Exhibit 10.1
TRANSACTION AGREEMENT
among
BOSTON SCIENTIFIC CORPORATION,
NEMO I ACQUISITION, INC.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(in his capacity as Stockholders' Representative)
and
RUBICON MEDICAL CORPORATION
Dated as of October 29, 2003
TABLE OF CONTENTS
Page
Article I
DEFINITIONS
Section 1.01. Definitions...................................................2
Article II
SUBSCRIPTION
Section 2.01. Subscription..................................................9
Section 2.02. Closing 9
Article III
the offer
Section 3.01. The Offer.....................................................9
Section 3.02. Exchange of Certificates.....................................12
Section 3.03. Company Action...............................................16
Section 3.04. Directors....................................................16
Article IV
THE MERGER
Section 4.01. The Merger...................................................17
Section 4.02. Effective Time; Closing......................................17
Section 4.03. Effect of the Merger.........................................18
Section 4.04. Conversion of Securities.....................................18
Section 4.05. Stock Transfer Books.........................................18
Section 4.06. Certificate of Incorporation; By-laws........................19
Section 4.07. Directors and Officers.......................................19
Section 4.08. Company Stockholders' Meeting................................19
Section 4.09. Preparation of Merger Registration Statement and
Merger Proxy Statement/Prospectus............................19
Section 4.10. Appraisal Rights/Dissenting Shares...........................20
Article V
COMPANY STOCK OPTIONS; AFFILIATES; EARN-OUT PAYMENTS
Section 5.01. Company Stock Options........................................21
Section 5.02. Affiliates...................................................21
Section 5.03. Earn-out Payments............................................21
Section 5.04. Additional Earn-out Payments.................................22
Section 5.05. Disputes.....................................................24
Article VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 6.01. Organization and Qualification; Subsidiaries.................24
Section 6.02. Certificate of Incorporation and By-laws.....................24
Section 6.03. Capitalization...............................................25
Section 6.04. Authority Relative to this Agreement.........................26
Section 6.05. No Conflict; Required Filings and Consents...................26
Section 6.06. Permits; Compliance..........................................27
Section 6.07. SEC Filings; Financial Statements............................28
Section 6.08. Absence of Certain Changes or Events.........................29
Section 6.09. Absence of Litigation........................................29
Section 6.10. Employee Benefit Plans.......................................29
Section 6.11. Labor and Employment Matters.................................31
Section 6.12. Real Property and Leases.....................................32
Section 6.13. Intellectual Property........................................33
Section 6.14. Taxes 35
Section 6.15. Environmental Matters........................................35
Section 6.16. Material Contracts...........................................36
Section 6.17. Insurance....................................................37
Section 6.18. Information to Be Supplied...................................37
Section 6.19. Brokers 38
Section 6.20. Opinion of Advisor...........................................38
Article VII
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Section 7.01. Corporate Organization.......................................38
Section 7.02. Certificate of Incorporation and By-laws.....................39
Section 7.03. Capitalization...............................................39
Section 7.04. Authority Relative to this Agreement.........................39
Section 7.05. No Conflict; Required Filings and Consents...................40
Section 7.06. Permits; Compliance..........................................40
Section 7.07. SEC Filings; Financial Statements............................41
Section 7.08. Absence of Certain Changes or Events.........................41
Section 7.09. Operations of Purchaser......................................41
Section 7.10. Information to Be Supplied...................................41
Section 7.11. Brokers 42
Section 7.12. Financial Projections........................................42
Section 7.13. Investor Representations.....................................42
Article VIII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 8.01. Conduct of Business by the Company...........................43
Section 8.02. Intellectual Property........................................45
Article IX
ADDITIONAL AGREEMENTS
Section 9.01. Access to Information; Confidentiality.......................45
Section 9.02. No Solicitation of Transactions..............................46
Section 9.03. Notification of Certain Matters..............................47
Section 9.04. Company Affiliates...........................................47
Section 9.05. Further Action; Reasonable Best Efforts......................48
Section 9.06. NYSE Listing.................................................48
Section 9.07. Public Announcements.........................................48
Section 9.08. Management Team..............................................48
Section 9.09. Directors' and Officers' Indemnification.....................49
Article X
CONDITIONS TO THE MERGER
Section 10.01. Conditions to the Merger....................................49
Article XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.01. Termination.................................................50
Section 11.02. Effect of Termination.......................................52
Section 11.03. Fees and Expenses...........................................52
Section 11.04. Amendment...................................................52
Section 11.05. Waiver 52
Article XII
GENERAL PROVISIONS
Section 12.01. Non-Survival of Representations, Warranties
and Agreements..............................................52
Section 12.02. Withholding Rights..........................................52
Section 12.03. Notices.....................................................53
Section 12.04. Severability................................................54
Section 12.05. Entire Agreement; Assignment................................54
Section 12.06. Parties in Interest.........................................54
Section 12.07. Specific Performance........................................54
Section 12.08. Governing Law...............................................54
Section 12.09. Waiver of Jury Trial........................................55
Section 12.10. Headings....................................................55
Section 12.11. Counterparts................................................55
Section 12.12. Attorneys' Fees.............................................55
TRANSACTION AGREEMENT
This TRANSACTION AGREEMENT, dated as of October 29, 2003 (this
"Agreement"), is entered into among Boston Scientific Corporation, a Delaware
corporation ("Parent"), Nemo I Acquisition, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), Rubicon Medical Corporation, a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇" or
"Stockholders' Representative") (in his capacity as stockholders'
representative).
WHEREAS, pursuant to an agreement dated July 17, 2003 (the
"Term Sheet") among Parent, the Company, ▇▇▇▇▇▇ Family Enterprises, a Utah
family limited partnership ("BFE"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇▇▇
(▇▇▇▇▇▇, BFE and ▇▇▇▇▇▇, together with ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family
Limited Partnership, a Utah family limited partnership, collectively, the
"Controlling Stockholders"), Parent purchased 2,000,000 shares of the Company's
common stock, par value $0.001 ("Common Stock"), for $2 million in cash (the
"First Equity Investment");
WHEREAS, concurrently with the execution hereof, Parent shall
purchase, and the Company shall issue to Parent, 1,090,147 of shares of Series A
Convertible Preferred Stock (the "Preferred Stock") for $15 million in cash,
which shall have the terms and conditions set forth in the Certificate of
Designation attached hereto as Exhibit A, including that such shares of
Preferred Stock shall be convertible into such number of shares of Common Stock
that, when aggregated with the Common Stock issued pursuant to the First Equity
Investment, shall constitute 18% of the equity of the Company on a Fully Diluted
Basis (as defined below) as of the date of issuance of the Preferred Stock;
WHEREAS, Parent, Purchaser and the Controlling Stockholders
have entered into option agreements, dated as of the date hereof (the "Option
Agreements"), providing that, among other things, (i) the Controlling
Stockholders have granted an option to Parent and Purchaser to purchase all of
their shares of Common Stock and all of their options to purchase Common Stock
for the consideration set forth therein payable in cash (the "Purchase Option")
and (ii) Parent may require the Controlling Stockholders, in lieu of selling
their equity interests in the Company to Purchaser as described in clause (i),
to tender their shares of Common Stock into the Offer (as defined below) in
exchange for, at the option of Parent or Purchaser, either cash or shares of
common stock of Parent, par value $0.01 per share ("Parent Common Stock") (such
option, the "Offer Option");
WHEREAS, in the event the Purchase Option is exercised, as
soon as practicable after the closing of the acquisition by Parent or Purchaser
from the Controlling Stockholders of the shares of Common Stock and options to
purchase Common Stock pursuant to the exercise of the Purchase Option (the
"Purchase Option Closing"), Purchaser shall commence a cash tender offer to
acquire all of the issued and outstanding shares of Common Stock upon the terms
and subject to the conditions of this Agreement and such cash tender offer;
WHEREAS, in the event the Offer Option is exercised, as soon
as practicable after Purchaser gives written notice to the Controlling
Stockholders of its exercise of the Offer Option, Purchaser shall commence an
exchange offer or a cash tender offer (either such exchange offer or cash tender
offer, as the case may be, the "Offer") to acquire all of the issued and
outstanding shares of Common Stock upon the terms and subject to the conditions
of this Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Company
Board") has, subject to the provisions of this Agreement, unanimously resolved
to recommend that holders of shares of Common Stock tender their shares of
Common Stock into the Offer, if made; and
WHEREAS, in furtherance of the transactions contemplated
hereby, each of the Board of Directors of Purchaser and the Company Board has
approved this Agreement and declared its advisability and approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"), upon the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Purchaser and the Company hereby agree as follows:
Article I.
DEFINITIONS
Section 1.01. Definitions. (a) For purposes of this Agreement:
"affiliate" of a specified person means a person who, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person.
"Average Parent Stock Price" means the average of the per
share closing prices of Parent Common Stock on the NYSE (as reported in
The Wall Street Journal) during the 20 consecutive trading days ending
on (and including) the trading day that is two trading days prior to
(i) the date on which the Exchange Offer Registration Statement becomes
effective if the Offer Option is exercised or, (ii) any other
applicable date specified herein.
"beneficial owner", with respect to any Shares, has the
meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks
are not required or authorized to close in The City of New York.
"Cash Consideration" means $2.00 per Share, together with any
rights to receive the Earn-out Payments.
"Cause" means the occurrence of any of the following events:
(i) a continuing failure or refusal of a person after written notice
from the Company to perform the duties required of him or her as an
employee of the Company or its Subsidiary; (ii) any continuing willful
misconduct by a person after written notice from the Company relating,
directly or indirectly, to the Company or its Subsidiary, or any
continuing breach by a person after written notice from the Company of
any policy of the Company, as reasonably determined by the Company
Board; (iii) any misuse or misappropriation by a person of property or
assets of the Company or its Subsidiary; (iv) any willful violation by
a person of any Law applicable to the business of the Company or its
Subsidiary, or a person's commission of a common law fraud or
conviction of a crime; or (v) any other willful misconduct by a person
that is injurious to the financial condition or business reputation of,
or is otherwise injurious to, the Company or its Subsidiary; provided,
however, that Cause shall not exist unless the failure, breach, or
other misconduct is material, and provided further that in the case of
▇▇▇▇▇▇, Cause shall have the meaning set forth in his employment
agreement with the Company.
"Clot Retrieving Device" means a clot-retrieving device
developed by the Company that is designed to be used for stroke
therapy.
"Code" means United States Internal Revenue Code of 1986, as
amended from time to time.
"Company Licensed Intellectual Property" means all (i)
licenses of Intellectual Property to the Company by any third party and
(ii) licenses of Intellectual Property by the Company to any third
party.
"Company Material Adverse Effect" means any event,
circumstance, change or effect that, individually or in the aggregate
with all other events, circumstances, changes and effects, is or is
reasonably likely to be materially adverse to (i) the business,
financial condition, prospects, assets, liabilities, intellectual
property or results of operations of the Company and its Subsidiary
taken as a whole or (ii) the ability of the Company to consummate the
Transactions; provided, however, that the mere fact that the Company is
operating at a loss and/or has exhausted its cash assets shall not, in
and of itself, constitute a "Company Material Adverse Effect".
"Company Owned Intellectual Property" means all Intellectual
Property owned by the Company.
"Company Stock Option Plan" means the Company 2001 Stock Plan,
as amended through the date of this Agreement.
"Company Stock Option" means any option outstanding, whether
or not exercisable and whether or not vested, under the Company Stock
Option Plan.
"Comparative Devices" means, in connection with Milestone 3,
the stroke therapy devices on the market, other devices that are in
clinical testing or otherwise available for comparison, or any device
of Parent that is being prepared for clinical testing, at the time the
Disinterested Physicians test the Clot Retrieving Device in a vascular
bench model.
"Consideration" means either the Cash Consideration or the
Share Consideration, as the case may be.
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise.
"Disinterested Physicians" means a committee of three
physicians (i) that has been selected in accordance with Section
5.04(b)(i) and (ii) each member of which has at least eight years of
experience as a trained Interventional Neuro Radiologist and, except as
provided in Section 5.04, none of whom is affiliated with either the
Company or Parent, including as either a medical director, consultant
or employee.
"Earn-out Payments" means the Milestone 2 Earn-out Payment and
the Milestone 3 Earn-out Payment.
"Earn-out Period" means the first five years following the
later of (i) the Effective Time or (ii) the achievement of Milestone 1.
"Environmental Law" means any United States federal, state,
local or non-United States laws relating to (i) releases or threatened
releases of Hazardous Substances or materials containing Hazardous
Substances, (ii) the manufacture, handling, transport, use, treatment,
storage or disposal of Hazardous Substances or materials containing
Hazardous Substances or (iii) pollution or protection of the
environment, health, safety or natural resources.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Ratio" means the quotient determined by dividing
$2.00 by the Average Parent Stock Price and rounding the result to the
nearest one thousandth of a share.
"Filter" means a medical device that includes a membrane that
(i) is formed into a sack, together with a guidewire and wire mechanism
for constraining and deploying the mouth of the sack, which, when
deployed, approximates the walls of a blood vessel thereby allowing the
membrane to capture particles in the blood stream and (ii) is currently
under development by the Company.
"Former Stockholders Committee" means a committee consisting
of the Controlling Stockholders and a third party who may or may not be
a former stockholder of the Company to be selected by the Controlling
Stockholders.
"Fully Diluted Basis" means after taking into account all
outstanding shares of Common Stock and assuming the exercise,
conversion or exchange of all options, warrants, convertible or
exchangeable securities and similar rights in respect of shares of
Common Stock and the issuance of all shares of Common Stock that the
Company is authorized or obligated to issue thereunder.
"Hazardous Substances" means (i) those substances defined in
or regulated under the following United States federal statutes and
their state counterparts, as each may be amended from time to time, and
all regulations thereunder: the Hazardous Materials Transportation Act,
the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water
Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products; (iii) natural gas, synthetic gas and
any mixtures thereof; and (iv) polychlorinated biphenyls, asbestos and
radon.
"Intellectual Property" means (i) United States and
international patents, patent applications and statutory invention
registrations, (ii) trademarks, service marks, trade dress, logos,
trade names, corporate names and other source identifiers, and
registrations and applications for registration thereof, (iii)
copyrightable works, copyrights, and registrations and applications for
registration thereof and (iv) confidential and proprietary information,
including trade secrets and know-how.
"knowledge" means, with respect to the Company, the knowledge
of the persons set forth on Exhibit 1.01 attached hereto after due
inquiry by such persons of employees of the Company who shall
reasonably be expected to have knowledge of the subject matter of such
inquiry.
"Milestone 1" means the date on which the Company receives
approval from the FDA (which approval is not subject to limitations
that would inhibit marketing or selling to a significant portion of the
market for the approved indication and is predicated on clinical trial
data collected by the Company) for commercial release of its Filter for
an embolic protection indication for one of the following disease or
anatomical indications: (i) carotid artery, (ii) acute myocardial
infarction, (iii) native coronary vessels or (iv) coronary vein grafts.
"Milestone 2" means when Net Sales of the Filter or other
devices that would otherwise infringe a valid and enforceable patent
claim of the Company's Intellectual Property exceed $50 million during
a period of 12 or fewer consecutive months.
"Milestone 3" means the date on which one of the following
conditions has been satisfied:
(A) On or before September 30, 2004, (i) the Disinterested
Physicians meet and use the Clot Retrieving Device in a
vascular bench model and the Disinterested Physicians
unanimously agree that such Clot Retrieving Device is superior
to the Comparative Devices and (ii) the Disinterested
Physicians test such Clot Retrieving Device in an animal model
and unanimously agree that such Clot Retrieving Device is
superior to the Comparative Devices; or
(B) The Disinterested Physicians (i) on or before September 30,
2004, determine that the Clot Retrieving Device would be
superior to the Comparative Devices with commercially
reasonable and technically feasible additional development,
(ii) on or before December 31, 2004, retest such Clot
Retrieving Device in the same vascular bench and animal models
and (iii) on or before December 31, 2004, unanimously
determine that such Clot Retrieving Device is superior to the
Comparative Devices.
For purposes of clause (A) and (B) above, the Clot Retrieving
Device shall be "superior" to the Comparative Device if it is
determined to be equal to the Comparative Device in all, and
better than the Comparative Device in one, of the following
categories: ease of use, safety and efficacy.
"Net Sales" means the aggregate amount of consolidated net
sales recorded by Parent from the sales of the Company's products in
accordance with United States generally accepted accounting principles,
consistently applied by Parent across all similar product lines, in
connection with the preparation of its financial statements as publicly
reported.
"NYSE" means The New York Stock Exchange.
"Option" means either the Purchase Option or the Offer Option,
as the case may be.
"Option Period" means the period during which Parent may
exercise an Option, which commences on the date of this Agreement and
terminates on the 90th day following written notice by the Company or
Parent of the achievement of Milestone 1, which notice shall be
accompanied by satisfactory documentation evidencing such achievement.
"Order" means any law, rule, regulation, judgment, decree,
executive order or award.
"Parent Material Adverse Effect" means any event,
circumstance, change or effect that, individually or in the aggregate
with all other events, circumstances, changes and effects, is or is
reasonably likely to be materially adverse to (i) the business,
financial condition, prospects, assets, liabilities or results of
operations of Parent and its subsidiaries taken as a whole or (ii) the
ability of Parent to consummate the Transactions.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person,
trust, association or entity or government, political subdivision,
agency or instrumentality of a government.
"Registration Rights Agreement" means the agreement entered
into concurrently herewith by the Company, Parent and Purchaser.
"Share" means one outstanding share of Common Stock.
"Share Consideration" means the number of shares of Parent
Common Stock equal to the Exchange Ratio, together with any rights to
receive cash in lieu of fractional shares pursuant to Section 3.02 and
the Earn-out Payments.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more
intermediaries.
"Tax" or "Taxes" means any and all taxes, fees, levies,
duties, tariffs, imposts and other charges of any kind (together with
any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any Governmental
Authority or taxing authority, including: taxes or other charges on or
with respect to income, franchise, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment,
social security, workers' compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, withholding,
ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and
similar charges.
"Tax Return" means any return, report, schedule, declaration,
estimate or election (including attachments to any of the foregoing)
filed or required to be filed with any Governmental Authority or taxing
authority with respect to Taxes.
"$" means United States Dollars.
(b) The following terms have the meaning set forth in the Sections set forth
below:
Defined Term Location of Definition
------------ ----------------------
Action..................................... ss. 6.09
Activities to Date......................... ss. 6.06(b)
Agreement.................................. Preamble
▇▇▇▇▇▇..................................... Recitals
BFE........................................ Recitals
Blue Sky Laws.............................. ss. 6.03(c)
Cash Offer Documents....................... ss. 3.01(c)
Cash Schedule TO........................... ss. 3.01(c)
Cash Tender Offer.......................... ss. 3.01(a)
Certificate of Merger...................... ss. 4.02
Certificates............................... ss. 3.02(a)
Common Stock............................... Recitals
Company.................................... Preamble
Company Affiliate.......................... ss. 9.04
Company Board.............................. Recitals
Company Disclosure Schedule................ ss. 6.03(a)
Company Licenses .......................... ss. 6.06(b)
Company Permits............................ ss. 6.06(a)
Company Preferred Stock.................... ss. 6.03(a)
Company Products........................... ss. 6.06(b)
Company SEC Reports........................ ss. 6.07(a)
Company Stockholders' Meeting.............. ss. 4.08(a)
Competing Transaction...................... ss. 9.02(c)
Confidentiality Agreement.................. ss. 9.01(b)
Continuing Directors....................... ss. 3.04(a)
Controlling Stockholders................... Recitals
DGCL....................................... Recitals
Dissenting Shares.......................... ss. 4.10(a)
Effective Time............................. ss. 4.02
Earn-out Recipients ....................... ss. 5.03(b)
Environmental Permits...................... ss. 6.15
ERISA...................................... ss. 6.10(a)
Exchange Agent............................. ss. 3.02(a)
Exchange Fund.............................. ss. 3.02(a)
Exchange Offer ............................ ss. 3.01(a)
Exchange Offer Documents................... ss. 3.01(d)
Exchange Offer Prospectus.................. ss. 3.01(d)
Exchange Offer Registration Statement...... ss. 3.01(d)
Exchange Offer Schedule TO ................ ss. 3.01(d)
FDA........................................ ss. 6.06(b)
First Equity Investment.................... Recitals
GAAP....................................... ss. 6.07(b)
Governmental Authority..................... ss. 6.05(b)
HSR Act.................................... ss. 6.05(b)
Indemnification Agreements................. ss. 9.09
Initial Expiration Date.................... ss. 3.01(b)
IRS........................................ ss. 6.10(a)
Law........................................ ss. 6.05(a)
Liens...................................... ss. 6.12(b)
▇▇▇▇▇▇..................................... Preamble
Material Contracts......................... ss. 6.16(a)
Merger..................................... Recitals
Merger Proxy Statement/Prospectus.......... ss. 4.09
Merger Registration Statement.............. ss. 4.09
Milestone 2 Earn-out Payment............... ss. 5.03(a)
Milestone 3 Earn-out Payment............... ss. 5.04(a)
Offer...................................... Recitals
Offer Documents............................ ss. 3.01(f)
Offer Option............................... Recitals
Offer to Purchase.......................... ss. 3.01(c)
Option Agreements.......................... Recitals
Option Payment............................. ss. 5.01
Parent..................................... Preamble
Parent Common Stock........................ Recitals
Parent Permits............................. ss. 7.06
Parent SEC Reports......................... ss. 7.07
Paying Agent............................... ss. 3.02(b)
Plans...................................... ss. 6.10(a)
Preferred Shares........................... ss. 2.01
Preferred Stock............................ Recitals
Purchase Option............................ Recitals
Purchase Option Closing.................... Recitals
Purchaser.................................. Preamble
Representatives............................ ss. 9.01(a)
Schedule TO................................ ss. 3.01(f)
SEC........................................ ss. 3.01(b)
Second-Step Merger......................... ss. 3.01(a)
Securities Act............................. ss. 3.01(d)
Stockholders' Representative............... Preamble
Subscription Price......................... ss. 2.01
Subsidiary................................. ss. 6.01(a)
Superior Proposal.......................... ss. 9.02(d)
Surviving Corporation...................... ss. 4.01(a)
Term Sheet................................. Recitals
Testing Parameters......................... ss. 5.04(b)
Transactions............................... ss. 3.03(a)
2002 Balance Sheet......................... ss. 6.07(c)
Article II
SUBSCRIPTION
Section 2.01. Subscription. Concurrently with the execution hereof, the Company
shall issue, sell and deliver to Parent, and Parent shall subscribe for,
purchase and acquire from the Company, 1,090,147 shares of Preferred Stock (the
"Preferred Shares") for an aggregate subscription price of $15 million (the
"Subscription Price").
Section 2.02. Closing. Concurrently with the execution hereof, the Company shall
deliver to Parent a certificate representing the Preferred Shares and Parent
shall deliver to the Company the Subscription Price by wire transfer in
immediately available funds to an account designated in writing by the Company.
Article III
THE OFFER
Section 3.01. The Offer. (a) (i) Provided that (x) Parent or Purchaser has
either effected the Purchase Option Closing or exercised the Offer Option, (y)
this Agreement shall not have been terminated in accordance with Article XI and
(z) none of the events set forth in Annex A shall have occurred and be
continuing, as promptly as reasonably practicable after the Purchase Option
Closing or the exercise of the Offer Option, Purchaser shall (1) if Parent
elected to issue shares of Parent Common Stock as consideration in its exercise
of the Offer Option, commence the Offer to exchange the Share Consideration for
each Share (the "Exchange Offer") or (2) if Parent or Purchaser elected to
exercise the Purchase Option or elected to pay cash as consideration in its
exercise of the Offer Option, commence the Offer as a cash tender offer for the
Cash Consideration (the "Cash Tender Offer").
(ii) Second-Step Merger. Subject to the provisions of this Agreement,
following acceptance of Shares pursuant to the Offer, Purchaser shall effect a
second-step Merger to merge Purchaser with and into the Company, as more fully
set forth in Article IV (the "Second-Step Merger").
(b) The obligation of Purchaser to accept Shares tendered pursuant to
the Offer shall be subject to the conditions set forth in Annex A. Purchaser
expressly reserves the right to waive any such condition, to increase the
Consideration, and to make any other changes in the terms and conditions of the
Offer; provided, however, that no change may be made which decreases the
Consideration or which reduces the maximum number of Shares to be purchased in
the Offer or which imposes conditions to the Offer in addition to those set
forth in Annex A. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (i) extend the Offer for one or more periods (of not
more than 10 business days each) beyond the scheduled expiration date, which
shall initially be 30 days following the commencement of the Offer (the "Initial
Expiration Date"), if, at any scheduled expiration of the Offer, any of the
conditions to Purchaser's obligation to accept Shares tendered pursuant to the
Offer shall not be satisfied or waived or (ii) extend the Offer for any period
required by any rule, regulation or interpretation of the U.S. Securities and
Exchange Commission (the "SEC"), or the staff thereof, applicable to the Offer.
Subject to the terms and conditions of the Offer, this Agreement and the
satisfaction (or waiver to the extent permitted by this Agreement) of the
conditions to the Offer, Purchaser shall accept all Shares validly tendered and
not withdrawn pursuant to the Offer as soon as practicable after the applicable
expiration date of the Offer and shall pay the Consideration for all such Shares
promptly after acceptance. Notwithstanding the immediately preceding sentence
and subject to the applicable rules of the SEC and the terms and conditions of
the Offer, Purchaser expressly reserves the right to delay payment for or
exchange of, as the case may be, Shares in order to comply in whole or in part
with Laws; provided that any such delay shall not extend beyond the date that is
180 days following the acceptance of the Shares for payment; provided, further,
that the Consideration for such accepted Shares shall be deposited with the
Exchange Agent or the Paying Agent, as applicable, during the period from the
date that Parent or Purchaser would otherwise have been required to pay for
Shares in accordance with the prompt payment rules of the Exchange Act to the
date of payment of the Consideration. If the Consideration is to be issued to a
person other than the person in whose name the surrendered certificate formerly
evidencing Shares is registered on the stock transfer books of the Company, it
shall be a condition of exchange or payment, as the case may be, that the
certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such exchange or payment, as
the case may be, shall have paid all transfer and other taxes required by reason
of the issuance or payment, as the case may be, of the Consideration to a person
other than the registered holder of the certificate surrendered, or shall have
established to the satisfaction of Purchaser that such taxes either have been
paid or are not applicable.
(c) If Purchaser commences a Cash Tender Offer, as promptly as
reasonably practicable after the Purchase Option Closing or Purchaser's exercise
of the Offer Option, as applicable, Purchaser shall file with the SEC a Tender
Offer Statement on Schedule TO that shall comply with the Exchange Act (together
with all amendments and supplements thereto, the "Cash Schedule TO") with
respect to the Offer. The Cash Schedule TO shall contain or shall incorporate by
reference an offer to purchase (the "Offer to Purchase") and forms of the
related letter of transmittal and any related summary advertisement (the Cash
Schedule TO, the Offer to Purchase and such other documents, together with all
supplements and amendments thereto, being referred to herein collectively as the
"Cash Offer Documents").
(d) If Purchaser commences an Exchange Offer, as promptly as reasonably
practicable after Purchaser's exercise of the Offer Option, Parent shall file
with the SEC a registration statement on Form S-4 to register the offer and sale
of shares of Parent Common Stock pursuant to the Offer (together with any
amendments or supplements thereto, the "Exchange Offer Registration Statement").
The Exchange Offer Registration Statement shall include a preliminary prospectus
containing the information required under the Exchange Act (the "Exchange Offer
Prospectus"). As promptly as reasonably practicable on the date of commencement
of the Offer, Parent and Purchaser shall (i) file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Exchange Offer Schedule TO") with respect to the Offer, which shall contain
or incorporate by reference all or part of the Exchange Offer Prospectus and the
form of the related letter of transmittal and any related summary advertisement
(the Exchange Offer Registration Statement, the Exchange Offer Schedule TO, the
Exchange Offer Prospectus and such other documents, together with any amendments
or supplements thereto, being referred to herein collectively as the "Exchange
Offer Documents") and (ii) cause the Exchange Offer Documents to be disseminated
to holders of Shares. Each of the Company and Parent shall use their reasonable
best efforts to have the Exchange Offer Registration Statement declared
effective under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), as promptly as
practicable after the filing thereof with the SEC and to keep the Exchange Offer
Registration Statement effective as long as necessary to complete the Offer;
provided, however, that Parent or Purchaser shall pay any and all SEC filing
fees incurred in connection with the Exchange Offer Documents.
(e) The Exchange Ratio, the Consideration and any other amounts payable
pursuant to the Offer or the Second-Step Merger shall be adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Common
Stock or Parent Common Stock), extraordinary cash dividends, reorganization,
recapitalization, reclassification, combination, exchange of shares or other
like change with respect to Common Stock or Parent Common Stock occurring or
having a record date on or after the date hereof and prior to the Effective
Time.
(f) Each of Parent, Purchaser and the Company agrees to correct
promptly any information provided by it for use in the Exchange Offer Documents
or the Cash Offer Documents, as the case may be (the "Offer Documents"), if and
to the extent that such information shall have become false or misleading in any
material respect and to supplement the Offer Documents to include any
information that shall become necessary to include in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Parent and Purchaser further agree to take all steps necessary
to cause the Cash Schedule TO or the Exchange Offer Schedule TO, as the case may
be (the "Schedule TO"), as so corrected to be filed with the SEC and to cause
the other Offer Documents as so corrected to be, at such time as reasonably
agreed by Parent and the Company, disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given reasonable opportunity to review and
comment on the Offer Documents prior to the filing of such documents with the
SEC or the dissemination of such documents to holders of Shares for the purpose
of ensuring consistency with this Agreement and that the Offer made to the
holders of Shares other than the Controlling Stockholders is no less favorable
to such holders than the terms contained in the Option Agreements are to the
Controlling Stockholders. Parent and Purchaser agree to provide the Company and
its counsel with any comments that Parent, Purchaser or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after receipt of such comments and shall provide the Company and its counsel an
opportunity to participate in the response of Parent or Purchaser to such
comments.
Section 3.02. Exchange of Certificates. If Purchaser effects an Exchange Offer:
(i) Exchange Agent. Parent shall deposit, or shall cause to be deposited,
with a bank or trust company designated by Parent and reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of
the holders of Shares, for exchange in accordance with this Agreement
through the Exchange Agent, certificates representing the shares of
Parent Common Stock issuable pursuant to Sections 3.01(a) (in
connection with the Exchange Offer) and 4.04 (in connection with the
Second-Step Merger) at such times as such shares of Parent Common Stock
are issuable pursuant thereto, and cash, from time to time as required
to make payments in lieu of any fractional shares pursuant to Section
3.02(a)(v) (such cash and certificates for shares of Parent Common
Stock, together with any dividends or distributions with respect
thereto to which such holders of Shares are entitled pursuant to
Section 3.02(a)(iii), being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall deliver the shares of Parent Common
Stock contemplated to be issued pursuant to Sections 3.01(a) and 4.04
out of the Exchange Fund. Except as contemplated by Section
3.02(a)(vi), the Exchange Fund shall not be used for any other purpose.
Exchange procedures for shares of Parent Common Stock issuable pursuant
to Section 3.01(a)(ii) shall be as set forth in the Exchange Offer
Documents.
(ii) Exchange Procedures for Exchange Offer Followed by Second-Step Merger.
As promptly as practicable after the Effective Time, Parent shall cause
the Exchange Agent to mail to each person who was, at the Effective
Time, a holder of record of Shares entitled to receive the Share
Consideration pursuant to Section 4.04(a): (i) a letter of transmittal
(which shall be in customary form and shall specify that delivery shall
be effected, and risk of loss and title to the certificates evidencing
such Shares (the "Certificates") shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and (ii) instructions for
use in effecting the surrender of the Certificates pursuant to such
letter of transmittal. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions
thereto, and such other documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Share Consideration, including a
certificate representing that number of whole shares of Parent Common
Stock which such holder has the right to receive in respect of the
Shares formerly represented by such Certificate (after taking into
account all Shares then held by such holder), cash in lieu of any
fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 3.02(a)(v) and any dividends or other
distributions to which such holder is entitled pursuant to Section
3.02(a)(iii), and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of Shares that is
not registered in the transfer records of the Company, the Share
Consideration, including a certificate representing the proper number
of shares of Parent Common Stock, cash in lieu of any fractional shares
of Parent Common Stock to which such holder is entitled pursuant to
Section 3.02(a)(v) and any dividends or other distributions to which
such holder is entitled pursuant to Section 3.02(a)(iii) may be issued
to a transferee if the Certificate representing such Shares is
presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 3.02(a), each Certificate shall be deemed
at all times after the Effective Time to represent only the right to
receive upon such surrender the Share Consideration, including the
certificate representing shares of Parent Common Stock, cash in lieu of
any fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 3.02(a)(v) and any dividends or other
distributions to which such holder is entitled pursuant to Section
3.02(a)(iii).
(iii) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. Each holder of a Certificate shall be entitled to receive all
dividends or other distributions declared or made after the Effective
Time with respect to the Parent Common Stock with a record date after
the Effective Time; provided, however, no dividends or other
distributions declared or made after the Effective Time with respect to
the Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and
no cash payment in lieu of any fractional shares shall be paid to any
such holder pursuant to Section 3.02(a)(v), until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of
escheat, tax or other Laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) promptly, the amount of any cash
payable with respect to a fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 3.02(a)(v) and the
amount of dividends or other distributions with a record date after the
Effective Time and theretofore paid with respect to such whole shares
of Parent Common Stock and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of Parent
Common Stock. Parent will provide the Exchange Agent with the cash
necessary to make the payments contemplated by this Section
3.02(a)(iii).
(iv) No Further Rights in Common Stock. The Share Consideration, including
all shares of Parent Common Stock issued in accordance with the terms
hereof (including any cash paid pursuant to Section 3.02(a)(iii) or
(a)(v)), shall be deemed to have been issued in full satisfaction of
all rights pertaining to such Shares.
(v) No Fractional Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any other rights of a
shareholder of Parent. Each holder of a fractional share interest shall
be paid an amount in cash (without interest) equal to the product
obtained by multiplying (i) such fractional share interest to which
such holder (after taking into account all fractional share interests
then held by such holder) would otherwise be entitled by (ii) the
Average Parent Stock Price. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of
fractional share interests, the Exchange Agent shall so notify Parent,
and Parent shall deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of
fractional share interests subject to and in accordance with the terms
of Section 3.02(a)(ii) and (a)(iii).
(vi) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of the Common Stock for six months
after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Common Stock who have not theretofore complied with
Articles III and IV shall thereafter look only to Parent for the shares
of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which they are entitled pursuant to Section 3.02(a)(v)
and any dividends or other distributions with respect to Parent Common
Stock to which they are entitled pursuant to Section 3.02(a)(iii). Any
portion of the Exchange Fund remaining unclaimed by holders of Shares
as of a date which is immediately prior to such time as such amounts
would otherwise escheat to or become property of any government entity
shall, to the extent permitted by Law, become the property of Parent
free and clear of any claims or interest of any person previously
entitled thereto.
(vii) No Liability. None of the Exchange Agent, Parent, Purchaser or the
Surviving Corporation shall be liable to any holder of Shares for any
such Shares (or dividends or distributions with respect thereto), or
cash delivered to a public official pursuant to any abandoned property,
escheat or similar Law.
(viii) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a
bond, in such reasonable amount as the Surviving Corporation may
direct, as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall issue in exchange
for such lost, stolen or destroyed Certificate, the Share
Consideration, including the shares of Parent Common Stock, any cash in
lieu of fractional shares of Parent Common Stock to which the holders
thereof are entitled pursuant to Section 3.02(a)(v) and any dividends
or other distributions to which the holders thereof are entitled
pursuant to Section 3.02(a)(iii).
(b) If Purchaser effects a Cash Tender Offer:
(i) Paying Agent. Parent shall deposit, or shall cause to be deposited,
with a bank or trust company designated by Parent and reasonably
satisfactory to the Company (the "Paying Agent"), such amount of funds
as are payable pursuant to the Cash Tender Offer. Such funds shall be
invested by the Paying Agent and shall be paid in accordance with
Section 3.01(a)(i) or 4.04(a), in each case as directed by Parent.
(ii) Exchange Procedures for Cash Tender Offer Followed by Second-Step
Merger. As promptly as practicable after the Effective Time, Parent
shall cause to be mailed to each person who was, at the Effective Time,
a holder of record of Shares entitled to receive the Cash Consideration
pursuant to Section 4.04(a): (i) a letter of transmittal (which shall
be in customary form and shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and (ii)
instructions for use in effecting the surrender of the Certificates
pursuant to such letter of transmittal. Upon surrender to the Paying
Agent of a Certificate, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions
thereto, and such other documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Cash Consideration for each Share
formerly evidenced by such Certificate, and such Certificate shall then
be canceled. No interest shall accrue or be paid on the Cash
Consideration payable upon the surrender of any Certificate for the
benefit of the holder of such Certificate. If the payment equal to the
Cash Consideration is to be made to a person other than the person in
whose name the surrendered certificate formerly evidencing Shares is
registered on the stock transfer books of the Company, it shall be a
condition of payment that the certificate so surrendered shall be
endorsed properly or otherwise be in proper form for transfer and that
the person requesting such payment shall have paid all transfer and
other similar taxes required by reason of the payment of the Cash
Consideration to a person other than the registered holder of the
certificate surrendered, or shall have established to the satisfaction
of Parent or Purchaser that such taxes either have been paid or are not
applicable.
(iii) Distributions with Respect to Unpaid Cash Amounts. Any portion of the
funds made available to the Paying Agent that remains undistributed to
the holders of the Common Stock for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of the
Common Stock who have not theretofore complied with Articles III and IV
shall thereafter look only to Parent for such funds. Any portion of the
such funds remaining unclaimed by holders of Shares as of a date which
is immediately prior to such time as such amounts would otherwise
escheat to or become property of any government entity shall, to the
extent permitted by Law, become the property of Parent free and clear
of any claims or interest of any person previously entitled thereto.
Section 3.03. Company Action. The Company hereby approves of and consents to the
Offer and represents and warrants that the Company Board, at a meeting duly
called and held on October 27, 2003, has unanimously (i) determined that this
Agreement and the Option Agreements and the transactions contemplated hereby
(including the Offer and the Merger) and thereby (collectively, the
"Transactions") are fair to, and in the best interests of, the holders of
Shares, (ii) approved, adopted and declared advisable this Agreement, the Option
Agreements and the Transactions (such approval and adoption having been made in
accordance with the DGCL) and (iii) subject to Section 9.02, resolved to
recommend that the holders of Shares accept the Offer and tender Shares pursuant
to the Offer, and, if required under the DGCL, adopt this Agreement. Subject to
Section 9.02, the Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Company Board described in this Section
3.03(a). Subject to Section 9.02, neither the Company Board nor any committee
thereof shall (i) withhold, withdraw, amend, change or modify any approval or
recommendation of the Transactions in any manner adverse to Purchaser or Parent,
(ii) approve or recommend, or propose to approve or recommend, any other merger
or other offer to the stockholders of the Company or (iii) enter into any
agreement with respect to any other merger or other offer to the stockholders of
the Company. Notwithstanding the foregoing, in the event that the Company Board
determines in good faith that it is required to do so by its fiduciary duties
under Law after consultation with outside legal counsel, the Company Board may
withhold, withdraw, amend, change or modify its approval or recommendation of
the Offer or the Merger. The Company represents and warrants that it has been
advised by its directors and executive officers that they intend, as of the date
of this Agreement, to tender all Shares beneficially owned by them to Purchaser
pursuant to the Offer.
(b) The Company shall promptly furnish Parent and Purchaser with
mailing labels containing the names and addresses of all record holders of
Shares and with security position listings of Shares held in stock depositories,
each as of the most recent date reasonably available, together with all other
available listings and computer files containing names, addresses and security
position listings of record holders and beneficial owners of Shares. The Company
shall promptly furnish Parent and Purchaser with such additional information,
including updated listings and computer files of stockholders, mailing labels
and security position listings, and such other assistance in disseminating the
Offer Documents to holders of Shares as Parent or Purchaser may reasonably
request. Subject to the requirements of Law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Purchaser shall (i) hold in
confidence the information contained in such labels, listings and files and (ii)
use such information only in connection with the Transactions and, if this
Agreement shall be terminated in accordance with Section 11.01, Parent shall, at
its option, either deliver to the Company all copies of such information then in
its or Purchaser's possession or destroy such information.
Section 3.04. Directors. Effective upon the earlier of the Purchase Option
Closing and the acceptance for exchange by Purchaser of Shares pursuant to the
Offer, Parent shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Company Board that equals the
product of (i) the total number of directors on the Company Board (giving effect
to the election of any additional directors pursuant to this Section 3.04) and
(ii) the percentage of the total number of shares of Company Common Stock
outstanding that are beneficially owned by Parent and/or Purchaser (including
shares of Company Common Stock accepted for exchange), and the Company shall
promptly take all action necessary to cause Parent's designees to be elected or
appointed to the Company Board, including increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such time, the
Company shall also use its reasonable best efforts to cause individuals
designated by Parent to constitute the number of members, rounded up to the next
whole number, on (y) each committee of the Company Board and (z) the board of
directors of its Subsidiary (and each committee thereof) that represents the
same percentage as such individuals represent on the Company Board, in each case
only to the extent permitted by Law. Notwithstanding the provisions of this
Section 3.04, the parties hereto shall use their respective reasonable best
efforts to ensure that at least two of the members of the Company Board who were
directors of the Company prior to the date described in the first sentence of
this Section 3.04(a) (the "Continuing Directors") shall continue as directors of
the Company until the Effective Time; provided that if there shall be in office
fewer than two Continuing Directors for any reason, the Company Board shall
cause a person designated by the remaining Continuing Director or, in the
absence of action by the Continuing Director, by the Stockholders'
Representative to fill such vacancy who shall be deemed to be a Continuing
Director for all purposes of this Agreement, or if no Continuing Directors then
remain, the other directors of the Company then in office shall designate two
persons to fill such vacancies who will not be officers or employees or
affiliates of the Company, Parent or Purchaser or any of their respective
subsidiaries and such persons shall be deemed to be Continuing Directors for all
purposes of this Agreement.
(b) Following the election or appointment of Parent's designees
pursuant to Section 3.04(a) and prior to the Effective Time, any amendment of
this Agreement or the Certificate of Incorporation or By-laws of the Company,
any termination of this Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or Purchaser or any waiver of any of the Company's rights hereunder,
shall require the concurrence of a majority of the directors of the Company then
in office who neither were designated by Parent nor (except for ▇▇▇▇▇▇) are
employees of the Company or its Subsidiary.
Article IV
THE MERGER
Section 4.01. The Merger. Upon the terms and subject to the conditions set forth
in Article X and in accordance with the DGCL, in the event the Offer is
consummated, at the Effective Time, Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
Section 4.02. Effective Time; Closing. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article X
and, if applicable, the satisfaction of the conditions set forth in Annex A (to
the extent applicable to the Merger), the parties hereto shall cause the Merger
to be consummated by filing this Agreement or a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware,
in such form as is required by, and executed in accordance with, the relevant
provisions of the DGCL (the date and time of such filing of the Certificate of
Merger being the "Effective Time"). Immediately prior to such filing of the
Certificate of Merger, a closing shall be held at the offices of Shearman &
Sterling LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other
place as the parties shall agree, for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in Article X.
Section 4.03. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of the Company
and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of each of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
Section 4.04. Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Purchaser, the Company or the
holders of any of the securities described in subparagraph (a), (b) or (c)
below, the following shall take place:
(a) each Share issued and outstanding immediately prior to the Effective
Time (other than any Shares to be canceled pursuant to Section 4.04(b)
and any Dissenting Shares (as defined in Section 4.10(a))) shall be
canceled and shall be converted automatically, subject to Section 3.02,
into the right to receive (i) if the Exchange Offer was consummated,
the Share Consideration or (ii) if the Cash Tender Offer was
consummated, the Cash Consideration, payable in each case without
interest upon surrender, in the manner provided in Section 3.02, of the
certificate that formerly evidenced such Share;
(b) each Share held in the treasury of the Company and each Share owned by
Purchaser, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall
be canceled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) each share of common stock, par value $0.01 per share, of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
Section 4.05. Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of Shares thereafter on the records of the Company. From and after
the Effective Time, the holders of Certificates representing Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided in this Agreement or by
Law. If Purchaser effects an Exchange Offer, any Certificates presented to the
Exchange Agent or Parent on or after the Effective Time for any reason shall be
converted into the Share Consideration, including shares of Parent Common Stock,
any cash in lieu of fractional shares of Parent Common Stock to which the
holders thereof are entitled pursuant to Section 3.02(a)(v) and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 3.02(a)(iii).
Section 4.06. Certificate of Incorporation; By-laws. (a) At the Effective Time,
the Certificate of Incorporation of Purchaser, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation; provided, however, that, at the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read as follows: "The name of the corporation is Rubicon Medical Corporation".
(b) At the Effective Time, the By-laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation.
Section 4.07. Directors and Officers. The directors of Purchaser immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal.
Section 4.08. Company Stockholders' Meeting. If required by Law in order to
consummate the Merger following the consummation of the Offer, the Company,
acting through the Company Board, shall, in accordance with Law and the
Company's Certificate of Incorporation and By-laws, duly call, give notice of,
convene and hold an annual or special meeting of the holders of the Common Stock
(the "Company Stockholders' Meeting") as promptly as reasonably practicable
after the acceptance of Shares pursuant to the Offer for the purpose of voting
on this Agreement and the Merger. At the Company Stockholders' Meeting, Parent
and Purchaser shall cause all Shares then owned by them and their subsidiaries
to be voted in favor of the adoption of this Agreement. Notwithstanding the
foregoing, Parent may require the Company to prepare and distribute to the
stockholders of the Company an information statement that complies with
Regulation 14C of the Exchange Act in lieu of calling, giving notice of,
convening and holding the Company Stockholders' Meeting, in which case the
Company shall promptly prepare and distribute such information statement and
otherwise, to the extent applicable, comply with its obligations under this
Section 4.08(a).
(b) Notwithstanding Section 4.08(a), in the event that Purchaser shall
acquire at least 90% of the then outstanding Shares, the parties shall take all
necessary and appropriate action to cause the Merger to become effective in
accordance with Section 253 of the DGCL, as promptly as reasonably practicable
after such acquisition, without a meeting of the stockholders of the Company.
Section 4.09. Preparation of Merger Registration Statement and Merger Proxy
Statement/Prospectus. In the event the Exchange Offer is effected, if required
by Law, promptly after the acceptance for exchange of Shares pursuant to the
Exchange Offer, Parent and the Company shall prepare, and Parent shall file with
the SEC, a registration statement on Form S-4 or a post-effective amendment to
the Exchange Offer Registration Statement, as appropriate, to register the offer
and sale of shares of Parent Common Stock pursuant to the Merger (together with
any amendments or supplements thereto, the "Merger Registration Statement"),
which shall include the proxy statement/prospectus to be sent to the
stockholders of the Company relating to the Company Stockholders' Meeting or any
information statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, being
referred to herein as the "Merger Proxy Statement/Prospectus"). Each of the
Company and Parent shall use reasonable best efforts to have the Merger
Registration Statement declared effective under the Securities Act as promptly
as reasonably practicable after the filing thereof and to keep the Merger
Registration Statement effective as long as is necessary to consummate the
Merger. The Company shall mail the Merger Proxy Statement/Prospectus to its
stockholders as promptly as reasonably practicable after the Merger Registration
Statement is declared effective under the Securities Act and, if necessary,
after the Merger Proxy Statement/Prospectus shall have been so mailed, promptly
circulate amended, supplemental or supplemented proxy material, and, if required
in connection therewith, resolicit proxies. Parent shall take any action (other
than applications to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities or Blue Sky Laws in connection with
the issuance of Parent Common Stock in the Merger. No amendment or supplement to
the Merger Proxy Statement/Prospectus will be made by the Company or Parent
without the approval of the other party, which will not be unreasonably withheld
or delayed. Each party shall advise the other party, promptly after it receives
notice thereof, of the time when the Merger Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of Parent 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 Merger Proxy Statement/Prospectus or
comments thereon and responses thereto or requests by the SEC for additional
information.
Section 4.10. Appraisal Rights/Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary and to the extent available under
the DGCL, Shares that are outstanding immediately prior to the Effective Time
and that are held by stockholders who shall have neither voted in favor of the
Merger nor consented thereto in writing and who shall have demanded properly in
writing appraisal for such Shares in accordance with Section 262 of the DGCL
(collectively, the "Dissenting Shares") shall not be converted into, or
represent the right to receive, the Consideration. Such stockholders shall be
entitled to receive payment of the appraised value of such Shares held by them
in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
Shares under such Section 262 shall thereupon be deemed to have been converted
into, and to have become exchangeable for, as of the Effective Time, the right
to receive the Consideration, without any interest thereon, upon surrender, in
the manner provided in Section 3.02, of the certificate or certificates that
formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
Article V
COMPANY STOCK OPTIONS; AFFILIATES; EARN-OUT PAYMENTS
Section 5.01. Company Stock Options(a) . At or prior to the Effective Time, the
Company shall take all necessary action, including using its reasonable best
efforts to obtain the consent of the individual option holders, if necessary, to
(i) terminate the Company Stock Option Plan and (ii) cancel, at the Effective
Time, each outstanding Company Stock Option that is outstanding and unexercised,
whether or not vested or exercisable, as of such date. Parent acknowledges that
in accordance with the terms of the Company Stock Option Plan, each outstanding
Company Stock Option shall vest immediately prior to any "Change of Control" (as
defined in the Company Stock Option Plan) and that participating individual
option holders may provide the Company with an advance directive for the
exercise of such vested options in the event of a "Change of Control" caused by
any of the Transactions in order to receive the consideration provided for in
the Company Stock Option Plan upon the consummation of such Transaction. Each
holder of a Company Stock Option that is outstanding and unexercised at the
Effective Time and that has an exercise price per Share of Company Common Stock
that is less than the Consideration (excluding any rights to receive Earn-out
Payments) shall be entitled (subject to the provisions of this Section 5.01) to
be paid by the Surviving Corporation, with respect to each Share of Company
Common Stock that could have been purchased under such Company Stock Option, an
amount in cash (subject to any applicable withholding taxes) equal to the
excess, if any, of the Consideration (excluding any rights to receive Earn-out
Payments) over the applicable per share exercise price of such Company Stock
Option (the "Option Payment"). The Surviving Corporation shall make such Option
Payment as promptly as practicable after the Effective Time with respect to any
outstanding and fully vested Company Stock Options that have an exercise price
that is less than the Consideration (excluding any rights to receive Earn-out
Payments) as of such date. Any such payment shall be subject to all applicable
federal, state and local tax withholding requirements. The Company shall take
all necessary action to approve the disposition of the Company Stock Options in
connection with the Transactions to the extent necessary to exempt such
dispositions and acquisitions under Rule 16b-3 of the Exchange Act.
Section 5.02. Affiliates. Notwithstanding anything to the contrary herein, no
Share Consideration shall be delivered to a person who may be deemed an
"affiliate" of the Company in accordance with Section 9.04 for purposes of Rule
145 under the Securities Act until such person has executed and delivered to
Parent an executed copy of the affiliate letter contemplated in Section 9.04.
Section 5.03. Milestone 2 Earn-out Payments. (a) Upon the achievement of
Milestone 2 prior to the expiry of the Earn-out Period, Parent shall promptly
pay or cause to be paid to each of the Controlling Stockholders and other
holders of Common Stock whose shares were purchased pursuant to an Option or the
Offer or converted into the right to receive Consideration pursuant to Section
4.04 (the "Earn-out Recipients") either, at the option of Parent, (i) a number
of shares of Parent Common Stock having a value (based on the Average Parent
Stock Price prior to the date of payment) equal to $1.00 multiplied by the
number of shares of Common Stock so purchased or converted or (ii) an amount of
cash equal to the number of shares of Common Stock so purchased or converted
multiplied by $1.00 (such amount calculated pursuant to either clause (i) or
(ii), the "Milestone 2 Earn-out Payment").
(b) Parent shall not take any action with the intention of prohibiting
or delaying the achievement of Milestone 2; provided, however, that nothing
shall prevent Parent from conducting its business as it sees fit at any time,
and Parent shall not be bound to specifically focus on developing, marketing or
selling any particular product, including any Company Product. The Former
Stockholders Committee shall monitor progress towards the achievement of
Milestone 2 and shall have the right to receive quarterly reports from Parent
relating to the calculation of Net Sales in the form and substance Parent
customarily prepares such reports in the ordinary course of business.
(c) Parent hereby agrees to keep, in accordance with its usual and
customary practice, books of account and records of Net Sales for each fiscal
quarter of Parent during the Earn-out Period, and Parent further grants the
Former Stockholders Committee, at the Former Stockholders Committee's expense
(subject to the penultimate sentence of this Section 5.03(c)), the right,
exercisable once during each 60 day period following the delivery to the Company
by Parent of an annual report of Net Sales for the fiscal year then ended, to
examine and to have a third party reasonably acceptable to Parent examine,
subject to the execution by such third party of a confidentiality agreement in
form and substance satisfactory to Parent, such books and records at the
location of such records on prior written notice of at least 10 business days.
If any audit reveals a discrepancy of five percent (5%) or more compared with
reported Net Sales by the Company to the Former Stockholders Committee, Parent
shall pay for the cost of such audit. Nothing in this Section 5.03 shall be
deemed to require Parent to keep any books of account or records other than
those which it maintains in the ordinary course of business, to retain any such
books of account or records for any period in excess of the period for which
Parent retains such records in the ordinary course of business, or to provide
access to any books and records of the Parent other than those specified above.
Section 5.04. Milestone 3 Earn-out Payments. (a) As additional consideration to
the Earn-out Recipients, upon the later to occur of (i) the achievement of
Milestone 3 or (ii) the Effective Time, provided that Milestone 3 has been
achieved, Parent shall pay or cause to be paid to each Earn-out Recipient as
soon as practicable thereafter, either (x) a number of shares of Parent Common
Stock having a value (based on the Average Parent Stock Price prior to the date
of payment) equal to the number of shares of Common Stock purchased by Parent or
Purchaser from such Earn-out Recipient pursuant to the Option or the Offer or
converted into the right to receive Consideration pursuant to Section 4.04
multiplied by $0.50 or (y) an amount of cash equal to the number of shares of
Common Stock purchased by Parent or Purchaser from such Earn-out Recipient
pursuant to the Option or the Offer or converted into the right to receive
Consideration pursuant to Section 4.04 multiplied by $0.50 (such payments
calculated pursuant to either clause (x) or (y), the "Milestone 3 Earn-out
Payment"). Parent shall have the right to determine whether the Milestone 3
Earn-out Payment takes the form provided for in (x) or (y), but shall provide
the same form of compensation to all Earn-out Recipients. Notwithstanding the
foregoing, to the extent the achievement of Milestone 3 occurs before Parent has
exercised an Option, upon exercise of an Option, the Cash Consideration or
Exchange Ratio, as applicable, shall include the amount of the Milestone 3
Earn-out Payment owing pursuant to this Section 5.04.
(b) For each of the tests referred to in Milestone 3, all of the
devices that are being tested in such test shall be tested by each Disinterested
Physician in the same test fixtures/models during the same testing session. The
Company and Parent shall agree on which models will be used on or before January
1, 2004, and the Company shall be granted reasonable access to those models for
the purpose of preparing its devices for satisfaction of Milestone 3. The
Company and Parent also agree as follows:
(i) On or before December 15, 2003, Parent and either the Company, if the
Disinterested Physicians are selected prior to the exercise of an
Option, or the Former Stockholders Committee, if the Disinterested
Physicians are selected after the exercise of an Option, shall by
mutual agreement select the Disinterested Physicians. If Parent and
either the Company or the Former Stockholders Committee, as the case
may be, are unable to agree on the Disinterested Physicians by December
15, 2003, Parent shall appoint one of the Disinterested Physicians, the
Company or the Former Stockholders Committee, as the case may be, shall
appoint another of the Disinterested Physicians and such Disinterested
Physicians designated by Parent and the Company or the Former
Stockholders Committee, as the case may be, shall select by mutual
agreement, within 10 business days of their selection, the third
Disinterested Physician who is not affiliated with either the Company
or Parent, including as a medical director, consultant or employee.
(ii) On or before January 15, 2004, Parent and the Company or the Former
Stockholders Committee, as the case may be, shall agree on the method
of testing to be used, the fixtures and models to be used in the
testing, the Comparative Devices to be used in the testing and the
location of testing (such determinations, the "Testing Parameters");
provided, that the test of the Clot Retrieving Device in the animal
model shall be performed at the ▇▇▇▇▇▇ Neurological Institute in
Phoenix, Arizona or another location mutually acceptable to Parent and
the Company or the Former Stockholders Committee, as the case may be,
and the test of the Clot Retrieving Device in the vascular bench model
shall be performed at a neutral third party facility. If Parent and the
Company or the Former Stockholders Committee, as the case may be, are
unable to agree on the Testing Parameters by January 15, 2004, then the
Disinterested Physicians shall select, by majority vote, on or before
March 1, 2004, between each item of the Testing Parameters proposed by
Parent and each item of the Testing Parameters proposed by the Company
or the Former Stockholders Committee, as the case may be. When Parent
and the Company (or the Former Stockholders Committee) or the
Disinterested Physicians, as the case may be, determine the models to
be used in the testing, the same models shall be made available to the
Company, the Former Stockholders Committee (if applicable) and Parent
for testing at reasonable times and locations. After coordinating with
the Disinterested Physicians and upon not fewer than 60 days advance
notice, the Company or the Former Stockholders Committee, as the case
may be, shall notify Parent of the date, time, place, and parameters of
any scheduled test.
(iii) Immediately following each test, each of the Disinterested Physicians
shall prepare a report summarizing the test, stating such Disinterested
Physician's opinion as to the superiority of the Clot Retrieving Device
over the Comparative Devices in each of the following categories: ease
of use, safety and efficacy, and, if necessary, identifying in such
Disinterested Physician's independent opinion any commercially
reasonable and technically feasible additional developments to the Clot
Retrieving Device that would render the Clot Retrieving Device superior
to the Comparative Devices. The Company or the Former Stockholders
Committee, as the case may be, may schedule any number of tests and
retests on or before September 30, 2004 and any number of retests on or
before December 31, 2004.
(iv) The costs and expenses of the Disinterested Physicians shall be borne
equally by Parent and the Company; provided that Parent shall not be
obligated to contribute any monies for more than an aggregate of five
tests and retests.
Section 5.05. Disputes. In the event that Parent and the Company are unable to
reach agreement with respect to any material issue with respect to the
achievement of Milestone 2 or Milestone 3, the appropriate senior officer of
Parent with knowledge of the embolic protection business of Parent and the
Stockholders' Representative shall consult with each other and attempt to
resolve such issue within 30 calendar days. Any issue that has not been resolved
in accordance with this Section 5.05 shall be resolved, if applicable, in
accordance with Section 12.08.
Article VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule (the "Company
Disclosure Schedule"), which has been prepared and delivered by the Company to
Parent and Purchaser prior to the execution and delivery of this Agreement, the
Company hereby represents and warrants to Parent and Purchaser that:
Section 6.01. Organization and Qualification; Subsidiaries. (a) Each of the
Company and Rubicon Medical, Inc., a Utah corporation (the "Subsidiary"), is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted. Each
of the Company and its Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not
prevent or materially delay consummation of the Transactions or otherwise
prevent or materially delay the Company from performing its obligations under
this Agreement and would not have a Company Material Adverse Effect.
(b) The Subsidiary is the only subsidiary of the Company and the
Company owns all of the outstanding capital stock of the Subsidiary. The Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
Section 6.02. Certificate of Incorporation and By-laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Certificate of
Incorporation and the By-laws, each as amended to date, of the Company and the
Subsidiary. Such Certificates of Incorporation and By-laws are in full force and
effect. Neither the Company nor its Subsidiary is in material violation of any
of the provisions of its Certificate of Incorporation or By-laws.
Section 6.03. Capitalization. The authorized capital stock of the Company
consists of (i) 100,000,000 shares of Common Stock and (ii) 5,000,000 shares of
preferred stock, par value $0.001 per share ("Company Preferred Stock"). As of
the date of this Agreement, (i) 54,773,334 shares of Common Stock are issued and
outstanding (excluding Common Stock issued pursuant to the Company Stock Option
Plan), all of which are validly issued, fully paid and nonassessable, (ii) no
shares of Common Stock are held in the treasury of the Company and (iii)
6,000,000 shares of Common Stock have been issued pursuant to, or are reserved
for future issuance pursuant to, outstanding employee stock options or stock
incentive rights granted pursuant to the Company Stock Option Plan. Other than
the Preferred Stock issued to Purchaser on the date hereof pursuant to Section
2.01, as of the date of this Agreement, no shares of Company Preferred Stock are
issued and outstanding. Except for the Option or as set forth in this Section
6.03, there are no options, warrants or other rights, agreements, arrangements
or commitments of any character relating to the issued or unissued capital stock
of the Company or its Subsidiary or obligating the Company or its Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or its Subsidiary. The Company has made available to Parent accurate and
complete copies of all stock option plans pursuant to which the Company has
granted such Company Stock Options that are currently outstanding. All shares of
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual obligations of the Company or its Subsidiary to
repurchase, redeem or otherwise acquire any shares of Common Stock or any
capital stock of its Subsidiary or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, its Subsidiary or
any other person. Except as set forth in Section 6.03(a) of the Company
Disclosure Schedule, there are no commitments or agreements of any character to
which the Company is bound obligating the Company to accelerate the vesting of
any Company Stock Option as a result of the Merger. All outstanding shares of
Common Stock, all outstanding Company Stock Options, and all outstanding shares
of capital stock of the Subsidiary have been issued and granted in material
compliance with (y) all applicable securities laws and other Laws and (z) all
requirements set forth in applicable contracts.
(b) Except as set forth in Section 6.03(b) of the Company Disclosure
Schedule, each outstanding share of capital stock of the Subsidiary is duly
authorized, validly issued, fully paid and nonassessable, and each such share is
owned by the Company free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, rights of first offer, agreements,
limitations on the Company's or its Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever.
(c) The shares of Preferred Stock issued pursuant to Article II (i)
have been duly authorized, validly issued, are fully paid and non-assessable and
are not subject to any Liens or preemptive rights created by statute, the
Company's Certificate of Incorporation or By-laws or any agreement to which the
Company is a party or is bound and (ii) are exempt from the registration
requirements of the Securities Act and registered or exempt from registration
under applicable state securities or "blue sky" laws ("Blue Sky Laws").
Section 6.04. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the holders of a majority of the then-outstanding shares of
Common Stock, and the filing and recordation of appropriate merger documents as
required by the DGCL). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Purchaser, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditor rights and general equitable and public policy principles.
The Company does not have a class of voting stock that is (i) listed on a
national securities exchange, (ii) authorized for quotation on the NASDAQ Stock
Market or (iii) held of record by more than 2,000 stockholders.
Section 6.05. No Conflict; Required Filings and Consents. (a) The execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the Certificate
of Incorporation or By-laws or any equivalent organizational documents of the
Company or its Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 6.05(b) have been obtained
and all filings and obligations described in Section 6.05(b) have been made,
conflict with or violate any United States or non-United States statute, law,
ordinance, regulation, rule, code, executive order, injunction, judgment, decree
or other order ("Law") applicable to the Company or its Subsidiary or by which
any property or asset of the Company or its Subsidiary is bound or affected or
(iii) result in any breach of or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or its Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clause (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or materially delay consummation of the Merger or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement and would not have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any United States federal, state, county or local or non-United States
government, governmental, regulatory or administrative authority, agency,
instrumentality or commission or any court, tribunal, or judicial or arbitral
body (a "Governmental Authority"), except (i) for applicable requirements, if
any, of the Securities Act, the Exchange Act, Blue Sky Laws, state takeover
laws, non-U.S. antitrust laws, filing and recordation of appropriate merger
documents as required by the DGCL and the pre-merger notification requirements
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or materially delay consummation of the Transactions, or otherwise
prevent or materially delay the Company from performing its obligations under
this Agreement, and would not have a Company Material Adverse Effect.
Section 6.06. Permits; Compliance. (a) Each of the Company and its Subsidiary is
in possession of all registrations, franchises, grants, authorizations
(including marketing authorizations), licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Authority necessary for each of the Company or its Subsidiary to manufacture,
market, sell, or distribute the Company Products (as defined in Section
6.06(b)), or to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits would not prevent or materially delay consummation of the Transactions
or otherwise prevent or materially delay the Company from performing its
obligations under this Agreement or would not have a Company Material Adverse
Effect. No suspension or cancellation of any of the Company Permits is pending
or, to the knowledge of the Company, threatened. Neither the Company nor its
Subsidiary is in conflict with, or in default, breach or violation of, in any
material respect, (i) any Law applicable to the Company or its Subsidiary or by
which any property or asset of the Company or its Subsidiary is bound or
affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, Company Permit, franchise or other instrument or obligation to
which the Company or its Subsidiary is a party or by which the Company or its
Subsidiary or any property or asset of the Company or its Subsidiary is bound.
(b) (i) With respect to the products of the Company and its Subsidiary
and, to the extent applicable, products under development (collectively, the
"Company Products"), (A) the Company or its Subsidiary has obtained, unless
otherwise exempt, all necessary and applicable approvals for the operation of
its business as currently conducted, clearances, authorizations, licenses and
registrations required by United States or foreign governments or government
agencies, to permit the design, development, pre-clinical and clinical testing,
manufacture, labeling, sale, distribution and promotion of the Company Products
(the "Activities to Date") with respect to each Company Product (collectively,
the "Company Licenses"); (B) the Company and its Subsidiary are in compliance in
all material respects with all terms and conditions of each Company License and
with all Law pertaining to the Activities to Date with respect to each Company
Product which is not required to be the subject of a Company License; (C) the
Company and its Subsidiary are in compliance in all material respects with all
Laws regarding registration, license, certification for each site at which a
Company Product is manufactured, labeled, sold or distributed; and (D) to the
extent any Company Product has been exported from the United States, the Company
has exported such Company Product in compliance in all material respects with
Law; (ii) all manufacturing operations relating to a Company Product performed
by and, with respect to manufacturing operations relating to a Company Product
performed on behalf of the Company have been and are being conducted in all
material respects in compliance with applicable current good manufacturing
practices and regulations issued by the U.S. Food and Drug Administration (the
"FDA") and, to the extent applicable, counterpart regulations in the European
Union and all other countries where compliance is required; (iii) all
non-clinical and clinical laboratory studies of Company Products under
development, sponsored by the Company and intended to be used to support
regulatory clearance or approval, have been and are being conducted in
compliance in all material respects with the current good laboratory practice
regulations of Governmental Authorities in the United States and, to the extent
applicable, counterpart regulations in the European Union and all other
countries; and (iv) the Company and its Subsidiary are in compliance in all
material respects with all applicable reporting requirements for all Company
Licenses or plant registrations described in clause (i) above, including
applicable adverse event reporting requirements in the United States and outside
of the United States under Law.
(c) To the knowledge of the Company, no filing or submission to the FDA
or any other Governmental Authority with regard to the Company Products that is
the basis for any approval or clearance contains any material omission or
materially false information.
(d) The Company is in material compliance with all FDA and non-United
States equivalent agencies and similar state and local Laws of Governmental
Agencies applicable to the maintenance, compilation and filing of reports,
including medical device reports, with regard to the Company Products. Section
6.06(d) of the Company Disclosure Schedule sets forth a list of all applicable
adverse event reports related to the Company Products, including any Medical
Device Reports (as defined in 21 CFR 803).
(e) The Company has not received any written notice or other written
communication from the FDA or any other Governmental Authority (i) contesting
the pre-market clearance or approval of, the uses of or the labeling and
promotion of any of the Company Products or (ii) otherwise alleging any
violation of any Laws by the Company.
Section 6.07. SEC Filings; Financial Statements. (a) The Company has filed all
forms, reports and documents required to be filed by it with the SEC since
December 7, 2000, and has heretofore delivered to Parent, in the form filed with
the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended December
7, 2001 and 2002, respectively, (ii) its Quarterly Reports on Form 10-Q for the
periods ended March 31, 2003 and June 30, 2003, (iii) all other forms, reports
and other registration statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by the Company with the SEC since
December 7, 2000 (the forms, reports and other documents referred to in clauses
(i), (ii) and (iii) above being, collectively, the "Company SEC Reports"). The
Company SEC Reports (y) were prepared in all material respects in accordance
with either the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations promulgated thereunder, and (z) did
not, at the time they were filed, or, if amended, as of the date of such
amendment, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The Subsidiary is not required to file any form, report or
other document with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and each fairly presents, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company and its consolidated Subsidiary as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which
would not have had, and would not have, a Company Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its Subsidiary as at December 31, 2002, including the
notes thereto (the "2002 Balance Sheet"), neither the Company nor its Subsidiary
has any liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise), except for liabilities and obligations, incurred in
the ordinary course of business consistent with past practice since the 2002
Balance Sheet, which would not prevent or materially delay consummation of the
Merger or otherwise prevent or materially delay the Company from performing its
obligations under this Agreement and would not have a Company Material Adverse
Effect.
(d) Except as set forth in Section 6.07(d) of the Company Disclosure
Schedule, the Company has heretofore furnished to Parent complete and correct
copies of all amendments and modifications that have not been filed by the
Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.
Section 6.08. Absence of Certain Changes or Events. (a) From December 31, 2002
to the date of this Agreement, except as expressly contemplated by this
Agreement, (i) the Company and its Subsidiary have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and
(ii) neither the Company nor its Subsidiary has taken any action that, if taken
after the date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 8.01.
(b) From December 31, 2002, except as expressly contemplated by this
Agreement, there has not been any Company Material Adverse Effect.
Section 6.09. Absence of Litigation. There is no litigation, suit, claim,
action, proceeding or investigation (an "Action") pending or, to the knowledge
of the Company, threatened against the Company or its Subsidiary, or any
property or asset of the Company or its Subsidiary, before any Governmental
Authority. Neither the Company nor its Subsidiary nor any property or asset of
the Company or its Subsidiary is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement with, or, to the
knowledge of the Company, continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority.
Section 6.10. Employee Benefit Plans. Section 6.10(a) of the Company Disclosure
Schedule lists (i) all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement, change
of control, retention, severance or other benefit plans, programs or
arrangements, and all employment, termination, service, severance or other
contracts or agreements to which the Company or its Subsidiary is a party, with
respect to which the Company or its Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or its Subsidiary for the
benefit of any current or former employee, officer, independent contractor or
director of the Company or its Subsidiary, (ii) each employee benefit plan for
which the Company or its Subsidiary could incur liability in the event such plan
has been or were to be terminated, and (iii) any contracts, arrangements or
understandings between the Company or its Subsidiary and any current or former
officer, employee, independent contractor or director of the Company or its
Subsidiary, including any contracts, arrangements or understandings relating in
any way to a sale of the Company or its Subsidiary (collectively, the "Plans").
Each Plan is in writing and the Company has furnished to Parent a true and
complete copy of each Plan and has delivered to Parent a true and complete copy
of each document, if any, prepared in connection with each such Plan, including
(i) a copy of each trust or other funding arrangement, (ii) each latest summary
plan description and summary of material modifications, if any, (iii) the three
most recently filed Internal Revenue Service ("IRS") Forms 5500, (iv) the most
recently received IRS determination letter for each such Plan, and (v) the three
most recently prepared financial statements in connection with each such Plan,
if any. Neither the Company nor its Subsidiary has any express or implied
commitment (i) to create, incur liability with respect to or cause to exist any
other employee benefit plan, program or arrangement, (ii) to enter into any
contract or agreement to provide compensation or benefits to any individual, or
(iii) to modify, change or terminate any Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) The Company has not now or at any time maintained, sponsored or
contributed to (i) a multiemployer plan (within the meaning of Section 3(37) or
4001(a)(3) of ERISA) or (ii) a single employer pension plan (within the meaning
of Section 4001(a)(15) of ERISA) for which the Company or its Subsidiary could
incur liability under Section 4063 or 4064 of ERISA. None of the Plans is
subject to Title IV of ERISA. Except as disclosed on Section 6.10(b) of the
Company Disclosure Schedule, none of the Plans (i) provides for the payment of
separation, severance, termination or similar-type benefits to any person, (ii)
obligates the Company or its Subsidiary to pay separation, severance,
termination or similar-type benefits solely or partially in connection with any
transaction contemplated by this Agreement, or (iii) obligates the Company or
its Subsidiary to make any payment or provide any benefit as a result of a
"change in control", within the meaning of such term under Section 280G of the
Code. None of the Plans provides for or promises retiree medical, disability or
life insurance benefits to any current or former employee, officer, independent
contractor or director of the Company or its Subsidiary.
(c) Each Plan is now and always has been operated in all material
respects in accordance with its terms and the requirements of all Laws,
including ERISA and the Code. The Company has not received any written notice or
other written communication of any action pending or, to the knowledge of the
Company, threatened with respect to any Plan (other than claims for benefits in
the ordinary course) and no fact or event exists that could reasonably be
expected to give rise to any such Action.
(d) Each Plan that is intended to be qualified under Section 401(a) of
the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS that the Plan is so qualified and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter or letters from the IRS to
adversely affect, or could reasonably be expected to affect, the qualified
status of any such Plan or the exempt status of any such trust.
(e) There has not been any prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan.
(f) All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes, no such
deduction has been challenged or disallowed by any Governmental Authority and no
fact or event exists which could reasonably be expected to give rise to any such
challenge or disallowance.
(g) Except as set forth in Section 6.10(g) of the Company Disclosure
Schedule and other than the Company Stock Options, there are no other equity
related awards outstanding under the Company Stock Option Plan or under any
other plan, program, contract, agreement or arrangement.
(h) Each of the Plans is subject only to the Laws of the United States
or a political subdivision thereof.
Section 6.11. Labor and Employment Matters. (i) There are no controversies
pending or threatened in writing between the Company or its Subsidiary and any
of their respective employees; (ii) neither the Company nor its Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its Subsidiary, nor are there
any activities or proceedings of any labor union to organize any such employees;
(iii) neither the Company nor its Subsidiary has breached or otherwise failed to
comply with any provision of any such agreement or contract, and there are no
grievances outstanding against the Company or its Subsidiary under any such
agreement or contract; (iv) there are no unfair labor practice complaints
pending or threatened in writing against the Company or its Subsidiary before
the National Labor Relations Board or comparable state agency or any current
union representation questions involving employees of the Company or its
Subsidiary; and (v) there is no strike, slowdown, work stoppage or lockout, or,
to the knowledge of the Company, threat thereof, by or with respect to any
employees of the Company or its Subsidiary.
(b) The Company and its Subsidiary (i) are in compliance with all Laws
relating to the employment of labor, including those related to wages, hours,
collective bargaining and the payment and withholding of taxes and other sums as
required by the appropriate Governmental Authority and (ii) have withheld and
paid to the appropriate Governmental Authority or are holding for payment not
yet due to such Governmental Authority all amounts required to be withheld from
employees or former employees of the Company or its Subsidiary and are not
liable for any arrears of wages, taxes, penalties or other sums for failure to
comply with any of the foregoing. The Company and its Subsidiary have paid in
full to all employees or former employees or adequately accrued for in
accordance with GAAP consistently applied all wages, salaries, commissions,
bonuses, benefits and other compensation due to or on behalf of such persons,
and the Company has not received any written notice or other written
communication of any claim with respect to payment of wages, salary or overtime
pay that has been asserted or is now pending or threatened in writing before any
Governmental Authority with respect to any persons currently or formerly
employed by the Company or its Subsidiary. Neither the Company nor its
Subsidiary is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees, former employees
or employment practices. The Company has not received any written notice or
other written communication of any charge or proceeding with respect to a
violation of any occupational safety or health standards that has been asserted
or is now pending or threatened in writing with respect to the Company. The
Company has not received any written notice or other written communication of
any charge of discrimination in employment or employment practices, for any
reason, including age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or threatened in writing
before the United States Equal Employment Opportunity Commission, or any other
Governmental Authority in any jurisdiction in which the Company or its
Subsidiary has employed or employ any person.
(c) Except as set forth in Section 6.11(c) of the Company Disclosure
Schedule, all independent contractors, officers and salaried current and former
employees of the Company and its Subsidiary are under written obligation to the
Company and its Subsidiary to maintain in confidence all confidential or
proprietary information acquired by them in the course of their employment and
to assign to the Company and its Subsidiary all inventions made by them within
the scope of their employment during such employment and for a reasonable period
thereafter.
Section 6.12. Real Property and Leases. (a) The Company and its Subsidiary have
sufficient title to all their real property assets to conduct their respective
businesses as currently conducted or as contemplated to be conducted, with only
such exceptions as would not have a Company Material Adverse Effect.
(b) Neither the Company nor its Subsidiary owns any real property. Each
parcel of real property leased by the Company or its Subsidiary (i) is leased
free and clear of all mortgages, pledges, liens, security interests, conditional
and installment sale agreements, encumbrances, charges or other claims of third
parties of any kind against the Company or its Subsidiary, including any
easement, right of way or other encumbrance to title, or any option, right of
first refusal, or right of first offer applicable to the Company or its
Subsidiary (collectively, "Liens"), other than (A) Liens for current taxes and
assessments not yet past due, (B) inchoate mechanics' and materialmen's Liens
for construction in progress, (C) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of the Company or its
Subsidiary consistent with past practice, (D) Liens set forth in the Company's
or its Subsidiary's lease to such real property and (E) all matters of record,
Liens and other imperfections of title and encumbrances that would not have a
Company Material Adverse Effect, and (ii) is neither subject to any governmental
decree or order to be sold nor is being condemned, expropriated or otherwise
taken by any public authority, nor, to the knowledge of the Company, has any
such condemnation, expropriation or taking been proposed.
(c) All leases of real property leased for the use or benefit of the
Company or its Subsidiary to which the Company or its Subsidiary is a party are
in full force and effect and have not been modified or amended, and there exists
no default under any such lease by the Company or its Subsidiary, nor any event
which, with notice or lapse of time or both, would constitute a default
thereunder by the Company or its Subsidiary, except as would not have a Company
Material Adverse Effect.
Section 6.13. Intellectual Property. (a) Section 6.13(a) of the Company
Disclosure Schedule sets forth a true and complete list of all (i) patents
granted, assigned, licensed or pending to the Company (ii) registered and
pending trademarks for the Company.
(b) Except as set forth in Section 6.13(b) of the Company Disclosure
Schedule, the operation of the business of the Company as currently
conducted or as contemplated to be conducted does not, to the knowledge
of the Company, interfere with, conflict with, infringe upon,
misappropriate or otherwise violate the Intellectual Property rights of
any third party in any material respect, and no Action is pending or,
to the knowledge of the Company, threatened alleging that the operation
of such business interferes with, conflicts with, infringes upon,
misappropriates or otherwise violates the Intellectual Property rights
of any third party.
(c) The Company is the sole owner of the entire right, title and interest
in and to, the Company Owned Intellectual Property or has a valid
license or other legal right under the Company Licensed Intellectual
Property subject to the terms of the license agreements governing the
Company Licensed Intellectual Property, used in the ordinary course of
its business as presently conducted or as contemplated by the Company
to be conducted.
(d) (i) To the knowledge of the Company, the Company Owned Intellectual
Property and any Intellectual Property licensed to the Company under
the Company Licensed Intellectual Property are valid or enforceable,
and (ii) the same have not been adjudged invalid or unenforceable in
whole or in part. The Company Owned Intellectual Property and the
Company Licensed Intellectual Property constitute all of the
Intellectual Property material to the operation of the business of the
Company as currently conducted or as currently contemplated by the
Company to be conducted.
(e) No Actions have been asserted, are pending, or, to the knowledge of the
Company, threatened against the Company (i) based upon or challenging
or seeking to deny or restrict the ownership by or license rights of
the Company of any of the Company Owned Intellectual Property or
Company Licensed Intellectual Property, (ii) alleging that any services
provided by, processes used by, or products manufactured or sold by the
Company infringe or misappropriate any Intellectual Property right of
any third party or (iii) alleging that the Company Licensed
Intellectual Property is being licensed or sublicensed in conflict with
the terms of any license or other agreement.
(f) As of the date of this Agreement, no investigation taken by the Company
with assistance of counsel has led the Company to conclude that any
person is engaging in any activity that infringes or misappropriates
the Company Owned Intellectual Property or Company Licensed
Intellectual Property. Except as set forth in Section 6.13(f) of the
Company Disclosure Schedule, the Company has not granted any license or
other right to any third party with respect to the Company Owned
Intellectual Property or Company Licensed Intellectual Property. The
execution, delivery and performance of this Agreement and the
consummation of the Transactions by the Company will not breach,
violate or conflict with any instrument or agreement concerning the
Company Owned Intellectual Property and will not cause the forfeiture
or termination or give rise to a right of forfeiture or termination of
any of the Company Owned Intellectual Property or materially impair the
right of Parent to license or dispose of, or to bring any action for
the infringement of, any material Company Owned Intellectual Property.
(g) The Company has delivered or made available to Parent correct and
complete copies of all the licenses of the Company Licensed
Intellectual Property, other than licenses of commercial off-the-shelf
computer software. With respect to each such license:
(i) with respect to any counterparty to the Company, to the
knowledge of the Company, and with respect to the Company,
such license is valid and binding and in full force and effect
and represents the entire agreement between the respective
licensor and licensee with respect to the subject matter of
such license;
(ii) except as set forth in Section 6.13(g) of the Company
Disclosure Schedule, such license will not cease to be valid
and binding and in full force and effect on terms identical in
all material respects to those currently in effect as a result
of the consummation of the Transactions, nor will the
consummation of the Transactions constitute a breach or
default under such license or otherwise so as to give the
licensor a right to terminate such license;
(iii) the Company has not (A) received any notice of termination or
cancellation under such license, (B) received any notice of
breach or default under such license, which breach has not
been cured or (C) granted to any other third party any rights,
adverse or otherwise, under such license that would constitute
a material breach of such license; and
(iv) neither the Company nor, to the knowledge of the Company, any
other party to such license is in material breach or default
thereof, and no event has occurred that, with notice or lapse
of time, would constitute such a material breach or default or
permit termination, modification or acceleration under such
license.
(h) The Company and its Subsidiary have taken reasonable steps in
accordance with normal industry practice to maintain the
confidentiality of their trade secrets and other confidential
Intellectual Property. Except as set forth in Section 6.13(h) of the
Company Disclosure Schedule, to the knowledge of the Company, (i) there
has been no misappropriation of any material trade secrets or other
material confidential Company Owned Intellectual Property by any
person; (ii) no employee, independent contractor or agent of the
Company has misappropriated any trade secrets of any other person in
the course of such performance as an employee, independent contractor
or agent; and (iii) no employee, independent contractor or agent of the
Company is in material default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of invention agreement
or similar agreement or contract relating in any way to the protection,
ownership, development, use or transfer of Company Owned Intellectual
Property.
Section 6.14. Taxes. The Company and its Subsidiary have filed all Tax Returns
required to be filed by them and have paid and discharged all Taxes required to
be paid or discharged, other than (a) such payments as are being contested in
good faith by appropriate proceedings and (b) such filings, payments or other
occurrences that would not, individually or in the aggregate, have a Company
Material Adverse Effect. All such Tax Returns are true, accurate and complete.
Neither the IRS nor any other United States or non-United States taxing
authority or agency is now asserting or, to the knowledge of the Company,
threatening to assert against the Company or its Subsidiary any deficiency or
claim for any Taxes or interest thereon or penalties in connection therewith.
Neither the Company nor its Subsidiary has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves for Taxes reflected in the financial
statements in the Company SEC Reports are adequate to cover all Taxes accruable
through the date thereof (including interest and penalties, if any, thereon) in
accordance with GAAP. Neither the Company nor its Subsidiary has any liability
for the Taxes of any other person (other than the Company and its Subsidiary) by
reason of having joined in the filing of a consolidated, combined or unitary Tax
Return, by contract, by transferee liability or otherwise. There are no Tax
liens upon any property or assets of the Company or its Subsidiary except liens
for current Taxes not yet due. Neither the Company nor its Subsidiary has been
required to include in income any adjustment pursuant to Section 481 of the Code
by reason of a voluntary change in accounting method initiated by the Company or
its Subsidiary, and the IRS has not initiated or proposed any such adjustment or
change in accounting method, in either case which adjustment or change would
have a Company Material Adverse Effect. Neither the Company nor its Subsidiary
has been a "distributing corporation" or a "controlled corporation" in a
distribution intended to qualify under Section 355(e) of the Code within the
past five years. Neither the Company nor its Subsidiary has received a notice
from a taxing authority for a jurisdiction in which a Tax Return has not been
filed asserting that, or inquiring as to whether, the filing of such a Tax
Return may be required.
Section 6.15. Environmental Matters. Except as would not have a Company Material
Adverse Effect, (a) neither the Company nor its Subsidiary has violated and is
in violation of any Environmental Law; (b) none of the real property assets
currently or formerly owned, leased or operated by the Company or its Subsidiary
(including soils and surface and ground waters) are contaminated with any
Hazardous Substance; (c) neither the Company nor its Subsidiary is actually,
potentially or allegedly liable for any off-site contamination by Hazardous
Substances; (d) neither the Company nor its Subsidiary is actually, potentially
or allegedly liable under any Environmental Law (including pending or threatened
liens); (e) the Company and its Subsidiary have all permits, licenses and other
authorizations required under any Environmental Law ("Environmental Permits");
(f) the Company and its Subsidiary are in compliance with their Environmental
Permits; and (g) neither the execution of this Agreement nor the consummation of
the Transactions will require any investigation, remediation or other action
with respect to Hazardous Substances, or any notice to or consent of
Governmental Authorities or third parties, pursuant to any applicable
Environmental Law or Environmental Permit.
Section 6.16. Material Contracts. Section 6.16(a) of the Company Disclosure
Schedule sets forth a list of the following types of contracts and agreements to
which the Company or its Subsidiary is a party (such contracts, agreements and
arrangements as are required to be set forth in Section 6.16(a) of the Company
Disclosure Schedule being the "Material Contracts"):
(i) each contract and agreement which is likely to involve consideration of
more than $50,000, in the aggregate, over the remaining term of such
contract or agreement;
(ii) all broker, distributor, dealer, manufacturer's representative,
franchise, agency, sales promotion, market research, marketing
consulting and advertising contracts and agreements to which the
Company or its Subsidiary is a party;
(iii) all management contracts (excluding contracts for employment) and
contracts with consultants, including any contracts involving the
payment of royalties or other amounts calculated based upon the
revenues or income of the Company or its Subsidiary or income or
revenues related to any Company Product to which the Company or its
Subsidiary is a party;
(iv) all contracts and agreements evidencing indebtedness;
(v) all contracts and agreements with any Governmental Authority to which
the Company or its Subsidiary is a party;
(vi) all contracts and agreements that limit, or purport to limit, the
ability of the Company or its Subsidiary to compete in any line of
business or with any person or entity or in any geographic area or
during any period of time;
(vii) all contracts and agreements providing for benefits under any Plan;
(viii) all material contracts or arrangements that result in any person or
entity holding a power of attorney from the Company or its Subsidiary
that relates to the Company, its Subsidiary or their respective
businesses;
(ix) all contracts for employment;
(x) all contracts with any stockholders or their affiliates; and
(xi) all other contracts and agreements, whether or not made in the ordinary
course of business, which are material to the Company and its
Subsidiary, taken as a whole, or the conduct of their respective
businesses, or the absence of which would prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement or would
have a Company Material Adverse Effect.
(b) Except as would not prevent or materially delay consummation of the
Merger or otherwise prevent or materially delay the Company from performing its
obligations under this Agreement and would not have a Company Material Adverse
Effect, (i) each Material Contract is a legal, valid and binding agreement, and
none of the Material Contracts is in default by its terms or, to the knowledge
of the Company, has been canceled by the other party; (ii) to the Company's
knowledge, no other party is in breach or violation of, or default under, any
Material Contract; (iii) the Company and its Subsidiary are not in receipt of
any claim of default under any such agreement; and (iv) neither the execution of
this Agreement nor the consummation of any Transaction shall constitute default,
give rise to cancellation rights, or otherwise adversely affect any of the
Company's rights in any material respect under any Material Contract. The
Company has furnished or made available to Parent true and complete copies of
all Material Contracts, including any amendments thereto, as set forth in
Section 6.16(b) of the Company Disclosure Schedule.
Section 6.17. Insurance. Section 6.17(a) of the Company Disclosure Schedule sets
forth, with respect to each insurance policy under which the Company or its
Subsidiary has been an insured, a named insured or otherwise the principal
beneficiary of coverage at any time within the past three years, (i) the names
of the insurer, the principal insured and each named insured, (ii) the policy
number, (iii) the period, scope and amount of coverage and (iv) the premium
charged.
(b) With respect to each such insurance policy: (i) to the knowledge of
the Company, the policy is legal, valid, binding and enforceable in accordance
with its terms (subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general applicability relating to
or affecting creditor rights and for general equitable and public policy
principles), and, except for policies that have expired under their terms in the
ordinary course, is in full force and effect; (ii) neither the Company nor its
Subsidiary is in material breach or default (including any such breach or
default with respect to the payment of premiums or the giving of notice), and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification, under the
policy; and (iii) to the knowledge of the Company, no insurer on the policy has
been declared insolvent or placed in receivership, conservatorship or
liquidation.
(c) At no time subsequent to July 31, 2000 has the Company or its
Subsidiary (i) been denied any insurance or indemnity bond coverage which it has
requested, (ii) made any material reduction in the scope or amount of its
insurance coverage or (iii) received notice from any of its insurance carriers
that any insurance premiums will be subject to increase in an amount materially
disproportionate to the amount of the increases with respect thereto (or with
respect to similar insurance) in prior years or that any insurance coverage
listed in Section 6.17(a) of the Company Disclosure Schedule will not be
available in the future substantially on the same terms as are now in effect.
Section 6.18. Information to Be Supplied. (a) Each of the documents required to
be filed by the Company with the SEC in connection with the Offer, the Merger
and the other Transactions will comply as to form in all material respects with
the requirements of the Exchange Act and the Securities Act, as the case may be,
and applicable rules and regulations thereunder. Each of the documents required
to be filed by the Company with the SEC in connection with the Offer, the Merger
and the other Transactions, and any of the information supplied or to be
supplied by the Company or its Subsidiary or their representatives for inclusion
or incorporation by reference in the Offer Documents or the Merger Registration
Statement, will not, on the date of its filing or mailing or, in the case of the
Merger Proxy Statement/Prospectus, at the time of the Company Stockholders'
Meeting or, in the case of the Offer Documents, at the time the Offer is
commenced or at the time Shares are accepted for exchange pursuant to the Offer,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to the Company or its Subsidiary, or their respective
officers or directors, should be discovered by the Company which should be set
forth in an amendment or a supplement to the Offer Documents, the Merger
Registration Statement or the Merger Proxy Statement/Prospectus, the Company
shall promptly inform Parent.
(b) Notwithstanding the foregoing provisions of this Section 6.18, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Offer Documents, Merger Registration
Statement, the Merger Proxy Statement/Prospectus or the Schedule TO based on
information supplied by or on behalf of Parent or Purchaser for inclusion or
incorporation by reference therein or based on information which is not made in
or incorporated by reference in such documents but which should have been
disclosed pursuant to Section 7.10.
Section 6.19. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company.
Section 6.20. Opinion of Advisor. The Company has received the opinion of Duff &
▇▇▇▇▇▇ LLC, dated the date of this Agreement, to the effect that, as of the date
hereof, the Consideration is fair, from a financial point of view, to the
stockholders of the Company.
Article VII
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
Section 7.01. Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay Parent or
Purchaser from performing their obligations under this Agreement and would not
have a Parent Material Adverse Effect.
Section 7.02. Certificate of Incorporation and By-laws. Parent has heretofore
furnished to the Company a complete and correct copy of the Certificate of
Incorporation and the By-laws of Parent and the Certificate of Incorporation and
By-laws of Purchaser, each as amended to date. Such Certificates of
Incorporation and By-laws are in full force and effect. Neither Parent nor
Purchaser is in violation of any of the provisions of its Certificate of
Incorporation or By-laws.
Section 7.03. Capitalization. (a) The authorized common stock of Parent consists
of 1,200,000,000 shares of Parent Common Stock. As of the date of this
Agreement, (i) 410,055,795 shares of Parent Common Stock are issued and
outstanding, all of which are validly issued, fully paid and non-assessable and
(ii) 4,837,618 shares of Parent Common Stock are held in the treasury of Parent.
Except as set forth in this Section 7.03, except for stock options granted
pursuant to the stock option plans of Parent and except for contingent payments
associated with certain business combinations, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of Parent or Purchaser or obligating
Parent or Purchaser to issue or sell any shares of capital stock of, or other
equity interests in, Parent or Purchaser. All shares of Parent Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and non-assessable. There are no
outstanding contractual obligations of Parent or Purchaser to repurchase, redeem
or otherwise acquire any shares of Parent Common Stock or any capital stock of
Purchaser. There are no outstanding contractual obligations of Parent to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, Purchaser or any other person.
(b) The authorized capital stock of Purchaser consists of 1,000 shares
of common stock, par value $0.01 per share, all of which are duly authorized,
validly issued, fully paid and non-assessable and free of any preemptive rights
in respect thereof and all of which are owned by Parent. Each outstanding share
of capital stock of Purchaser is duly authorized, validly issued, fully paid and
non-assessable.
(c) The Share Consideration, including the shares of Parent Common
Stock, if any, to be issued pursuant to the Exchange Offer and the Merger (i)
will be duly authorized, validly issued, fully paid and non-assessable and not
subject to any Liens or preemptive rights created by statute, Parent's
Certificate of Incorporation or By-laws or any agreement to which Parent is a
party or is bound and (ii) will, when issued, be registered under the Securities
Act and registered or exempt from registration under applicable Blue Sky Laws.
Section 7.04. Authority Relative to this Agreement. Each of Parent and Purchaser
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and, if it exercises an Option,
to consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Parent or
Purchaser are necessary to authorize this Agreement. This Agreement has been
duly and validly executed and delivered by Parent and Purchaser and, assuming
due authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of each of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor rights
and general equitable and public policy principles.
Section 7.05. No Conflict; Required Filings and Consents. (a) The execution and
delivery of this Agreement by Parent and Purchaser do not, and the performance
of this Agreement by Parent and Purchaser will not, (i) conflict with or violate
the Certificate of Incorporation or By-laws or other organizational documents of
either Parent or Purchaser, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 7.05(b) have been obtained
and all filings and obligations described in Section 7.05(b) have been made,
conflict with or violate any Law applicable to Parent or Purchaser or by which
any property or asset of either of them is bound or affected or (iii) result in
any breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any property
or asset of either of them is bound or affected, except, with respect to clause
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or materially delay consummation of the
Transactions or otherwise prevent or materially delay Parent and Purchaser from
performing their obligations under this Agreement and would not have a Parent
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and
Purchaser does not, and the performance of this Agreement by Parent and
Purchaser will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, Blue
Sky Laws and state takeover laws, non-U.S. antitrust laws, the HSR Act and
filing and recordation of appropriate merger documents as required by the DGCL,
and (ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
materially delay consummation of the Transactions, or otherwise prevent Parent
or Purchaser from performing their material obligations under this Agreement.
Section 7.06. Permits; Compliance. Each of Parent and Purchaser is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders of any
Governmental Authority necessary for Parent or Purchaser to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Parent Permits"), except where the failure to have, or the suspension or
cancellation of, any of the Parent Permits would not prevent or materially delay
consummation of the Transactions or otherwise prevent or materially delay Parent
from performing its obligations under this Agreement or would not have a Parent
Material Adverse Effect. No suspension or cancellation of any of the Parent
Permits is pending or, to the knowledge of Parent, threatened. Neither Parent
nor Purchaser is in conflict with, or in default, breach or violation of, (a)
any Law applicable to Parent or Purchaser or by which any property or asset of
Parent or Purchaser is bound or affected or (b) any note, bond, mortgage,
indenture, contract, agreement, lease, license, Parent Permit, franchise or
other instrument or obligation to which Parent or Purchaser is a party or by
which Parent or Purchaser or any property or asset of Parent or Purchaser is
bound.
Section 7.07. SEC Filings; Financial Statements. (a) Parent has filed all forms,
reports and documents required to be filed by it with the SEC since December 31,
2000 (collectively, the "Parent SEC Reports"). The Parent SEC Reports (i) were
prepared in all material respects in accordance with either the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and (ii) did not, at the time they were
filed, or, if amended, as of the date of such amendment, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Parent SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and each fairly
presents, in all material respects, the consolidated financial position, results
of operations and cash flows of Parent and its consolidated subsidiaries as at
the respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments which have not had, and would not
have, a Parent Material Adverse Effect).
Section 7.08. Absence of Certain Changes or Events. Since December 31, 2002,
except as expressly contemplated by this Agreement, there has not been any
Parent Material Adverse Effect.
Section 7.09. Operations of Purchaser. Purchaser is a direct, wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
Transactions, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
Section 7.10. Information to Be Supplied. (a) Each of the Schedule TO and the
other documents required to be filed by Parent with the SEC in connection with
the Offer and the Merger shall comply as to form in all material respects with
the requirements of the Exchange Act and the Securities Act, as the case may be,
and applicable rules and regulations thereunder. Each of the Schedule TO and the
other documents required to be filed by the Company with the SEC in connection
with the Offer, the Merger and the other Transactions and any information
supplied or to be supplied by Parent or its subsidiaries or their
representatives for inclusion or incorporation by reference in the Offer
Documents or the Merger Registration Statement/Prospectus will not, on the date
of its filing or mailing or at the time they become effective under the
Securities Act or, in the case of the Exchange Offer Registration Statement, on
the dates the Offer Documents are mailed to stockholders of the Company and at
the time Shares are accepted for exchange pursuant to the Offer and, in the case
of the Merger Registration Statement, at the time of the Company Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or Purchaser, or their respective officers or
directors, should be discovered by Parent which should be set forth in an
amendment or a supplement to the Offer Documents, the Merger Registration
Statement or the Merger Proxy Statement/Prospectus, Parent shall promptly inform
the Company.
(b) Notwithstanding the foregoing provisions of this Section 7.10, no
representation or warranty is made by Parent with respect to statements made or
incorporated by reference in the Offer Documents, the Merger Registration
Statement, the Merger Proxy Statement/Prospectus or the Schedule TO based on
information supplied by or on behalf of the Company or its Subsidiary for
inclusion or incorporation by reference therein or based on information which is
not made in or incorporated by reference in such documents but which should have
been disclosed pursuant to Section 6.18.
Section 7.11. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
Section 7.12. Financial Projections. Each of Parent and Purchaser has conducted
its own independent review and analysis of the financial prospects of the
business and has not relied on any financial projections provided by the Company
in connection with entering into this Agreement.
Section 7.13. Investor Representations. (a) Investment. Each of Parent and
Purchaser is acquiring the shares of Preferred Stock for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and, except as contemplated by this Agreement, each of Parent and
Purchaser has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof.
Each of such Parent and Purchaser is an "accredited investor" as defined in Rule
501(a) under the Securities Act. Each of such Parent and Purchaser understands
that the Preferred Stock has not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the representations as expressed herein. Parent and Purchaser further understand
that there is no assurance that any exemption from the Securities Act will be
available or, if available, that such exemption will allow Parent or Purchaser
to dispose of or otherwise transfer any or all of the Preferred Stock in the
amounts or at the times they might propose. Parent and Purchaser know of no
public solicitation or advertisement of an offer in connection with the proposed
issuance and sale of the Preferred Stock.
(b) No Public Market. Each of Parent and Purchaser understands that no
public market now exists for the Preferred Stock issued by the Company and that
the Company has made no assurances that a public market will ever exist for such
Preferred Stock. Each of Parent and Purchaser acknowledges that the Preferred
Stock must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available.
Article VIII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 8.01. Conduct of Business by the Company. The Company agrees that,
between the date of this Agreement and the Effective Time, except as set forth
in Section 8.01 of the Company Disclosure Schedule, unless Parent shall
otherwise consent in writing:
(i) the businesses of the Company and its Subsidiary shall be conducted
only in, and the Company and its Subsidiary shall not take any action
except in, the ordinary course of business and in a manner consistent
with past practice; provided that the Company shall be entitled to
establish and fund an account in the amount of $300,000 for the purpose
of funding the costs and expenses incurred by the Former Stockholders
Committee and the Stockholders' Representative in connection with
performing their obligations hereunder; provided, further that any
funds remaining in such account shall revert to the general account of
the Company after the expiry of such obligations; and
(ii) the Company shall use its reasonable best efforts to preserve
substantially intact the business organization of the Company and its
Subsidiary, to keep available the services of the current officers,
employees and consultants of the Company and its Subsidiary and to
preserve the current relationships of the Company and its Subsidiary
with customers, suppliers and other persons with which the Company or
its Subsidiary has significant business relations.
By way of amplification and not limitation, except as expressly
contemplated by any other provision of this Agreement or as set forth in Section
8.01 of the Company Disclosure Schedule, neither the Company nor its Subsidiary
shall, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of Parent (which consent shall not be unreasonably withheld):
(a) engage in any activity that could impair Parent's or Purchaser's
ability to exercise the Option or consummate the Transactions;
(b) amend or otherwise change its Certificate of Incorporation or By-laws
or equivalent organizational documents;
(c) issue, sell, pledge, dispose of, grant or encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of any class of capital stock of the Company or its Subsidiary,
or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other
ownership interest (including any phantom interest), of the Company or
its Subsidiary, except for options issued in the ordinary course of
business to employees of the Company in an amount not to exceed, in the
aggregate, the amount authorized pursuant to the Company Stock Option
Plan as of the date hereof, or (ii) any assets of the Company or its
Subsidiary except for the sale of inventory in the ordinary course of
business;
(d) except as expressly set forth in, and permitted by, Section 5.01, waive
any stock repurchase rights, accelerate, amend or change the period of
exercisability of options or restricted stock, reprice options granted
under the Company Stock Option Plan or authorize cash payments in
exchange for any options granted under such plan;
(e) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of
its capital stock;
(f) reclassify, combine, split, subdivide or redeem, or purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(g) (i) acquire (including by merger or acquisition of stock or assets or
any other business combination) any corporation, partnership, other
business organization or any division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise become
responsible for, the obligations of any person, or make any loans or
advances, or grant any security interest in any of its assets; (iii)
enter into any contract or agreement other than in the ordinary course
of business and consistent with past practice; (iv) authorize, or make
any commitment with respect to, any single capital expenditure which is
in excess of $250,000 or capital expenditures which are, in the
aggregate, in excess of $500,000 for the Company and its Subsidiary in
any calendar year; (v) enter into any distribution or supply contract
or agreement that is not terminable by the Company or its Subsidiary
without penalty within 60 days; or (vi) enter into or amend any
contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 8.01(g);
(h) except as provided in existing agreements between the Company and any
director, officer or employee, copies of which have been provided to
Parent prior to the date hereof, and except as required by Law,
increase or promise to increase the compensation payable or to become
payable or the benefits provided to its directors, officers or
employees, except for increases in the ordinary course of business and
consistent with past practice in salaries or wages of employees of the
Company or its Subsidiary who are not directors or officers of the
Company or its Subsidiary, or grant or promise to grant any severance
or termination pay to, or enter into any employment, service retention,
change of control or severance agreement with, any director,
independent contractor, officer or other employee of the Company or of
its Subsidiary, or establish, adopt, enter into or amend or promise to
enter into or amend any collective bargaining, bonus, profit-sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, service retention, change of control, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer, independent contractor or employee;
(i) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures;
(j) make, revoke or change any Tax election or method of Tax accounting or
settle or compromise any Tax liability;
(k) pay, discharge or satisfy any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the 2002 Balance Sheet or subsequently incurred in
the ordinary course of business and consistent with past practice;
(l) amend, modify or consent to the termination of any Material Contract,
or amend, waive, modify or consent to the termination of the Company's
or its Subsidiary's rights thereunder;
(m) in-license any royalty-bearing Intellectual Property or license or
sublicense to any person any Company Owned Intellectual Property or
Company Licensed Intellectual Property;
(n) commence any Action other than an Action to enforce or to recover
damages for breach of this Agreement without first consulting with
Parent or agree to pay in any calendar year any royalties for
Intellectual Property that exceed in the aggregate 7% of Net Sales in
such calendar year; or
(o) announce an intention, enter into any formal or informal agreement or
otherwise make a commitment, to do any of the foregoing.
Section 8.02. Intellectual Property. The Company shall maintain at least one
pending U.S. patent application in each independent patent family until the
expiration of the Option Period.
Article IX
ADDITIONAL AGREEMENTS
Section 9.01. Access to Information; Confidentiality. (a) From the date of this
Agreement until the Effective Time, the Company shall and shall cause its
Subsidiary to: (i) provide to Parent (and Parent's officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") access at reasonable times
upon prior notice to the officers, employees, agents, properties, offices and
other facilities of such party and its subsidiaries and to the books and records
thereof; (ii) furnish promptly to Parent such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of such party and its subsidiaries as Parent or its Representatives may
reasonably request; and (iii) without limiting the generality of the foregoing
clauses (i) and (ii), the Company shall allow Parent to conduct in all respects
a customary due diligence investigation, including a quality audit, operations
audit and technical review and by December 31, 2003 testing of at least 30
Filters; provided, however, that the documents set forth in Section 9.01 of the
Company Disclosure Schedule shall be provided only to Parent upon Parent's
written request and upon receipt by the Company from Parent of reasonable
assurances that Parent is requesting such documents in good faith and in
contemplation of its exercise of the Options and consummation of the
Transactions.
(b) All information obtained by Parent pursuant to this Section 9.01 shall be
kept confidential in accordance with the Confidential Disclosure Agreement,
dated December 16, 2002 (the "Confidentiality Agreement"), between Parent and
the Subsidiary.
(c) No investigation pursuant to this Section 9.01 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(d) Notwithstanding anything herein to the contrary, each party (and its
representatives, agents and employees) may consult any tax advisor regarding the
tax treatment and tax structure of the Transactions and, upon reasonable advance
notice to the other party, may disclose to any person, without limitation of any
kind, the tax treatment and tax structure of the Transactions and all materials
(including opinions or other tax analyses) that are provided relating to such
treatment or structure.
Section 9.02. No Solicitation of Transactions. (a) The Company shall not,
directly or indirectly, and shall instruct its officers, directors, employees,
Subsidiary, agents or advisors or other representatives (including any
investment banker, attorney or accountant retained by it) not to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing nonpublic information), or take any other action knowingly to
facilitate, any inquiries or the making of any proposal or offer (including any
proposal or offer to its stockholders) that constitutes, or may reasonably be
expected to lead to, any Competing Transaction (as defined below), or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to
or endorse any Competing Transaction, or authorize or permit any of the
officers, directors or employees of such party or its Subsidiary, or any
investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or its Subsidiary, to take any such
action. The Company shall notify Parent promptly if any proposal or offer, or
any inquiry or contact with any person with respect thereto, regarding a
Competing Transaction is made. The Company immediately shall cease and cause to
be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to a Competing Transaction. The Company shall
not release any third party from, or waive any provision of, any confidentiality
or standstill agreement to which it is a party.
(b) Notwithstanding anything to the contrary in this Section 9.02, the Company
Board may furnish information to, and enter into discussions with, a person who
has made an unsolicited, written, bona fide proposal or offer regarding a
Competing Transaction, if the Company Board has (i) determined, in its good
faith judgment (after having received the advice of Duff & ▇▇▇▇▇▇ LLC or another
financial advisor of nationally recognized reputation), that such proposal or
offer constitutes a Superior Proposal (as defined below), (ii) determined, in
its good faith judgment after consultation with independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), that, in
light of such Superior Proposal, the furnishing of such information or entering
into discussions is required to comply with its fiduciary obligations to the
Company and its stockholders under Law, (iii) provided written notice to Parent
at least three business days prior to taking any such action of (x) its intent
to furnish information or enter into discussions with such person, (y) the
identity of such person and (z) the terms and conditions of such proposal or
offer and (iv) obtained from such person an executed confidentiality agreement
on terms no less favorable to the Company than those contained in the
Confidentiality Agreement.
(c) A "Competing Transaction" means any of the following (other than the
Transactions): (i) any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other similar
transaction involving the Company or its Subsidiary; (ii) any sale, lease,
exchange, transfer, license or other disposition of all or a substantial part of
the assets of the Company or its Subsidiary; (iii) any sale, exchange, transfer
or other disposition of 20% or more of any class of equity securities of the
Company or its Subsidiary; (iv) any tender offer or exchange offer that, if
consummated, would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or its Subsidiary; or (v) any other
transaction the consummation of which would reasonably be expected to impede,
interfere with, prevent or materially delay any of the Transactions.
(d) A "Superior Proposal" means an unsolicited written bona fide offer made by a
third party to consummate any of the following transactions: (i) a merger,
consolidation, share exchange, business combination or other similar transaction
involving the Company pursuant to which the shareholders of the Company
immediately preceding such transaction would hold less than 50% of the equity
interest in the surviving or resulting entity of such transaction or (ii) the
acquisition by any person or group (including by means of a tender offer or an
exchange offer or a two-step transaction involving a tender offer followed with
reasonable promptness by a cash-out merger involving the Company), directly or
indirectly, of ownership of 100% of the then outstanding shares of stock of the
Company, on terms (including conditions to consummation of the contemplated
transaction) that the Company Board determines, in its good faith judgment
(after having received the advice of Duff & ▇▇▇▇▇▇ LLC or another financial
advisor of nationally recognized reputation), to be more favorable to the
Company's stockholders than the Merger.
Section 9.03. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (a) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which could reasonably be expected to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (b) any failure of the Company, Parent or Purchaser, as the case may be, to
comply with or satisfy any covenant or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 9.03 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 9.04. Company Affiliates. No later than five business days after the
exercise of an Option, the Company shall deliver to Parent a list of names and
addresses of those persons who were, in the Company's reasonable judgment, on
such date, affiliates (within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act (each such person being a
"Company Affiliate" )) of the Company. The Company shall provide Parent with
such information and documents as Parent shall reasonably request for purposes
of reviewing such list. In the event that an Exchange Offer is commenced, the
Company shall use its reasonable best efforts to deliver or cause to be
delivered to Parent, prior to the Initial Expiration Date, an affiliate letter
in form reasonably satisfactory to Parent, executed by each of the Company
Affiliates identified in the foregoing list and any person who shall, to the
knowledge of the Company, have become a Company Affiliate subsequent to the
delivery of such list.
Section 9.05. Further Action; Reasonable Best Efforts. Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto shall
(i) if required, make promptly its respective filings, and thereafter make any
other required submissions, under the HSR Act and, if applicable, non-U.S.
antitrust laws with respect to the Transactions and (ii) if Parent or Purchaser
exercises any of the Options, use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under Laws or otherwise to consummate and make
effective the Transactions, including using its reasonable best efforts to
obtain all Permits, consents, approvals, authorizations, qualifications and
orders of Governmental Authorities and parties to contracts with the Company and
its Subsidiary as are necessary for the consummation of the Transactions and to
fulfill the conditions to the Merger; provided that neither Purchaser nor Parent
will be required by this Section 9.05 to take any action, including entering
into any consent decree, hold separate orders or other arrangements, that (A)
requires the divestiture of any assets of any of Purchaser, Parent, the Company
or any of their respective subsidiaries or (B) limits Parent's freedom of action
with respect to, or its ability to retain, the Company and its Subsidiary or any
portion thereof or any of Parent's or its affiliates' other assets or
businesses; provided further that nothing in this Agreement shall be deemed to
require either Parent or Purchaser to exercise any Option. In case, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their reasonable best efforts to take all such
action.
Section 9.06. NYSE Listing. Parent shall promptly prepare and submit to the NYSE
a listing application covering the shares of Parent Common Stock to be issued in
the Exchange Offer and in the Merger and shall use its reasonable best efforts
to obtain as promptly as reasonably practicable approval for the listing of such
shares of Parent Common Stock, subject to official notice of issuance to the
NYSE, and the Company shall cooperate with Parent with respect to such listing.
Section 9.07. Public Announcements(a) . The initial press release or releases
relating to this Agreement shall have been agreed to by each of Parent and the
Company. Thereafter, (a) unless otherwise required by Law, the Company shall not
issue any press release or otherwise make any public statements with respect to
this Agreement, the Merger or any of the other Transactions without the prior
written consent of Parent and (b) unless otherwise required by Law or the
requirements of the NYSE, Parent shall not issue any press release or otherwise
make any public statements with respect to this Agreement, the Merger or any of
the other Transactions without the prior written consent of the Company.
Section 9.08. Management Team. Parent shall not terminate the employment of
▇▇▇▇▇▇ as President and CEO, ▇▇▇▇▇ ▇'▇▇▇▇▇ as Vice President of Clinical and
Regulatory Affairs, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as Vice President of Research and
Development, ▇▇▇ ▇▇▇▇▇▇▇ as Vice President of Operations and ▇▇▇▇▇ ▇▇▇▇▇ as
Chief Financial Officer, other than for Cause, prior to the earlier of (a) the
achievement of Milestone 1 and (b) the third anniversary of the date of this
Agreement.
Section 9.09. Directors' and Officers' Indemnification. From and after the
Effective Time or at any other time when Parent or Purchaser owns shares of
Common Stock constituting a majority of the shares of outstanding Common Stock,
Parent and Purchaser shall, and shall cause the Surviving Corporation to,
fulfill and honor in all respects the obligations of the Company pursuant to any
indemnification agreements between the Company and its directors, officers and
Controlling Stockholders in effect immediately prior to the Effective Time and
previously made available to Parent prior to the execution hereof, and any
indemnification and limitation of liability provisions under the Company's
Certificate of Incorporation and Bylaws as in effect immediately prior to the
Effective Date, in each case to the extent that such agreements, Certificate of
Incorporation and Bylaws are reasonably acceptable to Parent. Parent and
Purchaser acknowledge that the Company Board has caused the Company to enter
into this Agreement and to enter into the transactions contemplated hereby in
reliance upon the covenants of Parent and Purchaser contained in this Section
9.09 and the further covenant by Parent and Purchaser not to challenge or cause
the Company to challenge the validity or enforceability of such indemnity
agreements entered into in accordance with the terms hereof. In the event the
Company is unable or otherwise fails to meet its indemnification obligations to
any director, officer or Controlling Stockholder under any of the
indemnification agreements referred to in the first sentence of this Section
9.09 (the "Indemnification Agreements"), then Parent shall perform the
indemnification obligations thereunder as to such director, officer or
Controlling Stockholder as if Parent were the indemnitor under such
Indemnification Agreement.
Article X
CONDITIONS TO THE MERGER
Section 10.01. Conditions to the Merger. The obligations of each party to effect
the Merger shall be subject to the satisfaction, at or prior to the Effective
Time, of the following conditions:
(a) Option. Purchaser shall have (i) effected the Purchase Option Closing
or (ii) exercised the Offer Option;
(b) Merger Registration Statement. If required, the Merger Registration
Statement shall have been declared effective by the SEC under the
Securities Act and no stop order suspending the effectiveness of the
Merger Registration Statement shall have been issued by the SEC and no
proceeding for that purpose shall have been initiated by the SEC;
(c) Stockholder Approval. If and to the extent required by the DGCL, this
Agreement shall have been adopted by the affirmative vote of the
requisite number of stockholders of the Company;
(d) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Shares by Parent or Purchaser or any
affiliate of either of them illegal or otherwise restricting,
preventing or prohibiting consummation of the Transactions;
(e) Offer. Purchaser or its permitted assignee shall have accepted for
exchange or payment, as the case may be, and exchanged and paid for, as
the case may be, all Shares validly tendered and not withdrawn pursuant
to the Offer;
(f) U.S. Antitrust Approvals and Waiting Periods. Any waiting period (and
any extension thereof) applicable to the consummation of the Offer or
the Merger under the HSR Act and, if applicable, non-U.S. antitrust
laws shall have expired or been terminated; and
(g) NYSE Listing. The shares of Parent Common Stock to be issued in the
Merger, if any, shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
Article XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.01. Termination. This Agreement shall or may be terminated and the
Merger and the other Transactions may be abandoned, notwithstanding any
requisite adoption of this Agreement by the stockholders of the Company in the
following circumstances:
(a) automatically, if (i) neither Option has been exercised by the 90th day
following the satisfaction of Milestone 1; (ii) neither Option has been
exercised and 42 months have elapsed since the date hereof and, despite
the use by the Company of its reasonable best efforts to satisfy
Milestone 1, the FDA has denied approval for the Filter such that the
conditions described in the definition of Milestone 1 shall not have
occurred; provided that Parent may extend such 42-month period in
additional 18-month increments by its (or its designee's) purchase from
the Company of a debt instrument that is convertible into Common Stock
at a conversion price equal to the average of the per share closing
prices of the Common Stock on the over-the-counter market during the 20
consecutive trading days ending on (and including) the trading day two
days prior to the issuance of such instrument, and otherwise having
customary terms and conditions for debt instruments negotiated at arms'
length between unrelated parties and in an amount necessary to fund the
operating expenses of the Company during such 18-month period, as
determined by reference to a budget prepared in good faith in
accordance with the prior operating history of the Company; provided,
further, that this Agreement shall terminate under this clause (ii) on
the date that is six months prior to the expiry of such 18-month period
if Parent does not notify the Company in writing of its intent to
effect any further such extension by such date; or (iii) following
exercise of the Offer Option, the Effective Time has not occurred
within 24 months after exercise of the Offer Option; provided that any
termination pursuant to this Section 11.01(a)(iii) shall not limit any
remedy available to Parent or Purchaser if such delay is the result of
the Company's breach of this Agreement;
(b) by mutual written consent of each of Parent and the Company at any time
prior to the Effective Time;
(c) by Parent at any time following the exercise of an Option and prior to
the acquisition of Shares by Purchaser pursuant to the Offer, if due to
an occurrence or circumstance that would result in a failure to satisfy
any condition set forth in Annex A (other than a condition that has
been waived), Purchaser shall have (i) failed to commence the Offer
within 30 days following the Purchase Option Closing or the exercise of
the Offer Option, as applicable, (ii) terminated the Offer without
having accepted any Shares for payment thereunder or (iii) failed to
accept Shares for payment pursuant to the Offer within 90 days
following the commencement of the Offer (provided, however, that the
applicable time period specified in clause (iii) of this Section
11.01(c) shall be extended until the earlier to occur of (A) the fifth
business day following the public announcement of the expiration or
termination of any applicable waiting period under the HSR Act and (B)
180 days following the exercise of an Option), unless such action or
inaction under clauses (i), (ii) or (iii) of this Section 11.01(c)
shall have been caused by or resulted from the failure of Parent or
Purchaser to perform, in any material respect, any of their material
covenants or agreements contained in this Agreement, or the material
breach by Parent or Purchaser of any of their material representations
or warranties contained in this Agreement, in which case Parent may not
terminate this Agreement; or
(d) by the Company, at any time following the exercise of an Option and
prior to the acquisition of Shares by Purchaser pursuant to the Offer,
if Purchaser shall have (X) in breach of the terms of this Agreement by
Parent or Purchaser or (Y) because of the breach by the Company of the
terms of this Agreement, which breach has been caused by any action or
failure to act by Parent or Purchaser by reason of its control of the
Company following the Purchase Option Closing or (Z) because of the
failure of any condition in Annex A not caused by the Company, (i)
failed to commence the Offer within 30 days following the Purchase
Option Closing or the exercise of the Offer Option, as applicable, (ii)
terminated the Offer without having accepted any Shares for payment
thereunder or (iii) failed to accept Shares for payment pursuant to the
Offer within 90 days following the commencement of the Offer (provided,
however, that the applicable time period specified in clause (iii) of
this Section 11.01(d) shall be extended until the earlier to occur of
(A) the fifth business day following the public announcement of the
expiration or termination of any applicable waiting period under the
HSR Act and (B) 180 days following the exercise of an Option), unless
such action or inaction under clauses (i), (ii) or (iii) of this
Section 11.01(d) shall have been caused by or resulted from the failure
of the Company or any of the Controlling Stockholders to perform, in
any material respect, any of their respective material covenants or
agreements contained in this Agreement or the Option Agreements or any
material breach by the Company or the Controlling Stockholders of any
of their material representations or warranties contained in this
Agreement or the Option Agreements, in which case the Company may not
terminate this Agreement.
The party desiring to terminate this Agreement shall give written notice of such
termination to the other party.
Section 11.02. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 11.01, this Agreement shall forthwith become void,
and there shall be no liability hereunder on the part of any party hereto,
except (a) as set forth in Section 11.03 and (b) nothing herein shall relieve
any party from liability for any breach hereof prior to the date of such
termination; provided, however, that the Confidentiality Agreement and the terms
of Section 9.01(b) and Article XII shall survive any termination of this
Agreement.
Section 11.03. Fees and Expenses. All expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party incurring such
expenses, whether or not the Merger or any other Transaction is consummated.
Section 11.04. Amendment. This Agreement may be amended by the parties hereto at
any time prior to the Effective Time; provided, however, that, after the
adoption of this Agreement by the stockholders of the Company, no amendment may
be made that would reduce the amount or change the type of consideration into
which each Share shall be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties hereto.
Section 11.05. Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any obligation or other act of
any other party hereto, (b) waive any inaccuracy in the representations and
warranties of any other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement of any other party
or any condition to its own obligations contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
Article XII
GENERAL PROVISIONS
Section 12.01. Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and in any
certificate delivered pursuant hereto shall terminate at the Effective Time or
upon the termination of this Agreement pursuant to Section 11.01, as the case
may be, except that the agreements that by their terms survive the Effective
Time shall survive the Effective Time.
Section 12.02. Withholding Rights. Each of the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
Section 12.03. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or email or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 12.03):
if to Parent or Purchaser:
Boston Scientific Corporation
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Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Boston Scientific Corporation
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Attention: Assistant General Counsel
Shearman & Sterling LLP
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if to the Company:
Rubicon Medical Corporation
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Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President and CEO
with a copy to:
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Attention: R. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to the Stockholders' Representative:
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Rubicon Medical Corporation
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Section 12.04. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the Transactions is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
Transactions be consummated as originally contemplated to the fullest extent
possible.
Section 12.05. Entire Agreement; Assignment. This Agreement, the Option
Agreements, the Registration Rights Agreement and the Confidentiality Agreement
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof, including the Term Sheet. This Agreement shall not be assigned (whether
pursuant to a merger, by operation of law or otherwise), except that Parent and
Purchaser may assign all or any of their rights and obligations hereunder to any
affiliate of Parent.
Section 12.06. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 9.01 (which is intended to be for the benefit of
the persons covered thereby and may be enforced by such persons); provided that
Stockholders' Representative shall be entitled to enforce the provisions of
Sections 5.03 and 5.04 against Parent or Purchaser on behalf of the Earn-out
Recipients; and provided, further that the directors, officers and Controlling
Stockholders of the Company as of the date of this Agreement shall be third
party beneficiaries of Section 9.09 and shall have the right the enforce the
same in the event of a breach of Section 9.09 by Parent.
Section 12.07. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
Section 12.08. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined exclusively in any Delaware state or federal court sitting in
Wilmington, Delaware. The parties hereto hereby (a) submit to the exclusive
jurisdiction of any state or federal court sitting in Wilmington, Delaware for
the purpose of any Action arising out of or relating to this Agreement brought
by any party hereto, and (b) irrevocably waive, and agree not to assert by way
of motion, defense, or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
Section 12.09. Waiver of Jury Trial. Each of the parties hereto hereby waives to
the fullest extent permitted by Law any right it may have to a trial by jury
with respect to any litigation directly or indirectly arising out of, under or
in connection with this Agreement or the Transactions. Each of the parties
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce that foregoing waiver and (b)
acknowledges that it and the other hereto have been induced to enter into this
Agreement and the Transactions, as applicable, by, among other things, the
mutual waivers and certifications in this Section 12.09.
Section 12.10. Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 12.11. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
Section 12.12. Attorneys' Fees. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BOSTON SCIENTIFIC CORPORATION
By /s/ ▇▇▇▇▇▇▇▇ ▇. Best
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Name: ▇▇▇▇▇▇▇▇ ▇. Best
Title: Senior Vice President -
Finance & Administration
and Chief Financial Officer
NEMO I ACQUISITION, INC.
By /s/ ▇▇▇▇▇▇▇▇ ▇. Best
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Name: ▇▇▇▇▇▇▇▇ ▇. Best
Title: President
RUBICON MEDICAL CORPORATION
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President/CEO
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for exchange or payment, as the case may be, or
exchange or pay for, as the case may be, any Shares tendered pursuant to the
Offer, and may extend, terminate or amend the Offer, if (i) any applicable
waiting period under the HSR Act and, if applicable, non-U.S. antitrust laws
shall not have expired or been terminated prior to the expiration of the Offer,
(ii) Purchaser effects an Exchange Offer, the Exchange Offer Registration
Statement shall not have become effective under the Securities Act or shall be
the subject of any stop order or proceedings seeking a stop order, (iii)
Purchaser effects an Exchange Offer, the shares of Parent Common Stock to be
issued in the Offer and the Merger shall not have been approved for listing on
the NYSE, subject to official notice of issuance, or (iv) at any time on or
after the exercise of an Option and prior to the expiration of the Offer, any of
the following conditions shall exist:
(a) there shall have been instituted or be pending any Action
by a party other than Parent or any affiliate of Parent before any
Governmental Authority (i) challenging or seeking to make illegal,
materially delay, or otherwise, directly or indirectly, restrain or
prohibit or make materially more costly, the making of the Offer, the
acceptance for exchange or payment, as the case may be, of any Shares
by Parent, Purchaser or any other affiliate of Parent or the purchase
of Shares pursuant to the Option Agreements, or the consummation of any
other Transaction, or seeking to obtain damages in connection with any
Transaction; (ii) seeking to prohibit or limit the ownership or
operation by the Company, Parent or any of their subsidiaries of all or
any of the business or assets of the Company, Parent or any of their
subsidiaries; (iii) seeking to impose or confirm any limitation on the
ability of Parent, Purchaser or any other affiliate of Parent to
exercise effectively full rights of ownership of any Shares; (iv)
seeking to require divestiture by Parent, Purchaser or any other
affiliate of Parent of any Shares; or (v) which otherwise would prevent
or materially delay consummation of the Offer or the Merger or
otherwise prevent or materially delay the Company from performing its
obligations under this Agreement or would have a Company Material
Adverse Effect;
(b) there shall have been (i) any Law enacted, promulgated,
amended, issued or deemed applicable to (1) Parent, the Company or its
Subsidiary or affiliate of Parent or the Company or (2) any Transaction
or (ii) entered, promulgated or enforced by any court or Governmental
Authority, any Order of any kind which prohibits, restrains, restricts
or enjoins the consummation of the Offer or has effect of making the
Offer illegal, in each case, by any legislative body or Governmental
Authority that would result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a)
above;
(c) any Company Material Adverse Effect shall have occurred;
(d) there shall have occurred any general suspension of
trading in, or limitation on prices for, securities on the NYSE (other
than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a
market index);
(e) any representation or warranty of the Company in the
Agreement that is qualified as to materiality or Company Material
Adverse Effect shall not be true and correct or any such representation
or warranty that is not so qualified shall not be true and correct in
any material respect, in each case as if such representation or
warranty was made as of such time on or after the date of this
Agreement;
(f) the Company shall have failed to perform, in any material
respect, any obligation or to comply, in any material respect, with any
agreement or covenant of the Company to be performed or complied with
by it under the Agreement;
(g) the Agreement shall have been terminated in accordance
with its terms; and
(h) Parent and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for exchange or
payment, as the case may be, of Shares thereunder;
which, in the reasonable judgment of Parent in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for exchange or payment, as the case may be; provided,
however, that Parent and Purchaser shall be deemed to have waived any of the
foregoing conditions if and to the extent that either Parent or Purchaser,
whether by reason of its control of the Company following the Purchase Option
Closing or otherwise, or any affiliate of Parent or Purchaser, shall have caused
the existence of such condition or conditions.
The foregoing conditions are for the sole benefit of Purchaser
and Parent and may be waived by Purchaser or Parent in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right; the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
EXHIBIT 1.01
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