EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of May 21, 1997
Among
JOHNSON & JOHNSON
PALISADES MERGER CORP.
And
BIOPSYS MEDICAL, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger.................................... 2
SECTION 1.02. Closing....................................... 2
SECTION 1.03. Effective Time................................ 2
SECTION 1.04. Effect of the Merger.......................... 2
SECTION 1.05. Certificate of Incorporation and
By-Laws..................................... 2
SECTION 1.06. Directors..................................... 3
SECTION 1.07. Officers...................................... 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock....................... 3
SECTION 2.02. Exchange of Certificates...................... 4
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company................................. 8
SECTION 3.02. Representations and Warranties of
Parent and Sub.............................. 22
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business........................... 26
SECTION 4.02. No Solicitation............................... 30
Page
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement; Stockholders
Meeting..................................... 32
SECTION 5.02. Letters of the Company's Accountants.......... 33
SECTION 5.03. Letters of Parent's Accountants............... 34
SECTION 5.04. Access to Information;
Confidentiality............................. 34
SECTION 5.05. Reasonable Efforts; Notification.............. 34
SECTION 5.06. Stock Options................................. 36
SECTION 5.07. Indemnification and Insurance................. 36
SECTION 5.08. Fees and Expenses............................. 38
SECTION 5.09. Public Announcements.......................... 40
SECTION 5.10. Affiliates.................................... 40
SECTION 5.11. Stock Exchange Listing........................ 41
SECTION 5.12. Pooling of Interests.......................... 41
SECTION 5.13. Stockholder Agreement Legend.................. 41
SECTION 5.14. Tax Treatment................................. 41
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Merger............. 42
SECTION 6.02. Conditions to Obligations of Parent
and Sub..................................... 42
SECTION 6.03 Conditions to Obligation of the
Company..................................... 44
SECTION 6.04. Frustration of Closing Conditions............. 45
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.................................... 45
SECTION 7.02. Effect of Termination.......................... 47
SECTION 7.03. Amendment...................................... 47
SECTION 7.04. Extension; Waiver.............................. 47
Page
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties................................... 48
SECTION 8.02. Notices........................................ 48
SECTION 8.03. Definitions.................................... 49
SECTION 8.04. Interpretation................................. 50
SECTION 8.05. Counterparts................................... 50
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries................................ 50
SECTION 8.07. Governing Law.................................. 50
SECTION 8.08. Assignment..................................... 50
SECTION 8.09. Enforcement.................................... 51
SECTION 8.10. Severability................................... 51
Exhibit A Form of Company Affiliate Letter
AGREEMENT AND PLAN OF MERGER dated as of May
21, 1997, among JOHNSON & JOHNSON, a New Jersey
corporation ("Parent"), PALISADES MERGER CORP., a
Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and BIOPSYS MEDICAL, INC., a
Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent,
Sub and the Company, and Parent, acting as the sole stockholder
of Sub, have approved the merger of Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.001 per share, of the Company,
together with the associated right (a "Right") to purchase,
pursuant to the Company's November 8, 1996 Preferred Shares
Rights Agreement (the "Rights Agreement"), one one-thousandth of
a share of the Company's Series A Participating Preferred Stock,
par value $.001 per share (such common stock, together with the
Rights, "Company Common Stock"), other than Company Common Stock
owned by Parent, Sub or the Company, will be converted into the
right to receive common stock, par value $1.00 per share, of
Parent ("Parent Common Stock");
WHEREAS, substantially concurrently herewith and as a
condition and inducement to Parent's willingness to enter into
this Agreement, Parent and certain affiliate stockholders of the
Company have entered into a Stockholder Agreement (the
"Stockholder Agreement");
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and agree ments in
connection with the Merger and also to prescribe various
conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization within
the meaning of Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is
intended that the Merger will be accounted for as a pooling of
interests transaction; and
WHEREAS, immediately following the execution and
delivery of this Agreement, Parent and the Company will enter
into a stock option agreement (the "Option Agreement") pursuant
to which the Company will grant Parent the option to purchase
shares of Company Common Stock, upon the terms and subject to the
conditions set forth therein.
NOW, THEREFORE, in consideration of the represen
tations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to
the conditions set forth in this Agreement, and in accordance
with the Delaware General Corporation Law (the "DGCL"), Sub shall
be merged with and into the Company at the Effective Time (as
defined in Section 1.03). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election
of Parent, any direct or indirect wholly owned subsidiary (as
defined in Section 8.03) of Parent may be substituted for Sub as
a constituent corporation in the Merger. In such event, the
parties hereto agree to execute an appropriate amendment to this
Agreement in order to reflect such substitution.
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be
specified by the parties, which shall be no later than the second
business day after satisfaction or waiver of the conditions set
forth in Article VI (the "Closing Date"), at the offices of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, N.Y. 10019, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions
of this Agreement, as soon as practicable on or after the Closing
Date, the parties shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as Parent and the
Company shall agree should be specified in the Certificate of
Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall
have the effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-Laws.
(a) The Certificate of Incorporation of Sub, as
in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided
therein or by applicable law (subject in all cases to
Section 5.07), except that the name of the Surviving
Corporation in such Certificate of Incorporation will be
changed to be "Biopsys Medical, Inc.".
(b) The By-Laws of Sub, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter changed or amended as provided
therein or by applicable law (subject in all cases to Section
5.07).
SECTION 1.06. Directors. The directors of Sub
immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected
and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected
and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock or
any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and out standing
share of capital stock of Sub shall be con verted into and
become one validly issued, fully paid and nonassessable
share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent- Owned
Stock. Each share of Company Common Stock that is owned by
the Company and each share of Company Common Stock that is
owned by Parent or Sub shall automatically be canceled and
retired and shall cease to exist, and no Parent Common Stock
or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to
Section 2.02(e), each issued and outstanding share of
Company Common Stock (other than shares to be canceled in
accordance with Section 2.01(b)) shall be converted into the
right to receive that number (the "Exchange Ratio") of fully
paid and nonassessable shares of Parent Common Stock equal
to the amount obtained by dividing the Per Share Price (as
hereinafter defined) by the Average Price (as hereinafter
defined). The "Per Share Price" shall mean $27.55. The
"Average Price" shall mean the average per share closing
price of Parent Common Stock during the 20 full trading days
preceding the date of the last full trading day prior to the
Stockholders Meeting (as defined in Section 5.01) or any
adjournment or postponement at which the Stockholder
Approval (as defined in Section 3.01(q)) is obtained, as
such prices are reported on the New York Stock Exchange
("NYSE") Composite Transactions Tape (as reported by The
Wall Street Journal, or, if not reported thereby, any other
authoritative source). As of the Effective Time, all such
shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate
which immediately prior to the Effective Time represented
any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive
shares of Parent Common Stock and any cash in lieu of
fractional shares of Parent Common Stock to be issued or
paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.02, without
interest. Notwithstanding the foregoing, if between the date
of this Agreement and the Effective Time the outstanding
shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason
of the occurrence or record date of any stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares or if Parent pays or
declares an extraordinary dividend with a record date prior
to the Effective Date, the Exchange Ratio shall be
appropriately adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange or extraordinary dividend.
SECTION 2.02. Exchange of Certificates. (a) Exchange
Agent. As of the Effective Time, Parent shall deposit with First
Chicago Trust Company of New York or such other bank or trust
company of similar size as may be designated by Parent (the
"Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock, for
exchange in accordance with this Article II, through the Exchange
Agent, certificates representing the shares of Parent Common
Stock (such shares of Parent Common Stock, together with any
dividends or distributions with respect thereto with a record
date after the Effective Time and any cash payments in lieu of
any fractional shares of Parent Common Stock, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section
2.01 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time but in any event within 10
business days thereafter, Parent shall cause the Exchange Agent
to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive shares of
Parent Common Stock pursuant to Section 2.01(c), (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancelation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II after
taking into account all the shares of Company Common Stock then
held by such holder under all such Certificates so surrendered,
cash in lieu of fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.02(e) and any
dividends or other distributions to which such holder is entitled
pursuant to Section 2.02(c), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the
proper number of shares of Parent Common Stock may be issued to a
person other than the person in whose name the Certificate so
surrendered is registered, if, upon presentation to the Exchange
Agent, such Certificate shall be properly endorsed or otherwise
be in proper form for transfer and the person requesting such
issuance shall pay any transfer or other taxes required by reason
of the issuance of shares of Parent Common Stock to a
person other than the registered holder of such Certificate or
establish to the reasonable satisfaction of Parent that such tax
has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the certificate representing
shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock as contemplated by Section 2.02(e)
and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c). No interest will be paid or
will accrue on any cash payable pursuant to Sections 2.02(c) or
2.02(e).
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Parent Common
Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.02(e) until the holder of record of
such Certificate shall surrender such Certificate. Following
surrender of any such Certificate, there shall be paid to the
record holder of the certificate representing whole shares of
Parent Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 2.02(e) and
the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with
a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable
with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the
surrender for exchange of shares of Company Common Stock in
accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective
Time which may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of
this Agreement or prior to the date of this Agreement and which
remain
unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they
shall be canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of Parent.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock
(after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest)
in an amount, less the amount of any withholding taxes which may
be required thereon, equal to such fractional part of a share of
Parent Common Stock multiplied by the per share closing price of
Parent Common Stock on the date of the Stockholders Meeting, as
such price is reported on the NYSE Composite Transactions Tape
(as reported by The Wall Street Journal, or, if not reported
thereby, any other authoritative source).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for six months after the Effective Time shall be
delivered to Parent, upon demand, and any holders of the
Certificates who have not theretofore complied with this Article
II shall thereafter look only to Parent for, and Parent shall
remain liable for, payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. None of Parent, Sub, the Company or
the Exchange Agent shall be liable to any person in respect of
any shares of Parent Common Stock (or divi dends or distributions
with respect thereto) or cash from the Exchange Fund in each case
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund,
as directed by Parent, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Parent.
(i) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
shares of Parent Common Stock and any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of
Parent Common Stock deliverable in respect thereof, pursuant to
this Agreement.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the
Company. Except as set forth on the disclosure schedule delivered
by the Company to Parent prior to the execution of this Agreement
(the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The
Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry
on its business as now being conducted. The Company is duly
qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or
the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate would not have a
material adverse effect (as defined in Section 8.03) on the
Company. The Company has delivered to Parent complete and
correct copies of its Restated Certificate of Incorporation
and By-Laws, in each case as amended to the date hereof.
(b) Subsidiaries. The Company has no subsidiaries.
(c) Capital Structure. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common
Stock and 5,000,000 shares of preferred stock, par value
$.001 per share ("Preferred Stock"). At the close of
business on May 20, 1997, (i) 9,902,067 shares of Company
Common Stock were issued and outstanding, (ii) no shares of
Company Common Stock were held by the Company in its
treasury, (iii) 2,150,000 shares of Company Common Stock
were reserved for issuance pursuant to outstanding Stock
Option Plans (as defined in Section 5.06(a)), (iv) 150,000
shares of Company Common Stock were reserved for issuance
pursuant to the Company's 1996 Employee Stock Purchase Plan
(the "ESPP") and (v) 50,000 shares of the Company's Series A
Participating Preferred Stock were reserved for issuance in
connection with the Rights Agreement. Except as set forth
above, at the close of business on May 20, 1997, no shares
of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are, and
all shares which may be issued pursuant to the Stock Option
Plans and the ESPP will be, when issued in accordance with
the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into
securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth
above, there are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company is a party, or
by which it is bound, obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting
securities of the Company or obligating the Company to
issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are not any outstanding
contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock of the
Company.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement by the
holders of a majority of the outstanding shares of Company
Common Stock, to consummate the transactions contemplated by
this Agreement. The Company has all requisite corporate
power and authority to enter into the Option Agreement and
to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement and the Option
Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement and the
Option Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the
case of this Agreement, to approval of this Agreement by the
holders of a majority of the outstanding shares of Company
Common Stock. This Agreement and the Option Agreement have
been duly executed and delivered by the Company and
constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms except as enforceability may be limited by bankruptcy
and other similar laws and general principles of equity. The
execution and delivery of this Agreement and the Option
Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the Option Agreement and
compliance with the provisions of this Agreement and the
Option Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation
or to loss of a material benefit under, or result in the
creation of any pledge, claim, lien, charge, encumbrance or
security interest of any kind or nature whatsoever
(collectively, "Liens") in or upon any of the properties or
assets of the Company under any provision of (i) the
Restated Certificate of Incorporation or By-Laws of the
Company, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the
Company or its properties or assets or (iii) subject to the
governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or
regulation or (B) judgment, order or decree applicable to
the Company or its properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or
in the aggregate would not (x) have a material adverse
effect on the Company, (y) impair in any material respect
the ability of the Company to perform its obligations under
this Agreement or the Option Agreement, or (z) prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement or the Option Agreement;
(provided that in the case of clauses (y) and (z) as they
relate to clause (iii)(B), such representation shall be made
only as of the date hereof). No consent,
approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local
government or any court, administrative agency or commission
or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with
respect to the Company in connection with the execution and
delivery of this Agreement or the Option Agreement by the
Company or the consummation by the Company of the Merger or
the transactions contemplated by the Option Agreement,
except for (1) the filing of a premerger notification and
report form by the Company under the Hart-Scott- Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (2) the filing with the Securities and Exchange
Commission (the "SEC") of a proxy statement relating to the
approval by the Company's stockholders of this Agreement (as
amended or supplemented from time to time, the "Proxy
Statement") and such reports under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement, the Option
Agreement and the transactions contemplated by this
Agreement and the Option Agreement, (3) the filing of the
Certificate of Merger with the Delaware Secretary of State
and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
business, (4) such filings with and approvals of the NASDAQ
National Market System (the "NMS") to permit the shares of
Company Common Stock that are to be issued pursuant to the
Option Agreement to be traded on the NMS and (5) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained
or made would not, individually or in the aggregate, have a
material adverse effect on the Company or prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement or the Option Agreement.
(e) SEC Documents. The Company has filed all required
reports, schedules, forms, statements and other documents
with the SEC since April 1, 1996 (the "SEC Documents"). As
of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities
Act of 1933 (the "Securities Act"), or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents at the time they were filed
contained any untrue statement of a material fact or omitted
to state a 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 misleading.
Except to the extent that information contained in any SEC
Document has been revised or superseded by a later-filed SEC
Document, none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circum stances
under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on
a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented
the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and the
absence of footnotes). Except as set forth in the Filed SEC
Documents (as defined in Section 3.01(g)), the Company has
no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be
required under GAAP to be disclosed on a balance sheet of
the Company and which, individually or in the aggregate,
would have a material adverse effect on the Company.
(f) Information Supplied. None of the informa tion
supplied or to be supplied by the Company specifi cally for
inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common
Stock in the Merger (the "Form S-4") will (except to the
extent revised or superseded by amendments or supplements
contemplated hereby), at the time the Form S-4 is filed with
the SEC, at any time it is amended or supplemented and at
the time it becomes effective under the Securities Act,
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 light of the
circumstances under which they are made, not misleading and
(ii) the Proxy Statement will (except to the extent revised
or superseded by amendments or supplements contemplated
hereby), at the date it is first mailed to the Company's
stockholders and at the time of the meeting of the Company's
stockholders held
to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no
representation is made by the Company with respect to
statements made or incorporated by reference therein based
on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy
Statement.
(g) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available
prior to the date of this Agreement (the "Filed SEC
Documents"), since the date of the most recent audited
financial statements included in the Filed SEC Documents
and, in the case of clauses (ii), (iii), (iv), (vi) and
(vii) only, until the date hereof, the Company has conducted
its business only in the ordinary course consistent with
past practice, and there has not been (i) any material
adverse change (as defined in Section 8.03) in the Company,
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock
(other than the Rights issued or to be issued pursuant to
the Rights Agreement), (iii) any split, combination or
reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (x) any granting by the Company to
any officer of the Company of any increase in compensation,
except in the ordinary course of business consistent with
prior practice or as was required under employment
agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC
Documents, (y) any granting by the Company to any officer of
any increase in severance or termination pay, except as was
required under any employment, severance or termination
agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC
Documents or (z) any entry by the Company into any
employment, severance or termination agreement with any
officer, (v) any damage, destruction or loss, whether or not
covered by insurance, that individually or in the aggregate
would have a material adverse effect on the Company, (vi)
any
change in accounting methods, principles or practices having
a material adverse effect on the Company, except insofar as
may have been required by a change in GAAP or (vii) any tax
election that individually or in the aggregate would have a
material adverse effect on the Company or any of its tax
attributes or any settlement or compromise of any material
income tax liability.
(h) Litigation. There is no suit, action or proceeding
pending or, to the knowledge of the Company after
consultation with the Company's outside counsel, threatened
against or affecting the Company that individually or in the
aggregate would have a material adverse effect on the
Company, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator
outstanding against, or, to the knowledge of the Company
after consultation with the Company's outside counsel,
investigation by any Governmental Entity involving, the
Company that individually or in the aggregate would have a
material adverse effect on the Company.
(i) Contracts. Except as disclosed in the Filed SEC
Documents, as of the date hereof, there are no contracts or
agreements that are of a nature required to be filed as an
exhibit under the Exchange Act and the rules and regulations
promulgated thereunder. The Company is not in violation of
nor in default under (nor does there exist any condition
which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any
lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding to which
it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that
individually or in the aggregate would not have a material
adverse effect on the Company. The Company has not entered
into any contract, agreement arrangement or understanding
with any affiliate of the Company that is currently in
effect other than agreements that are (i) disclosed in the
Filed SEC Documents or (ii) not of a nature required to be
disclosed in the SEC Documents.
(j) Compliance with Laws. (i) The Company is in
compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any
Governmental Entity (collectively, "Legal Provisions")
applicable to its business or operations, except for
instances of possible noncompliance that, individually or in
the aggregate, would not have a material adverse effect on
the Company or prevent or
materially delay the consummation of the Merger or the
transactions contemplated by the Option Agreement. The
Company has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights,
including all authorizations under Environmental Laws (as
hereinafter defined) ("Permits"), necessary for it to own,
lease or operate its properties and assets and to carry on
its business as now conducted, and there has occurred no
default under, or violation of, any such Permit, except for
the lack of Permits and for defaults under, or violations
of, Permits which lack, default or violation individually or
in the aggregate would not have a material adverse effect on
the Company. Except as disclosed in the Filed SEC Documents,
the Company has not received any notice or other
communication from the Food and Drug Administration or any
other Governmental Entity (i) contesting the premarket
clearance or approval of, the uses of or the labeling and
promotion of any of the Company's products or (ii) otherwise
alleging any violation of any Legal Provision by the
Company.
(ii) The term "Environmental Laws" means any Federal,
state or local statute, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree or
injunction relating to: (A) Releases (as defined in 42
U.S.C. ss. 9601(22)) or threatened Releases of Hazardous
Material (as hereinafter defined) into the environment, (B)
the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous
Material or (C) the health or safety of employees in the
workplace environment. The term "Hazardous Material" means
(1) hazardous substances (as defined in 42 U.S.C.
ss.9601(14)), (2) petroleum, including crude oil and any
fractions thereof, (3) natural gas, synthetic gas and any
mixtures thereof, (4) asbestos and/or asbestos containing
material, (5) PCBs or materials containing PCBs and (6) any
material regulated as a medical waste or infectious waste.
(iii) During the period of ownership or operation by the
Company of any of its current or previously owned or leased
properties, there have been no Releases of Hazardous
Material in, on, under or affecting such properties or any
surrounding site, and the Company has not disposed of any
Hazardous Material in a manner that has led, or could
reasonably be anticipated to lead to a Release, except in
each case for those which
individually or in the aggregate would not have a material
adverse effect on the Company, and except as disclosed in
the Filed SEC Documents. Prior to the period of ownership or
operation by the Company of any of its current or previously
owned or leased properties, to the knowledge of the Company
after consultation with the Company's outside counsel, no
Hazardous Material was generated, treated, stored, disposed
of, used, handled or manufactured at, or transported shipped
or disposed of from, such current or previously owned or
leased properties, and there were no Releases of Hazardous
Material in, on, under or affecting any such property or any
surrounding site, except in each case for the generation,
treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material and
Releases which individually or in the aggregate would not
have a material adverse effect on the Company, and except as
disclosed in the Filed SEC Documents. The Company has not
received any written notice of, or entered into any order,
settlement or decree relating to: (A) any violation of any
Environmental Laws or the institution or pendency of any
suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with
any alleged violation of Environmental Laws, (B) the
response to or remediation of Hazardous Material at or
arising from any of the Company's properties or any other
properties or (C) payment for, response to or remediation of
Hazardous Material at or arising from any of the Company's
properties or any other properties, except in each case for
any such notices, orders, settlements or decrees which
individually or in the aggregate would not have a material
adverse effect on the Company.
(k) Absence of Changes in Benefit Plans; Labor
Relations. Except as disclosed in the Filed SEC Documents,
since the date of the most recent audited financial
statements included in the Filed SEC Documents and until the
date hereof, there has not been any adoption or amendment in
any material respect by the Company of any collective
bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other material plan, arrangement
or understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or
director of the Company (collectively, "Benefit Plans").
Except as disclosed in the Filed SEC Documents, as of the
date hereof,
there exist no employment, consulting, severance,
termination or indemnification agreements, arrangements or
understandings between the Company, any current or former
employee, officer or director of the Company. There are no
collective bargaining or other labor union agreements to
which the Company is a party or by which it is bound. Since
July 1, 1995, the Company has not encountered any labor
union organizing activity, nor had any actual or threatened
employee strikes, work stoppages, slowdowns or lockouts.
(l) ERISA Compliance. (i) Schedule 3.01(l)(i) to the
Company Disclosure Schedule contains a list and brief
description of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all
other Benefit Plans maintained, or contributed to, by the
Company or any person or entity that, together with the
Company, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code (the Company and each
such other person or entity, a "Commonly Controlled Entity")
for the benefit of any current or former employees, officers
or directors of the Company. The Company has made available
to Parent true, complete and correct copies of (1) each
Benefit Plan (or, in the case of any unwritten Benefit
Plans, descriptions thereof), (2) the most recent annual
report on Form 5500 filed with the Internal Revenue Service
with respect to each Benefit Plan (if any such report was
required), (3) the most recent summary plan description for
each Benefit Plan for which such summary plan description is
required and (4) each trust agreement and group annuity
contract relating to any Benefit Plan. Each Benefit Plan has
been administered in all material respects in accordance
with its terms. The Company and all the Benefit Plans are
all in compliance in all material respects with applicable
provisions of ERISA and the Code.
(ii) All Pension Plans have been the subject of
determination letters from the Internal Revenue Service to
the effect that such Pension Plans are qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter
has been revoked nor has any event occurred since the date
of its most recent determination letter or application
therefor that would adversely affect its qualification or
materially increase its costs.
(iii) Neither the Company nor any Commonly Controlled
Entity has maintained, contributed or been obligated to
contribute to any Benefit Plan that is subject to Title IV
of ERISA.
(iv) With respect to any Benefit Plan that is an
employee welfare benefit plan, there are no understandings,
agreements or undertakings, written or oral, that would
prevent any such plan (including any such plan covering
retirees or other former employees) from being amended or
terminated without material liability to the Company on or
at any time after the Effective Time.
(v) Schedule 3.01(l)(v) to the Company Disclosure
Schedule lists all outstanding Stock Options (as defined in
Section 5.06(a)) as of May 16, 1997, showing for each such
option: (1) the number of shares issuable, (2) the number of
vested shares, (3) the date of expiration and (4) the
exercise price.
(vi) Except as expressly provided by this Agreement, no
employee of the Company will be entitled to any additional
compensation or benefits or any acceleration of the time of
payment or vesting of any compensation or benefits under any
Benefit Plan as a result of the transactions contemplated by
this Agreement.
(vii) The deduction of any amount payable pursuant to
the terms of the Benefit Plans will not be subject to
disallowances under Section 162(m) of the Code.
(m) Taxes. The Company has filed all tax returns and
reports required to be filed by it and has paid all material
taxes required to be paid by it, and the most recent
financial statements contained in the Filed SEC Documents
reflect an adequate reserve for all taxes payable by the
Company for all taxable periods and portions thereof through
the date of such financial statements. No deficiencies for
any taxes have been proposed, asserted or assessed against
the Company, and no requests for waivers of the time to
assess any such taxes are pending. None of the Federal
income tax returns of the Company have been examined by the
United States Internal Revenue Service for the fiscal years
through June 30, 1996. The Company has not taken any action
nor does it have any knowledge (after consultation with the
Company's outside counsel) of any fact or circumstance that
is reasonably likely to prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of
the Code. As
used in this Agreement, "taxes" shall include all Federal,
state, local and foreign income, property, sales, excise and
other taxes, tariffs or governmental charges of any nature
whatsoever.
(n) No Excess Parachute Payments. No amount that could
be received (whether in cash or property or the vesting of
property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or
director of the Company who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation
Section 1.28OG-1) under any employment, severance or
termination agreement, other compensation arrangement or
Benefit Plan currently in effect would be an "excess
parachute payment" (as such term is defined in Section
28OG(b)(1) of the Code). No such person is entitled to
receive any additional payment from the Company, the
Surviving Corporation or any other person (a "Parachute
Gross-Up Payment") in the event that the excise tax of
Section 4999(a) of the Code is imposed on such person. The
Board of Directors of the Company has not granted to any
officer, director or employee of the Company any right to
receive any Parachute Gross-Up Payment.
(o) Title to Properties. (i) The Company has good and
valid title to, or valid leasehold interests in, all its
material properties and assets except for such as are no
longer used in the conduct of its businesses or as have been
disposed of in the ordinary course of business and except
for defects in title, easements, restrictive covenants and
similar encumbrances that individually or in the aggregate
would not have a material adverse effect on the Company. All
such material assets and properties, other than assets and
properties in which the Company has a leasehold interest,
are free and clear of all Liens and except for Liens that
individually or in the aggregate would not have a material
adverse effect on the Company.
(ii) The Company has complied in all material respects
with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are
in full force and effect, except for such noncompliance or
failure to be in full force and effect as would not
individually or in the aggregate have a material adverse
effect on the Company. The Company enjoys peaceful and
undisturbed possession under all such material leases,
except for failures to do so that would not individually or
in the
aggregate have a material adverse effect on the Company.
(p) Intellectual Property. The Company owns, or is
validly licensed or otherwise has the right to use, all
patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark
rights, copyrights and other proprietary intellectual
property rights and computer programs (collectively,
"Intellectual Property Rights") which are material to the
conduct of the business of the Company taken as a whole. No
claims are pending or, to the knowledge of the Company after
consultation with the Company's outside counsel, threatened
that the Company is infringing or otherwise adversely
affecting the rights of any person with regard to any
Intellectual Property Right. To the knowledge of the Company
after consultation with the Company's outside counsel, no
person is infringing the rights of the Company with respect
to any Intellectual Property Right. The Company has not
licensed, or otherwise granted, to any third party, any
rights in or to any Intellectual Property Rights.
(q) Voting Requirements. The affirmative vote of the
holders of a majority of the outstanding shares of Company
Common Stock at the Stockholders Meeting or any adjournment
or postponement thereof to approve this Agreement (the
"Stockholder Approval") is the only vote of the holders of
any class or series of the Company's capital stock necessary
to approve this Agreement and the transactions contemplated
hereby.
(r) State Takeover Statutes. The Board of Directors of
the Company has approved the Merger, this Agreement, the
Option Agreement and the Stockholder Agreement, and such
approval is sufficient to render inapplicable to the Merger,
this Agreement, the Option Agreement, the Stockholder
Agreement and the transactions contemplated by this
Agreement, the Option Agreement and the Stockholder
Agreement, the provisions of Section 203 of the DGCL to the
extent, if any, such Section is applicable to the Merger,
this Agreement, the Option Agreement, the Stockholder
Agreement and the transactions contemplated by this
Agreement, the Option Agreement and the Stockholder
Agreement. To the Company's knowledge after consultation
with the Company's outside counsel, no other state takeover
statute or similar statute or regulation applies to or
purports to apply to the Merger, this Agreement, the Option
Agreement, the Stockholder Agreement or the
transactions contemplated by this Agreement, the Option
Agreement or the Stockholder Agreement.
(s) Rights Agreement. The Rights Agreement has been
amended to (i) render the Rights Agreement inapplicable to
the Merger and the other transactions contemplated by this
Agreement, the Option Agreement and the Stockholder
Agreement, (ii) ensure that (y) none of Parent, its
subsidiaries or its permitted assignees or transferees under
the Stockholder Agreement is an Acquiring Person (as defined
in the Rights Agreement) pursuant to the Rights Agreement
solely by virtue of the execution of this Agreement, the
Option Agreement and the Stockholder Agreement or the
consummation of the Merger or the other transactions
contemplated by the Option Agreement or the Stockholder
Agreement and (z) a Distribution Date, a Triggering Event or
a Shares Acquisition Date (as such terms are defined in the
Rights Agreement) does not occur solely by reason of the
execution of this Agreement, the Option Agreement and the
Stockholder Agreement, the consummation of the Merger, or
the consummation of the other transactions, contemplated by
the Option Agreement or the Stockholder Agreement and (iii)
provide that the Final Expiration Date (as defined in the
Rights Agreement) shall occur immediately prior to the
Effective Time, and such amendment may not be further
amended by the Company without the prior consent of Parent
in its sole discretion.
(t) Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other
than Robertson Stephens & Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions
contemplated by this Agreement and the Option Agreement
based upon arrangements made by or on behalf of the Company.
Such fees or expenses payable by the Company to Robertson
Stephens & Company in connection with this Agreement and the
Option Agreement and the transactions contemplated by this
Agreement and the Option Agreement will not exceed such fees
and expenses set forth in Schedule 3.01(t) to the Company
Disclosure Schedule.
(u) Opinion of Financial Advisor. The Company has
received the opinion of Robertson Stephens & Company, dated
the date hereof, to the effect that, as of such date, the
consideration to be received in the Merger by the Company's
stockholders is fair to the Company's stockholders from a
financial point of view,
a signed copy of which opinion has been promptly delivered
to Parent.
(v) Accounting Matters. The Company has not taken nor
agreed to take any action that, to the Company's knowledge
after consultation with the Company's independent public
accountants, would prevent the business combination to be
effected by the Merger to be accounted for as a pooling of
interests.
(w) Distribution Agreements. Schedule 3.01(w) to the
Company Disclosure Schedule is a complete list of all
contracts or agreements to which the Company is a party as
of the date hereof relating to the distribution, sale,
license or marketing by third parties of the Company's
products. The Company has made available to Parent and its
representatives true and correct copies of all contracts and
agreements to which the Company is a party as of the date
hereof relating to the distribution, sale, license or
marketing by third parties of the Company's products.
SECTION 3.02. Representations and Warranties of Parent
and Sub. Parent and Sub represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has all
requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Sub is
duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate would
not have a material adverse effect on Parent. Parent has
delivered to the Company complete and correct copies of its
Certificate of Incorporation and By-Laws and the Certificate
of Incorporation and By-Laws of Sub, in each case as amended
to the date hereof.
(b) Authority; Noncontravention. Parent and Sub have
all requisite corporate power and authority to enter into
this Agreement (and, in the case of Parent, the Option
Agreement and the Stockholder Agreement), and to consummate
the transactions contemplated by this Agreement (and, in the
case of Parent, those contemplated by the Option Agreement
and the
Stockholder Agreement). The execution and delivery of this
Agreement (and, in the case of Parent, the Option Agreement
and the Stockholder Agreement) and the consummation of the
transactions contemplated by this Agreement (and, in the
case of Parent, those contemplated by the Option Agreement
and the Stockholder Agreement) have been duly authorized by
all necessary corporate action on the part of Parent and
Sub. This Agreement (and, in the case of Parent, the Option
Agreement and the Stockholder Agreement) has been duly
executed and delivered by Parent and Sub, and constitutes a
valid and binding obligation of each such party, enforceable
against each such party in accordance with its terms except
as enforceability may be limited by bankruptcy and other
similar laws and general principles of equity. The execution
and delivery of this Agreement, the Option Agreement and the
Stockholder Agreement do not, and the consummation of the
transactions contemplated by this Agreement, the Option
Agreement and the Stockholder Agreement and compliance with
the provisions of this Agreement, the Option Agreement and
the Stockholder Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation
or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under, any provision of
(i) the Certificate of Incorporation or By-Laws of Parent or
Sub or any provision of the comparable charter or
organizational documents of any other subsidiary of Parent,
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent, Sub
or any other subsidiary of Parent or their respective proper
ties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any
(A) statute, law, ordinance, rule or regulation or (B)
judgment, order or decree applicable to Parent, Sub or any
other subsidiary of Parent or their respective properties or
assets, other than, in the case of clause (ii) and clause
(iii)(A), any such conflicts, violations, defaults, rights
or Liens that individually or in the aggregate would not (x)
have a material adverse effect on Parent, (y) impair in any
material respect the ability of each of Parent and Sub to
perform its obligations under this Agreement and the Option
Agreement, as the case may be, or (z) prevent or materially
delay the consummation of any of the transactions
contemplated by this Agreement or the
Option Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect
to Parent, Sub or any other subsidiary of Parent in
connection with the execution and delivery of this Agreement
(and, in the case of Parent, the Option Agreement and the
Stockholder Agreement) by Parent and Sub or the consummation
by Parent and Sub of the transactions contemplated by this
Agreement (and, in the case of Parent, those contemplated by
the Option Agreement and the Stockholder Agreement), except
for (1) the filing of a premerger notification and report
form under the HSR Act, (2) the filing with the SEC of the
Form S-4 and such reports under the Exchange Act as may be
required in connection with this Agreement, the Option
Agreement or the Stockholder Agreement and the transactions
contemplated by this Agreement, the Option Agreement or the
Stockholder Agreement, (3) the filing of the Certificate of
Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in
which the Company is qualified to do business and (4) such
other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required
under the "blue sky" laws of various states, the failure of
which to be obtained or made would not, individually or in
the aggregate, have a material adverse effect on Parent or
prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement or the Option
Agreement.
(c) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for
inclusion or incorporation by reference in (i) the Form S-4
will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the time
the Form S-4 is filed with the SEC, at any time it is
amended or supplemented and at the time it becomes effective
under the Securities Act, 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 light of the circumstances under which they are
made, not misleading, and (ii) the Proxy Statement will
(except to the extent revised or superseded by amendments or
supplements contemplated hereby), at the date it is first
mailed to the Company's stockholders and at the time of the
meeting of the Company's stockholders held to vote on
approval and adoption of this Agreement, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading. The Form S-4 will comply as to form in
all material respects with the requirements of the
Securities Act and the rules and regulations thereunder,
except that no representation is made by Parent or Sub with
respect to statements made or incorporated by reference
therein based on information supplied by the Company
specifically for inclusion or incorporation by reference in
the Form S-4.
(d) Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Documents (as defined in Section
3.02(h)) filed with the SEC by Parent and publicly available
prior to the date of this Agreement ("Filed Parent SEC
Documents"), since the date of the most recent audited
financial statements included in the Filed Parent SEC
Documents and, only in the case of clauses (ii) and (iii)
below, through the date of this Agreement, Parent has
conducted its business only in the ordinary course
consistent with past practice, and there has not been (i)
any material adverse change in Parent, (ii) any declaration,
setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with
respect to any of the Parent's capital stock (except for
regular quarterly cash dividends) or (iii) any split,
combination or reclassification of any of its capital stock
or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock.
(e) Brokers. No broker, investment banker financial
advisor or other person is entitled to any broker's,
finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on
behalf of Parent or Sub.
(f) Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated
hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
(g) Accounting Matters. Parent has not taken nor agreed
to take any action that, to Parent's knowledge after
consultation with Parent's independent public accountants,
would prevent the business combination to be effected by the
Merger to be accounted for as a pooling of interests.
(h) Parent SEC Documents. Parent has filed all required
reports, schedules, forms, statements and other documents
with the SEC since April 1, 1996 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents at the time
they were filed contained any untrue statement of a material
fact or omitted to state a 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 misleading. Except to the extent that information
contained in any Parent SEC Document has been revised or
superseded by a later-filed Parent SEC Document, none of the
Parent SEC Documents contains any untrue statement of a
material fact or omits 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 misleading. The financial
statements of Parent included in the Parent SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly
presented the financial position of Parent as of the dates
thereof and the results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and the
absence of footnotes).
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of
Business by the Company. During the period from the date of this
Agreement to the Effective Time, the Company shall carry on its
businesses in the ordinary course consistent with the manner as
heretofore conducted and, to the extent consistent therewith, use
commercially reasonable efforts to preserve intact its current
business organization, and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and
others having
business dealings with it. Without limiting the generality of the
foregoing, other than as set forth in Section 4.01 of the Company
Disclosure Schedule or with respect to the amendment of the
Rights Agreement (as described in Section 3.01(s)), during the
period from the date of this Agreement to the Effective Time, the
Company shall not without Parent's consent:
(i) (x) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock or
property), in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock (other than the issuance of shares of Company
Common Stock upon the exercise of Stock Options outstanding
on the date of this Agreement and in accordance with their
present terms or as contemplated by Section 5.06) or (z)
purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any other securities thereof or any
rights, warrants or options to acquire any such shares or
other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities (other than (y) the issuance of
shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in
accordance with their present terms or as contemplated by
Section 5.06 or (z) the issuance of shares of Company Common
Stock pursuant to the Option Agreement);
(iii) amend its Restated Certificate of Incorporation,
By-Laws or other comparable charter or organizational
documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any business or
any corporation, partnership, joint ven ture, association or
other business organization or division thereof or (y) any
assets which, individually, is in excess of $50,000 or, in
the aggregate, are in excess of $150,000, except purchases
of inventory in the ordinary course of business and except
for capital expenditures (which are covered in clause (vii)
below);
(v) sell, lease, license, mortgage or otherwise
encumber or otherwise dispose of any of its properties or
assets, except sales of inventory or used equipment in the
ordinary course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of the Company, guarantee any
debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except
for short-term borrowings incurred in the ordinary course of
business consistent with past practice or (z) make any
loans, advances or capital contributions to, or investments
in, any other person, other than extensions of credit to
customers and advances to employees, in each case in the
ordinary course of business consistent with past practice;
(vii) except for the items listed on Schedule
4.01(a)(vii) to the Company Disclosure Schedule, make or
agree to make any new capital expenditure or expenditures
which, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $150,000 (or $200,000, to the
extent that 90 days after the date hereof have elapsed);
(viii) discharge, settle or satisfy any claims, whether
or not pending before a Governmental Entity, that
individually or in the aggregate have a material adverse
effect on the Company, or waive any material benefits of, or
agree to modify in any materially adverse respect any
confidentiality, standstill or similar agreements to which
the Company is a party;
(ix) except in the ordinary course of business, modify,
amend or terminate any material contract or agreement to
which the Company is a party or waive, release or assign any
material rights or claims thereunder, in any such case in a
manner adverse to the Company;
(x) enter into any contracts, agreements, binding
arrangements or binding understandings relating to the
distribution, sale, license or marketing by third parties of
the Company's products, other than pursuant to any such
agreements currently in place in accordance with their terms
as of the date hereof;
(xi) except as required to comply with applicable law,
(A) adopt, enter into, terminate or amend any collective
bargaining agreement or Benefit Plan for the benefit or
welfare of any current or former employee, officer or
director, (B) increase in any manner the compensation or
fringe benefits of, or pay any bonus to, any director,
officer or employee (except for normal increases of cash
compensation or cash bonuses in the ordinary course of
business consistent with past practice), (C) pay any benefit
not provided for under any Benefit Plan or any other benefit
plan or arrangement of the Company, (D) increase in any
manner the severance or termination pay of any officer, (E)
enter any employment, consulting, severance, termination or
indemnification agreement, arrangement or understanding with
any current or former employee, officer or director, (F)
except as permitted in clause (B), grant any awards under
any bonus, incentive, performance or other compensation plan
or arrangement or Benefit Plan (including the grant of stock
options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock or the
removal of existing restrictions in any Benefit Plans or
agreements or awards made thereunder) or (G) take any action
to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan;
(xii) form any subsidiary to the Company;
(xiii) except as required by GAAP, make any change in
accounting methods, principles or practices;
(xiv) authorize any of, or commit or agree to take any
of, the foregoing actions.
(b) Certain Tax Matters. From the date hereof until the
Effective Time, (i) the Company will file all tax returns and
reports ("Post-Signing Returns") required to be filed by it
(after taking into account any extensions); (ii) the Company will
timely pay all taxes due and payable with respect to such
Post-Signing Returns that are so filed; (iii) the Company will
accrue a reserve in its books and records and financial
statements in accordance with past practice for all taxes payable
by the Company for which no Post-Signing Return is due prior to
the Effective Time; (iv) the Company will promptly notify Parent
of any action, suit, proceeding, claim or audit (collectively,
"Actions") pending against or with respect to the Company in
respect of any tax where there is a reasonable possibility of a
determination or decision which would have a material
adverse effect on the Company's tax liabilities or tax attributes
and will not settle or compromise any such Action without
Parent's consent; and (v) the Company will not make any material
tax election without Parent's consent.
SECTION 4.02. No Solicitation. (a) The Company shall
not, nor shall it authorize or permit any of its officers,
directors or employees or any investment banker, attorney or
other advisor or representative retained by it to, directly or
indirectly, (i) solicit, initiate or encourage the submission of
any Takeover Proposal (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; provided, however, that if, at any
time prior to receipt of the Stockholder Approval the Board of
Directors of the Company determines in good faith, after
consultation with outside counsel, that failure to do so would
create a substantial risk of liability for breach of its
fiduciary duties to the Company's stockholders under applicable
law, the Company may, in response to a Takeover Proposal that was
unsolicited or that did not otherwise result from a breach of
this Section 4.02(a), and subject to compliance with Section
4.02(c), (x) furnish information with respect to the Company to
any person pursuant to a customary and reasonable confidentiality
agreement and (y) participate in negotiations regarding such
Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in
the preceding sentence by any officer, director or employee of
the Company or any investment banker, attorney or other advisor
or representative of the Company, acting on behalf of the
Company, shall be deemed to be a breach of this Section 4.02(a)
by the Company. For purposes of this Agreement, "Takeover
Proposal" means any proposal or offer from any person relating to
any direct or indirect acquisition or purchase of a substantial
amount of assets of the Company (other than products of the
Company) or more than a 20% interest in the total voting
securities of the Company or any tender offer or exchange offer
that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the
Company or any merger, consolidation, business combination, sale
of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other
than the transactions contemplated by this Agreement, the Option
Agreement or the Stockholder Agreement.
(b) Except as expressly permitted by this Section 4.02,
neither the Board of Directors of the Company
nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or
Sub, the approval or recommendation by such Board of Directors or
any such committee of this Agreement or the Merger, (ii) approve
or recommend, or propose to approve or recommend, any Takeover
Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other
similar agreement (an "Acquisition Agreement") with respect to
any Takeover Proposal. Notwithstanding the foregoing, prior to
receipt of the Stockholder Approval, the Board of Directors of
the Company, to the extent it determines in good faith, after
consultation with outside counsel, that it is necessary to do so
in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, may withdraw or modify its
approval or recommendation of this Agreement or the Merger or
approve or recommend any Superior Proposal (as hereinafter
defined), in each case at any time after the third business day
following Parent's receipt of written notice (a "Notice of
Superior Proposal") advising Parent that the Board of Directors
of the Company has received a Superior Proposal, specifying the
material terms and conditions of the Superior Proposal and
identifying the person making such Superior Proposal (it being
understood that any amendment to the price or material terms of a
Superior Proposal shall require an additional Notice of Superior
Proposal and an additional three business day period thereafter
to the extent permitted under applicable law). In addition,
during the period (the "Applicable Period") commencing after the
earlier of the effectiveness of the Form S-4 and 60 days after
the date hereof and ending on the receipt of the Stockholder
Approval, the Board of Directors of the Company, to the extent it
determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to comply with
its fiduciary duties to the Company's stockholders under
applicable law, may cause the Company to terminate this Agreement
in accordance with Section 7.01(b)(iv) (and concurrently with or
after such termination, if it so chooses, cause the Company to
enter into an Acquisition Agreement with respect to a Superior
Proposal). For purposes of this Agreement, a "Superior Proposal"
means any bona fide proposal made by a third party to acquire,
directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the voting power of the
Company Common Stock or all or substantially all the assets of
the Company and otherwise on terms which the Board of Directors
of the Company determines in its good faith judgment (after
consultation with a financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders
than the Merger and for which financing, to the extent required,
is then committed or which, in the good
faith judgment of the Board of Directors of the Company, is
capable of being obtained by such third party.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.02, the Company
promptly shall advise Parent orally and in writing of any request
for nonpublic information which the Company reasonably believes
could lead to a Takeover Proposal or of any Takeover Proposal, or
any inquiry with respect to or which the Company reasonably
believes could lead to any Takeover Proposal, the material terms
and conditions of such request, Takeover Proposal or inquiry, and
the identity of the person making any such Takeover Proposal or
inquiry. The Company will keep Parent informed in all material
respects of the status and details (including amendments or
proposed amendments) of any such Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere
in this Agreement shall prohibit the Company from (i) taking and
disclosing to its stockholders a position contemplated by Rule
14d-9 and 14e-2(a) promulgated under the Exchange Act or (ii)
making any disclosure to the Company's stockholders if, in the
good faith judgment of the Board of Directors of the Company,
after consultation with independent counsel, failure to so
disclose would be inconsistent with applicable laws; provided
that the Company shall not, except in accordance with the
provisions of Section 4.02(b), withdraw or modify, or propose to
withdraw or modify, its recommendation of the Merger or approve
or recommend, or propose to approve or recommend, a Takeover
Proposal.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meeting. (a) As soon as practicable
following the date of this Agreement, the Company and Parent
shall prepare and the Company shall file with the SEC the Proxy
Statement and Parent shall prepare and file with the SEC the Form
S-4, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after such filing.
The Company will use its reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly
as practicable after the Form S-4 is declared effective under the
Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in
which it is not now so qualified) required to be taken under any
applicable state securities laws in connection with the issuance
of Parent Common Stock in the Merger. Each of Parent and the
Company shall furnish all information concerning itself to the
other as may be reasonably requested in connection with any such
action and the preparation, filing and distribution of the Proxy
Statement.
(b) The Company will, as soon as practicable following
the date of this Agreement, establish a record date (which will
be as soon as practicable following the date of this Agreement)
for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of
obtaining the Stockholder Approval. The Company will, through its
Board of Directors, recommend to its stockholders approval and
adoption of this Agreement, except to the extent that the Board
of Directors of the Company shall have withdrawn or modified its
approval or recommendation of this Agreement or the Merger as
permitted by Section 4.02(b). Without limiting the generality of
the foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 5.01(b) shall not be
affected by the commencement, public proposal, public disclosure
or communication to the Company of any Takeover Proposal.
SECTION 5.02. Letters of the Company's Accountants. (a)
The Company shall use its reasonable efforts to cause to be
delivered to Parent two comfort letters from Deloitte and Touche
LLP, the Company's independent public accountants, one dated a
date within two business days before the date on which the Form
S-4 shall become effective and one dated a date within two
business days before the Closing Date, each addressed to Parent,
in form and substance reasonably satisfactory to Parent.
(b) The Company shall use its reasonable efforts to
cause to be delivered to Parent a letter from Deloitte and Touche
LLP, addressed to Parent and the Company, dated as of the Closing
Date, stating that (i) Deloitte and Touche LLP concurs with
management's conclusion that, as of such date, no conditions
exist with respect to the Company which would preclude accounting
for the Merger as a pooling of interests transaction under
Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations and (ii) the basis for such a concurrence
is Deloitte and Touche LLP's belief that the criteria for such
accounting treatment have been met.
SECTION 5.03. Letters of Parent's Accountants. (a)
Parent shall use reasonable efforts to cause to be delivered to
the Company two comfort letters from Coopers &
Lybrand L.L.P., Parent's independent public accountants, one
dated a date within two business days before the date on which
the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to the
Company, in the form customarily given to underwriters in
securities offerings of Parent in the past.
(b) Parent shall use its reasonable efforts to cause to
be delivered to the Company a letter from Coopers & Lybrand
L.L.P., addressed to the Company and Parent, dated as of the
Closing Date, stating that (i) Coopers & Lybrand L.L.P. concurs
with management's conclusion that, as of such a date, no
conditions exist which would preclude accounting for the Merger
as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and
regulations and (ii) the basis for such a concurrence is Coopers
& Lybrand L.L.P.'s belief that the criteria for such accounting
treatment have been met.
SECTION 5.04. Access to Information; Confidentiality.
The Company shall afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisors and other
representatives, reasonable access during normal business hours
during the period prior to the Effective Time or the termination
of this Agreement to all its properties, books, contracts,
commitments, personnel and records and, during such period, the
Company shall make available to Parent (a) a copy of each report,
schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or
state securities laws and (b) all other information concerning
its business, properties and personnel as Parent may reasonably
request. Except as required by law, Parent will hold, and will
cause its officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any
and all information received from the Company, directly or
indirectly, in confidence, in accordance with the Secrecy
Agreement dated as of July 15, 1996, between a subsidiary of
Parent and the Company (as it may be amended from time to time,
the "Confidentiality Agreement") and will agree to be bound
thereby as if Parent had been a party thereto.
SECTION 5.05. Reasonable Efforts; Notification. (a)
Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated
by this
Agreement and the Option Agreement, including (i) the obtaining
of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid an action or proceeding by any
Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the
Option Agreement or the consummation of the transactions
contemplated hereby or thereby, including seeking to have any
stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consum
mate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement and the Option Agreement. In
connection with and without limiting the foregoing, the Company
and its Board of Directors shall, if any state takeover statute
or similar statute or regulation is or becomes applicable to the
Merger, this Agreement, the Option Agreement, the Stockholder
Agreement or any other transactions contemplated by this
Agreement, the Option Agreement or the Stockholder Agreement, use
all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement and the Option
Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and the Option Agreement and
otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement, the Option Agreement, the Stockholder
Agreement and the other transactions contemplated by this
Agreement, the Option Agreement or the Stockholder Agreement.
Nothing in this Agreement shall be deemed to require Parent to
dispose of any significant asset or collection of assets.
(b) The Company shall give prompt notice to Parent of
(i) any representation or warranty made by it contained in this
Agreement or the Option Agreement becoming untrue or inaccurate
such that the condition set forth in Section 6.02(a) would not be
satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements
of the parties or the conditions to the obligations of the
parties under this Agreement or the Option Agreement.
(c) Parent shall give prompt notice to the Company of
(i) any representation or warranty made by it or Sub contained in
this Agreement or the Option Agreement becoming untrue or
inaccurate such that the condition set forth in Section 6.03(a)
would not be satisfied; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under
this Agreement or the Option Agreement.
SECTION 5.06. Stock Options. (a) It is acknowledged
that, by virtue of this Agreement and the transactions
contemplated hereby, terms of the Company's stock option plans
(collectively, the "Stock Option Plans") provide for the
acceleration prior to the Effective Time, and the expiration as
of the Effective Time, of each unexercised option to purchase
shares of Company Common Stock ("Stock Options") granted
thereunder. The Parent Common Stock to be issued in the Merger in
exchange for shares of Company Common Stock issued upon exercise
of the Stock Options shall contain an appropriate legend to
permit the Surviving Corporation to recognize any applicable tax
deductions to which it may be entitled upon the disposition of
such shares.
(b) All Stock Option Plans shall terminate as of the
Effective Time and the provisions in any other Benefit Plan
providing for the issuance, transfer or grant of any capital
stock of the Company or any interest in respect of any capital
stock of the Company shall be deleted as of the Effective Time,
and the Company shall ensure that following the Effective Time no
holder of a Stock Option or any participant in any Stock Option
Plan shall have any right thereunder to acquire any capital stock
of the Company, Parent or the Surviving Corporation.
(c) As soon as practicable following the date of this
Agreement but in any event no later than 30 days prior to the
Effective Time, the Company shall deliver to the holders of Stock
Options appropriate notices describing the transactions
contemplated by this Agreement and the effect consummation of
those transactions will have on outstanding Stock Options. This
notice shall meet the requirements of the notice contemplated by
Section 10(c) of the Company's 1996 Director Option Plan and
Section 13(c) of the Company's 1993 Option Plan.
SECTION 5.07. Indemnification and Insurance. (a) From
and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations
of the Company pursuant to (i) each indemnification agreement
currently in effect between the Company and each person who is or
was a director or officer of the Company at or prior to the
Effective Time and (ii) any indemnification provision under the
Company's Restated Certificate of Incorporation or By-Laws as
each is in effect on the date hereof (the persons to be
indemnified
pursuant to the agreements or provisions referred to in clauses
(i) and (ii) of this Section 5.07(a) shall be referred to as,
collectively, the "Indemnified Parties"). The Certificate of
Incorporation and By-Laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's Restated
Certificate of Incorporation and By-Laws on the date of this
Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights
thereunder of any Indemnified Party.
(b) Without limiting the provisions of Section 5.07(a),
after the Effective Time Parent will, to the fullest extent
permitted under applicable law, indemnify and hold harmless each
Indemnified Party against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, to the
extent arising out of or pertaining to any action or omission at
or prior to the Effective Time in his or her capacity as a
director or officer of the Company arising out of or pertaining
to the transactions contemplated by this Agreement (collectively,
"Losses") for a period of six years after the Effective Time;
provided, however, that if, at any time prior to the sixth
anniversary of the Effective Time, any Indemnified Party delivers
to Parent a written notice asserting a claim for indemnification
under this Section 5.07(b), then the claim asserted in such
notice shall survive the sixth anniversary of the Effective Time
until such time as such claim is fully and finally resolved. Each
Indemnified Party shall give Parent prompt written notice of any
such claim, action, suit, proceeding or investigation; provided
that the failure to give such prompt notice shall not relieve
Parent from any liability which it may have under this Section
5.07(b) unless Parent is actually prejudiced as a result. If any
such claim, action, suit, proceeding or investigation shall have
been brought against an Indemnified Party and if Parent shall
have acknowledged in writing to the Indemnified Party that Parent
will indemnify the Indemnified Party pursuant to this Section
5.07(b) for all Losses arising out of such claim, action, suit,
proceeding or investigation, then Parent shall be entitled to
participate therein, and to assume the defense thereof, and to
settle and compromise any such claim, action, suit, proceeding or
investigation (so long as the Indemnified Party is completely
released and has no continuing obligations or prohibitions
imposed on him or her). If Parent does not acknowledge its
obligation to
indemnify for all such Losses or does not elect to assume the
defense, settlement or compromise thereof, in each case pursuant
to the preceding sentence, then Parent shall nevertheless have
the right to participate in the defense of any such claim,
action, suit, proceeding or investigation and to consent in
writing (not to be unreasonably withheld or delayed) to any
settlement or compromise thereof, but such defense and any
settlement or compromise thereof shall at all times be under the
direction of the Indemnified Person. In the event of any such
claim, action, suit, proceeding or investigation (i) any counsel
retained by the Indemnified Parties must be reasonably
satisfactory to Parent, and (ii) after the Effective Time, Parent
will, subject to the second succeeding proviso, pay the
reasonable fees and expenses of one such counsel for all
Indemnified Parties (it being agreed that more than one such
counsel may be retained and, subject to the second succeeding
proviso, paid for by Parent if counsel for one of the Indemnified
Parties reasonably concludes that conflicts of interest may
exist), promptly after statements therefor are received;
provided, that in the event that any Indemnified Party is not
entitled to indemnification hereunder, any amounts advanced on
his or her behalf shall be remitted to Parent; provided, however,
that, notwithstanding the foregoing, Parent shall not be required
to pay for separate counsel for the Indemnified Parties if Parent
shall have acknowledged in writing to the Indemnified Party that
Parent will indemnify the Indemnified Party pursuant to this
Section 5.07(b) for all Losses arising out of such claim, action,
suit, proceeding or investigation unless an Indemnified Party
reasonably concludes that conflicts of interest with Parent may
exist, in which case clause (ii) shall apply without regard to
this proviso.
(c) This Section 5.07 shall survive the consummation of
the Merger at the Effective Time, is intended to benefit the
Company, Parent, the Surviving Corporation and the Indemnified
Parties, and shall be binding on all successors and assigns of
Parent and the Surviving Corporation.
SECTION 5.08. Fees and Expenses. (a) All fees and
expenses incurred in connection with the Merger, this Agreement
and the Option Agreement and the transactions contemplated by
this Agreement and the Option Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Merger
is consummated, except that expenses incurred in connection with
printing and mailing the Proxy Statement and the Form S-4 shall
be shared equally by Parent and the Company.
(b) In the event that this Agreement is terminated by
any party hereto pursuant to Section 7.01(b)(iv), the Company
shall promptly, but in no event later than two days after the
date of such termination, pay Parent a fee equal to $10 million
in immediately available funds (the "Termination Fee"). If, at
the time of any termination of this Agreement by any party hereto
pursuant to Section 7.01(b)(i) (to the extent the Company has
theretofore failed to hold the Stockholders Meeting in breach of
its obligations under Section 5.01(b)), 7.01(b)(iii) or 7.01(c),
a Takeover Proposal shall have been publicly announced and not
publicly withdrawn and prior to the date 12 months following the
date of the termination of this Agreement the Company shall
either (x) consummate a Company Acquisition (as hereinafter
defined) or (y) enter into a written Acquisition Agreement
providing for a Company Acquisition, then the Company shall pay
the Termination Fee in the case of clause (x) concurrently with
the consummation of such Company Acquisition or in the case of
clause (y) concurrently with the consummation of the transaction
subject to such Acquisition Agreement (whether or not such
transaction is consummated prior to the date 12 months following
the date of the termination of this Agreement, but only in the
event that such transaction subject to such Acquisition Agreement
is in fact consummated); provided, however, that no Termination
Fee shall be payable pursuant to this sentence if at the time the
Agreement is terminated pursuant to Section 7.01(b)(i) or
7.01(b)(iii) the condition set forth in Section 6.03(d) shall not
have been satisfied. The Company acknowledges that the agreements
contained in this Section 5.08(b) are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amounts due
pursuant to this Section 5.08(b), and, in order to obtain such
payment, Parent commences a suit which results in a judgment
against the Company for the amounts set forth in this Section
5.08(b), the Company shall pay to Parent its reasonable costs and
expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amounts set forth
in this Section 5.08(b) at the prime rate of Chase Manhattan
Bank, N.A. in effect on the date such payment was required to be
made. "Company Acquisition" shall mean any transaction or series
of related transactions involving (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company pursuant to which
the stockholders of the Company immediately preceding such
transaction or series of related transactions hold less than 60%
of the equity interests in the surviving or resulting entity of
such transaction or transactions (other than the transactions
contemplated by this Agreement); (ii) a sale by the Company of
assets (excluding inventory and used equipment sold in the
ordinary course of business) representing in excess of 40% of the
fair market value of the Company's business immediately prior to
such sale; or (iii) the acquisition by any person or group
(including without limitation by way of a tender offer or an
exchange offer or issuance by the Company), directly or
indirectly, of beneficial ownership or a right to acquire
beneficial ownership of 40% or more of the then outstanding
shares of capital stock of the Company.
SECTION 5.09. Public Announcements. Parent and Sub, on
the one hand, and the Company, on the other hand, will, to the
extent reasonably practicable, consult with each other before
issuing, and give each other the opportunity to review and
comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement,
including the Merger, and the Option Agreement, and shall not
issue any such press release or make any such public statement
prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or
national securities quotation system. The parties agree that the
initial press release to be issued with respect to the
transactions contemplated by this Agreement and the Option
Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 5.10. Affiliates. (a) Prior to the Closing
Date, the Company shall deliver to Parent a letter identifying
all persons who are, in the Company's reasonable judgment, at the
time this Agreement is submitted for approval to the stockholders
of the Company, "affiliates" of the Company for purposes of Rule
145 under the Securities Act or for purposes of qualifying the
Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations. The Company shall use its reasonable
efforts to cause each such person to deliver to Parent on or
prior to the Closing Date a written agreement substantially in
the form attached as Exhibit A hereto.
(b) Parent shall use reasonable efforts to cause all
persons who are, in Parent's reasonable judgment, "affiliates" of
Parent for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations to
comply with the fourth paragraph of Exhibit A hereto.
SECTION 5.11. Stock Exchange Listing. To the extent
Parent does not issue treasury shares in the Merger which are
already listed, Parent shall use its reasonable efforts to cause
the shares of Parent Common Stock to be issued in the Merger and
under the Stock Option Plans to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the
Closing Date. The Company shall use reasonable efforts to cause
the shares of Company Common Stock to be issued pursuant to the
Option Agreement to be approved for trading on the NMS, subject
to official notice of issuance, prior to their issuance pursuant
to the Option Agreement.
SECTION 5.12. Pooling of Interests. Each of the Company
and Parent will use reasonable efforts to cause the transactions
contemplated by this Agreement, including the Merger, to be
accounted for as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and
regulations, and such accounting treatment to be accepted by each
of the Company's and Parent's independent public accountants, and
by the SEC, respectively, and each of the Company and Parent
agrees that it will voluntarily take no action that would cause
(to its knowledge after consultation with its independent public
accountants) such accounting treatment not to be obtained.
SECTION 5.13. Stockholder Agreement Legend. The Company
will inscribe upon any Certificate representing Subject Shares
tendered by a Stockholder (as defined in the Stockholder
Agreement) for such purpose the following legend: "THE SHARES OF
COMMON STOCK, PAR VALUE $.001 PER SHARE, OF BIOPSYS MEDICAL, INC.
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER
AGREEMENT DATED AS OF MAY 21, 1997, AND ARE SUBJECT TO THE TERMS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE
PRINCIPAL EXECUTIVE OFFICES OF BIOPSYS MEDICAL, INC.".
SECTION 5.14. Tax Treatment. Each of Parent and the
Company shall not take any action and shall not fail to take any
action which action or failure to act would prevent, or would be
reasonably likely to prevent, the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code,
and each shall use reasonable efforts to obtain the opinions of
counsel referred to in Section 6.03(c).
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger. The respective obligation of each party to
effect the Merger is subject to the satisfaction or waiver on or
prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement shall have
been approved and adopted by the affirmative vote of the
holders of a majority of the outstanding shares of Company
Common Stock.
(b) NYSE Listing. The shares of Parent Company Stock
issuable to the Company's stockholders pursuant to this
Agreement shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(c) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall
have been terminated or shall have expired.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or
other order issued by any court of competent juris diction
or other legal restraint or prohibition (collectively,
"Restraints") preventing the consummation of the Merger
shall be in effect.
(e) Form S-4. The Form S-4 shall have become effective
under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
SECTION 6.02. Conditions to Obligations of Parent and
Sub. The obligations of Parent and Sub to effect the Merger are
further subject to the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company contained in this Agreement
shall be true and correct (other than the representations in
Sections 3.01(c) and 3.01(d), which shall be true and
correct in all material respects) on and as of the Closing
Date except for changes contemplated by this Agreement and
except for those representations and warranties which
address matters only as of a particular date, which shall
remain true and correct (other than the representations in
Sections 3.01(c) and 3.01(d), which shall be true
and correct in all material respects) as of such particular
date, with the same force and effect as if made on and as of
the Closing Date, except in such cases (other than the
representations in Sections 3.01(c) and 3.01(d)) where the
failure to be so true and correct would not have a material
adverse effect on the Company.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) Letters from Company Affiliates. Parent shall have
received from each person named in the letter referred to in
Section 5.10(a) an executed copy of an agreement
substantially in the form of Exhibit A hereto.
(d) No Governmental Litigation. There shall not be
pending any suit by, action by or proceeding by any
Governmental Entity, (i) seeking to place limitations on the
ownership of shares of Company Common Stock (or shares of
common stock of the Surviving Corporation) by Parent or Sub
or seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company, (ii)
seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of Parent's
subsidiaries of any material portion of any business or of
any assets of the Company, Parent or any of Parent's
subsidiaries, or to compel the Company, Parent or any of
Parent's subsidiaries to dispose of or hold separate any
material portion of any business or of any assets of the
Company, Parent or any of Parent's subsidiaries, as a result
of the Merger or (iii) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any
material respect the business or operations of the Company.
(e) No Material Adverse Change. At any time on or after
the date of this Agreement there shall not have occurred any
material adverse change in the Company (or, if one shall
have occurred, it shall have been cured).
(f) Pooling Letters. Parent and the Company shall have
received letters, respectively, from Coopers & Lybrand
L.L.P. and Deloitte and Touche LLP, dated as of the Closing
Date, addressed to Parent and the Company, stating in
substance the matters to be stated by Coopers & Lybrand
L.L.P. and Deloitte and
Touche LLP pursuant to Sections 5.03(b) and 5.02(b),
respectively.
SECTION 6.03. Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is further
subject to the following conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Sub contained in this Agreement
shall be true and correct (other than the representations in
Section 3.02(b), which shall be true and correct in all
material respects) on and as of the Closing Date except for
changes contemplated by this Agreement and except for those
representations and warranties which address matters only as
of a particular date, which shall remain true and correct
(other than the representations in Section 3.02(b), which
shall be true and correct in all material respects) as of
such particular date, with the same force and effect as if
made on and as of the Closing Date, except in such cases
(other than the representations in Section 3.02(b)) where
the failure to be so true and correct would not have a
material adverse effect on Parent.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material respects
all obligations required to be performed by them under this
Agreement at or prior to the Closing Date.
(c) Tax Opinions. The opinions of Wilson Sonsini
Goodrich & Rosati, counsel to the Company, and Cravath,
Swaine & Moore, counsel to Parent, shall be delivered to the
Company and Parent, respectively, in form and substance
reasonably satisfactory to the Company and Parent. In
rendering each such opinion, counsel shall be entitled to
rely upon (and Parent, Sub and the Company shall make)
customary representations reasonably requested by counsel.
The opinions shall be dated on the date that is two business
days prior to the Proxy Statement is first mailed to
stockholders of the Company and shall not have been
withdrawn or modified in any material respect.
(d) No Material Adverse Change. At any time on or after
the date of this Agreement, there shall not have occurred
any material adverse change in Parent (or, if one shall have
occurred, it shall have been cured).
SECTION 6.04. Frustration of Closing Conditions. None
of the Company, Parent or Sub may rely on the failure of any
condition set forth in Section 6.01, 6.02 or 6.03, as the case
may be, to be satisfied if such failure was caused by such
party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement,
as required by and subject to Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated, and the Merger contemplated hereby may be abandoned,
at any time prior to the Effective Time, whether before or after
approval of matters presented in connection with the Merger by
the stockholders of the Company:
(a) by mutual written consent of Parent, Sub and the
Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated
by December 31, 1997 for any reason; provided, however,
that the right to terminate this Agreement under this
Section 7.01(b)(i) shall not be available to any party
whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure
to act constitutes a wilful and material breach of this
Agreement;
(ii) if any Restraint having any of the effects
set forth in Section 6.01(d) shall be in effect and
shall have become final and nonappealable;
(iii) if the Stockholder Approval shall not have
been obtained at the Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof;
or
(iv) if, during the Applicable Period, the Board
of Directors of the Company has made the determination
referred to in the penultimate sentence of Section
4.02(b); provided, however, that the Company may not
terminate this Agreement pursuant to this Section
7.01(b)(iv) unless and until three business days have
elapsed following
delivery to Parent of a Notice of Superior Proposal
with respect to a Superior Proposal by the Board of
Directors of the Company, and no later than two days
thereafter the Company pays to Parent the amounts
specified under Section 5.08(b) pursuant to the terms
of such Section 5.08(b).
(c) by Parent if (i) the Board of Directors of the
Company or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent its approval
or recommendation of the Merger or this Agreement or
failed to reconfirm its recommendation within 15
business days after a written request to do so, or
approved or recommended any Takeover Proposal or (ii)
the Board of Directors of the Company shall have
resolved to take any of the foregoing actions;
(d) by the Company, upon a breach of any
representation, warranty, covenant or agreement on the
part of Parent set forth in this Agreement, or if any
such representation or warranty or Parent shall have
become inaccurate, in either case such that the
conditions set forth in Section 6.03(a) or Section
6.03(b), as the case may be, would not be satisfied as
of the time of such breach or as of the time such
representation or warranty shall have become
inaccurate; provided, that if such inaccuracy in
Parent's representations and warranties or breach by
Parent is curable by Parent through the exercise of its
reasonable efforts, then (i) the Company may not
terminate this Agreement under this Section 7.01(d)
with respect to a particular breach or inaccuracy prior
to or during the 45-day period commencing upon delivery
by the Company of written notice to Parent describing
such breach or inaccuracy, provided Parent continues to
exercise reasonable efforts to cure such breach or
inaccuracy and (ii) the Company may not, in any event,
terminate this Agreement under this Section 7.01(d) if
such inaccuracy or breach shall have been cured in all
material respects during such 45-day period; and,
provided further that the Company may not terminate
this Agreement pursuant to this Section 7.01(d) if it
shall have wilfully and materially breached this
Agreement; or
(e) by Parent, upon a breach of any
representation, warranty, covenant or agreement on the
part of the Company set forth in this Agreement, or if
any such representation or warranty of the Company
shall have become inaccurate, in either case such that
the conditions set forth in Section 6.02(a) or Section
6.02(b), as the case may be, would not be satisfied as
of the time of such breach or as of the time such
representation or warranty shall have become
inaccurate; provided, that if such inaccuracy in the
Company's representations and warranties or breach by
the Company is curable by the Company through the
exercise of its reasonable efforts, then (i) Parent may
not terminate this Agreement under this Section 7.01(e)
with respect to a particular breach or inaccuracy prior
to or during the 45-day period commencing upon delivery
by Parent of written notice to the Company describing
such breach or inaccuracy, provided the Company
continues to exercise reasonable efforts to cure such
breach or inaccuracy and (ii) Parent may not, in any
event, terminate this Agreement under this Section
7.01(e) if such inaccuracy or breach shall have been
cured in all material respects during such 45-day
period; and, provided further that Parent may not
terminate this Agreement pursuant to this Section
7.01(e) if it shall have wilfully and materially
breached this Agreement.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as
provided in Section 7.01, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, other than the provisions
of the last sentence of Section 5.04, Section 5.08, this Section
7.02 and Arti cle VIII and except to the extent that such
termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or
agree ments set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended
by the parties hereto at any time before or after any required
approval of matters presented in connection with the Merger by
the stockholders of the Company; provided, however, that after
any such approval, there shall be made no amendment that by law
requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to
the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto or (c) subject to the proviso of Section 7.03, waive
compliance with any of the agreements or conditions contained
herein. Any agreement on
the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Sub, to:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Michael H. Ullmann
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Robert I. Townsend, III, Esq.
if to the Company, to:
Biopsys Medical, Inc.
3 Morgan
Irvine, CA 92618
Attention: Steven L. Gex
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Casey McGlynn, Esq.
Christopher D. Mitchell, Esq.
Marty Korman, Esq.
SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) as it relates to the Company, "knowledge" means,
with respect to any matter in question, that any of the
Chief Executive Officer, Chief Financial Officer or Vice
President of Medical Affairs of the Company has actual
knowledge of such matter, and as it relates to Parent, the
term "knowledge" means, with respect to any matter in
question, that any of the Chief Executive Officer, Chief
Financial Officer or General Counsel of Parent has actual
knowledge of such matter;
(c) "material adverse change" or "material adverse
effect" means, when used in connection with the Company or
Parent, any change or effect that is, or is almost certainly
to be within three months, materially adverse to the
business, properties, assets or financial condition of
either the Company or Parent and its subsidiaries, taken as
a whole, as the case may be; provided, however, that (i) any
adverse change or effect that is proximately caused by
conditions affecting the economy or securities markets
generally shall not be taken into account in determining
whether there has been or would be a "material adverse
change" or a "material adverse effect" on or with respect to
such entity, (ii) any adverse change or effect that is
proximately caused by conditions affecting any industry in
which the entity competes shall not be taken into account in
determining whether there has been or would be a "material
adverse change" or a "material adverse effect" on or with
respect to the entity and (iii) any adverse change or effect
resulting from those items set forth on Schedule 8.03 of the
Company Disclosure Schedule shall not be taken into account
in determining whether there has been or would be a
"material adverse
change" or a "material adverse effect" on or with respect to
the Company;
(d) "person" means an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity;
(e) a "subsidiary" of any person means another person,
an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to
elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned
directly or indi rectly by such first person.
SECTION 8.04. Interpretation. When a reference is made
in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When ever the words "include",
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
SECTION 8.05. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement, the Option Agreement, the
Stockholder Agreement and the Confidentiality Agreement (a)
constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement, the
Option Agreement, the Stockholder Agreement and the
Confidentiality Agreement and (b) except for the provisions of
Article II, Section 5.06 and Section 5.07, are not intended to
confer upon any person other than the parties any rights or
remedies.
SECTION 8.07. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned, in whole or in part, by operation of law or otherwise
by any of the parties without the prior written consent of the
other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations
under this Agreement to Parent or to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall
relieve Sub of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the partes shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State
of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any court of the
United States located in the State of Delaware or of any Delaware
state court in the event any dispute arises out of this Agreement
or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating
to this Agreement or the transactions contemplated by this
Agreement in any court other than a court of the United States
located in the State of Delaware or a Delaware state court.
SECTION 8.10. 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. Upon such determination that any
term 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 to the fullest extent permitted by
applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent
possible.
IN WITNESS WHEREOF, Parent, Sub and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written
above.
JOHNSON & JOHNSON,
by /s/ William C. Weldon
-------------------------------
Name: William C. Weldon
Title:
PALISADES MERGER CORP.,
by /s/ Michael Ullmann
-----------------------------
Name: Michael Ullmann
Title:
BIOPSYS MEDICAL, INC.,
by /s/ Steven L. Gex
-----------------------------
Name: Steven L. Gex
Title: President and CEO
EXHIBIT A
TO THE MERGER AGREEMENT
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common stock, par value
$.001 per share ("Company Common Stock"), of Biopsys Medical, Inc., a
Delaware corporation (the "Company"), acknowledges that the undersigned may
be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), by the Securities and Exchange Commission (the "SEC")
and may be deemed an "affiliate" of the Company for purposes of qualifying
the Merger (as defined below) for pooling of interests accounting treatment
under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations, although nothing contained herein should be
construed as an admission of either such fact. Pursuant to the terms of the
Agreement and Plan of Merger dated as of May 21, 1997, among Johnson &
Johnson, a New Jersey corporation ("Parent"), Palisades Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and
the Company, Sub will be merged with and into the Company (the "Merger"),
and in connection with the Merger, the undersigned is entitled to receive
common stock, par value $1.00 per share ("Parent Common Stock"), of Parent.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the Parent
Common Stock received by the undersigned in exchange for any shares of
Company Common Stock in connection with the Merger may be restricted unless
such transaction is registered under the Securities Act or an exemption
from such registration is available. The undersigned understands that such
exemptions are limited and the undersigned has obtained or will obtain
advice of counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability to the sale of such
securities of Rules 144 and 145(d) promulgated under the Securities Act.
The undersigned understands that Parent will not be required to maintain
the effectiveness of any registration statement under the Securities Act
for the purposes of resale of Parent Common Stock by the undersigned.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the Parent
Common Stock received by the undersigned in exchange for shares of Company
Common Stock in connection with the Merger except (i) pursuant to an
effective registration statement under the Securities Act,
(ii) in conformity with the volume and other limitations of Rule 145 or
(iii) in a transaction which, in the opinion of the general counsel of
Parent or other counsel reasonably satisfactory to Parent (it being
expressly agreed that Wilson Sonsini Goodrich & Rosati shall be considered
reasonably satisfactory for all purposes under this Agreement) or as
described in a "no-action" or interpretive letter from the Staff of the SEC
specifically issued with respect to a transaction to be engaged in by the
undersigned, is not required to be registered under the Securities Act.
The undersigned hereby further represents to and covenants with
Parent that the undersigned has not, within the 30 days prior to the
Closing Date, sold, transferred or otherwise disposed of any shares of
Company Common Stock held by the undersigned and that the undersigned will
not sell, transfer or otherwise dispose of any Parent Common Stock received
by the undersigned in connection with the Merger until after such time as
results covering at least 30 days of post-Merger combined operations of the
Company and Parent have been published by Parent, in the form of a
quarterly earnings report, an effective registration statement filed with
the SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public
filing or announcement which includes such combined results of operations,
except as would not otherwise reasonably be expected to adversely affect
the qualification of the Merger as a pooling-of-interests.
In the event of a sale or other disposition by the undersigned of
Parent Common Stock pursuant to Rule 145, the undersigned will supply
Parent with evidence of compliance with such Rule, in the form of a letter
in the form of Annex I hereto (or other reasonably satisfactory
documentation evidencing compliance with Rule 145) and the opinion of
counsel or no-action letter referred to above. The undersigned understands
that Parent may instruct its transfer agent to withhold the transfer of any
Parent Common Stock disposed of by the undersigned, but that (provided such
transfer is not prohibited by any other provision of this letter agreement)
upon receipt of such evidence of compliance, Parent shall cause the
transfer agent to effectuate the transfer of the Parent Common Stock sold
as indicated in such letter.
Parent covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of
Parent Common Stock by the undersigned under Rule 145 in accordance with
the terms thereof.
The undersigned acknowledges and agrees that the legends set
forth below will be placed on certificates representing Parent Common Stock
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to Parent from counsel reasonably satisfactory to Parent to
the effect that such legends are no longer required for purposes of the
Securities Act.
There will be placed on the certificates for Parent Common Stock
issued to the undersigned, or any substitutions therefor, a legend stating
in substance:
"The shares represented by this certificate were issued pursuant
to a business combination which is being accounted for as a pooling of
interests, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have not been acquired by
the holder with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933.
The shares may not be sold, pledged or otherwise transferred (i) until
such time as Johnson & Johnson shall have published financial results
covering at least 30 days of combined operations after the Effective
Time and (ii) except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and (ii) the receipt by Parent of this
letter is an inducement to Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the securities
of Johnson & Johnson ("Parent") described below in the space provided for
that purpose (the "Securities"). The Securities were received by the
undersigned in connection with the merger of Palisades Merger Corp.,
a Delaware corporation, with and into Biopsys Medical, Inc.
Based upon the most recent report or statement filed by Parent
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph
(e) of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act").
The undersigned hereby represents that the Securities were sold
in "brokers' transactions" within the meaning of Section 4(4) of the
Securities Act or in transactions directly with a "market maker" as that
term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended. The undersigned further represents that the undersigned has not
solicited or arranged for the solicitation of orders to buy the Securities,
and that the undersigned has not made any payment in connection with the
offer or sale of the Securities to any person other than to the broker who
executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
EXECUTION COPY
=====================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of May 21, 1997
Among
JOHNSON & JOHNSON
PALISADES MERGER CORP.
And
BIOPSYS MEDICAL, INC.
=====================================================================
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger.................................... 2
SECTION 1.02. Closing....................................... 2
SECTION 1.03. Effective Time................................ 2
SECTION 1.04. Effect of the Merger.......................... 2
SECTION 1.05. Certificate of Incorporation and
By-Laws..................................... 2
SECTION 1.06. Directors..................................... 3
SECTION 1.07. Officers...................................... 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock....................... 3
SECTION 2.02. Exchange of Certificates...................... 4
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company................................. 8
SECTION 3.02. Representations and Warranties of
Parent and Sub.............................. 22
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business........................... 26
SECTION 4.02. No Solicitation............................... 30
Page
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement; Stockholders
Meeting..................................... 32
SECTION 5.02. Letters of the Company's Accountants.......... 33
SECTION 5.03. Letters of Parent's Accountants............... 34
SECTION 5.04. Access to Information;
Confidentiality............................. 34
SECTION 5.05. Reasonable Efforts; Notification.............. 34
SECTION 5.06. Stock Options................................. 36
SECTION 5.07. Indemnification and Insurance................. 36
SECTION 5.08. Fees and Expenses............................. 38
SECTION 5.09. Public Announcements.......................... 40
SECTION 5.10. Affiliates.................................... 40
SECTION 5.11. Stock Exchange Listing........................ 41
SECTION 5.12. Pooling of Interests.......................... 41
SECTION 5.13. Stockholder Agreement Legend.................. 41
SECTION 5.14. Tax Treatment................................. 41
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Merger............. 42
SECTION 6.02. Conditions to Obligations of Parent
and Sub..................................... 42
SECTION 6.03 Conditions to Obligation of the
Company..................................... 44
SECTION 6.04. Frustration of Closing Conditions............. 45
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.................................... 45
SECTION 7.02. Effect of Termination.......................... 47
SECTION 7.03. Amendment...................................... 47
SECTION 7.04. Extension; Waiver.............................. 47
Page
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties................................... 48
SECTION 8.02. Notices........................................ 48
SECTION 8.03. Definitions.................................... 49
SECTION 8.04. Interpretation................................. 50
SECTION 8.05. Counterparts................................... 50
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries................................ 50
SECTION 8.07. Governing Law.................................. 50
SECTION 8.08. Assignment..................................... 50
SECTION 8.09. Enforcement.................................... 51
SECTION 8.10. Severability................................... 51
Exhibit A Form of Company Affiliate Letter
AGREEMENT AND PLAN OF MERGER dated as of May
21, 1997, among JOHNSON & JOHNSON, a New Jersey
corporation ("Parent"), PALISADES MERGER CORP., a
Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and BIOPSYS MEDICAL, INC., a
Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent,
Sub and the Company, and Parent, acting as the sole stockholder
of Sub, have approved the merger of Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.001 per share, of the Company,
together with the associated right (a "Right") to purchase,
pursuant to the Company's November 8, 1996 Preferred Shares
Rights Agreement (the "Rights Agreement"), one one-thousandth of
a share of the Company's Series A Participating Preferred Stock,
par value $.001 per share (such common stock, together with the
Rights, "Company Common Stock"), other than Company Common Stock
owned by Parent, Sub or the Company, will be converted into the
right to receive common stock, par value $1.00 per share, of
Parent ("Parent Common Stock");
WHEREAS, substantially concurrently herewith and as a
condition and inducement to Parent's willingness to enter into
this Agreement, Parent and certain affiliate stockholders of the
Company have entered into a Stockholder Agreement (the
"Stockholder Agreement");
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and agree ments in
connection with the Merger and also to prescribe various
conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization within
the meaning of Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is
intended that the Merger will be accounted for as a pooling of
interests transaction; and
WHEREAS, immediately following the execution and
delivery of this Agreement, Parent and the Company will enter
into a stock option agreement (the "Option Agreement") pursuant
to which the Company will grant Parent the option to purchase
shares of Company Common Stock, upon the terms and subject to the
conditions set forth therein.
NOW, THEREFORE, in consideration of the represen
tations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to
the conditions set forth in this Agreement, and in accordance
with the Delaware General Corporation Law (the "DGCL"), Sub shall
be merged with and into the Company at the Effective Time (as
defined in Section 1.03). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election
of Parent, any direct or indirect wholly owned subsidiary (as
defined in Section 8.03) of Parent may be substituted for Sub as
a constituent corporation in the Merger. In such event, the
parties hereto agree to execute an appropriate amendment to this
Agreement in order to reflect such substitution.
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be
specified by the parties, which shall be no later than the second
business day after satisfaction or waiver of the conditions set
forth in Article VI (the "Closing Date"), at the offices of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, N.Y. 10019, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions
of this Agreement, as soon as practicable on or after the Closing
Date, the parties shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as Parent and the
Company shall agree should be specified in the Certificate of
Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall
have the effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-Laws.
(a) The Certificate of Incorporation of Sub, as
in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided
therein or by applicable law (subject in all cases to
Section 5.07), except that the name of the Surviving
Corporation in such Certificate of Incorporation will be
changed to be "Biopsys Medical, Inc.".
(b) The By-Laws of Sub, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter changed or amended as provided
therein or by applicable law (subject in all cases to Section
5.07).
SECTION 1.06. Directors. The directors of Sub
immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected
and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected
and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock or
any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and out standing
share of capital stock of Sub shall be con verted into and
become one validly issued, fully paid and nonassessable
share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent- Owned
Stock. Each share of Company Common Stock that is owned by
the Company and each share of Company Common Stock that is
owned by Parent or Sub shall automatically be canceled and
retired and shall cease to exist, and no Parent Common Stock
or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to
Section 2.02(e), each issued and outstanding share of
Company Common Stock (other than shares to be canceled in
accordance with Section 2.01(b)) shall be converted into the
right to receive that number (the "Exchange Ratio") of fully
paid and nonassessable shares of Parent Common Stock equal
to the amount obtained by dividing the Per Share Price (as
hereinafter defined) by the Average Price (as hereinafter
defined). The "Per Share Price" shall mean $27.55. The
"Average Price" shall mean the average per share closing
price of Parent Common Stock during the 20 full trading days
preceding the date of the last full trading day prior to the
Stockholders Meeting (as defined in Section 5.01) or any
adjournment or postponement at which the Stockholder
Approval (as defined in Section 3.01(q)) is obtained, as
such prices are reported on the New York Stock Exchange
("NYSE") Composite Transactions Tape (as reported by The
Wall Street Journal, or, if not reported thereby, any other
authoritative source). As of the Effective Time, all such
shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate
which immediately prior to the Effective Time represented
any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive
shares of Parent Common Stock and any cash in lieu of
fractional shares of Parent Common Stock to be issued or
paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.02, without
interest. Notwithstanding the foregoing, if between the date
of this Agreement and the Effective Time the outstanding
shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason
of the occurrence or record date of any stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares or if Parent pays or
declares an extraordinary dividend with a record date prior
to the Effective Date, the Exchange Ratio shall be
appropriately adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange or extraordinary dividend.
SECTION 2.02. Exchange of Certificates. (a) Exchange
Agent. As of the Effective Time, Parent shall deposit with First
Chicago Trust Company of New York or such other bank or trust
company of similar size as may be designated by Parent (the
"Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock, for
exchange in accordance with this Article II, through the Exchange
Agent, certificates representing the shares of Parent Common
Stock (such shares of Parent Common Stock, together with any
dividends or distributions with respect thereto with a record
date after the Effective Time and any cash payments in lieu of
any fractional shares of Parent Common Stock, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section
2.01 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time but in any event within 10
business days thereafter, Parent shall cause the Exchange Agent
to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive shares of
Parent Common Stock pursuant to Section 2.01(c), (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancelation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II after
taking into account all the shares of Company Common Stock then
held by such holder under all such Certificates so surrendered,
cash in lieu of fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.02(e) and any
dividends or other distributions to which such holder is entitled
pursuant to Section 2.02(c), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the
proper number of shares of Parent Common Stock may be issued to a
person other than the person in whose name the Certificate so
surrendered is registered, if, upon presentation to the Exchange
Agent, such Certificate shall be properly endorsed or otherwise
be in proper form for transfer and the person requesting such
issuance shall pay any transfer or other taxes required by reason
of the issuance of shares of Parent Common Stock to a
person other than the registered holder of such Certificate or
establish to the reasonable satisfaction of Parent that such tax
has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the certificate representing
shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock as contemplated by Section 2.02(e)
and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c). No interest will be paid or
will accrue on any cash payable pursuant to Sections 2.02(c) or
2.02(e).
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Parent Common
Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.02(e) until the holder of record of
such Certificate shall surrender such Certificate. Following
surrender of any such Certificate, there shall be paid to the
record holder of the certificate representing whole shares of
Parent Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 2.02(e) and
the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with
a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable
with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the
surrender for exchange of shares of Company Common Stock in
accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective
Time which may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of
this Agreement or prior to the date of this Agreement and which
remain
unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they
shall be canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of Parent.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock
(after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest)
in an amount, less the amount of any withholding taxes which may
be required thereon, equal to such fractional part of a share of
Parent Common Stock multiplied by the per share closing price of
Parent Common Stock on the date of the Stockholders Meeting, as
such price is reported on the NYSE Composite Transactions Tape
(as reported by The Wall Street Journal, or, if not reported
thereby, any other authoritative source).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for six months after the Effective Time shall be
delivered to Parent, upon demand, and any holders of the
Certificates who have not theretofore complied with this Article
II shall thereafter look only to Parent for, and Parent shall
remain liable for, payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. None of Parent, Sub, the Company or
the Exchange Agent shall be liable to any person in respect of
any shares of Parent Common Stock (or divi dends or distributions
with respect thereto) or cash from the Exchange Fund in each case
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund,
as directed by Parent, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Parent.
(i) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
shares of Parent Common Stock and any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of
Parent Common Stock deliverable in respect thereof, pursuant to
this Agreement.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the
Company. Except as set forth on the disclosure schedule delivered
by the Company to Parent prior to the execution of this Agreement
(the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The
Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry
on its business as now being conducted. The Company is duly
qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or
the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate would not have a
material adverse effect (as defined in Section 8.03) on the
Company. The Company has delivered to Parent complete and
correct copies of its Restated Certificate of Incorporation
and By-Laws, in each case as amended to the date hereof.
(b) Subsidiaries. The Company has no subsidiaries.
(c) Capital Structure. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common
Stock and 5,000,000 shares of preferred stock, par value
$.001 per share ("Preferred Stock"). At the close of
business on May 20, 1997, (i) 9,902,067 shares of Company
Common Stock were issued and outstanding, (ii) no shares of
Company Common Stock were held by the Company in its
treasury, (iii) 2,150,000 shares of Company Common Stock
were reserved for issuance pursuant to outstanding Stock
Option Plans (as defined in Section 5.06(a)), (iv) 150,000
shares of Company Common Stock were reserved for issuance
pursuant to the Company's 1996 Employee Stock Purchase Plan
(the "ESPP") and (v) 50,000 shares of the Company's Series A
Participating Preferred Stock were reserved for issuance in
connection with the Rights Agreement. Except as set forth
above, at the close of business on May 20, 1997, no shares
of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are, and
all shares which may be issued pursuant to the Stock Option
Plans and the ESPP will be, when issued in accordance with
the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into
securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth
above, there are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company is a party, or
by which it is bound, obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting
securities of the Company or obligating the Company to
issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are not any outstanding
contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock of the
Company.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement by the
holders of a majority of the outstanding shares of Company
Common Stock, to consummate the transactions contemplated by
this Agreement. The Company has all requisite corporate
power and authority to enter into the Option Agreement and
to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement and the Option
Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement and the
Option Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the
case of this Agreement, to approval of this Agreement by the
holders of a majority of the outstanding shares of Company
Common Stock. This Agreement and the Option Agreement have
been duly executed and delivered by the Company and
constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms except as enforceability may be limited by bankruptcy
and other similar laws and general principles of equity. The
execution and delivery of this Agreement and the Option
Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the Option Agreement and
compliance with the provisions of this Agreement and the
Option Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation
or to loss of a material benefit under, or result in the
creation of any pledge, claim, lien, charge, encumbrance or
security interest of any kind or nature whatsoever
(collectively, "Liens") in or upon any of the properties or
assets of the Company under any provision of (i) the
Restated Certificate of Incorporation or By-Laws of the
Company, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the
Company or its properties or assets or (iii) subject to the
governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or
regulation or (B) judgment, order or decree applicable to
the Company or its properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or
in the aggregate would not (x) have a material adverse
effect on the Company, (y) impair in any material respect
the ability of the Company to perform its obligations under
this Agreement or the Option Agreement, or (z) prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement or the Option Agreement;
(provided that in the case of clauses (y) and (z) as they
relate to clause (iii)(B), such representation shall be made
only as of the date hereof). No consent,
approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local
government or any court, administrative agency or commission
or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with
respect to the Company in connection with the execution and
delivery of this Agreement or the Option Agreement by the
Company or the consummation by the Company of the Merger or
the transactions contemplated by the Option Agreement,
except for (1) the filing of a premerger notification and
report form by the Company under the Hart-Scott- Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (2) the filing with the Securities and Exchange
Commission (the "SEC") of a proxy statement relating to the
approval by the Company's stockholders of this Agreement (as
amended or supplemented from time to time, the "Proxy
Statement") and such reports under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement, the Option
Agreement and the transactions contemplated by this
Agreement and the Option Agreement, (3) the filing of the
Certificate of Merger with the Delaware Secretary of State
and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
business, (4) such filings with and approvals of the NASDAQ
National Market System (the "NMS") to permit the shares of
Company Common Stock that are to be issued pursuant to the
Option Agreement to be traded on the NMS and (5) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained
or made would not, individually or in the aggregate, have a
material adverse effect on the Company or prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement or the Option Agreement.
(e) SEC Documents. The Company has filed all required
reports, schedules, forms, statements and other documents
with the SEC since April 1, 1996 (the "SEC Documents"). As
of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities
Act of 1933 (the "Securities Act"), or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents at the time they were filed
contained any untrue statement of a material fact or omitted
to state a 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 misleading.
Except to the extent that information contained in any SEC
Document has been revised or superseded by a later-filed SEC
Document, none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circum stances
under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on
a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented
the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and the
absence of footnotes). Except as set forth in the Filed SEC
Documents (as defined in Section 3.01(g)), the Company has
no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be
required under GAAP to be disclosed on a balance sheet of
the Company and which, individually or in the aggregate,
would have a material adverse effect on the Company.
(f) Information Supplied. None of the informa tion
supplied or to be supplied by the Company specifi cally for
inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common
Stock in the Merger (the "Form S-4") will (except to the
extent revised or superseded by amendments or supplements
contemplated hereby), at the time the Form S-4 is filed with
the SEC, at any time it is amended or supplemented and at
the time it becomes effective under the Securities Act,
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 light of the
circumstances under which they are made, not misleading and
(ii) the Proxy Statement will (except to the extent revised
or superseded by amendments or supplements contemplated
hereby), at the date it is first mailed to the Company's
stockholders and at the time of the meeting of the Company's
stockholders held
to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no
representation is made by the Company with respect to
statements made or incorporated by reference therein based
on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy
Statement.
(g) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available
prior to the date of this Agreement (the "Filed SEC
Documents"), since the date of the most recent audited
financial statements included in the Filed SEC Documents
and, in the case of clauses (ii), (iii), (iv), (vi) and
(vii) only, until the date hereof, the Company has conducted
its business only in the ordinary course consistent with
past practice, and there has not been (i) any material
adverse change (as defined in Section 8.03) in the Company,
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock
(other than the Rights issued or to be issued pursuant to
the Rights Agreement), (iii) any split, combination or
reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (x) any granting by the Company to
any officer of the Company of any increase in compensation,
except in the ordinary course of business consistent with
prior practice or as was required under employment
agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC
Documents, (y) any granting by the Company to any officer of
any increase in severance or termination pay, except as was
required under any employment, severance or termination
agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC
Documents or (z) any entry by the Company into any
employment, severance or termination agreement with any
officer, (v) any damage, destruction or loss, whether or not
covered by insurance, that individually or in the aggregate
would have a material adverse effect on the Company, (vi)
any
change in accounting methods, principles or practices having
a material adverse effect on the Company, except insofar as
may have been required by a change in GAAP or (vii) any tax
election that individually or in the aggregate would have a
material adverse effect on the Company or any of its tax
attributes or any settlement or compromise of any material
income tax liability.
(h) Litigation. There is no suit, action or proceeding
pending or, to the knowledge of the Company after
consultation with the Company's outside counsel, threatened
against or affecting the Company that individually or in the
aggregate would have a material adverse effect on the
Company, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator
outstanding against, or, to the knowledge of the Company
after consultation with the Company's outside counsel,
investigation by any Governmental Entity involving, the
Company that individually or in the aggregate would have a
material adverse effect on the Company.
(i) Contracts. Except as disclosed in the Filed SEC
Documents, as of the date hereof, there are no contracts or
agreements that are of a nature required to be filed as an
exhibit under the Exchange Act and the rules and regulations
promulgated thereunder. The Company is not in violation of
nor in default under (nor does there exist any condition
which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any
lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding to which
it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that
individually or in the aggregate would not have a material
adverse effect on the Company. The Company has not entered
into any contract, agreement arrangement or understanding
with any affiliate of the Company that is currently in
effect other than agreements that are (i) disclosed in the
Filed SEC Documents or (ii) not of a nature required to be
disclosed in the SEC Documents.
(j) Compliance with Laws. (i) The Company is in
compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any
Governmental Entity (collectively, "Legal Provisions")
applicable to its business or operations, except for
instances of possible noncompliance that, individually or in
the aggregate, would not have a material adverse effect on
the Company or prevent or
materially delay the consummation of the Merger or the
transactions contemplated by the Option Agreement. The
Company has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights,
including all authorizations under Environmental Laws (as
hereinafter defined) ("Permits"), necessary for it to own,
lease or operate its properties and assets and to carry on
its business as now conducted, and there has occurred no
default under, or violation of, any such Permit, except for
the lack of Permits and for defaults under, or violations
of, Permits which lack, default or violation individually or
in the aggregate would not have a material adverse effect on
the Company. Except as disclosed in the Filed SEC Documents,
the Company has not received any notice or other
communication from the Food and Drug Administration or any
other Governmental Entity (i) contesting the premarket
clearance or approval of, the uses of or the labeling and
promotion of any of the Company's products or (ii) otherwise
alleging any violation of any Legal Provision by the
Company.
(ii) The term "Environmental Laws" means any Federal,
state or local statute, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree or
injunction relating to: (A) Releases (as defined in 42
U.S.C. ss. 9601(22)) or threatened Releases of Hazardous
Material (as hereinafter defined) into the environment, (B)
the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous
Material or (C) the health or safety of employees in the
workplace environment. The term "Hazardous Material" means
(1) hazardous substances (as defined in 42 U.S.C.
ss.9601(14)), (2) petroleum, including crude oil and any
fractions thereof, (3) natural gas, synthetic gas and any
mixtures thereof, (4) asbestos and/or asbestos containing
material, (5) PCBs or materials containing PCBs and (6) any
material regulated as a medical waste or infectious waste.
(iii) During the period of ownership or operation by the
Company of any of its current or previously owned or leased
properties, there have been no Releases of Hazardous
Material in, on, under or affecting such properties or any
surrounding site, and the Company has not disposed of any
Hazardous Material in a manner that has led, or could
reasonably be anticipated to lead to a Release, except in
each case for those which
individually or in the aggregate would not have a material
adverse effect on the Company, and except as disclosed in
the Filed SEC Documents. Prior to the period of ownership or
operation by the Company of any of its current or previously
owned or leased properties, to the knowledge of the Company
after consultation with the Company's outside counsel, no
Hazardous Material was generated, treated, stored, disposed
of, used, handled or manufactured at, or transported shipped
or disposed of from, such current or previously owned or
leased properties, and there were no Releases of Hazardous
Material in, on, under or affecting any such property or any
surrounding site, except in each case for the generation,
treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material and
Releases which individually or in the aggregate would not
have a material adverse effect on the Company, and except as
disclosed in the Filed SEC Documents. The Company has not
received any written notice of, or entered into any order,
settlement or decree relating to: (A) any violation of any
Environmental Laws or the institution or pendency of any
suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with
any alleged violation of Environmental Laws, (B) the
response to or remediation of Hazardous Material at or
arising from any of the Company's properties or any other
properties or (C) payment for, response to or remediation of
Hazardous Material at or arising from any of the Company's
properties or any other properties, except in each case for
any such notices, orders, settlements or decrees which
individually or in the aggregate would not have a material
adverse effect on the Company.
(k) Absence of Changes in Benefit Plans; Labor
Relations. Except as disclosed in the Filed SEC Documents,
since the date of the most recent audited financial
statements included in the Filed SEC Documents and until the
date hereof, there has not been any adoption or amendment in
any material respect by the Company of any collective
bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other material plan, arrangement
or understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or
director of the Company (collectively, "Benefit Plans").
Except as disclosed in the Filed SEC Documents, as of the
date hereof,
there exist no employment, consulting, severance,
termination or indemnification agreements, arrangements or
understandings between the Company, any current or former
employee, officer or director of the Company. There are no
collective bargaining or other labor union agreements to
which the Company is a party or by which it is bound. Since
July 1, 1995, the Company has not encountered any labor
union organizing activity, nor had any actual or threatened
employee strikes, work stoppages, slowdowns or lockouts.
(l) ERISA Compliance. (i) Schedule 3.01(l)(i) to the
Company Disclosure Schedule contains a list and brief
description of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all
other Benefit Plans maintained, or contributed to, by the
Company or any person or entity that, together with the
Company, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code (the Company and each
such other person or entity, a "Commonly Controlled Entity")
for the benefit of any current or former employees, officers
or directors of the Company. The Company has made available
to Parent true, complete and correct copies of (1) each
Benefit Plan (or, in the case of any unwritten Benefit
Plans, descriptions thereof), (2) the most recent annual
report on Form 5500 filed with the Internal Revenue Service
with respect to each Benefit Plan (if any such report was
required), (3) the most recent summary plan description for
each Benefit Plan for which such summary plan description is
required and (4) each trust agreement and group annuity
contract relating to any Benefit Plan. Each Benefit Plan has
been administered in all material respects in accordance
with its terms. The Company and all the Benefit Plans are
all in compliance in all material respects with applicable
provisions of ERISA and the Code.
(ii) All Pension Plans have been the subject of
determination letters from the Internal Revenue Service to
the effect that such Pension Plans are qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter
has been revoked nor has any event occurred since the date
of its most recent determination letter or application
therefor that would adversely affect its qualification or
materially increase its costs.
(iii) Neither the Company nor any Commonly Controlled
Entity has maintained, contributed or been obligated to
contribute to any Benefit Plan that is subject to Title IV
of ERISA.
(iv) With respect to any Benefit Plan that is an
employee welfare benefit plan, there are no understandings,
agreements or undertakings, written or oral, that would
prevent any such plan (including any such plan covering
retirees or other former employees) from being amended or
terminated without material liability to the Company on or
at any time after the Effective Time.
(v) Schedule 3.01(l)(v) to the Company Disclosure
Schedule lists all outstanding Stock Options (as defined in
Section 5.06(a)) as of May 16, 1997, showing for each such
option: (1) the number of shares issuable, (2) the number of
vested shares, (3) the date of expiration and (4) the
exercise price.
(vi) Except as expressly provided by this Agreement, no
employee of the Company will be entitled to any additional
compensation or benefits or any acceleration of the time of
payment or vesting of any compensation or benefits under any
Benefit Plan as a result of the transactions contemplated by
this Agreement.
(vii) The deduction of any amount payable pursuant to
the terms of the Benefit Plans will not be subject to
disallowances under Section 162(m) of the Code.
(m) Taxes. The Company has filed all tax returns and
reports required to be filed by it and has paid all material
taxes required to be paid by it, and the most recent
financial statements contained in the Filed SEC Documents
reflect an adequate reserve for all taxes payable by the
Company for all taxable periods and portions thereof through
the date of such financial statements. No deficiencies for
any taxes have been proposed, asserted or assessed against
the Company, and no requests for waivers of the time to
assess any such taxes are pending. None of the Federal
income tax returns of the Company have been examined by the
United States Internal Revenue Service for the fiscal years
through June 30, 1996. The Company has not taken any action
nor does it have any knowledge (after consultation with the
Company's outside counsel) of any fact or circumstance that
is reasonably likely to prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of
the Code. As
used in this Agreement, "taxes" shall include all Federal,
state, local and foreign income, property, sales, excise and
other taxes, tariffs or governmental charges of any nature
whatsoever.
(n) No Excess Parachute Payments. No amount that could
be received (whether in cash or property or the vesting of
property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or
director of the Company who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation
Section 1.28OG-1) under any employment, severance or
termination agreement, other compensation arrangement or
Benefit Plan currently in effect would be an "excess
parachute payment" (as such term is defined in Section
28OG(b)(1) of the Code). No such person is entitled to
receive any additional payment from the Company, the
Surviving Corporation or any other person (a "Parachute
Gross-Up Payment") in the event that the excise tax of
Section 4999(a) of the Code is imposed on such person. The
Board of Directors of the Company has not granted to any
officer, director or employee of the Company any right to
receive any Parachute Gross-Up Payment.
(o) Title to Properties. (i) The Company has good and
valid title to, or valid leasehold interests in, all its
material properties and assets except for such as are no
longer used in the conduct of its businesses or as have been
disposed of in the ordinary course of business and except
for defects in title, easements, restrictive covenants and
similar encumbrances that individually or in the aggregate
would not have a material adverse effect on the Company. All
such material assets and properties, other than assets and
properties in which the Company has a leasehold interest,
are free and clear of all Liens and except for Liens that
individually or in the aggregate would not have a material
adverse effect on the Company.
(ii) The Company has complied in all material respects
with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are
in full force and effect, except for such noncompliance or
failure to be in full force and effect as would not
individually or in the aggregate have a material adverse
effect on the Company. The Company enjoys peaceful and
undisturbed possession under all such material leases,
except for failures to do so that would not individually or
in the
aggregate have a material adverse effect on the Company.
(p) Intellectual Property. The Company owns, or is
validly licensed or otherwise has the right to use, all
patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark
rights, copyrights and other proprietary intellectual
property rights and computer programs (collectively,
"Intellectual Property Rights") which are material to the
conduct of the business of the Company taken as a whole. No
claims are pending or, to the knowledge of the Company after
consultation with the Company's outside counsel, threatened
that the Company is infringing or otherwise adversely
affecting the rights of any person with regard to any
Intellectual Property Right. To the knowledge of the Company
after consultation with the Company's outside counsel, no
person is infringing the rights of the Company with respect
to any Intellectual Property Right. The Company has not
licensed, or otherwise granted, to any third party, any
rights in or to any Intellectual Property Rights.
(q) Voting Requirements. The affirmative vote of the
holders of a majority of the outstanding shares of Company
Common Stock at the Stockholders Meeting or any adjournment
or postponement thereof to approve this Agreement (the
"Stockholder Approval") is the only vote of the holders of
any class or series of the Company's capital stock necessary
to approve this Agreement and the transactions contemplated
hereby.
(r) State Takeover Statutes. The Board of Directors of
the Company has approved the Merger, this Agreement, the
Option Agreement and the Stockholder Agreement, and such
approval is sufficient to render inapplicable to the Merger,
this Agreement, the Option Agreement, the Stockholder
Agreement and the transactions contemplated by this
Agreement, the Option Agreement and the Stockholder
Agreement, the provisions of Section 203 of the DGCL to the
extent, if any, such Section is applicable to the Merger,
this Agreement, the Option Agreement, the Stockholder
Agreement and the transactions contemplated by this
Agreement, the Option Agreement and the Stockholder
Agreement. To the Company's knowledge after consultation
with the Company's outside counsel, no other state takeover
statute or similar statute or regulation applies to or
purports to apply to the Merger, this Agreement, the Option
Agreement, the Stockholder Agreement or the
transactions contemplated by this Agreement, the Option
Agreement or the Stockholder Agreement.
(s) Rights Agreement. The Rights Agreement has been
amended to (i) render the Rights Agreement inapplicable to
the Merger and the other transactions contemplated by this
Agreement, the Option Agreement and the Stockholder
Agreement, (ii) ensure that (y) none of Parent, its
subsidiaries or its permitted assignees or transferees under
the Stockholder Agreement is an Acquiring Person (as defined
in the Rights Agreement) pursuant to the Rights Agreement
solely by virtue of the execution of this Agreement, the
Option Agreement and the Stockholder Agreement or the
consummation of the Merger or the other transactions
contemplated by the Option Agreement or the Stockholder
Agreement and (z) a Distribution Date, a Triggering Event or
a Shares Acquisition Date (as such terms are defined in the
Rights Agreement) does not occur solely by reason of the
execution of this Agreement, the Option Agreement and the
Stockholder Agreement, the consummation of the Merger, or
the consummation of the other transactions, contemplated by
the Option Agreement or the Stockholder Agreement and (iii)
provide that the Final Expiration Date (as defined in the
Rights Agreement) shall occur immediately prior to the
Effective Time, and such amendment may not be further
amended by the Company without the prior consent of Parent
in its sole discretion.
(t) Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other
than Robertson Stephens & Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions
contemplated by this Agreement and the Option Agreement
based upon arrangements made by or on behalf of the Company.
Such fees or expenses payable by the Company to Robertson
Stephens & Company in connection with this Agreement and the
Option Agreement and the transactions contemplated by this
Agreement and the Option Agreement will not exceed such fees
and expenses set forth in Schedule 3.01(t) to the Company
Disclosure Schedule.
(u) Opinion of Financial Advisor. The Company has
received the opinion of Robertson Stephens & Company, dated
the date hereof, to the effect that, as of such date, the
consideration to be received in the Merger by the Company's
stockholders is fair to the Company's stockholders from a
financial point of view,
a signed copy of which opinion has been promptly delivered
to Parent.
(v) Accounting Matters. The Company has not taken nor
agreed to take any action that, to the Company's knowledge
after consultation with the Company's independent public
accountants, would prevent the business combination to be
effected by the Merger to be accounted for as a pooling of
interests.
(w) Distribution Agreements. Schedule 3.01(w) to the
Company Disclosure Schedule is a complete list of all
contracts or agreements to which the Company is a party as
of the date hereof relating to the distribution, sale,
license or marketing by third parties of the Company's
products. The Company has made available to Parent and its
representatives true and correct copies of all contracts and
agreements to which the Company is a party as of the date
hereof relating to the distribution, sale, license or
marketing by third parties of the Company's products.
SECTION 3.02. Representations and Warranties of Parent
and Sub. Parent and Sub represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has all
requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Sub is
duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate would
not have a material adverse effect on Parent. Parent has
delivered to the Company complete and correct copies of its
Certificate of Incorporation and By-Laws and the Certificate
of Incorporation and By-Laws of Sub, in each case as amended
to the date hereof.
(b) Authority; Noncontravention. Parent and Sub have
all requisite corporate power and authority to enter into
this Agreement (and, in the case of Parent, the Option
Agreement and the Stockholder Agreement), and to consummate
the transactions contemplated by this Agreement (and, in the
case of Parent, those contemplated by the Option Agreement
and the
Stockholder Agreement). The execution and delivery of this
Agreement (and, in the case of Parent, the Option Agreement
and the Stockholder Agreement) and the consummation of the
transactions contemplated by this Agreement (and, in the
case of Parent, those contemplated by the Option Agreement
and the Stockholder Agreement) have been duly authorized by
all necessary corporate action on the part of Parent and
Sub. This Agreement (and, in the case of Parent, the Option
Agreement and the Stockholder Agreement) has been duly
executed and delivered by Parent and Sub, and constitutes a
valid and binding obligation of each such party, enforceable
against each such party in accordance with its terms except
as enforceability may be limited by bankruptcy and other
similar laws and general principles of equity. The execution
and delivery of this Agreement, the Option Agreement and the
Stockholder Agreement do not, and the consummation of the
transactions contemplated by this Agreement, the Option
Agreement and the Stockholder Agreement and compliance with
the provisions of this Agreement, the Option Agreement and
the Stockholder Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation
or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under, any provision of
(i) the Certificate of Incorporation or By-Laws of Parent or
Sub or any provision of the comparable charter or
organizational documents of any other subsidiary of Parent,
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent, Sub
or any other subsidiary of Parent or their respective proper
ties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any
(A) statute, law, ordinance, rule or regulation or (B)
judgment, order or decree applicable to Parent, Sub or any
other subsidiary of Parent or their respective properties or
assets, other than, in the case of clause (ii) and clause
(iii)(A), any such conflicts, violations, defaults, rights
or Liens that individually or in the aggregate would not (x)
have a material adverse effect on Parent, (y) impair in any
material respect the ability of each of Parent and Sub to
perform its obligations under this Agreement and the Option
Agreement, as the case may be, or (z) prevent or materially
delay the consummation of any of the transactions
contemplated by this Agreement or the
Option Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect
to Parent, Sub or any other subsidiary of Parent in
connection with the execution and delivery of this Agreement
(and, in the case of Parent, the Option Agreement and the
Stockholder Agreement) by Parent and Sub or the consummation
by Parent and Sub of the transactions contemplated by this
Agreement (and, in the case of Parent, those contemplated by
the Option Agreement and the Stockholder Agreement), except
for (1) the filing of a premerger notification and report
form under the HSR Act, (2) the filing with the SEC of the
Form S-4 and such reports under the Exchange Act as may be
required in connection with this Agreement, the Option
Agreement or the Stockholder Agreement and the transactions
contemplated by this Agreement, the Option Agreement or the
Stockholder Agreement, (3) the filing of the Certificate of
Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in
which the Company is qualified to do business and (4) such
other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required
under the "blue sky" laws of various states, the failure of
which to be obtained or made would not, individually or in
the aggregate, have a material adverse effect on Parent or
prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement or the Option
Agreement.
(c) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for
inclusion or incorporation by reference in (i) the Form S-4
will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the time
the Form S-4 is filed with the SEC, at any time it is
amended or supplemented and at the time it becomes effective
under the Securities Act, 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 light of the circumstances under which they are
made, not misleading, and (ii) the Proxy Statement will
(except to the extent revised or superseded by amendments or
supplements contemplated hereby), at the date it is first
mailed to the Company's stockholders and at the time of the
meeting of the Company's stockholders held to vote on
approval and adoption of this Agreement, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading. The Form S-4 will comply as to form in
all material respects with the requirements of the
Securities Act and the rules and regulations thereunder,
except that no representation is made by Parent or Sub with
respect to statements made or incorporated by reference
therein based on information supplied by the Company
specifically for inclusion or incorporation by reference in
the Form S-4.
(d) Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Documents (as defined in Section
3.02(h)) filed with the SEC by Parent and publicly available
prior to the date of this Agreement ("Filed Parent SEC
Documents"), since the date of the most recent audited
financial statements included in the Filed Parent SEC
Documents and, only in the case of clauses (ii) and (iii)
below, through the date of this Agreement, Parent has
conducted its business only in the ordinary course
consistent with past practice, and there has not been (i)
any material adverse change in Parent, (ii) any declaration,
setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with
respect to any of the Parent's capital stock (except for
regular quarterly cash dividends) or (iii) any split,
combination or reclassification of any of its capital stock
or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock.
(e) Brokers. No broker, investment banker financial
advisor or other person is entitled to any broker's,
finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on
behalf of Parent or Sub.
(f) Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated
hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
(g) Accounting Matters. Parent has not taken nor agreed
to take any action that, to Parent's knowledge after
consultation with Parent's independent public accountants,
would prevent the business combination to be effected by the
Merger to be accounted for as a pooling of interests.
(h) Parent SEC Documents. Parent has filed all required
reports, schedules, forms, statements and other documents
with the SEC since April 1, 1996 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents at the time
they were filed contained any untrue statement of a material
fact or omitted to state a 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 misleading. Except to the extent that information
contained in any Parent SEC Document has been revised or
superseded by a later-filed Parent SEC Document, none of the
Parent SEC Documents contains any untrue statement of a
material fact or omits 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 misleading. The financial
statements of Parent included in the Parent SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly
presented the financial position of Parent as of the dates
thereof and the results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and the
absence of footnotes).
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of
Business by the Company. During the period from the date of this
Agreement to the Effective Time, the Company shall carry on its
businesses in the ordinary course consistent with the manner as
heretofore conducted and, to the extent consistent therewith, use
commercially reasonable efforts to preserve intact its current
business organization, and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and
others having
business dealings with it. Without limiting the generality of the
foregoing, other than as set forth in Section 4.01 of the Company
Disclosure Schedule or with respect to the amendment of the
Rights Agreement (as described in Section 3.01(s)), during the
period from the date of this Agreement to the Effective Time, the
Company shall not without Parent's consent:
(i) (x) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock or
property), in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock (other than the issuance of shares of Company
Common Stock upon the exercise of Stock Options outstanding
on the date of this Agreement and in accordance with their
present terms or as contemplated by Section 5.06) or (z)
purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any other securities thereof or any
rights, warrants or options to acquire any such shares or
other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities (other than (y) the issuance of
shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in
accordance with their present terms or as contemplated by
Section 5.06 or (z) the issuance of shares of Company Common
Stock pursuant to the Option Agreement);
(iii) amend its Restated Certificate of Incorporation,
By-Laws or other comparable charter or organizational
documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any business or
any corporation, partnership, joint ven ture, association or
other business organization or division thereof or (y) any
assets which, individually, is in excess of $50,000 or, in
the aggregate, are in excess of $150,000, except purchases
of inventory in the ordinary course of business and except
for capital expenditures (which are covered in clause (vii)
below);
(v) sell, lease, license, mortgage or otherwise
encumber or otherwise dispose of any of its properties or
assets, except sales of inventory or used equipment in the
ordinary course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of the Company, guarantee any
debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except
for short-term borrowings incurred in the ordinary course of
business consistent with past practice or (z) make any
loans, advances or capital contributions to, or investments
in, any other person, other than extensions of credit to
customers and advances to employees, in each case in the
ordinary course of business consistent with past practice;
(vii) except for the items listed on Schedule
4.01(a)(vii) to the Company Disclosure Schedule, make or
agree to make any new capital expenditure or expenditures
which, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $150,000 (or $200,000, to the
extent that 90 days after the date hereof have elapsed);
(viii) discharge, settle or satisfy any claims, whether
or not pending before a Governmental Entity, that
individually or in the aggregate have a material adverse
effect on the Company, or waive any material benefits of, or
agree to modify in any materially adverse respect any
confidentiality, standstill or similar agreements to which
the Company is a party;
(ix) except in the ordinary course of business, modify,
amend or terminate any material contract or agreement to
which the Company is a party or waive, release or assign any
material rights or claims thereunder, in any such case in a
manner adverse to the Company;
(x) enter into any contracts, agreements, binding
arrangements or binding understandings relating to the
distribution, sale, license or marketing by third parties of
the Company's products, other than pursuant to any such
agreements currently in place in accordance with their terms
as of the date hereof;
(xi) except as required to comply with applicable law,
(A) adopt, enter into, terminate or amend any collective
bargaining agreement or Benefit Plan for the benefit or
welfare of any current or former employee, officer or
director, (B) increase in any manner the compensation or
fringe benefits of, or pay any bonus to, any director,
officer or employee (except for normal increases of cash
compensation or cash bonuses in the ordinary course of
business consistent with past practice), (C) pay any benefit
not provided for under any Benefit Plan or any other benefit
plan or arrangement of the Company, (D) increase in any
manner the severance or termination pay of any officer, (E)
enter any employment, consulting, severance, termination or
indemnification agreement, arrangement or understanding with
any current or former employee, officer or director, (F)
except as permitted in clause (B), grant any awards under
any bonus, incentive, performance or other compensation plan
or arrangement or Benefit Plan (including the grant of stock
options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock or the
removal of existing restrictions in any Benefit Plans or
agreements or awards made thereunder) or (G) take any action
to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan;
(xii) form any subsidiary to the Company;
(xiii) except as required by GAAP, make any change in
accounting methods, principles or practices;
(xiv) authorize any of, or commit or agree to take any
of, the foregoing actions.
(b) Certain Tax Matters. From the date hereof until the
Effective Time, (i) the Company will file all tax returns and
reports ("Post-Signing Returns") required to be filed by it
(after taking into account any extensions); (ii) the Company will
timely pay all taxes due and payable with respect to such
Post-Signing Returns that are so filed; (iii) the Company will
accrue a reserve in its books and records and financial
statements in accordance with past practice for all taxes payable
by the Company for which no Post-Signing Return is due prior to
the Effective Time; (iv) the Company will promptly notify Parent
of any action, suit, proceeding, claim or audit (collectively,
"Actions") pending against or with respect to the Company in
respect of any tax where there is a reasonable possibility of a
determination or decision which would have a material
adverse effect on the Company's tax liabilities or tax attributes
and will not settle or compromise any such Action without
Parent's consent; and (v) the Company will not make any material
tax election without Parent's consent.
SECTION 4.02. No Solicitation. (a) The Company shall
not, nor shall it authorize or permit any of its officers,
directors or employees or any investment banker, attorney or
other advisor or representative retained by it to, directly or
indirectly, (i) solicit, initiate or encourage the submission of
any Takeover Proposal (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; provided, however, that if, at any
time prior to receipt of the Stockholder Approval the Board of
Directors of the Company determines in good faith, after
consultation with outside counsel, that failure to do so would
create a substantial risk of liability for breach of its
fiduciary duties to the Company's stockholders under applicable
law, the Company may, in response to a Takeover Proposal that was
unsolicited or that did not otherwise result from a breach of
this Section 4.02(a), and subject to compliance with Section
4.02(c), (x) furnish information with respect to the Company to
any person pursuant to a customary and reasonable confidentiality
agreement and (y) participate in negotiations regarding such
Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in
the preceding sentence by any officer, director or employee of
the Company or any investment banker, attorney or other advisor
or representative of the Company, acting on behalf of the
Company, shall be deemed to be a breach of this Section 4.02(a)
by the Company. For purposes of this Agreement, "Takeover
Proposal" means any proposal or offer from any person relating to
any direct or indirect acquisition or purchase of a substantial
amount of assets of the Company (other than products of the
Company) or more than a 20% interest in the total voting
securities of the Company or any tender offer or exchange offer
that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the
Company or any merger, consolidation, business combination, sale
of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other
than the transactions contemplated by this Agreement, the Option
Agreement or the Stockholder Agreement.
(b) Except as expressly permitted by this Section 4.02,
neither the Board of Directors of the Company
nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or
Sub, the approval or recommendation by such Board of Directors or
any such committee of this Agreement or the Merger, (ii) approve
or recommend, or propose to approve or recommend, any Takeover
Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other
similar agreement (an "Acquisition Agreement") with respect to
any Takeover Proposal. Notwithstanding the foregoing, prior to
receipt of the Stockholder Approval, the Board of Directors of
the Company, to the extent it determines in good faith, after
consultation with outside counsel, that it is necessary to do so
in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, may withdraw or modify its
approval or recommendation of this Agreement or the Merger or
approve or recommend any Superior Proposal (as hereinafter
defined), in each case at any time after the third business day
following Parent's receipt of written notice (a "Notice of
Superior Proposal") advising Parent that the Board of Directors
of the Company has received a Superior Proposal, specifying the
material terms and conditions of the Superior Proposal and
identifying the person making such Superior Proposal (it being
understood that any amendment to the price or material terms of a
Superior Proposal shall require an additional Notice of Superior
Proposal and an additional three business day period thereafter
to the extent permitted under applicable law). In addition,
during the period (the "Applicable Period") commencing after the
earlier of the effectiveness of the Form S-4 and 60 days after
the date hereof and ending on the receipt of the Stockholder
Approval, the Board of Directors of the Company, to the extent it
determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to comply with
its fiduciary duties to the Company's stockholders under
applicable law, may cause the Company to terminate this Agreement
in accordance with Section 7.01(b)(iv) (and concurrently with or
after such termination, if it so chooses, cause the Company to
enter into an Acquisition Agreement with respect to a Superior
Proposal). For purposes of this Agreement, a "Superior Proposal"
means any bona fide proposal made by a third party to acquire,
directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the voting power of the
Company Common Stock or all or substantially all the assets of
the Company and otherwise on terms which the Board of Directors
of the Company determines in its good faith judgment (after
consultation with a financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders
than the Merger and for which financing, to the extent required,
is then committed or which, in the good
faith judgment of the Board of Directors of the Company, is
capable of being obtained by such third party.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.02, the Company
promptly shall advise Parent orally and in writing of any request
for nonpublic information which the Company reasonably believes
could lead to a Takeover Proposal or of any Takeover Proposal, or
any inquiry with respect to or which the Company reasonably
believes could lead to any Takeover Proposal, the material terms
and conditions of such request, Takeover Proposal or inquiry, and
the identity of the person making any such Takeover Proposal or
inquiry. The Company will keep Parent informed in all material
respects of the status and details (including amendments or
proposed amendments) of any such Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere
in this Agreement shall prohibit the Company from (i) taking and
disclosing to its stockholders a position contemplated by Rule
14d-9 and 14e-2(a) promulgated under the Exchange Act or (ii)
making any disclosure to the Company's stockholders if, in the
good faith judgment of the Board of Directors of the Company,
after consultation with independent counsel, failure to so
disclose would be inconsistent with applicable laws; provided
that the Company shall not, except in accordance with the
provisions of Section 4.02(b), withdraw or modify, or propose to
withdraw or modify, its recommendation of the Merger or approve
or recommend, or propose to approve or recommend, a Takeover
Proposal.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meeting. (a) As soon as practicable
following the date of this Agreement, the Company and Parent
shall prepare and the Company shall file with the SEC the Proxy
Statement and Parent shall prepare and file with the SEC the Form
S-4, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after such filing.
The Company will use its reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly
as practicable after the Form S-4 is declared effective under the
Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in
which it is not now so qualified) required to be taken under any
applicable state securities laws in connection with the issuance
of Parent Common Stock in the Merger. Each of Parent and the
Company shall furnish all information concerning itself to the
other as may be reasonably requested in connection with any such
action and the preparation, filing and distribution of the Proxy
Statement.
(b) The Company will, as soon as practicable following
the date of this Agreement, establish a record date (which will
be as soon as practicable following the date of this Agreement)
for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of
obtaining the Stockholder Approval. The Company will, through its
Board of Directors, recommend to its stockholders approval and
adoption of this Agreement, except to the extent that the Board
of Directors of the Company shall have withdrawn or modified its
approval or recommendation of this Agreement or the Merger as
permitted by Section 4.02(b). Without limiting the generality of
the foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 5.01(b) shall not be
affected by the commencement, public proposal, public disclosure
or communication to the Company of any Takeover Proposal.
SECTION 5.02. Letters of the Company's Accountants. (a)
The Company shall use its reasonable efforts to cause to be
delivered to Parent two comfort letters from Deloitte and Touche
LLP, the Company's independent public accountants, one dated a
date within two business days before the date on which the Form
S-4 shall become effective and one dated a date within two
business days before the Closing Date, each addressed to Parent,
in form and substance reasonably satisfactory to Parent.
(b) The Company shall use its reasonable efforts to
cause to be delivered to Parent a letter from Deloitte and Touche
LLP, addressed to Parent and the Company, dated as of the Closing
Date, stating that (i) Deloitte and Touche LLP concurs with
management's conclusion that, as of such date, no conditions
exist with respect to the Company which would preclude accounting
for the Merger as a pooling of interests transaction under
Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations and (ii) the basis for such a concurrence
is Deloitte and Touche LLP's belief that the criteria for such
accounting treatment have been met.
SECTION 5.03. Letters of Parent's Accountants. (a)
Parent shall use reasonable efforts to cause to be delivered to
the Company two comfort letters from Coopers &
Lybrand L.L.P., Parent's independent public accountants, one
dated a date within two business days before the date on which
the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to the
Company, in the form customarily given to underwriters in
securities offerings of Parent in the past.
(b) Parent shall use its reasonable efforts to cause to
be delivered to the Company a letter from Coopers & Lybrand
L.L.P., addressed to the Company and Parent, dated as of the
Closing Date, stating that (i) Coopers & Lybrand L.L.P. concurs
with management's conclusion that, as of such a date, no
conditions exist which would preclude accounting for the Merger
as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and
regulations and (ii) the basis for such a concurrence is Coopers
& Lybrand L.L.P.'s belief that the criteria for such accounting
treatment have been met.
SECTION 5.04. Access to Information; Confidentiality.
The Company shall afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisors and other
representatives, reasonable access during normal business hours
during the period prior to the Effective Time or the termination
of this Agreement to all its properties, books, contracts,
commitments, personnel and records and, during such period, the
Company shall make available to Parent (a) a copy of each report,
schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or
state securities laws and (b) all other information concerning
its business, properties and personnel as Parent may reasonably
request. Except as required by law, Parent will hold, and will
cause its officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any
and all information received from the Company, directly or
indirectly, in confidence, in accordance with the Secrecy
Agreement dated as of July 15, 1996, between a subsidiary of
Parent and the Company (as it may be amended from time to time,
the "Confidentiality Agreement") and will agree to be bound
thereby as if Parent had been a party thereto.
SECTION 5.05. Reasonable Efforts; Notification. (a)
Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated
by this
Agreement and the Option Agreement, including (i) the obtaining
of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid an action or proceeding by any
Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the
Option Agreement or the consummation of the transactions
contemplated hereby or thereby, including seeking to have any
stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consum
mate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement and the Option Agreement. In
connection with and without limiting the foregoing, the Company
and its Board of Directors shall, if any state takeover statute
or similar statute or regulation is or becomes applicable to the
Merger, this Agreement, the Option Agreement, the Stockholder
Agreement or any other transactions contemplated by this
Agreement, the Option Agreement or the Stockholder Agreement, use
all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement and the Option
Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and the Option Agreement and
otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement, the Option Agreement, the Stockholder
Agreement and the other transactions contemplated by this
Agreement, the Option Agreement or the Stockholder Agreement.
Nothing in this Agreement shall be deemed to require Parent to
dispose of any significant asset or collection of assets.
(b) The Company shall give prompt notice to Parent of
(i) any representation or warranty made by it contained in this
Agreement or the Option Agreement becoming untrue or inaccurate
such that the condition set forth in Section 6.02(a) would not be
satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements
of the parties or the conditions to the obligations of the
parties under this Agreement or the Option Agreement.
(c) Parent shall give prompt notice to the Company of
(i) any representation or warranty made by it or Sub contained in
this Agreement or the Option Agreement becoming untrue or
inaccurate such that the condition set forth in Section 6.03(a)
would not be satisfied; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under
this Agreement or the Option Agreement.
SECTION 5.06. Stock Options. (a) It is acknowledged
that, by virtue of this Agreement and the transactions
contemplated hereby, terms of the Company's stock option plans
(collectively, the "Stock Option Plans") provide for the
acceleration prior to the Effective Time, and the expiration as
of the Effective Time, of each unexercised option to purchase
shares of Company Common Stock ("Stock Options") granted
thereunder. The Parent Common Stock to be issued in the Merger in
exchange for shares of Company Common Stock issued upon exercise
of the Stock Options shall contain an appropriate legend to
permit the Surviving Corporation to recognize any applicable tax
deductions to which it may be entitled upon the disposition of
such shares.
(b) All Stock Option Plans shall terminate as of the
Effective Time and the provisions in any other Benefit Plan
providing for the issuance, transfer or grant of any capital
stock of the Company or any interest in respect of any capital
stock of the Company shall be deleted as of the Effective Time,
and the Company shall ensure that following the Effective Time no
holder of a Stock Option or any participant in any Stock Option
Plan shall have any right thereunder to acquire any capital stock
of the Company, Parent or the Surviving Corporation.
(c) As soon as practicable following the date of this
Agreement but in any event no later than 30 days prior to the
Effective Time, the Company shall deliver to the holders of Stock
Options appropriate notices describing the transactions
contemplated by this Agreement and the effect consummation of
those transactions will have on outstanding Stock Options. This
notice shall meet the requirements of the notice contemplated by
Section 10(c) of the Company's 1996 Director Option Plan and
Section 13(c) of the Company's 1993 Option Plan.
SECTION 5.07. Indemnification and Insurance. (a) From
and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations
of the Company pursuant to (i) each indemnification agreement
currently in effect between the Company and each person who is or
was a director or officer of the Company at or prior to the
Effective Time and (ii) any indemnification provision under the
Company's Restated Certificate of Incorporation or By-Laws as
each is in effect on the date hereof (the persons to be
indemnified
pursuant to the agreements or provisions referred to in clauses
(i) and (ii) of this Section 5.07(a) shall be referred to as,
collectively, the "Indemnified Parties"). The Certificate of
Incorporation and By-Laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's Restated
Certificate of Incorporation and By-Laws on the date of this
Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights
thereunder of any Indemnified Party.
(b) Without limiting the provisions of Section 5.07(a),
after the Effective Time Parent will, to the fullest extent
permitted under applicable law, indemnify and hold harmless each
Indemnified Party against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, to the
extent arising out of or pertaining to any action or omission at
or prior to the Effective Time in his or her capacity as a
director or officer of the Company arising out of or pertaining
to the transactions contemplated by this Agreement (collectively,
"Losses") for a period of six years after the Effective Time;
provided, however, that if, at any time prior to the sixth
anniversary of the Effective Time, any Indemnified Party delivers
to Parent a written notice asserting a claim for indemnification
under this Section 5.07(b), then the claim asserted in such
notice shall survive the sixth anniversary of the Effective Time
until such time as such claim is fully and finally resolved. Each
Indemnified Party shall give Parent prompt written notice of any
such claim, action, suit, proceeding or investigation; provided
that the failure to give such prompt notice shall not relieve
Parent from any liability which it may have under this Section
5.07(b) unless Parent is actually prejudiced as a result. If any
such claim, action, suit, proceeding or investigation shall have
been brought against an Indemnified Party and if Parent shall
have acknowledged in writing to the Indemnified Party that Parent
will indemnify the Indemnified Party pursuant to this Section
5.07(b) for all Losses arising out of such claim, action, suit,
proceeding or investigation, then Parent shall be entitled to
participate therein, and to assume the defense thereof, and to
settle and compromise any such claim, action, suit, proceeding or
investigation (so long as the Indemnified Party is completely
released and has no continuing obligations or prohibitions
imposed on him or her). If Parent does not acknowledge its
obligation to
indemnify for all such Losses or does not elect to assume the
defense, settlement or compromise thereof, in each case pursuant
to the preceding sentence, then Parent shall nevertheless have
the right to participate in the defense of any such claim,
action, suit, proceeding or investigation and to consent in
writing (not to be unreasonably withheld or delayed) to any
settlement or compromise thereof, but such defense and any
settlement or compromise thereof shall at all times be under the
direction of the Indemnified Person. In the event of any such
claim, action, suit, proceeding or investigation (i) any counsel
retained by the Indemnified Parties must be reasonably
satisfactory to Parent, and (ii) after the Effective Time, Parent
will, subject to the second succeeding proviso, pay the
reasonable fees and expenses of one such counsel for all
Indemnified Parties (it being agreed that more than one such
counsel may be retained and, subject to the second succeeding
proviso, paid for by Parent if counsel for one of the Indemnified
Parties reasonably concludes that conflicts of interest may
exist), promptly after statements therefor are received;
provided, that in the event that any Indemnified Party is not
entitled to indemnification hereunder, any amounts advanced on
his or her behalf shall be remitted to Parent; provided, however,
that, notwithstanding the foregoing, Parent shall not be required
to pay for separate counsel for the Indemnified Parties if Parent
shall have acknowledged in writing to the Indemnified Party that
Parent will indemnify the Indemnified Party pursuant to this
Section 5.07(b) for all Losses arising out of such claim, action,
suit, proceeding or investigation unless an Indemnified Party
reasonably concludes that conflicts of interest with Parent may
exist, in which case clause (ii) shall apply without regard to
this proviso.
(c) This Section 5.07 shall survive the consummation of
the Merger at the Effective Time, is intended to benefit the
Company, Parent, the Surviving Corporation and the Indemnified
Parties, and shall be binding on all successors and assigns of
Parent and the Surviving Corporation.
SECTION 5.08. Fees and Expenses. (a) All fees and
expenses incurred in connection with the Merger, this Agreement
and the Option Agreement and the transactions contemplated by
this Agreement and the Option Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Merger
is consummated, except that expenses incurred in connection with
printing and mailing the Proxy Statement and the Form S-4 shall
be shared equally by Parent and the Company.
(b) In the event that this Agreement is terminated by
any party hereto pursuant to Section 7.01(b)(iv), the Company
shall promptly, but in no event later than two days after the
date of such termination, pay Parent a fee equal to $10 million
in immediately available funds (the "Termination Fee"). If, at
the time of any termination of this Agreement by any party hereto
pursuant to Section 7.01(b)(i) (to the extent the Company has
theretofore failed to hold the Stockholders Meeting in breach of
its obligations under Section 5.01(b)), 7.01(b)(iii) or 7.01(c),
a Takeover Proposal shall have been publicly announced and not
publicly withdrawn and prior to the date 12 months following the
date of the termination of this Agreement the Company shall
either (x) consummate a Company Acquisition (as hereinafter
defined) or (y) enter into a written Acquisition Agreement
providing for a Company Acquisition, then the Company shall pay
the Termination Fee in the case of clause (x) concurrently with
the consummation of such Company Acquisition or in the case of
clause (y) concurrently with the consummation of the transaction
subject to such Acquisition Agreement (whether or not such
transaction is consummated prior to the date 12 months following
the date of the termination of this Agreement, but only in the
event that such transaction subject to such Acquisition Agreement
is in fact consummated); provided, however, that no Termination
Fee shall be payable pursuant to this sentence if at the time the
Agreement is terminated pursuant to Section 7.01(b)(i) or
7.01(b)(iii) the condition set forth in Section 6.03(d) shall not
have been satisfied. The Company acknowledges that the agreements
contained in this Section 5.08(b) are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amounts due
pursuant to this Section 5.08(b), and, in order to obtain such
payment, Parent commences a suit which results in a judgment
against the Company for the amounts set forth in this Section
5.08(b), the Company shall pay to Parent its reasonable costs and
expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amounts set forth
in this Section 5.08(b) at the prime rate of Chase Manhattan
Bank, N.A. in effect on the date such payment was required to be
made. "Company Acquisition" shall mean any transaction or series
of related transactions involving (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company pursuant to which
the stockholders of the Company immediately preceding such
transaction or series of related transactions hold less than 60%
of the equity interests in the surviving or resulting entity of
such transaction or transactions (other than the transactions
contemplated by this Agreement); (ii) a sale by the Company of
assets (excluding inventory and used equipment sold in the
ordinary course of business) representing in excess of 40% of the
fair market value of the Company's business immediately prior to
such sale; or (iii) the acquisition by any person or group
(including without limitation by way of a tender offer or an
exchange offer or issuance by the Company), directly or
indirectly, of beneficial ownership or a right to acquire
beneficial ownership of 40% or more of the then outstanding
shares of capital stock of the Company.
SECTION 5.09. Public Announcements. Parent and Sub, on
the one hand, and the Company, on the other hand, will, to the
extent reasonably practicable, consult with each other before
issuing, and give each other the opportunity to review and
comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement,
including the Merger, and the Option Agreement, and shall not
issue any such press release or make any such public statement
prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or
national securities quotation system. The parties agree that the
initial press release to be issued with respect to the
transactions contemplated by this Agreement and the Option
Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 5.10. Affiliates. (a) Prior to the Closing
Date, the Company shall deliver to Parent a letter identifying
all persons who are, in the Company's reasonable judgment, at the
time this Agreement is submitted for approval to the stockholders
of the Company, "affiliates" of the Company for purposes of Rule
145 under the Securities Act or for purposes of qualifying the
Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations. The Company shall use its reasonable
efforts to cause each such person to deliver to Parent on or
prior to the Closing Date a written agreement substantially in
the form attached as Exhibit A hereto.
(b) Parent shall use reasonable efforts to cause all
persons who are, in Parent's reasonable judgment, "affiliates" of
Parent for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations to
comply with the fourth paragraph of Exhibit A hereto.
SECTION 5.11. Stock Exchange Listing. To the extent
Parent does not issue treasury shares in the Merger which are
already listed, Parent shall use its reasonable efforts to cause
the shares of Parent Common Stock to be issued in the Merger and
under the Stock Option Plans to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the
Closing Date. The Company shall use reasonable efforts to cause
the shares of Company Common Stock to be issued pursuant to the
Option Agreement to be approved for trading on the NMS, subject
to official notice of issuance, prior to their issuance pursuant
to the Option Agreement.
SECTION 5.12. Pooling of Interests. Each of the Company
and Parent will use reasonable efforts to cause the transactions
contemplated by this Agreement, including the Merger, to be
accounted for as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and
regulations, and such accounting treatment to be accepted by each
of the Company's and Parent's independent public accountants, and
by the SEC, respectively, and each of the Company and Parent
agrees that it will voluntarily take no action that would cause
(to its knowledge after consultation with its independent public
accountants) such accounting treatment not to be obtained.
SECTION 5.13. Stockholder Agreement Legend. The Company
will inscribe upon any Certificate representing Subject Shares
tendered by a Stockholder (as defined in the Stockholder
Agreement) for such purpose the following legend: "THE SHARES OF
COMMON STOCK, PAR VALUE $.001 PER SHARE, OF BIOPSYS MEDICAL, INC.
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER
AGREEMENT DATED AS OF MAY 21, 1997, AND ARE SUBJECT TO THE TERMS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE
PRINCIPAL EXECUTIVE OFFICES OF BIOPSYS MEDICAL, INC.".
SECTION 5.14. Tax Treatment. Each of Parent and the
Company shall not take any action and shall not fail to take any
action which action or failure to act would prevent, or would be
reasonably likely to prevent, the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code,
and each shall use reasonable efforts to obtain the opinions of
counsel referred to in Section 6.03(c).
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger. The respective obligation of each party to
effect the Merger is subject to the satisfaction or waiver on or
prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement shall have
been approved and adopted by the affirmative vote of the
holders of a majority of the outstanding shares of Company
Common Stock.
(b) NYSE Listing. The shares of Parent Company Stock
issuable to the Company's stockholders pursuant to this
Agreement shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(c) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall
have been terminated or shall have expired.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or
other order issued by any court of competent juris diction
or other legal restraint or prohibition (collectively,
"Restraints") preventing the consummation of the Merger
shall be in effect.
(e) Form S-4. The Form S-4 shall have become effective
under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
SECTION 6.02. Conditions to Obligations of Parent and
Sub. The obligations of Parent and Sub to effect the Merger are
further subject to the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company contained in this Agreement
shall be true and correct (other than the representations in
Sections 3.01(c) and 3.01(d), which shall be true and
correct in all material respects) on and as of the Closing
Date except for changes contemplated by this Agreement and
except for those representations and warranties which
address matters only as of a particular date, which shall
remain true and correct (other than the representations in
Sections 3.01(c) and 3.01(d), which shall be true
and correct in all material respects) as of such particular
date, with the same force and effect as if made on and as of
the Closing Date, except in such cases (other than the
representations in Sections 3.01(c) and 3.01(d)) where the
failure to be so true and correct would not have a material
adverse effect on the Company.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) Letters from Company Affiliates. Parent shall have
received from each person named in the letter referred to in
Section 5.10(a) an executed copy of an agreement
substantially in the form of Exhibit A hereto.
(d) No Governmental Litigation. There shall not be
pending any suit by, action by or proceeding by any
Governmental Entity, (i) seeking to place limitations on the
ownership of shares of Company Common Stock (or shares of
common stock of the Surviving Corporation) by Parent or Sub
or seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company, (ii)
seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of Parent's
subsidiaries of any material portion of any business or of
any assets of the Company, Parent or any of Parent's
subsidiaries, or to compel the Company, Parent or any of
Parent's subsidiaries to dispose of or hold separate any
material portion of any business or of any assets of the
Company, Parent or any of Parent's subsidiaries, as a result
of the Merger or (iii) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any
material respect the business or operations of the Company.
(e) No Material Adverse Change. At any time on or after
the date of this Agreement there shall not have occurred any
material adverse change in the Company (or, if one shall
have occurred, it shall have been cured).
(f) Pooling Letters. Parent and the Company shall have
received letters, respectively, from Coopers & Lybrand
L.L.P. and Deloitte and Touche LLP, dated as of the Closing
Date, addressed to Parent and the Company, stating in
substance the matters to be stated by Coopers & Lybrand
L.L.P. and Deloitte and
Touche LLP pursuant to Sections 5.03(b) and 5.02(b),
respectively.
SECTION 6.03. Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is further
subject to the following conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Sub contained in this Agreement
shall be true and correct (other than the representations in
Section 3.02(b), which shall be true and correct in all
material respects) on and as of the Closing Date except for
changes contemplated by this Agreement and except for those
representations and warranties which address matters only as
of a particular date, which shall remain true and correct
(other than the representations in Section 3.02(b), which
shall be true and correct in all material respects) as of
such particular date, with the same force and effect as if
made on and as of the Closing Date, except in such cases
(other than the representations in Section 3.02(b)) where
the failure to be so true and correct would not have a
material adverse effect on Parent.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material respects
all obligations required to be performed by them under this
Agreement at or prior to the Closing Date.
(c) Tax Opinions. The opinions of Wilson Sonsini
Goodrich & Rosati, counsel to the Company, and Cravath,
Swaine & Moore, counsel to Parent, shall be delivered to the
Company and Parent, respectively, in form and substance
reasonably satisfactory to the Company and Parent. In
rendering each such opinion, counsel shall be entitled to
rely upon (and Parent, Sub and the Company shall make)
customary representations reasonably requested by counsel.
The opinions shall be dated on the date that is two business
days prior to the Proxy Statement is first mailed to
stockholders of the Company and shall not have been
withdrawn or modified in any material respect.
(d) No Material Adverse Change. At any time on or after
the date of this Agreement, there shall not have occurred
any material adverse change in Parent (or, if one shall have
occurred, it shall have been cured).
SECTION 6.04. Frustration of Closing Conditions. None
of the Company, Parent or Sub may rely on the failure of any
condition set forth in Section 6.01, 6.02 or 6.03, as the case
may be, to be satisfied if such failure was caused by such
party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement,
as required by and subject to Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated, and the Merger contemplated hereby may be abandoned,
at any time prior to the Effective Time, whether before or after
approval of matters presented in connection with the Merger by
the stockholders of the Company:
(a) by mutual written consent of Parent, Sub and the
Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated
by December 31, 1997 for any reason; provided, however,
that the right to terminate this Agreement under this
Section 7.01(b)(i) shall not be available to any party
whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure
to act constitutes a wilful and material breach of this
Agreement;
(ii) if any Restraint having any of the effects
set forth in Section 6.01(d) shall be in effect and
shall have become final and nonappealable;
(iii) if the Stockholder Approval shall not have
been obtained at the Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof;
or
(iv) if, during the Applicable Period, the Board
of Directors of the Company has made the determination
referred to in the penultimate sentence of Section
4.02(b); provided, however, that the Company may not
terminate this Agreement pursuant to this Section
7.01(b)(iv) unless and until three business days have
elapsed following
delivery to Parent of a Notice of Superior Proposal
with respect to a Superior Proposal by the Board of
Directors of the Company, and no later than two days
thereafter the Company pays to Parent the amounts
specified under Section 5.08(b) pursuant to the terms
of such Section 5.08(b).
(c) by Parent if (i) the Board of Directors of the
Company or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent its approval
or recommendation of the Merger or this Agreement or
failed to reconfirm its recommendation within 15
business days after a written request to do so, or
approved or recommended any Takeover Proposal or (ii)
the Board of Directors of the Company shall have
resolved to take any of the foregoing actions;
(d) by the Company, upon a breach of any
representation, warranty, covenant or agreement on the
part of Parent set forth in this Agreement, or if any
such representation or warranty or Parent shall have
become inaccurate, in either case such that the
conditions set forth in Section 6.03(a) or Section
6.03(b), as the case may be, would not be satisfied as
of the time of such breach or as of the time such
representation or warranty shall have become
inaccurate; provided, that if such inaccuracy in
Parent's representations and warranties or breach by
Parent is curable by Parent through the exercise of its
reasonable efforts, then (i) the Company may not
terminate this Agreement under this Section 7.01(d)
with respect to a particular breach or inaccuracy prior
to or during the 45-day period commencing upon delivery
by the Company of written notice to Parent describing
such breach or inaccuracy, provided Parent continues to
exercise reasonable efforts to cure such breach or
inaccuracy and (ii) the Company may not, in any event,
terminate this Agreement under this Section 7.01(d) if
such inaccuracy or breach shall have been cured in all
material respects during such 45-day period; and,
provided further that the Company may not terminate
this Agreement pursuant to this Section 7.01(d) if it
shall have wilfully and materially breached this
Agreement; or
(e) by Parent, upon a breach of any
representation, warranty, covenant or agreement on the
part of the Company set forth in this Agreement, or if
any such representation or warranty of the Company
shall have become inaccurate, in either case such that
the conditions set forth in Section 6.02(a) or Section
6.02(b), as the case may be, would not be satisfied as
of the time of such breach or as of the time such
representation or warranty shall have become
inaccurate; provided, that if such inaccuracy in the
Company's representations and warranties or breach by
the Company is curable by the Company through the
exercise of its reasonable efforts, then (i) Parent may
not terminate this Agreement under this Section 7.01(e)
with respect to a particular breach or inaccuracy prior
to or during the 45-day period commencing upon delivery
by Parent of written notice to the Company describing
such breach or inaccuracy, provided the Company
continues to exercise reasonable efforts to cure such
breach or inaccuracy and (ii) Parent may not, in any
event, terminate this Agreement under this Section
7.01(e) if such inaccuracy or breach shall have been
cured in all material respects during such 45-day
period; and, provided further that Parent may not
terminate this Agreement pursuant to this Section
7.01(e) if it shall have wilfully and materially
breached this Agreement.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as
provided in Section 7.01, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, other than the provisions
of the last sentence of Section 5.04, Section 5.08, this Section
7.02 and Arti cle VIII and except to the extent that such
termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or
agree ments set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended
by the parties hereto at any time before or after any required
approval of matters presented in connection with the Merger by
the stockholders of the Company; provided, however, that after
any such approval, there shall be made no amendment that by law
requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to
the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto or (c) subject to the proviso of Section 7.03, waive
compliance with any of the agreements or conditions contained
herein. Any agreement on
the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Sub, to:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Michael H. Ullmann
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Robert I. Townsend, III, Esq.
if to the Company, to:
Biopsys Medical, Inc.
3 Morgan
Irvine, CA 92618
Attention: Steven L. Gex
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Casey McGlynn, Esq.
Christopher D. Mitchell, Esq.
Marty Korman, Esq.
SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) as it relates to the Company, "knowledge" means,
with respect to any matter in question, that any of the
Chief Executive Officer, Chief Financial Officer or Vice
President of Medical Affairs of the Company has actual
knowledge of such matter, and as it relates to Parent, the
term "knowledge" means, with respect to any matter in
question, that any of the Chief Executive Officer, Chief
Financial Officer or General Counsel of Parent has actual
knowledge of such matter;
(c) "material adverse change" or "material adverse
effect" means, when used in connection with the Company or
Parent, any change or effect that is, or is almost certainly
to be within three months, materially adverse to the
business, properties, assets or financial condition of
either the Company or Parent and its subsidiaries, taken as
a whole, as the case may be; provided, however, that (i) any
adverse change or effect that is proximately caused by
conditions affecting the economy or securities markets
generally shall not be taken into account in determining
whether there has been or would be a "material adverse
change" or a "material adverse effect" on or with respect to
such entity, (ii) any adverse change or effect that is
proximately caused by conditions affecting any industry in
which the entity competes shall not be taken into account in
determining whether there has been or would be a "material
adverse change" or a "material adverse effect" on or with
respect to the entity and (iii) any adverse change or effect
resulting from those items set forth on Schedule 8.03 of the
Company Disclosure Schedule shall not be taken into account
in determining whether there has been or would be a
"material adverse
change" or a "material adverse effect" on or with respect to
the Company;
(d) "person" means an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity;
(e) a "subsidiary" of any person means another person,
an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to
elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned
directly or indi rectly by such first person.
SECTION 8.04. Interpretation. When a reference is made
in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When ever the words "include",
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
SECTION 8.05. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement, the Option Agreement, the
Stockholder Agreement and the Confidentiality Agreement (a)
constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement, the
Option Agreement, the Stockholder Agreement and the
Confidentiality Agreement and (b) except for the provisions of
Article II, Section 5.06 and Section 5.07, are not intended to
confer upon any person other than the parties any rights or
remedies.
SECTION 8.07. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned, in whole or in part, by operation of law or otherwise
by any of the parties without the prior written consent of the
other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations
under this Agreement to Parent or to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall
relieve Sub of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the partes shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State
of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any court of the
United States located in the State of Delaware or of any Delaware
state court in the event any dispute arises out of this Agreement
or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating
to this Agreement or the transactions contemplated by this
Agreement in any court other than a court of the United States
located in the State of Delaware or a Delaware state court.
SECTION 8.10. 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. Upon such determination that any
term 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 to the fullest extent permitted by
applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent
possible.
IN WITNESS WHEREOF, Parent, Sub and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written
above.
JOHNSON & JOHNSON,
by /s/ William C. Weldon
-------------------------------
Name: William C. Weldon
Title:
PALISADES MERGER CORP.,
by /s/ Michael Ullmann
-----------------------------
Name: Michael Ullmann
Title:
BIOPSYS MEDICAL, INC.,
by /s/ Steven L. Gex
-----------------------------
Name: Steven L. Gex
Title: President and CEO
EXHIBIT A
TO THE MERGER AGREEMENT
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common stock, par value
$.001 per share ("Company Common Stock"), of Biopsys Medical, Inc., a
Delaware corporation (the "Company"), acknowledges that the undersigned may
be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), by the Securities and Exchange Commission (the "SEC")
and may be deemed an "affiliate" of the Company for purposes of qualifying
the Merger (as defined below) for pooling of interests accounting treatment
under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations, although nothing contained herein should be
construed as an admission of either such fact. Pursuant to the terms of the
Agreement and Plan of Merger dated as of May 21, 1997, among Johnson &
Johnson, a New Jersey corporation ("Parent"), Palisades Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and
the Company, Sub will be merged with and into the Company (the "Merger"),
and in connection with the Merger, the undersigned is entitled to receive
common stock, par value $1.00 per share ("Parent Common Stock"), of Parent.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the Parent
Common Stock received by the undersigned in exchange for any shares of
Company Common Stock in connection with the Merger may be restricted unless
such transaction is registered under the Securities Act or an exemption
from such registration is available. The undersigned understands that such
exemptions are limited and the undersigned has obtained or will obtain
advice of counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability to the sale of such
securities of Rules 144 and 145(d) promulgated under the Securities Act.
The undersigned understands that Parent will not be required to maintain
the effectiveness of any registration statement under the Securities Act
for the purposes of resale of Parent Common Stock by the undersigned.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the Parent
Common Stock received by the undersigned in exchange for shares of Company
Common Stock in connection with the Merger except (i) pursuant to an
effective registration statement under the Securities Act,
(ii) in conformity with the volume and other limitations of Rule 145 or
(iii) in a transaction which, in the opinion of the general counsel of
Parent or other counsel reasonably satisfactory to Parent (it being
expressly agreed that Wilson Sonsini Goodrich & Rosati shall be considered
reasonably satisfactory for all purposes under this Agreement) or as
described in a "no-action" or interpretive letter from the Staff of the SEC
specifically issued with respect to a transaction to be engaged in by the
undersigned, is not required to be registered under the Securities Act.
The undersigned hereby further represents to and covenants with
Parent that the undersigned has not, within the 30 days prior to the
Closing Date, sold, transferred or otherwise disposed of any shares of
Company Common Stock held by the undersigned and that the undersigned will
not sell, transfer or otherwise dispose of any Parent Common Stock received
by the undersigned in connection with the Merger until after such time as
results covering at least 30 days of post-Merger combined operations of the
Company and Parent have been published by Parent, in the form of a
quarterly earnings report, an effective registration statement filed with
the SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public
filing or announcement which includes such combined results of operations,
except as would not otherwise reasonably be expected to adversely affect
the qualification of the Merger as a pooling-of-interests.
In the event of a sale or other disposition by the undersigned of
Parent Common Stock pursuant to Rule 145, the undersigned will supply
Parent with evidence of compliance with such Rule, in the form of a letter
in the form of Annex I hereto (or other reasonably satisfactory
documentation evidencing compliance with Rule 145) and the opinion of
counsel or no-action letter referred to above. The undersigned understands
that Parent may instruct its transfer agent to withhold the transfer of any
Parent Common Stock disposed of by the undersigned, but that (provided such
transfer is not prohibited by any other provision of this letter agreement)
upon receipt of such evidence of compliance, Parent shall cause the
transfer agent to effectuate the transfer of the Parent Common Stock sold
as indicated in such letter.
Parent covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of
Parent Common Stock by the undersigned under Rule 145 in accordance with
the terms thereof.
The undersigned acknowledges and agrees that the legends set
forth below will be placed on certificates representing Parent Common Stock
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to Parent from counsel reasonably satisfactory to Parent to
the effect that such legends are no longer required for purposes of the
Securities Act.
There will be placed on the certificates for Parent Common Stock
issued to the undersigned, or any substitutions therefor, a legend stating
in substance:
"The shares represented by this certificate were issued pursuant
to a business combination which is being accounted for as a pooling of
interests, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have not been acquired by
the holder with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933.
The shares may not be sold, pledged or otherwise transferred (i) until
such time as Johnson & Johnson shall have published financial results
covering at least 30 days of combined operations after the Effective
Time and (ii) except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and (ii) the receipt by Parent of this
letter is an inducement to Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the securities
of Johnson & Johnson ("Parent") described below in the space provided for
that purpose (the "Securities"). The Securities were received by the
undersigned in connection with the merger of Palisades Merger Corp.,
a Delaware corporation, with and into Biopsys Medical, Inc.
Based upon the most recent report or statement filed by Parent
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph
(e) of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act").
The undersigned hereby represents that the Securities were sold
in "brokers' transactions" within the meaning of Section 4(4) of the
Securities Act or in transactions directly with a "market maker" as that
term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended. The undersigned further represents that the undersigned has not
solicited or arranged for the solicitation of orders to buy the Securities,
and that the undersigned has not made any payment in connection with the
offer or sale of the Securities to any person other than to the broker who
executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]