AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TYCO INTERNATIONAL LTD.,
T11 ACQUISITION CORP.
and
UNITED STATES SURGICAL CORPORATION
Dated as of May 25, 1998
TABLE OF CONTENTS
ARTICLE I
THE MERGER................................ 2
SECTION 1.01. The Merger............................................ 2
SECTION 1.02. Effective Time. ..................................... 2
SECTION 1.03. Effect of the Merger.................................. 2
SECTION 1.04. Certificate of Incorporation; By-Laws................. 2
SECTION 1.05. Directors and Officers................................ 3
SECTION 1.06. Effect on Capital Stock............................... 3
SECTION 1.07. Exchange of Certificates.............................. 5
SECTION 1.08. Stock Transfer Books.................................. 7
SECTION 1.09. No Further Ownership Rights in Company Common Stock... 7
SECTION 1.10. Lost, Stolen or Destroyed Certificates................ 7
SECTION 1.11. Tax and Accounting Consequences....................... 7
SECTION 1.12. Taking of Necessary Action; Further Action............ 7
SECTION 1.13. Material Adverse Effect............................... 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 8
SECTION 2.01. Organization and Qualification; Subsidiaries.......... 8
SECTION 2.02. Certificate of Incorporation and By-Laws.............. 9
SECTION 2.03. Capitalization........................................ 9
SECTION 2.04. Authority Relative to this Agreement.................. 10
SECTION 2.05. No Conflict; Required Filings and Consents............ 10
SECTION 2.06. Compliance; Permits................................... 11
SECTION 2.07. SEC Filings; Financial Statements..................... 12
SECTION 2.08. Absence of Certain Changes or Events.................. 13
SECTION 2.09. No Undisclosed Liabilities............................ 13
SECTION 2.10. Absence of Litigation................................. 13
SECTION 2.11. Employee Benefit Plans; Employment Agreements......... 13
SECTION 2.12. Labor Matters......................................... 16
SECTION 2.13. Registration Statement; Proxy Statement/Prospectus.... 17
SECTION 2.14. Restrictions on Business Activities................... 17
SECTION 2.15. Title to Property..................................... 18
SECTION 2.16. Taxes................................................. 18
SECTION 2.17. Environmental Matters................................. 19
SECTION 2.18. Brokers............................................... 21
SECTION 2.19. Intellectual Property................................. 21
SECTION 2.20. Interested Party Transactions......................... 22
SECTION 2.21. Insurance............................................. 23
SECTION 2.22. Product Liability and Recalls......................... 23
SECTION 2.23. Opinion of Financial Advisor.......................... 23
SECTION 2.24. Pooling Matters....................................... 23
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SECTION 2.25. Tax Matters........................................... 23
SECTION 2.26 Accuracy of Information................................ 24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB.......................... 24
SECTION 3.01. Organization and Qualification; Subsidiaries.......... 24
SECTION 3.02. Articles of Organization and By-Laws.................. 24
SECTION 3.03. Capitalization........................................ 25
SECTION 3.04. Authority Relative to this Agreement.................. 25
SECTION 3.05. No Conflict; Required Filings and Consents............ 26
SECTION 3.06. Compliance; Permits................................... 27
SECTION 3.07. SEC Filings; Financial Statements..................... 27
SECTION 3.08. Absence of Certain Changes or Events.................. 28
SECTION 3.09. No Undisclosed Liabilities............................ 28
SECTION 3.10. Absence of Litigation................................. 28
SECTION 3.11. Employee Benefit Plans; Employment Agreements......... 28
SECTION 3.12. Labor Matters......................................... 31
SECTION 3.13. Registration Statement; Proxy Statement/Prospectus... 31
SECTION 3.14. Restrictions on Business Activities................... 32
SECTION 3.15. Title to Property..................................... 32
SECTION 3.16. Taxes................................................. 33
SECTION 3.17. Environmental Matters................................. 34
SECTION 3.18. Brokers............................................... 35
SECTION 3.19. Intellectual Property................................. 35
SECTION 3.20. Interested Party Transactions......................... 35
SECTION 3.21. Insurance............................................. 35
SECTION 3.22. Product Liability and Recalls......................... 36
SECTION 3.23. Ownership of Merger Sub; No Prior Activities.......... 36
SECTION 3.24. Pooling Matters....................................... 36
SECTION 3.25. Tax Matters........................................... 36
SECTION 3.26. DGCL Section 203...................................... 36
SECTION 3.27 Accuracy of Information................................ 37
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER.................. 37
SECTION 4.01. Conduct of Business by the Company Pending the Merger. 37
SECTION 4.02. No Solicitation....................................... 39
SECTION 4.03. Conduct of Business by Parent Pending the Merger...... 40
ARTICLE V
ADDITIONAL AGREEMENTS.......................... 41
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement... 41
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SECTION 5.02. Company Shareholders Meeting.......................... 42
SECTION 5.03. Access to Information; Confidentiality................ 42
SECTION 5.04. Consents; Approvals................................... 42
SECTION 5.05. Agreements with Respect to Affiliates................. 42
SECTION 5.06. Indemnification and Insurance......................... 43
SECTION 5.07. Notification of Certain Matters....................... 44
SECTION 5.08. Further Action/Tax Treatment.......................... 45
SECTION 5.09. Public Announcements.................................. 45
SECTION 5.10. Listing of Parent Shares.............................. 45
SECTION 5.11. Conveyance Taxes...................................... 45
SECTION 5.12. Option Plans and Benefits, etc........................ 45
SECTION 5.13. Accountant's Letters.................................. 46
SECTION 5.14. Pooling Accounting Treatment.......................... 46
SECTION 5.15. Connecticut Transfer Act.............................. 47
SECTION 5.16. Director Appointment.................................. 47
ARTICLE VI
CONDITIONS TO THE MERGER......................... 47
SECTION 6.01. Conditions to Obligation of Each Party to
Effect the Merger................................... 47
SECTION 6.02. Additional Conditions to Obligations of
Parent and Merger Sub............................... 49
SECTION 6.03. Additional Conditions to Obligation of the Company.... 50
ARTICLE VII
TERMINATION............................... 50
SECTION 7.01. Termination........................................... 50
SECTION 7.02. Effect of Termination................................. 52
SECTION 7.03. Fees and Expenses..................................... 53
ARTICLE VIII
GENERAL PROVISIONS............................ 54
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements.......................................... 54
SECTION 8.02. Notices............................................... 54
SECTION 8.03. Certain Definitions................................... 56
SECTION 8.04. Amendment............................................. 57
SECTION 8.05. Waiver................................................ 57
SECTION 8.06. Headings.............................................. 57
SECTION 8.07. Severability.......................................... 57
SECTION 8.08. Entire Agreement...................................... 57
SECTION 8.09. Assignment; Merger Sub................................ 58
SECTION 8.10. Parties in Interest................................... 58
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative. 58
SECTION 8.12. Governing Law; Jurisdiction........................... 58
SECTION 8.13. Counterparts.......................................... 58
SECTION 8.14. WAIVER OF JURY TRIAL.................................. 58
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 25, 1998 (this
"Agreement"), among TYCO INTERNATIONAL LTD., a Bermuda company ("Parent"), T11
ACQUISITION CORP., a Delaware corporation and a direct, wholly owned subsidiary
of Parent ("Merger Sub"), and UNITED STATES SURGICAL CORPORATION, a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective shareholders, and consistent with and in furtherance of their
respective business strategies and goals, for Parent to cause Merger Sub to
merge with and into the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company have each approved the merger
(the "Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"), and
upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder;
WHEREAS, Parent, Merger Sub and the Company intend that the
Merger be accounted for as a pooling-of-interests for financial reporting
purposes; and
WHEREAS, pursuant to the Merger, each outstanding share (a
"Share") of the Company's Common Stock, par value $.10 per share (the "Company
Common Stock"), shall be converted into the right to receive the Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) Effective Time. At the Effective
Time (as defined in Section 1.02 hereof), and subject to and upon the terms and
conditions of this Agreement and the DGCL, Merger Sub shall be merged with and
into the Company, the separate corporate existence of Merger Sub shall cease,
and the Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.01, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Merger (the "Closing") will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of the conditions set forth in Article VI, at the
offices of Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, unless another date, time or place is agreed to in writing by the parties
hereto.
SECTION 1.02. Effective Time. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated as of the day of the
Closing by filing a certificate of merger as contemplated by the DGCL (the
"Certificate of Merger"), together with any required related certificates, with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with the relevant provisions of, the DGCL (the time
of such filing being the "Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate of
Merger and the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws. (a)
Certificate of Incorporation. Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time the Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of Incorporation; provided,
however, that Article FOURTH shall be amended and restated in its entirety to
provide that the capital stock of the Surviving Corporation shall consist of
1,000 shares of common stock, par value $.01 per share.
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(b) By-Laws. The By-Laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and ByLaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 1.06(b)) shall be converted, subject to Section 1.06(f),
into the right to receive 0.7606 (the "Exchange Ratio") validly issued, fully
paid and nonassessable Parent Common Shares, par value $.20 ("Parent Common
Shares").
(b) Cancellation. Each Share held in the treasury of the Company
and each Share owned by Parent, Merger Sub or any direct or indirect wholly
owned subsidiary of the Company or Parent immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, cease to be outstanding, be canceled and retired without payment
of any consideration therefor and cease to exist.
(c) Assumption of Outstanding Stock Options, etc.. (1) Each
option outstanding at the Effective Time to purchase shares of Company Common
Stock (a "Stock Option") granted under (I) (i) the Company's 1990 Employee Stock
Option Plan, (ii) the Company's 1993 Employee Stock Option Plan, (iii) the
Company's 1996 Employee Stock Option Plan, (iv) the Company's 1997 Key
Management Equity Investment Plan, (v) the PAS Stock Option Plans, (vi) the
Company's 1997 Stock Option Purchase Agreement, (vii) the Company's Serviced
Based Stock Option Plan, and (viii) the Company's Outside Directors Stock Option
Plan, or (II) any other stock plan or agreement of the Company (collectively,
the "Company Stock Option Plans"), which by its terms is not extinguished in the
Merger, shall be assumed by Parent and shall constitute an option (an "Adjusted
Option") to acquire, on the same terms and conditions mutatis mutandis as were
applicable under such Stock Option prior to the Effective Time (but taking
account of the Merger), the number of Parent Common Shares (rounded to the
nearest whole Parent Common Share) as the holder of such Stock Option would have
been entitled to receive pursuant to the Merger had such holder exercised such
Stock Option in full immediately prior to the Effective Time, at a price per
share (rounded to the nearest whole cent) equal to (x) the aggregate exercise
price for Company Common Stock otherwise purchasable pursuant to such Stock
Option divided by (y) the number of Parent Common Shares deemed purchasable
pursuant to such Adjusted Option. The
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other terms of each such Stock Option, and the plans under which they were
issued,shall continue to apply in accordance with their terms, including, to the
extent provided therein, the acceleration of vesting of such Stock Options in
connection with the transactions contemplated hereby.
As soon as practicable after the Effective Time, Parent shall
cause to be delivered to each holder of an outstanding Stock Option an
appropriate notice setting forth such holder's rights pursuant thereto, and that
such Stock Option shall continue in effect on the same terms and conditions.
Parent shall cause to be taken all corporate action necessary to
reserve for issuance a sufficient number of Parent Common Shares for delivery
upon exercise of Stock Options in accordance with this Section 1.06(c)(1). As
soon as practicable following the Effective Time, Parent shall cause the Parent
Common Shares subject to the Adjusted Options to be registered under the
Securities Act of 1933, as amended, and the SEC's rules thereunder (the
"Securities Act") pursuant to a registration statement on Form S-8 (or any
successor or other appropriate form), and shall use at least such efforts as are
applied to Parent's other stock options generally to cause the effectiveness of
such registration statement or registration statements (and the current status
of the prospectus or prospectuses contained therein) to be maintained for so
long as the Adjusted Options remain outstanding (subject to interruptions of
such effectiveness or current status as may be reasonably required from time to
time, and are applicable to registration statements of Parent with respect to
its option plans generally, because of developments affecting Parent or
otherwise).
(2) The contingent obligations of the Company (the "PAS
Obligations") to issue shares of Company Common Stock to certain former
stockholders of Progressive Angioplasty Systems, Inc. ("PAS"), pursuant to
Section 2.07 and Section 2.08 of the Agreement and Plan of Merger dated February
4, 1997, by and among the Company, a wholly owned subsidiary of the Company and
PAS (as amended by the First Amendment dated as of August 6, 1997, the "PAS
Agreement") shall be assumed by Parent from and after the Effective Time and
shall constitute an obligation to issue, on the same terms and conditions
mutatis mutandis as were applicable under the PAS Agreement prior to the
Effective Time, Parent Common Shares (rounded to the nearest whole Parent Common
Share), and Parent Common Shares shall be substituted for Company Common Stock
in the definition of the term "Closing Price" for purposes of determining the
number of Parent Common Shares, if any, that may be issued in accordance with
the PAS Agreement as aforesaid.
As soon as reasonably practicable following the Effective Time,
Parent shall cause the Parent Common Shares that may be issued pursuant to the
PAS Obligations to be registered under the Securities Act pursuant to a resale
shelf registration statement on Form S-3 (or any successor or other appropriate
form) and shall use its commercially reasonable efforts, subject to the receipt
of information from and as to the relevant former PAS stockholders, to cause
such registration statement to become effective as promptly after filing as
practicable. The provisions of Sections 6.01 and 6.02 of the PAS Agreement shall
apply to such registration statement mutatis mutandis.
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(d) Capital Stock of Merger Sub. Each share of common stock, $.01
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, $0.01 par value, of the
Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
appropriately adjusted to reflect fully the effect of any stock split, reverse
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Shares), reorganization, recapitalization, split
up, combination or exchange of shares or other like event with respect to Parent
Common Shares or Company Common Stock occurring after the date hereof and prior
to the Effective Time.
(f) Fractional Shares. No certificates or scrip representing less
than one Parent Share shall be issued upon the surrender for exchange of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"). In lieu of any such
fractional share, each holder of Shares who would otherwise have been entitled
to a fraction of a Parent Common Share upon surrender of Certificates for
exchange shall be paid upon such surrender cash (without interest) in an amount
equal to such fraction multiplied by the Closing Price of the Parent Common
Shares on the date of the Effective Time. "Closing Price" shall mean, on any
day, the last reported sale price of one Parent Common Share on the NYSE
Composite Transaction Tape.
SECTION 1.07. Exchange of Certificates. (a) Exchange Agent. At
the Effective Time Parent shall cause to be supplied, to or for such bank or
trust company as shall be mutually designated by the Company and Parent (the
"Exchange Agent"), in trust for the benefit of the holders of Company Common
Stock, for exchange in accordance with this Section 1.07, through the Exchange
Agent, certificates evidencing the Parent Common Shares issuable pursuant to
Section 1.06 in exchange for outstanding Shares and the cash to be paid in lieu
of fractional shares.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Parent will cause the Exchange Agent to mail to each holder
of record of Certificates (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 proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify), and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Parent Common Shares. Upon surrender of
a Certificate for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole Parent Common Shares which such holder has the right to receive in
accordance with the Exchange Ratio in respect of the Shares formerly evidenced
by such Certificate, (B) any dividends or other distributions to which such
holder is entitled pursuant to Section 1.07(c), and (C) cash in respect of
fractional shares as provided in Section 1.06(f) (the Parent Common Shares and
cash being, collectively, the "Merger Consideration"), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the
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transfer records of the Company as of the Effective Time, Parent Common Shares,
dividends, distributions, and cash in respect of fractional shares, may be
issued and paid in accordance with this Article I to a transferee if the
Certificate evidencing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
pursuant to this Section 1.07(b) and by evidence that any applicable stock
transfer taxes have been paid. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented Shares of the Company
Common Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends, to evidence the ownership of the
number of full Parent Common Shares, and cash in respect of fractional shares,
into which such shares of the Company Common Stock shall have been so converted.
(c) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
Parent Common Shares they are entitled to receive until the holder of such
Certificate shall surrender such Certificate in accordance with the provisions
of Section 1.07(b). Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole Parent Common Shares issued in exchange therefor, without
interest, at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole Parent Common Shares.
(d) Transfers of Ownership. If any certificate for Parent Common
Shares is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for Parent
Common Shares in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(e) No Liability. Neither Parent, Merger Sub nor the Company
shall be liable to any holder of Company Common Stock for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Withholding Rights. Parent or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
Parent or the Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Parent or the Exchange Agent.
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(g) Undistributed Certificates. Any portion of the certificates
evidencing the Parent Common Shares and the cash to be paid in lieu of
fractional shares supplied to the Exchange Agent which remains undistributed to
the holders of the Certificates for one year after the Effective Time shall be
delivered to Parent, upon demand, and any holders of the Certificates who have
not theretofore complied with this Section 1.07 shall thereafter look only to
Parent for payment of their claim for Merger Consideration, any dividends or
distributions with respect to Parent Common Stock and any cash in lieu of
fractional shares of Parent Common Stock.
SECTION 1.08. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers of the Company Common Stock thereafter on the
records of the Company.
SECTION 1.09. No Further Ownership Rights in Company Common
Stock. The Merger Consideration delivered upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Shares, and there shall be
no further registration of transfers on the records of the Surviving Corporation
of Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
SECTION 1.10. Lost, Stolen or Destroyed Certificates. In the
event any Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof, such Parent
Common Shares as may be required pursuant to Section 1.06; provided, however,
that Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 1.11. Tax and Accounting Consequences. It is intended by
the parties hereto that the Merger shall (i) constitute a reorganization within
the meaning of Section 368 of the Code and (ii) subject to applicable accounting
standards, qualify for accounting treatment as a pooling of interests. The
parties hereto hereby adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
SECTION 1.12. Taking of Necessary Action; Further Action. Each of
Parent, Merger Sub and the Company will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger and
the other transactions contemplated by this Agreement in accordance with this
Agreement as promptly as possible. If, at any time after the Effective Time, any
such further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company and Merger Sub, the officers and directors of the Company and Merger
Sub
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immediately prior to the Effective Time are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action.
SECTION 1.13. Material Adverse Effect. When used in connection
with the Company or any of its subsidiaries or Parent or any of its
subsidiaries, as the case may be, the term "Material Adverse Effect" means any
change, effect or circumstance that is or is reasonably likely to be materially
adverse to the business, assets (including intangible assets), financial
condition or results of operations of the Company and its subsidiaries or Parent
and its subsidiaries, as the case may be, in each case taken as a whole;
provided, however, that the following shall be excluded from the definition of
"Material Adverse Effect" and from any determination as to whether a Material
Adverse Effect has occurred or may occur with respect to the Company: the
effects of changes that are applicable to (A) the healthcare or medical device
industries generally, (B) the United States economy generally or (C) the United
States securities markets generally.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger
Sub as follows:
SECTION 2.01. Organization and Qualification; Subsidiaries. Each
of the Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority necessary to
own, lease and operate the properties it purports to own, operate or lease and
to carry on its business as it is now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power or
authority would not reasonably be expected to have a Material Adverse Effect.
Each of the Company and its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that could not reasonably be expected to have a Material Adverse
Effect. A true and complete list of all of the Company's "significant"
subsidiaries, as defined in Regulation S-X, is included as an exhibit to the
Company's 1997 Annual Report on Form 10-K. The Company will furnish to Parent a
list of all subsidiaries of the Company together with the jurisdiction of
incorporation of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock owned by the Company or another
subsidiary on a supplement to the Company Disclosure Schedule (as defined below)
to be delivered to Parent not later than 14 days from the date of this Agreement
(the "Supplemental Company Disclosure Schedule"). Except as set forth in Section
2.01 of the written disclosure schedule previously delivered by the Company to
Parent (the "Company Disclosure Schedule") or the Company SEC Reports (as
defined in Section 2.07 below), the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation,
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partnership, joint venture or other business association or entity, with respect
to which interest the Company has invested or is required to invest $5,000,000
or more, excluding securities in any publicly traded company held for investment
by the Company and comprising less than five percent of the outstanding stock of
such company.
SECTION 2.02. Certificate of Incorporation and By-Laws. The
Company has heretofore made available to Parent a complete and correct copy of
its Certificate of Incorporation and By-Laws as amended to date, and has made
available to Parent the Certificate of Incorporation and By-Laws (or equivalent
organizational documents) of each of its material subsidiaries (the "Subsidiary
Documents"). Such Certificate of Incorporation, By-Laws and Subsidiary Documents
are in full force and effect. Neither the Company nor any of its subsidiaries is
in violation of any of the provisions of its Certificate of Incorporation or
such By-Laws or equivalent organizational documents, except for immaterial
violations of the documents which may exist.
SECTION 2.03. Capitalization. The authorized capital stock of the
Company consists of 250,000,000 shares of Company Common Stock and 5,000,000
shares of Preferred Stock, par value $5.00 per share (the "Company Preferred
Stock"). As of April 30, 1998, (i) 76,698,965 shares of Company Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, and an additional 7,003,014 shares were held in treasury, (ii) no
shares of Company Preferred Stock were outstanding or held in treasury, (iii) no
shares of Company Common Stock or Company Preferred Stock were held by
subsidiaries of the Company, (iv) 24,348,700 shares of Company Common Stock were
reserved for existing grants and 3,799,689 shares were reserved for future
grants pursuant to the Company Stock Option Plans, and (v) not in excess of
294,928 shares of Company Common Stock were reserved and are available for
future issuance pursuant to the USCC Employees 1979 Stock Purchase Plan and the
Company's 1994 Employee Stock Purchase Plan (together, the "Stock Purchase
Plans"). The Company may be obligated to issue additional shares of Company
Common Stock pursuant to the PAS Obligations. Except as set forth in Section
2.03 of the Company Disclosure Schedule, no change in such capitalization has
occurred between April 30, 1998 and the date hereof, except for changes
resulting from the exercise of Stock Options and shares purchased under the
Stock Purchase Plans. Except as set forth in Section 2.01, this Section 2.03 or
Section 2.11 or in Section 2.03 or Section 2.11 of the Company Disclosure
Schedule or the Company SEC Reports, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character binding on the
Company or any of its subsidiaries relating to the issued or unissued capital
stock of the Company or any of its subsidiaries or obligating the Company or any
of its subsidiaries to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any of its subsidiaries. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed in Section 2.03 of the Company Disclosure
Schedule or the Company SEC Reports, there are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary or any other entity
other than guarantees of bank obligations of subsidiaries
-9-
entered into in the ordinary course of business. Except as set forth in Sections
2.01 and 2.03 of the Company Disclosure Schedule, all of the outstanding shares
of capital stock (other than directors' qualifying shares) of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and all such shares (other than directors' qualifying shares and
a de minimis number of shares owned by employees of such subsidiaries) are owned
by the Company or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in the Company's voting rights,
charges or other encumbrances of any nature whatsoever.
SECTION 2.04. Authority Relative to this Agreement. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action (including pursuant to Section 203 of the DGCL), and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
approval of the Merger and this Agreement by the holders of at least a majority
of the outstanding shares of Company Common Stock entitled to vote in accordance
with the DGCL and the Company's Certificate of Incorporation and By-Laws). As of
the date hereof, the Board of Directors of the Company has determined that it is
advisable and in the best interest of the Company's shareholders for the Company
to enter into this Agreement and to consummate the Merger upon the terms and
subject to the conditions of this Agreement. This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, as applicable,
constitutes a legal, valid and binding obligation of the Company.
SECTION 2.05. No Conflict; Required Filings and Consents. (a)
Section 2.05(a) of the Company Disclosure Schedule includes a list of (i) all
loan agreements, indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment obligations, guaranties,
standby letters of credit, equipment leases or lease purchase agreements, each
in an amount equal to or exceeding $10,000,000 to which the Company or any of
its subsidiaries is a party or by which any of them is bound; (ii) all
contracts, agreements, commitments or other understandings or arrangements to
which the Company or any of its subsidiaries is a party or by which any of them
or any of their respective properties or assets are bound or affected, but
excluding contracts, agreements, commitments or other understandings or
arrangements entered into in the ordinary course of business and involving, in
the case of any such contact, agreement, commitment, or other understanding or
arrangement, individual payments or receipts by the Company or any of its
subsidiaries of less than $5,000,000 over the term of such contract, commitment,
agreement, or other understanding or arrangement; and (iii) all agreements
which, as of the date hereof, are required to be filed as "material contracts"
with the Securities and Exchange Commission ("SEC") pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, and the SEC's rules
thereunder (the "Exchange Act") but have not been so filed with the SEC as of
the date hereof.
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(b) Except as set forth in Section 2.05(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of the
Company, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default), or impair the Company's or any of
its subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or affected,
except, in the case of clauses (ii) or (iii), for any such conflicts,
violations, breaches, defaults or other occurrences that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign
(each, a "Governmental Authority"), except (i) for applicable requirements, if
any, of the Securities Act, the Exchange Act, state securities laws ("Blue Sky
Laws"), the pre-merger notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), filings and consents under any applicable foreign
laws intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade ("Foreign Monopoly Laws"),
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, and the filing and recordation of appropriate merger or other
documents as required by the DGCL, (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the Merger,
or otherwise prevent or delay the Company from performing its material
obligations under this Agreement, or would not otherwise reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, or (iii) as
to which any necessary consents, approvals, authorizations, permits, filings or
notifications have heretofore been obtained or filed, as the case may be, by the
Company.
SECTION 2.06. Compliance; Permits. (a) Except as disclosed in
Section 2.06(a) of the Company Disclosure Schedule or the Company SEC Reports,
neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective
-11-
properties is bound or affected, except for any such conflicts, defaults or
violations which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.06(b) of the Company
Disclosure Schedule or the Company SEC Reports, the Company and its subsidiaries
hold all permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities which are
material to the operation of the business of the Company and its subsidiaries
taken as a whole as it is now being conducted (collectively, the "Company
Permits") except where the failure to hold such Company Permits would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. The Company and its subsidiaries are in compliance with the
terms of the Company Permits, except as described in the Company SEC Reports or
where the failure to so comply would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 2.07. SEC Filings; Financial Statements. (a) The Company
has filed all forms, reports and documents required to be filed with the SEC
since December 31, 1994 and has made available to Parent (i) its Annual Reports
on Form 10-K for the fiscal years ended December 31, 1995, 1996 and 1997, (ii)
its Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 (the
"March 31, 1998 10-Q"), and, (iii) all proxy statements relating to the
Company's meetings of shareholders (whether annual or special) held since
December 31, 1994, (iv) all other reports or registration statements (other than
Reports on Form 10-Q not referred to in clause (ii) above filed by the Company
with the SEC since December 31, 1994, and (v) all amendments and supplements to
all such reports and registration statements filed by the Company with the SEC
(collectively, the "Company SEC Reports"). Except as disclosed in Section 2.07
of the Company Disclosure Schedule, the Company SEC Reports (i) were prepared in
all material respects in accordance with the requirements of the Securities Act
or the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or in the Company SEC
Reports), and each fairly presents in all material respects the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
-12-
SECTION 2.08. Absence of Certain Changes or Events. Except as set
forth in Section 2.08 of the Company Disclosure Schedule or the Company SEC
Reports, between December 31, 1997 and the date hereof, the Company has
conducted its business in the ordinary course and there has not occurred: (i)
any changes, effects or circumstances constituting, individually or in the
aggregate, a Material Adverse Effect; (ii) any amendments or changes in the
Certificate of Incorporation or By-laws of the Company; (iii) any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) that would reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect; (iv) any material change by the Company in
its accounting methods, principles or practices; or (v) any sale of a material
amount of assets of the Company, except in the ordinary course of business.
SECTION 2.09. No Undisclosed Liabilities. Except as set forth in
Section 2.09 of the Company Disclosure Schedule or the Company SEC Reports,
neither the Company nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for in the Company's unaudited balance sheet (including any
related notes thereto) as of March 31, 1998 included in the Company's Quarterly
Report of Form 10-Q for the quarter ended March 31, 1998 (the "1998 Balance
Sheet"), (b) incurred in the ordinary course of business and not required under
GAAP to be reflected on the 1998 Balance Sheet, (c) incurred since March 31,
1998 in the ordinary course of business, (d) incurred in connection with this
Agreement or the Merger or the other transactions contemplated hereby, or (e)
which would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
SECTION 2.10. Absence of Litigation. Except as set forth in
Section 2.10 of the Company Disclosure Schedule or the Company SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, overtly threatened against the Company or any
of its subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that would reasonably be
expected to have a Material Adverse Effect.
SECTION 2.11. Employee Benefit Plans; Employment Agreements. (a)
Section 2.11(a) of the Company Disclosure Schedule lists all employee pension
benefit plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), all employee welfare benefit plans
(as defined in Section 3(1) of ERISA), and all other bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other similar fringe or employee benefit plans, programs or arrangements
(including those which contain change of control provisions), and any
employment, executive compensation or severance agreements (including those
which contain change of control provisions), written or otherwise, as amended,
modified or supplemented, for the benefit of, or relating to, any former or
current employee, officer, director or consultant (or any of their
beneficiaries) of the Company or any other entity (whether or not incorporated)
which is a member of a controlled group including the Company or which is under
common control with the Company within the meaning of Sections 414(b), (c), (m)
or (o) of the Code or Section 4001(a) (14) or (b) of ERISA (a "Company ERISA
Affiliate"), or any subsidiary of the Company, as well as each plan with
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respect to which the Company or a Company ERISA Affiliate could incur liability
under Title IV of ERISA or Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code") (together for the purposes of this Section 2.11, the
"Employee Plans"). The Company has made available to Parent, prior to the date
of this Agreement, or the Company will make available not later than 14 days
after the date of this Agreement, copies of (i) each such written Employee Plan
(or a written description of any Employee Plan which is not written) and all
related trust agreements, insurance and other contracts (including policies),
summary plan descriptions, summaries of material modifications and
communications distributed to plan participants, (ii) the three most recent
annual reports on Form 5500 series, with accompanying schedules and attachments,
filed with respect to each Employee Plan required to make such a filing, (iii)
the most recent actuarial valuation for each Employee Plan subject to Title IV
of ERISA, (iv) the latest reports which have been filed with the Department of
Labor with respect to each Employee Plan required to make such filing and (v)
the most recent favorable determination letters issued for each Employee Plan
and related trust which is subject to Parts 1, 2 and 4 of the Subtitle B of
Title I of ERISA (and, if an application for such determination is pending, a
copy of the application for such determination). For purposes of this Section
2.11, the term "material," when used with respect to (i) any Employee Plan,
shall mean that the Company or a Company ERISA Affiliate has incurred or may
incur obligations in an amount exceeding $500,000 with respect to such Employee
Plan, and (ii) any liability, obligation, breach or non-compliance, shall mean
that the Company or a Company ERISA Affiliate has incurred or may incur
obligations in an amount exceeding $500,000, with respect to any one such or
series of related liabilities, obligations, breaches, defaults, violations or
instances of non-compliance.
(b) Except as set forth in Section 2.11(b) of the Company
Disclosure Schedule or the Company SEC Reports, (i) none of the Employee Plans
promises or provides retiree medical or other retiree welfare benefits to any
person, and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA; (ii) no party in interest or disqualified
person (as defined in Section 3(14) of ERISA and Section 4975 of the Code) has
at any time engaged in a transaction with respect to any Employee Plan which
could subject the Company or any Company ERISA Affiliate, directly or
indirectly, to a tax, penalty or other material liability for prohibited
transactions under ERISA or Section 4975 of the Code; (iii) no fiduciary of any
Employee Plan has breached any of the responsibilities or obligations imposed
upon fiduciaries under Title I of ERISA, which breach would reasonably be
expected to result in any material liability to the Company or any Company ERISA
Affiliate; (iv) all Employee Plans have been established and maintained
substantially in accordance with their terms and have operated in compliance in
all material respects with the requirements prescribed by any and all statutes
(including ERISA and the Code), orders, or governmental rules and regulations
currently in effect with respect thereto (including all applicable requirements
for notification to participants or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and may by their terms be
amended and/or terminated at any time subject to applicable law and the terms of
each Employee Plan, and the Company and each of its subsidiaries have performed
all material obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Employee Plans; (v) each
Employee Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA is the
subject of a favorable determination
-14-
letter from the IRS, and nothing has occurred which may reasonably be expected
to impair such determination; (vi) all contributions required to be made with
respect to any Employee Plan pursuant to Section 412 of the Code, or the terms
of the Employee Plan or any collective bargaining agreement, have been made on
or before their due dates (including any extensions thereof); (vii) with respect
to each Employee Plan, no "reportable event" within the meaning of Section 4043
of ERISA (excluding any such event for which the 30 day notice requirement has
been waived under the regulations to Section 4043 of ERISA) or any event
described in Section 4062, 4063 or 4041 of ERISA has occurred for which there is
any material outstanding liability to the Company or any Company ERISA Affiliate
nor would the consummation of the transaction contemplated hereby (including the
execution of this agreement) constitute a reportable event for which the 30-day
requirement has not been waived; and (viii) neither the Company nor any Company
ERISA Affiliate has incurred or reasonably expects to incur any material
liability under Title IV of ERISA (other than liability for premium payments to
the Pension Benefit Guaranty Corporation (the "PBGC") arising in the ordinary
course).
(c) Section 2.11(c) of the Supplemental Company Disclosure
Schedule will set forth a true and complete list of each current or former
employee, officer or director of the Company or any of its subsidiaries who
holds (i) any option to purchase Company Common Stock as of the date hereof,
together with the number of shares of Company Common Stock subject to such
option, the option price of such option (to the extent determined as of the date
hereof), whether such option is intended to qualify as an incentive stock option
within the meaning of Section 422(b) of the Code (an "ISO"), and the expiration
date of such option; (ii) any shares of Company Common Stock that are
restricted; and (iii) any other right, directly or indirectly, to receive
Company Common Stock, together with the number of shares of Company Common Stock
subject to such right. Section 2.11(c) of the Company Disclosure Schedule sets
forth (x) the total number of any such ISOs and any such nonqualified options
and other such rights by exercise price and (y) the amount by which the value of
the Merger Consideration (using $42.50 as the value of the Merger Consideration)
exceeds the option or exercise price of all such ISOs, non-qualified options and
rights (including pursuant to the Company Stock Option Plan) in the aggregate
(such excess being the "Aggregate Option Exercise Spread").
(d) Section 2.11(d) of the Company Disclosure Schedule sets forth
a true and complete list of (i) all employment agreements with officers of the
Company or any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating the Company or any of its subsidiaries to make annual
cash payments in an amount exceeding $250,000; (iii) all agreements with respect
to the services of independent contractors or leased employees whether or not
they participate in any of the Employee Plans; (iv) all officers of the Company
or any of its subsidiaries who have executed a non-competition agreement with
the Company or any of its subsidiaries; (v) all severance agreements, programs
and policies of the Company or any of its subsidiaries with or relating to its
employees, in each case with outstanding commitments exceeding $150,000,
excluding programs and policies required to be maintained by law; and (vi) all
plans, programs, agreements and other arrangements of Company which contain
change in control provisions.
-15-
(e) Except as set forth in Section 2.11(e) of the Company
Disclosure Schedule, no employee of the Company or any of its subsidiaries has
participated in any employee pension benefit plans (as defined in Section 3(2)
of ERISA) maintained by or on behalf of the Company. The PBGC has not instituted
proceedings to terminate any Employee Plan that is subject to Title IV of ERISA
(each, a "Defined Benefit Plan"). The Defined Benefit Plans have no accumulated
or waived funding deficiencies within the meaning of Section 412 of the Code nor
have any extensions of any amortization period within the meaning of Section 412
of the Code or 302 of ERISA been applied for with respect thereto. The present
value of the benefit liabilities (within the meaning of Section 4041 of ERISA)
of the Defined Benefit Plans, determined on a termination basis using actuarial
assumptions that would be used by the PBGC does not exceed by more than
$1,000,000 the value of the Defined Benefit Plans' assets. All applicable
premiums required to be paid to the PBGC with respect to the Defined Benefit
Plans have been paid. No facts or circumstances exist with respect to any
Defined Benefit Plan which would give rise to a lien on the assets of the
Company under Section 4068 of ERISA or otherwise. All the assets of the Defined
Benefit Plans are readily marketable securities or insurance contracts.
(f) Except as provided in Schedule 2.11(f) of the Company
Disclosure Schedule or as contemplated by this Agreement, (i) the Company has
never maintained an employee stock ownership plan (within the meaning of Section
4975(e)(7) of the Code) or any other Employee Plan that invests in Company
stock; (ii) since December 31, 1997, the Company has not proposed nor agreed to
any increase in benefits under any Employee Plan (or the creation of new
benefits) or change in employee coverage which would increase the expense of
maintaining any Employee Plan; (iii) the consummation of the transactions
contemplated by this Agreement will not result in an increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of any
benefits or compensation payable in respect of any employee; (iv) no person will
be entitled to any severance benefits under the terms of any Employee Plan
solely by reason of the consummation of this transaction contemplated by this
Agreement.
(g) Each Employee Plan covering non-U.S. employees (an
"International Plan") has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable laws
(including any special provisions relating to registered or qualified plans
where such International Plan was intended to so qualify) and has been
maintained in good standing with applicable regulatory authorities. The fair
market value of the assets of each funded International Plan, if any, (or the
liability of each funded International Plan funded through insurance) is
sufficient to procure or provide for the benefits accrued thereunder through the
Effective Time according to the actuarial assumptions and valuations most
recently used to determine employer contributions to the International Plan.
(h) The Company has fiduciary liability insurance of at least
$1,500,000 in effect covering the fiduciaries of the Employee Plans (including
the Company) with respect to whom the Company may have liability.
SECTION 2.12. Labor Matters. Except as set forth in Section 2.12
of the Company Disclosure Schedule or the Company SEC Reports, (i) there are no
controversies
-16-
pending or, to the knowledge of the Company, threatened, between the Company or
any of its subsidiaries and any of their respective employees, which
controversies have had, or would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; (ii) neither the Company nor any
of its subsidiaries is a party to any material collective bargaining agreement
or other labor union contract applicable to persons employed by the Company or
its subsidiaries, nor does the Company or any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such employees; and
(iii) neither the Company nor any of its subsidiaries has any knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company or any of its subsidiaries which would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 2.13. Registration Statement; Proxy Statement/Prospectus.
Subject to the accuracy of the representations of Parent in Section 3.13, the
information supplied by the Company in writing specifically for inclusion in the
Registration Statement (as defined in Section 3.13) shall not at the time the
Registration Statement is declared effective by the SEC 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 the
light of the circumstances under which they were made, not misleading. The
information supplied by the Company for inclusion in the proxy
statement/prospectus to be sent to the shareholders of the Company in connection
with the meeting of the shareholders of the Company to consider the Merger (the
"Company Shareholders Meeting") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "Proxy Statement/Prospectus") will
not, on the date the Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto) is first mailed to shareholders or at the time of the
Company Shareholders Meeting contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements made therein not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Shareholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to the Company or any of its respective
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, the Company shall promptly inform
Parent and Merger Sub. The Proxy Statement/Prospectus shall comply in all
material respects with the requirements of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained or incorporated by reference
in, or furnished in connection with the preparation of, the Proxy
Statement/Prospectus.
SECTION 2.14. Restrictions on Business Activities. Except for
this Agreement or as set forth in Section 2.14 of the Company Disclosure
Schedule or the Company SEC Reports, to the best of the Company's knowledge,
there is no agreement, judgment, injunction, order or decree binding upon the
Company or any of its subsidiaries which has or would reasonably be expected to
have the effect of prohibiting or impairing the conduct of business by the
Company or any of its subsidiaries as currently conducted by the
-17-
Company or such subsidiary, except for any prohibition or impairment as would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 2.15. Title to Property. Except as set forth in Section
2.15 of the Company Disclosure Schedule, the Company and each of its
subsidiaries have good title to all of their real properties and other assets,
free and clear of all liens, charges and encumbrances, except liens for taxes
not yet due and payable and such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with the present use
of the property affected thereby or which could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and except
for liens which secure indebtedness reflected in the 1998 Balance Sheet; and, to
the knowledge of the Company, all leases pursuant to which the Company or any of
its subsidiaries lease from others material amounts of real or personal
property, are in good standing, valid and effective in accordance with their
respective terms, and there is not, to the knowledge of the Company, under any
of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material
default), except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 2.16. Taxes. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:
(a) The Company and each of its subsidiaries has timely and
accurately filed, or caused to be timely and accurately filed, all material Tax
Returns (as hereinafter defined) required to be filed by it, and has paid,
collected or withheld, or caused to be paid, collected or withheld, all material
amounts of Taxes (as hereinafter defined) required to be paid, collected or
withheld, other than such Taxes for which adequate reserves in the 1997 Balance
Sheet have been established or which are being contested in good faith. There
are no material claims or assessments pending against the Company or any of its
subsidiaries for any alleged deficiency in any Tax, there are no pending or
threatened audits or investigations for or relating to any liability in respect
of any Taxes, and the Company has not been notified in writing of any proposed
Tax claims or assessments against the Company or any of its subsidiaries (other
than in each case, claims or assessments for which adequate reserves in the 1997
Balance Sheet have been established or which are being contested in good faith
or are immaterial in amount). Neither the Company nor any of its subsidiaries
has executed any waivers or extensions of any applicable statute of limitations
to assess any material amount of Taxes. There are no outstanding requests by the
Company or any of its subsidiaries for any extension of time within which to
file any material Tax Return or within which to pay any material amounts of
Taxes shown to be due on any Tax Return. To the best knowledge of the Company,
there are no liens for material amounts of Taxes on the assets of the Company or
any of its subsidiaries except for statutory liens for current Taxes not yet due
and payable.
(b) For purposes of this Agreement, the term "Tax" shall mean any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, alternative or
add-on minimum, ad valorem,
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transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge imposed by any Governmental Authority, together
with any interest or penalty imposed thereon. The term "Tax Return" shall mean a
report, return or other information (including any attached schedules or any
amendments to such report, return or other information) required to be supplied
to or filed with a governmental entity with respect to any Tax, including an
information return, claim for refund, amended return or declaration or estimated
Tax.
(c) Except as set forth in Section 2.16 of the Company Disclosure
Schedule: (i) Neither the Company nor any of its subsidiaries has ever been a
member of an affiliated group within the meaning of Section 1504 of the Code or
filed or been included in a combined, consolidated or unitary Tax Return, other
than of the Company and its subsidiaries; (ii) other than with respect to the
Company and its subsidiaries, neither the Company nor any of its subsidiaries is
liable for Taxes of any other Person, or is currently under any contractual
obligation to indemnify any person with respect to Taxes (except for customary
agreements to indemnify lenders or security holders in respect of taxes other
than income taxes), or is a party to any tax sharing agreement or any other
agreement providing for payments by the Company or any of its subsidiaries with
respect to Taxes; (iii) neither the Company nor any of its subsidiaries is a
party to any joint venture, partnership or other arrangement or contract which
could be treated as a partnership for federal income tax purposes; (iv) neither
the Company nor any of its subsidiaries has entered into any sale leaseback or
any leveraged lease transaction that fails to satisfy the requirements of
Revenue Procedure 75-21 (or similar provisions of foreign law); (v) neither the
Company nor any of its subsidiaries has agreed or is required, as a result of a
change in method of accounting or otherwise, to include any adjustment under
Section 481 of the Code (or any corresponding provision of state, local or
foreign law) in taxable income; (vi) neither the Company nor any of its
subsidiaries is a party to any agreement, contract, arrangement or plan that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (vii) the
prices for any property or services (or for the use of property) provided by the
Company or any of its subsidiaries to any other subsidiary or to the Company
have been arm's length prices, determined using a method permitted by the
Treasury Regulations under Section 482 of the Code; (viii) neither the Company
nor any of its subsidiaries is liable with respect to any indebtedness the
interest of which is not deductible for applicable federal, foreign, state or
local income tax purposes; (ix) neither the Company nor any of its subsidiaries
is a "consenting corporation" under Section 341(f) of the Code or any
corresponding provision of state, local or foreign law; and (x) none of the
assets owned by the Company or any of its subsidiaries is property that is
required to be treated as owned by any other person pursuant to Section
168(g)(8) of the Internal Revenue Code of 1954, as amended, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986, or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
SECTION 2.17. Environmental Matters. (a) Except as set forth in
Section 2.17(a) to the Company Disclosure Schedule or in the Company SEC Reports
or as would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect, the operations and properties of the Company and
its subsidiaries are in material compliance with the Environmental Laws (as
hereinafter defined), which compliance
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includes the possession by the Company and its subsidiaries of all material
permits and governmental authorizations required under applicable Environmental
Laws, and material compliance with the terms and conditions thereof.
(b) Except as set forth in Section 2.17(b) of the Company
Disclosure Schedule or the Company SEC Reports or as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
there are no Environmental Claims (as hereinafter defined), including claims
based on "arranger liability," pending or, to the best knowledge of the Company,
threatened against the Company or any of its subsidiaries or against any person
or entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law.
(c) There are no past or present actions, inactions, activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Material of Environmental Concern (as
hereinafter defined), that would form the basis of any Environmental Claim
against the Company or any of its subsidiaries or against any person or entity
whose liability for any Environmental Claim the Company or any of its
subsidiaries have retained or assumed either contractually or by operation of
law, except for such Environmental Claims that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(d) Except as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect, (i) no off-site locations
where the Company or any of its subsidiaries has stored, disposed or arranged
for the disposal of Materials of Environmental Concern has been listed on the
National Priority List, CERCLIS, state Superfund site list or state analog to
CERCLIS, and the Company and its subsidiaries have not been notified that either
of them is a potentially responsible party at any such location; (ii) there are
no underground storage tanks located on property owned or leased by the Company
or any of its subsidiaries; (iii) there is no asbestos containing material
contained in or forming part of any building, building component, structure or
office space owned, leased or operated by the Company or any of its
subsidiaries; and (iv) there are no polychlorinated biphenyls (PCB's) or
PCB-containing items contained in or forming part of any building, building
component, structure or office space owned, leased or operated by the Company or
any of its subsidiaries.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of
action, investigation or written notice by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or operated by the
Company or any of its subsidiaries.
(ii) "Environmental Laws" means all Federal, state, local and
foreign laws, regulations, codes, ordinances, any guidance or directive relating
to pollution or protection of
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human health and the environment (including ambient air, surface water, ground
water, land surface or sub-surface strata), including laws and regulations
relating to emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern, including, but not limited to CERCLA, RCRA,
TSCA, OSHA, the Clean Air Act, the Clean Water Act, each as amended or
supplemented, and any applicable transfer statutes or laws.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, medical waste, toxic substances, petroleum and petroleum
products, asbestos-containing materials, poly chlorinated biphenyls, and any
other chemicals, pollutants or substances regulated under any Environmental Law.
SECTION 2.18. Brokers. No broker, finder or investment banker
(other than Chase Securities Inc. ("Chase"), the fees and expenses of whom will
be paid by the Company) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
SECTION 2.19. Intellectual Property. (a) As used herein, the term
"Intellectual Property Assets" shall mean all worldwide intellectual property
rights, including, without limitation, patents, trademarks, service marks and
copyrights, and registrations and applications therefor, trade names, know-how,
trade secrets, computer software programs or applications and proprietary
information. As used herein, "Company Intellectual Property Assets" shall mean
the Intellectual Property Assets used or owned by the Company or any of its
subsidiaries.
(b) The Company and/or each of its subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use all Intellectual Property
Assets that are used in the business of the Company and its subsidiaries as
currently conducted, without conflict with the rights of others, except as would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(c) Except as disclosed in Section 2.19(c) of the Supplemental Company
Disclosure Schedule or as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect, no claims with respect to the
Company Intellectual Property Assets, or the Intellectual Property Assets of a
third party (the "Third Party Intellectual Property Assets") to the extent
arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Assets by or through the Company or any of its
subsidiaries, are currently pending or, to the knowledge of the Company, are
threatened by any person.
(d) Except as disclosed in Section 2.19(d) of the Company Disclosure
Schedule or as would not reasonably be expected to have a Material Adverse
Effect, neither the Company nor any of its subsidiaries knows of any valid
grounds for any bona fide claim to the effect that the manufacture, sale,
licensing or use of any product now used, sold or licensed or
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proposed for use, sale, license by the Company or any of its subsidiaries
infringes on any Third Party Intellectual Property Assets.
(e) Section 2.19(e) of the Supplemental Company Disclosure Schedule will
set forth a list of (i) all patents and patent applications owned by the Company
and/or each of its subsidiaries worldwide; (ii) all trademark and service ▇▇▇▇
registrations and all trademark and service ▇▇▇▇ applications and all trade
names owned by the Company and/or each of its subsidiaries worldwide; (iii) all
copyright registrations and copyright applications owned by the Company and/or
each of its subsidiaries worldwide; and (iv) all licenses owned by the Company
and/or each of its subsidiaries in which the Company and/or each of its
subsidiaries is (A) a licensor with respect to any of the patents, trademarks,
service marks, trade names or copyrights listed in the Company Disclosure
Schedule; or (B) a licensee of any other person's patents, trade names,
trademarks, service marks or copyrights material to the Company except for any
licenses of software programs that are publicly available. To its knowledge, the
Company has heretofore made available to Parent a list of all such patents,
patent applications, trademark and service ▇▇▇▇ registrations, trademark and
service ▇▇▇▇ applications, trade names, copyright registrations, copyright
applications and licenses. The Company and/or each of its subsidiaries has made
all necessary filings and recordations to protect and maintain its interest in
the patents, patent applications, trademark and service ▇▇▇▇ registrations,
trademark and service ▇▇▇▇ applications, trade names, copyright registrations
and copyright applications and licenses set forth in the Company Disclosure
Schedule, except where the failure to so protect or maintain would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(f) Except as set forth in Section 2.19(f) of the Company Disclosure
Schedule or the Company SEC Reports or as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect: (i) each
patent, patent application, trademark or service ▇▇▇▇ registration, and
trademark or service ▇▇▇▇ application and copyright registration or copyright
application of the Company and/or each of its subsidiaries is valid and
subsisting and (ii) each license of Company Intellectual Property Assets is
valid, subsisting and enforceable.
(g) Except as set forth in Section 2.19(g) of the Company Disclosure
Schedule, to the Company's knowledge: there is no material unauthorized use,
infringement or misappropriation of any of the Company's Intellectual Property
Assets by any third party, including any employee, former employee, independent
contractor or consultant of the Company or any of its subsidiaries.
(h) Except as set forth on Schedule 2.19(h) on the Company Disclosure
Schedule, the disclosure under the heading "IMPACT OF THE YEAR 2000 ISSUE"
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 is accurate and correct in all material respects.
SECTION 2.20. Interested Party Transactions. Except as set forth
in Section 2.20 of the Company Disclosure Schedule or the Company SEC Reports or
for events as to which the amounts involved do not, in the aggregate, exceed
$300,000, since the date of the Company's proxy statement dated March 30, 1998
(the "1998 Company Proxy Statement"),
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no event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
SECTION 2.21. Insurance. Except as disclosed in Section 2.21 of
the Company Disclosure Schedule or the Company SEC Reports, all material fire
and casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance policies maintained by the Company or any
of its subsidiaries are with reputable insurance carriers, provide full and
adequate coverage for all normal risks incident to the business of the Company
and its subsidiaries and their respective properties and assets and are in
character and amount appropriate for the businesses conducted by the Company,
except as would not reasonably be expected to have a Material Adverse Effect.
SECTION 2.22. Product Liability and Recalls. (a) Except as
disclosed in Section 2.22(a) of the Company Disclosure Schedule or the Company
SEC Reports, the Company is not aware of any claim, pending or threatened,
against the Company or any of its subsidiaries for injury to person or property
of employees or any third parties suffered as a result of the sale of any
product or performance of any service by the Company or any of its subsidiaries,
including claims arising out of the defective or unsafe nature of its products
or services, which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.22(b) of the Company
Disclosure Schedule or the Company SEC Reports, there is no pending or, to the
knowledge of the Company, overtly threatened recall or investigation of any
product sold by the Company, which recall or investigation would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.23. Opinion of Financial Advisor. The Company has been
advised by its financial advisor, Chase, to the effect that in its opinion, as
of the date hereof, the Exchange Ratio is fair from a financial point of view to
the holders of Shares.
SECTION 2.24. Pooling Matters. To the Company's knowledge and
based upon consultation with its independent accountants, the Company has
provided to Parent and its independent accountants all information concerning
actions taken or agreed to be taken by the Company or any of its affiliates on
or before the date of this Agreement that would reasonably be expected to
adversely affect the ability of Parent to account for the business combination
to be effected by the Merger as a pooling of interests, and the Company has no
knowledge that such business combination cannot be accounted for in that manner.
For purposes of this Section 2.24, "to the Company's knowledge" means to the
actual knowledge of the Company's Chairman and Chief Executive Officer,
President and Chief Operating Officer or Chief Financial Officer.
SECTION 2.25. Tax Matters. The representations, statements and
covenants set forth in paragraph 2 through 18 of Exhibit A hereto are true and
correct in all material respects.
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SECTION 2.26 Accuracy of Information. The Company acknowledges
that none of Parent, its subsidiaries or any of their respective directors,
officers, employees, affiliates, agents, advisors or representatives makes any
representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information provided or made available to the Company
or its agents or representatives including, without limitation, any estimations,
projections or other statement regarding future performance, except to the
extent set forth in this Agreement (including the Parent Disclosure Schedule).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent
and warrant to the Company as follows:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each
of Parent and its subsidiaries is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority necessary to own, lease and operate the
properties it purports to own, operate or lease and to carry on its business as
it is now being conducted, except where the failure to be so organized and
existing or to have such power or authority would not reasonably be expected to
have a Material Adverse Effect. Each of Parent and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not reasonably be expected
to have a Material Adverse Effect. A true and complete list of all of Parent's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by
Parent or another subsidiary, is set forth in Section 3.01 of the written
disclosure schedule previously delivered by Parent to the Company (the "Parent
Disclosure Schedule"). Except as set forth in Section 3.01 of the Parent
Disclosure Schedule or the Parent SEC Reports (as defined in Section 3.07
below), Parent does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity, with respect to which Parent
has invested or is required to invest $3,000,000 or more, excluding securities
in any publicly traded company held for investment by Parent and comprising less
than five percent of the outstanding capital stock of such company.
SECTION 3.02. Articles of Organization and By-Laws. Parent has
heretofore made available to the Company a complete and correct copy of its
Memorandum of Association and Bye-Laws, as amended to date. Such Memorandum of
Association and Bye-Laws are in full force and effect. Neither Parent nor Merger
Sub is in violation of any of the provisions of its Memorandum of Association
(or Certificate of Incorporation) or by-laws.
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SECTION 3.03. Capitalization. (a) The authorized capital stock of
Parent consists of 1,503,750,000 Parent Common Shares and 125,000,000 Preference
Shares, $1.00 par value per share ("Parent Preferred Shares"). (i) As of April
23, 1998, (I) 583,096,885 Parent Common Shares were issued and outstanding, all
of which are validly issued, fully paid and non-assessable, (II) no Parent
Preferred Shares were outstanding and (III) no more than 5,000,000 Parent Common
Shares and no Parent Preferred Shares were held by subsidiaries of Parent; (ii)
as of March 31, 1998, warrants to purchase 185,933 Parent Common Shares were
outstanding; and (iii) as of September 30, 1997, approximately 44 million Parent
Common Shares were reserved for issuance upon exercise of stock options issued
under the Tyco International Ltd. Long Term Incentive Plan. No material change
in such capitalization has occurred between such dates and the date hereof other
than as a result of the exercise of options or warrants outstanding as of such
dates. Except as set forth in Section 3.03 of the Parent Disclosure Schedule or
the Parent SEC Reports, there are no options, warrants or other rights,
agreements arrangements or commitments of any character binding on Parent or any
of its subsidiaries relating to the issued or unissued capital stock of Parent
or any of its subsidiaries or obligating Parent or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in,
Parent or any of its subsidiaries. Except as set forth in Section 3.03 of the
Parent Disclosure Schedule or the Parent SEC Reports, there are no obligations,
contingent or otherwise, of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Parent Common Shares or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary other than guarantees
of bank obligations of subsidiaries entered into in the ordinary course of
business. Except as set forth in Section 3.01 or 3.03 of the Parent Disclosure
Schedule, all of the outstanding shares of capital stock (other than directors'
qualifying shares) of each of Parent's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and all such shares (other than directors'
qualifying shares) are owned by Parent or another subsidiary free and clear of
all security interests, liens, claims, pledges, agreements, limitations in
Parent's voting rights, charges or other encumbrances of any nature whatsoever.
(b) The Parent Common Shares to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid and nonassessable and shall
be listed, upon official notice of issuance, for trading on the NYSE.
SECTION 3.04. Authority Relative to this Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. The Board of Directors of Parent has determined that it is
advisable and in the best interest of Parent's shareholders for Parent to enter
into this Agreement and to consummate the Merger upon the terms and subject to
the conditions of this Agreement. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub
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and, assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent and Merger Sub.
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
Section 3.05(a) of the Parent Disclosure Schedule includes a list of (i) all
loan agreements, indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment obligations, guaranties,
standby letters of credit, equipment leases or lease purchase agreements to
which Parent or any of its subsidiaries is a party or by which any of them is
bound, each in an amount exceeding $25,000,000, but excluding any such agreement
between Parent and its wholly-owned subsidiaries or between two or more
wholly-owned subsidiaries of Parent; (ii) all contracts, agreements, commitments
or other understandings or arrangements to which Parent or any of its
subsidiaries is a party or by which any of them or any of their respective
properties or assets are bound or affected, but excluding contracts, agreements,
commitments or other understandings or arrangements entered into in the ordinary
course of business and involving, in each case, payments or receipts by Parent
or any of its subsidiaries of less than $20,000,000 in any single instance; and
(iii) all agreements which, as of the date hereof, are required to be filed with
the SEC pursuant to the requirements of the Exchange Act as "material contracts"
but have not been so filed with the SEC as of the date hereof.
(b) Except as set forth in Section 3.05(b) of the Parent
Disclosure Schedule, the execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, (i) conflict with or violate the Memorandum of Association (or
Certificate of Incorporation) or by-laws of Parent or Merger Sub, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or any of its subsidiaries or by which its or their respective
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or impair Parent's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except, in the case of clauses (ii) or (iii), for any
such conflicts, violations, breaches, defaults or other occurrences that would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(c) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance of this Agreement by Parent and Merger
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
Blue Sky Laws, the pre-merger notification requirements of the HSR Act, Foreign
Monopoly Laws, and the filing and recordation of appropriate merger or other
documents as required by the DGCL, (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the Merger,
or otherwise prevent Parent or
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Merger Sub from performing their respective material obligations under this
Agreement, and would not otherwise be reasonably expected, individually or in
the aggregate, to have a Material Adverse Effect or (iii) as to which any
necessary consents, approvals, authorizations, permits, filings or notifications
have heretofore been obtained or filed, as the case may be, by Parent.
SECTION 3.06. Compliance; Permits. (a) Except as disclosed in
Section 3.06(a) of the Parent Disclosure Schedule or the Parent SEC Reports,
neither Parent nor any of its subsidiaries is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its subsidiaries or by which its or any of their
respective properties is bound or affected or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or its or any of their respective
properties is bound or affected, except for any such conflicts, defaults or
violations which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.06(b) of the Parent
Disclosure Schedule or the Parent SEC Reports, Parent and its subsidiaries hold
all permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from governmental authorities which are material to the
operation of the business of the Parent and its subsidiaries taken as a whole as
it is now being conducted (collectively, the "Parent Permits" except where the
failure to hold such Parent Permits would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect). Parent and
its subsidiaries are in compliance with the terms of Parent Permits, except as
described in the Parent SEC Reports or where the failure to so comply would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) Parent has
filed all forms, reports and documents required to be filed with the SEC since
December 31, 1994, and has heretofore delivered to the Company, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years
ended December 31, 1995 and 1996 and its Transition Report on Form 10-K for the
nine month period ended September 30, 1997, (ii) its Quarterly Reports on Form
10-Q for the quarterly periods ending December 31, 1997, and ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇▇▇) all proxy statements relating to Parent's meetings of shareholders
(whether annual or special) held since December 31, 1996, (iv) all other reports
or registration statements (other than Reports on Form 10-Q not referred to in
clause (ii) above) filed by Parent with the SEC since December 31, 1994, and (v)
all amendments and supplements to all such reports and registration statements
filed by Parent with the SEC (collectively, the "Parent SEC Reports"). The
Parent SEC Reports (i) were prepared in all material respects in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of Parent's subsidiaries is required to file any forms, reports
or other documents with the SEC.
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(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports has
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or in the
Parent SEC Reports) and each fairly presents in all material respects the
consolidated financial position of Parent and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
SECTION 3.08. Absence of Certain Changes or Events. Except as set
forth in Section 3.08 of the Parent Disclosure Schedule or the Parent SEC
Reports, between December 31, 1997 and the date hereof, Parent has conducted its
business in the ordinary course and there has not occurred: (i) any changes,
effects or changed circumstances constituting, individually or in the aggregate,
a Material Adverse Effect; (ii) any amendments or changes in the Memorandum of
Association or Bye-Laws of Parent; (iii) any damage to, destruction or loss of
any assets of the Parent (whether or not covered by insurance) that would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; (iv) any material change by Parent in its accounting methods; or
(v) any sale of a material amount of assets of Parent, except in the ordinary
course of business.
SECTION 3.09. No Undisclosed Liabilities. Except as is disclosed
in Section 3.09 of the Parent Disclosure Schedule and the Parent SEC Reports,
neither the Parent nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for in the Parent's unaudited balance sheet (including any
related notes thereto) as of March 31, 1998 included in Parent's Quarterly
Report on Form 10-Q for the three months ended March 31, 1998 (the "1998 Balance
Sheet"), (b) incurred in the ordinary course of business and not required under
GAAP to be reflected on the 1998 Balance Sheet, (c) incurred since March 31,
1998 in the ordinary course of business, (d) incurred in connection with this
Agreement, or the Merger or the other transactions contemplated hereby, or (e)
which would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
SECTION 3.10. Absence of Litigation. Except as set forth in
Section 3.10 of the Parent Disclosure Schedule, there are no claims, actions,
suits, proceedings or investigations pending or, to the knowledge of the Parent,
threatened against the Parent or any of its subsidiaries, or any properties or
rights of the Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that would reasonably be expected to have a Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Employment Agreements. (a)
Section 3.11(a) of the Parent Disclosure Schedule lists all employee pension
benefit plans (as defined in Section 3(2) of ERISA), all employee welfare
benefit plans (as defined in Section 3(1) of ERISA), and all other bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements, and any employment, executive compensation or
severance agreements, written or otherwise, as amended, modified or
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supplemented, for the benefit of, or relating to, any former or current
employee, officer, director or consultant (or any of their beneficiaries) of
Parent or any entity (whether or not incorporated) which is a member of a
controlled group including Parent or which is under common control with Parent
within the meaning of Sections 414(b), (c), (m) or (o) of the Code or Section
4001(a) (14) or (b) of ERISA ("Parent ERISA Affiliate"), or any subsidiary of
Parent, as well as each plan with respect to which Parent or a Parent ERISA
Affiliate could incur liability under Title IV of ERISA or Section 412 of the
Code (together for the purposes of this Section 3.11, the "Employee Plans").
Prior to the date of this Agreement, Parent has made available to the Company
copies of (i) each such written Employee Plan (or a written description of any
Employee Plan which is not written) and all related trust agreements, insurance
and other contracts (including policies), summary plan descriptions, summaries
of material modifications and communications distributed to plan participants,
(ii) the three most recent annual reports on Form 5500 series, with accompanying
schedules and attachments, filed with respect to each Employee Plan required to
make such a filing, (iii) the most recent actuarial valuation for each Employee
Plan subject to Title IV of ERISA, (iv) the latest reports which have been filed
with the Department of Labor with respect to each Employee Plan required to make
such filing and (v) the most recent favorable determination letters issued for
each Employee Plan and related trust which is subject to Parts 1, 2 and 4 of the
Subtitle B of Title I of ERISA (and, if an application for such determination is
pending, a copy of the application for such determination). For purposes of this
Section 3.11, the term "material," when used with respect to (i) any Employee
Plan, shall mean that Parent or a Parent ERISA Affiliate has incurred or may
incur obligations in an amount exceeding $5,000,000 with respect to such
Employee Plan, and (ii) any liability, obligation, breach or non-compliance,
shall mean that Parent or a Parent ERISA Affiliate has incurred or may incur
obligations in an amount exceeding $3,000,000, with respect to any one such or
series of related liabilities, obligations, breaches, defaults, violations or
instances of non-compliance.
(b) Except as set forth in Section 3.11(b) of the Parent
Disclosure Schedule or the Parent SEC Reports, (i) none of the Employee Plans
promises or provides retiree medical or other retiree welfare benefits to any
person, and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA; (ii) no party in interest or disqualified
person (as defined in Section 3(14) of ERISA and Section 4975 of the Code) has
at any time engaged in a transaction with respect to any Employee Plan which
could subject Parent or any Parent ERISA Affiliate, directly or indirectly, to a
tax, penalty or other material liability for prohibited transactions under ERISA
or Section 4975 of the Code; (iii) no fiduciary of any Employee Plan has
breached any of the responsibilities or obligations imposed upon fiduciaries
under Title I of ERISA, which breach would reasonably be expected to result in
any material liability to Parent or any Parent ERISA Affiliate; (iv) all
Employee Plans have been established and maintained substantially in accordance
with their terms and have operated in compliance in all material respects with
the requirements prescribed by any and all statutes (including ERISA and the
Code), orders, or governmental rules and regulations currently in effect with
respect thereto (including all applicable requirements for notification to
participants or the Department of Labor, IRS or Secretary of the Treasury), and
may by their terms be amended and/or terminated at any time subject to
applicable law and the terms of each Employee Plan, and Parent and each of its
subsidiaries have performed all material obligations required to be performed by
them under, are not in
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any material respect in default under or violation of, and have no knowledge of
any default or violation by any other party to, any of the Employee Plans; (v)
each Employee Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA
is the subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; (vi) all
contributions required to be made with respect to any Employee Plan pursuant to
Section 412 of the Code, or the terms of the Employee Plan or any collective
bargaining agreement, have been made on or before their due dates (including any
extensions thereof); (vii) with respect to each Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the 30 day notice requirement has been waived under the regulations to
Section 4043 of ERISA) or any event described in Section 4062, 4063 or 4041 of
ERISA has occurred for which there is any material outstanding liability to
Parent or any Parent ERISA Affiliate nor would the consummation of the
transaction contemplated hereby (including the execution of this agreement)
constitute a reportable event for which the 30-day requirement has not been
waived; and (viii) neither Parent nor any Parent ERISA Affiliate has incurred or
reasonably expects to incur any material liability under Title IV of ERISA
(other than liability for premium payments to the PBGC arising in the ordinary
course).
(c) Section 3.11(c) of the Parent Disclosure Schedule sets forth
a true and complete list of the aggregate number of (i) options to purchase
Parent Common Shares as of the date hereof, together with the number of shares
of Parent Common Shares subject to such options, the option prices of such
options (to the extent determined as of the date hereof), whether such options
are intended to qualify as ISOs, and the expiration date of such options; (ii)
any shares of Parent Common Shares that are restricted; and (iii) any other
rights, directly or indirectly, to receive Parent Common Shares, together with
the number of Parent Common Shares subject to such rights, held by each current
or former employee, officer or director of Parent or any of its subsidiaries.
(d) Section 3.11(d) of the Parent Disclosure Schedule sets forth
a true and complete list of (i) all employment agreements with officers of
Parent or any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating Parent or any of its subsidiaries to make annual cash
payments in an amount exceeding $1,500,000; (iii) all agreements with respect to
the services of independent contractors or leased employees whether or not they
participate in any of the Employee Plans obligating Parent or any of its
subsidiaries to make annual cash payments in an amount exceeding $1,500,000;
(iv) all officers of Parent or any of its subsidiaries who have executed a
non-competition agreement with Parent or any of its subsidiaries; (v) all
severance agreements, programs and policies of Parent or any of its subsidiaries
with or relating to its employees, in each case with outstanding commitments
exceeding $1,500,000, excluding programs and policies required to be maintained
by law; and (vi) all plans, programs, agreements and other arrangements of
Company which contain change in control provisions.
(e) Except as set forth in Section 3.11(e) of the Parent
Disclosure Schedule, no employee of Parent or any of its subsidiaries has
participated in any employee pension benefit plans (as defined in Section 3(2)
of ERISA) maintained by or on behalf of Parent. The PBGC has not instituted
proceedings to terminate any Employee Plan that is subject to Title IV of ERISA
(each, a "Defined Benefit Plan"). The Defined Benefit Plans
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have no accumulated or waived funding deficiencies within the meaning of Section
412 of the Code nor have any extensions of any amortization period within the
meaning of Section 412 of the Code or 302 of ERISA been applied for with respect
thereto. The present value of the benefit liabilities (within the meaning of
Section 4041 of ERISA) of the Defined Benefit Plans, determined on a termination
basis using actuarial assumptions that would be used by the PBGC does not exceed
by more than $10,000,000 the value of the Defined Benefit Plans' assets. All
applicable premiums required to be paid to the PBGC with respect to the Defined
Benefit Plans have been paid. No facts or circumstances exist with respect to
any Defined Benefit Plan which would give rise to a lien on the assets of Parent
under Section 4068 of ERISA or otherwise. All the assets of the Defined Benefit
Plans are readily marketable securities or insurance contracts.
(f) Except as provided in Schedule 3.11(f) of the Parent
Disclosure Schedule, Parent has never maintained an employee stock ownership
plan (within the meaning of Section 4975(e)(7) of the Code) or any other
Employee Plan that invests in Parent stock.
(g) Each Employee Plan covering non-U.S. employees (an
"International Plan") has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable laws
(including any special provisions relating to registered or qualified plans
where such International Plan was intended to so qualify) and has been
maintained in good standing with applicable regulatory authorities. The benefit
liabilities of the International Plans are adequately provided for on the
consolidated financial statements of Parent.
(h) Parent has fiduciary liability insurance of at least
$15,000,000 in effect covering the fiduciaries of the Employee Plans (including
Parent) with respect to whom Parent may have liability.
SECTION 3.12. Labor Matters. Except as set forth in Section 3.12
of the Parent Disclosure Schedule or the Parent SEC Reports, (i) there are no
controversies pending or, to the knowledge of Parent or any of its subsidiaries,
threatened, between Parent or any of its subsidiaries and any of their
respective employees, which controversies have or would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; (ii)
neither Parent nor any of its subsidiaries is a party to any material collective
bargaining agreement or other labor union contract applicable to persons
employed by Parent or its subsidiaries, nor does Parent or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither Parent nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of Parent or
any of its subsidiaries which would reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
SECTION 3.13. Registration Statement; Proxy Statement/Prospectus.
Subject to the accuracy of the representations of the Company in Section 2.13,
the registration statement (the "Registration Statement") pursuant to which the
Parent Common Shares to be issued in the Merger will be registered with the SEC
shall not, at the time the
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Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
included therein, in light of the circumstances under which they were made, not
misleading. The information supplied by Parent in writing specifically for
inclusion in the Proxy Statement/Prospectus will not, on the date the Proxy
Statement/Prospectus is first mailed to shareholders or at the time of the
Company Shareholders Meeting, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Shareholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Parent, Merger Sub or any of their
respective affiliates, officers or directors should be discovered by Parent or
Merger Sub which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement/Prospectus, Parent or Merger
Sub will promptly inform the Company. The Registration Statement and Proxy
Statement/Prospectus shall comply in all material respects with the requirements
of the Securities Act, the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, Parent and Merger Sub make no
representation or warranty with respect to any information supplied by the
Company which is contained or incorporated by reference in, or furnished in
connection with the preparation of, the Registration Statement or the Proxy
Statement/Prospectus.
SECTION 3.14. Restrictions on Business Activities. Except for
this Agreement, to the best of Parent's knowledge, there is no agreement,
judgment, injunction, order or decree binding upon Parent or any of its
subsidiaries which has or would reasonably be expected to have the effect of
prohibiting or materially impairing the conduct of business by Parent or any of
its subsidiaries as currently conducted by Parent or such Subsidiary, except for
any prohibition or impairment as would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
SECTION 3.15. Title to Property. Parent and each of its
subsidiaries have good title to all of their real properties and other assets,
free and clear of all liens, charges and encumbrances, except liens for taxes
not yet due and payable and such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with the present use
of the property affected thereby or which could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and except
for liens which secure indebtedness reflected in the 1998 Balance Sheet; and, to
Parent's knowledge, all leases pursuant to which Parent or any of its
subsidiaries lease from other material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, to the knowledge of Parent, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default) except where the
lack of such good standing, validity and effectiveness, or the existence of such
default or event of default would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
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SECTION 3.16. Taxes. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:
(a) Parent and each of its subsidiaries has timely and accurately
filed, or caused to be timely and accurately filed, all material Tax Returns (as
hereinafter defined) required to be filed by it, and has paid, collected or
withheld, or caused to be paid, collected or withheld, all material amounts of
Taxes (as hereinafter defined) required to be paid, collected or withheld, other
than such Taxes for which adequate reserves in the September 1997 Balance Sheet
have been established or which are being contested in good faith. There are no
material claims or assessments pending against Parent or any of its subsidiaries
for any alleged deficiency in any Tax, there are no pending or threatened audits
or investigations for or relating to any liability in respect of any Taxes, and
Parent has not been notified in writing of any proposed Tax claims or
assessments against Parent or any of its subsidiaries (other than in each case,
claims or assessments for which adequate reserves in the September 1997 Balance
Sheet have been established or which are being contested in good faith or are
immaterial in amount). Neither Parent nor any of its subsidiaries has executed
any waivers or extensions of any applicable statute of limitations to assess any
material amount of Taxes. There are no outstanding requests by Parent or any of
its subsidiaries for any extension of time within which to file any material Tax
Return or within which to pay any material amounts of Taxes shown to be due on
any Tax Return. To the best knowledge of Parent, there are no liens for material
amounts of Taxes on the assets of Parent or any of its subsidiaries except for
statutory liens for current Taxes not yet due and payable.
(b) Except as set forth in Section 3.16 of the Parent Disclosure
Schedule: (i) Neither Parent nor any of its subsidiaries has ever been a member
of an affiliated group within the meaning of Section 1504 of the Code or filed
or been included in a combined, consolidated or unitary Tax Return, other than
of Parent and its subsidiaries; (ii) other than with respect to Parent and its
subsidiaries, neither Parent nor any of its subsidiaries is liable for Taxes of
any other Person, or is currently under any contractual obligation to indemnify
any person with respect to Taxes (except for customary agreements to indemnify
lenders or security holders in respect of taxes other than income taxes), or is
a party to any tax sharing agreement or any other agreement providing for
payments by Parent or any of its subsidiaries with respect to Taxes; (iii)
neither Parent nor any of its subsidiaries is a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for federal income tax purposes; (iv) neither Parent nor any of its
subsidiaries has entered into any sale leaseback or any leveraged lease
transaction that fails to satisfy the requirements of Revenue Procedure 75-21
(or similar provisions of foreign law); (v) neither Parent nor any of its
subsidiaries has agreed or is required, as a result of a change in method of
accounting or otherwise, to include any adjustment under Section 481 of the Code
(or any corresponding provision of state, local or foreign law) in taxable
income; (vi) the prices for any property or services (or for the use of
property) provided by Parent or any of its subsidiaries to any other subsidiary
or to Parent have been arm's length prices, determined using a method permitted
by the Treasury Regulations under Section 482 of the Code; (vii) neither Parent
nor any of its subsidiaries is liable with respect to any indebtedness the
interest of which is not deductible for applicable federal, foreign, state or
local income tax purposes; (viii) neither Parent nor any of its subsidiaries is
a "consenting corporation" under Section 341(f) of the Code or any corresponding
provision of state, local or foreign law; and (ix)
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none of the assets owned by Parent or any of its subsidiaries is property that
is required to be treated as owned by any other person pursuant to Section
168(g)(8) of the Internal Revenue Code of 1954, as amended, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986, or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
SECTION 3.17. Environmental Matters. (a) Except as set forth in
Section 3.17(a) to the Parent Disclosure Schedule or the Parent SEC Reports or
as would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, the operations and properties of Parent and its
subsidiaries are in material compliance with the Environmental Laws, which
compliance includes the possession by Parent and its subsidiaries of all
material permits and governmental authorizations required under applicable
Environmental Laws, and material compliance with the terms and conditions
thereof.
(b) Except as set forth in Section 3.17(b) of the Parent
Disclosure Schedule or the Parent SEC Reports or as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
there are no Environmental Claims, including claims based on "arranger
liability," pending or, to the best knowledge of Parent, threatened against
Parent or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim Parent or any of its subsidiaries has
retained or assumed either contractually or by operation of law.
(c) There are no past or present actions, inactions, activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Material of Environmental Concern, that
would form the basis of any Environmental Claim against Parent or any of its
subsidiaries or against any person or entity whose liability for any
Environmental Claim Parent or any of its subsidiaries have retained or assumed
either contractually or by operation of law, except for such Environmental
Claims that would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
(d) Except as set forth in Section 3.17(d) of the Parent
Disclosure Schedule or as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect: (i) no off-site locations
where Parent or any of its subsidiaries has stored, disposed or arranged for the
disposal of Materials of Environmental Concern has been listed on the National
Priority List, CERCLIS, state Superfund site list or state analog to CERCLIS,
and Parent and its subsidiaries have not been notified that either of them is a
potentially responsible party at any such location; (ii) there are no
underground storage tanks located on property owned or leased by Parent or any
of its subsidiaries; (iii) there is no asbestos containing material contained in
or forming part of any building, building component, structure or office space
owned, leased or operated by Parent or any of its subsidiaries; and (iv) there
are no polychlorinated biphenyls (PCB's) or PCB-containing items contained in or
forming part of any building, building component, structure or office space
owned, leased or operated by Parent or any of its subsidiaries.
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SECTION 3.18. Brokers. No broker, finder or investment banker
(other ▇▇▇▇ ▇▇▇▇▇▇▇, Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇
▇▇▇▇▇"), the fees and expenses of whom will be paid by Parent) is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
SECTION 3.19. Intellectual Property. (a) Parent and/or each of
its subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all Parent Intellectual Property Assets that are used in the
business of Parent and its subsidiaries as currently conducted without conflict
with the rights of others except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. As used
herein, "Parent Intellectual Property Assets" shall mean the Intellectual
Property Assets used or owned by the Parent or any of its subsidiaries.
(b) Except as disclosed in Section 3.19(b) of the Parent
Disclosure Schedule or as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect, no claims with respect to the
Parent Intellectual Property Assets, or Third Party Intellectual Property Assets
to the extent arising out of any use, reproduction or distribution of such Third
Party Intellectual Property Assets by or through Parent or any of its
subsidiaries, are currently pending or, to the knowledge of Parent, are
threatened by any person.
(c) Except as set forth in Section 3.19(c) of the Parent
Disclosure Schedule or the Parent SEC Reports or as could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect
each patent, patent application, trademark or service ▇▇▇▇ registration, and
trademark or service ▇▇▇▇ application and copyright registration or copyright
application of Parent and/or each of its subsidiaries is valid and subsisting.
(d) Except as set forth in Section 3.19(d) of the Parent
Disclosure Schedule, to Parent's knowledge: there is no material unauthorized
use, infringement or misappropriation of any of Parent's Intellectual Property
Assets by any third party, including any employee, former employee, independent
contractor or consultant of Parent or any of its subsidiaries.
SECTION 3.20. Interested Party Transactions. Except as set forth
in Section 3.20 of the Parent Disclosure Schedule or the Parent SEC Reports,
since the date of Parent's proxy statement dated February 20, 1998, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
SECTION 3.21. Insurance. Except as disclosed in Section 3.21 of
the Parent Disclosure Schedule or the Parent SEC Reports, all material fire and
casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance policies maintained by Parent or any of its
subsidiaries are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of Parent and its
subsidiaries and their respective properties and assets and are in character and
amount
-35-
appropriate for the businesses conducted by Parent, except as would not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.22. Product Liability and Recalls. (a) Except as
disclosed in Section 3.22(a) of the Parent Disclosure Schedule or the Parent SEC
Reports, Parent is not aware of any claim, pending or threatened, against Parent
or any of its subsidiaries for injury to person or property of employees or any
third parties suffered as a result of the sale of any product or performance of
any service by Parent or any of its subsidiaries, including claims arising out
of the defective or unsafe nature of its products or services, which would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) Except as disclosed in Section 3.22(b) of the Parent
Disclosure Schedule or the Parent SEC Reports, there is no pending or, to the
knowledge of Parent, overtly threatened, recall or investigation of any product
sold by Parent, which recall or investigation would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.23. Ownership of Merger Sub; No Prior Activities. (a)
Merger Sub is a direct, wholly-owned subsidiary of Parent and was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
SECTION 3.24. Pooling Matters. To Parent's knowledge and based
upon consultation with its independent accountants, Parent has provided to the
Company and its independent accountants all information concerning actions taken
or agreed to be taken by Parent or any of its affiliates on or before the date
of this Agreement that would reasonably be expected to adversely affect the
ability of Parent to account for the business combination to be effected by the
Merger as a pooling of interests, and Parent has no knowledge that such business
combination cannot be accounted for in that manner. For purposes of this Section
3.26, "to Parent's knowledge" means to the actual knowledge of Parent's Chief
Executive Officer or Chief Financial Officer.
SECTION 3.25. Tax Matters. The representations, statements, and
covenants set forth in paragraph 2 through 25 of Exhibit B hereto are true and
correct in all material respects.
SECTION 3.26. DGCL Section 203. Other than by reason of this
Agreement or the transactions contemplated hereby, Parent is not an "interested
stockholder" of the Company, as that term is defined in Section 203 of the DGCL.
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SECTION 3.27 Accuracy of Information. Each of Parent and Merger
Sub acknowledges that none of the Company, its subsidiaries or any of their
respective directors, officers, employees, affiliates, agents, advisors or
representatives makes any representation or warranty, either express or implied,
as to the accuracy or completeness of any of the information provided or made
available to Parent, Merger Sub or their agents or representatives including,
without limitation, including any estimations, projections or other statement
regarding future performance, except to the extent set forth in this Agreement
(including the Company Disclosure Schedule and the Supplemental Company
Disclosure Schedule).
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the
Merger. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, the
Company covenants and agrees that, unless Parent shall otherwise agree in
writing, and except as set forth in Section 4.01 of the Company Disclosure
Schedule, the Company shall conduct its business and shall cause the businesses
of its subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any of its subsidiaries shall, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, and except as set forth in Section 4.01
of the Company Disclosure Schedule, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Company's Certificate of
Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including, without limitation,
any phantom interest) in the Company, any of its subsidiaries or
affiliates (except for the issuance of shares of Company Common Stock
issuable pursuant to Stock Options under the Company Stock Option Plans,
which options are outstanding on the date hereof);
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(c) sell, pledge, dispose of or encumber any assets of the
Company or any of its subsidiaries (except for (i) sales of assets in
the ordinary course of business and in a manner consistent with past
practice, (ii) dispositions of obsolete or worthless assets, and (iii)
sales of immaterial assets not in excess of $2,000,000 in the
aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly
owned subsidiary of the Company may declare and pay a dividend to its
parent, and except that the Company may declare and pay quarterly cash
dividends of $0.04 per share consistent with past practice, (ii) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, or (iii) amend the
terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, or permit any subsidiary to purchase,
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, including, without limitation, shares of
Company Common Stock or any option, warrant or right, directly or
indirectly, to acquire shares of Company Common Stock, or propose to do
any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof other than those listed on Section
4.01(e) of the Company Disclosure Schedule; (ii) incur any indebtedness
for borrowed money, except for borrowings and reborrowing under the
Company's existing credit facilities or other borrowings not in excess
of $5,000,000 in the aggregate or issue any debt securities or assume,
guarantee (other than guarantees of bank debt of the Company's
subsidiaries entered into in the ordinary course of business) or endorse
or otherwise as an accommodation become responsible for, the obligations
of any person, or make any loans or advances, except in the ordinary
course of business consistent with past practice; or (iii) authorize any
capital expenditures or purchases of fixed assets which are, in the
aggregate, in excess of 110% of the amount thereof provided for in the
Company's current business plan, a copy of which has heretofore been
furnished to Parent; or (iv) enter into or materially amend any
contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 4.01(e);
(f) increase the compensation payable or to become payable to
its officers or employees, except for increases in salary or wages of
employees of the Company or its subsidiaries in accordance with past
practices, or grant any severance or termination pay (except to make
payments required to be made under obligations existing on the date
hereof in accordance with the terms of such obligations) to, or enter
into or modify any employment or severance agreement, in excess of
$100,000 with, any director, officer or other employee of the Company or
any of its subsidiaries, or establish, adopt, enter into or amend any
collective bargaining agreement, Employee Plan (within the meaning of
Section 2.11 of this Agreement), trust, fund, policy or arrangement for
the benefit of any current or former directors, officers or employees or
any of their beneficiaries, except, in each case, as may be
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required by law or as would not result in a material increase in the
cost of maintaining such collective bargaining agreement, Employee Plan,
trust, fund, policy or arrangement.
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable) except as required by a change in GAAP occurring after the
date hereof;
(h) make any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or
foreign tax liability, except to the extent the amount of any such
settlement has been reserved for in the financial statements contained
in the Company SEC Reports filed prior to the date of this Agreement or
other settlements not in excess of $2,000,000 in the aggregate;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $5,000,000 in the aggregate, other than the
payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities reflected or reserved
against in the financial statements contained in the Company SEC Reports
filed prior to the date of this Agreement or incurred in the ordinary
course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (i) above.
SECTION 4.02. No Solicitation. (a) The Company shall not,
directly or indirectly, through any officer, director, employee, representative
or agent of the Company or any of its subsidiaries, solicit or encourage the
initiation of any inquiries or proposals regarding any merger, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company or any subsidiaries of the Company (any of the foregoing inquiries or
proposals being referred to herein as an "Acquisition Proposal"). Nothing
contained in this Agreement shall prevent the Board of Directors of the Company
from (i) considering, negotiating, approving and recommending to the
shareholders of the Company a bona fide Acquisition Proposal not solicited in
violation of this Agreement, (ii) taking and disclosing to its shareholders a
position with respect to any tender or exchange offer commenced by a third
party, or amending or withdrawing such position, as contemplated by Rules 14d-9
and 14e-2 under the Exchange Act, (iii) making any disclosure to its
shareholders or (iv) furnishing information to a third party which has made a
bona fide Acquisition Proposal, provided that such third party has executed an
agreement with confidentiality provisions substantially similar to those then in
effect between the Company and Parent; provided that, as to each of clauses (i),
(ii), (iii) and (iv), the Board of Directors of the Company reasonably
determines in good faith (after due consultation with independent counsel, which
may be Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP ("Skadden, Arps")) that it is or
is reasonably likely to be required to do so in order to discharge properly its
fiduciary duties.
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(b) The Company shall immediately notify Parent after receipt of
any Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Parent shall be made orally and in writing, and, unless the Board
of Directors of the Company reasonably determines in good faith (after due
consultation with independent counsel) that it is or is reasonably likely to be
inconsistent with its fiduciary duties, shall indicate the identity of the
person making the Acquisition Proposal or intending to make an Acquisition
Proposal or requesting non-public information or access to the books and records
of Parent, the terms of any such Acquisition Proposal or modification or
amendment to an Acquisition Proposal, and whether the Company is providing or
intends to provide the person making the Acquisition Proposal with access to
information concerning the Company as provided in Section 4.02(c).
(c) Anything to the contrary in this Section or elsewhere in this
Agreement notwithstanding, the Board of Directors of the Company shall not (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors of the matters
set forth in Section 5.02, (ii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (iii) cause the Company to enter into any
agreement with respect to any Acquisition Proposal, except (x) to the extent
that such Board of Directors reasonably determines in good faith (after due
consultation with independent counsel) that it is or is reasonably likely to be
required to cause the Company to act as provided in this Section 4.02(d) in
order for the Board of Directors to discharge properly its fiduciary duties and
(y) with respect to the approval or recommendation of any Acquisition Proposal
or entering into any agreement with respect to any Acquisition Proposal, after
the third business day following Parent's receipt of written notice of the
information with respect to such Acquisition Proposal, and, if applicable, the
second business day after Parent's receipt of written notice of the information
with respect to all material amendments or modifications thereto, in each case
as contemplated by Section 4.02(b) above.
(d) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons (other than
Parent and Merger Sub) conducted heretofore with respect to any of the
foregoing. The Company agrees not to release any third party from the
confidentiality provisions of any confidentiality agreement to which the Company
is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its subsidiaries and any investment banker or other
advisor or representative retained by the Company are aware of the restrictions
described in this Section 4.02.
SECTION 4.03. Conduct of Business by Parent Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Parent
covenants and agrees that, except as set forth in Section 4.03 of Parent
Disclosure Schedule or unless the Company shall otherwise
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agree in writing, Parent shall conduct its business, and cause the businesses of
its subsidiaries to be conducted, in the ordinary course of business and
consistent with past practice, other than actions taken by Parent or its
subsidiaries in contemplation of the Merger, and shall not directly or
indirectly do, or propose to do, any of the following without the prior written
consent of the Company:
(a) amend or otherwise change Parent's Memorandum of Association
or Bye-Laws;
(b) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other person,
which, in any such case, would materially delay or prevent the
consummation of the Merger and the other transactions contemplated by
this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly
owned subsidiary of Parent may declare and pay a dividend to its parent,
and except that Parent may declare and pay quarterly cash dividends of
$0.025 per share consistent with past practice; or
(d) take or agree in writing or otherwise to take any action
which would make any of the representations or warranties of Parent
contained in this Agreement untrue or incorrect or prevent Parent from
performing or cause Parent not to perform its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement.
As promptly as practicable after the execution of this Agreement, the Company
shall prepare and file with the SEC preliminary proxy materials which shall
constitute the Proxy Statement/Prospectus. As promptly as practicable after
comments are received from the SEC thereon and after the furnishing by the
Company and Parent of all information required to be contained therein, the
Company and Parent shall file with the SEC a combined proxy and Registration
Statement on Form S-4 (or on such other form as shall be appropriate) relating
to the adoption of this Agreement and approval of the transactions contemplated
hereby by the shareholders of the Company pursuant to this Agreement, and shall
use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. The Proxy Statement/Prospectus
shall include the recommendation of the Board of Directors of the Company in
favor of the Merger, subject to the Company's rights pursuant to last sentence
of Section 5.02.
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SECTION 5.02. Company Shareholders Meeting. The Company shall
call the Company Shareholders Meeting as promptly as practicable for the purpose
of voting upon the approval of the Merger, and the Company shall use its
reasonable best efforts to hold the Company Shareholders Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective. Subject to its rights pursuant to the last sentence of Section
4.02(a), the Company shall solicit from its shareholders proxies in favor of
approval of the Merger and this Agreement, and shall take all other reasonable
action necessary or advisable to secure the vote or consent of shareholders in
favor of such approval.
SECTION 5.03. Access to Information; Confidentiality. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject (from which such party shall use
reasonable efforts to be released), the Company and Parent shall each (and shall
cause each of their subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other, reasonable access,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, the Company and
Parent each shall (and shall cause each of their subsidiaries to) furnish
promptly to the other all information concerning its business, properties and
personnel as such other party may reasonably request, and each shall make
available to the other the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the other's business,
properties and personnel as either Parent or the Company may reasonably request.
Each party shall keep such information confidential in accordance with the terms
of the confidentiality letter, dated April 9, 1998 (the "Confidentiality
Letter"), between Parent and the Company.
SECTION 5.04. Consents; Approvals. The Company and Parent shall
each use their reasonable best efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all United
States and foreign governmental and regulatory rulings and approvals), and the
Company and Parent shall make all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby. The Company and Parent shall furnish all
information required to be included in the Proxy Statement/Prospectus and the
Registration Statement, or for any application or other filing to be made
pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 5.05. Agreements with Respect to Affiliates. (a) The
Company shall deliver to Parent, prior to the date the Registration Statement
becomes effective under the Securities Act, a letter (the " Company Affiliate
Letter") identifying all persons who are, at the time of the Company
Shareholders Meeting, anticipated to be "affiliates" of the Company for purposes
of Rule 145 under the Securities Act ("Rule 145"), or the rules and regulations
of the SEC relating to pooling of interests accounting treatment for merger
transactions (the "Pooling Rules"). The Company shall use its reasonable best
efforts to cause each person who is identified as an "affiliate" in the
Affiliate Letter to deliver to Parent, no less than 35 days prior to the date of
the Company Shareholders Meeting a written
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agreement (an "Affiliate Agreement") in connection with restrictions on
affiliates under Rule 145 and pooling of interests accounting treatment, in form
mutually agreeable to the Company and Parent.
(b) Parent shall deliver to the Company, prior to the date the
Registration Statement becomes effective under the Securities Act, a letter (the
"Parent Affiliate Letter") identifying all persons who are, at the time of the
Closing, anticipated to be "affiliates" of Parent for purposes of the Pooling
Rules. Parent shall use its reasonable best efforts to cause each person who is
identified as an "affiliate" in the Parent Affiliate Letter to deliver to
Parent, no less than 35 days prior to the date of Closing a written agreement in
connection with restrictions on affiliates under pooling of interests accounting
treatment, in form mutually agreeable to the Company and Parent.
SECTION 5.06. Indemnification and Insurance. (a) The By-Laws and
Certificate of Incorporation of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the By-Laws and
Certificate of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
as of the Effective Time of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required after the Effective Time by law.
(b) The Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Surviving Corporation's Certificate
of Incorporation or By-Laws, indemnify and hold harmless, each present and
former director, officer or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the Company's Certificate of Incorporation or By-Laws or any applicable contract
or agreement as in effect on the date hereof, in each case for a period of six
years after the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time shall be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, the Surviving Corporation shall pay
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received, (iii) any written determination made by such counsel
shall, in the first instance and subject to any contrary determination by a
court of competent jurisdiction, be presumptively binding on the parties with
respect to whether an Indemnified Party's conduct complies with the standards of
applicable law, the Company's Certificate of Incorporation or By-Laws, or any
such applicable contract or agreement, and (iv) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within
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such six-year period, all rights to indemnification in respect of any such claim
or claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them in
each applicable jurisdiction with respect to any single action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Person with respect to whom such a conflict
exists (or group of such Indemnified Persons who among them have no such
conflict) may retain one separate law firm in each applicable jurisdiction.
(c) The Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements
and employment agreements (the employee parties under such agreements being
referred to as the "Officer Employees") with the Company's directors and
officers existing at or before the Effective Time.
(d) In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O Insurance") that is no less favorable than the
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that Parent and the
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of 200% of the annual premium currently paid by the Company
for such insurance, but in such case shall purchase as much such coverage as
possible for such amount.
(e) From and after the Effective Time, Parent shall
unconditionally guarantee the timely payment of all funds owing by, and the
timely performance of all other obligations of, the Surviving Corporation under
this Section.
(f) This Section shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
SECTION 5.07. Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be materially untrue or inaccurate, or (ii) any
failure of the Company, Parent or Merger Sub, as the case may be, materially to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice; and provided further
that failure to give such notice shall not be treated as a breach of covenant
for the purposes of Sections 6.02(b) or 6.03(b) unless the failure to give such
notice results in material prejudice to the other party.
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SECTION 5.08. Further Action/Tax Treatment. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. The foregoing covenant shall not include any obligation by
Parent to agree to divest, abandon, license or take similar action with respect
to any assets (tangible or intangible) of Parent or the Company, except as to
any line of business of the Company and its subsidiaries which accounts for no
more than 10% of the total revenues of the Company and its subsidiaries taken as
a whole, or any line of business of Parent which accounts for no more than 10%
of the total revenues of Parent's Disposable and Specialty Products Group. Each
of Parent, Merger Sub and the Company shall use its reasonable best efforts to
cause the Merger to qualify, and will not (both before and after consummation of
the Merger) take any actions, or fail to take any action, which could reasonably
be expected to prevent the Merger from qualifying as a reorganization under the
provisions of Section 368 of the Code that is not subject to Section 367(a)(1)
of the Code pursuant to Treasury Regulation Section 1.367(a)-(3)(c) (other than
with respect to Company shareholders who are or will be "5% transferee
shareholders" within the meaning of Treasury Regulation Section
1.367(a)-3(c)(5)(ii)). Parent shall report the Merger for income tax purposes as
a reorganization within the meaning of Section 368 of the Code.
SECTION 5.09. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release with respect to the
Merger or this Agreement and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which shall
not be unreasonably withheld; provided, however, that a party may, without the
prior consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the rules and
regulations of the NYSE, if it has used all reasonable efforts to consult with
the other party.
SECTION 5.10. Listing of Parent Shares. Parent shall use its best
efforts to cause the Parent Common Shares to be issued in the Merger and upon
exercise of the Adjusted Options to be listed, upon official notice of issuance,
on the NYSE prior to the Effective Time.
SECTION 5.11. Conveyance Taxes. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time and the Company shall be responsible for the payment of all such taxes and
fees.
SECTION 5.12. Option Plans and Benefits, etc. (a) Prior to the
Effective Time, the Parties to this Agreement shall take all such actions as
shall be necessary to
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effectuate the provisions of Section 1.06(c). The Company shall take such action
as is necessary to cause the ending date of the then current offering period
under the Company Stock Purchase Plans to be prior to the Effective Time and to
terminate such plans as of the Effective Time.
(b) The Company shall use its best efforts to obtain prior to the
Effective Time an acknowledgment from each former PAS stockholder who may be
entitled to receive shares of Company Common Stock pursuant to the PAS
Obligations, that from and after the Effective Time Tyco Common Shares will be
issued in lieu of shares of Company Common Stock issuable pursuant to the PAS
Obligations, as provided in Section 1.06(c)(2) of this Agreement.
(c) Parent and Sub agree that, effective as of the Effective
Time, Parent shall, or shall cause the Surviving Corporation and its
subsidiaries and successors to, provide those persons who, immediately prior to
the Effective Time, were employees of the Company or its subsidiaries ("Retained
Employees") with employee welfare and retirement plans and programs which
provide benefits that are, in the aggregate, substantially similar to those
provided to such Retained Employees immediately prior to the date hereof. With
respect to such benefits, (i) service accrued by such Retained Employees during
employment with the Company and its subsidiaries prior to the Effective Time
shall be recognized for all purposes, except to the extent necessary to prevent
duplication of benefits, (ii) any and all pre-existing condition limitations (to
the extent such limitations did not apply to a pre-existing condition under the
applicable Employee Plan (as defined in Section 2.11(a)) and eligibility waiting
periods under any group health plan shall be waived with respect to such
Retained Employees and their eligible dependents, and (iii) Retained Employees
shall be given credit for amounts paid under an Employee Plan during the same
period for purposes of applying deductibles, co-payments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the employee welfare plans maintained by Parent, the Surviving
Corporation or their subsidiaries.
SECTION 5.13. Accountant's Letters. Upon reasonable notice from
the other, the Company shall use its best efforts to cause Deloitte & Touche,
LLP to deliver to Parent, and Parent shall use its best efforts to cause Coopers
& ▇▇▇▇▇▇▇ to deliver to the Company, a letter covering such matters as are
reasonably requested by Parent or the Company, as the case may be, and as are
customarily addressed in accountant's "comfort" letters.
SECTION 5.14. Pooling Accounting Treatment. (a) Parent and the
Company each agrees to use its best efforts not to take any action that would
reasonably be expected to adversely affect the ability of Parent to account for
the business combination to be effected by the Merger as a pooling of interests,
and Parent and the Company each agrees to use its best efforts to take such
action as may be reasonably required to negate the impact of any past actions by
Parent, the Company or their respective affiliates which would reasonably be
expected to adversely impact the ability of Parent to treat the Merger as a
pooling of interests. The taking by Parent or the Company of any action
prohibited by the previous sentence, or the failure of Parent or the Company to
use its best efforts to take any
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action required by the previous sentence, if the Merger is not able to be
accounted for as a pooling of interests because of such action or failure to
take action, shall constitute a breach of this Agreement by such party for the
purposes of Section 7.01(i).
(b) Parent shall use its best efforts to obtain an opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, independent public accountants, to the effect that the Merger,
to the best of their knowledge after due inquiry qualifies for pooling of
interest accounting treatment if consummated in accordance with this Agreement
and the Company shall use its best efforts to obtain an opinion of Deloitte &
Touche, independent certified public accountants, to the effect that the Merger,
to the best of their knowledge, after due inquiry, qualifies for pooling of
interests accounting treatment if consummated in accordance with this Agreement.
SECTION 5.15. Connecticut Transfer Act. The Company shall comply
with all applicable provisions and requirements set forth in the Connecticut
Transfer Act, Conn. Gen. Stat. ss.22a-134 et. seq., as amended by Pub. Act
95-183, in respect of the Merger, required to be complied with prior to the
Effective Time, including, without limitation, making all required filings with
the Connecticut Department of Environmental Protection and all investigations
required to be made in respect thereof.
SECTION 5.16. Director Appointment. In the event that there shall
be a vacancy in the Board of Directors of Parent occurring after the Effective
Time and prior to the next annual general meeting of shareholders of Parent,
Parent shall take all necessary action, subject to applicable fiduciary
obligations of Parent's Board of Directors, to appoint ▇▇▇▇ ▇. ▇▇▇▇▇▇ to fill
such vacancy. In the event that no such vacancy shall occur, Parent shall take
all necessary action, subject to applicable fiduciary obligations of Parent's
Board of Directors, to nominate ▇▇. ▇▇▇▇▇▇ for election as a director of Parent
at the next annual general meeting of shareholders of Parent occurring after the
Effective Time.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no
proceedings for that purpose and no similar proceeding in respect of the
Proxy Statement/Prospectus shall have been initiated or threatened by
the SEC;
(b) Shareholder Approval. This Agreement and the Merger shall
have been approved by the requisite vote of the shareholders of the
Company;
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(c) Antitrust. All waiting periods applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated,
and all clearances and approvals required to be obtained in respect of
the Merger prior to the Effective Time under any Foreign Monopoly Laws
shall have been obtained.
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or
other inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction,
domestic or foreign, nor shall there be in effect any judgment, decree
or order of any governmental authority, administrative agency or court
of competent jurisdiction, or any other legal restraint (i) preventing
or seeking to prevent consummation of the Merger, (ii) prohibiting or
seeking to prohibit or limiting or seeking to limit, Parent from
exercising all material rights and privileges pertaining to its
ownership of the Surviving Corporation or the ownership or operation by
Parent or any of its subsidiaries of all or a material portion of the
business or assets of the Surviving Corporation or any of its
subsidiaries, or (iii) compelling or seeking to compel Parent or any of
its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of Parent or any of its subsidiaries
(including the Surviving Corporation and its subsidiaries), as a result
of the Merger or the transactions contemplated by this Agreement;
provided that for purposes of this Section 6.01(d) (but not for any
other purpose of this Agreement or otherwise), a line of business of the
Surviving Corporation and its subsidiaries which accounts for no more
than 10% of the total revenues of the Surviving Corporation and its
subsidiaries taken as a whole (in the case of (ii) above), or a line of
business of Parent which accounts for no more than 10% of the total
revenues of Parent's Disposable and Specialty Products Group (in the
case of (iii) above) shall not be deemed material;
(e) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal;
(f) Tax Opinions. The Company shall have received a written
opinion of Skadden, Arps, and Parent shall have received a written
opinion of Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇, in form and substance
reasonably satisfactory to each of them, to the effect that (i) the
Merger will constitute a reorganization within the meaning of Section
368 of the Code and (ii) the transfer of Company Common Stock by Company
shareholders, other than Company shareholders who are or will be "5%
transferee shareholders" within the meaning of Treasury Regulation
Section 1.367(a)-3(c)(5)(ii), pursuant to the Merger will qualify for an
exception under Treasury Regulation Section 1.367(a)-3 and accordingly,
Parent will be treated as a corporation for United States federal income
tax purposes. Each party agrees to make all reasonable representations
and covenants in connection with the rendering of such opinions; and
(g) Opinion of Accountant. Parent shall have received an opinion
of Coopers & ▇▇▇▇▇▇▇, independent certified public accountants, to the
effect that the
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Merger, to the best of their knowledge after due inquiry, qualifies for
pooling of interests accounting treatment if consummated in accordance
with this Agreement. Such opinion shall be in form and substance
reasonably satisfactory to Parent and the Company.
SECTION 6.02. Additional Conditions to Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to effect the Merger are
also subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct in all respects on and as of the Effective Time, except for (i)
changes contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which
shall have been true and correct as of such date, subject to clause
(iii)), or (iii) where the failure to be true and correct would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, with the same force and effect as if made on
and as of the Effective Time, and Parent and Merger Sub shall have
received a certificate of the Company to such effect signed by the Chief
Executive Officer or Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and Parent and Merger Sub shall have
received a certificate to such effect signed by the Chief Executive
Officer or Chief Financial Officer of the Company;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made, by the Company for the authorization, execution and
delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by
the Company, except where the failure to receive such consents, waivers,
approvals, authorizations or orders would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on
the Company or Parent;
(d) Affiliate Agreements. Parent shall have received from each
person who is identified in the Affiliate Letter as an "affiliate" of
the Company, an Affiliate Agreement, and such Affiliate Agreement shall
be in full force and effect; and
(e) Capitalization. The capitalization of the Company on the date
of this Agreement and as of the Effective Time (in terms of the sum of
the number of shares of Company Common Stock outstanding, plus the
number of shares reserved for existing grants pursuant to the Company
Stock Option Plans) shall not exceed by more than the sum of the number
of shares reserved and available for issuance under the Stock Purchase
Plans as of the date hereof (but in no event more than the number of
shares set forth in Section 2.03(v)), plus the number of shares, if any,
issued pursuant to the PAS Obligations after the date hereof, plus
50,000 shares the
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capitalization with respect to such outstanding shares and shares
reserved for Company Stock Option Plans set forth in Section 2.03
(including Section 2.03 of the Company Disclosure Schedule), and the
Aggregate Option Exercise Spread as of the date of this Agreement and as
of the Effective Time shall not exceed by more than $5,000,000 the
amount set forth in Section 2.11(c) of the Company Disclosure Schedule.
SECTION 6.03. Additional Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is also subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be
true and correct in all respects on and as of the Effective Time, except
for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date,
subject to clause (iii)), or (iii) where the failure to be true and
correct could not reasonably be expected to have a Material Adverse
Effect, with the same force and effect as if made on and as of the
Effective Time, and the Company shall have received a certificate to
such effect signed by the President or Chief Financial Officer of
Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and the Company shall have
received a certificate of Parent to such effect signed by the President
or Chief Financial Officer of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made, by Parent or Merger Sub for the authorization,
execution and delivery of this Agreement and the consummation by them of
the transactions contemplated hereby shall have been obtained and made
by Parent or Merger Sub, except where the failure to receive such
consents, etc. could not reasonably be expected to have a Material
Adverse Effect on the Company or Parent; and
(d) Listing. The Parent Common Shares issuable in the Merger and
upon exercise of the Adjustment Options shall have been authorized for
listing on the NYSE upon official notice of issuance.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
shareholders of the Company or Parent:
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(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have
been consummated by December 31, 1998 (other than for the reasons set
forth in clause (d) below); or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by either Parent or the Company, if the requisite vote of
the shareholders of the Company shall not have been obtained by December
31, 1998, or if the shareholders of the Company shall not have approved
the Merger and this Agreement at the Company Shareholders Meeting; or
(e) by Parent, if (i) the Board of Directors of the Company
shall withdraw, modify or change its approval or recommendation of this
Agreement or the Merger in a manner adverse to Parent or shall have
resolved to do so; (ii) the Board of Directors of the Company shall have
approved or recommended to the shareholders of the Company an
Alternative Transaction (as hereinafter defined); or (iii) a tender
offer or exchange offer for 25% or more of the outstanding shares of
Company Common Stock is commenced (other than by Parent or an affiliate
of Parent) and the Board of Directors of the Company approves or
recommends that the shareholders of the Company tender their shares in,
such tender or exchange offer; or
(f) by the Company, if the Board of Directors of the Company
shall withdraw, modify or change its approval or recommendation of this
Agreement or the Merger in a manner adverse to Parent or Merger Sub or
shall have resolved to do so, in each case in compliance with the
provisions of Section 4.02; or
(g) by Parent or the Company, if any representation or warranty
of the Company, or Parent and Merger Sub, respectively, set forth in
this Agreement shall be untrue when made, such that the conditions set
forth in Sections 6.02(a) or 6.03(a), as the case may be, would not be
satisfied (a "Terminating Misrepresentation"); provided, that, if such
Terminating Misrepresentation is curable prior to December 31, 1998 by
the Company or Parent, as the case may be, through the exercise of its
reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate this Agreement under
this Section 7.01(g); or
(h) by Parent, if any representation or warranty of the Company
shall have become untrue such that the condition set forth in Section
6.02(a) would not be satisfied (a "Company Terminating Change"), or by
the Company, if any representation or warranty of Parent and Merger Sub
shall have become untrue such that the condition set forth in Section
6.03(a) would not be satisfied (a "Parent
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇" and together with a Company Terminating Change, a
"Terminating Change"), in either case other than by reason of a
Terminating Breach (as hereinafter defined); provided that if any such
Terminating Change is curable prior to December 31, 1998 by the Company
or Parent, as the case may be, through the exercise of its reasonable
best efforts, and for so long as the Company or Parent, as the case may
be, continues to exercise such reasonable best efforts, neither Parent
nor the Company, respectively, may terminate this Agreement under this
Section 7.01(h); or
(i) by Parent or the Company, upon a breach of any covenant or
agreement on the part of the Company or Parent, respectively, set forth
in this Agreement, such that the conditions set forth in Sections
6.02(b) or 6.03(b), as the case may be, would not be satisfied (a
"Terminating Breach"); provided, that, if such Terminating Breach is
curable prior to December 31, 1998 by the Company or Parent, as the case
may be, through the exercise of its reasonable best efforts and for so
long as the Company or Parent, as the case may be, continues to exercise
such reasonable best efforts, neither Parent nor the Company,
respectively, may terminate this Agreement under this Section 7.01(i);
or
(j) by Parent if any representation or warranty of the Company
shall be untrue when made or shall have become untrue such that the
condition set forth in Section 6.02(e) would not be satisfied (other
than by reason of a Terminating Breach).
As used herein, "Alternative Transaction" means any of (i) a
transaction pursuant to which any person (or group of persons) other than Parent
or its affiliates (a "Third Party") acquires or would acquire more than 25% of
the outstanding shares of any class of equity securities of the Company, whether
from the Company or pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving the Company pursuant to
which any Third Party acquires more than 25% of the outstanding equity
securities of the Company or the entity surviving such merger or business
combination, or (iii) any other transaction pursuant to which any Third Party
acquires or would acquire control of assets (including for this purpose the
outstanding equity securities of subsidiaries of the Company, and the entity
surviving any merger or business combination including any of them) of the
Company, or any of its subsidiaries having a fair market value (as determined by
the Board of Directors of the Company in good faith) equal to more than 25% of
the fair market value of all the assets of the Company and its subsidiaries,
taken as a whole, immediately prior to such transaction; provided, however, that
the term Alternative Transaction shall not include any acquisition of securities
by a broker dealer in connection with a bona fide public offering of such
securities.
SECTION 7.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or any of its affiliates, directors, officers or shareholders (i) except
that the Company or Parent or Merger Sub may have liability as set forth in
Section 7.03 and Section 8.01 hereof, and (ii) except as provided in Section
7.03, nothing herein shall relieve the Company, Parent or Merger Sub from
liability
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for any willful material breach hereof (it being understood that the mere
existence of a Material Adverse Effect, by itself, shall not constitute such a
willful material breach).
SECTION 7.03. Fees and Expenses. (a) Except as set forth in this
Section 7.03, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated; provided, however, that
Parent and the Company shall share equally all SEC filing fees and printing
expenses incurred in connection with the printing and filing of the Proxy
Statement/Prospectus (including any preliminary materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) The Company shall pay Parent a fee of $125 million (the
"Fee"), plus Parent's actual, documented and reasonable out-of-pocket expenses
relating to the transactions contemplated by this Agreement (including but not
limited to, fees and expenses of counsel and accountants and out-of-pocket
expenses (but not fees) of financial advisors) ("Expenses", as applicable to
Parent or Company), but in no event more than $5 million, upon the first to
occur of any of the following events:
(i) the termination of this Agreement by Parent or the
Company pursuant to Section 7.01(d) as a result of the failure to
receive the requisite vote for approval of the Merger and this
Agreement by the shareholders of the Company by December 31, 1998
or of the failure of the shareholders of the Company to approve
the Merger and this Agreement at the Company Shareholders
Meeting; provided, however, that the Fee and Expenses shall not
be payable under this clause (i) if the Company Shareholders
Meeting is held and the holders of the requisite number of shares
of Company Common Stock do not vote to approve the Merger and the
Agreement, unless an Acquisition Proposal is subsequently
consummated, which Acquisition Proposal was publicly announced
within one year of the date the Company Shareholders Meeting
(including any adjournment thereof); or
(ii) the termination of this Agreement by Parent pursuant
to Section 7.01(e); or
(iii) the termination of this Agreement by the Company
pursuant to Section 7.01(f); or
(iv) the termination of this Agreement by Parent pursuant
to Section 7.01(i), provided that the Terminating Breach referred
to therein is willful.
(c) Upon a termination of this Agreement by Parent pursuant to
Section 7.01(g) or 7.01(j), the Company shall pay to Parent the Expenses of
Parent relating to the transactions contemplated by this Agreement, but in no
event more than $5 million. Upon termination of this Agreement by Company
pursuant to Section 7.01(g), Parent shall pay to the Company the Expenses of the
Company relating to the transactions contemplated by this Agreement, but in no
event more than $5 million.
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(d) The Fee and/or Expenses payable pursuant to Section 7.03(b)
or Section 7.03(c) shall be paid within one business day after a demand for
payment following the first to occur of any of the events described in Section
7.03(b) or Section 7.03(c); provided that, in no event shall the Company or
Parent, as the case may be, be required to pay such Fee and/or Expenses to the
other party, if, immediately prior to the termination of this Agreement, the
party entitled to receive such Fee and/or Expenses was in material breach of its
obligations under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements. (a) Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Article I and Sections 5.06 and 5.08 and any other agreement in this
Agreement which contemplates performance after the Effective Time shall survive
the Effective Time indefinitely and those set forth in Section 7.03 shall
survive termination indefinitely. The Confidentiality Letter shall survive
termination of this Agreement.
(b) Any disclosure made with reference to one or more Sections of
the Company Disclosure Schedule or the Parent Disclosure Schedule shall be
deemed disclosed with respect to each other section therein as to which such
disclosure is relevant provided that such relevance is reasonably apparent.
Disclosure of any matter in the Company Disclosure Schedule or the Parent
Disclosure Schedule shall not be deemed an admission that such matter is
material.
SECTION 8.02. Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made if and when delivered personally or by overnight courier to
the parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
Tyco International Ltd.
The ▇▇▇▇▇▇▇ Building
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Secretary
With a copy to:
Tyco International (US) Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel, Tyco International (US) Inc.
and
Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) If to the Company:
United States Surgical Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
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With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 8.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliates" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act)
has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon
the exercise of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, or (ii) which are beneficially
owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares;
(c) "business day" means any day other than a day on which banks
in New York are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or
otherwise;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company,
the Surviving Corporation, Parent or such other person, as the case may
be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock
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or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
SECTION 8.04. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger and this Agreement by the shareholders of the
Company, no amendment may be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time,
any party hereto may with respect to any other party hereto (a) extend the time
for the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 8.06. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. Severability. (a) If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
(b) The Company and Parent agree that the Fee provided in Section
7.03(b) is fair and reasonable in the circumstances, considering not only the
Merger Consideration but also the outstanding funded indebtedness (including
capital leases) of the Company and its subsidiaries. If a court of competent
jurisdiction shall nonetheless, by a final, non-appealable judgment, determine
that the amount of the Fee exceeds the maximum amount permitted by law, then the
amount of the Fee shall be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent jurisdiction.
SECTION 8.08. Entire Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings (other
than the Confidentiality Letters), both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein.
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SECTION 8.09. Assignment; Merger Sub. This Agreement shall not be
assigned by operation of law or otherwise, except that all or any of the rights
of Merger Sub hereunder may be assigned to any direct, wholly-owned subsidiary
of Parent provided that no such assignment shall relieve the assigning party of
its obligations hereunder. Parent guarantees the full and punctual performance
by Merger Sub of all the obligations hereunder of Merger Sub or any such
assignees.
SECTION 8.10. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, including, without limitation, by way of subrogation,
other than Section 5.06 (which is intended to be for the benefit of the
Indemnified Parties and Officer Employees and may be enforced by such
Indemnified Parties and Officer Employees).
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.12. Governing Law; Jurisdiction. (a) This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York applicable to contracts executed and fully performed within
the State of New York.
(b) Each of the parties hereto submits to the non-exclusive
jurisdiction of the federal courts of the United States located in the City of
New York, Borough of Manhattan with respect to any claim or cause of action
arising out of this Agreement or the transactions contemplated hereby.
SECTION 8.13. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB
AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
TYCO INTERNATIONAL LTD.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
T11 ACQUISITION CORP.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
UNITED STATES SURGICAL CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive
Officer