Table of Contents
SECURITIES AND EXCHANGE COMMISSION
Exchange Act of 1934 (Amendment No. )
Filed by a Party other than the Registranto
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
Table of Contents
• | an explanatory statement and notices of meeting in relation to the schemes of arrangement; | |
• | an explanatory statement and notice of meeting in relation to the Extraordinary General Meeting; | |
• | an information memorandum in relation to the listing of HeartWare International, Inc on ASX. |
1 | ||||
2 | ||||
4 | ||||
14 | ||||
19 | ||||
26 | ||||
30 | ||||
34 | ||||
45 | ||||
48 | ||||
65 | ||||
66 | ||||
73 | ||||
90 | ||||
98 | ||||
103 | ||||
119 | ||||
195 | ||||
205 | ||||
212 | ||||
219 | ||||
223 | ||||
227 | ||||
231 | ||||
242 | ||||
255 | ||||
260 | ||||
268 | ||||
271 | ||||
284 | ||||
303 | ||||
305 | ||||
307 | ||||
309 | ||||
313 | ||||
Table of Contents
Key Event | Date | |
Latest time and date for lodgement of completed proxy forms for Share Scheme Meeting | 10.00am on 20 October 2008 | |
Latest time and date for lodgement of completed proxy forms for Option Scheme Meeting | 10.30am on 20 October 2008 | |
Latest time and date for lodgement of completed proxy forms for Performance Rights Scheme Meeting | 11.00am on 20 October 2008 | |
Latest time and date for lodgement of completed proxy forms for EGM | 11.30am on 20 October 2008 | |
Time and date for determining eligibility to vote at Scheme Meetings | 7.00pm on 20 October 2008 | |
Time and date for determining eligibility to vote at the EGM | 7.00pm on 20 October 2008 | |
Share Scheme Meeting* | 10.00am on 22 October 2008 | |
Option Scheme Meeting* | 10.30am on 22 October 2008 | |
Performance Rights Scheme Meeting* | 11.00am on 22 October 2008 | |
EGM* | 11.30am on 22 October 2008 | |
Court hearing for approval of the Schemes | 30 October 2008 | |
Effective Date of Schemes | 31 October 2008 | |
Suspension of the Shares from trading on ASX | 31 October 2008 | |
CDIs commence trading on ASX on a deferred settlement basis | 3 November 2008 | |
Scheme Record Date | 7 November 2008 | |
Implementation Date for Schemes | 11 November 2008 | |
Despatch of CDI holding statements and transmittal letters | 14 November 2008 | |
CDIs commence trading on normal T+3 basis | 17 November 2008 |
* | Estimated times only. |
Table of Contents
• | redomiciliation will enhance the HeartWare Group’s ability to access the large pool of equity capital available in the US market. In addition, US investors who were previously prevented from investing in the Company due to the Company being a non-US based company will now be able to invest in HeartWare International; | |
• | the Company is subject to reporting and compliance requirements in both the US and Australia and is not able to benefit from the lesser requirements associated with being a “foreign company” in either jurisdiction. Redomiciliation to the US will reduce certain of the HeartWare Group’s reporting and related compliance obligations thereby significantly reducing the costs, administrative overheads and the general management time that is associated with the current dual compliance requirements; | |
• | redomiciliation will enhance HeartWare International’s ability to move quickly to a listing on a US Exchange, should it determine to take this step; | |
• | virtually all of the HeartWare Group’s operating and manufacturing activities are based in the US which, as stated above, is also the largest market for the Company’s products. Redomiciliation will more appropriately align the Company’s corporate structure with its operating activities and target market; and | |
• | redomiciliation will enable the HeartWare Group to maintain an ASX listing while at the same time facilitating more efficient access to US and international capital markets. |
Table of Contents
Rob Thomas
Chairman
Table of Contents
Overview | Section | |
• The HeartWare Group will redomicile in the United States of America. | Section 3 | |
• HeartWare International (a new company incorporated in the US) will become the parent company of the HeartWare Group. | Sections 3 and 6 | |
• HeartWare International will replace HeartWare Limited as the ASX listed entity with HeartWare International CDIs being quoted for trading on ASX. | Section 3 | |
• Three separate schemes of arrangement in relation to the Shares, Options and Performance Rights: | Section 3 and Appendices 3, 4 and 5 |
• | Share Scheme – Shares in the Company will be exchanged for CDIs or HeartWare International Shares. | Section 3 and Appendix 3 | |
• | Option Scheme – Options in the Company will be exchanged for options in HeartWare International. | Section 3 and Appendix 4 | |
• | Performance Rights Scheme – Performance Rights in the Company will be exchanged for restricted stock units in HeartWare International. | Section 3 and Appendix 5 |
• Standalone Options in the Company will be exchanged for replacement options in HeartWare International. | Section 3 |
Table of Contents
Parent Entity | HeartWare Limited | |||
Type of Securities on Issue | Ordinary Shares | |||
Number of Shares on Issue | 310,356,839 | |||
Type of Securities Quoted on ASX | Ordinary Shares | |||
Number of Shares (Ordinary) Quoted on ASX | 310,356,839 | |||
ASX Share Price | $A0.60 | (1) | ||
Number of Optionsˆ on Issue | 29,596,464 | |||
Weighted Average Exercise Price of Optionsˆ | A$0.64 | (2) | ||
Type of Securities Issued on Exercise of Optionsˆ | Ordinary Shares | |||
Number of Securities Issued on Conversation of Optionsˆ | ||||
– Ordinary Shares | 29,596,464 | |||
– Common Stock | Not applicable |
Parent Entity | HeartWare International, Inc. | |||
Type of Securities on Issue | Common Stock | |||
Number of Securities on Issue | 8,867,338 | |||
Type of Securities Quoted on ASX | CDIs | |||
Number of Securities (CDIs) Quoted on ASX | 310,356,839 | (3) | ||
ASX Share Price | $A0.60 | (4) | ||
Number of Options on Issueˆ | 845,613 | |||
Weighed Average Exercise Price of Optionsˆ | A$22.40 | (2) | ||
Type of Securities Issued on Exercise of Optionsˆ | Common Stock | (5) | ||
Number of Securities Issued on Conversion of Optionsˆ | ||||
– Ordinary Shares | Not applicable | |||
– Common Stock | 845,613 | (5) |
(1) | As at close of trade on 8 September 2008. | |
(2) | Excludes performance rights. | |
(3) | Assumes all Shareholders receive CDIs only, that is, that all common stock has been “converted” into CDIs. | |
(4) | Estimated closing trade price on 8 September 2008 assuming (a) all Shareholders receive CDIs instead of common stock and (b) identical market conditions. | |
(5) | The holder may elect to convert these into CDIs in which case the holder will receive 35 CDIs for each security. | |
* | Assumes all Shareholders receive CDIs only, that is, that all common stock has been “converted” in CDIs. | |
ˆ | Includes all forms of options, together with all performance rights. |
Table of Contents
Step 1: | Carefully read this Information Memorandum, the Notices of Meeting and all other documents you have been provided with. | |
Step 2: | If you have any queries concerning the Schemes or the Resolution, please consult your legal, financial or other professional adviser or contact the enquiry line on 1800 707 861 (Australia toll free) or +61 2 8256 3387 (International). | |
Step 3: | Attend and vote at the Scheme Meetings and the EGM or, if you are unable to attend, vote by proxy, attorney or corporate representative. |
Table of Contents
• | in person by attending the relevant Meeting; | |
• | by proxy; | |
• | by attorney; or | |
• | where the Shareholder or Incentive Holder is a body corporate, by a representative of that body corporate, each of which is described in more detail below. |
• | Share Scheme Meeting – 10.00am; | |
• | Option Scheme Meeting – estimated to take place at 10.30am immediately following the Share Scheme Meeting; | |
• | Performance Rights Scheme Meeting – estimated to take place at 11.00am immediately following the Option Scheme Meeting; and | |
• | EGM – estimated to take place at 11.30am immediately following the Performance Rights Scheme Meeting. |
Delivery address: Level 3, 60 Carrington Street, Sydney NSW Australia 2000
Postal address: GPO Box 2975, Victoria, Australia 3001
Facsimile number: + 61 3 9473 2500
(a) | by providing a written revocation to the Company’s share registry at the above address before the relevant Meeting; or | |
(b) | by properly executing and delivering a later dated proxy; or | |
(c) | by attending the relevant Meeting, requesting a return of the proxy before the start of the Meeting and voting in person at that Meeting. |
Table of Contents
Delivery address: Level 3, 60 Carrington Street, Sydney NSW Australia 2000
Postal address: GPO Box 2975, Victoria, Australia 3001
Facsimile number: + 61 3 9473 2500
Table of Contents
• | the Independent Expert’s Report in relation to the Proposed Transaction (contained in Appendix 2 to this Information Memorandum), which has been prepared by BDO Kendalls, who take responsibility for that Appendix; | |
• | the information in sections 10.1 and 10.2 of this Information Memorandum with respect to Australian tax consequences of the Proposed Transaction, which has been prepared by PWC Australia and PWC Australia takes responsibility for those sections. | |
• | the information in Appendix 11 of this Information Memorandum with respect to the summary of US federal income tax consequences of the HeartWare International 2008 Stock Incentive Plan, which has been prepared by DLA Piper LLP who take responsibility for that summary; and | |
• | the information in sections 1.2.5, 2 (Question 22), 4.5 and 10.3 of this Information Memorandum, which has been prepared by the Company and reviewed by PwC Australia in the case of the Australian tax consequences or PwC LLP in the case of the US tax consequences of the Proposed Transaction as indicated in section 10 of this Information Memorandum, and each such PwC partnership takes responsibility for the relevant section that such firm reviewed. |
Table of Contents
The information contained in this Information Memorandum for which PwC is responsible does not constitute “financial product advice” within the meaning of the Corporations Act. The PwC partnerships which are providing this advice are not licensed to provide financial product advice under the Corporations Act. To the extent that this Information Memorandum contains any information about a “financial product” within the meaning of the Corporations Act, taxation is only one of the matters that must be considered when making a decision about the relevant financial product. The material for which PwC is responsible, has been prepared for general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, you should, before acting on the material for which PwC is responsible, consider taking advice from a person who is licensed to provide financial product advice under the Corporations Act. In addition, before acting on the material for which PwC is responsible, you should also consider the appropriateness of this material having regard to your objectives, financial situation and needs and consider obtaining independent financial advice. |
Table of Contents
• | the Company and HeartWare International as its successor having complied with their US reporting obligations; | |
• | the volume of securities that can be sold in any three month period is limited to an amount equal to the greater of 1% of HeartWare International’s Shares on issue and 1% of the average weekly trading volume of HeartWare International’s Shares (measured over the previous four weeks); and | |
• | sales must be conducted by way of unsolicited broker’s transactions and a Form 144 filed with the SEC. |
Table of Contents
• | the Schemes including whether or not they are implemented; | |
• | continued losses and lack of profitability; | |
• | inability to raise capital; | |
• | inability to obtain necessary funding; | |
• | unsuccessful results of the Company’s clinical trials and failure to obtain regulatory approvals; | |
• | failure to prove the safety and efficacy of the Company’s products; | |
• | failure to comply with quality standards applicable to the Company’s manufacturing and quality processes; | |
• | inability to gain market acceptance of the Company’s products or to otherwise penetrate or grow the market in which the Company operates (now or in the future); | |
• | failure to obtain or maintain an adequate level of reimbursement by third party payers; | |
• | limited manufacturing, sales, marketing and distribution experience; | |
• | reliance on specialised suppliers for certain components and materials; | |
• | inability to protect the Company’s intellectual property; | |
• | litigation and product liability; | |
• | inability to manage growth; | |
• | inability to attract and retain qualified personnel; | |
• | failure to achieve and maintain effective internal control over financial reporting; | |
• | fluctuations in foreign exchange rates; and | |
• | any other factors described by the Company in its filings with the SEC. |
• | Share Scheme Meeting, which is material to the making of a decision by a Shareholder regarding whether or not to vote in favour of the Share Scheme; | |
• | Option Scheme Meeting, which is material to the making of a decision by an Optionholder regarding whether or not to vote in favour of the Option Scheme; | |
• | Performance Rights Scheme Meeting, which is material to the making of a decision by a Performance Rights Holder regarding whether or not to vote in favour of the Performance Rights Scheme; or | |
• | EGM, which is material to the making of a decision by a Shareholder regarding whether or not to vote in favour of the Resolution. |
Table of Contents
Table of Contents
1 | Summary of the Proposed Transaction |
1.1 | THE PROPOSED TRANSACTION | |
1.1.1 | Overview |
1.1.2 | Effect of the Proposed Transaction |
• | all of the existing Shares will be transferred to HeartWare International with the result that the Company will become a wholly-owned subsidiary of HeartWare International; | ||
• | in consideration for Shareholders transferring their Shares to HeartWare International, those Shareholders will be issued HeartWare International Shares. Unless a Shareholder elects otherwise, they will receive their HeartWare International Shares in the form of CDIs, which can be traded on ASX. Subject to rounding, a CDI will be equivalent to one Share. Shareholders whose addresses are recorded as outside Australia, New Zealand or the United States will not receive HeartWare International Shares, but will instead be entitled to the net proceeds of the sale of HeartWare International Shares (in the form of CDIs) to which they would have otherwise been entitled; | ||
• | those Shareholders who do not elect to receive CDIs will receive one HeartWare International Share for every 35 Shares they hold. The effect of this will be that HeartWare International Shares will be priced above the required and recommended price necessary to facilitate a listing on NASDAQ should the HeartWare Group determine to pursue such a listing; | ||
• | all existing Options and Performance Rights will be cancelled in exchange for the issue of new options and restricted stock units in HeartWare International to Optionholders and Performance Rights Holders; | ||
• | the existing Standalone Options will be cancelled in exchange for equivalent securities or rights in HeartWare International; | ||
• | HeartWare International will seek a listing and quotation of the CDIs on ASX thereby “replacing” the Company as the ASX listed entity in the HeartWare Group; and | ||
• | the Company will eventually be converted into a proprietary company and will remain largely inactive. |
1.1.3 | Potential Advantages |
• | allow the HeartWare Group to align its corporate structure with its operating structure including manufacturing, development, research and clinical efforts which are all undertaken in the US; | ||
• | enhance HeartWare International’s ability to effectively manage and grow its business in key markets; | ||
• | enhance HeartWare International’s ability to pursue growth and diversification opportunities in accordance with its strategic plans; | ||
• | enable HeartWare International to continue to be an Australian-listed publicly owned company as it grows internationally; | ||
• | facilitate further US-based demand for HeartWare International’s securities. The Directors believe that in excess of 65% of the Company’s Shares are already held by Shareholders who are resident in the US; |
Table of Contents
• | remove the FORUS restriction on the Company’s Shares allowing HeartWare International unfettered access to US investors, which the Directors believe should ultimately result in increased demand for HeartWare International securities; | ||
• | allow for the adoption of a US corporate structure for the HeartWare Group which will be more digestible and understandable for both US investors and US employees and enhance HeartWare International’s ability to attract and retain employees, especially key management with industry specific knowledge and experience who can enhance the development and commercialisation of the Company’s products; | ||
• | provide easier access to capital as certain US investors who were previously prevented from investing in the Company due to the Company being a non-US based company will now be able to invest in HeartWare International; | ||
• | reduce compliance costs of the HeartWare Group by eliminating the need to prepare Australian financial statements under Australian equivalents to International Financial Reporting Standards (IFRS) in addition to US GAAP financial statements thereby also eliminating the need to have Australian financial statements audited under Australian auditing standards; and | ||
• | reduce the resources used and time spent by management of the Company in reconciling and managing the differences between US and Australian law, particularly those differences associated with securities law. |
1.1.4 | Potential disadvantages and risks |
• | the effect of different legal regimes (please see Appendix 14 for a comparison of the Australian and US legal regimes); | ||
• | potential exposure of the HeartWare Group to a higher tax burden in the US (please see section 10.3 of this Information Memorandum for further details); | ||
• | exposure to US estate taxes in certain circumstances; | ||
• | potential loss of demand for HeartWare International’s Shares in the Australian market; | ||
• | exposure to the more litigious environment of the US; and | ||
• | loss of future dividend franking credit benefits should the Company make a dividend payment in the future (although the Company does not presently make dividend payments nor does it currently contemplate making dividend payments in the foreseeable future). |
1.2 | WHAT WILL SHAREHOLDERS AND INCENTIVE HOLDERS RECEIVE UNDER THE SCHEMES? |
1.2.1 | Share Scheme Consideration |
Table of Contents
1.2.2 | Option Scheme Consideration |
1.2.3 | Performance Rights Scheme Consideration |
1.2.4 | Treatment of Fractional Entitlements to Scheme Consideration |
1.2.5 | Tax Consequences |
Table of Contents
• | the exchange of Shares for HeartWare International Shares should not cause any US federal income tax to be paid by Shareholders who are otherwise not subject to US federal income tax; | ||
• | for Shareholders otherwise subject to US federal income tax (and except for Ineligible Overseas Shareholders), the exchange of Shares for HeartWare International Shares should not cause any US federal income tax to be paid by such Shareholders if certain US federal income tax filings are made by Shareholders in connection with the Share Scheme (further details of these filings are set out in section 10 of this Information Memorandum); | ||
• | the exchange of Options, Standalone Options and Performance Rights for HeartWare International Options, HeartWare International Standalone Options or HeartWare International Restricted Stock Units, respectively, should not cause any US federal income tax to be paid by Optionholders, Standalone Optionholders and Performance Rights Holders who are otherwise not subject to US federal income tax; and | ||
• | for Optionholders, Standalone Optionholders and Performance Rights Holders who are subject to US federal income tax, it is more likely than not that the exchange of Options, Standalone Options and Performance Rights for HeartWare International Options, HeartWare International Standalone Options and HeartWare International Restricted Stock Units (as relevant) under the Proposed Transaction will not cause any US federal income tax to be paid by such Optionholders, Standalone Optionholders and Performance Rights Holders. |
1.3 | STRUCTURE OF THE HEARTWARE GROUP IF THE SCHEMES BECOME EFFECTIVE | |
As a result of the Proposed Transaction, the Company will become a wholly owned subsidiary of HeartWare International and will be delisted from ASX. HeartWare International will apply for admission and for quotation of the CDIs on ASX and will, subject to obtaining the necessary approvals, replace the Company as the ASX listed entity in the HeartWare Group. | ||
The board of HeartWare International immediately after the Proposed Transaction will be the same as the current Board. Further information about these directors can be found in sections 5 and 6 of this Information Memorandum. | ||
Once the Schemes become Effective, Shareholders and Incentive Holders will hold HeartWare International Shares or CDIs, HeartWare International Options and HeartWare International Restricted Stock Units respectively with each being bound by the Scheme to which they are a party (including Shareholders, Optionholders and Performance Rights Holders who did not vote or voted against the Schemes). | ||
1.4 | INDEPENDENT EXPERT’S OPINION | |
The Company has appointed an independent expert, BDO Kendalls, to comment on the Proposed Transaction. The Independent Expert has concluded that the Proposed Transaction and the Schemes are in the best interests of the Shareholders (excluding Ineligible Overseas Shareholders), Optionholders and Performance Rights Holders. The Independent Expert has not provided an opinion with respect to the impact of the Proposed Transaction on Ineligible Overseas Shareholders. | ||
A copy of the Independent Expert’s Report is set out in Appendix 2 to this Information Memorandum. | ||
The Company has not retained BDO Kendalls to consider redomiciliation of the HeartWare Group in any jurisdiction other than Delaware, as the Company believes (having consulted with its advisers) Delaware to be a widely accepted and appropriate jurisdiction of incorporation for a company based in the US and which may seek a listing on NASDAQ. As such, the Independent Expert has not sought to analyse why the HeartWare Group has chosen to redomicile to Delaware as opposed to another jurisdiction in the US or elsewhere. |
Table of Contents
1.5 | RESOLUTION | |
In conjunction with the Schemes, an EGM will be held at which an ordinary resolution will be proposed to approve the new 2008 Stock Incentive Plan for HeartWare International for use following implementation of the Proposed Transaction. | ||
1.6 | DIRECTORS’ RECOMMENDATION | |
The directors of the Company and HeartWare International believe that the Proposed Transaction is in the best interests of the HeartWare Group and that the Schemes are in the best interests of Shareholders, Optionholders and Performance Rights Holders respectively. | ||
The directors of the Company and HeartWare International believe that the approval of the 2008 Stock Incentive Plan is in the best interests of HeartWare International and Shareholders. | ||
The Directors unanimously recommend that: |
• | Shareholders vote in favour of the Share Scheme at the Share Scheme Meeting; | ||
• | Optionholders vote in favour of the Option Scheme at the Option Scheme Meeting; |
• | Performance Rights Holders vote in favour of the Performance Rights Scheme at the Performance Rights Scheme Meeting; and | ||
• | Shareholders vote in favour of the Resolution at the EGM. |
1.7 | OTHER INFORMATION | |
This overview does not contain all of the information which is material to a Shareholder or Incentive Holder to assess how to vote. You are urged to read this Information Memorandum in its entirety and, if in any doubt, seek advice from your legal, financial or other professional adviser. |
Table of Contents
2 | Frequently asked questions |
Relevant | ||||||
Section of | ||||||
Information | ||||||
Question | Answer | Memorandum | ||||
THE PROPOSED TRANSACTION | ||||||
1 Why have I received this Information Memorandum? | This Information Memorandum has been sent to you because you are a Shareholder, Optionholder or Performance Rights Holder. The Information Memorandum contains information relevant to your consideration of the Proposed Transaction. Its purpose is to assist you in making a decision as to whether or not to approve the Schemes and the Resolution being proposed. | 3 | ||||
2 What is the Proposed Transaction? | The Proposed Transaction is a transaction to redomicile the HeartWare Group in the US. | 1 and 3 | ||||
3 How will the Proposed Transaction be implemented? | The Proposed Transaction will be implemented by: • a new US company, HeartWare International, acquiring all of the existing Shares from Shareholders in exchange for the issue of new HeartWare International Shares or CDIs to Shareholders under the Share Scheme; | 3 and 9 | ||||
• all of the existing Options being cancelled in exchange for HeartWare International issuing HeartWare International Options to Optionholders under the Option Scheme; | ||||||
• all of the existing Performance Rights being cancelled in exchange for HeartWare International issuing HeartWare International Restricted Stock Units to Performance Rights Holders under the Performance Rights Scheme; and | ||||||
• all of the existing Standalone Options being cancelled in exchange for HeartWare International issuing HeartWare International Standalone Options. | ||||||
The Option Scheme and Performance Rights Scheme are conditional on the Share Scheme becoming Effective. | ||||||
4 What is the effect of approving the Schemes? | If the Schemes are approved, the Proposed Transaction will be implemented and the HeartWare Group will redomicile in the US with HeartWare International becoming the ultimate parent company of the HeartWare Group. Shareholders and Incentive Holders (other than Ineligible Overseas Shareholders) will receive new HeartWare International Shares or CDIs, HeartWare International Options and HeartWare International Restricted Stock Units respectively and HeartWare International will become the listed entity on ASX. | 4 | ||||
5 Is The Proposed Transaction subject to any conditions? | The Proposed Transaction is subject to Shareholder, Optionholder, Performance Rights Holder and Court approvals, as well as a number of regulatory and other approvals, including with respect to the listing of HeartWare International on ASX. | 9 | ||||
6 Who is HeartWare International? | HeartWare International is a newly incorporated Delaware company which is presently a subsidiary of the Company and which, if the Share Scheme becomes Effective, will become the ultimate parent company of the HeartWare Group. Subject to the Share Scheme becoming Effective and ASX approval, HeartWare International will become listed on ASX. | 6 |
Table of Contents
Relevant | ||||||
Section of | ||||||
Information | ||||||
Question | Answer | Memorandum | ||||
7 Who will be the directors of HeartWare International following implementation of the Share Scheme. | Upon the Share Scheme becoming Effective, all members of the Board will be appointed to the board of HeartWare International. | 6 | ||||
8 Why is HeartWare International incorporated in Delaware? | Over 50% of all US publicly listed companies are incorporated in the State of Delaware. Delaware is usually chosen because of its well developed corporations laws. | 6 | ||||
9 Will there be changes to the operations or strategy of the HeartWare Group as a result of the Proposed Transaction? | Following the Proposed Transaction, the HeartWare Group will continue to have the same assets and liabilities. The Directors expect very few changes to the HeartWare Group’s operations as a result of the Proposed Transaction. It is the intention of the Directors that the business of the HeartWare Group will largely remain the same as before the Proposed Transaction and the HeartWare Group does not intend to change its strategy as a result of the Proposed Transaction. | 5 | ||||
Following implementation of the Proposed Transaction, the Directors will convert the present Company to a proprietary company limited by shares. In addition, the Directors may also consider an internal restructure of the HeartWare Group as discussed in section 6.9. | ||||||
10 Where will HeartWare International’s annual meetings be held in the future? | HeartWare International intends to alternate the venue for holding its annual meetings between Sydney and the US. | — | ||||
SCHEME CONSIDERATION | ||||||
11 What will I receive if the Share Scheme becomes Effective? | Unless you elect otherwise, if you hold Shares in the Company and the Share Scheme becomes Effective, you will receive your HeartWare International Shares in the form of CDIs to allow you to trade them on ASX. Subject to rounding, a CDI will be equivalent to one Share. If you make an election to receive HeartWare International Shares you will receive one HeartWare International Share in exchange for every 35 Shares you hold as at the Scheme Record Date (subject to rounding of fractional entitlements). | 3 and 9 | ||||
12 What will I receive if the Option Scheme becomes Effective? | If you hold Options and the Option Scheme becomes Effective, you will receive one HeartWare International Option in exchange for every 35 Options you hold as at the Scheme Record Date (subject to rounding of fractional entitlements). | 3 and 9 | ||||
13 What will I receive if the Performance Rights Scheme becomes Effective? | If you hold Performance Rights and the Performance Rights Scheme becomes Effective you will receive one HeartWare International Restricted Stock Unit in exchange for every 35 Performance Rights you hold as at the Scheme Record Date (subject to rounding of fractional entitlements). | 3 and 9 | ||||
14 When will I receive HeartWare International Shares, HeartWare International Options or HeartWare International Restricted Stock Units if the Schemes become Effective? | If the Schemes become Effective, it is expected that implementation of the Proposed Transaction will take place approximately 15 days after the Scheme Meetings. The HeartWare International Shares, HeartWare International Options and HeartWare International Restricted Stock Units will be issued on the Implementation Date and holding statements and transmittal letters will be mailed shortly thereafter. | 9 |
Table of Contents
Relevant | ||||||
Section of | ||||||
Information | ||||||
Question | Answer | Memorandum | ||||
15 Can I trade HeartWare International Shares, HeartWare International Options and HeartWare International Restricted Stock Units on ASX? | Subject to ASX approval, after the Share Scheme becomes Effective, HeartWare International will be listed and HeartWare International Shares will be able to be traded on ASX in the form of CDIs. As is the case with the current Options and Performance Rights, HeartWare International Options and HeartWare International Restricted Stock Units will not be quoted and will not be able to be traded on ASX. | 9 | ||||
Unless and until HeartWare International Shares are listed for trading on NASDAQ or another exchange, there will be no US public market for HeartWare International Shares. HeartWare International intends to seek a NASDAQ listing before the end of 2009, subject to HeartWare International’s performance and achievement of milestones such as regulatory approvals, market conditions and the satisfaction of relevant legal requirements. However, there can be no assurance that a listing on NASDAQ or other exchange will be sought or achieved by HeartWare International in any particular time frame or at all. | ||||||
16 Are there differences between my Shares and the HeartWare International Shares I will receive under the Share Scheme? | Yes. While the rights attaching to HeartWare International Shares are based on the rights of the existing Shares, there are certain important differences. In addition, there are a number of significant differences between US/Delaware law and Australian law. A summary of these differences is set out in Appendix 14 to this Information Memorandum. | 6 Appendix 14 | ||||
17 What are CDIs? | The electronic transfer system used on ASX, known as CHESS, cannot be used directly for the transfer of securities of foreign companies. To enable companies such as HeartWare International to have their securities cleared and settled electronically through CHESS, depositary instruments called CHESS Depositary Interests (CDIs) are issued. | Appendix 13 | ||||
CDIs confer beneficial interests in securities traded on ASX. CDI holders receive all of the economic benefits of actual ownership of the underlying shares. | ||||||
Each CDI will represent an interest in one thirty-fifth of an underlying HeartWare International Share. As one HeartWare International Share will be issued for every 35 Shares, it is expected that CDIs will begin to trade on ASX at or near the trading price of the Shares prior to implementation of the Proposed Transaction. | ||||||
A more detailed description of CDIs is set out in Appendix 13 to this Information Memorandum. | ||||||
18 Will my HeartWare International Options be granted under the same plans and on the same terms as my existing Options? | The HeartWare International Options will have largely the same terms as your current Options. The HeartWare International Options will be granted under the new HeartWare International Employee Stock Option Plan. A copy of the HeartWare International Employee Stock Option Plan is set out in Appendix 9 to this Information Memorandum. | Appendix 9 | ||||
19 How will my Standalone Options be treated as a result of the Proposed Transaction? | In accordance with the terms of the Implementation Agreement, the Company has agreed with each Standalone Optionholder to cancel the Standalone Options held by such holder upon the Share Scheme becoming Effective. In consideration for that cancellation, HeartWare International will grant to each Standalone Optionholder HeartWare International Standalone Options. | 9 |
Table of Contents
Relevant | ||||||
Section of | ||||||
Information | ||||||
Question | Answer | Memorandum | ||||
20 How will fractional entitlements be treated? | Fractional entitlements to HeartWare International Shares, HeartWare International Options, HeartWare International Restricted Stock Units and HeartWare International Standalone Options will be rounded down to the nearest whole number of HeartWare International Shares, HeartWare International Options and HeartWare International Restricted Stock Units and HeartWare International Standalone Options respectively after aggregating all holdings of the relevant Scheme Participant. | 3 | ||||
21 Will I have to pay brokerage fees or stamp duty? | Unless you are an Ineligible Overseas Shareholder you will not have to pay brokerage or stamp duty in connection with the exchange of your Shares for HeartWare International Shares. Ineligible Overseas Shareholders will have some brokerage deducted from the proceeds of sale of their CDIs under the nominee sale process. | 9 | ||||
22 Will I pay any tax on the exchange of my Shares, Options or Performance Rights? | The Company has been advised that the exchange of: • Shares for CDIs or HeartWare International Shares; • Options for HeartWare International Options; and • Performance Rights for HeartWare International Restricted Stock Units, | 10 | ||||
will not cause any Australian tax to be paid by Shareholders holding Shares on capital account and Incentive Holders that are eligible for capital gains tax or Division 13A employee share/option scheme tax rollover. | ||||||
Two class ruling applications have been lodged with the ATO seeking confirmation that the conditions for capital gains scrip for scrip rollover relief and Division 13A employee share/option rollover relief are satisfied and that rollover relief is available in relation to the transfer of Shares to HeartWare International under the Share Scheme, the cancellation of Options under the Option Scheme and the cancellation of Performance Rights under the Performance Rights Scheme. Shareholders and Incentive Holders will be advised of the outcome of the ruling process once the final rulings have been issued. | ||||||
Receipt of the final rulings is not a condition to the implementation of the Schemes. | ||||||
However, as a result of the Proposed Transaction Shareholders and Incentive Holders may be subject to US estate taxes. | ||||||
Subject to the limitations and qualifications set out in section 10 of this Information Memorandum, the Company has also been advised that: | ||||||
• the exchange of Shares for HeartWare International Shares should not cause any US federal income tax to be paid by Shareholders who are otherwise not subject to US federal income tax; | ||||||
• for Shareholders otherwise subject to US federal income tax (except for Ineligible Overseas Shareholders) the exchange of Shares for HeartWare International Shares should not cause any US federal income tax to be paid by such Shareholders if certain US federal income tax filings are made by such Shareholders in connection with the Share Scheme; | ||||||
Table of Contents
Relevant | ||||||
Section of | ||||||
Information | ||||||
Question | Answer | Memorandum | ||||
• the exchange of Options, Standalone Options and Performance Rights for HeartWare International Options, HeartWare International Standalone Options or HeartWare International Restricted Stock Units, respectively, should not cause any US federal income tax to be paid by Optionholders, Standalone Optionholders and Performance Rights Holders who are otherwise not subject to US federal income tax; | ||||||
• for Optionholders, Standalone Optionholders and Performance Rights Holders otherwise subject to US federal income tax, it is more likely than not that the exchange of Options, Standalone Options and Performance Rights for HeartWare International Options, HeartWare International Standalone Options and HeartWare International Restricted Stock Units (as relevant) under the Proposed Transaction should not cause any US federal income tax to be paid by such Optionholders, Standalone Optionholders and Performance Rights Holders. | ||||||
Each individual’s tax position is different and Shareholders and Incentive Holders are strongly urged to consult their tax advisers as to the specific tax consequences to them of the Share Scheme, Option Scheme and Performance Rights Scheme, respectively, including the applicability and effect of local and foreign income and other tax laws in their particular circumstance. | ||||||
APPROVALS | ||||||
23 What happens at the Court hearing? | If the Schemes are approved by Shareholders, Optionholders and Performance Rights Holders at the Scheme Meetings, the Court will be asked to approve the Schemes at the Second Court Hearing. | 9 | ||||
If Shareholders or Incentive Holders wish to oppose the approval by the Court of the Schemes at the Second Court Hearing, they may do so by filing with the Court and serving on the Company a notice of appearance in the prescribed form, together with any affidavit on which they wish to rely at the hearing. | ||||||
24 What happens if the Share Scheme is approved but the Option Scheme is not? | The Share Scheme is not conditional on the approval of the Option Scheme, so that if the Option Scheme resolution is not passed, the Share Scheme will still proceed. However, Optionholders will still hold options exercisable over Shares in the Company rather than options over HeartWare International Shares. | 4 and 9 | ||||
In this case, HeartWare International would consider all of the alternatives available to it, including compulsory acquisition (or cancellation) of the Options, either under the Corporations Act or by private treaty, or taking no immediate action, in which case Optionholders who subsequently exercise their Options would become minority shareholders of the Company (which will have become a subsidiary of HeartWare International and delisted from ASX). In those circumstances, the Company may consider acquiring the Shares or cancelling the Options (as the case requires) at a subsequent time. |
Table of Contents
Relevant | ||||||
Section of | ||||||
Information | ||||||
Question | Answer | Memorandum | ||||
25 What happens if the Share Scheme is approved but the Performance Rights Scheme is not? | The Share Scheme is not conditional on the Performance Rights Scheme so that if the Performance Rights Scheme resolution is not passed, the Share Scheme will still proceed. However, Performance Rights Holders will still hold rights over Shares in the Company rather than over HeartWare International Shares. | 4 and 9 | ||||
In this case, HeartWare International would consider all of the alternatives available to it, including compulsory acquisition (or cancellation) of the Performance Rights, either under the Corporations Act or by private treaty, or taking no immediate action, in which case Performance Rights Holders who subsequently exercise their rights would become minority shareholders of the Company (which will have become a subsidiary of HeartWare International and delisted from ASX). In those circumstances, the Company may consider acquiring the Shares or cancelling the Performance Rights (as the case requires) at a subsequent time. | ||||||
26 What happens if the Option Scheme is approved but the Share Scheme is not? | The Option Scheme is conditional on the approval of the Share Scheme, so that if the Share Scheme resolution is not passed both Schemes will fail. | 4 and 9 | ||||
27 What happens if the Performance Rights Scheme is approved but the Share Scheme is not? | The Performance Rights Scheme is conditional on the approval of the Share Scheme, so that if the Share Scheme resolution is not passed both Schemes will fail. | 4 and 9 | ||||
28 What happens if the Resolution is not approved? | The Schemes are not conditional upon approval of the Resolution. Accordingly, if the required approvals are obtained for the Schemes they will proceed regardless of whether the Resolution is passed at the EGM. If the Resolution is not passed, the 2008 Stock Incentive Plan will not be approved and no grants of incentives will be able to be made under this Plan. | 4 | ||||
VOTING | ||||||
29 What am I being asked to vote on? | If you own Shares, you are being asked to vote on the: • Share Scheme; and • Resolution at the EGM. | Your Vote on the Proposed Transaction (p6) | ||||
If you own Options, you are being asked to vote on the Option Scheme. | ||||||
If you own Performance Rights, you are being asked to vote on the Performance Rights Scheme. | ||||||
30 Am I entitled to vote? | If you are registered as a holder of Shares, Options or Performance Rights as at 7.00pm on 20 October 2008 and you are eligible to vote, you will be entitled to vote at the Share Scheme Meeting, the EGM, the Option Scheme Meeting or the Performance Rights Scheme Meeting (as applicable). | Your Vote on the Proposed Transaction (p6) | ||||
31 Should I vote? | You do not have to vote. However, your Directors believe that the Schemes are in the best interests of Shareholders and Incentive Holders and urge you to read this Information Memorandum carefully and, if eligible, to vote in favour of the Schemes and Resolution in person by attending the relevant Meeting or by proxy, attorney or corporate representative. | 3 |
Table of Contents
Relevant | ||||||
Section of | ||||||
Information | ||||||
Question | Answer | Memorandum | ||||
32 What happens if I do not vote, or vote against the Schemes, and the Schemes are approved? | If the necessary approvals for the Proposed Transaction are obtained, Shareholders, Optionholders and Performance Rights Holders will be issued HeartWare International Shares, HeartWare International Options and HeartWare International Restricted Stock Units respectively in exchange for their Shares, Options and Performance Rights. This will occur regardless of whether you voted for or against the Schemes or did not vote. | 9 | ||||
33 How do I vote? | You may vote either in person, by proxy, attorney or if you are a body corporate, by a corporate representative of that entity. There are several meetings that will be held in connection with the Proposed Transaction. Your vote is very important. Please see the section entitled “Your vote on the Proposed Transaction” for details as to the procedure for voting at the Meetings. | Your vote on the Proposed Transaction (p6) | ||||
MISCELLANEOUS | ||||||
34 Who can help answer my questions about the Proposed Transaction? | If you have any questions about the Proposed Transaction please consult your legal, financial or other professional adviser. Additionally, you can call the Company’s enquiry line on: | |||||
Australia (Toll Free): 1800 707 861 | ||||||
Outside Australia: +61 2 8256 3387 | ||||||
For additional copies of this Information Memorandum, please visit the Company’s website at www.heartware.com.au. |
Table of Contents
3 | The Proposed Transaction | |
3.1 | OVERVIEW | |
The Proposed Transaction is a proposal to redomicile the HeartWare Group in the US. This will be implemented by the establishment of a new corporate structure under which HeartWare International (a new company incorporated in the US) will become the ultimate parent company of the HeartWare Group and will hold all of the Shares in the Company. | ||
All existing Shares in the Company will be transferred to HeartWare International in exchange for the issue of HeartWare International Shares to Shareholders. Unless you elect otherwise, your HeartWare International Shares will be issued in the form of CDIs to allow you to trade them on ASX. | ||
In conjunction with this share exchange, all existing Options and Performance Rights in the Company will be cancelled in exchange for the issue of HeartWare International Options and HeartWare International Restricted Stock Units (the US equivalent of performance rights) to Optionholders and Performance Rights Holders. | ||
The exchange of the Shares, Options and Performance Rights for new securities in HeartWare International will be effected by way of three concurrent schemes of arrangement. | ||
3.2 | SHARE SCHEME | |
A scheme of arrangement under Part 5.1 of the Corporations Act will be proposed to Shareholders under which all existing Shares in the Company will be transferred to HeartWare International. Under this arrangement, unless a Shareholder elects otherwise, the HeartWare International Shares will be issued in the form of CDIs to enable them to trade on ASX. Each CDI will be equivalent to an interest in one thirty-fifth of a HeartWare International Share and accordingly, Shareholders will essentially receive one CDI for each Share held by them on the Scheme Record Date. If Shareholders make an election to receive HeartWare International Shares, they will receive: |
HeartWare International Shares will not be immediately tradeable on any public market. | ||
Fractional entitlements to Share Scheme Consideration will be rounded down to the nearest whole number of HeartWare International Shares or nearest multiple of 35 CDIs after aggregating all holdings of the relevant Shareholder. | ||
Further details of how Shareholders may elect to receive HeartWare International Shares rather than CDIs under the Share Scheme are set out in section 9.8 of this Information Memorandum. | ||
The detailed steps involved in implementing the Share Scheme are set out in Section 9 of this Information Memorandum. | ||
3.3 | OPTION SCHEME | |
A scheme of arrangement under Part 5.1 of the Corporations Act will be proposed to Optionholders under which all existing Options over Shares in the Company will be cancelled. Under this arrangement, Optionholders will receive: |
• | have an equivalent exercise price to the price under the existing Options (but reflecting the 35:1 exchange ratio under the Schemes); | ||
• | be vested to the same extent as the existing Options are vested; and | ||
• | be subject to the same performance hurdles (if any) as apply to the existing Options. |
Table of Contents
3.4 | PERFORMANCE RIGHTS SCHEME | |
A scheme of arrangement under Part 5.1 of the Corporations Act will be proposed to Performance Rights Holders under which all existing Performance Rights in the Company will be cancelled. Under this arrangement, Performance Rights Holders will receive: |
• | have a nil exercise price as per the existing Performance Rights; | ||
• | be vested to the same extent as the existing Performance Rights are vested; and | ||
• | be subject to the same performance hurdles (if any) as apply to the existing Performance Rights. |
3.5 | EXCHANGE RATIO |
3.6 | TREATMENT OF FRACTIONAL ENTITLEMENTS TO SCHEME CONSIDERATION |
Current holding: | 100,000 Shares | |
25,000 Options | ||
16,000 Performance Rights | ||
Exchange Ratio: | 35:1 | |
Entitlement to HeartWareInternational Shares: | 2,857.14 HeartWare International Shares rounded down to 2,857 HeartWare International Shares. | |
Entitlement to CDIs: | 2,857 x 35 | |
= 99,995 CDIs | ||
Entitlement to HeartWare International Options: | 714.29 HeartWare International Options rounded down to 714 HeartWare International Options. | |
Entitlement to HeartWare International Restricted Stock Units: | 457.14 HeartWare International Restricted Stock Units rounded down to 457 HeartWare International Restricted Stock Units |
Table of Contents
3.7 | RELATIONSHIP BETWEEN THE SCHEMES |
3.8 | INELIGIBLE OVERSEAS SHAREHOLDERS |
3.9 | APPROVALS |
(a) | the Share Scheme must be approved by a majority in number of Shareholders representing at least 75% of the votes cast by Shareholders present and voting (either in person or by proxy, attorney or corporate representative) at the Share Scheme Meeting (unless the Court orders otherwise); | ||
(b) | the Option Scheme must be approved by a majority in number of Optionholders representing at least 75% by value of the Options present and voting (either in person or by proxy, attorney or corporate representative) at the Option Scheme Meeting; | ||
(c) | the Performance Rights Scheme must be approved by a majority in number of Performance Rights Holders representing at least 75% by value of the Performance Rights present and voting (either in person or by proxy, attorney or corporate representative) at the Performance Rights Scheme Meeting; and | ||
(d) | the Resolution must be approved by a majority of votes of Shareholders present and voting (either in person or by proxy, attorney or corporate representative) at the EGM. |
Table of Contents
3.10 | REPLACEMENT OF STANDALONE OPTIONS |
3.11 | LISTING OF HEARTWARE INTERNATIONAL |
3.12 | CHESS DEPOSITARY INTERESTS (CDIS) |
Table of Contents
4 | Important considerations for Shareholders and Incentive Holders | |
4.1 | INTRODUCTION |
4.2 | POTENTIAL ADVANTAGES OF THE PROPOSED TRANSACTION |
• | allow the HeartWare Group to align its corporate structure with its operating structure including manufacturing, development, research and clinical efforts which are all undertaken in the US; | ||
• | enhance HeartWare International’s ability to effectively manage and grow its business in key markets; | ||
• | enhance HeartWare International’s ability to pursue growth and diversification opportunities in accordance with its strategic plans; | ||
• | enable HeartWare International to continue to be an Australian-listed publicly owned company as it grows internationally; | ||
• | facilitate further US-based demand for HeartWare International’s securities. The Directors believe that in excess of 65% of the Company’s Shares are already held by Shareholders who are resident in the US; | ||
• | removal of the FORUS restriction on the Company’s Shares allowing HeartWare International unfettered access to US investors, which the Directors believe should ultimately result in increased demand for HeartWare International securities. To ensure compliance with restrictions under US securities laws, all of the Company’s Shares are currently subject to a restriction on transfer to any US person (FORUS restriction). The lifting of the FORUS restriction will remove the restrictions placed on transfers to US persons which the Company believes will result in greater access to US investors. ASX has provided in-principle confirmation that FORUS restrictions on Shares will be lifted in connection with the Proposed Transaction; | ||
• | allow for the adoption of a US corporate structure for the HeartWare Group which will be more digestible and understandable for both US investors and US employees and enhance HeartWare International’s ability to attract and retain employees, especially key management with industry specific knowledge and experience who can enhance the development and commercialisation of the Company’s products; | ||
• | provide easier access to capital as certain US investors who were previously prevented from investing in the Company due to it being a non-US based company will now be able to invest in HeartWare International; | ||
• | reduce compliance costs of the HeartWare Group by eliminating the current requirements to prepare Australian financial statements under Australian equivalents to IFRS in addition to the US GAAP financial statements; and | ||
• | reduce the resources used and time spent by management of the Company in reconciling and managing the differences between US and Australian law, particularly those differences associated with securities law. |
Table of Contents
4.3 | POTENTIAL DISADVANTAGES AND RISKS OF THE PROPOSED TRANSACTION |
• | effect of different legal regimes (please see Appendix 14 for a comparison of the Australian and US legal regimes); | ||
• | exposure to US estate taxes in certain circumstances (please see section 10 for further details); | ||
• | potential loss of demand for HeartWare International’s Shares in the Australian market; | ||
• | exposure to the more litigious environment of the US; and | ||
• | loss of future dividend franking credit benefits should the Company make a dividend payment in the future (although the Company does not presently make dividend payments nor does it currently contemplate making dividend payments in the foreseeable future). |
4.4 | DIFFERENCES BETWEEN AUSTRALIAN AND US CORPORATIONS AND SECURITIES LAWS |
• | any person becoming a substantial holder of HeartWare International within the meaning of section 617B of the Corporations Act, and to disclose any details of the substantial holding of which HeartWare International is aware; and | ||
• | any subsequent changes in the substantial holdings of which HeartWare International is aware. |
• | the HeartWare Group will no longer prepare Australian financial statements and report under AIFRS; | ||
• | HeartWare International will hold some of its shareholder meetings in the US; | ||
• | HeartWare International will have CDIs traded on ASX rather than ordinary shares (Appendix 13 sets out a summary of the rights attaching to CDIs); and | ||
• | holders of HeartWare International Shares may, in certain circumstances, be subject to US estate taxes. |
Table of Contents
4.5 | TAX IMPLICATIONS OF THE PROPOSED TRANSACTION |
4.6 | IMPLICATIONS IF THE PROPOSED TRANSACTION DOES NOT PROCEED |
• | the benefits expected to arise from the Proposed Transaction such as improved access to capital markets and reduced compliance costs, as summarised in section 4.2 will not be obtained; | ||
• | the costs incurred in connection with presenting the Proposed Transaction to Shareholders will be incurred regardless of whether the Proposed Transaction is implemented; | ||
• | the redomiciling proposal will not be revisited in the foreseeable future; and | ||
• | the Company, as a reporting company in the US, will be required to incur the time and expense of dual reporting of its financial statements under AIFRS and US GAAP. |
• | as the Company will become a wholly owned subsidiary of HeartWare International and will be de-listed from ASX, the Options will be over unlisted securities in a tightly controlled entity. As a result, any unexercised Options would only be able to convert into extremely illiquid shares in an unlisted company. This would result in value realisation being uncertain for Optionholders; | ||
• | alternatively, HeartWare International may compulsorily acquire the Options but is not obliged to do so. The right of an Optionholder to continue to hold his or her Options, or Shares issued on exercise of such Options, will be subject to any decision by HeartWare International to compulsorily acquire the Options and Shares issued on exercise of such Options under Chapter 6A of the Corporations Act. HeartWare International has indicated that it may exercise its compulsory acquisition rights if the Option Scheme is not approved. Any such compulsory acquisition must be at fair value for the Options in the opinion of an independent expert nominated by ASIC and will be payable in cash, but there is no guarantee that this amount will be equal to or exceed the value of the HeartWare International Options which would have been issued under the Option Scheme; and | ||
• | finally, HeartWare International may consider discussing the cancellation of the Options with Optionholders by private treaty but is not obliged to do so. |
Table of Contents
• | as the Company will become a wholly owned subsidiary of HeartWare International and will be de-listed from ASX, the Performance Rights will be over unlisted securities in a tightly controlled entity. As a result, any unvested Performance Rights would only be able to convert into extremely illiquid shares in an unlisted company. This would result in value realisation being uncertain for Performance Rights Holders; | ||
• | alternatively, HeartWare International may compulsorily acquire the Performance Rights but is not obliged to do so. The right of a Performance Rights Holder to continue to hold his or her Performance Rights, or Shares issued on exercise of such Performance Rights, will be subject to any decision by HeartWare International to compulsorily acquire the Performance Rights and Shares issued on exercise of such Performance Rights under Chapter 6A of the Corporations Act. HeartWare International has indicated that it may exercise its compulsory acquisition rights if the Performance Rights Scheme is not approved. |
As with the Options, any such compulsory acquisition must be at fair value for the Performance Rights in the opinion of an independent expert nominated by ASIC and will be payable in cash, but there is no guarantee that this amount will be equal or exceed the value of the HeartWare International Restricted Stock Units which would have been issued under the Performance Rights Scheme; and | |||
• | finally, HeartWare International may consider discussing the cancellation of the Performance Rights with Performance Rights Holders by private treaty but it is not obliged to do so. |
4.7 | INDEPENDENT EXPERT’S OPINION |
4.8 | DIRECTORS’ RECOMMENDATION |
Table of Contents
5 | Information about the Company | |
5.1 | INTRODUCTION | |
This section contains information in relation to the Company. | ||
The Independent Expert’s Report set out in Appendix 2 to this Information Memorandum contains further information about the Company. | ||
5.2 | BUSINESS OVERVIEW |
Table of Contents
• | unique design; | ||
• | smaller size; | ||
• | less invasive implant techniques; | ||
• | increased durability; and | ||
• | reliability. |
• | small size which allows for routine implantation in the space immediately surrounding the heart, known as the pericardial space, unlike other full-output LVADs that are currently available and which are implanted in the abdomen; | ||
• | a hybrid passive magnetic and hydrodynamic impeller suspension system which eliminates the need for mechanical bearings, providing a “wearless mechanism”; | ||
• | a wide-bladed impeller which facilitates clear blood flow paths through the pump; | ||
• | an integrated inflow cannula which optimises blood flow characteristics and facilitates pericardial placement; | ||
• | dual motor stators and related circuitry which enhance system reliability; and | ||
• | efficient hydrodynamic coupling with motor design to maximise power efficiency and enable the delivery of up to ten litres of blood flow per minute. |
Table of Contents
Table of Contents
5.3 | MARKET OPPORTUNITY AND COMPETITION |
Class | Patient Symptoms | |
Class I (Mild) | No limitation of physical activity. Ordinary physical activity does not cause undue fatigue, palpitation or dyspnoea (shortness of breath). | |
Class II (Mild) | Slight limitation of physical activity. Comfortable at rest, but ordinary physical activity results in fatigue, palpitation or dyspnoea. | |
Class III (Moderate) | Marked limitation of physical activity. Comfortable at rest, but less than ordinary activity causes fatigue, palpitation or dyspnoea. | |
Class IV (Severe) | Unable to carry out any physical activity without discomfort. Symptoms of cardiac insufficiency at rest. If any physical activity is undertaken, discomfort is increased. |
Stage | Definition | |
Stage A | Those patients who are at risk of developing heart failure. | |
Stage B | Those patients who have known heart failure, more commonly referred to as a “structural abnormality of the heart”, but have never had heart failure. This includes patients diagnosed with “systolic” heart failure which occurs when the heart muscle does not contract with enough force, so there is not enough oxygenated blood being pumped throughout the body. | |
Stage C | Those patients who have a structural abnormality of the heart and current or previous symptoms of heart failure. | |
Stage D | Those patients who have late, fully developed symptoms of heart failure that is not readily yielding to medical treatment. |
Table of Contents
• | its small device size which allows for routine implantation in the space immediately surrounding the heart, known as the pericardial space, unlike other full-output LVADs that are currently available; | ||
• | a hybrid passive magnetic and hydrodynamic impeller suspension system which eliminates the need for mechanical bearings, providing a “wearless mechanism”; and | ||
• | a design that includes a wide-bladed impeller which facilitates clear blood flow paths through the pump and an integrated inflow cannula which optimises blood flow characteristics. |
• | the Company’s products are in the early stages of development, it has limited implantation experience, and the Company’s success is dependent on its further international clinical trials backing up the safety and efficacy of its products; | ||
• | a number of the Company’s competitors have significantly greater financial and human resources than the Company and have established reputations, as well as worldwide distribution channels, sales and marketing capabilities which are larger and more established than the Company’s; and | ||
• | the Company’s market is an emerging market and is reliant upon acceptance of LVAD technology. |
5.4 | THE COMPANY’S STRATEGY |
• | Finalising European and Australian Clinical Trials– the Company has completed its initial enrolment of 20 patients in its combined European and Australian clinical trial and have recently decided to expand the international trial to 50 patients. This international clinical trial is aimed at achieving European and Australian regulatory approval for the HeartWare LVAD System. As at 31 July 2008, the Company had implanted 40 of the maximum 50 patients. As at the date of this Information Memorandum the Company has implanted 42 patients. |
Table of Contents
• | Obtaining regulatory approval and commercially launching the HeartWare LVAD System- the Company’s main priority is to obtain regulatory approval in Europe, the US and Australia for the HeartWare LVAD System and to launch the HeartWare LVAD System commercially. | ||
• | US IDE approval– on 5 May 2008, the Company received conditional approval from the FDA, which enabled the Company to immediately commence its US clinical trial for the HeartWare LVAD System for use as a bridge-to-cardiac transplant in patients suffering from end-stage heart failure. On 18 August 2008, the Company commenced its US clinical trial with its first human implant at the Washington Hospital Centre. The commencement of implanting in additional centres in the US is expected to occur during this quarter. | ||
• | Commencing sales and marketing activities– once the Company obtains regulatory approval to sell its product commercially, the Company intends to further develop a network of training centres at the sites where the clinical trials are being conducted. The Company intends to work with a broad spectrum of physicians to promote the clinical benefits of the HeartWare LVAD System. The Company also plans to recruit and train a direct sales force to market the Company’s product in the US, Australia and some European countries and eventually engage distributors elsewhere. | ||
• | Focusing on continuous product development– in parallel with the clinical development of the HeartWare LVAD System, the Directors plan to advance the development of the Company’s next generation products, such as the MVAD and IV VAD. The Company’s first MVAD animal trials began in August 2005. In 2007, the Company began focusing on cannulation techniques for its MVAD via additional animal studies and this work is expected to continue throughout 2008. | ||
• | Partnering with leading professionals in the fields of cardiovascular surgery and cardiology and heart centres around the world– the Company’s Medical Advisory Board is composed of leading professionals in the fields of cardiovascular surgery and cardiology. The Company has established relationships with several leading heart centres around the world and continues to expand this network. The Directors believe that these relationships are key to the Company’s growth as they help to drive clinical awareness of the Company’s products. |
5.5 | THE COMPANY’S ISSUED SECURITIES |
• | 310,356,839 Shares; | ||
• | 22,746,464 Options; | ||
• | 5,000,000 Performance Rights; and | ||
• | 1,850,000 Standalone Options. |
Table of Contents
Number of Options | Exercise Price | Expiry Date | ||||||
4,273,804 | $ | 0.20 | 24 January 2010 | |||||
191,051 | $ | 0.60 | 24 January 2010 | |||||
191,051 | $ | 0.75 | 24 January 2010 | |||||
191,051 | $ | 1.00 | 24 January 2010 | |||||
191,051 | $ | 1.50 | 24 January 2010 | |||||
191,051 | $ | 0.60 | 27 April 2010 | |||||
191,051 | $ | 0.75 | 27 April 2010 | |||||
191,051 | $ | 1.00 | 27 April 2010 | |||||
191,051 | $ | 1.50 | 27 April 2010 | |||||
944,204 | $ | 0.50 | 27 April 2010 | |||||
764,204 | $ | 0.50 | 30 November 2012 | |||||
2,319,580 | $ | 1.10 | 25 July 2016 | |||||
5,581,264 | $ | 1.10 | 27 September 2016 | |||||
500,000 | $ | 1.10 | 28 October 2016 | |||||
150,000 | $ | 1.10 | 2 January 2017 | |||||
200,000 | $ | 0.75 | 26 July 2017 | |||||
2,850,000 | $ | 0.75 | 16 November 2017 | |||||
200,000 | $ | 0.60 | 11 July 2018 | |||||
3,435,000 | $ | 0.57 | 13 August 2018 |
Number of Performance Rights | Expiry Date | |||
1,650,000 | 16 November 2017 | |||
1,100,000 | 9 May 2018 | |||
2,250,000 | 13 August 2018 |
Number of | ||||||||||||
Name | Standalone Options | Expiry Date | Exercise Price | |||||||||
Robert Thomas | 200,000 | 24 January 2010 | $ | 0.60 | ||||||||
200,000 | 24 January 2010 | $ | 1.00 | |||||||||
100,000 | 24 January 2010 | $ | 1.50 | |||||||||
Dr Christine Bennett | 100,000 | 24 January 2010 | $ | 0.60 | ||||||||
100,000 | 24 January 2010 | $ | 1.00 | |||||||||
50,000 | 24 January 2010 | $ | 1.50 | |||||||||
Dr Denis Wade AM | 100,000 | 24 January 2010 | $ | 0.60 | ||||||||
100,000 | 24 January 2010 | $ | 1.00 | |||||||||
50,000 | 24 January 2010 | $ | 1.50 |
Table of Contents
Name | Number of Standalone Options | Expiry Date | Exercise Price | |||||||||
Dr Bud Frazier | 250,000 | 16 November 2017 | $ | 0.75 | ||||||||
Dr Steven Boyce | 100,000 | 16 November 2017 | $ | 0.75 | ||||||||
Inteq Limited | 190,000 | 24 January 2010 | $ | 0.60 | ||||||||
190,000 | 24 January 2010 | $ | 1.00 | |||||||||
95,000 | 24 January 2010 | $ | 1.50 | |||||||||
Maerborg Pty Ltd | 10,000 | 24 January 2010 | $ | 0.60 | ||||||||
10,000 | 24 January 2010 | $ | 1.00 | |||||||||
5,000 | 24 January 2010 | $ | 1.50 |
5.6 | RECENT DEVELOPMENTS |
Table of Contents
5.7 | THE COMPANY’S DIRECTORS AND MANAGEMENT STRUCTURE |
Name | Age | Position | ||||
Directors | ||||||
Robert Thomas | 63 | Chairman, Non-Executive Director | ||||
Dr Seth Harrison | 48 | Deputy Chairman, Non-Executive Director | ||||
Douglas Godshall | 44 | Executive Director, Chief Executive Officer | ||||
Dr Christine Bennett | 52 | Non-Executive Director | ||||
Dr Denis Wade, AM | 71 | Non-Executive Director | ||||
Robert Stockman | 55 | Non-Executive Director | ||||
Timothy Barberich | 61 | Non-Executive Director | ||||
Executives | ||||||
Douglas Godshall | 44 | Managing Director, Chief Executive Officer | ||||
David McIntyre | 38 | Chief Financial Officer, Company Secretary | ||||
Jeffrey LaRose | 47 | Chief Scientific Officer | ||||
David Hathaway | 61 | Chief Medical Officer | ||||
James Schuermann | 40 | Vice President, Sales and Marketing | ||||
Barry Yomtov | 53 | Vice President, Product Development | ||||
Ramon Paz | 51 | Vice President, Quality Assurance |
Table of Contents
Table of Contents
5.8 | OTHER INFORMATION ABOUT THE COMPANY |
Table of Contents
6 | Information about HeartWare International | |
6.1 | CORPORATE OVERVIEW |
6.2 | CHOICE OF JURISDICTION |
6.3 | HEARTWARE INTERNATIONAL’S ISSUED SECURITIES |
Table of Contents
• | be issued on a one for 35 basis, meaning that an Optionholder will receive one option to subscribe for a HeartWare International Share for every 35 Options held by them on the Scheme Record Date; and | ||
• | have an exercise price equal to 35 times the exercise price of the Options it replaces. |
6.4 | DIRECTORS OF HEARTWARE INTERNATIONAL |
6.5 | INTENTIONS IF THE SCHEMES BECOME EFFECTIVE |
6.6 | NEW 2008 STOCK INCENTIVE PLAN |
Table of Contents
• | stock options; | ||
• | stock appreciation rights; | ||
• | stock based incentives; and | ||
• | performance incentives. |
6.7 | DIFFERENCES BETWEEN THE RIGHTS ATTACHING TO THE SHARES AND THE HEARTWARE INTERNATIONAL SHARES |
6.8 | CONVERSION OF THE COMPANY TO A PROPRIETARY COMPANY LIMITED BY SHARES |
6.9 | GROUP RESTRUCTURING |
Table of Contents
7 | Investigating Accountant’s Report |
Board of Directors HeartWare Limited Level 57, MLC Centre 19-29 Martin Place SYDNEY NSW 2000 AUSTRALIA Board of Directors HeartWare International Inc 14000 NW 57th Court Miami Lakes Florida 33014 United States of America | Grant Thornton Corporate Finance Pty Ltd ABN 59 003 265 987 AFSL 247140 Level 17, 383 Kent Street Sydney NSW 2000 PO Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E info@gtnsw.com.au W www.grantthornton.com.au |
Table of Contents
2
Table of Contents
3
• | a review of the reconciling adjustments from Australian GAAP/IFRS to US GAAP included in theNotestoAppendix 1; | ||
• | a review of work papers, accounting records of the HeartWare Group and other documents and reports; | ||
• | a comparison of the consistency in application of the applicable Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the HeartWare Group disclosed in the HeartWare Group’s annual report for the year ended 31 December 2007; and | ||
• | enquiry of Directors, management and other employees of the HeartWare Group. |
Table of Contents
4
• | a review of the pro forma transactions and adjustments; | ||
• | a review of work papers, accounting records of the HeartWare Group and other documents and reports; | ||
• | a comparison of the consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in the US, and the accounting policies adopted by the HeartWare Group disclosed in the HeartWare Group’s annual report for the year ended 31 December 2007; and | ||
• | enquiry of Directors, management and other employees of the HeartWare Group. |
Table of Contents
5
• | Tranche 1: vests on completion of enrollment of the Company’s Bridge-to-Transplant clinical trial in the United States; | ||
• | Tranche 2: vests on the one year anniversary of completion of enrollment of the Company’s Bridge-to-Transplant clinical trial in the United States; and | ||
• | Tranche 3: vests on receipt by the Company from the US Food and Drug Administration of pre-market approval (PMA) for use of the HVAD pump as a Bridge-to-Transplant therapy in the United States. |
Table of Contents
6
Table of Contents
7
GRANT THORNTON CORPORATE FINANCE PTY LTD
NEIL COOKE | MATT ADAM-SMITH | |
Director | Director |
Table of Contents
8
Pro Forma Consolidated Balance Sheet
Unaudited as at | Unaudited as at | |||||||||||||||||||
31 March 2008 | 31 March 2008 | Unaudited as at | Pro forma as at | |||||||||||||||||
(Australian | (Australian | 31 March 2008 | 31 March 2008 | |||||||||||||||||
GAAP/IFRS)(1) | GAAP/IFRS)(2) | (US GAAP)(3) | (US GAAP)(4) | |||||||||||||||||
Note | A$’000 | US$’000 | US$’000 | US$’000 | ||||||||||||||||
CURRENT ASSETS | ||||||||||||||||||||
Cash and cash equivalents | 3 | 24,923 | 22,880 | 22,880 | 49,610 | |||||||||||||||
Trade and other receivables and other current assets | 793 | 729 | 729 | 729 | ||||||||||||||||
TOTAL CURRENT ASSETS | 25,716 | 23,609 | 23,609 | 50,339 | ||||||||||||||||
NON-CURRENT ASSETS | ||||||||||||||||||||
Property, plant and equipment | 3,528 | 3,239 | 3,239 | 3,239 | ||||||||||||||||
Intangible assets | 4 | 2,203 | 2,022 | 358 | 358 | |||||||||||||||
TOTAL NON-CURRENT ASSETS | 5,731 | 5,261 | 3,597 | 3,597 | ||||||||||||||||
TOTAL ASSETS | 31,447 | 28,870 | 27,206 | 53,936 | ||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||||||
Trade and other payables | (2,218 | ) | (2,037 | ) | (2,037 | ) | (2,037 | ) | ||||||||||||
Convertible notes | 5 | (1,513 | ) | (1,389 | ) | (1,389 | ) | — | ||||||||||||
TOTAL LIABILITIES | (3,731 | ) | (3,426 | ) | (3,426 | ) | (2,037 | ) | ||||||||||||
NET ASSETS | 27,716 | 25,444 | 23,780 | 51,899 | ||||||||||||||||
EQUITY | ||||||||||||||||||||
Issued capital | 6 | 94,647 | 76,757 | 76,757 | 105,614 | |||||||||||||||
Share based payments reserve | 7 | 7,008 | 5,624 | 5,460 | 5,460 | |||||||||||||||
Foreign currency translation reserve | (1,074 | ) | 1,602 | 1,602 | 1,602 | |||||||||||||||
Accumulated losses | 8 | (72,865 | ) | (58,539 | ) | (60,039 | ) | (60,777 | ) | |||||||||||
TOTAL EQUITY | 27,716 | 25,444 | 23,780 | 51,899 | ||||||||||||||||
(1) | The unaudited balance sheet has been extracted from the unaudited management report of the HeartWare Group as at 31 March 2008 which was used as the basis for the consolidated balance sheet included in a filing with the SEC (Form 10-Q) on 12 May 2008. | |
(2) | The translation adjustments are set out in Appendix 1 — Note 1. | |
(3) | The reconciling adjustments between Australian GAAP/IFRS and US GAAP are included in the Notes to this Appendix. | |
(4) | The pro forma consolidated balance sheet reflects the pro forma adjustments as described in Note 2. |
Table of Contents
9
Unaudited as at | Unaudited as at | |||||||||||||||
31 March 2008 | 31 March 2008 | |||||||||||||||
A$’000 | US$’000 | |||||||||||||||
Rate used | (Australian | Translation | (Australian | |||||||||||||
(1) | GAAP/IFRS) | adjustments | GAAP/IFRS) | |||||||||||||
CURRENT ASSETS | ||||||||||||||||
Cash and cash equivalents | Spot | 24,923 | (2,043 | ) | 22,880 | |||||||||||
Trade and other receivables and other current assets | Spot | 793 | (64 | ) | 729 | |||||||||||
TOTAL CURRENT ASSETS | 25,716 | (2,107 | ) | 23,609 | ||||||||||||
NON-CURRENT ASSETS | ||||||||||||||||
Property, plant and equipment | Spot | 3,528 | (289 | ) | 3,239 | |||||||||||
Intangible assets | Spot | 2,203 | (181 | ) | 2,022 | |||||||||||
TOTAL NON-CURRENT ASSETS | 5,731 | (470 | ) | 5,261 | ||||||||||||
TOTAL ASSETS | 31,447 | (2,577 | ) | 28,870 | ||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Trade and other payables | Spot | (2,218 | ) | 181 | (2,037 | ) | ||||||||||
Convertible notes | Spot | (1,513 | ) | 124 | (1,389 | ) | ||||||||||
TOTAL LIABILITIES | (3,731 | ) | 305 | (3,426 | ) | |||||||||||
NET ASSETS | 27,716 | (2,272 | ) | 25,444 | ||||||||||||
EQUITY | ||||||||||||||||
Issued capital | Historical | 94,647 | (17,890 | ) | 76,757 | |||||||||||
Share based payments reserve | Historical | 7,008 | (1,384 | ) | 5,624 | |||||||||||
Foreign currency translation reserve(2) | n/a | (1,074 | ) | 2,676 | 1,602 | |||||||||||
Accumulated losses | Historical | (72,865 | ) | 14,326 | (58,539 | ) | ||||||||||
TOTAL EQUITY | 27,716 | (2,272 | ) | 25,444 | ||||||||||||
(1) | Under Australian GAAP/IFRS assets and liabilities are translated at the spot rate ruling on the balance sheet date. Equity items are translated at the historical rate on the date the transaction occurred (an average rate is permitted for revenue and expense items in certain circumstances). There are no material applicable differences between the Australian GAAP/IFRS treatment of the above foreign currency translation and the treatment under US GAAP. | |
(2) | The foreign currency translation reserve represents the cumulative differences resulting from the translation of balance sheet items at differing exchange rates. |
Table of Contents
10
• | issue of 62,256,562 fully paid ordinary shares by way of a placement on 11 July 2008 at US$0.48 (A$0.50) each resulting in gross proceeds of approximately US$29,664,007 (A$31,128,281); | |
• | expenses associated with the placement of shares amounting to US$807,000 (A$846,000); | |
• | share consolidation as part of the Proposed Transaction in the ratio of approximately 1 share in HeartWare International Inc for every 35 Shares held in the Company; | |
• | expenses associated with the Proposed Transaction of US$738,000 (A$775,000); and | |
• | redemption of the convertible notes for cash at their carrying value on 31 March 2008 of $1,389,000. |
Table of Contents
11
US$’000 | ||||
Unaudited cash and cash equivalents at 31 March 2008 under Australian GAAP/IFRS | ||||
(translation to US$ is shown inNote 1) | 22,880 | |||
Reconciling adjustments to US GAAP: | ||||
None | — | |||
Unaudited cash and cash equivalents at 31 March 2008 under US GAAP | 22,880 | |||
Pro forma transactions: | ||||
Proceeds from shares issued | 29,664 | |||
Expenses associated with issue of shares | (807 | ) | ||
Expenses associated with the Proposed Transaction | (738 | ) | ||
Redemption of convertible notes | (1,389 | ) | ||
Pro forma cash and cash equivalents under US GAAP | 49,610 | |||
US$’000 | ||||
Unaudited intangible assets at 31 March 2008 under Australian GAAP/IFRS | ||||
(translation to US$ is shown inNote 1) | 2,022 | |||
Reconciling adjustments to US GAAP: | ||||
Research and development costs capitalised under Australian GAAP/IFRS and expensed under US GAAP | (1,664 | ) | ||
Unaudited intangible assets at 31 March 2008 under US GAAP | 358 | |||
Pro forma transactions: | ||||
None | — | |||
Pro forma intangible assets under US GAAP | 358 | |||
Table of Contents
12
US$’000 | ||||
Unaudited convertible notes at 31 March 2008 under Australian GAAP/IFRS | ||||
(translation to US$ is shown inNote 1) | 1,389 | |||
Reconciling adjustments to US GAAP: | ||||
None | — | |||
Unaudited convertible notes at 31 March 2008 under US GAAP | 1,389 | |||
Pro forma transactions: | ||||
Redemption of the convertible notes for cash at their carrying value on 31 March 2008 | (1,389 | ) | ||
Pro forma convertible notes under US GAAP | — | |||
Table of Contents
13
US$’000 | ||||
Unaudited issued capital at 31 March 2008 under Australian GAAP/IFRS | ||||
(translation to US$ is shown inNote 1) | 76,757 | |||
Reconciling adjustments to US GAAP: | ||||
None | — | |||
Unaudited issued capital at 31 March 2008 under US GAAP | 76,757 | |||
Pro forma transactions: | ||||
Issue of shares | 29,664 | |||
Issue costs directly attributable to new share issue | (807 | ) | ||
Pro forma issued capital under US GAAP | 105,614 | |||
No. of shares | ||||
Unaudited number of shares issued at 31 March 2008 under Australian GAAP/IFRS | 248,100,277 | |||
Reconciling adjustments to US GAAP: | ||||
None | — | |||
Unaudited number of shares issued at 31 March 2008 under US GAAP | 248,100,277 | |||
Pro forma transactions: | ||||
Shares issued under the placement | 62,256,562 | |||
Reduction in number of shares at approximately 1 share per original 35 shares held* | (301,489,501 | ) | ||
Pro forma number of shares issued under US GAAP | 8,867,338 | |||
* | As many individual shareholdings will not be exact multiples of 35 this figure cannot be determined accurately prior to the share reduction due to rounding. The figure shown will not be materially different from the ultimate total number of ordinary shares on issue. |
Table of Contents
14
US$’000 | ||||
Unaudited share based payments reserve at 31 March 2008 underAustralian GAAP/IFRS | ||||
(translation to US$ is shown inNote 1) | 5,624 | |||
Reconciling adjustments to US GAAP: | ||||
Share option awards expensed and credited to this reserve under | (164 | ) | ||
Australian GAAP/IFRS but not under US GAAP (due to different recognition criteria) | ||||
Unaudited share based payments reserve at 31 March 2008 underUS GAAP | 5,460 | |||
Pro forma transactions: | ||||
None | — | |||
Pro forma share based payments reserve under US GAAP | 5,460 | |||
Table of Contents
15
US$’000 | ||||
Unaudited accumulated losses at 31 March 2008 under Australian GAAP/IFRS | ||||
(translation to US$ is shown inNote 1) | (58,539 | ) | ||
Reconciling adjustments to US GAAP: | ||||
Share option awards expensed under Australian GAAP/IFRS but not under US GAAP (due to different recognition criteria) | 164 | |||
Research and development costs capitalised under Australian GAAP/IFRS and expensed under US GAAP | (1,664 | ) | ||
Unaudited accumulated losses at 31 March 2008 under US GAAP | (60,039 | ) | ||
Pro forma transactions: | ||||
Expenses associated with the Proposed Transaction | (738 | ) | ||
Pro forma accumulated losses under US GAAP | (60,777 | ) | ||
Table of Contents
16
Audited as at | Unaudited as at | Movement from | ||||||||||
31 December 2007 | 31 March 2008 | 31 December 2008 | ||||||||||
(US GAAP) | (US GAAP) | to 31 March 2008 | ||||||||||
US$’000 | US$’000 | US$’000 | ||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalents | 28,276 | 22,880 | (5,396 | ) | ||||||||
Trade and other receivables | 783 | 729 | (54 | ) | ||||||||
TOTAL CURRENT ASSETS | 29,059 | 23,609 | (5,450 | ) | ||||||||
NON-CURRENT ASSETS | ||||||||||||
Property, plant and equipment | 2,978 | 3,239 | 261 | |||||||||
Intangible assets | 318 | 358 | 40 | |||||||||
TOTAL NON-CURRENT ASSETS | 3,296 | 3,597 | 301 | |||||||||
TOTAL ASSETS | 32,355 | 27,206 | (5,149 | ) | ||||||||
CURRENT LIABILITIES | ||||||||||||
Trade and other payables | (1,756 | ) | (2,037 | ) | (281 | ) | ||||||
Convertible notes | (1,327 | ) | (1,389 | ) | (62 | ) | ||||||
TOTAL LIABILITIES | (3,083 | ) | (3,426 | ) | (343 | ) | ||||||
NET ASSETS | 29,272 | 23,780 | (5,492 | ) | ||||||||
EQUITY | ||||||||||||
Issued capital | 76,757 | 76,757 | — | |||||||||
Share based payments reserve | 5,102 | 5,460 | 358 | |||||||||
Foreign currency translation reserve | 612 | 1,602 | 990 | |||||||||
Accumulated losses | (53,199 | ) | (60,039 | ) | (6,840 | ) | ||||||
TOTAL EQUITY | 29,272 | 23,780 | (5,492 | ) | ||||||||
Table of Contents
17
Table of Contents
8 | Explanatory statement for the EGM | |
Set out below is the explanatory statement which has been prepared for the information of Shareholders in connection with the business to be conducted at the EGM of the Company to be held at approximately 11.30am on 22 October 2008 at The Adelaide Room, Sofitel Sydney Wentworth Hotel, 61-101 Phillip Street, Sydney NSW 2000. Further information regarding the business of the EGM which is required to be provided to Shareholders to comply with US law is set out at Appendix 15. | ||
This information is important. You should read the information relating to the EGM carefully, and if necessary seek your own independent advice. | ||
The Directors unanimously recommend that Shareholders vote in favour of the Resolution, which seeks approval of the HeartWare International 2008 Stock Incentive Plan. | ||
The Chairman of the Board intends to vote undirected proxies in favour of the Resolution at the EGM. | ||
Approval of the HeartWare International 2008 Stock Incentive Plan | ||
HeartWare International’s board of directors has approved and adopted the HeartWare International 2008 Stock Incentive Plan, subject to approval of the Shareholders of the Company. | ||
Approval of the HeartWare International 2008 Stock Incentive Plan by Shareholders of the Company will be considered approval of the HeartWare International 2008 Stock Incentive Plan for the purposes of section 162(m) and 422 of the US Internal Revenue Code 1986, as amended. | ||
Provided that the Share Scheme becomes Effective, it is expected that no further Options will be offered under the Company’s current Employee Share Option Plan, irrespective of whether the HeartWare International 2008 Stock Incentive Plan is approved. | ||
The HeartWare International 2008 Stock Incentive Plan will provide HeartWare International with the flexibility to issue a range of incentives to employees, officers, directors and other individuals who provide services to HeartWare International or any Affiliate of HeartWare International, including: |
• | stock options; | ||
• | stock appreciation rights; | ||
• | stock based incentives; and | ||
• | performance incentives. |
Table of Contents
9 | Implementation of the proposed transaction | |
9.1 | STEPS FOR IMPLEMENTING THE SCHEMES | |
To implement the Schemes, the steps set out below have been, or must be taken: |
(a) | the Company and HeartWare International entered into the Implementation Agreement on 5 August 2008 under which they have agreed to implement the Schemes. A copy of the Implementation Agreement is included in Appendix 1; | ||
(b) | on 17 September 2008, HeartWare International executed the Deeds Poll in favour of each Scheme Participant. Under the Deeds Poll, HeartWare International undertakes to perform certain obligations under the Implementation Agreement and the Schemes, including covenanting to provide the Scheme Consideration. Copies of the Deeds Poll are included in Appendices 6 to 8; | ||
(c) | on 17 September 2008, the Court ordered that the Company convene: |
• | the Share Scheme Meeting on 22 October 2008 for the purpose of considering and, if thought fit, approving the Share Scheme; | ||
• | the Option Scheme Meeting on 22 October 2008 for the purpose of considering and, if thought fit, approving the Option Scheme; and | ||
• | the Performance Rights Scheme Meeting on 22 October 2008 for the purpose of considering and, if thought fit, approving the Performance Rights Scheme; |
(d) | the Company has also convened an EGM on 22 October 2008 at which it will seek approval for the Resolution explained in section 8 of the Information Memorandum and set out in the Notice of EGM in Appendix 19; | ||
(e) | if the Share Scheme is approved by the requisite majorities (see section 9.5 below) of Shareholders voting at the Share Scheme Meeting and all of the conditions in clause 2 of the Implementation Agreement have been satisfied or, where possible, waived and if the Implementation Agreement has not been terminated on or before the dates specified for such steps under the Implementation Agreement, then the Company will apply to the Court for an order approving the Share Scheme; | ||
(f) | if all of the conditions set out in paragraph (e) above have been satisfied and the Option Scheme is approved by the requisite majorities (see section 9.5 below) of Optionholders voting at the Option Scheme Meeting then the Company will apply to the Court for an order approving the Option Scheme; | ||
(g) | if all of the conditions set out in paragraph (e) above have been satisfied and the Performance Rights Scheme is approved by the requisite majorities (see section 9.5 below) of Performance Rights Holders voting at the Performance Rights Scheme Meeting then the Company will apply to the Court for an order approving the Performance Rights Scheme; | ||
(h) | the Court has discretion to refuse to grant the orders approving the Schemes, or any of them, even if the Schemes are approved by the requisite majorities of eligible Shareholders and Incentive Holders. If the Court orders referred to above are obtained, then the Company and HeartWare International will take or procure the taking of steps required to implement the Schemes, namely: |
• | the Company will lodge with ASIC an office copy of the Court orders under section 411 of the Corporations Act, approving the Schemes, upon which the Schemes will become Effective; and | ||
• | on the Implementation Date: |
(i) | in consideration for the transfer of Shares to HeartWare International, HeartWare International will issue the Share Scheme Consideration to each Scheme Shareholder (or to the Nominee on behalf of any Ineligible Overseas Shareholder (as to which, see section 9.10 below)) in accordance with the provisions of the Share Scheme; | ||
(ii) | all Options will be cancelled and HeartWare International will issue the Option Scheme Consideration to each Scheme Optionholder in accordance with the provisions of the Option Scheme; and | ||
(iii) | all Performance Rights will be cancelled and HeartWare International will issue the Performance Rights Scheme Consideration to such Scheme Performance Rights Holders in accordance with the provisions of the Performance Rights Scheme. |
Table of Contents
9.2 | CONDITIONS PRECEDENT | |
The obligations of the Company and HeartWare International to implement the Schemes are subject to the following conditions being satisfied or, where applicable, waived in accordance with the terms of the Implementation Agreement. |
• | No Prohibitive Orders— prior to 8.00am on the Second Court Hearing Date, no judicial authority or entity and no Government Agency taking and not withdrawing any action, or imposing any legal restraint or prohibition, to prevent the implementation of the Proposed Transaction (or any transaction contemplated by the Proposed Transaction); | ||
• | Regulatory Consents— all approvals, consents or waivers which the parties agree are required to implement the Proposed Transaction (other than the approval by the Court of the Share Scheme under section 411(4)(b) of the Corporations Act) having been obtained or deemed to be obtained by 5.00pm on the Business Day immediately prior to the Second Court Date including ASIC and ASX providing all consents, approvals and waivers and doing other acts which are necessary or reasonably desirable to implement the Proposed Transaction on terms that are unconditional or subject only to conditions which are acceptable to the Company; | ||
• | Shareholder approval— Shareholders approving the Share Scheme at the Share Scheme Meeting (or any adjournment or postponement of it at which the Share Scheme is voted on) by the requisite majorities under the Corporations Act; | ||
• | Court approval of Share Scheme— the Court approving the Share Scheme in accordance with section 411(4)(b) of the Corporations Act either unconditionally or on conditions that are customary or usual; | ||
• | ASX Listing— ASX approving: |
(i) | HeartWare International for admission to the official list of ASX; | ||
(ii) | the CDIs for official quotation by ASX, |
• | Depository— before 5.00pm on the Business Day prior to the Second Court Date, HeartWare International having appointed a Depositary and the Depositary agreeing to the allotment to it of HeartWare International Shares under the Share Scheme; | ||
• | Nominee— before 5.00pm on the Business Day prior to the Second Court Date, HeartWare International having appointed a Nominee and the Nominee agreeing to sell the CDIs in respect of the entitlements of Ineligible Overseas Shareholders under the Share Scheme; and | ||
• | Ability to issue CDIs— before 5.00pm on the Business Day prior to the Second Court Date, | ||
HeartWare International having done everything necessary under the ASTC Settlement Rules to enable it to issue CDIs other than the allotment to the Depositary of HeartWare International Shares under the Share Scheme. |
• | Share Scheme Conditions satisfied— each of the conditions precedent to the Share Scheme as described in section 9.2(a) having been satisfied or waived; | ||
• | Optionholder Approval— Optionholders approving the Option Scheme at the Option Scheme Meeting (or any adjournment or postponement of it at which the Option Scheme is voted on) by the requisite majorities under the Corporations Act; and | ||
• | Court Approval of Option Scheme— the Court approving the Option Scheme in accordance with section 411(4)(b) of the Corporations Act either unconditionally or on conditions that are customary or usual. |
• | Share Scheme Conditions satisfied— each of the conditions precedent to the Share Scheme as described in section 9.2(a) having been satisfied or waived; | ||
• | Performance Rights Holder Approval— Performance Rights Holders approving the Performance Rights Scheme at the Performance Rights Scheme Meeting (or any adjournment or postponement of it at which the Performance Rights Scheme is voted on) by the requisite majorities under the Corporations Act; and | ||
• | Court Approval of Performance Rights Scheme— the Court approving the Performance Rights Scheme in accordance with section 411(4)(b) of the Corporations Act either unconditionally or on conditions that are customary or usual. |
Table of Contents
9.3 | NO ENCUMBRANCES ON SHARES | |
Shareholders should be aware that clause 7 of the Share Scheme provides that each Scheme Shareholder is deemed to have warranted to HeartWare International that: |
(a) | all of his or her Shares (including any rights and entitlements attaching to those Shares) transferred to HeartWare International under the Share Scheme will, on the Implementation Date, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and other third-party interests of any kind, whether legal or otherwise; and | ||
(b) | he or she has full power and capacity to transfer his or her Shares (including any rights and entitlements attaching to those Shares). |
9.4 | TERMINATION | |
The Implementation Agreement may be terminated by the Company or HeartWare International, by giving written notice to the other party, at any time prior to 8.00am on the Second Court Date if: |
(a) | the other party is in material breach of any of the terms of the Implementation Agreement and: |
• | the party wishing to terminate has given the other party a written notice: |
(i) | setting out the details of the breach; and | ||
(ii) | stating its intention to terminate, and |
• | the breach continues to exist five Business Days (or any shorter period ending at 5.00pm on the day before the Second Court Date) from the date the notice is given; or |
(b) | the Board of the Company withdraws its recommendation of the Schemes. |
(a) | the Independent Expert opines that such Scheme is not fair and reasonable and in the best interests of the Shareholders, Optionholders or Performance Rights Holders (as relevant); or | ||
(b) | the Company’s Shareholders or Incentive Holders (as relevant) fail to approve such Scheme by the necessary majorities at the relevant Scheme Meeting; or | ||
(c) | the Court refuses to grant an order convening any required Scheme Meeting or approving such Scheme and either the parties agree not to conduct an appeal or the parties agree to conduct an appeal but the appeal is unsuccessful; or | ||
(d) | such Scheme is not approved by the Court under section 411(4)(b) of the Corporations Act on or before the Sunset Date. |
9.5 | VOTING MAJORITIES REQUIRED TO APPROVE SCHEMES | |
For the Schemes to become Effective, the resolutions proposed at the Scheme Meetings must be approved: |
(a) | in the case of a resolution approving the Share Scheme: |
• | by a majority in number of Shareholders present and voting at the Share Scheme Meeting (either in person or by proxy, attorney or corporate representative) unless the Court orders otherwise; and | ||
• | by Shareholders holding at least 75% of the votes cast on the resolution; and |
(b) | in the case of a resolution approving the Option Scheme: |
• | by a majority in number of Optionholders present and voting at the Option Scheme Meeting (either in person or by proxy, attorney or corporate representative); | ||
• | being a majority whose Options represent in aggregate at least 75% by value of the total Options held by the Optionholders present and voting (either in person or by proxy, attorney or corporate representative) at the Meeting; and |
(c) | in the case of a resolution approving the Performance Rights Scheme: |
• | by a majority in number of Performance Rights Holders present and voting at the Performance Rights Scheme Meeting (either in person or by proxy, attorney or corporate representative); | ||
• | being a majority whose Performance Rights represent in aggregate at least 75% by value of the total Performance Rights held by the Performance Rights Holders present and voting (either in person or by proxy, attorney or corporate representative) at the Meeting. |
Table of Contents
9.6 | KEY DATES FOR THE IMPLEMENTATION OF THE SCHEMES | |
The key dates with regard to the implementation of the Schemes include: |
(a) | Effective Date— the date on which the Court order approving the Schemes takes effect, being the date it is lodged with ASIC; | ||
(b) | Scheme Record Date— the date on which the Share Register, the Option Register and the Performance Rights Register (as relevant) is examined to determine who is entitled to participate in the Schemes; | ||
(c) | Implementation Date— the date on which: |
• | the Shares held by the Scheme Shareholders will be transferred to HeartWare International and HeartWare International Shares will be issued to Scheme Shareholders as consideration; | ||
• | the Options held by the Scheme Optionholders will be cancelled and HeartWare International Options will be issued to Scheme Optionholders as consideration; and | ||
• | the Performance Rights held by Scheme Performance Rights Holders will be cancelled and HeartWare International Restricted Stock Units will be issued to Scheme Performance Rights Holders as consideration. |
9.7 | DETERMINATION OF ENTITLEMENTS UNDER THE SHARE SCHEME | |
For the purposes of determining which Shareholders are eligible to participate in the Share Scheme, dealings in the Shares will only be recognised if: |
• | in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Share Register as the holder of the relevant Shares by the Scheme Record Date; and | ||
• | in all other cases, registrable transmission applications or transfers in respect of those dealings are received on or before the Scheme Record Date at the place where the Share Register is kept. |
9.8 | ELECTION FOR HEARTWARE INTERNATIONAL SHARES RATHER THAN CDIS | |
A Scheme Shareholder may make an election to receive HeartWare International Shares rather than CDIs under the Share Scheme however, HeartWare International Shares will not be tradeable on any public market. If a Scheme Shareholder does not make an election, they will receive CDIs under the Share Scheme. | ||
A Scheme Shareholder election must be made by notice in writing to the Company’s Share Registry which must be received by the Share Registry by 5.00pm on the Scheme Record Date (or such other date as agreed by the Company and HeartWare International). Shareholders who provide the necessary notice will be issued HeartWare International Shares instead of CDIs in respect of those shares. Following implementation of the Proposed Transaction, HeartWare International Shares will be exchangeable for CDIs, at any time subject to compliance with US securities laws. | ||
9.9 | EFFECT OF THE SCHEMES |
(a) | Share Scheme |
• | on the Implementation Date: |
(i) | the Shares that are held by Scheme Shareholders will be transferred to HeartWare International without the need for any further action by Scheme Shareholders; |
Table of Contents
(ii) | save as set out at section 9.10 below with respect to Ineligible Overseas Shareholders, HeartWare International will issue, or cause to be issued: |
(A) | one CDI for every one Share held by Scheme Shareholders on the Scheme Record Date, where the Scheme Shareholder has not made an election in accordance with section 9.8 above; or | ||
(B) | one HeartWare International Share for every 35 Shares held by the Scheme Shareholder on the Scheme Record Date, where the Scheme Shareholder has made an election in accordance with section 9.8 above; and |
• | within five Business Days of the Implementation Date, HeartWare International will: |
(i) | issue holding statements, certificates or transmittal letters (as the case may be) for such CDIs or HeartWare International Shares in the name of such persons; and | ||
(ii) | procure the dispatch of such holding statements, certificates or transmittal letters to the address shown in the Share Register for such persons. |
(b) | Option Scheme |
• | on the Implementation Date: |
(i) | the Options held by each Scheme Optionholder will be cancelled without the need for any further action by Scheme Optionholders; | ||
(ii) | HeartWare International will issue one HeartWare International Option to each Scheme Optionholder for every 35 Options held by such Scheme Optionholder as at the Scheme Record Date; and |
• | within five Business Days of the Implementation Date, HeartWare International will: |
(i) | issue certificates for such HeartWare International Options in the name of such persons; and | ||
(ii) | procure the dispatch of such certificates to the address shown in the Option Register for such persons. |
(c) | Performance Rights Scheme |
• | on the Implementation Date: |
(i) | the Performance Rights held by each Scheme Performance Rights Holder will be cancelled without the need for any further action by Scheme Performance Rights Holders; | ||
(ii) | HeartWare International will issue one Restricted Stock Unit to each Scheme Performance Rights Holder for every 35 Performance Rights held by such Scheme Performance Rights Holder as at the Scheme Record Date; |
• | within five Business Days of the Implementation Date, HeartWare International will: |
(i) | issue certificates for such HeartWare International Restricted Stock Units in the name of such persons; and | ||
(ii) | procure the dispatch of such certificates to the address shown in the Restricted Stock Unit Holder Register for such persons. |
9.10 | INELIGIBLE OVERSEAS SHAREHOLDERS | |
All Shareholders whose addresses, as shown in the Share Register on the Scheme Record Date, are in a place outside of Australia and its external territories, New Zealand or the US, have been classified as Ineligible Overseas Shareholders. | ||
The issue of HeartWare International Shares to such Shareholders may be prohibited by the laws of the jurisdictions in which they reside or may require compliance with conditions or legal requirements which HeartWare International regards as onerous. Unless HeartWare International is satisfied that the laws of an Ineligible Overseas Shareholder’s place of residence or registered address, as shown in the Share Register, do not prevent the issue or allotment of HeartWare International Shares (without being obliged to conduct any investigation into the matter) and if HeartWare International considers that the compliance requirements are not too onerous, HeartWare International will not issue HeartWare International Shares to Ineligible Overseas Shareholders. |
Table of Contents
HeartWare International will instead issue and allot CDIs in respect of such Ineligible Overseas Shareholders’ entitlements to a nominee appointed by HeartWare International. The Nominee will: |
• | as soon as reasonably practicable (at the risk of the Ineligible Overseas Shareholders) sell the CDIs issued to it; and |
• | account to each Ineligible Overseas Shareholder for the net proceeds of the sale of the CDIs allotted in respect of that Ineligible Overseas Shareholder (calculated on an averaged basis so that all Ineligible Overseas Shareholders receive the same price per CDI (subject to rounding to the nearest cent) and after deduction of any applicable brokerage and other taxes and charges), |
9.11 | TRADING CDIS | |
If the Court approves the Share Scheme, the Company will notify ASX of the Court approval on the date of that approval. | ||
Suspension of trading in the Shares on ASX will occur from the close of trading on the date on which the Company lodges the Court order approving the Share Scheme with ASIC. | ||
Deferred settlement trading of CDIs, representing HeartWare International Shares, will commence on ASX after the trading of the Shares is suspended. CDIs are expected to commence trading on ASX on a normal T+3 settlement basis on 17 November 2008, being the Business Day following the dispatch of holding statements. Should you wish to trade your CDIs before the issue of holding statements, you will do so at your own risk. The proceeds from the sale of securities sold on a deferred delivery basis will not be received until after the deferred delivery period has ended. | ||
The Company will apply for termination of the official quotation of the Shares on ASX after the Implementation Date. | ||
Unless and until HeartWare International Shares are listed for trading on NASDAQ or another exchange, there will be no public market for HeartWare International Shares. | ||
9.12 | CANCELLATION OF STANDALONE OPTIONS | |
In conjunction with the Schemes, the Standalone Options granted in the Company will be cancelled and, in consideration of the cancellation, HeartWare International will issue to the Standalone Optionholders one HeartWare International Standalone Option for every 35 Standalone Options held by the Standalone Optionholders. Any fractions of HeartWare International Standalone Options will be rounded down to the nearest whole number of HeartWare International Standalone Options. | ||
The cancellation of the Standalone Options in the Company and the offer of HeartWare International Standalone Options is conditional on: |
• | the Share Scheme becoming Effective; and | ||
• | all ASX waivers which the parties agree are required to effect the cancellation of the Standalone Options in the Company and issue the HeartWare International Standalone Options being obtained on terms that are unconditional or subject only to conditions which are acceptable to the Company. |
9.13 | COMPULSORY ACQUISITION OF OPTIONS AND PERFORMANCE RIGHTS | |
If the Share Scheme is approved but the Option Scheme and/or Performance Rights Scheme is not, HeartWare International may compulsorily acquire the Options and/or Performance Rights using the general statutory rights of compulsory acquisition under the Corporations Act. | ||
If HeartWare International proceeds to compulsorily acquire Options and/or Performance Rights (or the Shares issued on exercise of such Options or Performance Rights) under the Corporations Act, HeartWare International may only acquire Options, Performance Rights and/or Shares for a cash sum and must pay the same amount for each of the Options and/or Performance Rights and/or Shares acquired. The procedures for compulsorily acquiring Options, Performance Rights and/or Shares requires HeartWare International to provide Incentive Holders or Shareholders (as applicable) with the following: |
• | a compulsory acquisition notice (which, amongst other things, specifies a period in which Incentive Holders or Shareholders may object to the acquisition); | ||
• | an expert’s report prepared by an expert nominated by ASIC, which states whether, in the expert’s opinion, the terms proposed in the compulsory acquisition notice give a fair value for the Options, Performance Rights or Shares (as applicable); and |
Table of Contents
• | an objection form. |
HeartWare International can only proceed with the compulsory acquisition if: |
• | the Optionholders, Performance Rights Holders and/or Shareholders (as applicable) who objected to the compulsory acquisition together hold less than 10% by value of the remaining Options and/or Performance Rights by the end of the objection period, which must be at least one month; or |
• | the Court approves the compulsory acquisition. |
If Optionholders, Performance Rights Holders or Shareholders (as applicable) who hold at least 10% of the Options, Performance Rights or Shares covered by the compulsory acquisition notice object to the acquisition before the end of the objection period, HeartWare International must give everyone to whom the compulsory acquisition notice was sent, notice that the proposed compulsory acquisition will not occur or a notice that HeartWare International has applied to the Court for approval of the compulsory acquisition. | ||
If HeartWare International elects to apply to the Court for approval of the compulsory acquisition of Options, Performance Rights and/or Shares, the burden of proof is on HeartWare International to establish to the Court’s satisfaction that the terms set out in the compulsory acquisition notice give a fair value for the Options, Performance Rights and/or Shares. HeartWare International will bear the costs that a person incurs in legal proceedings in relation to the compulsory acquisition, unless the Court is satisfied that the person acted improperly, vexatiously or otherwise unreasonably. |
Table of Contents
10 | Taxation implications for shareholders and incentive holders | |
The tax discussion set out in sections 10.1 and 10.2 of this Information Memorandum was prepared by and is the responsibility of PwC Australia. The tax discussion set out in section 10.3 of this Information Memorandum was prepared by the Company but was reviewed by and is the responsibility of PwC LLP. |
10.1 | AUSTRALIAN TAX IMPLICATIONS | |
This section, prepared by PricewaterhouseCoopers, comments on the general Australian taxation position of individual and corporate resident and non-resident Shareholders and Incentive Holders of the Company in relation to the “disposal” of their shares, options and performance rights in exchange for shares, options and restricted stock units in HeartWare International pursuant to three Schemes of Arrangements under Part 5.1 of the Corporations Act. In providing this opinion PricewaterhouseCoopers has relied upon certain facts, set out in this Information Memorandum and in the Implementation Agreement, which have not been independently reviewed or verified by PricewaterhouseCoopers. | ||
The summary contained in this section regarding the Australian tax considerations does not purport to be a complete analysis of the potential tax consequences of the Proposed Transaction, and is intended as a general guide to the Australian tax implications only. It should not be a substitute for specific advice from an appropriate professional adviser and all Shareholders and Incentive Holders are strongly advised to obtain their own professional advice on the tax implications based on their own specific circumstances. | ||
The comments are based on the law and understanding of the practice of the tax authorities in Australia as at the date of this document. These are subject to change periodically as is their interpretation by the courts. | ||
Note that we have not addressed in this section, the non-Australian tax position of Shareholders and Incentive Holders. | ||
To persons receiving this document in Australia we note the information contained in this document does not constitute “financial product advice” within the meaning of the Corporations Act 2001 (Cth) (“Corporations Act”). The PricewaterhouseCoopers partnership which is providing this advice is not licensed to provide financial product advice under the Corporations Act. To the extent that this document contains any information about a “financial product” within the meaning of the Corporations Act, taxation is only one of the matters that must be considered when making a decision about the relevant financial product. This material has been prepared for general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, you should, before acting on this material, consider taking advice from a person who is licensed to provide financial product advice under the Corporations Act. Before acting on this material, you should also consider the appropriateness of this material having regard to your objectives, financial situation and needs and consider obtaining independent financial advice. |
10.1.1 | Australian tax considerations |
Category of taxpayer | Relevant section | |||
Australian resident individual | 10.1.2 | |||
Australian resident company | 10.1.3 | |||
Australian resident complying superannuation fund | 10.1.4 | |||
Australian resident trust (not taxed as a company) | 10.1.5 | |||
Non-resident Shareholder | 10.1.6 | |||
Optionholder | 10.1.7 | |||
Performance Rights Holder | 10.1.8 |
Where relevant to the particular category of taxpayer, each of the sections referred to above contains information relating to the tax implications of: |
• | the transfer of the Shares of the Company to HeartWare International, and the cancellation of all Options and Performance Rights and the reissue of replacement options and restricted stock units in HeartWare International under the Schemes; |
• | the future disposal of the HeartWare International Shares, HeartWare International Options or HeartWare International Restricted Stock Units that you receive under the Schemes; and |
Table of Contents
• | the receipt of future dividends from HeartWare International. In this regard we note that the Company has not paid any dividends to its shareholders in the past, and we understand it is uncertain whether HeartWare International will pay dividends to its shareholders in the future. |
We also provide similar comments in relation to the cancellation and reissue of Standalone Options under the cancellation deed. |
10.1.2 | Australian tax consequences of the Share Scheme for Australian resident individuals |
Table of Contents
• | $1,000; or |
• | the Australian tax payable on the net income on which foreign income tax is paid. |
Table of Contents
10.1.3 | Australian tax consequences of the Share Scheme for Australian resident companies |
• | where the Shares are held on capital account, if you hold a direct voting interest of 10% or more in HeartWare International, throughout a 12 month period within the 24 months prior to the disposal of HeartWare International Shares, the capital gain or capital loss may be reduced to the extent that HeartWare International has “active foreign business assets”. The calculation of this reduction is complex, and will depend on the mix of assets held by HeartWare International at that time. We recommend that you seek independent professional advice with respect to this issue before a future disposal of HeartWare International Shares; and |
• | the CGT discount is not available. |
10.1.4 | Australian tax consequences of the Share Scheme for Australian resident complying superannuation funds |
10.1.5 | Australian tax consequences of the Share Scheme for Australian resident trusts that are not taxed as companies |
Table of Contents
10.1.6 | Australian tax consequences of the Share Scheme for non-resident Shareholders |
• | you, together with your associates, own at least 10% of the Shares in the Company (either at the time of the transfer, or throughout a 12 month period within the previous 24 months), and the market value of the Company’s Australian real property assets is more than 50% of the market value of its total assets; or |
• | you hold the Share in connection with the conduct of a business through a permanent establishment in Australia. |
10.1.7 | Australian tax consequences of the Option Scheme for Optionholders and cancellation deed for Standalone Optionholders |
Table of Contents
• | the value of the options over the HeartWare International Shares can reasonably be regarded as matching the value of the Options over the Shares; |
• | you are an employee of HeartWare International, the Company or another company in the HeartWare International wholly-owned group; |
• | you do not hold a legal or beneficial interest in more than 5% of the shares in HeartWare International; and |
• | you are not in a position to cast, or control the casting of, more than 5% of the maximum number of votes that may be cast at a general meeting of HeartWare International. |
Table of Contents
• | the value of the Standalone Options over the HeartWare International Shares can reasonably be regarded as matching the value of the Standalone Options over the Shares; |
• | you are an employee of HeartWare International, the Company or another company in the HeartWare wholly-owned group; |
• | you do not hold a legal or beneficial interest in more than 5% of the shares in HeartWare International; and |
• | you are not in a position to cast, or control the casting of, more than 5% of the maximum number of votes that may be cast at a general meeting of HeartWare International. |
10.1.8 | Australian tax consequences of the Performance Rights Scheme for Performance Right Holders |
• | the value of the HeartWare International Restricted Stock Units can reasonably be regarded as matching the value of the Performance Rights over the Shares; |
• | you are an employee of HeartWare International, the Company or another company in the HeartWare wholly-owned group; |
• | you do not hold a legal or beneficial interest in more than 5% of the shares in HeartWare International; and |
• | you are not in a position to cast, or control the casting of, more than 5% of the maximum number of votes that may be cast at a general meeting of HeartWare International. |
Table of Contents
10.1.9 | Stamp duty/ GST consequences |
10.1.10 | Application of the Foreign Investment Fund (“FIF”) rules |
• | Optionholders receiving “qualifying” options who are employees and who did not elect to pay tax on the market value of their options in the year the options were granted to them will not be taxed under the FIF rules; and |
• | whilst HeartWare International remains listed on the ASX (or another approved stock exchange — eg NASDAQ), and the relevant stock exchange designates HeartWare International to be engaging in eligible activities (eg the ASX currently classifies the Company as engaging in the Health Care Equipment and Services sector which is eligible), an exemption will apply to ensure that Australian resident taxpayers will not be required to include attributed FIF income in their Australian assessable income. |
10.2 | US ESTATE TAXES IMPLICATIONS UNDER THE PROPOSED TRANSACTION |
Table of Contents
US Residents | NRNC* | Highest Estate | ||||||||||||||||
Calendar Year | Exclusion | Credit | Exclusion | Credit | Tax Rates | |||||||||||||
2008 | $2 million | $ | 780,800 | $ | 60,000 | $ | 13,000 | 45 | % | |||||||||
2009 | $3.5 million | $ | 1,455,800 | $ | 60,000 | $ | 13,000 | 45 | % | |||||||||
2010 | N/A (taxes repealed) | N/A | N/A (taxes repealed) | N/A | 0 | % | ||||||||||||
2011 and thereafter | $1 million | $ | 345,800 | $ | 60,000 | $ | 13,000 | 55 | % |
* | Persons who are not residents or citizens of the US. |
Tax on US$350,000: | US$ | 104,800 | ||
Allowable Credit: | US$ | 78,080 | ||
(10% of 780,800) | ||||
Net estate tax payable: | US$ | 26,720 |
10.3 | US TAX IMPLICATIONS |
Table of Contents
• | a tax-exempt organisation; |
• | an S corporation or other pass-through entity; |
• | an insurance company; |
• | a financial institution; |
• | a mutual fund; |
• | a dealer in stock and securities or foreign currencies; |
• | a trader in securities who elects the mark-to-market method of accounting for your securities; |
• | a US holder or non-US holder of Shares subject to the alternative minimum tax provisions of the Code; |
• | a US holder or non-US holder of Shares who received his or her Shares through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan; |
• | certain expatriates or a person that has a functional currency other than the US dollar; |
• | persons that do not hold their Shares, Options or Performance Rights as capital assets; |
• | a regulated investment company; |
• | a real estate investment trust; |
• | a controlled foreign corporation; |
• | a passive foreign investment company; |
• | holders of Options or Standalone Options that were not issued as compensatory options; |
• | Shareholders who actually or constructively have owned, owns or is deemed to own five percent or more, by voting power or value, of the Company’s issued Shares, either at any time during the five-year period up to and including the date of the Proposed Transaction or at any time after the Proposed Transaction; or |
• | a holder of Shares who holds such Shares as part of a hedge against currency risk, a straddle or a constructive sale or a conversion transaction. |
Table of Contents
• | a US citizen or resident as determined under the Code; |
• | a corporation, or other entity taxable as a corporation for US federal income tax purposes, created or organised under the laws of the United States, any state or the District of Columbia; | ||
• | an estate, the income of which is subject to US federal income taxation regardless of its source; or | ||
• | a trust, if |
(i) | a court within the United States is able to exercise primary supervision over its administration and at least one US Person is authorised to control all substantial decisions of the trust; or | ||
(ii) | it has validly elected to be treated as a US Person. |
10.3.1 | US tax consequences of the Share Scheme for US Participants |
Table of Contents
• | File a section 367(b) Notice with your US federal tax return; |
• | File notification of the election with HeartWare International (if you hold less than 10% of the Company); |
• | File an election under US Treasury Regulation section 1.367(b) — 3(c)(3); |
• | File an election to treat the Company as a qualifying electing fund; and |
• | File a deemed dividend election or deemed sale election. |
Table of Contents
• | any gain recognised on the disposition is spread over the shareholder’s holding period for such shares (i.e. if the shareholder held the shares for exactly 3 calendar years, the gain would be divided over the 3-year period evenly) to determine the annual gain amount; |
• | the annual gain amounts are subject to the highest US tax rate in effect for the respective year to calculate an annual tax amount; and |
• | each annual tax amount is subject to an interest charge that begins accruing at the time beginning on the due date for tax payments each year and ending on the due date for the taxable year in which the disposition occurs. |
Table of Contents
• | any gain recognised on the disposition is spread over the shareholder’s holding period for such shares (i.e., if the shareholder held the shares for exactly 3 calendar years, the gain would be divided over the 3-year period evenly) to determine the annual gain amount; |
• | the annual gain amounts are subject to the highest US tax rate in effect for the respective year to calculate an annual tax amount; and |
• | each annual tax amount would be subject to an interest charge that begins accruing at the time beginning on the due date for tax payments each year and ending on the due date for the taxable year in which the disposition occurs. |
• | provides to HeartWare International or the nominee holding the HeartWare International Shares on the US Participant’s behalf (typically the US Participant’s broker) a properly executed IRS Form W-9 with such US Participant’s taxpayer identification number (which for an individual is its Social Security number), and certifies that such number is correct and that the US Participant is not subject to backup withholding; or |
• | is otherwise exempt from backup withholding. |
10.3.2 | US tax consequences of the Share Scheme for Non-US Participants |
Table of Contents
• | the gain is effectively connected with a US trade or business of the Non-US Participant (or, if a treaty applies, attributable to a permanent establishment in the United States of such Non-US Participant); |
• | in the case of a Non-US Participant who is an individual, such Non-US Participant is present in the United States for a period or periods aggregating 183 days or more during the taxable year of the disposition, and either |
(a) | such Non-US Participant has a “tax home” (as such term is defined in section 911 of the Code) in the United States; or |
(b) | the disposition is attributable to an office or other fixed place of business maintained by such Non-US Participant in the United States; or |
• | HeartWare International is characterised as a United States real property holding corporation for United States federal income tax purposes. HeartWare International does not believe it is currently, and does not anticipate becoming, a United States real property holding corporation. However, because the determination of whether HeartWare International is a United States real property holding corporation depends on the fair market value of its United States real property interests relative to the fair market value of its other business assets, there can be no assurance that HeartWare International will not become a United States real property holding corporation in the future. |
Table of Contents
10.3.3 | US tax consequences of the Share Scheme for the Company and HeartWare International |
10.3.4 | US tax consequences of the Option Scheme and Standalone Option Cancellation in exchange for HeartWare International Standalone Options (the “Standalone Exchange”) |
Table of Contents
10.3.5 | US tax consequences of the Performance Rights Scheme |
Table of Contents
11 | Additional information |
11.1 | ASX LISTING OF THE COMPANY AND HEARTWARE INTERNATIONAL |
11.2 | INTERESTS OF DIRECTORS |
Performance | Standalone | |||||||||||||||
Director | Shares | Options | Rights | Options | ||||||||||||
Robert Thomas | 2,808,000 | 1 | 764,204 | — | 500,000 | |||||||||||
Dr Seth Harrison | 93,538,782 | 2 | — | — | — | |||||||||||
Douglas Godshall | 100,305 | 5,581,264 | 1,100,000 | — | ||||||||||||
Bob Stockman | 500,000 | 200,000 | — | — | ||||||||||||
Dr Christine Bennett | 100,000 | — | — | 250,000 | ||||||||||||
Dr Denis Wade, AM | 1,451,333 | 3 | — | — | 250,000 | |||||||||||
Timothy J. Barberich | 100,000 | 200,000 | — | — |
1 | Includes 2,150,000 shares held in trust. | |
2 | Represents Shares held by Apple Tree Partners I, L.P., the Company’s largest shareholder. Dr Harrison is Managing General Partner in Apple Tree Partners I, L.P. Dr Harrison disclaims beneficial ownership of such Shares, except to the extent of his pecuniary interest therein. | |
3 | Represents 1,451,333 shares held in trust. |
Table of Contents
HeartWare | HeartWare | |||||||||||||||
HeartWare | HeartWare | International | International | |||||||||||||
International | International | Restricted | Standalone | |||||||||||||
Director | Shares | Options | Stock Units | Options | ||||||||||||
Robert Thomas | 80,228 | 1 | 21,834 | — | 14,285 | |||||||||||
Seth Harrison MD | 2,672,536 | 2 | — | — | — | |||||||||||
Douglas Godshall | 2,865 | 159,464 | 31,428 | — | ||||||||||||
Bob Stockman | 14,285 | 5,714 | — | — | ||||||||||||
Dr Christine Bennett | 2,857 | — | — | 7,142 | ||||||||||||
Dr Denis Wade, AM | 41,466 | 3 | — | — | 7,142 | |||||||||||
Timothy J. Barberich | 2,857 | 5,714 | — | — |
1 | Includes 61,428 shares held in trust. | |
2 | Represents Shares held by Apple Tree Partners I, L.P., the Company’s largest shareholder. Dr Harrison is Managing General Partner in Apple Tree Partners I, L.P. Dr Harrison disclaims beneficial ownership of such Shares, except to the extent of his pecuniary interest therein. | |
3 | Represents 41,466 shares held in trust. |
11.3 | PAYMENTS OR OTHER BENEFITS TO DIRECTORS, SECRETARIES OR EXECUTIVE OFFICERS |
11.4 | OTHER PAYMENTS AND BENEFITS |
11.5 | AGREEMENTS OR ARRANGEMENTS WITH DIRECTORS |
11.6 | INTERESTS IN CONTRACTS |
Table of Contents
11.7 | REGULATORY RELIEF |
• | consent to omit from this Information Memorandum the list of Incentive Holders and other matters which would otherwise be required by paragraphs 8201(a), 8201(b), 8201(c), 8201(d), 8201(e), 8203(a) and 8203(b) of Part 2 of Schedule 8 to the Corporations Regulations to be set out in this Information Memorandum; | ||
• | an exemption pursuant to section 259C(2) of the Corporations Act in connection with the transfer of the Shares to HeartWare International pursuant to the Share Scheme; | ||
• | a declaration under subsection 741(1)(b) modifying subsection 707(3) and (4) so that the modified form of those subsections as set out in Class Order 04/671 applies to HeartWare International Shares issued following the exercise of HeartWare International Options granted under the Option Scheme and HeartWare International Restricted Stock Units issued under the Performance Rights Scheme; and | ||
• | an exemption under subsection 741(1)(a) to provide relief from Chapters 6D and 7 on a similar basis to Class Order 03/184 in respect of offers of HeartWare International Options and HeartWare International Restricted Stock Units under the HeartWare International 2008 Stock Incentive Plan in the 12 months following the listing of HeartWare International on ASX, but without requiring HeartWare International Shares to have been quoted on a relevant financial market throughout the 12 month period prior to the offer of HeartWare International Options and Restricted Stock Units. |
• | a waiver from Listing Rule 6.23 so that shareholder approval for the purpose of that Rule is not required in respect of the cancellation of the Options, Standalone Options and Performance Rights; |
• | a waiver from paragraph 108 of Appendix A to permit HeartWare International to use the Information Memorandum as an information memorandum for the purposes of its application to list on ASX and to confirm that HeartWare International is not required to make the statement in paragraph 108 of Appendix 1A of the ASX Listing Rules (which requires prospectus equivalent information to be included); |
• | a waiver from paragraph 42 of Appendix 1A of the ASX Listing Rules to the extent necessary to permit the Information Memorandum not to include a brief history of HeartWare International; |
• | a waiver from paragraphs 87, 87A, 87B and 87C of Appendix 1A of the ASX Listing Rules to the extent necessary to permit HeartWare International not to provide the financial statements referred to in those paragraphs; |
• | a waiver from paragraph 106 of Appendix 1A of the ASX Listing Rules to permit the Information Memorandum not to include details of HeartWare International’s existing and proposed activities and level of operations, or a statement of its main business; |
• | a waiver from paragraph 110 of Appendix 1A of the ASX Listing Rules to permit this Information Memorandum not to specify the date on which it was signed; |
• | a waiver from paragraph 116 of Appendix 1A of the ASX Listing Rules to permit HeartWare International not to include a statement in the Information Memorandum that HeartWare International will not need to raise capital in the three months after the date of issue of this Information Memorandum; |
• | a waiver from paragraph 117 of Appendix 1A of the ASX Listing Rules to permit HeartWare International not to include a statement in the Information Memorandum that a supplementary information memorandum will be issued if HeartWare International becomes aware of certain matters occurring between the issue of this Information Memorandum and the date HeartWare International’s securities are quoted, on condition that any such matters are announced to the market by the Company; |
• | a waiver from condition 8 of Listing Rule 1.1 to the extent necessary to permit HeartWare International not to comply with Listing Rules 1.2 or 1.3 on condition that the Company satisfies Listing Rules 12.1 and 12.2 at the time of admission of HeartWare International; |
• | confirmation that the terms that apply to the securities of HeartWare International including HeartWare International Shares, HeartWare International Options and HeartWare International Restricted Stock Units, are appropriate and equitable for the purposes of Listing Rule 6.1; |
Table of Contents
• | a waiver from Listing Rule 6.23.2 in respect of HeartWare International Options, HeartWare International Standalone Options and HeartWare International Restricted Stock Units, on the basis that an alternative mechanism equivalent to that contained in those Rules will apply under the rules of an alternate regulatory regime; |
• | a waiver from Listing Rules 7.1 to permit HeartWare International to issue Standalone Options to Standalone Optionholders without the approval of Shareholders of HeartWare International; |
• | confirmation that Listing Rule 9.1 will not apply to any HeartWare International Shares, HeartWare International Options or HeartWare International Restricted Stock Units issued to HeartWare International Shareholders and Incentive Holders under the Schemes; |
• | a waiver from Listing Rule 10.11 to permit HeartWare International to issue, without Shareholder approval, replacement equity securities to related parties pursuant to their participation in the Schemes on the condition that it does so on the same basis as securities that are issued to all holders in the same classes and otherwise in accordance with the relevant Schemes; |
• | a waiver from Listing Rule 10.14 to permit HeartWare International to issue, without Shareholder approval, replacement HeartWare International Options and HeartWare International Restricted Stock Units pursuant to an employee stock plan to its directors and their associates in consideration for the cancellation of their Options and Performance Rights; |
• | confirmation that HeartWare International may accept nominations for the election of directors in accordance with the timetable set out in HeartWare International’s by-laws for the purposes of Listing Rule 14.3; |
• | a waiver from Listing Rule 15.12 to the extent necessary to permit HeartWare International’s certificate of incorporation and by-laws not to contain the provisions required by Listing Rules 15.12.1 to 15.12.3 inclusive; and |
• | confirmation that HeartWare International may prepare its accounts in US GAAP and will not be required to provide a statement reconciling its accounts to Australian accounting standards or international accounting standards. |
11.8 | FOREIGN REGULATORY MATTERS |
• | the HeartWare International Shares being offered under the Share Scheme are securities for which an application for quotation on ASX will be made and HeartWare International will at the time of the offer of HeartWare International Shares to New Zealand resident Shareholders, have complied with the requirements of the ASX that are applicable at that time; | ||
• | the HeartWare International Shares are offered as consideration for the transfer of the Shares of the Company; |
Table of Contents
• | the Company’s Shares are quoted on the ASX; and | ||
• | the offer by HeartWare International of HeartWare International Shares under the Share Scheme to New Zealand resident Shareholders complies with the laws of Australia and any code, rules or other requirements relating to the offer that applies in Australia. |
11.9 | SHARE REGISTER |
11.10 | OPTION REGISTER |
11.11 | PERFORMANCE RIGHTS REGISTER |
11.12 | OTHER MATERIAL INFORMATION |
11.13 | MATERIAL CHANGES IN THE FINANCIAL POSITION OF THE COMPANY |
Table of Contents
HeartWare Limited
Level 57, MLC Centre,
19-29 Martin Place
Sydney NSW 2000, Australia
Fax: +61 2 9238 2063
Email: enquiries@heartware.com.au
11.14 | EFFECT ON CREDITORS |
11.15 | DISCLOSURE OF FEES AND BENEFITS RECEIVED BY CERTAIN PERSONS |
• | BDO Kendalls as the Independent Expert; |
• | DLA Phillips Fox as the Australian legal adviser to the Company and HeartWare International; |
• | DLA Piper US LLP as the US legal adviser to the Company and HeartWare International; |
• | Grant Thornton NSW as the Australian auditor to the Company; |
• | Grant Thornton Corporate Finance Pty Limited as investigating accountant to the Company; |
• | PwC Australia as the Australian tax adviser to the Company and HeartWare International; |
• | PwC LLP as the US tax adviser to the Company and HeartWare International; and |
• | Computershare as the share registry of the Company and HeartWare International. |
11.16 | CONSENTS |
• | BDO Kendalls as the Independent Expert; |
• | DLA Phillips Fox as the Australian legal adviser to the Company and HeartWare International; |
• | DLA Piper US LLP as the US legal adviser to the Company and HeartWare International; |
• | Grant Thornton NSW as the Australian auditor to the Company; |
• | Grant Thornton Corporate Finance Pty Limited as investigating accountant to the Company; |
• | Grant Thornton LLP as the US auditor to the Company and HeartWare International; |
• | PwC Australia as the Australian tax adviser to the Company and HeartWare International; |
Table of Contents
• | PwC LLP as the US tax adviser to the Company and HeartWare International; and |
• | Computershare as the Australian share registry of the Company and HeartWare International. |
• | BDO Kendalls in respect of the Independent Expert’s Report in Appendix 2; |
• | Grant Thornton Corporate Finance Pty Limited in respect of the Investigating Accountant’s Report included in section 7; |
• | PwC Australia in respect of the information in section 10.1 and 10.2; and |
• | PwC LLP in respect of the information in section 10.3. |
11.17 | DEADLINE FOR SUBMITTING SHAREHOLDER PROPOSAL |
11.18 | DISCLAIMERS |
• | does not make, or purport to make, any statement in this Information Memorandum other than those statements made in the capacity and to the extent the person has provided its consent as referred to in section 11.16 above; and |
• | to the maximum extent permitted under law, expressly disclaims and takes no responsibility for any part of this Information Memorandum other than as described in section 11.6 with the person’s consent. |
11.19 | LODGEMENT OF THIS INFORMATION MEMORANDUM |
This Information Memorandum was given to ASIC on 12 September 2008 pursuant to section 411(2)(b) of the Corporations Act. |
11.20 | CONSENT TO LODGEMENT |
Robert Thomas
Chairman
Table of Contents
Chairman
Table of Contents
12 | Glossary | |
12.1 | DEFINITIONS | |
A$means Australian currency. | ||
Affiliatehas the meaning given in the Exchange Act being a person controlled, controlling or under common control with HeartWare International and is likely to include: |
• | the directors of HeartWare International and the Company; | ||
• | the executive officers of HeartWare International and potentially the Company; and | ||
• | significant shareholders of HeartWare International (i.e. those shareholders holding at least 10% of the issued shares of HeartWare International). |
Table of Contents
Table of Contents
Table of Contents
• | HeartWare International will acquire all of the Shares under the Share Scheme; | ||
• | the Company will cancel all of the Options under the Option Scheme; | ||
• | the Company will cancel all of the Performance Rights under the Performance Rights Scheme; | ||
• | the Company will cancel all of the Standalone Options; and | ||
• | the existing security holders of the Company will receive HeartWare International Shares, HeartWare International Options, HeartWare International Restricted Stock Units and HeartWare International Standalone Options (as relevant), |
Table of Contents
Table of Contents
HeartWare International, Inc
105 | ||||
105 | ||||
105 | ||||
105 | ||||
105 | ||||
106 | ||||
106 | ||||
106 | ||||
106 | ||||
107 | ||||
107 | ||||
107 | ||||
107 | ||||
107 | ||||
107 | ||||
107 | ||||
108 | ||||
108 | ||||
108 | ||||
108 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
109 | ||||
110 | ||||
110 | ||||
110 |
Table of Contents
110 | ||||
110 | ||||
111 | ||||
111 | ||||
111 | ||||
111 | ||||
112 | ||||
112 | ||||
112 | ||||
112 | ||||
112 | ||||
112 | ||||
113 | ||||
113 | ||||
113 | ||||
113 | ||||
113 | ||||
113 | ||||
113 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
114 | ||||
115 | ||||
115 | ||||
117 | ||||
118 | ||||
118 | ||||
118 | ||||
Table of Contents
A | The parties have agreed that the Company will seek to implement a reorganisation pursuant to which: |
(a) | HeartWare International would acquire all of the issued Shares of the Company in exchange for HeartWare International Shares or CDIs by means of a scheme of arrangement under Part 5.1 of the Corporations Act (Share Scheme); | ||
(b) | the existing Options would be cancelled in exchange for HeartWare International Options in HeartWare International by means of a scheme of arrangement under Part 5.1 of the Corporations Act (Option Scheme); and | ||
(c) | the existing Performance Rights would be cancelled in exchange for Restricted Stock Units in HeartWare International by means of a scheme of arrangement under Part 5.1 of the Corporations Act (Performance Rights Scheme). |
B | The parties will implement the Schemes in good faith on the terms and conditions of this Agreement. | ||
C | In conjunction with the Schemes, the parties will seek to replace the existing Standalone Options with new options in HeartWare International. | ||
D | Following implementation of the Schemes, HeartWare International will: |
(a) | buy back the HeartWare International Shares issued to the Company on incorporation of HeartWare International for the nominal consideration of $1.00; and | ||
(b) | convert the Company from a public company to a proprietary company limited by shares. |
1 | IMPLEMENTATION OF THE PROPOSED TRANSACTION |
1.1 | The Company will propose and the parties will seek to implement the Proposed Transaction in accordance with this Agreement. |
2 | CONDITIONS |
2.1 | The transfer of the Scheme Shares and HeartWare International’s obligations under clause 3.3 are subject to each of the following conditions being satisfied or waived in accordance with this clause 2: |
2.1.1 | (No prohibitive orders) Prior to 8.00am on the Second Court Hearing Date no judicial authority or entity and no Government Agency taking and not withdrawing any action, or imposing any legal restraint or prohibition, to prevent the implementation of the Proposed Transaction (or any transaction contemplated by the Proposed Transaction). | ||
2.1.2 | (Regulatory Consents) All approvals, consents or waivers which the parties agree are required to implement the transactions envisaged by this Agreement (other than the approval of the Court of the Schemes under section 411(4)(b) of the Corporations Act) having been obtained or deemed obtained by 5:00pm on the Business Day immediately prior to the Second Court Hearing Date including ASIC and ASX providing all consents, approvals and waivers and doing other acts which are necessary or reasonably desirable to implement the Proposed Transaction on terms that are unconditional or subject only to conditions which are acceptable to the Company (Regulatory Consents). | ||
2.1.3 | (ASX listing) ASX approving: |
(a) | HeartWare International for admission to the official list of ASX; and | ||
(b) | the CDIs for official quotation by ASX, |
1.
Table of Contents
2.1.4 | (Shareholder Approval) Shareholders approving the Share Scheme at the Share Scheme Meeting (or any adjournment or postponement of it at which the Share Scheme is voted on) by the requisite majorities under the Corporations Act. | ||
2.1.5 | (Court Approval of Share Scheme) The Court approving the Share Scheme in accordance with section 411(4)(b) of the Corporations Act either unconditionally or on conditions that are customary or usual. | ||
2.1.6 | (Depositary): Before 5.00pm on the Business Day prior to the Second Court Hearing Date, HeartWare International has appointed a Depositary and the Depositary has agreed to the allotment to it of HeartWare International Shares under the Share Scheme. | ||
2.1.7 | (Nominee): Before 5.00pm on the Business Day prior to the Second Court Hearing Date, HeartWare International has appointed a Nominee and the Nominee has agreed to sell the CDIs as contemplated by clause 3.8. | ||
2.1.8 | (Ability to issue CDIs): Before 5.00pm on the Business Day prior to the Second Court Hearing Date, HeartWare International has done everything necessary under the ASTC Settlement Rules to enable it to issue CDIs other than the allotment to a Depositary of HeartWare International Shares under the Share Scheme. |
2.2 | The cancellation of the Options and HeartWare International’s obligations under clause 4.3 are subject to the satisfaction or waiver of each of the conditions set out in clause 2.1 and each of the following conditions being satisfied or waived in accordance with this clause 2: |
2.2.1 | (Optionholder Approval) Optionholders approving the Option Scheme at the Option Scheme Meeting (or any adjournment or postponement of it at which the Option Scheme is voted on) by the requisite majorities under the Corporations Act. | ||
2.2.2 | (Court Approval of Option Scheme) The Court approving the Option Scheme in accordance with section 411(4)(b) of the Corporations Act either unconditionally or on conditions that are customary or usual. |
2.3 | The cancellation of the Performance Rights and HeartWare International’s obligations under clause 5.3 are subject to the satisfaction or waiver of each of the conditions set out in clause 2.1 and each of the following conditions being satisfied or waived in accordance with this clause 2: |
2.3.1 | (Performance Rights Holder Approval) Performance Rights Holders approving the Performance Rights Scheme at the Performance Rights Scheme Meeting (or any adjournment or postponement of it at which the Performance Rights Scheme is voted on) by the requisite majorities under the Corporations Act. | ||
2.3.2 | (Court Approval of Performance Rights Scheme) The Court approving the Performance Rights Scheme in accordance with section 411(4)(b) of the Corporations Act either unconditionally or on conditions that are customary or usual. |
2.4 | Each of the parties must use its reasonable endeavours to procure that: |
2.4.1 | each of the conditions in clauses 2.1, 2.2 and 2.3 is satisfied as expeditiously as possible and in any event on or before the Sunset Date, including providing all reasonable assistance to the other party as is necessary to satisfy such conditions; and | ||
2.4.2 | there is no occurrence within the control of the Company or HeartWare International (as the context requires) which would prevent the conditions in clause 2.1, 2.2 or 2.3 from being satisfied. |
2.5 | The conditions in clauses 2.1.1 to 2.1.3 and 2.1.6 to 2.1.8 are for the joint benefit of the Company and HeartWare International and may only be waived jointly by them. | |
2.6 | The conditions in clauses 2.1.4, 2.1.5, 2.2.1, 2.2.2, 2.3.1 and 2.3.2 cannot be waived. | |
2.7 | Any waiver of the conditions in clause 2.1 must take place prior to 8.00am on the Second Court Hearing Date to be effective. |
2.
Table of Contents
2.8 | If: |
2.8.1 | a condition in clause 2.1, 2.2 or 2.3 is not satisfied or waived by the date specified for its satisfaction; or | ||
2.8.2 | a condition in clause 2.1, 2.2 or 2.3 becomes incapable of being satisfied by the date specified for its satisfaction and is not waived, |
2.8.3 | determine whether the Proposed Transaction or an element of the Proposed Transaction (as relevant) may proceed by way of alternative means or methods; | ||
2.8.4 | change the date of the application made to the Court for an order under section 411(4)(b) of the Corporations Act approving the Schemes or adjourning that application (as applicable) to another date agreed by the Company and HeartWare International (being a date no later than 5 Business Days before the Sunset Date); or | ||
2.8.5 | extend the relevant date or Sunset Date. |
2.9 | If the parties are unable to reach agreement under clause 2.8 within 5 Business Days of the date on which they both become aware that the condition has become incapable of being satisfied (or, if earlier, by 8.00am on the Second Court Hearing Date), then unless the condition is waived, either party may terminate this Agreement at any time prior to 8.00am on the Second Court Hearing Date with immediate effect by written notice to the other party. | |
2.10 | Subject to the rights of the parties under clauses 11.3, 12, 13 or 14 of this Agreement, following any termination under clause 2.9, no party will have any liability to the other party in respect of this Agreement. |
2.11 | The Company and HeartWare International must promptly notify each other of any change or event causing, or which, so far as can reasonably be foreseen, would cause: |
2.11.1 | any of the conditions in clause 2.1, 2.2 or 2.3 being satisfied or becoming incapable of satisfaction; or | ||
2.11.2 | a material breach of this Agreement. |
3 | SHARE SCHEME |
3.1 | On or before 8.00am on the Second Court Hearing Date: |
3.1.1 | the Company will make an offer to each Standalone Optionholder to cancel the Standalone Options held by that person in accordance with clause 8; and | ||
3.1.2 | the Company will seek a ruling from the Australian Taxation Office that Australian resident Scheme Shareholders, Scheme Optionholders and Scheme Performance Rights Holders will receive capital gains tax rollover relief in relation to the transfer of their Shares to HeartWare International under the Share Scheme and the cancellation and replacement of their Options and Performance Rights under the Option Scheme and Performance Rights Scheme respectively and for Standalone Optionholders in relation to the cancellation and replacement of their Standalone Options in accordance with clause 8; |
3.2 | The Company will propose a scheme of arrangement under which all the Scheme Shares are transferred to HeartWare International and Scheme Shareholders will be entitled to receive the Share Scheme Consideration. |
3.3 | In consideration of the Scheme Shareholders transferring their Shares to HeartWare International on the Implementation Date, HeartWare International covenants in the Company’s favour (in its own right and separately as trustee or nominee for each Scheme Shareholder) that HeartWare International will, on the Implementation Date, and immediately before the transfer of the Shares to HeartWare International, issue to such Scheme Shareholder (or, in accordance with clause 3.8 to a Nominee on its behalf where such Scheme Shareholder is an Ineligible Overseas Shareholder): |
3.3.1 | one CDI for every Share held by them on the Scheme Record Date, where the Scheme Shareholder has not made an election in accordance with clause 3.4; or | ||
3.3.2 | one HeartWare International Share for every 35 Shares held by them on the Scheme Record Date, where such Scheme Shareholder has made an election in accordance with clause 3.4. |
3.
Table of Contents
3.4 | The Information Memorandum must be accompanied by written notice to the Company’s share registry, under which each Scheme Shareholder may make an election to receive HeartWare International Shares rather than CDIs under the Share Scheme, by completing, signing and returning the form by 5.00pm on the Scheme Record Date (or such other date as agreed by the parties in writing) to the Company’s share registry. | |
3.5 | An election under clause 3.4 may only be made in respect of all and not only some of the Shares held by a Scheme Shareholder. | |
3.6 | If a Scheme Shareholder does not make an election in accordance with clause 3.4, a Scheme Shareholder will receive CDIs under the Share Scheme. |
3.7 | Fractional entitlements to Share Scheme Consideration will be rounded down to the nearest: |
3.7.1 | whole number of HeartWare International Shares, if the Scheme Shareholder has elected to receive HeartWare International Shares under the Share Scheme; or | ||
3.7.2 | multiple of 35 CDIs, if the Scheme Shareholder has not made an election under clause 3.4, after aggregating all holdings of such Scheme Shareholder. |
3.8 | Where a Scheme Shareholder is an Ineligible Overseas Shareholder, the number of CDIs to which the Scheme Shareholder would otherwise be entitled under the Scheme will be issued to a Nominee of HeartWare International who will sell those CDIs as soon as reasonably practicable (at the risk of that Ineligible Overseas Shareholder) and pay the net proceeds received (calculated on an averaged basis so that all Ineligible Overseas Shareholders receive the same price per CDI subject to rounding to the nearest cent), after deducting any applicable brokerage and other taxes and charges, to that Ineligible Overseas Shareholder in full satisfaction of that Ineligible Overseas Shareholder’s rights to Scheme Consideration. |
3.9 | The obligations of HeartWare International to issue HeartWare International Shares under this Agreement will be satisfied by HeartWare International on the Implementation Date, procuring the entry in the registers maintained by HeartWare International of holders of HeartWare International Shares of each person who is to receive HeartWare International Shares. | |
3.10 | After the satisfaction of the obligations of HeartWare International in clause 3.9, and within five Business Days after the Implementation Date, HeartWare International will: |
3.10.1 | issue holding statements, certificates or transmittal letters (as the case may be) for such HeartWare International Shares in the name of such persons; and | ||
3.10.2 | procure the dispatch of such holding statements, certificates or transmittal letters to the address as shown in the registers for such persons. |
3.11 | The obligations of HeartWare International to issue CDIs under clause 3.3 of this Agreement will be satisfied by HeartWare International on the Implementation Date, procuring the entry in the register maintained by HeartWare International of holders of HeartWare International Shares of the Depositary as depositary to hold the HeartWare International Shares underlying those CDIs and procuring the Depositary to issue CDIs to Scheme Shareholders in accordance with the Share Scheme. | |
3.12 | After the satisfaction of the obligations of HeartWare International in clause 3.11, and within five Business Days after the Implementation Date, HeartWare International will: |
3.12.1 | issue holding statements or transmittal letters (as the case may be) for such HeartWare International Shares in the name of the Depositary, and procure the dispatch of such holding statements or transmittal letters to the Depositary; | ||
3.12.2 | record in the CDI Register each person who is to receive CDIs under clause 3.3; and | ||
3.12.3 | dispatch to each person who is to receive CDIs under clause 3.3 a holding statement in the name of that person representing the number of CDIs to be issued to that person. |
4.
Table of Contents
4 | OPTION SCHEME |
4.1 | On or before 8.00am on the Second Court Hearing Date, HeartWare International will adopt the HeartWare International Employee Stock Option Plan. |
Option Scheme |
4.2 | The Company will propose a scheme of arrangement under which all of the Options are cancelled and Scheme Optionholders will be entitled to receive the Option Scheme Consideration. |
4.3 | In consideration of the Scheme Optionholders agreeing to cancel their Options on the Implementation Date, HeartWare International covenants in the Company’s favour (in its own right and separately as trustee or nominee for each Scheme Optionholder) that HeartWare International will, on the Implementation Date, and immediately before the cancellation of the Options, issue to such Scheme Optionholder one HeartWare International Option for every 35 Options held by them on the Scheme Record Date. |
4.4 | Each HeartWare International Option issued in accordance with clause 4.3 will: |
4.4.1 | have an exercise price per HeartWare International Option equal to 35 times the exercise price per option of the Options it replaces; | ||
4.4.2 | have an exercise period equal to the unexpired exercise period of the Options it replaces; | ||
4.4.3 | be vested to the same extent and have the same terms as to vesting as the Options it replaces; and | ||
4.4.4 | otherwise be issued on the terms of the HeartWare International Employee Stock Option Plan. |
4.5 | Fractional entitlements to Option Scheme Consideration will be rounded down to the nearest whole number of HeartWare International Options after aggregating all holdings of such Scheme Optionholder. |
4.6 | The obligations of HeartWare International to issue HeartWare International Options under this Agreement will be satisfied by HeartWare International on the Implementation Date, procuring the entry in the register maintained by HeartWare International of optionholders of each person who is to receive HeartWare International Options. | |
4.7 | After the satisfaction of the obligations of HeartWare International in clause 4.6, and within five Business Days after the Implementation Date, HeartWare International will: |
4.7.1 | issue certificates for such HeartWare International Options in the name of such persons; and | ||
4.7.2 | procure the dispatch of such certificates to the address as shown in the option register for such persons. |
5 | PERFORMANCE RIGHTS SCHEME |
5.1 | On or before 8.00am on the Second Court Hearing Date, HeartWare International will adopt the HeartWare International Restricted Stock Unit Plan. |
5.2 | The Company will propose a scheme of arrangement under which all of the Performance Rights are cancelled and Scheme Performance Rights Holders will be entitled to receive the Performance Rights Scheme Consideration. |
5.3 | In consideration of the Scheme Performance Rights Holders agreeing to cancel their Performance Rights on the Implementation Date, HeartWare International covenants in the Company’s favour (in its own right and separately as trustee or nominee for each Scheme Performance Rights Holder) that HeartWare International will, on the Implementation Date, and immediately before the cancellation of the Performance Rights, issue to such Scheme Performance Rights Holder one Restricted Stock Unit in HeartWare International for every 35 Performance Rights held by them on the Scheme Record Date. |
5.
Table of Contents
5.4 | Each HeartWare International Restricted Stock Unit issued in accordance with clause 5.3 will: |
5.4.1 | be vested to the same extent and have the same period for vesting as the Performance Rights it replaces; | ||
5.4.2 | be subject to equivalent vesting conditions as the Performance Rights it replaces; and | ||
5.4.3 | otherwise be issued on the terms of the HeartWare International Restricted Stock Unit Plan. |
5.5 | Fractional entitlements to Performance Rights Scheme Consideration will be rounded down to the nearest whole number of Restricted Stock Units after aggregating all holdings of such Scheme Performance Rights Holder. |
5.6 | The obligations of HeartWare International to issue Restricted Stock Units under this Agreement will be satisfied by HeartWare International on the Implementation Date, procuring the entry in the register maintained by HeartWare International of Restricted Stock Unit Holders of each person who is to receive Restricted Stock Units. | |
5.7 | After the satisfaction of the obligations of HeartWare International in clause 5.6, and within five Business Days after the Implementation Date, HeartWare International will: |
5.7.1 | issue certificates for such Restricted Stock Units in the name of such persons; and | ||
5.7.2 | procure the dispatch of such certificates to the address as shown in the Restricted Stock Unit Holder register for such persons. |
6 | COOPERATION | |
6.1 | HeartWare International and the Company must each use all reasonable endeavours to produce the Information Memorandum, seek the required Regulatory Consents and implement the Schemes as soon as reasonably practicable. |
7 | IMPLEMENTATION OF SCHEMES |
7.1 | The Company must take all necessary steps to propose, implement and complete the Schemes as soon as reasonably practicable. This includes taking each of the following steps: |
7.1.1 | (Prepare Information Memorandum) Prepare the Information Memorandum in accordance with all applicable laws including the Corporations Act, applicable ASIC Policy Statements and the Listing Rules. The Information Memorandum must include, amongst other things: |
(a) | details of the Schemes; | ||
(b) | the Deeds Poll; | ||
(c) | an explanatory statement complying with the Corporations Act’s requirements in respect of the Schemes as a whole; | ||
(d) | report from the Independent Expert; | ||
(e) | notices of the Scheme Meetings; | ||
(f) | proxy forms for the Scheme Meetings; and | ||
(g) | a statement that each director of the Company recommends that Shareholders, Optionholders and Performance Rights Holders vote in favour of the Schemes. |
7.2 | (Independent Expert) Appoint an independent expert to provide a report with respect to the Schemes to be included in the Information Memorandum in accordance with all applicable laws. | |
7.3 | (Registration) Request ASIC to register the explanatory statement included in the Information Memorandum in relation to the Schemes in accordance with section 412(6) of the Corporations Act. | |
7.4 | (Engage suitable counsel) Engage suitable counsel to represent the Company in all Court proceedings related to the Schemes. | |
7.5 | (Section 411(17)(b) statement) Apply to ASIC for a statement under section 411(17)(b) of the Corporations Act that ASIC has no objection to the Schemes. | |
7.6 | (Court direction) Apply to the Court for orders under section 411(1) of the Corporations Act directing the Company to convene the Scheme Meetings. |
6.
Table of Contents
7.7 | (Scheme Meetings) Convene and hold the Scheme Meetings to seek approval of the Schemes in accordance with the Court’s orders. | |
7.8 | (New information) Provide to Shareholders, Optionholders and Performance Rights Holders any further or new information which arises after the Dispatch Date and prior to the Scheme Meetings which is necessary to ensure that the information contained in the Information Memorandum is not false, misleading or deceptive in any material respect. | |
7.9 | (Court approval) Apply to the Court for orders approving the Schemes if they are approved by the requisite majorities of Shareholders, Optionholders and Performance Rights Holders respectively at the Scheme Meetings. | |
7.10 | (Certificate) Provide the Court on the Second Court Hearing Date with a certificate confirming whether all the conditions in clauses 2.1, 2.2 and 2.3, have been satisfied or waived in accordance with the terms of this Agreement. | |
7.11 | (Lodge copy of Court order) Lodge an office copy of the Court order approving the Schemes (if made) with ASIC no later than 5.00pm on the day after the orders are made. | |
7.12 | (Registration) If the Share Scheme becomes Effective, enter in the Register all transfers of Scheme Shares to HeartWare International under the Share Scheme on the Implementation Date. |
7.13 | HeartWare International must take all necessary steps to implement and complete the Schemes as soon as is reasonably practicable. This includes taking each of the following steps: |
7.13.1 | (Deeds Poll) Execute the Deeds Poll immediately following the Court making the orders under section 411(1) of the Corporations Act to convene the Scheme Meetings; | ||
7.13.2 | (HeartWare International Information) Prepare and provide to the Company all information regarding HeartWare International required by all applicable laws, including the Corporations Act, applicable ASIC Policy Statements, and the Listing Rules, for inclusion in the Information Memorandum. | ||
7.13.3 | (Certificate) Provide the Court on the Second Court Hearing Date with a certificate confirming whether all the conditions in clauses 2.1, 2.2 and 2.3 have been satisfied or waived in accordance with the terms of this Agreement. | ||
7.13.4 | (HeartWare International new information) Provide to the Company any further or new information about HeartWare International which arises after the Dispatch Date and prior to the Scheme Meetings which is necessary or reasonably required by the Company to ensure that the information concerning HeartWare International disclosed in the Information Memorandum is not false, misleading or deceptive in any material respect. | ||
7.13.5 | (Scheme Consideration) If the: |
(a) | Share Scheme becomes Effective, issue the Share Scheme Consideration in accordance with clause 3.3; | ||
(b) | Option Scheme becomes Effective, issue the Option Scheme Consideration in accordance with clause 4.3; and | ||
(c) | Performance Rights Scheme becomes Effective, issue the Performance Rights Scheme Consideration in accordance with clause 5.3, | ||
in each case on the Implementation Date. |
8 | REPLACEMENT OF STANDALONE OPTIONS |
8.1 | On or before 8.00am on the Second Court Hearing Date, the Company will make an offer to each Standalone Optionholder to cancel the Standalone Options held by that person. In consideration for and subject to that cancellation, HeartWare International will grant one HeartWare International Standalone Option to each Standalone Optionholder for every 35 Standalone Options held by them as at the Implementation Date (rounded down to the nearest whole number of HeartWare International Standalone Options) on the terms set out in clause 8.4 below. | |
8.2 | The offers set out in clause 8.1, shall be conditional upon: |
8.2.1 | the Share Scheme becoming Effective; and | ||
8.2.2 | ASX granting a waiver on or before the Implementation Date of the requirement under Listing Rule 6.23 to obtain Shareholder approval for the cancellation of the Standalone Options; and |
7.
Table of Contents
8.3 | In addition to the conditions set out in clause 8.2, the offer of HeartWare International Standalone Options under clause 8.1 to directors of HeartWare International or related parties of HeartWare International will also be subject to ASX granting a waiver of the requirement under Listing Rule 10.11 of the requirement to obtain Shareholder approval for the new issue on or before the Implementation Date. |
8.4 | Each HeartWare International Standalone Option issued in accordance with clause 8.1 will: |
8.4.1 | have an exercise price per option equal to 35 times the exercise price per option of the Standalone Options it replaces; | ||
8.4.2 | have an exercise period equal to the unexpired exercise period of the Standalone Options it replaces; | ||
8.4.3 | be vested to the same extent and have the same terms as to vesting as the Standalone Options it replaces; and | ||
8.4.4 | otherwise be issued on the terms of the HeartWare International Option Deeds. |
9 | CONVERSION OF COMPANY TO A PROPRIETARY COMPANY |
9.1 | Within 10 Business Days following implementation of the Share Scheme, HeartWare International will pass a special resolution to convert the Company from a public company to a proprietary company limited by shares and lodge all necessary documentation with ASIC to give effect to the conversion of the Company from a public company to a proprietary company. |
10 | BUY BACK OF SHARES IN HEARTWARE INTERNATIONAL |
10.1 | Within ten Business Days following implementation of the Share Scheme, HeartWare International will buy back the HeartWare International Shares issued to the Company on incorporation for the nominal consideration of $1.00 in accordance with the requirements of Delaware law. |
11 | TERMINATION |
11.1 | Without prejudice to any other rights of termination under this Agreement, either party may terminate this Agreement by giving the other party written notice at any time before 8.00am on the Second Court Hearing Date if: |
11.1.1 | the other party is in material breach of any term of this Agreement and: |
(a) | the party wishing to terminate has given the other party a written notice: |
(i) | setting out details of the breach; and | ||
(ii) | stating its intention to terminate, and |
(b) | the breach continues to exist 5 Business Days (or any shorter period ending at 5.00pm on the day before the Second Court Hearing Date) from the date the notice is given; or |
11.1.2 | the board of the Company withdraws its recommendation of the Schemes. |
11.2 | All of the obligations in this Agreement with respect to a Scheme will terminate automatically without the need for action by any party in the event that: |
11.2.1 | the Independent Expert opines that such Scheme is not fair and reasonable and in the best interests of the Shareholders, Optionholders or Performance Rights Holders (as relevant); or | ||
11.2.2 | the Company’s Shareholders, Optionholders or Performance Rights Holders (as relevant) fail to approve such Scheme by the necessary majorities at the relevant Scheme Meeting; or | ||
11.2.3 | the Court refuses to grant an order convening any required Scheme Meeting or approving such Scheme and either the parties agree not to conduct an appeal or the parties agree to conduct an appeal but the appeal is unsuccessful; or | ||
11.2.4 | such Scheme is not approved by the Court under section 411(4)(b) of the Corporations Act on or before the Sunset Date. |
11.3 | If either the Company or HeartWare International terminates this Agreement under clauses 2.9 or 11.1 or this Agreement or any rights or obligations under this Agreement terminate automatically under clause 11.2, this Agreement and the parties’ obligations under it cease without any liability or obligation on behalf of the parties. |
8.
Table of Contents
12 | PUBLIC ANNOUNCEMENTS |
12.1 | Neither party may make a public announcement about this Agreement, the Information Memorandum or the Schemes unless: |
12.1.1 | the other party has approved the form of the announcement; or | ||
12.1.2 | the law or the Listing Rules requires an announcement to be made, subject to clause 12.2. |
12.2 | If the law or the Listing Rules require a party to make an announcement or disclosure about either the subject of this Agreement or the Information Memorandum, that party must give the other party as much notice as is reasonably practical and to the extent reasonably practical consult with the other party about the form and content of the announcement or disclosure. |
13 | COSTS AND STAMP DUTY |
13.1 | Subject to clause 13.2, the Company will bear all costs and expenses (including professional fees) incurred by the Company and HeartWare International in connection with the negotiation, preparation and execution of this Agreement and the implementation or attempted implementation of the Schemes. | |
13.2 | HeartWare International must pay all stamp duty and any related fines or penalties in respect of this Agreement, the Deeds Poll and the acquisition of the Scheme Shares in accordance with the Share Scheme. |
14 | MISCELLANEOUS |
14.1 | Any notice, demand, consent or other communication (aNotice) given or made under this Agreement: | |
14.1.1 | must be in writing and signed by a person duly authorised by the sender; | |
14.1.2 | must be delivered to the intended recipient by prepaid post or by hand or fax to the address or fax number below or the address (being an address in Australia) or fax number last notified by the intended recipient to the sender: |
Company: | ||
Address: | Level 57 | |
MLC Centre | ||
19–29 Martin Place | ||
Sydney NSW 2000 | ||
Australia | ||
Fax: | +61 2 9238 2063 | |
Attention: | David McIntyre | |
HeartWare International: | ||
Address: | 14000–14050 NW 57th Court, Miami Lakes, FL USA 33014 | |
Fax: | +1 305 818 4111 | |
Attention: | David McIntyre |
14.1.3 | will be taken to be duly given or made: |
(a) | in the case of delivery in person, when delivered; | ||
(b) | in the case of delivery by post, two Business Days after the date of posting (if posted to an address in the same country); and | ||
(c) | in the case of fax, on receipt by the sender of a transmission control report from the dispatching machine showing the relevant number of pages and the correct destination fax machine number or name of recipient and indicating that the transmission has been made without error, | ||
but if the result is that a Notice would be taken to be given or made on a day that is not a Business Day in the place to which the Notice is sent or is later than 4.00pm (local time) it will be taken to have been duly given or made at the commencement of business on the next Business Day in that place. |
9.
Table of Contents
14.2 | No failure to exercise nor any delay in exercising any right, power or remedy by a party operates as a waiver. A single or partial exercise of any right, power or remedy does not preclude any other or further exercise of that or any other right, power or remedy. A waiver is not valid or binding on the party granting that waiver unless made in writing. |
14.3 | The rights, powers and remedies provided to each party in this Agreement are in addition to, and do not exclude or limit, any right, power or remedy provided by law or equity or by any agreement. |
14.4 | This Agreement contains the entire agreement between the parties as at the date of this Agreement with respect to its subject matter and supersedes all prior agreements and understandings between the parties in connection with it. |
14.5 | No amendment or variation of this Agreement is valid or binding on a party unless made in writing executed by the Company and HeartWare International which may so make an amendment or variation notwithstanding that one or more other parties or persons may be entitled to the benefit of all or any of the provisions of this Agreement. |
14.6 | The rights and obligations of each party under this Agreement are personal. They cannot be assigned, encumbered or otherwise dealt with and no party may attempt, or purport, to do so without the prior consent of the other party. |
14.7 | The rights and obligations of the parties will not merge on the completion of any transaction contemplated by this Agreement. They will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing a transaction. |
14.8 | Each party agrees to do all things and execute all deeds, instruments, transfers or other documents as may be necessary or desirable to give full effect to the provisions of this Agreement and the transactions contemplated by it. |
14.9 | Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction is ineffective as to that jurisdiction to the extent of the prohibition or unenforceability. That does not invalidate the remaining provisions of this Agreement nor affect the validity or enforceability of that provision in any other jurisdiction. |
14.10 | This Agreement may be executed in any number of counterparts. All counterparts together will be taken to constitute one instrument. |
14.11 | Unless expressly included, the consideration for any supply under or in connection with this Agreement does not include GST. | |
14.12 | To the extent that any supply made by a party to another party (Recipient) under or in connection with this Agreement is a taxable supply and a tax invoice has been provided to the Recipient, the Recipient must pay, in addition to the consideration to be provided under this Agreement for that supply (unless it expressly includes GST) an amount equal to the amount of that consideration (or its GST exclusive market value) multiplied by the rate at which GST is imposed in respect of the supply. | |
14.13 | The amount of GST payable in accordance with clause 14.12 will be paid at the same time and in the same manner as the consideration otherwise payable for the supply is provided. |
14.14 | This document is governed by the law of New South Wales. The parties submit to the non-exclusive jurisdiction of its courts and courts of appeal from them. The parties will not object to the exercise of jurisdiction by those courts on any basis. |
10.
Table of Contents
15 | DEFINITIONS AND INTERPRETATION |
15.1 | In this Agreement the following definitions apply: | |
AIFRSmeans the Australian equivalent to International Financial Reporting Standards applying in Australia. | ||
Apple Treemeans Apple Tree Partners I, LP. | ||
APRAmeans the Australian Prudential Regulation Authority. | ||
ASICmeans the Australian Securities and Investments Commission. | ||
ASTCmeans Australian Settlement and Transfer Corporation Limited. | ||
ASXmeans ASX Limited or the securities market which it operates, as the context requires. | ||
Business Daymeans a day that is not a Saturday, Sunday or a public holiday or bank holiday in Sydney, Australia, or New York, United States of America. | ||
CDImeans the CHESS Depositary Interest to be issued in connection with the Share Scheme representing an interest in one thirty-fifth of a HeartWare International Share. | ||
CDI Registerhas the meaning given to that term in the ASTC Settlement Rules. | ||
CHESS Depositary Interesthas the meaning given to that term in the ASTC Settlement Rules. | ||
Corporations Actmeans theCorporations Act 2001(Cth). | ||
Courtmeans the Federal Court of Australia or any other court of competent jurisdiction under the Corporations Act agreed in writing by the Company and HeartWare International. | ||
Deeds Pollmeans the Share Scheme Deed Poll, the Option Scheme Deed Poll and the Performance Rights Scheme Deed Poll. | ||
Depositaryhas the meaning given to it in the ASTC Settlement Rules. | ||
Dispatch Datemeans the day that the Information Memorandum is dispatched to the Shareholders, Optionholders and Performance Rights Holders. | ||
Effectivemeans, when used in relation to a Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the Court order made under section 411(4)(b) of the Corporations Act in relation to that Scheme. | ||
Effective Datemeans the date on which a Scheme becomes Effective. | ||
First Court Hearing Datemeans the date the Court hears the application to order the convening of the Scheme Meetings under section 411(1) of the Corporations Act. | ||
Government Agencymeans: |
(a) | a government, whether foreign, federal, state, territorial or local; | ||
(b) | a department, office or minister of a government (whether foreign, federal, state, territorial or local) acting in that capacity; or | ||
(c) | a commission, delegate, instrumentality, agency, board, or other government, semi-government, judicial, administrative, monetary or fiscal authority, whether statutory or not and whether foreign, federal, state, territorial or local, |
11.
Table of Contents
(a) | HeartWare International will acquire all of the Shares under the Share Scheme; | ||
(b) | the Company will cancel all of the Options under the Option Scheme; | ||
(c) | the Company will cancel all of the Performance Rights under the Performance Rights Scheme; | ||
(d) | the Company will cancel all of the Standalone Options; and | ||
(e) | the existing security holders of the Company will receive HeartWare International Shares, HeartWare International Options, HeartWare International Restricted Stock Units and HeartWare International Standalone Options (as relevant). |
12.
Table of Contents
15.2 | In the interpretation of this Agreement, the following provisions apply unless the context otherwise requires: |
15.2.1 | The singular includes the plural and conversely. | ||
15.2.2 | A gender includes all genders. | ||
15.2.3 | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. | ||
15.2.4 | A reference to a person, corporation, trust, partnership, unincorporated body or other entity includes any of them. | ||
15.2.5 | A reference to a clause, schedule or annexure is a reference to a clause of, or schedule or annexure to, this Agreement. | ||
15.2.6 | A reference to an agreement or document (including a reference to this Agreement) is to the agreement or document as amended, varied, supplemented, novated or replaced, except to the extent prohibited by this Agreement or that other agreement or document. |
13.
Table of Contents
15.2.7 | A reference to a person includes a reference to the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns. | ||
15.2.8 | A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. | ||
15.2.9 | A reference to $ is to the lawful currency of Australia. | ||
15.2.10 | Words and phrases not specifically defined in this Agreement have the same meanings (if any) given to them in the Corporations Act. | ||
15.2.11 | A reference to time is a reference to time in Sydney, Australia. | ||
15.2.12 | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing must be done on the immediately succeeding Business Day. | ||
15.2.13 | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. | ||
15.2.14 | A reference to a party using its best endeavours or reasonable endeavours does not include a reference to that party paying money or providing other valuable consideration to or for the benefit of any person (and an obligation on a party to use its best or reasonable endeavours does not oblige that party to pay money or provide other valuable consideration to or for the benefit of any person). |
15.3 | This Agreement must not be construed adversely to a party solely because that party or its solicitors were responsible for preparing it. |
Payments |
15.4 | Unless otherwise expressly provided in this Agreement, where an amount is required to be paid to a party (the Receiving Party) by another party under this Agreement, that amount must be paid: |
15.4.1 | in immediately available and irrevocable funds by electronic transfer to a bank account or accounts notified by the Receiving Party in writing on or before the due date for payment, or in other such immediately payable funds as the parties agree; and | ||
15.4.2 | without deduction, withholding or set-off. |
Signature of director | Signature of director/company secretary | |
ROBERT BAIN THOMAS | DENIS NEWELL WADE | |
Name of director (print) | Name of director/company secretary (print) |
Signature of director | Signature of director/company secretary | |
ROBERT BAIN THOMAS | DENIS NEWELL WADE | |
Name of director (print) | Name of director/company secretary (print) |
14.
Table of Contents
Independent Expert’s Report
September 2008
Table of Contents
HeartWare Ltd Independent Expert’s Report |
122 | ||||
124 | ||||
127 | ||||
127 | ||||
128 | ||||
130 | ||||
130 | ||||
131 | ||||
134 | ||||
134 | ||||
136 | ||||
136 | ||||
137 | ||||
137 | ||||
138 | ||||
140 | ||||
140 | ||||
142 | ||||
144 | ||||
146 | ||||
146 | ||||
151 | ||||
151 | ||||
153 | ||||
154 | ||||
156 | ||||
158 | ||||
158 | ||||
166 | ||||
170 | ||||
173 | ||||
177 | ||||
180 | ||||
181 |
i
Table of Contents
HeartWare Ltd Independent Expert’s Report |
182 | ||||
183 | ||||
183 | ||||
183 | ||||
184 | ||||
186 | ||||
186 | ||||
188 | ||||
189 | ||||
190 | ||||
191 | ||||
192 | ||||
ii
Table of Contents
HeartWare Ltd Independent Expert’s Report |
a) | financial product advice in relation to deposit and payment products (limited to basic deposit products and deposit products other than basic deposit products), securities, derivatives, managed investments schemes, superannuation, government debentures, stocks and bonds; and |
b) | arranging to deal in financial products mentioned in a) above, with the exception of derivatives. |
iii
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Location Address: | Postal Address: | Phone: | (07) 3237 5999 | |||
Level 18 | GPO Box 457 | Fax: | (07) 3221 9227 | |||
300 Queen Street | BRISBANE QLD 4001 | Email: | cf.brisbane@bdo.com.au | |||
BRISBANE QLD 4000 |
iv
Table of Contents
BDO Kendalls Corporate Finance (QLD) Ltd Level 18, 300 Queen St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Phone 61 7 3237 5999 Fax 61 7 3221 9227 cf.brisbane@bdo.com.au www.bdo.com.au ABN 54 010 185 725 AFS Licence No. 245513 |
HeartWare Ltd
Level 57, MLC Centre
19-29 Martin Place
SYDNEY NSW 2000
• | HeartWare shareholders whose addresses are recorded in the HeartWare share register as within Australia, New Zealand and the US are collectively referred to as ‘the Shareholders’ in this Report; |
• | HeartWare option holders who have received their options under the HeartWare Employee Share Option Plan are collectively referred to as ‘the Option Holders’ in this Report; and |
• | HeartWare performance rights holders are collectively referred to as ‘the Performance Rights Holders’ in this Report. |
separate partnerships and entities.
1.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Incorporation of a new entity, HeartWare International; |
• | Schemes of Arrangement between HeartWare and the Shareholders (the ‘Share Scheme’), HeartWare and the Option Holders (the ‘Option Scheme’) and HeartWare and the Performance Rights Holders (the ‘Performance Rights Scheme’) collectively known as the ‘Schemes’ to effect the: |
• | Exchange of ordinary shares in HeartWare for HeartWare International Chess Depositary Interests (‘CDIs’) or HeartWare International common stock at the election of the relevant Shareholder; |
• | Exchange of options in HeartWare for options in HeartWare International; |
• | Exchange of performance rights in HeartWare for restrictive stock units in HeartWare International; and |
• | Applying for the quotation of HeartWare International CDIs on the ASX. |
2.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | an explanatory statement and notices of meeting in relation to the Schemes; |
• | an explanatory statement and notice of meeting in relation to an Extraordinary General Meeting; and |
• | an information memorandum in relation to the listing of HeartWare International on ASX. |
3.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | The advantages of the Proposed Transaction to the Equity Interest Holders (refer Table 2.1 and Section 7.1); |
• | The disadvantages of the Proposed Transaction to the Equity Interest Holders (refer Table 2.1 and Section 7.2); |
• | The impact of the Proposed Transaction on the liquidity of equity interests in HeartWare and HeartWare International (refer Section 7.3); |
• | Taxation impacts for Equity Interest Holders (refer Section 7.4); |
• | Additional matters that Equity Interest Holders may wish to consider in deciding to vote in favour of or against the Proposed Transaction (refer Section 7.5); and |
• | The position of the Equity Interest Holders if the Proposed Transaction is not approved (refer Section 7.6); |
4.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Advantage of the Proposed Transaction | Disadvantages of the Proposed Transanction | |
The US is a credible and larger capital market for medical device companies and HeartWare has successfully raised significant funds from US investors. | Changes to protection of Equity Interest Holders. | |
Improved US investor and analyst understanding of HeartWare’s structure. | Australian investors cease to hold equity interests in an Australian company. | |
Removal of foreign ownership restriction US (‘FORUS’). | Holding CDIs instead of shares. | |
Retention of ASX Listing. | Costs borne by HeartWare. | |
Cost savings and reduced compliance requirements. | Exposure to additional litigation risk. | |
Opportunity to pursue a NASDAQ listing and (if a NASDAQ listing is completed) the potential for increased liquidity and re-rating. | Restrictions imposed on the sale of shares by Affiliates. | |
Increased opportunity for commercial partnering and joint venture arrangements in the US. | Potential taxation consequences in certain circumstances. |
5.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
1 | Once the HeartWare International options and restrictive stock units are able to be exercised, the HeartWare International common stock received can be converted to HeartWare International CDIs at the ratio specified in this Report. |
6.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | If the Share Scheme is approved, the Shareholders in HeartWare will transfer all of their shares to HeartWare International, in exchange for which they will receive HeartWare International CDIs, or at their election, common stock in HeartWare International; |
• | If the Option Scheme is approved, the options currently held in HeartWare will be cancelled and, in exchange, the Option Holders will receive options in HeartWare International; |
• | If the Performance Rights Scheme is approved, the performance rights currently held in HeartWare will be cancelled and, in exchange, the Performance Rights Holders will receive restricted stock units in HeartWare International; and |
• | Shareholders in jurisdictions outside Australia, New Zealand and US will not be eligible to receive HeartWare International common stock. Instead CDIs will be issued to a nominee appointed by HeartWare International who will sell those CDIs at a price and term determined by the nominee. The proceeds from the sale will then be distributed to those Ineligible Foreign Shareholders. Although we do not provide an opinion on this mechanism in this Report, we have provided further discussion in Section 3.6 of this Report. |
7.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
8.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Approval of the Share Scheme by a majority in number of present and voting Shareholders representing at least 75% of the votes cast by Shareholders present and voting (either in person or by proxy, attorney or corporate representative); |
• | Approval of the Option Scheme by a majority in number of present and voting Option Holders representing at least 75% by value of the options (either in person or by proxy, attorney or corporate representative); |
• | Approval of the Performance Rights Scheme by a majority in number of present and voting Performance Rights Holders representing at least 75% by value of the performance rights (either in person or by proxy, attorney or corporate representative); and |
• | The implementation agreement as set out in Appendix 1 of the Information Memorandum (the ‘Implementation Agreement’) has not been terminated. |
• | No prohibitive orders or determinations are made preventing the implementation of the Schemes; |
• | All regulatory consents or waivers being obtained; | |
• | The Federal Court approving the Share Scheme; |
• | Approvals obtained from the ASX for the admission of HeartWare International to the ASX and for the quotation of HeartWare International CDIs; |
• | Necessary compliance under the ASX Settlement and Transfer Corporation Rules to enable the CDIs to be issued |
• | With respect to the issue of CDIs, the appointment of a depositary and the depositary agreeing to the allotment of HeartWare international common stock under the Share Scheme; and |
• | The appointment of a nominee and the nominee agreeing to the allotment of CDIs to it and to sell the CDIs for the benefit of Ineligible Foreign Shareholders. |
2 | The first court hearing occurred prior to the Information Memorandum being sent to the Equity Interest Holders. |
9.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Shareholders can elect to accept HeartWare International CDIs or HeartWare International common stock, in exchange for their shares in HeartWare. The decision to choose HeartWare International common stock or CDIs is that of each individual shareholder having regard to their own circumstances; |
• | Those eligible Share Scheme participants who have not elected to receive HeartWare International common stock, will be issued with one HeartWare International CDI for every share held by them in HeartWare; |
• | Those eligible Share Scheme participants who have elected to receive HeartWare International common stock, will be issued with one HeartWare International common stock for every 35 shares held by them in HeartWare; |
• | Shareholders will be able to exchange their HeartWare International common stock for HeartWare International CDIs and vice versa at any time in future; and |
• | Shares held by Ineligible Foreign Shareholders will be transferred to HeartWare International in exchange for HeartWare International issuing CDIs to the nominee for sale on their behalf (refer to Section 3.6). |
10.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
11.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Allow HeartWare International with the opportunity to consolidate its operations by allowing all corporate, manufacturing, development, research and clinical efforts to undertaken within or from the US; |
• | Align the corporate structure of HeartWare group with its operating structure; |
• | Enhance HeartWare and HeartWare International’s ability to expand into key markets; |
• | Enhance HeartWare and HeartWare International’s ability to seek growth and diversification opportunities in line with its strategic goals; |
• | Enable HeartWare through HeartWare International to continue to be represented on the ASX through the listing of its CDIs; |
• | Enhance demand for HeartWare International securities from US investors through the removal of FORUS; |
• | Enhance demand for HeartWare International securities from US investors who are mandated to invest in US domiciled entities; |
• | Provide a corporate structure which will be clearer and more transparent to US investors and US employees; |
• | Enhance HeartWare and HeartWare International’s ability to attract and retain key staff with the knowledge and experience to enable the development and commercialisation of HeartWare’s products; |
• | Allow for reduction in compliance costs by eliminating the dual reporting requirements; and |
• | Reduce management resources required in reconciling and managing the differences between US and Australian laws. |
12.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Pre-Restructure | Post-Restructure | |||||||||||||||
Number of | Pre-Restructure | Number of | Post-Restructure | |||||||||||||
Shareholders | Shares (a) | % of shares | Shares (b) | % of Total Shares | ||||||||||||
Top 10 shareholders | 218,789,948 | 70.50 | % | 6,251,141 | 70.50 | % | ||||||||||
Other shareholders | 91,566,891 | 29.50 | % | 2,616,197 | 29.50 | % | ||||||||||
Total | 310,356,839 | 100.00 | % | 8,867,338 | 100.00 | % | ||||||||||
(a) | As per Appendix 3B HeartWare dated 14 August 2008. | |
(b) | Assuming an exchange ratio of 35 to 1. |
13.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Approval of the Share Scheme by a majority in number of present and voting Shareholders representing at least 75% of the votes cast by Shareholders present and voting (either in person or by proxy, attorney or corporate representative); |
• | Approval of the Option Scheme by a majority in number of present and voting Option Holders representing at least 75% by value of the options (either in person or by proxy, attorney or corporate representative); |
• | Approval of the Performance Rights Scheme by a majority in number of present and voting Performance Rights Holders representing at least 75% by value of the performance rights (either in person or by proxy, attorney or corporate representative); |
• | The Resolution must be approved by a majority of votes of Shareholders eligible to vote at the EGM. |
14.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | The advantages of the Proposed Transaction to the Equity Interest Holders (refer Section 7.1); | |
• | The disadvantages of the Proposed Transaction to the Equity Interest Holders (refer Section 7.2); | |
• | The impact of the Proposed Transaction on the liquidity of equity interests in HeartWare and HeartWare International (refer Section 7.3); | |
• | Taxation impacts for Equity Interest Holders (refer Section 7.4); | |
• | Additional matters that Equity Interest Holders may wish to consider in deciding to vote in favour of or against the Proposed Transaction (refer Section 7.5); and | |
• | The position of the Equity Interest Holders if the Proposed Transaction is not approved (refer Section 7.6). |
15.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | The reasons for the Proposed Transaction are generally strategic and qualitative in nature; |
• | The Schemes effectively represent the creation of a new corporate structure, with a new holding company for the group; and |
• | The assets and business activities of HeartWare International immediately following the Proposed Transaction will remain substantially the same as those prior to the Proposed Transaction. |
16.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
17.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
3 | In relation to US securities law, a ‘foreign private issuer’ is an organisation other than a foreign government, incorporated or organised outside of the US, which does not have more than 50% of its outstanding voting securities directly or indirectly owned by US residents. In addition, it must not operate principally in the US, 50% or more of its directors or executive officers must not be US residents or more than 50% of its assets must not be located in the United States. (Rule 405 under the Securities Act of 1933. www.sec.gov) |
18.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | 310,356,839 ordinary shares; | |
• | 22,761,464 employee share options (‘ESOs’) over unissued shares; | |
• | 5,000,000 performance rights over unissued shares; and | |
• | 1,850,000 incentive options over unissued shares. |
4 | Sourced from the HeartWare’s latest Appendix 3B dated 14 August 2008 |
19.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Number | Percentage of | |||||||
Shareholders (based on legal title) | of Shares | Total Shares | ||||||
1 Apple Tree Partners LLP | 92,590,482 | 29.83 | % | |||||
2 HSBC Custody Nominees Australia Limited — GSCO ECSA | 48,000,000 | 15.47 | % | |||||
3 HSBC Custody Nominees Australia Limited | 22,616,630 | 7.29 | % | |||||
4 ANZ Nominees Limited | 22,055,603 | 7.11 | % | |||||
5 J P Morgan Nominees Pty Limited | 12,716,883 | 4.10 | % |
20.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Number | Percentage of | |||||||
Shareholders (based on legal title) | of Shares | Total Shares | ||||||
6 Citicorp Nominees Pty Limited | 10,321,677 | 3.33 | % | |||||
7 Warman Investments Pty Limited | 8,000,000 | 2.58 | % | |||||
8 HSBC Custody Nominees (Australia) Limited — A/C 2 | 7,510,878 | 2.42 | % | |||||
9 National Nominees Limited | 6,151,181 | 1.98 | % | |||||
10 Mr Jon B Platt | 5,197,505 | 1.68 | % | |||||
Other shareholders | 75,196,000 | 24.23 | % | |||||
Total | 310,356,839 | 100.00 | % | |||||
21.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Reference | Date | Announcement | ||
(a) | 3 Sep 2008 | Completion of enrolment in international clinical trial. | ||
(b) | 9 Oct 2007 | Change in substantial holdings of a director. | ||
(c) | 1 Nov 2007 | Submission for investigational device exemption with the US Food and Drug Administration. | ||
(d) | 20 Nov 2007 | Performance rights issued to HeartWare employees. | ||
(e) | 13 Dec 2007 | Exercising of 88,000 employee options at $0.20 each and the cancellation of 10,000 employee share options. | ||
(f) | 19 Dec 2007 | Shareholder update. | ||
(g) | 11 Jan 2008 | No price sensitive announcement. | ||
(h) | 31 Jan 2008 | Quarterly cash flow update. | ||
(i) | 4 Mar 2008 | Enrolment of 30th patient in international clinical trial. 90% survival rate among initial 20 patient cohort. | ||
(j) | 26 Mar 2008 | Cancellation of 1,356,306 employee share options and Notice of Annual General Meeting released. | ||
(k) | 9 Apr 2008 | Muneer A Satter on market purchase of 12.2 million ordinary shares. | ||
(I) | 18 Apr 2008 | Announcement of moving to an expanded manufacturing facility. | ||
(m) | 5 May 2008 | Food and Drug Administration grants Conditional Investigational Device Exemption. | ||
(n) | 16 May 2008 | Operational update. | ||
(o) | 23 May 2008 26 May 2008 27 May 2008 | Private placement in Excess of A$30 Million. Preliminary Notice of Meeting — EGM. Shareholder Purchase Plan update. | ||
(p) | 11 June 2008 | Share Purchase Plan cancelled. | ||
(q) | 20 June 208 | Cancellation of 2.45 million employee share options and 400,000 performance rights which have lapsed. | ||
(r) | 11 July 2008 | Results of EGM and completion of placement announced 23 May 2008. | ||
(s) | 25 July 2008 | Redemption of convertible note by Apple Tree Partners. | ||
(t) | 31 July 2008 | Quarterly update and Appendix 4C Quarterly cashflow statement released to market. | ||
1 August 2008 | Institutional Review Board of Washington Hospital Center approved the Washington Hospital Center’s participation in the clinical trial of HeartWare’s LVAS. | |||
(u) | 13 August 2008 14 August 2008 | Half year financial report released to market. The grant of additional ESO’s and performance rights. |
22.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Period Before | VWAP | VWAP | ||
6 June 2008 | Period | ($) | ||
1 Week | 9 August 2008 to 15 August 2008 | 0.5959 | ||
1 Month | 16 July 2008 to 15 August 2008 | 0.5366 | ||
3 Months | 16 May 2008 to 15 August 2008 | 0.5194 | ||
6 Months | 16 February 2007 to 15 August 2008 | 0.3910 | ||
9 Months | 16 November 2007 to 15 August 2008 | 0.4388 | ||
12 Months | 16 August 2007 to 15 August 2008 | 0.5092 |
• | Share Purchase Plan to existing HeartWare shareholders raising $1.2 million through the issuance of 2.0 million new shares at $0.60 each completed on 24 July 2007; | |
• | Private placement to sophisticated and institutional investors in Australia, the US and Europe of 59.7 million shares at $0.60 each completed on 26 July 2007 raising $35.8 million; | |
• | On 23 May 2008, HeartWare announced that it had received commitments in excess of $30 million in a private placement of ordinary shares to be issued at $0.50 each. HeartWare also announced on 23 May 2008 that it intended to offer the opportunity for Australian shareholders to participate in a share purchase plan which was also priced at $0.50 per share. Since the announcement, HeartWare shares have generally been trading below $0.50. HeartWare has determined not to proceed with the Share Purchase Plan; and | |
• | On 11 July 2008, HeartWare announced the completion of the Placement and had raised approximately $31.1 million through the issuance of 62,256,562 new ordinary HeartWare shares before placement costs. |
5 | Grant Thornton NSW in Australia and Grant Thornton LLP in the United States. |
23.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Year ended | Year ended | |||||||
31 December 2006 | 31 December 2007 | |||||||
($) | ($) | |||||||
Revenue | 1,143,912 | 1,150,040 | ||||||
Administrative and facilities expenses | (516,717 | ) | (616,162 | ) | ||||
Advertising and marketing expenses | (106,790 | ) | (166,983 | ) | ||||
Audit, financial and taxation services | (186,468 | ) | (233,231 | ) | ||||
Consultants — clinical, regulatory and medical | (1,908,451 | ) | (2,400,238 | ) | ||||
Contractor expenses | (201,852 | ) | (1,152,546 | ) | ||||
Depreciation and amortization expenses | (746,821 | ) | (810,881 | ) | ||||
Payments to employees and directors | (11,218,456 | ) | (13,440,257 | ) | ||||
Net loss on foreign exchange transactions | (770,227 | ) | (1,042,508 | ) | ||||
Information technology expense | (278,385 | ) | (372,026 | ) | ||||
Insurance expenses | (269,700 | ) | (206,524 | ) | ||||
Legal expense | (1,113,560 | ) | (1,230,321 | ) | ||||
Raw materials and consumables used | (2,223,821 | ) | (1,043,583 | ) | ||||
Rental expense and outgoings | (699,350 | ) | (953,042 | ) | ||||
Research and development expenses | (1,695,837 | ) | (550,306 | ) | ||||
Sterilisation and testing expenses | (133,899 | ) | (174,241 | ) | ||||
Tax and Duties expenses, other than income tax | (131,178 | ) | (236,407 | ) | ||||
Travel, accommodation and related expenses | (1,357,808 | ) | (1,645,113 | ) | ||||
Trials expenses — animal and human | (435,839 | ) | (587,837 | ) | ||||
Validation and verification expense | (228,278 | ) | (18,575 | ) | ||||
Other expenses | (171,128 | ) | (645,906 | ) | ||||
(Loss) before income tax | (23,250,653 | ) | (26,376,647 | ) | ||||
Income tax expense | — | — | ||||||
(Loss) attributable to members of HeartWare Limited | (23,250,653 | ) | (26,376,647 | ) | ||||
Basic and Diluted (loss) per share (cents per share) | (13.3 | ) | (12.4 | ) |
24.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Employee and Directors employment expense increased from $11.2 million to $13.4 million. We understand that this is mainly due to the increase in staff and the increase of share based payments from $1.2 million to $2.8 million; | |
• | Raw materials and consumables used decreased from $2.2 million to $1.0 million; and | |
• | Research and development expense decreased from $1.7 million to $0.55 million. |
As at 31 December | As at 31 December | |||||||
2006 | 2007 | |||||||
($) | ($) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | 21,101,693 | 32,073,942 | ||||||
Trade and other receivables | 153,905 | 180,035 | ||||||
Other current assets | 609,915 | 705,785 | ||||||
Total Current Assets | 21,865,513 | 32,959,762 | ||||||
Non-Current Assets | ||||||||
Property, plant and equipment | 3,140,329 | 3,072,874 | ||||||
Intangible assets | 2,881,771 | 2,592,089 | ||||||
Other non-current assets | 2,527 | — | ||||||
Total Non-Current Assets | 6,024,627 | 5,664,963 | ||||||
Total Assets | 27,890,140 | 38,624,725 | ||||||
Current Liabilities | ||||||||
Trade and other payables | 1,782,239 | 1,665,561 | ||||||
Financial liabilities | 1,495,676 | 1,517,689 | ||||||
Short-term provisions | 200,608 | 311,870 | ||||||
Total Current Liabilities | 3,478,523 | 3,495,120 | ||||||
Non-Current Liabilities | ||||||||
Financial liabilities | 20,139 | — | ||||||
Total Non-Current Liabilities | 20,139 | — | ||||||
Total Liabilities | 3,498,662 | 3,495,120 | ||||||
Net Assets | 24,391,478 | 35,129,605 | ||||||
Equity | ||||||||
Issued capital | 59,673,110 | 94,647,107 | ||||||
Reserves | 3,506,993 | 5,647,770 | ||||||
Retained earnings | (38,788,625 | ) | (65,165,272 | ) | ||||
Total Equity | 24,391,478 | 35,129,605 | ||||||
25.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Cash and cash equivalents increased from $21.1 million to $32.1 million. We are instructed by HeartWare that cash and cash equivalent are currently approximately $46 million following the most recent capital raising completed 11 July 2008; |
• | Total assets increased from $27.9 million to $38.6 million mainly as a result of the increase in cash and cash equivalents; and |
• | Total liabilities remained consistent at approximately $3.5 million. |
Year ended | Year ended | |||||||
31 December | 31 December | |||||||
2006 | 2007 | |||||||
($) | ($) | |||||||
Cash flows from operating activities | ||||||||
Payments to suppliers and employees | (22,343,699 | ) | (23,836,052 | ) | ||||
Interest received | 1,157,557 | 1,085,157 | ||||||
Finance costs | (488 | ) | (690 | ) | ||||
Net cash used in operating activities | (21,186,360 | ) | (22,751,585 | ) | ||||
Cash flows from investing activities | ||||||||
Proceeds from sale of property plant and equipment | 3,735 | 9,569 | ||||||
Payments for purchase of property, plant and equipment | (1,827,710 | ) | (908,984 | ) | ||||
Payments for intangible assets | (393,072 | ) | (265,311 | ) | ||||
Net cash used in investing activities | (2,217,047 | ) | (1,164,726 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issues of shares | 32,869,695 | 37,051,408 | ||||||
Payments for share issue expenses | (2,020,790 | ) | (2,077,411 | ) | ||||
Net cash provided by financing activities | 30,848,905 | 34,973,997 |
26.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Year ended | Year ended | |||||||
31 December | 31 December | |||||||
2006 | 2007 | |||||||
($) | ($) | |||||||
Net increase in cash held | 7,445,228 | 11,057,686 | ||||||
Cash at beginning of the year | 13,679,897 | 21,101,693 | ||||||
Effect of exchange rates on cash holdings in foreign currencies | (23,432 | ) | (85,437 | ) | ||||
Cash at end of year | 21,101,693 | 32,073,942 | ||||||
• | Cash outflow from operating activities increased $1.6 million from $21.2 million to $22.8 million; | |
• | Cash outflow from investing activities decreased $1.0 million from $2.2 million to $1.2 million; | |
• | Cash inflow from financing activities increased $4.1 million from $30.9 million to $35.0 million; and | |
• | Cash at year end increased $11.0 million from $21.1 million to $32.1 million. |
27.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | An overview of the health care and medical device industry in general (refer to Section 6.1 below); |
• | An overview of the health care and medical device industry in Australia (refer to Section 6.2 below); |
• | An overview of the health care and medical device industry in the US (refer to Section 6.3 below); and |
• | A comparison of the health care and medical device industry in Australia and the US. |
Industry Group | Industry | Sub-Industry | ||
Health Care, Equipment & Services | Health Care Equipment & Supplies Health Care Providers and Services Healthcare Technology | Health Care Equipment Health Care Supplies Health Care Distributors Health Care Services Health Care Facilities Managed Health Care Health Care Technology | ||
Pharmaceuticals, Biotechnology & Life Sciences | Biotechnology Pharmaceuticals Life Sciences Tools & Services | Biotechnology Pharmaceuticals Life Sciences Tools & Services |
• | The share price volatility of early stage health care device companies tends to be higher than the share price volatility of companies in many other sectors. The share price of early stage health care device companies can be heavily dependent on announcements made relating to the progress of the company’s product; and |
• | Value can be created or lost over much shorter periods of time compared to businesses in other sectors as product development milestones are either met or missed respectively. |
28.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
6 | AusMedtech 2008 available atwww.ausbiotech.org | |
7 | Wisconsin Technology Network,“Global medical Device market outperforms drug market growth”June 2008,www.wistechnology.com/articles/4790 | |
8 | Wisconsin Technology Network,“Global medical Device market outperforms drug market growth”June 2008,www.wistechnology.com/articles/4790 |
29.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Product development time is generally shorter (about 33% to 50% of drug development time)9; and | |
• | There is generally less regulatory approval risk10. |
• | Companies which manufacture health care equipment, devices and supplies; | |
• | Companies which provide health care related services; | |
• | Owners and operators of health care products; | |
• | Providers of basic health-care services; and | |
• | Owners and operators of health care facilities and organisation. This includes companies primarily involved in the research, development, production and marketing of pharmaceutical and biotechnology products11. |
9 | Wisconsin Technology Network,“Global medical Device market outperforms drug market growth”June 2008, www.wistechnoloqy.com/articles/4790 | |
10 | Wisconsin Technology Network,“Global medical Device market outperforms drug market growth”June 2008, www.wistechnology.com/articles/4790 | |
11 | Australian Securities Exchangewww.asx.com.au | |
12 | AusMedtech “AusMedtech Fast Facts” 2008 available fromhttp://www.ausbiotech.org/content.asp?paqeid=109 | |
13 | 18 July 2008 Industry Listing fromwww.tradingroom.com.au |
30.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Market | ||||||||
Capitalisation | ||||||||
Code | ($ billion) | Description | ||||||
ResMed Inc | RMD | 3.14 | ResMed Inc develops, manufactures and markets medical equipment for the treatment of sleep disordered breathing. The company sells diagnostic and treatment devices in various countries through its subsidiaries and independent distributors. | |||||
Cochlear Limited | COH | 2.56 | Cochlear Limited researches, develops and markets cochlear implant systems for hearing impaired individuals. | |||||
Fisher & Paykel Healthcare Corporation Ltd | FPH | 0.95 | Fisher & Paykel Healthcare Corporation Limited designs, manufactures and markets heated humidification products and systems for use in respiratory care and treatment of sleep apnoea. The company also offers patient warming and neonatal care products, including warming products and infant resuscitators. |
14 | Australian Department of Health and Ageing,www.health.gov.au | |
15 | Wisconsin Technology Network,“Global medical Device market outperforms drug market growth”June 2008, www.wistechnology.com/articles/4790 |
31.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Market | ||||||||
Capitalisation | ||||||||
Code | (USD $ billion) | Description | ||||||
Medtronic, Inc | MDT (NYSE) | 56.57 | Medtronic, Inc, provides device-based therapies that restore health, extend life, and alleviate pain. The company’s principal products include those for bradycardia pacing, tachyarrhythmia management, atrial fibrillation management, heart failure management, heart valve replacement, malignant and non-malignant pain, and movement disorders. Medtronic’s products are sold worldwide. | |||||
Baxter International Inc | BAX (NYSE) | 37.96 | Baxter International Inc develops, manufactures and markets products and technologies related to the blood and circulatory systems. The company also researches, develops, manufactures and sells vaccines for the prevention of infectious diseases. Baxter conducts operations in North America, Asia, Europe, Japan and Latin America. | |||||
Stryker Corp | SYK (NYSE) | 26.29 | Stryker Corporation develops, manufactures, and markets specialty surgical and medical products. The company’s products include orthopaedic implants, powered surgical instruments, endoscopic systems, patient care, and handling equipment for the global market. Stryker also provides outpatient physical therapy services in the US. |
16 | National Institutes of Health available fromwww.nih.gov |
32.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
6.4 | Comparison of the Equity Market for Health Care Equipment and Device Companies in the US and Australia |
Table 6.4: | Merger and Acquisitions Announced for Calendar Year 2007 for Healthcare Equipment and Device Companies |
Smallest | Average | Largest | ||||||
Acquirer | Number of | Transaction Value | Transaction Value | Transaction Value | ||||
Domiciliation | deals | (USD $ million) | (USD $ million) | (USD $ million) | ||||
Australia | 16 | 0.09 | 5.18 | 15.17(a) | ||||
US | 148 | 0.01 | 345.97 | 8,130.00(b) |
(a) | Visionmed Group Ltd was acquired by Clinical Cell Culture Ltd. | |
(b) | Abbott Laboratories sold its core laboratory diagnostics business to GE in January 2007. |
• | As many healthcare equipment and device companies, including HeartWare, have negative earnings, earnings multiples are less relevant to a comparison of markets; | |
• | As the healthcare, equipment and device companies may account differently for balance sheet matters including the capitalisation of research and development expenditure, any asset based multiples are less relevant to our comparison; | |
• | The Proposed Transaction does not involve a merger or acquisition or imply an earnings or net asset based multiple; | |
• | Detailed data in relation to some of the smaller transactions is not readily available; and | |
• | The purpose of our analysis in Table 6.4 is to demonstrate the relative difference in size of the markets only. |
33.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Market Capitalisation | Market Capitalisation | |||||
ASX listed Peers | (A$ million) | NASDAQ Listed Peers | (USD$ million) | |||
Ventracor Ltd | 68 | Thoratec Corporation | 979 | |||
CathRx | 35 | ABIOMED Inc | 630 | |||
Sunshine Heart Inc (CDI) | 13 | Micrus Endovascular Corporation | 234 | |||
ATCor Medical | 10 | ATS Medical Inc | 140 |
34.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | The advantages of the Proposed Transaction to the Equity Interest Holders (refer Section 7.1); | |
• | The disadvantages of the Proposed Transaction to the Equity Interest Holders (refer Section 7.2); | |
• | The impact of the Proposed Transaction on the liquidity, share price and value of equity interests in HeartWare and HeartWare International (refer Section 7.3); | |
• | Taxation impacts for the Equity Interest Holders (refer Section 7.4); | |
• | Additional matters that Equity Interest Holders should consider when deciding to vote in favour of or against the Proposed Transaction (refer Section 7.5); | |
• | The position of the Equity Interest Holders if the Proposed Transaction is not approved (refer Section 7.6); and |
• | The US provides a credible and larger capital market for medical device companies; | |
• | Improved US investor and analyst understanding of HeartWare’s structure; | |
• | Removal of FORUS; |
35.
Table of Contents
• | Retention of ASX listing; | |
• | Cost savings and reduced compliance requirements; | |
• | Opportunity to pursue a NASDAQ listing and (if a NASDAQ listing is completed) the potential for increased liquidity and re-rating; and | |
• | Increased opportunity for commercial partnering and joint venture arrangements in the US. |
7.1.1 | The US provides a Credible and Larger Capital Market for Medical Device Companies |
• | In the 2007 year, health care venture capitalists invested USD $1 billion into companies in the development of cardiovascular or coronary devices, drugs and biotechnology based products; | |
• | For the five years ended 31 December 2007, close to USD $3 billion of venture capital was injected into companies in the US cardiovascular sector with 72 investments in health care device companies alone; |
17 | Bloomberg 17 July 2008. | |
18 | Bloomberg 17 July 2008. | |
19 | Irving Levin Associates (June 2008), “Drugs, Devices and Diagnostics For the Heart” www.levinassociates.com |
36.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | For the first five months of 2008 to 31 May 2008, companies in the cardiovascular sector undertook 11 capital raising transactions totalling USD $241.3 million, including three transactions in May 2008; and | |
• | Esperion Therapeutics and Miragen Therapeutics, which are pharmaceutical companies developing cardiovascular products, raised USD $22.8 million and USD $8 million respectively in May 2008. |
• | HeartWare International will have greater exposure and be more accessible to a number of specialist investment funds and venture capitalists in the US which are able to, and are generally more comfortable investing in US companies; | |
• | Our professional experience suggests that certain investment mandates (e.g. certain pension funds in the US being required to invest in locally domiciled companies) may limit HeartWare’s ability to attract capital. After the Proposed Transaction, it will be easier for US investors with restrictive investment mandates to invest in HeartWare International; | |
• | It is our experience and that of HeartWare that many professional US investors also have a preference for investing in US domiciled and regulated companies. One reason for this is that investors in the US, and their advisers, are more familiar, in broad terms, with US corporations and securities legislation, rules and practices. HeartWare has instructed us that their experience with investors in the US is similar; | |
• | The current existence of FORUS may act as an obstacle to potential and credible investors in the US willing to acquire or increase an equity interest in HeartWare. As discussed in Section 7.1.3, the removal of FORUS may make an equity interest in HeartWare International more appealing to investors in the US; and | |
• | Currently, Australian medical device manufacturers attract relatively low levels of foreign direct investment which restricts these companies’ growth prospects (as stated by the Australian Government Department of Industry, Tourism and Resources20). |
20 | Australian Government Department of Industry, Tourism and Resources, (2006),“Medical Devices for a healthy Life”.Available fromwww.innovation.gov.au |
37.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
7.1.2 | Improved US Investor and Analyst Understanding of HeartWare’s Structure |
• | The majority of investors are US based; | |
• | There has recently been a significant appetite for investment in HeartWare in the US; | |
• | It is HeartWare’s view that potential US investors are generally unfamiliar with the corporate and regulatory regimes in Australia; and | |
• | It is HeartWare’s view that potential US investors are not as familiar with the capital markets in Australia. |
38.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Accounting principles between Generally Accepted Accounting Principles for the US (‘US GAAP’) and AIFRS are not consistent and require different accounting treatment in certain instances (e.g. the capitalisation of research and development costs in one set of accounts and not in the another); | |
• | Australia has abandoned the concept of authorised capital (i.e. the maximum number of shares a business may issue), a concept which remains in place in a US company’s articles of incorporation; and | |
• | Offering shares in an Australian company to employees in the US is less attractive than issuing them with shares in a US company (e.g. differences in ESOP regulation between the two jurisdictions are hard for employees to understand). |
39.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Shares in HeartWare listed on the ASX at the current time, cannot be resold into the US unless such transfers are pursuant to a registration under the US Securities Act of 1933 or an exemption there from; |
• | The restrictions imposed as a consequence of FORUS make it more difficult for new US investors to obtain an equity interest in HeartWare; and |
• | While FORUS does not preclude the issue of new shares in HeartWare to certain US investors pursuant to another available exemption from registration under the US Securities Act of 1933, as stated in Section 5.1 of this Report, those shares are subject to significant transfer restrictions. |
• | Current and potential US shareholders will have the ability to buy and sell CDIs in HeartWare International on a public market; | |
• | Existing non US shareholders will benefit from new buyers from the US market; | |
• | New buyers from a larger market may assist to increase demand for HeartWare International shares and liquidity for shareholders; and | |
• | A reduction in compliance burden for HeartWare and HeartWare International will result in monetary savings for HeartWare group (for additional information refer to Section 7.1.5). |
40.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Shareholders will retain a tradeable instrument after the Proposed Transaction. Option Holders and Performance Rights Holders will also benefit from a tradeable instrument upon meeting exercise conditions and exercising the instrument if they do not elect to receive HeartWare International common stock (we refer readers to Section 3.3 of this Report for discussion relating to the consequences of the Option Scheme and the Performance Rights Scheme not being approved); and | |
• | Securities in HeartWare International will be able to be traded on the ASX in the form of CDIs, regardless of whether a NASDAQ listing eventuates. |
7.1.6 | Opportunity to Pursue a NASDAQ Listing and (if a NASDAQ Listing is Completed) the Potential for Increased Liquidity and Re-Rating |
41.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
7.1.7Increased Opportunity for Commercial Partnering and Joint Venture Arrangements in the US |
• | HeartWare has operations and management team based in the US and expects that majority of the revenue from its LVAD would come from the US. For this reason, commercial partnering with an established company in the US would be appropriate from a synergetic perspective; and | |
• | As discussed in Section 6.4 of this Report, there is a greater presence of larger health care device companies specifically involved in the treatment of heart-related conditions in the US when compared to Australia. |
42.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Changes to protection of Equity Interest Holders; | |
• | Australian investors cease to hold equity interests in an Australian company; | |
• | Holding CDIs instead of shares; | |
• | Costs borne by HeartWare; | |
• | Exposure to additional litigation risk; | |
• | Restrictions imposed on the sale of shares by affiliates; and | |
• | Potential taxation consequences in certain circumstances. |
• | 20% Rule; | |
• | Poison Pill; | |
• | Partial Offers; |
43.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Directors’ Rights; | |
• | Shareholders’ Rights to call Meetings and the Notice Period of Meetings; | |
• | Shareholder Oppression; and | |
• | Nomination of Directors. |
7.2.2 Australian Investors Cease to Hold Equity Interests in an Australian Company |
• | instructing the depositary nominee company; or | |
• | attending as the depositary nominee’s proxy. |
21 | The nominee company has ‘legal’ ownership of the shares underlying the CDIs. | |
22 | For example economic benefits such as dividends, bonus issues, rights issue or similar corporate activity. |
44.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Underwriting costs, generally incurred as a percentage of the capital raised via IPO (assuming a public listing in conjunction with a capital raising which may or may not occur); and | |
• | Ongoing costs related to regulatory compliance, administration and maintenance of a NASDAQ listing including compliance with Section 404 of the Sarbanes-Oxley Act 2002. These compliance costs can often be considered significant for small companies. |
• | The directors of HeartWare International and HeartWare; | |
• | The executive officers of HeartWare International and potentially HeartWare; and | |
• | Significant shareholders of HeartWare International (i.e. those shareholders holding at least 10% of the issued shares of HeartWare International). For example, we understand that Apple Tree Partners would be included in this group. |
45.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | HeartWare and HeartWare International as its successor having complied with its US reporting obligations; | |
• | The volume of securities that can be sold in any three month period is limited to an amount equal to the greater of 1% of HeartWare International’s outstanding Shares on issue and 1% of the average weekly trading volume of HeartWare International’s Shares (measured over the previous four weeks); and | |
• | Sales must be conducted by way of unsolicited broker’s transactions and a Form 144 filed with the SEC. |
46.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
47.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Decrease | |
Our experience suggests that in usual circumstances trading in CDIs is expected to be lower than the trading in shares on a primary exchange, where the CDI listing is a secondary listing. However, there is only limited information available in relation to the relative changes in liquidity in circumstances where a company’s shares are moved from a primary ASX listing, to a situation whereby CDIs are the only market for the company’s shares. In many cases, CDIs are used in relation to a secondary listing or by a company actively seeking a primary listing on another exchange. | ||
As a result of Heartware International being domiciled in the US and not being quoted on any US exchange, a current holder of HeartWare shares may face additional risks by accepting shares in HeartWare International. These additional risks may reduce investor interest and result in a lower level of liquidity. | ||
In our view, the additional risks, potentially reducing liquidity, include: |
• | A risk that the pricing of the CDI market may be impacted by the supply and demand in the CDI market alone rather than the fundamental value of HeartWare International and forward prospects; and | ||
• | A risk that a shareholder seeking regulatory redress for a breach of corporate regulations or ASX listing rules may incur higher costs to pursue a remedy of that breach. |
• | Increase | |
Currently, there are restrictions imposed on US shareholders and potential US shareholders which in our view are likely to be reducing liquidity. Following the Proposed Transaction, shareholders in the US may actively buy and sell CDIs on market, increasing liquidity. |
48.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Despite additional risks associated with the CDIs mentioned above, it is our opinion that in the case of HeartWare equities, there are also benefits which mitigate those risks, including: |
• | An increase in the interest of US investors as a consequence of the Proposed Transaction; | ||
• | Efficiency in pricing as common stock in HeartWare International can be transferred to and from CDIs at low cost; and | ||
• | As the Proposed Transaction is anticipated to be value adding to HeartWare over time, it is our view that the additional value should be brought about from the Proposed Transaction. Reasons include those advantages set out in Section 7 of this Report. |
• | Capital market conditions; | |
• | The meeting or missing of milestones by HeartWare International; | |
• | Market demand for HeartWare International’s LVAD and MVAD; | |
• | Market demand for devices in the industry which HeartWare operates in; | |
• | Development of new technologies within the health care equipment and device industry; | |
• | Cash flow stability and earnings announcements; | |
• | Changes to the regulatory environment and reimbursements available for medical devices; and | |
• | Asset backing of HeartWare International. |
49.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
23 | HeartWare has expressed its expectation to generate revenue within the calendar year however the growth in earnings will only be incremental at this stage. |
50.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
7.4.3Australian Tax Effects of the Proposed Transaction on the Australian Equity Interest Holders |
51.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
7.4.4 Australian Tax Effects of the Proposed Transaction on the US and New Zealand Equity Interest Holders |
52.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
7.4.5 United States Tax Effects of the Proposed Transaction on the Australian and New Zealand Equity Interest Holders |
7.4.6 United States Tax Effects of the Proposed Transaction on the United States Equity Interest Holders |
53.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | HeartWare International could be subject to risks specific to the US, the US health care sector and the US capital markets (including the NASDAQ if a listing eventuates) and these risks may be significantly different to the risk currently experienced by HeartWare in its current state; and |
• | As previously stated in Section 7.2.5 above, Section 1.1.4 of the Information Memorandum has identified that HeartWare and HeartWare International may be exposed to the more litigious environment of the US. |
54.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | The market for ADRs in the US is often less liquid than that for a primary listing of shares; | |
• | US investors are not as attracted to ADRs given their lower levels of liquidity when compared to a primary listing of shares; and | |
• | ADRs trade at lower levels of liquidity than the underlying ASX listed shares. |
• | the utilisation of ADRs would not eliminate the requirement for HeartWare to comply with dual reporting requirements; | |
• | FORUS will continue to exist; and | |
• | HeartWare has already incurred costs related to the Proposed Transaction and filing fees which cannot be recovered. |
• | An investor in the US could reduce their currency risk by taking up HeartWare International common stock as the value of the common stock would be denominated in US Dollars rather than Australian Dollars and vice versa; | |
• | An investor in Australia could experience currency risk by taking up HeartWare International common stock as the value of the common stock would be denominated in US Dollars rather than Australian Dollars. |
55.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Delaware’s well-developed body of case law provides greater guidance on corporate governance issues; | |
• | Delaware’s highly-regarded Court of Chancery which is a Court of Equity, presided by Chancellors, who issue written opinions and decisions; and | |
• | Delaware is known for its user friendly and efficient incorporation and administration processes relative to other jurisdictions. |
• | is general in nature and is not intended to be legal advice on Corporate Governance and the Regulatory Framework in Australia or the US; and | |
• | has been prepared in conjunction with consultation with Independent Legal Counsel. |
24 | HeartWare International will be incorporated in the State of Delaware in the US. Research from the Delaware State Government’s Division of Corporations (State of Delawarehttp://corp.delaware.gov) suggests that over 50% of public listed companies in the US and 60% of the Fortune 500 companies are incorporated in Delaware. |
56.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | AIFRS and the resulting AIFRS annual report is lodged with ASIC and the ASX; and | |
• | US GAAP and the resulting US GAAP financial report is lodged with the SEC. |
57.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
58.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | Information Memorandum which comprise an explanatory statement and notices of meeting in relation to the Schemes, an explanatory statement and notice of meeting in relation to an Extraordinary General Meeting and the information memorandum in relation to the listing of HeartWare International on the ASX; | |
• | HeartWare Annual Report for the 2007 financial year; | |
• | Industry information from sources including: AusBiotech and AusMedtec, Austrade, US Food and Drug Administration, the Economist, Wistechnology News, Reuters, Associated Press, Washington Biotechnology and Biomedical Association, Mercer Capital, Healthcare Corporate Finance News from Irvine Levin Associates Inc. and Annual Reports of peer companies; | |
• | Publicly available information including Bloomberg, ASX announcements, NASDAQ stock exchange information, Securities Exchange Commission information about listed companies and compliance, Delaware State Division of Corporations information, MergerMarket, Aspect Huntley, Connect 4, and other relevant research; | |
• | Consultation with other financial and legal experts in relation to financial and legal matters in the US and Australia; and | |
• | Meetings and correspondence with the management and advisers of HeartWare. |
59.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
60.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
61.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Director
62.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
NASDAQ Sector | ||||||||
Representation | ASX Sector Representation | |||||||
GICS Sector | (%) | (%) | ||||||
Consumer Discretionary | 11.68 | 5.01 | ||||||
Consumer Staples | 1.95 | 6.87 | ||||||
Energy | 2.19 | 11.32 | ||||||
Financials | 8.17 | 29.78 | ||||||
Health Care | 14.2 | 3.08 | ||||||
Industrial | 6.65 | 7.61 | ||||||
Information Technology | 52.27 | 0.77 | ||||||
Materials | 1.44 | 29.79 | ||||||
Telecommunications | 1.34 | 4.05 | ||||||
Utilities | 0.11 | 1.72 | ||||||
Total | 100.00 | 100.00 | ||||||
63.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Number of Companies | Market Capitalisation | |||
Exchange | (Approximate) | (Approximate) | ||
NASDAQ | 3,200 | USD $3.6 trillion | ||
ASX | 2,087 | AUD $1.3 trillion |
Table A.3: | Number of Health Care Equipment Companies and Combined Market Capitalisation — NASDAQ and ASX |
Number of Health Care Equipment | ||||||
Companies | Market Cap | Average Market | ||||
Exchange | (Approximate) | (Approximate) | Cap | |||
NASDAQ | 66 | USD $48 billion | USD $736 million | |||
ASX | 27 | AUD $3.5 billion | AUD $127 million |
• | the US is recognised as one of the global leaders in capital markets for health care equipment companies; and | |
• | the relative size of the US in terms of population and product markets when compared to Australia. |
64.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Figure B.1: | Comparison of the performance of the NASDAQ Composite Index and All Ordinaries Index to the HeartWare Share Price (HTW) since 31 January 2005 |
65.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
12 July 2005 with a base index number of 200 and tracks the share prices of NASDAQ-listed companies classified according to the Industry Classification Benchmark as Health Care which include health care providers, medical equipment, medical supplies, biotechnology and Pharmaceuticals. The current market capitalisation of this index is USD $467 billion as at 18 July 200825.
25 | 18 July 2008 Nasdaq.com Index Microsite from www.nasdaq.com/services/indexes/microsite.aspx?indxsym=ixhc | |
26 | 18 July 2008 Industry Listing fromwww.tradingroom.com.au | |
27 | 18 July 2008 Industry Listing fromwww.tradingroom.com.au | |
28 | The NASDAQ Health Care Index began in July 2005 |
66.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
2005 | 2006 | 2007 | 2008(a) | Total | ||||||||||||||||
IPO | ||||||||||||||||||||
No of companies | 5 | 2 | 4 | 1 | 12 | |||||||||||||||
Amount raised (USD$m) | 325 | 119 | 667 | 51 | 1,162 | |||||||||||||||
All Public Capital Raisings | ||||||||||||||||||||
No of companies | 93 | 132 | 135 | 12 | 372 | |||||||||||||||
Amount raised (USD$m) | 8,677 | 15,638 | 17,894 | 794 | 43,003 |
Source: Bloomberg 12 June 2008 | ||
(a) | Year to date 12 June 2008 |
2005 | 2006 | 2007 | 2008(a) | Total | ||||||||||||||||
IPO | ||||||||||||||||||||
No of companies | 4 | 2 | 3 | — | 9 | |||||||||||||||
Amount raised (AUD$m) | 69 | 21 | 23 | — | 113 | |||||||||||||||
All Public Capital Raisings | ||||||||||||||||||||
No of companies | 142 | 178 | 249 | 62 | 631 | |||||||||||||||
Amount raised (AUD$m) | 13,691 | 8,085 | 9,592 | 650 | 32,018 |
Source:Bloomberg 12 June 2008 | ||
(a) | Year to date 12 June 2008 |
67.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
Average | Average | |||||||||||||||||
Market Cap | Annual | NASDAQ Listed | Market Cap | Annual | ||||||||||||||
ASX listed Peers | (A$ million)(a) | Liquidity33 | Peers | (US$ million)(a) | Liquidity34 | |||||||||||||
Ventracor Ltd | 68 | 108 | % | Thoratec Corporation | 979 | 498 | % | |||||||||||
CathRx | 35 | 5 | % | ABIOMED Inc | 630 | 393 | % | |||||||||||
Sunshine Heart Inc (CDI) | 13 | 6 | % | Micrus Endovascular Corporation | 234 | 414 | % | |||||||||||
ATCor Medical | 10 | 46 | % | ATS Medical Inc | 141 | 164 | % |
(a) | Bloomberg 18 July 2008 |
29 | www.nasdaq.com, 15 June 2007 | |
30 | NASDAQ Press Release (9 July 2008) available from http://www.nasdaq.com/newsroom/news/newsroomnewsStory.aspx?textpath=pr2008%5CACQPMZ200807091345PRIMZONEFULLFEED146053.htm | |
31 | www.asx.com.au, Average Daily Trading Volume for the period 1 June 2007 to 30 May 2008 | |
32 | Sourced from Bloomberg, the average annual turnover is calculated by dividing the annualised average daily volume over the 6-month period from 12 December 2007 to 12 June 2008 by the total number of shares outstanding in the company over the period. | |
33 | Refer to footnote above. | |
34 | Refer to footnote above. |
68.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | 20% Rule; | |
• | Poison Pill; | |
• | Partial Offers; | |
• | Directors’ Rights; | |
• | Shareholders’ Rights to call Meetings and the Notice Period of Meetings; | |
• | Shareholder Oppression; and | |
• | Nomination of Directors. |
69.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
• | An existing shareholder can increase their shareholding in a company from below 20% to above 20% without seeking the approval of the remaining shareholders, although they would need to disclose their interest at or before becoming a controlling shareholder; | |
• | A new shareholder can acquire 20% or more of the shares in a company without making a takeover offer; and | |
• | A substantial or majority shareholder can sell their shares to a third party by private treaty at a premium over the share price, without offering their shares on market. In Australia, a shareholder holding in excess of 20% could only sell their shares to a third party by private treaty at a premium if approved by shareholders. |
70.
Table of Contents
HeartWare Ltd Independent Expert’s Report |
71.
Table of Contents
HeartWare Limited
The holders of fully paid ordinary shares in HeartWare Limited
197 | ||||
197 | ||||
197 | ||||
197 | ||||
197 | ||||
197 | ||||
197 | ||||
197 | ||||
198 | ||||
198 | ||||
198 | ||||
198 | ||||
198 | ||||
198 | ||||
198 | ||||
198 | ||||
199 | ||||
199 | ||||
199 | ||||
199 | ||||
199 | ||||
200 | ||||
200 | ||||
200 | ||||
200 | ||||
200 | ||||
200 |
Table of Contents
201 | ||||
201 | ||||
201 | ||||
201 | ||||
201 | ||||
201 | ||||
201 | ||||
202 | ||||
202 | ||||
202 | ||||
202 | ||||
202 | ||||
202 | ||||
202 | ||||
202 | ||||
203 | ||||
203 | ||||
204 |
Table of Contents
pursuant to section 411 of the Corporations Act 2001 (Cth)
1 | PRELIMINARY |
The Company |
1.1 | The Company is a public company limited by shares, incorporated in Australia and registered in Victoria. Its registered office is at Level 57, MLC Centre, 19-29 Martin Place, Sydney, NSW 2000. | |
1.2 | The Company is admitted to the official list of ASX and the Shares are officially quoted on the financial market operated by ASX. | |
1.3 | As at 12 September 2008, 310,356,839 Shares were on issue. |
HeartWare International |
1.4 | HeartWare International is a corporation limited by shares, incorporated in Delaware, United States. Its registered office is at 14000–14050 NW 57th Court, Miami Lakes, FL USA 33014. |
Effect of Share Scheme |
1.5 | If this Share Scheme becomes Effective: |
1.5.1 | HeartWare International will provide the Share Scheme Consideration to each Scheme Shareholder in accordance with the terms of this Share Scheme; | ||
1.5.2 | all of the Scheme Shares will be transferred to HeartWare International; and | ||
1.5.3 | the Company will enter the name and address of HeartWare International in the Share Register as the holder of all of the Scheme Shares. |
Implementation Agreement and Share Scheme Deed Poll |
1.6 | The Company and HeartWare International have entered into the Implementation Agreement which sets out the terms on which the Company and HeartWare International have agreed to implement this Share Scheme. | |
1.7 | HeartWare International has executed the Share Scheme Deed Poll in favour of each Scheme Shareholder pursuant to which it has covenanted to perform its obligations under this Share Scheme, including to provide the Share Scheme Consideration to Scheme Shareholders. |
2 | CONDITIONS PRECEDENT |
Conditions precedent to Share Scheme |
2.1 | This Share Scheme is conditional on: |
2.1.1 | as at 8.00am on the Second Court Hearing Date, the Implementation Agreement not having been terminated in accordance with its terms; | ||
2.1.2 | all of the conditions precedent set out in clause 2.1 of the Implementation Agreement having been satisfied or waived in accordance with the terms of that agreement; | ||
2.1.3 | the Court having approved this Share Scheme, with or without modification, pursuant to section 411(4)(b) of the Corporations Act; and | ||
2.1.4 | such other conditions made or required by the Court pursuant to section 411(6) of the Corporations Act in relation to this Share Scheme as are acceptable to the Company and HeartWare International, having been satisfied, |
and the provisions of clauses 3 to 7 will not come into effect unless and until each of these conditions precedent has been satisfied. |
1.
Table of Contents
Certificate in relation to conditions precedent | ||
2.2 | On the Second Court Hearing Date, the Company and HeartWare International will each provide to the Court a certificate confirming whether or not all of the conditions precedent set out in clause 2.1 of the Implementation Agreement (other than in relation to this Share Scheme being approved by the Court pursuant to section 411(4)(b) of the Corporations Act) have been satisfied or waived in accordance with the terms of that agreement. | |
2.3 | The giving of a certificate by each of the Company and HeartWare International under clause 2.2 will, in the absence of manifest error, be conclusive evidence of the satisfaction or waiver of the conditions precedent referred to in the certificate. |
Lapse of Share Scheme | ||
2.4 | This Share Scheme will lapse and be of no further force or effect if the Effective Date has not occurred on or before the Sunset Date. |
3 | IMPLEMENTATION OF SHARE SCHEME |
Lodgement of Court order | ||
3.1 | On or before 5.00pm on the first Business Day following approval of this Share Scheme by the Court pursuant to section 411(4)(b) of the Corporations Act, the Company will lodge with ASIC an office copy of the Court order approving this Share Scheme. |
Provision of Share Scheme Consideration | ||
3.2 | On the Implementation Date, in consideration for the transfer to HeartWare International of all of the Scheme Shares, HeartWare International must provide the Share Scheme Consideration to each Scheme Shareholder in accordance with clause 4. |
Transfer of Scheme Shares | ||
3.3 | On the Implementation Date, in consideration for and immediately following the issue of the Share Scheme Consideration in accordance with clause 4: |
3.3.1 | all of the Scheme Shares, together with all rights and entitlements attaching to those shares at that date, will be transferred to HeartWare International without the need for any further act by any Scheme Shareholder; | ||
3.3.2 | to transfer all of the Scheme Shares to HeartWare International, the Company will effect a valid transfer or transfers of the Scheme Shares under section 1074D of the Corporations Act or deliver to HeartWare International duly completed and executed share transfer forms (or a master transfer form) in accordance with section 1071B of the Corporations Act and HeartWare International will execute and deliver those share transfer form(s) to the Company; and | ||
3.3.3 | the Company will enter the name and address of HeartWare International in the Share Register as the holder of all of the Scheme Shares. |
4 | PROVISION OF SHARE SCHEME CONSIDERATION |
Payment of Share Scheme Consideration | ||
4.1 | The obligation of HeartWare International to pay the Share Scheme Consideration will be satisfied on the Implementation Date by the Company procuring that HeartWare International, in accordance with its covenant in favour of Scheme Shareholders contained in clause 2.2 of the Share Scheme Deed Poll, issues to such Scheme Shareholder (or, in accordance with clause 4.6 to a Nominee on its behalf where such Scheme Shareholder is an Ineligible Overseas Shareholder): |
4.1.1 | one CDI for every Scheme Share held by them on the Scheme Record Date, where the Scheme Shareholder has not made an election in accordance with clause 4.2; or | ||
4.1.2 | one HeartWare International Share for every 35 Scheme Shares held by them on the Scheme Record Date, where such Scheme Shareholder has made an election in accordance with clause 4.2. |
2.
Table of Contents
Election | ||
4.2 | Each Scheme Shareholder may make an election to receive HeartWare International Shares by providing written notice to the Company’s share registry by 5.00pm on the Scheme Record Date (or such other date notified to Scheme Shareholders). | |
4.3 | An election under clause 4.2 may only be made in respect of all and not only some of the Scheme Shares held by a Scheme Shareholder. | |
4.4 | If a Scheme Shareholder does not make an election in accordance with clause 4.2, a Scheme Shareholder will receive CDIs under this Share Scheme. |
Fractional entitlements | ||
4.5 | Fractional entitlements to Share Scheme Consideration will be rounded down to the nearest: |
4.5.1 | whole number of HeartWare International Shares, if the Scheme Shareholder has elected to receive HeartWare International Shares under this Share Scheme; or | ||
4.5.2 | multiple of 35 CDIs, if the Scheme Shareholder has not made an election under clause 4.2, after aggregating all holdings of such Scheme Shareholder. |
Ineligible Overseas Shareholders | ||
4.6 | Where a Scheme Shareholder is an Ineligible Overseas Shareholder, the Company will procure that HeartWare International, in accordance with its covenant in favour of Scheme Shareholders contained in clause 2.2 of the Share Scheme Deed Poll, issues the number of CDIs to which the Scheme Shareholder would otherwise be entitled under this Share Scheme to a Nominee of HeartWare International who will sell those CDIs as soon as reasonably practicable (at the risk of that Ineligible Overseas Shareholder) and pay the net proceeds received (calculated on an averaged basis so that all Ineligible Overseas Shareholders receive the same price per CDI subject to rounding to the nearest cent), after deducting any applicable brokerage and other taxes and charges, to that Ineligible Overseas Shareholder in full satisfaction of that Ineligible Overseas Shareholder’s rights to Share Scheme Consideration. The net proceeds of sale will be paid by cheque in Australian dollars and dispatched by mail to Ineligible Overseas Shareholders to their address in the Share Register. |
Joint holders | ||
4.7 | In the case of Scheme Shares held in joint names: |
4.7.1 | any holding statement or transmittal letters for HeartWare International Shares or CDIs which are to be issued in respect of the relevant Scheme Shares will be issued in the names of the joint holders and sent to the holder whose name appears first in the Share Register on the Scheme Record Date; and | ||
4.7.2 | any cheque required to be paid to Scheme Shareholders with respect to Share Scheme Consideration will be paid to the joint holders and will be forwarded to the holder whose name appears first in the Share Register on the Scheme Record Date. |
General | ||
4.8 | The obligation of the Company to procure HeartWare International to issue HeartWare International Shares under clause 4.1 of this Agreement will be satisfied by HeartWare International on the Implementation Date procuring the entry in the registers maintained by HeartWare International of holders of HeartWare International Shares of each person who is to receive HeartWare International Shares. | |
4.9 | After the satisfaction of the obligation of the Company in clause 4.8, and within five Business Days after the Implementation Date, the Company will procure HeartWare International to: |
4.9.1 | issue holding statements, certificates or transmittal letters (as the case may be) for such HeartWare International Shares in the name of such persons; and | ||
4.9.2 | procure the dispatch of such holding statements, certificates or transmittal letters to the address as shown in the registers for such persons. |
4.10 | The obligation of the Company to procure HeartWare International to issue CDIs under clause 4.1 of this Share Scheme will be satisfied by HeartWare International on the Implementation Date procuring the entry in the register maintained by HeartWare International of holders of HeartWare International Shares of the Depositary as depositary to hold the HeartWare International Shares underlying those CDIs and procuring the Depositary to issue CDIs to Scheme Shareholders in accordance with this Share Scheme. |
3.
Table of Contents
4.11 | After the satisfaction of the obligation of the Company in clause 4.10, and within five Business Days after the Implementation Date, HeartWare International will: |
4.11.1 | issue holding statements or transmittal letters (as the case may be) for such HeartWare International Shares in the name of the Depositary, and procure the dispatch of such holding statements or transmittal letters to the Depositary; | ||
4.11.2 | record in the CDI Register each person who is to receive CDIs under clause 4.1; and | ||
4.11.3 | dispatch to each person who is to receive CDIs under clause 4.1 a holding statement in the name of that person representing the number of CDIs to be issued to that person. |
5 | DEALINGS IN THE SHARES |
Determination of Scheme Shareholders |
5.1 | For the purpose of determining who are Scheme Shareholders, dealings in Shares will only be recognised if: |
5.1.1 | in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Share Register as the holder of the relevant Shares by the Scheme Record Date; or | ||
5.1.2 | in all other cases, registrable transfers or transmission applications in respect of those dealings are received on or before the Scheme Record Date at the place where the Share Register is kept. |
5.2 | The Company must register registrable transfers or transmission applications of the kind referred to in clause 5.1.2 by the Scheme Record Date provided that nothing in this clause 5.2 requires the Company to register a transfer that would result in a Shareholder holding a parcel of Shares that is less than a Marketable Parcel. | |
5.3 | The Company will not accept for registration, nor recognise for any purpose, any transfer or transmission application in respect of Shares received after the Scheme Record Date (other than the transfers contemplated by clause 3.3). |
Maintenance of the Share Register |
5.4 | For the purpose of determining entitlements to the Share Scheme Consideration, the Company will, until the Share Scheme Consideration has been provided, maintain or procure the maintenance of the Share Register in accordance with this clause 5. The Share Register in this form will solely determine entitlements to the Share Scheme Consideration. |
Effect of certificates and holding statements |
5.5 | From the Scheme Record Date (other than for HeartWare International after the Implementation Date), all certificates and holding statements for the Scheme Shares will cease to have effect as documents of title, and each entry on the Share Register at that date will cease to have any effect other than as evidence of an entitlement to the Share Scheme Consideration. |
Information to be made available to HeartWare International |
5.6 | The Company will procure that, as soon as reasonably practicable after the Scheme Record Date, details of the names, registered addresses and holdings of Scheme Shares of every Scheme Shareholder as shown in the Share Register at the Scheme Record Date are made available to HeartWare International in such form as HeartWare International or the HeartWare International Share Registry reasonably requires. |
6 | QUOTATION OF THE SHARES |
6.1 | The Company will apply to ASX for: |
6.1.1 | suspension of Shares from official quotation on ASX with effect from close of trading on the Business Day after the Effective Date; and |
6.1.2 | termination of official quotation of the Shares on ASX with effect as soon as practicable after the Implementation Date. |
4.
Table of Contents
7 | GENERAL SHARE SCHEME PROVISIONS |
Appointment of the Company as agent and attorney |
7.1 | Each Scheme Shareholder, without the need for any further act, irrevocably appoints the Company and each of the directors and officers of the Company, jointly and severally, as its attorney and agent for the purpose of: |
7.1.1 | in the case of Scheme Shares in a CHESS holding: |
(a) | causing a message to be transmitted to ASTC in accordance with ASTC Settlement Rules so as to transfer the Scheme Shares held by the Scheme Shareholder from the CHESS subregister of the Company to the issuer sponsored subregister operated by the Company notwithstanding that, at the time of such transfer, HeartWare International has not provided the Share Scheme Consideration which is due under this Share Scheme to the Scheme Shareholders; and | ||
(b) | completing and signing on behalf of Scheme Shareholders any required form of transfer of Scheme Shares; and |
7.1.2 | in the case of Scheme Shares registered in the issuer sponsored subregister operated by the Share Registry, completing and signing on behalf of Scheme Shareholders any required form of transfer; and | ||
7.1.3 | in all cases, executing any document or doing any other act necessary to give full effect to this Share Scheme and the transactions contemplated by it. |
Scheme Shareholders’ consent |
7.2 | Each Scheme Shareholder consents to the Company doing all things and executing all deeds, instruments, transfers and other documents as may be necessary or desirable to give full effect to this Share Scheme and the transactions contemplated by it. |
7.3 | Each Scheme Shareholder agrees to be bound by the Certificate of Incorporation and by-laws of HeartWare International in respect of the HeartWare International Shares or CDIs issued to them pursuant to this Share Scheme. |
Agreement by Scheme Shareholders |
7.4 | Each Scheme Shareholder agrees to the transfer of all of their Scheme Shares to HeartWare International in accordance with the terms of this Share Scheme. |
Warranty by Scheme Shareholders |
7.5 | Each Scheme Shareholder is deemed to have warranted to HeartWare International that: |
7.5.1 | all of their Scheme Shares (including any rights and entitlements attaching to those shares) transferred to HeartWare International under this Share Scheme will, on the date of the transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind, whether legal or otherwise; and | ||
7.5.2 | they have full power and capacity to sell and transfer their Scheme Shares (including any rights and entitlements attaching to those shares). |
The Company undertakes in favour of each Scheme Shareholder that it will provide such warranty to HeartWare International on behalf of the Scheme Shareholder. |
Rights in Scheme Shares |
7.6 | Shareholders shall be entitled to any dividends and other distributions declared or paid on the Shares prior to the Implementation Date. |
Title to Scheme Shares |
7.7 | HeartWare International will be beneficially entitled to all of the Scheme Shares transferred to it under this Share Scheme pending registration by the Company of HeartWare International in the Share Register as the holder of all of the Scheme Shares. |
5.
Table of Contents
Appointment of HeartWare International as sole proxy |
7.8 | From the Implementation Date until the Company registers HeartWare International in the Share Register as the holder of all of the Scheme Shares, each Scheme Shareholder: |
7.8.1 | is deemed to have irrevocably appointed the Chairman of HeartWare International as their sole proxy and, where applicable, corporate representative, to attend shareholders’ meetings of the Company, exercise the votes attached to the Scheme Shares registered in their name and sign any shareholders’ resolutions, whether in person, by proxy or by corporate representative; |
7.8.2 | must not attend or vote at any shareholders’ meetings of the Company, or sign any resolutions, whether in person, by proxy or by corporate representative, other than under this clause 7.8; and |
7.8.3 | must take all other actions in the capacity of the registered holder of Scheme Shares as HeartWare International directs. |
The Company undertakes in favour of each Scheme Shareholder that it will appoint the Chairman of HeartWare International as that Scheme Shareholder’s proxy or, where applicable, corporate representative, in accordance with this clause 7.8. |
Share Scheme alterations and conditions |
7.9 | If the Court proposes to approve this Share Scheme subject to any alterations or conditions, the Company may, by its counsel or solicitors, and with the consent of HeartWare International, consent to those alterations or conditions on behalf of all persons concerned, including, for the avoidance of doubt, all Scheme Shareholders. |
Enforcement of Share Scheme Deed Poll |
7.10 | The Company undertakes in favour of each Scheme Shareholder to enforce the Share Scheme Deed Poll against HeartWare International on behalf of and as agent and attorney for the Scheme Shareholders. |
Effect of Share Scheme |
7.11 | This Share Scheme binds the Company and all Shareholders and, to the extent of any inconsistency and to the extent permitted by law, overrides the constitution of the Company. |
Notices |
7.12 | Where a notice, transfer, transmission application, direction or other communication referred to in this Share Scheme is sent by post to the Company, it will not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at the Company’s registered office or at the place where the Share Register is kept. |
Further assurances |
7.13 | The Company will execute all deeds, instruments, transfers and other documents and do all acts and things (on its own behalf and on behalf of each Scheme Shareholder) as may be necessary or desirable to give full effect to this Share Scheme and the transactions contemplated by it. |
Costs and stamp duty |
7.14 | Subject to the terms of the Implementation Agreement, the Company will pay the costs of the Share Scheme, except that HeartWare International will pay any stamp duty payable on the transfer by Scheme Shareholders of the Scheme Shares to HeartWare International. |
8 | GOVERNING LAW AND JURISDICTION |
8.1 | This Share Scheme is governed by the laws of New South Wales. | |
8.2 | Each party irrevocably and unconditionally: |
8.2.1 | submits to the non-exclusive jurisdiction of the courts of New South Wales; and | ||
8.2.2 | waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum. |
6.
Table of Contents
9 | DEFINITIONS AND INTERPRETATION |
Definitions |
9.1 | In this Share Scheme, unless the context requires otherwise: | |
ASICmeans the Australian Securities and Investments Commission. | ||
ASTCmeans the Australian Settlement and Transfer Corporation Limited. | ||
ASTC Settlement Rulesmeans the Settlement Rules of ASTC. | ||
ASXmeans ASX Limited or the securities market it operates, as the context requires. | ||
ASX Market Rulesmeans the Market Rules of ASX. | ||
Business Daymeans a day that is not a Saturday, Sunday, public holiday or bank holiday in Sydney, Australia or New York, United States of America. | ||
CDImeans the CHESS Depositary Interest to be issued in connection with the Share Scheme representing an interest in one thirty-fifth of a HeartWare International Share. | ||
CDI Registerhas the meaning given to that term in the ASTC Settlement Rules. | ||
CHESSmeans the Clearing House Electronic Sub-Register System of share transfers operated by ASX Settlement and Transfer Corporation Pty Ltd. | ||
CHESS Depositary Interesthas the meaning given to that term in the ASTC Settlement Rules. | ||
Companymeans HeartWare Limited ABN 34 111 970 257. | ||
Corporations Actmeans theCorporations Act 2001(Cth). | ||
Courtmeans the Federal Court of Australia or any other court of competent jurisdiction under the Corporations Act agreed in writing by the Company and HeartWare International. | ||
Depositaryhas the meaning given to the term ‘Depositary’ in the ASTC Settlement Rules. | ||
Effectivemeans, when used in relation to this Share Scheme, the coming into effect, pursuant to section 411(10) of the Corporations Act, of the Court order made under section 411(4)(b) of the Corporations Act in relation to this Share Scheme, but in any event at no time before an office copy of the order of the Court is lodged with ASIC. | ||
Effective Datemeans the date on which this Share Scheme becomes Effective. | ||
HeartWare Internationalmeans HeartWare International, Inc., a corporation incorporated under the laws of the state of Delaware, United States of America. | ||
HeartWare International Sharesmeans shares of fully paid common stock in the capital of HeartWare International. | ||
HeartWare International Share Registrymeans Computershare Investor Services Pty Limited. | ||
Implementation Agreementmeans the implementation agreement dated 5 August 2008 between the Company and HeartWare International. | ||
Implementation Datemeans the third Business Day following the Scheme Record Date. | ||
Ineligible Overseas Shareholdermeans a Scheme Shareholder who is registered in the Share Register with an address outside Australia and its external territories, New Zealand and the United States or such other country agreed to by the Company and HeartWare International. | ||
Information Memorandummeans the document containing the information described in clause 7.1.1 of the Implementation Agreement to be approved by the Court and to be despatched to the Shareholders. | ||
Marketable Parcelhas the meaning given in the ASX Market Rules. | ||
Nomineemeans the nominee selected by HeartWare International prior to the Implementation Date for the purposes of clause 4.6. Related Body Corporatehas the meaning given in the Corporations Act. | ||
Scheme Record Datemeans 7.00pm on the fifth Business Day after the Effective Date or any other date agreed with ASX to be the record date for the Share Scheme to determine entitlements to receive Share Scheme Consideration. | ||
Scheme Sharemeans a Share held by a Scheme Shareholder at the Scheme Record Date. | ||
Scheme Shareholdermeans a Shareholder, as at the Scheme Record Date. |
7.
Table of Contents
Second Court Hearing Datemeans the first day on which the application made to the Court for an order approving this Share Scheme pursuant to section 411(4)(b) of the Corporations Act is heard, or if the hearing of the application is adjourned for any reason, the first day of the adjourned hearing. | ||
Sharemeans a fully paid ordinary share in the Company. | ||
Shareholdermeans each person who is registered in the Share Register as a holder of the Shares. | ||
Share Registermeans the register of shareholders of the Company maintained by or on behalf of the Company in accordance with section 168(1) of the Corporations Act. | ||
Share Registrymeans Computershare Investor Services Pty Limited ACN 078 279 277. | ||
Share Schememeans this scheme of arrangement under Part 5.1 of the Corporations Act between the Company and Scheme Shareholders, subject to any alterations or conditions made or required by the Court and approved in writing by the parties. | ||
Share Scheme Considerationhas the meaning given to it in the Implementation Agreement. | ||
Share Scheme Deed Pollmeans the share scheme deed poll dated 17 September 2008 executed by HeartWare International under which HeartWare International covenants in favour of each Scheme Shareholder to perform its obligations under the Implementation Agreement and this Share Scheme. | ||
Sunset Datemeans 5.00pm on 31 December 2008 or such other date and time agreed in writing between the Company and HeartWare International. |
Interpretation |
9.2 | In the interpretation of this Share Scheme, the following provisions apply unless the context otherwise requires: |
9.2.1 | The singular includes the plural and conversely. | ||
9.2.2 | A gender includes all genders. | ||
9.2.3 | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. | ||
9.2.4 | A reference to a person, corporation, trust, partnership, unincorporated body or other entity includes any of them. | ||
9.2.5 | A reference to a clause, schedule or annexure is a reference to a clause of, or schedule or annexure to, this Share Scheme. | ||
9.2.6 | A reference to an agreement or document (including a reference to this Share Scheme) is to the agreement or document as amended, varied, supplemented, novated or replaced, except to the extent prohibited by this Share Scheme or that other agreement or document. | ||
9.2.7 | A reference to a person includes a reference to the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns. | ||
9.2.8 | A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. | ||
9.2.9 | A reference to $ is to the lawful currency of Australia. | ||
9.2.10 | Words and phrases not specifically defined in this Share Scheme have the same meanings (if any) given to them in the Corporations Act. | ||
9.2.11 | A reference to time is a reference to time in Sydney, Australia. | ||
9.2.12 | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing must be done on the immediately succeeding Business Day. | ||
9.2.13 | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. | ||
9.2.14 | A reference to a party using its best endeavours or reasonable endeavours does not include a reference to that party paying money or providing other valuable consideration to or for the benefit of any person (and an obligation on a party to use its best or reasonable endeavours does not oblige that party to pay money or provide other valuable consideration to or for the benefit of any person). |
8.
Table of Contents
HeartWare Limited
The holders of options granted under the HeartWare Limited Employee Share Option Plan
206 | ||||
206 | ||||
206 | ||||
206 | ||||
206 | ||||
206 | ||||
206 | ||||
206 | ||||
207 | ||||
207 | ||||
207 | ||||
207 | ||||
207 | ||||
207 | ||||
207 | ||||
207 | ||||
207 | ||||
207 | ||||
208 | ||||
208 | ||||
208 | ||||
208 | ||||
208 | ||||
208 | ||||
208 | ||||
208 | ||||
208 | ||||
208 | ||||
209 | ||||
209 | ||||
209 | ||||
209 | ||||
209 | ||||
209 | ||||
209 | ||||
209 | ||||
209 | ||||
211 |
Table of Contents
pursuant to section 411 of the Corporations Act 2001 (Cth)
OPERATIVE PROVISIONS |
1 | PRELIMINARY |
The Company |
1.1 | The Company is a public company limited by shares, incorporated in Australia and registered in Victoria. Its registered office is at Level 57, MLC Centre, 19-29 Martin Place, Sydney, NSW 2000. |
1.2 | As at 12 September 2008, 22,746,464 Options were on issue. |
HeartWare International |
1.3 | HeartWare International is a corporation limited by shares, incorporated in Delaware, United States. Its registered office is at 14000–14050 NW 57th Court, Miami Lakes, FL USA 33014. |
Effect of Scheme |
1.4 | If this Option Scheme becomes Effective: |
1.4.1 | HeartWare International will provide the Option Scheme Consideration to each Scheme Optionholder in accordance with the terms of this Option Scheme; | ||
1.4.2 | all of the Scheme Options will be cancelled; and | ||
1.4.3 | HeartWare International will enter the name of each Scheme Optionholder in the HeartWare International Option Register in accordance with the terms of this Option Scheme. |
Implementation Agreement and Option Scheme Deed Poll |
1.5 | The Company and HeartWare International have entered into the Implementation Agreement which sets out the terms on which the Company and HeartWare International have agreed to implement this Option Scheme. |
1.6 | HeartWare International has executed the Option Scheme Deed Poll in favour of each Scheme Optionholder pursuant to which it has covenanted to perform its obligations under this Scheme, including to provide the Option Scheme Consideration to Scheme Optionholders. |
2 | CONDITIONS PRECEDENT |
Conditions precedent to Option Scheme |
2.1 | This Option Scheme is conditional on: |
2.1.1 | as at 8.00am on the Second Court Hearing Date, the Implementation Agreement not having been terminated in accordance with its terms; | ||
2.1.2 | all of the conditions precedent set out in clause 2.2 of the Implementation Agreement having been satisfied or waived in accordance with the terms of that agreement; | ||
2.1.3 | the Court having approved this Option Scheme, with or without modification, pursuant to section 411(4)(b) of the Corporations Act; and | ||
2.1.4 | such other conditions made or required by the Court pursuant to section 411(6) of the Corporations Act in relation to this Option Scheme as are acceptable to the Company and HeartWare International, having been satisfied, |
and the provisions of clauses 3 to 6 will not come into effect unless and until each of these conditions precedent has been satisfied. |
1.
Table of Contents
Certificate in relation to conditions precedent |
2.2 | On the Second Court Hearing Date, the Company and HeartWare International will each provide to the Court a certificate confirming whether or not all of the conditions precedent set out in clause 2.2 of the Implementation Agreement (other than in relation to this Option Scheme and the Share Scheme being approved by the Court pursuant to section 411(4)(b) of the Corporations Act) have been satisfied or waived in accordance with the terms of that agreement. |
2.3 | The giving of a certificate by each of the Company and HeartWare International under clause 2.2 will, in the absence of manifest error, be conclusive evidence of the satisfaction or waiver of the conditions precedent referred to in the certificate. |
Lapse of Option Scheme |
2.4 | This Option Scheme will lapse and be of no further force or effect if the Effective Date has not occurred on or before the Sunset Date. |
3 | IMPLEMENTATION OF OPTION SCHEME |
Lodgement of Court order |
3.1 | On or before 5.00pm on the first Business Day following approval of this Option Scheme by the Court pursuant to section 411(4)(b) of the Corporations Act, the Company will lodge with ASIC an office copy of the Court order approving this Option Scheme. |
Provision of Option Scheme Consideration |
3.2 | On the Implementation Date, in consideration for the Scheme Optionholders agreeing to the cancellation of the Scheme Options, HeartWare International must provide the Option Scheme Consideration to each Scheme Optionholder in accordance with clause 4. |
Cancellation of Options |
3.3 | On the Implementation Date, in consideration for and immediately following the issue of the Option Scheme Consideration in accordance with clause 4: |
3.3.1 | all of the Scheme Options (together with all rights and entitlements attaching to the Scheme Options) will be cancelled; and | ||
3.3.2 | the Company will record in its Option Register the cancellation of all of the Scheme Options. |
Waiver of accelerated vesting rights |
3.4 | Each Scheme Optionholder waives any rights he or she may have under clause 2.7 of the Schedule to the Employee Share Option Plan, to the removal of conditions of exercise for the exercise of his or her Options and waives all and any rights to exercise Options pursuant to such clause. |
Invitation to Optionholders |
3.5 | It is agreed that this Option Scheme shall constitute an Invitation (as defined in the HeartWare International Employee Stock Option Plan) to Optionholders to subscribe for HeartWare International Options upon the terms set out in clause 4 of this Option Scheme, except that the Issue Date (as such term is defined in the HeartWare International Employee Stock Option Plan) for HeartWare International Options shall be the date that Options were issued to Optionholders pursuant to the Employee Share Option Plan and: |
3.5.1 | the term “Expiry Date” in the HeartWare International Employee Stock Option Plan; and | ||
3.5.2 | the period of vesting referred to in the HeartWare International Employee Stock Option Plan, |
shall each be construed accordingly. |
4 | PROVISION OF OPTION SCHEME CONSIDERATION |
Provision of Option Scheme Consideration |
4.1 | The obligation of HeartWare International to provide the Option Scheme Consideration will be satisfied on the Implementation Date by the Company procuring that HeartWare International, in accordance with its covenant in favour of Scheme Optionholders contained in clause 2.2 of the Option Scheme Deed Poll, issues to such Scheme Optionholder one HeartWare International Option for every 35 Scheme Options held by them on the Scheme Record Date. |
2.
Table of Contents
Terms of New Options |
4.2 | Each HeartWare International Option issued pursuant to this Option Scheme will: |
4.2.1 | have an exercise price per Option equal to 35 times the exercise price of each Option it replaces; | ||
4.2.2 | have an exercise period equal to the unexpired exercise period of the Options it replaces; | ||
4.2.3 | be vested to the same extent and have the same terms as to vesting as the Options it replaces; and | ||
4.2.4 | otherwise be issued on the terms of the HeartWare International Employee Stock Option Plan. |
Fractional entitlements |
4.3 | Fractional entitlements to Option Scheme Consideration will be rounded down to the nearest whole number of HeartWare International Options after aggregating all holdings of such Scheme Optionholder. |
General |
4.4 | The obligation of the Company to procure HeartWare International to issue HeartWare International Options under clause 4.1 of this Option Scheme will be satisfied by HeartWare International on the Implementation Date procuring the entry in the HeartWare International Option Register of each person who is to receive HeartWare International Options. |
4.5 | After the satisfaction of the obligation of the Company in clause 4.4, and within five Business Days after the Implementation Date, the Company will procure HeartWare International to: |
4.5.1 | issue certificates for such HeartWare International Options in the name of such persons; and | ||
4.5.2 | procure the dispatch of such certificates to the address as shown in the register for such persons. |
5 | EXERCISE OF OPTIONS |
Issue of Shares |
5.1 | The Company will issue Shares in accordance with any valid exercise of an Option which is received on or before 12.00 noon on the Business Day prior to the Scheme Record Date. |
5.2 | The Company will not accept for registration or recognise for any purpose any exercise of an Option received after 12.00 noon on the Business Day before the Scheme Record Date and, after such time, the Options shall not be capable of exercise notwithstanding any terms on which such Options were granted. |
Maintenance of the Option Register |
5.3 | For the purpose of determining entitlements to the Option Scheme Consideration, the Company will, until the Option Scheme Consideration has been provided, maintain or procure the maintenance of the Option Register in accordance with this clause 5. The Option Register in this form will solely determine entitlements to the Option Scheme Consideration. |
Effect of Option Register |
5.4 | After the Scheme Record Date, all option certificates for the Options issued under the Option Scheme and each entry in the Option Register as at the Scheme Record Date will cease to have any effect, except as evidence of entitlements to Option Scheme Consideration under this Option Scheme. |
Information to be made available to HeartWare International |
5.5 | The Company will procure that, as soon as reasonably practicable after the Scheme Record Date, details of the names, registered addresses and holdings of Options of every Scheme Optionholder as shown in the Option Register at the Scheme Record Date are made available to HeartWare International in such form as HeartWare International reasonably requires. |
6 | GENERAL OPTION SCHEME PROVISIONS |
Appointment of the Company as agent and attorney |
6.1 | Each Scheme Optionholder, without the need for any further act, irrevocably appoints the Company and each of the directors and officers of the Company, jointly and severally, as its attorney and agent for the purpose of doing all things necessary including executing all deeds, instruments, and other documents as may be necessary or desirable to give full effect to this Option Scheme and the transactions contemplated by it. |
3.
Table of Contents
Option Scheme alterations and conditions |
6.2 | If the Court proposes to approve this Option Scheme subject to any alterations or conditions, the Company may, by its counsel or solicitors, and with the consent of HeartWare International, consent to those alterations or conditions on behalf of all persons concerned, including, for the avoidance of doubt, all Scheme Optionholders. |
Enforcement of Option Scheme Deed Poll |
6.3 | The Company undertakes in favour of each Scheme Optionholder to enforce the Option Scheme Deed Poll against HeartWare International on behalf of and as agent and attorney for the Scheme Optionholders. |
Effect of Option Scheme |
6.4 | This Option Scheme binds the Company and all Scheme Optionholders and, to the extent of any inconsistency and to the extent permitted by law, overrides the constitution of the Company. |
Notices |
6.5 | Where a notice, transfer, transmission application, direction or other communication referred to in this Option Scheme is sent by post to the Company, it will not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at the Company’s registered office or at the place where the Option Register is kept. |
Further assurances |
6.6 | The Company will execute all deeds, instruments, transfers and other documents and do all acts and things (on its own behalf and on behalf of each Scheme Optionholder) as may be necessary or desirable to give full effect to this Option Scheme and the transactions contemplated by it. |
Costs and stamp duty |
6.7 | Subject to the terms of the Implementation Agreement, the Company will pay the costs of the Option Scheme. |
7 | GOVERNING LAW AND JURISDICTION |
7.1 | This Option Scheme is governed by the laws of New South Wales. | |
7.2 | Each party irrevocably and unconditionally: |
7.2.1 | submits to the non-exclusive jurisdiction of the courts of New South Wales; and | ||
7.2.2 | waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum. |
8 | DEFINITIONS AND INTERPRETATION |
Definitions |
8.1 | In this Option Scheme, unless the context requires otherwise: | |
ASICmeans the Australian Securities and Investments Commission. | ||
ASXmeans ASX Limited or the securities market it operates, as the context requires. | ||
Business Daymeans a day that is not a Saturday, Sunday, public holiday or bank holiday in Sydney, Australia or New York, United States of America. | ||
Corporations Actmeans theCorporations Act 2001(Cth). | ||
Courtmeans the Federal Court of Australia or any other court of competent jurisdiction under the Corporations Act agreed in writing by the Company and HeartWare International. | ||
Effectivemeans, when used in relation to this Option Scheme, the coming into effect, pursuant to section 411(10) of the Corporations Act, of the order of the Court made for the purposes of section 411(4)(b) of the Corporations Act in relation to this Option Scheme, but in any event at no time before an office copy of the order of the Court is lodged with ASIC. | ||
Effective Datemeans the date on which this Option Scheme becomes Effective. | ||
Employee Share Option Planmeans HeartWare Limited’s Employee Share Option Plan. | ||
HeartWare Internationalmeans HeartWare International, Inc a corporation limited by shares, incorporated in Delaware, United States. |
4.
Table of Contents
HeartWare International Employee Stock Option Planhas the meaning given to it in the Implementation Agreement. | ||
HeartWare International Optionmeans an option to subscribe for HeartWare International Shares granted under the HeartWare International Employee Stock Option Plan. | ||
HeartWare International Option Registermeans the register of optionholders maintained by or on behalf of HeartWare International. | ||
HeartWare International Sharesmeans shares of fully paid common stock in the capital of HeartWare International. | ||
Implementation Agreementmeans the implementation agreement dated 5 August 2008 between the Company and HeartWare International. | ||
Implementation Datemeans the third Business Day after the Scheme Record Date. | ||
Information Memorandummeans the document containing the information described in clause 7.1 of the Implementation Agreement to be approved by the Court and to be despatched to Optionholders. | ||
Optionsmeans options entitling holders to subscribe for Shares, issued under the HeartWare Limited Employee Share Option Plan. | ||
Option Registermeans the register of optionholders of the Company maintained by or on behalf of the Company in accordance with the Corporations Act. | ||
Option Schememeans this scheme of arrangement under Part 5.1 of the Corporations Act between the Company and Scheme Optionholders, subject to any alterations or conditions made or required by the Court pursuant to section 411(6) of the Corporations Act. | ||
Option Scheme Considerationhas the meaning given to it in the Implementation Agreement. | ||
Option Scheme Deed Pollmeans the option scheme deed poll dated 17 September 2008 executed by HeartWare International under which HeartWare International covenants in favour of each Scheme Optionholder to perform its obligations under the Implementation Agreement and this Option Scheme. | ||
Optionholdermeans a person who is registered in the Option Register as a holder of Options from time to time. | ||
Related Body Corporatehas the meaning given in section 50 of the Corporations Act. | ||
Scheme Optionmeans an Option held by a Scheme Optionholder at the Scheme Record Date. | ||
Scheme Optionholdermeans an Optionholder who is entered into the Option Register as the holder of Options as at the Scheme Record Date. | ||
Scheme Record Datemeans 7.00pm on the fifth Business Day after the Effective Date or any other date agreed with ASX to be the record date for the Option Scheme to determine entitlements to receive Option Scheme Consideration. | ||
Scheme Shareholdermeans a Shareholder, as at the Scheme Record Date. | ||
Second Court Hearing Datemeans the first day on which the application made to the Court for an order approving this Option Scheme pursuant to section 411(4)(b) of the Corporations Act is heard, or if the hearing of the application is adjourned for any reason, the first day of the adjourned hearing. | ||
Sharemeans a fully paid ordinary share in the Company. | ||
Share Schememeans the scheme of arrangement, substantially in the form set out in Annexure 1 to the Implementation Agreement, under Part 5.1 of the Corporations Act between the Company and Scheme Shareholders. | ||
Sunset Datemeans 5.00pm on 31 December 2008 or such other date and time agreed in writing between the Company and HeartWare International. |
5.
Table of Contents
Interpretation |
8.2 | In the interpretation of this Option Scheme, the following provisions apply unless the context otherwise requires: |
8.2.1 | The singular includes the plural and conversely. | ||
8.2.2 | A gender includes all genders. | ||
8.2.3 | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. | ||
8.2.4 | A reference to a person, corporation, trust, partnership, unincorporated body or other entity includes any of them. |
8.2.5 | A reference to a clause, schedule or annexure is a reference to a clause of, or schedule or annexure to, this Option Scheme. | ||
8.2.6 | A reference to an agreement or document (including a reference to this Option Scheme) is to the agreement or document as amended, varied, supplemented, novated or replaced, except to the extent prohibited by this Option Scheme or that other agreement or document. | ||
8.2.7 | A reference to a person includes a reference to the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns. | ||
8.2.8 | A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. | ||
8.2.9 | A reference to $ is to the lawful currency of Australia. | ||
8.2.10 | Words and phrases not specifically defined in this Option Scheme have the same meanings (if any) given to them in the Corporations Act. | ||
8.2.11 | A reference to time is a reference to time in Sydney, Australia. | ||
8.2.12 | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing must be done on the immediately succeeding Business Day. | ||
8.2.13 | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. | ||
8.2.14 | A reference to a party using its best endeavours or reasonable endeavours does not include a reference to that party paying money or providing other valuable consideration to or for the benefit of any person (and an obligation on a party to use its best or reasonable endeavours does not oblige that party to pay money or provide other valuable consideration to or for the benefit of any person). |
6.
Table of Contents
HeartWare Limited
The holders of performance rights granted under the HeartWare Limited Performance Rights Plan
213 | ||||
213 | ||||
213 | ||||
213 | ||||
213 | ||||
213 | ||||
213 | ||||
213 | ||||
214 | ||||
214 | ||||
214 | ||||
214 | ||||
214 | ||||
214 | ||||
214 | ||||
214 | ||||
214 | ||||
214 | ||||
215 | ||||
215 | ||||
215 | ||||
215 | ||||
215 | ||||
215 | ||||
215 | ||||
215 | ||||
215 | ||||
215 | ||||
216 | ||||
216 | ||||
216 | ||||
216 | ||||
216 | ||||
216 | ||||
216 | ||||
216 | ||||
216 | ||||
218 |
Table of Contents
pursuant to section 411 of the Corporations Act 2001 (Cth)
1 | PRELIMINARY |
The Company |
1.1 | The Company is a public company limited by shares, incorporated in Australia and registered in Victoria. Its registered office is at Level 57, MLC Centre, 19-29 Martin Place, Sydney, NSW 2000. |
1.2 | As at 12 September 2008, 5,000,000 Performance Rights were on issue. |
HeartWare International |
1.3 | HeartWare International is a corporation limited by shares, incorporated in Delaware, United States. Its registered office is at 14000–14050 NW 57th Court, Miami Lakes, FL USA 33014. |
Effect of Scheme |
1.4 | If this Performance Rights Scheme becomes Effective: |
1.4.1 | HeartWare International will provide the Performance Rights Scheme Consideration to each Scheme Performance Rights Holder in accordance with the terms of this Performance Rights Scheme; |
1.4.2 | all of the Scheme Performance Rights will be cancelled; and |
1.4.3 | HeartWare International will enter the name of each Scheme Performance Rights Holder in the HeartWare International Restricted Stock Unit Register in accordance with the terms of this Performance Rights Scheme. |
Implementation Agreement and Performance Rights Scheme Deed Poll |
1.5 | The Company and HeartWare International have entered into the Implementation Agreement which sets out the terms on which the Company and HeartWare International have agreed to implement this Performance Rights Scheme. |
1.6 | HeartWare International has executed the Performance Rights Scheme Deed Poll in favour of each Scheme Performance Rights Holder pursuant to which it has covenanted to perform its obligations under this Scheme, including to provide the Performance Rights Scheme Consideration to Scheme Performance Rights Holders. |
2 | CONDITIONS PRECEDENT |
Conditions precedent to Performance Rights Scheme |
2.1 | This Performance Rights Scheme is conditional on: |
2.1.1 | as at 8.00am on the Second Court Hearing Date, the Implementation Agreement not having been terminated in accordance with its terms; |
2.1.2 | all of the conditions precedent set out in clause 2.3 of the Implementation Agreement having been satisfied or waived in accordance with the terms of that agreement; |
2.1.3 | the Court having approved this Performance Rights Scheme, with or without modification, pursuant to section 411(4)(b) of the Corporations Act; and |
2.1.4 | such other conditions made or required by the Court pursuant to section 411(6) of the Corporations Act in relation to this Performance Rights Scheme as are acceptable to the Company and HeartWare International, having been satisfied, |
and the provisions of clauses 3 to 6 will not come into effect unless and until each of these conditions precedent has been satisfied. |
1.
Table of Contents
Certificate in relation to conditions precedent |
2.2 | On the Second Court Hearing Date, the Company and HeartWare International will each provide to the Court a certificate confirming whether or not all of the conditions precedent set out in clause 2.3 of the Implementation Agreement (other than in relation to this Performance Rights Scheme and the Share Scheme being approved by the Court pursuant to section 411(4)(b) of the Corporations Act) have been satisfied or waived in accordance with the terms of that agreement. |
2.3 | The giving of a certificate by each of the Company and HeartWare International under clause 2.2 will, in the absence of manifest error, be conclusive evidence of the satisfaction or waiver of the conditions precedent referred to in the certificate. |
Lapse of Performance Rights Scheme |
2.4 | This Performance Rights Scheme will lapse and be of no further force or effect if the Effective Date has not occurred on or before the Sunset Date. |
3 | IMPLEMENTATION OF PERFORMANCE RIGHTS SCHEME |
Lodgement of Court order |
3.1 | On or before 5.00pm on the first Business Day following approval of this Performance Rights Scheme by the Court pursuant to section 411(4)(b) of the Corporations Act, the Company will lodge with ASIC an office copy of the Court order approving this Performance Rights Scheme. |
Provision of Performance Rights Scheme Consideration |
3.2 | On the Implementation Date, in consideration for the Scheme Performance Rights Holders agreeing to the cancellation of the Scheme Performance Rights, HeartWare International must provide the Performance Rights Scheme Consideration to each Scheme Performance Rights Holder in accordance with clause 4. |
Cancellation of Performance Rights |
3.3 | On the Implementation Date, in consideration for and immediately following the issue of the Performance Rights Scheme Consideration in accordance with clause 4: |
3.3.1 | all of the Scheme Performance Rights (together with all rights and entitlements attaching to the Scheme Performance Rights) will be cancelled; and |
3.3.2 | the Company will record in its Performance Rights Register the cancellation of all of the Scheme Performance Rights. |
Waiver of accelerated vesting rights |
3.4 | Each Scheme Performance Rights Holder acknowledges that the Performance Rights Scheme does not constitute a “Change of Control Event” for the purposes of clause 6.3 of the Performance Rights Plan Rules and waives all and any rights to early vesting of Performance Rights pursuant to such clause. |
Invitation to Performance Rights Holders |
3.5 | It is agreed that this Performance Rights Scheme shall constitute an Invitation, pursuant to clause 4.1 of the HeartWare International Restricted Stock Unit Plan, to Performance Rights Holders to subscribe for Restricted Stock Units upon the terms set out in clause 4 of this Performance Rights Scheme, except that the Grant Date (as such term is defined in the HeartWare International Restricted Stock Unit Plan) for Restricted Stock Units shall be the date that Performance Rights were issued to Performance Rights Holders pursuant to the Performance Rights Plan and “Final Exercise Date” as defined in the HeartWare International Restricted Stock Unit Plan shall be construed accordingly. |
4 | PROVISION OF PERFORMANCE RIGHTS SCHEME CONSIDERATION |
Provision of Performance Rights Scheme Consideration |
4.1 | The obligation of HeartWare International to provide the Performance Rights Scheme Consideration will be satisfied on the Implementation Date by the Company procuring that HeartWare International, in accordance with its covenant in favour of Scheme Performance Rights Holders contained in clause 2.2 of the Performance Rights Scheme Deed Poll, issues to such Scheme Performance Rights Holder one Restricted Stock Unit for every 35 Scheme Performance Rights held by them on the Scheme Record Date. |
2.
Table of Contents
Terms of Restricted Stock Units |
4.2 | Each Restricted Stock Unit issued pursuant to this Performance Rights Scheme will: |
4.2.1 | be vested to the same extent and have the same period for vesting as the Performance Rights it replaces; | ||
4.2.2 | be subject to equivalent vesting conditions as the Performance Rights it replaces; and | ||
4.2.3 | otherwise be issued on the terms of the HeartWare International Restricted Stock Unit Plan. |
Fractional entitlements |
4.3 | Fractional entitlements to Performance Rights Scheme Consideration will be rounded down to the nearest whole number of Restricted Stock Units after aggregating all holdings of such Scheme Performance Rights Holder. |
General |
4.4 | The obligation of the Company to procure HeartWare International to issue Restricted Stock Units under clause 4.1 of this Performance Rights Scheme will be satisfied by HeartWare International on the Implementation Date procuring the entry in the HeartWare International Restricted Stock Unit Register of each person who is to receive Restricted Stock Units. |
4.5 | After the satisfaction of the obligation of the Company in clause 4.4, and within five Business Days after the Implementation Date, the Company will procure HeartWare International to: |
4.5.1 | issue certificates for such Restricted Stock Units in the name of such persons; and | ||
4.5.2 | procure the dispatch of such certificates to the address as shown in the register for such persons. |
5 | EXERCISE OF PERFORMANCE RIGHTS |
Issue of Shares |
5.1 | The Company will issue Shares in accordance with any valid exercise of a Performance Right which is received on or before 12.00 noon on the Business Day prior to the Scheme Record Date. |
5.2 | The Company will not accept for registration or recognise for any purpose any exercise of a Performance Right received after 12.00 noon on the Business Day before the Scheme Record Date and, after such time, the Performance Rights shall not be capable of exercise notwithstanding any terms on which such Performance Rights were granted. |
Maintenance of the Performance Rights Register |
5.3 | For the purpose of determining entitlements to the Performance Rights Scheme Consideration, the Company will, until the Performance Rights Scheme Consideration has been provided, maintain or procure the maintenance of the Performance Rights Register in accordance with this clause 5. The Performance Rights Register in this form will solely determine entitlements to the Performance Rights Scheme Consideration. |
Effect of Performance Rights Register |
5.4 | After the Scheme Record Date, all certificates for the Scheme Performance Rights and each entry in the Performance Rights Register as at the Scheme Record Date will cease to have any effect, except as evidence of entitlements to Performance Rights Scheme Consideration under this Performance Rights Scheme. |
Information to be made available to HeartWare International |
5.5 | The Company will procure that, as soon as reasonably practicable after the Scheme Record Date, details of the names, registered addresses and holdings of Performance Rights of every Scheme Performance Rights Holder as shown in the Performance Rights Register at the Scheme Record Date are made available to HeartWare International in such form as HeartWare International reasonably requires. |
6 | GENERAL PERFORMANCE RIGHTS SCHEME PROVISIONS |
Appointment of the Company as agent and attorney |
6.1 | Each Scheme Performance Rights Holder, without the need for any further act, irrevocably appoints the Company and each of the directors and officers of the Company, jointly and severally, as its attorney and agent for the purpose of doing all things necessary including executing all deeds, instruments, and other documents as may be necessary or desirable to give full effect to this Performance Rights Scheme and the transactions contemplated by it. |
3.
Table of Contents
Performance Rights Scheme alterations and conditions |
6.2 | If the Court proposes to approve this Performance Rights Scheme subject to any alterations or conditions, the Company may, by its counsel or solicitors, and with the consent of HeartWare International, consent to those alterations or conditions on behalf of all persons concerned, including, for the avoidance of doubt, all Scheme Performance Rights Holders. |
Enforcement of Performance Rights Scheme Deed Poll |
6.3 | The Company undertakes in favour of each Scheme Performance Rights Holder to enforce the Performance Rights Scheme Deed Poll against HeartWare International on behalf of and as agent and attorney for the Scheme Performance Rights Holders. |
Effect of Performance Rights Scheme |
6.4 | This Performance Rights Scheme binds the Company and all Scheme Performance Rights Holders and, to the extent of any inconsistency and to the extent permitted by law, overrides the constitution of the Company. |
Notices |
6.5 | Where a notice, transfer, transmission application, direction or other communication referred to in this Performance Rights Scheme is sent by post to the Company, it will not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at the Company’s registered office or at the place where the Performance Rights Register is kept. |
Further assurances |
6.6 | The Company will execute all deeds, instruments, transfers and other documents and do all acts and things (on its own behalf and on behalf of each Scheme Performance Rights Holder) as may be necessary or desirable to give full effect to this Performance Rights Scheme and the transactions contemplated by it. |
Costs and stamp duty |
6.7 | Subject to the terms of the Implementation Agreement, the Company will pay the costs of the Performance Rights Scheme. |
7 | GOVERNING LAW AND JURISDICTION |
7.1 | This Performance Rights Scheme is governed by the laws of New South Wales. | |
7.2 | Each party irrevocably and unconditionally: |
7.2.1 | submits to the non-exclusive jurisdiction of the courts of New South Wales; and | ||
7.2.2 | waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum. |
8 | DEFINITIONS AND INTERPRETATION |
Definitions |
8.1 | In this Performance Rights Scheme, unless the context requires otherwise: |
ASICmeans the Australian Securities and Investments Commission. |
ASXmeans ASX Limited or the securities market it operates, as the context requires. |
Business Daymeans a day that is not a Saturday, Sunday, public holiday or bank holiday in Sydney, Australia or New York, United States of America. |
Corporations Actmeans theCorporations Act 2001(Cth). |
Courtmeans the Federal Court of Australia or any other court of competent jurisdiction under the Corporations Act agreed in writing by the Company and HeartWare International. |
Effectivemeans, when used in relation to this Performance Rights Scheme, the coming into effect, pursuant to section 411(10) of the Corporations Act, of the order of the Court made for the purposes of section 411(4)(b) of the Corporations Act in relation to this Performance Rights Scheme, but in any event at no time before an office copy of the order of the Court is lodged with ASIC. |
Effective Datemeans the date on which this Performance Rights Scheme becomes Effective. |
HeartWare Internationalmeans HeartWare International, Inc a corporation limited by shares, incorporated in Delaware, United States. |
4.
Table of Contents
HeartWare International Restricted Stock Unit Planhas the meaning given to it in the Implementation Agreement. |
HeartWare International Restricted Stock Unit Registermeans the register of restricted stock unit holders maintained by or on behalf of HeartWare International. |
HeartWare International Sharesmeans shares of fully paid common stock in the capital of HeartWare International. |
Implementation Agreementmeans the implementation agreement dated 5 August 2008 between the Company and HeartWare International. |
Implementation Datemeans the third Business Day after the Scheme Record Date. |
Information Memorandummeans the document containing the information described in clause 7.1 of the Implementation Agreement to be approved by the Court and to be despatched to Performance Rights Holders. |
Performance Rightsmeans Performance Rights entitling holders to subscribe for Shares, issued under the Performance Rights Plan. |
Performance Rights Holdermeans a person who is registered in the Performance Rights Register as a holder of Performance Rights from time to time. |
Performance Rights Planmeans the HeartWare Limited Performance Rights Plan. |
Performance Rights Registermeans the register of Performance Rights Holders of the Company maintained by or on behalf of the Company in accordance with the Corporations Act. |
Performance Rights Schememeans this scheme of arrangement under Part 5.1 of the Corporations Act between the Company and Scheme Performance Rights Holders, subject to any alterations or conditions made or required by the Court pursuant to section 411(6) of the Corporations Act. |
Performance Rights Scheme Considerationhas the meaning given to it in the Implementation Agreement. |
Performance Rights Scheme Deed Pollmeans the Performance Rights Scheme deed poll dated 17 September 2008 executed by HeartWare International under which HeartWare International covenants in favour of each Scheme Performance Rights Holder to perform its obligations under the Implementation Agreement and this Performance Rights Scheme. |
Related Body Corporatehas the meaning given in section 50 of the Corporations Act. |
Restricted Stock Unitsmeans restricted stock units in HeartWare International granted under the HeartWare International Restricted Stock Unit Plan. |
Scheme Performance Rightmeans a Performance Right held by a Scheme Performance Rights Holder at the Scheme Record Date. |
Scheme Performance Rights Holdermeans a Performance Rights Holder who is entered into the Performance Right Register as the holder of Performance Rights as at the Scheme Record Date. |
Scheme Record Datemeans 7.00pm on the fifth Business Day after the Effective Date or any other date agreed with ASX to be the record date for the Performance Rights Scheme to determine entitlements to receive Performance Rights Scheme Consideration. |
Scheme Shareholdermeans a Shareholder as at the Scheme Record Date. |
Second Court Hearing Datemeans the first day on which the application made to the Court for an order approving this Performance Rights Scheme pursuant to section 411(4)(b) of the Corporations Act is heard, or if the hearing of the application is adjourned for any reason, the first day of the adjourned hearing. |
Sharemeans a fully paid ordinary share in the Company. |
Share Schememeans the scheme of arrangement, substantially in the form set out in Annexure 1 to the Implementation Agreement, under Part 5.1 of the Corporations Act between the Company and Scheme Shareholders. |
Sunset Datemeans 5.00pm on 31 December 2008, or such other date and time as agreed in writing between the Company and HeartWare International. |
5.
Table of Contents
Interpretation |
8.2 | In the interpretation of this Performance Rights Scheme, the following provisions apply unless the context otherwise requires: |
8.2.1 | The singular includes the plural and conversely. | ||
8.2.2 | A gender includes all genders. | ||
8.2.3 | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. | ||
8.2.4 | A reference to a person, corporation, trust, partnership, unincorporated body or other entity includes any of them. | ||
8.2.5 | A reference to a clause, schedule or annexure is a reference to a clause of, or schedule or annexure to, this Performance Rights Scheme. | ||
8.2.6 | A reference to an agreement or document (including a reference to this Performance Rights Scheme) is to the agreement or document as amended, varied, supplemented, novated or replaced, except to the extent prohibited by this Performance Rights Scheme or that other agreement or document. | ||
8.2.7 | A reference to a person includes a reference to the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns. | ||
8.2.8 | A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. | ||
8.2.9 | A reference to $ is to the lawful currency of Australia. | ||
8.2.10 | Words and phrases not specifically defined in this Performance Rights Scheme have the same meanings (if any) given to them in the Corporations Act. | ||
8.2.11 | A reference to time is a reference to time in Sydney, Australia. | ||
8.2.12 | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing must be done on the immediately succeeding Business Day. | ||
8.2.13 | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. | ||
8.2.14 | A reference to a party using its best endeavours or reasonable endeavours does not include a reference to that party paying money or providing other valuable consideration to or for the benefit of any person (and an obligation on a party to use its best or reasonable endeavours does not oblige that party to pay money or provide other valuable consideration to or for the benefit of any person). |
6.
Table of Contents
HeartWare International, Inc
in favour of each Scheme Shareholder
220 | ||||
220 | ||||
220 | ||||
220 | ||||
220 | ||||
220 | ||||
220 | ||||
220 | ||||
220 | ||||
220 | ||||
221 | ||||
221 | ||||
221 | ||||
221 | ||||
221 | ||||
221 | ||||
222 | ||||
222 | ||||
222 | ||||
222 | ||||
222 | ||||
222 | ||||
222 | ||||
222 | ||||
222 | ||||
222 |
Table of Contents
A | The Company’s board considers that it is in the interests of the Company that Shareholders be given the opportunity to consider and, if thought fit, approve the Share Scheme. |
B | Accordingly, the Company’s board has resolved that the Company should propose the Share Scheme. |
C | The effect of the Share Scheme will be that all of the Scheme Shares will be transferred to HeartWare International in consideration for the issue of HeartWare International Shares or CDIs to such Scheme Shareholders. |
D | On 5 August 2008, HeartWare International and the Company entered into an Implementation Agreement. |
E | Under the Implementation Agreement, HeartWare International has agreed to take all necessary steps to implement and complete the Share Scheme as soon as is reasonably practicable, including executing this document and providing the Share Scheme Consideration. | |
F | HeartWare International is entering into this document for the purpose of covenanting in favour of Scheme Shareholders to perform its obligations under the Implementation Agreement and the Share Scheme. |
1 | CONDITIONS AND TERMINATION |
Conditions precedent |
1.1 | HeartWare International’s obligations under clause 2 are subject to the Share Scheme becoming Effective. |
Termination |
1.2 | HeartWare International’s obligations under this document will automatically terminate and the terms of this document will be of no further force or effect if: |
1.2.1 | the Implementation Agreement is terminated in accordance with its terms; or |
1.2.2 | the Share Scheme does not become Effective on or before the Sunset Date, |
unless HeartWare International and the Company otherwise agree in accordance with the Implementation Agreement. |
Consequences of termination |
1.3 | If this document is terminated under clause 1.2, then, in addition and without prejudice to any other rights, powers or remedies available to it: |
1.3.1 | HeartWare International is released from its obligations to further perform this document except those obligations under clause 6.1; and |
1.3.2 | Scheme Shareholders retain the rights they have against HeartWare International in respect of any breach of this document which occurs before it is terminated. |
2 | PROVISION OF SHARE SCHEME CONSIDERATION |
Compliance with Share Scheme obligations generally |
2.1 | HeartWare International will comply with its obligations under the Implementation Agreement and do all acts and things as may be necessary or desirable on its part to perform the acts contemplated of it under the Share Scheme. |
Provision of Share Scheme Consideration |
2.2 | Subject to clause 1, in consideration of the transfer to HeartWare International of all of the Scheme Shares, HeartWare International will, on the Implementation Date, issue to each Scheme Shareholder (or, in accordance with clause 4.6 of the Share Scheme to a Nominee on its behalf where such Scheme Shareholder is an Ineligible Overseas Shareholder) the Share Scheme Consideration in accordance with clause 4 of the Share Scheme. |
1.
Table of Contents
3 | REPRESENTATIONS AND WARRANTIES |
3.1 | HeartWare International represents and warrants that: |
3.1.1 | it is a corporation validly existing under the laws of its place of registration; |
3.1.2 | it has the corporate power to enter into and perform its obligations under this document and to carry out the transactions contemplated by this document; |
3.1.3 | it has taken all necessary corporate action to authorise the entry into this document and has taken or will take all necessary corporate action to authorise the performance of this document and to carry out the transactions contemplated by this document; and |
3.1.4 | this document is valid and binding upon it and enforceable against it in accordance with its terms. |
4 | CONTINUING OBLIGATIONS |
4.1 | This document is irrevocable and, subject to clause 1, remains in full force and effect until: |
4.1.1 | HeartWare International has fully performed its obligations under this document; or | ||
4.1.2 | the earlier termination of this document under clause 1.2. |
5 | NOTICES |
5.1 | Any notice, demand, consent or other communication (aNotice) given or made under this document: |
5.1.1 | must be in writing and signed by a person duly authorised by the sender; |
5.1.2 | must be delivered to the intended recipient by prepaid post or by hand or fax to the address or fax number below or the address (being an address in Australia) or fax number last notified by the intended recipient to the sender: |
HeartWare International | ||||
Address: | 14000–14050 NW 57th Court, Miami Lakes, FL USA 33014 | |||
Fax: | +1 305 818 4111 | |||
Attention: | David McIntyre |
5.1.3 | will be taken to be duly given or made: |
(a) | in the case of delivery in person, when delivered; |
(b) | in the case of delivery by post, two Business Days after the date of posting (if posted to an address in the same country); and |
(c) | in the case of fax, on receipt by the sender of a transmission control report from the dispatching machine showing the relevant number of pages and the correct destination fax machine number or name of recipient and indicating that the transmission has been made without error, |
but if the result is that a Notice would be taken to be given or made on a day that is not a Business Day in the place to which the Notice is sent or is later than 4.00pm (local time) it will be taken to have been duly given or made at the commencement of business on the next Business Day in that place. |
6 | GENERAL |
Stamp duty |
6.1 | HeartWare International will: |
6.1.1 | pay all stamp duty (including fines, penalties and interest) in respect of this document, the performance of this document and each transaction effected by or made under this document; and |
6.1.2 | indemnify each Scheme Shareholder against any liability arising from failure to comply with clause 6.1.1. |
Waiver |
6.2 | Waiver of any right arising from a breach of this document or of any right, power, authority, discretion or remedy arising upon default under this document must be in writing and signed by the party granting the waiver. |
6.3 | A failure or delay in exercise, or partial exercise, of: |
6.3.1 | a right arising from a breach of this document; or | ||
6.3.2 | a right, power, authority, discretion or remedy created or arising upon default under this document, |
does not result in a waiver of that right, power, authority, discretion or remedy. |
2.
Table of Contents
6.4 | A party is not entitled to rely on a delay in the exercise or non-exercise of a right, power, authority, discretion or remedy arising from a breach of this document or on a default under this document as constituting a waiver of that right, power, authority, discretion or remedy. |
6.5 | A party may not rely on any conduct of another party as a defence to exercise of a right, power, authority, discretion or remedy by that other party. |
Variation |
6.6 | A provision of this document may not be amended or varied unless the amendment or variation is agreed to in writing by the Company and the Court indicates that the amendment or variation would not of itself preclude approval of the Share Scheme in which event HeartWare International will enter into a further deed poll in favour of each Scheme Shareholder giving effect to the amendment or variation. |
Rights cumulative |
6.7 | The rights, powers and remedies of HeartWare International and of each Scheme Shareholder under this document are cumulative and do not exclude any other rights, powers or remedies provided by law independently of this document. |
Assignment |
6.8 | The rights and obligations of HeartWare International and of each Scheme Shareholder under this document are personal and must not be assigned, encumbered or otherwise dealt with at law or in equity. |
Further assurances |
6.9 | HeartWare International will, at its own expense, execute all deeds and other documents and do all acts and things as may be necessary or desirable to give full effect to this document. |
7 | GOVERNING LAW AND JURISDICTION |
7.1 | This document is governed by the laws of New South Wales. HeartWare International irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of New South Wales. |
8 | DEFINITIONS AND INTERPRETATION |
Definitions |
8.1 | Terms that are not defined in this document and that are defined in the Implementation Agreement or the Share Scheme have the same meaning in this document, unless the context makes it clear that a definition is not intended to apply. |
Interpretation |
8.2 | Clause 9.2 of the Share Scheme applies to the interpretation of this document except that references to ‘this Share Scheme’ in that clause are to be read as references to ‘this document’. |
Nature of Deed Poll |
8.3 | HeartWare International acknowledges that this document may be relied on and enforced by any Scheme Shareholder in accordance with its terms even though the Scheme Shareholders are not party to it. |
Signature of director | Signature of director/company secretary | |
Name of director (print) | Name of director/company secretary (print) |
3.
Table of Contents
HeartWare International, Inc
in favour of each Scheme Optionholder
224 | ||||
224 | ||||
224 | ||||
224 | ||||
224 | ||||
224 | ||||
224 | ||||
224 | ||||
224 | ||||
224 | ||||
225 | ||||
225 | ||||
225 | ||||
225 | ||||
225 | ||||
225 | ||||
226 | ||||
226 | ||||
226 | ||||
226 | ||||
226 | ||||
226 | ||||
226 | ||||
226 | ||||
226 | ||||
226 |
Table of Contents
A | The Company’s board considers that it is in the interests of the Company that Optionholders be given the opportunity to consider and, if thought fit, approve the Option Scheme. |
B | Accordingly, the Company’s board has resolved that the Company should propose the Option Scheme. |
C | The effect of the Option Scheme will be that all of the Scheme Options will be cancelled in consideration for the issue of HeartWare International Options by HeartWare International to such Scheme Optionholders. |
D | On 5 August 2008, HeartWare International and the Company entered into an Implementation Agreement. |
E | Under the Implementation Agreement, HeartWare International has agreed to take all necessary steps to implement and complete the Option Scheme as soon as is reasonably practicable, including executing this document and providing the Option Scheme Consideration. |
F | HeartWare International is entering into this document for the purpose of covenanting in favour of Scheme Optionholders to perform its obligations under the Implementation Agreement and the Option Scheme. |
1 | CONDITIONS AND TERMINATION |
1.1 | HeartWare International’s obligations under clause 2 are subject to the Option Scheme becoming Effective. |
1.2 | HeartWare International’s obligations under this document will automatically terminate and the terms of this document will be of no further force or effect if: |
1.2.1 | the Implementation Agreement is terminated in accordance with its terms; or |
2.2 | the Option Scheme does not become Effective on or before the Sunset Date, |
unless HeartWare International and the Company otherwise agree in accordance with the Implementation Agreement. |
Consequences of termination |
1.3 | If this document is terminated under clause 1.2, then, in addition and without prejudice to any other rights, powers or remedies available to it: |
1.3.1 | HeartWare International is released from its obligations to further perform this document except those obligations under clause 6.1; and |
1.3.2 | Scheme Optionholders retain the rights they have against HeartWare International in respect of any breach of this document which occurs before it is terminated. |
2 | PROVISION OF OPTION SCHEME CONSIDERATION |
Compliance with Option Scheme obligations generally |
2.1 | HeartWare International will comply with its obligations under the Implementation Agreement and do all acts and things as may be necessary or desirable on its part to perform the acts contemplated of it under the Option Scheme. |
Provision of Option Scheme Consideration |
2.2 | Subject to clause 1, in consideration for the Scheme Optionholders agreeing to the cancellation of their Scheme Options, HeartWare International, will on the Implementation Date, issue to each Scheme Optionholder the Option Scheme Consideration in accordance with clause 4 of the Option Scheme. |
1.
Table of Contents
3 | REPRESENTATIONS AND WARRANTIES |
3.1 | HeartWare International represents and warrants that: |
3.1.1 | it is a corporation validly existing under the laws of its place of registration; |
3.1.2 | it has the corporate power to enter into and perform its obligations under this document and to carry out the transactions contemplated by this document; |
3.1.3 | it has taken all necessary corporate action to authorise the entry into this document and has taken or will take all necessary corporate action to authorise the performance of this document and to carry out the transactions contemplated by this document; and |
3.1.4 | this document is valid and binding upon it and enforceable against it in accordance with its terms. |
4 | CONTINUING OBLIGATIONS |
4.1 | This document is irrevocable and, subject to clause 1, remains in full force and effect until: |
4.1.1 | HeartWare International has fully performed its obligations under this document; or | ||
4.1.2 | the earlier termination of this document under clause 1.2. |
5 | NOTICES |
5.1 | Any notice, demand, consent or other communication (aNotice) given or made under this document: |
5.1.1 | must be in writing and signed by a person duly authorised by the sender; |
5.1.2 | must be delivered to the intended recipient by prepaid post or by hand or fax to the address or fax number below or the address (being an address in Australia) or fax number last notified by the intended recipient to the sender: |
HeartWare International | ||||
Address: | 14000–14050 NW 57th Court, Miami Lakes, FL USA 33014 | |||
Fax: | +1 305 818 4111 | |||
Attention: | David McIntyre |
5.1.3 | will be taken to be duly given or made: |
(a) | in the case of delivery in person, when delivered; |
(b) | in the case of delivery by post, two Business Days after the date of posting (if posted to an address in the same country); and |
(c) | in the case of fax, on receipt by the sender of a transmission control report from the dispatching machine showing the relevant number of pages and the correct destination fax machine number or name of recipient and indicating that the transmission has been made without error, |
but if the result is that a Notice would be taken to be given or made on a day that is not a Business Day in the place to which the Notice is sent or is later than 4.00pm (local time) it will be taken to have been duly given or made at the commencement of business on the next Business Day in that place. |
6 | GENERAL |
Stamp duty |
6.1 | HeartWare International will: |
6.1.1 | pay all stamp duty (including fines, penalties and interest) in respect of this document, the performance of this document and each transaction effected by or made under this document; and |
6.1.2 | indemnify each Scheme Optionholder against any liability arising from failure to comply with clause 6.1.1. |
Waiver |
6.2 | Waiver of any right arising from a breach of this document or of any right, power, authority, discretion or remedy arising upon default under this document must be in writing and signed by the party granting the waiver. |
6.3 | A failure or delay in exercise, or partial exercise, of: |
6.3.1 | a right arising from a breach of this document; or | ||
6.3.2 | a right, power, authority, discretion or remedy created or arising upon default under this document, |
does not result in a waiver of that right, power, authority, discretion or remedy. |
2.
Table of Contents
6.4 | A party is not entitled to rely on a delay in the exercise or non-exercise of a right, power, authority, discretion or remedy arising from a breach of this document or on a default under this document as constituting a waiver of that right, power, authority, discretion or remedy. |
6.5 | A party may not rely on any conduct of another party as a defence to exercise of a right, power, authority, discretion or remedy by that other party. |
Variation |
6.6 | A provision of this document may not be amended or varied unless the amendment or variation is agreed to in writing by the Company and the Court indicates that the amendment or variation would not of itself preclude approval of the Option Scheme in which event HeartWare International will enter into a further deed poll in favour of each Scheme Optionholder giving effect to the amendment or variation. |
Rights cumulative |
6.7 | The rights, powers and remedies of HeartWare International and of each Scheme Optionholder under this document are cumulative and do not exclude any other rights, powers or remedies provided by law independently of this document. |
Assignment |
6.8 | The rights and obligations of HeartWare International and of each Scheme Optionholder under this document are personal and must not be assigned, encumbered or otherwise dealt with at law or in equity. |
Further assurances |
6.9 | HeartWare International will, at its own expense, execute all deeds and other documents and do all acts and things as may be necessary or desirable to give full effect to this document. |
7 | GOVERNING LAW AND JURISDICTION |
7.1 | This document is governed by the laws of New South Wales. HeartWare International irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of New South Wales. |
8 | DEFINITIONS AND INTERPRETATION |
Definitions |
8.1 | Terms that are not defined in this document and that are defined in the Implementation Agreement or the Option Scheme have the same meaning in this document, unless the context makes it clear that a definition is not intended to apply. |
Interpretation |
8.2 | Clause 8.2 of the Option Scheme applies to the interpretation of this document except that references to ‘this Option Scheme’ in that clause are to be read as references to ‘this document’. |
Nature of Deed Poll |
8.3 | HeartWare International acknowledges that this document may be relied on and enforced by any Scheme Optionholder in accordance with its terms even though the Scheme Optionholders are not party to it. |
Signature of director | Signature of director/company secretary | |
Name of director (print) | Name of director/company secretary (print) |
3.
Table of Contents
HeartWare International, Inc
in favour of each Scheme Performance Rights Holder
228 | ||||
228 | ||||
228 | ||||
228 | ||||
228 | ||||
228 | ||||
228 | ||||
228 | ||||
228 | ||||
228 | ||||
229 | ||||
229 | ||||
229 | ||||
229 | ||||
229 | ||||
229 | ||||
230 | ||||
230 | ||||
230 | ||||
230 | ||||
230 | ||||
230 | ||||
230 | ||||
230 | ||||
230 | ||||
230 |
Table of Contents
A | The Company’s board considers that it is in the interests of the Company that Performance Rights Holders be given the opportunity to consider and, if thought fit, approve the Performance Rights Scheme. | |
B | Accordingly, the Company’s board has resolved that the Company should propose the Performance Rights Scheme. | |
C | The effect of the Performance Rights Scheme will be that all of the Scheme Performance Rights will be cancelled in consideration for the issue of Restricted Stock Units by HeartWare International to such Scheme Performance Rights Holders. | |
D | On 5 August 2008, HeartWare International and the Company entered into an Implementation Agreement. | |
E | Under the Implementation Agreement, HeartWare International has agreed to take all necessary steps to implement and complete the Performance Rights Scheme as soon as is reasonably practicable, including executing this document and providing the Performance Rights Scheme Consideration. | |
F | HeartWare International is entering into this document for the purpose of covenanting in favour of Scheme Performance Rights Holders to perform its obligations under the Implementation Agreement and the Performance Rights Scheme. |
1 | CONDITIONS AND TERMINATION |
Conditions precedent |
1.1 | HeartWare International’s obligations under clause 2 are subject to the Performance Rights Scheme becoming Effective. |
Termination |
1.2 | HeartWare International’s obligations under this document will automatically terminate and the terms of this document will be of no further force or effect if: |
1.2.1 | the Implementation Agreement is terminated in accordance with its terms; or | ||
1.2.2 | the Performance Rights Scheme does not become Effective on or before the Sunset Date, | ||
unless HeartWare International and the Company otherwise agree in accordance with the Implementation Agreement. |
Consequences of termination |
1.3 | If this document is terminated under clause 1.2, then, in addition and without prejudice to any other rights, powers or remedies available to it: |
1.3.1 | HeartWare International is released from its obligations to further perform this document except those obligations under clause 6.1; and | ||
1.3.2 | Scheme Performance Rights Holders retain the rights they have against HeartWare International in respect of any breach of this document which occurs before it is terminated. |
2 | PROVISION OF PERFORMANCE RIGHTS SCHEME CONSIDERATION |
Compliance with Performance Rights Scheme obligations generally | ||
2.1 | HeartWare International will comply with its obligations under the Implementation Agreement and do all acts and things as may be necessary or desirable on its part to perform the acts contemplated of it under the Performance Rights Scheme. |
Provision of Performance Rights Scheme Consideration | ||
2.2 | Subject to clause 1, in consideration for Scheme Performance Rights Holders agreeing to the cancellation of their Performance Rights, HeartWare International will, on the Implementation Date, issue to each Scheme Performance Rights Holder, the Performance Rights Scheme Consideration in accordance with clause 4 of the Performance Rights Scheme. |
1.
Table of Contents
3 | REPRESENTATIONS AND WARRANTIES | |
3.1 | HeartWare International represents and warrants that: |
3.1.1 | it is a corporation validly existing under the laws of its place of registration; |
3.1.2 | it has the corporate power to enter into and perform its obligations under this document and to carry out the transactions contemplated by this document; |
3.1.3 | it has taken all necessary corporate action to authorise the entry into this document and has taken or will take all necessary corporate action to authorise the performance of this document and to carry out the transactions contemplated by this document; and |
3.1.4 | this document is valid and binding upon it and enforceable against it in accordance with its terms. |
4 | CONTINUING OBLIGATIONS | |
4.1 | This document is irrevocable and, subject to clause 1, remains in full force and effect until: |
4.1.1 | HeartWare International has fully performed its obligations under this document; or | ||
4.1.2 | the earlier termination of this document under clause 1.2. |
5 | NOTICES | |
5.1 | Any notice, demand, consent or other communication (aNotice) given or made under this document: |
5.1.1 | must be in writing and signed by a person duly authorised by the sender; | ||
5.1.2 | must be delivered to the intended recipient by prepaid post or by hand or fax to the address or fax number below or the address (being an address in Australia) or fax number last notified by the intended recipient to the sender: |
HeartWare International | ||||
Address: | 14000–14050 NW 57th Court, Miami Lakes, FL USA 33014 | |||
Fax: | +1 305 818 4111 | |||
Attention: | David McIntyre |
5.1.3 | will be taken to be duly given or made: |
(a) | in the case of delivery in person, when delivered; |
(b) | in the case of delivery by post, two Business Days after the date of posting (if posted to an address in the same country); and |
(c) | in the case of fax, on receipt by the sender of a transmission control report from the dispatching machine showing the relevant number of pages and the correct destination fax machine number or name of recipient and indicating that the transmission has been made without error, |
but if the result is that a Notice would be taken to be given or made on a day that is not a Business Day in the place to which the Notice is sent or is later than 4.00pm (local time) it will be taken to have been duly given or made at the commencement of business on the next Business Day in that place. |
6 | GENERAL |
Stamp duty | ||
6.1 | HeartWare International will: |
6.1.1 | pay all stamp duty (including fines, penalties and interest) in respect of this document, the performance of this document and each transaction effected by or made under this document; and |
6.1.2 | indemnify each Scheme Performance Rights Holder against any liability arising from failure to comply with clause 6.1.1. |
Waiver |
6.2 | Waiver of any right arising from a breach of this document or of any right, power, authority, discretion or remedy arising upon default under this document must be in writing and signed by the party granting the waiver. | |
6.3 | A failure or delay in exercise, or partial exercise, of: |
6.3.1 | a right arising from a breach of this document; or | ||
6.3.2 | a right, power, authority, discretion or remedy created or arising upon default under this document, does not result in a waiver of that right, power, authority, discretion or remedy. |
2.
Table of Contents
6.4 | A party is not entitled to rely on a delay in the exercise or non-exercise of a right, power, authority, discretion or remedy arising from a breach of this document or on a default under this document as constituting a waiver of that right, power, authority, discretion or remedy. |
6.5 | A party may not rely on any conduct of another party as a defence to exercise of a right, power, authority, discretion or remedy by that other party. |
Variation |
6.6 | A provision of this document may not be amended or varied unless the amendment or variation is agreed to in writing by the company and the Court indicates that the amendment or variation would not of itself preclude approval of the Performance Rights Scheme in which event HeartWare International will enter into a further deed poll in favour of each Scheme Performance Rights Holder giving effect to the amendment or variation. |
Rights cumulative |
6.7 | The rights, powers and remedies of HeartWare International and of each Scheme Performance Rights Holder under this document are cumulative and do not exclude any other rights, powers or remedies provided by law independently of this document. |
Assignment |
6.8 | The rights and obligations of HeartWare International and of each Scheme Performance Rights Holder under this document are personal and must not be assigned, encumbered or otherwise dealt with at law or in equity. |
Further assurances |
6.9 | HeartWare International will, at its own expense, execute all deeds and other documents and do all acts and things as may be necessary or desirable to give full effect to this document. |
7 | GOVERNING LAW AND JURISDICTION |
7.1 | This document is governed by the laws of New South Wales. HeartWare International irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of New South Wales. |
8 | DEFINITIONS AND INTERPRETATION |
Definitions |
8.1 | Terms that are not defined in this document and that are defined in the Implementation Agreement or the Performance Rights Scheme have the same meaning in this document, unless the context makes it clear that a definition is not intended to apply. |
Interpretation |
8.2 | Clause 8.2 of the Performance Rights Scheme applies to the interpretation of this document except that references to ‘this Performance Rights Scheme’ in that clause are to be read as references to ‘this document’. |
Nature of Deed Poll |
8.3 | HeartWare International acknowledges that this document may be relied on and enforced by any Scheme Performance Rights Holder in accordance with its terms even though the Scheme Performance Rights Holders are not party to it. |
Signature of director | Signature of director/company secretary | |
Name of director (print) | Name of director/company secretary (print) |
3.
Table of Contents
Employee Stock Option Plan
Adopted by the Board on 5 August 2008
232 | ||||
232 | ||||
232 | ||||
232 | ||||
232 | ||||
232 | ||||
232 | ||||
232 | ||||
232 | ||||
232 | ||||
232 | ||||
233 | ||||
233 | ||||
233 | ||||
233 | ||||
233 | ||||
233 | ||||
233 | ||||
235 |
Table of Contents
1 | GRANT OF OPTIONS |
General Eligibility |
1.1 | At any time and from time to time, the Board may issue Options to Participants (or to a nominated Associate as the Participant directs) having regard, in each case, to: |
1.1.1 | the contribution to the Company or an Associated Body Corporate which has been made by the Participant; |
1.1.2 | the period of employment of the Participant with the Company or an Associated Body Corporate, including (but not limited to) the years of service by that Participant; |
1.1.3 | the potential contribution of the Participant to the Company or an Associated Body Corporate; and |
1.1.4 | any other matters which the Board considers in its absolute discretion to be relevant. |
Price of Options |
1.2 | Options are to be issued free to Participants. |
Issue of Options |
1.3 | Each Option must be issued on the terms of these Rules and each Participant will be taken to have agreed to be bound by these Rules on acceptance by that Participant of an Option. |
2 | MAXIMUM NUMBER OF OPTIONS |
Maximum number of Options to be issued under the Plan | ||
2.1 | The aggregate number of Options in respect of which Invitations may be made on any date under the Plan when added to: |
2.1.1 | the number of Shares allotted under any employee share plan for the benefit of employees during the five years preceding the date on which Invitations are made; and |
2.1.2 | the number of Shares which may be acquired by exercise of options granted under the Plan (or any Company option plan for the benefit of employees), shall not exceed 11% of the number of Shares on issue on the day preceding such date. |
Maximum number of Options to be issued to a Participant under the Plan |
2.2 | The number of Options which may be allotted under the Plan to any one Participant shall be restricted in any case where the result of accepting an Invitation would cause that Participant (legally or beneficially) to be able to cast more than 5% of the votes able to be cast at a general meeting of the Company. The Board may in its discretion from time to time determine the extent of the restriction. |
3 | OPTIONS TERMS |
Essential terms |
3.1 | An Option must be granted on the Essential Terms and may be granted on such other additional terms, conditions or restrictions, not being inconsistent with these Rules or the Essential Terms, as the Board determines either generally or in relation to particular Options. |
Variation of terms |
3.2 | Despite anything to the contrary in these Rules, to the full extent permissible by Applicable Law, the Board may from time to time vary the Exercise Price, the period in which an Option may be exercised and the conditions to which an Option is subject or any of them. |
4 | OVERRIDING RESTRICTIONS ON ISSUE AND EXERCISE |
4.1 | Notwithstanding anything else in these Rules or in the terms of any Option, an Option may not be offered, issued, or exercised if to do so: |
4.1.1 | would contravene any Applicable Law; or |
4.1.2 | would contravene the local laws of, or the rules or requirements of any regulatory or statutory body in, a Participant’s country of residence or in the opinion of the Board compliance with those local laws, rules or requirements would be impractical or result in any unnecessary or unreasonable expense in the circumstances. |
1.
Table of Contents
5 | ADMINISTRATION OF THE PLAN |
Delegation | ||
5.1 | The Plan shall be in all respects administered under the directions of the Board or a committee of the Board. |
5.2 | The Board or committee may appoint, for the proper administration and management of the Plan, such secretarial or executives or staff or other persons as it considers desirable and may delegate to those persons such powers and authorities as may be necessary or desirable for the administration and management of the Plan. |
5.3 | Unless otherwise determined by the Board or a committee of the Board, the Company’s share registry will maintain a separate register of Options issued under the Plan. |
Procedures |
5.4 | Subject to these Rules, the Board may make such regulations and establish such procedures for the administration and management of the Plan as it considers appropriate. |
Disputes |
5.5 | If any disagreement or dispute with respect to the interpretation of these Rules or the terms of grant of any Option arises, such disagreement or dispute shall be referred to the Board and the decision of the Board shall, in the absence of manifest error, be final and binding upon all parties. |
Covenant or exercise of discretion |
5.6 | The Company or an Associated Body Corporate or the Board may, subject to any express provision in these Rules or the Applicable Law to the contrary: |
5.6.1 | do any act, matter or thing or make any decision, determination or resolution; or | ||
5.6.2 | conditionally or unconditionally give or withhold any consent or approval, |
as contemplated by these Rules in its absolute uncontrolled and unexaminable discretion and is not obliged to give reasons for so doing. |
6 | DEFINITION AND INTERPRETATION |
Definition | ||
6.1 | In these Rules, unless the contrary intention appears: | |
Applicable Lawmeans any one or more or all, as the context requires, of: |
(a) | the Corporations Act and any regulations to it; |
(b) | the Listing Rules; |
(c) | the charter of the Company; |
(d) | any practice note, policy statement, class order, declaration, guideline, policy or procedure pursuant to the provisions of which any of the SEC, ASIC or ASX is authorised or entitled to regulate, implement or enforce, either directly or indirectly, the provisions of any of the foregoing statutes, regulations or rules or any conduct of any duly authorised person, pursuant to any of the above mentioned statutes, regulations or rules; |
(e) | the United States Securities Act of 1933, as amended (including the rules thereunder), Exchange Act and any other applicable United States federal or state law, including without limitation the Delaware General Corporation Law. |
ASICmeans the Australian Securities and Investments Commission. |
Associatehas the same meaning as in section 139GE of the Income Tax Assessment Act, except that “taxpayer” shall be construed as a reference to “Participant”. |
Associated Body Corporatemeans any: |
(a) | related body corporate of the Company; and |
(b) | entity designated by the Board, in its discretion, to be an associated company for the purposes of the Plan. |
ASXmeans, as the context requires: |
(a) | ASX Limited ACN 008 624 691 and any successor body corporate; or |
(b) | the financial market operated by the body corporate referred to in paragraph (a). |
2.
Table of Contents
Boardmeans all or some of the Directors of the Company acting as a board. | ||
Business Daymeans any day that is not Saturday, Sunday or public holiday in Framingham, Massachusetts. | ||
CDIsmeans CHESS Depositary Interests. | ||
Change of Control Eventmeans: |
(a) | a change of Ownership of the Company; |
(b) | a change of Effective Control of the Company; |
(c) | a change of Ownership of Assets of the Company; or |
(d) | a liquidation or dissolution of the Company |
as described in these Rules and construed consistent with Section 409A of the Code. For the purposes of a Change of Control Event, fair market value is determined by the Board, and share ownership is determined under section 318(a) of the Code. A Change of Control Event excludes any transfer to a related person as described in Section 409A of the Code or a public offering of the Shares. | ||
Change of Effective Controlof the Company means the date on which a majority of members of the Company’s full board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s full board of directors before the date of the appointment or election. | ||
Change of the Ownership of Assets of the Companymeans the date on which any one person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12 month period ending on the date of the most recent acquisition by such Person or Persons), assets from the Company that have a total gross fair market value equal to or more than 51% of the total gross fair market value of all of the assets of the Company immediately before such acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. | ||
Change of Ownership of the Companymeans the date on which any one Person acquires, or Persons Acting as a Group acquire, ownership of Shares that, together with the Shares held by such Person or Persons Acting as Group, constitutes more than 50% of the total Fair Market Value or total voting power of the Shares of the Company. However, if any one Person is, or Persons Acting as a Group are, considered to own more than 50% of the total fair market value or total voting power of the Shares of the Company, the acquisition of additional Shares by the same Person or Persons Acting as a Group is not considered to cause a Change of Ownership of the Company or to cause a Change of Effective Control of the Company. An increase in the percentage of Shares owned by any one Person, or Persons Acting as a Group, as a result of a transaction in which the Company acquires its Shares in exchange for property will be treated as an acquisition of Shares. | ||
Codemeans the United States Internal Revenue Code of 1986, as amended. | ||
Companymeans HeartWare International, Inc, a corporation incorporated in Delaware, USA. | ||
Corporations Actmeans theCorporations Act 2001(Cth). | ||
Essential Termsmeans the terms of issue of Options set out in the schedule. | ||
Exchange Actmeans the United States Securities Exchange Act of 1934, as amended, including the rules promulgated thereunder. | ||
Exercise Pricemeans in relation to a Share to be issued upon exercise of an Option the issue price of that Share as determined in accordance with clause 1.2 of the Essential Terms. | ||
Expiry Datemeans in relation to an Option the date which is the fifth anniversary of the Issue Date or such other date reasonably determined by the Board provided that such date shall be no later than the tenth anniversary of the Issue Date. | ||
Fair Market Valuemeans, with respect to the Shares, as at any date: |
(a) | if the principal market for the Shares (as determined by the Board if the Shares are listed or admitted to trading on more than one exchange or market) is a national securities exchange or an established securities market, the closing price per Share on that date on the principal exchange or market on which the Shares are then listed or admitted to trading or, if no sale is reported for that date, the last preceding business day on which a sale was reported; |
(b) | if the principal market for the Shares is not a national securities exchange or established securities market, the average of the highest bid and lowest asked prices for the Shares on that day as reported on a national quotation system or, if no prices are reported for that date, the last preceding business day on which prices were reported; or |
(c) | if the Shares are neither listed or admitted to trading on an established exchange or market, nor are quoted by a national quotation system, the value determined by the Board in good faith. |
3.
Table of Contents
With respect to property other than Shares, fair market value means the value of the property determined by such methods or procedures to be established from time to time by the Board in accordance with section 409A of the Code. | ||
Invitationmeans an invitation to a Participant pursuant to the Plan Rules to acquire Options. | ||
Issue Datemeans the date determined by the Board as the date on which an Option was granted. | ||
Listing Rulesmeans, while the Company is admitted to the official list of the ASX, the official listing rules of the ASX and any other rules of the ASX that are applicable. In the event that the Shares become listed for trading on any other securities exchange or market, the term “Listing Rules” also shall mean the applicable rules of such exchange or market. | ||
Optionmeans an option issued under this Plan to subscribe for Shares. | ||
Participantmeans an employee (including an executive or non executive Director) or a full-time or part-time employee of the Company or an Associated Body Corporate, who is invited by the Board to participate in the Plan and is issued Options under the Plan and includes a nominated Associate of that Participant. | ||
Personmeans any individual, entity or group within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act, other than employee benefit plans sponsored or maintained by the Company and by entities controlled by the Company or an underwriter of the Shares of the Company in a registered public offering. | ||
Persons Acting as a Groupmeans persons who are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of shares, or similar business transaction with the corporation. If a Person owns shares in both corporations that enter into a merger, consolidation, purchase or acquisition of shares, or similar transaction, such shareholder is considered to be a Person Acting as a Group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Persons will not be considered to be Persons Acting as a Group solely because they purchase assets of the same corporation at the same time or purchase or own shares of the same corporation at the same time, or as a result of the same public offering. | ||
Planmeans this Employee Stock Option Plan established and operated in accordance with these Rules. | ||
Rulesmeans these Rules as altered or added to from time to time and a reference to a provision of these Rules is a reference to that provision as altered or added to from time to time, and for the avoidance of doubt, includes the Essential Terms. | ||
Schedulemeans a schedule to, and forming part of, these Rules. | ||
SECmeans the United States Securities and Exchange Commission. | ||
Sharemeans a fully paid share in the common stock of the Company, par value US$.001 per share in the form of either common stock or CDIs. |
6.2 | For the purposes of these Rules, unless the contrary intention appears: |
6.2.1 | the singular includes the plural and vice-versa; 6.2.2 words denoting a gender include all genders; | ||
6.2.3 | if a word or phrase is defined cognate words and phrases have corresponding definitions; | ||
6.2.4 | a reference to a statute, ordinance, code or other law includes regulations and other statutory instruments under it and consolidations, amendments, re-enactments or replacements or any of them; and | ||
6.2.5 | any power, authority or discretion vested in the Company or the Board may be exercised at any time and from time to time and unless expressed otherwise, in their absolute discretion. |
4.
Table of Contents
1 | OPTIONS | |
1.2 | Entitlement to Shares | |
Each Option entitles the holder to subscribe for and be issued, credited as fully paid, the number of Shares specified in the Option. Whilst the Company remains listed on ASX, the Participant will be entitled to elect whether to receive the Shares in the form of common stock of the Company or as CDIs. | ||
1.2 | Exercise Price | |
The Exercise Price of a Share to be issued on exercise of an Option shall be the Exercise Price as determined by the Board (in its discretion) on or before the Issue Date. | ||
1.3 | Issue of certificate | |
Subject to these Rules, the Company shall issue Shares on exercise of an Option and shall issue a certificate for Shares so issued within 10 Business Days after the date of exercise of the relevant Option. | ||
1.4 | Ranking of Shares issued on the exercise of Options | |
Shares issued on the exercise of Options will rank pari passu with all existing Shares in the capital of the Company from the date of issue of those Shares. No Participant has the rights of a Shareholder with respect to Shares until the Shares/CDIs have been issued upon the exercise of the Options. The Company shall make no adjustment for dividends, distributions, or other rights for which the record date is before the date the Shares/CDIs are issued. | ||
2 | EXERCISE OF OPTIONS | |
2.1 | Procedure for Exercise | |
Subject toclause 2.2of thisschedule, an Option is exercisable by the holder lodging with the Company Secretary: |
• | a notice of exercise of that Option in the form attached to this schedule; | ||
• | a cheque for the Exercise Price for each Share to be issued on the exercise of that Option; and | ||
• | the certificate for that Option. |
In the event of the death of a holder of Options, those Options are exercisable by the executor of the estate of the holder in the same manner as set out above. |
2.2 | Conditions relating to exercise of an Option |
(a) | An Option must be exercised (if at all) not later than its Expiry Date and, subject to thisclause 2, may only be exercised at any time after the option has been vested and before it has lapsed. |
(b) | The Board may determine (in its absolute discretion) any further conditions of exercise consistent with these Rules that apply to an Option. |
(c) | The exercise of some Options only does not affect the Participant’s right to exercise other Options at a later time. |
(d) | If the Participant exercises less than all Options represented by the certificate then the Company will cancel the certificate and issue a new certificate for the balance. |
2.3 | Vesting of Options | |
Unless the Board otherwise determines, Options issued will vest in the Option holder in the following period: |
(a) | at the end of 12 months from the date of issue of the relevant Options, 25% of the Options issued; | ||
(b) | at the end of 24 months from the date of issue of the relevant Options, 25% of the Options issued; | ||
(c) | at the end of 36 months from the date of issue of the relevant Options, 25% of the Options issued; and | ||
(d) | at the end of 48 months from the date of issue of the relevant Options, 25% of the Options issued. |
5.
Table of Contents
2.4 | Lapse of Options | |
Unless the Board otherwise determines at the time of issue of any Options that are issued on or after 29 August 2006, an Option held by a Participant will immediately lapse upon the first to occur of: |
(a) | its Expiry Date; |
(b) | the making by the Board of a determination that: |
(i) | the Participant has acted fraudulently, dishonestly or in breach of the Participant’s obligations to the Company or an Associated Body Corporate; and |
(ii) | the Option is on that account to be forfeited; |
(c) | subject toclause 2.5of thisschedule, the Participant ceasing to be employed by the Company or an Associated Body Corporate for any reason (or, in the case of an Option held by a nominated Associate, the employment of the nominating Participant is terminated); |
(d) | upon the effective time of a Change of Control Event, unless the transaction the subject of the Change of Control Event provides for the continuation or assumption of outstanding Options by the surviving or successor entity or a parent company of that entity, or for the substitution of equivalent awards, as determined in the sole discretion of the Board, of the surviving or successor entity or a parent of that entity. This is subject to the proviso that holders of Options that lapse under this Rule 2.4(d) are permitted to exercise all of their Options immediately before the Change of Control Event. |
2.5 | When a Participant is deemed to cease being an employee of the Company | |
For the purposes ofclause 2.4(c) of thisschedule, a Participant shall, unless otherwise determined by the Board at the time of issue of any Options that are issued on or after 29 August 2006, be deemed to have ceased to be employed by the Company or an Associated Body Corporate: |
(a) | on the day which is six months after the day the Participant ceases to be employed by the Company or an Associated Body Corporate by virtue of: |
(i) | the Participant’s death; or | ||
(ii) | the Participant being retrenched or made redundant by the Company or an Associated Body Corporate (other than as a direct result of the disposal or sale of the Company or Associated Body Corporate); and |
(b) | on the day which is 30 days after the Participant ceases to be employed by the Company or an Associated Body Corporate or such later date that the Board determines in its absolute discretion where the Participant ceases to be employed by virtue of: |
(i) | the Participant retiring; or |
(ii) | the Participant’s permanent illness or permanent physical or mental incapacity (as certified by a medical practitioner who is approved in writing by the Board). |
2.6 | Change of Control | |
If, in the opinion of the Board, a Change of Control Event has occurred, or is likely to occur, the Board may declare an Option to be free of any conditions of exercise and Options which are so declared may, subject toclause 2.4of thisschedule, be exercised at any time on or before such date specified by the Board, but not later than the Expiry Date and in any number. | ||
3 | TRANSFER | |
An Option is personal to the Participant to whom it was granted, and the Participant may not sell, transfer or otherwise dispose of, or make a declaration of trust in respect of, it except to an Associate of that Participant. | ||
4 | QUOTATION OF OPTIONS | |
Options will not be listed for quotation on ASX. |
6.
Table of Contents
5 | FUTURE ISSUES OF SHARES | |
5.1 | New issues |
(a) | There are no participating rights or entitlements inherent in the Options and Participants will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Options. |
(b) | However, the Company will ensure that the record date for determining entitlements to any such issue will be at least 10 Business Days after the issue is announced. |
(c) | Participants shall be afforded the opportunity to exercise all Options which they are entitled to exercise pursuant to these Rules prior to the date for determining entitlements to participate in any such issue. |
6 | RECONSTRUCTION OF CAPITAL | |
In the event of any reconstruction (including consolidation (reverse split), sub-division (stock split), split-up or similar transaction, spin-off, dividend, recapitalisation, merger or share exchange) of the issued capital of the Company prior to the expiry of any Options (other than as part of a transaction resulting in a Change of Control Event) the number of Options to which each Participant is entitled or the exercise price of his or her Options, the maximum number of grants of the Options under the Plan and the type of shares that the Participant will be entitled to or any other terms will be reconstructed in a manner determined by the Board. | ||
7 | ADVICE | |
7.1 | Company to notify Participants of any adjustment | |
The Company shall give notice to each Participant of any adjustment to the number of Shares which the Participant is entitled to subscribe for or be issued on exercise of an Option or the exercise price per Share. | ||
7.2 | Company to provide details of current market price of Shares | |
The Company will provide to a Participant upon request, within a reasonable time, either verbally or in writing, details of the current market price (in Australian dollars) of the Shares in the Company and details of the Exercise Price in relation to Options held by that Participant. | ||
8 | NOTICES | |
Notices may be given by the Company to the Participant in the manner prescribed by the by-laws of the Company for the giving of notices to members of the Company and the relevant provisions of the constitution of the Company apply with all necessary modification to notices to Participants. | ||
9 | RIGHT TO ACCOUNTS | |
Participants will be sent all reports and accounts required to be laid before members of the Company in general meeting and all notices of general meetings of members but will not have any right to attend or vote at those meetings. | ||
10 | ASSIGNMENT OF OPTIONS | |
Subject to clause 3 of this schedule, a Participant may not assign or transfer an Option. | ||
11 | COMPANY’S RIGHTS NOT WAIVED | |
11.1 | Participation does not affect the right of the Company in respect of the Participants |
(a) | The Company’s right to terminate or vary the terms of employment of any Participant shall not be prejudiced in any way by the Company or any Participant participating in the Plan or anything contained in these Rules or both. |
(b) | Further, participation in the Plan, the rights or benefits of a Participant under these Rules or the inability or restricted ability of a Participant to exercise an Option or any of them, shall not be used as grounds for granting or increasing damages in any action brought by any Participant against the Company whether in respect of any alleged wrongful dismissal or otherwise. |
(c) | Neither the Rules nor any Options create or are to be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company (or any Associated Body Corporate) and a Participant or any other person. To the extent that any Participant or other person acquires a right to receive a payment from the Company or any Associated Body Corporate with respect to an Option, that right is no greater than the right of any unsecured general creditor of the Company. |
7.
Table of Contents
11.2 | No representation as to the price of Shares |
(a) | None of the Company, its directors, officers or employees represents that the Company’s share price will attain, maintain or exceed the Exercise Price. |
(b) | A Participant who chooses to exercise any Option does so at their own risk in that they may suffer financial detriment if the Company’s share price falls. |
12 | GOVERNING LAW | |
12.1 | The Plan and these Rules shall in all respects be governed by and shall be construed in accordance with the laws of Delaware, without regard to its conflict of laws principles. | |
12.2 | Each Participant, the Company and any Associated Body Corporate irrevocably and unconditionally agrees and submits to the personal jurisdiction and venue in the federal or state courts in the districts which include Framingham, Massachusetts with respect to any suits relating to the Options. | |
13 | SEVERANCE | |
If any provision in these Rules is void, voidable by any party or illegal, it shall be read down so as to be valid and enforceable or, if it cannot be so read down, the provision (or where possible, the offending words) shall be severed from these Rules without affecting the validity, legality or enforceability of the remaining provisions (or parts of those provisions) of these Rules which shall continue in full force and effect. | ||
14 | AMENDMENT OF RULES | |
14.1 | Amendment by Board | |
Subject toclause 14.2of thisschedule, the Board may from time to time amend (including the power to revoke, add to or vary) all or any of the provisions of these Rules in any respect whatsoever, by an instrument in writing without the necessity of obtaining the prior or subsequent consent of shareholders of the Company or any Associated Body Corporate in a general meeting. | ||
14.2 | Amendment may be made retrospective | |
The Board may make any amendment to these Rules with retrospective effect as the Board may determine in good faith, providing that the Board obtains the prior approval of at least 50% of Participants who shall be adversely affected by the retrospective amendment in relation to Options previously granted to them. | ||
15 | SUSPENSION OR TERMINATION OF THE PLAN | |
The Board may suspend or terminate the Plan at any time, in which case the Company shall not make any further grants of Options under the Plan during the suspended or terminated period. However, during that period the Board shall otherwise continue to administer the Plan in accordance with these Rules until all Options have been exercised or expired. | ||
16 | TAX WITHHOLDING | |
16.1 | General Payment Requirement | |
At the time an Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Participant, by having accepted the Option, authorizes withholding from payroll or any other payment of any kind due to the Participant and otherwise agrees to make adequate provision for United States federal, state and local taxes, or other applicable non-United States taxes required by law to be withheld, if any, which arise in connection with the Option. The Company may require a Participant to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Option. If the Participant does not make such payment when requested, the Company may refuse to issue any Share or share certificate under the Plan until arrangements satisfactory to the Company for such payment have been made. | ||
16.2 | Payment with Shares | |
The Company may, in its sole discretion, permit a Participant to satisfy, in whole or in part, any withholding tax obligation which may arise in connection with an Option either by electing to have the Company withhold from the Shares to be issued upon exercise that number of Shares, or by electing to deliver to the Company already-owned Shares, in either case having a fair market value equal to no more than the amount necessary to satisfy the statutory minimum withholding amount due. |
8.
Table of Contents
17 | COMPLIANCE WITH SECURITIES LAWS, LISTING AND REGISTRATION | |
If at any time the Board determines that the delivery of Shares under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or United States federal or state securities laws, or applicable non-United States securities laws, the right to exercise an Option or receive Shares pursuant to an Option shall be suspended until the Board determines that such delivery is lawful. If at any time the Board determines that the delivery of Shares under the Plan is or may violate the rules of the securities exchange on which the Shares are then listed for trade, the right to exercise an Option or receive Shares pursuant to an Option shall be suspended until the Board determines that such delivery would not violate such rules. The Company shall have no obligation to effect any registration or qualification of the Shares under United States federal or state laws, or applicable non-United States laws. | ||
The Company may require that a Participant, as a condition to exercise of an Option, and as a condition to the delivery of any share certificate, make such written representations (including representations to the effect that such person will not dispose of the Shares so acquired in violation of United States federal or state securities laws, or applicable non-United States securities laws) and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Shares in compliance with applicable United States federal or state securities laws, or applicable non-United States securities laws. The stock certificates for any Shares issued pursuant to this Plan may bear a legend restricting transferability of the Shares unless such Shares are registered or an exemption from registration is available under the Securities Act of 1933, as amended, and applicable state or applicable non-United States securities laws. |
240 | HEARTWARE LIMITEDINFORMATION MEMORANDUM |
9.
Table of Contents
HeartWare International, Inc
14000–14050 NW 57th Court
MIAMI LAKES FL 33014
UNITED STATES OF AMERICA
Signedby
in the presence of:
Executedfor
in accordance with section [ ] of the
[ ] by:
Company Secretary/ | Director | |
Name of Company Secretary/Director (print) | Name of Director (print) |
10.
Table of Contents
Restricted Stock Unit Plan – Plan Rules
Adopted by the Board on 5 August 2008
Table of contents | ||||
243 | ||||
243 | ||||
243 | ||||
243 | ||||
243 | ||||
243 | ||||
244 | ||||
245 | ||||
246 | ||||
246 | ||||
247 | ||||
247 | ||||
248 | ||||
248 | ||||
248 | ||||
249 | ||||
249 | ||||
249 | ||||
249 | ||||
249 | ||||
249 | ||||
250 | ||||
250 | ||||
250 | ||||
250 | ||||
250 | ||||
251 | ||||
251 | ||||
253 |
Table of Contents
1 | INTRODUCTION |
1.1 | The Plan is called the ‘HeartWare International, Inc. Restricted Stock Unit Plan’. | |
1.2 | The purpose of the Plan is to provide Eligible Participants with an opportunity to share in the growth of the Company and to assist the Group in retaining and attracting highly skilled and experienced employees. |
2 | THE PLAN |
2.1 | The Plan will commence on the date determined by the Board. | |
2.2 | The Plan will operate in accordance with the terms and conditions set out in these Rules, which bind each Group Company and each Participant. |
3 | GRANT OF RESTRICTED STOCK UNITS |
3.1 | The Company may grant Restricted Stock Units to Eligible Participants on any such date and with such Performance Conditions (if any) as the Board determines. The number of Restricted Stock Units which an Eligible Participant is granted will be determined by the Board. | |
3.2 | The Restricted Stock Units will be granted on the terms of this Plan and may be subject to additional terms and conditions imposed by the Board. | |
3.3 | Restricted Stock Units do not carry any voting rights. | |
3.4 | Subject to Rule 7.4, Restricted Stock Units are not transferable. | |
3.5 | Subject to these Rules, each Restricted Stock Unit entitles the Participant to one Share upon vesting. Whilst the Company remains listed on ASX, the Participant will be entitled to elect whether to receive the Shares in the form of common stock of the Company or as CDIs. |
4 | INVITATION TO APPLY FOR RESTRICTED STOCK UNITS |
4.1 | The Board may from time to time give an Eligible Participant notice inviting the Eligible Participant to apply for Restricted Stock Units. The notice must specify: |
4.1.1 | the name of the Eligible Participant; | ||
4.1.2 | the number of Restricted Stock Units for which the Eligible Participant is invited to apply; | ||
4.1.3 | the Exercise Price (if any) of, and the Performance Conditions (if any) applicable to, each Restricted Stock Unit; | ||
4.1.4 | the Performance Period for each Restricted Stock Unit; | ||
4.1.5 | the Exercise Period for each Restricted Stock Unit; | ||
4.1.6 | the closing date for applying for each Restricted Stock Unit; and | ||
4.1.7 | how the Eligible Participant is to apply for the Restricted Stock Units. |
5 | APPLYING FOR RESTRICTED STOCK UNITS |
5.1 | An Eligible Participant who wishes to apply for Restricted Stock Units must on or before the closing date specified in the invitation made under Rule 4.1 (or any later date that the Board may allow) do what is specified in the invitation. | |
5.2 | Where the Eligible Participant complies with Rule 4.1, the Board may grant the relevant Restricted Stock Units to the Eligible Participant. | |
5.3 | The Company will issue to each Eligible Participant a Certificate in respect of any Restricted Stock Units granted to the Eligible Participant. |
6 | VESTING OF RESTRICTED STOCK UNITS |
6.1 | Subject to Rules 6.2 and 6.3, a Restricted Stock Unit (which has not otherwise lapsed under Rule 9) that has been granted to a Participant will not vest in that Participant unless and until the Performance Conditions (if any) applicable to that Restricted Stock Unit have been satisfied. | |
6.2 | Notwithstanding Rule 6.1, the Board may, in its absolute discretion and subject to any further conditions decided by the Board (including the relevant Exercise Period), permit the vesting in the relevant Participant of any or all of the Restricted Stock Units that were granted to that Participant in accordance with this Plan where a Performance Condition in respect of the Restricted Stock Units is not satisfied, if the Board believes that it is in the Company’s best interests to do so. |
1.
Table of Contents
6.3 | Notwithstanding Rule 6.1, all Restricted Stock Units granted to a Participant in accordance with this Plan will immediately vest upon: |
6.3.1 | the occurrence of a Change of Control Event; | ||
6.3.2 | the death of the Participant; or | ||
6.3.3 | the Participant ceasing to be employed by a Group Company by reason of disability or retrenchment of the Participant. |
6.4 | Vesting requires a declaration by the Company that a Restricted Stock Unit has vested, but does not require any action or election by the Participant. The Board will advise the Participant in writing when a Restricted Stock Unit has vested. |
7 | EXERCISE OF RESTRICTED STOCK UNITS |
7.1 | Upon receiving notice from the Board under Rule 6.4 that a Restricted Stock Unit has vested: |
7.1.1 | a Participant who was situated outside Australia at the time of receipt of the invitation to apply for Restricted Stock Units and was at that time ordinarily resident outside Australia or who is or becomes during the term of the Restricted Stock Units a US Taxpayer will be deemed to have immediately validly exercised all vested Restricted Stock Units to the extent that such Restricted Stock Units do not require payment of an Exercise Price; and | ||
7.1.2 | any other Participant will be entitled to exercise the Restricted Stock Unit so vested provided that the following conditions are satisfied: |
(a) | the Restricted Stock Unit has not lapsed under Rule 9; | ||
(b) | the Restricted Stock Unit is exercised during the Exercise Period for that Restricted Stock Unit and the requirements of Rule 7.2 have been complied with during that Exercise Period; | ||
(c) | subject to Rules 6.2 and 6.3, the relevant Performance Conditions (if any) for the Restricted Stock Unit have been satisfied; and | ||
(d) | the Participant exercises either: |
(A) | the Restricted Stock Units in multiples of 100 or such other multiple that the Board determines and notifies to the Participant; or | ||
(B) | all of the Restricted Stock Units granted to the Participant that the Participant is then entitled to exercise. |
7.2 | Subject to Rule 7.1.1, to exercise a vested Restricted Stock Unit the Participant must lodge a signed exercise notice (in the form approved by the Board), together with the Exercise Price (if any) specified in the invitation made under Rule 4.1, in respect of that Restricted Stock Unit with the secretary of the Company or such other person as the Board determines. | |
7.3 | As soon as practicable, but in no event later than 30 days, after a Restricted Stock Unit has been validly exercised, the Company must allot and issue to the Participant (or, as applicable, the Participant’s legal personal representative in the case of the Participant’s death) the Shares the subject of the Restricted Stock Unit. Transfer or delivery of Shares to the Participant (or, as applicable, the Participant’s legal personal representative in the case of the Participant’s death) upon or after issuance is subject to the Participant (or his or her legal representative) satisfying any Tax withholding or payment obligations that arise in connection with such exercise. | |
7.4 | If a Participant dies during the Exercise Period for a Restricted Stock Unit held by that Participant, the Restricted Stock Unit may be exercised by the legal personal representative of the Participant in accordance with this Rule 7 and, to the extent necessary for this to occur, the Restricted Stock Unit may be transferred to the legal personal representative and in such circumstances will not lapse and the exercise rights will continue to apply as if the Participant had not died. |
2.
Table of Contents
8 | RESTRICTION ON DISPOSAL OF SHARES |
8.1 | All Shares acquired pursuant to an exercise of Restricted Stock Units are subject to the restrictions set out in this Rule 8, unless the holder of the Shares: |
8.1.1 | was situated at the time of receipt of the invitation to apply for Restricted Stock Units outside Australia and was at that time ordinarily resident outside Australia; or | ||
8.1.2 | has at the time of exercise of the Restricted Stock Unit already ceased employment with the Group. |
8.2 | Any Restricted Share must not be disposed of or dealt with in any way by the Participant until the earlier of: |
8.2.1 | the expiration of the period of one year commencing at the time of acquisition of the Restricted Share by the Participant; | ||
8.2.2 | the date on which a Participant ceases to be employed by a Group Company; | ||
8.2.3 | the tenth anniversary of the Grant Date of the Restricted Stock Unit pursuant to which the Participant acquired the relevant Restricted Share; | ||
8.2.4 | the date on which a Change of Control Event occurs; | ||
8.2.5 | the day immediately following the date on which this Plan is suspended or terminated in accordance with these Rules; | ||
8.2.6 | a date otherwise determined by the Board, in its sole discretion, in respect of that Participant; and | ||
8.2.7 | the date on which any withdrawal request made under Rule 8.6 is approved by the Board. |
8.3 | The Company may make such arrangements as it considers necessary to enforce the restriction on disposal of Restricted Shares and Participants must agree to such arrangements. | |
8.4 | Without limiting Rule 8.3, and subject to the Listing Rules, the Company may procure that an ASX holding lock be put on CDIs representing Restricted Shares while they are subject to the restriction on disposal under Rule 8.2. | |
8.5 | Subject to the Listing Rules, the Company must not register any paper transfer that it receives in respect of any Restricted Shares. | |
8.6 | A holder of Restricted Shares may apply in writing to the Board at any time to withdraw all or a portion of those Restricted Shares from the Plan and, subject to Rules 8.7 and 8.9, the Board must not unreasonably refuse to accept such an application. | |
8.7 | The Board may in its absolute discretion refuse to accept an application to withdraw any Restricted Shares from the Plan: |
8.7.1 | if any debts owed by the holder to any Group Company have not been repaid or arrangements have not been made for repayment; or | ||
8.7.2 | where any of the circumstances set out in Rule 9.1.4 have occurred, unless the Group has been recompensed for any loss or damage suffered in those circumstances or arrangements satisfactory to the Board have been made. |
8.8 | Without limiting its powers, the Board may determine that the holder of Restricted Shares is to sell all or any of those Restricted Shares and apply the proceeds to repay any debt referred to in Rule 8.7.1 and/or to recompense the Group for any loss suffered as a result of any of the circumstances referred to in Rule 8.7.2 and pay any balance to the holder. |
8.9 | A holder of Restricted Shares must not lodge a withdrawal application in respect of any Restricted Shares if it would breach or may result in a breach of the insider trading provisions of Applicable Law and any approval of the withdrawal application may be withheld or delayed by the Board where, in its reasonable opinion, it forms the view that such approval is not appropriate at that time. | |
8.10 | The Company is not liable and will not be held responsible to the holder of Restricted Shares for or in relation to any action taken or any inaction by the Company or the Board under Rules 8.6, 8.7 and 8.9. | |
8.11 | An application for withdrawal served under Rule 8.6 is deemed to have been accepted by the Company by the lifting of any holding lock on the relevant Restricted Shares. | |
8.12 | As soon as reasonably practicable after the restriction on disposal of a Share under Rule 8.2 no longer applies, the Company must procure that any restriction on dealing with that Share pursuant to these Rules no longer applies. | |
8.13 | When a Share is no longer subject to the restriction on disposal in Rule 8.2, the Company must, as soon as reasonably practicable, procure that any holding lock on the CDI representing that Share is removed. |
3.
Table of Contents
9 | LAPSE OF RESTRICTED STOCK UNITS |
9.1 | A Restricted Stock Unit automatically lapses on the earliest to occur of the following times: |
9.1.1 | on exercise of the Restricted Stock Unit under Rule 7; | ||
9.1.2 | subject to Rule 6.2, if the Performance Conditions for the Restricted Stock Unit have not been met before the end of the Performance Period, at the end of the Performance Period; | ||
9.1.3 | if the Performance Conditions for the Restricted Stock Unit have been met during the Performance Period, the Board has given a notice to the Participant under Rule 6.4 and the Restricted Stock Unit is not exercised under Rule 7 during the Exercise Period, at the end of the Exercise Period; | ||
9.1.4 | if the Board becomes aware of circumstances which, in the reasonable opinion of the Board, indicate that the Participant who holds the Restricted Stock Unit has acted fraudulently, dishonestly or in a manner which is in breach of his or her obligations to the Company or any Group Company and the Board, in its absolute discretion, determines that the Restricted Stock Unit lapses (regardless of whether the Restricted Stock Unit may be exercised under Rule 7), on the day the Board makes its determination that the Restricted Stock Unit lapses; | ||
9.1.5 | subject to Rule 6.3, if the Participant who holds the Restricted Stock Unit ceases to be employed by any Group Company, on the Final Exercise Date; and | ||
9.1.6 | subject to Rule 9.2, upon the effective time of a Change of Control Event, unless the transaction the subject of the Change of Control Event provides for the continuation or assumption of outstanding Restricted Stock Units by the surviving or successor entity or a parent company of that entity, or for the substitution of equivalent awards, as determined in the sole discretion of the Board, of the surviving or successor entity or a parent of that entity. |
9.2 | Holders of Restricted Stock Units that lapse under Rule 9.1.6 are permitted to exercise all of their Restricted Stock Units immediately before the Change of Control Event. |
10 | LIMITATION ON GRANTS |
10.1 | No grant of Restricted Stock Units may be made under the Plan to an Eligible Participant and no Shares may be transferred or issued under the Plan if such grant, transfer, or issue would contravene any Applicable Law or these Rules. | |
10.2 | No grant of a Restricted Stock Unit may be made under the Plan if the number of unissued Shares the subject of the Restricted Stock Unit grant, when aggregated with: |
10.2.1 | the number of Shares which would be issued were each outstanding offer under the Plan with respect to Restricted Stock Units to be accepted or exercised; and | ||
10.2.2 | the number of Shares issued previously pursuant to the Plan, would exceed 148,572 Shares. |
10.3 | Subject to Rule 10.2, no grant of a Restricted Stock Unit may be made under the Plan if the number of unissued Shares the subject of the Restricted Stock Unit grant when aggregated with: |
10.3.1 | the number of Shares which would be issued were each outstanding offer with respect to Shares, units of Shares, Restricted Stock Units, and options to acquire unissued Shares, being an offer made or option or right acquired pursuant to the Plan or any other employee share or option or right scheme extended only to employees or directors of the Company or an Associated Body Corporate of the Company to be accepted or exercised; and | ||
10.3.2 | the number of Shares issued during the previous five years pursuant to the Plan or any other employee share or option scheme extended only to employees or directors of the Company or an Associated Body Corporate of the Company; |
but disregarding any offer made, or option or right acquired or Share issued by way of or as a result of: |
10.3.3 | an offer to a person situated at the time of receipt of the offer outside Australia; | ||
10.3.4 | an offer that did not need disclosure to investors because of section 708 of the Corporations Act; | ||
10.3.5 | an offer that did not require the giving of a Product Disclosure Statement because of section 1012D of the Corporations Act; or | ||
10.3.6 | an offer made under a disclosure document or Product Disclosure Statement, |
would exceed 5% of the total number of issued Shares as at the time of the grant of the Restricted Stock Unit. |
4.
Table of Contents
10.4 | The Board may elect not to grant Restricted Stock Units to Eligible Participants who are resident outside of the United States if it determines that the grants may be illegal or it would be impracticable to do so and the Board may formulate special terms and conditions, in addition to those set out in these Rules, to apply to Eligible Participants resident outside the United States. |
11 | SHARES OF PARTICIPANTS |
11.1 | Shares that are issued on the exercise of any Restricted Stock Units will rank equally with all Shares from the date of issue in all respects including in respect of voting rights, entitlements to participate in dividends and future issues offered to all Shareholders where the record date for determining entitlements falls on or after the date of issue. | |
11.2 | The Company must make application to the ASX for official quotation of any CDIs that are delivered under the Plan that are not already quoted on the official list of the ASX as soon as practicable after delivery of those CDIs, so long as CDIs are quoted on the official list of the ASX at that time. |
12 | RIGHTS PRIOR TO ISSUANCE OF SHARES | |
12.1 | No Participant has the rights of a Shareholder with respect to Shares until the Shares have been issued upon the exercise of the Restricted Stock Units. The Company shall make no adjustment for dividends, distributions, or other rights for which the record date is before the date the Shares are issued. | |
12.2 | Subject to Rules 12.3 and 12.4, unless Shares in respect of Restricted Stock Units held by a Participant have been issued or transferred, as applicable, to and registered in the name of the Participant before the record date for determining entitlements to the new issue, the Participant is not entitled to participate in any new issue of securities of the Company as a result of holding a Restricted Stock Unit. | |
12.3 | If the Company makes a pro rata issue of securities to the holders of Shares (excluding an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) then: |
12.3.1 | if no amount is payable on the exercise of Restricted Stock Units, the number of Restricted Stock Units (or other terms and conditions, if any, applicable to the Restricted Stock Units) held by a Participant may be adjusted in such manner as the Board in its discretion determines. Such adjustment, if any, will be subject to the Listing Rules and any Applicable Law; and | ||
12.3.2 | if an amount is payable on the exercise of Restricted Stock Units, the exercise price will be changed as permitted by the Listing Rules. |
12.4 | If there is a reorganisation (including consolidation (reverse split), sub-division (stock split), split-up or similar transaction, spin-off, dividend, recapitalisation, merger or share exchange) of the issued capital of the Company other than as part of a transaction resulting in a Change of Control Event then the rights of a Participant (including the number of Shares to which each Participant is entitled on exercise of their Restricted Stock Units, the Exercise Price of their Restricted Stock Units, the maximum number of grants of Restricted Stock Units under the Plan and the type of shares that the Participant will be entitled to) will be changed at the discretion of the Board and without requiring the consent of Participants provided that any such changes comply with the Listing Rules (as applicable to options) applying to a reorganisation of capital at the time of the reorganisation. | |
12.5 | For the purpose of this Rule 12, a fraction of a Share to which a Participant is entitled in respect of any other Restricted Stock Unit will be aggregated with all other fractions to which a Participant may become entitled in respect of any other Restricted Stock Units, but a fraction of a Share remaining after such aggregation will be disregarded. | |
12.6 | In applying any provisions of this Rule 12 to adjust a number of Shares the subject of a Restricted Stock Unit or the Exercise Price of a Restricted Stock Unit, account will be taken of each prior event requiring adjustment under this Rule 12 so that the effect of successive applications of the provisions of this Rule 12 is cumulative. | |
12.7 | Any calculations or adjustments which are required to be made under this Rule 12 will be made by the Board and, in the absence of manifest error, are final and conclusive and binding on the Company and the Participant. | |
12.8 | The Company must within a reasonable period give to each Participant notice of any change under Rule 12 to the Exercise Price of any Restricted Stock Unit held by the Participant or to the number of Shares that the Participant is entitled to be issued on exercise of the Restricted Stock Unit. |
5.
Table of Contents
13 | ADMINISTRATION OF THE PLAN | |
13.1 | The Plan will be administered by the Board. The Board will have the power to: |
13.1.1 | make regulations and determine appropriate procedures for the administration and implementation of the Plan provided they are consistent with these Rules; | ||
13.1.2 | determine finally and conclusively all questions of fact or interpretation arising in connection with the Plan; | ||
13.1.3 | subject to the Listing Rules, waive or modify the application of these Rules in relation to any Participant or any proposed grant of Restricted Stock Units; | ||
13.1.4 | delegate such functions and powers, as it considers necessary for the efficient administration of the Plan, to any person capable of performing those functions and exercising those powers; and | ||
13.1.5 | take and rely upon independent professional or expert advice in or in relation to the exercise of any of their powers or discretions under this Plan. |
13.2 | Any power or discretion that is conferred on the Board by these Rules may be exercised by the Board in the interests or for the benefit of the Company. In exercising that power or discretion, the Board is not under any fiduciary or other obligation to any person. | |
13.3 | Whenever the Board exercises a discretion pursuant to these Rules, the exercise of that discretion will be in the sole and absolute discretion of the Board and each decision will, in the absence of manifest error, be final and conclusive and binding upon Participants. | |
13.4 | The Company must indemnify, and keep indemnified, to the full extent permitted by law, each person who is or has been an officer or director of the Company against all proceedings, actions, claims, demands, losses, liabilities, damages, costs and expenses which may be made, brought against, suffered or incurred by the person arising directly or indirectly out of or in connection with the administration of the Plan. |
14 | AMENDMENT OF THESE RULES | |
14.1 | Subject to the Listing Rules and Rule 14.2, the Company may at any time by written instrument or by resolution of the Board, amend all or any of the provisions of these Rules (including this Rule 14). | |
14.2 | No amendment of the provisions of these Rules is to reduce the rights of any Participant in respect of Restricted Stock Units acquired under the Plan by a Participant prior to the date of the amendment, other than: |
14.2.1 | an amendment introduced primarily: |
(a) | to correct any manifest error or mistake; or | ||
(b) | to comply with any Applicable Law; or |
14.2.2 | an amendment agreed to in writing by a Participant. |
14.3 | Subject to Rules 14.1 and 14.2, any amendment made pursuant to Rule 14.1 may be given such retrospective effect as is specified in the written instrument or resolution by which the amendment is made. |
15 | ATTORNEY |
15.1 | Each Participant, in consideration of a grant made to them under these Rules, will be deemed to irrevocably appoint each officer and director of the Company, the Company and any person nominated from time to time by the Board or the Company (each an Attorney), severally, as the Participant’s attorney to complete and execute any documents including, without limiting the generality thereof, applications for Shares, transfers of Restricted Shares or any document or other agreement to give effect to these Rules or the terms of any grant made to a Participant under these Rules and to do all acts or things on behalf of and in the name of the Participant which may be convenient or necessary for the purpose of giving effect to the provisions of these Rules or the terms of any grant made to a Participant under these Rules and the Participant will be deemed to covenant that the Participant will ratify and confirm any act or thing done pursuant to this power and will release the Group, each officer and director of the Company and any Attorney from any liability whatsoever arising from the exercise of the powers conferred by this Rule and will indemnify and hold harmless the Group, each officer and director of the Company, each Group Company and any Attorney in respect thereof. |
6.
Table of Contents
16 | RIGHTS OF PARTICIPANTS |
16.1 | These Rules: |
16.1.1 | do not confer on any Participant the right to continue as an Employee; | ||
16.1.2 | do not affect any rights which any Group Company may have to terminate the employment of that Employee; | ||
16.1.3 | may not be used to increase damages in any action brought against any Group Company in respect of that termination; and | ||
16.1.4 | do not, of themselves, confer on a Participant the right to acquire any interest in any Share. |
16.2 | The value of a Share acquired under the Plan does not increase a Participant’s income for the purpose of calculating any employee benefits. | |
16.3 | It is acknowledged and accepted by each Participant that the terms of the Plan do not form a part of the terms and conditions of the Participant’s employment contract, nor do the terms of the Plan constitute a contract or arrangement (including any related condition or collateral arrangement) in relation to the Participant’s employment contract. | |
16.4 | Neither the Rules nor any Restricted Stock Units create or is to be construed to create a trust or separate fund of any kind or a fiduciary relationship between any Group Company and a Participant or any other person. To the extent that any Participant or other person acquires a right to receive a payment from the Group with respect to a Restricted Stock Unit, that right is no greater than the right of any unsecured general creditor of the Company. |
17 | TERMINATION, SUSPENSION OR REINSTATEMENT OF THE PLAN |
17.1 | The Board may by ordinary resolution, suspend, terminate or reinstate the operation of the Plan at any time. In the event of a suspension or termination these Rules will continue to operate with respect to any Restricted Stock Unit granted under the Plan prior to that suspension or termination. | |
17.2 | In passing a resolution to terminate or suspend the operation of the Plan, the Board must consider and endeavour to ensure that there is fair and equitable treatment of all Participants. | |
17.3 | It is a condition of these Rules that if the Plan is terminated or suspended at any time no compensation under any employment contract will arise as a result. |
18 | GOVERNING LAW |
18.1 | These Rules and the rights and obligations of the Group Companies and the Participants under these Rules are governed by the laws of Delaware, without regard to its conflict of laws principles. | |
18.2 | Each Participant and each Group Company irrevocably and unconditionally agrees and submits to the personal jurisdiction and venue in the federal or state courts in the districts which include Framingham, Massachusetts with respect to any suits relating to the Restricted Stock Units. |
19 | PARTICIPATION IN OTHER PLANS |
19.1 | The Company is not restricted to using the Plan as the only method of providing incentive rewards to Employees. The Company may continue to operate current incentive schemes or approve other incentive schemes. | |
19.2 | Participation in the Plan does not affect, and is not affected by, participation in any other incentive or other scheme of the Company unless the terms of that scheme provide otherwise. |
20 | RELATIONSHIP OF PARTIES | |
20.1 | The Board acts as a principal in the operation of the Plan and neither it, nor any of its members, acts as a trustee or agent of any Participant. |
21 | ADVICE | |
21.1 | Participants should obtain their own independent advice at their own cost in relation to the financial, taxation and other implications arising for them as a result of their participation in the Plan. |
7.
Table of Contents
22 | EXPENSES AND WITHHOLDING TAXES | |
22.1 | All costs, expenses and charges incurred in the administration of the Plan must be paid by the Company. | |
22.2 | No Group Company will be liable for any Tax payable by a Participant in respect of the acquisition or dealing with any Restricted Stock Units or any Shares issued pursuant to this Plan or otherwise. | |
22.3 | At the time a Restricted Stock Unit is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Participant, by having accepted the Restricted Stock Unit, authorises withholding from payroll or any other payment of any kind due to the Participant and otherwise agrees to make adequate provision for all Taxes required by law to be withheld, if any, which arise in connection with the Restricted Stock Unit. The Company may require a Participant to make a cash payment to cover any withholding Tax obligation as a condition of exercise of the Restricted Stock Unit. If the Participant does not make such payment when requested, the Company may refuse to issue any Share, CDI or share certificate under the Plan until arrangements satisfactory to the Company for such payment have been made. | |
22.4 | The Company may, in its sole discretion, permit a Participant to satisfy (in whole or in part) any withholding Tax obligation which may arise in connection with a Restricted Stock Unit either by: |
22.4.1 | electing to have the Company withhold, from the Shares to be issued upon exercise of Restricted Stock Units, that number of Shares; or | ||
22.4.2 | by electing to deliver to the Company already-owned Shares, in either case having a fair market value equal to no more than the amount necessary to satisfy the statutory minimum withholding amount due. |
23 | NOTICES | |
23.1 | Any notice or direction given under this Plan is validly given if it is handed to the person concerned or posted by ordinary prepaid post to the person’s last known address. Where a notice or other communication is given by post, it will be deemed to have been received 48 hours after it was put into the post correctly addressed and stamped. |
24 | DATA PROTECTION | |
24.1 | By participating in the Plan, each Participant consents to the collection, use and dealing by, and disclosure to, the Company of personal data provided by the Participant pursuant to their participation in the Plan. This data will be treated in accordance with the Company’s privacy policy, a copy of which may be obtained from the secretary of the Company. |
25 | CERTAIN PROVISIONS MAY BE EXCLUDED | |
25.1 | If (but for this Rule) a provision of the Rules would be illegal, void, unenforceable or contravene Applicable Law, the Rules are to be interpreted as if the provision was omitted. |
26 | UNITED STATES FEDERAL TAX LAW COMPLIANCE | |
26.1 | It is intended that all Restricted Stock Units granted under these Rules to a Participant who is a US Taxpayer at the time of receipt of the invitation to apply for the Restricted Stock Units or becomes a US Taxpayer at any time before the Final Exercise Date of such Restricted Stock Units shall fall within the short-term deferral provisions of United States Treasury Regulation Section 1.409A-1(b)(4) or otherwise be exempt from or comply with the provisions of Section 409A, and to the extent reasonably possible the Rules and the Restricted Stock Units granted thereunder shall be administered, interpreted and construed consistent with that intention. | |
26.2 | Rule 26.1 shall not be construed as a guarantee by the Company or any Group Company of any particular tax effect to a Participant. No Group Company will be liable to a Participant for any payment or issuance of Shares made under these Rules or any Restricted Stock Units that is determined to result in an additional Tax, penalty, or interest under Section 409A. | |
26.3 | Notwithstanding Rule 7.1.1, in the event that a US Taxpayer’s Restricted Stock Units become vested pursuant to Rule 6.3.3 and on the date of such vesting the Participant is a “specified employee” within the meaning of Section 409A, as determined in good faith by the Board, such Restricted Stock Units to the extent that they do not require payment of an Exercise Price will be deemed to have been validly exercised on the first Business Day that is more than six months after the date the Participant ceases to be employed by a Group Company and may not be exercised by the Participant earlier than such Business Day provided, however, that this delayed exercise provision shall be imposed only if the Restricted Stock Units are not otherwise exempt from Section 409A. |
8.
Table of Contents
27 | COMPLIANCE WITH SECURITIES LAWS; LISTING AND REGISTRATION | |
27.1 | If at any time the Board determines that the delivery of Shares under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or United States federal or state securities laws, or applicable non-United States securities laws, the right to exercise a Restricted Stock Unit or receive Shares pursuant to a Restricted Stock Unit shall be suspended until the Board determines that such delivery is lawful. If at any time the Board determines that the delivery of Shares under the Plan is or may violate the rules of the securities exchange on which the Shares are then listed for trade, the right to exercise a Restricted Stock Unit or receive Shares pursuant to a Restricted Stock Unit shall be suspended until the Board determines that such delivery would not violate such rules. The Company shall have no obligation to effect any registration or qualification of the Shares under United States federal or state laws or applicable non-United States laws. | |
27.2 | The Company may require that a Participant, as a condition to exercise of a Restricted Stock Unit, and as a condition to the delivery of any share certificate, make such written representations (including representations to the effect that such person will not dispose of the Shares so acquired in violation of United States federal or state securities laws, or applicable non-United States securities laws) and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Shares in compliance with applicable United States federal or state securities laws, or applicable non-United States securities laws. The stock certificates for any Shares issued pursuant to this Plan may bear a legend restricting transferability of the Shares unless such Shares are registered or an exemption from registration is available under the Securities Act of 1933, as amended, and applicable state or non-United States securities laws. |
28 | DICTIONARY | |
28.1 | In these Rules, unless the context otherwise requires: | |
Applicable Law means any one or more or all, as the context requires, of: |
(a) | the Corporations Act and any regulations to it; | ||
(b) | the Listing Rules; | ||
(c) | the charter of the Company; | ||
(d) | any practice note, policy statement, class order, declaration, guideline, policy or procedure pursuant to the provisions of which any of the SEC, ASIC or ASX is authorised or entitled to regulate, implement or enforce, either directly or indirectly, the provisions of any of the foregoing statutes, regulations or rules or any conduct of any duly authorised person, pursuant to any of the above mentioned statutes, regulations or rules; | ||
(e) | the United States Securities Act of 1933, as amended (including the rules thereunder), Exchange Act and any other applicable United States federal or state law, including without limitation the Delaware General Corporation Law. |
ASIC means the Australian Securities and Investments Commission. | ||
Associated Body Corporate of the Company means: |
(a) | a related body corporate of the Company, within the meaning of section 50 of the Corporations Act; | ||
(b) | a body corporate that has voting power in the Company of not less than 20%; or | ||
(c) | a body corporate in which the Company has voting power of not less than 20%, |
where ‘voting power’ has the meaning in section 610 of the Corporations Act. | ||
ASX means, as the context requires: |
(a) | ASX Limited ACN 008 624 691 and any successor body corporate; or | ||
(b) | the financial market operated by the body corporate referred to in paragraph (a). |
Boardmeans all or some of the directors of the Company acting as a board or a committee appointed by such Board. | ||
Businessday means any day, other than a Saturday, Sunday or public holiday, on which banks are open for business in Framingham, Massachusetts. | ||
CDIsmeans CHESS Depositary Interests. |
9.
Table of Contents
Change of Control Eventmeans: |
(a) | a Change of Ownership of Company; | ||
(b) | a Change of Effective Control of the Company; | ||
(c) | a Change of the Ownership of Assets of the Company; or | ||
(d) | a liquidation or dissolution of the Company, |
as described in these Rules and construed consistent with Section 409A of the Code. For the purposes of a Change of Control Event, fair market value is determined by the Board, and share ownership is determined under section 318(a) of the Code. A Change of Control Event excludes any transfer to a related person as described in Section 409A of the Code or a public offering of the Shares. | ||
Change of Effective Control of the Companymeans the date on which a majority of members of the Company’s full board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s full board of directors before the date of the appointment or election. | ||
Change of the Ownership of Assets of the Companymeans the date on which any one person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12 month period ending on the date of the most recent acquisition by such Person or Persons), assets from the Company that have a total gross fair market value equal to or more than 51% of the total gross fair market value of all of the assets of the Company immediately before such acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. | ||
Change of Ownership of the Companymeans the date on which any one Person acquires, or Persons Acting as a Group acquire, ownership of Shares that, together with the Shares held by such Person or Persons Acting as Group, constitutes more than 50% of the total fair market value or total voting power of the Shares of the Company. However, if any one Person is, or Persons Acting as a Group are, considered to own more than 50% of the total fair market value or total voting power of the Shares of the Company, the acquisition of additional Shares by the same Person or Persons Acting as a Group is not considered to cause a Change of Ownership of the Company or to cause a Change of Effective Control of the Company. An increase in the percentage of Shares owned by any one Person, or Persons Acting as a Group, as a result of a transaction in which the Company acquires its Shares in exchange for property will be treated as an acquisition of Shares. | ||
Codemeans the United States Internal Revenue Code of 1986, as amended. | ||
Companymeans HeartWare International Inc, a corporation incorporated in Delaware, USA. | ||
Corporations Actmeans theCorporations Act 2001(Cth). | ||
Disabilitymeans the permanent inability, by reason of physical condition, mental illness or accident, of the person to perform substantially all of the duties of the position in which the person has been employed or appointed (as determined by the Board). | ||
Eligible Participantmeans an Employee who is declared by the Board to be an Eligible Participant for the purposes of the Plan. | ||
Employeemeans any full-time or part-time employee of any Group Company and includes any such employee on maternity leave, long service leave or other special leave as approved by the Board from time to time and also includes a director of any Group Company who is employed in an executive capacity by that company, but does not include: |
(a) | a director of a Group Company who is not employed in an executive capacity by that company; | ||
(b) | a director who is employed in an executive capacity by a Group Company but who has been given notice of dismissal as a director of that Group Company (or has given notice of resignation as a director of that Group Company); or | ||
(c) | an employee (whether full-time or part-time) who has been given notice of dismissal for misconduct from employment with a Group Company (or has given notice of resignation from such employment in order to avoid such dismissal). |
Exchange Actmeans the United States Securities Exchange Act of 1934, as amended, including the rules promulgated thereunder. | ||
Exercise Periodmeans, in respect of a Restricted Stock Unit, which has not lapsed, the period commencing on the day after the day on which the Board gives notice to the Participant who holds the Restricted Stock Unit under Rule 6.4, and ending on the Final Exercise Date. |
10.
Table of Contents
Exercise Pricemeans, in respect of a Restricted Stock Unit, the price (if any) which the holder of that Restricted Stock Unit must pay to the Company upon its exercise. | ||
Fair Market Valuemeans, with respect to the Shares, as at any date: |
(a) | if the principal market for the Shares (as determined by the Board if the Shares are listed or admitted to trading on more than one exchange or market) is a national securities exchange or an established securities market, the closing price per Share on that date on the principal exchange or market on which the Shares are then listed or admitted to trading or, if no sale is reported for that date, the last preceding business day on which a sale was reported; | ||
(b) | if the principal market for the Shares is not a national securities exchange or established securities market, the average of the highest bid and lowest asked prices for the Shares on that day as reported on a national quotation system or, if no prices are reported for that date, the last preceding business day on which prices were reported; or | ||
(c) | if the Shares are neither listed or admitted to trading on an established exchange or market, nor are quoted by a national quotation system, the value determined by the Board in good faith. |
With respect to property other than Shares, fair market value means the value of the property determined by such methods or procedures to be established from time to time by the Board in accordance with section 409A of the Code. | ||
Final Exercise Datemeans for a Restricted Stock Unit that has not lapsed: |
(a) | where the Participant continues to be employed by any Group Company, the date determined by the Board at the time of invitation to the Participant to apply for the Restricted Stock Unit or such other date as is determined under Rule 6.2, provided that it is no later than 10 years after the Grant Date of that Restricted Stock Unit; | ||
(b) | where the Participant ceases to be employed by any Group Company and a notice under Rule 6.4 has been given to the Participant, the date being 6 months from and including the day on which the Participant ceased to be employed by any Group Company or the date set out in paragraph (a), whichever is earlier; or | ||
(c) | where the Participant ceases to be employed by any Group Company and a notice under Rule 6.4 has not been given to the Participant, the date being the day on which the Participant ceased to be employed by any Group Company. |
Grant Datemeans the grant date of Restricted Stock Units as specified in the invitation to Participants issued in accordance with clause 4. | ||
Groupmeans the Company and each Subsidiary of the Company and Group Company means any of them. | ||
Listing Rulesmeans, while the Company is admitted to the official list of the ASX, the official listing rules of the ASX and any other rules of the ASX that are applicable. In the event that the Shares become listed for trading on any other securities exchange or market, the term “Listing Rules” also shall mean the applicable rules of such exchange or market. | ||
Participantmeans an Eligible Participant to whom Restricted Stock Units have been granted under the Plan. | ||
Performance Conditionsmeans, in relation to a Restricted Stock Unit, the conditions (if any), as determined by the Board, that must be satisfied during the Performance Period before a Restricted Stock Unit may vest. | ||
Performance Periodmeans, in respect of a Restricted Stock Unit, the period specified as the Performance Period in the invitation made in relation to that Restricted Stock Unit, being the period during which the Company will assess whether the Performance Conditions for the Restricted Stock Unit have been met, subject to these Rules. | ||
Personmeans any individual, entity or group within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act, other than employee benefit plans sponsored or maintained by the Company and by entities controlled by the Company or an underwriter of the Shares of the Company in a registered public offering. | ||
Persons Acting as a Groupmeans persons who are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of shares, or similar business transaction with the corporation. If a Person owns shares in both corporations that enter into a merger, consolidation, purchase or acquisition of shares, or similar transaction, such shareholder is considered to be a Person Acting as a Group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Persons will not be considered to be Persons Acting as a Group solely because they purchase assets of the same corporation at the same time or purchase or own shares of the same corporation at the same time, or as a result of the same public offering. |
11.
Table of Contents
Planmeans the HeartWare International, Inc. Restricted Stock Unit Plan established and operated in accordance with these Rules. | ||
Restricted Sharemeans a Share held under the Plan that is subject to the restrictions under Rule 8. | ||
Restricted StockUnit means a right granted to acquire a Share under the Plan (whether by way of issue or transfer, at the Company’s election), subject to these Rules. | ||
Retrenchmentmeans a termination of an Employee’s employment where the employer company has made a definite decision expressly for the purpose of this provision that the employer no longer wishes the job the Employee has been doing to be done by anyone and this is not due to ordinary or customary turnover of labour or the Employee’s performance or any breach of the Employee’s terms of employment, and includes a situation where: |
(a) | the Employee ceases to be employed by a Group Company because the employer company ceases to be a Subsidiary of the Company; or | ||
(b) | the business in which the Employee is engaged is transferred outside the Group. |
Rulesmeans the rules governing the operation of the Plan set out in this document as amended in accordance with the Rules from time to time. | ||
SECmeans the United States Securities and Exchange Commission. | ||
Section 409Ameans Section 409A of the Code. | ||
Sharemeans a fully paid share of the common stock of the Company, par value US$.001 per share in the form of either common stock or CDIs. | ||
Subsidiarymeans an entity which is a subsidiary of the Company within the meaning of Division 6 of Part 1.2 of the Corporations Act or is a subsidiary or otherwise controlled by the Company within the meaning of any approved accounting standard. | ||
Taxincludes any tax, levy, charge, impost, GST, deduction, compulsory loan, duty or withholding which is assessed, levied or imposed by any government or any governmental, semi-governmental or judicial entity or authority and includes any interest, penalty, fine, charge, fee or other amount imposed on or in respect of the above. | ||
US Taxpayer means a person who is subject to the provisions of the United States Internal Revenue Code of 1986, as amended, or any successor thereto, with respect to compensation for labour or services performed in the United States. |
29 | INTERPRETATION | |
29.1 | In these Rules, unless the contrary intention appears: |
29.1.1 | references to any legislation or any provision of any legislation includes any modification, re-enactment or replacement of the legislation or any legislative provision substituted for, and all legislation and statutory instruments and regulations issued under, the legislation; | ||
29.1.2 | words importing the singular include the plural and vice versa; | ||
29.1.3 | references to any document (including these Rules) include references to that document as amended, consolidated, novated, supplemented or replaced from time to time; | ||
29.1.4 | a reference to ‘amendment’ includes addition, alteration, deletion, extension, modification and variation; and | ||
29.1.5 | references to the exercise of a power or discretion include a decision not to exercise the power or discretion. |
29.2 | Headings are used for convenience only and do not affect the interpretation of these Rules. | |
29.3 | A Participant does not cease to be employed by or to be an executive director of any Group Company where the Participant ceases to be employed by or ceases to be an executive director of one Group Company but contemporaneously commences employment with or contemporaneously is appointed as an executive director of another Group Company. |
12.
Table of Contents
• | providing key people with incentives to improve the value of the HeartWare International Shares and contribute to the growth and financial success of HeartWare International; and | |
• | enabling HeartWare International to attract, retain and reward the best available people. |
Table of Contents
• | cash; or | |
• | HeartWare International Shares or CDIs, or other securities, phantom stock, stock equivalent units, stock appreciation units, securities or debentures convertible into HeartWare International Shares or CDIs, |
• | extraordinary or non-recurring items; | |
• | changes in tax laws; | |
• | changes in generally accepted accounting principles or accounting policies; | |
• | changes related to restructured or discontinued operations; | |
• | the restatement of prior period financial results; or | |
• | any other unusual, non-recurring gain or loss that is separately identified and quantified in HeartWare International’s financial statements, |
• | revenue; | |
• | earnings before interest, tax, depreciation and amortisation (EBITDA); | |
• | operating income; | |
• | pre or after tax income; | |
• | cash flow; | |
• | cash flow per share; | |
• | net earnings; | |
• | earnings per share; | |
• | price-to-earnings ratio; | |
• | return on equity; | |
• | return on invested capital; | |
• | return on assets; | |
• | growth in assets; | |
• | share price performance; | |
• | economic value added; | |
• | total shareholder return; |
Table of Contents
• | improvement in or attainment of expense levels; | |
• | improvement in or attainment of working capital levels; | |
• | relative performance to a group of companies comparable to HeartWare International; and | |
• | strategic business criteria consisting of one or more objectives based on HeartWare International meeting specified goals relating to revenue, market penetration, business expansion, costs, clinical trials, product feasibility studies, regulatory submissions, regulatory approvals, or acquisitions or divestitures. |
• | any HeartWare International Shares or CDIs granted pursuant to awards under the 2008 Plan; and | |
• | any HeartWare International Shares or CDIs subject to any outstanding award under the 2008 Plan, the HeartWare International Employee Stock Option Plan or the HeartWare International Restricted Stock Unit Plan. |
• | award issued under the 2008 Plan has for any reason expired or otherwise terminated, in whole or in part, without having been exercised in full; | |
• | HeartWare International Shares or CDIs issued to an award holder under the 2008 Plan are forfeited, or bought back by HeartWare International because of the failure to meet a contingency or condition required for the vesting of such shares; or | |
• | awards issued under the 2008 Plan are settled in cash, |
Table of Contents
• | the maximum number of shares for which awards may be granted under the 2008 Plan and the maximum number of shares with respect to which awards may be granted during any one fiscal year to any individual; and | |
• | the number of shares covered by and the exercise price and other terms of outstanding awards, |
• | appropriate adjustments to the maximum number and type of shares reserved for issue or with respect to which awards may be granted under the 2008 Plan (in the aggregate, with respect to any individual during any one calendar year and with respect to which awards that are intended to be tax-qualified as incentive stock options under the Internal Revenue Code); and | |
• | any adjustments in outstanding awards, including, but not limited to, modifying the number, kind and price of securities subject to awards. |
Table of Contents
Table of Contents
2008 STOCK INCENTIVE PLAN
1. | ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS | |
HeartWare International, Inc, a Delaware corporation (the “Company”), hereby establishes the HeartWare International, Inc 2008 Stock Incentive Plan (the “Plan”). The purpose of the Plan is to promote the long-term growth and profitability of the Company by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Company through their future services, and (ii) enabling the Company to attract, retain and reward the best-available persons. | ||
The Plan permits the granting of stock options (including incentive stock options qualifying under Code section 422 and nonstatutory stock options), stock appreciation rights, restricted or unrestricted stock awards, phantom stock, performance awards, other stock-based awards, or any combination of the foregoing. | ||
2. | DEFINITIONS | |
Under this Plan, except where the context otherwise indicates, the following definitions apply: |
(a) | “Administrator” means the Board or the committee(s) or officer(s) appointed by the Board that have authority to administer the Plan as provided in Section 3 hereof. | ||
(b) | “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, the Company (including, but not limited to, joint ventures, limited liability companies, and partnerships). For this purpose, “control” shall mean ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity, or the power to direct the management and policies of the entity, by contract or otherwise. | ||
(c) | “ASX” means ASX Limited ACN 008 624 691 or the securities market which it operates, as the context requires. | ||
(d) | “Award”means any stock option, stock appreciation right, stock award, phantom stock award, performance award, or other stock-based award. | ||
(e) | “Board” means the Board of Directors of the Company. | ||
(f) | “Business Day” means any day that is not Saturday, Sunday or a public holiday, on which banks are open for business in Framingham, Massachusetts. | ||
(g) | “Change in Control”means: a (i) Change in Ownership of the Company, (ii) Change in Effective Control of the Company, or (iii) Change in the Ownership of Assets of the Company, all as described herein and construed in accordance with Code section 409A. |
(i) | A Change in Ownership of the Company shall occur on the date that any one Person acquires, or Persons Acting as a Group acquire, ownership of the capital stock of the Company that, together with the stock held by such Person or Group, constitutes more than 50% of the total fair market value or total voting power of the capital stock of the Company. However, if any one Person is, or Persons Acting as a Group are, considered to own more than 50% of the total fair market value or total voting power of the capital stock of the Company, the acquisition of additional stock by the same Person or Persons Acting as a Group is not considered to cause a Change in Ownership of the Company or to cause a Change in Effective Control of the Company (as described below). An increase in the percentage of capital stock owned by any one Person, or Persons Acting as a Group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock. | ||
(ii) | A Change in Effective Control of the Company shall occur on the date a majority of members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election. |
Table of Contents
(iii) | A Change in the Ownership of Assets of the Companyshall occur on the date that any one Person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons), assets from the Company that have a total gross fair market value equal to or more than 51% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. |
The following rules of construction apply in interpreting the definition of Change in Control: |
(A) | A Person means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than employee benefit plans sponsored or maintained by the Company and by entities controlled by the Company or an underwriter of the capital stock of the Company in a registered public offering. | ||
(B) | Persons will be considered to be Persons Acting as a Group (or Group) if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a Person owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a Group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Persons will not be considered to be acting as a Group solely because they purchase assets of the same corporation at the same time or purchase or own stock of the same corporation at the same time, or as a result of the same public offering. | ||
(C) | A Change in Control shall not include a transfer to a related person as described in Code section 409A or a public offering of capital stock of the Company. | ||
(D) | For purposes of this Section 2(f), Code section 318(a) applies to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation section 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option. |
(h) | “Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. | ||
(i) | “Common Stock” means shares of common stock of the Company, par value of US$.001 per share. | ||
(j) | “Grant Agreement” means a written document memorializing the terms and conditions of an Award granted pursuant to the Plan and which shall incorporate the terms of the Plan. | ||
(k) | “Fair Market Value” means, with respect to the Common Stock, as of any date: |
(i) | if the principal market for the Common Stock (as determined by the Board if the Common Stock is listed or admitted to trading on more than one exchange or market) is a national securities exchange or an established securities market, the closing price per share of Common Stock on that date on the principal exchange or market on which the Common Stock is then listed or admitted to trading or, if no sale is reported for that date, the last preceding Business Day on which a sale was reported; | ||
(ii) | if the principal market for the Common Stock is not a national securities exchange or established securities market, the average of the highest bid and lowest asked prices for the Common Stock on that day as reported on a national quotation system or, if no prices are reported for that date, the last preceding Business Day on which prices were reported; | ||
(iii) | if the Common Stock is neither listed or admitted to trading on an established exchange or market, nor is quoted by a national quotation system, the value determined by the Board in good faith. | ||
(iv) | With respect to property other than Common Stock, Fair Market Value means the value of the property determined by such methods or procedures to be established from time to time by the Board in accordance with Code section 409A. |
(l) | “Listing Rules” means the official listing rules of ASX as amended from time to time and any other rules of the ASX that are applicable. |
Table of Contents
(m) | “Performance Measures”shall mean criteria established by the Administrator relating to any of the following, as it may apply to an individual, one or more business units, divisions or subsidiaries, or on a Company-wide basis, and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies: revenue; earnings before interest, taxes, depreciation and amortization (EBITDA); operating income; pre- or after-tax income; cash flow; cash flow per share; net earnings; earnings per share; price-to-earnings ratio; return on equity; return on invested capital; return on assets; growth in assets; share price performance; economic value added; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels; relative performance to a group of companies comparable to the Company, and strategic business criteria consisting of one or more objectives based on the Company’s meeting specified goals relating to revenue, market penetration, business expansion, costs, clinical trials, product feasibility studies, regulatory submissions, regulatory approvals, or acquisitions or divestitures. |
3. | ADMINISTRATION |
(a) | Administration of the Plan. The Plan shall be administered by the Board or by such committee or committees as may be appointed by the Board from time to time. To the extent allowed by applicable state law, the Board by resolution may authorize an officer or officers to grant Awards (other than stock awards) to other officers and employees of the Company and its Affiliates, and, to the extent of such authorization, such officer or officers shall be the Administrator. | ||
(b) | Powers of the Administrator. The Administrator shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards. |
The Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be granted; (ii) determine the types of Awards to be granted; (iii) determine the number of shares to be covered by or used for reference purposes for each Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided however, that, except as provided in Section 6 or 7(d) of the Plan, any modification that would materially adversely affect any outstanding Award shall not be made without the consent of the holder); (vi) accelerate or otherwise changethe time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any grantee’s employment or other relationship with the Company; provided, however, that no such waiver or acceleration of lapse restrictions shall be made with respect to a performance-based stock award granted to an executive officer of the Company if such waiver or acceleration is inconsistent with Code section 162(m) and the Committee had determined that qualification of such award under Code section 162(m) is desirable; (vii) establish objectives and conditions, if any, for earning Awards and determining whether Awards will be paid with respect to a performance period; and (viii) for any purpose, including but not limited to, qualifying for preferred tax treatment under foreign tax laws or otherwise complying with the regulatory requirements of local or foreign jurisdictions, to establish, amend, modify, administer or terminate sub plans, and prescribe, amend and rescind rules and regulations relating to such sub plans. | ||
The Administrator shall have full power and authority, in its sole and absolute discretion, to administer, construe and interpret the Plan, Grant Agreements and all other documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind and interpret such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Administrator deems necessary or advisable, and to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Administrator shall deem it desirable to carry it into effect. |
(c) | Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Grant Agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. | ||
(d) | Limited Liability. To the maximum extent permitted by law, no member of the Administrator shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder. |
Table of Contents
(e) | Indemnification. To the maximum extent permitted by law and by the Company’s charter and by-laws, the members of the Administrator shall be indemnified by the Company in respect of all their activities under the Plan. | ||
(f) | Effect of Administrator’s Decision.All actions taken and decisions and determinations made by the Administrator on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Company, its stockholders, any participants in the Plan and any other employee, consultant, or director of the Company, and their respective successors in interest. |
4. | SHARES AVAILABLE FOR THE PLAN; MAXIMUM AWARDS |
(a) | Share Reserve.Subject to adjustments as provided in Section 7(d) of the Plan, upon the effective date of the Plan, the total number of shares of Common Stock reserved and available for grant and issuance pursuant to this Plan will be equal to 469,140 shares (the “Share Reserve”). Commencing January 1, 2009, and on each January 1st thereafter through January 1, 2018, the Share Reserve will automatically adjust so that it will equal (i) thirteen percent (13%) of the weighted average number of shares of Common Stock outstanding, as that number is determined by the Company to calculate basic earnings (loss) per share for the preceding fiscal year; reduced by (ii) the sum of (A) any shares of Common Stock granted pursuant to Awards under the Plan, and (B) any shares of Common Stock subject to any outstanding Award under the Plan, the HeartWare International, Inc. Employee Share Option Plan or the HeartWare International, Inc. Restricted Stock Unit Plan. Notwithstanding the foregoing, the Board may act, prior to the first day of any calendar year, to provide that there shall be no increase in the Share Reserve for such calendar year or that the increase in the Share Reserve for such calendar year shall be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence. Shares may be issued in connection with a merger or acquisition as permitted by NASDAQ Rule 4350(i)(1)(A)(iii) or, if applicable, NYSE Listed Company Manual Section 303A.08, or AMEX Company Guide Section 711 or other applicable rule of the principal exchange or market on which the Common Stock is listed for trade and such issuance shall not reduce the number of shares available for issuance under the Plan. | ||
(b) | ISO Limit.Notwithstanding the foregoing, not more than 469,140 shares, subject to adjustments as provided in Section 7(d) of the Plan, of the total shares authorized for issuance under the Plan shall be available for issuance pursuant to incentive stock options intended to qualify under Code section 422. | ||
(c) | Reversion of Shares to the Share Reserve.If any (i) Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, (ii) shares of Common Stock issued to an Award recipient pursuant to an Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares, or (iii) an Award is settled in cash, then the shares of Common Stock not issued under such Award, or forfeited to or repurchased by the Company, shall revert to and again become available for issuance under the Plan. If any shares subject to an Award are not delivered to an Award recipient because such shares are withheld for the payment of taxes or the Award is exercised through a reduction of shares subject to the Award (i.e., “net exercised”) or an appreciation distribution in respect of a stock appreciation right is paid in shares of Common Stock, the number of shares subject to the Award that are not delivered to the Award recipient shall remain available for subsequent issuance under the Plan. If the exercise price of any Award is satisfied by tendering shares of Common Stock held by the Award recipient (either by actual delivery or attestation), then the number of shares so tendered shall remain available for issuance under the Plan. | ||
(d) | Code section162(m) Limit.Subject to adjustments as provided in Section 7(d) of the Plan, the maximum number of shares of Common Stock subject to Awards of any combination that may be granted during any one fiscal year of the Company to any one individual under this Plan shall be limited to one-third of the total number of shares issuable under the Plan, pursuant to Section 4(a), as of the Plan’s effective date. | ||
(e) | Source of Shares.The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock or treasury shares, including shares repurchased by the Company on the open market. The Company shall at all times during the term of the Plan and while any Awards are outstanding retain as authorized and unissued Common Stock, or as treasury Common Stock, at least the number of shares of Common Stock required to fulfil the Company’s obligations under such Awards, or otherwise assure itself of its ability to perform its obligations thereunder. |
Table of Contents
5. | PARTICIPATION | |
Participation in the Plan shall be open to all employees, officers, and directors of, and other individuals providing bona fide services to or for, the Company, or of any Affiliate of the Company, as may be selected by the Administrator from time to time. The Administrator may also grant Awards to individuals in connection with hiring, retention or otherwise, prior to the date the individual first performs services for the Company or an Affiliate, provided that such Awards shall not become vested or exercisable, and no shares shall be issued to such individual, prior to the date the individual first commences performance of such services. |
6. | AWARDS | |
The Administrator, in its sole discretion, establishes the terms of all Awards granted under the Plan. Awards may be granted individually or in tandem with other types of Awards, concurrently with or with respect to outstanding Awards. All Awards are subject to the terms and conditions provided in the Grant Agreement. The Administrator may permit or require a recipient of an Award to defer such individual’s receipt of the payment of cash or the delivery of Common Stock that would otherwise be due to such individual by virtue of the issuance of, exercise of, payment of, or lapse or waiver of restrictions respecting, any Award. If any such payment deferral is required or permitted, the Administrator shall, in its sole discretion, establish rules and procedures for such payment deferrals. |
(a) | Stock Options.The Administrator may from time to time grant to eligible participants Awards of incentive stock options as that term is defined in Code section 422 or nonstatutory stock options;provided, however,that Awards of incentive stock options shall be limited to employees of the Company or of any current or hereafter existing“parent corporation”or“subsidiary corporation,” as defined in Code sections 424(e) and (f), respectively, of the Company and any other individuals who are eligible to receive incentive stock options under the provisions of Code section 422. Options must have an exercise price at least equal to Fair Market Value as of the date of grant and may not have a term in excess of ten years’ duration. No stock option shall be an incentive stock option unless so designated by the Administrator at the time of grant or in the Grant Agreement evidencing such stock option. | ||
(b) | Stock Appreciation Rights.The Administrator may from time to time grant to eligible participants Awards of Stock Appreciation Rights (“SAR”). An SAR entitles the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or portion thereof, which is exercised. The base price per share specified in the Grant Agreement shall not be less than the lower of the Fair Market Value on the grant date or the exercise price of any tandem stock option Award to which the SAR is related. Payment by the Company of the amount receivable upon any exercise of an SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Administrator. If upon settlement of the exercise of an SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Administrator shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated. | ||
(c) | Stock Awards. |
(i) | The Administrator may from time to time grant stock awards to eligible participants in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as it shall determine. A stock award may be denominated in Common Stock or other securities, stock-equivalent units, securities or debentures convertible into Common Stock, or any combination of the foregoing and may be paid in Common Stock or other securities, in cash, or in a combination of Common Stock or other securities and cash, all as determined in the sole discretion of the Administrator. | ||
(ii) | The Administrator may grant stock awards in a manner constituting “qualified performance-based compensation” within the meaning of Code section 162(m). The grant of, or lapse of restrictions with respect to, such performance-based stock awards shall be based upon one or more Performance Measures and objective performance targets to be attained relative to those Performance Measures, all as determined by the Administrator. Performance targets may include minimum, maximum and target levels of performance, with the size of the performance-based stock award or the lapse of restrictions with respect thereto based on the level attained. |
Table of Contents
The Administrator shall be authorized to make adjustments in the method of calculating attainment of Performance Measures and performance targets in recognition of: (A) extraordinary or non-recurring items; (B) changes in tax laws; (C) changes in generally accepted accounting principles or changes in accounting policies; (D) charges related to restructured or discontinued operations; (E) restatement of prior period financial results; and (F) any other unusual, non-recurring gain or loss that is separately identified and quantified in the Company’s financial statements; provided that the Administrator’s decision as to whether such adjustments will be made with respect to any Covered Employee, within the meaning of Code section 162(m), is determined when the performance targets are established for the applicable performance period. Notwithstanding the foregoing, the Administrator may, at its sole discretion, modify the performance results upon which Awards are based under the Plan to offset any unintended results arising from events not anticipated when the Performance Measures and performance targets were established; provided, that such adjustment is permitted by Code section 162(m). In the event that a Change in Control occurs after a performance-based stock award has been granted but before completion of the applicable performance period, such Award shall become payable (or the lapse restrictions shall lapse, as applicable) as of the date of the Change in Control. |
7. | MISCELLANEOUS |
(a) | Withholding of Taxes.Grantees and holders of Awards shall pay to the Company or its Affiliate, or make provision satisfactory to the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax liability. The Company or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the grantee or holder of an Award. In the event that payment to the Company or its Affiliate of such tax obligations is made in shares of Common Stock, such shares shall be valued at Fair Market Value on the applicable date for such purposes and shall not exceed in amount the minimum statutory tax withholding obligation. | ||
(b) | Loans. To the extent otherwise permitted by law, the Company or its Affiliate may make or guarantee loans to grantees to assist grantees in exercising Awards and satisfying any withholding tax obligations. | ||
(c) | Transferability. Except as otherwise determined by the Administrator, and in any event in the case of an incentive stock option or a stock appreciation right granted with respect to an incentive stock option, no Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Administrator in accord with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee’s guardian or legal representative. | ||
(d) | Adjustments for Corporate Transactions and Other Events. |
(i) | Stock Dividend, Stock Split and Reverse Stock Split.In the event of a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, (A) the maximum number of shares of such Common Stock as to which Awards may be granted under this Plan, the maximum number of shares available for issuance pursuant to incentive stock options intended to qualify under Code section 422, and the maximum number of shares with respect to which Awards may be granted during any one fiscal year of the Company to any individual, as provided in Section 4 of the Plan, and (B) the number of shares covered by and the exercise price and other terms of outstanding Awards, shall, without further action of the Board, be adjusted to reflect such event. The Administrator may make adjustments, in its discretion, to address the treatment of fractional shares and fractional cents that arise with respect to outstanding Awards as a result of the stock dividend, stock split or reverse stock split. | ||
(ii) | Non-Change in Control Transactions. Except with respect to the transactions set forth in Section 7(d)(i), in the event of any change affecting the Common Stock, the Company or its capitalization, by reason of a spin-off, split-up, dividend, recapitalization, merger, consolidation or share exchange, other than any such change that is part of a transaction resulting in a Change in Control of the Company, the Administrator, in its discretion and without the consent of the holders of the Awards, may make (A) appropriate adjustments to the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the Plan, in the aggregate and with respect to any individual during any one fiscal year of the Company, as provided in Section 4 of the Plan; and (B) any adjustments in outstanding Awards, including but not limited to modifying the number, kind and price of securities subject to Awards |
Table of Contents
(iii) | Change in Control Transactions.In the event of any transaction resulting in a Change in Control of the Company, outstanding stock options and other Awards that are payable in or convertible into Common Stock under this Plan will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Awards by, or for the substitution of the equivalent awards, as determined in the sole discretion of the Administrator, of the surviving or successor entity or a parent thereof. In the event of such termination, (A) the outstanding stock options and other Awards that will terminate upon the effective time of the Change in Control shall become fully vested immediately before the effective time of the Change in Control, and (B) the holders of stock options and other Awards under the Plan will be permitted, immediately before the Change in Control, to exercise or convert all portions of such stock options or other Awards under the Plan that are then exercisable or convertible or which become exercisable or convertible upon or prior to the effective time of the Change in Control. | ||
(iv) | Unusual or Nonrecurring Events.The Administrator is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan provided always that the rights of holders of Awards will be changed to the extent necessary to comply with the Listing Rules applying to a reorganization of capital at the time of the reorganization. |
(e) | Substitution of Awards in Mergers and Acquisitions.Awards may be granted under the Plan from time to time in substitution for awards held by employees, officers, consultants or directors of entities who become or are about to become employees, officers, consultants or directors of the Company or an Affiliate as the result of a merger or consolidation of the employing entity with the Company or an Affiliate, or the acquisition by the Company or an Affiliate of the assets or stock of the employing entity. The terms and conditions of any substitute Awards so granted may vary from the terms and conditions set forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the substitute Awards to the provisions of the awards for which they are substituted. | ||
(f) | Termination, Amendment and Modification of the Plan.The Board may terminate, amend or modify the Plan or any portion thereof at any time. Except as otherwise determined by the Board, termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. | ||
(g) | Non-Guarantee of Employment or Service.Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an individual to continue in the service of the Company or shall interfere in any way with the right of the Company to terminate such service at any time with or without cause or notice and whether or not such termination results in (i) the failure of any Award to vest; (ii) the forfeiture of any unvested or vested portion of any Award; and/or (iii) any other adverse effect on the individual’s interests under the Plan. | ||
(h) | Compliance with Securities Laws; Listing and Registration.If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or United States federal or state securities laws, or applicable non-United States securities laws, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery is lawful. If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may violate the rules of the national exchange on which the shares are then listed for trade, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery would not violate such rules. The Company shall have no obligation to effect any registration or qualification of the Common Stock under United States federal or state securities laws, or applicable non-United States securities laws. | ||
The Company may require that a grantee, as a condition to exercise of an Award, and as a condition to the delivery of any share certificate, make such written representations (including representations to the effect that such person will not dispose of the Common Stock so acquired in violation of United States federal or state securities laws, or applicable non-United States securities laws) and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Common Stock in compliance with applicable United States federal or state securities laws, or applicable non-United States securities laws. The stock certificates for any shares of Common Stock issued pursuant to this Plan may bear a legend restricting transferability of the shares of Common Stock unless such shares are registered or an exemption from registration is available under the Securities Act of 1933, as amended, and applicable state or applicable non-United States securities laws. |
Table of Contents
(i) | No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company. | ||
(j) | Governing Law. The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Delaware, without regard to its conflict of laws principles. | ||
(k) | Effective Date; Termination Date. The Plan is effective as of the date on which the Plan is adopted by the Board, subject to approval of the stockholders within twelve months before or after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan, or if earlier, the tenth anniversary of the date this Plan is approved by the stockholders. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards. | ||
(l) | Listing Rules.While the Company remains listed on ASX, the Company and the Administrator agree that they will not make any amendments to this Plan or issue any Awards or take any other action unless such action complies with the Listing Rules. | ||
(m) | No person to whom an award is made pursuant to this Plan has the rights of a stockholder with respect to Common Stock until the Common Stock have been issued upon the exercise of an Award and the Company shall make no adjustment for dividends, distributions or other rights for which the record date is before the date the Common Stock are issued. |
Table of Contents
1 | DEFINITIONS | |
Capitalised terms used in this Appendix and not otherwise defined have the same meanings as set out in the Glossary of the Information Memorandum. |
2 | INTRODUCTION |
3 | NUMBER OF CDIS ISSUED IN RELATION TO HEARTWARE INTERNATIONAL SHARES |
4 | CESSATION OF TRADING IN SHARES |
5 | TRADING IN CDIS ON ASX ON IMPLEMENTATION OF THE PROPOSED TRANSACTION |
Table of Contents
6 | VOTING |
• | instructing CDN, as the legal owner, to vote the HeartWare International Shares underlying their CDIs in a particular manner. The instruction form must be completed and returned to HeartWare International’s share registry prior to the meeting; | ||
• | informing HeartWare International that they wish to nominate themselves or another person to be appointed as CDN’s proxy for the purposes of attending and voting at the general meeting; | ||
• | converting their CDIs into a holding of HeartWare International Shares and voting these at the meeting (however, if thereafter the former CDI holder wishes to sell their investment on ASX, it would be necessary to convert HeartWare International Shares back to CDIs). This must be done prior to the record date for the meeting. See section 7 below for further information regarding the conversion process. |
7 | CONVERTING FROM A CDI HOLDING TO A DIRECT HOLDING OF HEARTWARE INTERNATIONAL |
• | directly in the case of CDIs on the issuer sponsored sub-register operated by HeartWare International. CDI holders will be provided with a form entitled “Removal Form” for completion and return to Computershare Investor Services Pty Limited, GPO Box 2975, Victoria, Australia 3001; or | ||
• | through their ‘sponsoring participant’ (usually your broker) in the case of CDIs which are sponsored on the CHESS subregister. In this case, your sponsoring broker will arrange for completion of the relevant form and its return to Computershare. |
8 | CONVERTING FROM A DIRECT HOLDING OF HEARTWARE INTERNATIONAL TO A CDI |
Table of Contents
9 | COMMUNICATION WITH CDI HOLDERS |
10 | DIVIDENDS AND OTHER SHAREHOLDER ENTITLEMENTS |
11 | LOCAL AND INTERNATIONAL TRADING IN CDIS |
12 | TAKEOVERS |
13 | FEES |
14 | FURTHER INFORMATION |
Level 3
60 Carrington Street
SYDNEY NSW 2000
Investor Enquiries: 1300 855 080
Table of Contents
HeartWare International
Level 57
MLC Centre
19–29 Martin Place
SYDNEY AUSTRALIA 2000
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
RIGHTS ATTACHING TO SHARES | ||||
Share capital | Australian law contains no concept of authorised capital or par value. The issue price of shares is set by the directors of the Company as at the time of the issue. | HeartWare International’s certificate of incorporation authorises the issue of up to 25,000,000 shares of common stock, US$ .001 par value per share, and up to 5,000,000 shares of preferred stock, US$.001 par value per share. | ||
Issue of additional shares | Subject to the Listing Rules and the Corporations Act restrictions on issuing shares to an entity controlled by the Company, the Company’s constitution authorises the Board to allot and issue any securities in the capital of the Company to any person on such terms and with such rights as the Board determines. Under the Listing Rules, the Company is prohibited from issuing or agreeing to issue equity securities, or other securities with rights of conversion to equity (such as an option), in any 12 month period which amount to more than 15% of the Company’s ordinary securities on issue unless it obtains shareholder approval or unless one of a number of exceptions apply. | HeartWare International’s certificate of incorporation permits an increase or decrease (but not below the number of shares which are currently outstanding) in the authorised shares of any class, by the affirmative vote of the holders of a majority of the outstanding common stock of the corporation, without the approval of the holders of any preferred stock of the corporation, or any such series, unless otherwise required by the certificate establishing any series of preferred stock. HeartWare International’s by-laws permit the issue of any unissued balance of the authorised shares of any class by vote of the board of directors in such manner, for such consideration and on such terms as the board of directors may determine, without stockholder approval. Under the ASX Listing Rules, HeartWare International is prohibited from issuing or agreeing to issue equity securities, or other securities with rights of conversion to equity (such as an option), in any 12 month period which amount to more than 15% of HeartWare International’s common stock on issue unless it obtains stockholder approval or unless one of a number of exceptions apply. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Issue of preference shares | The Company’s constitution authorises the Board to issue preference shares, including preference shares liable to be redeemed, subject to the Listing Rules. The Company, however, has never issued any preference shares. | HeartWare International’s certificate of incorporation authorises the board of directors to, from time to time, issue preferred stock in series and establish the number of shares in such series and fix the designation, powers, preferences and rights of the shares of such series and any qualifications, limitations or restrictions on those shares. | ||
Buy-back of shares | Australian law permits the Company to buy-back its outstanding shares through a specific buy-back scheme authorised by the Corporations Act if: • the buy-back does not materially prejudice the Company’s ability to pay its creditors; and • the Company follows the procedures set out in the Corporations Act. The form of shareholder approval (e.g. ordinary resolution or special/unanimous resolution), if required, and the notice period and disclosure to be given to shareholders depend on the type of buy-back. | Delaware General Corporation Law generally permits HeartWare International to purchase or redeem its outstanding shares out of funds legally available for that purpose without obtaining stockholder approval, provided that: • the capital of HeartWare International is not impaired; • such purchase or redemption would not cause the capital of HeartWare International to become impaired; • the purchase price does not exceed the price at which the shares are redeemable at the option of HeartWare International; and • immediately following any such redemption HeartWare International shall have outstanding one or more shares of one or more classes or series of stock, which shares shall have full voting powers. | ||
Transfer of shares | Under the Company’s constitution, securities in the Company are generally freely transferable. The Directors may refuse to register a transfer of shares only if: • permitted to do so by the Listing Rules or the ASTC Settlement Rules; or • subject to the Corporations Act, the Listing Rules and the ASTC Settlement Rules, registration of the transfer would create a new holding of an “unmarketable parcel,” as that term is defined in the Company’s constitution. The Directors must refuse to register a transfer of shares if: • the Corporations Act, the Listing Rules or the ASTC Settlement Rules forbid the registration; • registration of the transfer would give effect to a contract resulting from the acceptance of an offer made under a Proportional Takeover bid unless and until an Approving Resolution is passed (in accordance with the definition of those terms in the Corporations Act and the Listing Rules respectively); • subject to section 259C of the Corporations Act, registration of the transfer would result in a transfer to a subsidiary of the Company; or • the securities the subject of the transfer notice are classified as restricted securities under the Listing Rules. | Under Delaware General Corporation Law, shares are generally freely transferable subject to restrictions imposed by US federal or state securities laws, by the certificate of incorporation or by-laws of HeartWare International or by an agreement signed with the holders of the shares at issue. HeartWare International’s certificate of incorporation and by-laws do not impose any specific restrictions on transfer. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Dividends and distributions | The Company’s constitution permits the Board to declare dividends to shareholders from time to time in its sole discretion, subject to the limitation that dividends are paid out of the Company’s profits, including profits previously set aside as a reserve. Before declaring a dividend, the Directors must be satisfied that the proposed dividend can be paid without causing the Company to be unable to pay its debts as they fall due. | Under Delaware General Corporation Law, the board of directors of HeartWare International is permitted to declare and pay dividends to stockholders either: (a) out of HeartWare International’s surplus, which is defined to be the net assets less statutory capital; or (b) if no surplus exists, then out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, provided that the capital of the corporation is not less than the aggregate amount of the capital represented by the corporation’s outstanding stock of all classes having a preference on distributions of assets. | ||
Voting rights | The Company’s constitution provides that: • on a show of hands each shareholder has one vote; and • on a poll each shareholder has one vote for every fully paid share held and a fraction of a vote for each partly paid share held, with the fraction of the vote being equivalent to the portion of the share paid up. | HeartWare International’s by-laws provide that each stockholder has one vote for every share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share of stock entitled to vote so held, unless otherwise provided by Delaware General Corporation Law or in the certificate of incorporation. | ||
Variation of rights | As the Company’s constitution does not provide otherwise, the rights attached to shares of any class may be varied or cancelled only in accordance with section 246B of the Corporations Act: • with the written consent of holders of 75% of the issued shares of the affected class; or • by special resolution passed at a separate meeting of the holders of the issued shares of the affected class. The Corporations Act provides that where shareholders in a class do not all agree (whether by resolution or written consent) to the: • variation or cancellation of their rights; or • a modification to the company’s constitution to allow rights to be varied, shareholders with at least 10% of the votes in the class may apply to the court to have the variation, cancellation or modification set aside. Subject to the shares’ terms of issue, the rights attached to a class of shares are not deemed to be varied by the issue of further shares of that class. | Under Delaware General Corporation Law, any amendment to HeartWare International’s certificate of incorporation would entitle the holders of the outstanding shares of a particular class to vote as a class on the amendment if that amendment would: • increase or decrease the aggregate number of authorised shares of that class; • increase or decrease the par value of the shares of that class; or • alter or change the powers, preferences or special rights of the shares of that class so as to affect them adversely. If an amendment would alter or change the powers, preferences or special rights of one or more series of any class so as to adversely affect that series without adversely affecting the entire class, then only the shares of the series so affected shall be considered a separate class and entitled to such separate class approval of the proposed amendment. | ||
Under Delaware General Corporation Law, amendments to HeartWare International’s certificate of incorporation also generally require: • a board resolution recommending the amendment; and • approval of a majority of the outstanding shares entitled to vote and a majority of the outstanding shares of each class entitled to vote. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Variation of rights (continued) | Pursuant to HeartWare International’s by- laws and consistent with Delaware General Corporation Law and HeartWare International’s certificate of incorporation, HeartWare International’s by-laws may be amended by the affirmative vote of a majority of the directors present at a meeting at which a quorum is present and the vote is held or by the affirmative vote of the holders of at least 662/3% of the voting power of all of the shares of capital stock of the corporation then issued and outstanding and entitled to vote generally in any election of directors, voting together as a single class. | |||
CAPITAL RAISING | ||||
Listing Rules | Under the Listing Rules, the Company is prohibited from issuing or agreeing to issue equity securities, or securities with rights of conversion to equity (such as an option), in any 12 month period which amount to more than 15% of the Company’s ordinary securities on issue unless it obtains shareholder approval or unless one of a number of the specified exceptions apply. | Under the Listing Rules, HeartWare International will be prohibited from issuing or agreeing to issue equity securities, or securities with rights of conversion to equity (such as an option), in any 12 month period which amount to more than 15% of HeartWare International’s issued common stock on issue unless it obtains stockholder approval or unless one of a number of the specified exceptions apply. | ||
Continuous disclosure | Generally, the Listing Rules require the Company to disclose to ASX any information concerning the Company that a reasonable person would expect to have a material effect on the price or the value of the Company’s shares. US federal securities laws require the Company to publicly file with the SEC: • annual reports on Form 10-K; • quarterly reports on Form 10-Q; • periodic reports containing material information required to be disclosed on Form 8-K; • any information required to be filed with a stock exchange, such as ASX; and • any material information sent to security holders, such as proxy statements. | HeartWare International will be subject to both the Listing Rules and US federal securities laws and regulations following the implementation of the Share Scheme in relation to its continuous disclosure obligations. The Listing Rules will generally require HeartWare International to disclose to ASX any information concerning HeartWare International that a reasonable person would expect to have a material effect on the price or the value of HeartWare International’s shares. US federal securities laws and regulations require HeartWare International to publicly file with the SEC, among others: • annual reports on Form 10-K; • quarterly reports on Form 10-Q; • current reports containing material information required to be disclosed on Form 8-K; and • proxy statements. | ||
DIRECTORS | ||||
Powers of the Board | The Company’s constitution grants the Board the power to manage the Company’s business and to exercise all powers of the Company that are not required to be exercised by the Company in general meeting subject to the Corporations Act, Listing Rules and any other applicable law. | HeartWare International’s certificate of incorporation and by-laws grant the board of directors the power to manage or direct the management of HeartWare International’s business and affairs, and to exercise all such powers and do all such acts and things as may be exercised or done by the corporation except as otherwise provided by Delaware General Corporation Law or the certificate of incorporation. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Duties of Directors | Under Australian law, the Directors of the Company have certain general law and statutory obligations to the Company. These obligations include a duty to: • act in good faith in the interests of the company; • act for a proper purpose; • not to fetter their discretion; • to exercise care, skill and diligence; and • to avoid conflicts of interest. | Under Delaware Law, the directors of HeartWare International have fiduciary obligations, including the duty of care and the duty of loyalty. The duty of care requires directors to inform themselves of all reasonably available material information before making business decisions on behalf of HeartWare International and to act with requisite care in discharging their duties to HeartWare International. The duty of loyalty requires directors to act in good faith and in the best interests of HeartWare International and its stockholders. | ||
Compen- sation of Directors | The Corporations Act provides that payments to related parties (including directors) must be approved by resolution of the Company. Exceptions to this include the payment of reasonable remuneration to a person as an officer or employee of the Company and payments of expenses incurred. The Company’s constitution provides that compensation of the non-executive directors will be determined by the board, subject to the limitations that: • the compensation arrangements must not in any year exceed in aggregate the amount that the Company in general meeting determines; and • the compensation arrangements must not be a commission on or percentage of profits or operating revenue. The Company must repay a director for all reasonable costs and expenses incurred in attending board and committee meetings, in attending to the Company’s business and in carrying out his or her duties as a director. | HeartWare International’s by-laws provide that the directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the board of directors may from time to time determine. Such compensation and reimbursement will not preclude the directors from serving the corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service. | ||
Transactions involving directors | The Corporations Act prohibits the Company from giving a director a financial benefit unless either the Company obtains shareholders’ approval or the financial benefit is exempt (such as benefits given on arms’ length terms). The Listing Rules prohibit the Company from acquiring a substantial asset from, or disposing of a substantial asset to, any of its directors unless it obtains shareholder approval. Additionally, the Listing Rules prohibit the Company from issuing securities to any of its directors unless either it obtains shareholder approval or the securities issue is exempt (such as pro rata issues to shareholders). Directors, when entering into transactions with the Company, are subject to Australian common law and statutory duties to avoid conflicts of interest. | Under Delaware General Corporation Law, no contract or transaction between HeartWare International and one or more of its directors, or between HeartWare International and any other corporation, partnership, association or other organisation in which one or more of its directors are directors or officers or have a financial interest will be void or voidable solely for that reason, or solely because the relevant director is present at or participates in the HeartWare International board or committee meeting that authorises the contract or transaction, or solely because the vote of the relevant director is counted for that purpose, if: • the material facts as to the director’s relationship or interest, and as to the contract or transaction are disclosed or known to the board of directors or committee, and the board of directors or committee in good faith authorises the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Transactions involving directors (continued) | Within the parameters summarised above, under the Company’s constitution, a director’s position as such does not disqualify him or her from: • holding any other office or place of profit or employment, except with the Company’s auditor; • being a shareholder or creditor of any corporation (including the Company) or partnership, except of the Company’s auditor; or • entering into an agreement with the Company, provided, however, that a director discloses his or her interests in relation to being present and voting at a board meeting that considers a matter in which he or she has a material personal interest as required by sections 191 and 195 of the Corporations Act as well as any relevant general law principles. | • the material facts as to the director’s relationship or interest and as to the contract or transaction are disclosed or known to the HeartWare International stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or • the contract or transaction is fair to HeartWare International as of the time that it is authorised, approved or ratified by the board of directors, committee or stockholders. HeartWare International’s by-laws provide that interested directors may be counted in determining the presence of a quorum at a board or committee meeting at which a contract or transaction in which a director has an interest is authorised. The Listing Rules will prohibit HeartWare International from acquiring a substantial asset from, or disposing of a substantial asset to, any of its directors unless it obtains stockholder approval. Additionally, the Listing Rules will prohibit HeartWare International from issuing securities to any of its directors unless either it obtains stockholder approval or the security issue is exempt (such as pro rata issues to stockholders). | ||
Number and nomination of directors | Under Listing Rule 14.3, the Company is required to accept nominations for the election of directors up to 35 business days (30 business days in the case of a meeting requested by shareholders) before the date of a general meeting at which the directors are elected. Under the Company’s constitution, the Company cannot validly elect a person as a director unless the person has retired and sought re-election or the board has recommended the appointment, or at least 35 business days before the meeting (30 business days in the case of a meeting requested by the Company’s shareholders) the Company has received both a nomination for that person and a consent to act as a director signed by that person. As a public company in Australia, the Company must have not fewer than three directors and at least one company secretary. At least two of directors and one company secretary must reside in Australia. | HeartWare International’s by-laws provide that the number of directors is initially three and thereafter, subject to the rights of any series of preferred stock to elect directors under specified circumstances, will be fixed from time to time exclusively by the board of directors pursuant to a resolution adopted by a majority of the total number of authorised directors (whether or not there exist any vacancies in previously authorised directorships at the time any such resolution is presented to the board for adoption). HeartWare International’s by-laws provide that directors may be nominated either (a) by the board of directors or a duly authorised committee thereof, or (b) by any stockholder entitled to vote in the election of directors generally, provided that a stockholder desiring to nominate a director complies with the following procedure. In order to nominate directors at an annual meeting, a stockholder must provide HeartWare International’s secretary with advance written notice of his or her intent to make the nomination at least 120 calendar days in advance of the first anniversary of the date that corporation’s proxy statement was released to stockholders in connection with the previous year’s annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been advanced by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, notice must be received not later than the tenth day following the day on which public announcement of the date of such meeting is first made. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Number and nomination of directors (continued) | Each such notice must set forth: • the name and address of the stockholder who intends to make the nomination, of the beneficial owner, if any, on whose behalf the nomination is being made and of the person or persons to be nominated; | |||
• a representation that the stockholder is a holder of record of stock of the corporation entitled to vote for the election of directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; | ||||
• a description of all arrangements or understandings between the stockholder or such beneficial owner and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; | ||||
• such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, had the nominee been nominated, or intended to be nominated, by the board of directors; | ||||
• the consent of each nominee to serve as a director of the corporation if so elected; and | ||||
• the class and number of shares of the corporation that are owned beneficially and of record by such stockholder and such beneficial owner, if any. | ||||
In order to nominate directors at a special meeting of stockholders for the election of directors, the stockholder notice must be delivered to HeartWare International’s secretary not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 70th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. | ||||
Removal of directors | Under the Corporations Act, the shareholders of the Company may remove a director by passing an ordinary resolution to do so at a general meeting. Under the Corporations Act, members with at least 5% of the votes that can be cast on a resolution or at least 100 members who are entitled to vote at a general meeting may give the Company notice of a resolution they propose to move at a general meeting. A notice of intention to move the resolution must be given to the Company at least two months before the meeting is to be held. However, if the Company calls a meeting after the notice of intention is given, the meeting may pass the resolution even though the meeting is held less than two months after the notice of intention is given. | HeartWare International’s by-laws provide that, subject to the rights of the holders of any series of preferred stock then outstanding, directors may be removed for cause by the affirmative vote of the holders of a majority of the voting power of all of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Removal of directors (continued) | The Company’s constitution further provides that a person automatically ceases to be a director if the person: | |||
• is removed from office as a director by a resolution of the Company at a general meeting; | ||||
• is not permitted under the Corporations Act to be a director; | ||||
• dies; | ||||
• becomes of unsound mind or physically or mentally incapable of performing the functions of that office; | ||||
• fails to attend Board meetings (either personally or by an alternate) for a continuous period of six months without leave of absence from the Board; or | ||||
• resigns by notice in writing to the Company. | ||||
Casual vacancies | Subject to the other terms of the Company’s constitution, the Board may appoint a person to be a director at any time, except during a general meeting. Any director so appointed automatically retires at the next annual general meeting and is not taken into account in deciding the rotation or retirement of directors. | HeartWare International’s by-laws provide that, subject to the rights of the holders of any series of preferred stock then outstanding, vacancies in the board of directors will be filled by a majority vote of the directors then in office, even if less than a quorum (and not by stockholders), or by the sole remaining director, or, to the extent required by the certificate of incorporation, by the stockholders. | ||
Rotation of directors | The Listing Rules require the directors, other than the managing director, to retire by rotation. The Company’s constitution also states that at every annual general meeting, one-third of the directors (other than the managing director) or, if their number is not a multiple of three, then the number nearest but not less than one-third must retire. Directors required to retire are those who have been longest in office since last being elected. A retiring director is eligible for re-election. The Company’s constitution also states that a director (other than a managing director) must retire from office at the conclusion of the third annual general meeting after which the director was elected or re-elected. | Neither Delaware General Corporation Law nor HeartWare International’s certificate of incorporation provide for mandatory retirement or rotation of directors. HeartWare International has a classified board of directors which means that one third of the directors (or if the number of directors is not a multiple of three, then the number nearest) is elected annually. HeartWare International’s by-laws provide that each director shall hold office until his or her successor is duly elected and qualified, except in the case of his or her death, resignation or removal. | ||
Directors’ indemnity | The Corporations Act prohibits indemnification of directors against specific liabilities. These are liabilities: • owed to the company or a related body corporate; • for a pecuniary penalty order or a compensation order under the Corporations Act; or • that is owed to someone other than the company or a related body corporate and did not arise out of conduct in good faith. | HeartWare International’s by-laws provide that, to the fullest extent permitted by Delaware General Corporation Law, HeartWare International will indemnify and hold harmless a director in an action brought by reason of the fact that the director is or was a director of HeartWare International, or is, or was, serving at the request of HeartWare International as a director or officer of any other entity, against all expenses, liability and loss reasonably incurred or suffered by such person in connection therewith. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Directors’ indemnity (continued) | The Corporations Act prohibits an indemnity for legal costs in specific circumstances including where an officer is liable, found guilty or where the grounds for a court order have been made out. Payment by a company of insurance premiums which cover conduct involving a wilful breach of duty or a breach of certain statutory directors duties is also prohibited under the Corporations Act. | HeartWare International may maintain insurance to the extent reasonably available to protect a director against any expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under Delaware General Corporation Law. | ||
The Company’s constitution provides that the Company may, subject to and so far as permitted by the Corporations Act, indemnify every officer, director and secretary of the Company out of the assets of the Company, against any liability, loss, damage, cost or expense incurred as a result of the conduct of any activity of the Company or arising from the proper performance of duties. | ||||
Directors’ liability | Under the Corporations Act, there is a general prohibition on a company or a related body corporate exempting officers from liability. | Under Delaware General Corporation Law, HeartWare International may include in its certificate of incorporation a provision eliminating the personal liability of a director to the company or its stockholders for monetary damages for a breach of fiduciary duty as a director. However, the provision may not eliminate liability for (a) breach of the director’s duty of loyalty, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (c) unlawful payment of dividends, (d) unlawful purchases or redemptions of shares, or (e) any transaction from which the director derived an improper personal benefit. HeartWare International’s certificate of incorporation provides that, to the fullest extent permitted by Delaware General Corporation Law, a director shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. | ||
Corporate governance | The Company’s board structure, the independence of its board members, the existence and composition of its various board committees and its corporate policies as a whole must comply with the Listing Rules and US federal securities laws (including without limitation the Sarbanes-Oxley Act). | HeartWare International’s board structure, the independence of its board members, the existence and composition of its various board committees and its corporate policies as a whole must comply with applicable Listing Rules, US federal securities laws (including without limitation the Sarbanes-Oxley Act) and Delaware General Corporation Law. | ||
Insider trading | The Corporations Act prohibits (subject to exceptions) any person who possesses price-sensitive information relating to the Company or its securities from buying or selling those securities or procuring others to do so, or from communicating the information to third parties. | US federal securities laws generally prohibit any person who possesses material non-public information relating to HeartWare International or its securities from buying or selling those securities or procuring others to do so, or from communicating the material non-public information to third parties. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
SHAREHOLDERS’ MEETINGS | ||||
Quorum of shareholders | The Company’s constitution states that the quorum for a general meeting of the Company’s shareholders is two shareholders present in person or by proxy and entitled to vote. | HeartWare International’s by-laws provide that, except as otherwise provided by Delaware General Corporation Law or the by-laws of HeartWare International, the holders of a majority of the shares of the capital stock of the corporation entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business. Where a separate class vote by a class or classes or series is required, a majority of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. | ||
Annual meetings | Under the Corporations Act, the annual general meeting of the Company is required to be held at least once every calendar year and within five months after the end of each financial year. | Delaware General Corporation Law requires HeartWare International to have an annual stockholders’ meeting to elect directors, unless directors are elected by written consent in lieu of an annual meeting. Under Delaware General Corporation Law, a director or stockholder of HeartWare International may petition the Court of Chancery of Delaware for an order compelling the holding of an annual meeting if: | ||
• no annual meeting has been held, or action by written consent to elect directors in lieu of an annual meeting has been taken, for a period of 30 days after the date designated for the annual meeting; or | ||||
• if no date for an annual meeting has been designated, a period of 13 months has passed after the latest to occur of HeartWare International’s organisation, the last annual meeting or the last action by written consent to elect directors in lieu of an annual meeting. | ||||
Special /extraordinary meetings | Under the Company’s constitution, a meeting of shareholders may be convened at any time by the Board or a Director and must be called by the Board when it receives a request to do so from members with at least 5% of the votes that may be cast at the meeting or at least 100 members who are entitled to vote at the meeting. | HeartWare International’s by-laws permit special meetings of stockholders for any purposes prescribed in the notice of the meeting to be called at any time by the board of directors, the chairman of the board of directors or the president of the corporation. | ||
Notice of meetings | Under the Corporations Act, notice of a general meeting of the Company must be given to the Company’s shareholders at least 28 days before the meeting. A notice of meeting must specify: • the date, time and place of the meeting; • the general nature of the business to be transacted at the meeting; | Delaware General Corporation Law and HeartWare International’s by-laws provide that notice of a stockholders’ meeting must be delivered not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided in HeartWare International’s by-laws or as required by Delaware General Corporation Law. | ||
• any proposed resolutions; | ||||
• inform members of the right to appoint a proxy; and | ||||
• where directors are being elected, the names of those directors. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Resolutions at general meetings | A resolution at a general meeting is to be passed by a majority of votes cast by those present and voting, unless the Corporations Act provides otherwise. | HeartWare International’s by-laws provide that, when a quorum is present at any meeting of stockholders, any election of directors shall be determined by a plurality of the votes cast by the stockholders entitled to vote at the election, and any other matter shall be determined by a majority in voting power of the shares present in person or represented by proxy and entitled to vote on the matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, a majority of the shares of each such class present in person or by proxy and entitled to vote on the matter shall decide such matter), except when a different vote is required by express provision of Delaware General Corporation Law, the certificate of incorporation or the by-laws of the corporation. | ||
Delaware General Corporation Law requires the approval of a majority of all votes entitled to be cast by HeartWare International stockholders for specified actions including: | ||||
• dissolution of the corporation; | ||||
• most mergers or consolidations; and | ||||
• amendments to the corporation’s certificate of incorporation. | ||||
Special resolutions | Under the Corporations Act, a special resolution is passed by 75% of the votes cast by members present and voting and entitled to vote on the resolution. | Delaware General Corporation Law contains no concept of special resolutions. | ||
Approval by special resolution of shareholders is required for actions such as modifying or repealing the Company’s constitution, changing the company’s name or type, selectively reducing or buying back capital (in some circumstances), providing financial assistance in connection with the acquisition of shares in the Company, and undertaking a voluntary winding up of the Company. | ||||
Derivative actions | Under common law, the Company’s shareholders do not have the right to bring a common law action on behalf of the Company. Under the Corporations Act, a statutory derivative action may be instituted by a shareholder, former shareholder or person entitled to be registered as a shareholder of the Company or an officer or former officer of the Company. In all cases, leave of the court is required. Such leave will be granted if: • it is probable that the Company will not itself bring the proceedings or properly take responsibility for them; • the applicant is acting in good faith; • it is in the best interests of the Company that the applicant be granted leave; • there is a serious question to be tried and either: | Delaware General Corporation Law permits a HeartWare International stockholder to bring a derivative action on behalf of HeartWare International if those in control of HeartWare International have failed to assert a claim belonging to HeartWare International. | ||
Derivative actions have certain standing and eligibility requirements, including, that the plaintiff in the action must generally have been a stockholder of the company at the time that the act complained of occurred and must maintain his or her status as a stockholder of the company throughout the course of the litigation. Derivative plaintiffs must have previously made a demand on the directors of the company to assert the corporate claim, unless such a demand would have been futile. | ||||
(i) at least 14 days before making the application, the applicant gave written notice to the Company of the intention to apply for leave and of the reasons for applying; or | ||||
(ii) it is otherwise appropriate for the court to grant leave. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS | ||||
Relief from oppression | Under the Corporations Act, any shareholder of the Company can apply for an order from the court in cases of conduct which is either: • contrary to the interests of shareholders as a whole; • oppressive to, unfairly prejudicial to, or unfairly discriminatory against, any shareholders in that capacity or any other capacity. | Delaware General Corporation Law contains no equivalent statutory provisions. However, Delaware General Corporation Law may provide judicial remedies to stockholders in comparable circumstances. | ||
Former shareholders can also bring an action if it relates to the circumstances in which they ceased to be a shareholder. | ||||
Inspection of books | Under the Corporations Act, a shareholder of the Company must obtain a court order to obtain access to the Company’s books and records. | Delaware General Corporation Law provides each HeartWare International stockholder with the right during normal business hours to inspect for any proper purpose, and to make copies of and to take extracts from, certain books and records of HeartWare International upon the stockholder making a written demand under oath stating the purpose of his or her inspection. | ||
The books and records subject to a stockholders’ right of inspection include HeartWare International’s stock ledger, HeartWare International’s list of stockholders and certain other books and records of HeartWare International and its subsidiaries. | ||||
TAKEOVERS | ||||
Takeovers | The Corporations Act restricts the acquisition by any person of a “relevant interest” in a “voting share” of the Company where, because of a transaction, that person or someone else’s percentage “voting power” in the Company increases above 20% (or, where the person’s voting power was already above 20% and below 90%, increases in any way at all) subject to certain exceptions such as where the change is approved by shareholders or results from a pro rata issue. | Section 203 of the Delaware General Corporation Law, from which HeartWare International did not elect to opt out, provides that if a holder acquires 15% or more of HeartWare International’s stock without prior approval of the board of directors, then for three years HeartWare International cannot engage in a broad range of business combinations with such interested holder. Such limitations do not apply under certain circumstances, including if either the holder buys at least 85% of HeartWare International’s stock (other than stock owned by directors who are also officers and certain employee stock plans) in a transaction whereby that holder acquires its 15% interest, or the business combination is subsequently approved by the board of directors and two-thirds of the stock held by persons other than such holder. | ||
One of the key exceptions to these restrictions is where the shares are acquired under takeover offers made under the Corporations Act to all shareholders, which must be on the same terms for all shareholders (subject to minor exceptions) and which must comply with the timetable and disclosure requirements of the Corporations Act. The purpose of these provisions is to attempt to ensure that shareholders in the target company have a reasonable and equal opportunity to share in any premium for control and that they are given reasonable time and enough information to assess the merits of the proposal. These provisions will cease to apply to the Company upon implementation of the Proposed Transaction. |
Table of Contents
Rights of Holders of Shares | Rights of Holders of | |||
in the Company | HeartWare International Shares | |||
Takeovers (continued) | Certain provisions of the certificate of incorporation and by-laws of HeartWare International also have the potential effect of deterring takeovers, such as those provisions: | |||
• authorising the board of directors to issue from time to time any series of preferred stock and fix the designation, powers, preferences and rights of the shares of such series of preferred stock; | ||||
• prohibiting stockholders from acting by written consent in lieu of a meeting; | ||||
• requiring advance notice of stockholder intention to put forth director nominees or bring up other business at a stockholders’ meeting; and | ||||
• prohibiting stockholders from calling a special meeting of stockholders. | ||||
The certificate of incorporation and by-laws of HeartWare International may be amended in the future pursuant to these provisions and Delaware General Corporation Law to authorise additional takeover defence mechanisms. | ||||
Winding Up | The Company’s constitution states that if the Company is wound up any property that remains (after satisfaction of all debts and liabilities of the | Delaware General Corporation Law permits the board of directors to authorise the dissolution of HeartWare International, if: | ||
Company, the payments of costs and expenses of winding up and any adjustment of the rights of contributories amount shareholders) must be distributed among shareholders equally. | • a majority of the directors in office adopt a resolution to approve dissolution at a board meeting called for that purpose; | |||
• holders of a majority of the issued and outstanding shares entitled to vote on the matter adopt a resolution to approve dissolution at a stockholders’ meeting called for that purpose; and | ||||
• a certificate of dissolution is filed with the Delaware Secretary of State. | ||||
Delaware General Corporation Law also permits stockholders to authorise the dissolution of HeartWare International without board action, if: | ||||
• all of the stockholders entitled to vote on the matter provide written consent to dissolution; and | ||||
• a certificate of dissolution is filed with the Delaware Secretary of State. |
Table of Contents
• | each person, or group of affiliated persons, who is known by the Company to beneficially own 5% or more of any class of the Company’s voting securities; and | |
• | each of the Company’s named executive officers. |
Number of Shares | Percent of Shares | |||||||
Name and Address of Beneficial Owner | Beneficially Owned | Outstanding | ||||||
5% Shareholders | ||||||||
Apple Tree Partners I, L.P. 501 Kings Highway East, E-1, Fairfield, Connecticut 08625 | 93,538,782 | 30 | % | |||||
Muneer A. Satter 71 S. Wacker Drive, Suite 500, Chicago, IL 60606 | 48,000,000 | 1 | 15 | % | ||||
FMR LLC and FIL Limited 82 Devonshire Street, Boston MA 02109 | 25,807,667 | 8 | % | |||||
Deephaven Capital Management LLC 130 Cheshire Lane, Suite 102, Minnetonka, MN 56305 | 20,515,180 | 2 | 7 | % | ||||
Barclays Global Investors Australia Limited Level 43, 225 George Street, Sydney NSW Australia 2000 | 18,957,292 | 6 | % | |||||
Executive Officers | ||||||||
David McIntyre | 1,415,357 | 3 | * | |||||
Jeffrey LaRose | 2,163,153 | 4 | 1 | % | ||||
Ramon Paz | 185,000 | 5 | * | |||||
James Schuermann | — | * | ||||||
Barry Yomtov | 150,000 | 6 | * | |||||
David Hathaway | — | * | ||||||
Lauren Farrell | 37,500 | 7 | * |
* | Indicates less than 1% | |
1 | Represents shares held by Muneer A. Satter as trustee for (i) Muneer A. Satter Revocable Trust, (ii) Satter Children’s Trust, (iii) Satter Family Trust, (iv) Kristen Hayler Hertel Revocable Trust, (v) Gordon and Barbara Anne Hertel Insurance Trust (vi) Albus Satter Insurance Trust (vii) Anne-Carole Wtiort Insurance Trust (vi) Albus Satter Insurance Trust (vii) Anne-Carole Witort Insurance Trust, (viii) Rose Shereen Fuqua Insurance Trust, (ix) Rabi H. Satter Insurance Trust and (x) The Satter Foundation. | |
2 | Includes 17,409,228 shares held in its capacity as investment advisor to Deephaven Growth Opportunities Trading Ltd. and 3,105,952 shares held in its capacity as investment advisor to Deephaven Event Trading Ltd. | |
3 | Represents 1,387,357 shares subject to options exercisable within 60 days of August 25, 2008 and 28,000 shares held by Mr McIntyre’s spouse. | |
4 | Represents shares subject to options exercisable within 60 days of August 25, 2008. | |
5 | Includes 170,000 shares subject to options exercisable within 60 days of August 25, 2008. | |
6 | Represents shares subject to options exercisable within 60 days of August 25, 2008. | |
7 | Represents shares subject to options exerciseable within 60 days of August 25, 2008. |
Table of Contents
Table of Contents
• | offer sufficient rewards to attract and retain executives in light of current employment market conditions in the industry in which the Company operates; | |
• | link rewards for executives to the achievement of corporate goals thereby aligning the interest of the Company’s executives and its shareholders; | |
• | ensure parity in terms of compensation among executives; and | |
• | assess and reward executives using a varied performance measures. |
• | meeting with management and selected members of the Board of Directors for the purposes of learning about the Company, its background, historical compensation practices and perceived shareholder views; | |
• | collecting and analysing Company-specific background data from management for the purposes of independent analysis; and | |
• | identifying and examining the compensation practices of a peer group of comparable, publicly traded, development stage, biotechnology and medical device companies located in the US, and comparing that data to the Company’s data. |
Table of Contents
• | Overall, base salaries for executives of the Company were lower than the median and most executives were almost 10% below the median of the Peer Group. | |
• | The Company has not established an annual cash bonus despite most pre-commercial biotech companies maintaining a common annual bonus structure for their senior executives. The Company had pre-established target annual bonus for only 3 executives (i.e. Mr Godshall, Mr Rowe and Ms Foley). | |
• | Actual 2006 cash compensation (i.e. salary plus bonus) was approximately 10% below median for the Company’s eight most highly compensated executives. | |
• | The Company’s senior executives have an aggregate carried-interest ownership that is below the 25th percentile of the Peer Group and the actual value of this ownership is diminished because the Company historically granted premium-priced equity (i.e. equity that is priced higher than the fair market value of the underlying security at the relevant grant date). |
Table of Contents
Base Salary of Peer Group | ||||||||||||||||||||
25th | 75th | Actual | ||||||||||||||||||
Percentile | Median | Percentile | Base | |||||||||||||||||
Name | Title | (US$) | (US$) | (US$) | Salary (US$) | |||||||||||||||
Godshall, Doug | CEO | 319,000 | 348,000 | 371,000 | 350,000 | |||||||||||||||
McIntyre, David | CFO | 216,000 | 237,000 | 252,000 | 225,000 | |||||||||||||||
LaRose, Jeff | CSO | 213,000 | 246,000 | 262,000 | 225,000 | |||||||||||||||
Rowe, Dozier | COO | 252,000 | 277,000 | 351,000 | 225,000 | |||||||||||||||
Foley, Jennifer | VP. Clin & Reg | 197,000 | 228,000 | 242,000 | 220,000 |
• | Mr Godshall, who received $71,250; | |
• | Mr McIntyre, who received $45,000; | |
• | Mr LaRose, who received $45,000; | |
• | Ms Foley, who received $30,000; and | |
• | Mr Rowe, who received $27,000. |
Table of Contents
Maximum | Actual | Actual | ||||||||||||||
Criteria | Target % | Bonus ($) | % | Bonus ($) | ||||||||||||
Completion of capital raise | 40 | % | 30,000 | 40 | % | 30,000 | ||||||||||
Completion of CE Mark Enrolment | 20 | % | 15,000 | 20 | % | 15,000 | ||||||||||
Submission of the HVAD IDE application | 15 | % | 11,250 | 15 | % | 11,250 | ||||||||||
Development of a shareholder communication strategy | 15 | % | 11,250 | 10 | % | 7,500 | ||||||||||
Overall leadership and development of the Company | 10 | % | 7,500 | 10 | % | 7,500 | ||||||||||
$ | 75,000 | $ | 71,250 |
Bonus as a Percentage of Base Salary | ||||||||||||||||||||||||
Peer Group | ||||||||||||||||||||||||
25th | 75th | Actual Bonus | ||||||||||||||||||||||
Name | Title | Percentile | Average | Percentile | Percentage | $ | ||||||||||||||||||
McIntyre, David | CFO | 12 | % | 21 | % | 31 | % | 20 | % | 45,000 | ||||||||||||||
LaRose, Jeff | CSO | 0 | % | 17 | % | 28 | % | 20 | % | 45,000 | ||||||||||||||
Rowe, Dozier | COO | 17 | % | 22 | % | 30 | % | 12 | % | 27,000 |
Table of Contents
Table of Contents
• | in connection with the appointment of Ms Foley as Vice-President, Clinical and Regulatory Affairs with effect from January 2, 2007, Ms Foley was granted 1,000,000 options on commencement of her employment with HeartWare, Inc and otherwise in accordance with the terms of her employment agreement. The exercise price of these options was AU$1.10, which constituted a 57% premium to the share price at the date of grant, which was AU$0.70; and | |
• | on November 13, 2007, the Company approved the grant of up to an aggregate of 3.15 million performance rights under the PRP to its executive officers. Accordingly, on November 16, 2007, Mr McIntyre received 400,000 performance rights, Mr LaRose received 300,000 performance rights and each of Mr Rowe and Ms Foley received 200,000 performance rights. Mr Godshall was allocated 1.1 million performance rights, subject to Shareholders approving such grant (as required by the ASX Listing Rules – Shareholders approved the grant at the Company’s annual general meeting held on May 9, 2008 and the 1.1 million performance rights were issued that day). The exercise price for the performance rights is zero and the performance rights lapse if they have not vested within 5 years of the grant date. Vesting of the performance rights is subject to the performance hurdles set out below. The share price at the date of grant was AU$0.75. |
• | vesting for the first tranche, representing 25% of each allotment, occurs on the last to occur of the first anniversary of the grant date, the Company receiving CE mark in Europe, the Company filing its application for Therapeutic Goods Association approval in Australia and the commencement of the Company’s Bridge-to-Transplant trial in the US; | |
• | vesting for the second tranche, representing 25% of each allotment, occurs on the last to occur of the second anniversary of the grant date and the completion of enrolment under the Company’s Bridge-to-Transplant trial in the US; | |
• | vesting for the third tranche, representing 25% of the each allotment, occurs on the last to occur of the third anniversary of the grant date, the Company filing an application for Pre-Market Approval with the United States Food and Drug Administration as a Bridge-to-Transplant therapy and the completion of enrolment under the Company’s Destination Therapy clinical trial in the US; and | |
• | vesting for the fourth tranche, representing 25% of the each allotment, occurs on the last to occur of the fourth anniversary of the grant date and the Company completing a human feasibility study for its next generation device, the MVAD. |
Table of Contents
Non- | Change in | |||||||||||||||||||||||||||||||||||
Equity | Pension | |||||||||||||||||||||||||||||||||||
Incentive | Value and | |||||||||||||||||||||||||||||||||||
Plan | Non- | |||||||||||||||||||||||||||||||||||
Stock | Option | Compen- | qualified | All Other | ||||||||||||||||||||||||||||||||
Bonus | Awards | Awards | sation | Deferred | Compen- | |||||||||||||||||||||||||||||||
Name and Principal | Salary | (1) | (2) | (3) | (4) | (5) | sation | Total | ||||||||||||||||||||||||||||
Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
Douglas Godshall | 2007 | 350,000 | — | — | — | 71,250 | — | — | 421,250 | |||||||||||||||||||||||||||
Chief Executive | 2006 | 87,500 | 75,000 | 7 | — | 2,217,984 | 8 | — | — | — | 2,380,484 | |||||||||||||||||||||||||
Officer6 | ||||||||||||||||||||||||||||||||||||
David McIntyre | 2007 | 225,000 | 45,000 | 262,717 | — | — | — | 108,000 | 10 | 640,717 | ||||||||||||||||||||||||||
Chief Financial | 2006 | 186,834 | 9 | 35,000 | — | 79,367 | — | 5,003 | 111,127 | 11 | 417,331 | |||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||||||
Dozier Rowe | 2007 | 225,000 | 27,000 | 131,358 | — | — | — | — | 383,358 | |||||||||||||||||||||||||||
Chief Operating | 2006 | 147,212 | — | — | 79,367 | — | — | — | 226,579 | |||||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||||||
Jeffrey LaRose | 2007 | 225,000 | 45,000 | 197,038 | — | — | — | — | 467,038 | |||||||||||||||||||||||||||
Chief Scientific | 2006 | 211,539 | 45,000 | — | 79,367 | — | — | — | 335,906 | |||||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||||||
Jennifer Foley | 2007 | 211,539 | 30,000 | 131,358 | 376,736 | 30,000 | 12 | — | — | 779,633 | ||||||||||||||||||||||||||
Vice-President, | 2006 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Clinical and Regulatory | ||||||||||||||||||||||||||||||||||||
Jane Reedy | 2007 | 439,231 | 13 | — | — | — | — | — | — | 439,231 | ||||||||||||||||||||||||||
Former Vice | 2006 | 200,000 | 25,000 | — | 79,367 | — | — | — | 304,367 | |||||||||||||||||||||||||||
President, Sales and Marketing |
1 | Unless otherwise stated, the amount specified represents a cash bonus paid on October 31, 2007 as part of a Company-wide discretionary bonus in recognition of the completion of enrolment in the Company’s international clinical trials, the filing of an investigational device exemption, or IDE, with the US Food & Drug Administration and the Company’s overall progress since June 2006. | |
2 | All performance rights, or stock awards, are issued with an exercise price of nil. The amount referenced is calculated by multiplying the number of stock awards granted by the closing market price of the Company’s stock on the relevant grant date as published by the Australian Securities Exchange. The stock awards were granted on November 16, 2007 when the closing market price was AU$0.745 and was converted using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816. The amount referenced could also have been calculated, and generated the same grant date fair value, using the Black-Scholes valuation model adopting the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. |
Table of Contents
3 | All option awards are issued with an exercise price in AU$. All 2006 amounts were converted using the exchange rate at December 31, 2006 of AU$1.00 = US$0.7913. All 2007 amounts were converted using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816. In each case, the amount referenced is calculated at the relevant grant date using the Black-Scholes valuation model adopting the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. | |
4 | The amounts reported were all paid on October 31, 2007. Further details of these payments are set out under the heading “Bonus” under the “Elements of Compensation” above. | |
5 | Statutory payments for superannuation (i.e. pension) fund equal to 9% of annual salary. This only applied for the period during 2006 in which Mr McIntyre was employed in Australia and the amount was converted into US$ using the average exchange rate during the 2006 fiscal year of AU$1.00 = US$0.7580. | |
6 | Mr Godshall commenced employment as Chief Executive Officer of the Company on September 18, 2006 and became a director of the Company on October 28, 2006. Mr Godshall does not receive any compensation for his services as a director. | |
7 | Represents a sign-on bonus on commencement of employment on September 18, 2006. | |
8 | The Board determined in November 2007 to grant 1.1 million performance rights to Mr Godshall with an exercise price of zero. However, the ASX Listing Rules require that all equity grants to Mr Godshall be first approved by the Company’s shareholders. This approval was obtained at the Company’s Annual General Meeting on May 9, 2008. | |
9 | Mr McIntyre’s base salary includes AU$73,333 paid in Australian dollars while Mr McIntyre resided in Australia. Amounts were converted into US$ using the average exchange rate during the 2006 fiscal year of AU$1.00 = US$0.7580. | |
10 | Includes twelve monthly after-tax payments of approximately US$6,000 (gross cost US$9,000) for the purposes of assisting Mr McIntyre with the provision of comparative housing, financing of motor vehicles, rental shortfall on his Australian residence and other incremental recurring costs associated with his relocation to the US. | |
11 | Includes a one-time pre-tax payment of $27,750 as a relocation allowance and seven monthly after-tax payments of approximately US$6,000 (gross cost US$9,000) for the purposes of assisting Mr McIntyre with the provision of comparative housing, financing of motor vehicles, rental shortfall on his Australian residence and other incremental recurring costs associated with his relocation to the US. As at December 31, 2006, a pre-tax amount of US$80,077 (AU$105,647) has been paid to Mr McIntyre in this regard. The 2006 amount also includes $3,300 related to the cost of providing a maintained motor vehicle and car parking space during his employment in Australia. | |
12 | This amount represents a sign-on bonus on commencement of employment in September 2006. | |
13 | Ms Reedy was HeartWare, Inc’s Vice President, Sales and Marketing until September 12, 2007 and resigned all positions with HeartWare, Inc with effect from December 31, 2007. The 2007 compensation includes an accrual for severance recorded in the fiscal year ended December 31, 2007 that will be paid to Ms Reedy in 2008. |
For the Year Ended December 31, 2007
All other | ||||||||||||||||||||||||||||||||||||||||||||
Option | Grant | |||||||||||||||||||||||||||||||||||||||||||
Awards: | Date Fair | |||||||||||||||||||||||||||||||||||||||||||
Estimated Future | Estimated Future | Number of | Exercise or | Value of | ||||||||||||||||||||||||||||||||||||||||
Payouts Under | Payouts Under | Securities | Base Price | Stock and | ||||||||||||||||||||||||||||||||||||||||
Non-Equity | Equity Incentive Plan | Underlying | of Option | Option | ||||||||||||||||||||||||||||||||||||||||
Action | Grant | Incentive Plan Awards3 | Awards4 | Options | Awards | Awards | ||||||||||||||||||||||||||||||||||||||
Date | Date | Threshold | Target | Maximum | Threshold | Target | Maximum | 5 | 6 | 7 | ||||||||||||||||||||||||||||||||||
Name and Position | 1 | 2 | ($) | ($) | ($) | (#) | (#) | (#) | (#) | ($/sh) | ($) | |||||||||||||||||||||||||||||||||
Douglas Godshall | — | — | — | 75,000 | 75,000 | — | — | 8 | — | — | — | — | ||||||||||||||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||||||||||||||||||
David McIntyre | 11/13/07 | 11/16/07 | — | — | — | — | 400,000 | 400,000 | — | — | 262,717 | |||||||||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||||||||||||||||||
Dozier Rowe | 11/13/07 | 11/16/07 | — | — | — | — | 200,000 | 200,000 | — | — | 131,358 | |||||||||||||||||||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||||||||||||||||||||||||||
Jeffrey LaRose | 11/13/07 | 11/16/07 | — | — | — | — | 300,000 | 300,000 | — | — | 197,038 | |||||||||||||||||||||||||||||||||
Chief Scientific | 12/21/06 | 01/02/07 | 9 | — | — | — | — | — | — | 1,000,000 | 0.97 | 10 | 376,736 | 11 | ||||||||||||||||||||||||||||||
Officer | ||||||||||||||||||||||||||||||||||||||||||||
Jennifer Foley | 11/13/07 | 11/16/07 | — | — | — | — | 200,000 | 200,000 | — | — | 131,358 | |||||||||||||||||||||||||||||||||
Vice-President, Clinical and Regulatory | ||||||||||||||||||||||||||||||||||||||||||||
Jane Reedy | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Former Vice- President Sales and Marketing |
1 | This date represents the date on which the Board resolved to issue the option or stock award. | |
2 | This date represents the date on which the option or stock award was entered into the Company’s register of option holders. | |
3 | Details of this payment to Mr Godshall are set out under the heading “Bonus” under the “Elements of Compensation” section above. |
Table of Contents
4 | The amounts represent the number of shares in the Company expected to be issued to the relevant named executive officer under the Company’s Performance Rights Plan. These stock awards vesting in four equal tranches on satisfaction of various performance hurdles, details of which are set out under the heading “Equity Grants” above. | |
5 | These option awards vest in four equal annual tranches commencing on the first anniversary of the grant date. | |
6 | All option awards are issued with an exercise price in AU$ and are converted into US$ using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816. | |
7 | With the exception of the option awards granted to Ms Foley on January 2, 2007, all amounts refer to a grant of performance rights, or stock awards, with an exercise price of nil. The amount referenced in the table is calculated by multiplying the number of stock awards granted by the closing market price of the Company’s stock on the relevant grant date as published by the ASX. The stock awards were granted on November 16, 2007 when the closing market price was AU$0.745 and was converted using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816. In each case, the amount referenced could also have been calculated, and generated the same grant date fair value, using the Black-Scholes valuation model and adopting the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. | |
8 | The Board determined in November 2007 to grant 1.1 million performance rights to Mr Godshall with an exercise price of zero. However, the ASX Listing Rules require that all equity grants to Mr Godshall be first approved by the Company’s shareholders. This approval was obtained at the Company’s Annual General Meeting on May 9, 2008. | |
9 | In accordance with Ms Foley’s employment agreement, these options were granted following the commencement of Ms Foley’s employment with HeartWare, Inc on January 2, 2007. | |
10 | The exercise price of these options is AU$1.10 which was converted into US$ using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816. | |
11 | Ms Foley was granted 1,000,000 options with an exercise price of AU$1.10, being the same issue price for the Company’s capital raising that was completed in May 2006. The exercise price was converted into US$ using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816. The amount referenced in the table is calculated at the relevant grant date using the Black-Scholes valuation model using the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. |
There were no option exercises during 2007 by named executive officers.
Table of Contents
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity Incentive | ||||||||||||||||||||||||||||||||||||
Equity | Plan Awards: | |||||||||||||||||||||||||||||||||||
Equity | Incentive Plan | Market or | ||||||||||||||||||||||||||||||||||
Incentive | Awards: | Payout Value | ||||||||||||||||||||||||||||||||||
Plan Awards: | Number of | of Unearned | ||||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Market Value | Unearned | Shares, Units | |||||||||||||||||||||||||||||||
Securities | Securities | Securities | Number of | of Shares or | Shares, Units | or Other Rights | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | Shares or | Units of Stock | or other Rights | That Have Not | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Option | Units of Stock | That Have Not | That Have Not | Vested | ||||||||||||||||||||||||||||
Options (# | Options (# | Unearned | Exercise Price | Expiration | That Have Not | Vested | Vested | 2 | ||||||||||||||||||||||||||||
Exercisable) | Unexercisable) | Options (#) | 1($) | Date | Vested (#) | ($) | (#) | (#) | ||||||||||||||||||||||||||||
Douglas | 1,395,316 | 0.97 | 09/04/16 | |||||||||||||||||||||||||||||||||
Godshall3 | 4,185,948 | 0.97 | 09/04/16 | |||||||||||||||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
David | 191,051 | 0.53 | 01/31/10 | 400,000 | 193,952 | |||||||||||||||||||||||||||||||
McIntyre | 191,051 | 0.66 | 01/31/10 | |||||||||||||||||||||||||||||||||
Chief Financial Officer | 191,051 | 0.88 | 01/31/10 | |||||||||||||||||||||||||||||||||
191,051 | 1.32 | 01/31/10 | ||||||||||||||||||||||||||||||||||
382,102 | 382,102 | 0.66 | 11/30/12 | |||||||||||||||||||||||||||||||||
50,000 | 150,000 | 0.97 | 10/18/16 | |||||||||||||||||||||||||||||||||
Dozier Rowe | 250,000 | 1.24 | 04/20/16 | 200,000 | 96,976 | |||||||||||||||||||||||||||||||
750,000 | 0.97 | 10/18/16 | ||||||||||||||||||||||||||||||||||
Chief Operating Officer | 50,000 | 150,000 | 0.97 | 10/18/16 | ||||||||||||||||||||||||||||||||
Jeffrey | 1,540,000 | 0.18 | 01/31/10 | 300,000 | 145,464 | |||||||||||||||||||||||||||||||
LaRose | 382,102 | 0.44 | 04/27/15 | |||||||||||||||||||||||||||||||||
Chief Scientific Officer | 382,102 | 0.44 | 04/27/15 | |||||||||||||||||||||||||||||||||
50,000 | 150,000 | 0.97 | 10/18/16 | |||||||||||||||||||||||||||||||||
Jennifer | 1,000,000 | 0.97 | 01/02/17 | 200,000 | 96,967 | |||||||||||||||||||||||||||||||
Foley | 50,000 | 150,000 | 0.97 | 10/18/16 | ||||||||||||||||||||||||||||||||
Vice President, Clinical and Regulatory Affairs | ||||||||||||||||||||||||||||||||||||
Jane Reedy | 573,153 | 0.44 | 04/27/15 | �� | ||||||||||||||||||||||||||||||||
Former Vice | 50,000 | 150,000 | 0.97 | 10/18/16 | ||||||||||||||||||||||||||||||||
President, Sales and Marketing |
1 | All option awards are issued with an exercise price in AU$ and are converted into US$ using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816. | |
2 | Represents the closing market price of the Company’s shares on December 31, 2007 as published by the Australian Securities Exchange (and converted into US$ using the exchange rate at December 31, 2007 of AU$1.00 = US$0.8816) multiplied by the number of stock awards. | |
3 | The Board determined in November 2007 to grant 1.1 million performance rights to Mr Godshall with an exercise price of zero. However, the ASX Listing Rules require that all equity grants to Mr Godshall be first approved by the Company’s shareholders. This approval was obtained at the Company’s Annual General Meeting on May 9, 2008. |
Table of Contents
• | annual salary of US$350,000; | |
• | a sign-on bonus of US$75,000 paid upon commencement of employment (the sign-on bonus was used as an incentive to persuade Mr Godshall to join the Company as he considered multiple employment offers); | |
• | an annual performance bonus of US$75,000 subject to satisfaction of agreed annual performance criteria (the criteria and quantitative components of such bonus, by percentage, are set forth below); | |
• | full participation in the Company’s employee benefits program, including life and disability insurance (short and long term), health and group dental; and | |
• | upon commencement of employment, and pursuant to the terms of his employment agreement, Mr Godshall was granted 5,581,264 options under the ESOP, with an exercise price of AU$1.10 per share (the number of options equals approximately 3% of the then-outstanding shares of the Company and was based on the Company’s understanding of comparable executive equity packages as confirmed by the Company’s recruitment consultant, Russell Reynolds Associates, and the exercise price per share was equal to the per share price of the Company’s most recent capital raising at the time of grant). Consistent with all the Company’s options granted under the ESOP rules, these options vest in four equal annual tranches commencing on the first anniversary of the grant date. This vesting schedule was established following consultation with the Company’s lawyers, Corrs Chambers Westgarth, and the Company’s corporate advisers, Inteq Limited, in late 2004. |
Criteria | % of Bonus | |||
• Successful completion of initial phase of USE IDE clinical trial. | 25 | % | ||
• Receipt of CE Marking in Europe. | 15 | % | ||
• Advance MVAD to next development milestone. | 10 | % | ||
• Implement branding and product differentiation strategy. | 5 | % | ||
• Train and stock 20 sites in the United States. | 10 | % | ||
• Develop corporate financing opportunities. | 25 | % | ||
• Develop global marketing strategy. | 10 | % |
Table of Contents
• | annual salary of AU$220,000; | |
• | superannuation calculated at the statutory rate of 9% per annum; | |
• | provision of one car parking space and a maintained motor vehicle; and | |
• | upon commencement of employment, and pursuant to the terms of his employment agreement, Mr McIntyre was granted an aggregate of 764,204 options under the ESOP, with exercise prices between AU$0.60 and AU$1.50 per share. The number of options granted in this regard was approximately equal to 0.75% of the Company’s issued capital at the relevant time and was negotiated and agreed with Mr McIntyre prior to the commencement of his employment. Consistent with all the Company’s options granted under the ESOP rules, these options vest in four equal annual tranches commencing on the first anniversary of the grant date. This vesting schedule was established following consultation with the Company’s lawyers, Corrs Chambers Westgarth, and the Company’s corporate advisers, Inteq Limited, in late 2004. |
• | annual salary of $225,000; | |
• | full participation in the Company’s employee benefits program, including life and disability insurance (short and long term), health and group dental; and | |
• | relocation benefits as follows: |
• | a one-time pre-tax relocation allowance of $27,750 upon commencement of assignment in the US in April 2006. The allowance is provided to assist Mr McIntyre with meeting out-of-pocket expenses that were incurred on relocation to the US, such as installation and purchase of electrical appliances, house cleaning, telephone installation etc, together with associated costs of leaving Australia (termination of services etc); and | ||
• | a monthly after-tax payment of approximately $6,000, with a gross cost to the Company of $9,000 for the purposes of assisting Mr McIntyre with the provision of comparative housing, financing of motor vehicles, rental shortfall on his Australian residence and other incremental recurring costs associated with his relocation to the US. |
• | annual salary commenced at $205,000 and was revised to $225,000 on the completion of a ninety-day review; |
Table of Contents
• | full participation in the Company’s employee benefits program, including life and disability insurance (short and long term), health and group dental; and | |
• | upon commencement of employment, Mr Rowe was granted 1,000,000 options under the ESOP, with an exercise price of AU$1.41 per share. The number of options granted to Mr Rowe was negotiated with him following recommendations made to the Company by its recruitment consultant, Russell Reynolds Associates. Consistent with all the Company’s options granted under the ESOP rules, these options vest in four equal annual tranches commencing on the first anniversary of the grant date. This vesting schedule was established following consultation with the Company’s lawyers, Corrs Chambers Westgarth, and the Company’s corporate advisers, Inteq Limited, in late 2004. |
Mr LaRose has an employment agreement with HeartWare, Inc, the material terms of which are set out below:
• | annual salary of $225,000; and | |
• | full participation in the Company’s employee benefits program, including life and disability insurance (short and long term), health and group dental. |
• | annual salary of $220,000; | |
• | a sign-on bonus of $30,000 paid upon commencement of employment (the sign-on bonus was used as an incentive to persuade Ms Foley to join HeartWare, Inc; and in light of the limited availability of senior executives with extensive clinical experience); | |
• | a one-off bonus of $30,000 subject to the Company filing an investigational device exemption with the US Food and Drug Administration within ninety days of the completion of enrolment of the Company’s international clinical trial; and | |
• | full participation in the Company’s employee benefits program, including life and disability insurance (short and long term), health and group dental. |
• | annual salary of $220,000; | |
• | a one-time payment of $40,000 as a sign-on bonus upon commencement of her employment, which bonus was paid in May 2005; | |
• | full participation in the Company’s employee benefits program, including life and disability insurance (short and long term), health and group dental; and | |
• | upon commencement of her employment, Ms Reedy was granted 1,146,306 options under the ESOP, with an exercise price of AU$0.50 per share. The number of options granted to Ms Reedy was agreed following protracted negotiations between Ms Reedy and the Company. Ms Reedy had been acting as a consultant to the Company for an extended period of time and was able to negotiate a higher number of options as a result. Consistent with all the Company’s options granted under the ESOP rules, these options vest in four equal annual tranches commencing on the first anniversary of the grant date. This vesting schedule was established following consultation with the Company’s lawyers, Corrs Chambers Westgarth, and the Company’s corporate advisers, Inteq Limited, in late 2004. |
Table of Contents
• | by the Company without cause; | |
• | by the executive for “good reason”; | |
• | upon death or disability; and | |
• | following a change in control. |
• | a further 3 months notice in writing of such termination or payment of 3 months’ salary in lieu of notice; | |
• | the continuation of all benefits provided to him and his family for 6 months following the date of termination; and | |
• | the acceleration of a pro rata portion of the options that would otherwise vest on the next anniversary of Mr Godshall’s commencement date with the Company following the date of termination, calculated by multiplying the relevant number of options that would otherwise vest by a fraction, the numerator of which is the number of months Mr Godshall has worked since the most recent anniversary of Mr Godshall’s commencement date and the denominator of which is 12. | |
• | For Mr McIntyre, he is also entitled to payment for the reasonable costs of relocating him and his family from Miami to Sydney unless he accepts a new position with another employer that covers his relocation expenses, in which case HeartWare, Inc shall pay the excess of his relocation benefit over the expenses actually paid by such new employer. |
Payment | ||||||||||||||||||||||||
in Lieu of | Share | |||||||||||||||||||||||
Severance | Notice | Options | Benefits | |||||||||||||||||||||
Payment | ($) | ($) | ($) | Relocation | Total | |||||||||||||||||||
Name | ($) | 1 | 2 | 3 | ($) | ($) | ||||||||||||||||||
Douglas Godshall | 175,000 | 87,500 | 119,406 | 5,342 | — | 387,248 | ||||||||||||||||||
David McIntyre | 166,500 | — | — | — | 67,750 | 4 | 234,250 | |||||||||||||||||
Dozier Rowe | 112,500 | — | — | — | — | 112,500 |
1 | Assumes that the Company elects to make a payment in lieu of notice to the named executive officer instead of providing written notice of termination. | |
2 | Represents the Black-Scholes value of share options calculated as at the grant date using the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. | |
3 | Represents the cost to the Company of benefits for the named executive officer and his family. | |
4 | Represents the estimated cost to relocate Mr McIntyre and his family from Florida to Australia. |
Table of Contents
• | if Mr Godshall becomes incapacitated such that, in the opinion of an independent physician, the incapacitation prevents Mr Godshall from performing his duties for 3 consecutive months or 3 months in aggregate in any twelve month period, then Mr Godshall shall be entitled to receive his salary and health insurance benefits for 3 months following termination, and Mr Godshall’s options shall accelerate in the manner specified above under the heading “Termination Without Cause”; and | |
• | upon Mr Godshall’s death, his estate shall be entitled to receive the benefits as set out under the heading “Termination Without Cause” above. |
Death | Disability | |||||||||||||||||||||||||||||||||||
Payment | Share | Share | ||||||||||||||||||||||||||||||||||
Severance | in Lieu of | Options | Benefits | Severance | Option | Benefits | ||||||||||||||||||||||||||||||
Name | Payment | Notice | 1 | 2 | Total | Payment | 3 | 4 | Total | |||||||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||
Douglas Godshall | 175,000 | 87,500 | 119,406 | 5,342 | 387,248 | 87,500 | 119,406 | 2,671 | 209,577 |
1 | Represents the Black-Scholes value of share options calculated as at the grant date using the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. | |
2 | Represents the cost to the Company of benefits for the named executive officer and his family. | |
3 | Represents the Black-Scholes value of share options calculated as at the grant date using the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. | |
4 | Represents the cost to the Company of benefits for the named executive officer and his family. |
• | a person or entity becomes the owner, directly or indirectly, of more than fifty percent of HeartWare, Inc’s voting power (except by way of a merger, consolidation or similar transaction); | |
• | there is a merger, consolidation or similar transaction where HeartWare, Inc’s existing shareholders do not own, directly or indirectly, more than fifty percent of HeartWare, Inc’s voting power of the surviving entity in a merger, consolidation or similar transaction (except where these circumstances arise in the context of a public offering); or | |
• | there is a consummated sale, lease, exclusive license or other disposition of HeartWare, Inc’s consolidated assets. |
Table of Contents
Payment | ||||||||||||||||||||||||
Severance | in Lieu of | Share | ||||||||||||||||||||||
Name | Payment | Notice | Options2 | Benefits | Relocation | Total | ||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||
David McIntyre | — | 83,250 | — | — | — | 83,250 | ||||||||||||||||||
Dozier Rowe | — | — | 92,886 | — | — | 92,886 |
1 | The benefits referred to above are the incremental benefits the named executive officer would receive upon a change of control in the event of a termination without cause or a termination for good reason, which are separately disclosed in a table preceding the above table. | |
2 | Represents the Black-Scholes value of share options calculated using the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. |
Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||
Year Ended | Fees Earned | Non-Equity | Deferred | |||||||||||||||||||||||||||||
Name and | December 31, | or Paid in | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||
Position | 2007 | Cash | Awards | Awards | Compensation | Earnings2 | Compensation | Total | ||||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||
Robert Thomas | 2007 | 100,608 | — | — | — | 9,055 | — | 109,663 | ||||||||||||||||||||||||
Chairman | ||||||||||||||||||||||||||||||||
Seth Harrison, | 2007 | 83,840 | — | — | — | 7,546 | — | 91,386 | ||||||||||||||||||||||||
M.D. Deputy Chairman | ||||||||||||||||||||||||||||||||
Dr Christine Bennett | 2007 | 50,304 | — | — | — | 4,527 | — | 54,831 | ||||||||||||||||||||||||
Non-executive director | ||||||||||||||||||||||||||||||||
Dr Denis Wade | 2007 | — | — | — | — | 54,831 | — | 54,831 | ||||||||||||||||||||||||
Non-executive director | ||||||||||||||||||||||||||||||||
Robert Stockman3 | 2007 | — | — | 67,720 | 4 | — | — | — | 67,720 | |||||||||||||||||||||||
Non-executive director |
1 | All amounts paid to directors are denominated in AU$ and are converted into US dollars using the average exchange rate for fiscal 2007 of AU$1.00 = US$0.8384. | |
2 | Statutory contributions of 9% of fees to a superannuation fund (i.e., pension) for Australian directors only. These amounts are paid in AU$ and are converted into US dollars using the average exchange rate for fiscal 2007 of AU$1.00 = US$0.8384. |
Table of Contents
3 | Mr Stockman was appointed to the Board as of December 11, 2006 and has not received any director’s fees during 2006 or 2007. Mr Stockman will commence receiving directors’ fees with effect from January 1 2008 at the rate of $60,000 per annum. | |
4 | Mr Stockman was granted 200,000 options on July 26, 2007 with an exercise price of AU$0.75. The amount in the table represents the Black-Scholes value of these share options calculated using the assumptions described in Note 3 and Note 12 of the Notes to Consolidated Financial Statements included in the Company’s audited Consolidated Financial Statements for the fiscal years ended December 31, 2007, 2006 and 2005 appearing elsewhere in this document. |
Table of Contents
• | a majority in number of the holders of the fully paid ordinary shares of the Company present and voting (either in person or by proxy, attorney or corporate representative) unless the Court orders otherwise; and | |
• | by at least 75% of the total number of votes cast on the resolution. |
Table of Contents
Hand deliveries: | Level 3 | |
60 Carrington Street | ||
SYDNEY NSW Australia 2000 | ||
Postal address: | GPO Box 2975 | |
Victoria, Australia 3001 | ||
Fax number: | +61 3 9473 2500 |
Company Secretary
Table of Contents
• | a majority in number of the Optionholders present and voting (either in person or by proxy, attorney or corporate representative); and | |
• | being a majority whose Options in aggregate are at least 75% by value of the total Options held by the Optionholders present and voting. |
Table of Contents
Hand deliveries: | Level 3 | |
60 Carrington Street | ||
SYDNEY NSW Australia 2000 | ||
Postal address: | GPO Box 2975 | |
Victoria, Australia 3001 | ||
Fax number: | +61 3 9473 2500 |
Company Secretary
Table of Contents
• | a majority in number of the holders of performance rights, present and voting (either in person or by proxy, attorney or corporate representative); and | |
• | being a majority whose performance rights in aggregate are at least 75% by value of the total performance rights held by the holders of performance rights present and voting. |
Table of Contents
Hand deliveries: | Level 3 | |
60 Carrington Street | ||
SYDNEY NSW Australia 2000 | ||
Postal address: | GPO Box 2975 | |
Victoria, Australia 3001 | ||
Fax number: | +61 3 9473 2500 |
Company Secretary
Table of Contents
Table of Contents
Hand deliveries: | Level 3 | |
60 Carrington Street | ||
SYDNEY NSW Australia 2000 | ||
Postal address: | GPO Box 2975 | |
Victoria, Australia 3001 | ||
Fax number: | +61 3 9473 2500 |
Company Secretary
Table of Contents
Table of Contents
Table of Contents
HeartWare Limited | HeartWare International, Inc | |
ABN 34 111 970 257 | 14000–14050 NW 57th Court | |
Level 57, MLC Centre | Miami Lakes | |
19–29 Martin Place | Florida | |
SYDNEY NSW 2000 | United States of America 33014 | |
Australia | Tel: +1 305 818 4100 | |
Tel:+ 61 2 9238 2064 | Fax: +1 954 874 1401 | |
Fax: + 61 2 9238 2063 | ||
Tax Advisor – US | Tax Advisor – Australia | |
PricewaterhouseCoopers LLP | PricewaterhouseCoopers Australia | |
3 Embarcadero Centre | Riverside Centre | |
San Francisco CA 94111 | 123 Eagle Street | |
United States of America | BRISBANE QLD 4001 | |
Tel: + 1 415 498 5000 | Australia | |
Fax: + 1 415 498 7100 | Tel: + 61 7 3257 5000 | |
Fax: + 61 7 3257 5999 | ||
US Legal Counsel | Legal Advisor – Australia | |
DLA Piper US LLP | DLA Phillips Fox | |
1251 Avenue of the Americas | Level 38 | |
New York, NY 10020-1104 | 201 Elizabeth Street | |
United States of America | SYDNEY NSW 2000 | |
Tel: + 1 212 335 4500 | Australia | |
Fax: + 1 212 335 4501 | Tel: + 61 2 9286 8000 | |
Fax: + 61 2 9283 4144 | ||
US Auditor | Australian Auditor | |
Grant Thornton LLP | Grant Thornton NSW | |
2700 South Commerce Parkway | Level 17 | |
Suite 300, Weston, FL 33331 | 383 Kent Street | |
United States of America | SYDNEY NSW 2000 | |
Tel: +1 954 768 9900 | Australia | |
Fax: +1 954 768 9908 | Tel: + 61 2 8297 2400 | |
Fax: + 61 2 9299 4445 | ||
Investigating Accountant | Share Registry | |
Grant Thornton Corporate | Computershare Investor Services | |
Finance Pty Ltd | Pty Limited | |
Level 17 | GPO Box 2975 | |
383 Kent Street | Victoria 3001 | |
SYDNEY NSW 2000 | Australia | |
Australia | Shareholder line: 1300 850 505 | |
Tel: + 61 2 8297 2400 | Tel: + 61 2 8234 5000 | |
Fax: + 61 2 9299 4445 | Facsimile: + 61 3 9473 2500 | |
web.queries@computershare.com.au | ||
Enquiry line | ||
Tel: 1800 707 861 (Australia toll free) | ||
+61 2 8256 3387 (International) |
Table of Contents
Table of Contents
HeartWare Limited ACN 111 970 257 MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Lodge your vote: By Mail: Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia Alternatively you can fax your form to +61 3 9473 2118For all enquiries call: (within Australia) 1300 855 080 (outside Australia) +61 3 9415 4000Share Scheme Meeting Proxy Form For your vote to be effective it must be received by 10:00am (AEDT) on Monday 20 October 2008 How to Vote on Items of Business All your securities will be voted in accordance with your directions.Appointment of Proxy Voting 100% of your holding:Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.Voting a portion of your holding:Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.Appointing a second proxy:You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.A proxy need not be a securityholder of the Company. Signing Instructions for Postal Forms Individual:Where the holding is in one name, the securityholder must sign.Joint Holding:Where the holding is in more than one name, all of the securityholders should sign.Power of Attorney:If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.Companies:Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held.Attending the Meeting Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.computershare.com.Comments & Questions:If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.Turn over to complete the form View your securityholder information, 24 hours a day, 7 days a week:www.investorvote.com.au Review your securityholding Update your securityholdingYour secure access information is:SRN/HIN:I1234567890PLEASE NOTE:For security reasons it is important that you keep your SRN/HIN confidential. |
Table of Contents
MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Change of address.If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences withX should advise your broker of any changes.Appoint a Proxy to Vote on your Behalf the Chairman of the Meeting PLEASE NOTE:Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s). or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Share Scheme Meeting of HeartWare Limited to be held at The Adelaide Room, Sofitel Sydney Wentworth Hotel, 61-101 Phillip Street, Sydney on Wednesday, 22 October 2008 at 10:00am and at any adjournment of that meeting.PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.ORDINARy BUSINESS Item 1 Approval of Share SchemeFor Against AbstainItems of Business The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.Signature of Securityholder(s)This section must be completed.Individual or Securityholder 1 Sole Director and Sole Company Secretary Securityholder 2 Director Securityholder 3 Director/Company Secretary Contact Name Contact Daytime Telephone Date HeartWare Limited ACN 111 970 257Lodge your vote: By Mail: Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia Alternatively you can fax your form to +61 3 9473 2118For all enquiries call: (within Australia) 1300 855 080 (outside Australia) +61 3 9415 4000 |
Table of Contents
MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Option Scheme Meeting Proxy Form For your vote to be effective it must be received by 10:30am (AEDT) on Monday 20 October 2008 How to Vote on Items of Business All your securities will be voted in accordance with your directions.Appointment of Proxy Voting 100% of your holding:Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.Voting a portion of your holding:Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.Appointing a second proxy:You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.A proxy need not be a securityholder of the Company. Signing Instructions for Postal Forms Individual:Where the holding is in one name, the securityholder must sign.Joint Holding:Where the holding is in more than one name, all of the securityholders should sign.Power of Attorney:If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.Companies:Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held.Attending the Meeting Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.computershare.com.Comments & Questions:If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.Turn over to complete the form View your securityholder information, 24 hours a day, 7 days a week:www.investorvote.com.au Review your securityholding Update your securityholdingYour secure access information is:SRN/HIN:I1234567890PLEASE NOTE:For security reasons it is important that you keep your SRN/HIN confidential. |
Table of Contents
MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Change of address.If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences withX should advise your broker of any changes.Proxy Form Appoint a Proxy to Vote on your Behalf I/We being a member/s of HeartWare Limited hereby appoint the Chairman of the Meeting OR PLEASE NOTE:Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s). or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Option Scheme Meeting of HeartWare Limited to be held at The Adelaide Room, Sofitel Sydney Wentworth Hotel, 61-101 Phillip Street, Sydney on Wednesday, 22 October 2008 at 10:30am and at any adjournment of that meeting.PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.ORDINARy BUSINESS Item 1 Approval of Option SchemeFor Against AbstainItems of Business The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.Signature of Securityholder(s)This section must be completed.Individual or Securityholder 1 Sole Director and Sole Company Secretary Securityholder 2 Director Securityholder 3 Director/Company Secretary Contact Name Contact Daytime Telephone Date HeartWare Limited ACN 111 970 257 |
Table of Contents
MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Lodge your vote: By Mail: Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia Alternatively you can fax your form to +61 3 9473 2118For all enquiries call: (within Australia) 1300 855 080 (outside Australia) +61 3 9415 4000Performance Rights Scheme Meeting Proxy Form For your vote to be effective it must be received by 11:00am (AEDT) on Monday 20 October 2008 How to Vote on Items of Business All your securities will be voted in accordance with your directions.Appointment of Proxy Voting 100% of your holding:Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.Voting a portion of your holding:Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.Appointing a second proxy:You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.A proxy need not be a securityholder of the Company. Signing Instructions for Postal Forms Individual:Where the holding is in one name, the securityholder must sign.Joint Holding:Where the holding is in more than one name, all of the securityholders should sign.Power of Attorney:If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.Companies:Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held.Attending the Meeting Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.computershare.com.Comments & Questions:If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.Turn over to complete the form View your securityholder information, 24 hours a day, 7 days a week:www.investorvote.com.au Review your securityholding Update your securityholdingYour secure access information is:SRN/HIN:I1234567890PLEASE NOTE:For security reasons it is important that you keep your SRN/HIN confidential. |
Table of Contents
MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Change of address.If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with) should advise your broker of any changes.Proxy Form Appoint a Proxy to Vote on your Behalf I/We being a member/s of HeartWare Limited hereby appoint the Chairman of the Meeting _____ OR PLEASE NOTE:Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s). or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Performance Rights Scheme Meeting of HeartWare Limited to be held at The Adelaide Room, Sofitel Sydney Wentworth Hotel, 61-101 Phillip Street, Sydney on Wednesday, 22 October 2008 at 11:00am and at any adjournment of that meeting.Items of Business PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.ORDINARy BUSINESSFor Against Abstain Item 1 Approval of Performance Rights Scheme The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.Signature of Securityholder(s)This section must be completed.Individual or Securityholder 1 Sole Director and Sole Company Secretary Securityholder 2 Director Securityholder 3 Director/Company Secretary Contact Name Contact Daytime Telephone Date HeartWare Limited ACN 111 970 257Lodge your vote: By Mail: Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia Alternatively you can fax your form to +61 3 9473 2118For all enquiries call: (within Australia) 1300 855 080 (outside Australia) +61 3 9415 4000 |
Table of Contents
MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Extraordinary General Meeting Proxy Form For your vote to be effective it must be received by 11:30am (AEDT) on Monday 20 October 2008 How to Vote on Items of Business All your securities will be voted in accordance with your directions.Appointment of Proxy Voting 100% of your holding:Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.Voting a portion of your holding:Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.Appointing a second proxy:You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.A proxy need not be a securityholder of the Company. Signing Instructions for Postal Forms Individual:Where the holding is in one name, the securityholder must sign.Joint Holding:Where the holding is in more than one name, all of the securityholders should sign.Power of Attorney:If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.Companies:Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held.Attending the Meeting Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.computershare.com.Comments & Questions:If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.Turn over to complete the form View your securityholder information, 24 hours a day, 7 days a week:www.investorvote.com.au Review your securityholding Update your securityholdingYour secure access information is:SRN/HIN:I1234567890PLEASE NOTE:For security reasons it is important that you keep your SRN/HIN confidential. |
Table of Contents
MR JOHN SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030Proxy Form Appoint a Proxy to Vote on your Behalf I/We being a member/s of HeartWare Limited hereby appoint Change of address.If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences withX should advise your broker of any changes.the Chairman of the Meeting OR PLEASE NOTE:Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s). or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Extraordinary General Meeting of HeartWare Limited to be held at The Adelaide Room, Sofitel Sydney Wentworth Hotel, 61-101 Phillip Street, Sydney on Wednesday, 22 October 2008 at 11:30am and at any adjournment of that meeting.Items of Business PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.ORDINARy BUSINESSFor Against Abstain Item 1 Approval of HeartWare International 2008 Stock Incentive Plan The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.Signature of Securityholder(s)This section must be completed.Individual or Securityholder 1 Sole Director and Sole Company Secretary Director Securityholder 3 Director/Company Secretary Contact Name Contact Daytime Telephone Date |