EXHIBIT (9)
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
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dated as of July 23, 1997, among Nellcor Puritan ▇▇▇▇▇▇▇ Incorporated, a
Delaware corporation (the "Company"), Mallinckrodt Inc., a New York corporation
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("Purchaser"), and NPB Acquisition Corp., a Delaware corporation and a wholly-
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owned subsidiary of Purchaser ("Merger Sub"), the Company and Merger Sub
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sometimes being hereinafter collectively referred to as the "Constituent
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Corporations."
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RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each
have determined that it is in the best interests of their respective
shareholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, the Company, Purchaser and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representa tion, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER
1.1. Tender Offer. (a) Provided that this Agreement shall not have
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been terminated in accordance with Article IX hereof and none of the events set
forth in Annex A hereto shall have occurred or be existing, within five business
days of the date hereof Purchaser shall cause Merger Sub to commence a tender
offer (the "Offer") for all of the outstanding shares of Common Stock, par value
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$.001 per share, of the Company, including the associated Rights (as defined in
Section 6.1(b)) (together, the "Shares") at a price of $28.50 per Share in cash,
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net to the seller, subject to the terms and conditions set forth in Annex A
hereto (the "Offer Conditions"). The initial expiration date (the "Initial
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Expiration Date") shall be the date twenty business days from the date (the
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"Commencement Date") the Offer Documents (as hereinafter defined) are first
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filed with the Securities and Exchange Commission (the "SEC"), including the
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Commencement Date as the first business day of such period. Purchaser and
Merger Sub expressly reserve the right, in their sole discretion, to waive any
condition (other than the Minimum Condition, as defined in the Offer Conditions)
and to set forth or change any other terms and conditions of the Offer, provided
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that, unless
previously approved by the Company in writing, no provision may be set forth or
changed which decreases the price per Share payable in the Offer, changes the
form of consideration payable in the Offer (other than by adding consideration),
reduces the maximum number of Shares to be purchased in the Offer, or imposes
conditions to the Offer in addition to those set forth herein that are
materially adverse to holders of the Shares. Merger Sub covenants and agrees
that, subject to the terms and conditions of the Offer, including but not
limited to the Offer Conditions, it will accept for payment and pay for Shares
as soon as it is permitted to do so under applicable law, provided that Merger
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Sub shall have the right, in its sole discretion, to extend the Offer from time
to time notwithstanding the prior satisfaction of the Offer Conditions to a date
not beyond the fifth business day following the satisfaction of all of the Offer
Conditions if more than 90% of the outstanding Shares (on a fully diluted basis)
have not been duly tendered (exclusive of Shares tendered by guaranteed
delivery) and not withdrawn. Purchaser agrees that, unless it is permitted to
terminate this Agreement pursuant to Article IX, it can terminate the Offer only
on a scheduled expiration date. Purchaser further agrees that: (A) in the
event that it would otherwise be entitled to terminate the Offer at any
scheduled expiration thereof due to the failure of one or more of the conditions
set forth in paragraphs (a), (c), (d) or (f) of the Offer Conditions to be
satisfied or waived, it shall give the Company notice thereof and, at the
request of the Company, extend the Offer until the earlier of (1) such time as
such condition is or conditions are satisfied or waived and (2) the date chosen
by the Company which shall not be later than (x) September 15, 1997 or (y) the
earliest date on which the Company reasonably believes such condition or
conditions will be satisfied; provided that, if such condition is not or
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conditions are not satisfied by any date chosen by the Company pursuant to this
clause (y), the Company may request further extensions of the Offer not beyond
September 15, 1997; and (B) it shall, at the request of the Company made in
writing at least one business day prior to the Initial Expiration Date (which
request may be made by the Company only on one occasion), extend the Offer for
up to five business days from such Initial Expiration Date. It is agreed that
the terms and conditions set forth in the Offer, including but not limited to
the Offer Conditions, are for the benefit of Purchaser and Merger Sub and may be
asserted by Purchaser and Merger Sub regardless of the circumstances giving rise
to any such condition.
(b) The Company hereby approves of and consents to the Offer and
represents and warrants that: (i) its Board of Directors, at a meeting duly
called and held on July 23, 1997, has unanimously (A) determined that this
Agreement and the transactions contemplated hereby, including each of the Offer
and the Merger (as defined in Section 2.1), are fair to and in the best
interests of the holders of Shares, (B) approved this Agreement and the
transactions contemplated hereby, including each of the Offer and the Merger,
and (C) resolved to recommend that the stockholders of the Company accept the
Offer, tender their Shares to Merger Sub thereunder and approve this Agreement
and the transactions contemplated hereby; and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated (the "Financial Advisor") has delivered to the Board of Directors
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of the Company its written opinion that the consideration to be received by
holders of Shares, other than Purchaser and Merger Sub,
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pursuant to each of the Offer and the Merger is fair to such holders from a
financial point of view.
(c) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer with the SEC. The Schedule 14D-1
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shall contain an Offer to Purchase and forms of the related letter of
transmittal (which Schedule 14D-1, Offer to Purchase and other related
documents, together with any supplements or amendments thereto, are referred to
herein collectively as the "Offer Documents"). Not later than the fifth
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business day after the date hereof, the Company will file a Solicitation
Statement on Schedule 14D-9 (the "Schedule 14D-9") with the SEC. Purchaser
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agrees, as to the Offer Documents, and the Company agrees, as to the Schedule
14D-9, that such documents shall, in all material respects, comply with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the "Exchange Act") and other applicable laws. The
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Company and its counsel, as to the Offer Documents, and Purchaser and its
counsel, as to the Schedule 14D-9, shall be given an opportunity to review such
documents prior to their being filed with the SEC. Purchaser, Merger Sub and
the Company each agrees promptly to correct any information provided by it for
use in the Offer Documents or the Schedule 14D-9 that shall have become false or
misleading in any material respect, and Purchaser and Merger Sub, on the one
hand, and the Company, on the other hand, further agree to take all steps
necessary to cause the Offer Documents and the Schedule 14D-9, as the case may
be, as so corrected to be filed with the SEC and disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
(d) In connection with the Offer, the Company will cause its transfer
agent to furnish promptly to Merger Sub a list, as of a recent date, of the
record holders of Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares and lists of
security positions of Shares held in stock depositories. The Company will
furnish Merger Sub with such additional information (including, but not limited
to, updated lists of holders of Shares and their addresses, mailing labels and
lists of security positions) and such other assistance as Purchaser or Merger
Sub or their agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the requirements of law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer and the Merger, Purchaser
and each of its affiliates and associates shall hold in confidence the
information contained in any of such lists, labels or additional information
and, if this Agreement is terminated, shall promptly deliver to the Company all
copies of such information then in their possession.
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ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger. Subject to the terms and conditions of this
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Agreement, at the Effective Time (as defined in Section 2.3) Merger Sub shall be
merged with and into the Company and the separate corporate existence of Merger
Sub shall thereupon cease (the "Merger"). The Company shall be the surviving
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corporation in the Merger (sometimes hereinafter referred to as the "Surviving
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Corporation") and shall continue to be governed by the laws of the State of
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Delaware, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Section 3.1. The Merger shall have the
effects specified in the Delaware General Corporation Law (the "DGCL").
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2.2. Closing. The closing of the Merger (the "Closing") shall take
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place (i) at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ at 9:00 a.m. on the first business day on which the last to be fulfilled or
waived of the conditions set forth in Article VIII hereof shall be fulfilled or
waived in accordance with this Agreement, or (ii) at such other place and time
and/or on such other date as the Company and Purchaser may agree.
2.3. Effective Time. As soon as practicable following the Closing,
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and provided that this Agreement has not been terminated or abandoned pursuant
to Article IX hereof, the Company and Purchaser will cause a Certificate of
Merger (the "Delaware Certificate of Merger") to be executed and filed with the
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Secretary of State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective on the date on which the Delaware Certificate of
Merger has been duly filed with the Secretary of State of Delaware, and such
time is hereinafter referred to as the "Effective Time."
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ARTICLE III
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1. The Certificate of Incorporation. The Restated Certificate of
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Incorporation of the Company (the "Certificate") in effect at the Effective Time
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shall be the Certificate of Incorporation of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the DGCL, except that
Article Fourth of the Certificate shall be amended to read in its entirety as
follows:
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"The aggregate number of shares which the Corporation shall have the
authority to issue is 1,000 shares of Common Stock, par value $.001
per share."
3.2. The Bylaws. The Bylaws of the Company in effect at the
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Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the DGCL.
ARTICLE IV
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
4.1. Officers and Directors. The directors of Merger Sub and the
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officers of the Company at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
4.2. Boards of Directors; Committees. If requested by Purchaser, the
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Company will, subject to compliance with applicable law and promptly following
the purchase by Merger Sub of such number of Shares pursuant to the Offer as
satisfies the Minimum Condition, take all actions necessary to cause persons
designated by Purchaser to become directors of the Company so that the total
number of such persons equals not less than the product of the total number of
directors on the Board (giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Merger Sub or any affiliate of Merger Sub bears to the
total number of Shares then outstanding. In furtherance thereof, the Company
will increase the size of the Board, or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit Purchaser's
designees to be elected to the Company's Board of Directors; provided that at
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all times prior to the Effective Time, the Company's Board of Directors shall
consist of at least two members who are neither officers, stockholders,
designees nor affiliates of Purchaser ("Purchaser Representatives"). At such
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time, the Company, if so requested, will use its reasonable efforts to cause
persons designated by Purchaser to constitute the same percentage of each
committee of such board, each board of directors of each subsidiary of the
Company and each committee of each such board (in each case to the extent of the
Company's ability to elect such persons). The Company's obligations to appoint
designees to the Board of Directors shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to such Section and Rule in order to fulfill
its obligations under this Section 4.2 and shall include in the Schedule 14D-9,
or in a separate Rule 14f-1 information statement provided
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to stockholders, such information with respect to the Company and its officers
and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 4.2. Purchaser and Merger Sub will supply to the
Company and will be solely responsible for any information with respect to
either of them and their nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
4.3 Actions by Directors. For purposes of Article IX and Sections
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10.3 and 10.4, and with respect to any amendment of the Certificate or the
Bylaws of the Company, no action taken by the Board of Directors of the Company
prior to the Merger shall be effective unless such action is approved by the
affirmative vote of at least a majority of the directors of the Company which
are not Purchaser Representatives.
ARTICLE V
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
5.1. Conversion or Cancellation of Shares. The manner of converting
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or canceling shares of the Company and Merger Sub in the Merger shall be as
follows:
(a) At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Purchaser,
Merger Sub or any other subsidiary of Purchaser (collectively, the "Purchaser
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Companies") or Shares that are held by stockholders ("Dissenting Stockholders")
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exercising appraisal rights pursuant to Section 262 of the DGCL) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive, without interest, an amount in cash (the
"Merger Consideration") equal to $28.50 or such greater amount which may be paid
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pursuant to the Offer. All such Shares, by virtue of the Merger and without any
action on the part of the holders thereof, shall no longer be outstanding and
shall be canceled and retired and shall 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 the Merger
Consideration for such Shares upon the surrender of such certificate in
accordance with Section 5.2 or the right, if any, to receive payment from the
Surviving Corporation of the "fair value" of such Shares as determined in
accordance with Section 262 of the DGCL.
(b) At the Effective Time, each Share issued and outstanding at the
Effective Time and owned by any of the Purchaser Companies, and each Share
issued and held in the Company's treasury at the Effective Time, shall, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
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(c) At the Effective Time, each share of Common Stock, par value
$0.001 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Merger Sub or the holders of such shares, be converted into one Share.
5.2. Payment for Shares. Purchaser shall make available or cause to
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be made available to the paying agent appointed by Purchaser with the Company's
prior approval (the "Paying Agent") amounts sufficient in the aggregate to
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provide all funds necessary for the Paying Agent to make payments pursuant to
Section 5.1(a) hereof to holders of Shares issued and outstanding immediately
prior to the Effective Time. Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each person who was, at the Effective
Time, a holder of record (other than any of the Purchaser Companies) of Shares a
form (mutually agreed to by Purchaser and the Company) of letter of transmittal
and instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any of such Shares in
exchange for payment therefor. Upon surrender to the Paying Agent of such
certificates, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the Surviving Corporation
shall promptly cause to be paid to the persons entitled thereto a check in the
amount to which such persons are entitled, after giving effect to any required
tax withholdings. No interest will be paid or will accrue on the amount payable
upon the surrender of any such certificate. If payment is to be made to a
person other than the registered holder of the certificate surrendered, it shall
be a condition of such payment that the certificate so surrendered shall be
properly 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 certificate
surrendered or establish to the satisfaction of the Surviving Corporation or the
Paying Agent that such tax has been paid or is not applicable. One hundred and
eighty days following the Effective Time, the Surviving Corporation shall be
entitled to cause the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) made available to the Paying Agent which
have not been disbursed to holders of certificates formerly representing Shares
outstanding on the Effective Time, and thereafter such holders shall be entitled
to look to the Surviving Corporation only as general creditors thereof with
respect to the cash payable upon due surrender of their certificates.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to any holder of certificates formerly representing Shares for
any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar law. The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of cash for Shares and Purchaser shall reimburse the Surviving
Corporation for such charges and expenses.
5.3. Dissenters' Rights. If any Dissenting Stockholder shall be
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entitled to be paid the "fair value" of his or her Shares, as provided in
Section 262 of the DGCL, the Company shall give Purchaser notice thereof and
Purchaser shall have the right to participate
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in all negotiations and proceedings with respect to any such demands. Neither
the Company nor the Surviving Corporation shall, except with the prior written
consent of Purchaser, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 5.1.
5.4. Transfer of Shares After the Effective Time. No transfers of
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Shares shall be made on the stock transfer books of the Surviving Corporation at
or after the Effective Time.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of the Company. The Company
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hereby represents and warrants to Purchaser and Merger Sub that, except (with
respect to any particular subsection of this Section 6.1) to the extent
specifically disclosed in the corresponding subsection of that certain letter
delivered by the Company to the Purchaser on or prior to the date hereof (the
"Disclosure Letter"):
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(a) Corporate Organization and Qualification. Each of the Company and
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its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization, has all
requisite corporate or similar power and authority to carry on its business as
presently conducted and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification, except for any such failure of any
of the Company's subsidiaries to be so organized, existing, in good standing or
to have such power and authority or to so qualify, which, when taken together
with all other such failures, is not reasonably likely to have a material
adverse effect on the financial condition, properties, business or results of
operations of the Company and its subsidiaries taken as a whole. The Company
has made available to Purchaser a complete and correct copy of the Certificate
and the Company's Bylaws, each as currently in effect. The Certificate and
Bylaws so delivered are in full force and effect. The Company has delivered to
Purchaser prior to the date hereof a list of the current subsidiaries of the
Company which evidences, among other things, the amount of capital stock or
other equity interests owned by the Company, directly or indirectly, in such
subsidiaries, if such amount is less than 100%. No entity in which the Company
owns, directly or indirectly, an equity interest but less than a 50% equity
interest is, individually or when taken together with all such other entities,
material to the business of the Company and its subsidiaries taken as a whole.
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(b) Authorized Capital. The authorized capital stock of the Company
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consists of 150,000,000 Shares, of which 63,677,435 Shares were outstanding on
July 22, 1997, and 5,000,000 shares of Preferred Stock par value $.001 per share
(the "Preferred Shares"), of which no shares were outstanding on July 23, 1997.
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All of the outstanding Shares have been duly authorized and are validly issued,
fully paid and nonassessable. As of July 22, 1997, options to purchase an
aggregate of 7,412,644 Shares were outstanding (or, in the case of the 1995 ESPP
(as defined below) reserved for issuance) pursuant to the Infrasonics 1995 Stock
Option Plan (the "Infrasonics 1995 Plan"), the 1995 Merger Stock Incentive Plan
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(the "1995 Plan"), the 1994 Equity Incentive Plan, as amended (the "1994 Plan"),
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the Infrasonics 1991 Stock Option Plan (the "Infrasonics 1991 Plan"), the 1991
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Equity Incentive Plan, as amended (the "1991 Plan"), the 1988 Stock Option Plan
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for Non-Employee Directors, as amended (the "1988 Plan"), the 1985 Equity
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Incentive Plan (the "1985 Plan"), the Infrasonics 1983 Employee Stock Option
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Plan (the "Infrasonics 1983 Plan"), the Aequitron Medical, Inc. 1985 Incentive
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Stock Option Plan, the Aequitron Medical, Inc. 1988 Stock Option Plan, the 1986
Employee Stock Participation Plan, as amended (the "1986 ESPP"), which
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terminated August 1996, and the 1995 Employee Stock Participation Plan (the
"1995 ESPP" and collectively with the Plans listed in this sentence, the "Stock
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Plans") and 5,000,000 Preferred Shares were reserved for issuance upon exercise
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of the rights (the "Rights") issued pursuant to the Rights Agreement, dated as
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of September 1, 1992, as amended and restated as of March 8, 1996, between the
Company and The First National Bank of Boston (the "Rights Agreement"). Each of
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the outstanding shares of capital stock of each of the Company's subsidiaries
(as defined in Rule 1.02(v) of Regulation S-X promulgated pursuant to the
Exchange Act) is duly authorized, validly issued, fully paid and nonassessable
and is owned, either directly or indirectly, by the Company, free and clear of
all liens, pledges, security interests, claims or other encumbrances. Except as
set forth above, there are no shares of capital stock of the Company authorized,
issued or outstanding and except as set forth above, there are no pre emptive
rights nor any outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of the Company or any of
its subsidiaries. Immediately prior to the consummation of the Offer and the
Merger, no Preferred Shares or any other securities of the Company will be
subject to issuance pursuant to the Rights Agreement as a result of any of the
transactions contemplated by this Agreement, no Distribution Date (as defined in
the Rights Agreement) shall have occurred as a result of any of the transactions
contemplated by this Agreement and, at or after the Effective Time, except as
provided in Section 7.8(a), neither the Surviving Corporation nor the Purchaser
will have any obligation to issue, transfer or sell any Shares or common stock
of the Surviving Corporation or Purchaser pursuant to any Benefit Plan referred
to in Section 7.1(d).
(c) Corporate Authority. Subject only to approval of this Agreement
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by the holders of a majority of the outstanding Shares, the Company has the
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Assuming
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the due authorization, execution and delivery hereof by Purchaser and Merger
Sub, this Agreement is a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
affecting creditors' rights and to general equitable principles.
(d) Governmental Filings; No Violations. (i) Other than the filings
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provided for in Section 2.3, as required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), filings required under the Exchange
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Act and such filings or consents, registrations, approvals, permits or
authorizations as may be required under the laws of Germany, Ireland, Canada,
Belgium, Hungary and Mexico (collectively, the "Regulatory Approvals"), no
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notices, reports or other filings are required to be made by the Company with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any governmental or regulatory
authority, agency, commission or other entity, domestic or foreign
("Governmental Entity"), in connection with the execution and delivery of this
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Agreement by the Company and the consummation of the transactions contemplated
hereby, the failure to make or obtain any or all of which is reason ably likely
to have a material adverse effect on the financial condition, properties,
business or results of operations of the Company and its subsidiaries taken as a
whole, or could prevent or materially delay the transactions contemplated by
this Agreement or impair the ability of Purchaser, Merger Sub, the Company or
any of their respective affiliates, following consummation of the Offer or the
Merger, to conduct any material business or operations in any jurisdiction where
they are now being conducted.
(ii) The execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions contemplated by
this Agreement will not, constitute or result in (A) a breach or violation of,
or a default under, the Certificate or the Company's Bylaws or the comparable
governing instruments of any of its subsidiaries, (B) a breach or violation of,
or a default under, the acceleration of or the creation of a lien, pledge,
security interest or other encumbrance on assets (with or without the giving of
notice or the lapse of time) pursuant to, any provision of any agreement, lease,
permit, contract, note, mortgage, indenture, arrangement or other legal
obligation ("Contracts") of the Company or any of its subsidiaries or any law,
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rule, ordinance or regulation or judgment, decree, order, award or governmental
or non-governmental permit or license to which the Company or any of its
subsidiaries is subject or (C) any change in the rights or obligations of any
party under any of the Contracts, except, in the case of clause (B) or (C)
above, for such breaches, violations, defaults, accelerations or changes that,
alone or in the aggregate, are not reasonably likely to have a material adverse
effect on the financial condition, properties, business or results of operations
of the Company and its subsidiaries taken as a whole or that could not prevent
or materially delay the transactions contemplated by this Agreement or impair
the ability of Purchaser, Merger Sub, the Company or any of their respective
affiliates, following consummation of the Offer or the Merger, to conduct any
material business or
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operations in any jurisdiction where they are now being conducted. The
Disclosure Letter sets forth, to the knowledge of the officers of the Company, a
list of any consents required under any material Contracts to be obtained prior
to consummation of the transactions contemplated by this Agreement (whether or
not subject to the exception set forth with respect to clause (B) above).
(e) Company Reports; Financial Statements. The Company and, to the
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extent applicable, each of its then or current subsidiaries, has made all
filings required to be made with the SEC since July 1, 1995 (collectively,
including any such reports filed subsequent to the date hereof, the "Company
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Reports") and the Company has delivered to Purchaser each registration
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statement, schedule, report, proxy statement or information statement prepared
by it since July 7, 1996 (the "Audit Date"), including, without limitation, (i)
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the Company's Annual Report on Form 10-K for the fiscal year ended July 7, 1996,
(ii) the Company's Quarterly Reports on Form 10-Q for the periods ended October
6, 1996, January 5, 1997 and ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇▇) a Form 8-K dated March 26,
1997, (iv) a Form 8-K dated December 5, 1996, (v) a Form 8-K dated September 9,
1996, (vi) a Form 8-K dated June 27, 1996, (vii) a Form S-8 Registration
Statement dated December 12, 1996, (viii) a Form S-8 Registration Statement
dated November 27, 1996, (ix) a Form S-8 Registration Statement dated July 26,
1996, (x) a Form 11-K for the fiscal year ended December 3, 1995, and (xi) a
definitive proxy statement on Schedule 14A dated September 16, 1996, each in the
form (including exhibits and any amendments thereto) filed with the SEC. As of
their respective dates, the Company Reports did not, and any Company Reports
filed with the SEC subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents the consolidated
financial position of the Company and its subsidiaries as of its date and each
of the consolidated statements of income and of changes in financial position
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings and changes in financial position, as the case may be, of the Company
and its subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Other than the Company Reports specifically
recited above, the Company has not, on or prior to the date hereof, filed any
other definitive reports or statements with the SEC since the Audit Date. The
Company will periodically provide Purchaser with current draft versions of the
Company's Annual Report on Form 10-K, including documents incorporated therein
by reference, for the fiscal year ended July 6, 1997, (the "1997 l0-K") promptly
---------
after preparation of such draft. As soon as practicable after receiving its
auditor's opinion with respect to the Company's financial statements for the
fiscal year ended July 6, 1997 (the "1997 Financial Statements"), the
-------------------------
-11-
Company will deliver to Purchaser a copy of such 1997 Financial Statements
(including such auditor's opinion).
(f) Absence of Certain Changes. Except as disclosed in the Company
--------------------------
Reports filed with the SEC prior to the date hereof, since the Audit Date the
Company and its subsidiaries have conducted their respective businesses only in,
and have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses and there has not been (i) any
material adverse change in the financial condition, properties, business or
results of operations of the Company and its subsidiaries taken as a whole or
any development or combination of developments of which management of the
Company has knowledge that is reasonably likely to result in any such change;
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company; or (iii) any
change by the Company in accounting principles, practices or methods. Since the
Audit Date, except as provided for herein or as disclosed in the Company Reports
filed with the SEC prior to the date hereof and other than in the ordinary
course, there has not been any increase in the compensation payable or which
could become payable by the Company and its subsidiaries to their officers or
key employees, or any amendment of any Benefit Plans (as defined in Section
6.1(h), other than increases or amendments made in the ordinary course of
business. Since July 7, 1997, with respect to members of the Company's Board of
Directors, and since July 24, 1996, with respect to officers or employees of the
Company (other than new hires), neither the Company nor any subsidiary of the
Company has issued to any directors or officers or employees of the Company any
options, warrants, rights or convertible securities relating to the issued or
unissued capital stock of the Company.
(g) Litigation and Liabilities. Except as disclosed with reasonable
--------------------------
specificity in the Company Reports filed with the SEC prior to the date hereof
or in the Disclosure Letter, there are no (i) civil, criminal or administrative
actions, suits, claims, hearings, investigations or proceedings pending or, to
the knowledge of the management of the Company, threatened against the Company
or any of its subsidiaries or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise, including, without limitation, those relating
to matters involving any Environmental Law (as defined in Section 6.1(m)), or
any other facts or circumstances of which the management of the Company is aware
that insofar as can reasonably be foreseen could result in any claims against or
obligations or liabilities of the Company or any of its subsidiaries, that,
alone or in the aggregate, are reasonably likely to have a material adverse
effect on the financial condition, properties, business or results of operations
of the Company and its subsidiaries taken as a whole. For purposes of this
subsection (g), a civil, criminal or administrative action, suit or claim shall
be deemed to be "disclosed with reasonable specificity" in a Company Report if
it is referred to by case name or case caption in such Company Report.
-12-
(h) Employee Benefits.
-----------------
(i) All bonus, deferred compensation, pension, retirement, profit-
sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option, employment, termination, severance,
compensation, medical, health or other plan, contract, policy or arrangement
which cover employees or former employees of the Company and its subsidiaries
and directors and former directors of the Company and its subsidiaries (the
"Compensation and Benefit Plans"), including, but not limited to, "employee
-------------------------------
benefit plans" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") are listed in the Disclosure
-----
Letter. True and complete copies of all Compensation and Benefit Plans and such
other benefit plans, contracts or arrangements, including, but to limited to,
any trust instruments and insurance contracts, if any, forming a part of any
such plans and agreements, and all amendments thereto have been made available
to Purchaser.
(ii) All Compensation and Benefit Plans are in substantial compliance
with applicable law and all Compensation and Benefit Plans which are employee
benefit plans, other than "multiemployer plans" within the meaning of Sections
3(37) of ERISA, to the extent subject to ERISA, are in substantial compliance
with ERISA. Each Compensation and Benefit Plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and
------------
which is intended to be qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), has received a favorable determination
----
letter from the Internal Revenue Service with respect to "TRA" (as defined in
Section 1 of Internal Revenue Service Revenue Procedure 93-39), and the Company
is not aware of any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending or, to the
knowledge of the Company, threatened litigation relating to the Compensation and
Benefit Plans. Neither the Company nor any subsidiary has engaged in a
transaction with respect to any Compensation and Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could subject
the Company or any of its subsidiaries to a material tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA.
(iii) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company or any subsidiary with respect
to any ongoing, frozen or terminated "single-employer plan", within the meaning
of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or the single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). The Company and its Subsidiaries have not incurred and do
----------------
not expect to incur any withdrawal liability with respect to a multiemployer
plan under Subtitle E of Title IV of ERISA. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been
-13-
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan have been timely made. Neither any Pension Plan
nor any single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Neither the Company nor its subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
(v) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan, and there has
been no material change in the financial condition of such Plan since the last
day of the most recent Plan Year. The withdrawal liability of the Company and
its subsidiaries under each Compensation and Benefit Plan which is a
multiemployer plan to which the Company, its subsidiaries or an ERISA Affiliate
has contributed during the preceding 12 months, determined as if a "complete
withdrawal", within the meaning of Section 4203 of ERISA, had occurred as of the
date hereof, does not exceed $100,000.
(vi) Neither the Company nor the subsidiaries have any obligations
for retiree health and life benefits under any Compensation and Benefit Plan,
except as set forth in the Disclosure Letter. The Company or its subsidiaries
may amend or terminate any such Plan without incurring any liability thereunder.
(vii) Except as set forth in Section 7.8, the consummation of the
transactions contemplated by this Agreement will not (x) entitle any employees
of the Company or any of its subsidiaries to severance pay, (y) accelerate the
time of payment or vesting or trigger any payment of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any of the Compensation and Benefit Plans or (z) result in any
breach or violation of, or a default under any of the Compensation and Benefit
Plans.
(viii) All Compensation and Benefit Plans covering non-U.S. Employees
comply in all material respects with applicable local law. The Company and its
subsidiaries have no material unfunded liabilities with respect to any Pension
Plan which covers non-U.S. Employees.
(i) Compliance. Except to the extent specifically disclosed in
----------
Company Reports filed prior to the date hereof, neither the Company nor any of
its subsidiaries is in
-14-
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which its or any of their respective properties are bound or affected, or
(ii) any Contract to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or its or any of their
respective properties are bound or affected, except for any such conflicts,
defaults or violations that, individually or in the aggregate, are not
reasonably likely to have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole, or could prevent or materially delay the
transactions contemplated by this Agreement or impair the ability of Purchaser,
Merger Sub, the Company or any of their respective affiliates, following
consummation of the Offer or the Merger, to conduct any material business or
operations in any jurisdiction where they are now being conducted.
(j) Brokers and Finders. Neither the Company nor any of its
-------------------
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated herein, except that the Company has employed
the Financial Advisor as its financial advisors, the arrangements with which
have been disclosed in writing to Purchaser prior to the date hereof.
(k) Other Actions.
-------------
(i) The transactions contemplated hereby have been approved by a
majority of the total number of Disinterested Directors, as defined in Article
Eleventh of the Certificate of the Company, in accordance with such Article and,
as a result thereof, Article Eleventh is inapplicable to the Offer and the
Merger.
(ii) The Company has taken all necessary action to provide that (x)
the execution of this Agreement and the consummation of the transactions
contemplated hereby will not cause (i) Merger Sub and/or the Purchaser to become
an Acquiring Person (as defined in the Rights Agreement) or (ii) a Distribution
Date, a Shares Acquisition Date or a Triggering Event (as such terms are defined
in the Rights Agreement) to occur and (y) all outstanding Rights will expire
(whether or not tendered and purchased pursuant to the Offer) upon and as of the
acceptance of Shares for payment pursuant to the Offer (so long as Purchaser
thereafter purchases Shares accepted for payment pursuant to the Offer) and
neither the Company, Merger Sub nor Purchaser nor any of their respective
affiliates shall have any obligations under the Rights Agreement to any holder
(or former holder) of Rights following consummation of the Offer.
(l) Takeover Statutes. The Board of Directors of the Company has
-----------------
taken all necessary action to approve the transactions contemplated by this
Agreement such that the restrictions on transactions under Section 203 of the
DGCL shall not apply to such
-15-
transactions. No other "fair price," "moratorium," "control share acquisition"
or other similar antitakeover statute or regulation (each a "Takeover Statute")
----------------
is applicable to the Company, the Shares, the Offer, the Merger or the
transactions contemplated thereby or hereby.
(m) Environmental Matters. Except as disclosed in the Disclosure
---------------------
Letter and except for such matters that, alone or in the aggregate, are not
reasonably likely to have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole: (i) Company and its subsidiaries have complied
at all times with all applicable Environmental Laws; (ii) the properties
currently owned or operated by the Company or any subsidiary (including soils,
groundwater and surface water) have not been contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by the Company or
any of its subsidiaries were not contaminated with Hazardous Substances during
or prior to such period of ownership or operation; (iv) neither the Company nor
any subsidiary is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither the Company nor any
subsidiary has received any notice, demand, letter, claim or request for
information indicating that it may be subject to liability for any release or
threat of release of any Hazardous Substance or in violation of or liable under
any Environmental Law; (vi) neither the Company nor any subsidiary is subject to
any order, decree, injunction or other legally binding arrangement with any
governmental entity or any indemnity or other legally binding agreement with any
third party relating to liability under any Environmental Law; (vii) none of the
properties currently owned or operated by the Company or any subsidiary contain
any underground storage tanks, asbestos-containing material, lead products, or
polychlorinated biphenyls; (viii) there are no other circumstances or conditions
involving the Company or any subsidiary that could reasonably be expected to
result in any claims, liability, investigations, costs or restrictions against
the Company or any subsidiary or on the ownership, use, or transfer of any
property currently owned or operated by the Company or any of its subsidiaries
pursuant to any Environmental Law; and (ix) the Company has delivered to
Purchaser copies of all environmental reports, studies, assessments, sampling
data and other environmental information in its possession relating to Company
or any subsidiary or any of their current or former properties or operations.
As used herein, the term "Environmental Law" means any federal, state
-----------------
or local law, regulation, order, decree, permit, authorization, common law or
legally binding agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health, safety, or natural
resources, (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (C) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property and the
term "Hazardous Substance" means any substance that is: (A) listed, classified
-------------------
or regulated pursuant to any applicable Environmental Law; or (B) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon.
-16-
(n) Tax Matters. The Company and each of its subsidiaries, and any
-----------
consolidated, combined or unitary group for tax purposes of which the Company or
any of its subsidiaries is or has been a member, has timely filed all Tax
Returns required to be filed by it in the manner provided by law except where
the failure to file would not be reasonably likely to have a material adverse
effect on the financial condition, properties, business or results of operations
of the Company and its subsidiaries taken as a whole. All such Tax Returns are
true, correct and complete in all material respects. The Company and each of
its subsidiaries have paid all Taxes (including interest and penalties) due or
required to be withheld from amounts owing to any employee, creditor or third
party or have provided adequate reserves in their financial statements for any
Taxes that have not been paid, whether or not shown as being due on any returns.
Except as has been disclosed to Purchaser in Schedule 6.1(n) to this Agreement:
(i) no material claim for unpaid Taxes has become a lien or encumbrance of any
kind against the property of the Company or any of its subsidiaries or is being
asserted against the Company or any of its subsidiaries; (ii) no audit,
examination, investigation or other proceeding in respect of Taxes is pending,
threatened or being conducted by a Tax Authority; (iii) no extension or waiver
of the statute of limitations on the assessment of any Taxes has been granted by
the Company or any of its subsidiaries and is currently in effect; (iv) neither
the Company nor any of its subsidiaries is a party to, is bound by, or has any
obligation under, or potential liability with regards to, any Tax sharing
agreement, Tax indemnification agreement or similar contract or arrangement; (v)
no power of attorney has been granted by or with respect to the Company or any
of its subsidiaries with respect to any matter relating to Taxes; (vi) neither
the Company nor any of its subsidiaries is a party to any agreement, plan,
contract or arrangement that would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code; (vii) neither the Company nor any of its subsidiaries has any
deferred intercompany gain or loss arising as a result of a deferred
intercompany transaction within the meaning of Treasury Regulation Section
1.1502-13 (or similar provision under state, local or foreign law) or any excess
loss accounts within the meaning of Treasury Regulation Section 1.1502-19;
(viii) the Company is not and has not been a United States real property holding
corporation (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(ii) of the Code. As used herein, "Taxes"
-----
shall mean any taxes of any kind, including but not limited to those on or
measured by or referred to as income, gross receipts, capital, sales, use, ad
valorem, franchise, profits, license, withholding, premium, value added,
property or windfall profits taxes, customs, duties or similar fees, assessments
or charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any governmental authority,
domestic or foreign. As used herein, "Tax Return" shall mean any return, report
----------
or statement required to be filed with any governmental authority with respect
to Taxes.
(o) Contracts with Physicians, Hospitals, HMOs and Third Party
----------------------------------------------------------
Providers. The Company has made available to representatives of Purchaser a list
---------
of all outstanding contracts, partnerships, joint ventures and other
arrangements or understandings (written or
-17-
oral) that are material to the Company's business and that are between (i) the
Company and any of its subsidiaries and (ii) any physician, hospital, HMO, other
managed care organization or other third-party provider relating to the sale or
supply of medical devices, the provision of medical or consulting services,
treatments or patient referrals or any other similar activities.
(p) (i) The Disclosure Letter sets forth a complete and accurate
list (and, with respect to the Company's Aequitron and Eden Prairie divisions, a
complete and accurate list, to the knowledge of the Company's executives) for
the last five years, of (A) all Regulatory Letters (as defined below), Notices
of Adverse Findings and Section 305 notices and similar letters or notices
issued by the Food and Drug Administration (the "FDA") or any other governmental
---
entity that is concerned with the safety, efficacy, reliability or manufacturing
of the medical products sold by the Company or its subsidiaries (any such
governmental entity, a "Medical Device Regulatory Agency") to the Company or any
--------------------------------
of its subsidiaries; (B) all United States Pharmacopoeia product problem
reporting program complaints or reports, MedWatch FDA forms 3500 and device
experience network complaints received by the Company or any of its subsidiaries
and all Medical Device Reports filed by the Company or any of its subsidiaries,
which complaints or reports pertain to any incident involving death or serious
injury, and for which incident there has been (I) a notice or follow-up inquiry
to the Company by the FDA, (II) a litigation or arbitration claim or cause of
action commenced, or (III) a notice to any insurance carrier of the Company
tendering the defense or giving any notice of a possible or actual claim against
the Company; (C) all product recalls and safety alerts conducted by or issued to
the Company or any of its subsidiaries and any requests from the FDA or any
other Medical Device Regulatory Agency requesting the Company or any of its
subsidiaries to cease to investigate, test or market any product; (D) any civil
penalty actions begun by the FDA or any other Medical Device Regulatory Agency
against the Company or any of its subsidiaries and known of by the Company or
any of its subsidiaries and all consent decrees and all documents relating to
the negotiation of and compliance with such consent decree issued with respect
to the Company or the Company's subsidiaries; and (E) any other written
communications between the Company or any of its subsidiaries, on the one hand,
and the FDA or any other Medical Device Regulatory Agency on the other hand that
describe matters that could have a material adverse effect on the sales or
revenues attributable to any product or product line of the Company or its
subsidiaries or discuss material issues concerning the safety or efficacy of any
such product or product line. The Company has made available to Purchaser
copies of all documents referred to in Section 6.1(p) of the Disclosure Letter
as well as copies of all complaints and other information required to be
maintained by the Company pursuant to 21 CFR Section 820. For purposes of this
subparagraph (i), "Regulatory Letter" means a letter characterized by the FDA as
-----------------
a warning letter, a notice of adverse finding or a similar letter in which FDA
or any other Medical Device Regulatory Agency expresses the opinion that
violations of law have occurred.
-18-
(ii) Except to the extent that such items would not, individually or in
the aggregate, have a material adverse effect on the financial condition,
properties, businesses or results of operations of the Company and its
subsidiaries taken as a whole, and would not result in the entry or filing of
any material injunction or criminal action or proceeding against or involving
the Company, and would not require that executive officers of the Company or
Purchaser be added as a named individual party to the consent decree to which
the Company is presently subject: (A) the Company (or, if applicable, a
subsidiary of the Company) has obtained all consents, approvals, certifications,
authorizations and permits of, and has made all filings with, or notifications
to, all Medical Device Regulatory Agencies pursuant to applicable requirements
of all FDA rules, regulations and consent decrees, and all applicable state and
foreign laws, rules and regulations applicable to the Company or any of its
subsidiaries; (B) all representations made by the Company or any of its
subsidiaries in connection with any such consents, approvals, certifications,
authorizations, permits, filings and notifications were true and correct in all
material respects at the time such representations and warranties were made, and
the Company's products, and the products of the Company's subsidiaries, comply
with, and perform in accordance with the specifications described in, such
representations; (C) the Company and the Company's subsidiaries are in
compliance with all applicable FDA rules, regulations and consent decrees, and
all applicable state and foreign laws, rules and regulations (including Good
Manufacturing Practices and Medical Device Reporting requirements) relating to
medical device manufacturers and distributors or otherwise applicable to the
Company's or the Company's subsidiaries' business; (D) the Company has no reason
to believe that any of the consents, approvals, authorizations, registrations,
certifications, permits, filings or notifications that it or any of its
subsidiaries has received or made to operate their respective businesses have
been or are being revoked or challenged; and (E) there are no investigations or
inquiries pending or threatened relating to the operation of the Company's or
the Company's subsidiaries' business or the Company's compliance with applicable
laws relating to its medical device business or otherwise applicable to the
Company's or its subsidiaries' business.
6.2. Representations and Warranties of Purchaser and Merger Sub.
----------------------------------------------------------
Purchaser and Merger Sub represent and warrant to the Company that:
(a) Corporate Organization and Qualification. Each of Purchaser and
----------------------------------------
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization, has all
requisite corporate power and authority to carry on its business as presently
conducted and is in good standing as a foreign corporation in each jurisdiction
where the properties owned, leased or operated, or the business conducted, by it
require such qualification except for any such failure to be so organized,
existing, in good standing or to have such power and authority or to so qualify,
which, when taken together with all other such failures, is not reasonably
likely to have a material adverse effect on the financial condition, properties,
business or results of operations of Purchaser and its subsidiaries, taken as a
whole.
-19-
(b) Corporate Authority. Purchaser and Merger Sub each has the
-------------------
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Assuming the due authorization, execution and
delivery hereof by the Company, this Agreement is a valid and binding agreement
of Purchaser and Merger Sub enforceable against Purchaser and Merger Sub in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws affecting creditors'
rights and to general equitable principles.
(c) Governmental Filings; No Violations. (i) Other than the
-----------------------------------
Regulatory Filings, no notices, reports or other filings are required to be made
by Purchaser and Merger Sub with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Purchaser and
Merger Sub from, any Governmental Entity in connection with the execution and
delivery of this Agreement by Purchaser and Merger Sub and the consummation of
the transactions contemplated hereby, the failure to make or obtain any or all
of which could prevent or materially delay the transactions contemplated by this
Agreement.
(ii) The execution and delivery of this Agreement by Purchaser and
Merger Sub do not, and the consummation by Purchaser and Merger Sub of the
transactions contemplated by this Agreement will not, constitute or result in
(i) a breach or violation of, or a default under, the Certificate of
Incorporation or Bylaws of Purchaser or Merger Sub or the comparable governing
instruments of any of their subsidiaries or (ii) a breach or violation of, a
default under, the acceleration of or the creation of a lien, pledge, security
interest or other encumbrance on assets (with or without the giving of notice or
the lapse of time) pursuant to, any provision of any Contract of Purchaser or
Merger Sub or any of their subsidiaries or any law, ordinance, rule or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which Purchaser or Merger Sub or any of their subsidiaries
are subject, except, in the case of clause (ii) above, for such breaches,
violations, defaults or accelerations or changes that, alone or in the
aggregate, could not prevent or materially delay the transactions contemplated
by this Agreement.
(d) Funds. Purchaser has or will have the funds necessary to
-----
consummate the transactions contemplated by this Agreement. On or prior to the
date hereof, Purchaser has made available to the Company a copy of the executed
Commitment Letter, dated July 21, 1997, among Purchaser and the Lenders party
thereto (the "Commitment Letter").
-----------------
-20-
ARTICLE VII
COVENANTS
7.1. Interim Operations of the Company. The Company covenants and
---------------------------------
agrees, as to itself and its subsidiaries, that, after the date hereof and prior
to the date on which Purchaser's nominees comprise a majority of the Board of
Directors of the Company (unless Purchaser shall otherwise agree in writing and
except as otherwise permitted by this Agreement (including Section 7.2) or
specifically disclosed in the corresponding section of the Disclosure Letter):
(a) the business of the Company and its subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its subsidiaries shall use its best efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees and business associates;
(b) the Company shall not (i) sell or pledge or agree to sell or
pledge any stock owned by it in any of its subsidiaries; (ii) amend the
Certificate or its Bylaws or amend, modify or terminate the Rights Agreement, or
redeem the Rights issued pursuant thereto; (iii) split, combine or reclassify
the outstanding Shares; or (iv) declare, set aside or pay any dividend payable
in cash, stock or property with respect to the Shares;
(c) neither the Company nor any of its subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any additional shares of, or securities
convertible or exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class of
the Company or its subsidiaries or any other property or assets other than, in
the case of the Company, Shares issuable pursuant to options outstanding on the
date hereof under the Stock Plans; (ii) transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of or encumber any assets or incur or modify any
indebtedness (other than drawings under existing credit facilities in the
ordinary course of business) or other liability other than in the ordinary and
usual course of business; (iii) acquire directly or indirectly by redemption or
otherwise any shares of the capital stock of the Company or (iv) authorize
capital expenditures in excess of $500,000 individually or $5,000,000 in the
aggregate or make any acquisition of another company (by merger, consolidation
or acquisition of stock or assets) or any investment in, assets or stock of any
other person or entity;
(d) except to the extent required under the existing Compensation and
Benefit Plans (as in effect prior to the date of this Agreement and set forth in
the Disclosure Schedule) neither the Company nor any of its subsidiaries shall
grant any severance
-21-
or termination pay to, or enter into any employment or severance agreement with
any director, officer or other employee of the Company or such subsidiaries,
other than as required by statute in foreign jurisdictions and except in the
ordinary course of business consistent with past practice; and neither the
Company nor any of its subsidiaries shall establish, adopt, enter into, make any
new grants or awards under or amend, any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, employee stock ownership, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees (the
"Benefit Plans");
--------------
(e) neither the Company nor any of its subsidiaries shall settle or
compromise any material claims or litigation or, except in the ordinary and
usual course of business and with the consent of Purchaser (which consent shall
not be unreasonably withheld), modify, amend or terminate any of its material
Contracts or waive, release or assign any material rights or claims;
(f) neither the Company nor any of its subsidiaries shall make any
tax election or permit any insurance policy naming it as a beneficiary or a loss
payable payee to be canceled or terminated without notice to Purchaser, except
in the ordinary and usual course of business;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, neither the Company nor any of its
subsidiaries shall change any of the accounting practices or principles used by
it;
(h) neither the Company nor any of its subsidiaries shall adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or other reorganization of the Company or any
of its subsidiaries not constituting an inactive subsidiary (other than the
Merger); and
(i) neither the Company nor any of its subsidiaries will authorize or
enter into an agreement to do any of the foregoing or take any action that would
knowingly cause any of the representations or warranties of the Company
contained in this Agreement to be untrue or incorrect or would result in any of
the Offer Conditions set forth in Annex A not being satisfied.
-22-
7.2. Acquisition Proposals. The Company, its affiliates and its and
----------------------
their respective officers, directors, employees, representatives and agents
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its subsidiaries) shall immediately cease any
existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any acquisition or exchange of all or any material
portion of the assets of, or more than 15% of the equity interest in, the
Company or any of its subsidiaries (by direct purchase from the Company, tender
or exchange offer or otherwise) or any business combination, merger or similar
transaction (including an exchange of stock or assets) with or involving the
Company or any subsidiary (except for the subsidiary specified in Section 7.2 of
the Disclosure Letter) or division of the Company (an "Acquisition
-----------
Transaction"). Except as set forth in this Section 7.2, neither the Company nor
any of its affiliates, nor any of its or their respective officers, directors,
employees, representatives or agents, shall, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Purchaser and Merger Sub, any affiliate or associate of
Purchaser and Merger Sub or any designees of Purchaser and Merger Sub) with
respect to any inquiries or the making of any offer or proposal (including,
without limitation, any offer or proposal to the stockholders of the Company)
concerning an Acquisition Transaction ( an "Acquisition Proposal"); provided,
--------------------
however, that the Company may, directly or indirectly, furnish information and
access pursuant to an appropriate confidentiality agreement, in each case only
in response to a request for information or access, to any person making a
written Acquisition Proposal to the Board of Directors of the Company made after
the date hereof which was not encouraged, solicited or initiated by the Company
or any of its affiliates or any of its or their respective officers, directors,
employees, representatives or agents on or after the date hereof and may
participate in discussions and negotiate with such person concerning any such
Acquisition Proposal, if and only if the Board of Directors of the Company
determines in good faith, based upon the advice of outside counsel to the
Company, that failing to provide such information or access or to participate in
such discussions or negotiations would constitute a breach of the Board's
fiduciary duty under applicable law and provided, further, that nothing herein
shall prevent the Board from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer; provided, further, that the
Board shall not recommend that the stockholders of the Company tender their
Shares in connection with any such tender offer unless the Board shall have
determined in good faith, based upon the advice of outside counsel to the
Company, that failing to take such action would constitute a breach of the
Board's fiduciary duty under applicable law. The Board shall notify Purchaser
immediately if any such written Acquisition Proposal is made and shall in such
notice indicate the identity of the offeror and the terms and conditions of any
such proposal. The Company agrees not to release any third party from, or waive
any provisions of, any confidentiality or standstill agreement to which the
Company is a party, unless the Board shall have determined in good faith, based
upon the advice of outside counsel to the Company, that
-23-
failing to release such third party or waive such provisions would constitute a
breach of the fiduciary duties of the Board of Directors under applicable law.
7.3. Meetings of the Company's Stockholders. (a) If required to
--------------------------------------
consummate the Merger, the Company will take, consistent with applicable law,
the Certificate and the Company's Bylaws, all action necessary to convene a
meeting of holders of Shares as promptly as practicable following the purchase
of Shares pursuant to the Offer to consider and vote upon the approval of this
Agreement and the Merger. Subject to fiduciary requirements of applicable law,
the Board of Directors of the Company shall recommend such approval and the
Company shall take all lawful action to solicit such approval. At any such
meeting of the Company all of the Shares then owned by the Purchaser Companies
will be voted in favor of this Agreement. The Company's proxy or information
statement with respect to such meeting of shareholders (the "Proxy Statement"),
---------------
at the date thereof and at the date of such meeting, will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
-------- -------
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by the Company
in reliance upon and in conformity with written information concerning the
Purchaser Companies furnished to the Company by Purchaser specifically for use
in the Proxy Statement. The Proxy Statement shall not be filed, and no
amendment or supplement to the Proxy Statement will be made by the Company,
without consultation with Purchaser and its counsel.
(b) Notwithstanding the foregoing, in the event that Merger Sub shall
acquire at least 90% of the outstanding Shares, the Company agrees, at the
request of Merger Sub, subject to Article VIII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
7.4. Filings; Other Action. (a) Subject to the terms and conditions
---------------------
herein provided, the Company and Purchaser shall: (i) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act and other Regulatory Filings with respect to the Offer and the Merger;
and (ii) use all commercially reasonable efforts to promptly take, or cause to
be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including but not limited to cooperating in the preparation and filing of the
Offer Documents, the Schedule 14D-9, the Proxy Statement, any required filings
under the HSR Act or other foreign filings and any amendments to any thereof.
Each party hereto shall use all commercially reasonable 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 the consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Offer and
the
-24-
Merger. The Company, as reasonably requested by Purchaser and in a manner not
inconsistent with the terms of the Commitment Letter, will cooperate with
Purchaser and Merger Sub with respect to consummating the financing for the
Offer and the Merger and any refinancing of the Company's indebtedness.
(b) The Company and Purchaser each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Purchaser or the Company, as the case may be, or any
of their subsidiaries, from any Governmental Authority with respect to the Offer
or the Merger or any of the other transactions contemplated by this Agreement.
The parties hereto will consult and cooperate with one another, and consider in
good faith the views of one another in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and proposals
made or submitted by or on behalf of any party hereto in connection with
proceedings under or relating to the HSR Act or any other antitrust law.
7.5. Access. (a) Upon reasonable notice, the Company shall (and
------
shall cause each of its subsidiaries to) afford Purchaser's officers, employees,
counsel, lenders, accountants and other authorized representatives
("Representatives") access, during normal business hours throughout the period
-----------------
prior to the Effective Time, to its properties, books, Contracts and records
and, during such period, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to Purchaser all information concerning its
business, properties and personnel as Purchaser or its Representatives may
reasonably request, pro vided that no investigation pursuant to this Section 7.5
shall affect or be deemed to modify any representation or warranty made by the
Company and provided, further, that the foregoing shall not require the Company
-------- -------
to permit any inspection, or to disclose any information, which in the
reasonable judgment of the Company (a) would result in the disclosure of any
trade secrets of third parties or violate any obligation of the Company with
respect to confidentiality if the Company shall have used reasonable efforts to
obtain the consent of such third party to such inspection or disclosure, (b)
would be in violation of applicable law, rules or regulation or (c) constitutes
information protected by attorney-client privilege or attorney work product, but
only to the extent that disclosure, in the opinion of counsel to the Company,
would jeopardize the Company's ability to assert such attorney-client privilege
or attorney work product and Purchaser is informed at the time that information
is being withheld on the foregoing bases. Upon any termination of this
Agreement, Purchaser will collect and deliver to the Company all documents
obtained by it or any of its Representatives then in their possession and any
copies thereof.
(b) Upon any termination of this Agreement, Purchaser will treat all
documents obtained by it or any of its Representatives in accordance with the
terms of the Confidentiality Agreement, dated as of June 3, 1997 ( the
"Confidentiality Agreement") between the Company and Purchaser. All requests
--------------------------
for information made pursuant to this
-25-
Section shall be directed to an executive officer of the Company or such person
as may be designated by any such officer.
7.6. Notification of Certain Matters. The Company shall give prompt
-------------------------------
notice to Purchaser of: (a) any notice of, or other communication relating to,
any environmental matter, a default or event that, with notice or lapse of time
or both, would become a default, received by the Company or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any Contract to which the Company or any of its subsidiaries is a
party or is subject; and (b) any material adverse change in the financial
condition, properties, business or results of operations of the Company and its
subsidiaries taken as a whole or the occurrence of any event which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in any such change. Each of the Company and Purchaser shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
7.7. Publicity. The initial press release shall be a joint press
---------
release and thereafter the Company and Purchaser each shall consult with the
other prior to issuing any press releases or otherwise making public
announcements with respect to the transactions contemplated hereby and prior to
making any filings with any Governmental Entity or with any national securities
exchange with respect thereto.
7.8. Stock Plans and Benefits.
------------------------
(a) Stock Plans. Except as provided in the next sentence, the Company
-----------
shall take such actions as may be necessary such that immediately prior to the
Effective Time each stock option outstanding pursuant to the Stock Plans (the
"Option"), whether or not then exercisable, shall be canceled and only entitle
-------
the holder thereof, upon surrender thereof, to receive an amount in cash from
the Company equal to the result of multiplying the number of Shares previously
subject to such Option by the difference between the Merger Consideration and
the per Share exercise price of such Option. Notwithstanding anything contained
herein to the contrary, all Options granted after July 21, 1997 shall, at the
Effective Time, be assumed by Purchaser in accordance with the terms of the
applicable Stock Plan and the stock option agreement by which it is evidenced.
From and after the Effective Time, (i) each post July 21, 1997 Option may be
exercised solely for shares of Purchaser common stock, (ii) the number of shares
of Purchaser common stock subject to such Option shall be equal to the result
(rounded down to the nearest whole share) of multiplying the number of Shares
subject to such Option immediately prior to the Effective Time by a fraction
(the "Conversion Fraction"), the numerator of which is the Merger Consideration
-------------------
and the denominator of which is the average of the closing prices of one share
of Purchaser common stock on the New York Stock Exchange for the five business
days immediately prior to the Effective Time and (iii) the per share exercise
price under each such Option shall be equal to
-26-
the result (rounded up to the nearest whole cent) of dividing the per share
exercise price under each such Option immediately prior the Effective Time by
the Conversion Fraction; provided, however, that with respect to any Option
which is an "incentive stock option", within the meaning of Section 422 of the
Code, the adjustments provided in this Section shall, if applicable, be modified
in a manner so that the adjustments are consistent with requirements of Section
424(a) of the Code.
The Company agrees to take such actions as may be necessary so that
each employee participating in the 1995 ESPP immediately prior to the Effective
Time shall only be entitled to receive an amount in cash equal to the result of
multiplying (i) the Merger Consideration by (ii) a fraction, the numerator of
which is the accumulated payroll deductions in the employee's account under the
1995 ESPP at the Effective Time, and the denominator of which is the purchase
price for the "Offering" for the "Purchase Period" (as such terms are defined in
the 1995 ESPP) in effect immediately prior to the Effective Time. The Company
agrees to take such actions as may be necessary to cease as of the Effective
Time all further Offerings and payroll deductions under the 1995 ESPP.
All restrictions on the retention of shares of restricted stock
granted to employees under the 1994 Plan shall lapse immediately prior to the
Effective Time.
(b) Employee Benefits. Purchaser agrees that during the period
-----------------
commencing at the Effective Time and ending on the second anniversary thereof,
the employees of the Company will continue to be provided with benefits under
employee benefit plans (other than stock options or other plans involving the
issuance of securities of the Company or Purchaser) which in the aggregate are
substantially comparable to those currently provided by the Company to such
employees; provided, however, that employees covered by collective bargaining
agreements need not be provided with such benefits. Purchaser will cause each
employee benefit plan of Purchaser in which employees of the Company are
eligible to participate to take into account for purposes of eligibility and
vesting thereunder the service of such employees with the Company as if such
service were with Purchaser, to the same extent that such service was credited
under a comparable plan of the Company. Purchaser will, and will cause the
Surviving Corporation to, honor in accordance with their terms (i) all employee
benefit obligations to current and former employees of the Company accrued as of
the Effective Time and (ii) to the extent set forth in the Disclosure Letter,
all employee severance plans in existence on the date hereof and all employment
or severance agreements entered into prior to the date hereof.
7.9. Indemnification; Directors' and Officers' Insurance. (a) From
---------------------------------------------------
and after the Effective Time, Purchaser agrees that it will (i) to the fullest
extent that the Company would have been permitted under Delaware law and the
Certificate or the Company's Bylaws in effect on the date hereof, and (ii) cause
the Surviving Corporation, to the fullest extent permitted under Delaware law,
to indemnify and hold harmless each present and former
-27-
director and officer of the Company, determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
--------------------
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
-----
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, (and Purchaser shall also advance expenses as incurred to the fullest
extent permitted under applicable law provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification); provided that
--------
if there is any disagreement between any Indemnified Party and the Merger Sub or
Purchaser with respect to whether an officer's or director's conduct complies
with the standards set forth under Delaware law and the Certificate and the
Company's Bylaws, such determination shall be made by independent counsel
selected by the Surviving Corporation. The indemnification provisions of
Article X and Article XI of the Bylaws of the Company shall not be amended,
modified or repealed for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were officers, directors or employees of the Company.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 7.9, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Purchaser thereof but
failure to so notify will not relieve Purchaser of liability except to the
extent Purchaser is materially adversely affected thereby. In the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) Purchaser or the Surviving Corporation shall have
the right to assume the defense thereof and Purchaser shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Purchaser or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties advises
that, in such counselor's reasonable judgment, there are issues that constitute
conflicts of interest between Purchaser or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Purchaser or the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Purchaser shall be obligated
-------- -------
pursuant to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will
cooperate in the defense of any such matter and (iii) Purchaser shall not be
liable for any settlement effected without its prior written consent; and
provided further that Purchaser shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
-28-
(c) Purchaser shall cause the Surviving Corporation either (i) to
maintain the Company's existing officers' and directors' liability insurance (or
equivalent thereof) ("D&O Insurance") for a period of six years after the
-------------
Effective Time so long as the annual premium therefor is not in excess of an
amount (the "D&O Premium") equal to 150% of the last annual premium paid prior
-----------
to the date hereof; provided, however, if the existing D&O Insurance expires, is
-------- -------
terminated or canceled during such six year period, the Surviving Corporation
will use its best efforts to obtain as much D&O Insurance as can be obtained for
the remainder of such period for a premium not in excess (on an annualized
basis) of the D&O Premium or (ii) purchase tail insurance in respect of the
existing D&O Insurance for six years for a premium not to exceed $1,000,000.
(d) If the Surviving Corporation or any of its successors or assigns
(i) shall consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations set
forth in Section 7.8 and this Section 7.9.
(e) The provisions of this Section 7.9 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
7.10. Other Actions by the Company. If any Takeover Statute shall
----------------------------
become applicable to the transactions contemplated hereby, the Company and the
members of the Board of Directors of the Company shall grant such approvals and
take such actions as are necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS
8.1. Conditions to Obligations of Purchaser and Merger Sub. The
-----------------------------------------------------
respective obligations of Purchaser and Merger Sub to consummate the Merger are
subject to the ful fillment of each of the following conditions, any or all of
which may be waived in whole or in part by Purchaser or Merger Sub, as the case
may be, to the extent permitted by applicable law:
-29-
(a) Stockholder Approval. If required by the DGCL, this Agreement
--------------------
shall have been duly approved by the holders of a majority of the Shares, in
accordance with applicable law and the Certificate and the Company's Bylaws;
(b) Purchase of Shares. Merger Sub (or one of the Purchaser
------------------
Companies) shall have purchased Shares pursuant to the Offer;
(c) Injunction. No United States or state court or other
----------
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, pre liminary or permanent)
which is in effect and prohibits consummation of the transactions contemplated
by this Agreement (collectively, an "Order"); and
-----
(d) Other Obligations. The Company shall have fulfilled its
-----------------
obligations under Section 7.8(a) and the representations set forth in Section
6.1(k) shall be true and correct; provided, however, that this condition shall
-------- -------
be deemed satisfied if Purchaser Representatives constitute not less than a
majority of the Board of Directors of the Company and take any action to
reverse, modify or amend any action taken by the Board of Directors of the
Company prior to the Purchaser Representatives constituting such majority.
8.2. Conditions to Obligations of the Company. The obligations of
----------------------------------------
the Company to consummate the Merger are subject to the fulfillment of each of
the following conditions, any or all of which may be waived in whole or in part
by the Company to the extent permitted by applicable law:
(a) Stockholder Approval. If required by the DGCL, this Agreement
--------------------
shall have been duly approved by the holders of a majority of the Shares, in
accordance with applicable law and the Certificate and the Company's Bylaws;
(b) Purchase of Shares. Merger Sub (or one of the Purchaser
------------------
Companies) shall have purchased Shares pursuant to the Offer;
(c) Order. There shall be in effect no Order.
-----
ARTICLE IX
TERMINATION
9.1. Termination by Mutual Consent. This Agreement may be terminated
-----------------------------
and the transactions contemplated hereby may be abandoned at any time prior to
the Effective
-30-
Time, before or after the approval by holders of Shares, by the mutual consent
of Purchaser and the Company, by action of their respective Boards of Directors.
9.2. Termination by either Purchaser or the Company. This Agreement
----------------------------------------------
may be terminated and the transactions contemplated hereby may be abandoned by
action of the Board of Directors of either Purchaser or the Company if (i)
Merger Sub, or any Purchaser Company, shall have terminated the Offer without
purchasing any Shares pursuant thereto; or (ii) the Merger shall not have been
consummated by December 31, 1997, whether or not such date is before or after
the approval by holders of Shares; or (iii) if required, the approval of
shareholders required by Section 8.1(a) shall not have been obtained at a
meeting duly convened therefor; or (iv) any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United States
or any country or economic region in which either the Company or Purchaser,
directly or indirectly, has material assets or operations, shall have issued a
final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such order,
decree, ruling or other action is or shall have become final and nonappealable.
9.3. Termination by Purchaser. This Agreement may be terminated and
------------------------
the transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, before or after the approval by holders of Shares, by action of
the Board of Directors of Purchaser, if (i) the Company shall have breached or
failed to perform in any material respect any of the covenants or agreements
contained in this Agreement to be complied with or performed by the Company
prior to such date of termination which breach or failure shall not have been
cured prior to the earlier of (A) ten business days following the giving of
written notice to the Company of such breach or failure and, if applicable, (B)
the date on which the Offer is then scheduled to expire, or any representation
or warranty of the Company set forth in this Agreement shall have been
inaccurate or incomplete when made except for such failures to be complete or
accurate that, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole or could prevent or materially delay the
transactions contemplated by this Agreement or impair the ability of Purchaser,
Merger Sub, the Company or any of their respective affiliates, following
consummation of the Offer or the Merger, to conduct any material business or
operations in any jurisdiction where they are now being conducted, (ii) the
Board of Directors of the Company (or a special committee thereof) shall have
amended, modified or withdrawn in a manner adverse to Purchaser or Merger Sub
its approval or recommendation of the Offer, this Agreement or the Merger or the
Board of Directors of the Company, upon request by Purchaser, shall have failed
to publicly reaffirm such approval or recommendation within ten business days of
such request by Purchaser, or shall have endorsed, approved or recommended any
other Acquisition Proposal, or shall have resolved to do any of the foregoing,
or (iii) the Company shall have entered into any agreement, letter of intent or
agreement in principle with respect to any other Acquisition Proposal.
-31-
9.4. Termination by the Company. This Agreement may be terminated
--------------------------
and the transactions contemplated hereby may be abandoned at any time prior to
the Effective Time, before or after the approval by holders of Shares by action
of the Board of Directors of the Company, (i) if Purchaser or Merger Sub (or
another Purchaser Company) (x) shall have breached or failed to perform in any
material respect any of the covenants or agreements contained in this Agreement
to be complied with or performed by Purchaser or Merger Sub prior to such date
of termination which breach or failure shall not have been cured prior to the
earlier of (A) ten business days following the giving of written notice to the
Purchaser of such breach or failure, and, if applicable, (B) the date on which
the Offer is then scheduled to expire, or (y) shall have failed to commence the
Offer within the time required in Section 1.1, or (ii) if (w) the Company is
not in material breach of any of the terms of this Agreement, (x) the Board of
Directors of the Company authorizes the Company, subject to complying with the
terms of this Agreement, to enter into a definitive written acquisition
agreement concerning an Acquisition Transaction (the "Alternative Acquisition
-----------------------
Agreement") and five business days elapse after delivery to Purchaser of a
---------
written notice that the Board of Directors has so authorized the Company to
enter into such Alternative Acquisition Agreement, attaching the most current
version of such agreement (which shall include all of the material terms,
including the price proposed to be paid for Shares pursuant thereto) to such
notice, (y) Purchaser does not make, within five business days of receipt of
such written notice from the Company, an offer that the Board of Directors of
the Company determines, in good faith after consultation with its financial
advisors, is at least as favorable, from a financial point of view, to the
stockholders of the Company as the offer set forth in the Alternative
Acquisition Agreement that the Company has indicated that it intends to enter
into following the end of such five business day period, and (z) the Company,
prior to such termination, pays to Purchaser in immediately available funds the
fees required to be paid pursuant to Section 9.5(b).
9.5. Effect of Termination and Abandonment. (a) In the event of the
-------------------------------------
termination of this Agreement pursuant to this Article IX, no party hereto (or
any of its directors or officers, employees, agents or advisors) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in Section 9.5(b) below and Section 10.2 and except that nothing herein
will relieve any party from liability for any willful breach of this Agreement,
including, without limitation, Section 1.1 hereof.
(b) If (i) (x) the Offer shall have remained open for a minimum of at
least 25 business days, (y) after the date hereof any corporation, partnership,
person, other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Purchaser or Merger Sub or any of their respective subsidiaries
or affiliates (collectively, a "Person") shall have become the beneficial owner
------
of 15% or more of the outstanding Shares or shall have publicly announced a
proposal or intention to make an Acquisition Proposal or any Person shall have
commenced, or shall have publicly announced an intention to commence, a tender
offer or exchange offer for 15% or more of the outstanding Shares, and (z) the
Minimum
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Condition (as defined in Annex A) shall not have been satisfied and the Offer is
terminated without the purchase of any Shares thereunder, or (ii) the Purchaser
shall have terminated this Agreement pursuant to Section 9.3 (ii) or 9.3(iii),
or (iii) the Company shall have terminated this Agreement pursuant to Section
9.4(ii), then the Company shall promptly, but in no event later than two days
after the date of such termination (except as otherwise expressly provided in
Section 9.4(ii) requiring an earlier payment), pay Purchaser a fee of
$45,000,000 (the "Termination Fee") and shall reimburse Purchaser and Merger Sub
---------------
(not later than one business day after submission of statements therefor) for
(i) an amount equal to all of the actual documented out-of-pocket charges and
expenses incurred by Purchaser or Merger Sub in connection with this Agreement
and the transactions contemplated by this Agreement up to a maximum amount of
$3,500,000, plus (ii) an amount equal to all of the actual documented financing
fees paid by Purchaser in connection with the debt facilities referred to in the
Commitment Letter up to a maximum amount of $4,000,000 (such charges, expenses
and financing fees referred to in clauses (i) and (ii) collectively, the
"Purchaser Expenses"), in each case payable by wire transfer in same day funds.
-------------------
If this Agreement is terminated by Purchaser pursuant to Section 9.3(i), then
the Company shall promptly pay to Purchaser the Purchaser Expenses and, if
within 18 months of the date of such termination, the Company shall enter into
any agreement with respect to an Acquisition Transaction, the Company shall,
promptly, but in no event later than two days after the entry into such
agreement, pay Purchaser the Termination Fee. The Company acknowledges that the
agreements contained in this Section 9.5(b) are an integral part of the
transactions contemplated in this Agreement, and that, without these agreements,
Purchaser and Merger Sub would not enter into this Agreement; accordingly, if
the Company fails to promptly pay the amount due pursuant to this Section
9.5(b), and, in order to obtain such payment, Purchaser or Merger Sub commences
a suit which results in a judgment against the Company for the fee set forth in
this paragraph (b), the Company shall pay to Purchaser or Merger Sub its costs
and expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the prime rate of ▇▇▇▇▇▇ Guaranty
Trust Company of New York on the date such payment was required to be made.
(c) If this Agreement is terminated by the Company pursuant to
Section 9.4(i) or by the Company or Purchaser pursuant to Section 9.2(i) in the
event Merger Sub or Purchaser shall have terminated the Offer in violation of
the terms of the Offer, then Purchaser shall promptly reimburse the Company (not
later than one business day after submission of statements therefor) for an
amount equal to the Company's actual documented out-of-pocket expenses incurred
in connection with the transactions contemplated by the Agreement in an amount
not to exceed $3,500,000.
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ARTICLE X
Miscellaneous and General
10.1. Payment of Expenses. Whether or not the Merger shall be
-------------------
consummated, each party hereto shall, subject to Section 9.5(b), pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the Merger.
10.2. Survival. The agreements of the Company, Purchaser and Merger
--------
Sub contained in Sections 5.2 (but only to the extent that such Section
expressly relates to actions to be taken after the Effective Time), 5.3, 5.4,
7.8, 7.9, 7.10, 10.1 and 10.6 through 10.13 shall survive the consummation of
the Merger. The agreements of the Company, Purchaser and Merger Sub contained
in the Confidentiality Agreement and Sections 7.5(b), 9.5, 10.1 and 10.6 through
10.13 shall survive the termination of this Agreement. Except as provided in
Section 9.5(b), all other representations, warranties, agreements and covenants
in this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
10.3. Modification or Amendment. Subject to the applicable
-------------------------
provisions of the DGCL, at any time prior to the Effective Time, the parties
hereto may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties.
10.4. Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.5. Counterparts. For the convenience of the parties hereto, this
------------
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware.
10.7. Notices. Any notice, request, instruction or other document to
-------
be given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, if to
-----
Purchaser or Merger Sub, addressed to Purchaser or Merger Sub, as the case may
-----------------------
be, at Mallinckrodt Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-
1820, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. (with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10004); and
---
-34-
if to the Company, addressed to the Company at Nellcor Puritan ▇▇▇▇▇▇▇
-----------------
Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq., ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, 19900 MacArthur Boulevard, 12th Floor, Irvine, California 92612),
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
10.9. Entire Agreement, etc. This Agreement (including the
---------------------
Disclosure Letter and any exhibits or Annexes hereto) (a) constitutes the entire
agreement, and supersedes all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof, and (b) shall not be assignable by
operation of law or otherwise and is not intended to create any obligations to,
or rights in respect of, any persons other than the parties hereto; provided,
--------
however, that Purchaser may designate, by written notice to the Company, another
-------
wholly-owned direct or indirect subsidiary to be a Constituent Corporation in
lieu of Merger Sub, in the event of which, all references herein to Merger Sub
shall be deemed references to such other subsidiary except that all
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement shall be deemed representations and warranties made with
respect to such other subsidiary as of the date of such designation.
10.10. Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and, except for Section 7.9,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
10.11. Definition of "Subsidiary". When a reference is made in this
--------------------------
Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries.
-35-
10.12. Obligation of Purchaser. Whenever this Agreement requires
-----------------------
Merger Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Purchaser to cause Merger Sub to take such action.
10.13. Captions. The Article, Section and paragraph captions herein
--------
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
-36-
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
MALLINCKRODT INC.
By: /s/ C. ▇▇▇ ▇▇▇▇▇▇
------------------------
Name: C. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman & Chief Executive Officer
NELLCOR PURITAN ▇▇▇▇▇▇▇ INC.
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Title: President & Chief Executive Officer
NPB ACQUISITION CORP.
By: /s/ C. ▇▇▇ ▇▇▇▇▇▇
-----------------------
Name: C. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman & Chief Executive Officer
-37-
ANNEX A
CERTAIN CONDITIONS OF THE OFFER. The capitalized terms used in this
-------------------------------
Annex A have the meanings set forth in the attached Agreement. 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 (relating to Merger Sub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, or may delay the acceptance for payment of or
payment for, any tendered Shares, or may, in its sole discretion (subject to the
Merger Agreement), terminate or amend the Offer as to any Shares not then paid
for if, (i) prior to the expiration of the Offer, (x) a number of Shares which,
together with any Shares owned by Purchaser or Merger Sub, constitutes more than
50% of the voting power (determined on a fully-diluted basis) of all the
securities of the Company entitled to vote generally in the election of
directors or in connection with a merger shall not have been validly tendered
and not withdrawn prior to the expiration of the Offer (the "Minimum Condition")
-----------------
or (y) any waiting periods under the HSR Act applicable to the purchase of
Shares pursuant to the Offer, and any similar waiting periods under any foreign
statutes or regulations that are applicable to the Offer or the Merger shall not
have expired or been terminated, or any Regulatory Approvals applicable to the
Offer and the Merger shall not have been obtained on terms satisfactory to the
Purchaser in its reasonable judgment, or (ii) on or after July 23, 1997, and at
or before the time of payment for any of such Shares (whether or not any Shares
have theretofore been accepted for payment), any of the following events shall
occur:
(a) there shall have occurred and be continuing (i) any general
suspension of, or limitation on prices for, trading in securities on the
NYSE or in the over-the-counter market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any material limitation (whether or not mandatory) by any
Governmental Entity on, or any other event that could reasonably be
expected to materially adversely affect, the extension of credit by banks
or other lending institutions, (iv) or in the case of any of the foregoing
existing at the time of the com mencement of the Offer, a material
acceleration or worsening thereof, or (v) any material adverse change in
the relevant financial markets that could reasonably be expected to
materially and adversely affect the syndication of the senior bank debt
facilities referred to in the Commitment Letter;
(b) the Company shall have breached or failed to perform in any
material respect any of the covenants or agreements contained in the
Agreement to be complied with or performed by the Company prior to the date
of termination of the Agreement which breach or failure shall not have been
cured prior to the earlier of (A) ten business days following the giving of
written notice to the Company of such breach or failure and (B), the date
on which the Offer is then scheduled to expire, or any representation or
warranty of the Company set forth in the Agreement shall have been
inaccurate or incomplete when made or, except for those representations or
warranties that address matters only as of a particular date, thereafter
shall
-1-
become inaccurate or incomplete and except for changes specifically
permitted in this Agreement and the failure of any such representations and
warranties to be complete and accurate that, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on the financial condition, properties, business or results of
operations of the Company and its subsidiaries taken as a whole or could
prevent or materially delay the transactions contemplated by this Agreement
or impair the ability of Purchaser, the Merger Sub, the Company or any of
their respective affiliates, following consummation of the Offer or the
Merger, to conduct any material business or operations in any jurisdiction
where they are now being conducted.
(c) there shall be instituted or pending any action, litigation,
proceeding, investigation or other application (hereinafter, an "Action")
------
before any court or other Governmental Entity by any Governmental Entity:
(i) challenging the acquisition by Purchaser or Merger Sub of Shares,
seeking to restrain or prohibit the consummation of the transactions
contemplated by the Offer or the Merger, seeking to obtain any material
damages or otherwise directly or indirectly relating to the transactions
contemplated by the Offer or the Merger; (ii) seeking to prohibit, or
impose any material limitations on, Purchaser's or Merger Sub's ownership
or operation of all or any portion of their or the Company's business or
assets (including the business or assets of their respective affiliates and
subsidiaries), or to compel Purchaser or Merger Sub to dispose of or hold
separate all or any portion of Purchaser's or Merger Sub's or the Company's
business or assets (including the business or assets of their respective
affiliates and subsidiaries) as a result of the transactions contemplated
by the Offer or the Merger; (iii) seeking to make the acceptance for
payment, purchase of, or payment for, some or all of the Shares illegal or
render Merger Sub unable to, or result in a material delay in, or restrict,
the ability of Merger Sub to, accept for payment, purchase or pay for some
or all of the Shares; (iv) seeking to impose material limitations on the
ability of Purchaser or Merger Sub effectively to acquire or hold or to
exercise full rights of ownership of the Shares including, without
limitation, the right to vote the Shares purchased by them on an equal
basis with all other Shares on all matters properly presented to the
stockholders; or (v) that, in any event, is reasonably likely to have a
material adverse effect on the financial condition, properties, business or
operations of the Company or Purchaser or Merger Sub (or any of their
respective affiliates or subsidiaries) or the value of the Shares to
Purchaser or Merger Sub or the benefits expected to be derived by Purchaser
or Merger Sub as a result of consummation of the transactions contemplated
by the Offer and the Merger;
-2-
(d) any statute, rule, regulation, order or injunction shall be
enacted, promulgated, entered, enforced or deemed or become applicable to
the Offer or the Merger, or any Action shall be instituted or pending
brought by any person not on behalf of a Governmental Entity or other
action shall have been taken by any court or other Governmental Entity
other than the application to the Offer or the Merger of waiting periods
under the HSR Act, that, in the reasonable judgment of Purchaser, could be
expected to, directly or indirectly, result in any of the effects of, or
have any of the consequences sought to be obtained or achieved in, any
Action referred to in clauses (i) through (v) of paragraph (c) above;
(e) a tender or exchange offer for 15% or more of the outstanding
Shares shall have been commenced or publicly proposed to be made by another
Person (including the Company or its subsidiaries), or it shall have been
publicly disclosed or the Purchaser shall have learned that any Person
(including the Company or its subsidiaries), shall have become the
beneficial owner (as defined in Section 13(d) of the Exchange Act and the
rules promulgated thereunder) of more than 15% of any class or series of
capital stock of the Company (including the Shares) (other than for bona
fide arbitrage purposes);
(f) any change or development shall have occurred that has had, or is
reasonably likely to have, a material adverse effect on the financial
condition, properties, businesses or results of operations of the Company
and its subsidiaries taken as a whole;
(g) the Board of Directors of the Company (or a special committee
thereof) shall have amended, modified or withdrawn in a manner adverse to
Purchaser or Merger Sub its approval or recommendation of the Offer, the
Agreement or the Merger, or the Board of Directors of the Company, upon
request by Purchaser, shall have failed to publicly reaffirm such approval
or recommendation within ten business days of such request by Purchaser, or
shall have endorsed, approved or recommended any other Acquisition
Proposal, or shall have resolved to do any of the foregoing; or
(h) the Agreement shall have been terminated by the Company or
Purchaser or Merger Sub in accordance with its terms or Purchaser or Merger
Sub shall have reached an agreement or understanding in writing with the
Company providing for termination or amendment of the Offer or delay in
payment for the Shares;
-3-
which, in the sole judgment of Purchaser and Merger Sub, in any such case, and
regardless of the circumstances (including any action or inaction by Purchaser
or Merger Sub) giving rise to any such conditions, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Purchaser and
Merger Sub and may be asserted by Purchaser or Merger Sub regardless of the
circumstances (including any action or inaction by Purchaser or Merger Sub)
giving rise to such condition or may be waived by Purchaser or Merger Sub, by
express and specific action to that effect, in whole or in part at any time and
from time to time in its sole discretion. Any determination by Purchaser and
Merger Sub concerning any event described in this Annex A shall be final and
binding upon all parties. The failure by Merger Sub at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
-4-