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EXECUTION VERSION
Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
Among
BOSTON SCIENTIFIC CORPORATION,
ADAM ACQUISITION 2001 INC.
and
CARDIAC PATHWAYS CORPORATION
Dated as of June 28, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions....................................................................2
ARTICLE II
THE OFFER
SECTION 2.01. The Offer......................................................................7
SECTION 2.02. Company Action.................................................................8
ARTICLE III
THE MERGER
SECTION 3.01. The Merger....................................................................10
SECTION 3.02. Effective Time................................................................10
SECTION 3.03. Effect of the Merger..........................................................10
SECTION 3.04. Certificate of Incorporation; By-laws.........................................10
SECTION 3.05. Directors and Officers........................................................11
SECTION 3.06. Conversion of Securities......................................................11
SECTION 3.07. Employee Stock Options; Employee Stock Purchase Plan..........................11
SECTION 3.08. Company Warrants..............................................................12
SECTION 3.09. Dissenting Shares.............................................................12
SECTION 3.10. Surrender of Shares; Series B Shares and Warrants; Stock Transfer Books.......13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries..................................15
SECTION 4.02. Restated Certificate of Incorporation and By-laws.............................15
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SECTION 4.03. Capitalization................................................................15
SECTION 4.04. Authority Relative to This Agreement..........................................16
SECTION 4.05. No Conflict; Required Filings and Consents; Appraisal Rights..................16
SECTION 4.06. Permits; Compliance...........................................................17
SECTION 4.07. SEC Filings; Financial Statements.............................................19
SECTION 4.08. Absence of Certain Changes or Events..........................................20
SECTION 4.09. Absence of Litigation.........................................................20
SECTION 4.10. Employee Matters..............................................................20
SECTION 4.11. Labor Matters.................................................................22
SECTION 4.12. Offer Documents; Schedule 14D-9; Proxy Statement..............................22
SECTION 4.13. Property and Leases...........................................................23
SECTION 4.14. Intellectual Property.........................................................23
SECTION 4.15. Taxes.........................................................................26
SECTION 4.16. Environmental Matters.........................................................26
SECTION 4.17. Amendment to Rights Agreement.................................................27
SECTION 4.18. Material Contracts............................................................27
SECTION 4.19. Insurance.....................................................................28
SECTION 4.20. Products Liability............................................................29
SECTION 4.21. Brokers.......................................................................29
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01. Corporate Organization........................................................29
SECTION 5.02. Authority Relative to This Agreement..........................................30
SECTION 5.03. No Conflict; Required Filings and Consents....................................30
SECTION 5.04. Offer Documents; Proxy Statement..............................................31
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SECTION 5.05. Financing.....................................................................31
SECTION 5.06. Brokers.......................................................................31
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the Merger.........................31
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Stockholders' Meeting.........................................................34
SECTION 7.02. Proxy Statement...............................................................34
SECTION 7.03. Company Board Representation; Section 14(f)...................................34
SECTION 7.04. Access to Information; Confidentiality........................................36
SECTION 7.05. No Solicitation of Transactions...............................................36
SECTION 7.06. Directors' and Officers' Indemnification and Insurance........................37
SECTION 7.07. 401(k) Plan...................................................................38
SECTION 7.08. Benefit Plans; Credit for Past Services.......................................38
SECTION 7.09. Notification of Certain Matters...............................................39
SECTION 7.10. Further Action; Reasonable Best Efforts.......................................39
SECTION 7.11. Public Announcements..........................................................40
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Merger......................................................40
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination...................................................................41
SECTION 9.02. Effect of Termination.........................................................42
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SECTION 9.03. Fees and Expenses.............................................................42
SECTION 9.04. Amendment.....................................................................42
SECTION 9.05. Waiver........................................................................43
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Notices......................................................................43
SECTION 10.02. Severability.................................................................44
SECTION 10.03. Entire Agreement; Assignment.................................................44
SECTION 10.04. Parties in Interest..........................................................44
SECTION 10.05. Specific Performance.........................................................45
SECTION 10.06. Governing Law................................................................45
SECTION 10.07. Waiver of Jury Trial.........................................................45
SECTION 10.08. Headings.....................................................................45
SECTION 10.09. Counterparts.................................................................45
SECTION 10.10. Stockholder Agreements.......................................................45
ANNEX A Conditions to the Offer
DISCLOSURE SCHEDULE
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AGREEMENT AND PLAN OF MERGER, dated as of June 28, 2001
(including the annex and schedule hereto, this "Agreement"), among BOSTON
SCIENTIFIC CORPORATION, a Delaware corporation ("Parent"), ADAM ACQUISITION 2001
INC., a Delaware corporation and a wholly owned subsidiary of Parent
("Purchaser"), and CARDIAC PATHWAYS CORPORATION, a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each determined that it is in the best interests of their
respective stockholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Purchaser shall make
a cash tender offer (the "Offer") to acquire all the shares of common stock, par
value $0.001 per share, of the Company ("Common Shares"), including the
associated preferred share purchase rights (the "Rights", and together with the
Common Shares, the "Shares") issued pursuant to the rights agreement, dated as
of April 22, 1997 between the Company and Wells Fargo Bank Minnesota N.A., as
successor in interest to Norwest Bank Minnesota, N.A., as rights agent (the
"Rights Agreement"), that are issued and outstanding for $5.267 per Share (such
amount, or any greater amount per Share paid pursuant to the Offer, being the
"Per Share Amount"), net to the seller in cash, upon the terms and subject to
the conditions of this Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Board") has
unanimously approved the making of the Offer and resolved to recommend that
holders of Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved this Agreement
and declared its advisability and approved the merger (the "Merger") of
Purchaser with and into the Company in accordance with the General Corporation
Law of the State of Delaware ("Delaware Law") following the consummation of the
Offer and upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Purchaser and certain stockholders of the
Company (the "Selling Stockholders") have entered into a stock purchase
agreement, dated as of the date hereof (the "Stock Purchase Agreement"),
providing that, among other things, the Selling Stockholders will sell any
shares of preferred stock, series B, par value $0.001 per share, of the Company
("Series B Shares") held by them to Purchaser and will tender any Shares held by
them into the Offer on the terms and subject to the conditions set forth
therein; and
WHEREAS, Parent, Purchaser and certain other stockholders of the
Company (the "Supporting Stockholders" and, together with the Selling
Stockholders, the "Stockholders") have entered into stockholder support
agreements, dated as of the date hereof (together with the Stock Purchase
Agreement, the "Stockholder Agreements"), providing that, among other things,
such Supporting Stockholders will tender their Shares into the Offer on the
terms and subject to the conditions set forth therein;
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) For purposes of this Agreement:
"Acquisition Proposal" means (i) any proposal or offer from any
person other than Parent or Purchaser relating to any direct or indirect
acquisition of (A) all or a substantial part of the assets of the
Company or (B) over 15% of any class of equity securities of the
Company; (ii) any tender offer or exchange offer, as defined pursuant to
the Exchange Act, that, if consummated, would result in any person
beneficially owning 15% or more of any class of equity securities of the
Company, other than the Offer; or (iii) any merger, consolidation,
business combination, sale of all or a substantial part of the assets,
recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Subsidiary, other than the Transactions; or
(iv) any other similar transaction that would impede, interfere with,
prevent or materially delay one or more of the Transactions.
"affiliate" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with, such specified person.
"beneficial owner", with respect to any Shares, has the meaning
ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks
are not required or authorized to close in The City of New York.
"Company Licensed Intellectual Property" means all (i) licenses
of Intellectual Property and Company Software to the Company by any
third party, and (ii) licenses of Intellectual Property and Company
Software by the Company to any third party.
"Company Owned Intellectual Property" means all Intellectual
Property owned by the Company.
"Company Software" means all Software (i) material to the conduct
of the business of the Company, or (ii) manufactured, distributed, sold,
licensed or marketed by the Company.
"Company Systems" shall mean all computer, hardware, software,
systems, and equipment (including embedded microcontrollers in
non-computer equipment) embedded within or required to operate the
current products of the Company and the Subsidiaries,
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and/or material to or necessary for the Company and the Subsidiaries to
carry on their businesses as currently conducted.
"control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, as trustee
or executor, by contract or otherwise;
"Environmental Laws" means any United States federal, state,
local or non-United States laws relating to (i) releases or threatened
releases of Hazardous Substances or materials containing Hazardous
Substances; (ii) the manufacture, handling, transport, use, treatment,
storage or disposal of Hazardous Substances or materials containing
Hazardous Substances; or (iii) pollution or protection of the
environment, health, safety or natural resources.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary
and which, together with the Company or any Subsidiary, is treated as a
single employer within the meaning of Section 414(b), (c), (m) or (o) of
the Code.
"Hazardous Substances" means (i) those substances defined in or
regulated under the following United States federal statutes and their
state counterparts, as each may be amended from time to time, and all
regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide, and Rodenticide Act and the Clean Air Act; (ii) petroleum and
petroleum products, including crude oil and any fractions thereof; (iii)
natural gas, synthetic gas, and any mixtures thereof; (iv)
polychlorinated biphenyls, asbestos and radon; and (v) any other
contaminant, substance, material or waste regulated by any Governmental
Authority pursuant to any Environmental Law.
"Intellectual Property" means all: (i) United States,
international, and non-United States patents, patent applications and
statutory invention registrations, (ii) trademarks, service marks,
domain names, trade dress, logos, and other source identifiers,
including registrations and applications for registration thereof in any
country, and further including rights acquired at common law by use or
otherwise in any country, (iii) copyrights, including registrations and
applications for registration thereof in any country, and further
including rights acquired by virtue of creation of any subject matter
eligible for copyright protection by treaty or otherwise in any country,
(iv) Software, (v) customer lists, confidential marketing and customer
information, and (vi) confidential and proprietary information,
including trade secrets, technical information and know-how.
"knowledge of the Company" means the actual knowledge of any
executive officer of the Company.
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"Material Adverse Effect" means, with respect to the Company, any
event, circumstance, change or effect that, individually or in the
aggregate with such other events, circumstances, changes and effects is
or is reasonably likely to be materially adverse to the business, assets
(including Company Licensed Intellectual Property, Company Owned
Intellectual Property and all other intangible assets), liabilities,
financial condition or results of operations of the Company and the
Subsidiaries taken as a whole, or that is materially adverse to the
Company's ability to consummate the Transactions; provided, however,
that none of the following shall be deemed in themselves, either alone
or in combination, to constitute, and none of the following shall be
taken into account in determining whether there has been or will be, a
Material Adverse Effect on the Company: (i) any change in the market
price or trading volume of the Company's stock after the date hereof;
(ii) any adverse event, circumstance, change or effect that results from
the public announcement or pendency of the Transactions, including any
cancellations of or delays in customer orders, any reduction in sales,
any disruption in supplier, distributor, partner or similar
relationships or any loss of employees; (iii) any adverse event,
circumstance, change or effect in the industries in which Company
operates or in the economy generally and which do not have a
disproportionately adverse effect upon the Company; (iv) any adverse
event, circumstance, change or effect, including litigation, resulting
from or relating to the approval of, or the entering into, or compliance
with the terms of, or the taking of any action required by, this
Agreement; or (v) any delisting of the Company's Shares from the NASDAQ
National Market System ("Nasdaq").
"person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
"Software" means computer software, programs and databases in any
form, including Internet web sites, web site content, member or user
lists and information associated therewith and links, source code,
object code, operating systems and specifications, data, databases,
database management code, utilities, graphical user interfaces, menus,
images, icons, forms, methods of processing, software engines,
platforms, and data formats, all versions, updates, corrections,
enhancements, and modifications thereof, and all related documentation,
developer notes, comments and annotations.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.
"Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any Governmental Authority or taxing
authority, including, without limitation: taxes or other charges on or
with respect to income, franchise, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment,
social security, workers' compensation,
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unemployment compensation or net worth; taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value-added
or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs and similar charges.
(b) The following terms have the meaning set forth in the
Sections set forth below:
Defined Term Location of Definition
------------ ----------------------
Action Section 4.09
Activities to Date Section 4.06(b)
Agreement Preamble
Appointment Time Section 7.03(a)
Blue Sky Laws Section 4.05(b)
Board Recitals
Certificate of Designation Section 3.10(d)
Certificate of Merger Section 3.02
Certificates Section 3.10(b)
Code Section 4.10(a)
Common Shares Recitals
Company Preamble
Company Licenses Section 4.06(b)
Company Products Section 4.06(b)
Company Preferred Stock Section 4.03
Common Share Warrants Section 4.03
Company Stock Option Section 3.07(a)
Company Stock Option Plans Section 3.07(a)
Confidentiality Agreement Section 7.04(b)
Continuing Directors Section 7.03(a)
Current Balance Sheet Section 4.07(c)
Defect Section 4.20
Delaware Law Recitals
Disclosure Schedule Section 4.01(b)
Dissenting Shares Section 3.09(a)
Effective Time Section 3.02
Environmental Permits Section 4.16
ERISA Section 4.10(a)
ESPP Section 3.07(b)
ESPP Date Section 3.07(b)
Exchange Act Section 2.01(a)
FDA Section 4.06(b)
GAAP Section 4.07(b)
Governmental Authority Section 4.05(b)
HSR Act Section 2.01(a)
IRS Section 4.10(a)
Law Section 4.05(a)
Liens Section 4.13(b)
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Material Contracts Section 4.18(a)
Merger Recitals
Merger Consideration Section 3.06(a)
Minimum Condition Section 2.01(a)
Multiemployer Plan Section 4.10(b)
Multiple Employer Plan Section 4.10(b)
Nasdaq Section 1.01(a)
Offer Recitals
Offer Documents Section 2.01(b)
Offer to Purchase Section 2.01(b)
Parent Preamble
Paying Agent Section 3.10(a)
Permits Section 4.06(a)
Permitted Liens Section 4.13(b)
Per Share Amount Recitals
Plans Section 4.10(a)
Product Section 4.20
Proxy Statement Section 4.12
Purchaser Preamble
Representatives Section 7.05(a)
Rights Recitals
Rights Agreement Recitals
Schedule 14D-9 Section 2.02(b)
Schedule TO Section 2.01(b)
SEC Section 2.01(a)
SEC Reports Section 4.07(a)
Securities Act Section 4.07(a)
Selling Stockholders Recitals
Series B Shares Recitals
Series B Warrants Section 4.03
Shares Recitals
Stock Purchase Agreement Recitals
Stockholder Agreements Recitals
Stockholders Recitals
Stockholders' Meeting Section 7.01(a)
Subsidiary Section 4.01(a)
Supporting Stockholders Recitals
Surviving Corporation Section 3.01
Transactions Section 2.02(a)
Warrants Section 4.03
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ARTICLE II
THE OFFER
SECTION 2.01. The Offer. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 9.01 hereof and that none of
the events set forth in clauses (a) through (i) of Annex A hereto shall have
occurred or be continuing, Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act")) the Offer as promptly as
reasonably practicable after the date hereof, but in no event later than seven
business days after the initial public announcement of the execution of this
Agreement; provided; however, in the event the Company shall have failed to
provide mailing labels to Purchaser pursuant to Section 2.02 hereof within five
business days after the initial public announcement of the execution of this
Agreement, Purchaser shall commence the Offer within two business days of
receipt of such labels. The obligation of Purchaser to accept for payment Shares
tendered pursuant to the Offer shall be subject to the condition (the "Minimum
Condition") that at least the number of Shares that, when added to Shares
already owned by Parent (after giving effect to the assumed purchase of the
Series B Shares pursuant to the Stock Purchase Agreement as though such purchase
had already occurred) shall constitute a majority of the then outstanding Shares
on a fully diluted basis (including, without limitation, all Shares issuable
upon the conversion of the Series B Shares or upon the exercise or conversion of
any options, warrants, rights or other convertible securities, but excluding any
securities that have an effective conversion or exercise price immediately prior
to the expiration of the Offer that is in excess of the Per Share Amount) shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer, and shall also be subject to the satisfaction of each of the other
conditions set forth in Annex A hereto. Purchaser expressly reserves the right
to waive any such condition, to increase the Per Share Amount, and to make any
other changes in the terms and conditions of the Offer; provided, however, that
no change may be made which (i) decreases the Per Share Amount, (ii) reduces
the maximum number of Shares to be purchased in the Offer (iii) changes the form
of consideration to be paid in the Offer, (iv) extends the Offer except as
provided in this Section 2.01(a), (v) imposes conditions to the Offer in
addition to those set forth in Annex A hereto or amends the conditions set forth
in Annex A to broaden the scope of such conditions, or (vi) amends any other
terms of the Offer in a manner adverse to the holders of the Shares.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (A) extend the Offer for a period of not more than 30 business days
beyond the scheduled expiration date, which shall be 20 business days following
the commencement of the Offer, if, at the scheduled expiration of the Offer, any
of the conditions to Purchaser's obligation to accept for payment Shares, shall
not be satisfied or waived, or (B) extend the Offer for any period required by
any rule, regulation or interpretation of the Securities and Exchange Commission
(the "SEC"), or the staff thereof, applicable to the Offer. In addition, if, on
the initial scheduled expiration date of the Offer, the sole condition remaining
unsatisfied is the failure of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), to have expired
or been terminated, then Purchaser may extend the Offer from time to time until
the earlier to occur of (i) December 31, 2001 and (ii) the fifth business day
following the public announcement of the expiration or termination of the
applicable waiting period under the HSR Act. Parent and Purchaser agree that, if
any one or more of the conditions to the Offer set forth on Annex A are not
satisfied and none of the events set forth in paragraphs (b), (f) or (g) of
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Annex A that would permit Purchaser not to accept tendered Shares for payment
has occurred, then, provided that such other conditions set forth in Annex A are
reasonably capable of being satisfied within 30 days in Parent and Purchaser's
sole judgment, Purchaser shall, at the request of the Company, extend the Offer
from time to time unless any such condition is no longer reasonably capable of
being satisfied within such 30 day period in Parent and Purchaser's sole
judgment; provided, however, in no event shall Purchaser be required to extend
the Offer beyond December 31, 2001. The Per Share Amount shall, subject to
applicable withholding of taxes, be paid net to the seller in cash, upon the
terms and subject to the conditions of the Offer. Purchaser shall pay for all
Shares validly tendered and not withdrawn promptly following the acceptance of
Shares for payment pursuant to the Offer. If the payment equal to the Per Share
Amount in cash is to be made to a person other than the person in whose name the
surrendered certificate formerly evidencing Shares is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Per Share
Amount to a person other than the registered holder of the certificate
surrendered, or shall have established to the reasonable satisfaction of
Purchaser that such taxes either have been paid or are not applicable. Purchaser
may, in its sole discretion, provide a "subsequent offering period" as
contemplated by Rule 14d-11 under the Exchange Act following its acceptance for
payment of Shares in the Offer.
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer. The Schedule TO shall contain or
shall incorporate by reference an offer to purchase (the "Offer to Purchase")
and forms of the related letter of transmittal and any related summary
advertisement (the Schedule TO, the Offer to Purchase and such other documents,
together with all supplements and amendments thereto, being referred to herein
collectively as the "Offer Documents"). Parent, Purchaser and the Company agree
to correct promptly any information provided by any of them for use in the Offer
Documents that shall have become false or misleading, and Parent and Purchaser
further agree to take all steps necessary to cause the Schedule TO, as so
corrected, to be filed with the SEC, and the other Offer Documents, as so
corrected, to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and Purchaser
shall give the Company and its counsel a reasonable opportunity to review and
comment upon the Offer Documents prior to the filing thereof with the SEC or
dissemination to holders of Shares. Parent and Purchaser shall provide the
Company and its counsel with any comments Parent or Purchaser or their counsel
may receive from the SEC or its staff with respect to the Offer Documents after
receipt of such comments and shall provide the Company and its counsel with a
reasonable opportunity to participate in the response of Parent or Purchaser to
such comments.
SECTION 2.02. Company Action. (a) The Company hereby approves of
and consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on June 28, 2001, has unanimously (A) determined that this
Agreement and the transactions contemplated hereby, including each of the Offer
and the Merger, and the transactions contemplated by the Stockholder Agreements
(collectively, the "Transactions"), are fair to, and in the best interests of,
the holders of Shares, (B) approved, adopted and declared advisable this
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Agreement and the Transactions (such approval and adoption having been made in
accordance with Delaware Law, including, without limitation, Section 203 thereof
and (C) resolved to recommend that the holders of Shares accept the Offer and
tender Shares pursuant to the Offer, and, if applicable, vote to adopt this
Agreement, subject, in the case of (C), to the right of the Board to withhold,
withdraw, amend, change or modify its recommendation in accordance with the
terms of Section 7.05(b) and (ii) Dain Rauscher Wessels has delivered to the
Board a written opinion that the consideration to be received by the holders of
Shares pursuant to each of the Offer and the Merger is fair to the holders of
Shares from a financial point of view. To the extent that such recommendation is
not so withheld, withdrawn, amended, changed or modified, the Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Board described in the immediately preceding sentence, and the Company shall not
withhold, withdraw, amend, change or modify such recommendation in any manner
adverse to Purchaser or Parent except as provided in Section 7.05. The Company
has been advised by its directors and executive officers that they intend to
tender all Shares beneficially owned by them to Purchaser pursuant to the Offer
and, if applicable, to sell such Shares, together with any Series B Shares
beneficially owned by them, to Purchaser pursuant to their Stockholder
Agreements.
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, except as
provided in Section 7.05(b), the recommendation of the Board described in
Section 2.02(a), and shall, subject to Section 2.02(c), disseminate the Schedule
14D-9 to the extent required by Rule 14d-9 promulgated under the Exchange Act,
and any other applicable federal securities laws. The Company, Parent and
Purchaser agree to correct promptly any information provided by any of them for
use in the Schedule 14D-9 which shall have become false or misleading, and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9,
as so corrected, to be filed with the SEC and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company shall give Parent and its counsel a reasonable opportunity to
review and comment upon the Schedule 14D-9 prior to the filing thereof with the
SEC or dissemination to holders of Shares. The Company shall provide Parent and
its counsel with any comments the Company or its counsel may receive from the
SEC or its staff with respect to the Schedule 14D-9 after receipt of such
comments and shall provide Parent and its counsel with a reasonable opportunity
to participate in the response of the Company to such comments.
(c) As promptly as reasonably practicable after the date hereof,
the Company shall, or cause its transfer agent to, furnish Purchaser with
mailing labels containing the names and addresses of all record holders of
Shares and with security position listings of Shares held in stock depositories,
each as of a recent date, together with all other available listings and
computer files containing names, addresses and security position listings of
record holders and, if known to the Company, beneficial owners of Shares. The
Company shall promptly furnish Purchaser with such additional information,
including, without limitation, updated listings and computer files of
stockholders, mailing labels and security position listings, and such other
assistance in disseminating the Offer Documents to holders of Shares as Parent
or Purchaser may reasonably request. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Offer or the
Merger, Parent and Purchaser shall hold in confidence the
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information contained in such labels, listings and files, shall use such
information only in connection with the Transactions, and, if this Agreement
shall be terminated in accordance with Section 9.01, shall deliver, and will
cause their agents to deliver, to the Company all copies of such information
then in their possession or control.
ARTICLE III
THE MERGER
SECTION 3.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VIII, and in accordance with Delaware Law,
Purchaser shall be merged with and into the Company.
SECTION 3.02. Effective Time. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VIII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of Delaware Law (the date and time of
such filing being the "Effective Time").
SECTION 3.03. Effect of the Merger. As a result of the Merger,
the separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 3.04. Certificate of Incorporation; By-laws. (a) At the
Effective Time, and subject to Section 7.06(a), the Certificate of Incorporation
of the Surviving Corporation shall be amended and restated in its entirety to
read as the Certificate of Incorporation of Purchaser, as in effect immediately
prior to the Effective Time, and shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation; provided, however, that, at the Effective Time,
Article I of the Certificate of Incorporation of the Surviving Corporation shall
be amended to read as follows: "The name of the corporation is Cardiac Pathways
Corporation."
(b) Unless otherwise determined by Parent prior to the Effective
Time, and subject to Section 7.06(a), the By-laws of the Surviving Corporation
shall be amended and restated in their entirety to read as the By-laws of
Purchaser, as in effect immediately prior to the Effective Time, until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation or such By-laws.
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SECTION 3.05. Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of
Purchaser immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal.
SECTION 3.06. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section
3.06(c) and any Dissenting Shares (as hereinafter defined)) shall be
canceled and shall be converted automatically into the right to receive
cash in an amount equal to the Per Share Amount (the "Merger
Consideration") payable, without interest, to the holder of such Share,
upon surrender, in the manner provided in Section 3.10, of the
certificate that formerly evidenced such Share (or in the case of a
lost, stolen or destroyed certificate, upon delivery of an affidavit
(and bond, if required) in the manner provided in Section 3.10(c));
(b) Each Series B Share issued and outstanding immediately prior
to the Effective Time (other than Series B Shares to be canceled
pursuant to Section 3.06(c)) shall be canceled and converted
automatically into the right to receive from the Company (which payment
may be made on behalf of the Company by Purchaser pursuant to Section
3.10) cash in an amount equal to the liquidation preference set forth in
section 6(a) of the Certificate of Designation plus the Per Share Amount
(calculated as though each Series B Share had been converted into Shares
in accordance with the Certificate of Designation), in each case without
interest, to the holder of such Series B Share, upon surrender, in the
manner provided in Section 3.10, of the certificate formerly evidencing
such Series B Share (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in
the manner provided in Section 3.10(c)).
(c) Each Share held in the treasury of the Company and each Share
or Series B Share owned by Purchaser, Parent or any direct or indirect
wholly owned subsidiary of Parent or of the Company immediately prior to
the Effective Time shall be canceled without any conversion thereof and
no payment or distribution shall be made with respect thereto; and
(d) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
SECTION 3.07. Employee Stock Options; Employee Stock Purchase
Plan. (a) Effective as of the Effective Time, the Company shall take all
necessary action to (i) terminate the Company's 1991 Stock Option Plan, the 1996
Director Option Plan, the 1998 Nonstatutory Stock Option Plan and 2000 Stock
Option Plan, each as amended through the date of this
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Agreement (the "Company Stock Option Plans"), and (ii) cancel, at the Effective
Time, each outstanding option to purchase shares of Company Common Stock granted
under the Company Stock Option Plans (each, a "Company Stock Option") that is
outstanding and unexercised as of such date. Each holder of a Company Stock
Option that is outstanding and unexercised at the Effective Time shall be
entitled to receive from the Surviving Corporation immediately after the
Effective Time, in exchange for the cancellation of such Company Stock Option,
an amount in cash equal to the excess, if any, of (x) the Per Share Amount over
(y) the per share exercise price of such Company Stock Option, multiplied by the
number of shares of Company Common Stock subject to such Company Stock Option as
of the Effective Time. Any such payment shall be subject to all applicable
federal, state and local tax withholding requirements.
(b) Employee Stock Purchase Plan. As of the last day of the
payroll period immediately preceding the earlier of the Appointment Time and
November 1, 2001 (the "ESPP Date"), all offering and purchase periods under way
under the Company's Employee Stock Purchase Plan (the "ESPP"), shall be
terminated and, as of the date of this Agreement, no new offering or purchase
periods shall be commenced. The Company shall take all necessary action,
including providing all required notices to participants, to ensure that the
rights of participants in the ESPP with respect to any such offering or purchase
periods shall be determined by treating the ESPP Date as the last day of such
offering and purchase periods. The Company shall take all actions as may be
necessary in order to freeze the rights of the participants in the ESPP,
effective as of the date of this Agreement, to existing participants and, to the
extent permissible under the ESPP, existing participation levels. At the
Appointment Time, the Company shall terminate the ESPP.
SECTION 3.08. Company Warrants. At the Effective Time, the holder
of each Common Share Warrant and Series B Share Warrant (each as defined in
Section 4.03) shall be entitled to receive, and shall, upon surrender of such
Warrant to Purchaser for cancellation, receive, in settlement and cancellation
thereof, an amount of cash equal to the product of (x) the excess, if any, of
the aggregate amount which the holder of such Warrant would be entitled to
receive pursuant to Section 3.06 in respect of the Shares or Series B Shares
issuable upon exercise of such Warrant if such Warrant were exercised
immediately prior to the Effective Time with respect to all Shares or Series B
Shares remaining to be exercised thereunder over the aggregate exercise price of
each such Warrant with respect to all Shares or Series B Shares remaining to be
exercised thereunder, and (y) the number of Shares or Series B Shares, as the
case may be, remaining to be exercised under such Warrant, which payment shall
be made to each such Warrant holder as soon as practicable after the Effective
Time. The Company shall take all necessary action to effect the disposition of
the Common Share Warrants and the Series B Share Warrants as contemplated by
this Section 3.08. Upon surrender of such Warrants by the holders thereof, any
Common Share Warrant or Series B Warrant not surrendered for cancellation as
provided above shall survive the Merger and shall become a warrant to receive,
upon payment of the exercise price provided for therein, an amount of cash based
on the Per Share Amount (plus, in the case of the Series B Warrants, the
liquidation preference set forth in the Certificate of Designation) in
accordance with the merger adjustment provisions of each such Warrant.
SECTION 3.09. Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, Shares that are outstanding
immediately prior to the Effective Time
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and that are held by stockholders who shall have not voted in favor of the
Merger and who shall have demanded properly in writing appraisal for such Shares
in accordance with Section 262 of Delaware Law (collectively, the "Dissenting
Shares") shall not be converted into, or represent the right to receive, the
Merger Consideration. Such stockholders shall be entitled to receive payment of
the appraised value of such Shares held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 3.10, of the certificate or certificates that formerly
evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to Delaware Law and received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Delaware Law. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
SECTION 3.10. Surrender of Shares; Series B Shares and Warrants;
Stock Transfer Books. (a) Prior to the Effective Time, Purchaser shall designate
a bank or trust company to act as agent (the "Paying Agent") for the holders of
Shares, Series B Shares and Warrants to receive the funds to which holders of
such Shares, Series B Shares and Warrants shall become entitled pursuant to
Sections 3.06 and 3.08. Purchaser shall deliver or cause to be delivered such
immediately available funds to the Paying Agent on a daily basis, as directed by
the Paying Agent, to enable the Paying Agent to make prompt payment to the
holders of Shares, Series B Shares and Warrants upon surrender of Certificates
pursuant to Section 3.10(b). Such funds shall be held in trust by the Paying
Agent for the benefit of the holders of Shares, Series B Shares and Warrants
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a holder
of record of Shares entitled to receive the Merger Consideration pursuant to
Section 3.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares or Series B Shares or certificates or other instruments
representing such Warrants as applicable (the "Certificates") shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and instructions
for use in effecting the surrender of the Certificates pursuant to such letter
of transmittal. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount specified in Section 3.06
for each Share, Series B Share or Warrant (rounded to the nearest whole cent
after aggregating all Shares, Series B Shares and Warrants held by such holder),
as applicable, formerly evidenced by such Certificate, and such Certificate
shall then be canceled. No interest shall accrue or be paid on the amounts
payable pursuant to Section 3.06 upon the surrender of any Certificate for the
benefit of the holder of such Certificate. If the payment of the amounts payable
pursuant to Section 3.06 is to be made to a person other than the
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person in whose name the surrendered Certificate formerly evidencing Shares,
Series B Shares or Warrants, as applicable, is registered on the stock transfer
books of the Company, it shall be a condition of payment that the Certificate so
surrendered shall be endorsed properly or otherwise be in proper form for
transfer and that the person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the amount
specified in Section 3.06 to a person other than the registered holder of the
Certificate surrendered, or shall have established to the reasonable
satisfaction of Purchaser that such taxes either have been paid or are not
applicable.
(c) In the event that any Certificates shall have been lost,
stolen or destroyed, the Paying Agent shall issue in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, the cash consideration payable with respect thereto
pursuant to Section 3.06; provided, however, that Parent may, in its discretion
and as a condition precedent to the issuance of such cash, require the owner of
such lost, stolen or destroyed Certificates to deliver a bond in such sum as it
may reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Paying Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(d) At any time following the 180th day after the Effective Time,
Purchaser shall no longer be required to retain the Paying Agent to make the
disbursements required by this Section 3.10, and, thereafter, the holders of
Shares, Series B Shares and Warrants shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Share, Series B Share or Warrant for any Merger
Consideration delivered in respect of such Share, Series B Share or Warrant to a
public official pursuant to any abandoned property, escheat or other similar
law.
(e) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Shares or Series B Shares on
the records of the Company. From and after the Effective Time, the holders of
Shares and Series B Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares or Series B Shares
except as otherwise provided herein or by applicable law, or additionally in the
case in the Series B Shares, by the certificate of designation of rights,
preferences and privileges of the Series B Shares (the "Certificate of
Designation").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Purchaser to enter into this
Agreement, the Company hereby represents and warrants to Parent and Purchaser,
subject to such exceptions as are specifically disclosed in writing in the
disclosure schedule supplied by the Company to Parent dated as of the date
hereof (the "Disclosure Schedule"):
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SECTION 4.01. Organization and Qualification; Subsidiaries. (a)
Each of the Company and each subsidiary of the Company ("Subsidiary") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Company and each Subsidiary is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not have a Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary and the percentage of
the outstanding capital stock of each Subsidiary owned by the Company and each
other Subsidiary, is set forth in Section 4.01(b) of the Disclosure Schedule.
The Subsidiaries do not conduct any business and do not have any employees or
any material assets, liabilities, or operations. The Company does not directly
or indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity
other than the Subsidiaries.
SECTION 4.02. Restated Certificate of Incorporation and By-laws.
The Company has heretofore furnished to Parent a complete and correct copy of
the Restated Certificate of Incorporation and the By-laws of the Company and the
Certificate of Incorporation, By-laws or equivalent organizational documents of
each Subsidiary, each as amended to date. Such Certificates of Incorporation,
By-laws or equivalent organizational documents are in full force and effect.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its Certificate of Incorporation, By-laws or equivalent organizational
documents, except where any such violation by a Subsidiary would not have a
Material Adverse Effect. SECTION 4.03. Capitalization. The authorized capital
stock of the Company consists of 30,000,000 Common Shares and 5,000,000 shares
of preferred stock, par value $0.001 per share ("Company Preferred Stock"). As
of the date hereof, (a) 9,052,243 Shares are issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (b) no Shares are held
in the treasury of the Company, (c) no Shares are held by the Subsidiaries, (d)
2,062,620 Shares are reserved for future issuance pursuant to outstanding
employee stock options or stock incentive rights granted pursuant to the Company
Stock Option Plans and (e) rights to purchase 22,582 Shares pursuant to the
ESPP. As of the date hereof, 27,250 Series B Shares are issued and outstanding,
all of which are validly issued, fully paid and nonassessable. Except as set
forth in this Section 4.03, and except further for (a) the Stockholder
Agreements, (b) the Rights issued pursuant to the Rights Agreement, (c) warrants
to purchase 7,034 Shares (the "Common Share Warrants"), (d) warrants to purchase
300 Series B Shares (the "Series B Warrants", and together with the Common Share
Warrants, the "Warrants") and (e) rights to purchase 22,582 Shares pursuant to
the ESPP, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any Subsidiary or obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. Section 4.03 of the Disclosure
Schedule accurately sets forth information regarding the holder, the exercise
price, the date of grant or issuance, the amount of any accumulated and
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unpaid dividends owed or which would be owed on any such security through
September 30, 2001, and the number of underlying securities issuable in respect
of each Series B Share, Common Share Warrant, Series B Warrant, Company Stock
Option and right to purchase Shares pursuant to the ESPP through September 30,
2001. All securities of the Company subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Other than the Series B Shares, there are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any securities of the Company or of any Subsidiary or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary or any other person. Each
outstanding share of capital stock of each Subsidiary is duly authorized,
validly issued, fully paid and nonassessable, and each such share is owned by
the Company or another Subsidiary free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or any Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever.
SECTION 4.04. Authority Relative to This Agreement. The Company
has (subject to the required actions and proceedings described in the following
sentence) all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, (a) the
approval of the holders of a majority of the outstanding Series B Shares and (b)
the adoption of this Agreement by the holders of a majority of the
then-outstanding Shares and Series B Shares voting together as a single class,
if and to the extent required by applicable law, and the filing and recordation
of appropriate merger documents as required by Delaware Law). This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Purchaser, constitutes
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditor rights and for general equitable
and public policy principles. The Board has approved this Agreement and the
Transactions and such approvals are sufficient so that the restrictions on
business combinations set forth in Section 203(a) of Delaware Law shall not
apply to the Transactions.
SECTION 4.05. No Conflict; Required Filings and Consents;
Appraisal Rights. (a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Restated Certificate of Incorporation, the
Certificate of Designation, or By-laws of the Company or equivalent
organizational documents of any Subsidiary, (ii) subject to obtaining the
approvals of the Company's stockholders described in Section 4.04 with respect
to the Merger and compliance with the requirements described in Section 4.05
below, conflict with or violate any United States or, to Company's knowledge any
non-United States, statute, law, ordinance, regulation, rule, code, executive
order, injunction, judgment, decree or other order ("Law") applicable to the
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Company or any Subsidiary or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or any Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state, county or local or non-United
States government, governmental, regulatory or administrative authority, agency,
instrumentality or commission or any court, tribunal, or judicial or arbitral
body (a "Governmental Authority"), except (i) for applicable requirements, if
any, of the Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws")
and state takeover laws, the pre-merger notification requirements of the HSR
Act, any antitrust filing, notification or approval in any other relevant
jurisdiction, the rules and regulations of Nasdaq and filing and recordation of
appropriate merger documents as required by Delaware Law, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not have a Material Adverse Effect.
SECTION 4.06. Permits; Compliance. (a) Each of the Company and the Subsidiaries
is in possession of all registrations, franchises, grants, authorizations
(including marketing authorizations), licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Authority necessary for each of the Company or the Subsidiaries to manufacture,
market, sell, or distribute the Company Products (as defined in Section 4.06(b),
other than products under development) or to own, lease and operate its
properties or to carry on its business as it is now being conducted (the
"Permits"), except where the failure to have, or the suspension or cancellation
of, any of the Permits would not have a Material Adverse Effect. As of the date
hereof, no suspension or cancellation of any of the Permits is pending or, to
the knowledge of the Company, threatened, except where the failure to have, or
the suspension or cancellation of, any of the Permits would not have a Material
Adverse Effect. Neither the Company nor any Subsidiary is in conflict with, or
in default, breach or violation of, (i) any Law applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, Permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound,
except for any such conflicts, defaults, breaches or violations that would not
have a Material Adverse Effect.
(b) (i) With respect to the products of the Company and its
Subsidiaries and, to the extent applicable, products under development
(collectively, the "Company Products") (A) the Company or any of its
Subsidiaries has obtained, unless otherwise exempt, all necessary and applicable
approvals, clearances, authorizations, licenses and registrations required by
United States or foreign governments or government agencies, to permit the
design, development, pre-
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clinical and clinical testing, manufacture, labeling, sale, distribution and
promotion of the Company Products (the "Activities to Date") with respect to
each Company Product (collectively, the "Company Licenses"); (B) the Company and
each of its Subsidiaries are in compliance in all material respects with all
terms and conditions of each Company License and with all applicable Law
pertaining to the Activities to Date with respect to each Company Product which
is not required to be the subject of a Company License; (C) the Company and each
of its Subsidiaries are in compliance in all material respects with all
applicable Laws regarding registration, license, certification for each site at
which a Company Product is manufactured, labeled, sold, or distributed; and (D)
to the extent any Company Product has been exported from the United States, the
Company has exported such Company Product in compliance in all material respects
with applicable Law; (ii) all manufacturing operations performed by or on behalf
of the Company have been and are being conducted in all material respects in
compliance with applicable current good manufacturing practices and regulations
issued by the U.S. Food and Drug Administration (the "FDA") and, to the extent
applicable, counterpart regulations in the European Union and all other
countries where compliance is required; (iii) all non-clinical and clinical
laboratory studies of Company Products under development, sponsored by the
Company and intended to be used to support regulatory clearance or approval,
have been and are being conducted in compliance in all material respects with
the current good laboratory practice regulations of Governmental Authorities in
the United States and, to the extent applicable, counterpart regulations in the
European Union and all other countries; and (iv) the Company and each of its
Subsidiaries are in compliance in all material respects with all applicable
reporting requirements for all Company Licenses or plant registrations described
in clause (i) above, including, but not limited to, applicable adverse event
reporting requirements in the United States and outside of the United States
under applicable Law.
(c) To the knowledge of the Company, no filing or submission to
the FDA or any other Governmental Authority with regard to the Company Products
that is the basis for any approval or clearance contains any material omission
or materially false information.
(d) The Company is in compliance with all FDA and non-United
States equivalent agencies and similar state and local Governmental Agency Laws
applicable to the maintenance, compilation and filing of reports, including
medical device reports, with regard to the Company Products, except where such
noncompliance would not have a Material Adverse Effect. Section 4.06(d) of the
Disclosure Schedule sets forth a list of all applicable adverse event reports
related to the Company Products, including any Medical Device Reports (as
defined in 21 CFR 803). Set forth on Section 4.06(d) of the Disclosure Schedule
are complaint trend reports of the Company from June 2000 through May 2001 with
a monthly summary of complaints, including information regarding complaint
aging, complaints by product and root cause analysis of closed complaints, which
reports are correct in all material respects.
(e) The Company has not received any written notice or other
written communication from the FDA or any other Governmental Authority (i)
contesting the pre-market clearance or approval of, the uses of or the labeling
and promotion of any of the Company Products or (ii) otherwise alleging any
violation of any Laws by the Company.
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(f) There have been no recalls, field notifications or seizures
ordered or adverse regulatory actions taken (or to the Company's knowledge
threatened) by the FDA or any other Governmental Authority with respect to any
of the Company Products, including any facilities where any such Company
Products are produced, processed, packaged or stored and neither the Company nor
any of its Subsidiaries has within the last three years, either voluntarily or
at the request of any Governmental Authority, initiated or participated in a
recall of any Company Product or provided post-sale warnings regarding any
Company Product.
SECTION 4.07. SEC Filings; Financial Statements. (a) The Company
has filed all forms, reports and documents required to be filed by it with the
SEC since June 30, 1998, and has heretofore delivered or made available via
EDGAR to Parent, in the form filed with the SEC, (i) its Annual Reports on Form
10-K for the fiscal years ended June 30, 1998, 1999 and 2000, respectively, (ii)
its Quarterly Reports on Form 10-Q for the periods ended September 30, 2000,
December 31, 2000 and March 31, 2001, (iii) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since June
30, 1998 and (iv) all other forms and reports, including reports on Form 8-K,
and other registration statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by the Company with the SEC since June
30, 1998 (the forms, reports and other documents referred to in clauses (i),
(ii), (iii) and (iv) above being, collectively, the "SEC Reports"). The SEC
Reports (i) were prepared in all material respects in accordance with either the
requirements of the Securities Act of 1933, as amended (together with the rules
and regulations promulgated thereunder, the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations promulgated thereunder,
and (ii) did not, at the time they were filed, unless amended or superceded (in
which case, if amended or superceded, as of the date of such amendment or super
cession), contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No Subsidiary is required to file any form, report or
other document with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited statements, do not
contain footnotes as permitted by Form 10-Q under the Exchange Act) and each
fairly presents, in all material respects, the consolidated financial position,
results of operations and cash flows of the Company and its consolidated
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which would not have had, and would not have, a
Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its consolidated Subsidiaries as at March 31,
2001, including the notes thereto (the "Current Balance Sheet"), neither the
Company nor any Subsidiary has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice.
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(d) The Company has heretofore furnished or made available to
Parent complete and correct copies of all amendments and modifications that have
not been filed by the Company with the SEC to all agreements, documents and
other instruments that previously had been filed by the Company with the SEC and
are currently in effect.
SECTION 4.08. Absence of Certain Changes or Events. Since March
31, 2001, or as expressly contemplated by this Agreement, or specifically
disclosed in the SEC Reports filed since March 31, 2001 and prior to the date of
this Agreement, (a) the Company and the Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice, (b) there has not been any Material Adverse Effect, and (c) none of
the Company or any Subsidiary has taken any action that, if taken after the date
of this Agreement, would constitute a breach of any of the covenants set forth
in Section 6.01.
SECTION 4.09. Absence of Litigation. Except as specifically
disclosed in the SEC Reports filed prior to the date of this Agreement, there is
no litigation, suit, claim, action, proceeding or investigation (an "Action")
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary, or any property or asset of the Company or any Subsidiary,
before any Governmental Authority that would have a Material Adverse Effect.
Neither the Company nor any Subsidiary nor any property or asset of the Company
or any Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or similar written agreement with, or, to the knowledge of
the Company, continuing investigation by, any Governmental Authority, or any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority that would have a Material Adverse Effect.
SECTION 4.10. Employee Matters. (a) Section 4.10(a) of the
Disclosure Schedule lists (i) all employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements, whether legally enforceable or not, to which the Company or any
Subsidiary is a party, with respect to which the Company or any Subsidiary has
any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of the Company or any Subsidiary, (ii) each employee benefit
plan for which the Company or any Subsidiary could incur liability under Section
4069 of ERISA in the event such plan has been or were to be terminated, and
(iii) any plan in respect of which the Company or any Subsidiary could incur
liability under Section 4212(c) of ERISA (collectively, the "Plans"). Each Plan
is in writing and the Company has furnished or made available to Purchaser a
true and complete copy of each Plan and has delivered or made available to
Purchaser a true and complete copy of each material document, if any, prepared
in connection with each such Plan, including, without limitation, (i) a copy of
each trust or other funding arrangement, (ii) each summary plan description and
summary of material modifications thereto, (iii) the most recently filed
Internal Revenue Service ("IRS") Form 5500, (iv) the most recently received IRS
determination letter for each such Plan, and (v) the most recently prepared
actuarial report and financial statement in connection with each such Plan.
Neither the Company nor any Subsidiary has any express or implied commitment,
whether legally enforceable or not, (i) to create, incur liability with respect
to or cause to exist any new or additional employee benefit plan, program
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or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual, or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Internal Revenue Code of 1986, as amended
(the "Code").
(b) None of the Plans is a multiemployer plan (within the meaning
of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for
which the Company or any Subsidiary could incur liability under Section 4063 or
4064 of ERISA (a "Multiple Employer Plan"). None of the Plans (i) provides for
the payment of separation, severance, termination or similar-type benefits to
any person (other than as ordinarily due upon termination or retirement), (ii)
obligates the Company or any Subsidiary to pay separation, severance,
termination or similar-type benefits solely or partially as a result of any
transaction contemplated by this Agreement, or (iii) obligates the Company or
any Subsidiary to make any payment or provide any benefit as a result of a
"change in control", within the meaning of such term under Section 280G of the
Code. None of the Plans provides for or promises retiree medical insurance
benefits to any current or former employee, officer or director of the Company
or any Subsidiary. Each of the Plans is subject only to the Laws of the United
States or a political subdivision thereof.
(c) Each Plan is now and always has been operated in all material
respects in accordance with its terms and the requirements of all applicable
Laws including, without limitation, ERISA and the Code. The Company and the
Subsidiaries have performed all material obligations required to be performed by
them under, are not in any respect in default under or in violation of, and have
no knowledge of any default or violation by any party to, any Plan. No Action is
pending or, to the knowledge of the Company, threatened with respect to any Plan
(other than claims for benefits in the ordinary course) and no fact or event
exists that could reasonably be expected to give rise to any such Action.
(d) Each Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS covering all of the provisions applicable to
the Plan for which determination letters are currently available that the Plan
is so qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event has occurred since the date of such determination letter or
letters from the IRS to adversely affect the qualified status of any such Plan
or the exempt status of any such trust.
(e) There has not been any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan. Neither the Company nor any Subsidiary has incurred any liability under,
arising out of or by operation of Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA, or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and no fact or event exists which could reasonably be expected to
give rise to any such liability.
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(f) All contributions, premiums or payments required to be made
with respect to any Plan have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority and no
material fact or event exists which could reasonably be expected to give rise to
any such challenge or disallowance.
(g) All current directors, officers, management employees, and
technical and professional employees and all former employees who have had a
material role in the development of Company Owned Intellectual Property, Company
Systems or other confidential or proprietary information of the Company and the
Subsidiaries are under written obligation to the Company and the Subsidiaries to
maintain in confidence all confidential or proprietary information acquired by
them in the course of their employment and to assign to the Company and the
Subsidiaries all inventions made by them within the scope of their employment
during such employment and for a reasonable period thereafter.
(h) Section 4.10(h) of the Disclosure Schedule lists the name,
the place of employment, the current annual salary rates (including descriptions
of any raises in the preceding three months), bonuses, deferred or contingent
compensation, pension, "golden parachute" and other like benefits paid or
payable (in cash or otherwise) in the prior fiscal year and the current fiscal
year, the date of employment and a description of the position and job function
of each current salaried employee, officer, director, consultant or agent of the
Company and its Subsidiaries.
SECTION 4.11. Labor Matters. There are no controversies pending
or, to the knowledge of the Company, threatened between the Company or any
Subsidiary and any of their respective employees or former employees, which
controversies would have a Material Adverse Effect. Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any Subsidiary,
nor, to the knowledge of the Company, are there any activities or proceedings of
any labor union to organize any such employees. There are no unfair labor
practice complaints pending against the Company or any Subsidiary before the
National Labor Relations Board or any current union representation questions
involving employees of the Company or any Subsidiary. There is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat
thereof, by or with respect to any employees of the Company or any Subsidiary.
SECTION 4.12. Offer Documents; Schedule 14D-9; Proxy Statement.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents shall, at the times the Schedule 14D-9, the
Offer Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to stockholders of the Company, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Neither the proxy statement to be sent to the stockholders
of the Company in connection with the Stockholders' Meeting (as hereinafter
defined) or the information statement to be sent to such stockholders, as
appropriate (such proxy statement or information statement, as amended or
supplemented, being referred to herein as the "Proxy Statement"), shall, at the
date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to stockholders of the Company, at the time of
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the Stockholders' Meeting and at the Effective Time, contain any statement
which, at the time and in light of the circumstances under which it was made, is
false or misleading with respect to any material fact, or which omits to state
any material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies, if any, for the Stockholders'
Meeting which shall have become false or misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent, Purchaser or any of Parent's or Purchaser's
representatives for inclusion in the foregoing documents. The Schedule 14D-9 and
the Proxy Statement shall comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 4.13. Property and Leases. (a) The Company and the
Subsidiaries have sufficient title to all their properties and assets to conduct
their respective businesses as currently conducted or as contemplated to be
conducted, with only such exceptions as would not have a Material Adverse
Effect.
(b) Neither the Company nor any Subsidiary owns any real
property. Each parcel of real property leased by the Company or any Subsidiary
(i) is leased free and clear of all mortgages, pledges, liens, security
interests, conditional and installment sale agreements, encumbrances, charges or
other claims of third parties of any kind against the Company or any Subsidiary,
including, without limitation, any easement, right of way or other encumbrance
to title, or any option, right of first refusal, or right of first offer
applicable to the Company or any Subsidiary (collectively, "Liens"), other than
(A) Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Subsidiary consistent with past practice, (D)
Liens securing obligations of the lessor of such leasehold or the owner of such
property and not of the Company, (E) Liens set forth in the Company's lease to
such real property, and (F) all matters of record, Liens and other imperfections
of title and encumbrances that would not have a Material Adverse Effect
(collectively, "Permitted Liens"), and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Company, has any such condemnation,
expropriation or taking been proposed.
(c) All leases of real property leased for the use or benefit of
the Company or any Subsidiary to which the Company or any Subsidiary is a party
are in full force and effect and have not been modified or amended, and there
exists no default under any such lease by the Company or any Subsidiary, nor any
event which, with notice or lapse of time or both, would constitute a default
thereunder by the Company or any Subsidiary, except as would not have a Material
Adverse Effect.
SECTION 4.14. Intellectual Property. (a) Section 4.14 of the
Company Disclosure Schedule sets forth a true and complete list of all (i) a
list of all patents granted, assigned, licensed or pending to the Company, (ii)
a list of patents and pending applications licensed from Sonometrics
Corporation, (iii) a list of registered and pending trademarks for the Company
and (iv) a list of software copyright notices contained in the Company's
products.
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(b) The operation of the business of the Company as currently
conducted or as contemplated to be conducted does not, to the Company's
knowledge, interfere with, conflict with, infringe upon, misappropriate or
otherwise violate the Intellectual Property rights of any third party, and no
Action is pending or threatened alleging that the operation of such business
interferes with, conflicts with, infringes upon, misappropriates or otherwise
violates the Intellectual Property rights of any third party.
(c) The Company is the sole owner of the entire right, title and
interest in and to, or has a valid license or other legal right under, Company
Owned Intellectual Property and the Company Licensed Intellectual Property used
in the ordinary course of its respective business as presently conducted or as
contemplated by the Company to be conducted, subject to the terms of the license
agreements governing the Company Licensed Intellectual Property.
(d) The Company has no present knowledge from which it concludes
that the Company Owned Intellectual Property and any Intellectual Property
licensed to the Company under the Company Licensed Intellectual Property, are
necessarily invalid or unenforceable, and the same have not been adjudged
invalid or unenforceable in whole or in part. The Company Owned Intellectual
Property and the Company Licensed Intellectual Property constitute all of the
Intellectual Property necessary for the operation of the business of the Company
as currently conducted or as currently contemplated by the Company to be
conducted.
(e) No Actions have been asserted, are pending, or, to the
knowledge of the Company, threatened against the Company (i) based upon or
challenging or seeking to deny or restrict the ownership by or license rights of
the Company of any of the Company Owned Intellectual Property or Company
Licensed Intellectual Property, (ii) alleging that any services provided by,
processes used by, or products manufactured or sold by the Company infringe or
misappropriate any Intellectual Property right of any third party, or (iii)
alleging that the Company Licensed Intellectual Property is being licensed or
sublicensed in conflict with the terms of any license or other agreement.
(f) As of the date of this Agreement, no investigation taken by
the Company with assistance of counsel has led the Company to conclude that any
person is engaging in any activity that infringes or misappropriates the Company
Owned Intellectual Property or Company Licensed Intellectual Property. Except as
set forth in Section 3.17 of the Company Disclosure Schedule, the Company has
not granted any license or other right to any third party with respect to the
Company Owned Intellectual Property or Company Licensed Intellectual Property.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated by this Agreement by the Company will not
breach, violate or conflict with any instrument or agreement concerning the
Company Owned Intellectual Property, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any of the
Company Owned Intellectual Property or materially impair the right of the Parent
to license or dispose of, or to bring any action for the infringement of, any
material Company Owned Intellectual Property.
(g) The Company has delivered or made available to the Parent
correct and complete copies of all the licenses of the Company Licensed
Intellectual Property, other than licenses of commercial off-the-shelf computer
software. With respect to each such license:
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(i) except where the failure would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
such license is valid and binding and in full force and effect and
represents the entire agreement between the respective licensor and
licensee with respect to the subject matter of such license;
(ii) such license will not cease to be valid and binding and in
full force and effect on terms identical in all material respects to
those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation
of the transactions contemplated by this Agreement constitute a material
breach or default under such license or otherwise so as to give the
licensor a right to terminate such license;
(iii) the Company has not (A) received any notice of termination
or cancellation under such license, (B) received any notice of breach or
default under such license, which breach has not been cured, and (C)
granted to any other third party any rights, adverse or otherwise, under
such license that would constitute a material breach of such license;
and
(iv) neither the Company nor, to the knowledge of the Company,
any other party to such license is in material breach or default
thereof, and no event has occurred that, with notice or lapse of time,
would constitute such a material breach or default or permit
termination, modification or acceleration under such license.
(h) To the Company's knowledge, after due inquiry, the Company
Software is free of all viruses, worms, trojan horses and other material known
contaminants, and does not contain any bugs, errors, or problems of a material
nature that could disrupt its operation or have an adverse impact on the
operation of other software programs or operating systems. The Company has
obtained all approvals necessary for exporting the Company Software outside the
United States and importing the Company Software into any country in which the
Company Software is now sold or licensed for use, and all such export and import
approvals in the United States and throughout the world are, to the Company's
knowledge, valid, current, outstanding and in full force and effect. No rights
in the Company Software have been transferred to any third party except to the
customers of the Company and authorized resellers to whom the Company has
licensed such Company Software in the ordinary course of business.
(i) The Company has no present knowledge from which it
necessarily concludes that it does not have the right to use all software
development tools, library functions, compilers, and other third party software
that is material to the business of the Company, or that is required to operate
or modify the Company Software.
(j) The Company has taken reasonable steps in accordance with
normal industry practice to maintain the confidentiality of their trade secrets
and other confidential Intellectual Property. To the knowledge of the Company,
(i) there has been no misappropriation of any material trade secrets or other
material confidential Company Owned Intellectual Property by any person; (ii) no
employee, independent contractor or agent of the Company has misappropriated any
trade secrets of any other person in the course of such performance as an
employee, independent contractor or agent; and (iii) no employee, independent
contractor or
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agent of the Company is in material default or breach of any term of any
employment agreement, non-disclosure agreement, assignment of invention
agreement or similar agreement or contract relating in any way to the
protection, ownership, development, use or transfer of Company Owned
Intellectual Property.
SECTION 4.15. Taxes. The Company and the Subsidiaries have filed
all United States federal, state, local and non-United States Tax returns and
reports required to be filed by them and have paid and discharged all Taxes
required to be paid or discharged, other than (a) such payments as are being
contested in good faith by appropriate proceedings and (b) such filings,
payments or other occurrences that would not have a Material Adverse Effect.
Neither the IRS nor any other United States or non-United States taxing
authority or agency is now asserting or, to the knowledge of the Company,
threatening to assert against the Company or any Subsidiary any deficiency or
claim for any Taxes or interest thereon or penalties in connection therewith.
Neither the Company nor any Subsidiary has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves for Taxes reflected in the Current Balance
Sheet are adequate to cover all Taxes accruable through such date (including
interest and penalties, if any, thereon) in accordance with GAAP. Neither the
Company nor any Subsidiary has made an election under Section 341(f) of the
Code. There are no Tax liens upon any property or assets of the Company or any
of the Subsidiaries except liens for current Taxes not yet due. Neither the
Company nor any of the Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by the Company or any of the Subsidiaries, and
the IRS has not initiated or proposed any such adjustment or change in
accounting method, in either case which adjustment or change would have a
Material Adverse Effect. Except as set forth in the financial statements
described in Section 4.07, neither the Company nor any of the Subsidiaries has
entered into a transaction which is being accounted for under the installment
method of Section 453 of the Code, which would have a Material Adverse Effect.
Set forth on Section 4.15 of the Disclosure Schedule is a statement, from a Tax
perspective, of the net operating loss position of the Company and the
Subsidiaries as reflected in the Company's most recently filed federal income
tax return, which amount does not take into account or reflect any limitations
to which such net operating loss position may be subject to under the Code (such
as section 382 thereunder) or applicable Law.
SECTION 4.16. Environmental Matters. Except as would not have a
Material Adverse Effect, (a) the Company has not violated and is not in
violation of any Environmental Law; (b) none of the properties currently or
formerly owned, leased or operated by the Company (including, without
limitation, soils and surface and ground waters) are contaminated with any
Hazardous Substance; (c) the Company is not actually, potentially or allegedly
liable for any off-site contamination by Hazardous Substances; (d) the Company
is not actually, potentially or allegedly liable under any Environmental Law
(including, without limitation, pending or threatened liens); (e) the Company
has all permits, licenses and other authorizations required under any
Environmental Law ("Environmental Permits"); (f) the Company has always been and
is in compliance with its Environmental Permits; and (g) neither the execution
of this Agreement nor the consummation of the Transactions will require any
investigation, remediation or other action with respect to Hazardous Substances,
or any notice to or consent of Governmental Authorities or third parties,
pursuant to any applicable Environmental Law or Environmental Permit.
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SECTION 4.17. Amendment to Rights Agreement. The Company has
irrevocably amended, and the Board has taken all necessary action to irrevocably
amend, the Rights Agreement so that (a) none of the execution or delivery of
this Agreement or the Stockholder Agreements, the making of the Offer pursuant
to this Agreement, the acceptance for payment of Shares by Purchaser pursuant to
the Offer, the consummation of the Merger pursuant to this Agreement, the
purchase of Shares, Series B Shares or Warrants pursuant to the Stockholder
Agreements or the consummation of any other Transaction will result in (i) the
occurrence of the "flip-in event" described under Section 11 of the Rights
Agreement, (ii) the occurrence of the "flip-over event" described in Section 13
of the Rights Agreement, or (iii) the Rights becoming evidenced by, and
transferable pursuant to, certificates separate from the certificates
representing Shares and (b) the Rights will expire pursuant to the terms of the
Rights Agreement at the Effective Time.
SECTION 4.18. Material Contracts. (a) Subsections (i) through (x)
of Section 4.18 of the Disclosure Schedule contain a list of the following types
of contracts and agreements to which the Company or any Subsidiary is a party
(such contracts, agreements and arrangements as are required to be set forth in
Section 4.18(a) of the Disclosure Schedule being the "Material Contracts"):
(i) each contract and agreement which (A) is likely to involve
consideration of more than $100,000, in the aggregate, during the
calendar year ending December 31, 2001, (B) is likely to involve
consideration of more than $100,000, in the aggregate, over the
remaining term of such contract, and which, in either case, cannot be
canceled by the Company or any Subsidiary without material penalty or
further payment and without more than 90 days' notice;
(ii) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
the Company or any Subsidiary is a party;
(iii) all management contracts (excluding contracts for
employment) and contracts with other consultants, including any
contracts involving the payment of royalties or other amounts calculated
based upon the revenues or income of the Company or any Subsidiary or
income or revenues related to any product of the Company or any
Subsidiary to which the Company or any Subsidiary is a party;
(iv) all contracts and agreements evidencing indebtedness;
(v) all contracts and agreements with any Governmental
Authority to which the Company or any Subsidiary is a party;
(vi) all contracts and agreements, including license
agreements, that limit, or purport to limit, the ability of the Company
or any Subsidiary to compete in any line of business or with any person
or entity or in any geographic area or during any period of time;
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(vii) all contracts and agreements providing for benefits under
any Plan, excluding individual stock option grant agreements with
respect to Company Stock Options set forth on Section 4.03 of the
Disclosure Schedule;
(viii) all material contracts or arrangements that result in any
person or entity holding a power of attorney from the Company or any
Subsidiary that relates to the Company, any Subsidiary or their
respective businesses;
(ix) all contracts for employment required to be listed in
Section 4.10 of the Disclosure Schedule; and
(x) all other contracts and agreements, including clinical
study agreements, whether or not made in the ordinary course of
business, which are material to the Company or the conduct of its
business, or the absence of which would have a Material Adverse Effect.
(b) Except as would not have a Material Adverse Effect, (i) each
Material Contract is a legal, valid and binding agreement (subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor rights
and for general equitable and public policy principles), and none of the
Material Contracts is in default by its terms or has been canceled by the other
party; (ii) to the Company's knowledge, no other party is in breach or violation
of, or default under, any Material Contract; (iii) the Company and the
Subsidiaries are not in receipt of any claim of default under any such
agreement; and (iv) neither the execution of this Agreement nor the consummation
of any Transaction shall constitute default, give rise to cancellation rights,
or otherwise adversely affect any of the Company's material rights under any
Material Contract. The Company has furnished or made available to Parent true
and complete copies of all Material Contracts, including any amendments thereto.
SECTION 4.19. Insurance. (a) Section 4.19(a) of the Disclosure
Schedule sets forth, with respect to each insurance policy under which the
Company or any Subsidiary has been an insured, a named insured or otherwise the
principal beneficiary of coverage at any time within the past three years, (i)
the names of the insurer, the principal insured and each named insured, (ii) the
policy number, (iii) the period, scope and amount of coverage and (iv) the
premium charged. Such insurance policies and the types and amounts of coverage
provided therein are usual and customary in the context of the businesses and
operations in which the Company and the Subsidiaries are engaged for companies
of comparable sizes at comparable stages of development.
(b) With respect to each such insurance policy: (i) to the
Company's knowledge, the policy is legal, valid, binding and enforceable in
accordance with its terms (subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditor rights and for general equitable and public
policy principles), and, except for policies that have expired under their terms
in the ordinary course, is in full force and effect; (ii) neither the Company
nor any Subsidiary is in material breach or default (including any such breach
or default with respect to the payment of premiums or the giving of notice), and
no event has occurred which, with notice or the lapse of time, would
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constitute such a breach or default, or permit termination or modification,
under the policy; and (iii) to the knowledge of the Company, no insurer on the
policy has been declared insolvent or placed in receivership, conservatorship or
liquidation.
(c) At no time subsequent to June 30, 1998 has the Company or any
Subsidiary (i) been denied any insurance or indemnity bond coverage which it has
requested, (ii) made any material reduction in the scope or amount of its
insurance coverage, or (iii) received notice from any of its insurance carriers
that any insurance premiums will be subject to increase in an amount materially
disproportionate to the amount of the increases with respect thereto (or with
respect to similar insurance) in prior years or that any insurance coverage
listed in Section 4.20(a) of the Disclosure Schedule will not be available in
the future substantially on the same terms as are now in effect.
SECTION 4.20. Products Liability. There is no pending or, to the
knowledge of the Company, threatened, claim, action, suit, inquiry, proceeding
or investigation by any individual or Governmental Authority in which a Product
is alleged to have a Defect. As used in this Section 4.20, the term "Product"
shall mean any product designed, manufactured, shipped, sold, marketed,
distributed and/or otherwise introduced into the stream of commerce by or on
behalf of the Company or any of its Subsidiaries, including, without limitation,
any product sold in the United States by the Company or any of its Subsidiaries
as the distributor, agent, or pursuant to any other contractual relationship
with a non-US. manufacturer; and the term "Defect" shall mean a defect or
impurity of any kind, whether in design, manufacture, processing, or otherwise,
including, without limitation, any dangerous propensity associated with any
reasonably foreseeable use of a Product.
SECTION 4.21. Brokers. No broker, finder or investment banker
(other than Dain Rauscher Wessels) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and Dain Rauscher Wessels pursuant to which such firm would be entitled
to any payment relating to the Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
As an inducement to the Company to enter into this Agreement,
Parent and Purchaser hereby, jointly and severally, represent and warrant to the
Company that:
SECTION 5.01. Corporate Organization. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not prevent or materially
delay consummation of the Transactions, or otherwise prevent Parent or Purchaser
from performing its material obligations under this Agreement.
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SECTION 5.02. Authority Relative to This Agreement. Each of
Parent and Purchaser has (subject to the required actions and proceedings
described in the following sentence) all necessary corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Purchaser
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Parent and Purchaser and,
assuming due authorization, execution and delivery by the Company, constitutes a
legal, valid and binding obligation of each of Parent and Purchaser enforceable
against each of Parent and Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor rights
and for general equitable and public policy principles.
SECTION 5.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws of either Parent or
Purchaser, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 5.03(b) have been obtained and all filings and
obligations described in Section 5.03(b) have been made, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent or Purchaser or by which any property or asset of either of them is bound
or affected, or (iii) result in any breach of, or constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Purchaser is a party or by which
Parent or Purchaser or any property or asset of either of them is bound or
affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or materially delay consummation of the Transactions or otherwise
prevent Parent and Purchaser from performing their material obligations under
this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, the HSR Act, any antitrust filing, notification or approval in any other
relevant jurisdiction, and filing and recordation of appropriate merger
documents as required by Delaware Law, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the
Transactions, or otherwise prevent Parent or Purchaser from performing their
material obligations under this Agreement.
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SECTION 5.04. Offer Documents; Proxy Statement. The Offer
Documents shall not, at the time the Offer Documents are filed with the SEC or
are first published, sent or given to stockholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The information supplied by Parent for inclusion in the
Proxy Statement shall not, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not false or misleading, or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to any information supplied by
the Company or any of its representatives for inclusion in any of the foregoing
documents or the Offer Documents. The Offer Documents shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
SECTION 5.05. Financing. Parent has and will have at the closing
of the Offer and the Merger, as applicable, sufficient funds or available
borrowing capacity to permit Purchaser to consummate all the Transactions,
including the purchase of Shares, Series B Shares and Warrants pursuant to the
Offer, the Merger, and the Stockholder Agreements.
SECTION 5.06. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the
Merger. The Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, or except as
expressly contemplated by this Agreement or described in Section 6.01 of the
Disclosure Schedule, the businesses of the Company and the Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice; and the Company shall use its reasonable best efforts
consistent with its obligations under this Agreement to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations; provided
that nothing in this Section 6.01 shall require the Company or the Subsidiaries
to make any payments to any officer, employee, consultant or other person who is
not otherwise entitled to receive such payments solely in order to keep
available the services of, or preserve any current relationship with, any such
person,
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unless such payments would be in the ordinary course of business consistent with
past practice. By way of amplification and not limitation, except as expressly
contemplated by this Agreement and Section 6.01 of the Disclosure Schedule,
neither the Company nor any Subsidiary shall, between the date of this Agreement
and the Effective Time, directly or indirectly, do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change its Restated Certificate of
Incorporation or By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the securities
issuable pursuant to the Common Share Warrants, Series B Warrants,
Company Stock Options, or rights to purchase Shares pursuant to the
ESPP, in each case as set forth on Section 4.03 of the Disclosure
Schedule) or (ii) any assets of the Company or any Subsidiary, except in
the ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for dividends by any direct
or indirect wholly owned Subsidiary to the Company or any other
Subsidiary or the accrual of cumulative dividends on the Series B Shares
pursuant to the Certificate of Designation;
(d) reclassify, combine, split, subdivide or redeem, or purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any significant amount of assets; (ii) incur
any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise become responsible for, the
obligations of any person, or make any loans or advances, or grant any
security interest in any of its assets, except, in each case, in the
ordinary course of business and consistent with past practice; (iii)
enter into any contract or agreement that would be a Material Contract,
(iv) enter into any distribution or manufacturing contract or agreement,
other than contracts or agreements (including intellectual property
contracts) entered into in the ordinary course of business and
consistent with past practice; (v) authorize, or make any commitment
with respect to, any capital expenditure in any manner not reflected in
the capital budget of the Company attached as Section 6.01(e)(v) of the
Disclosure Schedule; or (vi) enter into or amend any contract,
agreement, commitment or binding arrangement with respect to any matter
set forth in this Section 6.01(e);
(f) take any action that would have the effect, directly or
indirectly, of causing the amount of cash and cash equivalents (as such
term is defined under GAAP) held by
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the Company and the Subsidiaries (i) to be less than $15.0 million on a
consolidated basis at any time up to and including September 30, 2001 or
(ii) to be less than $10.0 million on a consolidated basis at any time
after September 30, 2001 to the expiration of the Offer (as may be
extended from time to time in accordance with the terms of this
Agreement), provided, however, the Company shall be entitled to pay
documented out-of-pocket fees and expenses of the Company (including
legal, accounting, investment banking and other fees and expenses
pursuant to the engagement letters attached to Section 6.01(f) of the
Disclosure Schedule) incurred in connection with the Transactions up to
the aggregate amount of $2.5 million; and provided further, however,
that the Company shall be entitled to pay additional reasonable
documented out-of-pocket fees and expenses of the Company incurred in
connection with causing the waiting period under the HSR Act to expire
or be terminated (including any required filings and complying with any
extension of any such waiting period) or any litigation resulting from
or relating to the approval of, or the entering into, or compliance with
the terms of, or the taking of any action required by, this Agreement,
and such payments shall in either case be deemed included in the amount
of cash and cash equivalents held by the Company and the Subsidiaries
for the purpose of this Section 6.01(f);
(g) increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past
practice in salaries, wages, bonuses or incentives of employees of the
Company or any Subsidiary who are not directors or officers of the
Company, or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or other
employee of the Company or of any Subsidiary, or establish, adopt, enter
into or amend any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee;
(h) change any of the accounting methods used by it unless
required by GAAP;
(i) make any tax election other than immaterial tax elections in
the ordinary course consistent with past practice or settle or
compromise any United States federal, state, local or non-United States
material income tax liability;
(j) pay, discharge or satisfy any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any
such liabilities in the ordinary course of business and consistent with
past practice;
(k) amend, modify or consent to the termination of any Material
Contract, or amend, waive, modify or consent to the termination of the
Company's or any Subsidiary's material rights thereunder, other than in
the ordinary course of business and consistent with past practice;
(l) commence or settle any Action; or
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(m) announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Stockholders' Meeting. (a) If required by
applicable law in order to consummate the Merger, the Company, acting through
the Board, shall, in accordance with applicable law and the Company's Restated
Certificate of Incorporation and By-laws, (i) duly call, give notice of, convene
and hold an annual or special meeting of its stockholders as promptly as
practicable following satisfaction of the condition set forth in Section 8.01(d)
for the purpose of considering and taking action on this Agreement and the
Transactions (the "Stockholders' Meeting") and (ii) (A) include in the Proxy
Statement, and not subsequently withdraw, amend, change or modify in any manner
adverse to Purchaser or Parent, the recommendation of the Board that the
stockholders of the Company adopt this Agreement and the Transactions and (B)
use its best efforts to obtain such adoption. At the Stockholders' Meeting,
Parent and Purchaser shall cause all Shares then owned by them and their
subsidiaries to be voted in favor of the adoption of this Agreement and the
Transactions.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of each of the then outstanding Shares and Series B
Shares, the parties shall take all necessary and appropriate action to cause the
Merger to become effective, in accordance with Section 253 of Delaware Law, as
promptly as reasonably practicable after such acquisition, without a meeting of
the stockholders of the Company.
SECTION 7.02. Proxy Statement. If approval of the Company's
shareholders is required by applicable law to consummate the Merger, promptly
following satisfaction of condition set forth in Section 8.01(d), the Company
shall file the Proxy Statement with the SEC under the Exchange Act, and shall
use its best efforts to have the Proxy Statement cleared by the SEC promptly
after such filing. Parent, Purchaser and the Company shall cooperate with each
other in the preparation of the Proxy Statement, and the Company shall notify
Parent of the receipt of any comments of the SEC with respect to the Proxy
Statement and of any requests by the SEC for any amendment or supplement thereto
or for additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its counsel the opportunity to review the
Proxy Statement, including all amendments and supplements thereto, prior to its
being filed with the SEC and shall give Parent and its counsel the opportunity
to review all responses to requests for additional information and replies to
comments prior to their being filed with, or sent to, the SEC. Each of the
Company, Parent and Purchaser agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement and all
required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.
SECTION 7.03. Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer and from
time to time thereafter,
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Purchaser shall be entitled to designate up to such number of directors, rounded
up to the next whole number, on the Board as shall give Purchaser representation
on the Board equal to the product of the total number of directors on the Board
(giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Shares and Series B Shares
beneficially owned by Purchaser or any affiliate of Purchaser following such
purchase bears to the total number of Shares then outstanding on an
"as-converted" basis, and the Company shall, at such time, promptly take all
actions necessary to cause Purchaser's designees to be elected as directors of
the Company, including increasing the size of the Board, if necessary, or
securing Director resignations (the moment of such election being the
"Appointment Time"). Prior to the date hereof the Company has obtained the
conditional resignations of all but two of the incumbent directors of the
Company, which conditional resignations shall automatically become effective at
the Appointment Time. At such times, the Company shall use its best efforts to
cause persons designated by Purchaser to constitute the same percentage as
persons designated by Purchaser shall constitute of the Board of (i) each
committee of the Board, (ii) each board of directors of each Subsidiary, and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable Law. Notwithstanding the foregoing, in the event that
Purchaser's designees are so elected to the Board, until the Effective Time,
such Board shall have at least two directors who are directors of Company on the
date of this Agreement and who are not officers or employees of Company (the
"Continuing Directors") and, provided further that, in such event, if the number
of Continuing Directors shall be reduced below two for any reason whatsoever,
the remaining Continuing Director shall designate a person to fill such vacancy
who shall be deemed to be a Continuing Director for purposes of this Agreement
or, if no Continuing Directors then remain, the other directors of Company on
the date hereof shall designate two persons to fill such vacancies who shall not
be officers or employees of Company, or officers or affiliates of Purchaser, and
such persons shall be deemed to be Continuing Directors for purposes of this
Agreement.
(b) The Company shall promptly take all actions required pursuant
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder to
fulfill its obligations under this Section 7.03, and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Purchaser shall supply to the Company, and be solely
responsible for, any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant to
this Section 7.03, prior to the Effective Time, the affirmative vote of at least
one Continuing Director shall be required for the Company to (i) amend or
terminate this Agreement or agree or consent to any amendment or termination of
this Agreement, (ii) amend the Restated Certificate of Incorporation or By-laws
of the Company in a manner that is reasonably likely to adversely affect the
interests of the holders of the Shares or the Series B Shares (other than Parent
and its affiliates), (iii) waive any of the Company's rights, benefits or
remedies hereunder, (iv) extend the time for performance of Parent's and
Purchaser's respective obligations hereunder, or (v) approve any other action by
the Company which is reasonably likely to adversely affect the interests of the
holders of the Shares or the Series B Shares (other than Parent and its
affiliates); provided, however, the Company and the Subsidiaries shall not be
considered affiliates of Parent for purposes of this Section 7.03(c)), with
respect to the Transactions.
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SECTION 7.04. Access to Information; Confidentiality. (a) From
the date hereof until the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser reasonable access during normal business hours upon
reasonable notice to the officers, employees, agents, properties, offices,
plants and other facilities, books and records of the Company and each
Subsidiary, and shall furnish Parent and Purchaser with such financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
(b) All information obtained by Parent or Purchaser pursuant to
this Section 7.04 shall be kept confidential in accordance with the
confidentiality agreement, dated October 10, 2000 (the "Confidentiality
Agreement"), between Parent and the Company.
(c) No investigation pursuant to this Section 7.04 shall affect
any representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto or any condition to the
Offer.
SECTION 7.05. No Solicitation of Transactions. (a) Neither the
Company nor any Subsidiary shall, directly or indirectly, through any officer,
director, employee, representative, agent or otherwise (collectively,
"Representatives"), (i) solicit, initiate or take any action intended to
encourage the submission of any Acquisition Proposal, or (ii) except as required
by the fiduciary duties of the Board under applicable law after consultation
with outside legal counsel in response to unsolicited proposals, participate in
any discussions or negotiations regarding, or furnish to any person, any
information (provided that prior to furnishing such information, the Company
enters into a customary, confidentiality agreement on terms no less favorable to
the Company than those contained in the Confidentiality Agreement) with respect
to, or otherwise cooperate in any way with respect to, or assist or participate
in, or take any action intended to facilitate or encourage, any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal.
The Company shall, and shall direct or cause its Representatives to, immediately
cease and cause to be terminated any discussions or negotiations with any
parties that may be ongoing with respect to any Acquisition Proposal.
(b) Except as set forth in this Section 7.05(b), neither the
Board nor any committee thereof shall (i) withhold, withdraw, amend, change or
modify, or propose to withhold, withdraw, amend, change or modify, in a manner
adverse to Parent or Purchaser, the approval or recommendation by the Board or
any such committee of this Agreement, the Offer, the Merger or any other
Transaction, (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that, prior to
the time of acceptance for payment of Shares pursuant to the Offer, the Board
determines in good faith that it is required to do so by its fiduciary duties
under applicable law after consultation with outside legal counsel, the Board
may withhold, withdraw, amend, change or modify its approval or recommendation
of the Offer and the Merger.
(c) The Company shall promptly advise Parent orally (within one
business day) and in writing (within two business days) of (i) any Acquisition
Proposal or any request for information with respect to any Acquisition
Proposal, the material terms and conditions of such
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Acquisition Proposal or request and the identity of the person making such
Acquisition Proposal or request and (ii) any changes in any such Acquisition
Proposal or request.
(d) Nothing contained in this Section 7.05 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders, if the Board determines in good faith
that it is required to do so by its fiduciary duties under applicable law after
consultation with outside legal counsel; provided, however, that neither the
Company nor the Board nor any committee thereof shall, except as permitted by
Section 7.05(b), withhold, withdraw, amend, change or modify, or propose
publicly to withhold, withdraw, amend, change or modify, its position with
respect to this Agreement, the Offer, the Merger or any other Transaction or to
approve or recommend, or propose publicly to approve or recommend, an
Acquisition Proposal.
(e) The Company agrees, except as required by the Board's
fiduciary duties under applicable law after consultation with outside legal
counsel, not to release any third party from, or waive any provision of, any
standstill agreement or any material provision of any confidentiality agreement
to which the Company is a party.
(f) Notwithstanding Section 7.05(a) but subject to the other
terms and conditions of this Agreement, at any time on or after November 15,
2001 and prior to the Appointment Time, the Company may, upon delivery of
written notice to Purchaser, solicit, initiate, or participate in discussions or
negotiations regarding (or provide information in connection with) the
acquisition by any person or persons that is not a competitor of Parent or the
Company (as determined by Parent in its reasonable judgment) of equity
securities of the Company representing not more than 40% of the equity
securities of the Company (calculated on a fully diluted basis as though such
proposed issuance had already occurred); provided, however, that (i) the Company
shall not enter into any contract, agreement or arrangement in respect of any
such proposed equity issuance, (ii) prior to engaging in any such discussions or
negotiations, or providing any such information, the Company shall have entered
into a confidentiality agreement with such person or persons on terms no less
favorable to the Company that those contained in the Confidentiality Agreement,
and (iii) no single person or group of persons would, if the transactions
contemplated by such discussions or negotiations were consummated, acquire more
than 5% of the equity securities of the Company (calculated on a fully diluted
basis as though such proposed issuance had already occurred).
SECTION 7.06. Directors' and Officers' Indemnification and
Insurance. (a) From and after the Appointment Time, Parent will, and will cause
the Surviving Corporation to, fulfill and honor in all respects the obligations
of the Company pursuant to any indemnification agreements between the Company
and its directors and officers in effect immediately prior to the Appointment
Time and previously made available to Parent prior to the execution hereof, and
any indemnification and limitation of liability provisions under the Company's
Restated Certificate of Incorporation and Bylaws as in effect on the date
hereof. The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification and limitation of liability for directors, officers, employees,
fiduciaries and agents ("Indemnified Parties") than are set forth in the
Restated
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Certificate of Incorporation and By-laws of the Company, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would affect adversely the rights
thereunder of individuals who, at or prior to the Effective Time, were
directors, officers, employees, fiduciaries or agents of the Company, unless
such modification shall be required by law.
(b) Parent shall cause the Surviving Corporation to maintain in
effect for six years from the Effective Time, if available, the current
directors' and officers' liability insurance policies maintained by the Company
(provided that the Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions that are not materially
less favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 7.06(b) more than an amount per year equal to
200% of current annual premiums paid by the Company for such insurance (which
premiums the Company represents and warrants to be $110,000 in the aggregate) ;
provided, further, that if the premium for such coverage exceeds such amount,
Parent and/or the Surviving Corporation shall purchase a comparable policy with
the greatest coverage available for 200% of the annual premium currently paid by
Company.
(c) In the event the Company or the Surviving Corporation or any
of their respective successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the Company
or the Surviving Corporation, as the case may be, or at Parent's option, Parent,
shall assume the obligations set forth in this Section 7.06.
(d) The provisions of this Section 7.06 shall survive the
consummation of the Offer and the Merger and are (i) intended to be for the
benefit of, and will be enforceable by, each of the Indemnified Parties and (ii)
in addition to, and not in substitution for, any other rights to indemnification
or contribution that any such person may have by contract or otherwise.
SECTION 7.07. 401(k) Plan. Company shall terminate, effective as
of the day immediately preceding the Effective Time the Company's 401(k) plan(s)
listed on Section 4.10(a) of the Disclosure Schedule, unless Parent provides
notice to Company that such 401(k) plan(s) shall not be terminated. Parent shall
receive from Company evidence that Company's plan(s) has or have been terminated
pursuant to resolutions of the Board (the form and substance of such resolutions
shall be subject to review and approval of Parent), effective as of the day
immediately preceding the Effective Time.
SECTION 7.08. Benefit Plans; Credit for Past Services. As of the
Effective Time, Parent shall cause the Surviving Corporation to honor and
satisfy all obligations and liabilities with respect to the Plans. Parent shall
cause the Surviving Corporation to continue to provide employees of the Company
and its Subsidiaries with benefits (including welfare benefit and excluding
equity compensation) that are substantially similar to the benefits currently
provided by the Company; provided, however, Surviving Corporation shall not be
required to provide any specific benefits that Parent does not otherwise provide
to its similarly situated employees. To the extent that service is relevant for
eligibility, vesting or allowances (including
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flexible time off), but not for benefit accruals, under any plan, program or
arrangement of the Purchaser and/or Surviving Corporation, then Parent shall
ensure that such plan, program or arrangement shall credit employees for service
prior to the Effective Time with the Company and its Subsidiaries.
Notwithstanding anything in this Section 7.08 to the contrary, nothing in this
Section 7.08 shall be deemed to limit or otherwise affect the right of Parent,
Purchaser or the Surviving Corporation (i) to terminate employment or change the
place of work, responsibilities, status or description of any employee or group
of employees, or (ii) to terminate any employee benefit plan without
establishing a replacement plan to the extent the Company would have had such
right prior to the Effective Time, in each case as Parent, Purchaser or
Surviving Corporation may determine in its discretion.
SECTION 7.09. Notification of Certain Matters. (a) Until the
Appointment Time, the Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which
reasonably could be expected to cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect such that,
in the case of the Company, the conditions set forth in Annex A would not be
satisfied and (ii) any failure of the Company, Parent or Purchaser, as the case
may be, to comply with or satisfy any covenant or agreement to be complied with
or satisfied by it hereunder such that, in the case of the Company, the
conditions set forth in Annex A would not be satisfied; provided, however, that
the delivery of any notice pursuant to this Section 7.09 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 7.10. Further Action; Reasonable Best Efforts. (a) Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
(i) make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act and applicable German antitrust laws, if any,
with respect to the Transactions and (ii) use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions, including,
without limitation, using its reasonable best efforts to obtain all Permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Authorities and parties to contracts with the Company and the Subsidiaries as
are necessary for the consummation of the Transactions and to fulfill the
conditions to the Offer and the Merger; provided that neither Purchaser nor
Parent will be required by this Section 7.10 to take any action, including
entering into any consent decree, hold separate orders or other arrangements,
that (A) requires the divestiture of any assets of any of Purchaser, Parent, the
Company or any of their respective subsidiaries or (B) limits Parent's freedom
of action with respect to, or its ability to retain, the Company and the
Subsidiaries or any portion thereof or any of Parent's or its affiliates' other
assets or businesses. Except where prohibited by applicable law, and subject to
the Confidentiality Agreement, Company and Parent each shall promptly (a) supply
the other with any information which may reasonably be required in order to
effectuate such filings and (b) supply any additional information which
reasonably may be required by antitrust, competition or merger control
authorities in any competent jurisdiction and which the parties may reasonably
deem appropriate.
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(b) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Transactions, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal.
(c) From the date hereof until the Effective Time, none of
Parent, Purchaser or the Company will, nor permit any of their subsidiaries to,
(i) take any action or knowingly omit to take any action that would make any of
the representations and warranties of such person contained herein false to an
extent that would cause any of the conditions set forth in Annex A not to be
satisfied or (ii) take any action to prevent or materially delay the performance
of the obligations of such person under this Agreement or the Stock Purchase
Agreement.
(d) Parent will take all action necessary to cause Purchaser to
perform its obligations under this Agreement and to consummate the Offer and the
Merger on the terms and subject to the conditions set forth in this Agreement.
(e) Immediately prior to the consummation of the Offer, the
Company shall deliver to Purchaser a certificate, executed by a senior officer
of the Company, in respect of the conditions set forth in paragraphs (e) and (f)
of Annex A to the extent that such conditions relate to the Company.
SECTION 7.11. Public Announcements. Parent and the Company agree
that no public release or announcement concerning the Transactions, the Offer or
the Merger shall be issued by either party without the prior consent of the
other party (which consent shall not be unreasonably withheld), except as such
release or announcement may be required by Law or the rules or regulations of
any securities exchange, in which case the party required to make the release or
announcement shall use its reasonable best efforts to allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Merger. The obligations of each
party to effect the Merger shall be subject to the satisfaction, at or prior to
the Effective Time, of the following conditions:
(a) Stockholder Approval. If necessary under Delaware Law, this
Agreement shall have been adopted by the affirmative vote of the
stockholders of the Company;
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
(c) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or
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permanent) which is then in effect and has the effect of making the
acquisition of Shares by Parent or Purchaser or any affiliate of either
of them illegal or otherwise restricting, preventing or prohibiting
consummation of the Transactions; and
(d) Acquisition of Shares, etc. Parent, Purchaser, or any
affiliate or permitted assignee thereof shall have (i) purchased all
Shares validly tendered and not withdrawn pursuant to the Offer that,
together with any Shares, Series B Shares or Warrants purchased pursuant
to the Stockholder Agreements, would satisfy the Minimum Condition, or
(ii) purchased a number of Series B Shares, Shares and Warrants pursuant
to the Stockholder Agreements constituting a majority of the outstanding
Shares of the Company on a fully diluted basis (including, without
limitation, all Shares issuable upon the conversion of the Series B
Shares or upon the exercise or conversion of any options, warrants,
rights or other convertible securities, but excluding any securities
that have an effective conversion or exercise price immediately prior to
the expiration of the Offer that is in excess of the Per Share Amount);
provided, however, that this condition shall not be applicable to the
obligations of Parent or Purchaser if (x) in breach of this Agreement or
the terms of the Offer, Purchaser fails to purchase any Shares validly
tendered and not withdrawn pursuant to the Offer, or (y) in breach of
the Stockholder Agreements, Parent or Purchaser fails to purchase any
Series B Shares, Shares or Warrants, as applicable, thereunder.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated and
the Merger and the other Transactions may be abandoned, notwithstanding any
requisite adoption of this Agreement by the stockholders of the Company:
(a) at any time prior to the Effective Time, by mutual written
consent of each of Parent, Purchaser and the Company duly authorized by
the Boards of Directors of Parent, Purchaser and the Company; or
(b) at any time prior to the Effective Time, by either Parent,
Purchaser or the Company if (i) the Effective Time shall not have
occurred on or before December 31, 2001; provided, however, that the
right to terminate this Agreement under this Section 9.01(b) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date or (ii) any Governmental
Authority shall have enacted, issued, promulgated, enforced or entered
any injunction, order, decree or ruling (whether temporary, preliminary
or permanent) which has become final and nonappealable and has the
effect of making consummation of the Offer or the Merger illegal or
otherwise preventing or prohibiting consummation of the Offer or the
Merger; or
(c) at any time prior to the Appointment Time, by Parent if due
to an occurrence or circumstance that would result in a failure to
satisfy any condition set forth in Annex A
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hereto, Purchaser shall have (i) failed to commence the Offer within 30
days following the date of this Agreement, (ii) terminated the Offer
without having accepted any Shares for payment thereunder or (iii)
failed to accept Shares for payment pursuant to the Offer within 90 days
following the commencement of the Offer (provided, however, that the
applicable time period specified in clause (iii) of this Section 9.01(c)
shall be extended until the earlier to occur of (A) the fifth business
day following the public announcement of the expiration or termination
of any applicable waiting period under the HSR Act and (B) December 31,
2001), unless such action or inaction under clauses (i), (ii) or (iii)
of this Section 9.01(c) shall have been caused by or resulted from the
failure of Parent or Purchaser to perform, in any material respect, any
of their material covenants or agreements contained in this Agreement,
or the material breach by Parent or Purchaser of any of their material
representations or warranties contained in this Agreement in which case
Parent may not terminate this Agreement;
(d) at any time prior to the Appointment Time, by the Company,
upon approval of the Board, if Purchaser shall have in breach of the
terms of this Agreement (i) failed to commence the Offer within 30 days
following the date of this Agreement, (ii) terminated the Offer without
having accepted any Shares for payment thereunder or (iii) failed to
accept Shares for payment pursuant to the Offer within 90 days following
the commencement of the Offer (provided, however, that the applicable
time period specified in clause (iii) of this Section 9.01(d) shall be
extended until the earlier to occur of (A) the fifth business day
following the public announcement of the expiration or termination of
any applicable waiting period under the HSR Act and (B) December 31,
2001), unless such action or inaction under clauses (i), (ii) or (iii)
of this Section 9.01(d) shall have been caused by or resulted from the
failure of the Company or any of the Stockholders to perform, in any
material respect, any of their respective material covenants or
agreements contained in this Agreement or any of the Stockholder
Agreements or any material breach by the Company or the Stockholders of
any of their material representations or warranties contained in this
Agreement or the Stockholder Agreements, in which case the Company may
not terminate this Agreement.
The party desiring to terminate this Agreement shall give written notice of such
termination to the other party.
SECTION 9.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 9.01, this Agreement shall
forthwith become void, and there shall be no liability on the part of any party
hereto, except (a) as set forth in Section 9.03 and Article X hereof and (b)
nothing herein shall relieve any party from liability for any breach of a
covenant hereof prior to the date of such termination; provided, however, that
the Confidentiality Agreement shall survive any termination of this Agreement.
SECTION 9.03. Fees and Expenses. All costs and expenses incurred
in connection with this Agreement, the Stockholder Agreements and the
Transactions shall be paid by the party incurring such expenses, whether or not
any Transaction is consummated.
SECTION 9.04. Amendment. Subject to Section 7.03, this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of
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Directors at any time prior to the Effective Time; provided, however, that,
after the Appointment Time, no amendment may be made that would reduce the
amount or change the type of consideration into which each Share shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
SECTION 9.05. Waiver. Subject to Section 7.03, at any time prior
to the Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties of any other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement of any other party or any condition to its own
obligations contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.01):
if to Parent or Purchaser:
Boston Scientific Corporation
One Boston Scientific Place
Natick, MA 01760-1537
Telecopier No: (508) 650-8960
Attention: Assistant General Counsel
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No: (212) 848-7179
Attention: Clare O'Brien
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if to the Company:
Cardiac Pathways Corporation
995 Benecia Avenue
Sunnyvale, CA 94086
Telecopier No.: (408) 737-1000
Attention: President and Chief Executive Officer
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304-1050
Telecopier No.: (650) 493-6811
Attention: Chris F. Fennell
Michael S. Dorf
SECTION 10.02. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 10.03. Entire Agreement; Assignment. This Agreement and
the Stockholder Agreements constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede, except as set forth in
Section 7.04(b), all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned (whether pursuant to a merger, by operation
of law or otherwise), except that Parent and Purchaser may assign all or any of
their rights and obligations hereunder to any affiliate of Parent, provided that
no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 10.04. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 7.06 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
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SECTION 10.05. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
SECTION 10.06. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State (other
than those provisions set forth herein that are required to be governed by
Delaware Law). All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined exclusively in any New York state or
federal court sitting in the Borough of Manhattan of The City of New York. The
parties hereto hereby (a) submit to the exclusive jurisdiction of any state or
federal court sitting in the Borough of Manhattan of The City of New York for
the purpose of any Action arising out of or relating to this Agreement brought
by any party hereto, and (b) irrevocably waive, and agree not to assert by way
of motion, defense, or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
SECTION 10.07. Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law any right it may
have to a trial by jury with respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement or the Transactions.
Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other hereto have been
induced to enter into this Agreement and the Transactions, as applicable, by,
among other things, the mutual waivers and certifications in this Section 10.07.
SECTION 10.08. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.09. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 10.10. Stockholder Agreements. Notwithstanding anything
set forth in this Agreement or any Stockholder Agreement to the contrary, none
of Parent, Purchaser, or any of their affiliates may acquire any Shares, Series
B Shares or Warrants pursuant to any Stockholder Agreement (other than pursuant
to the Offer) prior to the acceptance for payment of Shares in the Offer,
unless, upon such purchase, the condition to the Merger set forth in Section
8.01(d) would be satisfied.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
BOSTON SCIENTIFIC CORPORATION
By /s/ Boston Scientific Corporation
-------------------------------------
Name:
Title:
ADAM ACQUISITION 2001 INC.
By /s/ Adam Acquisition 2001 Inc.
-------------------------------------
Name:
Title:
CARDIAC PATHWAYS CORPORATION
By /s/ Cardiac Pathways Corporation
-------------------------------------
Name:
Title:
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ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment any Shares tendered pursuant to the Offer,
and may extend, terminate or amend the Offer, if (i) immediately prior to the
expiration of the Offer the Minimum Condition shall not have been satisfied,
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer, or (iii) at any time on or
after the date of this Agreement and prior to the expiration of the Offer any of
the following conditions shall exist:
(a) there shall have been instituted or be pending any Action
before any Governmental Authority (i) challenging or seeking to make
illegal, materially delay, or otherwise, directly or indirectly,
restrain or prohibit or make materially more costly, the making of the
Offer, the acceptance for payment of any Shares by Parent, Purchaser or
any other affiliate of Parent, or the purchase of Series B Shares
pursuant to the Stock Purchase Agreement, or the consummation of any
other Transaction, or seeking to obtain material damages in connection
with any Transaction; (ii) seeking to prohibit or materially limit the
ownership or operation by the Company, Parent or any of their
subsidiaries of all or any of the business or assets of the Company,
Parent or any of their subsidiaries that is material to either Parent
and its subsidiaries, taken as a whole, or the EPT Division of Parent,
or the Company and the Subsidiaries, taken as a whole, or to compel the
Company, Parent or any of their subsidiaries, as a result of the
Transactions, to dispose of or to hold separate all or any portion of
the business or assets of the Company, Parent or any of their
subsidiaries that is material to Parent and its subsidiaries, taken as a
whole, or the EPT Division of Parent, or the Company and the
Subsidiaries, taken as a whole; (iii) seeking to impose or confirm any
limitation on the ability of Parent, Purchaser or any other affiliate of
Parent to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer or any Series B Shares acquired by
Purchaser pursuant to the Stock Purchase Agreement or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
Transactions; or (iv) seeking to require divestiture by Parent,
Purchaser or any other affiliate of Parent of any Shares or Series B
Shares;
(b) there shall have been any statute, rule, regulation,
legislation or interpretation enacted, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any subsidiary or
affiliate of Parent or the Company or (ii) any Transaction, by any
United States or non-United States legislative body or Governmental
Authority with appropriate jurisdiction, other than the routine
application of the waiting period provisions of the HSR Act to the
Offer, the Stockholder Agreements or the Merger, that is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
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(c) any Material Adverse Effect shall have occurred;
(d) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States that materially and adversely affects the ability of
Parent to consummate the Transactions for more than five business days
after the expiration of the Offer or (ii) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States that materially and adversely
affects the ability of Purchaser and Parent to consummate the
Transactions or, in the case of such calamity existing on the date
hereof, a material acceleration or worsening thereof;
(e) except as set forth in the two provisos set forth in this
paragraph (e), any representation or warranty of the Company in the
Agreement shall not be true and correct as if such representation or
warranty was made as of any expiration date of the Offer (as may be
extended from time to time in accordance with the terms of this
Agreement) without for this purpose giving effect to qualifications or
limitations as to materiality or the absence of a Material Adverse
Effect contained in such representations and warranties, except for such
failures to be true and correct as would not have a Material Adverse
Effect; provided, that the representations and warranties of the Company
in Sections 4.01, 4.02, 4.03, 4.04, 4.17 and 4.21 shall not, to the
extent qualified by materiality or Material Adverse Effect, be true and
correct, or to the extent that any such representation or warranty is
not so qualified, shall not be true and correct in any material respect
as if such representations or warranties were made as of the date of the
expiration of the Offer (as may be extended from time to time in
accordance with the terms of this Agreement); and provided, further,
that those representations or warranties that address matters only as of
a specific date shall not be true and correct (subject to the applicable
materiality standard as set forth above) as of such date;
(f) (i) the Company shall have (A) failed to perform, in any
material respect, any obligation or to comply, in any material respect,
with any agreement or covenant of the Company to be performed or
complied with by it under the Agreement, or (B) shall have failed to
perform or comply in any respect with its agreement and covenant in
Section 6.01(f), or (ii) the Stockholders shall have failed to perform,
in any material respect, any obligation or to comply, in any material
respect, with any agreement or covenant of the Stockholders to be
performed or complied with by them under the Stockholder Agreements as a
result of which Purchaser's ability to consummate the Transactions is
materially impaired;
(g) the Agreement or the Stock Purchase Agreement shall have been
terminated in accordance with its terms;
(h) the conditions to Parent's obligations under the Stock
Purchase Agreement (other than the condition relating to the closing of
the Offer) to acquire a number of Series B Shares which, when added to
the number of Shares tendered pursuant to the Offer, would satisfy the
Minimum Condition, shall not have been satisfied or waived; or
A-2
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(i) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of
Shares thereunder;
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser
and Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-3