EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GUIDANT CORPORATION
SKI ACQUISITION CORP.
AND
ENDOVASCULAR TECHNOLOGIES, INC.
DATED AS OF OCTOBER 5, 1997
TABLE OF CONTENTS
PAGE NO.
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ARTICLE 1 THE MERGER........................................... 1
1.1 The Merger................................................ 1
1.2 The Closing............................................... 1
1.3 Effective Time............................................ 1
1.4 Certificate of Incorporation and Bylaws................... 2
1.5 Directors of the Surviving Corporation.................... 2
1.6 Officers of the Surviving Corporation..................... 2
ARTICLE 2 CONVERSION AND EXCHANGE OF SECURITIES................ 2
2.1 Merger Sub Stock.......................................... 2
2.2 EVT Stock................................................. 2
2.3 Exchange of Certificates Representing EVT Common Stock.... 3
2.4 Adjustment of Exchange Ratio.............................. 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EVT................ 5
Existence; Good Standing; Corporate Authority; Compliance
3.1 With Law.................................................. 5
3.2 Authorization, Validity and Effect of Agreements.......... 6
3.3 Capitalization............................................ 6
3.4 Subsidiaries.............................................. 6
3.5 Other Interests........................................... 7
3.6 No Violation.............................................. 7
3.7 SEC Documents............................................. 7
3.8 Patents, Trademarks, Copyrights and Trade Secrets......... 8
3.9 Investigations; Litigation................................ 8
3.10 Governmental Approvals.................................... 8
3.11 Absence of Certain Changes................................ 8
3.12 Taxes and Tax Returns..................................... 9
3.13 Material Contracts........................................ 10
3.14 Employee Benefit Plans.................................... 10
3.15 Labor Matters............................................. 12
3.16 Guidant Stock Ownership................................... 12
3.17 Pooling of Interests; Tax Reorganization.................. 12
3.18 Environmental Matters..................................... 12
3.19 State Takeover Statutes and Shareholder Rights Plan....... 12
3.20 No Brokers................................................ 12
3.21 Opinion of Financial Advisor.............................. 12
3.22 Affiliates................................................ 13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF GUIDANT AND MERGER
SUB........................................................... 13
Existence; Good Standing; Corporate Authority; Compliance
4.1 With Law.................................................. 13
4.2 Authorization, Validity and Effect of Agreements.......... 13
4.3 Capitalization............................................ 13
4.4 Merger Sub................................................ 14
4.5 No Violation.............................................. 14
4.6 SEC Documents............................................. 14
4.7 Investigations; Litigation................................ 15
4.8 Absence of Certain Changes................................ 15
4.9 No Brokers................................................ 15
4.10 Patents, Trademarks, Copyrights and Trade Secrets......... 15
4.11 Pooling of Interests; Tax Reorganization.................. 15
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PAGE NO.
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ARTICLE 5 COVENANTS................................................. 15
5.1 Alternative Proposals......................................... 15
5.2 Interim Operations............................................ 16
5.3 Meeting of Stockholders....................................... 18
5.4 Filings; Other Actions........................................ 18
5.5 Inspection of Records......................................... 18
5.6 Publicity..................................................... 18
5.7 Registration Statement........................................ 19
5.8 Listing Application........................................... 19
5.9 Affiliate Letters............................................. 19
5.10 Expenses...................................................... 19
5.11 Certain Transaction Related Fees.............................. 20
5.12 Directors' and Officers' Indemnification and Insurance........ 20
5.13 Reorganization................................................ 20
5.14 Shareholder Rights Plan and Takeover Statutes................. 20
5.15 Support Agreement Legend...................................... 21
5.16 Conveyance Taxes.............................................. 21
5.17 Transfer Taxes................................................ 21
5.18 Company Employee Stock Purchase Plan.......................... 21
5.19 Benefit Arrangements.......................................... 21
ARTICLE 6 CONDITIONS................................................ 22
6.1 Conditions to Each Party's Obligation to Effect the Merger.... 22
6.2 Conditions to Obligation of EVT to Effect the Merger.......... 22
Conditions to Obligation of Guidant and Merger Sub to Effect
6.3 the Merger.................................................... 23
ARTICLE 7 TERMINATION............................................... 23
7.1 Termination by Mutual Consent................................. 23
7.2 Termination by Either Guidant or EVT.......................... 23
7.3 Termination by EVT............................................ 24
7.4 Termination by Guidant........................................ 24
7.5 Effect of Termination and Abandonment......................... 24
7.6 Extension; Waiver............................................. 25
7.7 Certain Rights of Guidant..................................... 25
ARTICLE 8 GENERAL PROVISIONS........................................ 25
8.1 Nonsurvival of Representations, Warranties and Agreements..... 25
8.2 Notices....................................................... 25
8.3 Assignment; Binding Effect.................................... 26
8.4 Entire Agreement.............................................. 26
8.5 Amendment..................................................... 26
8.6 Governing Law................................................. 26
8.7 Counterparts.................................................. 26
8.8 Headings...................................................... 26
8.9 Interpretation................................................ 26
8.10 Waivers....................................................... 27
8.11 Incorporation of Exhibits..................................... 27
8.12 Severability.................................................. 27
8.13 Enforcement of Agreement...................................... 27
8.14 Subsidiaries.................................................. 27
8.15 Other......................................................... 27
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EXHIBIT A Form of Affiliate Letter
SCHEDULES
EVT Disclosures Schedules
3.4. Subsidiaries
3.8. Patents, Trademarks, Copyrights and Trade Secrets
3.9. Investigations; Litigation
3.10 Governmental Approvals
3.13 Material Contracts
3.14 Employee Benefit Plans
3.22 Affiliates Guidant Disclosure Schedules
4.7 Investigations; Litigation
GUIDANT WILL FURNISH SUPPLEMENTALLY A COPY OF THE SCHEDULES TO THE SECURITIES
AND EXCHANGE COMMISSION UPON REQUEST.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 5,
1997, between Guidant Corporation, an Indiana corporation ("Guidant"), Ski
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Guidant ("Merger Sub"), and EndoVascular Technologies, Inc., a Delaware
corporation ("EVT").
RECITALS
A. Guidant and EVT each have determined that a business combination between
Guidant and EVT is in the best interests of their respective companies and
stockholders and presents an opportunity for their respective companies to
achieve long-term strategic and financial benefits, and accordingly have
agreed to effect the merger provided for herein upon the terms and subject to
the conditions set forth herein.
B. Concurrently with the execution of this Agreement, in order to induce
Guidant and Merger Sub to enter into the Agreement, certain stockholders of
EVT are entering into support agreements (each a "Support Agreement") with
Guidant, providing for certain voting and other restrictions with respect to
the shares of EVT Common Stock (as defined herein) beneficially owned by them
upon the terms and conditions specified therein.
C. It is intended that for federal income tax purposes, the merger provided
for herein shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code") and for
accounting purposes as a pooling of interests.
D. Merger Sub is a wholly owned subsidiary of Guidant and has been formed
solely to facilitate the Merger (as defined herein) and has conducted and will
conduct no business or activity other than in connection with the Merger.
E. The parties intend to cause the Merger to be accounted for as a pooling
of interests pursuant to APB Opinion No. 16, Staff Accounting Series Releases
130, 135 and 146 and Staff Accounting Bulletin Topic Two.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
The Merger
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3), Merger Sub shall be merged
with and into EVT in accordance with this Agreement, and the separate
corporate existence of Merger Sub shall thereupon cease (the "Merger"). EVT
shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and will be a wholly owned
subsidiary of Guidant. The Merger shall have the effects specified in the
Delaware General Corporation Law (the "DGCL").
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") shall take place (a) at the offices of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, 1301 Avenue of the Americas, New York, New York, at
10:00 a.m., local time, on the first business day immediately following the
day on which the last to be fulfilled or waived of the conditions set forth in
Article 6 shall be fulfilled or waived in accordance herewith or (b) at such
other time, date or place as Guidant and EVT may agree in writing. The date on
which the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 EFFECTIVE TIME. If all the conditions set forth in Article 6 shall have
been fulfilled or waived in accordance herewith and this Agreement shall not
have been terminated as provided in Article 7, the parties
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hereto shall cause a Certificate of Merger meeting the requirements of Section
251 of the DGCL to be properly executed and filed in accordance with such
Section on the Closing Date. The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with the DGCL or at such later time which the
parties hereto shall have agreed upon and designated in such filing as the
effective time of the Merger (the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. After the Effective Time, (i)
the Certificate of Incorporation of the Surviving Corporation shall be amended
and restated in its entirety to read as the Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time, except that the
Certificate of Incorporation of the Surviving Corporation shall provide that
the name of the corporation be "EndoVascular Technologies, Inc." and (ii) the
Bylaws of the Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until duly amended in
accordance with applicable law.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation as of the Effective Time and until their successors are
duly appointed or elected in accordance with applicable law.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The officers of EVT immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
as of the Effective Time and until their successors are duly appointed or
elected in accordance with applicable law.
ARTICLE 2
Conversion and Exchange of Securities
2.1 MERGER SUB STOCK. At the Effective Time, each share of common stock, par
value $.01 per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, par value $.01 per share,
of the Surviving Corporation.
2.2 EVT STOCK. (a) At the Effective Time, each share of common stock, par
value $.00001 per share, of EVT (the "EVT Common Stock") issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive such number or fraction of a number, rounded to four
decimal places (the "Exchange Ratio"), of shares of common stock, without par
value, of Guidant (the "Guidant Common Stock") that equals the result obtained
by dividing $20.00 by the "Closing Price" (the "Exchange Consideration");
provided, however, that if the Closing Price shall be greater than or equal to
$46.63 but less than or equal to $51.75, then the Exchange Ratio shall be
fixed at 0.3865; provided, further, that if the Closing Price shall be less
than $46.63, then the Exchange Ratio shall be the result obtained by dividing
$18.00 by the Closing Price.
"Closing Price" means the average closing price of Guidant Common Stock,
rounded to four decimal places, as reported in The Wall Street Journal's New
York Stock Exchange Composite Transaction Reports, for each of the 10
consecutive Trading Days immediately preceding the third Trading Day prior to
the EVT Stockholders Meeting (as defined in Section 5.3). "Trading Day" means
a day on which the New York Stock Exchange, Inc. (the "NYSE") is open for
trading.
(b) As a result of the Merger and without any action on the part of the
holder thereof, at the Effective Time, all shares of EVT Common Stock
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall cease to exist, and each holder of shares of EVT Common
Stock shall thereafter cease to have any rights with respect to such shares of
EVT Common Stock, except the right to receive, without interest, the Exchange
Consideration and cash for fractional shares of Guidant Common Stock in
accordance with Sections 2.3(b) and 2.3(e) upon the surrender of a certificate
(a "Certificate") representing such shares of EVT Common Stock.
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(c) Each share of EVT Common Stock issued and held in EVT's treasury at the
Effective Time shall, by virtue of the Merger, cease to be outstanding and
shall be canceled and retired and shall cease to exist without payment of any
consideration therefor.
(d) All options to purchase capital stock of EVT (the "EVT Options")
outstanding, whether or not exercisable, whether or not vested, and whether or
not performance-based, at the Effective Time under EVT's 1989 Stock Option
Plan and 1995 Stock Option Plan, (collectively, the "EVT Stock Option Plans"),
shall by virtue of the Merger and without any further action on the part of
EVT or the holder thereof, be converted into an option to purchase Guidant
Common Stock pursuant to the terms of the Guidant Corporation 1994 Stock Plan
("Guidant 1994 Stock Plan") in such manner that Guidant (i) is "assuming a
stock option in a transaction to which Section 424(a) applied" within the
meaning of Section 424 of the Code, or (ii) to the extent that Section 424 of
the Code does not apply to any such EVT Options, would be a transaction within
Section 424 of the Code. Each EVT Option converted by Guidant shall be
exercisable upon the same terms and conditions as under the applicable EVT
Stock Option Plan and the applicable option agreement issued thereunder,
except that (A) each such EVT Option shall be exercisable for that whole
number of shares of Guidant Common Stock (rounded down to the nearest whole
share) into which the number of shares of EVT Common Stock subject to such EVT
Option immediately prior to the Effective Time would be converted under
Section 2.2(a), and (B) the option price per share of Guidant Common Stock
shall be an amount equal to the option price per share of EVT Common stock
subject to such EVT Option in effect immediately prior to the Effective Time
divided by the Exchange Ratio (the option price per share, as so determined,
being rounded downward to the nearest full cent). Guidant shall (i) on or
prior to the Effective Time, reserve for issuance the number of shares of
Guidant Common Stock that will become subject to options to purchase shares of
Guidant Common Stock ("Guidant Options") pursuant to this Section 2.2(d), (ii)
from and after the Effective Time, upon exercise of the Guidant Options in
accordance with the terms thereof, make available for issuance all shares of
Guidant Common Stock covered thereby and (iii) as promptly as practicable
after the Effective Time, issue to each holder of an outstanding EVT Option a
document evidencing the foregoing assumption by Guidant.
(e) It is the intention of the parties that the EVT Options converted by
Guidant qualify following the Effective Time as incentive stock options as
defined in Section 422 of the Code to the extent permitted under Section 422
of the Code and to the extent the EVT Options qualified as incentive stock
options prior to the Effective Time.
(f) If necessary to register Guidant Common Stock issuable upon the exercise
of Guidant Options, Guidant shall as promptly as practicable following the
Effective Time file a registration statement on Form S-8 or an amendment to an
existing registration statement on Form S-8 under the Securities Act of 1933,
as amended (the "Securities Act"), covering the shares of Guidant Common Stock
issuable upon the exercise of Guidant Options created upon the assumption by
Guidant of EVT Options under Section 2.2(d), except to the extent the shares
issuable pursuant to the assumption of EVT Options by Guidant have already
been registered, and will use its reasonable best efforts to cause such
registration statement to become effective and to maintain such registration
in effect until the exercise or expiration of such Guidant Options. No payment
shall be made for fractional interests, rather, the aggregate number of shares
to be issued under any assumed EVT Option shall be rounded down to the nearest
whole number.
2.3 EXCHANGE OF CERTIFICATES REPRESENTING EVT COMMON STOCK.
(a) As of the Effective Time, Guidant shall deposit, or shall cause to be
deposited, with First Chicago Trust Company of New York (the "Exchange
Agent"), for the benefit of the holders of shares of EVT Common Stock, for
exchange in accordance with this Article 2, certificates representing the
shares of Guidant Common Stock to be issued in connection with the Merger and
cash in an amount equal to Guidant's good faith estimate of the cash required
to be paid to holders of shares of EVT Common Stock in lieu of fractional
shares expected to be payable in connection with the Merger (such cash and
certificates for shares of Guidant Common Stock, together with any dividends
or distributions with respect thereto (relating to record dates for such
dividends or distributions after the Effective Time), being hereinafter
referred to as the "Exchange Fund") to be issued
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pursuant to Section 2.2 and paid pursuant to this Section 2.3 in exchange for
outstanding shares of EVT Common Stock. Notwithstanding anything in this
Agreement to the contrary, Guidant may, in lieu of issuing certificates for
Guidant Common Stock, make book-entry notations pursuant to established book-
entry procedures of the Exchange Agent, and all references in this Agreement
to certificates for Guidant Common Stock will be deemed to be references to
book-entry notations.
(b) Promptly after the Effective Time, Guidant shall cause the Exchange
Agent to mail to each holder of record of shares of EVT Common Stock (i) a
letter of transmittal specifying that delivery shall be effected, and risk of
loss and title to such shares of EVT Common Stock shall pass, only upon
delivery of the Certificates representing such shares to the Exchange Agent
and which letter shall be in such form and have such other provisions as
Guidant may reasonably specify and (ii) instructions for use in effecting the
surrender of EVT Common Stock Certificates in exchange for the Exchange
Consideration, including cash in lieu of fractional shares. Upon surrender of
a Certificate for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of the shares represented by such Certificate
shall be entitled to receive in exchange therefor (x) a certificate
representing that number of whole shares of Guidant Common Stock and (y) a
check representing the amount of cash in lieu of fractional shares, if any,
and unpaid dividends and distributions, if any, that such holder has the right
to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article 2, after giving effect to any required withholding
tax, and the shares represented by the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash payable
to holders of shares of EVT Common Stock. In the event of a transfer of
ownership of EVT Common Stock that is not registered in the transfer records
of EVT, a certificate representing the proper number of shares of Guidant
Common Stock, together with a check for the cash to be paid may be issued to
such a transferee if the Certificate representing such EVT Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared after the Effective Time on Guidant Common Stock
shall be paid with respect to any shares of EVT Common Stock represented by a
Certificate until such Certificate is surrendered for exchange as provided
herein. Subject to the effect of applicable laws, following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Guidant Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends
or other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Guidant Common Stock and not
paid, less the amount of any withholding taxes which may be required thereon,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Guidant Common Stock, less the amount of any withholding
taxes which may be required thereon.
(d) At or after the Effective Time, there shall be no transfers on the stock
transfer books of EVT of the shares of EVT Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for certificates for shares of Guidant Common Stock and
cash deliverable in respect thereof pursuant to this Agreement in accordance
with the procedures set forth in this Article 2. Certificates surrendered for
exchange by any person constituting an "affiliate" of EVT for purposes of Rule
145(c) under the Securities Act of 1933, as amended (the "Securities Act"),
shall not be exchanged until Guidant has received a written agreement from
such person as provided in Section 5.9.
(e) No fractional shares of Guidant Common Stock shall be issued pursuant
hereto. In lieu of the issuance of any fractional share of Guidant Common
Stock, cash adjustments will be paid to holders in respect of any fractional
share of Guidant Common Stock that would otherwise be issuable, and the amount
of such cash adjustment shall be equal to the product obtained by multiplying
such stockholder's fractional share of Guidant Common Stock that would
otherwise be payable by the Closing Price.
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(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any shares of Guidant Common Stock) that remains
unclaimed by the former stockholders of EVT six months after the Effective
Time shall be delivered to Guidant. Any former stockholders of EVT who have
not theretofore complied with this Article 2 shall thereafter look only to
Guidant, and Guidant shall comply with such requests, made in accordance with
the terms of this Agreement, for payment of their shares of Guidant Common
Stock, cash and unpaid dividends and distributions on Guidant Common Stock
deliverable in respect of each share of EVT Common Stock such stockholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon.
(g) None of Guidant, EVT, the Surviving Corporation, the Exchange Agent or
any other person shall be liable (except to the extent provided by applicable
law) to any former holder of shares of EVT Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and the posting by such person of
a bond in such amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the shares of Guidant Common Stock and cash
deliverable in respect thereof pursuant to this Agreement.
2.4 ADJUSTMENT OF EXCHANGE RATIO. In the event that, subsequent to the date
of this Agreement but prior to the Effective Time, the outstanding shares of
Guidant Common Stock or EVT Common Stock, respectively, shall have been
changed into a different number of shares or a different class as a result of
a stock split, reverse stock split, stock dividend, subdivision,
reclassification, combination, exchange, recapitalization or other similar
transaction, the Exchange Ratio shall be appropriately adjusted.
ARTICLE 3
Representations and Warranties of EVT
Except as set forth in the disclosure schedule delivered at or prior to the
execution hereof to Guidant (the "EVT Disclosure Schedule") or in the EVT
Reports (as defined below), EVT represents and warrants to Guidant as of the
date of this Agreement as follows:
3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW. EVT
is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation. EVT is duly licensed or
qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the character
of the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified or to be in good standing would not have a material adverse effect
on the business, results of operation, financial condition or prospects of EVT
and its Subsidiaries (as defined in Section 8.14) taken as a whole (as
modified by the following proviso, an "EVT Material Adverse Effect");
provided, however, that any such effect resulting from (i) any change in
economic or business conditions generally affecting the medical devices
industry, (ii) any change in generally accepted accounting principles or
interpretations thereof generally affecting the medical devices industry (as
opposed to EVT specifically), (iii) any effect on EVT resulting from actions
taken or not taken by EVT at Guidant's direction pursuant to Section 5.2 of
this Agreement or (iv) operating losses not in excess of $2 million per month,
shall not be considered when determining if an EVT Material Adverse Effect has
occurred. EVT has all requisite corporate power and authority to own, operate
and lease its properties and carry on its business as now conducted or as
reasonably contemplated in the future. Each of EVT's Subsidiaries is a
corporation or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the corporate or partnership power and authority to own its
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properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires
such qualification, except for jurisdictions in which such failure to be so
qualified or to be in good standing would not have an EVT Material Adverse
Effect. Neither EVT nor any of its Subsidiaries is in violation of any order
of any court, governmental authority or arbitration board or tribunal, or any
law, ordinance, governmental rule or regulation to which EVT or any of its
Subsidiaries or any of their respective properties or assets is subject, other
than any violations that would not have an EVT Material Adverse Effect. EVT
and its Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their business as now conducted,
except where the failure to obtain any such item or to take any such action
would not have an EVT Material Adverse Effect.
3.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. EVT has the requisite
corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. Subject only to the approval of
this Agreement and the transactions contemplated hereby by the holders of a
majority of the outstanding shares of EVT Common Stock, the consummation by
EVT of the transactions contemplated hereby has been unanimously approved by
the Board of Directors of EVT and duly authorized by all requisite corporate
action. This Agreement constitutes, and all agreements and documents
contemplated hereby to which EVT is a party (when executed and delivered
pursuant hereto for value received) will constitute, the valid and legally
binding obligations of EVT, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
3.3 CAPITALIZATION. The authorized capital stock of EVT consists of
30,000,000 shares of EVT Common Stock and 5,000,000 shares of preferred stock,
par value $.00001 per share (the "EVT Preferred Stock"). As of October 5,
1997, there were 8,545,609 shares of EVT Common Stock issued and outstanding
and no shares of EVT Preferred Stock issued and outstanding. As of October 5,
1997, options to acquire 1,280,414 shares of EVT Common Stock were outstanding
pursuant to the terms of the 1989 Stock Option Plan and the 1995 Stock Option
Plan (the "EVT Stock Option Plans"). Since such date, no additional options
have been granted. EVT has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) on
any matter with respect to such securities. All issued and outstanding shares
of EVT Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. The current "Purchase Period" (as
defined in EVT's Employee Stock Purchase Plan (the "Stock Purchase Plan"))
commenced on August 1, 1997 and will end upon the earlier of January 30, 1998
or immediately prior to the Effective Time, provided that if the Effective
Time is later than January 31, 1998, then a new Purchase Period will commence
on February 2, 1998 and will end upon the earlier of July 31, 1998 or
immediately prior to the Effective Time. Except for the outstanding purchase
rights held by participants in the current Purchase Period, there are no other
purchase rights or options outstanding under the Stock Purchase Plan. There
are not at the date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments, other than under the EVT Stock Option Plans, the Rights
Agreement, dated February 5, 1997, between EVT and ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder
Services (the "EVT Shareholder Rights Plan"), the Stock Purchase Plan, and as
contemplated herein, that obligate EVT or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of EVT or any of its
Subsidiaries. After the Effective Time, the Surviving Corporation will have no
obligation to issue, transfer or sell any shares of capital stock or other
securities of EVT or the Surviving Corporation pursuant to any EVT Plan (as
defined in Section 3.14).
3.4 SUBSIDIARIES. EVT owns directly or indirectly each of the outstanding
shares of capital stock (or other ownership interests having by their terms
ordinary voting power to elect a majority of directors or others performing
similar functions with respect to such Subsidiary) of each of EVT's
Subsidiaries. Each of the outstanding shares of capital stock of each of EVT's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and is owned, directly or indirectly, by EVT free and clear of all liens,
pledges, security interests, claims or other encumbrances. Set forth in
Section 3.4 of the EVT Disclosure Schedule is the name and jurisdiction of
incorporation of each Subsidiary of EVT.
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3.5 OTHER INTERESTS. Except for interests in its Subsidiaries, neither EVT
nor any of its Subsidiaries owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity other than marketable securities available
for sale.
3.6 NO VIOLATION. Neither the execution and delivery by EVT of this
Agreement nor the consummation by EVT of the transactions contemplated hereby
in accordance with the terms hereof, will: (i) conflict with or result in a
breach of any provisions of the Certificate of Incorporation or Bylaws of EVT;
(ii) result in a breach or violation of, a default under, or the triggering of
any payment or other material obligations pursuant to, or accelerate vesting
under, any existing EVT Plan, or any grant or award made under any of the
foregoing; (iii) violate, conflict with, result in a breach of any provision
of, constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, result in the termination or in a
right of termination or cancellation of, accelerate the performance required
by, result in the triggering of any payment or other material obligations
pursuant to, result in the creation of any lien, security interest, charge or
encumbrance upon any of the material properties of EVT or its Subsidiaries
under, or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust or any material license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which EVT or any of its Subsidiaries is a party, or by which EVT or any of its
Subsidiaries or any of their respective properties is bound or affected,
except for any of the foregoing matters which would not have an EVT Material
Adverse Effect; or (iv) other than the filings provided for in Article 1,
filings required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act, or applicable state securities and "Blue
Sky" laws, as required under the DGCL and the rules of the Nasdaq National
Market or filings in connection with the maintenance of qualification to do
business in other jurisdictions or foreign filings of which EVT notifies
Guidant in writing within five business days of the date hereof (collectively,
the "Regulatory Filings"), require any consent, approval or authorization of,
or declaration, filing or registration with, any domestic governmental or
regulatory authority, other than consents, approvals, authorizations,
declarations or filings or registration which, if not obtained or made would
not have an EVT Material Adverse Effect. The stockholders of EVT have no
appraisal, dissenters or other similar rights with respect to the Merger.
3.7 SEC DOCUMENTS. As of their respective dates, each registration
statement, report, proxy statement or information statement (as defined in
Regulation 14C under the Exchange Act) of EVT prepared by it since its initial
public offering of EVT Common Stock (including, without limitation, the
Registration Statement on Form S-1 with respect to its initial offering), in
the form (including exhibits and any amendments thereto) filed with the
Securities and Exchange Commission (the "SEC"), (collectively, the "EVT
Reports") (i) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each of the balance
sheets included in or incorporated by reference into the EVT Reports
(including the related notes and schedules) fairly presents the consolidated
financial position of EVT and its Subsidiaries as of its date, and each of the
statements of operations, retained earnings and cash flows included in or
incorporated by reference into the EVT Reports (including any related notes
and schedules) fairly presents the results of operations, retained earnings or
cash flows, as the case may be, of EVT and its Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments which would not be material in amount or effect),
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein. Neither EVT nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise), except (a) as set forth in the EVT Reports, (b) liabilities or
obligations reflected on, or reserved against in, a balance sheet of EVT or in
the notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied and included in the EVT Reports, (c)
liabilities or obligations incurred in the ordinary course of business which
do not have an EVT Material Adverse Effect and (d) arising under executory
contracts not currently in default.
7
3.8 PATENTS, TRADEMARKS, COPYRIGHTS AND TRADE SECRETS. (a) Section 3.8 of
the EVT Disclosure Schedule contains a complete list of all United States and
foreign patents and patent applications, trademarks (whether registered or as
to which registration has been applied for), trade names and service marks
owned by or licensed to EVT or any of its Subsidiaries as of the date hereof.
(b) Except as set forth in Section 3.8 of the Ski Disclosure Schedule or the
EVT Reports, (i) to the knowledge of EVT, there is no existing or, threatened
infringement, misuse or misappropriation by others, of any United States or
foreign patents, patent applications, trademarks, whether registered or as to
which registration has been applied for, tradenames, service marks,
copyrights, processes, designs, formulae, inventions, know-how, trade secrets
or concepts (the "Intellectual Property") of EVT or any of its Subsidiaries
that is reasonably likely to be material to EVT's operation, (ii) there are no
pending or threatened claims by EVT or any of its Subsidiaries against others
for infringement, misuse or misappropriation, of any Intellectual Property of
EVT or its Subsidiaries that are reasonably likely to be material to EVT's
operation and (iii) to the knowledge of EVT, neither EVT nor any of its
Subsidiaries is infringing, misusing or misappropriating any Intellectual
Property of any third party and, to EVT's knowledge, no claim of such
infringement, misuse or misappropriation is pending or threatened.
(c) Except as set forth in Section 3.8 of the EVT Disclosure Schedule or the
EVT Reports, EVT and its Subsidiary own or possess adequate licenses or other
valid rights to use all of the Intellectual Property of EVT. EVT has no
knowledge of any facts or claims which may bring the validity of its issued
patents into question.
3.9 INVESTIGATIONS; LITIGATION. Except as set forth in Section 3.9 of the
EVT Disclosure Schedule or in the EVT Reports and except in the ordinary
course of its business, (a) no material investigation or review by any
governmental entity with respect to EVT or any of its Subsidiaries is pending
(or, to EVT's knowledge, threatened) nor has any governmental entity indicated
to EVT an intention to conduct the same; and (b) there are no actions, suits
or proceedings pending against EVT or its Subsidiaries or, to the knowledge of
EVT, threatened against EVT or its Subsidiaries, at law or in equity, or
before or by any federal, state, local or foreign commission, board, bureau,
agency or instrumentality.
3.10 GOVERNMENTAL APPROVALS. Except as set forth in Section 3.10 of the EVT
Disclosure Schedule, there are no products now being manufactured, sold or
distributed by EVT or any Subsidiary which at the date hereof would require
any approval of the United States Food and Drug Administration (the "FDA") or
any other governmental body that regulates the safety, effectiveness, market
clearances, market or post-market surveillance of the products, whether
Federal, state, local or foreign for the purpose for which they are being
manufactured, sold or distributed, for which such approval has not been
obtained. All products now being commercially distributed by EVT or any
Subsidiary in any jurisdiction meet, in all material respects, the applicable
legal requirements of such jurisdiction with respect to their safety,
effectiveness, market clearance, marketing and post-market surveillance and
all requisite governmental approvals have been duly obtained and are in full
force and effect, and except as set forth in the EVT Reports, there is no
basis known to EVT for the FDA or any other governmental body to rescind any
approval for any of their commercially distributed products for the purpose
for which they are being manufactured, sold or distributed. There is no action
or proceeding by the FDA or any other governmental body claiming that any
product now being commercially distributed or used in any clinical trials by
EVT or any Subsidiary is defective or fails to meet any applicable regulatory
standards or that EVT has violated any applicable rules or regulations
governing the marketing or post-market surveillance requirements for any
product, including, but not limited to, recall procedures, pending or, to the
knowledge of EVT, threatened against EVT or any Subsidiary, and no such
proceeding was brought at any time in the past, relating to the safety or
efficacy of any of its products, and, to the knowledge of EVT, there is no
basis for any such action or proceeding. No Institutional Review Board or
Institutional Review Committee or other similar group has terminated or
recommended termination of a clinical study of any product of EVT or any
Subsidiary.
3.11 ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, EVT has conducted
its business only in the ordinary course of such business, and there has not
been (i) any EVT Material Adverse Effect or any event which is reasonably
likely to result in an EVT Material Adverse Effect; (ii) any declaration,
setting aside or
8
payment of any dividend or other distribution with respect to its capital
stock; or (iii) any material change in its accounting principles, practices or
methods.
3.12 TAXES AND TAX RETURNS. (a) Definitions:
"Code" means the Internal Revenue Code of 1986, as amended. All citations to
provisions of the Code, or to the Treasury Regulations promulgated thereunder,
shall include any amendments thereto and any substitute or successor
provisions thereto.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, employment, excise,
withholding, property, sales, use, transfer, license, payroll and franchise
taxes, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, imposed by the United States, or any
state, local or foreign government or subdivision or agency thereof.
"Taxable Period" means any taxable year or any other period that is treated
as a taxable year (or other period, or portion thereof, in the case of a Tax
imposed with respect to such period or portion thereof, e.g., a quarter) with
respect to which any Tax may be imposed under any applicable statute, rule, or
regulation.
"Tax Reserve" shall have the meaning set forth in Section 3.12(d).
"Tax Return" shall mean any report, return, election, notice or other
information required to be supplied to a taxing authority in connection with
Taxes.
(b) All Tax Returns required to be filed by or with respect to EVT and each
of its Subsidiaries for all Taxable Periods ending on or before the date
hereof or the Effective Time have been or will be timely filed. Except to the
extent that a proper reserve for Taxes has been reflected on the EVT Financial
Statements included in the EVT Reports for the period ended June 30, 1997, in
accordance with GAAP, all such Tax Returns (i) were prepared in the manner
required by applicable law, (ii) are true, correct, and complete in all
material respects, and (iii) reflect the liability for Taxes of EVT and each
of its Subsidiaries. All Taxes shown to be payable on such Tax Returns, and
all assessments of Tax made against EVT and each of its Subsidiaries with
respect to such Tax Returns, have been paid when due except to the extent that
a proper reserve for Taxes has been reflected on the EVT Financial Statements
included in the EVT Reports for the period ended June 30, 1997, in accordance
with GAAP. No adjustment relating to any such Tax Return has been proposed or
threatened formally or informally by any Taxing authority and, except to the
extent that a proper reserve for Taxes has been reflected on the EVT Financial
Statements included in the EVT Reports for the period ended June 30, 1997, in
accordance with GAAP, no basis exists for any such adjustment.
(c) EVT and each of its Subsidiaries have made (or there has been made on
its behalf) all required current estimated Tax payments sufficient to avoid
any material underpayment penalties.
(d) EVT and each of its Subsidiaries have (i) timely paid or caused to be
paid or will cause to be paid all Taxes that are or were due on or prior to
the date hereof or the Effective Time, except to the extent that a proper
reserve for Taxes has been reflected on the EVT Financial Statements included
in the EVT Reports for the period ended June 30, 1997, in accordance with
GAAP, whether or not shown (or required to be shown) on a Tax Return and (ii)
provided a sufficient reserve for the payment of all Taxes not yet due and
payable (the "Tax Reserve") on the financial statements included in EVT's
Annual Report on Form 10-K for the year ended December 31, 1996. There are no
Taxes that would be due if asserted by a Taxing authority, except with respect
to which EVT and each of its Subsidiaries are maintaining adequate reserves on
such EVT Financial Statements.
(e) EVT and each of its Subsidiaries have complied (and until the Closing
Date will comply) in all material respects with the provisions of the Code
relating to the withholding and payment of Taxes, including, without
limitation, the withholding and reporting requirements under Code sections
1441 through 1464, 3401 through 3406, and 6041 through 6049, as well as
similar provisions under any other laws, and have, within the time and in the
manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all amounts required.
9
(f) Except as set forth in Schedule 3.12(f) of the EVT Disclosure Schedule,
none of the Tax Returns have been examined by the IRS or relevant state, local
or foreign Taxing authorities. There are no threatened actions, suits,
proceedings, investigations or claims relating to or asserted for Taxes of EVT
and/or any of its Subsidiaries to EVT's knowledge and there is no basis for
any such claim.
(g) No material claim has ever been made in writing by any Taxing authority
with respect to EVT or any of its Subsidiaries in a jurisdiction where EVT
and/or any of its Subsidiaries do not file reports and returns that EVT or any
such Subsidiary is or may be subject to Taxation by that jurisdiction. Except
for liens for real and personal property Taxes that are not yet due and
payable, there are no liens for any Tax upon any asset of EVT or any of its
Subsidiaries.
(h) Neither EVT nor any of its Subsidiaries has agreed or is required to
include in income or make any material adjustment under either Section 481(a)
or Section 482 of the Code (or an analogous provision of state, local, or
foreign law) by reason of a change in accounting or otherwise. Neither EVT nor
any of its Subsidiaries has disposed of any material property in a transaction
being accounted for under the installment method pursuant to Section 453 of
the Code.
(i) Neither EVT nor any of its Subsidiaries is a party to any agreement
(other than this Agreement) to share Taxes with respect to any Taxable Period.
(j) There is no contract, agreement, plan or arrangement covering any person
that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by EVT or any Subsidiary thereof by reason
of Section 280G of the Code.
(k) Neither EVT nor any of its Subsidiaries has distributed the stock of any
corporation in a transaction satisfying the requirements of Section 355 of the
Code since April 16, 1997.
3.13 MATERIAL CONTRACTS. Section 3.13 of the EVT Disclosure Schedule sets
forth a complete list as of the date of this Agreement of (i) contracts,
commitments and agreements (for purposes of this Agreement, contracts,
commitments and agreements shall include, without limitation, all
collaborative arrangements or relationships of EVT and its Subsidiaries) to
which EVT or any Subsidiary is a party or under which any of them is obligated
or bound or to which any of their properties or assets may be subject, which
(a) involve a payment or receipt after the date hereof of more than $200,000,
(b) are supply agreements, (c) involve the licensing of or by EVT of any
Intellectual Property, (d) are joint development agreements or (e) are
contracts, commitments and agreements that individually or in the aggregate
with other contracts, commitments and agreements are material to the business
of EVT and its Subsidiaries taken as a whole. To EVT's knowledge, all material
terms of each of such contracts are in full force and effect and are
enforceable against all parties thereto in accordance with their terms.
Neither EVT nor any of its Subsidiaries is in default under any such contract,
commitment or agreement and, to the knowledge of EVT, no party having any
commitment to, or contract or agreement with, EVT or any Subsidiary is in
default thereunder and EVT has no knowledge of any fact, circumstance or event
which might reasonably be expected in the future to cause any such party to be
in default under any such material contract, commitment or agreement except
for such instances that would not result in an EVT Material Adverse Effect.
3.14 EMPLOYEE BENEFIT PLANS. (a) Section 3.14 of the EVT Disclosure Schedule
sets forth each plan, agreement, arrangement or commitment which is an
employment or consulting agreement, executive or incentive compensation plan,
bonus plan, deferred compensation agreement, employee pension, profit sharing,
savings or retirement plan, employee stock option or stock purchase plan,
group life, health, or accident insurance or other employee benefit plan,
agreement, arrangement or commitment, including, without limitation, any
commitment arising under the laws of any jurisdiction, severance, holiday,
vacation, Christmas or other bonus plans (including, but not limited to,
"employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), maintained by
EVT or any Subsidiary for any of their
10
present or former employees, officers or directors ("EVT Personnel") or with
respect to which EVT or any Subsidiary has liability, makes or has an
obligation to make contributions ("EVT Plans").
(b) EVT has provided Guidant with (i) copies of all EVT Plans or in the case
of an unwritten plan, a written description thereof, (ii) copies of any
annual, financial or actuarial reports and Internal Revenue Service
determination letters relating to such EVT Plans and (iii) copies of all
summary plan descriptions (whether or not required to be furnished under
ERISA) and employee communications relating to such EVT Plans and distributed
to EVT Personnel, in each case under this subsection (b), existing or in
effect during or within the past five years.
(c) There are no EVT Personnel who are entitled to (i) any pension benefit
that is unfunded or (ii) any pension or other benefit to be paid after
termination of employment other than required by Section 601 of ERISA or
pursuant to plans intended to be qualified under Section 401(a) of the Code
and listed on Section 3.14 of the EVT Disclosure Schedule, and no other
benefits whatsoever are payable to any EVT Personnel after termination of
employment (including retiree medical and death benefits).
(d) Each EVT Plan that is an employee welfare benefit plan under Section
3(1) of ERISA is either (i) funded through an insurance company contract and
is not a "welfare benefit fund" within the meaning of Section 419 of the Code
or (ii) is unfunded.
(e) All contributions or payments owed with respect to any periods prior to
the Closing under any EVT Plan have been made or accrued. Each EVT Plan by its
terms and operation is in material compliance with all applicable laws
(including, but not limited to, ERISA, the Code and the Age Discrimination in
Employment Act of 1967, as amended).
(f) There are no actions, suits or claims pending or threatened (other than
routine noncontested claims for benefits) or, to EVT's knowledge, no set of
circumstances exist which may reasonably give rise to such a claim against any
EVT Plan or administrator or fiduciary of any such EVT Plan. As to each EVT
Plan for which an annual report is required to be filed under ERISA or the
Code, all such filings, including schedules, have been made on a timely basis
and with respect to the most recent report regarding each such EVT Plan
liabilities do not exceed assets, and no material adverse change has occurred
with respect to the financial matters covered thereby.
(g) Neither EVT nor any entity required to be aggregated with EVT pursuant
to Sections 414(b), (c), (m) or (o) of the Code contributes to, maintains or
has any liability with respect to a plan subject to Title IV of ERISA, Section
412 of the Internal Revenue Code or Section 302 of ERISA.
(h) Each EVT Plan that is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the Internal
Revenue Service stating that such plan is so qualified and nothing has
occurred since the date of such letter to cause the letter to be no longer
valid or effective.
(i) Neither EVT, any Subsidiary nor any other person, including any
fiduciary, has engaged in any "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA), which could subject any of the EVT
Plans (or their trusts), EVT, or any person who EVT has an obligation to
indemnify, to any tax or penalty imposed under Section 4975 of the Code or
Section 502 of ERISA.
(j) The events contemplated by this Agreement (either alone or together with
any other event) will not (i) entitle any EVT Personnel to severance pay,
unemployment compensation, or other similar payments under any EVT Plan or
law, (ii) accelerate the time of payment or vesting or increase the amount of
benefits due under any EVT Plan or compensation to any EVT Personnel, (iii)
result in any payments (including parachute payments) under any EVT Plan or
law becoming due to any EVT Personnel, or (iv) terminate or modify or give a
third party a right to terminate or modify the provisions or terms of any EVT
Plan.
(k) EVT, its Subsidiaries and each member of their respective business
enterprises have complied with the Worker Adjustment and Retraining
Notification Act.
11
3.15 LABOR MATTERS. Neither EVT nor any of its Subsidiaries is a party to,
or bound by, any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
EVT, threatened against EVT or its Subsidiaries relating to their business,
except for any such proceeding which would not have an EVT Material Adverse
Effect. To the knowledge of EVT, there are no organizational efforts with
respect to the formation of a collective bargaining unit currently being made
or threatened involving employees of EVT or any of its Subsidiaries. EVT and
its Subsidiaries are in compliance in all material respects with all
applicable laws regarding employment consulting, employment practices, wages,
hours and terms and conditions of employment.
3.16 GUIDANT STOCK OWNERSHIP. Neither EVT nor any of its Subsidiaries owns
any shares of Guidant Common Stock or other securities convertible into
Guidant Common Stock.
3.17 POOLING OF INTERESTS; TAX REORGANIZATION. There has been no action or
omission by EVT or its Subsidiaries which would prevent the accounting for the
Merger as a pooling of interests in accordance with Accounting Principles
Board Opinion ▇▇. ▇▇ ("▇▇▇ ▇▇. ▇▇"), the interpretative releases issued
pursuant thereto, and the pronouncements of the SEC. There has been no action
or omission by EVT or its Subsidiaries which would prevent the Merger from
constituting a reorganization within the meaning of Section 368(a) of the
Code.
3.18 ENVIRONMENTAL MATTERS. Except as described in the EVT Reports, EVT and
each of its Subsidiaries are in material compliance with all applicable
federal, state, local and foreign laws, rules and regulations relating to
pollution or protection of human health, worker safety or the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) (collectively, "Environmental Laws"). Such
compliance includes, but is not limited to, the possession by EVT and its
Subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms
and conditions thereof. Neither EVT nor any of its Subsidiaries has received
written notice of, or to the knowledge of EVT, is the subject of, any actions,
causes of action, claims, investigations, demands or notices by any person or
entity alleging liability under or noncompliance with any Environmental Law.
To the knowledge of EVT, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future.
3.19 STATE TAKEOVER STATUTES AND SHAREHOLDER RIGHTS PLAN. The Board of
Directors of EVT has approved the Merger, this Agreement, the Support
Agreements and the other transactions contemplated by this Agreement and the
Support Agreements, and such approval is sufficient to render inapplicable to
the Merger, this Agreement, the Support Agreements and the transactions
contemplated by this Agreement and the Support Agreements, the EVT Shareholder
Rights Plan and the provisions of Section 203 of the DGCL to the extent, if
any, such EVT Shareholder Rights Plan or Section would otherwise be applicable
to the Merger, this Agreement, the Support Agreements and the transactions
contemplated by this Agreement and the Support Agreements.
3.20 NO BROKERS. EVT has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
EVT or Guidant to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that EVT has retained ▇▇▇▇▇▇▇▇▇▇ Securities, Inc. as its financial advisor,
the arrangements of which have been disclosed by EVT to Guidant. Other than
the foregoing arrangements, EVT is not aware of any claim for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
3.21 OPINION OF FINANCIAL ADVISOR. EVT has received the opinion of
▇▇▇▇▇▇▇▇▇▇ Securities, Inc. to the effect that, as of the date hereof, the
Exchange Consideration is fair to the holders of EVT Common Stock from a
financial point of view.
12
3.22 AFFILIATES. Section 3.22 of the EVT Disclosure Schedule contains an
accurate and complete list of the names and addresses of those persons who are
"affiliates" of EVT within the meaning of Rule 145 of the rule and regulations
promulgated under the Securities Act.
ARTICLE 4
Representations and Warranties of Guidant and Merger Sub
Except as set forth in the disclosure schedule delivered at or prior to the
execution hereof to EVT (the "Guidant Disclosure Schedule") or in the Guidant
Reports (as defined below), Guidant and Merger Sub represent and warrant to
EVT as of the date of this Agreement as follows:
4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW. Each
of Guidant and Merger Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation.
Guidant is duly licensed or qualified to do business as a foreign corporation
and is in good standing under the laws of any other state of the United States
in which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary, except where
the failure to be so qualified or to be in good standing would not have a
material adverse effect on the business, results of operations or financial
condition of Guidant and its Subsidiaries taken as a whole (as modified by the
following proviso, a "Guidant Material Adverse Effect"); provided, however,
that any such effect resulting from (i) any change in economic or business
conditions generally affecting the medical devices industry or (ii) any change
in generally accepted accounting principles or interpretation thereof
generally affecting the medical devices industry (as opposed to Guidant
specifically) shall not be considered when determining if a Guidant Material
Adverse Effect has occurred. Guidant has all requisite corporate power and
authority to own, operate and lease its properties and carry on its business
as now conducted. Neither Guidant nor Merger Sub is in violation of any order
of any court, governmental authority or arbitration board or tribunal, or any
law, ordinance, governmental rule or regulation to which Guidant or Merger Sub
or any of their respective properties or assets is subject, other than any
violations which would not have a Guidant Material Adverse Effect. Guidant and
Merger Sub have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations
in connection with their business as now conducted, except where the failure
to obtain any such item or to take any such action would not have a Guidant
Material Adverse Effect.
4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of Guidant and
Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby.
The consummation by Guidant and Merger Sub of the transactions contemplated
hereby has been unanimously approved by the Board of Directors of Guidant and
duly authorized by all requisite corporate action. This Agreement constitutes,
and all agreements and documents contemplated hereby (when executed and
delivered pursuant hereto for value received) will constitute, the valid and
legally binding obligations of Guidant and Merger Sub, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
4.3 CAPITALIZATION. The authorized capital stock of Guidant consists of
250,000,000 shares of Guidant Common Stock and 50,000,000 shares of Preferred
Stock, without par value, ("Guidant Preferred Stock"). As of September 30,
1997, there were 148,139,439 shares of Guidant Common Stock and no shares of
Guidant Preferred Stock issued and outstanding. Since such date, no additional
shares of capital stock of Guidant have been issued, except shares issued
pursuant to the exercise of options outstanding under Guidant's stock option
plans (the "Guidant Stock Option Plans"). As of September 30, 1997, options to
acquire 6,675,161 shares of Guidant Common Stock were outstanding. Since such
date, no additional options have been granted. Prior to the Closing Date,
Guidant anticipates that options to acquire additional shares of Guidant
Common Stock will be granted to certain employees pursuant to the Guidant 1994
Stock Plan. Guidant has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into
13
or exercisable for securities having the right to vote) with the stockholders
of Guidant on any matter. All such issued and outstanding shares of Guidant
Common Stock are duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights. Except as contemplated by this Agreement, there
are not at the date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments, other than pursuant to the Guidant Stock Option Plans and the
Rights Agreement between Guidant and Bank One, Indianapolis, NA dated October
17, 1994 (the "Guidant Rights Agreement"), which obligate Guidant or any of
its Subsidiaries to issue, transfer or sell any shares of capital stock of
Guidant or any of its Subsidiaries.
4.4 MERGER SUB. The authorized capital stock of Merger Sub consists of 100
shares of common stock, par value $.01 per share, all of which shares are
issued and outstanding and owned by Guidant. Notwithstanding any provisions to
the contrary, Guidant may, in its sole discretion, increase or decrease the
number of shares of authorized common stock of Merger Sub and the number of
shares of common stock of Merger Sub issued and outstanding owned by Guidant.
Merger Sub has not engaged in any activities other than in connection with the
transactions contemplated by this Agreement.
4.5 NO VIOLATION. Neither the execution and delivery by Guidant and Merger
Sub of this Agreement, nor the consummation by Guidant and Merger Sub of the
transactions contemplated hereby in accordance with the terms hereof, will:
(i) conflict with or result in a breach of any provisions of the Certificate
of Incorporation or Bylaws of Guidant or Merger Sub; (ii) result in a breach
or violation of, a default under, or the triggering of any payment or other
material obligations pursuant to, or accelerate vesting under, any of the
Guidant Stock Option Plans, or any grant or award under any of the foregoing;
(iii) violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination or in a right of
termination or cancellation of, accelerate the performance required by, result
in the triggering of any payment or other material obligations pursuant to,
result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties of Guidant or Merger Sub under, or result
in being declared void, voidable, or without further binding effect, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust or any material license, franchise, permit, lease, contract,
agreement or other instrument, commitment or obligation to which Guidant or
Merger Sub is a party, or by which Guidant or Merger Sub or any of their
respective properties is bound or affected, except for any of the foregoing
matters which would not have a Guidant Material Adverse Effect; or (iv) other
than the Regulatory Filings, require any consent, approval or authorization
of, or declaration, filing or registration with, any domestic governmental or
regulatory authority, other than consents, approvals, authorizations,
declarations or filings or registrations which, if not obtained or made would
not have a Guidant Material Adverse Effect.
4.6 SEC DOCUMENTS. As of their respective dates, each registration
statement, report, proxy statement or information statement (as defined in
Regulation 14C under the Exchange Act) of Guidant prepared by it since its
initial public offering (including, without limitation, the Registration
Statement on Form S-1 with respect to its initial offering), in the form
(including exhibits and any amendments thereto) filed with the SEC,
(collectively, the "Guidant Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. Each of
the consolidated balance sheets included in or incorporated by reference into
the Guidant Reports (including the related notes and schedules) fairly
presents the consolidated financial position of Guidant as of its date, and
each of the consolidated statements of income, retained earnings and cash
flows included in or incorporated by reference into the Guidant Reports
(including any related notes and schedules) fairly presents the results of
operations, retained earnings or cash flows, as the case may be, of Guidant
for the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which would not be material
in amount or effect), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein. Guidant has no liabilities or obligations of
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any nature (whether accrued, absolute, contingent or otherwise) except (a)
liabilities or obligations reflected on, or reserved against in, a balance
sheet of Guidant or in the notes thereto, prepared in accordance with
generally accepted accounting principles consistently applied and included in
the Guidant Reports and (b) liabilities or obligations incurred in the
ordinary course of business which do not have a Guidant Material Adverse
Effect.
4.7 INVESTIGATIONS; LITIGATION. Except as set forth in Section 4.7 of the
Guidant Disclosure Schedule or in the Guidant Reports (a) no material
investigation or review, except in the ordinary course of its business, by any
governmental entity with respect to Guidant is pending (or, to Guidant's
knowledge, threatened) nor has any governmental entity indicated to Guidant an
intention to conduct the same; and (b) there are no actions, suits or
proceedings pending against Guidant or, to the knowledge of Guidant,
threatened against Guidant, at law or in equity, or before or by any federal
or state commission, board, bureau, agency or instrumentality, that are
reasonably likely to have a Guidant Material Adverse Effect.
4.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, Guidant has
conducted its business only in the ordinary course of such business, and there
has not been (i) any Guidant Material Adverse Effect or any event which is
reasonably likely to result in a Guidant Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock (other than the regular quarterly cash
dividends payable on Guidant Common Stock); or (iii) any material change in
its accounting principles, practices or methods.
4.9 NO BROKERS. Guidant has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
EVT or Guidant to pay any finder's fee, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Guidant has retained BT Alex. ▇▇▇▇▇, Incorporated as its financial
advisor. Other than the foregoing arrangements, Guidant is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
4.10 PATENTS, TRADEMARKS, COPYRIGHTS AND TRADE SECRETS. Guidant and its
Subsidiaries own, or are licensed or otherwise possess legally enforceable
rights to use all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, and tangible or intangible proprietary
information or material ("Guidant Intellectual Property") that are used or
proposed to be used in the business of Guidant and its Subsidiaries as
currently conducted or as proposed to be conducted, except where the failure
to have such rights would not have a Guidant Material Adverse Effect.
4.11 POOLING OF INTERESTS; TAX REORGANIZATION. There has been no action or
omission by Guidant or its Subsidiaries which would prevent the accounting for
the Merger as a pooling of interests in accordance with APB No. 16, the
interpretive releases issued pursuant thereto, and the pronouncements of the
SEC. There has been no action or omission by Guidant or its Subsidiaries which
would prevent the Merger from constituting a reorganization with the meaning
of Section 368(a) of the Code.
ARTICLE 5
Covenants
5.1 ALTERNATIVE PROPOSALS. EVT, its affiliates and their respective
officers, directors, employees, representatives and agents shall immediately
cease any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any material equity interest in, EVT or any of
its Subsidiaries or any business combination with EVT or any of its
Subsidiaries. EVT may, directly or indirectly, furnish information and access,
in each case only in response to unsolicited requests therefor, to any
corporation, partnership, person or other entity or group pursuant to
confidentiality agreements, and may participate in discussions and negotiate
with such entity or group concerning
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(i) any merger, consolidation, share exchange, business combination, or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15% or more of the assets of EVT in a single
transaction or series of transactions; (iii) any tender offer or exchange
offer for 15% or more of the outstanding shares of EVT Common Stock or the
filing of a registration statement under the Securities Act in connection
therewith; (iv) any person having acquired beneficial ownership or the right
to acquire beneficial ownership of, or any "group" (as such term is defined
under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) having been formed which beneficially owns or has the
right to acquire beneficial ownership of, 15% or more of the outstanding
shares of EVT Common Stock; or (v) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to engage in any of
the foregoing, if such entity or group has submitted a written proposal or an
indication of interest reasonably likely to lead to a written proposal to the
Board relating to any such transaction (an "Alternative Proposal") and the
Board by a majority vote determines in its good faith judgment, based as to
legal matters on the advice of outside legal counsel and as to financial
matters upon the advice of an investment banking firm of national reputation,
that the Alternative Proposal is a Superior Proposal (as hereinafter defined)
and that failing to take such action would constitute a breach of the Board's
fiduciary duty. The Board shall provide a copy of any such written proposal or
indication of interest to Guidant or Merger Sub immediately after receipt
thereof and thereafter keep Guidant and Merger Sub promptly advised of any
development with respect thereto. Except as set forth above, neither EVT or
any of its affiliates, nor any of its or their respective officers, directors,
employees, representatives or agents, shall, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations
with, or provide any information to, any corporation, partnership, person or
other entity or group (other than Guidant and Merger Sub, any affiliate or
associate of Guidant and Merger Sub or any designees of Guidant and Merger
Sub) concerning (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets
of EVT in a single transaction or series of transactions; (iii) any tender
offer or exchange offer for 15% or more of the outstanding shares of EVT
Common Stock or the filing of a registration statement under the Securities
Act in connection therewith; (iv) any person having acquired beneficial
ownership or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) having been formed which beneficially owns
or has the right to acquire beneficial ownership of, 15% or more of the
outstanding shares of EVT Common Stock; or (v) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, or similar transaction involving EVT or any
subsidiary or division of EVT (each a "Transaction"); provided, however, that
nothing herein shall prevent the Board from taking, and disclosing to EVT's
shareholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to any tender offers, provided, further,
that the Board shall not recommend that the shareholders of EVT tender their
outstanding shares of EVT Common Stock in connection with any such tender
offer or exchange offer unless the Board by a majority vote determines in its
good faith judgment, based as to legal matters on the advice of outside legal
counsel and as to financial matters upon the advice of an investment banking
firm of national reputation, that the tender offer is a Superior Proposal and
that failing to take such action would constitute a breach of the Board's
fiduciary duty. Nothing in this Section 5.1 shall (x) permit EVT to terminate
this Agreement (except as specifically provided in Article 7 hereof), (y)
permit EVT to enter into any agreement with respect to an Alternative Proposal
during the term of this Agreement (it being agreed that during the term of
this Agreement, EVT shall not enter into any agreement with any person that
provides for, or in any way facilitates, an Alternative Proposal (other than a
confidentiality agreement in customary form)), or (z) affect any other
obligation of EVT under this Agreement.
For purposes of this Agreement "Superior Proposal" means any Alternative
Proposal with respect to a Transaction which is superior to the Merger from a
financial point of view to the stockholders of EVT.
5.2 INTERIM OPERATIONS. Prior to the Effective Time, except as set forth in
the EVT Disclosure Schedule or as contemplated by any other provision of this
Agreement, unless Guidant has consented in writing thereto, which consent
shall not be unreasonably withheld, EVT:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
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(ii) shall use its reasonable efforts, and shall cause each of its
Subsidiaries to use its reasonable efforts, to preserve intact their
business organizations and goodwill, keep available the services of their
respective officers and employees and maintain satisfactory relationships
with those persons having business relationships with them;
(iii) shall not, and shall cause its Subsidiaries not to, amend their
respective Certificates of Incorporation or Bylaws or comparable governing
instruments;
(iv) shall promptly notify Guidant of (x) any material adverse change in
its condition (financial or otherwise), business, properties, assets,
prospects, liabilities or the normal course of its business or of its
properties, (y) any litigation or governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), or (z) any material breach of any representation or warranty
contained herein;
(v) shall, upon receiving any written notice from any Taxing authority
proposing any adjustment to any Tax relating to EVT or any of its
Subsidiaries, give prompt written notice thereof to Guidant, which notice
shall describe in detail each proposed adjustment;
(vi) shall promptly deliver to Guidant true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of
this Agreement;
(vii) subject to the provisions of Section 5.1, shall not, and shall not
permit any of its Subsidiaries to, authorize, propose or announce an
intention to authorize or propose, or enter into an agreement with respect
to, any merger, consolidation or business combination (other than the
Merger), any acquisition of a material amount of assets or securities, any
disposition of a material amount of assets or securities or any release or
relinquishment of any material contract rights;
(viii) shall not, and shall not permit any of its Subsidiaries to, issue
any shares of their capital stock or securities, except upon exercise of
options outstanding on the date of this Agreement to purchase shares of EVT
Common Stock outstanding under EVT Stock Option Plans, or effect any stock
split or otherwise change its capitalization and except for up to 35,000
shares of EVT Common Stock to be issued pursuant to the Stock Purchase
Plan;
(ix) shall not, and shall not permit any of its Subsidiaries to, grant,
confer or award any options, warrants, conversion rights or other rights,
not existing on the date hereof, to acquire any shares of its capital stock
or other securities of EVT or its Subsidiaries except for options to
purchase up to 100,000 shares of EVT Common Stock granted to newly hired
officers, employees and consultants in the ordinary course of business
consistent with past practice;
(x) shall not, and shall not permit any of its Subsidiaries to, take any
action which would, or would be reasonably likely to, prevent the
accounting for the Merger as a pooling of interests in accordance with APB
No. 16, the interpretive releases issued thereto, and the pronouncements of
the SEC.
(xi) shall not and shall not permit any of its Subsidiaries to, take any
actions which would, or would be reasonably likely to, prevent the Merger
from qualifying as a reorganization with the meaning of Section 368(a) of
the Code;
(xii) shall not, and shall not permit any of its Subsidiaries to, amend
the terms of any EVT Benefit Plan, including, without limitation, any
employment, severance or similar agreements or arrangements in existence on
the date hereof, or adopt any new employee benefit plans, programs or
arrangements or any employment, severance or similar agreements or
arrangements except that EVT may hire employees in the ordinary course of
business consistent with past practice and this subsection (xii) shall not
preclude EVT from making payments under EVT Plans;
(xiii) shall not, and shall not permit any of its Subsidiaries to, (x)
incur, create, assume or otherwise become liable for borrowed money or
assume, guarantee, endorse or otherwise become responsible or liable for
the obligations of any other individual, corporation or other entity except
pursuant to the loan agreement existing on the date hereof between Guidant
and EVT (the "Loan Agreement") or (y) make any loans or advances to any
other person, except in the case of clause (x) for borrowings under
existing credit facilities in the ordinary course of business;
17
(xiv) shall not, and shall not permit any of its Subsidiaries to, (x)
change any practice with respect to Taxes, (y) make, revoke or change any
election with respect to Taxes or (z) settle or compromise any tax
liability;
(xv) shall not, and shall not permit any of its Subsidiaries to, (y)
declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock or other ownership
interests or (z) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or capital stock of any of its
Subsidiaries, or make any commitment for any such action, except for the
repurchase of unvested shares from employees, consultants or directors in
accordance with the EVT Plans and the agreements entered into pursuant
thereto; and
(xvi) shall not, and shall not permit any of its Subsidiaries to, agree,
in writing or otherwise, to take any of the foregoing actions or take any
action which would make any representation or warranty in Article 3 hereof
untrue or incorrect.
5.3 MEETING OF STOCKHOLDERS. EVT will take all action necessary in
accordance with applicable law and its Certificate of Incorporation and Bylaws
to convene a meeting of its stockholders (the "EVT Stockholders Meeting") as
promptly as practicable to consider and vote upon the approval of this
Agreement and the transactions contemplated hereby. The Board of Directors of
EVT shall recommend such approval and shall take all lawful action to solicit
such approval, including, without limitation, timely mailing the Proxy
Statement/Prospectus (as defined in Section 5.7); provided, however, that such
recommendation or solicitation shall not be required if and to the extent that
the Board of Directors of EVT determines after the date hereof, in its good
faith judgment, based as to legal matters on the advice of outside legal
counsel and as to financial matters upon the advice of an investment banking
firm of national reputation, that the making of such recommendation or
solicitation would involve a breach of its fiduciary duties to its
stockholders imposed by law.
5.4 FILINGS; OTHER ACTIONS. Subject to the terms and conditions herein
provided, EVT and Guidant shall: (a) promptly make their respective filings
and thereafter make any other required submissions under the HSR Act with
respect to the Merger; (b) use all reasonable efforts to cooperate with one
another (i) in determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Time from, governmental or
regulatory authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and (ii) timely
making all such filings and timely seeking all such consents, approvals,
permits or authorizations; and (c) use all reasonable efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable.
5.5 INSPECTION OF RECORDS. From the date hereof to the Effective Time, EVT
and Guidant shall (i) allow all designated officers, attorneys, accountants
and other representatives of their respective companies reasonable access at
all reasonable times to the offices, records and files, correspondence, audits
and properties, as well as to all information relating to commitments,
contracts, titles and financial position, or otherwise pertaining to the
business and affairs, of the other party and their Subsidiaries, (ii) furnish
to such other party and such other party's counsel, financial advisors,
auditors and other authorized representatives such financial and operating
data and other information as such persons may reasonably request and (iii)
instruct employees, counsel and financial advisors to cooperate with such
party in such party's investigation of the business of the other party and its
Subsidiaries.
5.6 PUBLICITY. The initial press release relating to this Agreement shall be
a joint press release and thereafter EVT and Guidant shall, subject to their
respective legal obligations (including requirements of stock exchanges and
other similar regulatory bodies), consult with each other, and use reasonable
efforts to agree upon the text of any press release, before issuing any such
press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national securities
exchange with respect thereto.
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5.7 REGISTRATION STATEMENT. Guidant and EVT shall cooperate and promptly
prepare and Guidant shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the Guidant Common Stock issuable in the Merger, which
Registration Statement shall contain the proxy statement with respect to the
meeting of the stockholders of EVT in connection with the Merger (the "Proxy
Statement/Prospectus"). Notwithstanding the foregoing, Guidant may file the
Proxy Statement/Prospectus with the SEC, and receive SEC clearance of the
Proxy Statement/Prospectus, prior to filing the Form S-4. The respective
parties will cause the Proxy Statement/Prospectus and the Form S-4 to comply
as to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder.
Guidant shall use reasonable efforts, and EVT will cooperate with Guidant, to
have the Form S-4 declared effective by the SEC as promptly as practicable.
Guidant shall use reasonable efforts to obtain, prior to the effective date of
the Form S-4, all necessary state securities law or "Blue Sky" permits or
approvals required to carry out the transactions contemplated by this
Agreement. The information supplied by EVT for inclusion or incorporation by
reference in the Proxy Statement/Prospectus and the Form S-4 shall not (i) at
the time the Form S-4 is declared effective, (ii) at the time the Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is first
mailed to holders of EVT Common Stock, (iii) at the time of the EVT
Stockholders' Meeting and (iv) at the Effective Time, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The information
supplied by Guidant for inclusion or incorporation by reference in the Proxy
Statement/Prospectus and the Form S-4 shall not (i) at the time the Form S-4
is declared effective, (ii) at the time the Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto) is first mailed to holders of EVT
Common Stock, (iii) at the time of the EVT Stockholders' Meeting and (iv) at
the Effective Time, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. No amendment or supplement to the Proxy
Statement/Prospectus will be made by EVT without the approval of Guidant.
Guidant will advise EVT, promptly after it receives notice thereof, of the
time when the Form S-4 has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the
qualification of the Guidant Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional
information.
5.8 LISTING APPLICATION. Guidant shall promptly prepare and submit to the
NYSE and the Pacific Exchange, Inc. (the "Pacific Exchange") a listing
application covering the shares of Guidant Common Stock issuable in the
Merger, and shall use all reasonable efforts to obtain, prior to the Effective
Time, approval for the listing of such Guidant Common Stock, subject to
official notice of issuance.
5.9 AFFILIATE LETTERS. At least 30 days prior to the Closing Date, EVT shall
deliver to Guidant a list of names and addresses of those persons who were, at
the record date for its stockholders' meeting to approve the Merger,
"affiliates" (each such person, an "Affiliate") of EVT within the meaning of
Rule 145 of the rules and regulations promulgated under the Securities Act.
EVT shall provide Guidant such information and documents as Guidant shall
reasonably request for purposes of reviewing such list. EVT shall deliver or
cause to be delivered to Guidant, prior to the Closing Date, from each of the
Affiliates of EVT identified in the foregoing list, an Affiliate Letter in the
form attached hereto as Exhibit A. Guidant shall be entitled to place legends
as specified in such Affiliate Letters on the certificates evidencing any
Guidant Common Stock to be received by such Affiliates pursuant to the terms
of this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for the Guidant Common Stock, consistent with the terms of such
Affiliate Letters.
5.10 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses except
as expressly provided herein and except that the filing fee in connection with
the filing of the Form S-4 or Proxy Statement/Prospectus with the SEC and the
expenses incurred in connection with printing and mailing the Form S-4 and the
Proxy Statement/Prospectus shall be paid by Guidant.
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5.11 CERTAIN TRANSACTION RELATED FEES. EVT shall not, and shall not permit
any Subsidiary to, incur, spend or otherwise become liable or obligated for
any fees, costs or other expenses arising out of or related to the
transactions contemplated hereby, including without limitation fees of
counsel, investment banking, and other financial and other advisors, in excess
of $2.5 million. The foregoing sentence shall not apply to any fees, costs or
other expenses arising out of or relating to any dispute or litigation that
relates to the transactions contemplated hereby. EVT shall not, without the
prior written consent of Guidant, amend the arrangements with ▇▇▇▇▇▇▇▇▇▇
Securities, Inc., which have been disclosed by EVT to Guidant.
5.12 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation and the Bylaws of the Surviving
Corporation shall contain the respective provisions that are set forth, as of
the date of this Agreement, in Article IX of the Eighth Amended and Restated
Certificate of Incorporation of EVT ("Restated Certification") and Article
VII, Section 6 of the Bylaws of EVT, 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 affect adversely the rights thereunder of
individuals who at or at any time prior to the Effective Time were entitled to
indemnification thereunder.
(b) Guidant hereby agrees (i) to assume, as of the Effective Time, all
obligations of EVT under Article IX of the Restated Certificate and Article
VII, Section 6 of the Bylaws of EVT, and (ii) to pay all amounts that become
due and payable under such provisions.
(c) The Surviving Corporation and Guidant shall honor and fulfill in all
respects the obligations of EVT pursuant to indemnification agreements with
EVT's directors and officers existing at or before the Effective Time.
(d) The Surviving Corporation shall use commercially reasonable efforts to
maintain in effect for six years from the Effective Time, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by EVT's directors' and officers' liability insurance policy
on terms comparable to such existing insurance coverage; provided, however,
that in no event shall the Surviving Corporation be required to expend
pursuant to this Section 5.12 more than an amount per year equal to 150% of
current annual premiums paid by EVT for such insurance (which premiums EVT
represents and warrants to be not more than $250,000 in the aggregate) and;
provided further that if the annual premiums exceed such amount, Guidant shall
be obligated to use commercially reasonable efforts to obtain a policy with
the greatest coverage available for a cost not exceeding such amount.
(e) This Section shall survive the consummation of the Merger, is intended
to benefit EVT, the Surviving Corporation and each indemnified party, shall be
binding, jointly and severally, on all successors and assigns of the Surviving
Corporation and Guidant, and shall be enforceable by the indemnified parties.
5.13 REORGANIZATION. From and after the date hereof and until the Effective
Time, neither Guidant nor EVT nor any of their respective subsidiaries or
other affiliates shall (i) knowingly take any action, or knowingly fail to
take any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code; or (ii) enter
into any contract, agreement, commitment or arrangement with respect to the
foregoing.
5.14 SHAREHOLDER RIGHTS PLAN AND TAKEOVER STATUTES. EVT shall take all
action necessary to render the EVT Shareholder Rights Plan and the rights
issued pursuant thereto inapplicable to the transactions contemplated hereby
or by the Support Agreements. If any "fair price," "moratorium," "control
share acquisition" or other form of antitakeover statute or regulation,
including without limitation Section 203 of the DGCL, is or shall become
applicable to the transactions contemplated hereby or the Support Agreements,
EVT and the members of the Board of Directors of EVT shall grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby and by the Support Agreements may be consummated as
promptly as practicable on the terms contemplated hereby and by the Support
Agreements and otherwise act to
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eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby and by the Support Agreements.
5.15 SUPPORT AGREEMENT LEGEND. EVT will inscribe upon any Certificate
representing the Shares tendered by a Stockholder (as such terms are defined
in the various Support Agreements dated the same date as this Agreement, a
list of which are included in Section 5.14 of the EVT Disclosure Schedule) for
such purpose the following legend: "THE SHARES OF COMMON STOCK, PAR VALUE
$.00001 PER SHARE, OF EVT REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SUPPORT AGREEMENT DATED AS OF OCTOBER 5, 1997, AND ARE SUBJECT TO TERMS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE
OFFICES OF EVT.
5.16 CONVEYANCE TAXES. EVT and Guidant 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 or any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
5.17 TRANSFER TAXES. On or before the Closing Date, the Board of Directors
of EVT shall declare a special dividend (the "Special Dividend") to the
holders of EVT Common Stock in an amount equal to the amount of any real
property transfer or gains Taxes and/or stock transfer Taxes imposed on the
holders of EVT Common Stock by any state or other jurisdiction (and any
penalties and interest with respect to such taxes) (the "Transfer Taxes"),
which become payable in connection with the Merger. In satisfaction of the
Special Dividend, EVT shall pay the Transfer Taxes on behalf of the holders of
EVT Common Stock. EVT and Guidant shall cooperate in the preparation,
execution and filing of any required returns with respect to such Transfer
Taxes (including returns on behalf of the holders of EVT Common Stock) and in
the determination of the portion of the consideration allocable to individual
real properties of EVT and the EVT Subsidiaries. The Proxy
Statement/Prospectus shall provide that the holders of EVT Common Stock shall
be deemed to have (i) authorized EVT to prepare, execute and file any Tax
Returns relating to Transfer Taxes and pay any Transfer Taxes arising in
connection with the Merger, in each case, on behalf of such holders, and (ii)
agreed to be bound by the values and allocations established by EVT and
Guidant in the preparation of any return with respect to the Transfer Taxes,
if applicable.
5.18 COMPANY EMPLOYEE STOCK PURCHASE PLAN. Outstanding purchase rights under
EVT's Stock Purchase Plan shall be exercised upon the earlier of January 30,
1998 or immediately prior to the Effective Time, provided that if the
Effective Time is later than January 31, 1998, then a new Purchase Period will
commence on February 2, 1998 and will end upon the earlier of July 31, 1998 or
immediately prior to the Effective Time, and each participant in the Stock
Purchase Plan shall accordingly be issued shares of EVT Common Stock at that
time pursuant to the terms of the Stock Purchase Plan and each share of EVT
Common Stock so issued shall by virtue of the Merger, and without any action
on the part of the holder thereof, be converted into the right to receive the
Exchange Consideration.
5.19 BENEFIT ARRANGEMENTS. (a) Guidant and EVT agree that Guidant will
provide benefits to EVT employees and officers following the Effective Time
that are substantially identical to the benefits currently provided to
similarly situated employees and officers of Guidant. From and after the
Effective Time, Guidant shall grant all employees credit for all service (to
the same extent as service with Guidant is taken into account with respect to
similarly situated employees of Guidant) with EVT prior to the Effective Time
for (i) vesting purposes and (ii) for purposes of vacation accrual after the
Effective Time as if such service with EVT was service with Guidant. Guidant
and EVT agree that where applicable with respect to any medical or dental
benefit plan of Guidant, Guidant shall waive any pre-existing condition
exclusion and actively-at-work requirements (provided, however, that no such
waiver shall apply to a pre-existing condition of any employee of EVT who was,
as of the Effective Time, excluded from participation in a plan by virtue of
such pre-existing condition) and provided that any covered expenses incurred
on or before the Effective Time by an employee or an employee's
21
covered dependents shall be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-pocket provisions after
the Effective Time to the same extent as such expenses are taken into account
for the benefit of similarly situated employees of Guidant.
(b) Any EVT employee who is terminated without cause after the Effective
Time will receive severance benefits which would result from the Merger in
accordance with the existing terms of the EVT Officers Severance Plan or EVT
Key Employees Severance Plan, to the extent such individual is eligible under
each such plan. This Section 5.19(b) is intended to benefit each beneficiary
of such plans and shall be enforceable by the beneficiaries of such plans.
(c) To the extent any matching contribution is paid or payable to the EVT
401(k) Savings Plan, it shall be paid in cash.
ARTICLE 6
Conditions
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the holders of the issued and outstanding shares of
capital stock of EVT in accordance with the DGCL and EVT's Restated
Certificate of Incorporation.
(b) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
(c) None of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction in the United States which
prohibits the consummation of the transactions contemplated by this
Agreement. In the event any such order or injunction shall have been
issued, each party agrees to use all reasonable efforts to have any such
injunction lifted.
(d) The Form S-4 shall have become effective and shall be effective at
the Effective Time, and no stop order suspending effectiveness of the Form
S-4 shall have been issued, no action, suit, proceeding or investigation by
the SEC to suspend the effectiveness thereof shall have been initiated and
be continuing, and all material approvals under state securities laws
relating to the issuance or trading of the Guidant Common Stock to be
issued to EVT stockholders in connection with the Merger shall have been
received.
(e) The Guidant Common Stock to be issued to EVT stockholders in
connection with the Merger shall have been approved for listing on the NYSE
and the Pacific Exchange, subject only to official notice of issuance.
(f) All material consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents which may be
required to be filed after the Effective Time.
6.2 CONDITIONS TO OBLIGATION OF EVT TO EFFECT THE MERGER. The obligation of
EVT to effect the Merger shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions:
(a) Guidant shall have performed in all material respects their
agreements contained in this Agreement required to be performed on or prior
to the Closing Date, the representations and warranties of Guidant and
Merger Sub contained in this Agreement, the Guidant Disclosure Schedule and
documents delivered at closing, other than the representations and
warranties contained in Section 4.8(i) of this Agreement, shall be true and
correct in all material respects as of the Closing Date, except that those
representations and warranties which address matters only as of a
particular date shall have been true and correct as of such
22
date, and EVT shall have received a certificate of the President or a Vice
President of Guidant, dated the Closing Date, certifying to such effect.
(b) EVT shall have received the opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel to EVT, dated the Closing
Date and based upon reasonably requested representation letters, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
EVT and Guidant will each be a party to that reorganization within the
meaning of Section 368(b) of the Code.
6.3 CONDITIONS TO OBLIGATION OF GUIDANT AND MERGER SUB TO EFFECT THE
MERGER. The obligations of Guidant and Merger Sub to effect the Merger shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) EVT shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the
Closing Date, the representations and warranties of EVT contained in this
Agreement, the EVT Disclosure Schedule and documents delivered at closing
shall be true and correct in all material respects as of the Closing Date,
except that those representations and warranties which address matters only
as of a particular date shall have been true and correct as of such date,
and Guidant shall have received a certificate of the President or a Vice
President of EVT, dated the Closing Date, certifying to such effect.
(b) Guidant shall have received the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP,
counsel to Guidant, dated the Closing Date and based upon reasonably
requested representation letters, to the effect that the Merger will be
treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and that EVT and Guidant will each
be a party to that reorganization within the meaning of Section 368(b) of
the Code.
(c) Guidant shall have received a letter of its independent public
accountants, dated the Effective Time, in form and substance reasonably
satisfactory to it, stating that such accountants concur with management's
conclusion that the Merger will qualify as a transaction to be accounted
for in accordance with the pooling of interests method of accounting under
the requirements of ▇▇▇ ▇▇. ▇▇.
(d) From the date of this Agreement through the Effective Time, there
shall not have occurred an EVT Material Adverse Effect.
ARTICLE 7
Termination
7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the stockholders of EVT, by the mutual
consent of Guidant and EVT.
7.2 TERMINATION BY EITHER GUIDANT OR EVT. This Agreement may be terminated
and the Merger may be abandoned by action of the Board of Directors of either
Guidant or EVT if (a) the Merger shall not have been consummated by March 31,
1998, or (b) the approval of EVT's stockholders required by Section 6.1(a)
shall not have been obtained at a meeting duly convened therefor or at any
adjournment thereof, or (c) a United States federal, state, local or foreign
court of competent jurisdiction or United States federal or state, local or
foreign governmental, regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; provided, that the party seeking to terminate
this Agreement pursuant to this clause (c) shall have used all reasonable
efforts to remove such injunction, order or decree; and provided, in the case
of a termination pursuant to clause (a) above, that the terminating party
shall not have breached in any material respect its obligations under
23
this Agreement in any manner that shall have proximately contributed to the
failure to consummate the Merger by March 31, 1998. Notwithstanding the
foregoing, EVT's ability to terminate this Agreement pursuant to this
subsection (b) and (c) of Section 7.2 is conditioned upon the prior payment by
EVT of any amounts owed by it pursuant to Section 7.5(a).
7.3 TERMINATION BY EVT. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, before or after the
adoption and approval by the stockholders of EVT referred to in Section
6.1(a), by action of the Board of Directors of EVT, if (a) in the exercise of
its good faith judgment as to fiduciary duties to its stockholders imposed by
law based on the advice of outside counsel, the Board of Directors of EVT
determines that such termination is required by reason of a Superior Proposal
being made, or (b) there has been a breach by Guidant or Merger Sub of any
representation or warranty contained in this Agreement that has had or will
have a Guidant Material Adverse Effect, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by EVT to Guidant, (c) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of Guidant,
which breach is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by EVT to Guidant, or (d) the Closing
Price is less than $40.00. Notwithstanding the foregoing, EVT's ability to
terminate this Agreement pursuant to this Section 7.3 is conditioned upon the
prior payment by EVT of any amounts owed by it pursuant to Section 7.5(a).
7.4 TERMINATION BY GUIDANT. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, before or after the
approval by the stockholders of EVT referred to in Section 6.1(a), by action
of the Board of Directors of Guidant, if (a) the Board of Directors of EVT
shall have withdrawn or modified in a manner materially adverse to Guidant its
approval or recommendation of this Agreement or the Merger or shall have
recommended an Alternative Proposal to EVT stockholders, (b) there has been a
breach by EVT of any representation or warranty contained in this Agreement
that has had or will have an EVT Material Adverse Effect, which breach is not
curable or, if curable, is not cured within 30 days after written notice of
such breach is given by Guidant to EVT, (c) there has been a material breach
of any of the covenants or agreements set forth in this Agreement on the part
of EVT, which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by Guidant to EVT, or (d)
the Closing Price is less than $40.00.
7.5 EFFECT OF TERMINATION AND ABANDONMENT. (a) EVT shall pay Guidant a fee
of $7 million, which amount shall be payable by wire transfer of same day
funds, within two business days after such amount becomes due, upon the
occurrence of any of the following events:
(i) EVT or Guidant terminates this Agreement pursuant to clause (b) of
Section 7.2 and prior to such termination, (x) a proposal with respect to a
Transaction shall have been made, and (y) within one year after such
termination, (A) any third party shall acquire beneficial ownership of more
than 50% of EVT's outstanding shares of voting stock, or (B) EVT shall
enter into any agreement with respect to any Transaction, and within such
one year period or thereafter, such Transaction is consummated;
(ii) Guidant terminates this Agreement pursuant to clause (a) of Section
7.4;
(iii) EVT terminates this Agreement pursuant to clause (a) of Section
7.3.
EVT acknowledges that the agreements contained in this Section 7.5(a) are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, Guidant and Merger Sub would not enter into this
Agreement; accordingly, if EVT fails to promptly pay the amount due pursuant
to this Section 7.5(a), and, in order to obtain such payment, Guidant or
Merger Sub commences a suit which results in a judgment against EVT for the
full amount of the fee set forth in this Section 7.5(a), EVT shall pay to
Guidant its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the rate of 12%
per annum from the date such fee was required to be paid.
(b) In the event of termination of this Agreement and the abandonment of the
Merger pursuant to this Article 7, all obligations of the parties hereto shall
terminate, except the obligations of the parties set forth in
24
this Section 7.5 and Section 5.10 and except for the Confidentiality
Agreement, dated October 1, 1996. Moreover, in the event of termination of
this Agreement pursuant to Section 7.3 or 7.4, nothing herein shall prejudice
the ability of the nonbreaching party from seeking damages from any other
party for any breach of this Agreement, including without limitation,
attorneys' fees and the right to pursue any remedy at law or in equity.
Notwithstanding any other provision contained herein, Guidant shall not have
the right to seek damages from any officer, director or employee of EVT.
7.6 EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto, by action taken by its Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party.
7.7 CERTAIN RIGHTS OF GUIDANT. If EVT proposes to terminate this Agreement
pursuant to subsection (d) of Section 7.3, EVT shall first notify Guidant in
writing of its intent to so terminate this Agreement and Guidant shall then
have not less than five days from the date of receipt of written notice by EVT
to submit a final and best written offer (a "Final Offer") for a change in the
Exchange Consideration. If such Final Offer is accepted by EVT, the parties
thereto shall amend this Agreement to reflect such Final Offer and shall make
any appropriate amendments to the Registration Statement and the Proxy
Statement/Prospectus. Any decision by EVT to accept or reject a Final Offer
shall be at EVT's sole discretion.
ARTICLE 8
General Provisions
8.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger,
provided, however, that the agreements contained in Article 1, Article 2,
Section 5.11, Section 5.12, Section 5.19 and this Article 8 shall survive the
Merger to the extent contemplated by such sections.
8.2 NOTICES. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission, by courier or other
national overnight express mail service (with proof of service), hand delivery
or certified or registered mail (return receipt requested and first-class
postage prepaid), addressed as follows:
If to Guidant or Merger Sub:
Guidant Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
25
If to EVT:
EndoVascular Technologies, Inc.
▇▇▇▇ ▇'▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
with copies to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
8.3 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 5.11, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits, the EVT Disclosure
Schedule, the Guidant Disclosure Schedule, the Confidentiality Agreement dated
October 1, 1996, between EVT and Guidant and any documents delivered by the
parties in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be
binding upon any party hereto unless made in writing and signed by all parties
hereto.
8.5 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of EVT and Guidant, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws.
8.7 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all of the parties
hereto.
8.8 HEADINGS. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
8.9 INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, and words denoting each gender shall include the other gender and
words denoting natural persons shall include corporations and partnerships and
vice versa.
26
8.10 WAIVERS. Except as provided in this Agreement, no action taken pursuant
to this Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any
other provision hereunder.
8.11 INCORPORATION OF EXHIBITS. The EVT Disclosure Schedule, the Guidant
Disclosure Schedule and all Exhibits attached hereto and referred to herein
are hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
8.12 SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
8.13 ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
was not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
8.14 SUBSIDIARIES. As used in this Agreement, the word "Subsidiary" when
used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the board of directors or others performing similar functions with respect to
such corporation or other organization, or any organization of which such
party is a general partner.
8.15 OTHER. Guidant agrees that any adverse effect on EVT resulting from any
of the matters set forth in clauses (i) through (iv) of the proviso to the
definition of EVT Material Adverse Effect in Section 3.1 shall not be
considered in determining whether there has been a material adverse change to
or effect on EVT for purposes of the Loan Agreement.
27
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
GUIDANT CORPORATION
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name:▇. ▇▇▇▇▇▇ (▇▇▇) ▇▇▇▇▇▇▇, III
Title: Vice President
SKI ACQUISITION CORP.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name:▇. ▇▇▇▇▇▇ (▇▇▇) ▇▇▇▇▇▇▇, III
Title:Vice President
ENDOVASCULAR TECHNOLOGIES, INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name:W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title:President and Chief
Executive Officer
28
EXHIBIT A
TO MERGER
AGREEMENT
FORM OF AFFILIATE LETTER
[GUIDANT]
[ADDRESS]
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to be
an "affiliate" of EndoVascular Technologies, Inc., a Delaware corporation
("EVT"), as the term "affiliate" is (i) defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Act"), or (ii) used in and for purposes of
Accounting Series, Releases 130 and 135, as amended, of the SEC (the "Pooling
Rules"). Pursuant to the terms of the Agreement and Plan of Merger, dated as
of October 5, 1997 (the "Agreement"), between Guidant Corporation, an Indiana
corporation ("Guidant"), Ski Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Guidant ("Merger Sub"), and EVT, Merger Sub will be
merged with and into EVT (the "Merger").
As a result of the Merger, I will receive shares of Common Stock, without
par value, of Guidant (the "Guidant Common Stock") in exchange for shares
owned by me of Common Stock, par value $.00001 per share, of EVT.
Compliance with the Act. In compliance with the Act and the Rules and
Regulations thereunder, I represent, warrant and covenant to Guidant that in
the event I receive any Guidant Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Guidant Common Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed the
requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of the Guidant Common Stock,
to the extent I felt necessary, with my counsel or counsel for EVT.
C. I have been advised that the issuance of Guidant Common Stock to me
pursuant to the Merger has been registered with the SEC under the Act on a
Registration Statement on Form S-4. However, I have also been advised that,
since at the time the Merger was submitted for a vote of the stockholders
of EVT, I may be deemed to have been an affiliate of EVT and the
distribution by me of the Guidant Common Stock has not been registered
under the Act, I may not sell, transfer or otherwise dispose of the Guidant
Common Stock issued to me in the Merger unless such sale, transfer or other
disposition (i) has been registered under the Act and all applicable state
securities or "blue sky" laws, (ii) is made in conformity with Rule 145
promulgated by the SEC under the Act and all applicable state securities or
"blue sky" laws, or (iii) in the opinion of counsel reasonably acceptable
to Guidant, or pursuant to a "no action" letter obtained by the undersigned
from the staff of the SEC, is otherwise exempt from registration under the
Act and all applicable state securities or "blue sky" laws.
D. I understand that Guidant is under no obligation to register the sale,
transfer or other disposition of the Guidant Common Stock received by me or
on my behalf as a result of the Merger under the Act or to take any other
action necessary in order to make compliance with an exemption from such
registration available.
E. I also understand that stop transfer instructions will be given to
Guidant's transfer agents with respect to the Guidant Common Stock and that
there will be placed on the certificates for the Guidant Common Stock
issued to me, or any substitutions therefor, a legend stating in substance:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO A
BUSINESS COMBINATION WHICH IS BEING ACCOUNTED FOR AS A POOLING OF
INTERESTS, IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED BETWEEN THE REGISTERED HOLDER HEREOF AND GUIDANT
CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF GUIDANT CORPORATION."
F. I also understand that unless the transfer by me of my Guidant Common
Stock has been registered under the Act or is a sale made in conformity
with the provisions of Rule 145 and all applicable state securities or
"blue sky" laws, Guidant reserves the right to put the following legend on
the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES OR
"BLUE SKY" LAWS AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH
SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES OR "BLUE
SKY" LAWS.
It is understood and agreed that the legends set forth in paragraphs E and F
above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act, any applicable
state securities or "blue sky" laws or this Agreement. It is understood and
agreed that such legends and the stop orders referred to above will be removed
if (i) one year shall have elapsed from the date the undersigned acquired the
Guidant Common Stock received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) two years shall have
elapsed from the date the undersigned acquired the Guidant Common Stock
received in the Merger and the provisions of Rule 145(d)(3) are then available
to the undersigned, (iii) Guidant has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to Guidant, or a
"no action" letter obtained by the undersigned from the staff of the SEC, to
the effect that the restrictions imposed by Rule 145 under the Act and all
applicable state securities or "blue sky" laws no longer apply to the
undersigned or (iv) the shares of stock beneficially owned by me, any of my
affiliates and any person with whom I am acting in concert represent less than
1% of the outstanding Guidant Common Stock and may be sold pursuant to Rule
144 during a single 90-day period.
2. Pooling Requirements. I further represent to and covenant with Guidant
that (A) I have not sold any shares of common stock of EVT within 30 days of
the Effective Time (as defined in the Merger Agreement and (B) I will not
sell, transfer or otherwise dispose of (i) any shares of common stock of EVT
within 30 days of the Effective Time or (ii) any Guidant Common Stock received
by me in the Merger or any other shares of the capital stock of Guidant until
after such time as results covering at least 30 days of post-merger combined
operations of EVT and Guidant have been published by Guidant, in the form of a
quarterly earnings report, an effective registration statement filed with the
SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public filing
or announcement which includes such combined results of operations and would
satisfy the Pooling Rules.
3. Certain Tax Matters. In connection with the qualification of the receipt
of Guidant Common Stock in the Merger as tax-free under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), I hereby represent and
warrant to Guidant as follows:
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A. I am currently the owner of shares of EVT Common Stock and have
not acquired, or made any Sale (as defined below) of EVT Common Stock since
, 1997, or otherwise in contemplation of the Merger. These shares
constitute my entire interest in EVT.
B. Except with respect to (i) the exchange of EVT Common Stock for
Guidant Common Stock pursuant to the Merger, I have no current plan or
intent to engage in any Sale (as defined below) of any EVT Common Stock on,
or prior to, the Merger.
C. I have no current plan or intent to engage in a sale, exchange,
transfer, pledge, distribution, redemption, or any transaction that reduces
my risk of loss or potential for gain (by short sale or otherwise) with
respect to, or other disposition of, directly or indirectly (collectively,
a "Sale"), any Guidant Common Stock that I receive in the Merger. I am not
aware of, or participating in, any plan or intent on the part of EVT's
stockholders (a "Plan") to engage in any Sale of Guidant Common Stock to be
issued in the Merger such that the aggregate fair market value, as of the
Effective Time of the shares subject to such Sale would exceed ten percent
(10%) of the aggregate fair market value of all shares of EVT Common Stock
outstanding immediately prior to the Merger (the "Outstanding EVT Common
Stock"). A Sale of Guidant Common Stock shall be considered to have
occurred pursuant to a Plan if, among other things, such sale, transfer or
other disposition occurs in a transaction that is in contemplation of, or
related to, the Merger (a "Related Transaction"). Additionally, for
purposes of the foregoing, shares of EVT Common Stock with respect to which
a pre-Merger Sale occurs in a Related Transaction shall be considered to be
shares of Outstanding EVT Common Stock that are exchanged for shares of
Guidant Common Stock which are disposed of pursuant to a Plan.
D. Notwithstanding the foregoing provisions, I acknowledge that I will
hold the Guidant Common Stock with an investment intent and, therefore, in
the event of a change of circumstances (including a change in financial
circumstances or a change in value of Guidant Common Stock), I may at some
time in the future engage in a Sale of some or all of my shares of Guidant
Common Stock. I do not intend to take a position on any federal or state
income tax return that is inconsistent with the treatment of the receipt of
Guidant Common Stock in the Merger as occurring pursuant to a
reorganization qualifying as tax-free under Section 368(a) of the Code.
E. I shall immediately notify Guidant in writing via facsimile if, at any
time prior to the Effective Time, any of the following representations are
untrue.
The representation, covenants and agreements contained herein shall be true
and correct at all times from the date hereof. I understand that my
obligations hereunder shall attach to and be binding upon any person or entity
to whom legal or beneficial ownership of my shares of EVT Common Stock (and
shares of Guidant Common Stock following the Merger) shall pass by operation
of law or otherwise.
Very truly yours,
Name:
Accepted this
day of ,
1997 by Guidant
Corporation
By: _________________________________
Name:
Title:
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