated April 11, 1995 (the "License
Agreement"), whereby the Company granted the Parent a non-exclusive worldwide
license to make, have made, use, sell and otherwise dispose of a polycarbonate
urethane material that is covered by, whose method of making or use is covered
by, or that is a component of an article of manufacture covered by at least one
claim of certain patents and patent applications owned by the Company, and any
related counterparts, foreign equivalents, divisions and continuations in part.
Copies of the Loan Agreement, the Promissory Note and the License Agreeement are
collectively filed herewith as Exhibit 6 and incorporated herein by
reference.The License Agreement may be terminated by the Company upon payment in
full of principal and interest payable to the Parent under the Loan Agreement
and Promissory Note, provided that such payment is made on or before the earlier
of (xx) August 9, 1996 and (yy) forty-five days after the Merger Agreement is
terminated in one of a number of specified circumstances. In certain other
circumstances, including the institution of bankruptcy or insolvency proceedings
by the Company or by undisclosed creditors of the Company as provided in the
License Agreement, or termination of the Merger Ageeement by the Company after
its receipt of a Superior Proposal, the License Agreement may not be terminated,
even if the Company repays in full all amounts of principal and interest payable
to the Parent under the terms of the Loan Agreement and Promissory Note.
TRANSFERS OF SHARES OF EUROPEAN SUBSIDIARIES
Norman R. Weldon, Ph.D., the Company's President and Chief Executive
Officer, has agreed to transfer to an individual to be designated by the Parent
one share of the capital stock of Corvita Europe, S.A. ("Corvita Europe") now
owned by Dr. Weldon; Herbert Kontges, Ph.D., Managing Director of Corvita
Europe, has agreed to transfer to an individual to be designated by the Parent
one share of the capital stock of Corvita Europe now owned by Dr. Kontges; and
Dr. Weldon has agreed to transfer to an individual designated by the Parent five
shares of the capital stock of Laboratoire Corvita, S.A.R.L. ("Laboratoire
Corvita") now owned by Dr. Weldon. Corvita Europe is a corporation organized
under the laws of Belgium; it has 51,500 shares of issued and outstanding
capital stock, 51,498 of which are owned by the Company. Laboratoire Corvita is
a corporation organized under the laws of France; it has 500 shares of issued
and outstanding capital stock, 495 of which are owned by the Company. The share
transfers by Dr. Weldon and Dr. Kontges will become effective on the Acceptance
Date. Dr. Weldon and Dr. Kontges have each delivered stock powers to the Parent
for the purpose of effecting such share transfers in accordance with the
foregoing agreements.
MATERIAL AGREEMENTS
The Company and Corvita Europe have entered into certain agreements with
third parties, which agreements are designated as "Material Agreements" under
the provisions of the Merger Agreement
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and are required to be in effect to satisfy the conditions of the Offer. The
agreements so designated are: (a) a License Termination Agreement, dated as of
December 1, 1995, between the Company and Sumitomo Bakelite Co., Ltd., a
Japanese corporation ("Sumitomo"), terminating the License Agreement, dated as
of June 19, 1990, between the Company and Sumitomo; (b) a License Agreement,
dated as of January 24, 1996, among Corvita Europe, Jean Pierre Dereume, M.D.,
and L'Universite Libre de Bruxelles; (c) a Consent to Assignment provided to the
Company by Vascor, Inc., dated April 9, 1996, whereby Vascor, Inc. consents to
the assignment to The Polymer Technology Group ("PTG") of certain of the
Company's rights and obligations under a License and Supply Agreement, dated
November 30, 1993, between Vascor, Inc. and the Company; (d) a License
Agreement, dated April 9, 1996 between the Company and PTG; and (e) the CICI and
RVC Stock Purchase Agreements.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has unanimously determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the shareholders
of the Company and that the Offer and the Merger are otherwise in the best
interests of the Company and its shareholders, has approved and adopted the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, and recommends that all holders of Shares accept the Offer and
tender their Shares pursuant to the Offer.
Copies of a letter to the Company's shareholders communicating the Board's
recommendation and a press release announcing the Merger Agreement and related
transactions are filed herewith as Exhibits 7 and 8, respectively, and are
incorporated herein by reference.
(B) BACKGROUND AND REASONS FOR THE BOARD'S RECOMMENDATION.
BACKGROUND. Beginning in early, 1993, the Company and the Parent from time
to time discussed the possibility of a strategic relationship or business
transaction between their companies. Representatives of the Company and the
Parent met to discuss a possible joint development of medical device products,
and exchanged technical information pursuant to a confidentiality agreement
between the companies.
On June 29, 1993, representatives of the Parent and the Company met to
continue their discussions of a possible joint technical development arrangement
between the companies. At that meeting, a representative of the Parent raised
the possibility of the Parent acquiring an equity investment in the Company in
exchange for rights in certain proprietary technology of the Company.
Discussions of a possible joint development arrangement, possibly including
an equity investment in the Company, continued throughout the summer of 1993.
Those discussions were terminated before the end of 1993.
The Company has sold polycarbonate urethane material to Howmedica, Inc., a
subsidiary of the Parent. Howmedica, Inc. has purchased the material for
evaluation.
During 1994, the Company had a series of discussions with other potential
corporate partners concerning a possible investment or strategic alliance. The
Board of Directors of the Company directed Howard S. Wachtler, the Chairman of
the Board's Business Development Committee, to participate with management in
pursuing such opportunities. The Company concluded a private equity placement in
early 1994 and a public offering on November 1, 1994. The Company remained
interested in finding a strategic partner or investor relationship to help
broaden the Company's market reach and to strengthen the Company's financial
position.
By late 1994, the Company was discussing possible terms of strategic
relationships with three other companies. One such arrangement was proposed to
involve the joint development of a coronary stent product, a distribution
arrangement for the Company's products in Europe, and a sale of a significant
portion of the Company's equity to the corporate partner. Another arrangement
under
8
<PAGE>
discussion at that time was proposed to involve a substantial equity investment,
a commitment for future stock purchases, a commitment to fund certain of the
Company's clinical trials, and a product distribution agreement for one of the
Company's product lines. A third was proposed to involve a substantial equity
investment and a grant of marketing rights for one or more of the Company's
product lines. In each case, the Company's Board of Directors authorized the
Company's management and the Board's Business Development Committee to proceed
with discussions, and reviewed possible terms for the conclusion of a definitive
agreement; however, in each case, the parties ultimately were unable to agree on
terms and discussions with those potential corporate partners were ended in
December, 1994 and in early 1995.
During 1995, the Company conducted a series of meetings and discussions with
a fourth potential corporate partner, which led to in-depth discussions of the
terms for a possible transaction. The terms under discussion included a possible
series of capital investments in the Company, with possible rights to purchase a
controlling interest, and possible marketing rights for distribution of one or
more of the Company's products.
In addition to the four potential strategic alliance arrangements described
above, management of the Company and Mr. Wachtler continued throughout 1995 to
engage in discussions with a number of other potential investors and corporate
partners. In May 1995, a representative of the Parent contacted a shareholder of
the Company regarding the possible acquisition by the Parent of an equity
interest in the Company. The Parent's representative was told that the Company
was considering a number of strategic alternatives, including a possible sale of
the Company, and was referred to Mr. Wachtler. In June 1995, a representative of
the Parent and Mr. Wachtler discussed the Parent's possible interest in
exploring an acquisition of the Company.
In early 1995, the Company also began to seek an investment banking firm to
advise the Company in its consideration of corporate partner or strategic
alliance opportunities and financing alternatives. Management of the Company
spoke with representatives of several investment banking firms, and reported to
the Board of Directors and its Business Development Committee on their efforts
to identify an investment banking firm to serve as a financial advisor to the
Company.
In late June and early July, 1995, representatives of the Company met in
person and by telephone with Dillon, Read & Co. Inc. ("Dillon Read") to discuss
the possibility of Dillon Read advising the Company. On July 10, 1995, the
Company entered into an engagement letter with Dillon Read, whereby the Company
agreed to engage Dillon Read for a period of one year to serve as exclusive
financial advisor to the Company with respect to business combinations. The
engagement letter contemplated that Dillon Read would advise concerning such
possible transactions as, among others, a sale of part of the Company by way of
a sale of common stock, assets, or other securities, or a sale of all of the
Company by way of a merger, transfer of assets, or otherwise, for cash or
securities, in one or a series of transactions.
In addition, on July 19, 1995, the Company entered into an agreement with
Maredo, Ltd. for advisory services with respect to a possible financing with
certain European institutional investors. The Company also spoke with a number
of investment banking firms during 1995 concerning possible financing
transactions.
Dillon Read initiated or reopened contacts with more than fourteen companies
that it or the Company had identified as potential corporate partners of or
investors in the Company. Throughout the remainder of 1995 and in early 1996,
Dillon Read worked with the Company and Mr. Wachtler to solicit interest in a
strategic alliance with or acquisition of the Company.
As part of this effort, a representative of Dillon Read and Mr. Wachtler
telephoned the Parent to further explore a possible acquisition of the Company,
and Dillon Read sent the Parent on July 18, 1995 an information packet
describing the Company.
On August 16, 1995, the Parent and the Company entered into the
Confidentiality Agreement, and shortly thereafter, the Parent began due
diligence meetings with management and technical
9
<PAGE>
personnel of the Company. Pursuant to the Confidentiality Agreement, the Parent
requested and received certain non-public information concerning the Company.
Subsequent due diligence meetings and document reviews were conducted throughout
the fall of 1995.
On October 4, 1995, a representative of Dillon Read and a representative of
the Parent spoke concerning the Parent's interest in acquiring the Company. The
Parent's representative initiated an exploratory discussion of both parties'
positions with respect to a possible price for a transaction.
In mid-October, a representative of Dillon Read indicated to a
representative of Lazard Freres that the Company's Board of Directors would like
to receive a written expression of interest in acquiring the Company from
Parent. The Parent responded by providing a written, non-binding indication of
interest from the Parent to acquire the Company at $10.00 per share, provided
that the Company negotiate exclusively with the Parent.
On October 17, 1995, Dillon Read and Epstein Becker & Green, P.C., the
Company's legal advisors, reviewed with the Board of Directors of the Company
the status of discussions with various potential corporate partners. As part of
that discussion, the Board reviewed the Parent's written, non-binding indication
of interest, and although the Board supported continuing negotiations, it
rejected the exclusivity provision. A representative of Dillon Read communicated
the Board's position to a representative of Lazard Freres. The Lazard Freres
representative asked whether there was an acquisition price at which the Company
would negotiate exclusively with Parent. After further deliberation, the Board
of Directors of the Company indicated that it would permit an exclusive
negotiation at price of $12.00 per share. On October 18, 1995, P. Nigel Gray,
President of the Parent's Hospital Products Group, sent a non-binding letter to
the Company confirming the interest of the Parent in purchasing all of the
outstanding shares of common stock of the Company at a price of approximately
$10.00 per share, without an exclusivity provision.
On November 2, 1995, representatives of the Company, the Parent and Dillon
Read met in New York and discussed the status of certain intellectual property
rights of the Company, and the potential for obtaining or clarifying the
Company's ownership of certain European and Japanese rights through agreements
with third parties. The Parent asked that the Company pursue agreements with
those third parties and indicated that obtaining such agreements would be a
condition of any possible acquisition offer by the Parent. Following that
meeting, the Company began negotiations with the third parties in question with
a view to obtaining the agreements the Parent had requested.
On December 1, 1995, the Company received a letter from one of the other
potential corporate partners with whom it had been having serious discussions
concerning a possible strategic relationship with, and an investment in, the
Company, in which that other company indicated it would not be in a position to
make an offer to the Company.
In early December 1995, the Parent and its counsel presented the Company and
the Company's counsel with a proposed draft merger agreement and a proposed
draft shareholders agreement. The draft merger agreement referred to a number of
conditions to any offer by the Parent, including third-party agreements
concerning European and Japanese intellectual property rights previously
requested by the Parent, the agreement of certain shareholders to tender their
stock to the Parent or Merger Sub, and a proposed license of the Company's
technology to the Parent.
Also in early December, Mr. Wachtler and a representative of Dillon Read met
with Mr. Gray and a representative of Lazard Freres to discuss the status of
negotiations between the parties, including the range of prices at which the
Parent might make an acquisition offer. The Company's representatives indicated
that the Company was interested in receiving $11.00 per Share. The Parent's
representatives indicated that the Parent was considering an offer at
approximately $10.00 per share, but that the aggregate consideration might be
increased by up to $4 million less the cost to the Company of obtaining
third-party agreements that the Parent had identified as a condition of any
possible offer.
Throughout the remainder of December, 1995 and January, 1996, the Parent
continued its due diligence efforts and counsel to the Parent and the Company
continued preparation and negotiation of
10
<PAGE>
documentation for a merger agreement between the Parent and the Company. Mr.
Wachtler kept members of the Board of Directors of the Company informed of the
status of negotiations with the Parent by means of numerous informal reports.
Dillon Read also continued its efforts to identify alternative business
combination opportunities. The Company received preliminary requests for
information from two companies in January 1996, and continued discussions in the
United States and in Europe with another potential corporate partner.
On January 18, 1996, the Company issued a press release in which it
announced that it was undergoing discussions for its acquisition at a price in
the range of approximately $10.00 per share.
In late January and February, 1996, representatives of the Parent, the
Company and their counsel met to discuss the Company's supply agreements for
supply of polycarbonate urethane material. Representatives of the Company and
the Parent discussed seeking potential third party manufacturers of the
Company's polycarbonate urethane material.
Through the remainder of February and during March 1996, the parties
continued to negotiate the terms of an acquisition agreement, the Company and
its counsel continued to pursue obtaining the third-party agreements that had
been requested by Parent, and Mr. Wachtler, the Company's management, and its
finacial and legal adivsors continued to make reports to the Board of Directors
concerning the status of negotiations with the Parent.
During this same period, the Parent's financial advisor and the Company's
financial advisor continued to hold discussions concerning, among other things,
the offer and merger consideration. Representatives of the Company discussed
with representatives of the Parent the Company's need to obtain financing to
fund the Company's operational needs. In February 1996, the parties' financial
advisors discussed the transaction by telephone and the Parent's financial
advisor indicated that the Parent would likely consider an offer in the range of
$10.25 to $10.50 per share, assuming that the parties were able to resolve open
points and that the conditions established by the Parent were satisfied, and
subject to the Parent receiving current information with respect to the
Company's cash balances and payables.
At a meeting of the Board of Directors of the Company on February 29, 1995,
among other business, the Board ratified and approved the license agreement
among Corvita Europe, Jean Pierre Dereume and L'Universite Libre de Bruxelles.
In March and early April, Parent and the Company continued negotiations that
culminated in Parent and the Company agreeing upon a form of merger agreement
and certain shareholders agreeing upon a form of Shareholders agreement. The
Company also continued negotiations to obtain third-party manufacturers of the
Company's polycarbonate urethane material.
On April 4, 1996, a representative of Lazard Freres telephoned a
representative of Dillion Read to indicate that the Parent was prepared to make
an acquisition offer of $10.25 per share, subject to completing the Merger
Agreement and the transactions contemplated in the Merger Agreement.
The Board of Directors of the Company met on April 5, 1996, to consider the
Parent's proposed acquisition offer and the terms of the draft merger agreement.
Representatives of Epstein, Becker & Green, P.C. reviewed in detail with the
Board the terms of the proposed merger agreement, the proposed Shareholders
agreement, the conditions of the offer, and the related transactions and
agreements contemplated by the proposed merger agreement. Epstein, Becker &
Green, P.C. also explained the procedures for the tender offer contemplated by
the terms of the proposed merger agreement. Representatives of Dillon Read
distributed materials in draft form supporting Dillon Read's analysis of the
offer from a financial point of view, discussed a range of offer prices at which
Dillon Read might be able to conclude that an offer was fair, and noted that the
$10.25 proposed offer price was within such range. The Board of Directors
conducted a discussion of the information presented by its legal and financial
advisors, and considered the factors described below at REASONS FOR THE
TRANSACTIONS; FACTORS CONSIDERED BY THE BOARD. The Board of Directors resolved
to approve the
11
<PAGE>
proposed merger agreement, the proposed shareholders agreement, and the offer,
subject to the satisfactory completion of negotiations of the remaining open
points, including conclusion of a license agreement with a third-party
manufacturer, and receipt of a fairness opinion of Dillon Read.
During the period from April 5 through April 11, 1996, representatives of
each of the Company, the Parent, and their respective legal advisors completed
negotiations of the remaining open points of the proposed merger agreement,
finalized documentation of the Merger Agreement, the Shareholders Agreement, and
other related agreements and documents, and continued discussions of a possible
loan from the Parent to the Company. On April 10 and the morning of April 11,
the parties concluded the terms of a Loan Agreement and Promissory Note for a
loan by the Parent of up to $2,000,000, together with a related License
Agreement.
On the morning of April 11, 1996, Dillon Read delivered its Opinion, and the
Merger Agreement, the Shareholders Agreement, the Loan Agreement and the License
Agreement were executed and the transaction was publicly announced.
REASONS FOR THE TRANSACTIONS; FACTORS CONSIDERED BY THE BOARD. In approving
the Merger Agreement and the transactions contemplated thereby and recommending
that all holders of Shares tender their Shares pursuant to the Offer, the Board
of Directors considered a number of factors, including:
1. the financial and other terms and conditions of the Offer and the
Merger Agreement;
2. the presentation of Dillon Read at the April 5, 1996 Board of
Directors' meeting, and the Board of Directors' expectation that Dillon Read
would supply an opinion to the effect that, as of the date of its opinion
and based upon and subject to certain matters stated therein, the $10.25 per
Share cash consideration to be received by the holders of Shares pursuant to
the Offer and the Merger is fair, from a financial point of view, to the
public shareholders of the Company (the "Opinion"). Dillon Read presented
its final Opinion on April 11, 1996, the full text of which, setting forth
the assumptions made, matters considered and limitations on the review
undertaken by Dillon Read, is attached hereto as Exhibit 9 and is
incorporated herein by reference. Shareholders are urged to read the Opinion
carefully in its entirety;
3. the fact that the structure of the acquisition of the Company by the
Merger Sub as provided for in the Merger Agreement involves a cash tender
offer for all outstanding Shares to be commenced within five business days
of the public announcement of the Merger Agreement and to be followed as
promptly as practicable by a merger for the same consideration, thereby
enabling the Company's shareholders to obtain cash for their Shares at the
earliest possible time;
4. the fact that the Merger Agreement, which prohibits the Company, its
subsidiaries and their respective officers, directors, employees,
representatives, agents or affiliates from initiating, soliciting or
knowingly encouraging any potential Acquisition Proposal (as defined in the
Merger Agreement), permits the Company to furnish non-public information to,
or to enter into, maintain or continue discussions and negotiations with,
any person or entity that makes an unsolicited inquiry, offer or proposal
relating to an Acquisition Proposal after the date of the Merger Agreement,
if the Board of Directors, after consultation with and based upon the advice
of counsel, determines that failure to do so would create a reasonable
possibility of breach of its fiduciary duties;
5. the fact that in the event that the Board were to decide to accept
an Acquisition Proposal by a third party, the Board could terminate the
Merger Agreement and pay the Parent a termination fee of $4,000,000 million
(or approximately $0.56 per outstanding Share and $0.48 per Share on a fully
diluted basis). The Board, after considering, among other things, the advice
of Dillon Read, did not believe that such termination provision would deter
a higher offer by a third party interested in acquiring the Company;
12
<PAGE>
6. the fact that the obligations of the Parent and the Merger Sub to
consummate the Offer and the Merger pursuant to the terms of the Merger
Agreement are not conditioned upon financing;
7. the fact that on January 18, 1996, the Company issued a press
release that stated that the Company was in discussions regarding a possible
acquisition of the Company in the $10 per Share range, and the fact that
neither prior nor subsequent to such press release did any other party
indicate a willingness to pursue an acquisition of the Company for a cash
price in excess of the $10.25 per Share price offered by the Parent and
Merger Sub;
8. the fact that the Shareholders were willing to enter into the
Shareholders Agreement pursuant to which they agreed to tender substantially
all of their Shares pursuant to the Offer and to vote their Shares in favor
of the Merger; it being noted by the Board of Directors of the Company that
the Shareholders will be treated the same as all other shareholders in the
Offer and the Merger;
9. the fact that the terms of the Merger Agreement and the Shareholders
Agreement should not unduly discourage other third parties from making bona
fide proposals subsequent to signing the Merger Agreement and, if any such
proposal were made, the Company, in the exercise of its fiduciary duties,
could determine to provide information to and engage in negotiations with
any other third party;
10. the historical market price of, and recent trading activity in, the
Shares; information with regard to the financial condition, results of
operations, competitive position, business and prospects of the Company, as
reflected in the Company's projections; current economic and market
conditions (including current conditions in the industry in which the
Company is engaged) and the going concern value of the Company; the Board
did not consider the liquidation of the Company as a viable course of
action, and, therefore, no appraisal or liquidation values were sought for
purposes of evaluating the Offer and the Merger;
11. the possible alternatives to the Offer and the Merger, including,
without limitation, continuing to operate the Company as an independent
entity and the risks associated therewith;
12. the familiarity of the Board of Directors with the business, results
of operations, properties and financial condition of the Company and the
nature of the industry in which it operates;
13. the compatibility of the business and operating strategies of the
Parent and the Company; and
14. the regulatory approvals required to consummate the Merger,
including, among others, antitrust approvals, and the prospects for
receiving such approvals.
The Board of Directors did not assign relative weights to the factors or
determine that any factor was of particular importance. Rather, the Board of
Directors viewed their position and recommendation as being based on the
totality of the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Dillon Read was retained to act as financial advisor to the Company in
considering and reviewing possible business combinations, including a possible
sale of the Company. Dillon Read will receive upon the purchase of Shares by the
Parent pursuant to the Offer total compensation equal to $500,000 plus 3% of the
consideration in excess of $50,000,000 when and as paid to the Company and/or
the shareholders, or approximately $1.55 million (the "Transaction Fee"). Dillon
Read was paid a $25,000 engagement fee and is being paid a fee of $200,000 for
its Opinion, which amounts will be credited against the Transaction Fee. The
Company incurred the obligation to pay the Opinion fee on delivery of the
Opinion. The Company also has agreed to reimburse Dillon Read for its
out-of-pocket expenses, including fees of its legal counsel, and to indemnify
Dillon Read (and its officers, directors, employees,
13
<PAGE>
controlling persons and agents) against certain liabilities arising out of or in
connection with Dillon Read's engagement. The terms of the Company's engagement
of Dillon Read are set forth in a letter agreement dated July 10, 1995.
Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in the Shares have been effected during the past 60 days
by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender pursuant to
the Offer all Shares beneficially owned by them (other than Shares issuable upon
exercise of stock options and Shares, if any, which if tendered could cause such
persons to incur liability under the provisions of Section 16(b) of the Exchange
Act).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or divided
policy of the Company.
(b) Except as described in Item 3(b) and Item 4 above (the provisions of
which are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
14
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of April 11, 1996, among Corvita Corporation, Pfizer Inc. and
HPG Acquisition Corp.
Exhibit 2 Shareholders Agreement, dated as of April 11, 1996, among Pfizer Inc., HPG Acquisition Corp. and
certain shareholders named therein, and including Schedule 1 thereto.
Exhibit 3 Confidentiality and Standstill Agreement, dated August 16, 1995, between Dillon, Read & Co. Inc. on
behalf of Corvita Corporation and Pfizer Inc.
Exhibit 4 Stock Purchase Agreement, dated as of April 11, 1996, among Corvita Corporation and George A. Adams,
David C. MacGregor, Gregory J. Wilson and Jennie M. Wilson as trustees for the Gregory Wilson Family
Trust, and Jennie M. Wilson.
Exhibit 5 Stock Purchase Agreement, dated as of April 11, 1996, between Corvita Corporation and Research
Visions Canada, Inc.
Exhibit 6 Loan Agreement, dated April 11, 1996, between Pfizer Inc. and Corvita Corporation; Promissory Note of
Corvita Corporation, dated April 11, 1996; and License Agreement, dated April 11, 1996, between
Corvita Corporation and Pfizer Inc.
Exhibit 7 Letter to Shareholders of Corvita Corporation, dated April 17, 1996.
Exhibit 8 Press Release, dated April 11, 1996, issued by Pfizer Inc. and Corvita Corporation.
Exhibit 9 Opinion of Dillon, Read & Co. Inc., dated April 11, 1996, and Consent by Dillon Read to the inclusion
of the Opinion as an Exhibit, dated April 16, 1996.
</TABLE>
15
<PAGE>
SIGNATURE
After reasonable 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: April 17, 1996
By /s/ NORMAN R. WELDON
-----------------------------------
Name: Norman R. Weldon, Ph.D.
Title: President and Chief
Executive Officer
<PAGE>
SCHEDULE I
CORVITA CORPORATION
8210 N.W. 27TH STREET
MIAMI, FLORIDA 33122
------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
The Information Statement is being mailed on or about April 17, 1996, as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"). You are receiving this Information Statement in connection
with the possible election of persons designated by the Parent to a majority of
the seats on the Board of Directors of the Company. The Merger Agreement
requires the Company to take all action necessary to cause the Parent Designees
(as defined below) to be elected to the Board of Directors under the
circumstances described therein. This Information Statement is required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. See "General
Information Regarding the Company". Capitalized terms used and not otherwise
defined herein shall have the meaning set forth in the Schedule 14D-9.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
Pursuant to the Merger Agreement, the Merger Sub commenced the Offer on
April 17, 1996. The Offer is scheduled to expire at 12:00 Midnight on May 14,
1996, unless the Offer is extended.
The following information is based on the Company's Proxy Statement dated
September 15, 1995, and, except as indicated, such information is given as of
such date.
The information contained in this Information Statement (including
information incorporated by reference) concerning the Parent, the Merger Sub and
the Parent Designees has been furnished to the Company by the Parent, and the
Company assumes no responsibility for the accuracy or completeness of such
information. Certain capitalized terms used but not defined in this Information
Statement have the meanings ascribed to them in the Schedule 14D-9.
GENERAL INFORMATION REGARDING THE COMPANY
The Shares are the only class of voting securities of the Company. Each
Share entitles its record holder to one vote. As of April 4, 1996, there were
7,106,149 Shares outstanding, 808,636 Shares were reserved for issuance upon the
exercise of certain options outstanding and 491,699 Shares were reserved for
issuance upon the exercise of certain warrants to purchase Shares outstanding.
ELECTION OF DIRECTORS
The Merger Agreement provides that, promptly upon the purchase by the Merger
Sub of such number of Shares that represents a majority of the outstanding
Shares on a fully diluted basis, the Parent shall be entitled to designate the
number of directors, rounded to the next whole number, that equals the product
of (i) the total number of directors on the Company's Board of Directors (giving
effect to the election of any additional directors pursuant to this provision)
and (ii) the percentage (expressed as a decimal) that the number of Shares
beneficially owned by Parent bears to the total number of Shares outstanding.
The Company will, subject to the provisions of Section 14(f) of the Exchange Act
and Rule 14f-1 under the Exchange Act, use all reasonable efforts necessary to
cause the persons designated pursuant to or listed on Schedule 2.6 of the Merger
Agreement to be elected or appointed to the Board of Directors of the Company.
It is expected that the Parent Designees may assume office at any time
following the purchase by the Parent of a majority of the outstanding Shares on
a fully diluted basis pursuant to the Offer, which purchase cannot be earlier
than May 15, 1996, and that, upon assuming office, the Parent Designees will
thereafter constitute the entire Board of Directors of the Company. All of the
current directors of the Company have indicated their intention to resign as
directors on the Control Date.
<PAGE>
Biographical information concerning each of the Parent Designees is
presented below.
PARENT DESIGNEES
The Parent has informed the Company that the Parent Designees shall be the
persons set forth in the following table. The following table sets forth the
name, age, present principal occupation or employment and five-year employment
history for each of the persons whom the Parent has designated pursuant to
Schedule 2.6 of the Merger Agreement as the Parent Designees. The business
address of each such person is 235 East 42nd Street, New York, NY 10017, and
each such person is a citizen of the United States, except P. Nigel Gray is a
citizen of the United Kingdom, and George A. Stewart is a citizen of Canada.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME AGE EMPLOYMENT HISTORY
- --------------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
P. Nigel Gray 57 President of Pfizer's Hospital Products Group (July 1995-Present); Vice
President (1994-Present); President of Pfizer's Medical Devices Division
(1993-1995); Executive Vice President of Pfizer's Hospital Products
Division (1993-1995); President of Howmedica International (1992-1993);
and Senior Vice President and General Manager of Howmedica International
(1987-1992).
George A. Stewart 53 President of HPG Acquisition Corp. (January 1996-Present); President of
Pfizer's Medical Devices Division (1995-Present); President, Valleylab,
Inc. (1993-1995); President, Schneider Worldwide (1992-1993); and
President, Shiley Inc. (1991-1992).
C. Dean Maglaris 50 Vice President, Business Planning and Development, of Pfizer's Hospital
Products Group (September 1995-Present); Group Vice President, National
Accounts Operations, of Pfizer's U.S. Pharmaceutical Group (1994-1995);
Vice President, General Manager--National Health Care Operations, of
Pfizer's U.S. Pharmaceutical Group (1992-1994); and Vice President of
Marketing for Pfizer Labs (1987-1992).
Dorothy Bonner Burke 52 Secretary and Vice President of HPG Acquisition Corp. (January
1996-Present); and Assistant General Counsel of Pfizer (1990-Present).
William E. Rhodes, III 42 Vice President of HPG Acquisition Corp. (January 1996-Present); Director,
Business Development and Technology, of Pfizer's Hospital Products Group
(1993-Present); President of The William-James Co. Biomedical Consulting
Firm (1983-1993).
</TABLE>
The Parent has advised the Company that, to the best of the knowledge of the
Parent, none of the Parent Designees currently is a director of or holds any
position with the Company, and except as disclosed in the Offer to Purchase,
none of the Parent Designees beneficially owns any securities (or rights to
acquire any securities) of the Company or has been involved in any transactions
with the Company or any of its directors, executive officers or affiliates that
are required to be disclosed pursuant to the rules of the Commission, except as
may be disclosed in the Offer to Purchase.
The Parent has advised the Company that each of the persons listed in the
table above has consented to act as a director, and that none of such persons
has during the last five years been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or was a
I-2
<PAGE>
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and 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 CURRENT MEMBERS OF THE BOARD AND EXECUTIVE OFFICERS OF THE COMPANY
Currently the Company's entire Board of Directors is elected at the Annual
Meeting of Shareholders to hold office until the next Annual Meeting of
Shareholders and until their successors are duly elected and qualified. The name
and age of each current director, the year in which such director first became a
director of the Company, the office held within the Company by such director, if
any, the principal occupation of such director during the past five years and,
as of June 30, 1995, any other directorships held by such director in any
company subject to the reporting requirements of the Exchange Act or in any
company registered as an investment company under the Investment Company Act of
1940, as amended, are set forth below:
<TABLE>
<CAPTION>
YEAR FIRST SERVED
NAME AGE AS A DIRECTOR POSITION
- ----------------------------------- --- ----------------- --------------------------------------
<S> <C> <C> <C>
Norman R. Weldon, Ph.D. 61 1986 President, Chief Executive
Officer and Director
David C. MacGregor, M.D. 57 1990 Chairman of the Board and Vice
President of Medical Research
Richard L. Kronenthal, Ph.D. 66 1991 Director
Donald L. Murfin 52 1990 Director
David Nierenberg 42 1992 Director
Photios T. Paulson 56 1990 Director
Howard S. Wachtler 46 1988 Director
</TABLE>
NORMAN R. WELDON, PH.D., is a co-founder of the Company, has been its
President, Chief Executive Officer and a Director since December 1986 and is
currently Chairman of the Nominating Committee. Dr. Weldon has degrees in
biochemistry, industrial management and economics. He has been in senior line
management positions in high technology companies for 30 years, serving as
President and Chief Executive Officer of CTS Corporation (1976-1979) and Cordis
Corporation (1979-1987). Dr. Weldon also serves as a director of The New Economy
Fund, Small Cap World Fund, Novoste Corporation and Enable Medical Corporation,
and is a member of the Advisory Board of The Investment Company of America.
DAVID C. MACGREGOR, M.D., is a co-founder of the Company and has served as
Chairman of the Board and Vice President of Medical Research since 1990 and as a
Director since 1987. Dr. MacGregor has served as Chairman of the Board of
Corvita Canada since June 1991. From 1987 until 1990, Dr. MacGregor was Medical
Director and Vice President of Clinical Research at Cordis Corporation, and from
1981 until 1987, was Vice President for Medical Research at Cordis. Dr.
MacGregor is a cardiovascular and thoracic surgeon. He first conceived the
concept for the Corvita Graft in 1980 and has published over 100 scientific
papers in the medical literature. Dr. MacGregor has been awarded 20 U.S.
patents, including the basic patents covering the mechanical structure of the
Corvita Grafts. Dr. MacGregor directs the Company's medically related
activities, including animal and clinical trials, product assurance activities
and the medical interface with regulatory agencies. Dr. MacGregor devotes
approximately 85% of his time to the performance of Company duties. The Company
believes that the amount of time that Dr. MacGregor devotes to Company duties is
sufficient for the performance thereof. Dr. MacGregor is also a director of
ORTECH Corporation, a not-for-profit research organization.
RICHARD L. KRONENTHAL, PH.D., has been a Director since 1991. Dr. Kronenthal
is a polymer chemist and a consultant to medical product companies and venture
capital groups. Since 1989, Dr. Kronenthal has been President of Kronenthal
Associates, a consulting firm. From 1957 to 1989, he
I-3
<PAGE>
was employed by Ethicon, Inc. where he was Director of Research and Development
and headed a major research project to develop a small diameter vascular graft.
Dr. Kronenthal is a director of Lukens Medical, and Direct Therapeutics
Corporations. He is also a scientific advisor to Ventures Medical, SEA Ventures
Inc., Acusphere, Inc., Merocel Corporation, Melanx Corporation, Ortec
International and Chitogenics.
DONALD L. MURFIN has been a Director since 1990 and is currently Chairman of
the Audit Committee. Mr. Murfin has been a general partner of Chemicals and
Materials Enterprise Associates, Limited Partnership, a venture capital limited
partnership, since 1989. Mr. Murfin was a General Partner of Trident Capital
Fund, a venture capital limited partnership, from 1988 to 1989. He is a polymer
chemist and from 1985 to 1988, was Vice President of The Lubrizol Corporation, a
manufacturer of specialty chemicals, and from 1979 to 1988, was President and
Director of Lubrizol Enterprises, Inc., the venture development subsidiary of
Lubrizol. Mr. Murfin is also a director of Genentech, Inc. He is also a Trustee
of the Edison Biotechnology Center in Cleveland, Ohio.
DAVID NIERENBERG joined Corvita as a Director in November 1992 and is
currently Chairman of the Compensation Committee. Mr. Nierenberg has been a
general partner of Trinity Ventures Limited since 1986. Previously, he was
associated with General Electric Venture Capital and was a partner at Bain &
Company, a management consulting firm. Mr. Nierenberg is also a Director of
Natus Medical, Eyesys Technologies, and Health Plan Services.
PHOTIOS (FRED) PAULSON has been a Director since 1990. Mr. Paulson's career
includes 27 years with Becton Dickinson & Company, during which he held various
executive positions including those of President, European Division and Chief
Operating Officer of the corporation. From 1987 to 1991, Mr. Paulson was Senior
Advisor, Health Care Industry, for Prudential Securities, Inc. and from 1991 to
1995, served as Chairman of bioMerieux Vitek, Inc., a clinical diagnostics
company. Mr. Paulson presently serves as Vice President of bioMerieux Alliance,
a French holding company, and is on the Board of Directors of bioMerieux Vitek,
Inc. and Novametrics Medical Systems, Inc.
HOWARD S. WACHTLER has been a Director since 1988 and is currently Chairman
of the Marketing and Business Development Committee. Mr. Wachtler has been
Managing Director of Medical Venture Holdings, Inc., an affiliate of Oppenheimer
& Co., Inc. and its predecessor entity since 1986. Mr. Wachtler was formerly
Director, Business Planning Development, for Pfizer Hospital Products Group. Mr.
Wachtler is also a director of Xenova, Ltd., Exocell, Inc., and Gliatech, Inc.
In addition, Mr. Wachtler serves on the Board of Governors of the Emerging
Company Section of the Biotechnology Industry Organization (BIO).
Except as noted above, there are no family relationships among any of the
Company's executive officers or directors. There are no arrangements or
understandings between any executive officer and any other person pursuant to
which such person was selected as an officer.
I-4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of the close of business on April 4, 1996,
certain information with respect to the holdings of each director and executive
officer of the Company and all directors and officers as a group. Each of the
persons listed below has sole voting and investment power with respect to such
Shares, unless otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-----------------------------------
NAME OF BENEFICIAL OWNER OR ACQUIRABLE WITHIN PERCENT OF CLASS
PERSONS IN GROUP CURRENTLY OWNED 60 DAYS (1) OUTSTANDING
- ------------------------------------------------------------ ---------------- ----------------- -----------------
<S> <C> <C> <C>
Norman R. Weldon, Ph.D. (2)(3).............................. 489,250 11,326(P) 7.03
Leonard Pinchuk, Ph.D. (2)(4)............................... 110,850 100,250 2.93
David C. MacGregor, M.D. (2)................................ 154,539 29,000 2.57
Herbert Kontges, Ph.D....................................... 45,000 67,000 1.58
1,249(P)
Christian L. Mazzola........................................ 0 110,000 1.52
Richard L. Kronenthal, Ph.D. (2)............................ 12,373 6,875 *
Photios T. Paulson (2)...................................... 11,250 10,625 *
4,580(P)
Donald L. Murfin (5) ....................................... 1,075 5,000 1.43
c/o Chemicals & Materials 97,307(P)
Enterprise Associates
One Cleveland Center
Suite 2700
Cleveland, Ohio 44114
David Nierenberg (6) ....................................... 240,987 5,000 3.81
c/o Trinity Ventures II, L.P. 25,864(P)
155 Bovet Road, Suite 660
San Mateo, California 94402
Howard S. Wachtler (7) ..................................... 410,765 5,000 6.33
c/o WestMed Venture Partners, L.P. 36,916(P)
Oppenheimer Tower
World Financial Center
New York, New York 10281
All directors and executive officers as a group
(13 persons) (8).......................................... 1,476,089 338,750 26.14
177,242(P)
</TABLE>
- ------------------------
* Less than 1%
(1) Reflects number of shares of Common Stock acquirable upon exercise of
options unless followed by a "(P)", in which event reflects number of shares
issuable upon conversion of Preferred Stock acquirable upon exercise of
warrants.
(2) Address is Corvita Corporation, 8210 N.W. 27th Street, Miami, Florida 33122.
(3) Includes 9,000 shares of Common Stock beneficially owned by Carol Weldon,
Dr. Weldon's wife, as to which Dr. Weldon disclaims beneficial ownership.
(4) Includes 7,500 shares of Common Stock held by each of The Rendall Aaron
Pinchuk Irrevocable Trust, The Bryan Mitchell Pinchuk Irrevocable Trust, and
The Kerri Jill Pinchuk Irrevocable
I-5
<PAGE>
Trust, and 37,500 shares of Common Stock held by The Diane F. Pinchuk
Revocable Trust (collectively, the "Pinchuk Family Trusts"), as to which Mr.
Pinchuk disclaims beneficial ownership.
(5) Includes 102,307 shares of Common Stock beneficially owned by New Enterprise
Group, c/o New Enterprise Associates V, Limited Partnership, 1119 St. Paul
Street, Baltimore, MD 21202. Mr. Murfin is a limited partner in NEA Partners
V Limited Partnership, the general partner of New Enterprise Associates V
Limited Partnership, which is a venture fund of The New Enterprise Group,
and disclaims beneficial ownership of these shares.
(6) Consists of shares of Common Stock beneficially owned by Trinity Ventures
II, L.P., Trinity Ventures III and Trinity Side-by-Side I, L.P.
(collectively, the "Trinity Group"). Mr. Nierenberg is a general partner in
the limited partnership which serves as a general partner of each member of
The Trinity Group, and disclaims beneficial ownership of these shares.
(7) Consists of 410,765 shares of Common Stock beneficially owned by WestMed
Venture Partners, L.P., c/o Oppenheimer and Co., Inc., Oppenheimer Tower,
World Financial Center, New York, NY 10281. Mr. Wachtler is a managing
director of Medical Venture Holdings, Inc., which is the general partner of
WestMed Venture Management, L.P., which is the managing general partner of
WestMed Venture Partners, L.P. Mr. Wachtler disclaims beneficial ownership
of these shares.
(8) See notes (5), (6), (7), (8) and (9) above.
I-6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the Company's last three fiscal years
ended June 30, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to the Company's executive
officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
AWARDS
ANNUAL COMPENSATION --------------
-------------------------------------------- COMMON STOCK
NAME AND FISCAL OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS (#)
- ------------------------------------------- --------- ----------- ----------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Norman R. Weldon, Ph.D..................... 1995 109,615
President and Chief 1994 106,353(1)
Executive Officer 1993 104,167
Leonard Pinchuk, Ph.D...................... 1995 102,000 30,000 20,000
Vice President of Product 1994 98,388 20,000 56,250
Development and Secretary 1993 95,876 10,000 15,000
David C. MacGregor, M.D. (2)............... 1995 87,418 20,000
Chairman and Vice President 1994 101,128
of Medical Research 1993 104,167
Herbert Kontges, Ph.D...................... 1995 108,667 11,846(3) 10,000
Vice President of Endoluminal 1994 95,236 10,228(3) 27,000
Products and Co-Managing 1993 98,366 9,717(3) 7,500
Director, Corvita Europe, S.A.
Christian L. Mazzola (4)................... 1995 102,000 38,990(5) 35,000
Vice President of Sales and 1994 84,375 10,822(6) 75,000
Marketing and Co-Managing 1993 -- --
Director, Corvita Europe, S.A.
</TABLE>
- ------------------------
(1) Includes $52,500 in accrued salary paid in fiscal year 1995.
(2) Dr. MacGregor became a part-time employee of the Company effective April 1,
1994 pursuant to which he is paid at an annualized rate of $105,000, based
on the percentage of 2,000 hours worked per annum with a minimum annual
salary of $52,000.
(3) Consists of car lease payments.
(4) Commenced employment with the Company in August 1993.
(5) Consists of $11,846 in car lease payments and $27,144 in non-recurring
moving expenses.
(6) Includes $10,228 in car lease payments.
I-7
<PAGE>
STOCK OPTION GRANTS
The following table sets forth certain information concerning options
granted in the Company's fiscal year ended June 30, 1995 to the individuals
named in the Summary Compensation Table:
OPTION GRANTS IN FISCAL YEAR 1995(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATE OF STOCK
COMMON STOCK OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISEE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED (1) 1994 (2) ($/SHARE) DATE 5%($) 10%($)
- -------------------------------------- ------------- ------------ ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Leonard Pinchuk....................... 20,000 8.38% $ 4.50 6/21/02 $ 36,639 $ 85,385
David C. MacGregor.................... 20,000 8.38% $ 4.50 6/21/02 $ 36,639 $ 85,385
Herbert Kontges....................... 10,000 4.19% $ 4.50 6/21/02 $ 18,320 $ 42,692
Christian L. Mazzola.................. 35,000 16.67% $ 4.50 6/21/02 $ 64,118 $ 149,423
</TABLE>
- ------------------------
(1) Subject to shareholder approval of the 1995 Option Plan by March 1, 1996.
(2) Exercisable at the cumulative annual rate of 25% of the total number of
shares underlying the option commencing one year from the date of grant.
STOCK OPTION HOLDINGS
The following table presents the value of unexercised options held at June
30, 1995 by the individuals named in the Summary Compensation Table:
OPTION VALUES AT JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN- THE-MONEY OPTIONS
OPTIONS AT
AT JUNE 30, 1995(#) JUNE 30, 1995 (1)($)
EXERCISABLE(E) EXERCISABLE(E)
UNEXERCISABLE(U) UNEXERCISABLE(U)
--------------------- ----------------------
<S> <C> <C>
Norman R. Weldon.................................................. 9,000(E) 32,250(E)
Leonard Pinchuk................................................... 30,563(E) 74,204(E)
49,687(U) 77,109(U)
David C. MacGregor................................................ 9,000(E) 32,250(E)
Herbert Kontges................................................... 33,000(E) 101,250(E)
24,000(U) 37,500(U)
Christian L. Mazzola.............................................. 24,375(E) 60,469(E)
50,625(U) 108,281(U)
</TABLE>
- ------------------------
(1) Values are calculated by subtracting the exercise price from the closing
sales price of the Common Stock on June 30, 1995 of $5.25 per share.
I-8
<PAGE>
OWNERSHIP OF VOTING SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of April 4, 1995, except as a different
date is noted below, the beneficial ownership of the Common Stock by each person
known by the Company to be the beneficial owner, as defined in Rule 13d-3 under
the Exchange Act, of five percent or more of such Shares. Each of the persons
listed below has sole voting and investment power with respect to such Shares,
unless otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-----------------------------------
ACQUIRABLE WITHIN PERCENT OF CLASS
NAME AND ADDRESS CURRENTLY OWNED 60 DAYS (1) OUTSTANDING
- ------------------------------------------------------------ ---------------- ----------------- -----------------
<S> <C> <C> <C>
WestMed Venture Partners, L.P. ............................. 410,765 5,000 6.33%
c/o Oppenheimer and Co., Inc. 36,916(P)
Oppenheimer Tower
World Financial Center
New York, New York 10281
Norman R. Weldon, Ph.D. (2)(3) ............................. 489,250 11,326(P) 7.03
Howard S. Wachtler (5) ..................................... 410,765 5,000 6.33
c/o WestMed Venture partners, L.P. 36,916(P)
Oppenheimer Tower
World Financial Center
New York, New York 10281
Montgomery Asset Management, L.P. (6) ...................... 496,000 0 6.98
600 Montgomery Street
San Francisco, California 94111
Janus Capital Corporation (7) .............................. 393,000 0 5.53
100 Fillmore Street, Suite 300
Denver, Colorado 80206-4923
Thomas H. Bailey (7) ....................................... 393,000 0 5.53
c/o Janus Capital Corporation
100 Fillmore Street, Suite 300
Denver, Colorado 80206-4923
INVESCO PLC (8) ............................................ 517,292 0 7.28
11 Devonshire Square
London EC2M 4YR
England
</TABLE>
- ------------------------
* Less than 1%
(1) Reflects number of shares of Common Stock acquirable upon exercise of
options unless followed by a "(P)", in which event reflects number of shares
issuable upon conversion of Preferred Stock acquirable upon exercise of
warrants.
(2) Address is Corvita Corporation, 8210 N.W. 27th Street, Miami, Florida 33122.
(3) Includes 9,000 shares of Common Stock beneficially owned by Carol Weldon,
Dr. Weldon's wife, as to which Dr. Weldon disclaims beneficial ownership.
(4) Consists of 885,074 shares of Common Stock beneficially owned by New
Enterprise Group. Mr. Murfin is a limited partner in NEA Partners V Limited
Partnership, the general partner of New Enterprise Associates V Limited
Partnership, which is a venture fund of The New Enterprise Group, and
disclaims beneficial ownership of these shares.
I-9
<PAGE>
(5) Consists of 410,765 shares of Common Stock beneficially owned by WestMed
Venture Partners, L.P., Mr. Wachtler is a managing director of Medical
Venture Holdings, Inc., which is the general partner of WestMed Venture
Management, L.P., which is the managing general partner of WestMed Venture
Partners, L.P. Mr. Wachtler disclaims beneficial ownership of these shares.
(6) Consists of 496,000 shares of Common Stock beneficially owned, as of
December 31, 1995, by Montgomery Asset Management, L.P. ("Montgomery"), an
Investment Advisor registered under section 203 of the Investment Advisors
Act of 1940. Information is from Schedule 13G filed by such owner with the
Securities and Exchange Commission and dated January 29, 1996. The Company
has no information concerning ownership by Montgomery on April 4, 1996, or
at any time other than as of December 31, 1995. As of December 31, 1995,
Montgomery reported beneficial ownership of 6.99% of the Common Stock.
(7) Consists of 393,900 shares of Common Stock held, as of February 13, 1996, by
investment companies and individual and institutional clients to which Janus
Capital Corporation ("Janus Capital") furnishes investment advice, which may
be deemed to be beneficially owned by Janus Capital and which may be deemed
to be beneficially owned by Thomas H. Bailey ("Mr. Bailey"). Janus Capital
is an Investment Advisor registered under section 203 of the Investment
Advisors Act of 1940. Mr. Bailey owns approximately 12.2% of Janus Capital
and serves as its President and Chairman of the Board. Voting and investment
power with respect to such shares is shared by the foregoing persons. Mr.
Bailey disclaims beneficial ownership of these shares. Information is from
Schedule 13G jointly filed by such owners with the Securities and Exchange
Commission and dated February 13, 1996. The Company has no information
concerning ownership by Janus Capital and Mr. Bailey on April 4, 1996, or at
any time other than as of February 13, 1995. As of February 13, 1995, Janus
Capital and Mr. Bailey reported beneficial ownership of 5.6% of the Common
Stock.
(8) Consists of 517,292 shares of Common Stock held, as of February 14, 1996, by
persons to which INVESCO Funds Group, Inc. furnishes investment advice. Such
shares may be beneficially owned by INVESCO Funds Group, inc., an Investment
Advisor registered under Section 203 of the Investment Advisor Act of 1940;
INVESCO North American Holdings, Inc., a holding company in accordance with
Rule 13d-1(b)(ii)(G) under the Securities Exchange Act of 1934 ("Rule
13d-1(b)(ii)(G)"); INVESCO, Inc., a holding company in accordance with Rule
13d-1(b)(ii)(G), and INVESCO PLC, a parent holding company under section
240.13d-1(b)(ii)(G). Voting and investment power with respect to such shares
is shared by the foregoing entities. Information is from Schedule 13G
jointly filed by such entities with the Securities and Exchange Commission
and dated February 14, 1996. The Company has no information concerning
ownership by such entities on April 4, 1996, or at any time other than as of
February 14, 1996. As of February 14, 1996, the foregoing entities reported
their beneficial ownership as 7.4% of the Common Stock.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee, comprised of two independent directors, Donald L.
Murfin (Chairman) and Fred T. Paulson, and one employee director, David
MacGregor, meets with the Company's independent auditors to review the scope of
their annual audit, the adequacy of the Company's system of internal controls,
and the sufficiency of its financial reporting. The Audit Committee held one
meeting during fiscal year 1995.
The Compensation Committee, comprised of three independent directors, David
Nierenberg (Chairman), Donald L. Murfin and Richard L. Kronenthal, establishes
the compensation program for Norman R. Weldon, Ph.D., the Company's President
(Chief Executive Officer), recommends to the Board of Directors a general
compensation program for all officers and administers the Corvita stock option
plans. The Compensation Committee held two meetings during fiscal year 1995.
I-10
<PAGE>
The Business Development Committee, comprised of four independent directors,
Howard S. Wachtler (Chairman), Richard L. Kronenthal, David Nierenberg and
Donald L. Murfin, makes recommendations to the Board of Directors as to new
business opportunities and strategies. The Business Development Committee held
three meetings during fiscal year 1995.
The Nominating Committee, comprised of one employee director, Norman R.
Weldon (Chairman), and two independent directors, Fred T. Paulson and Howard S.
Wachtler, nominates individuals to serve on the Board of Directors. The
Nominating Committee held two meetings during fiscal year 1995.
MEETINGS OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended June 30, 1995, its Board of Directors
held nine meetings.
COMPENSATION OF DIRECTORS
All directors who are not employees of the Company receive a fee of $500 for
each meeting of the Board of Directors attended, plus reimbursement of expenses,
and an additional $100 for each committee meeting attended after January 1,
1995.
Under the Company's 1995 Non-Employee Director Stock Option Plan (the "1995
Director Plan"), non-management Directors each were granted an initial
non-qualified option to purchase 5,000 Shares upon shareholder approval of the
1995 Director Plan. Each such option was granted at an exercise equal to the
fair market value of the Common Stock on the date of grant, is exercisable one
year after the date of grant, and will terminate ten years after the date of
grant, or thirty days after the earlier termination of service to the Company by
the non-management Director (except in the case that termination of service as a
director is due to death or permanent disability, in which case the option will
be immediately exercisable in full and will expire one year after termination of
the director's service). No other option grant may be made under the Plan to
non-management Directors.
As part of its functions, the Compensation Committee determines, on an
annual basis, the compensation to be paid to the Company's President and Chief
Executive Officer and to the other executive officers of the Company. The
Committee has established a number of objectives which serve as guidelines in
making its compensation decisions, including:
- Providing a competitive total compensation package which enables the
Company to attract and retain, on a long-term basis, high-caliber
executive personnel;
- Integrating compensation programs with the Company's short-term and
long-term strategic plan and business objectives; and
- Encouraging achievement of business objectives and enhancement of
shareholder value by providing executive management long-term incentive
through equity ownership.
The Company has been engaged primarily in research and development of new
medical devices and related biomaterials for treatment of late-stage vascular
disease, and revenues to date have been minimal. As a result, the use of
traditional performance standards, such as corporate profitability, are not
believed to be appropriate in evaluating of the performance of the Company or
its individual executives. The compensation of the Company's executive officers
is based, in substantial part, on the achievement of individual and overall
corporate objectives. Such objectives are established at the beginning of each
calendar year and modified as necessary to reflect changes in market conditions
and other factors. Individual and overall corporate performance is measured by
reviewing whether these corporate objectives have been achieved.
Executive compensation consists of base salary and participation in the
Company's stock option plans, established in October 1988 and in February 1995.
In addition, the Company has established a bonus pool from which bonuses may be
paid to executives and other eligible employees who have exceeded their
performance objectives during the year. To reflect the development stage of the
I-11
<PAGE>
Company and its financial loss position, with growth expected in the future,
executives are paid salaries at lower than prevailing rates in the medical
device industry but receive higher levels of stock options and/or cash bonuses
paid on performance.
THE COMPENSATION COMMITTEE
David Nierenberg
Donald L. Murfin
Richard L. Kronenthal, Ph.D.
CERTAIN TRANSACTIONS; OTHER MATTERS
SECTION 16 DISCLOSURE
Section 16 of the Securities Exchange Act of 1934, as amended, requires that
officers, directors and holders of more than 10% of the Common Stock ("Reporting
Persons") file reports of their trading in Company equity securities with the
Securities and Exchange Commission. Based on a review of Section 16 forms filed
by the Reporting Persons during the last fiscal year, the Company believes that
the Reporting Persons complied with all applicable Section 16 filing
requirements.
I-12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return to
the Company's shareholders from October 25, 1994 (the date the Company became
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended) through June 30, 1995, as well as an overall stock market index (The
Nasdaq Stock Market -- U.S. Companies) and the Company's self-determined peer
group (1):
[GRAPH]
- ------------------------
(1) The self-determined peer group consists of the following medical and dental
instrument supply companies which have become subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, within the
past twelve months: Circon Corp., Hemasure Inc., Innerdyne Inc., Misonix
Inc., Fluoroscan Imaging Systems Inc., Incontrol Inc., Interlobe
International and Optex Biomedical Inc. The Company anticipates using SIC
Group 3840 (surgical, medical and dental instruments and supplies) as its
standard peer group index in future years.
I-13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of April 11, 1996, among Corvita Corporation, Pfizer Inc., and
HPG Acquisition Corp.
Exhibit 2 Shareholders Agreement, dated as of April 11, 1996, among Pfizer Inc., HPG Acquisition Corp., and
certain stockholders named herein, and including Schedule 1 thereto.
Exhibit 3 Confidentiality and Standstill Agreement, dated August 16, 1995, between Dillon, Read & Co. Inc. on
behalf of Corvita Corporation and Pfizer Inc.
Exhibit 4 Stock Purchase Agreement, dated as of April 11, 1996, among Corvita Corporation and George A. Adams,
David C. MacGregor, Gregory J. Wilson and Jennie M. Wilson as trustees for the Gregory Wilson Family
Trust, and Jennie M. Wilson.
Exhibit 5 Stock Purchase Agreement, dated as of April 11, 1996, between Corvita Corporation and Research
Visions Canada, Inc.
Exhibit 6 Loan Agreement, dated April 11, 1996, between Pfizer Inc. and Corvita Corporation; Promissory Note of
Convita Corporation, dated April 11, 1996; and License Agreement, dated April 11, 1996, between
Corvita Corporation and Pfizer Inc.
Exhibit 7 Letter to Shareholders of Corvita Corporation, dated April 17, 1996.*
Exhibit 8 Press Release, dated April 11, 1996, issued by Pfizer Inc. and Corvita Corporation.
Exhibit 9 Opinion of Dillon, Read & Co. Inc., dated April 11, 1996, and Consent by Dillon Read to the inclusion
of the Opinion as an Exhibit, dated April 16, 1996.
</TABLE>
- ------------------------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
<PAGE>
AGREEMENT AND PLAN OF MERGER
AMONG
PFIZER INC.,
HPG ACQUISITION CORP.
AND
CORVITA CORPORATION
Dated as of April 11, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Company Action . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.3 Directors. . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4 Effects of the Merger. . . . . . . . . . . . . . . . . . 8
SECTION 2.5 Articles of Incorporation and Bylaws . . . . . . . . . . 8
SECTION 2.6 Directors and Officers . . . . . . . . . . . . . . . . . 8
SECTION 2.7 Merger Without Meeting of Shareholders.. . . . . . . . . 8
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS . . . . . . . . . . . . 8
SECTION 3.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . 8
SECTION 3.2 Stock Options; Warrants. . . . . . . . . . . . . . . . . 9
ARTICLE IV PAYMENT OF SHARES . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.1 Payment for Shares . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2 Stock Transfer Books . . . . . . . . . . . . . . . . . . 13
SECTION 4.3 Dissenting Shares. . . . . . . . . . . . . . . . . . . . 13
SECTION 4.4 Right to Merger Consideration. . . . . . . . . . . . . . 13
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.1 Organization and Qualification . . . . . . . . . . . . . 14
SECTION 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Corporate Power and Authority. . . . . . . . . . . . . . 15
SECTION 5.4 Absence of Certain Changes . . . . . . . . . . . . . . . 16
SECTION 5.5 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.6 Governmental Authorization . . . . . . . . . . . . . . . 18
SECTION 5.7 Non-Contravention. . . . . . . . . . . . . . . . . . . . 18
SECTION 5.8 Investment Banking Fees and Commissions. . . . . . . . . 19
SECTION 5.9 Material Contracts . . . . . . . . . . . . . . . . . . . 19
SECTION 5.10 Litigation, etc. . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.11 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.12 Intellectual Property. . . . . . . . . . . . . . . . . . 24
SECTION 5.13 Restrictions on Operations . . . . . . . . . . . . . . . 25
SECTION 5.14 Environmental Laws . . . . . . . . . . . . . . . . . . . 25
SECTION 5.15 Compliance with Laws . . . . . . . . . . . . . . . . . . 28
SECTION 5.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 28
i
<PAGE>
SECTION 5.17 Product Registration;
Regulatory Compliance. . . . . . . . . . . . . . . . . . 30
SECTION 5.18 Company Action . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.19 Labor Matters. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.20 Supply . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB. . . . . . . . . . . . . . . . . . . 33
SECTION 6.1 Organization and Qualification . . . . . . . . . . . . . 33
SECTION 6.2 Corporate Power and Authority. . . . . . . . . . . . . . 33
SECTION 6.3 Governmental Authorization . . . . . . . . . . . . . . . 33
SECTION 6.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . 34
SECTION 6.5 Merger Sub . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.1 Conduct of Business. . . . . . . . . . . . . . . . . . . 35
SECTION 7.2 No Solicitation. . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.3 Access to Information. . . . . . . . . . . . . . . . . . 40
SECTION 7.4 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 40
SECTION 7.5 Indemnification and Insurance. . . . . . . . . . . . . . 41
SECTION 7.6 State Takeover Statutes. . . . . . . . . . . . . . . . . 43
SECTION 7.7 Proxy Statement. . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.8 Company Meeting. . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.9 Support of Merger. . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER. . . . . . . . . . . 44
SECTION 8.1 Conditions to Each Party's
Obligation to Effect the Merger. . . . . . . . . . . . . 44
ARTICLE IX TERMINATION; AMENDMENT; WAIVER. . . . . . . . . . . . . . . . 45
SECTION 9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.2 Effect of Termination. . . . . . . . . . . . . . . . . . 46
SECTION 9.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . 46
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.1 Non-Survival of Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.2 Entire Agreement; Assignment . . . . . . . . . . . . . . 47
SECTION 10.3 Enforcement of the Agreement . . . . . . . . . . . . . . 47
SECTION 10.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.7 Descriptive Headings . . . . . . . . . . . . . . . . . . 49
SECTION 10.8 Parties in Interest. . . . . . . . . . . . . . . . . . . 49
SECTION 10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.10 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 50
SECTION 10.11 Performance by Merger Sub. . . . . . . . . . . . . . . . 51
SECTION 10.12 Materiality. . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.13 Subsidiaries Defined . . . . . . . . . . . . . . . . . . 51
SECTION 10.14 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 51
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 11, 1996, among Pfizer
Inc., a Delaware corporation ("Parent"), HPG ACQUISITION CORP., a Florida
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and CORVITA
CORPORATION, a Florida corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent and Merger Sub
have each determined that it is advisable and in the best interest of Parent and
its stockholders to engage in a transaction whereby Merger Sub will merge with
and into the Company on the terms and subject to the conditions of this
Agreement; and
WHEREAS, the Board of Directors of the Company has determined that it
is advisable and in the best interest of the Company and its shareholders to
engage in a transaction whereby Merger Sub will merge with and into the Company
on the terms and subject to the conditions of this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Merger Sub shall
make a tender offer (the "Offer") to acquire all of the outstanding shares of
common stock, par value $0.001 per share, of the Company (the "Shares"), at a
price of $10.25 per Share (such amount, or any greater amount per share paid
pursuant to the Offer, being hereinafter referred to as the "Offer
Consideration"), net to the sellers in cash, in accordance with the terms and
subject to the conditions provided for herein; and
WHEREAS, as an inducement and a condition to entering into this
Agreement, Parent required certain shareholders of the Company (the "Selling
Shareholders") to execute and deliver, contemporaneously herewith, an agreement
(the "Shareholders Agreement") providing for certain matters with respect to
their Shares, the tender of their Shares and certain other actions relating to
the Offer, and in order to induce Parent and Merger Sub to enter into this
Agreement, the Company has approved the execution and delivery by Merger Sub and
such shareholders of the Shareholders Agreement; and
<PAGE>
WHEREAS, the Company, Parent and Merger Sub wish to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER. (a) Provided that this Agreement shall not
have been terminated pursuant to Article IX and none of the events or conditions
set forth in Annex A shall have occurred or be existing, Merger Sub shall, and
Parent shall cause Merger Sub to, commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), the
Offer as promptly as practicable (but in no event later than the fifth business
day from and including the date of the initial public announcement of this
Agreement). Subject to the terms and conditions of the Offer, Merger Sub shall,
and Parent shall cause Merger Sub to, accept for payment at the Offer
Consideration (and thereby purchase) and pay for all of the Shares that have
been validly tendered and not withdrawn pursuant to the Offer prior to its
expiration date, as it may be extended in accordance with the terms of the Offer
(the "Acceptance Date"). The obligation of Merger Sub to, and of Parent to
cause Merger Sub to, commence the Offer and accept for payment, purchase and pay
for all of the Shares tendered pursuant to the Offer shall be subject to the
conditions set forth in Annex A hereto, including the condition that a number of
Shares representing a majority of all outstanding Shares on a fully diluted
basis (based on the number of Shares outstanding as of the Acceptance Date)
shall have been validly tendered and not withdrawn prior to the expiration date
of the Offer (the "Minimum Condition"). Merger Sub expressly reserves the right
to increase the price per Share payable in the Offer or to make any other
changes in the terms and conditions of the Offer, except without the written
consent of the Company, Merger Sub shall not (i) reduce the number of Shares
sought to be purchased pursuant to the Offer, (ii) reduce the price per Share
payable in the Offer, (iii) change the form of consideration to be paid in the
Offer, (iv) impose additional conditions to the Offer or amend any other term of
the Offer in any
2
<PAGE>
manner adverse to the holders of Shares or (v) amend or waive satisfaction of
the Minimum Condition.
(b) On the date of commencement of the Offer, Parent and Merger Sub
shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 with respect to the Offer which will contain
the offer to purchase and form of the related letter of transmittal (such
Schedule 14D-1 and the documents therein pursuant to which the Offer will be
made, together with any supplements or amendments thereto, collectively, the
"Offer Documents"). Parent and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and Parent
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. Parent and
Merger Sub agree to give the Company and its counsel a reasonable opportunity to
review and comment upon any Offer Document to be filed with the SEC prior to any
such filing and to provide the Company and its counsel in writing with any
comments Parent, Merger Sub or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments.
(c) The Offer shall be made by means of an offer to purchase which
shall provide for an initial expiration date of 20 business days from the date
of commencement. Parent and Merger Sub agree that Merger Sub shall not
terminate or withdraw the Offer or extend the expiration date of the Offer
unless at the expiration date of the Offer the conditions to the Offer shall not
have been satisfied or earlier waived; PROVIDED that notwithstanding the
foregoing, Merger Sub may, without the consent of the Company, extend the Offer
on one occasion following the time that all of the conditions to the Offer have
been satisfied as of the scheduled expiration date of the Offer for a period not
to exceed 10 business days, if the number of Shares tendered, together with any
Shares beneficially owned by Parent or Merger Sub or any other wholly-owned
subsidiary of Parent, is less than 80% of the Shares outstanding on the
scheduled expiration date of the Offer; PROVIDED, FURTHER, that if Merger Sub
elects to extend the Offer as set forth in the immediately preceding proviso,
the obligation of Merger Sub, and of Parent to cause Merger Sub to, accept for
payment, purchase and pay for all of the Shares tendered pursuant to
3
<PAGE>
the Offer and not withdrawn shall be subject only to the Minimum Condition and
the conditions set forth in Sections 3(A), 3(B) and 3(F) of Annex A. If at the
expiration date of the Offer, any of the conditions to the Offer shall not have
been satisfied or earlier waived but, in the reasonable belief of Parent, may be
satisfied prior to August 9, 1996, Merger Sub shall extend the expiration date
of the Offer an additional period or periods of time until the earlier of (i)
the date all such conditions are met or waived and Merger Sub becomes obligated
to accept for payment and pay for shares tendered pursuant to the Offer or (ii)
this Agreement is terminated in accordance with its terms. Notwithstanding
anything to the contrary contained herein, Merger Sub may without the consent of
the Company, extend the Offer so as to comply with applicable rules and
regulations of the SEC. Any individual extension of the Offer shall be for a
period of no more than 10 business days.
SECTION 1.2 COMPANY ACTION. (a) The Company hereby approves of
and consents to the Offer at the Offer Consideration and represents and warrants
that the Company's Board of Directors, at a meeting duly called and held, has,
subject to the terms and conditions set forth herein, (i) determined that this
Agreement and the transactions contemplated hereby, including the Offer at the
Offer Consideration and the Merger, are fair to, and in the best interests of,
the shareholders of the Company, (ii) approved this Agreement and the
Shareholders Agreement, the Offer at the Offer Consideration and the Merger, in
all respects, including for purposes of Section 1103 of the Florida 1989
Business Corporation Act (the "BCA"), and (iii) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares thereunder at
the Offer Consideration to Merger Sub and approve and adopt this Agreement and
the Merger. The Company consents to the inclusion of such recommendation and
approval in the Offer Documents. The Company further represents that Dillon,
Read & Co. Inc., the Company's financial advisor ("Dillon Read"), has delivered
to the Company's Board of Directors the written opinion of Dillon Read that the
Offer Consideration to be received by the shareholders of the Company pursuant
to the Offer and the Merger is fair from a financial point of view to such
shareholders.
(b) The Company hereby agrees, subject to the terms and conditions
set forth herein, to file as promptly as practicable (and after affording Parent
and its counsel a reasonable opportunity to review and comment thereon) with
4
<PAGE>
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (such Schedule
14D-9 together with any amendments or supplements thereto, the "Schedule 14D-9")
containing the recommendations described in Section 1.2(a) and to mail the
Schedule 14D-9 to the shareholders of the Company concurrently with the
commencement of the Offer. Each of the Company, Parent and Merger Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false or misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Notwithstanding anything to the
contrary in this Agreement, the recommendations referred to in Section 1.2(a)
and the Schedule 14D-9 may be withdrawn, modified or amended if the Board of
Directors of the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that the failure to take
such action could create a reasonable possibility of a breach by the Board of
Directors of the Company of its fiduciary duties to shareholders under
applicable law.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Merger Sub promptly with mailing labels, securities
position listings and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of a recent date and
shall furnish Merger Sub with such additional information and assistance
(including, without limitation, updated lists of shareholders, mailing labels
and lists of securities positions) as Merger Sub or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Merger Sub shall hold
in confidence the information contained in any of such lists or labels and the
additional information referred to in the preceding sentence, will use the
information contained in any such labels, listings and files only in connection
with the Offer and the Merger and, if this Agreement shall be terminated, will
deliver to the Company all copies of such information then in their possession.
5
<PAGE>
SECTION 1.3 DIRECTORS. (a) Promptly upon the purchase pursuant to
the Offer by Parent or Merger Sub of such number of Shares which represents a
majority of all outstanding Shares on a fully diluted basis, Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this Section) and (ii) the
percentage (expressed as a decimal) that the number of Shares beneficially owned
by Parent bears to the total number of Shares outstanding, and the Company
shall, subject to compliance with Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, take all action necessary to cause Parent's
designees to be elected or appointed to the Company's Board of Directors,
including, without limitation, increasing the number of directors or seeking and
accepting resignations of incumbent directors. Notwithstanding the foregoing,
until the Effective Time (as defined in Section 2.2) the Company shall be
entitled to retain as members of its Board of Directors at least two directors
who are directors of the Company on the date hereof, subject to their
availability and willingness to serve. The date on which Parent's designees
constitute a majority of the Company's board of directors is referred to as the
"Control Date."
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3. Parent will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors pursuant to this
Section 1.3 and prior to the Effective Time, any amendment of this Agreement,
any termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or Merger Sub hereunder or any
waiver thereof, any waiver of any condition to the obligations of the Company or
any of the Company's rights hereunder or other action by the Company hereunder
will require the concurrence of, and shall
6
<PAGE>
be effective only if approved by a majority of the directors of the Company then
in office who are not affiliates of Parent and were not designated by Parent
(the "Company Designees"), which action shall be deemed to constitute the action
of the full Board of Directors even if such majority of the Company Designees
does not constitute a majority of all directors then in office; provided, that,
if there shall be no Company Designees, such actions may be effected by majority
vote of the entire Board of Directors except that no such action shall amend the
terms of this Agreement in a manner adverse to the shareholders of the Company.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. Upon the terms and subject to the
conditions hereof, and pursuant to Section 1103 of the BCA, Merger Sub shall be
merged with and into the Company (the "Merger") at the Effective Time. Following
the Merger, the Company shall continue as the surviving corporation (the
"Surviving Corporation") under the name of "Corvita Corporation," and the
separate corporate existence of Merger Sub shall cease.
SECTION 2.2 EFFECTIVE TIME. On the date of the Closing (as defined
in Section 2.3), the Surviving Corporation will cause articles of merger
substantially in the form of Exhibit A attached hereto (the "Articles of
Merger") to be executed and filed with the Secretary of State of the State of
Florida as provided in Section 1105 of the BCA. The Merger shall become
effective (i) at the time and date which the Articles of Merger are filed with
the Secretary of State of the State of Florida or (ii) such other time as is
agreed upon by the parties and specified in the Articles of Merger (such time as
the Merger becomes effective is hereinafter referred to as the "Effective
Time").
SECTION 2.3 CLOSING. The closing of the Merger (the "Closing")
shall take place (i) at the offices of Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York, as promptly as practicable following the date on
which the last of the conditions set forth in Article VIII is satisfied or
waived in accordance with the terms of this Agreement, which date shall in any
event not be later than the third business day following the satisfaction or
waiver of the last of such conditions, or (ii) at such other place
7
<PAGE>
and/or on such other date as Parent and the Company may agree.
SECTION 2.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the BCA. As of the Effective Time, Parent shall own all of
the issued and outstanding common stock of the Surviving Corporation.
SECTION 2.5 ARTICLES OF INCORPORATION AND BYLAWS. At the Effective
Time, the Company's Articles of Incorporation and Bylaws shall be the Articles
of Incorporation and Bylaws of the Surviving Corporation.
SECTION 2.6 DIRECTORS AND OFFICERS. The directors of Merger Sub at
the Effective Time shall become the directors of the Surviving Corporation until
their successors are duly elected and qualified. At the Effective Time, the
persons listed on Schedule 2.06 shall become the officers of the Surviving
Corporation until their successors are duly elected and qualified.
SECTION 2.7 MERGER WITHOUT MEETING OF SHAREHOLDERS. Notwithstanding
anything to the contrary contained herein, if Parent, directly or indirectly
through Merger Sub or any other wholly-owned subsidiary, acquires at least 80%
of the outstanding Shares, each of Parent, Merger Sub and the Company shall take
all necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after the consummation of the Offer, without a meeting of
shareholders of the Company, in accordance with Section 1104 of the BCA.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (excluding Shares owned, directly or indirectly, by the Company
or any subsidiary of the Company or by Parent, Merger Sub or any other
subsidiary of Parent and Dissenting Shares (as defined in Section 4.3)) shall be
converted into the right to receive the Offer Consideration (the "Merger
8
<PAGE>
Consideration"), without interest thereon, upon surrender of the certificate
formerly representing such Share, less any required withholding of taxes.
(b) All Shares, when converted as provided in Section 3.1(a), no
longer shall be outstanding and shall automatically be cancelled and retired and
cease to exist, and each holder of a certificate representing any such Shares
shall thereafter cease to have any rights with respect to such Shares, except
the right to receive for each of such Shares, upon the surrender of such
certificate in accordance with Section 4.1, the Merger Consideration specified
in Section 3.1(a) above.
(c) Each Share issued and outstanding immediately prior to the
Effective Time owned by Parent or any direct or indirect wholly-owned subsidiary
of Parent shall cease to be outstanding, be cancelled and retired without
payment of any consideration therefor and cease to exist.
(d) Each Share issued and held immediately prior to the
Effective Time in the Company's treasury or by any of the Company's direct or
indirect wholly-owned subsidiaries shall be cancelled and retired without
payment of any consideration therefor and cease to exist.
(e) Each share of common stock, par value $0.001 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into one issued and outstanding share of common stock, par value
$0.001 per share, of the Surviving Corporation.
SECTION 3.2 STOCK OPTIONS; WARRANTS. Immediately after the
Acceptance Date, each holder of a then outstanding option to purchase Shares
(collectively, the "Options") under the Company's 1988 Stock Option Plan, the
Company's 1995 Stock Option Plan and the Company's Non-Employee Director Stock
Option Plan (collectively, the "Stock Option Plans"), whether or not then
exercisable or fully vested, and each holder of the warrants to purchase an
aggregate of 491,699 Shares issued to certain parties (collectively, the
"Warrants"), shall, in settlement thereof, be entitled to receive from the
Company for each Share subject to such Option, or Warrant, an amount (net of any
applicable withholding tax) in cash equal to the difference between the Offer
Consideration and the per Share exercise
9
<PAGE>
price of such Option, or Warrant, to the extent the Offer Consideration is
greater than the per Share exercise price of such Option or Warrant (such excess
amount with respect to Options being hereinafter referred to as the "Option
Consideration", and such amount with respect to the Warrants being hereinafter
referred to as the "Warrant Consideration"); PROVIDED, HOWEVER, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
Prior to the Acceptance Date, the Company shall use its reasonable efforts to
obtain all necessary consents or releases from holders of Options under the
Stock Option Plans, and holders of Warrants, and take any such other action as
may be reasonably necessary to give effect to the transactions contemplated by
this Section 3.02 (except for such action that may require the approval of the
Company's shareholders) and to otherwise cause each Option, and each Warrant, to
be surrendered to the Company and cancelled, whether or not any Option
Consideration or Warrant Consideration is payable with respect thereto, at the
Acceptance Date. The surrender of an Option, or Warrant, to the Company shall
be deemed a release of any and all rights the holder had or may have had in such
Option, or Warrant, other than the right to receive the Option Consideration or
Warrant Consideration. If necessary, Parent shall cause the Company to be
provided with sufficient funds to make the payments required by this Section
3.2.
ARTICLE IV
PAYMENT OF SHARES
SECTION 4.1 PAYMENT FOR SHARES. (a) Prior to the commencement of
the Offer, (i) Merger Sub shall appoint a United States bank or trust company
mutually acceptable to the Company and Parent to act as paying agent (the
"Paying Agent") for the payment of the Offer Consideration and the Merger
Consideration, and (ii) Parent shall deposit or shall cause to be deposited with
the Paying Agent in a separate fund established for the benefit of the holders
of Shares, for payment in accordance with this Article IV, through the Paying
Agent (the "Payment Fund"), immediately available funds in amounts necessary to
make the payments pursuant to the Offer, Section 3.1(a) and this Section 4.1 to
holders (other than the Company or any subsidiary of the Company or Parent,
Merger Sub or any other subsidiary of Parent, or holders of Dissenting Shares).
The
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Paying Agent shall pay the Offer Consideration and the Merger Consideration out
of the Payment Fund.
From time to time at or after the Effective Time Parent shall take all
lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest portions of the
Payment Fund as Parent directs in obligations of or guaranteed by the United
States of America, in commercial paper obligations receiving the highest
investment grade rating from both Moody's Investors Services, Inc. and Standard
& Poor's Corporation, or in certificates of deposit, bank repurchase agreements
or banker's acceptances of commercial banks with capital exceeding
$1,000,000,000 (collectively, "Permitted Investments"); PROVIDED, HOWEVER, that
the maturities of Permitted Investments shall be such as to permit the Paying
Agent to make prompt payment to former holders of Shares entitled thereto as
contemplated by this Section. Parent shall cause the Payment Fund to be
promptly replenished to the extent of any losses incurred as a result of
Permitted Investments. All earnings on Permitted Investments shall be paid to
Parent. If for any reason (including losses) the Payment Fund is inadequate to
pay the amounts to which holders of Shares shall be entitled under this Section
4.1, Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) As soon as reasonably practicable after the Effective Time,
Parent shall instruct the Paying Agent to mail to each holder of record (other
than the Company or any subsidiary of the Company or Parent, Merger Sub or any
other subsidiary of Parent) of a Certificate or Certificates which, immediately
prior to the Effective Time, evidenced outstanding Shares (the "Certificates"),
(i) a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other provisions as Parent reasonably may specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment therefor. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such instructions,
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the holder of such Certificate shall be entitled to receive in respect thereof
cash in an amount equal to the product of (x) the number of Shares represented
by such Certificate and (y) the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. No interest shall be paid or accrued
on the Merger Consideration payable upon the surrender of any Certificate. If
payment is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be promptly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the surrendered Certificate or established to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
4.1, each Certificate (other than Certificates representing Shares owned by
Parent or any subsidiary of Parent or held in the treasury of the Company) shall
represent for all purposes only the right to receive the Merger Consideration,
subject to Section 4.3.
(c) Any portion of the Payment Fund which remains undistributed to
the holders of Shares for one year after the Effective Time shall be delivered
to Parent, upon demand, and any holders of Shares who have not theretofore
complied with this Article IV and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time shall thereafter look
only to Parent for payment of the Merger Consideration to which they are
entitled. All interest accrued in respect of the Payment Fund shall inure to
the benefit of and be paid to Parent.
(d) Neither Parent nor the Surviving Corporation shall be liable to
any holder of Shares for any cash from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Parent.
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SECTION 4.2 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company. On
or after the Effective Time, any Certificates presented to the Paying Agent or
Parent for any reason shall be converted into the Merger Consideration.
SECTION 4.3 DISSENTING SHARES. Notwithstanding any other
provisions of this Agreement to the contrary, Shares that are outstanding
immediately prior to the Effective Time and which are held by shareholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 1320 of the BCA (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration. Such shareholders instead shall be entitled to receive payment
of the appraised value of such Shares held by them in accordance with the
provisions of such Section 1320, 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 appraisal of such Shares under such Section
1320 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner provided
in Section 4.1, of the Certificate or Certificates that, immediately prior to
the Effective Time, evidenced such Shares.
SECTION 4.4 RIGHT TO MERGER CONSIDERATION. Subject to Section 4.3,
until surrendered and exchanged in accordance with Section 4.1, each Certificate
shall, after the Effective Time, represent solely the right to receive promptly
upon surrender in accordance with the provisions of Section 4.1 the Merger
Consideration and shall have no other rights, including voting rights. Subject
to Section 4.3, from and after the Effective Time, Parent shall be entitled to
treat any Certificates that have not yet been surrendered for exchange as
evidencing only the ownership of the aggregate Merger Consideration into which
the Shares represented by such Certificates shall have been converted
notwithstanding any failure to surrender such Certificates.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Parent and Merger Sub as
follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION. (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has all requisite corporate power and authority to
carry on its business as it is now being conducted.
(b) The only direct and indirect subsidiaries of the Company are
those named in Schedule 5.01 to the Disclosure Statement relating hereto, which
Disclosure Statement has been delivered to Parent simultaneously herewith (the
"Disclosure Statement"). Each subsidiary of the Company 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 carry on its business as it is now being conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation and is
in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
in the aggregate have a Material Adverse Effect (as defined below). For
purposes of this Agreement, "Material Adverse Effect" shall mean any adverse
change in or effect on the condition (financial or otherwise), business, assets
or results of operations of the Company and its subsidiaries that is material to
the Company and its subsidiaries taken as a whole.
SECTION 5.2 CAPITALIZATION. (a) The authorized capital stock of
the Company consists of 23,750,000 shares, of which 18,750,000 shares are common
stock, par value of $0.001 per share, and 5,000,000 shares are Series Preferred
Stock, par value of $0.001 per share (the "Company Preferred Stock"). Schedule
5.2 of the Disclosure Statement sets forth a true, correct and complete list of
all outstanding Options (including a list of the persons to whom such Options
have been granted) and Warrants (including a list of the persons and entities to
which such Warrants have been issued). At the close of business on April 4,
1996, 7,106,149 Shares were issued and outstanding,
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no shares of Company Preferred Stock were issued and outstanding, and 808,636
Shares were reserved for issuance pursuant to the Stock Option Plans and 491,699
Shares were reserved for issuance pursuant to the Warrants. Except as set forth
in the preceding sentence and Schedule 5.2 of the Disclosure Statement, there
are not as of the date hereof, and, except as provided in Section 3.2 and
Schedule 5.2 of the Disclosure Statement, at the Effective Time there will not
be, any outstanding or authorized subscriptions, options, warrants, calls,
rights, commitments or any other agreements of any character obligating the
Company to issue any additional Shares or any other shares of capital stock of
the Company or any other securities convertible into, exchangeable, exercisable
or evidencing the right to subscribe for any such shares. All of the
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable and free of preemptive
rights.
(b) The number of outstanding shares of capital stock of each of
the subsidiaries of the Company, owned of record and beneficially by the
Company, is set forth in Schedule 5.01 to the Disclosure Statement. The
Company, or a wholly-owned subsidiary of the Company, is the sole record and
beneficial owner of the issued and outstanding capital stock of each subsidiary
listed in Schedule 5.01 to the Disclosure Statement, except as otherwise set
forth in such Schedule. There are no irrevocable proxies with respect to such
shares, and, except as set forth in Schedule 5.01 to the Disclosure Statement,
no equity securities of any of such subsidiaries are or may become required to
be issued by reason of any options, warrants, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any such subsidiary is bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. All of such shares so owned by the Company or a wholly-owned subsidiary
of the Company are validly issued, fully paid and nonassessable and are owned by
it free and clear of all Liens (as defined in Section 5.7).
SECTION 5.3 CORPORATE POWER AND AUTHORITY. The Company has full
corporate power and authority to execute and deliver this Agreement and, subject
to any required approval of the Company's shareholders, to consummate
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the transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by, and the Shareholders Agreement
has been approved by, the Board of Directors of the Company and other than the
approval of this Agreement and the Merger by the holders of a majority of the
outstanding Shares, no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement constitutes a valid and binding
obligation of each of Parent and Merger Sub, this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and remedies and to general principles of
equity.
SECTION 5.4 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company's SEC Reports (as defined in Section 5.5) under the Exchange Act, since
December 31, 1995, the Company and its subsidiaries have not suffered
any Material Adverse Effect. Except as disclosed in the Company's SEC Reports
under the Exchange Act or in writing to Parent by the Company prior to execution
of this Agreement, or as otherwise set forth in this Agreement or the Disclosure
Statement, since December 31, 1995, there has not been (a) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
Shares, or any redemption or other acquisition by the Company of any shares of
its capital stock; (b) any increase in the rate or terms of compensation payable
or to become payable by the Company to its directors, officers or key employees,
except increases occurring in the ordinary course of business consistent with
past practices; (c) any increase in the rate or terms of any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with any such directors, officers or employees, except increases occurring in
the ordinary course of business consistent with past practices; (d) any entry
into any agreement, commitment or transaction by the Company which is material
to the Company and its subsidiaries taken as a whole, except for agreements,
commitments or transactions in the ordinary course of business; (e) any
amendment, termination or lapse of a material contract of the Company and its
subsidiaries, taken as a whole; (f) any material labor dispute involving
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the employees of the Company or its subsidiaries; (g) any change by the Company
in accounting methods, principles or practices except as required or permitted
by generally accepted accounting principles; (h) any write-off or write-down of,
or any determination to write-off or write-down, any asset of the Company or any
of its subsidiaries or any portion thereof which write-off, write-down, or
determination exceeds $10,000 individually or $30,000 in the aggregate; (i) any
amendment, termination, waiver, disposal, or lapse of, or other failure to
preserve, any license, permit, or other form of authorization of the Company or
any subsidiary, except for any thereof that would not have a Material Adverse
Effect; or (j) any agreements by the Company to (1) do any of the things
described in the preceding clauses (a) through (i) other than as expressly
contemplated or provided for herein or (2) take, whether in writing or
otherwise, any action which, if taken prior to the date of this Agreement, would
have made any representation or warranty of the Company in this Agreement untrue
or incorrect.
SECTION 5.5 SEC REPORTS. (a) The Company has filed all required
forms, reports and documents with the SEC required to be filed by it pursuant to
the Federal securities laws and the SEC rules and regulations thereunder, all of
which have complied as of their respective filing dates, or, in the case of
registration statements, their respective effective dates, in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, and the rules and
regulations promulgated thereunder. None of such forms, reports or documents,
including, without limitation, any exhibits, financial statements or schedules
included therein, at the time filed, or, in the case of registration statements,
their respective effective dates, contained any untrue statement of a material
fact or omitted 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. All forms, reports and documents
filed by the Company with the SEC are hereinafter collectively referred to as
the "SEC Reports".
(b) The consolidated balance sheets and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows
(including, without limitation, the related notes thereto) of the Company
included in the Company's Annual Report on Form 10-K for the fiscal years ended
June 30, 1994 and 1995 and the
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Company's Quarterly Reports on Form 10-Q for the quarters ended September 30,
1995 and December 31, 1995 complied as to form, at the time filed, in all
material respects with generally accepted accounting principles and the
published rules and regulations of the SEC with respect thereto at the time
filed and present fairly (subject to normal nonrecurring audit adjustments in
the case of unaudited interim financial statements) the consolidated financial
position of the Company as of their respective dates, and the results of
consolidated operations, the stockholders' equity (deficit) and the cash flows
for the periods presented therein, all in conformity with generally accepted
accounting principles applied on a consistent basis, except as otherwise noted
therein.
SECTION 5.6 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby by the Company require no action by the Company
in respect of, or filing with, any governmental body, agency, official or
authority other than (i) the filing with the SEC of such reports and information
as may be required in connection with this Agreement and the transactions
contemplated hereby pursuant to the applicable requirements of the Securities
Act, the Exchange Act and the rules and regulations promulgated thereunder,
(ii) the filing of the Articles of Merger in accordance with the BCA, and, if
necessary, appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iii) such filings,
authorizations, orders and approvals as may be required under foreign laws and
(iv) compliance with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), except for filings and
approvals which are not required prior to the consummation of the Merger or
where the failure of any such action to be taken or filing to be made would not
have or reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby.
SECTION 5.7 NON-CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby by the Company do not and will not
(i) contravene or conflict with the Company's Amended and Restated Articles of
Incorporation (the "Company's Articles of Incorporation") or Bylaws,
(ii) assuming compliance with the matters referred to in Section 5.6, contravene
or conflict with or constitute
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a violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company or any of its subsidiaries,
(iii) assuming that the Company, Parent and Merger Sub comply in all respects
with the applicable provisions of the Securities Act and the Exchange Act and
the rules and regulations thereunder, in each case, as more fully described in
Section 5.6, except as disclosed in the SEC Reports or in Schedule 5.07 to the
Disclosure Schedule, constitute or result in a default under or give rise to a
right of termination, cancellation or acceleration of any right or obligation,
including without limitation, a repurchase obligation, of the Company or any of
its subsidiaries or to a loss of any benefit to which the Company or any of its
subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its subsidiaries or any license,
franchise, permit or other similar authorization held by the Company or any of
its subsidiaries, or (iv) result in the creation or imposition of any Lien (as
defined below) on any asset of the Company or any of its subsidiaries, other
than, in the case of clauses (ii), (iii) or (iv), any such conflicts,
violations, defaults, losses and Liens that individually or in the aggregate
would not have a Material Adverse Effect. For purposes of this Agreement,
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest, encumbrance, restriction or adverse claim of any kind or
nature in respect of such asset, other than any such mortgage, lien, pledge,
charge, security interest, encumbrance, restriction or adverse claim (i) for
taxes or other governmental charges not yet due and payable, (ii) materialmen's,
mechanic's and similar liens or (iii) reflected on the consolidated balance
sheets of the Company as of September 30, 1995 and December 31, 1995 or (iv) on
any of the Company's properties or assets, or irregularities in title thereto,
that do not materially detract from the value of, or materially impair the use
of, any such property or asset.
SECTION 5.8 INVESTMENT BANKING FEES AND COMMISSIONS. Except for
those fees and expenses payable to Dillon Read with respect to the Company, no
person or entity is entitled to receive from the Company or any of its
subsidiaries any investment banking, brokerage or finder's fee in connection
with this Agreement or the transactions contemplated hereby.
SECTION 5.9 MATERIAL CONTRACTS. (a) Except as disclosed in the
Company's SEC Reports or on Schedule 5.09
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to the Disclosure Statement, neither the Company nor any of its subsidiaries is
a party to any (i) contract or agreement not made in the ordinary course of
business or which is not terminable without penalties of $50,000 or more in the
aggregate or upon notice of thirty (30) days or less; (ii) employment,
consulting, non-competition, severance, golden parachute or indemnification
contract or agreement; (iii) mortgage, pledge, conditional sales contract,
security agreement, loan agreement, credit agreement, promissory note or other
similar contract with respect to any real property of the Company or any of its
subsidiaries; (iv) mortgage pledge, conditional sales contract, security
agreement, factoring agreement, loan agreement, credit agreement, promissory
note or other similar contract with respect to any tangible personal property of
the Company or any of its subsidiaries involving indebtedness for borrowed money
or capital equipment leases, in each case, of more than $50,000; (v) guarantee,
subordination agreement, letter of credit or any other similar type of contract
or agreement involving obligations in excess of $50,000 individually or $50,000
in the aggregate; (vi) contract or agreement with any governmental authority
other than any such contract or agreement which is terminable without penalties
of $50,000 or more in the aggregate or upon notice of 30 days or less, which
involves obligations or indebtedness in excess of $50,000 individually or in the
aggregate, or which requires performance by the Company or any of its
subsidiaries that is not scheduled, and reasonably expected to be completed,
within 30 days from the date hereof; or (vii) commitment or agreement to enter
into any of the foregoing. The Company has delivered or otherwise made
available to Parent true, correct and complete copies of the contracts and
agreements listed on Schedule 5.09 to the Disclosure Statement, together with
all amendments, modifications, supplements or material side letters affecting
the obligations of any party thereunder. Neither the Company nor any of its
subsidiaries is in default under any such contract or agreement nor, to the
Company's knowledge, is any other party thereto in default, which default, in
each case, could reasonably be expected to have a Material Adverse Effect.
(b) (i) The Company and Sumitomo Bakelite Co, Ltd., a Japanese
corporation ("Sumitomo"), have entered into the License Termination Agreement,
dated as of December 21, 1995, terminating the License Agreement, dated as of
June 19, 1990, between the Company and Sumitomo (the "License Termination
Agreement"), (ii) Corvita Europe, S.A., a Belgian corporation and a wholly-owned
subsidiary of the Company ("Corvita Europe"), Jean Pierre Dereume and
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L'Universite Libre Bruxelles have entered into the Patent License Agreement,
dated as of January 24, 1996 (the "Patent License Agreement"), (iii) the Company
has entered into a Stock Purchase Agreement of even date herewith, with the
shareholders of Cardiovascular Innovations Canada, Inc. ("Cardiovascular
Innovations") and with Research Visions Canada, Inc. providing for the purchase
by the Company, directly or indirectly (by purchase of all of the shares of
Cardiovascular Innovations) of all of the shares of Corvita Canada, Inc. that it
does not presently own (the "Stock Purchase Agreements"), (iv) Vascor, Inc.
("Vascor") has executed, as of April 9, 1996, a Consent to Assignment of the
License and Supply Agreement between Vascor and the Company (the "Supply
Agreement") and (v) The Polymer Technology Group and the Company have entered
into a License Agreement, dated April 9, 1996 (the "PTG Agreement" and, together
with the License Termination Agreement, the Patent License Agreement and the
Supply Agreement, the "Material Agreements"), and each such agreement is in full
force and effect and there has been no material breach by the Company or the
other party thereto that has not been cured.
SECTION 5.10 LITIGATION, ETC. As of the date hereof, except as
disclosed in the SEC Reports or in Schedule 5.10 to the Disclosure Statement,
there is no suit, claim, action or proceeding (at law or in equity) pending nor,
to the knowledge of the Company, is any investigation pending or any suit,
claim, action, or proceeding threatened against the Company or any of its
subsidiaries before any court or governmental or regulatory authority or body
seeking money damages in excess of $50,000 or non-monetary relief that, if
granted, could reasonably be expected to have a Material Adverse Effect or
seeking to prevent or challenging the transactions contemplated by this
Agreement. The Company is not subject to any outstanding order, writ,
injunction or decree that would have a Material Adverse Effect.
SECTION 5.11 BENEFIT PLANS. (a) Schedule 5.11 to the Disclosure
Statement contains a true and complete list of each "employee benefit plan" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), including foreign plans which would be subject to ERISA if
such plans covered U.S. employees, bonus, deferred compensation, incentive
compensation, excess benefit, supplemental retirement, stock purchase, stock
option, severance, life insurance, disability, salary continuation, supplemental
unemployment and other employee benefit plan, program or arrangement whether
written or
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unwritten, qualified or nonqualified, funded or unfunded (i) maintained,
contributed to or required to be contributed to by the Company (the foregoing
being herein called "Benefit Plans"). With respect to each Benefit Plan
maintained or contributed to by the Company or any of its subsidiaries or under
which any of them has any liability or obligation, the Company has made
available to Parent, if applicable, a true and correct copy of (a) the
most recent annual report (Form 5500) filed with the IRS, (b) such Benefit Plan,
(c) each trust agreement and group annuity contract, if any, relating to such
Benefit Plan, and (d) a current IRS determination letter.
(b) With respect to the Benefit Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which Parent or
any of its affiliates could be subject to any liability that is reasonably
likely to have a Material Adverse Effect (except liability for benefits claims
and funding obligations payable in the ordinary course) under ERISA, the
Internal Revenue Code of 1986, as amended (the "Code"), or any other applicable
law. To the best of the knowledge of the Company, each Benefit Plan which is
intended to qualify under Section 401(a) of the Code ("Qualified Plans") is and
always has been qualified under such Section and each trust maintained in
connection with such a plan has at all time been exempt from federal income
taxes under Section 501 of the Code. To the best of the knowledge of the
Company, each Qualified Plan is in receipt of a favorable determination letter
issued by the IRS, and each such letter has not been revoked nor, to the
knowledge of the Company, threatened to be revoked. To the best of the
knowledge of the Company, each Benefit Plan has been administered in all
material respects in accordance with its terms and with all applicable laws. No
"prohibited transaction" (within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred with respect to any Benefit Plan which would
result directly or indirectly in liability to the Company.
(c) With respect to the Benefit Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
that have not been accounted for by reserves, or otherwise properly footnoted in
accordance with generally accepted accounting principles, on the financial
statements
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of the Company, which obligations are reasonably likely to have a Material
Adverse Effect.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment becoming due, or materially increase the amount of compensation
due, any current or former employee of the Company or any of its subsidiaries
including, without limitation, any severance payment or benefit; (ii) materially
increase any benefits otherwise payable under any Benefit Plan; or (iii) result
in the acceleration of the time of payment or vesting of any such material
benefits, except in each case as contemplated by this Agreement.
(e) The Company and its subsidiaries have complied in all
material respects with the continuation coverage requirements of Section 4980B
of the Code with respect to each group health plan within the meaning of Section
4980B(g)(2) of the Code.
(f) To the best of the knowledge of the Company, each Benefit
Plan which is not subject to regulation under ERISA ("Foreign Plan") has at all
times been maintained, operated and administered in all material respects in
compliance with its terms and all applicable laws. To the best of the knowledge
of the Company, if a Foreign Plan is required under applicable law or by its
terms to be funded in any respect, such Foreign Plan is so funded and, if such
Foreign Plan is not required to be funded, the benefits payable under such
Foreign Plan are adequately reserved for on the Company's, or a subsidiary's,
financial statements included in the Company's SEC Reports (or there is an
adequate combination of reserves and funding) in accordance with U.S. generally
accepted accounting principles. All contributions to and payments from any
Foreign Plan for all periods prior to the date of the balance sheet have been
fully paid or adequately reserved for on the Company's, or a subsidiary's,
financial statements included in the Company's SEC Reports in accordance with
U.S. generally accepted accounting principles. There are no pending or, to the
knowledge of the Company, threatened actions, claims, lawsuits, arbitrations,
audits, investigations or similar proceedings involving any Foreign Plan, or the
assets, sponsor, administrator or fiduciaries of any such Foreign Plans (other
than routine benefit claims in type and amount consistent with past practice)
which would become the
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liability of the Company or Parent on and the after the Closing Date, nor does
the Company have knowledge of facts which could form a reasonable basis for any
such proceedings.
SECTION 5.12 INTELLECTUAL PROPERTY. The Company and its
subsidiaries fully own, or are licensed or otherwise have the right to use, all
patents, patent rights, invention rights, trademark rights, trade names, trade
name rights, service mark rights, copyrights, know-how, trade secrets,
technology and computer programs which are material to the conduct of the
business of the Company and its subsidiaries taken as a whole (the "Intellectual
Property"), including, but not limited to, the patents, patent rights, license
agreements, published foreign patent applications, trademark rights, trade
names, trade name rights and service mark rights set forth in Schedule 5.12 to
the Disclosure Statement. Schedule 5.12 to the Disclosure Statement sets forth
a true, correct and complete list of the Intellectual Property (other than
invention rights, invention disclosures and related agreements and non-published
patent applications). Except as set forth in Schedule 5.12 to the Disclosure
Statement, neither the Company nor any of its subsidiaries has been granted or
has granted any outstanding license (other than "shrink wrap licenses" for any
retail consumer products generally available) or other rights under any
Intellectual Property. The Company and its subsidiaries fully own the data
compiled from all clinical trials and neither the Company nor any of its
subsidiaries is prohibited from (x) using such data in any manner, including for
purposes of gaining regulatory approval for any product of the Company currently
sold or under development or (y) assigning or otherwise transferring ownership
rights in such data to a third party. Except as set forth in Schedule 5.12 to
the Disclosure Statement, (i) to the best of the knowledge of the Company, there
is no violation, breach, misappropriation or infringement by any third party of
any Company Intellectual Property, (ii) there are no pending or, to the best of
the knowledge of the Company, threatened opposition, interference,
reexamination, arbitration, invalidity, declaratory judgment, revocation,
nullity or similar actions in respect of any Company Intellectual Property and
(iii) to the best of the knowledge of the Company, the Company is not infringing
or otherwise adversely affecting the rights of any person with regard to any
patent, license, trademark, trade name, service mark, copyright, know-how, trade
secret or other intellectual property right held by that person nor has it
received notice of any such claim.
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SECTION 5.13 RESTRICTIONS ON OPERATIONS. Except as set forth on
Schedule 5.13 to the Disclosure Statement, the Company and its subsidiaries are
not restricted directly or indirectly by any agreement to which the Company, or
any of its subsidiaries, is bound from carrying on its business anywhere in the
world nor is the Company aware of any other agreement which purports to restrict
the Company or any of its subsidiaries from carrying out its business anywhere
in the world.
SECTION 5.14 ENVIRONMENTAL LAWS. Except as disclosed on Schedule
5.14 to the Disclosure Statement, in the Environmental Reports (as defined in
Section 5.14(d)) or as would not have a Material Adverse Effect:
(a) The Company and its subsidiaries and their respective
operations comply in all material respects with all applicable Environmental
Laws (as defined in Section 5.14(e)).
(b) The Company and its subsidiaries have obtained and maintain
all Environmental Permits (as defined in Section 5.14(e)) necessary for their
operations; there are no legal proceedings pending or, to the knowledge of the
Company, threatened to revoke any such Environmental Permit, the Company and its
subsidiaries are in compliance in all material respects with all such
Environmental Permits; none of the Company or any of its subsidiaries has
received any written notice from any governmental authority to the effect that
there is lacking any Environmental Permit required in connection with the
current use or operation of any of its properties; and the consummation of the
transactions contemplated hereby will not cause the Company to have any of its
rights under such Environmental Permits adversely affected.
(c) To the best of the knowledge of the Company, all real
property owned, operated or leased by the Company and its subsidiaries is free
from contamination by Hazardous Materials (as defined in Section 3.14(e)) at
levels requiring remediation under any Environmental Laws and neither the
Company nor any of its subsidiaries has caused or permitted any Hazardous
Material to remain or be disposed of, either on or under real property legally
or beneficially owned, leased or operated by the Company or any of its
subsidiaries or on any real property not permitted to accept, store or dispose
of such Hazardous Materials other than in compliance with applicable
Environmental Laws.
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(d) The Company and its subsidiaries have provided or made
available to Parent all audits, studies, reports, analyses and results of
investigations, memoranda and correspondence in the Company's possession related
to Environmental Laws or Environmental Claims that have been drafted, created or
performed with respect to currently or previously owned, leased or operated
properties of the operations of the Company and its subsidiaries. The
foregoing, together with the report prepared by ERM Northeast, a member of the
Environmental Resource Management Group, in final form delivered to Parent
regarding the property owned, leased and operated by the Company or any of its
subsidiaries are collectively referred to as the "Environmental Reports".
(e) For purposes of this Agreement:
"ENVIRONMENTAL CLAIM" means any written accusation, allegation, notice
of violation, action, claim, Environmental Lien, demand, abatement or other
order or direction (conditional or otherwise) by any governmental body or any
other person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restrictions resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material in, into or onto the environment (including,
without limitation, the air, soil, surface water or groundwater) at, in, by,
from or related to any property owned, operated or leased by the Company or its
subsidiaries or any activities or operations thereof; (ii) the generation,
transportation, storage, treatment, handling or disposal of Hazardous Materials
in connection with any property owned, operated or leased by the Company or its
subsidiaries or their operations or facilities; or (iii) the violation, or
alleged violation, of any Environmental Law, order or Environmental Permit of or
from any governmental body relating to environmental matters connected with any
property owned, leased or operated by the Company or its subsidiaries.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement relating to the environment, natural resources, or public or
employee health and safety and includes, but is not limited to, the
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Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 ET SEQ., the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 ET seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 ET SEQ., the Clean Water Act, 33 U.S.C. Section 1251 ET SEQ., the
Clean Air Act, 33 U.S.C. Section 2601 ET SEQ., the Toxic Substances Control Act,
15 U.S.C. Section 2601 ET SEQ., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. Section 136 ET SEQ., the Oil Pollution Act of 1990,
33 U.S.C. Section 2701 ET SEQ. and the Occupational Safety and Health Act, 29
U.S.C. Section 651 ET SEQ., (and including, without limitation, European Union
directives and regulations and, with respect to the European operations and
property located within the European Union, prescribed work practices and
technical or other standards issued by competent organizations) as such laws
have been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous state or local statutes, including without
limitation, any state environmental property transfer statutes.
"ENVIRONMENTAL PERMIT" means any permit, approval, authorization,
license, variance, registration, or permission required under any applicable
Environmental Law or order.
"HAZARDOUS MATERIALS" means any hazardous substance, material or waste
which is regulated by any local, state, Federal or foreign governmental body
in the jurisdiction in which the Company or any of its subsidiaries conducts
business, including, without limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste," "subject waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, including, but not limited to, petroleum products, asbestos
and polychlorinated biphenyls.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching, or migration on or into the indoor or outdoor environment or into or
out of any property.
"REMEDIAL ACTION" means all actions, including, without limitation,
any capital expenditures, required or voluntarily undertaken to (i) clean up,
remove, treat, or in any other way address any Hazardous Material or other
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substance; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or post-
remedial monitoring and care; or (iv) bring any property owned, operated or
leased by the Company or any of its subsidiaries and the facilities located and
operations conducted thereon into compliance with all Environmental Laws and
Environmental Permits.
SECTION 5.15 COMPLIANCE WITH LAWS. Except as set forth in Schedule
5.15 to the Disclosure Statement or as disclosed in the SEC Reports, neither the
Company nor any of its subsidiaries has violated or failed to comply with any
statute, law, ordinance, regulation, rule or order of any foreign, Federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to its business or
operations, except where any such violations or failures to comply would not, in
the aggregate, have a Material Adverse Effect; and the conduct of the business
of the Company and its subsidiaries is in conformity with all Federal, state and
local energy and public utility and all other Federal, state and local
governmental and regulatory requirements applicable to its business or
operations, except where such nonconformities would not, in the aggregate, have
a Material Adverse Effect. The Company and its subsidiaries have all permits,
licenses and franchises from governmental agencies required to conduct their
businesses as now being conducted, except for such permits, licenses and
franchises the absence of which would not, in the aggregate, have a Material
Adverse Effect.
SECTION 5.16 TAXES. Except as set forth in Schedule 5.16 to the
Disclosure Statement:
(a) Each of the Company and its subsidiaries has (i) timely
filed all Federal and all state, local and foreign returns, declarations,
reports, estimates, information returns and statements ("Returns") required to
be filed by or for it on or prior to the date hereof in respect of any Taxes and
such Returns are true, complete and correct in all material respects,
(ii) timely paid all Taxes that are shown as being due on any Returns,
(iii) established reserves that are adequate for the payment of all Taxes not
yet due and payable with respect to the results of operations of the Company and
its subsidiaries through the date hereof, (iv) complied in all material
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respects with all applicable laws, rules and regulations relating to Taxes, and
(v) timely withheld and paid over to the proper governmental authorities all
Taxes and other amounts required to be so withheld and paid over.
(b) (i) Schedule 5.16 to the Disclosure Statement sets forth the
last taxable period (x) through which the Federal Returns of the Company and any
of its subsidiaries have been examined by the Internal Revenue Service ("IRS")
or (y) for which the date for assessment and collection of any deficiency has
expired; (ii) all deficiencies asserted as a result of such examinations have
been paid, fully settled or adequately provided for in the Company's most recent
audited financial statements; (iii) no Federal tax audits or
other administrative proceedings or court proceedings are presently pending with
respect to the Company or any of its subsidiaries with regard to any Federal
Taxes; and (iv) the Company has not received notice that any deficiency for any
such Taxes aggregating in excess of $50,000 has been proposed, asserted or
assessed against the Company or any of its subsidiaries, by any Federal, state,
local or foreign taxing authority or court with respect to any period.
(c) Neither the Company nor any of its subsidiaries has executed
or entered into with the IRS or any other taxing authority (i) any agreement or
other document that continues in force and effect beyond the Effective Time and
that extends or has the effect of extending the period for assessments or
collection of any Federal, state, local or foreign Taxes or (ii) a closing
agreement pursuant to Section 7121 of the Code, or any predecessor provision
thereof, or any similar agreement, pursuant to any similar provision of state,
local or foreign law, that continues in force and effect beyond the Effective
Time.
(d) Neither the Company nor any of its subsidiaries is a party
to an agreement that provides for the payment of any amount that would
constitute a "parachute payment" within the meaning of Section 280G of the Code.
(e) Neither the Company nor any of its subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
subsidiaries.
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(f) Neither the Company nor any of its subsidiaries is a party
to, is bound by or has any obligation under any tax sharing agreement or similar
agreement or arrangement.
(g) All representations made by the Company, any of its
subsidiaries or their respective authorized representatives in connection with
any tax exemption, grant, dispensation or similar allowance under any Federal,
state, local or foreign tax laws are complete, true and accurate in all material
respects and any covenants, promises or undertakings made or to be performed by
the Company or any of its subsidiaries in connection with such tax exemption,
grant, disposition or similar allowance under any such Federal, state, local or
foreign tax laws have been duly discharged or performed in accordance with their
terms.
(h) The Company (i) has not agreed to make, nor is it required
to make any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise and (ii) has not leased or rented any property
other than on arm's length terms and conditions.
(i) Neither the Company nor any of its subsidiaries is, or has
been, a United States Real Property Holding Corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii).
For purposes of this Agreement, (i) "Taxes" shall mean all Federal,
state, local, foreign and other taxes, charges, fees, levies, imposts, duties,
licenses or other assessments of every kind and description, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority and (ii) "Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations thereunder, and any reference to
a specific provision of the Code shall include any predecessor of such Code
provision which was in effect on or after January 1, 1988.
SECTION 5.17 PRODUCT REGISTRATION; REGULATORY COMPLIANCE. (a)
Schedule 5.17 to the Disclosure Statement sets forth, as of the date hereof, a
list of all licenses and approvals granted by or pending with any governmental
authority in any particular country to market any product relating to the
Company's business as conducted on the date hereof (the "Product
Registrations"). Except as set forth in Schedule 5.17 to the Disclosure
Statement, (i) all
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products sold under the Product Registrations are manufactured and marketed in
accordance with the specifications and standards contained in such Product
Registrations, (ii) the Company is the sole and exclusive owner of the Product
Registrations and has not granted any right or reference with respect thereto
and is not prohibited from assigning or otherwise transferring its rights to
such Product Registrations to a third party, (iii) the Product Registrations
granted are in full force and effect with all required annual reports filed and
government maintenance fees and taxes having been paid thereon and no consent of
any governmental authority is required in connection with the transactions
contemplated hereby, (iv) each of the products produced or sold in connection
with the Company's business as conducted on the date hereof (x) is, and at all
times has been, in compliance with all applicable laws, and (y) is, and at all
relevant times has been, fit for the ordinary purposes of which it is intended
to be used and conforms to any promises or affirmations of fact made on the
label for such product or in connection with its sale, or is or has been
provided for use in research, scientific or experimental programs or used for
research, scientific or experimental purposes in accordance with an express
understanding that its fitness and its conformance to performance expectations
are undergoing evaluation, and (v) to the knowledge of the Company, there is no
design or production defect with respect to any of such products and no facts
have come to the Company's attention as a result of the Company's research which
indicates that there are any design defects with respect to any of such
products, and each of such products contains adequate warnings, presented in a
reasonably prominent manner, in accordance with applicable laws and current
industry practice with respect to its packaging, contents and use.
(b) The Company is not aware of any facts: (i) which would furnish a
substantial basis for the recall, withdrawal or suspension by any governmental
authority, or by order of any court, of any product sold by the Company; or
(ii) which would otherwise reasonably be expected to cause the Company to
withdraw, recall or suspend any product from the market, or otherwise take any
other remedial action, or to terminate or suspend the manufacturing or testing
of any product.
(c) Except as set forth in the SEC Reports, Schedule 5.10 or Schedule
5.17, there is no suit, claim, action or proceeding (at law or in equity)
pending nor, to the knowledge of the Company, is any suit, claim, action or
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proceeding threatened against the Company or any of its subsidiaries before any
court or governmental or regulatory authority or body involving any claim that
any product of the Company is defective or otherwise has caused physical harm to
any user.
SECTION 5.18 COMPANY ACTION. The Board of Directors of the Company
(at a meeting duly called and held) has by the requisite vote of all directors
present (a) determined that the Offer and Merger is advisable and in the best
interests of the Company and it shareholders, (b) approved this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, and
(c) directed that this Agreement and the Merger be submitted for consideration
by the Company's shareholders at a duly called meeting (the "Company Meeting")
and has determined to recommend, subject to the Board's ability to withdraw,
modify or change its recommendation regarding this Agreement and the Merger in
accordance with the provisions of Section 7.2, the approval by the Company's
shareholders of these matters. In connection with its consideration of this
Agreement, the Board of Directors of the Company received a written opinion from
Dillon Read that the Offer Consideration to be received by the Company's common
shareholders in the Offer and the Merger is fair, from a financial point of
view, to such shareholders. The affirmative votes of the holders of a majority
of the outstanding Shares entitled to vote thereon are the only votes of the
holders of any class or series of Company capital stock necessary to approve
this Agreement and the transactions contemplated hereby, including the Merger.
SECTION 5.19 LABOR MATTERS. Except as disclosed on Schedule 5.19 of
the Disclosure Statement, neither the Company nor any of its subsidiaries is a
party to or bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization.
SECTION 5.20 SUPPLY. On April 9, 1996, the Company and its
subsidiaries had in finished goods inventory 188 units of endoluminal grafts
manufactured at their facilities in Belgium, which together with ongoing
manufacturing operations in Belgium, is sufficient for continuing to supply at
current levels the reasonably anticipated requirements of all clinical trials
currently in progress and currently scheduled.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 6.1 ORGANIZATION AND QUALIFICATION. Each of the Parent and
Merger Sub 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 carry on its business as it is now
being conducted.
SECTION 6.2 CORPORATE POWER AND AUTHORITY. Each of the Parent and
Merger Sub has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by the respective Boards of Directors of Parent and Merger Sub, and
the sole shareholder of Merger Sub, and no other corporate proceedings on the
part of the Parent or Merger Sub are necessary to authorize this Agreement or
to consummate the Merger and the other transactions contemplated by this
Agreement. This Agreement has been duly and validly executed and delivered by
each of Parent and Merger Sub and, assuming this Agreement constitutes a valid
and binding obligation of the Company, this Agreement constitutes the legal,
valid and binding obligation of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors' rights and
remedies and to general principles of equity.
SECTION 6.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by each of the Parent and Merger Sub of this Agreement and the
consummation of the transactions contemplated hereby by Merger Sub require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority other than (i) the filing with the SEC of such reports and
information as may be required in connection with this Agreement and the
transactions contemplated hereby pursuant to the applicable requirements of the
Securities Act and the Exchange Act and
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the rules and regulations promulgated thereunder, (ii) the filing of the
Articles of Merger in accordance with the BCA, (iii) such filings,
authorizations, orders and approvals as may be required under foreign laws,
(iv) compliance with applicable requirements of the HSR Act, except for filings
and approvals which are not required prior to the consummation of the Merger or
where the failure of any such action to be taken or filing to be made would not
have or reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Parent or prevent consummation of the transactions
contemplated hereby.
SECTION 6.4 NON-CONTRAVENTION. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation of
the transactions contemplated hereby by Parent and Merger Sub do not and will
not (i) contravene or conflict with the Certificate of Incorporation or Bylaws
of the Parent or the Articles of Incorporation or Bylaws of Merger Sub,
(ii) assuming compliance with the matters referred to in Section 6.3, contravene
or conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
Parent or Merger Sub, (iii) constitute or result in a default under or give rise
to a right of termination, cancellation or acceleration of any right or
obligation of Parent or Merger Sub or to a loss of any benefit to which Parent
or Merger Sub is entitled under any provision of any agreement or other
instrument binding upon Parent or Merger Sub or any license, franchise, permit
or other similar authorization held by Parent or Merger Sub, or (iv) result in
the creation or imposition of any Lien on any asset of Parent or Merger Sub,
except for any occurrences or results referred to in clauses (ii), (iii), and
(iv) which would not have or reasonably be expected to have, individually or in
the aggregate, a material adverse effect on Parent or prevent consummation of
the transactions contemplated hereby.
SECTION 6.5 MERGER SUB. (a) Parent owns all of the outstanding
stock of Merger Sub; at all times prior to the Merger, no person other than
Parent has owned, or will own, any of the outstanding stock of Merger Sub.
Merger Sub was formed by Parent solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) There are not as of the date of this Agreement, and there
will not be at the Effective Time, any outstanding or authorized options,
warrants, calls, rights, commitments or any other agreements of any character
which
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Merger Sub is a party to, or may be bound by, requiring it to issue, transfer,
sell, purchase, redeem or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for or acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time,
except for obligations incurred in connection with this Agreement, Merger Sub
has not and will not have incurred, directly or indirectly through any other
corporation, any obligations or liabilities of any kind or engaged in any
activities of any type or kind whatsoever or entered into any arrangement or
arrangements with any person or entity.
(d) Parent will make available, and Merger Sub will have, at or
before the Acceptance Date, adequate funds to accept for payment, purchase and
pay for all of the Shares tendered and not withdrawn pursuant to the Offer.
ARTICLE VII
COVENANTS
SECTION 7.1 CONDUCT OF BUSINESS. Except as expressly provided in
this Agreement, or as expressly agreed to in writing by Parent, or as set forth
in Schedule 7.01 to the Disclosure Statement, during the period from the date of
this Agreement and continuing until the Control Date or until the termination of
this Agreement pursuant to Section 9.1 (the "Executory Period"):
(a) The Company will use commercially reasonable efforts, and
will cause each of its subsidiaries to use commercially reasonable efforts, to
conduct its operations according to its ordinary and usual course of business
and consistently with past practice and to preserve intact its respective
business organization, keep available the services of its officers and employees
and maintain satisfactory relationships with licensors, suppliers, distributors,
customers and others having business relationships with it.
(b) The Company will, and will cause each of its subsidiaries
to, maintain its books and records in its usual manner and consistent with past
practice and not permit a material change in any of its financial reporting,
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tax, or accounting practices or policies or in any assumption underlying such
practices or policies, or in any method of calculating any bad debt,
contingency, or other reserve for financial reporting purposes or for other
accounting purposes, except as may be required by generally accepted accounting
principles.
(c) Without limiting the generality of the foregoing, neither
the Company nor any of its subsidiaries, as the case may be, will, without the
prior written consent of Parent, (i) issue, sell, pledge or encumber, or
authorize or propose the issuance, sale, pledge or encumbrance of (A) any shares
of capital stock of any class (including Shares), or securities convertible
into, or exchangeable for, any such shares, or any rights, warrants or options
to acquire any such shares or other convertible or exchangeable securities, or
grant or accelerate any right to convert or exchange any securities of the
Company or any of its subsidiaries for such shares, other than shares issuable
upon exercise of currently outstanding stock options, stock awards or warrants,
or (B) any other securities in respect of, in lieu of or in substitution for
shares of common stock outstanding on the date hereof (including the Shares);
(ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase or
otherwise acquire, any of its outstanding securities (including the Shares);
(iii) split, combine or reclassify any shares of its capital stock or declare or
pay any dividend or distribution on any shares of capital stock of the Company;
(iv) except as set forth in Schedule 7.01 to the Disclosure Statement, make any
acquisition of a material amount of assets or securities, any disposition of a
material amount of assets or securities, or enter into or modify any material
contract, agreement, commitment, arrangement, license or right or any release or
relinquishment of any material contract rights, not in the ordinary course of
business; (v) pledge or encumber any material assets of the Company except in
the ordinary course of business consistent with past practice; (vi) incur any
long-term debt for borrowed money or short-term debt for borrowed money, except
for unsecured debt bearing interest at current market rates incurred in the
ordinary course of business consistent with past practice; (vii) propose or
adopt any amendments to the Articles of Incorporation or Bylaws of the Company
or any of its subsidiaries; (viii) enter into any new employment agreement
providing for compensation (including salary, bonus, benefits and all other
forms of compensation, whether immediately payable or deferred) in excess of
$50,000 per year or amend any existing agreement with any officer,
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director or employee or grant any increase in the compensation or benefits to
officers, directors, employees and former employees other than increases in the
ordinary course of business and consistent with past practice or pursuant to the
terms of agreements or plans as currently in effect; (ix) adopt a plan of
complete or partial liquidation or resolutions providing for the complete or
partial liquidation or dissolution of the Company or any of its subsidiaries;
(x) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except wholly-owned subsidiaries of the Company in the ordinary course of
business and consistent with past practices; (xi) make any loans, advances or
capital contributions to, or investments in, any other person (other than loans
or advances to subsidiaries and customary loans or advances to employees in
accordance with past practices); (xii) adopt or amend (except as may be required
by law or required by this Agreement) any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or other arrangement for the
benefit or welfare of any employee or former employee; (xiii) take any action
other than in the ordinary course of business and consistent with past practice
with respect to the grant of any severance or termination pay or with respect to
any increase of benefits payable under its severance or termination pay policies
in effect on the date hereof; (xiv) make any tax election or settle or
compromise any material Federal, state, local or foreign income tax liability,
except in the ordinary course of business and consistent with past practice;
(xv) execute or enter into with the IRS or any other taxing authority (x) any
agreement or other document extending or having the effect of extending the
period of assessments or collection of any Federal, state, local or foreign
Taxes or (y) a closing agreement pursuant to Section 7121 of the Code, or any
successor provision thereof, or any similar agreement, pursuant to any similar
provision of state, local or foreign laws; (xvi) except pursuant to agreements
in effect on the date hereof which are disclosed on Schedule 7.01 to the
Disclosure Statement or as contemplated by the capital expenditures budget
currently in effect, authorize capital expenditures in excess of $50,000 in the
aggregate; or (xvii) authorize or propose any of the foregoing, or enter into
any contract, agreement, commitment or arrangement to do any of the foregoing,
or take any action which would make any representation or warranty of the
Company in this Agreement untrue or incorrect.
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(d) The Company will, prior to the Acceptance Date, use its
reasonable best efforts to obtain written determinations or permits from the
responsible governmental authorities as to which environmental permits are
required for presently unpermitted activities including, but not limited to,
waste water discharges and air emissions at the Company's facilities in Florida
and operations in Brussels, Belgium. Upon the receipt of a determination that a
permit is required, the Company shall, as soon as possible, file applications
and support information necessary to obtain such permits and shall use its
reasonable best efforts to expedite the issuance of such permits. With regard
to the Corvita Europe operating permit only, the Company shall file the
application for such permit prior to the Acceptance Date.
(e) Each of the Company and its subsidiaries shall file all
Returns that are due prior to the Closing Date and shall prior to the Closing
Date pay any and all taxes shown as being due on such Returns. The Company
shall provide to Parent at the Closing a copy of such Returns and a copy of the
receipts for any and all Taxes paid with respect to such Returns.
SECTION 7.2 NO SOLICITATION. (a) Until the earlier of the Control
Date or the termination of this Agreement, the Company shall not, and shall not
permit any of its subsidiaries, or any of its or their officers, directors,
employees, representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
its subsidiaries), to, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action knowingly to facilitate, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its or their officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by
it or any of its subsidiaries to take any such action; PROVIDED, HOWEVER, that
nothing in this Agreement shall prohibit the Board of Directors of the Company
from furnishing information to, or entering into, maintaining or continuing
discussions or negotiations with, any person or
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entity that makes an unsolicited Acquisition Proposal after the date hereof, if
the Board of Directors of the Company, after consultation with and based upon
the advice of independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), determines in good faith that the failure to
take such action could create a reasonable possibility of a breach by the Board
of Directors of the Company of its fiduciary duties to shareholders under
applicable law and, prior to taking such action, the Company (i) provides
reasonable notice to Parent to the effect that it is taking such action and (ii)
receives from such person or entity an executed confidentiality agreement in
reasonably customary form. The Company shall use reasonable efforts to keep
Parent informed of the status of any such Acquisition Proposal. For purposes of
this Agreement, "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the transactions contemplated by this
Agreement with Parent or Merger Sub) involving the Company or any of its
subsidiaries: (w) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (x) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of related transactions; (y) any tender
offer or exchange offer for 20 percent or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) Except as set forth in this Section 7.2(b), the Board of
Directors of the Company shall not (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Merger Sub, the approval or
recommendation by the Board of Directors of the Offer, this Agreement or the
Merger, (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or (iii) cause the Company to enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, in the
event that prior to the time of acceptance for payment of Shares in the Offer
the Board of Directors of the Company determines in good faith, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), that the
failure to take such action could create a reasonable possibility of a breach by
the Board of
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Directors of the Company of its fiduciary duties to the Company's shareholders
under applicable law, the Board of Directors of the Company may withdraw or
modify its approval or recommendation of the Offer, this Agreement and the
Merger, approve or recommend an Acquisition Proposal that is more favorable to
shareholders of the Company than the Offer and Merger (a "Superior Proposal") or
cause the Company to enter into an agreement with respect to a Superior
Proposal. The Company shall provide reasonable notice to Parent or Merger Sub
to the effect that it is taking such action in no event less than 3 business
days.
SECTION 7.3 ACCESS TO INFORMATION. During the Executory Period,
the Company will upon reasonable notice (i) give Parent and its authorized
representatives reasonable access during regular business hours to all of its
subsidiaries, plants, offices, warehouses and other properties and to their
employees, agents, independent accountants and all of their books, records and
contracts, (ii) permit Parent and its authorized representatives to make such
inspections, including, without limitation, environmental assessments or
surveys, during regular business hours as Parent may reasonably require and
(iii) cause its officers and those of its subsidiaries to furnish Parent and its
authorized representatives with such financial and operating data and other
information with respect to the business and properties of the Company and its
subsidiaries as the Parent may from time to time reasonably request, provided
that all requests for such access, inspection, or information and notices
pursuant to this Section 7.3 be made through Norman R. Weldon, Ph.D. or such
other person as he shall designate in notice to Parent in accordance with
Section 10.5 hereof. Notwithstanding anything to the contrary contained herein,
the Company shall deliver to Parent, immediately after the execution of this
Agreement by all of the parties hereto, a schedule which sets forth a true,
correct and complete list of invention rights, invention disclosures and related
agreements and non-published patent applications of the Company and its
subsidiaries not previously disclosed to Parent in Schedule 5.12 to the
Disclosure Statement and shall provide Parent with access to all such documents
and information relating thereto in accordance with this Section 7.3.
SECTION 7.4 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein, and to the fiduciary duties of the Board of Directors of the
Company under applicable laws, each of the parties hereto agrees to (i) make all
required filings under the HSR Act as promptly
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as practicable but in no event later than six business days of the date hereof,
and thereafter promptly make any other required submissions under the HSR Act,
(ii) promptly make their respective filings and thereafter promptly make any
other required submissions under the Securities Act and the Exchange Act with
respect to the Merger and (iii) use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, (a) using their respective reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and its subsidiaries as are necessary for consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to the
Merger, (b) taking any action reasonably necessary to vigorously defend, lift,
mitigate and rescind the effect of any litigation or administrative proceeding
adversely affecting this Agreement or the transactions contemplated hereby,
including, without limitation, promptly appealing any adverse court or
administrative order or injunction and (c) to fulfill all conditions precedent
applicable to such party pursuant to this Agreement. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such
necessary action.
SECTION 7.5 INDEMNIFICATION AND INSURANCE. (a) The Surviving
Corporation and Parent agree that until six years from the Effective Time, the
Surviving Corporation will maintain all rights to indemnification now existing
in favor of the directors, officers, employees, fiduciaries and agents of the
Company as provided in the Company's Articles of Incorporation and Bylaws or
otherwise in effect under any agreement or otherwise on the date of this
Agreement and that the Articles of Incorporation and Bylaws of the Surviving
Corporation shall not be amended to reduce or limit the rights of indemnity
afforded to the present and former directors and officers 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 of indemnity or the ability to
indemnify.
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(b) The Surviving Corporation will at all times exercise the
powers granted to it by its Articles of Incorporation, its Bylaws, and by
applicable law to indemnify and hold harmless to the fullest extent possible
present or former directors, officers, employees, fiduciaries and agents of the
Company against any threatened or actual claim, action, suit, proceeding or
investigation made against them arising from their service in such capacities
(or service in such capacities for another enterprise at the request of the
Company) prior to, and including the Effective Time for at least six years from
the Effective Time. Parent shall assume and perform the obligations of the
Surviving Corporation under this Section 7.5; PROVIDED, that, any indemnified
party shall make a good faith effort (which shall not include any requirement to
bring any suit, claim, action, or other proceeding) to cause the Surviving
Corporation to perform its obligations under this Section 7.5 before requesting
Parent to assume and perform such obligations.
(c) Should any threatened or actual claim action, suit,
proceeding or investigation be made against any present or former director,
officer, employee, fiduciary or agent of the Company, arising from his services
as such, within six years from the Effective Time, the provisions of this
Section 7.5 shall continue in effect until the final disposition of all such
claims.
(d) Any indemnified party wishing to claim indemnification under
this Section, upon learning of any such action, suit, claim, proceeding or
investigation, shall notify Parent and the Surviving Corporation within 15 days
thereof; PROVIDED, HOWEVER, that any failure so to notify Parent and the
Surviving Corporation of any obligation to indemnify such indemnified party or
of any other obligation imposed by this Section shall not affect such
obligations except to the extent Parent and/or the Surviving Corporation is
actually prejudiced thereby. Parent and the Surviving Corporation shall be
entitled to assume the defense of any such action, suit, claim, proceeding or
investigation with counsel of its choice, unless there is, under applicable
standards of professional conduct, a conflict of any significant issue between
the positions of Parent and the Surviving Corporation, on the one hand, and the
indemnified parties, on the other, in which event the indemnified parties as a
group may retain one law firm to represent them with respect to such matter.
Neither Parent or the Surviving Corporation, on the one hand, nor the
indemnified parties, on the other hand, may settle any such action,
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suit, claim, proceeding or investigation without the prior written consent of
the other party, which consent shall not be unreasonably withheld or delayed.
(e) In addition to the foregoing, Parent shall cause the
Surviving Corporation to honor in accordance with their terms any
indemnification agreements in existence on the date hereof between the Company
and any present or former director, officer, employee, fiduciary or agent of the
Company.
(f) The parties agree that the provisions of this Section 7.5
will not require Parent or the Surviving Corporation to maintain directors' and
officers' insurance coverage in favor of the Company's present and former
directors and officers.
SECTION 7.6 STATE TAKEOVER STATUTES. The Company shall, upon the
request of Parent, take all reasonable steps to assist in any challenge by
Parent to the validity or applicability to the Offer or the Merger of any state
takeover law.
SECTION 7.7 PROXY STATEMENT. Unless the Merger is consummated in
accordance with Section 1104 of the BCA, the Company shall prepare and file with
the SEC, and in consultation with Parent and Merger Sub, as soon as practicable
after the consummation of the Offer, a preliminary proxy or information
statement (the "Preliminary Proxy Statement") relating to the Merger in
accordance with the Exchange Act and the rules and regulations under the
Exchange Act, with respect to the transactions contemplated by this Agreement.
The Company, Parent and Merger Sub shall cooperate with each other in the
preparation of the Preliminary Proxy Statement. The Company shall use all
reasonable efforts to respond promptly to any comments made by the SEC with
respect to the Preliminary Proxy Statement, and to cause the Proxy Statement to
be mailed to the Company's shareholders at the earliest practicable date.
SECTION 7.8 COMPANY MEETING. The Company shall take all action
necessary, in accordance with BCA and its Articles of Incorporation and Bylaws,
to convene a special meeting of shareholders of the Company (the "Company
Meeting"), if necessary, as promptly as practicable for the purpose of
considering and voting upon this Agreement and the transactions contemplated
hereby, including the Merger. Subject to the fiduciary duties of the Company's
Board of Directors under applicable law as advised in writing by
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outside legal counsel (who may be the Company's regularly engaged independent
legal counsel), the Board of Directors of the Company shall recommend that the
holders of the Shares vote in favor of and approve this Agreement and the Merger
at the Company Meeting.
SECTION 7.9 SUPPORT OF MERGER. Merger Sub shall, and Parent shall
cause Merger Sub to, vote all of the Shares that it acquires in the Offer in
favor of the Merger at any meeting of shareholders of the Company required to be
held to approve the Merger and cause the Company and Merger Sub to execute and
file Articles of Merger with the Secretary of State of the State of Florida.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the Effective
Time, of the following conditions:
(a) Merger Sub shall have accepted for payment and paid for
Shares pursuant to the Offer in accordance with the terms thereof; PROVIDED,
HOWEVER, that this condition shall be deemed satisfied with respect to the
obligations of Parent and Merger Sub if Merger Sub shall have failed to purchase
Shares pursuant to the Offer in violation of this Agreement or the terms of the
Offer.
(b) Unless the Merger is consummated pursuant to Section 1104 of
the BCA, this Agreement and the Merger shall have been approved and adopted by
the affirmative vote of the shareholders of the Company by the requisite vote in
accordance with applicable law.
(c) No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
Federal or state court or governmental authority and no other action shall have
been taken by any regulatory authority or agency which is in effect and has the
effect of prohibiting the consummation of the Merger.
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ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time, in
any one of the following circumstances:
(a) By mutual written consent duly authorized by the Boards of
Directors of the Company and Parent prior to the Control Date.
(b) By Parent or the Company, if, without any material breach by
such terminating party of its obligations under this Agreement, the purchase of
Shares pursuant to the Offer shall not have occurred on or before August 9,
1996.
(c) By Parent or the Company, if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being purchased
in accordance with Section 1.1; PROVIDED, HOWEVER, that Parent may not terminate
this Agreement pursuant to this Section 9.1(c), if Parent's termination of, or
Merger Sub's failure to accept for payment or pay for any Shares tendered
pursuant to, the Offer does not follow the occurrence, or failure to occur, as
the case may be, of any condition set forth in Exhibit A or is otherwise in
violation of the terms of the Offer or this Agreement.
(d) By Parent or the Company, if any Federal or state court of
competent jurisdiction or other Federal or state governmental body shall have
issued an order, decree or ruling, or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and non-appealable.
(e) By the Company, if it shall have received a Superior
Proposal, and the Company's Board of Directors, after consultation with and
based upon the written advice of outside legal counsel (who may be the Company's
regularly engaged outside legal counsel), determines in good faith that failure
to accept such Superior Proposal could create a reasonable possibility of a
breach by the Board of Directors of the Company of its fiduciary duties to
shareholders under applicable law.
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(f) By Parent, but only prior to the Acceptance Date, if the
Board of Directors of the Company shall have (i) withdrawn, modified or amended
in any adverse respect its approval or recommendation of this Agreement, the
Merger or the transactions contemplated hereby, (ii) recommended to its
shareholders an Acquisition Proposal or (iii) resolved to do any of the
foregoing.
(g) By Parent or the Company, but only prior to the Acceptance
Date, if (A) the other party shall have failed to comply in any material respect
with any of the material covenants and agreements contained in this Agreement to
be complied with or performed by such party at or prior to such date of
termination, and such failure continues for ten business days after the actual
receipt by such party of a written notice from the other party setting forth in
detail the nature of such failure, or (B) a material representation or warranty
of the other party contained in this Agreement shall be untrue in any material
respect when made or on and as of the Acceptance Date as if made on the
Acceptance Date.
(h) By the Company, if the Offer has not been timely commenced
in accordance with Section 1.1.
SECTION 9.2 EFFECT OF TERMINATION. In the event of the termination
and abandonment of this Agreement pursuant to Section 9.1 hereof, this
Agreement, except for the provisions of this Section 9.2 and Section 10.10
hereof, shall forthwith become void and have no effect, without any liability on
the part of any party or its directors, officers or shareholders; PROVIDED,
HOWEVER, that nothing in this Section 9.2 shall relieve any party to this
Agreement of liability for any willful or intentional breach of this Agreement.
SECTION 9.3 AMENDMENT. To the extent permitted by applicable law,
this Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Merger Sub at any time before or after
adoption of this Agreement by the shareholders of the Company. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
SECTION 9.4 EXTENSION; WAIVER. At any time prior to the Control
Date, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company, Parent or Merger Sub, may (i) extend the
time for the performance of any of the obligations or
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other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by any other applicable party or
in any document, certificate or writing delivered pursuant hereto by any other
applicable party or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representations or warranties shall survive beyond the Acceptance Date and no
covenants made in this Agreement shall survive beyond the Control Date;
PROVIDED, HOWEVER, that this Section 10.1 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time, including, without limitation, the covenants contained
in Sections 7.5 and 10.10.
SECTION 10.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(a) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise, provided that Parent or Merger Sub may assign any of their
rights and obligations to any wholly-owned, direct subsidiary of Parent but no
such assignment shall relieve Parent or Merger Sub of its obligations hereunder.
SECTION 10.3 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereon in any Federal or
state court located in the State of New York (as to which the parties agree to
submit to jurisdiction for the purpose
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of such action), this being in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 10.4 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect. Each party agrees that, should any court of competent authority hold
any provision of this Agreement to be null, void or unenforceable, or order any
party to take any action inconsistent herewith or not to take any action
required herein, the other party shall not be entitled to specific performance
of such provision or to any other remedy, including, without limitation, money
damages, for breach hereof or of any other provision of this Agreement as a
result of such holding or order.
SECTION 10.5 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by cable, telegram, telecopier, telex
or overnight courier, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
if to Parent or Merger Sub:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attention: Paul S. Miller, Esq.
Senior Vice President
and General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
if to the Company:
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida
Attention: Norman R. Weldon Ph.D.
President and
Chief Executive Officer
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with a copy to:
Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). All such notices or communications shall be deemed to be
received (a) in the case of personal delivery, cable, telex or telecopy, on the
date of such delivery, (b) in the case of overnight courier, on the next
business day after the date when sent and (c) in the case of registered or
certified mailing, on the third business day following the date on which the
piece of mail containing such communication was posted.
SECTION 10.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto, provided that matters affecting the validity of the
corporate action taken by the Company, Parent or Merger Sub relating to the
Merger shall be governed by the laws of the State of Florida.
SECTION 10.7 DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 10.8 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Sections 3.1, 3.2 and Article IV and, in respect of the indemnified
parties only, 7.5.
SECTION 10.9 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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SECTION 10.10 FEES AND EXPENSES. (a) If this Agreement or the
transactions contemplated hereby are terminated for any of the following reasons
(i) such termination occurs pursuant to Section 9.1(e),
(ii) such termination occurs pursuant to Section 9.1(f), or
(iii) such termination occurs pursuant to Section 9.1(g) as a
result of an intentional material breach of this Agreement by the
Company following (but not prior to) the Company's receipt of an
Acquisition Proposal by any person or group other than Parent,
then the Company shall pay Parent a fee equal to $4 million, which fee shall be
inclusive of all Expenses (as defined below).
(b) As used herein, the term "Expenses" shall mean all of
Parent's, Merger Sub's and their affiliates' reasonable out-of-pocket expenses
(including all fees and expenses of counsel, accountants, experts, investment
bankers, financial and other consultants to Parent, Merger Sub and their
affiliates) incurred by them or on their behalf in connection with the
transactions contemplated by this Agreement, including, but not limited to, in
connection with the negotiation, preparation, execution and performance of this
Agreement and the Parent's due diligence investigation of the Company.
(c) Except as provided otherwise in Section 10.10(a) hereof, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses; PROVIDED, HOWEVER, that the costs of printing the Proxy Statement
and in each case all exhibits, amendments or supplements thereto shall be borne
equally by the Company and Parent.
(d) Any payment required to be made pursuant to Section 10.10
shall be made as promptly as practicable but not later than five business days
after the occurrence of the event giving rise to such payment and shall be made
by wire transfer of immediately available funds to an account designated by
Parent, except that any payment to be made pursuant to Section 10.10(a)(i) shall
be made not later
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than the termination of this Agreement by the Company pursuant to Section
9.1(e).
SECTION 10.11 PERFORMANCE BY MERGER SUB. Subject to the terms
hereof, the Parent hereby agrees to cause Merger Sub to comply with its
obligations hereunder and to cause Merger Sub to consummate the Merger as
contemplated herein.
SECTION 10.12 MATERIALITY. The parties hereto agree that,
notwithstanding anything to the contrary contained herein, for purposes of this
Agreement, (a) the representations set forth in Sections 5.9(b)(i), 5.9(b)(ii)
and 5.9(b)(iii) are each, individually and in the aggregate, material
representations and warranties of the Company and (b) the failure of any one or
more of the Material Agreements to be in full force and effect or, if there
shall have been any material breach by the Company or the other party thereto
which has not been cured, such breach, shall be deemed to cause the
representations and warranties in Sections 5.9(b)(i), 5.9(b)(ii) and 5.9(b)(iii)
to be untrue and incorrect in a manner which is reasonably likely to have a
Material Adverse Effect.
SECTION 10.13 SUBSIDIARIES DEFINED. For purposes of this agreement
"Subsidiaries" means with respect to any party, any corporation, partnership,
joint venture or other organization, whether incorporated or unincorporated, of
which (i) such party or any other subsidiary of such party is a general partner;
(ii) voting power to elect a majority of the board of directors or other
performing similar functions with respect to such corporation, partnership,
joint venture or other organization is held by such party or by any one or more
of its subsidiaries, or by such party and any one or more of its subsidiaries;
or (iii) at least 25% of the equity, or other securities or other interests is,
directly or indirectly, owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and any one or more of its subsidiaries.
SECTION 10.14 PUBLICITY. So long as this Agreement is in effect,
each of the Parent and Merger Sub, on the one hand, and the Company, on the
other hand, promptly shall advise, consult and cooperate with the other prior to
issuing, or permitting any of its subsidiaries, directors, officers, employees
or agents to issue, any press release or other statement to the press or any
third party with respect to this Agreement, or the transactions contemplated
hereby.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by an officer thereof thereunto duly authorized, on
the day and year first above written.
PFIZER INC.
By: /S/ PAUL S. MILLER
--------------------------------------
Name: Paul S. Miller
Title: Senior Vice
President and
General Counsel
HPG ACQUISITION CORP.
By: /S/ GEORGE A. STEWART
--------------------------------------
Name: George A. Stewart
Title: President
CORVITA CORPORATION
By: /S/ NORMAN R. WELDON
--------------------------------------
Name: Norman R. Weldon
Title: President and
Chief Executive
Officer
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Merger Sub shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, to pay
for any Shares tendered, and may postpone the acceptance for payment or, subject
to the restriction referred to above, payment for any Shares tendered, and,
subject to the provisions of the Merger Agreement, may terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for), if, (1)
there have not been validly tendered and not withdrawn prior to the time the
Offer shall otherwise expire a number of Shares that constitutes a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" meaning, as of any date, the number of Shares outstanding,
together with Shares the Company is then required to issue pursuant to
obligations outstanding at that date under employee stock option or other
benefit plans or otherwise), (2) any applicable waiting periods under the HSR
Act shall not have expired or been terminated prior to the expiration of the
Offer or any formal investigations relating to the Offer or the Merger that may
have been opened by the Department of Justice or the Federal Trade Commission
(by means of a written request for additional information or otherwise) shall
not have terminated, or (3) at any time before acceptance for payment of, of
payment for, such Shares, any of the following events shall occur or be deemed
to have occurred:
(A) there shall be pending any suit, action or proceeding by any
governmental entity (1) challenging the acquisition by Parent or Merger Sub
of any Shares under the Offer or seeking to restrain or prohibit the making
or consummation of the Offer or Merger, (2) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the
other transactions contemplated by this Agreement,
A-1
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(3) seeking to impose material limitations on the ability of Parent or
Merger Sub to acquire or hold, or exercise full rights of ownership of, any
Shares 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, or (4) 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
and its subsidiaries; or
(B) any governmental entity or federal or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree, injunction or other
order that is in effect and that (1) materially restricts, prevents or
prohibits consummation of the Offer, the Merger or any material transaction
contemplated by the Merger Agreement, (2) prohibits or limits materially
the ownership or operation by the Company, Parent or any of their
subsidiaries of all or any material portion of the business or assets of
the Company and its subsidiaries taken as a whole, or compels the Company,
Parent or any of their subsidiaries to dispose of or hold separate all or
any material portion of the business or assets of the Company and its
subsidiaries taken as a whole, (3) imposes material limitations on the
ability of Parent or any of its subsidiaries to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right
to vote any Shares acquired by Merger Sub pursuant to the Offer or
otherwise on all matters properly presented to the Company's shareholders,
including, without limitation, the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger Agreement, or (4)
requires divestitures by Parent, Merger Sub or any other affiliate of
Parent of any Shares; provided that Parent shall have used all reasonable
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted; or
(C) the representations and warranties of the Company in the Merger
Agreement were untrue or incorrect in a manner which is reasonably likely
to have an adverse change in or effect on the condition (financial or
otherwise), business, assets or results of operations of the Company and
its subsidiaries taken
A-2
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as a whole on the Company ("Material Adverse Effect") when made or (except
for those that address matters as of a specific date and except for changes
specifically permitted by the Merger Agreement) thereafter become and
remain untrue or incorrect in a manner which is reasonably likely to have a
Material Adverse Effect; or
(D) the Company shall have breached or failed to comply in any
material respect with any of its obligations under the Merger Agreement
and, with respect to any such breach or failure that can be remedied, the
breach or failure is not remedied within 10 business days after Parent has
furnished the Company written notice of such breach or failure; or
(E) the Merger Agreement shall have been terminated in accordance
with its terms; or
(F) the board of directors of the Company shall have withdrawn or
materially modified or changed (including by amendment of the Schedule 14D-
9) in a manner adverse to Merger Sub its recommendation of the Offer, the
Merger Agreement or the Merger, or the board of directors of the Company
shall have approved or recommended any Acquisition Proposal; or
(G) it shall have been publicly disclosed or Merger Sub shall have
otherwise learned that any person or "group" (as defined in section
13(d)(3) of the Exchange Act), other than Parent or its affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 under the Exchange Act) of
more than 25 percent of the Shares, through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an option,
right or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 25 percent of the Shares; or
(H) there shall have occurred and continued for at least three
business days (1) any general suspension of, or limitation on prices for,
trading in securities on any national securities exchange or in the over-
the-counter market in the United States, (2) the declaration of any banking
moratorium or any suspension of payments in respect of banks, or any
limitation (whether or not mandatory) by any governmental entity on, or
other event materially adversely affecting, the
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extension of credit by lending institutions in the United States or (3) in
the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
which, in the judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent or Merger Sub) giving
rise to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payments.
The foregoing conditions are for the sole benefit of Parent, Merger
Sub and their affiliates and may be asserted by Parent or Merger Sub regardless
of the circumstances (including, without limitation, any action or inaction by
Parent, Merger Sub or any of their affiliates) giving rise to any such condition
or may be waived by Parent or Merger Sub, in whole or in part, from time to time
in its sole discretion, except as otherwise provided in the Merger Agreement.
The failure by Parent or Merger Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right and may be asserted at any time and from time to
time. Unless otherwise defined in this Exhibit A, capitalized terms used in
this Exhibit A have the meanings ascribed to them in the Merger Agreement among
Parent, Merger Sub and the Company to which this Exhibit A is attached (the
"Merger Agreement").
A-4
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SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of April 11, 1996, among Pfizer Inc., a Delaware
corporation ("PARENT"), HPG Acquisition Corp., a Florida corporation and a
direct wholly-owned subsidiary of Parent ("MERGER SUB"), and the other parties
signatory hereto (each a "SHAREHOLDER", and collectively, the "SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Merger Sub and Corvita
Corporation, a Florida corporation (the "COMPANY"), are entering into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "MERGER AGREEMENT"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which, among other things, Merger Sub will be merged with and into
the Company (the "MERGER");
WHEREAS, in furtherance of the Merger, Parent and the Company have
agreed that as soon as practicable (and not later than five business days) after
the first public announcement of the execution and delivery of the Merger
Agreement, Merger Sub will commence a cash tender offer to purchase all
outstanding shares of Company Common Stock (as defined in Section 1), including
all of the Shares (as defined in Section 2) Beneficially Owned (as defined in
Section 1) by the Shareholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholders agree, and the Shareholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "COMPANY COMMON STOCK" shall mean at any time the common stock,
$.001 par value, of the Company.
<PAGE>
(c) "PERSON" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
2. TENDER OF SHARES.
(a) Each Shareholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer pursuant to Section
1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Company Common Stock set forth opposite such Shareholder's name on
Schedule I hereto (the "EXISTING SHARES" and, together with any shares of
Company Common Stock acquired by such Shareholder after the date hereof and
prior to the termination of this Agreement, whether upon the exercise of
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise, the "SHARES"). Each Shareholder hereby acknowledges and agrees that
Merger Sub's obligation to accept for payment and pay for Shares in the Offer is
subject to the terms and conditions of the Offer.
(b) Each Shareholder hereby agrees to permit Parent and Merger Sub to
publish and disclose in the Offer Documents and, if approval of the Merger by
the Company's shareholders (other than Parent or any of its wholly-owned
subsidiaries) is required under applicable law, in the Proxy Statement
(including all documents and schedules filed with the SEC) his or its identity
and ownership of Company Common Stock and the nature of his or its commitments
under this Agreement.
3. PROVISIONS CONCERNING COMPANY COMMON STOCK. Each Shareholder
hereby agrees that during the period commencing on the date hereof and
continuing until the first to occur of the Effective Time or termination of the
Merger Agreement in accordance with its terms, at any meeting of the holders of
Company Common Stock, however called, or in connection with any written consent
of the holders of Company Common Stock, such Shareholder shall vote (or cause to
be voted) the Shares held of record or Beneficially Owned by such Shareholder,
whether issued, heretofore owned or hereafter acquired, (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in furtherance
thereof and hereof; (ii) against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement (after giving effect to any materiality or similar qualifications
contained therein); and (iii) except as otherwise agreed to in writing in
advance by Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Articles of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any
2
<PAGE>
other action involving the Company or its subsidiaries which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. Such Shareholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements contained in this
Section 3.
4. ACQUIRED SHARES. In order to induce Parent and Merger Sub to
enter into the Merger Agreement, each of the Shareholders hereby agrees that if
the Merger Agreement is terminated by Parent in accordance with any of Sections
9.1(f) or 9.1(g) thereof, or by the Company in accordance with Section 9.1(e)
thereof, and, during the period commencing on the date of such termination and
continuing until the first anniversary of the date hereof, the Shares are
disposed, transferred or sold ("Sale") to a Person (other than Parent or Merger
Sub) in a transaction in which there is, directly or indirectly, a change (x) in
the ownership of a majority of the Company Common Stock or (y) in a majority of
the individuals who constitute the Company's board of directors on the date
hereof, for a per share amount in excess of the Offer Consideration, Parent
shall be entitled to, and each Shareholder agrees to pay to Parent, an amount
per share in cash equal to 50% of the difference between the gross proceeds
received, or receivable, by such Shareholders in the Sale and the Offer Price.
Any such payment due and owing to Parent shall be made within three (3) days of
the Shareholders' receipt thereof. Each of the Shareholders agrees to effect
any Sale of Shares (other than pursuant to the Merger Agreement) in an arms'
length bona fide transaction to an unaffiliated Person.
5. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each
Shareholder hereby represents and warrants to Parent as follows:
(a) OWNERSHIP OF SHARES. Such Shareholder is either (i) the record
and Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder
of, the number of Shares set forth opposite such Shareholder's name on Schedule
I hereto. On the date hereof, the Existing Shares set forth opposite such
Shareholder's name on Schedule I hereto constitute all of the shares of
securities issued by the Company owned of record or Beneficially Owned by such
Shareholder. Such Shareholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Sections 2 and 3 hereof,
sole power of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Shares set forth
opposite such Shareholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Shareholder has the legal
capacity, power and authority to enter into and perform all of such
Shareholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Shareholder will not violate any other
agreement to which such Shareholder is a party including, without limitation,
any voting agreement, shareholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Shareholder and
constitutes a valid and binding agreement of such Shareholder, enforceable
against such Shareholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such
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Shareholder is Trustee whose consent is required for the execution and delivery
of this Agreement or the consummation by such shareholder of the transactions
contemplated hereby.
(c) NO CONFLICTS. Except for filings under the HSR Act, if
applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other Person
is necessary for the execution of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby and
(B) none of the execution and delivery of this Agreement by such Shareholder,
the consummation by such Shareholder of the transactions contemplated hereby or
compliance by such Shareholder with any of the provisions hereof shall
(1) conflict with or result in any breach of any applicable organizational
documents applicable to such Shareholder, (2) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which such Shareholder is a party or by which such Shareholder or any of
such Shareholder's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Shareholder or any of such Shareholder's properties or
assets.
(d) NO ENCUMBRANCES. Except as applicable in connection with the
transactions contemplated by Section 2 hereof, such Shareholder's Shares and the
certificates representing such Shares are now, and at all times during the term
hereof will be, held by such Shareholder, or by a nominee or custodian for the
benefit of such Shareholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances arising
hereunder. The transfer by each Shareholder of his or its Shares to Merger Sub
in the Offer shall pass to and unconditionally vest in Merger Sub good and valid
title to the number of Shares set forth opposite such Shareholder's name on
Schedule I hereto, free and clear of all claims, liens, restrictions, security
interests, pledges, limitations and encumbrances whatsoever.
(e) NO FINDER'S FEES. Other than existing financial advisory and
investment banking arrangements and agreements entered into by the Company no
broker, investment banker, financial adviser or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Shareholder.
(f) NO SOLICITATION. No Shareholder shall, in his or its capacity as
such, directly or indirectly, solicit (including by way of furnishing
information) or respond to any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) with respect to
his or its Shares or with respect to the Company that constitutes an Acquisition
Proposal, except that a Shareholder who is a director of the Company may take
actions in such capacity to the extent permitted by the Merger Agreement. If
any Shareholder receives any such inquiry or proposal, then such Shareholder
shall promptly inform Parent of the existence thereof. Each Shareholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
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(g) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Except as
applicable in connection with the transactions contemplated by Section 2 hereof,
no Shareholder shall (i) directly or indirectly, offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Shareholder's Shares or
any interest therein; (ii) except as contemplated by this Agreement, grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares; or (iii) take any action
that would make any representation or warranty of such Shareholder contained
herein untrue or incorrect or have the effect of preventing or disabling such
Shareholder from performing such Shareholder's obligations under this Agreement.
(h) WAIVER OF APPRAISAL RIGHTS. Each Shareholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Shareholder
may have.
(i) RELIANCE BY PARENT. Such Shareholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter into,
the Merger Agreement in reliance upon such Shareholder's execution and delivery
of this Agreement.
(j) FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
6. STOP TRANSFER; CHANGES IN SHARES. Each Shareholder agrees with,
and covenants to, Parent that such Shareholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Shareholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Section 2 hereof). In the event of a stock dividend or
distribution, or any change in the Company Common Share by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "SHARES" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
7. TERMINATION. Except as otherwise provided herein, the covenants
and agreements contained herein with respect to the Shares shall terminate upon
the earlier of (x) the Effective Time and (y) the first anniversary of the date
hereof; provided, however, that the provisions of Sections 5(f), 5(g)(i) and
5(g)(ii) shall terminate upon any earlier termination of the Merger Agreement.
8. SHAREHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director of the Company makes any agreement
or understanding herein in his or her capacity as such director.
5
<PAGE>
9. CONFIDENTIALITY. The Shareholders recognize that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Shareholder hereby agrees
not to disclose or discuss such matters with anyone not a party to this
Agreement (other than such Shareholder's counsel and advisors, if any) without
the prior written consent of Parent, except for filings required pursuant to the
Exchange Act and the rules and regulations thereunder or disclosures such
Shareholder's counsel advises are necessary in order to fulfill such
Shareholder's obligations imposed by law, in which event such Shareholder shall
give notice of such disclosure to Parent as promptly as practicable.
10. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Shareholder agrees that this Agreement and
the obligations hereunder shall attach to such Shareholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Shareholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Parent may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Shareholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; PROVIDED that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any shareholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added shareholder shall be treated as a
"Shareholder" for all purposes of this Agreement.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
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If to Shareholders: At the addresses set forth on Schedule I hereto
copy to: Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
If to Parent: Pfizer Inc.
235 East 42nd Street
New York, New York 10017-5755
Attention: Paul S. Miller, Esq.
Senior Vice President
and General Counsel
copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000 (telephone)
(212) 310-8007 (telecopier)
Attention: Dennis J. Block, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
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(i) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
(l) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(m) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, Parent, Merger Sub and each Shareholder have
caused this Agreement to be duly executed as of the day and year first above
written.
PFIZER INC.
By: /s/ Paul S. Miller
----------------------------------
Name: Paul S. Miller
Title: Senior Vice President and
General Counsel
HPG ACQUISITION CORP.
By: /s/ George A. Stewart
----------------------------------
Name: George A. Stewart
Title: President
/s/ Norman R. Weldon
--------------------------------------
Norman R. Weldon, Ph.D.
/s/ David C. MacGregor
--------------------------------------
David C. MacGregor, M.D.
/s/ Leonard Pinchuk
--------------------------------------
Leonard Pinchuk, Ph.D.
WestMed Venture Partners, L.P.
By: /s/ Hal S. Watts
----------------------------------
Name: Hal S. Watts
Title:
9
<PAGE>
Trinity Ventures II, L.P.
By: /s/ David Nierenberg
----------------------------------
Name: David Nierenberg
Title: General Partner
/s/ Bruce A. Weber
--------------------------------------
Bruce A. Weber
/s/ Herbert Kontges
--------------------------------------
Herbert Kontges
/s/ John B. Martin
--------------------------------------
John B. Martin
/s/ Karen C. Vinjamuri
--------------------------------------
Karen C. Vinjamuri
AGREED TO AND ACKNOWLEDGED
(with respect to Section 6):
CORVITA CORPORATION
By:/s/ Norman R. Weldon
--------------------------
Name: Norman R. Weldon
Title: President and
Chief Executive Officer
10
<PAGE>
SCHEDULE I TO
SHAREHOLDERS AGREEMENT
Percentage of Out-
Name and Address Number of standing Common Stock
of Shareholder Shares Owned (to nearest hundredth)
- ---------------- ------------ ----------------------
Norman R. Weldon, Ph.D. 489,250 6.88%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100 x801
(F): (305) 599-9301
David C. MacGregor, M.D. 154,539 2.17%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Leonard Pinchuk, Ph.D. 50,850 0.72%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
WestMed Venture Partners, L.P. 410,765 5.78%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Trinity Ventures II, L.P. 240,987 3.39%
c/o Trinity Ventures
155 Bovet Road, Suite 660
San Mateo, CA 94402
Attention: David Nierenberg
(W): (415) 358-9700
(F): (415) 358-9785
11
<PAGE>
Percentage of Out-
Name and Address Number of standing Common Stock
of Shareholder Shares Owned (to nearest hundredth)
- ---------------- ------------ ----------------------
Bruce A. Weber 20,000 0.28%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Herbert Kontges 45,000 0.63%
c/o Corvita Corporation, S.A.
40 Avenue Joseph Wybran
Erasmus Technology Center
Brussels 1070, Belgium
(W): 011-322-521-6940
(F): 011-322-521-6591
John B. Martin 58,450 0.82%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Karen C. Vinjamuri 17,450 0.25%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100 x404
(F): (305) 599-9301
TOTAL: 1,487,291 20.93%
--------- -----
--------- -----
12
<PAGE>
[Letterhead - Dillon, Read & Co. Inc.]
CONFIDENTIALITY AND STANDSTILL AGREEMENT
August 16, 1995
Pfizer Inc.
235 East 42nd Street
New York, NY 10017
Attention: P. Nigel Gray
President, Hospital Products Group
Ladies and Gentlemen:
We have advised you that Dillon, Read & Co. Inc. ("Dillon Read") is acting on
behalf of Corvita Corporation ("Corvita" or the "Company") with respect to your
discussions with the Company. In connection with your analysis of a possible
acquisition transaction with the Company, you have requested certain oral and
written information concerning the Company from officers, directors, employees
and/or agents of the Company, including Dillon Read, to be disclosed pursuant to
this Agreement (collectively, the "Information"). As a condition to being
furnished with the information, you agree (and agree to cause your affiliates)
to treat the Information in accordance with the following:
1. The Information disclosed pursuant to this Agreement will be used
solely for the purpose of evaluating a possible acquisition
transaction between the Company and you and will not be used for any
other purpose or in any way directly or indirectly in competition with
or detrimental to the Company, and said Information will be kept
confidential by you and your advisors and not be disclosed to any
third party provided, however, that you may disclose the said
Information or portions thereof to those of your directors, officers,
employees and representatives (the persons to whom such disclosure is
permissible being collectively called "Representatives") who need to
know such Information for the sole purpose of evaluating your possible
acquisition transaction with the Company (it being understood that
those Representatives will be informed by you of the confidential
nature of the Information and will agree to be bound by this agreement
and shall be directed by you not to disclose the said Information to
any other person). You agree to be responsible for any breach of this
agreement by your Representatives.
<PAGE>
Pfizer Inc.
August 16, 1995
Page 2
In the event that you are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoenas, civil
investigative demands or similar processes) to disclose any Information
supplied to you pursuant to this Agreement it is agreed that you will (i)
provide the Company with prompt notice of such request(s) and the documents
requested so that the Company may seek an appropriate protective order
and/or waive your compliance with the provisions of this agreement, and
(ii) take such legally available steps, as the Company may reasonably
request, to resist or narrow such request provided that any expenses
(including legal fees and expenses) incurred by you in carrying out the
Company's request will be reimbursed by the Company. It is further
agreed that if in the absence of a protective order or the receipt of a
waiver hereunder you are nonetheless, in the reasonable written opinion of
your legal counsel, compelled to disclose Information concerning the
Company to any tribunal or else stand liable for contempt or suffer other
censure or penalty, you may disclose such Information to such tribunal
without liability hereunder; provided, however, that you shall give the
Company written notice of the Information to be so disclosed as far in
advance of its disclosure as is practicable, shall furnish only that
portion of the Information which is legally required, and shall take such
steps as reasonably requested by the Company provided that any expenses
incurred by you in carrying out the Company's request shall be reimbursed
by the Company.
2. The term "Information" does not include any information which (i) is
already in your possession on the date hereof, (ii) is or becomes generally
available to and known by the public (other than as a result of a wrongful
disclosure directly or indirectly by you or your Representatives), (iii)
becomes available to you on a nonconfidential basis from a source other
than the Company or its advisors, provided that such source is not and was
not bound to your knowledge (after reasonable inquiry) by a confidentiality
agreement with or other obligation of secrecy to the Company with respect
thereto or (iv) is independently acquired or developed by you (which you
can show through written documentation) without violating any
confidentiality agreement with or other obligation of secrecy to the
Company.
3. When the Company so requests, you will return promptly to Dillon Read or
the Company all copies, extracts or other reproductions in whole or in part
of the Information in your possession or in the possession of your
Representatives which was disclosed only pursuant to this Agreement, and
you will destroy all copies of any memoranda, notes, analyses,
compilations, studies or other documents prepared by you or for your use
based on, containing or reflecting any Information which was disclosed only
pursuant to this Agreement. Such destruction shall, if requested, be
certified in writing to Dillon Read or the Company by an authorized officer
supervising such destruction.
4. Without the prior written consent of the Company, you will not, and will
direct your Representatives not to, disclose to any person either the fact
that any investigation, discussions or negotiations are taking place
concerning a possible acquisition transaction between the Company and you,
or that you have requested or received Information from the Company or
Dillon Read pursuant to this Agreement, or any of the terms, conditions or
other facts with respect to any such possible acquisition transaction,
including the status thereof. The term "person" as used throughout this
agreement will be interpreted broadly to
<PAGE>
Pfizer Inc.
August 16, 1995
Page 3
include, without limitation, any corporation, company, partnership or
individual, or any governmental instrumentality or any official or employee
thereof.
In addition, without the prior written consent of the Company, you will
not, and will direct your Representatives not to, hold any discussion
whatsoever with suppliers, customers and/or any other person with whom the
Company has a relationship regarding any potential acquisition transaction
involving the Company, the possible terms of any such acquisition
transaction or the fact that any investigation, discussions or negotiations
are taking place concerning a possible acquisition transaction between you
and the Company.
5. You understand and acknowledge that neither the Company nor Dillon Read is
making any representation or warranty, express or implied, as to the
accuracy or completeness of the Information, and none of the Company,
Dillon Read, or any of their respective directors, officers, employees,
stockholders, owners, affiliates or agents will have any liability to you
or any other person resulting from your use of the Information. Only
those representations or warranties that are made to you in a definitive
transaction agreement when, as, and if it is executed, and subject to such
limitations and restrictions as may be specified in such definitive
transaction agreement, will have any legal effect.
6. You also understand and agree that unless and until a definitive
transaction agreement has been executed and delivered, no contract or
agreement providing for a transaction with the Company shall be deemed to
exist between you and the Company, and neither the Company nor you will be
under any legal obligation of any kind whatsoever with respect to such
transaction by virtue of this or any written or oral expression thereof,
except, in the case of this agreement, for the matters specifically agreed
to herein. For purposes of this paragraph, the term "definitive
transaction agreement" does out include an executed letter of intent or any
other preliminary written agreement, nor does it include any written or
oral acceptance of an offer, bid proposal or expression of interest on your
part.
7. You agree that the Company shall be entitled to equitable relief, including
injunction and specific performance, in the event of any breach of the
provisions of this agreement, in addition to all other remedies available
to the Company at law or in equity including, but not limited to,
reasonable attorney's fees. You also hereby irrevocably and
unconditionally consent to submit to the jurisdiction of the courts of the
State of Florida and Courts of the United States of America located in
State of Florida for any actions, suits or proceedings arising out of or
relating to this agreement (and you agree not to commence any action, suit
or proceeding relating thereto except in such courts), and further agree
that service of any process, summons, notice or document by U.S. registered
mail to your address set forth above shall be effective service of process
for any action, suit or proceeding brought against you in any such court.
You hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this
agreement, in the courts of the State of Florida or of the United States of
America located in the State of Florida, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in inconvenient forum.
<PAGE>
Pfizer Inc.
August 16, 1995
Page 4
B. You hereby acknowledge that you are aware that the securities laws of the
United States prohibit any person who has material, non-public information
concerning the Company or a possible transaction involving the Company from
purchasing or selling securities of the Company in reliance upon such
information or from communicating such information to any other person or
entity under circumstances in which it is reasonably foreseeable that such
person or entity is likely to purchase or sell such securities in reliance
upon such information.
You agree that, for a period of two years from the date of this agreement,
unless such action shall have been specifically approved in writing by the
Board of Directors of the Company, none of you, any of your affiliates or
any Representatives will in any manner, directly or indirectly, (a) effect
or seek, offer or propose (whether publicly or otherwise) to effect,
participate in or cause or in any way assist any other person to effect or
seek, offer or propose (whether publicly or otherwise) to effect or
participate in, (i) any acquisition of any securities (or beneficial
ownership thereof) or assets of the Company or any of its subsidiaries,
(ii) any tender or exchange offer or merger or other business combination
involving the Company or any of its subsidiaries, (iii) any
recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company or any of its
subsidiaries or (iv) any "solicitation" of "proxies" (as such terms are
used in proxy rules of the Securities and Exchange Commission) or consents
to vote any voting securities of the Company, (b) form, join or in any way
participate in a "group" (as such term is used in regulations under the
Exchange Act) for the propose of acquiring, holding, voting or disposing of
equity securities of the Company, (c) otherwise act, alone or in concert
with others, to seek to control or influence the management, the Board of
Directors or policies of the Company, (d) take any action which might force
the Company to make a public announcement regarding any of the types of
matters set forth in (a) above, or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing,
except that you shall be free of any restriction or obligation imposed by
this Paragraph 8 if one or more third parties has taken any one or more of
the actions set forth above or has announced its intention to do so.
9. You agree that the Company reserves the right, in its sole and absolute
discretion, to reject any or all proposals, to decline to furnish further
Information and to terminate discussions and negotiations with you at any
time. The exercise by the Company of these rights shall not affect the
enforceability of any provision of this agreement.
10. Without the prior written consent of the Company you agree not to directly
or indirectly solicit for employment any of the current employees of the
Company so long as they are employed by the Company during the period in
which there are discussions or negotiations conducted pursuant to this
agreement and for a period of one year after abandonment or termination of
such discussions or negotiations. For the purposes of this paragraph, a
solicitation will not include general employment solicitations, including
newspaper advertisements and industry publications, or employees of the
Company who approach you.
11. This agreement will be governed and construed in accordance with the laws
of the State of Florida as applied to agreements to be performed entirely
within the State of Florida. No amendment, modification or discharge of
this agreement, and no waiver hereunder, shall be valid or binding unless
set forth in writing and duly executed by the party against whom
<PAGE>
Pfizer Inc.
August 16, 1995
Page 5
enforcement of the amendment, modification, discharge or waiver is sought.
No delay or failure at any time on the part of any party in exercising any
right, power or privilege under this agreement, or in enforcing any
provision of this agreement, shall impair any such right, power or
privilege, or be construed as a waiver of such provision, or be construed
as a waiver of any default or any acquiescence therein, or shall effect the
right of any party thereafter to enforce each and every provision of this
agreement in accordance with its terms. This agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
12. All obligations of the Parties under this Agreement (other than obligations
arising from breaches of this Agreement occurring prior to the end of such
three year period) shall terminate three years from the date of this
Agreement.
If you agree with the foregoing, please so indicate by signing and returning
one executed copy of this letter, which will constitute our agreement with
respect to the subject matter of this letter.
Very truly yours,
DILLON, READ & CO. INC. on behalf of
CORVITA CORPORATION
BY: /s/ Tamara A. Baum
-------------------
Tamara A. Baum
Managing Director
Confirmed and Agreed as of
the day written above:
PFIZER INC.
By: /s/ P. Nigel Gray
-------------------
P. Nigel Gray
President, Hospital Products Group
<PAGE>
STOCK PURCHASE AGREEMENT
AMONG
CORVITA CORPORATION
AND
GEORGE A. ADAMS,
DAVID C. MACGREGOR,
GREGORY J. WILSON AND JENNIE M. WILSON, as trustees for the
GREGORY WILSON FAMILY TRUST,
AND
JENNIE M. WILSON,
FOR THE STOCK OF
CARDIOVASCULAR INNOVATIONS CANADA, INC.
---------------------------
Dated as of April 11, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I SALE OF SHARES; PURCHASE PRICE. . . . . . . . . . . . . . . . 2
SECTION 1.1 Sale and Purchase of Shares. . . . . . . . . . . . . . . 2
SECTION 1.2 Purchase Price; Payment. . . . . . . . . . . . . . . . . 2
ARTICLE II CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . 3
SECTION 3.1 Organization and Qualification . . . . . . . . . . . . . 3
SECTION 3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.3 Power; Due Execution and Delivery. . . . . . . . . . . . 4
SECTION 3.4 Financial Statements . . . . . . . . . . . . . . . . . . 5
SECTION 3.5 Absence of Certain Changes . . . . . . . . . . . . . . . 5
SECTION 3.6 Governmental Authorization . . . . . . . . . . . . . . . 7
SECTION 3.7 Non-Contravention. . . . . . . . . . . . . . . . . . . . 7
SECTION 3.8 Investment Banking Fees and Commissions. . . . . . . . . 8
SECTION 3.9 Material Contracts . . . . . . . . . . . . . . . . . . . 8
SECTION 3.10 Litigation, etc. . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.11 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.12 Intellectual Property. . . . . . . . . . . . . . . . . . 10
SECTION 3.13 Restrictions on Operations . . . . . . . . . . . . . . . 11
SECTION 3.14 Compliance with Laws . . . . . . . . . . . . . . . . . . 11
SECTION 3.15 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.16 Product Registration; Regulatory
Compliance . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.17 Labor Matters. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.18 Ownership and Transfer of Shares . . . . . . . . . . . . 14
SECTION 3.19 Family Law Act . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.20 No Undisclosed Liabilities . . . . . . . . . . . . . . . 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . 15
SECTION 4.1 Organization and Qualification . . . . . . . . . . . . . 15
SECTION 4.2 Corporate Power and Authority. . . . . . . . . . . . . . 15
SECTION 4.3 Governmental Authorization . . . . . . . . . . . . . . . 15
SECTION 4.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . 15
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1 Conduct of Business. . . . . . . . . . . . . . . . . . . 16
SECTION 5.2 Access to Information. . . . . . . . . . . . . . . . . . 18
SECTION 5.3 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 19
SECTION 5.4 No Solicitation. . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.6 Repayment of Loans . . . . . . . . . . . . . . . . . . . 20
i
<PAGE>
ARTICLE VI CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.1 Conditions Precedent to Obligations of
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.2 Conditions Precedent to Obligations of
Sellers. . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.1 General Survival . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.3 Indemnification. . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.4 Notice; Control of Defense . . . . . . . . . . . . . . . 25
SECTION 7.5 Entire Agreement; Assignment . . . . . . . . . . . . . . 27
SECTION 7.6 Enforcement of the Agreement . . . . . . . . . . . . . . 27
SECTION 7.7 Validity . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.10 Descriptive Headings . . . . . . . . . . . . . . . . . . 29
SECTION 7.11 Parties in Interest. . . . . . . . . . . . . . . . . . . 29
SECTION 7.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.13 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 30
ii
<PAGE>
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated as of April 11, 1996 (this
"Agreement") among Corvita Corporation, a Florida corporation ("Purchaser"), and
George A. Adams, David C. MacGregor, Gregory J. Wilson and Jennie M. Wilson, as
trustees for the Gregory Wilson Family Trust, and Jennie M. Wilson (each a
"Seller" and collectively, the "Sellers").
W I T N E S S E T H :
WHEREAS, Sellers own in the aggregate 102 shares of common stock,
without par value ("Shares"), of Cardiovascular Innovations Canada, Inc., an
Ontario corporation ("CICI"), constituting all of the shares of common stock of
CICI;
WHEREAS, each Seller owns the numbers of Shares set forth opposite
his, her or its name as follows:
Seller Shares
------ ------
George A. Adams 56
David C. MacGregor 26
Gregory Wilson 12
Family Trust
Jennie M. Wilson 8
WHEREAS, CICI owns 120,000 shares of common stock, without par value,
of Corvita Canada, Inc., an Ontario corporation (the "Company");
WHEREAS, concurrently herewith, Purchaser, Pfizer Inc., a Delaware
corporation ("Parent"), and HPG Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), are entering into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which Merger Sub will
be merged with and into Purchaser;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Purchaser and each of the Sellers agree, and
Purchaser and each of the Sellers have agreed, to enter into this Agreement;
<PAGE>
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
ARTICLE I
SALE OF SHARES; PURCHASE PRICE
SECTION 1.1 SALE AND PURCHASE OF SHARES. Upon the terms and
subject to the conditions contained in this Agreement, on the Closing Date (as
defined in Section 2.1) Sellers shall sell, convey, transfer, assign and deliver
to Purchaser, and Purchaser shall purchase and acquire from Sellers, all right,
title and interest of Sellers, legal or equitable, in and to the Shares.
SECTION 1.2 PURCHASE PRICE; PAYMENT. (a) The aggregate purchase
price for the Shares shall be an amount equal to US$1,943,320 (the "Purchase
Price"), payable to each of the Sellers as follows:
Seller Amount
------ ------
George A. Adams US$1,066,921
David C. MacGregor US$495,356
Gregory Wilson
Family Trust US$228,626
Jennie M. Wilson US$152,417
(b) On the Closing Date, Purchaser shall, subject to such withholding
as may be required pursuant to Section 116 of the Income Tax Act (Canada) and
subject to the terms of any agreement executed pursuant to Sections 6.1(i) and
6.2(i) hereof, pay the Purchase Price to Sellers by wire transfer of immediately
available funds to an account designated by Sellers.
2
<PAGE>
ARTICLE II
CLOSING
SECTION 2.1 CLOSING DATE. Subject to the prior satisfaction of the
conditions set forth in Sections 6.1 and 6.2 hereof (or the waiver thereof by
the party entitled to waive that condition), the closing of the sale and
purchase of the Shares provided for in Section 1.1 hereof (the "Closing") shall
take place at 10:00 a.m. Toronto time at the offices of Lang Michener, Suite
2500, 181 Bay Street, Toronto (or at such other place as the parties may
designate in writing) on the Control Date (as defined in the Merger Agreement),
or on such other date as Sellers and Purchaser may designate in writing. The
date on which the Closing shall be held is referred to in this Agreement as the
"Closing Date".
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller represents and warrants to Purchaser as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. Each of CICI and the
Company is a corporation duly organized, validly existing and in good standing
under the laws of Ontario and has all requisite corporate power and authority to
carry on its business as it is now being conducted and to own its property. The
Company has no subsidiaries, direct or indirect. CICI has no subsidiaries,
direct or indirect, other than the Company. For purposes of this Agreement:
(i) "subsidiary" shall mean, with respect to any party, any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated, of which such party or any other subsidiary of such party is a
general partner; (ii) voting power to elect a majority of the board of directors
or other performing similar functions with respect to such corporation,
partnership, joint venture or other organization is held by such party or by any
one or more of its subsidiaries, or by such party and any one or more of its
subsidiaries; or (iii) at least 25% of the equity, or other securities or other
interests is, directly or indirectly, owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and any one or more of its
subsidiaries.
3
<PAGE>
SECTION 3.2 CAPITALIZATION. (a) The authorized capital stock of
the Company consists of an unlimited number of common shares without par value
(the "Company Common Stock"). As of the date hereof, 238,500 shares of Company
Common Stock (the "Company Shares") were issued and outstanding. There are not
as of the date hereof, and at the Closing there will not be, any outstanding or
authorized subscriptions, options, warrants, calls, rights, commitments or any
other agreements of any character obligating the Company to issue any additional
Company Shares or any other shares of capital stock of the Company or any other
securities convertible into, exchangeable, exercisable or evidencing the right
to subscribe for any such shares. All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable and free of preemptive rights, except as set forth in
Schedule 3.2 attached hereto.
(b) The authorized capital stock of CICI consists of an unlimited
number of common shares without par value (the "CICI Common Stock"). At the
close of business on the date hereof, 102 shares of CICI Common Stock (the
"Shares") were issued and outstanding. There are not as of the date hereof, and
at the Closing there will not be, any outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments or any other agreements of any
character obligating CICI to issue any additional Shares or any other shares of
capital stock of CICI or any other securities convertible into, exchangeable,
exercisable or evidencing the right to subscribe for any such shares. All of
the outstanding shares of capital stock of CICI have been duly authorized and
validly issued and are fully paid and nonassessable and free of preemptive
rights, except as set forth in Schedule 3.2 attached hereto.
SECTION 3.3 POWER; DUE EXECUTION AND DELIVERY. Each Seller has all
requisite legal right, power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Sellers and, assuming this Agreement
constitutes a valid and binding obligation of Purchaser, this Agreement
constitutes the legal, valid and binding obligation of Sellers, enforceable
against each of them in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws,
now
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or hereafter in effect, affecting creditors' rights and remedies and to general
principles of equity.
SECTION 3.4 FINANCIAL STATEMENTS. (a) The unaudited balance
sheets of the Company as at June 30, 1993, April 22, 1994 and March 31, 1995 and
the related statements of income and retained earnings and changes in financial
position for the fiscal year then ended are in accordance with the books and
records of the Company, and fairly present the financial position, results of
operations and the changes in financial position of the Company as of the dates
and for the periods indicated. The unaudited balance sheet of the Company as at
December 31, 1995 and the related statements of income and retained earnings and
changes in financial position for the 9-month period then ended are in
accordance with the books and records of the Company, and fairly present the
financial position, results of operations and the changes in financial position
of the Company as of the date and for the period indicated. The unaudited
balance sheet of the Company as of December 31, 1995 (hereinafter referred to as
the "Company Balance Sheet"), and each of the other financial statements
referred to above, are attached hereto as part of Schedule 3.4.
(b) The unaudited balance sheet of CICI as at March 31, 1995 and the
related statements of income and retained earnings and changes in financial
position for the fiscal year then ended are in accordance with the books and
records of CICI, and fairly present the financial position, results of
operations and the changes in financial position of CICI as of the date and for
the period indicated. The unaudited balance sheet of CICI as at March 31, 1995
(hereinafter referred to as the "CICI Balance Sheet"), and each of the other
financial statements referred to above, are attached hereto as part of Schedule
3.4.
SECTION 3.5 ABSENCE OF CERTAIN CHANGES. (a) Since the date of the
Company Balance Sheet, there has not been (i) any declaration, setting aside or
payment of any dividend or other distribution in respect of the Company Shares,
or any redemption or other acquisition by the Company of any shares of its
capital stock; (ii) any increase in the rate or terms of compensation payable or
to become payable by the Company to its directors, officers or key employees,
except increases occurring in the ordinary course of business consistent with
past practices; (iii) any increase in the rate or terms of any bonus, insurance,
pension or other employee benefit plan, payment or
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arrangement made to, for or with any such directors, officers or employees,
except increases occurring in the ordinary course of business consistent
with past practices; (iv) any entry into any agreement, commitment or
transaction by the Company which is material to the Company, except for
agreements, commitments or transactions in the ordinary course of business;
(v) any amendment, termination or lapse of a material contract of the Company;
(vi) any material labor dispute involving the employees of the Company;
(vii) any change by the Company in accounting methods, principles or practices
except as required or permitted by Canadian GAAP; (viii) any write-off or write-
down of, or any determination to write-off or write-down, any asset of the
Company or any portion thereof which write-off, write-down, or determination
exceeds $5,000 individually or $20,000 in the aggregate; (ix) any amendment,
termination, waiver, disposal, or lapse of, or other failure to preserve, any
license, permit, or other form of authorization of the Company, except for any
thereof that would not have a Company Material Adverse Effect (as defined
below); or (x) any agreements by the Company to (1) do any of the things
described in the preceding clauses (i) through (ix) other than as expressly
contemplated or provided for herein or (2) take, whether in writing or
otherwise, any action which, if taken prior to the date of this Agreement, would
have made any representation or warranty of the Sellers in this Agreement untrue
or incorrect. For purposes of this Agreement "Company Material Adverse Effect"
shall mean any adverse change in or effect on the condition (financial or
otherwise), business, assets or results of operations of the Company or CICI
that is material to the Company or CICI.
(b) Since the date of the CICI Balance Sheet, there has not been
(i) any declaration, setting aside or payment of any dividend or other
distribution in respect of the CICI Shares, or any redemption or other
acquisition by CICI of any shares of its capital stock; (ii) any increase in the
rate or terms of compensation payable or to become payable by CICI to its
directors, officers or key employees, except increases occurring in the ordinary
course of business consistent with past practices; (iii) any increase in the
rate or terms of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any such directors, officers or
employees, except increases occurring in the ordinary course of business
consistent with past practices; (iv) any entry into any agreement, commitment or
transaction by CICI which is material to CICI, except for agreements,
commitments or
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transactions in the ordinary course of business; (v) any amendment, termination
or lapse of a material contract of CICI; (vi) any material labor dispute
involving employees of CICI; (vii) any change by CICI in accounting methods,
principles or practices except as required or permitted by Canadian GAAP;
(viii) any write-off or write-down of, or any determination to write-off or
write-down, any asset of CICI or any portion thereof which write-off, write-
down, or determination exceeds US$5,000 individually or US$20,000 in the
aggregate; (ix) any amendment, termination, waiver, disposal, or lapse of, or
other failure to preserve, any license, permit, or other form of authorization
of CICI, except for any thereof that would not have a Material Adverse Effect
(as defined above); or (x) any agreements by CICI to (1) do any of the things
described in the preceding clauses (i) through (x) other than as expressly
contemplated or provided for herein or (2) take, whether in writing or
otherwise, any action which, if taken prior to the date of this Agreement, would
have made any representation or warranty of the Sellers in this Agreement untrue
or incorrect.
SECTION 3.6 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by Sellers of this Agreement and the consummation of the
transactions contemplated hereby by Sellers require no action by Sellers in
respect of, or filing with, any government or governmental or regulatory body
thereof, or political subdivision thereof, whether Federal, provincial, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator ("Governmental Body").
SECTION 3.7 NON-CONTRAVENTION. Except as set forth in Schedule
3.7, the execution, delivery and performance by Sellers of this Agreement and
the consummation of the transactions contemplated hereby by Sellers do not and
will not (i) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Sellers, (ii) constitute or result in a default under or
give rise to a right of termination, cancellation or acceleration of any right
or obligation, including without limitation, a repurchase obligation, of the
Company or of CICI or to a loss of any benefit to which the Company or CICI is
entitled under any provision of any agreement or other instrument binding upon
the Company or CICI or any license, franchise, permit or other similar
authorization held by the Company or CICI, or (iii) result
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in the creation or imposition of any Lien (as defined below) on any asset of the
Company or of CICI, other than, in the case of clauses (i), (ii) or (iii), any
such conflicts, violations, defaults, losses and Liens that individually or in
the aggregate would not have a Company Material Adverse Effect. For purposes of
this Agreement, "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, encumbrance, restriction or adverse claim of
any kind or nature in respect of such asset, other than any such mortgage, lien,
pledge, charge, security interest, encumbrance, restriction or adverse claim
(w) for taxes or other governmental charges not yet due and payable,
(x) materialmen's, mechanic's and similar liens or (y) reflected on the balance
sheet of the Company as of December 31, 1995 or the balance sheet of CICI as of
March 31, 1995 or (z) on any of the Company's or CICI's properties or assets, or
irregularities in title thereto, that do not materially detract from the value
of, or materially impair the use of, any such property or asset.
SECTION 3.8 INVESTMENT BANKING FEES AND COMMISSIONS. No person or
entity is entitled to receive from the Company or CICI any investment banking,
brokerage or finder's fee in connection with this Agreement or the transactions
contemplated hereby.
SECTION 3.9 MATERIAL CONTRACTS. Except as disclosed on Schedule
3.9, neither the Company nor CICI is a party to any (i) contract or agreement
not made in the ordinary course of business or which is not terminable without
penalties of $50,000 or more in the aggregate or upon notice of thirty (30) days
or less; (ii) employment, consulting, non-competition, severance, golden
parachute or indemnification contract or agreement; (iii) mortgage, pledge,
conditional sales contract, security agreement, loan agreement, credit
agreement, promissory note or other similar contract with respect to any real
property of the Company or of CICI; (iv) mortgage pledge, conditional sales
contract, security agreement, factoring agreement, loan agreement, credit
agreement, promissory note or other similar contract with respect to any
tangible personal property of the Company or of CICI involving indebtedness for
borrowed money or capital equipment leases, in each case, of more than $50,000;
(v) guarantee, subordination agreement, letter of credit or any other similar
type of contract or agreement involving obligations in excess of $50,000
individually or $50,000 in the aggregate; (vi) contract or agreement with any
governmental authority
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other than any such contract or agreement which is terminable without penalties
of $50,000 or more in the aggregate or upon notice of 30 days or less, which
involves obligations or indebtedness in excess of $50,000 individually or in the
aggregate, or which requires performance by the Company or CICI that is not
scheduled, and reasonably expected to be completed, within 30 days from the date
hereof; or (vii) commitment or agreement to enter into any of the foregoing.
Each of the Company and CICI has delivered or made available to Purchaser true,
correct and complete copies of the contracts and agreements listed on Schedule
3.9, together with all amendments, modifications, supplements or material side
letters affecting the obligations of any party thereunder. The Company is not
in default under any such contract or agreement nor, to Seller's knowledge, is
any other party thereto in default, which default, in each case, could
reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.10 LITIGATION, ETC. As of the date hereof, there is no
suit, claim, action or proceeding (at law or in equity) pending nor, to the
knowledge of each of the Sellers, is any investigation pending or any suit,
claim, action, or proceeding threatened against the Company or CICI before any
court or governmental or regulatory authority or body seeking money damages in
excess of $50,000 or non-monetary relief that, if granted, could reasonably be
expected to have a Company Material Adverse Effect or seeking to prevent or
challenging the transactions contemplated by this Agreement. Neither the
Company nor CICI is subject to any outstanding order, injunction, judgment,
decree, ruling, writ, assessment or arbitration award ("Order") that would have
a Company Material Adverse Effect.
SECTION 3.11 BENEFIT PLANS. Schedule 3.11 contains a true and
complete list of each "employee benefit plan", bonus, deferred compensation,
incentive compensation, excess benefit, supplemental retirement, stock purchase,
stock option, severance, life insurance, disability, salary continuation,
supplemental unemployment and other employee benefit plan, program or
arrangement whether written or unwritten, qualified or nonqualified, funded or
unfunded (i) maintained, contributed to or required to be contributed to by the
Company (the foregoing being herein called "Benefit Plans"). With respect to
each Benefit Plan maintained or contributed to by the Company or under which the
Company has any liability or obligation, the Company has
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made available to Purchaser a true and correct copy of (a) such Benefit Plan and
(b) each trust agreement and group annuity contract, if any, relating to such
Benefit Plan. To the best of the knowledge of the Sellers, each Benefit Plan
has at all times been maintained, operated and administered in all material
respects in compliance with its terms and all applicable laws. To the best of
the knowledge of the Sellers, if a Benefit Plan is required under applicable law
or by its terms to be funded in any respect, such Benefit Plan is so funded and,
if such Benefit Plan is not required to be funded, the benefits payable under
such Benefit Plan are adequately reserved for on the Company's, or a
subsidiary's, financial statements (or there is an adequate combination of
reserves and funding) in accordance with Canadian generally accepted accounting
principles. To the best of the knowledge of the Sellers, all contributions to
and payments from any Benefit Plan for all periods prior to the date of the
balance sheet have been fully paid or adequately reserved for on the Company's
financial statements. To the best of the knowledge of the Sellers, there are no
pending or threatened actions, claims, lawsuits, arbitrations, audits,
investigations or similar proceedings involving any Benefit Plan, or the assets,
sponsor, administrator or fiduciaries of any such Benefit Plans (other than
routine benefit claims in type and amount consistent with past practice) which
would become the liability of the Company or Purchaser on or the after the
Closing Date, nor do the Sellers have knowledge of facts which could form a
reasonable basis for any such proceedings.
SECTION 3.12 INTELLECTUAL PROPERTY. The Company fully owns, or is
licensed or otherwise has the right to use, all patents, patent rights,
invention rights, trademark rights, trade names, trade name rights, service mark
rights, copyrights, know-how, trade secrets, technology and computer programs
which are material to the conduct of the business of the Company (the
"Intellectual Property"), including, but not limited to, the patents, patent
rights, license agreements, published foreign patent applications, trademark
rights, trade names, trade name rights, service mark rights, copyrights, know-
how, trade secrets set forth in Schedule 3.12. Schedule 3.12 sets forth a true,
correct and complete list of the Intellectual Property (other than invention
rights, patent applications, invention disclosures and related agreements and
non-published patent applications). Except as set forth in Schedule 3.12, the
Company has not been granted or has granted any outstanding license (other
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than "shrink wrap licenses" for any retail consumer products generally
available) or other rights under any Intellectual Property. The Company fully
owns the data compiled from all clinical trials and the Company is not
prohibited from (x) using such data in any manner, including for purposes of
gaining regulatory approval for any product of the Company currently sold or
under development or (y) assigning or otherwise transferring ownership rights in
such data to a third party. Except as set forth in Schedule 3.12, (i) to the
best of the knowledge of Sellers, there is no violation, breach,
misappropriation or infringement by any third party of any Company Intellectual
Property, (ii) there are no pending or, to the best of the knowledge of Sellers,
threatened opposition, interference, reexamination, arbitration, invalidity,
declaratory judgment, revocation, nullity or similar actions in respect of any
Company Intellectual Property and (iii) the Company is not, to the best of the
knowledge of Sellers, infringing or otherwise adversely affecting the rights of
any person with regard to any patent, license, trademark, trade name, service
mark, copyright, know-how, trade secret or other intellectual property right
held by that person nor has it received notice of any such claim.
SECTION 3.13 RESTRICTIONS ON OPERATIONS. Except as set forth on
Schedule 3.13 attached hereto, the Company is not restricted directly or
indirectly by any agreement to which the Company is bound from carrying on its
business anywhere in the world nor are Sellers aware of any other agreement
which purports to restrict the Company from carrying out its business anywhere
in the world.
SECTION 3.14 COMPLIANCE WITH LAWS. Neither the Company nor CICI has
violated or failed to comply with any statute, law, ordinance, regulation, rule
or order of any foreign, Federal, provincial or local government or any other
governmental department or agency, or any judgment, decree or order of any
court, applicable to its business or operations, except where any such
violations or failures to comply would not, in the aggregate, have a Company
Material Adverse Effect; and the conduct of the business of the Company and of
CICI is in conformity with all Federal, provincial and local energy and public
utility and all other Federal, provincial and local governmental and regulatory
requirements applicable to its business or operations, except where such
nonconformities would not, in the aggregate, have a Company Material Adverse
Effect. The Company and CICI have all permits, licenses and franchises
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from governmental agencies required to conduct their businesses as now being
conducted, except for such permits, licenses and franchises the absence of which
would not, in the aggregate, have a Company Material Adverse Effect.
SECTION 3.15 TAXES. (a) Schedule 3.15 sets forth the last taxable
period (x) through which the Federal Returns (as defined below) of the Company
and of CICI have been examined by Revenue Canada (such process being hereinafter
referred to as the "Revenue Canada Examination") or (y) for which the date for
assessment and collection of any deficiency has expired.
(b) Except as set forth in Schedule 3.15, each of the Company
and CICI has (i) timely filed all Federal and all provincial, local and foreign
returns, declarations, reports, estimates, information returns and statements
("Returns") required to be filed by or for it on or prior to the date hereof in
respect of any Taxes (as defined below) and such Returns are true, complete and
correct in all material respects, (ii) timely paid all Taxes that are shown as
being due on any Returns, (iii) established reserves that are adequate for the
payment of all Taxes not yet due and payable with respect to the results of
operations of the Company and CICI, respectively, through the date hereof,
(iv) complied in all material respects with all applicable laws, rules and
regulations relating to Taxes, and (v) timely withheld and paid over to the
proper governmental authorities all Taxes and other amounts required to be so
withheld and paid over.
(c) Except as set forth in Schedule 3.15, neither the Company
nor CICI has executed or entered into with any taxing authority (i) any
agreement, waiver or other arrangement that continues in force beyond the
Closing Date and that extends or has the effect of extending the period for
assessments or collection of any Federal, provincial, local or foreign Taxes, or
(ii) any agreement or other document with respect to the settlement of any
Taxes, that continues in force beyond the Closing Date.
(d) Except as set forth in Schedule 3.15, neither the Company
nor CICI is a party to, bound by or has any obligation under any tax sharing
agreement or similar agreement or arrangement.
(e) Except as set forth in Schedule 3.15, all representations
made by the Company, by CICI or by their
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respective authorized representatives in connection with any tax exemption,
grant, dispensation or similar allowance under any Federal, provincial, local or
foreign tax laws are complete, true and accurate in all material respects and
any covenants, promises or undertakings made or to be performed by the Company
or by CICI in connection with such tax exemption, grant, dispensation, or
similar allowance have been duly discharged or performed in accordance with
their terms.
(f) Except as set forth in Schedule 3.15, Sellers are residents
of Canada for Canadian income tax purposes.
(g) Except as set forth in Schedule 3.15, (i) all deficiencies
asserted as a result of the Revenue Canada Examinations have been paid, fully
settled or adequately provided for in the Company's and CICI's most recent
financial statements, if applicable; (ii) no Federal tax audits or other
administrative proceedings or court proceedings are presently pending with
respect to the Company or CICI with respect to any Federal Taxes; and
(iii) neither the Company nor CICI has received notice that any deficiency for
any such Taxes aggregating in excess of US$10,000 has been proposed, asserted or
assessed against the Company by any Federal, provincial, local, or foreign
taxing authority or court with respect to any period.
(h) Except as set forth in Schedule 3.15, neither the Company
nor CICI has leased or rented any property other than on arm's length terms and
conditions.
(i) Neither the Company nor CICI is, or has been, a United
States Real Property Holding Corporation within the meaning of Section 897(c)(2)
of the United States Internal Revenue Code of 1986, as amended (the "Code"),
during the applicable period specified in Code section 897(c)(1)(A)(ii).
For purposes of this Agreement, "Taxes" shall mean all Canadian
Federal, provincial, local, foreign and other taxes, charges, fees, levies,
imposts, duties, licenses or other assessments of every kind and description,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority.
SECTION 3.16 PRODUCT REGISTRATION; REGULATORY COMPLIANCE. (a)
Schedule 3.16 sets forth, as of the date
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hereof, a list of all licenses and approvals granted by or pending with any
Governmental Body in any particular country to market any product relating to
the Company's business as conducted on the date hereof (the "Product
Registrations"). Except as set forth in Schedule 3.16, (i) all products sold
under the Product Registrations are manufactured and marketed in accordance with
the specifications and standards contained in such Product Registrations, (ii)
the Company is the sole and exclusive owner of the Product Registrations and has
not granted any right or reference with respect thereto and is not prohibited
from assigning or otherwise transferring its rights to such Product
Registrations to a third party, and (iii) the Product Registrations granted are
in full force and effect with all required annual reports filed and government
maintenance fees and taxes having been paid thereon and no consent of any
governmental authority is required in connection with the transactions
contemplated hereby.
SECTION 3.17 LABOR MATTERS. The Company is not a party to or bound
by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization.
SECTION 3.18 OWNERSHIP AND TRANSFER OF SHARES. Except as set forth
in Schedule 3.18 attached hereto, Sellers are the recorded and beneficial owners
of the Shares, free and clear of any and all Liens and Sellers will deliver such
Shares as provided in this Agreement, and such delivery will convey to Purchaser
good and marketable title to such Shares, free and clear of any and all Liens.
SECTION 3.19 FAMILY LAW ACT. No order has been given under the
Family Law Act (Ontario) (the "FLA") nor is there any application pending under
the FLA by any spouses of any of the Sellers which would or does affect the
Shares in any manner whatsoever.
SECTION 3.20 NO UNDISCLOSED LIABILITIES. Neither the Company nor
CICI has any indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become due)
that would have been required to be reflected in, reserved against or otherwise
described on the Company Balance Sheet or the CICI Balance Sheet, respectively,
in accordance with Canadian GAAP which was not fully so reflected, reserved
against or otherwise described or was not incurred in the ordinary course of
business consistent
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with past practice since the Company Balance Sheet date or the CICI Balance
Sheet date, respectively.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Florida and has all requisite corporate power and authority to carry on its
business as it is now being conducted.
SECTION 4.2 CORPORATE POWER AND AUTHORITY. Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Purchaser, and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Purchaser and, assuming this Agreement constitutes a
valid and binding obligation of Sellers, this Agreement constitutes the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and remedies and to general principles of
equity.
SECTION 4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by Purchaser of this Agreement and the consummation of the
transactions contemplated hereby by Purchaser require no action by or in respect
of, or filing with, any Governmental Body.
SECTION 4.4 NON-CONTRAVENTION. The execution, delivery and
performance by Purchaser of this Agreement and the consummation of the
transactions contemplated hereby by Purchaser do not and will not (i) contravene
or conflict with the Articles of Incorporation or Bylaws of Purchaser,
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(ii) contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to Purchaser, (iii) constitute or result in a default under or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of Purchaser or to a loss of any benefit to which Purchaser is
entitled under any provision of any agreement or other instrument binding upon
Purchaser or any license, franchise, permit or other similar authorization held
by Purchaser, or (iv) result in the creation or imposition of any Lien on any
asset of Purchaser, except for any occurrences or results referred to in clauses
(ii), (iii), and (iv) which would not have or reasonably be expected to have,
individually or in the aggregate, a material adverse effect on Purchaser or
prevent consummation of the transactions contemplated hereby.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS. Except as expressly provided in
this Agreement, or as expressly agreed to in writing by Purchaser, during the
period from the date of this Agreement and continuing until the Closing Date or
until the termination of this Agreement pursuant to
Section 7.2 (the "Executory Period"):
(a) Sellers shall cause each of the Company and CICI to conduct
its operations according to its ordinary and usual course of business and
consistent with past practice and will use their commercially reasonable efforts
to preserve intact their respective business organizations, keep available the
services of their officers and employees and maintain satisfactory relationships
with licensors, suppliers, distributors, customers and others having business
relationships with them.
(b) Sellers shall cause each of the Company and CICI to maintain
its books and records in its usual manner and consistent with past practice and
not permit a material change in any of its financial reporting, tax, or
accounting practices or policies or in any assumption underlying such practices
or policies, or in any method of calculating any bad debt, contingency, or other
reserve for financial reporting purposes or for other accounting purposes,
except as may be required by Canadian GAAP.
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(c) Without limiting the generality of the foregoing, Sellers
shall cause each of the Company and CICI, without the prior written consent of
Purchaser, not to (i) issue, sell, pledge or encumber, or authorize or propose
the issuance, sale, pledge or encumbrance of (A) any shares of capital stock of
any class (including Shares), or securities convertible into, or exchangeable
for, any such shares, or any rights, warrants or options to acquire any such
shares or other convertible or exchangeable securities, or grant or accelerate
any right to convert or exchange any securities of the Company or of CICI for
such shares, other than shares issuable upon exercise of currently outstanding
stock options, stock awards or warrants, or (B) any other securities in respect
of, in lieu of or in substitution for shares of common stock outstanding on the
date hereof (including the Shares); (ii) redeem, purchase or otherwise acquire,
or propose to redeem, purchase or otherwise acquire, any of its outstanding
securities (including the Shares); (iii) split, combine or reclassify any shares
of its capital stock or declare or pay any dividend or distribution on any
shares of capital stock of the Company or of CICI; (iv) make any acquisition of
a material amount of assets or securities, any disposition of a material amount
of assets or securities, or enter into or modify any material contract,
agreement, commitment, arrangement, license or right or any release or
relinquishment of any material contract rights, not in the ordinary course of
business; (v) pledge or encumber any material assets of the Company or of CICI
except in the ordinary course of business consistent with past practice;
(vi) incur any long-term debt for borrowed money or short-term debt for borrowed
money, except for debt incurred in the ordinary course of business consistent
with past practice; (vii) propose or adopt any amendments to the Articles of
Incorporation or Bylaws of the Company or of CICI; (viii) enter into any new
employment agreement providing for compensation (including salary, bonus,
benefits and all other forms of compensation, whether immediately payable or
deferred) in excess of US$50,000 per year or amend any existing agreement with
any officer, director or employee or grant any increase in the compensation or
benefits to officers, directors, employees and former employees other than
increases in the ordinary course of business and consistent with past practice
or pursuant to the terms of agreements or plans as currently in effect;
(ix) adopt a plan of the Company or CICI of complete or partial liquidation or
resolutions providing for the complete or partial liquidation or dissolution of
the Company or CICI; (x) assume, guarantee, endorse or otherwise
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become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person; (xi) make any loans, advances or capital
contributions to, or investments in, any other person (other than loans or
advances to subsidiaries and customary loans or advances to employees in
accordance with past practices); (xii) adopt or amend (except as may be required
by law or required by this Agreement) any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or other arrangement for the
benefit or welfare of any employee or former employee; (xiii) take any action
other than in the ordinary course of business and consistent with past practice
with respect to the grant of any severance or termination pay or with respect to
any increase of benefits payable under its severance or termination pay policies
in effect on the date hereof; (xiv) make any tax election or settle or
compromise any material Federal, provincial, local or foreign income tax
liability, except in the ordinary course of business and consistent with past
practice; (xv) execute or enter into with any taxing authority any agreement or
other document extending or having the effect of extending the period of
assessments or collection of any Federal, provincial, local or foreign Taxes;
(xvi) except as contemplated by the capital expenditures budget currently in
effect, authorize capital expenditures in excess of $50,000 in the aggregate; or
(xvii) authorize or propose any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing, or take any
action which would make any representation or warranty of the Sellers in this
Agreement untrue or incorrect.
(d) Sellers shall cause CICI to file its Returns for the tax
year ending March 31, 1995 and pay any and all Taxes shown thereon as being due.
Sellers shall provide to Purchaser at the Closing a copy of such Returns and a
copy of the receipts for any and all Taxes paid with respect to such Returns.
SECTION 5.2 ACCESS TO INFORMATION. During the Executory Period,
Sellers shall cause the Company and CICI, upon reasonable notice, to (i) give
Purchaser and its authorized representatives reasonable access during regular
business hours to all of its plants, offices, warehouses and other properties
and to their employees, agents, independent accountants and all of their books,
records and contracts, (ii) permit Parent, Purchaser and their authorized
representatives to make such inspections, including, without
18
<PAGE>
limitation, environmental assessments or surveys, during regular business hours
as Parent may reasonably require and (iii) cause its officers to furnish Parent,
Purchaser and their authorized representatives with such financial and operating
data and other information with respect to the business and properties of the
Company and of CICI as the Parent or Purchaser may from time to time reasonably
request.
SECTION 5.3 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (a) using their
respective reasonable best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
parties to contracts with the Company as are necessary for consummation of the
transactions contemplated by this Agreement, (b) taking any action reasonably
necessary to vigorously defend, lift, mitigate and rescind the effect of any
litigation or administrative proceeding adversely affecting this Agreement or
the transactions contemplated hereby, including, without limitation, promptly
appealing any adverse court or administrative order or injunction and (c) to
fulfill all conditions precedent applicable to such party pursuant to this
Agreement. In case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, Sellers and
the proper officers and directors of the Purchaser shall use their reasonable
best efforts to take all such necessary action.
SECTION 5.4 NO SOLICITATION. Until the earlier of the Closing Date
or the termination of this Agreement, Sellers will not, and will not cause or
permit the Company, CICI or any of the Company's or CICI's directors, officers,
employees, representatives or agents (collectively, the "Representatives") to,
directly or indirectly, (i) discuss, negotiate, undertake, authorize, recommend,
propose or enter into, either as the proposed surviving, merged, acquiring or
acquired corporation, any transaction involving a merger, consolidation,
business combination, purchase or disposition of any amount of the assets or
capital stock or other equity interest in the Company or CICI other than the
transactions contemplated by this Agreement (an "Acquisition
19
<PAGE>
Transaction"), (ii) facilitate, encourage, solicit or initiate discussions,
negotiations or submissions of proposals or offers in respect of an Acquisition
Transaction, (iii) furnish or cause to be furnished, to any person or entity,
any information concerning the business, operations, properties or assets of the
Company or of CICI in connection with an Acquisition Transaction, or
(iv) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person or entity to
do or seek any of the foregoing. Seller will inform Purchaser in writing
immediately following the receipt by Seller, the Company or any Representative
of any proposal or inquiry in respect of any Acquisition Transaction.
SECTION 5.5 TAXES. Purchaser shall provide, or cause to be
provided, to each shareholder of CICI who is a United States citizen or resident
notice of any election made under section 338 of the Code with respect to the
purchase of CICI's stock, as required by United States Treasury Regulation
section 1.338-1(g)(4).
SECTION 5.6 REPAYMENT OF LOANS. Prior to the Closing Date, the
Purchaser will repay to Sellers the unpaid balance of currently existing
shareholder loans made by Sellers to CICI, together with accrued interest. The
principal amounts of such loans are as follows:
Seller Amount
------ ------
George A. Adams Can.$8,960
David C. MacGregor Can.$4,160
Gregory Wilson
Family Trust Can.$1,920
Jennie M. Wilson Can.$1,280
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of
20
<PAGE>
the following conditions (any or all of which may be waived by Purchaser in
whole or in part to the extent permitted by applicable law):
(a) all representations and warranties of Sellers contained herein
shall be true and correct as of the date hereof;
(b) all representations and warranties of Sellers contained herein
qualified as to materiality shall be true and correct, and the representations
and warranties of Sellers contained herein not qualified as to materiality shall
be true and correct in all material respects, at and as of the Closing Date with
the same effect as though those representations and warranties had been made
again at and as of that time;
(c) Sellers shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing Date;
(d) Purchaser shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to Purchaser)
executed by Sellers certifying as to the fulfillment of the conditions specified
in Sections 6.1(a), 6.1(b), 6.1(c) and 6.1(f) hereof;
(e) Certificates representing all of the Shares not owned by
Purchaser shall have been, or shall at the Closing be, validly delivered and
transferred to Purchaser, free and clear of any and all Liens;
(f) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(g) (i) Purchaser, Parent, and Merger Sub shall have entered into
the Merger Agreement, and (ii) Merger Sub shall have made the tender offer
contemplated by the Merger Agreement and shall have accepted for payment and
paid for all of the shares of common stock of Purchaser that were validly
tendered and not withdrawn pursuant to such tender offer;
21
<PAGE>
(h) Purchaser shall have entered into a stock purchase agreement with
Research Visions Canada, Inc. ("RVC") (the "RVC Agreement") pursuant to which
Purchaser will acquire all of the Company Shares owned by RVC and the closing of
the transactions contemplated by the RVC Agreement shall occur simultaneously
with the Closing;
(i) A certificate under Section 116 of the Income Tax Act (Canada)
shall have been received with respect to the sale of Shares by David C.
MacGregor or David C. MacGregor shall have executed an agreement substantially
in the form of Schedule 6.1(i) and David C. MacGregor shall have complied with
the terms thereof at the Closing; and
(j) the Company's Shareholders Agreement dated April 22, 1994 and the
Memorandum of Understanding among all the shareholders of CICI dated April 18,
1994 shall have been terminated.
SECTION 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The
obligations of Sellers to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of which may be waived by Sellers
in whole or in part to the extent permitted by applicable law):
(a) all representations and warranties of Purchaser contained herein
shall be true and correct as of the date hereof;
(b) all representations and warranties of Purchaser contained herein
qualified as to materiality shall be true and correct, and all representations
and warranties of Purchaser contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of the Closing
Date with the same effect as though those representations and warranties had
been made again at and as of that date;
(c) Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date;
(d) Sellers shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to Sellers)
executed by
22
<PAGE>
the Chief Executive Officer and Chief Financial Officer of Purchaser certifying
as to the fulfillment of the conditions required to be fulfilled at and as of
the Closing Date as specified in Sections 6.2(a), 6.2(b) and 6.2(c);
(e) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(f) Parent shall have executed and delivered to David C. MacGregor at
the Closing an agreement in the form of Schedule 6.2(f);
(g) (i) Purchaser, Parent, and Merger Sub shall have entered into
the Merger Agreement, and (ii) Merger Sub shall have made the tender offer
contemplated by the Merger Agreement and shall have accepted for payment and
paid for all of the shares of common stock of Purchaser that were validly
tendered and not withdrawn pursuant to such tender offer;
(h) RVC shall have entered into the RVC Agreement, pursuant to which
Purchaser will acquire all of the Company Shares owned by RVC and the closing of
the transactions contemplated by the RVC Agreement shall occur simultaneously
with the Closing; and
(i) Purchaser shall have executed an agreement substantially in the
form of Schedule 6.1(i) and Purchaser shall have complied with the terms thereof
at the Closing.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 GENERAL SURVIVAL. The parties hereto agree that (a)
the representations, warranties, covenants and agreements of Purchaser and
Seller contained in the this Agreement shall survive the execution and delivery
hereof, regardless of any investigation made by the parties thereto, for one (1)
year following the Closing Date, except that the representations and warranties
contained in Section 3.15 shall survive for five (5) years following the Closing
Date (the "Survival Period"). Notwithstanding anything to the contrary
contained herein, no claim, suit or proceeding for breach of any
23
<PAGE>
representation or warranty, covenant or agreement of any of the Sellers set
forth in this Agreement may be brought by any person unless written notice of
such claim (stating the date of discovery thereof and basis therefor) shall have
been given on or prior to the last day of the applicable Survival Period (in
which event each such representation and warranty shall, with respect to the
specific claim made, survive the applicable Survival Period until such claim is
finally resolved and all obligations with respect thereto are fully satisfied).
SECTION 7.2 TERMINATION. This Agreement may be terminated and the
sale and purchase of Shares contemplated hereby may be abandoned (i) by mutual
written consent of Sellers and Purchaser prior to the Closing Date or (ii) by
either Sellers or Purchaser if the Merger Agreement is terminated. In the event
of termination and abandonment of this Agreement pursuant to this Section 7.2,
this Agreement, except for the provisions of this Section 7.2, shall forthwith
become void and have no effect, without liability on the part of any party or
its directors, officers or shareholders; provided, however, that nothing in this
Agreement shall relieve any party to this Agreement of liability for any willful
or intentional breach thereof.
SECTION 7.3 INDEMNIFICATION. (a) Subject to the provisions of
Section 7.1, Sellers hereby agree to indemnify, defend and hold harmless
Purchaser and, from and after the Closing, the Company (the "Purchased Company")
from and against and in respect of any and all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, interest and
penalties, costs and expenses (including, without limitation, reasonable legal
fees and disbursements incurred in connection therewith and in seeking
indemnification therefor, and any amounts or expenses required to be paid or
incurred in connection with any action, suit, proceeding, claim, appeal, demand,
assessment or judgment) (individually, a "Loss" and, collectively, "Losses")
resulting from, arising out of, or imposed upon or incurred by Purchaser or the
Purchased Company by reason of any inaccuracy in or breach of any of the
Sellers' representations, warranties, covenants and agreements contained in this
Agreement (individually, a "Company Loss" and, collectively, the "Company
Losses"); PROVIDED that in no event shall Sellers be liable for an amount of any
such Company Loss in excess of the Purchase Price.
24
<PAGE>
(b) Notwithstanding anything contained herein to the contrary, for
all purposes of this Agreement, Losses shall be determined net of the amount of
any insurance proceeds recovered in respect thereof.
SECTION 7.4 NOTICE; CONTROL OF DEFENSE. (a) If any claims in
respect of Losses shall be asserted against Purchaser or the Purchased Company
or any of their respective successors in respect of which Purchaser or the
Purchased Company proposes to demand indemnification from Sellers under Section
7.3 hereof, Purchaser or the Purchased Company shall promptly notify Sellers
(providing reasonable detail with respect thereto); PROVIDED, HOWEVER, that in
the event of any claim for indemnification hereunder resulting from or in
connection with any claim or legal proceedings by a third party (a "Third Party
Claim"), Purchaser or the Purchased Company shall give such notice thereof to
Sellers not later than 15 days after the assertion, in writing, of any such
claim; and PROVIDED FURTHER, HOWEVER, that failure to give such reasonably
prompt notice shall not release, waive or otherwise affect Sellers' obligations
with respect thereto except to the extent Sellers can demonstrate actual loss or
prejudice as a result thereof. The Purchased Company shall not be deemed to
have notice of any claim or of any breach by the Purchased Company or Sellers of
any representation, warranty, covenant or agreement under this Agreement by
virtue of knowledge acquired on or prior to the date of the Closing by an
employee of the Purchased Company. Sellers shall have the right to assume the
defense of a Third Party Claim if, within thirty (30) days (or sooner, if the
nature of the Third Party Claim so requires) after the date on which written
notice of a Third Party Claim has been given to Sellers pursuant to this Section
7.4, Sellers elect in writing to assume such defense and acknowledges in writing
the indemnification obligations of Sellers in respect of such Third Party Claim;
PROVIDED, HOWEVER, that no settlement shall be made without the prior written
consent of Purchaser and the Purchased Company, which consent shall not be
unreasonably withheld (it being understood that neither Purchaser nor the
Purchased Company shall be required to enter into any settlement that does not
include an unconditional release of Purchaser and the Purchased Company of all
liability in respect of such claim or that imposes any continuing obligation on
Purchaser or the Purchased Company to take or refrain from taking any actions
(and the withholding of consent in any such case shall be deemed reasonable)).
Purchaser and the Purchased Company shall have the right to be represented by
counsel at
25
<PAGE>
their own expense in any such contest, defense, litigation or settlement
conducted by Sellers; PROVIDED, HOWEVER, that Purchaser and the Purchased
Company shall be entitled to participate in any such contest, defense,
litigation or settlement with separate counsel at the expense of Sellers if
(i) so requested by Sellers to participate or (ii) in the reasonable opinion of
counsel to Purchaser and the Purchased Company, a conflict or potential conflict
exists between Sellers, on the one hand, and Purchaser and the Purchased
Company, on the other hand, that would make such separate representation
advisable. So long as Sellers have assumed the defense of any Third Party Claim
within such thirty (30) days (or shorter) period and are defending such claim in
good faith, Sellers shall have the exclusive right to contest, defend and
litigate, except as hereinabove provided, such Third Party Claim and, except as
hereinabove provided, shall have the exclusive right, in their sole discretion,
to settle any such claim, either before or after the initiation of litigation at
such time and on such terms as Sellers deem appropriate. If Purchaser or the
Purchased Company is entitled to indemnification against a Third Party Claim,
and Sellers elect not to or fail to assume the defense of a Third Party Claim
pursuant to this Section 7.4, or contest its obligation to indemnify in respect
of such Third Party Claim, Purchaser and the Purchased Company shall have the
right, without prejudice to their rights of indemnification hereunder, to
contest, defend and litigate such Third Party Claim or to settle any such claim,
and Purchaser and the Purchased Company shall be reimbursed for the costs and
expenses of defending such Third Party Claim upon the submission of periodic
bills. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such Third Party
Claim.
(b) Sellers hereby agree that if, following the Closing, any payment
is made by Sellers in respect of any Losses (a "Loss Payment"), Sellers shall
have no rights against the Purchased Company, or any director, officer or
employee thereof (in their capacity as such), whether by reason of contribution,
indemnification, subrogation or otherwise, in respect of any such Loss Payment,
and shall not take any action against the Purchased Company or any such person
with respect thereto. Any such rights which Sellers may, by operation of law or
otherwise, have against the Purchased Company or any such person shall,
effective at the time of the Closing, be deemed to be hereby expressly and
knowingly waived.
26
<PAGE>
SECTION 7.5 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(a) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise.
SECTION 7.6 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereon in any Federal or
state court located in the State of New York (as to which the parties agree to
submit to jurisdiction for the purpose of such action), this being in addition
to any other remedy to which they are entitled at law or in equity.
SECTION 7.7 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect. Each party agrees that, should any court of competent authority hold
any provision of this Agreement to be null, void or unenforceable, or order any
party to take any action inconsistent herewith or not to take any action
required herein, the other party shall not be entitled to specific performance
of such provision or to any other remedy, including, without limitation, money
damages, for breach hereof or of any other provision of this Agreement as a
result of such holding or order.
SECTION 7.8 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by cable, telegram, telecopier, telex
or overnight courier, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
27
<PAGE>
if to Purchaser:
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida 33122
Attention: Norman R. Weldon Ph.D.
President and
Chief Executive Officer
with a copy to:
Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10157
Attention: Dennis J. Block, Esq.
if to Sellers:
George A. Adams
30 Belsize Drive
Toronto, Ontario M4S 1L4
CANADA
and
David C. MacGregor
3971 Gull Shore Blvd. N.
Suite 305
Naples, Florida 33940
USA
and
Gregory Wilson Family Trust
5 Widdicombe Hill
Etobicoke, Ontario M9R 1A9
CANADA
28
<PAGE>
and
Jennie M. Wilson
5 Widdicombe Hill
Etobicoke, Ontario M9R 1A9
CANADA
with a copy to:
Lang Michener
Suite 2500, BCE Place
181 Bay Street
Toronto, Ontario M5J 2T7
CANADA
Attention: David M.W. Young, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). All such notices or communications shall be deemed to be
received (a) in the case of personal delivery, cable, telex or telecopy, on the
date of such delivery and (b) in the case of overnight courier, on the third
business day after the date when sent.
SECTION 7.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
SECTION 7.10 DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 7.11 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 7.12 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
29
<PAGE>
SECTION 7.13 PUBLICITY. So long as this Agreement is in effect,
each of Purchaser and Sellers promptly shall advise, consult and cooperate with
the other prior to issuing, or permitting any of its directors, officers,
employees or agents to issue, any press release or other statement to the press
or any third party with respect to this Agreement, or the transactions
contemplated hereby.
30
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by an officer thereof thereunto duly authorized, as of
the day and year first above written.
CORVITA CORPORATION
By: /s/ Norman R. Weldon
-----------------------
Name: Norman R. Weldon
Title: President and
Chief Executive
Officer
SELLERS:
/s/ George A. Adams
----------------------
George A. Adams
/s/ David C. MacGregor
----------------------
David C. MacGregor
GREGORY WILSON FAMILY TRUST
By: /s/ Gregory J. Wilson
-----------------------
Name: Gregory J. Wilson
Title: Trustee
By: /s/ Jennie M. Wilson
-----------------------
Name: Jennie M. Wilson
Title: Trustee
/s/ Jennie M. Wilson
----------------------
Jennie M. Wilson
<PAGE>
STOCK PURCHASE AGREEMENT
BETWEEN
CORVITA CORPORATION
AND
RESEARCH VISIONS CANADA, INC.
-----------------------------
Dated as of April 11, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I SALE OF SHARES; PURCHASE PRICE. . . . . . . . . . . . . . . . 1
SECTION 1.1 Sale and Purchase of Shares. . . . . . . . . . . . . . . 1
SECTION 1.2 Purchase Price; Payment. . . . . . . . . . . . . . . . . 2
ARTICLE II CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . 2
SECTION 3.1 Organization and Qualification . . . . . . . . . . . . . 2
SECTION 3.2 Power; Due Execution and Delivery. . . . . . . . . . . . 3
SECTION 3.3 Governmental Authorization . . . . . . . . . . . . . . . 3
SECTION 3.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . 3
SECTION 3.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.6 Ownership and Transfer of Shares . . . . . . . . . . . . 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . 4
SECTION 4.1 Organization and Qualification . . . . . . . . . . . . . 4
SECTION 4.2 Corporate Power and Authority. . . . . . . . . . . . . . 4
SECTION 4.3 Governmental Authorization . . . . . . . . . . . . . . . 5
SECTION 4.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . 5
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5.1 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 5
ARTICLE VI CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.1 Conditions Precedent to
Obligations of Purchaser . . . . . . . . . . . . . . . . 6
SECTION 6.2 Conditions Precedent to
Obligations of Seller. . . . . . . . . . . . . . . . . . 7
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7.1 General Survival . . . . . . . . . . . . . . . . . . . . 8
SECTION 7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7.3 Entire Agreement; Assignment . . . . . . . . . . . . . . 8
SECTION 7.4 Enforcement of the Agreement . . . . . . . . . . . . . . 8
SECTION 7.5 Validity . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7.8 Descriptive Headings . . . . . . . . . . . . . . . . . . 10
SECTION 7.9 Parties in Interest. . . . . . . . . . . . . . . . . . . 10
SECTION 7.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7.11 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 11
i
<PAGE>
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated as of April 11, 1996 (this
"Agreement"), between Corvita Corporation, a Florida corporation ("Purchaser"),
and Research Visions Canada, Inc., a Canadian corporation ("Seller").
W I T N E S S E T H :
WHEREAS, Seller owns 3,500 shares of common stock without par value
("Shares"), of Corvita Canada, Inc., an Ontario corporation (the "Company");
WHEREAS, concurrently herewith, Purchaser, Pfizer Inc., a Delaware
corporation ("Parent"), and HPG Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), are entering into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which Merger Sub will
be merged with and into Purchaser;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Purchaser and Seller agree, and Purchaser
and Seller have agreed, to enter into this Agreement;
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
ARTICLE I
SALE OF SHARES; PURCHASE PRICE
SECTION 1.1 SALE AND PURCHASE OF SHARES. Upon the terms and
subject to the conditions contained in this Agreement, on the Closing Date (as
defined in Section 2.1) Seller shall sell, convey, transfer, assign and deliver
to Purchaser, and Purchaser shall purchase and acquire from Seller, all right,
title and interest of Seller, legal or equitable, in and to the Shares.
<PAGE>
SECTION 1.2 PURCHASE PRICE; PAYMENT. (a) The purchase price for
the Shares shall be an amount equal to US$56,680 (the "Purchase Price").
(b) On the Closing Date, Purchaser shall, subject to withholding, if
any, pay the Purchase Price to Seller by wire transfer of immediately available
funds to an account designated by Seller.
ARTICLE II
CLOSING
SECTION 2.1 CLOSING DATE. Subject to the prior satisfaction of the
conditions set forth in Sections 6.1 and 6.2 hereof (or the waiver thereof by
the party entitled to waive that condition), the closing of the sale and
purchase of the Shares provided for in Section 1.1 hereof (the "Closing") shall
take place at 10:00 a.m. Toronto time at the offices of Lang Michener, Suite
2500, 181 Bay Street, Toronto (or at such other place as the parties may
designate in writing) on the Control Date (as defined in the Merger Agreement),
or on such other date as Seller and Purchaser may designate in writing. The
date on which the Closing shall be held is referred to in this Agreement as the
"Closing Date".
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of Ontario and has all requisite corporate power and authority to carry on its
business as it is now being conducted and to own its property. Seller has no
subsidiaries, direct or indirect. For purposes of this Agreement:
(i) "subsidiary" shall mean, with respect to any party, any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated, of which (i) such party or any other subsidiary of such party is
a general partner; (ii) voting power to elect a majority of the board of
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directors or other performing similar functions with respect to such
corporation, partnership, joint venture or other organization is held by such
party or by any one or more of its subsidiaries, or by such party and any one or
more of its subsidiaries; or (iii) at least 25% of the equity, or other
securities or other interests is, directly or indirectly, owned or controlled by
such party or by any one or more of its subsidiaries, or by such party and any
one or more of its subsidiaries.
SECTION 3.2 POWER; DUE EXECUTION AND DELIVERY. Seller has all
requisite legal right, power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Seller and its shareholders and no other corporate proceedings on
the part of Seller are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Seller and, assuming this Agreement constitutes a
valid and binding obligation of Purchaser, this Agreement constitutes the legal,
valid and binding obligation of Seller, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws, now or hereafter in effect,
affecting creditors' rights and remedies and to general principles of equity.
SECTION 3.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby by Seller require no action by Seller in
respect of, or filing with, any government or governmental or regulatory body
thereof, or political subdivision thereof, whether Federal, provincial, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator ("Governmental Body").
SECTION 3.4 NON-CONTRAVENTION. The execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby by Seller do not and will not (i) contravene or conflict
with Seller's Articles of Incorporation or Bylaws, or (ii) contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment,
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injunction, order or decree binding upon or applicable to Seller.
SECTION 3.5 TAXES. Seller is a resident of Canada for Canadian
income tax purposes.
SECTION 3.6 OWNERSHIP AND TRANSFER OF SHARES. Seller is the record
and beneficial owner of the Shares, free and clear of any and all Liens. Seller
does not own of record or beneficially any other shares of, or options (or other
rights) to acquire shares of, capital stock of the Company. Seller has the
corporate power and authority to sell, transfer, assign and deliver such Shares
as provided in this Agreement, and such delivery will convey to Purchaser good
and marketable title to such Shares, free and clear of any and all Liens. For
purposes of this Agreement, "Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest, encumbrance, restriction or
adverse claim of any kind or nature in respect of such asset.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Florida and has all requisite corporate power and authority to carry on its
business as it is now being conducted.
SECTION 4.2 CORPORATE POWER AND AUTHORITY. Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Purchaser, and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Purchaser and, assuming this Agreement constitutes
a valid and binding obligation of Seller, this Agreement constitutes
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the legal, valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws, now or
hereafter in effect, affecting creditors' rights and remedies and to general
principles of equity.
SECTION 4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by Purchaser of this Agreement and the consummation of the
transactions contemplated hereby by Purchaser require no action by or in respect
of, or filing with, any Governmental Body.
SECTION 4.4 NON-CONTRAVENTION. The execution, delivery and
performance by Purchaser of this Agreement and the consummation of the
transactions contemplated hereby by Purchaser do not and will not (i) contravene
or conflict with the Articles of Incorporation or Bylaws of Purchaser, or
(ii) contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to Purchaser.
ARTICLE V
COVENANTS
SECTION 5.1 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, and to fulfill all conditions precedent
applicable to such party pursuant to this Agreement. In case at any time after
the Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such
necessary action.
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ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by Purchaser
in whole or in part to the extent permitted by applicable law):
(a) all representations and warranties of Seller contained herein
shall be true and correct as of the date hereof;
(b) Seller shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date;
(c) Purchaser shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to Purchaser)
executed by Seller certifying as to the fulfillment of the conditions specified
in Section 6.1(b) hereof;
(d) Certificates representing all of the Shares not owned by
Purchaser or by Cardiovascular Innovations Canada, Inc. ("CICI") shall have
been, or shall at the Closing be, validly delivered and transferred to
Purchaser, free and clear of any and all Liens;
(e) (i) Purchaser, Parent, and Merger Sub shall have entered into the
Merger Agreement, and (ii) Merger Sub shall have made the tender offer
contemplated by the Merger Agreement and shall have accepted for payment and
paid for all of the shares of common stock of Purchaser that were validly
tendered and not withdrawn pursuant to such tender offer;
(f) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(g) all of the shareholders of CICI shall have entered into a stock
purchase agreement with Purchaser (the
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"CICI Agreement"), pursuant to which Purchaser will acquire all of the issued
and outstanding shares of CICI and the closing of the transactions contemplated
by the CICI Agreement shall occur simultaneously with the Closing; and
(h) the Company's Shareholders Agreement dated April 22, 1994 and the
Memorandum of Understanding among all the shareholders of CICI dated April 18,
1994 shall have been terminated.
SECTION 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The
obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of which may be waived by Seller in
whole or in part to the extent permitted by applicable law):
(a) all representations and warranties of Purchaser contained herein
shall be true and correct as of the date hereof;
(b) Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date;
(c) Seller shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to Seller)
executed by the Chief Executive Officer and Chief Financial Officer of Purchaser
certifying as to the fulfillment of the conditions specified in Section 6.2(b);
(d) Certificates representing all of the Shares not owned by
Purchaser or by Seller shall have been, or shall at the Closing be, validly
delivered and transferred to Purchaser, free and clear of any and all Liens;
(e) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(f) (i) Purchaser, Parent, and Merger Sub shall have entered into the
Merger Agreement, and (ii) Merger Sub shall have made the tender offer
contemplated by the Merger Agreement and shall have accepted for payment and
paid for
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all of the shares of common stock of Purchaser that were validly tendered and
not withdrawn pursuant to such tender offer; and
(g) all of the shareholders of CICI shall have entered into the CICI
Agreement, pursuant to which Purchaser will acquire all of the issued and
outstanding shares of CICI and the closing of the transactions contemplated by
the CICI Agreement shall occur simultaneously with the Closing.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 GENERAL SURVIVAL. The parties hereto agree that (a)
the representations, warranties, covenants and agreements of Purchaser and
Seller contained in the this Agreement shall survive the execution and delivery
hereof, regardless of any investigation made by the parties thereto, for a
period of one (1) year following the Closing Date.
SECTION 7.2 TERMINATION. This Agreement may be terminated and the
sale and purchase of Shares contemplated hereby may be abandoned (i) by mutual
written consent of Seller and Purchaser prior to the Closing Date or (ii) by
either Seller or Purchaser if the Merger Agreement is terminated. In the event
of termination and abandonment of this Agreement pursuant to this Section 7.2,
this Agreement, except for the provisions of this Section 7.2, shall forthwith
become void and have no effect, without liability on the part of any party or
its directors, officers or shareholders; provided, however, that nothing in this
Agreement shall relieve any party to this Agreement of liability for any willful
or intentional breach thereof.
SECTION 7.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(a) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise.
SECTION 7.4 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were
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not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereon in any Federal or state court
located in the State of New York (as to which the parties agree to submit to
jurisdiction for the purpose of such action), this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 7.5 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect. Each party agrees that, should any court of competent authority hold
any provision of this Agreement to be null, void or unenforceable, or order any
party to take any action inconsistent herewith or not to take any action
required herein, the other party shall not be entitled to specific performance
of such provision or to any other remedy, including, without limitation, money
damages, for breach hereof or of any other provision of this Agreement as a
result of such holding or order.
SECTION 7.6 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by cable, telegram, telecopier, telex
or overnight courier, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
if to Purchaser:
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida 33122
Attention: Norman R. Weldon Ph.D.
President and
Chief Executive Officer
with a copy to:
Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
9
<PAGE>
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10157
Attention: Dennis J. Block, Esq.
if to Seller:
Research Visions Canada, Inc.
33 Plainsman Road
Mississauga, Ontario L5N 1C4
CANADA
Attention: John Hanley
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). All such notices or communications shall be deemed to be
received (a) in the case of personal delivery, cable, telex or telecopy, on the
date of such delivery, (b) in the case of overnight courier, on the next
business day after the date when sent and (c) in the case of registered or
certified mailing, on the third business day following the date on which the
piece of mail containing such communication was posted.
SECTION 7.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
SECTION 7.8 DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 7.9 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
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SECTION 7.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 7.11 PUBLICITY. So long as this Agreement is in effect,
each of Purchaser and Seller promptly shall advise, consult and cooperate with
the other prior to issuing, or permitting any of its directors, officers,
employees or agents to issue, any press release or other statement to the press
or any third party with respect to this Agreement, or the transactions
contemplated hereby.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by an officer thereof thereunto duly authorized, as of
the day and year first above written.
CORVITA CORPORATION
By: /s/ Norman R. Weldon
-----------------------
Name: Norman R. Weldon
Title: President and
Chief Executive
Officer
RESEARCH VISIONS CANADA, INC.
By: /s/ John Hanley
-----------------------
Name: John Hanley
Title: President
<PAGE>
PFIZER, INC.
235 EAST 42ND STREET
NEW YORK, NEW YORK 10017
April 11, 1996
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida
Gentlemen:
We hereby agree to make advances to Corvita Corporation (the "Company"
or "you") from time to time until the earlier to occur of (x) the termination of
the Agreement and Plan of Merger, dated as of April 11, 1996, among Pfizer Inc.,
HPG Acquisition Corp. and the Company (the "Merger Agreement") and (y) August 9,
1996, in an amount not to exceed $2,000,000.
Subject to the terms set forth herein, funds shall be made available
to you on the business day subsequent to the business day on which we receive a
certificate, signed by the chief financial officer of the Company, requesting a
specified sum and certifying that (i) such amount will be used to pay (A)
obligations of the Company incurred in the ordinary course of business,
including payroll (but not bonuses), and other general and administrative
expenses (but not including fees payable to the Company's legal and financial
advisors), which obligations (including the name of each payee and the amounts
owed to each such payee) shall be set forth in a schedule attached to such
officer's certificate or (B) claims of the Company's creditors set forth on
Exhibit A hereto, and (ii) that the Company is in compliance with the covenant
contained in the Promissory Note referred to below. Funds shall be advanced in
amounts not to exceed $150,000 once every five business days; PROVIDED, HOWEVER,
that an initial funding in an amount not to exceed $550,000 shall be advanced to
the Company upon its compliance with the terms hereof.
Borrowings under this letter will be evidenced by your Promissory Note
to our order in the form attached hereto as Exhibit A. All outstanding amounts
evidenced by the Note will bear interest at a rate per annum equal to 8.25%.
Interest shall be paid monthly in arrears on the last day of each month.
<PAGE>
Please evidence your agreement by signing a counterpart of this
letter.
Very truly yours,
PFIZER INC.
By: /s/ Paul S. Miller
-----------------------------------------
Title: Senior Vice
President and
General Counsel
Accepted and Agreed:
CORVITA CORPORATION
By: /s/ Norman R. Weldon
-------------------------
Title: President and
Chief Executive
Officer
2
<PAGE>
THE PROMISSORY NOTE REPRESENTED HEREBY WAS ORIGINALLY ISSUED ON APRIL 11, 1996,
AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE THEREWITH OR
PURSUANT TO AN EXEMPTION THEREFROM.
PROMISSORY NOTE
$2,000,000 New York, New York
April 11, 1996
FOR VALUE RECEIVED, the undersigned Corvita Corporation, a Florida
corporation whose principal office is located at 8210 N.W. 27th Street, Miami,
Florida ("Payor"), does hereby promise to pay to Pfizer Inc., a Delaware
corporation whose principal office is located at 235 East 42nd Street, New York,
New York 10017 ("Payee"), in lawful money of the United States, in immediately
available funds, the principal amount of TWO MILLION DOLLARS ($2,000,000),
together with interest thereon at a rate per annum equal to 8.25%, calculated on
the basis of a 360-day year for actual days elapsed. Payment of the principal
amount of this Note shall be made upon demand of Payee at any time on or after
the earlier of (i) August 9, 1996, (ii) the termination of the Merger Agreement
(as hereinafter defined), or (iii) the consummation of the Merger contemplated
by and as defined in the Merger Agreement. Interest shall be payable monthly in
arrears on the last day of each month.
All loans made by the Payee to the Payor, and all payments made on
account of the principal thereof, shall be recorded by the Payee and, prior to
any transfer hereof, endorsed on this Note.
The Payor agrees that so long as any amounts remain outstanding under
this Note, it will continue to operate its business in the ordinary course
consistent with past practice, including continuing to conduct clinical studies
and to perform Food and Drug Administration regulatory activities.
Upon the occurrence of any of the following events:
(i) the failure by the Payor to comply with the covenant contained
in the preceding paragraph; or
(ii) the institution by or against the Payor of any proceeding
seeking to adjudicate the Payor a bankrupt or
<PAGE>
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for the Payor or for any substantial party of its property;
then this Note shall become immediately due and payable, without presentment,
notice, demand or protest, all of which are waived by the Payor.
This Note shall be binding upon and inure to the benefit of Payee and
Payor and their respective transferees, successors and assigns; PROVIDED,
HOWEVER, that Payor may not transfer or assign any of its rights or obligations
hereunder without the prior written consent of Payee.
This Note may not be changed orally, but only by an agreement in
writing and signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York.
IN WITNESS WHEREOF, the Payor has caused this Note to be executed and
delivered by its duly authorized officer on the date first written above.
CORVITA CORPORATION
By: /s/ Norman R. Weldon
-----------------------------------
Name: Norman R. Weldon
Title: President and
Chief Executive
Officer
2
<PAGE>
LICENSE AGREEMENT
This Agreement, dated April 11, 1996 (this "Agreement"), is entered
into by and between Corvita Corporation, a corporation organized under the laws
of Florida and having its principal place of business at 8210 N.W. 27th Street,
Miami, Florida 33122 (the "Licensor") and Pfizer Inc., a corporation organized
under the laws of Delaware and having its principal place of business at 235
East 42nd Street, New York, New York 10017-5755 ("the Licensee").
WHEREAS:
The Licensor is the owner of certain United States patents, and
foreign counterparts and applications for foreign counterparts of such patents,
covering a certain polycarbonate urethane material manufactured and sold by the
Licensor under the registered trademark "Corethane";
The Licensee manufactures and sells urethane materials and therefore
desires a license under the Licensed Patents, subject to the terms and
conditions set forth in this Agreement, to manufacture and sell the Licensor's
polycarbonate urethane material;
The Licensor, the Licensee and HPG Acquisition Corp., a corporation
organized under the laws of Florida and a direct wholly-owned subsidiary of the
Licensee, have entered into an Agreement and Plan of Merger dated April 11, 1996
(as such agreement may hereafter be amended from time to time, the "Merger
Agreement"; capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement), pursuant to which, among
other things, HPG will be merged with and into the Licensor;
Simultaneously herewith, the Licensor and the Licensee are entering
into a Loan Agreement (the "Loan Agreement") relating to the Licensee's
agreement, subject to certain conditions specified therein, to advance to the
Licensor not more than $2,000,000, and the Licensor has executed a Promissory
Note, of even date herewith (the "Promissory Note") in favor of the Licensee in
connection therewith;
NOW THEREFORE, in consideration of the mutual representation,
warranties, covenants and agreements, including, but not limited to, the Loan
Agreement, and upon the terms and subject to the conditions hereinafter set
forth, the parties hereto do hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 AFFILIATE. The term "Affiliate" shall mean, with respect to any
person or entity, any other person or entity that directly or indirectly
controls, is under common control with or is controlled by that person or
entity. For purposes of this definition, "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with"), as used
with respect to any person or entity, shall mean the possession, direct or
indirectly, of the power to direct or to cause the direction of the management
and policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.
1.2 CLAIM. The term "Claim" shall mean a patent claim which has not
expired and which has not been disclaimed, canceled or finally held invalid or
unenforceable by a court or administrative body of competent jurisdiction from
which no further appeal is possible or has been taken within the time period
provided under applicable law for such appeal.
1.3 EFFECTIVE DATE. The "Effective Date" of this Agreement shall be
the date hereof.
1.4 LICENSED DEVICE. The term "Licensed Device" shall mean a device
containing one or more parts composed of, in whole or in part, a Licensed
Material.
1.5 LICENSED KNOW-HOW. The term "Licensed Know-How" shall mean
manufacturing know-how related to the manufacture of any Licensed Material,
which manufacturing know-how is known to Licensor on or around the Effective
Date of this Agreement.
1.6 LICENSED MATERIAL. The term "Licensed Material" shall mean a
polycarbonate urethane material that is covered by, whose method of making or
use is covered by, or that is a component of an article of manufacture covered
by at least one claim of a Licensed Patent and that is manufactured, used or
sold for any end-use.
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<PAGE>
1.7 LICENSED PATENT. The term "Licensed Patent" shall mean and
include any of the patents and patent applications listed on Exhibit A attached
hereto, and any counterparts, foreign equivalents, divisions and continuations-
in-part relating thereto, as licensed hereunder for any end-use; PROVIDED,
HOWEVER, that the term shall not include any improvements to any Licensed Patent
or to any Licensed Material invented by the Licensor or by any of its Affiliates
after the Effective Date.
1.8 LICENSED USE. The term "Licensed Use" shall mean any use by a
User of a Licensed Material for the development, improvement, manufacture, sale,
or use of Licensed Devices.
1.9 TERRITORY. The term "Territory" shall mean a territory
consisting of all of the countries of the world.
1.10 USER. The term "User" shall mean any person or entity that uses
Licensed Material in the manufacture, sale and use of Licensed Devices.
ARTICLE II
GRANT
2.1 WORLDWIDE LICENSE.
(a) LICENSED MATERIAL. The Licensor hereby grants to the
Licensee the non-exclusive right and license under the Licensed Patents and the
Licensed Know-How to make, have made, use, sell and otherwise dispose of
Licensed Material during the term hereof throughout the Territory, subject to
all of the terms and conditions of this Agreement. The foregoing grant excludes
the right to sublicense, with the following exceptions:
(i) The Licensee shall have the right to sublicense any of
its rights under the foregoing grant to any one or more of its Affiliates, on
such terms and conditions as the Licensee in its sole discretion deems
appropriate, to the full extent, and subject to all of the limitations and
conditions of the grant to the Licensee hereunder.
(ii) In the event that the Licensor grants to any third
party, other than an Affiliate of the Licensor, a successor to any substantial
part of the business of the Licensor, or a successor to any substantial part of
the business of such an Affiliate, a license under the Licensed Patents and the
Licensed Know-How to make and sell (or to make, use, and sell) the Licensed
Material on terms and
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<PAGE>
conditions that include rights to sublicense that are greater, broader, or in
addition to the sublicense rights granted in paragraphs 2.1(a)(i) and 2.1(a)(ii)
hereof, the Licensor will grant to the Licensee sublicense rights that are at
least as extensive as those granted to such third party.
2.2 IMPROVEMENTS.
(a) LICENSOR'S IMPROVEMENTS. All right, title and interest in
and to any improvements of the Licensed Patents or of the Licensed Material
invented by the Licensor or by any of its Affiliates after the Effective Date
shall remain the exclusive property of the Licensor and the Licensee shall not
be entitled to receive any license or other interest in such improvements.
(b) LICENSEE'S IMPROVEMENTS. All right, title and interest in
and to any improvements of the Licensed Material invented by the Licensee or by
any of its Affiliates after the Effective Date shall remain the exclusive
property of the Licensee and the Licensor shall not be entitled to receive any
license or other interest in such improvements.
2.3 EFFORTS. The Licensee's only obligation under this Agreement
with respect to the promotion and marketing of Licensed Material is to use such
reasonable efforts as Licensee in the exercise of its sole discretion deems
appropriate.
2.4 BANKRUPTCY. The Licensor acknowledges that this Agreement
constitutes a license for "intellectual property" as that term is defined in
Section 365(n) of the U.S. Bankruptcy Code and all provisions of that Section
shall apply in the event of the Licensor's bankruptcy.
ARTICLE III
PAYMENT
3.1 INITIAL PAYMENT. No initial or other payment shall be payable by
the Licensee for the licenses granted hereunder, it being acknowledged that the
forgiveness of the principal and interest under the Promissory Note is full and
sufficient consideration for the licenses granted herein.
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3.2 ROYALTY. No royalty shall be payable by the Licensee with
respect to Licensed Material made, sold or otherwise disposed of after the
Effective Date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 LICENSOR'S REPRESENTATIONS. The Licensor represents and warrants
to the Licensee as of the Effective Date that (a) the Licensor is the sole owner
of the Licensed Patents, (b) the Licensor has the right to grant to the Licensee
the rights and licenses granted hereunder, (c) no approvals or consents of any
governmental entity are necessary with respect to the execution and performance
by the Licensor of this Agreement and, (d) the Licensed Patents and the Licensed
Know-How are valid, sustaining, enforceable and do not infringe the rights of
any third party, and (e) to the best of the Licensor's knowledge, the
manufacture, use and sale of the Licensed Material as practiced commercially by
the Licensor on or around the Effective Date of this Agreement and its use in
the manufacture of Licensed Devices will not infringe the patents or other
intellectual property rights of third parties and no claim of any such
infringement or misappropriation has been made by any third party.
4.2 MUTUAL REPRESENTATIONS. The Licensor and the Licensee each
represent and warrant to the other as of the Effective Date that it has the full
power and authority to enter into this Agreement and carry out the transactions
and activities contemplated hereby.
4.3 LICENSEE'S REPRESENTATIONS. The Licensee represents and warrants
that (a) the Licensee has full power and authority to enter into and perform its
obligations under this Agreement, and (b) no approvals or consents of any
person, firm or governmental entity are necessary with respect to the execution
and performance by the Licensee of this Agreement.
ARTICLE V
CONFIDENTIAL INFORMATION
5.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Neither the Licensor
nor the Licensee shall disclose to any third party or use except in furtherance
of this Agreement any confidential information disclosed by the other
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party or its Affiliates in connection with the Agreement, except that either
party may disclose such confidential information to the extent necessary to
comply with an order of a court or a government agency PROVIDED THAT the
disclosing party shall use its reasonable best efforts to notify the other party
of the disclosing party's intention to make the disclosure, and shall provide
the other party with a copy of the court or government agency's order, identify
precisely the confidential information the disclosing party intends to disclose,
and cooperate with the other party in devising reasonable measures to protect
the confidentiality of such information including, but not limited to, obtaining
a protective order from the court or government agency that issued the order to
disclose. For purposes of this Agreement, confidential information shall
include at least any customer list, and any non-patented technology, data, know-
how or technical information provided to the Licensee by the Licensor in
connection with this Agreement and performance of the transactions and
activities contemplated hereby.
5.2 RETURN OF CONFIDENTIAL INFORMATION. Upon the termination of this
Agreement for any reason prior to the expiration of its term, the Licensee shall
return to the Licensor all confidential information including, without
limitation, any customer list, and any non-patented technology, data, know-how
or technical information provided to the Licensee by the Licensor.
5.3 NON-CONFIDENTIAL INFORMATION. Neither any party nor the
inspector shall be under any obligation with respect to information of the other
party or, in the case of the inspector, information of the Licensee, which the
party receiving the information or the inspector can demonstrate, preferably by
reference to documents:
(a) through no act or failure on the part of the party receiving
the information or the inspector, becomes known or available to the public;
(b) is known by the party receiving the information or by the
inspector prior to its receiving such information from the other party; or
(c) is furnished to the party receiving the information or to
the inspector by any person not legally precluded from making disclosure of the
information without restriction.
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ARTICLE VI
COVENANTS
6.1 NO SUBLICENSES. Except as set forth in paragraphs 2.1(a)(i) and
(ii) of this Agreement, or as permitted pursuant to the provisions of paragraph
2.1(a)(iii), the Licensee will not sublicense any of its rights hereunder to any
person or entity.
6.2 REGULATORY SUBMISSIONS.
(a) LICENSOR DATA. The Licensor's Device Master File shall
remain the property of the Licensor and shall remain confidential, proprietary
information of the Licensor. The Licensee shall be allowed access to data
contained or referenced in the Licensor's Device Master File as of the Effective
Date for the purpose of establishing the Licensee's FDA Master File.
(b) LICENSEE DATA. The Licensee's FDA Master File shall remain
the property of the Licensee and shall remain confidential, proprietary
information of the Licensee. However, upon the request of any User or of the
Licensor, the Licensee will permit User or the Licensor to reference all data
that may be generated by or for the Licensee and contained in the Licensee's FDA
Master File demonstrating the safety of the Licensed Material.
(c) INVESTIGATIONAL DEVICE EXEMPTION. The Licensor hereby
grants to the Licensee a right of reference to Investigational Device Exemption
#G950009 ("IDE"), and to all information contained in any application for such
IDE, and to any application or file to which such IDE refers. The Licensor
hereby represents and warrants that it has full and complete authority to grant
this right of reference. The Licensor further agrees to cooperate with the
Licensee in effectuating the provisions of this paragraph, including but not
limited to providing written documentation to be submitted to FDA confirming
this right of reference.
ARTICLE VII
PATENT INFRINGEMENT
7.1 PATENT ENFORCEMENT. The Licensor shall have the first right to
institute patent infringement actions against third parties manufacturing or
marketing products, devices or instruments competitive with the Licensed Devices
based on any
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patents covering the Licensed Materials. If the Licensor does not institute an
infringement proceeding against an offending third party within 30 days, the
Licensee shall have the right, but not the obligation, to institute such an
action. Any award paid by third parties as a result of such an infringement
action (whether by way of settlement or otherwise), shall be paid to the party
who instituted and maintained such action.
7.2 INDEMNITY FOR CLAIMS OF INFRINGEMENT. The Licensor shall
indemnify, defend and hold harmless the Licensee, its Affiliates, its successors
and assigns, and their directors, officers, employees, agents and
representatives from and against any loss, damage, cost or expense of any kind
or nature (including reasonable attorneys' and other professionals' fees and
expenses) incurred as a result of or in responding to any demand, claim, action,
proceeding or suit that is brought or threatened to be brought against any of
them by any third party and that asserts a claim of patent infringement arising
from such third party's assertion of the ownership or co-ownership of rights in
or to or related to the Licensed Material; PROVIDED, HOWEVER, that the Licensor
shall have no obligation to indemnify any person or entity with respect to any
demand, claim, action, proceeding or suit that is brought or threatened to be
brought by any third party and that asserts a claim of patent infringement to
the extent the claim results from any modification of the Licensed Material from
the commercial practice of the Licensor on or around the Effective Date of this
Agreement.
ARTICLE VIII
ASSIGNMENTS AND TRANSFERS
8.1 TRANSFERS GENERALLY. The Licensee shall not be permitted to
assign or transfer any of its rights, obligations or duties under this Agreement
without the express written consent of the Licensor. The Licensor shall not be
permitted to assign or transfer any or all of its rights, obligations or duties
under this Agreement without the express written consent of the Licensee.
ARTICLE IX
TERM AND TERMINATION
9.1 TERM. The term of this Agreement shall commence on the
Effective Date, and unless sooner terminated as herein provided, shall end on
the date
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on which the last to expire of the Licensed Patents covering the Licensed
Material expires.
9.2 TERMINATION. This Agreement may be terminated prior to the
expiration of its term (a) if mutually agreed by the parties in writing, (b) in
the event of the breach of this Agreement by either party, at the option of the
non-breaching party; PROVIDED that the non-breaching party has provided written
notice to the breaching party of the breach and the non-breaching party's
intention to terminate the Agreement, and the breaching party has failed to cure
its breach within ninety days following the date such notice was sent to the
breaching party, or (c) by the Licensor upon payment in full of the principal
amount outstanding under the Loan Agreement together with all interest thereon;
PROVIDED, HOWEVER, with respect to clause (c), that the Licensor makes such
payment to the Licensee in immediately available funds on or prior to the
earlier of (i) August 9, 1996 and (ii) forty-five calendar days after the Merger
Agreement is terminated in accordance with Section 9.1(a), 9.1(b), 9.1(c),
9.1(d), 9.1(g) or 9.1(h) thereof. Notwithstanding anything to the contrary
contained in section 9.2(c) hereof, the Licensor shall not be entitled to
terminate this Agreement (x) if the Merger Agreement is terminated in accordance
with Section 9.1(e) or 9.1(f) thereof, or (y) upon the institution by or against
the Licensee of any proceeding seeking to adjudicate the Licensor a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for the Licensor or for any substantial part of its property.
9.3 DISPOSITION OF LICENSED PATENTS. In the event that this
Agreement is terminated prior to the expiration of its term pursuant to the
provisions of Section 9.2, all rights in and to the license granted hereunder
shall immediately revert to and become the property of the Licensor in
accordance with Section 9.2 hereofX, and the Licensee shall be obligated to
return all confidential information of the Licensor as provided in Section 5.2
hereof.
9.4 SURVIVAL. Any provision of this Agreement with respect to the
subject matter described in this Article IX shall continue in effect after the
expiration of the term of, or termination of, this Agreement to the extent
necessary to permit the complete fulfillment or discharge of any obligation that
so continues:
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(a) Any agreement, including the provisions of Article V of this
Agreement, in effect at the time of such expiration or termination with respect
to confidential information of any party to this Agreement; and
(b) The indemnity for claims of infringement contained in
Article VII of this Agreement.
9.5 SALES AFTER TERMINATION. Upon termination or expiration of this
Agreement for any reason, the Licensee shall have the right to sell or otherwise
dispose of any stock of Licensed Material which it or any of its Affiliates has
in its possession or for which it has acquired constituent materials.
ARTICLE X
MISCELLANEOUS
10.1 NOTICE. Any notice given pursuant to this Agreement shall be
in writing and, except as otherwise expressly provided herein, shall be deemed
to have been duly delivered when it actually is delivered in person or by
facsimile transmission; seven days after it is mailed by certified or registered
mail, postage and mailing expense prepaid; and one day after it is sent by
overnight express mail or by overnight courier service (such as FedEx or DHL),
postage or shipping expense prepaid and designated for next-day delivery; and,
if given or rendered to
the Licensee, addressed to:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attention: Paul S. Miller, Esq.
Senior Vice President
and General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
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or if given or rendered to the Licensor, addressed to:
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida
Attention: Norman R. Weldon, Ph.D.
President and
Chief Executive Officer
with a copy to:
Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
Either party may specify a different address by notice in writing in accordance
with this Section 10.1.
10.2 ENTIRE AGREEMENT; AMENDMENT. This agreement sets forth the
entire agreement and understanding between the parties as to the subject matter
hereof and has priority over any and all agreements, documents, verbal consents
or understandings previously made between the parties with respect to the
subject matter hereof. None of the terms of this Agreement shall be amended or
modified except as set forth in a writing signed by both the Licensor and the
Licensee.
10.3 WAIVER. A waiver by any party of any term or condition of this
Agreement in any one instance shall not be deemed or construed to be a waiver of
such term or condition for any similar instance in the future or of any
subsequent breach thereof. No failure by a party to take action against default
or breach of this Agreement shall constitute a waiver of such party's right to
enforce any provision of this Agreement or to take action against such default
or breach or against any subsequent default or breach. All rights, remedies,
undertaking, obligations, and agreements contained in this Agreement shall be
cumulative and none of them shall be a limitation of any other remedy, right,
undertaking, obligation or agreement of any party.
10.4 SEVERABILITY. If, and solely to the extent that, any provision
of this Agreement shall be invalid or unenforceable, or shall render this entire
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Agreement invalid or unenforceable, such offending provision shall be of no
effect and shall not affect the validity of the remainder of this Agreement or
of any of its other provisions.
10.5 NO AGENCY. Nothing in this Agreement shall be deemed to
appoint or authorize the Licensee to act as an agent of the Licensor or to
assume or incur any liability or obligation in the name of or on behalf of the
Licensor.
10.6 DISCLAIMER. LICENSOR HEREBY DISCLAIMS ALL WARRANTIES, WHETHER
EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE LICENSED MATERIAL,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
INCLUDING, BUT NOT LIMITED TO, THE USE OF THE LICENSED MATERIAL IN IMPLANTABLE
DEVICES OR IN ANY OTHER MEDICAL APPLICATIONS. IN NO EVENT SHALL LICENSOR BE
LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES,
INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS.
10.7 HEADINGS. Headings in this Agreement are included for ease of
reference only and shall have no effect on the meaning or interpretation of this
Agreement.
10.8 SINGULAR/PLURAL. Whenever in the context it appears
appropriate, each term stated either in the singular or the plural shall include
both the singular and the plural.
10.9 APPLICABLE LAW/JURISDICTION. All disputes arising out of the
validity, interpretation or application of this Agreement shall be submitted to
the courts of competent jurisdiction sitting in the County and State of New
York. This Agreement shall be interpreted and construed in accordance with the
law of New York, without reference to its conflicts of laws provisions.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.11 NO THIRD-PARTY BENEFICIARIES. The provisions of this
Agreement are for the exclusive benefit of the parties hereto, and no other
person,
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firm, institution or other entity shall have any right or claim against any
party to this Agreement by reason of such provisions or shall be entitled to
enforce any such provision against any party.
13
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LICENSOR
Corvita Corporation
By: /S/ NORMAN R. WELDON
-------------------------------
Title: President and
Chief Executive Officer
LICENSEE
Pfizer Inc.
By: /S/ PAUL S. MILLER
-------------------------------
Title: Senior Vice President
and General Counsel
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EXHIBIT A
LICENSED PATENTS
U.S. Patent No. 5,133,742, L. Pinchuk, "Crack-Resistant Polycarbonate Urethane
Polymer Prostheses and the Like," July 28, 1992
U.S. Patent No. 5,229,431, L. Pinchuk, "Crack-Resistant Polycarbonate Urethane
Polymer Prostheses and the Like," July 28, 1993
U.S. Patent No. 4,810,749, L. Pinchuk, "Polyurethanes," March 7, 1989
All pending and issued reissues, re-examinations, divisions, continuations,
continuations-in-part, renewals, extensions and additions thereto, and all
foreign counterparts and applications for foreign counterparts of the foregoing.
15
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[CORVITA LETTERHEAD]
April 17, 1996
Dear Shareholders:
On behalf of the Board of Directors of Corvita Corporation (the "Company"),
I am pleased to inform you that on April 11, 1996, the Company entered into a
definitive Agreement and Plan of Merger (the "Merger Agreement") with Pfizer
Inc. ("Pfizer"), and a wholly-owned subsidiary of Pfizer ("HPG"), pursuant to
which Pfizer has agreed to acquire the Company in a two-step transaction.
On April 17, 1996, pursuant to the Merger Agreement, HPG commenced a cash
tender offer for any and all outstanding shares of the Company's common stock at
a price of $10.25 per share net to the seller in cash (the "Offer"). Following
successful completion of the Offer, it is expected that HPG will be merged with
and into the Company, with the Company surviving the merger (the "Merger"). At
the effective time of the Merger, each share of common stock issued and
outstanding (other than shares of common stock held by Pfizer, HPG or the
Company, or by a subsidiary of Pfizer or the Company) will be converted into the
right to receive $10.25 per share in cash or any greater amount paid pursuant to
the Offer, without interest.
YOUR BOARD OF DIRECTORS, BY THE UNANIMOUS VOTE OF ALL OF THE DIRECTORS OF
THE COMPANY, APPROVED THE OFFER AND THE MERGER IN ALL RESPECTS 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 RECOMMENDS THAT SHAREHOLDERS
OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
In reaching its conclusions, the Board of Directors gave careful
consideration to a number of factors, which are described in the Schedule 14D-9
filed by the Company with the Securities and Exchange Commission and enclosed
with this letter. The Board also engaged Dillon, Read & Co. Inc. as its
financial advisor to evaluate the Offer and the Merger, and Dillon, Read & Co.,
Inc. has rendered to the Board its opinion, which is included as an exhibit to
the Schedule 14D-9, that the cash consideration to be received by the Company's
shareholders is fair from a financial point of view to such shareholders as of
the date of delivery of such opinion.
The enclosed Offer to Purchase and related Letter of Transmittal set forth,
in detail, the terms and conditions of the Offer and provide instructions on how
to tender your shares. I urge you to read the enclosed materials carefully.
Sincerely,
/s/ Norman R. Weldon, Ph.D.
-------------------------------------
Norman R. Weldon, Ph.D.
President and Chief Executive Officer
<PAGE>
Pfizer Inc
235 East 42nd Street
New York, NY 10017
----------------------------------------
[Logo] NEWS
For immediate release Contact:
April 11, 1996 Bob Fauteux (Pfizer, New York) 212-573-3079
Andrew Heath (Pfizer, Brussels) 32-2-722-0853
Karen Vinjamuri (Corvita, Miami) 305-599-3100
PFIZER AGREES TO ACQUIRE CORVITA CORPORATION,
INNOVATOR IN TECHNOLOGIES FOR VASCULAR DISEASE
New York, April 11 -- Pfizer Inc (NYSE: PFE) and Corvita Corporation (Nasdaq:
CVTA) jointly announced today that they have signed a definitive merger
agreement pursuant to which Pfizer will acquire all of the outstanding stock of
Corvita at $10.25 per share, or approximately $85 million. To implement this
agreement Pfizer will commence a cash tender offer within five business days.
The completion of the tender offer is subject to a number of customary
conditions.
Based in Miami, Florida, Corvita develops, manufactures and markets synthetic
vascular grafts. These grafts are used in the treatment of severely diseased
arteries and are produced at Corvita's facilities in Miami and Brussels,
Belgium. Corvita is also developing combination stent/graft devices, which are
in clinical trails both in the U.S. and Europe.
Consummation of the merger is conditioned on, among other things, the tender of
at least a majority of the outstanding shares of Corvita, on a fully diluted
basis, in the tender offer. Shareholders owning approximately 20% of the
outstanding shares of Corvita have entered into binding agreements to tender
their shares.
Corvita will operate as a business of the Pfizer Hospital Products Group (HPG).
(more)
<PAGE>
-2-
"The acquisition of Corvita brings new products and biomaterials technologies
highly complementary to one of HPG's strategic emphases, interventional
cardiology and radiology," said P. Nigel Gray, vice president of Pfizer Inc and
president of the Pfizer Hospital Products Group. "In these rapidly growing
clinical specialties, Corvita's expertise in developing advanced stent/graft
devices adds significantly to the existing global strengths of our Schneider and
NAMIC businesses."
Corvita stent/graft devices may be implanted in diseased or damaged arteries,
for example, using minimally invasive techniques. Once in place, these devices
allow the unimpeded flow of blood.
"Corvita's technologies focus on the critical medical needs of thousands of
patients suffering from life-threatening vascular disease, including abdominal
aortic aneurysms, and trauma," said Robert Neimeth, executive vice president of
Pfizer Inc responsible for the Hospital Products and Animal Health Groups, and
president of the Pfizer International Pharmaceuticals Group. In the United
States each year, abdominal aortic aneurysm -- a weakening of the walls of one
of the body's main arteries, sometimes to the point of rupture -- afflicts an
estimated 190,000 people, often resulting in death.
Pfizer Inc is a research-based, diversified health-care company with global
operations. In 1995, the Company reported sales of over $10 billion and invested
more than $1.4 billion in research and development.
# # # # #
<PAGE>
[Letterhead - Dillon, Read & Co., Inc.]
April 11, 1996
The Board of Directors
Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
To the Board of Directors:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock, $0.001 par value ("Company Common Stock"),
of Corvita Corporation ("Corvita" or the "Company") of the cash consideration to
be paid to such holders pursuant to an Agreement and Plan of Merger, dated as of
April 11, 1996 (the "Agreement"), among Corvita, Pfizer Inc. ("Pfizer") and HPG
Acquisition Corp. ("Merger Sub"). The Agreement provides for, among other
things, a two-step transaction, comprised of (i) a tender offer for any and all
shares of Company Common Stock at a price of $10.25 net per share in cash for
each share of Company Common Stock and (ii) the merger of Merger Sub with and
into Corvita, with Corvita as the surviving corporation, whereupon each
outstanding share of Company Common Stock (excluding shares owned by Corvita,
Pfizer or Merger Sub) will be converted into the right to receive $10.25 per
share in cash.
In arriving at our opinion we have examined the Agreement, certain publicly
available information relating to the business, financial condition and
operations of Corvita as well as certain financial and other information
furnished to us by Corvita that is not publicly available. We have met with
certain senior officers of Corvita to discuss the operations, financial
condition, history and prospects of Corvita. We have reviewed historical common
stock price and trading volume data relating to Corvita and analyzed the
consideration to be received by the holders of Company Common Stock in
relation to, among other measures, market price, historical earnings, future
earnings potential, sales and cash flow of Corvita's business. We have
considered the financial terms of certain other recent merger and acquisition
transactions involving similar companies which we believe to be generally
comparable to Corvita and have analyzed certain
<PAGE>
publicly available information, including financial information relating to
public companies whose operations we deemed comparable to those of Corvita.
Finally, we have conducted such other analyses and examinations and considered
such other financial, economic and market criteria as we have deemed necessary
in arriving at our opinion.
In the course of our analysis, we have relied upon the accuracy and completeness
of the publicly available financial information and non-public financial and
other information provided to us, which we have not independently verified.
With respect to the non-public financial information, we assumed that it has
been reasonably prepared in good faith on bases reflecting the best currently
available estimates and judgments of the management of Corvita as to the future
financial performance of Corvita and other relevant considerations. With your
consent, we have not made, requested or received any independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of Corvita.
Our opinion is based on information available to us, and economic, monetary and
market conditions existing and disclosed to us, as of the date hereof, and we
disclaim any undertaking to advise you of, or to revise this opinion in any way
to reflect, any changes which may arise hereafter.
We are acting as financial advisor to Corvita in connection with the Agreement
and, in such capacity, will receive a fee upon consummation of the merger based
on the aggregate consideration paid in connection therewith.
Our opinion may not be published or otherwise referred to, nor shall any public
reference to Dillon, Read & Co. Inc. be made, without our prior written consent.
This opinion is being rendered solely to the Board of Directors of Corvita for
its use in evaluating the transaction contemplated by the Agreement and is
neither for the benefit of nor being rendered to the holders of Company Common
Stock or any other person.
Subject to the foregoing, and based on our experience as investment bankers, our
work described above and other factors we have deemed relevant, we are of the
opinion that, as of the date hereof, the cash consideration to be received by
the holders of Company Common Stock pursuant to the Agreement is fair to such
holders from a financial point of view.
Very truly yours,
/s/ DILLON, READ & CO. INC.
DILLON, READ & CO. INC.
<PAGE>
DILLON, READ & CO. INC.
535 MADISON AVENUE
NEW YORK, NEW YORK 10022
212-906-7000
April 16, 1996
Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
Ladies and Gentlemen:
We hereby consent to the filing of our opinion letter dated April 11,
1996 to the Board of Directors of Corvita Corporation (the "Company") as an
exhibit to the Schedule 14d-9 of the Company relating to the tender offer to
be made pursuant to the Agreement and Plan of Merger, dated April 11, 1996,
among Pfizer Inc., HPG Acquisition Corp. and the Company.
Very truly yours,
/s/ Dillon, Read & Co. Inc.
DILLON, READ & CO. INC.
