EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
Dated as of November 12, 1995
Among
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
JNJ MERGER CORP.
And
CORDIS CORPORATION
TABLE OF CONTENTS
Page
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ARTICLE I
The Merger
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SECTION 1.01. The Merger . . . . . . . . . . . . . . 1
SECTION 1.02. Closing . . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time . . . . . . . . . . . . 2
SECTION 1.04. Effects of the Merger . . . . . . . . 3
SECTION 1.05. Articles of Incorporation and
By-Laws . . . . . . . . . . . . . . 3
SECTION 1.06. Directors . . . . . . . . . . . . . . 3
SECTION 1.07. Officers . . . . . . . . . . . . . . . 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock . . . . . . . 4
SECTION 2.02. Exchange of Certificates . . . . . . . 5
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of
the Company . . . . . . . . . . . . 9
SECTION 3.02. Representations and Warranties of
Parent and Sub . . . . . . . . . . 22
ARTICLE IV
Covenants Relating to Conduct of Business
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SECTION 4.01. Conduct of Business . . . . . . . . . 27
SECTION 4.02. No Solicitation . . . . . . . . . . . 31
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ARTICLE V
Additional Agreements
---------------------
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Shareholders
Meeting . . . . . . . . . . . . . . 35
SECTION 5.02. Letters of the Company's Accountants . 36
SECTION 5.03. Letters of Parent's Accountants . . . . 36
SECTION 5.04. Accounting and Tax Matters . . . . . . 37
SECTION 5.05. Foreign Approval . . . . . . . . . . . 37
SECTION 5.06. Access to Information . . . . . . . . . 37
SECTION 5.07. Reasonable Efforts; Notification . . 38
SECTION 5.08. Rights Agreement . . . . . . . . . . . 40
SECTION 5.09. Stock Options . . . . . . . . . . . . 40
SECTION 5.10. Indemnification and Insurance . . . . 42
SECTION 5.11. Fees and Expenses . . . . . . . . . . 43
SECTION 5.12. Public Announcements . . . . . . . . . 44
SECTION 5.13. Affiliates . . . . . . . . . . . . . . 44
SECTION 5.14. Stock Exchange Listing . . . . . . . . 45
SECTION 5.15. Certain Litigation . . . . . . . . . . 45
SECTION 5.16. Consent Solicitation . . . . . . . . . ▇▇
▇▇▇▇▇▇▇ ▇.▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Benefits . . . . 46
SECTION 5.18. Employment Agreements . . . . . . . . . 48
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Merger . . 48
SECTION 6.02. Conditions to Obligations of Parent
and Sub . . . . . . . . . . . . . . 49
SECTION 6.03. Conditions to Obligations of the
Company . . . . . . . . . . . . . . 50
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
SECTION 7.01. Termination . . . . . . . . . . . . . 51
SECTION 7.02. Effect of Termination . . . . . . . . 53
SECTION 7.03. Amendment . . . . . . . . . . . . . . 53
SECTION 7.04. Extension; Waiver . . . . . . . . . . 53
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ARTICLE VIII
General Provisions
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SECTION 8.01. Nonsurvival of Representations and
Warranties . . . . . . . . . . . . 54
SECTION 8.02. Notices . . . . . . . . . . . . . . . 54
SECTION 8.03. Definitions . . . . . . . . . . . . . 55
SECTION 8.04. Interpretation . . . . . . . . . . . . 56
SECTION 8.05. Counterparts . . . . . . . . . . . . . 56
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . . . 56
SECTION 8.07. Governing Law . . . . . . . . . . . . . 56
SECTION 8.08. Assignment . . . . . . . . . . . . . . 56
SECTION 8.09. Enforcement . . . . . . . . . . . . . 57
Exhibit A Form of Company Affiliate Letter
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AGREEMENT AND PLAN OF MERGER dated as of
November 12, 1995, among ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a
New Jersey corporation ("Parent"), JNJ MERGER
CORP., a Florida corporation ("Sub"), and a
wholly owned subsidiary of Parent, and CORDIS
CORPORATION, a Florida corporation (the
"Company").
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the merger of Sub
into the Company, or the Company into Sub, at the election
of Parent as set forth below (the "Merger"), upon the terms
and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock,
par value $l.00 per share, of the Company ("Company Common
Stock"), other than shares owned by Parent or the Company or
any subsidiary of Parent, will be converted into the right
to receive common stock, par value $1.00 per share, of
Parent ("Parent Common Stock");
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and agree-
ments in connection with the Merger and also to prescribe
various conditions to the Merger; and
WHEREAS, for Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization
within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements contained in
this Agreement, the parties hereto agree as follows:
ARTICLE I
The Merger
----------
SECTION 1.01. The Merger. Upon the terms and
-----------
subject to the conditions set forth in this Agreement, and
in accordance with the Florida Business Corporation Act (the
"FBCA"), Sub shall be merged with and into the Company at
the Effective Time (as hereinafter defined). Following the
Merger, the separate corporate existence of Sub shall cease
and the Company shall continue as the surviving corporation
2
(the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance
with the FBCA. Notwithstanding the foregoing, Parent may
elect at any time prior to the Merger, instead of merging
Sub into the Company as provided above, to merge the Company
with and into Sub; provided, however, that the Company shall
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not be deemed to have breached any of its representations,
warranties, covenants or agreements set forth in this
Agreement, and none of the conditions set forth in
Sections 6.01 and 6.02 to Parent's and Sub's obligations to
effect the Merger shall be deemed not to have been
satisfied, to the extent such breach or failure of a
condition results from such election. In such event, the
parties hereto agree to execute an appropriate amendment to
this Agreement in order to reflect the foregoing, and, where
appropriate, to provide that Sub shall be the Surviving
Corporation and shall continue under the name "Cordis
Corporation". At the election of Parent, any direct wholly
owned corporate subsidiary (as defined in Section 8.03) of
Parent may be substituted for Sub as a constituent
corporation in the Merger; provided, however, that the
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Company shall not be deemed to have breached any of its
representations, warranties, covenants or agreements set
forth in this Agreement, and none of the conditions set
forth in Sections 6.01 and 6.02 to Parent's and Sub's
obligations to effect the Merger shall be deemed not to have
been satisfied, to the extent such breach or failure of a
condition results from such election. In such event, the
parties hereto agree to execute an appropriate amendment to
this Agreement in order to reflect such substitution.
SECTION 1.02. Closing. The closing of the Merger
--------
(the "Closing") will take place at 10:00 a.m. on a date to
be specified by the parties, which shall be no later than
the second business day after satisfaction or waiver of the
conditions set forth in Article VI (the "Closing Date"), at
the offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, unless another
date, time or place is agreed to in writing by the parties
hereto.
SECTION 1.03. Effective Time. As soon as practi-
---------------
cable on the Closing Date, the parties shall deliver
articles of merger or other appropriate documents (in any
such case, the "Certificate of Merger") executed in
accordance with the relevant provisions of the FBCA to the
Florida Department of State for filing as required under the
FBCA and shall make all other filings or recordings required
3
under the FBCA. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with the
Florida Department of State, or at such other time as Sub
and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective
being the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger
----------------------
shall have the effects set forth in Section 607.1106 of the
FBCA.
SECTION 1.05. Articles of Incorporation and By-
---------------------------------
Laws. (a) The Restated Articles of Incorporation of the
-----
Company, as in effect immediately prior to the Effective
Time, shall be amended as of the Effective Time so that
Article III of such Restated Articles of Incorporation reads
in its entirety as follows: "The total number of shares of
all classes of stock which the Corporation shall have
authority to issue is 100 shares of Common Stock, par value
$1.00 per share", and, as so amended, such Restated Articles
of Incorporation shall be the Articles of Incorporation of
the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The By-laws of the Company as in effect at
the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided
therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub at
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the Effective Time shall be the directors of the Surviving
Corporation, until the earlier of their resignation or
removal or until their respective successors are duly
elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the
---------
Company at the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
4
ARTICLE II
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.01. Effect on Capital Stock. As of the
------------------------
Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and out-
---------------------
standing share of capital stock of Sub shall be con-
verted into and become one validly issued, fully paid
and nonassessable share of common stock, par value
$1.00 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-
------------------------------------------
Owned Stock. Each share of Company Common Stock that
------------
is owned by the Company and each share of Company
Common Stock owned by Parent or any subsidiary of
Parent shall automatically be canceled and retired and
shall cease to exist (together with the associated
Right (as defined in Section 3.01(c)), and no Parent
Common Stock or other consideration shall be delivered
in exchange therefor.
(c) Conversion of Company Common Stock. Subject
-----------------------------------
to Section 2.02(e), each issued and outstanding share
of Company Common Stock (other than shares to be
canceled in accordance with Section 2.01(b)) together
with the associated Right shall be converted into the
right to receive that number (the "Exchange Ratio") of
validly issued, fully paid and nonassessable shares of
Parent Common Stock equal to the amount obtained by
dividing $109 by the Average Closing Price (as
hereinafter defined) and rounding to the nearest
1/10,000th of a share. The "Average Closing Price"
shall be an amount equal to the average per share
closing price of Parent Common Stock, as reported on
the New York Stock Exchange ("NYSE") Composite
Transaction Tape for the 10 trading days immediately
preceding the Closing Date. As of the Effective Time,
all such shares of Company Common Stock shall no longer
be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company
Common Stock shall cease to have any rights with
respect thereto, except the right to receive shares of
5
Parent Common Stock and any cash in lieu of fractional
shares of Parent Common Stock to be issued or paid in
consideration therefor upon surrender of such
certificate in accordance with Section 2.02, in each
case without interest. The foregoing notwithstanding,
if between the date of this Agreement and the Effective
Time the outstanding shares of Parent Common Stock
shall have been changed into a different number of
shares or a different class, by reason of any stock
dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of
shares or if Parent pays an extraordinary dividend, the
Exchange Ratio shall be appropriately adjusted to
reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination
or exchange or extraordinary dividend.
SECTION 2.02. Exchange of Certificates.
-------------------------
(a) Exchange Agent. As of the Effective Time, Parent shall
---------------
deposit with First Chicago Trust Company of New York or such
other bank or trust company as may be designated by Parent
(and reasonably acceptable to the Company) (the "Exchange
Agent"), for the benefit of the holders of shares of Company
Common Stock, for exchange in accordance with this Arti-
cle II, through the Exchange Agent, certificates represent-
ing the shares of Parent Common Stock (such shares of Parent
Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.01 in
exchange for outstanding shares of Company Common Stock.
Except as contemplated by Section 2.02(f), the Exchange Fund
shall not be used for any other purpose. Parent agrees to
make available to the Exchange Agent from time to time as
needed, cash sufficient to pay cash in lieu of fractional
shares.
(b) Exchange Procedures. As soon as reasonably
--------------------
practicable after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company
Common Stock (the "Certificates") whose shares were
converted into the right to receive shares of Parent Common
Stock pursuant to Section 2.01(c), (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the
Exchange Agent, and which shall be in such form and have
6
such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing
shares of Parent Common Stock. Upon surrender of a Certifi-
cate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that
number of shares of Parent Common Stock (rounded down to the
nearest whole share) which such holder has the right to
receive pursuant to the provisions of this Article II after
taking into account all the shares of Company Common Stock
then held by such holder under all such Certificates so
surrendered, cash in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to
which such holder is entitled pursuant to Section 2.02(c),
and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer
records of the Company, a certificate representing the
proper number of shares of Parent Common Stock may be issued
to a person other than the person in whose name the
Certificate so surrendered is registered, if, upon
presentation to the Exchange Agent, such Certificate shall
be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the
issuance of shares of Parent Common Stock to a person other
than the registered holder of such Certificate or establish
to the reasonable satisfaction of Parent that such tax has
been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall
be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certifi-
cate representing shares of Parent Common Stock, cash in
lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 2.02 and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.02(c). No interest will be paid or will accrue on
any cash payable pursuant to Sections 2.02(c) or 2.02(e).
(c) Distributions with Respect to Unexchanged
-----------------------------------------
Shares. No dividends or other distributions with respect to
-------
Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common
7
Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant
to Section 2.02(e) until the holder of record of such
Certificate shall surrender such Certificate. Following
surrender of any such Certificate, there shall be paid to
the record holder of the certificate representing whole
shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or
other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common
Stock.
(d) No Further Ownership Rights in Company Common
---------------------------------------------
Stock. All shares of Parent Common Stock issued upon the
------
surrender for exchange of shares of Company Common Stock in
accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to
have been issued in full satisfaction of all rights pertain-
ing to such shares of Company Common Stock, subject, how-
------- ----
ever, to the Surviving Corporation's obligation to pay any
----
dividends or make any other distributions with a record date
prior to the Effective Time which may have been declared or
made by the Company on such shares of Company Common Stock
in accordance with the terms of this Agreement or prior to
the date of this Agreement and which remain unpaid at the
Effective Time, and there shall be no further registration
of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this
Article II.
(e) No Fractional Shares. (i) No certificates
---------------------
or scrip representing fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
8
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent
Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof,
cash (without interest) in an amount equal to such
fractional part of a share of Parent Common Stock multiplied
by the Average Closing Price.
(f) Termination of Exchange Fund. Any portion of
-----------------------------
the Exchange Fund which remains undistributed to the holders
of the Certificates for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders
of the Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent for
payment of their claim for Parent Common Stock, any cash in
lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common
Stock.
(g) No Liability. None of Parent, Sub, the
-------------
Company or the Exchange Agent shall be liable to any person
in respect of any shares of Parent Common Stock (or divi-
dends or distributions with respect thereto) or cash the
Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange
----------------------------
Agent shall invest any cash included in the Exchange Fund,
as directed by Parent, on a daily basis. Any interest and
other income resulting from such investments shall be paid
to Parent.
(i) Lost Certificates. If any Certificate shall
------------------
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required
by the Surviving Corporation, the posting by such person of
a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the shares of Parent Common Stock
and any cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof, pursuant to this Agreement.
9
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of
---------------------------------
the Company. The Company represents and warrants to Parent
------------
and Sub as follows:
(a) Organization, Standing and Corporate Power.
-------------------------------------------
Each of the Company and its Significant Subsidiaries is
a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite
corporate power and authority to carry on its business
as now being conducted. Each of the Company and its
subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction
in which the nature of its business or the ownership or
leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed or to
be in good standing (individually or in the aggregate)
would not have a material adverse effect on the
Company. The Company has delivered to Parent complete
and correct copies of its Restated Articles of
Incorporation and By-laws and the certificates of
incorporation and by-laws (or similar organizational
documents) of its Significant Subsidiaries, in each
case as amended to the date hereof. For purposes of
this Agreement, a "Significant Subsidiary" means any
subsidiary of the Company that constitutes a
significant subsidiary within the meaning of Rule 1-02
of Regulation S-X of the Securities and Exchange
Commission (the "SEC").
(b) Subsidiaries. Schedule 3.01(b) lists each
-------------
subsidiary of the Company, together with its
jurisdiction of incorporation or organization. All the
outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid
and nonassessable and, except as set forth on Schedule
3.01(b), owned by the Company, by another subsidiary of
the Company or by the Company and another such
subsidiary, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens").
Except for the capital stock of its subsidiaries and
except for the ownership interests set forth in
10
Schedule 3.01(b), the Company does not own, directly or
indirectly, any capital stock or other ownership
interest in any corporation, partnership, joint venture
or other entity.
(c) Capital Structure. The authorized capital
------------------
stock of the Company consists of 50,000,000 shares of
Company Common Stock and 2,500,000 shares of preferred
stock, par value $1.00 per share ("Company Preferred
Stock"). At the close of business on November 3, 1995,
(i) 16,515,892 shares of Company Common Stock were
issued and outstanding, (ii) no shares of Company
Common Stock were held by the Company in its treasury,
(iii) 1,478,284 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding
stock options granted pursuant to The Cordis
Corporation Non Qualified Stock Option Plan, The Cordis
Corporation Director Non-Qualified Stock Option Plan
and The ▇▇▇▇▇▇▇ Laboratories Plan or for issuance
pursuant to the 1991 Performance Unit Award Plan and
the Company's 401(k) Plan (such stock options and
plans, collectively, the "Company Stock Plans"),
(iv) 16,515,892 shares of Company Common Stock were
reserved for issuance upon exercise of the rights (the
"Rights") distributed to the holders of Company Common
Stock pursuant to the Rights Agreement dated as of
October 13, 1995 (the "Rights Agreement"), between the
Company and Chemical Mellon Shareholder Services
L.L.C., as Rights Agent, and (v) no shares of Company
Preferred Stock were issued or outstanding. Except as
set forth above, as of the date of this Agreement, no
shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or
outstanding. All outstanding shares of capital stock
of the Company are, and all shares which may be issued
pursuant to the Company Stock Plans will be, when
issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote
(or convertible into securities having the right to
vote) on any matters on which shareholders of the
Company may vote. Except as set forth above, as of the
date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agree-
ments, arrangements or undertakings of any kind to
which the Company or any of its subsidiaries is a party
11
or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of
the Company or of any of its subsidiaries or obligating
the Company or any of its subsidiaries to issue, grant,
extend or enter into any such security, option,
warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual
obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its
subsidiaries.
(d) Authority; Noncontravention. The Company has
----------------------------
the requisite corporate power and authority to enter
into this Agreement and, subject to approval of this
Agreement by the holders of a majority of the
outstanding shares of Company Common Stock, to
consummate the transactions contemplated by this
Agreement to be consummated by it. The execution and
delivery of this Agreement by the Company and the
consummation by the Company of the transactions
contemplated by this Agreement to be consummated by it
have been duly authorized by all necessary corporate
action on the part of the Company, subject, in the case
of this Agreement, to approval of this Agreement by the
holders of a majority of the outstanding shares of
Company Common Stock. This Agreement has been duly
executed and delivered by the Company and constitutes a
valid and binding obligation of the Company,
enforceable against the Company in accordance with its
terms. Except as set forth on Schedule 3.01(d), the
execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in
any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material
benefit under, or result in the creation of any Lien
upon any of the properties or assets of the Company or
any of its subsidiaries under, any provision of (i) the
Restated Articles of Incorporation or By-laws of the
Company or any provision of the comparable charter or
organizational documents of any of its subsidiaries,
12
(ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to the Company or any of its subsidiaries or
their respective properties or assets or (iii) subject
to the governmental filings and other matters referred
to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order
or decree applicable to the Company or any of its
subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) and clause
(iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the
aggregate would not (x) have a material adverse effect
on the Company, (y) impair in any material respect the
ability of the Company to perform its obligations under
this Agreement, or (z) prevent or materially delay the
consummation of any of the transactions contemplated by
this Agreement to be consummated by it. No consent,
approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local
government or any court, tribunal, administrative
agency or commission or other governmental authority or
agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the
consummation by the Company of the transactions contem-
plated by this Agreement to be consummated by it,
except for (i) the filing of a premerger notification
and report form by the Company under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and such foreign antitrust filings as
may be applicable, (ii) the filing with the SEC of
(y) a proxy statement relating to the approval by the
Company's shareholders of this Agreement (as amended or
supplemented from time to time, the "Proxy Statement"),
and (z) such reports under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the Florida
Department of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business, (iv) the consents
set forth on Schedule 3.01(d) and (v) such other
consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of
13
which to be obtained or made would not, individually or
in the aggregate, have a material adverse effect on the
Company or prevent or materially delay the consummation
of any of the transactions contemplated by this
Agreement.
(e) SEC Documents. The Company has filed all
--------------
required reports, schedules, forms, statements and
other documents with the SEC since June 30, 1995 (the
"SEC Documents"). As of their respective dates, the
SEC Documents complied as to form in all material
respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Except to the
extent that information contained in any SEC Document
has been revised or superseded by a later-filed SEC
Document, filed and publicly available prior to the
date of this Agreement, as of the date of this
Agreement, none of the SEC Documents contains any
untrue statement of a material fact or omits to state
any material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading. The financial statements of the
Company included in the SEC Documents complied as of
their respective dates of filing with the SEC as to
form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods
involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial
position of the Company and its consolidated
subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjust-
ments). Except as set forth in the Filed SEC Documents
14
(as defined below), and except for liabilities and
obligations incurred in the ordinary course of business
consistent with past practice, neither the Company nor
any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated
balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto which,
individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the
Company.
(f) Information Supplied. None of the informa-
---------------------
tion supplied or to be supplied by the Company specifi-
cally for inclusion or incorporation by reference in
(i) the registration statement on Form S-4 to be filed
with the SEC by Parent in connection with the issuance
of Parent Common Stock in the Merger (the "Form S-4")
will, at the time the Form S-4 is filed with the SEC,
at any time it is amended or supplemented and at the
time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit
to state any material fact required to be stated
therein or necessary to make the statements therein, in
light of the circumstances under which they are made,
not misleading, and (ii) the Proxy Statement will, at
the date it is first mailed to the Company's
shareholders and at the time of the meeting of the
Company's shareholders held to vote on approval of this
Agreement, contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they are made, not misleading. The Proxy
Statement will comply as to form in all material
respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no
representation is made by the Company with respect to
statements made or incorporated by reference therein
based on information supplied by Parent or Sub
specifically for inclusion or incorporation by
reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except
-------------------------------------
as disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement (the
"Filed SEC Documents"), and except as expressly
15
contemplated by this Agreement, since the date of the
most recent audited financial statements included in
the Filed SEC Documents, the Company has conducted its
business only in the ordinary course, and there has not
been (i) any material adverse change in the Company,
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock
or property) with respect to any of the Company's
capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any
issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock,
(iv) (x) any granting by the Company or any of its
subsidiaries to any officer of the Company or any of
its subsidiaries of any increase in compensation,
except in the ordinary course of business consistent
with prior practice or as was required under employment
agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC
Documents, (y) any granting by the Company or any of
its subsidiaries to any officer of any increase in
severance or termination pay, except as was required
under any employment, severance or termination
agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC
Documents or (z) any entry by the Company or any of its
subsidiaries into any employment, severance or
termination agreement with any officer, (v) any damage,
destruction or loss, whether or not covered by
insurance, that has or is likely to have a material
adverse effect on the Company, or (vi) any change in
accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or
business, except insofar as may have been required by a
change in generally accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed
-----------
SEC Documents, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries (other
than any such suit, action or proceeding challenging
the acquisition by Parent or Sub of any shares of
Company Common Stock or any provision of this Agreement
or seeking to restrain or prohibit the consummation of
the Merger) that, individually or in the aggregate,
could reasonably be expected to have a material adverse
effect on the Company, nor is there any judgment,
16
decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or
any of its subsidiaries having, or which could
reasonably be expected to have, any such effect.
(i) Compliance with Laws. (i) Except as
---------------------
disclosed in the Filed SEC Documents, the Company and
its subsidiaries are in compliance with all applicable
statutes, laws, ordinances, regulations, rules,
judgments, decrees and orders of any Governmental
Entity applicable to its business or operations, except
for instances of possible noncompliance that,
individually or in the aggregate, would not have a
material adverse effect on the Company. To the
knowledge of the Company, each of the Company and its
subsidiaries has in effect all Federal, state, local
and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices,
permits and rights ("Permits"), necessary for it to
own, lease or operate its properties and assets and to
carry on its business as now conducted, and there has
occurred no default under any such Permit, except for
the lack of Permits and for defaults under Permits
which, individually or in the aggregate, would not have
a material adverse effect on the Company.
(j) Absence of Changes in Benefit Plans; Labor
------------------------------------------
Relations. Except as disclosed in the Filed SEC
----------
Documents, since the date of the most recent audited
financial statements included in the Filed SEC
Documents, there has not been any adoption or amendment
in any material respect by the Company or any of its
subsidiaries of any collective bargaining agreement or
any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan,
arrangement or understanding in each case maintained or
contributed to, or required to be maintained or
contributed to, by the Company or its subsidiaries for
the benefit of any current or former employee, officer
or director of the Company or any of its subsidiaries
(each, a "Benefit Plan" and, collectively, "Benefit
Plans"). Except as set forth in Schedule 3.01(j) or as
disclosed in the Filed SEC Documents, there exist no
employment, severance, termination or indemnification
agreements, arrangements or understandings between the
17
Company or any of its subsidiaries and any current or
former employee, officer or director of the Company or
any of its subsidiaries or any consulting agreement
with the Company or any of its subsidiaries with
respect to which the aggregate liability thereunder
exceeds $100,000 or which cannot be cancelled by the
Company or any such subsidiary without penalty on
30 days' or less notice. Each of the Tier I, Tier II,
Tier III, and Tier IV Severance Agreements described in
Item 3 of the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 dated November 1, 1995 have
been rescinded or otherwise terminated.
(k) Benefit Plan Compliance.
------------------------
(i) Schedule 3.01(k)(i) contains a list and brief
description of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in
Section 3(l) of ERISA) and all other Benefit Plans
maintained, or contributed to, or required to be
contributed to, by the Company or any of its
subsidiaries or any other person or entity that,
together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the
Code (the Company and each such other person or entity,
a "Commonly Controlled Entity") for the benefit of any
current or former employees, officers or directors of
the Company or any of its subsidiaries. The Company
has delivered or made available to Parent true,
complete and correct copies of (1) each Benefit Plan
(or, in the case of any unwritten Benefit Plans,
descriptions thereof), (2) the most recent annual
report on Form 5500 filed with the Internal Revenue
Service with respect to each Benefit Plan (if any such
report was required), (3) the most recent summary plan
description for each Benefit Plan for which such
summary plan description is required and (4) each trust
agreement and group annuity contract relating to any
Benefit Plan. Each Benefit Plan has been administered
in all material respects in accordance with its terms
and is in compliance with the applicable provisions of
ERISA, the Code, all other applicable laws and all
applicable collective bargaining agreements except
where the failure to comply would not be reasonably
expected to result in a material adverse effect on the
Company.
18
(ii) Except as disclosed in Schedule 3.01(k)(ii),
all Pension Plans have been the subject of
determination letters from the Internal Revenue
Service, or have filed a timely application therefor,
to the effect that such Pension Plans are qualified and
exempt from Federal income taxes under Section 401(a)
and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any such
Pension Plan been amended since the date of its most
recent determination letter or application therefor in
any respect that would adversely affect its qualifica-
tion or materially increase its costs.
(iii) No Commonly Controlled Entity has incurred
any liability which has not been fully paid to a
Pension Plan under Title IV of ERISA (other than for
contributions not yet due) or to the Pension Benefit
Guaranty Corporation (other than for payment of
premiums not yet due) that, when aggregated with other
such liabilities, would result in a material adverse
effect on the Company.
(iv) As of the most recent valuation date for each
Pension Plan that is a "defined benefit pension plan"
(as defined in Section 3(35) of ERISA subject to
Title IV of ERISA (other than a multiemployer plan)
(hereinafter a "Defined Benefit Plan")), there was not
any material amount of "unfunded benefit liabilities"
(as defined in Section 4001(a)(18) of ERISA) under
such Defined Benefit Plan, and the Company is not aware
of any facts or circumstances that would materially
adversely change the funded status of any such Defined
Benefit Plan. The Company has furnished or made
available to Parent the most recent actuarial report or
valuation with respect to each Defined Benefit Plan and
has no reason to believe that the conclusions expressed
in those reports or valuations are incorrect.
(v) No Commonly Controlled Entity has been
required at any time within the five calendar years
preceding the date hereof or is required currently to
contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) or has withdrawn from any
multiemployer plan where such withdrawal has resulted
or would result in any "withdrawal liability" (within
the meaning of Section 4201 of ERISA) that has not been
fully paid.
19
(vi) With respect to any Benefit Plan that is an
employee welfare benefit plan, except as disclosed in
Schedule 3.01(k)(vi), (1) no such Benefit Plan is
funded through a "welfare benefits fund", as such term
is defined in Section 419(e) of the Code, and (2) each
such Benefit Plan that is a "group health plan", as
such term is defined in Section 5000(b)(1) of the Code,
complies substantially with the applicable requirements
of Section 4980B(f) of the Code.
(vii) Schedule 3.01(k)(vii) lists all outstanding
Options as of November 1, 1995, showing for each such
Option: (1) the number of shares issuable, (2) the
number of vested shares, (3) the date of expiration and
(4) the exercise price.
(viii) Except as provided in Section 5.09 or as
listed on Schedule 3.01(m) and except with respect to
the Options listed on Schedule 3.01(k)(vii), no
employee of the Company or any of its subsidiaries will
be entitled to any additional compensation or benefits
or any acceleration of the time of payment or vesting
of any compensation or benefits under any Benefit Plan
as a result of the transactions contemplated by this
Agreement.
(ix) Except as set forth in Schedule 3.01(k)(ix)
or as contemplated under Section 5.17, neither the
Company or any of its subsidiaries nor any person
acting on behalf of the Company or any of its
subsidiaries has, in contemplation of any corporate
transaction involving Parent or Sub, issued any written
communication to, or otherwise made or entered into any
legally binding commitment with, any employees of the
Company or of any of its subsidiaries to the effect
that, following the date hereof, (i) any benefits or
compensation provided to such employees under existing
Benefit Plans or under any other plan or arrangement
will be enhanced, (ii) any new plans or arrangements
providing benefits or compensation will be adopted,
(iii) any Benefit Plans will be continued for any
period of time, or (iv) any plans or arrangements
provided by Parent or Sub will be made available to
such employees.
(l) Taxes. Each of the Company and each of its
------
subsidiaries, and each affiliated, consolidated,
combined or unitary group of which the Company or any
20
of subsidiaries is a member (an "Affiliated Group"),
has filed all material tax returns and reports required
to be filed by it and has paid (or the Company has paid
on its behalf) all taxes required to be paid by it
(other than taxes, the failure to pay which would not,
individually or in the aggregate, have a material
adverse effect on the Company), and the most recent
financial statements contained in the Filed SEC
Documents reflect an adequate reserve for all material
taxes payable by the Company and its subsidiaries for
all taxable periods and portions thereof through the
date of such financial statements. No deficiencies for
any taxes have been proposed, asserted or assessed
against the Company or any of its subsidiaries or any
Affiliated Group (other than deficiencies, the
liability for which would not, individually or in the
aggregate, have a material adverse effect on the
Company), and no requests for waivers of the time to
assess any taxes are pending. The Federal income tax
returns of the Company and each of its subsidiaries
consolidated in such returns have been examined by the
United States Internal Revenue Service for all years
through 1992. None of the assets or properties of the
Company or any of its subsidiaries is subject to any
material tax lien. As used in this Agreement, "taxes"
shall include all Federal, state, local and foreign
income, property, sales, excise and other taxes,
tariffs or governmental charges of any nature
whatsoever, including any interest, penalties or
additions with respect thereto.
(m) No Excess Parachute Payments. Except as
-----------------------------
described on Schedule 3.01(m), no amount that could be
received (whether in cash or property or the vesting of
property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement,
other compensation arrangement or Benefit Plan
currently in effect would be an "excess parachute
payment" (as such term is defined in Section 280G(b)(1)
of the Code).
(n) Voting Requirements. The affirmative vote of
--------------------
the holders of a majority of the outstanding shares of
Company Common Stock approving this Agreement is the
21
only vote of the holders of any class or series of the
Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this
Agreement.
(o) State Takeover Statutes. The Board of
------------------------
Directors of the Company has approved the Merger and
this Agreement, and such approval is sufficient to
render inapplicable to the Merger and this Agreement,
and the transactions contemplated by this Agreement,
the provisions of Section 607.0901 and Section 607.0902
of the FBCA to the extent, if any, any such Section is
applicable to the Merger and this Agreement and the
transactions contemplated by this Agreement.
(p) Brokers. No broker, investment banker,
--------
financial advisor or other person, other than ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), the fees
and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with
the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company.
The Company has provided Parent with a true and correct
copy of the fee letter between the Company and ▇▇▇▇▇▇
▇▇▇▇▇▇▇.
(q) Opinion of Financial Advisor. The Company
-----------------------------
has received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated the
date hereof, to the effect that, as of such date, the
consideration to be received in the Merger by the
Company's shareholders (other than Parent and its
affiliates) is fair to such shareholders from a
financial point of view, a signed copy of which opinion
has been delivered to Parent.
(r) Accounting Matters. Neither the Company nor,
-------------------
to its knowledge, any of its affiliates, has taken or
agreed to take any action that (without regard to any
action taken or agreed to be taken by Parent or any of
its affiliates) would prevent Parent from accounting
for the business combination to be effected by the
Merger as a pooling of interests.
(s) Tax Matters. Neither the Company nor, to its
------------
knowledge, any of its affiliates, has taken or agreed
to take any action, or knows of any circumstances, that
(without regard to any action taken or agreed to be
22
taken by Parent or any of its affiliates) would prevent
the Merger from qualifying as a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Code or that would result in the conditions set
forth in clauses (iii) and (iv) of Section 6.03(c) not
being true.
SECTION 3.02. Representations and Warranties of
---------------------------------
Parent and Sub. Parent and Sub represent and warrant to the
---------------
Company as follows:
(a) Organization Standing and Corporate Power.
------------------------------------------
Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on
its business as now being conducted. Each of Parent
and Sub is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing
of its Properties makes such qualification or licensing
necessary, other than in such jurisdictions where the
failure to be so qualified or licensed or to be in good
standing (individually or in the aggregate) would not
have a material adverse effect on Parent. Parent has
delivered to the Company complete and correct copies of
its Certificate of Incorporation and By-laws and the
Articles of Incorporation and By-laws of Sub, in each
case as amended to the date hereof.
(b) Capital Structure. The authorized capital
------------------
stock of Parent consists of 1,080,000,000 shares of
Parent Common Stock and 2,000,000 shares of Preferred
Stock without par value. At the close of business on
November 3, 1995, (i) 767,411,606 shares of Parent
Common Stock were issued and outstanding,
(ii) 120,017,106 shares of Parent Common Stock were
held by Parent in its treasury, (iii) not more than
38,000,000 shares of Parent Common Stock were reserved
for issuance upon exercise of outstanding employee and
director stock options to purchase shares of Parent
Common Stock and (iv) no shares of Parent Preferred
Stock were outstanding. Except as set forth above and
for amounts which in the aggregate are not material, at
the close of business on November 3, 1995, no shares of
capital stock or other voting securities of the Parent
were issued, reserved for issuance or outstanding.
Other than the options referred to in clause (iii)
23
above and as disclosed in Parent SEC Documents (as
defined in Section 3.02(d)), as of the date of this
Agreement, there are no material amounts of outstanding
securities convertible into Parent Common Stock. All
outstanding shares of capital stock of the Parent are,
and all shares which may be issued pursuant to this
Agreement will be, when issued in accordance with the
terms hereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive
rights. As of the date of this Agreement, the
authorized capital stock of Sub consists of 100 shares
of common stock, par value $1.00 per share, all of
which have been validly issued, are fully paid and
nonassessable and are owned by Parent free and clear of
any Liens.
(c) Authority; Noncontravention. Parent and Sub
----------------------------
have all requisite corporate power and authority to
enter into this Agreement and to consummate the
transactions contemplated by this Agreement to be
consummated by them. The execution and delivery of
this Agreement, and the consummation of the
transactions contemplated by this Agreement to be
consummated by them, in each case by Parent and/or Sub,
as the case may be, have been duly authorized by all
necessary corporate action on the part of Parent and
Sub. This Agreement has been duly executed and
delivered by Parent and Sub, and constitutes a valid
and binding obligation of each such party, enforceable
against each such party in accordance with its terms.
The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in
any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material
benefit under, or result in the creation of any Lien
upon any of the properties or assets of Parent or any
of its subsidiaries under, any provision of (i) the
certificate of incorporation or by-laws of Parent or
Sub or any provision of the comparable charter or
organizational documents of any other subsidiary of
Parent, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Parent, Sub or any other subsidiary of
24
Parent or their respective properties or assets or
(iii) subject to the governmental filings and other
matters referred to in the following sentence, any
(A) statute, law, ordinance, rule or regulation or
(B) judgment, order or decree applicable to Parent, Sub
or any other subsidiary of Parent or their respective
properties or assets, other than, in the case of
clause (ii) and clause (iii), any such conflicts,
violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a
material adverse effect on Parent, (y) impair in any
material respect the ability of Parent and Sub to
perform their respective obligations hereunder or
(z) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement to
be consummated by them. No consent, approval, order or
authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or
with respect to Parent, Sub or any other subsidiary of
Parent in connection with the execution and delivery of
this Agreement by Parent and Sub or the consummation by
Parent and Sub of the transactions contemplated by this
Agreement to be consummated by them, except for (i) the
filing of a premerger notification and report form
under the HSR Act and such foreign antitrust filings as
may be applicable, (ii) the filing with the SEC of the
Form S-4 and such reports under the Exchange Act as may
be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the Florida
Department of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business and (iv) such other
consents, approvals, orders, authorizations,
registrations, declarations and filings as may be
required under the "blue sky" laws of various states,
the failure of which to be obtained or made would not,
individually or in the aggregate, have a material
adverse effect on Parent or prevent or materially delay
the consummation of any of the transactions
contemplated by this Agreement.
(d) SEC Documents. Parent has filed all required
--------------
reports, schedules, forms, statements and other
documents with the SEC since December 31, 1994 (the
"Parent SEC Documents"). As of their respective dates,
the Parent SEC Documents complied as to form in all
material respects with the requirements of the
25
Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Documents, and
none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading. Except to the extent that information
contained in any Parent SEC Document has been revised
or superseded by a later-filed Parent SEC Document
filed and publicly available prior to the date of this
Agreement (the "Filed Parent SEC Documents"), as of the
date of this Agreement, none of the Parent SEC
Documents contains any untrue statement of a material
fact or omits to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. The financial
statements of Parent included in the Parent SEC
Documents complied as of their respective dates of
filing with the SEC as to form in all material respects
with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with
generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated
in the notes thereto) and fairly present the
consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Parent
SEC Documents, and except for liabilities and
obligations incurred in the ordinary course of business
consistent with past practice, neither Parent nor any
of its subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance
sheet of Parent and its consolidated subsidiaries or in
the notes thereto which, individually or in the
aggregate, could reasonably be expected to have a
material adverse effect on Parent.
26
(e) Information Supplied. None of the
---------------------
information supplied or to be supplied by Parent or Sub
specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the
Form S-4 is filed with the SEC, at any time it is
amended or supplemented and at the time it becomes
effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they are made, not
misleading, and (ii) the Proxy Statement will, at the
date it is first mailed to the Company's shareholders
and at the time of the meeting of the Company's
shareholders held to vote on approval of this
Agreement, contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they are made, not misleading. The Form S-4 will
comply as to form in all material respects with the
requirements of the Securities Act and the rules and
regulations thereunder, except that no representation
is made by Parent or Sub with respect to statements
made or incorporated by reference therein based on
information supplied by the Company specifically for
inclusion or incorporation by reference in the
Form S-4.
(f) Accounting Matters. Neither Parent nor Sub
-------------------
nor, to Parent's knowledge, any affiliate of Parent,
has taken or agreed to take any action that (without
regard to any action taken or agreed to be taken by the
Company or any of its affiliates) would prevent Parent
from accounting for the business combination to be
effected by the Merger as a pooling of interests.
(g) Tax Matters. Neither Parent nor Sub nor, to
------------
Parent's knowledge, any affiliate of Parent, has taken
or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken
or agreed to be taken by the Company or any of its
affiliates) would prevent the Merger from qualifying as
a reorganization within the meaning of Sections
368(a)(1)(A) or 368(a)(2)(E) of the Code or that would
result in the conditions set forth in clauses (iii) and
(iv) of Section 6.03(c) not being true.
27
(h) Ownership of Company Common Stock. As of the
----------------------------------
date hereof, neither Parent nor, to its knowledge, any
of its affiliates or associates (as such terms are
defined under the Exchange Act), (i) beneficially owns,
directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding providing for
the acquisition, holding, voting or disposition of, in
each case, shares of capital stock of the Company or
any securities convertible into or exercisable or
exchangeable for capital stock of the Company, which in
the aggregate represent 10% or more of the outstanding
shares of Company Common Stock after giving effect to
the conversion, exercise or exchange of all such
securities beneficially owned by Parent and its
affiliates and associates which are convertible into or
exercisable or exchangeable for capital stock of the
Company.
(i) Interim Operations of Sub. Sub was formed
--------------------------
solely for the purpose of engaging in a business
combination transaction with the Company and has
engaged in no other business activities and has
conducted its operations only as contemplated hereby.
ARTICLE IV
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 4.01. Conduct of Business. (a) Conduct
-------------------- -------
of Business by the Company. During the period from the date
---------------------------
of this Agreement to the Effective Time, the Company shall,
and shall cause its subsidiaries to, except as expressly
contemplated or permitted by this Agreement or to the extent
that Parent shall otherwise consent in writing, carry on
their respective businesses in the usual, regular and
ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent
therewith, use reasonable efforts to preserve intact their
current business organizations, keep available the services
of their current officers and employees and preserve their
relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings
with them to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect
(individually, with respect to any Significant Subsidiary,
or in the aggregate, with respect to the Company and its
subsidiaries taken as a whole) at the Effective Time.
28
Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any of its
subsidiaries to, (except as expressly contemplated or
permitted by this Agreement or to the extent that Parent
shall otherwise consent in writing):
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions (whether in cash,
stock or property) in respect of, any of its capital
stock, except for dividends by a direct or indirect
wholly owned subsidiary of the Company to its parent,
(y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase,
redeem or otherwise acquire any shares of capital stock
of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options
to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other
voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities
(other than the issuance of shares of Company Common
Stock upon the exercise of Options outstanding on the
date of this Agreement and in accordance with their
present terms);
(iii) amend its articles of incorporation, by-laws
or other comparable charter or organizational
documents;
(iv) except as set forth on Schedule 4.01(a)(iv),
acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint ven-
ture, association or other business organization or
division thereof or (y) any assets that are material,
individually or in the aggregate, to the Company and
its subsidiaries taken as a whole, except purchases of
inventory in the ordinary course of business consistent
with past practice;
29
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of
any of its properties or assets, except sales of
inventory in the ordinary course of business consistent
with past practice;
(vi) (y) incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person,
issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities
of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition
of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course
of business consistent with past practice, or
(z) except as set forth on Schedule 4.01(a)(vi), make
any loans, advances or capital contributions to, or
investments in, any other person, other than (A) to the
Company or any direct or indirect wholly owned subsidi-
ary of the Company or (B) advances to employees in
accordance with past practice;
(vii) except for the items listed on
Schedule 4.01(a)(vii), make or agree to make any new
capital expenditure or expenditures which,
individually, is in excess of $250,000 or, in the
aggregate, are in excess of $5,000,000;
(viii) make any material tax election or settle or
compromise any material tax liability;
(ix) except as set forth on Schedule 4.01(a)(ix),
pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in the
ordinary course of business consistent with past
practice or in accordance with their terms, of
liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company
included in the Filed SEC Documents or incurred in the
ordinary course of business consistent with past
practice, or waive any material benefits of, or agree
to modify in any material respect, any confidentiality,
30
standstill or similar agreements to which the Company
or any of its subsidiaries is a party;
(x) except in the ordinary course of business,
modify, amend or terminate any material contract or
agreement to which the Company or any subsidiary is a
party or waive, release or assign any material rights
or claims;
(xi) enter into any contracts, agreements,
arrangements or understandings relating to the
distribution, sale or marketing by third parties of the
Company's or its subsidiaries' products or products
licensed by the Company or its subsidiaries;
(xii) except as required to comply with applicable
law, (A) adopt, enter into, terminate or amend any
Benefit Plan or other arrangement for the benefit or
welfare of any director, officer or current or former
employee, (B) increase in any manner the compensation
or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal
increases or bonuses in the ordinary course of business
consistent with past practice), (C) pay any benefit not
provided for under any Benefit Plan, (D) except as
permitted in clause (B), grant any awards under any
bonus, incentive, performance or other compensation
plan or arrangement or Benefit Plan (including the
grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units
or restricted stock, or the removal of existing
restrictions in any Benefit Plans or agreement or
awards made thereunder) or (E) take any action to fund
or in any other way secure the payment of compensation
or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan;
(xiii) make any change in any method of accounting or
accounting practice or policy other than those required
by generally accepted accounting principles;
(xiv) intentionally take any action that (without
regard to any action taken or agreed to be taken by
Parent or any of its affiliates) would prevent Parent
from accounting for the business combination to be
effected by the Merger as a pooling of interests;
31
(xv) intentionally take any action that (without
regard to any action taken or agreed to be taken by
Parent or any of its affiliates) would prevent the
Merger from qualifying as a reorganization within the
meaning of Sections 368(a)(1)(A) or 368(a)(2)(E) of the
Code or that would result in the conditions set forth
in clauses (iii) and (iv) of Section 6.03(c) not being
true; or
(xvi) authorize any of, or commit or agree to take
any of, the foregoing actions.
(b) Other Actions. The Company and Parent shall
--------------
not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in
this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Merger set forth in
Article VI not being satisfied (subject to the Company's
right to take action specifically permitted by
Section 4.02).
(c) Certain Tax Matters. From the date hereof
--------------------
until the Effective Time, (i) the Company and its
subsidiaries will accurately prepare and timely file with
the relevant taxing authority all tax returns and reports
("Post-Signing Returns") required to be filed; (ii) the
Company and its subsidiaries will timely pay all taxes due
and payable; (iii) the Company and its subsidiaries will
make adequate provision on their books and records, to the
extent required in accordance with generally accepted
accounting principles, for all taxes due and payable after
the Effective Time; and (iv) the Company and its
subsidiaries will promptly notify Parent of any action,
suit, proceeding, claim or audit pending against or with
respect to the Company or any of its subsidiaries in respect
of any tax where there is a reasonable possibility of a
determination or decision which would reasonably be expected
to have a material adverse effect on the Company's tax
liabilities or tax attributes.
SECTION 4.02. No Solicitation. (a) The Company
----------------
and its officers, directors, employees, representatives and
agents shall immediately cease any discussions or
negotiations with any parties that may be ongoing with
32
respect to a takeover proposal. The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it
authorize or permit any of its officers, directors or
employees or any investment banker, attorney or other
advisor or representative retained by it or any of its
subsidiaries to, (i) solicit, initiate or knowingly
encourage the submission of, any takeover proposal, or (ii)
participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with
respect to, or take any other action knowingly to facilitate
any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
takeover proposal; provided, however, that to the extent
-------- -------
required by the fiduciary obligations of the Board of
Directors of the Company, determined by a majority of the
members thereof based on the advice of outside counsel, the
Company may, (A) in response to an unsolicited takeover
proposal and subject to compliance with Section 4.02(c),
furnish non-public information with respect to the Company
to any person pursuant to a customary confidentiality
agreement (as determined by the Company's outside counsel)
and discuss such information (but not the terms of any
possible takeover proposal) with such person and (B) upon
receipt by the Company of an unsolicited takeover proposal,
and subject to compliance with Section 4.02(c), participate
in negotiations and discussions regarding such takeover
proposal. For purposes of this Agreement, "takeover
proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or
purchase of 15% or more of the consolidated assets of the
Company and its subsidiaries or 20% or more of any class of
equity securities of the Company or any of its Significant
Subsidiaries or any tender offer or exchange offer that if
consummated would result in any person beneficially owning
20% or more of any class of equity securities of the Company
or any of its Significant Subsidiaries, or any merger,
consolidation, business combination, sale of substantially
all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of its
subsidiaries, other than the transactions contemplated by
this Agreement, or any other transaction the consummation of
which could reasonably be expected to impede, interfere
with, prevent or materially delay the Merger or which would
reasonably be expected to dilute materially the benefits to
Parent of the transactions contemplated hereby.
(b) Except as set forth in this Section 4.02,
neither the Board of Directors of the Company nor any
33
committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Sub,
the approval or recommendation by such Board of Directors or
any such committee of this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or
recommend, any takeover proposal or (iii) enter into any
agreement with respect to any takeover proposal.
Notwithstanding the foregoing, the Board of Directors of the
Company, to the extent required by the fiduciary obligations
thereof, as determined in good faith by a majority of the
members thereof based on the advice of outside counsel, may
(subject to the following sentences), withdraw or modify its
approval or recommendation of this Agreement or the Merger,
approve or recommend any superior proposal (as defined
below), enter into an agreement with respect to such
superior proposal or terminate this Agreement, in each case
at any time after a reasonable period of time following
Parent's receipt of written notice (a "Notice of Superior
Proposal") advising Parent that the Board of Directors of
the Company has received a superior proposal, specifying the
material terms and conditions of such superior proposal and
identifying the person making such superior proposal (it
being understood that any amendment to a superior proposal
shall necessitate an additional reasonable time period). In
addition, if the Company proposes to enter into an agreement
with respect to any takeover proposal, it shall concurrently
with entering into such agreement pay, or cause to be paid,
to Parent the Expenses (as defined in Section 5.11(c)) and
the Termination Fee (as defined in Section 5.11(b)). For
purposes of this Agreement, "superior proposal" means a bona
fide proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or
securities, more than 50% of the shares of Company Common
Stock then outstanding or all or substantially all the
assets of the Company, and otherwise on terms which a
majority of the disinterested members of the Board of
Directors of the Company determines in its good faith
judgment (based on the advice of a financial advisor of
nationally recognized reputation) to be more favorable to
the Company's shareholders than the Merger and for which
financing, to the extent required, is then committed or
which, in the good faith judgment of a majority of such
disinterested members, is reasonably capable of being
financed by such third party.
(c) In addition to the obligations of the Company
set forth in paragraph (b), the Company promptly shall
advise Parent in writing of any request for information or
34
of any takeover proposal, or any inquiry with respect to or
which reasonably could be expected to lead to any takeover
proposal, and the material terms and conditions of such
request, takeover proposal or inquiry. The Company will
keep Parent informed in all material respects of the status
and details (including amendments or proposed amendments) of
any such takeover proposal or inquiry.
(d) Nothing contained in this Section 4.02 shall
prohibit the Company from (i) taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or (ii) making any
disclosure to the Company's shareholders if, in the good
faith judgment of the majority of the members of the Board
of Directors of the Company, after consultation with outside
counsel, failure to so disclose would be inconsistent with
applicable laws; provided that the Company does not, except
--------
in accordance with the provisions of Section 4.02(b),
withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or approve or recommend,
or propose to approve or recommend, a takeover proposal.
(e) The provisions of Section 4.02(a), (b) and
(c), and Section 5.11(b), shall be inapplicable during the
Termination Period (as defined in Section 7.01(e));
provided, however, that during the Termination Period, the
-------- -------
Company shall not enter into a definitive agreement with
respect to any takeover proposal or terminate this Agreement
pursuant to Section 7.01(d) until two business days
following Parent's receipt of written notice specifying the
material terms and conditions of such takeover proposal and
identifying the person making such takeover proposal and
stating that the Board of Directors of the Company intends
to approve or recommend such takeover proposal. During such
two business day period, Parent shall be entitled to elect
to immediately and irrevocably terminate the Termination
Period and any such irrevocable termination shall be
effective immediately upon delivery of written notice
thereof to the Company in the manner prescribed in Section
4.02(f) and at such time the provisions of Section 4.02(a),
(b) and (c) and Section 5.11(b) shall become immediately
applicable.
(f) In addition to its right under
Section 4.02(e), Parent shall be entitled to elect at any
time to immediately and irrevocably terminate the
Termination Period and any such termination shall be
effective immediately upon delivery of written notice
35
thereof to the Company in the manner prescribed in the next
sentence and at such time the provisions of Section 4.02(a),
(b) and (c) and Section 5.11(b) shall become immediately
applicable. Any notice by Parent to the Company of
termination of the Termination Period may be given by
facsimile transmission addressed to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇; Confirmation
No.: (▇▇▇) ▇▇▇-▇▇▇▇) and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. (Telecopy
No.: (▇▇▇) ▇▇▇-▇▇▇▇; Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇) (or
such other telecopy numbers as shall be specified by notice
pursuant to Section 8.02) and such notice shall be deemed
delivered upon completion of the transmissions. Parent
shall promptly deliver copies of such facsimiles to the
addressees thereof pursuant to Section 8.02.
ARTICLE V
Additional Agreements
---------------------
SECTION 5.01. Preparation of Form S-4 and the
-------------------------------
Proxy Statement; Shareholders Meeting. (a) As soon as
--------------------------------------
practicable following the date of this Agreement, the
Company and Parent shall prepare and file with the SEC the
Proxy Statement and Parent shall prepare and file with the
SEC the Form S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Company and Parent
shall use all reasonable efforts to have the Form S-4
declared effective under the Securities Act as promptly as
practicable after such filing. The Company will use its
reasonable efforts to cause the Proxy Statement to be mailed
to the Company's shareholders as promptly as practicable
after the Form S-4 is declared effective under the
Securities Act. Parent shall, at its expense, also take any
action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required
to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the
Merger and under the Company Stock Plans. Each of Parent
and the Company shall furnish all information concerning
itself to the other as may be reasonably requested in
connection with any such action and the preparation, filing
and distribution of the Form S-4 and the preparation, filing
and distribution of the Proxy Statement.
(b) The Company will, as soon as practicable
following the date of this Agreement, establish a record
date (which will be as soon as practicable following the
36
date of this Agreement) for, duly call, give notice of,
convene and hold a meeting of its shareholders (the
"Shareholders Meeting") for the purpose of approving this
Agreement; provided, however, that the Company may postpone
-------- -------
or adjourn any Shareholders Meeting to a date no later than
May 14, 1996, in order to facilitate the satisfaction of the
condition set forth in Section 6.01(a). The Company will,
through its Board of Directors, recommend to its
shareholders approval of this Agreement, except to the
extent that the Board of Directors of the Company shall have
withdrawn or modified its approval or recommendation of this
Agreement or the Merger as permitted by Section 4.02(b).
Without limiting the generality of the foregoing, the
Company agrees that its obligations pursuant to the first
sentence of this Section 5.01(b) shall not be affected by
(i) the commencement, public proposal, public disclosure or
communication to the Company of any takeover proposal or
(ii) the withdrawal or modification by the Board of
Directors of the Company of its approval or recommendation
of this Agreement or the Merger.
SECTION 5.02. Letters of the Company's Accoun-
-------------------------------
tants. (a) The Company shall use its reasonable efforts to
------
cause to be delivered to Parent a "comfort" letter of
Deloitte & Touche LLP, the Company's independent public
accountants, dated a date within two business days before
the date on which the Form S-4 shall become effective and
addressed to Parent, customary in scope and substance for
letters delivered by independent public accountants in
connection with registration statements similar to the
Form S-4.
(b) The Company shall use its reasonable efforts
to cause to be delivered to Parent letters from Deloitte &
Touche LLP, addressed to Parent and the Company, one dated
the date of the Proxy Statement, stating that after
appropriate review of the Merger Agreement the Company is an
entity which would qualify as a party to a pooling of
interests transaction under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations,
and one dated as of the Closing Date, confirming as of the
Closing Date the previously delivered letter referred to
above.
SECTION 5.03. Letters of Parent's Accountants.
--------------------------------
(a) Parent shall use its reasonable efforts to cause to be
delivered to the Company a "comfort" letter of Coopers &
▇▇▇▇▇▇▇ L.L.P., Parent's independent public accountants,
37
dated a date within two business days before the date on
which the Form S-4 shall become effective and addressed to
the Company, and in the form customarily given in securities
offerings of Parent registered on Form S-4 in the past.
(b) Parent shall use its reasonable efforts to
cause to be received by it letters from Coopers & ▇▇▇▇▇▇▇
L.L.P., addressed to Parent, one dated the date of the Proxy
Statement, stating that the Merger will qualify as a pooling
of interests transaction under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations,
and one dated as of the Closing Date, confirming as of the
Closing Date the previously delivered letter referred to
above.
SECTION 5.04. Accounting and Tax Matters.
---------------------------
(a) Parent shall not, and shall not permit any of its
subsidiaries to, intentionally take any action that (without
regard to any action taken or agreed to be taken by the
Company or any of its affiliates) would prevent Parent from
accounting for the business combination to be effected by
the Merger as a pooling of interests.
(b) Parent shall not, and shall not permit any of
its subsidiaries to, intentionally take any action that
(without regard to any action taken or agreed to be taken by
the Company or any of its affiliates) would prevent the
Merger from qualifying as a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code or that would result in the conditions set forth in
clauses (iii) and (iv) of Section 6.03(c) not being true.
SECTION 5.05. Foreign Approval. The parties
-----------------
agree that the Merger shall not be implemented in the
Federal Republic of Germany without the prior notification
and/or approval of the German Federal Cartel Office.
SECTION 5.06. Access to Information. (a) The
----------------------
Company shall, and shall cause each of its subsidiaries to,
upon reasonable notice from Parent, afford to Parent, and to
Parent's officers, employees, accountants, counsel,
financial advisors and other representatives, reasonable
access during normal business hours during the period prior
to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and,
during such period, each of the Company shall, and shall
cause each of its subsidiaries to, furnish promptly to
Parent upon request (i) a copy of each report, schedule,
38
registration statement and other document filed or received
by it during such period pursuant to the requirements of
Federal or state securities laws or tax laws and (ii) all
other information concerning its business, properties and
personnel as Parent may reasonably request.
(b) Parent shall, and shall cause each of its
subsidiaries to, upon reasonable notice from the Company,
afford to Deloitte & Touche LLP, on behalf of the Company,
reasonable access during normal business hours during the
period prior to the Effective Time to any information
reasonably related to the ability of Parent to account for
the business combination to be effected by the Merger as a
pooling of interests.
(c) Each of the Company and Parent may make
copies of documents provided to them pursuant this
Section 5.06 at their own expense. The parties shall, and
shall cause their respective officers, employees,
accountants, counsel, financial advisors and other
representatives to, hold any such information which is
nonpublic in confidence on the same terms and conditions as
set forth in the letter dated November 3, 1995, as amended
from time to time, between the Company and Parent (the
"Confidentiality Agreement").
SECTION 5.07. Reasonable Efforts; Notification.
---------------------------------
(a) The Company agrees to promptly effect all necessary
filings required to be made by it under the HSR Act and any
other domestic or foreign antitrust law, rule or regulation.
Each of Parent and Sub agrees to (i) continue to process the
filing made under the HSR Act on October 20, 1995, and to
promptly effect all necessary filings required to be made by
them under any other domestic or foreign antitrust law, rule
or regulation, and (ii) promptly take, or cause their
affiliates to take, if required by the Federal Trade
Commission or its staff, the Assistant Attorney General in
charge of the Antitrust Division or her staff, any state
attorney general or its staff, or any other Governmental
Entity, in each case in order to consummate the Merger, all
steps (including executing agreements and submitting to
judicial or administrative orders) to secure government
antitrust clearance (including by avoiding or setting aside
any preliminary or permanent injunction or other order of
any Governmental Entity), including, without limitation, all
steps to make arrangements for or to effect the sale or
other disposition of particular assets or categories of
assets or businesses of Parent, Sub, any of their affiliates
39
and/or the Company or any of its subsidiaries and to hold
separate (including, without limitation, pursuant to
arrangements which restrict, limit or prohibit access to the
Company or any of its subsidiaries and/or the voting of
shares of capital stock of the Company or the voting stock
of any of its subsidiaries) pending such sale or other
disposition of particular assets or categories of assets,
businesses or voting securities of the Company or the voting
stock of any of its subsidiaries. All the actions required
to be taken or to be taken hereunder by Parent, Sub or their
affiliates pursuant to this Section 5.07 will be consistent
with their respective obligations under applicable law or
any agreement to which any of such person is a party.
(b) Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to
use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all other
things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all other
necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all other
reasonable steps as may be necessary to avoid an action or
proceeding by any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, the
Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement or the
other transactions contemplated by this Agreement, use all
reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the
40
effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement. Nothing
herein shall limit or affect the Company's taking actions
specifically permitted by Section 4.02(b).
SECTION 5.08. Rights Agreement. The Company
-----------------
shall take all necessary action to (i) render the Rights
Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement and (ii) ensure
that (y) neither Parent nor any of its affiliates is an
Acquiring Person (as defined in the Rights Agreement)
pursuant to the Rights Agreement and (z) a Stock Acquisition
Date or Distribution Date (in each case as defined in the
Rights Agreement) does not occur by reason of the execution
of this Agreement, the consummation of the Merger, or the
consummation of the other transactions contemplated by this
Agreement. The Board of Directors of the Company shall also
take all further action (in addition to that referred to
above) requested in writing by Parent (including redeeming
the Rights immediately prior to the Effective Time or
amending the Rights Agreement) in order to render the Rights
inapplicable to the Merger and the other transactions
contemplated by this Agreement. Except as provided above
with respect to the Merger and the other transactions
contemplated by this Agreement, or as requested in writing
by Parent, the Board of Directors of the Company shall not
(i) amend the Rights Agreement or (ii) take any action with
respect to, or make any determination under, the Rights
Agreement, including a redemption of the Rights or any
action to facilitate a takeover proposal; provided that any
--------
such action may be taken simultaneously with entering into
an agreement pursuant to Section 4.02(b).
SECTION 5.09. Stock Options. (a) As soon as
--------------
practicable following the date of this Agreement, the Board
of Directors of the Company (or, if appropriate, any commit-
tee administering the Company Stock Plans) shall adopt such
resolutions or take such other actions as may be required to
effect the following with respect to all options to purchase
shares of Company Common Stock granted under the Company
Stock Plans ("Options") not exercised prior to the Closing
Date:
(i) adjust the terms of all such Options to
purchase shares of Company Common Stock to provide
that, at the Effective Time, each Option outstanding
immediately prior to the Effective Time shall be deemed
to constitute an option to acquire, on substantially
41
the same terms and conditions (including full
exercisability at such time as such Option shall be
exercisable by its terms), as were applicable to such
Option under the terms of such Option and the
applicable Company Stock Plans, the same number of
shares of Parent Common Stock (rounded down to the
nearest whole share) as the holder of such Option would
have been entitled to receive pursuant to the Merger
had such holder exercised such Option in full
immediately prior to the Effective Time, at a price per
share equal to (y) the aggregate exercise price for the
shares of Company Common Stock otherwise purchasable
pursuant to such Option divided by (z) the number of
shares of Parent Common Stock deemed purchasable
pursuant to such Option; provided, however, that (i) no
-------- -------
certificate or scrip representing fractional shares of
Parent Common Stock shall be issued in respect of any
Option as adjusted pursuant to this Section 5.09 and
(ii) any such fractional share will not entitle the
owner thereof to vote or to any rights of a shareholder
of Parent; provided, further, that in the case of any
-------- -------
option to which Section 421 of the Code applies by
reason of its qualification under any of Section 422 of
the Code ("qualified stock options"), the option price,
the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such
option shall be determined in order to comply with
Section 424(a) of the Code; and
(ii) make such other changes to the Company Stock
Plans as it deems appropriate to give effect to the
Merger (subject to the approval of Parent, which shall
not be unreasonably withheld).
(b) The provisions in the Company Stock Plans and
any other Benefit Plan providing for the issuance, transfer
or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be
deleted as of the Effective Time, and the Company shall use
its best efforts to ensure that following the Effective Time
no holder of an Option or any participant in any Company
Stock Plan shall have any right thereunder to acquire any
capital stock of the Company, Parent or the Surviving
Corporation, except as provided in Section 5.09(a).
(c) As soon as practicable after the Effective
Time, Parent shall deliver to the holders of Options
appropriate notices setting forth such holders' rights
42
pursuant to the respective Company Stock Plans and the
agreements evidencing the grants of such Options shall
continue in effect on the same terms and conditions (subject
to the adjustments required by this Section 5.09 after
giving effect to the Merger). Except as otherwise provided
in this Section 5.09, Parent shall comply with the terms of
the Company Stock Plans and ensure, to the extent required
by, and subject to the provisions of such Company Stock
Plans, that the Options which qualified as incentive stock
options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time.
(d) Parent agrees to use reasonable efforts to
take such actions as are necessary for the conversion of the
Options in accordance with this Section 5.09, including
(i) the reservation, issuance and listing of Parent Common
Stock as is necessary to effectuate the transactions
contemplated by Section 5.09(a), (ii) entering into such
agreements as are necessary to assume such Options and
(iii) the filing of a registration statement on Form S-8, if
necessary, to facilitate the public sale of stock issuable
upon the exercise of such Options.
(e) A holder of an Option adjusted in accordance
with this Section 5.09 may exercise such adjusted Option in
whole or in part in accordance with its terms by delivering
a properly executed notice of exercise to Parent, together
with the consideration therefor and the Federal withholding
tax information, if any, required in accordance with the
related Company Stock Plan.
SECTION 5.10. Indemnification and Insurance.
------------------------------
(a) The by-laws of the Surviving Corporation shall contain
the provisions with respect to indemnification and
exculpation from liability set forth in the Company's by-
laws on the date of this Agreement, which provisions shall
not be amended, repealed or otherwise modified for a period
of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals
who on or prior to the Effective Time were directors,
officers, employees or agents of the Company.
(b) For six years from the Effective Time, Parent
shall, unless Parent agrees in writing to guarantee the
indemnification obligations set forth in Section 5.10(a),
maintain in effect the current level and scope of directors'
and officers' liability insurance covering those persons who
are currently covered by the Company's directors' and
43
officers' liability insurance policy (a copy of which has
been heretofore delivered to Parent), so long as the annual
premium therefor would not be in excess of 200% of the last
annual premium paid prior to the date of this Agreement (the
"Company's Current Premium"). If such premiums for such
insurance would at any time exceed 200% of the Company's
Current Premium, then the Surviving Corporation shall cause
to be maintained policies of insurance which, in the
Surviving Corporation's good faith determination, provide
the maximum coverage available at an annual premium equal to
200% of the Company's Current Premium. The Company
represents to Parent that the Company's Current Premium is
$561,088.
(c) This Section 5.10 (i) shall survive the
consummation of the Merger at the Effective Time, (ii) is
intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties and their respective
heirs, executors, administrators, representatives and
successors, and (iii) is in addition to, and not in
substitution for, any other rights to indemnification or
contribution that any such Indemnified Party may have by
contract or otherwise. In the event that Parent or the
Surviving Corporation or any of their respective successors
or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its
assets to any person, then, and in each such case, proper
provision shall be made so that the successors, assigns and
transferees of Parent and the Surviving Corporation, as
applicable, assume the respective obligations of Parent and
the Surviving Corporation set forth in this Section 5.10.
SECTION 5.11. Fees and Expenses. (a) Except as
------------------
provided below, all fees and expenses incurred in connection
with the Merger, this Agreement and the transactions contem-
plated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger
is consummated, except that expenses incurred in connection
with the filing, printing and mailing of the Proxy Statement
and the Form S-4 shall be shared equally by Parent and the
Company.
(b) The Company shall promptly pay, or cause to
be paid, to Parent a fee of $40,000,000 (the "Termination
Fee"), payable in same day funds, plus all Expenses, if
(i) this Agreement is terminated by the Company pursuant to
44
Section 7.01(d) or (ii) prior to any termination of this
Agreement (other than a termination (A) pursuant to
Section 7.01(e) or (B) occurring after a Governmental Entity
of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become
final and nonappealable), a bona fide takeover proposal
shall have been made public after the date hereof and prior
to the Shareholders Meeting and the requisite approval of
the Company's shareholders of the Merger shall not have been
obtained upon a vote taken at a duly held Shareholders
Meeting and, within 12 months of such termination, a
transaction constituting a takeover proposal is consummated
or the Company enters into an agreement with respect to,
approves or recommends such takeover proposal.
(c) For purposes of this Section 5.11, "Expenses"
means all documented out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent or any of its
subsidiaries in connection with the Merger or any of the
transactions contemplated by this Agreement, including all
reasonable fees and expenses of counsel, investment banking
firms, accountants, experts and consultants to Parent or any
or its affiliates; provided, however, that the Company shall
-------- -------
not be obligated to make payments of Expenses pursuant to
this Section 5.11 in excess of $10,000,000 in the aggregate.
SECTION 5.12. Public Announcements. Parent and
---------------------
Sub, on the one hand, and the Company, on the other hand,
will consult with each other before issuing, and give each
other the opportunity to review and comment upon, any press
release or other public statements with respect to the
transactions contemplated by this Agreement, including the
Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except
as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any
national securities exchange or the Nasdaq National Market.
The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 5.13. Affiliates. (a) Prior to the
-----------
Closing Date, the Company shall deliver to Parent a letter
identifying all persons who are, at the time this Agreement
45
is submitted for approval to the shareholders of the
Company, "affiliates" of the Company for purposes of
Rule 145 under the Securities Act or for purposes of
qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations. The Company
shall use its reasonable efforts to cause each such person
to deliver to Parent on or prior to the Closing Date a
written agreement substantially in the form attached as
Exhibit A hereto.
(b) Parent shall use its reasonable efforts to
cause all persons who are "affiliates" of Parent for
purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations to
comply with the fourth paragraph of Exhibit A hereto.
(c) For so long as resales of shares of Parent
Common Stock issued pursuant to the Merger are subject to
the resale restrictions set forth in Rule 145 under the
Securities Act, Parent will use its reasonable efforts to
comply with Rule 144(c)(1) under the Securities Act.
SECTION 5.14. Stock Exchange Listing. To the
-----------------------
extent Parent does not issue treasury shares in the Merger
or under Company Stock Plans which are already listed,
Parent shall use its reasonable efforts to cause the shares
of Parent Common Stock to be issued in the Merger and under
the Company Stock Plans to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the
Closing Date.
SECTION 5.15. Certain Litigation. (a) Each
-------------------
party agrees to use reasonable efforts to obtain a dismissal
without prejudice of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and JNJ Acquisition
Corp. v. Cordis Corporation, with each party bearing its own
costs and attorneys' fees therefor. The Company agrees that
it will not settle any litigation currently pending, or
commenced after the date hereof, against the Company or any
of its directors, without the prior written consent of
Parent.
(b) The Company will not voluntarily cooperate
with any third party which has sought or may hereafter seek
to restrain or prohibit or otherwise oppose the Merger and
will cooperate with Parent and Sub to resist any such effort
to restrain or prohibit or otherwise oppose the Merger,
46
unless the Board of Directors of the Company determines in
good faith, after consultation with counsel, that failing so
to cooperate with such third party or cooperating with
Parent or Sub, as the case may be, would constitute a breach
of the Board's fiduciary duties under applicable law.
SECTION 5.16. Consent Solicitation. Parent and
---------------------
Sub shall immediately terminate the solicitation of Company
shareholder consents, the Company shall immediately
terminate the solicitation of revocations of consent with
respect thereto, and each party shall withdraw the related
SEC filings and cease soliciting written consents or
revocations, as applicable, from the shareholders of the
Company.
SECTION 5.17. United States Employee Benefits.
--------------------------------
(a) For a period of one year following the Effective Time
(the "Initial Period"), Parent and Sub agree to maintain for
the benefit of employees of the Company and its subsidiaries
who are employed in the United States ("U.S. Employees") the
Benefit Plans listed on Schedule 5.17(a) (the "Scheduled
Benefit Plans") or substitute plans which in the aggregate
provide substantially equivalent benefits to the Scheduled
Benefit Plans, for the employees of the Company and its
subsidiaries. For the one-year period following the Initial
Period, Parent shall provide or make available for the
benefit of U.S. Employees who continue in employment during
the one-year period following the Initial Period pension,
health and welfare benefits which are substantially
equivalent in the aggregate to such benefits provided or
made available to other similarly situated employees of
Parent and Sub. Following the completion of the Initial
Period and the one-year period thereafter, Parent, in its
sole discretion, shall determine the benefits to be provided
or made available to U.S. Employees.
(b) As of the Effective Time, U.S. Employees
(i) shall be eligible for coverage under the terms and
conditions of the written severance policy of Parent to the
same extent such individuals would be eligible for coverage
under such severance policy if they were employed by Parent
or Sub and (ii) shall be given past service credit with the
Company or its subsidiaries to the same extent such service
was credited under the Company's written severance policy as
of the Effective Time; provided, however, that each
-------- -------
U.S. Employee whose name is set forth on Schedule 5.18 shall
not be eligible for severance benefits under the written
severance policy of Parent, or any other severance policy of
47
Parent, Sub or the Company or any of its subsidiaries,
during the period that such individual is covered under an
employment agreement described in such Schedule.
(c) As of the Effective Time, U.S. Employees
shall be given past service credit for their service with
the Company or its subsidiaries prior to the Effective Time
(i) for all purposes under the terms and conditions of the
Scheduled Benefit Plans (or any substitute plans provided
pursuant to Section 5.17(a)) and, as provided in accordance
with Section 5.17(b), under the terms and conditions of the
written severance policy of Parent, and (ii) for eligibility
and vesting purposes (but not for benefit accrual purposes
other than with respect to the Company's vacation policy)
under any other pension, health and welfare plan provided by
Parent to the employees of the Company or its subsidiaries
during the Initial Period or the one-year period thereafter
to the same extent such service would be credited under the
terms and conditions of such plans analogous to the
Scheduled Benefit Plans as if such U.S. Employees were
employed by Parent prior to the Effective Time; provided,
--------
however, that no such past service credit will be given for
-------
any purpose with respect to Parent's post-retirement medical
plan. Notwithstanding the foregoing, it is understood
between the parties hereto that neither Parent nor Sub shall
be required to provide any benefits from and after the
Effective Time except as expressly provided in this
Section 5.17.
(d) Parent agrees to (i) continue and maintain
the Company's existing annual incentive compensation plans
listed on Schedule 3.01(k)(i) in effect through the end of
the Company's fiscal year ending June 30, 1996, and
(ii) equitably adjust, as Parent deems necessary and
appropriate in its sole discretion, any performance criteria
established under such incentive plans for the annual award
period ending on June 30, 1996, in order to eliminate any
costs or expenses directly arising from the implementation
of the Merger which would adversely impact upon the
achievement of the applicable performance criteria. For
calendar year 1996, Parent shall make available incentive
compensation opportunities on terms and conditions
substantially equivalent to those made available to
similarly situated employees of Parent; it being understood,
however, that for any award period under Parent's incentive
plans which (i) is in effect on July 1, 1996 and
(ii) commenced prior to July 1, 1996, the performance
criteria and target awards payable shall be equitably
48
adjusted, as Parent deems necessary and appropriate in its
sole discretion, to reflect any shortened performance cycle.
(e) Parent and Sub acknowledge that, for purposes
of those Benefit Plans listed on Schedule 3.01(m), the
consummation of the Merger will constitute a "Change in
Control" of the Company (as that term is defined in such
plans, agreements and arrangements). Parent agrees (i) to
cause the Surviving Corporation after consummation of the
Merger to pay all amounts provided under such plans,
agreements and arrangements as a result of a Change in
Control of the Company in accordance with their terms as in
effect on the date hereof and (ii) to honor and to cause the
Surviving Corporation to honor, all rights and privileges to
or with respect to any such plans, agreements and
arrangements as in effect on the date hereof which, by their
respective terms, became effective as a result of such
Change in Control.
SECTION 5.18. Employment Agreements. The Company
----------------------
shall use its reasonable efforts to cause each person whose
name is set forth on Schedule 5.18 to enter into an
employment agreement on the terms and conditions generally
applicable to the category of employment agreement which
will be offered to such person as set forth on such
Schedule.
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.01. Conditions to Each Party's
--------------------------
Obligation To Effect the Merger. The respective obligation
--------------------------------
of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Shareholder Approval. This Agreement shall
---------------------
have been approved by the affirmative vote of the
holders of a majority of the outstanding shares of
Company Common Stock.
(b) NYSE Listing. The shares of Parent Company
-------------
Stock issuable to the Company's shareholders pursuant
to this Agreement and under the Company Stock Plans
shall have been approved for listing on the NYSE,
subject to official notice of issuance.
49
(c) HSR Act. The waiting period applicable to
--------
the Merger under the HSR Act shall have been terminated
or shall have expired.
(d) No Injunctions or Restraints; Illegality.
-----------------------------------------
None of the parties hereto shall be subject to any
statute, rule, regulation, decree, ruling, injunction
or other order issued by any Governmental Entity of
competent jurisdiction (an "Injunction") which
prohibits, restrains, enjoins or restricts the
consummation of the transactions contemplated by this
Agreement; provided, however, that each of Parent and
-------- -------
Sub shall have used its best efforts, to the extent
required pursuant to Section 5.07(a), to prevent any
such injunction or other order, and to appeal as
promptly as practicable any injunction or other order
that may have been entered, including, without
limitation, by proffering its willingness to accept an
order embodying any arrangement required to be made by
Parent or Sub pursuant to clause (a)(ii) of
Section 5.07 (and notwithstanding anything in this
subsection (d) to the contrary, no terms, conditions or
provisions of an order embodying such an arrangement
shall constitute a basis for Parent or Sub asserting
nonfulfillment of the conditions contained in this
subsection (d)).
(e) Form S-4. The Form S-4 shall have become
---------
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order.
SECTION 6.02. Conditions to Obligations of Parent
-----------------------------------
and Sub. The obligations of Parent and Sub to effect the
--------
Merger are further subject to the following conditions:
(a) Representations and Warranties. The
-------------------------------
representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in
all material respects, in each case as of the date of
this Agreement and (except to the extent such
representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as
of the Closing Date, except as otherwise contemplated
by this Agreement, and Parent shall have received a
50
certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer
of the Company to such effect.
(b) Performance of Obligations of the Company.
------------------------------------------
The Company shall have performed in all material
respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on
behalf of the Company by the chief executive officer
and the chief financial officer of the Company to such
effect.
(c) Letters from Company Affiliates. Parent
--------------------------------
shall have received from each person named in the
letter referred to in Section 5.13(a) an executed copy
of an agreement substantially in the form of Exhibit A
hereto.
(d) No Material Adverse Change. At any time on
---------------------------
or after the date of this Agreement there shall not
have occurred any material adverse change in the
business, properties, assets, financial condition or
results of operations of the Company and its
subsidiaries, taken as a whole.
(e) Pooling Letters. Parent shall have received
----------------
each of the letters described in Sections 5.02(b) and
5.03(b) from Deloitte & Touche LLP and Coopers &
▇▇▇▇▇▇▇ L.L.P., respectively.
SECTION 6.03. Conditions to Obligations of the
--------------------------------
Company. The obligation of the Company to effect the Merger
--------
is further subject to the following conditions:
(a) Representations and Warranties. The repre-
-------------------------------
sentations and warranties of Parent and Sub set forth
in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of Parent and Sub set forth in this Agree-
ment that are not so qualified shall be true and
correct in all material respects, in each case as of
the date of this Agreement and (except to the extent
such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on
and as of the Closing Date, except as otherwise
contemplated by this Agreement, and the Company shall
have received a certificate signed on behalf of Parent
51
by the chief executive officer and the chief financial
officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub.
---------------------------------------------
Parent and Sub shall have performed in all material
respects all obligations required to be performed by
them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate
signed on behalf of Parent by the chief executive
officer and the chief financial officer of Parent to
such effect.
(c) Tax Opinion. On or prior to the date on
------------
which the Form S-4 becomes effective, the Company shall
have received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the Company, based on certain
letters provided by Parent, Sub and the Company,
respectively, in the forms set forth in
Schedules 6.03(c)(I) and (II) to this Agreement, to the
effect that (i) the Merger will be treated for Federal
income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, (ii) the
Company, Parent and Sub will each be a party to that
reorganization within the meaning of Section 368(b) of
the Code, (iii) no income, gain or loss will be
recognized for Federal income tax purposes by either
the Company or Parent as a result of the consummation
of the Merger, and (iv) no income, gain or loss will be
recognized for Federal income tax purposes by
shareholders of the Company upon the exchange in the
Merger of shares of the Company solely for shares of
Parent (except to the extent of any cash received in
lieu of fractional shares).
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
SECTION 7.01. Termination. This Agreement may be
------------
terminated, and the Merger contemplated hereby may be
abandoned, at any time prior to the Effective Time, whether
before or after approval of matters presented in connection
with the Merger by the shareholders of the Company:
(a) by mutual written consent of Parent, Sub and
the Company;
52
(b) by either Parent or the Company:
(i) if, upon a vote taken at a duly held
Shareholders Meeting or any adjournment thereof,
any required approval of the shareholders of the
Company shall not have been obtained;
(ii) if the Merger shall not have been
consummated on or before May 15, 1996, unless the
failure to consummate the Merger is the result of
a breach of this Agreement by the party seeking to
terminate this Agreement; provided, however, that
-------- -------
the passage of such period shall be tolled for any
part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or
action restraining, enjoining or otherwise
prohibiting the consummation of the Merger or the
calling or holding of the Shareholders Meeting; or
(iii) if any Governmental Entity of competent
jurisdiction shall have issued an order, decree or
ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting
the Merger and such order, decree, ruling or other
action shall have become final and nonappealable;
(c) by either Parent or Sub:
(i) if, prior to the Shareholders Meeting, a
takeover proposal is commenced, publicly proposed,
publicly disclosed or communicated to the Company
(or the willingness of any person to make a
takeover proposal is publicly disclosed or
communicated to the Company) and the Board of
Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation
of the Merger or this Agreement, or approved or
recommended any takeover proposal, or resolved to
take any of the foregoing actions; or
(ii) if the Company shall have entered into
any agreement with respect to any superior
proposal in accordance with Section 4.02(b); or
(d) by the Company in connection with entering
into a definitive agreement in accordance with
Section 4.02(b) or Section 4.02(e), as applicable,
53
provided it has complied with all provisions thereof,
including the notice provisions therein, and that it
makes simultaneous payment of the Expenses and
Termination Fee to the extent required hereunder.
(e) by Parent at any time during the period from
the date hereof to December 27, 1995 (or such earlier
date elected by Parent pursuant to Section 4.02(e) or
Section 4.02(f)) (such period, the "Termination
Period"), if Parent in its sole judgment determines,
based on its due diligence review of the Company, that
it is inadvisable to proceed with the Merger.
SECTION 7.02. Effect of Termination. In the
----------------------
event of termination of this Agreement by either the Company
or Parent as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of the first sentence of
Section 3.01(p), the second sentence of Section 5.06(c),
Section 5.11, this Section 7.02 and Article VIII and except
to the extent that such termination results from the wilful
and material breach by a party of any of its
representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be
----------
amended by the parties hereto at any time before or after
any required approval of matters presented in connection
with the Merger by the shareholders of the Company;
provided, however, that after any such approval, there shall
-------- -------
be made no amendment that by law requires further approval
by such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 7.04. Extension; Waiver. At any time
------------------
prior to the Effective Time, the parties may (a) extend the
time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto or (c) subject to the
proviso of Section 7.03, waive compliance with any of the
agreements or conditions contained herein. Any agreement on
the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this
54
Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
General Provisions
------------------
SECTION 8.01. Nonsurvival of Representations and
----------------------------------
Warranties. None of the representations and warranties in
-----------
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance
after the Effective Time.
SECTION 8.02. Notices. Except as otherwise
--------
provided in Section 4.02(f), all notices, requests, claims,
demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or
sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) if to the Company, to
Cordis Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
55
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
SECTION 8.03. Definitions. For purposes of this
------------
Agreement:
(a) an "affiliate" of any person means another
person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "knowledge" of any person means actual
knowledge of the directors and executive officers of
such person;
(c) "material adverse change" or "material adverse
effect" means, when used in connection with the Company
or Parent, any change or effect that is materially
adverse to the business, properties, assets, financial
condition or results of operations of such party and
its subsidiaries taken as a whole;
(d) "person" means an individual, corporation,
partnership, joint venture, association, trust, unin-
corporated organization or other entity;
(e) a "subsidiary" of any person means another
person, an amount of the voting securities, other
voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indi-
rectly by such first person;
(f) "superior proposal" has the meaning assigned
thereto in Section 4.02; and
(g) "takeover proposal" has the meaning assigned
thereto in Section 4.02.
56
SECTION 8.04. Interpretation. When a reference
---------------
is made in this Agreement to a Section, Exhibit or Schedule,
such reference shall be to a Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. When-
ever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 8.05. Counterparts. This Agreement may
-------------
be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party
--------------------------------
Beneficiaries. This Agreement and the Confidentiality
--------------
Agreement, (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter of this Agreement and the Confidentiality
Agreement and (b) except for the provisions of Article II
and Section 5.10, are not intended to confer upon any person
other than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement
--------------
shall be governed by, and construed in accordance with, the
laws of the State of Florida, regardless of the laws that
might otherwise govern under applicable principles of
conflicts of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement
-----------
nor any of the rights, interests or obligations hereunder
shall be assigned, in whole or in part, by operation of law
or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in
its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct
wholly owned corporate subsidiary of Parent, but no such
assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and
be enforceable by, the parties and their respective
successors and assigns.
57
SECTION 8.09. Enforcement. The parties agree
------------
that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any court of the
United States located in the State of Florida or the State
of New York or in Florida state court, this being in
addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Florida or the
State of New York or any Florida state court in the event
any dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and
(c) agrees that it will not bring any action relating to
this Agreement or the transactions contemplated by this
Agreement in any court other than a Federal court sitting in
the State of Florida or the State of New York or a Florida
state court.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice Chairman
JNJ MERGER CORP.
by /s/ ▇.▇. ▇▇▇▇▇
--------------------------
Name: ▇.▇. ▇▇▇▇▇
Title: President
CORDIS CORPORATION
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer