EXECUTION COPY
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Dated as of December 15, 2004
Among
JOHNSON & JOHNSON,
SHELBY MERGER SUB, INC.
And
GUIDANT CORPORATION
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1.01 The
Merger................................................. 1
SECTION 1.02.
Closing.................................................... 1
SECTION 1.03. Effective
Time............................................. 1
SECTION 1.04. Effects of the
Merger...................................... 2
SECTION 1.05. Articles of
Incorporation and By-laws...................... 2
SECTION 1.06.
Directors.................................................. 2
SECTION 1.07.
Officers................................................... 2
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.............. 7
SECTION 3.02. Representations
and Warranties of Parent and Sub...........28
ARTICLE IV
Covenants Relating to Conduct of Business; No Solicitation
SECTION 4.01. Conduct of
Business........................................32
SECTION 4.02. No
Solicitation............................................37
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of
the Form S-4 and the Proxy Statement;
Shareholders'
Meeting....................................40
SECTION 5.02. Access to
Information; Confidentiality.....................41
SECTION 5.03. Reasonable Best
Efforts....................................42
SECTION 5.04. Company Stock
Options; ESPP................................44
(i)
<PAGE>
SECTION 5.05. Indemnification,
Exculpation and Insurance.................45
SECTION 5.06. Fees and
Expenses..........................................46
SECTION 5.07. Public
Announcements.......................................48
SECTION 5.08.
Affiliates.................................................48
SECTION 5.09. Stock Exchange
Listing.....................................48
SECTION 5.10. Shareholder
Litigation.....................................48
SECTION 5.11. Employee
Matters...........................................48
SECTION 5.12. Company
Notes..............................................50
SECTION 5.13. Rights
Agreement...........................................50
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to
Each Party's Obligation to Effect the Merger.50
SECTION 6.02. Conditions to
Obligations of Parent and Sub................51
SECTION 6.03. Conditions to
Obligation of the Company....................52
SECTION 6.04. Frustration of
Closing Conditions..........................53
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01.
Termination................................................53
SECTION 7.02. Effect of
Termination......................................54
SECTION 7.03.
Amendment..................................................54
SECTION 7.04. Extension;
Waiver..........................................54
SECTION 7.05. Procedure for
Termination or Amendment.....................54
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of
Representations and Warranties..............55
SECTION 8.02.
Notices....................................................55
SECTION 8.03.
Definitions................................................56
SECTION 8.04.
Interpretation.............................................57
SECTION 8.05. Consents and
Approvals.....................................57
SECTION 8.06.
Counterparts...............................................58
SECTION 8.07. Entire
Agreement; No Third-Party Beneficiaries.............58
SECTION 8.08. GOVERNING
LAW..............................................58
SECTION 8.09.
Assignment.................................................58
SECTION 8.10. Specific
Enforcement; Consent to Jurisdiction..............58
SECTION 8.11. Waiver of Jury
Trial.......................................58
SECTION 8.12.
Severability...............................................59
(ii)
<PAGE>
Annex I Index of
Defined Terms
Exhibit A Restated Articles of
Incorporation of the Surviving Corporation
Exhibit B Affiliate Letter
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated
as of December 15, 2004, among JOHNSON & JOHNSON, a
New Jersey corporation ("Parent"), SHELBY MERGER SUB, INC.,
an Indiana corporation and a wholly owned Subsidiary of
Parent ("Sub"), and GUIDANT CORPORATION, an Indiana
corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub
has
adopted, and the Board of Directors of
Parent has approved, this Agreement and
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, without
par value, of the Company ("Company
Common Stock"), other than shares of
Company Common Stock directly owned by
Parent, Sub or the Company, will be
converted into the right to receive (a) a
number of validly issued, fully paid and
nonassessable shares of common stock,
par value $1.00 per share, of Parent
("Parent Common Stock") and (b) $30.40 in
cash, without interest; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and
agreements in connection with the
Merger and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, in consideration of the representations,
warranties,
covenants and agreements contained in this
Agreement, and subject to the
conditions set forth herein, 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 Business
Corporation Law of the State of Indiana
(the "IBCL"), Sub shall be merged with
and into the Company at the Effective Time.
Following the Effective Time, the
separate corporate existence of Sub shall
cease and the Company shall continue
as the surviving corporation in the Merger
(the "Surviving Corporation") and
shall succeed to and assume all the rights
and obligations of Sub in
accordance with the IBCL.
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 (to the extent
permitted by applicable Law) waiver of the
conditions set forth in Article VI
(other than those conditions that by their
terms are to be satisfied at the
Closing, but subject to the satisfaction or
(to the extent permitted by
applicable Law) waiver of those
conditions), at the offices of Cravath, Swaine
& Moore LLP, Worldwide Plaza, 825
Eighth Avenue, New York, New York 10019,
unless another time, date or place is
agreed to in writing by Parent and the
Company; provided, however, that if all the
conditions set forth in Article VI
shall no longer be satisfied or (to the
extent permitted by applicable Law)
waived on such second business day, then
the Closing shall take place on the
first business day
<PAGE>
2
on which all such conditions shall again
have been satisfied or (to the extent
permitted by applicable Law) waived unless
another time is agreed to in
writing by Parent and the Company. The date
on which the Closing occurs is
referred to in this Agreement as the
"Closing Date".
SECTION 1.03. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the
Closing Date, the parties shall file
with the Secretary of State of the State of
Indiana articles of merger (the
"Articles of Merger") executed and
acknowledged by the parties in accordance
with the relevant provisions of the IBCL
and, as soon as practicable on or
after the Closing Date, shall make all
other filings or recordings required
under the IBCL. The Merger shall become
effective upon the filing of the
Articles of Merger with the Secretary of
State of the State of Indiana, or at
such later time as Parent and the Company
shall agree and shall specify in the
Articles 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 23-1-40-6 of
the IBCL.
SECTION 1.05. ARTICLES OF INCORPORATION AND BY-LAWS. (a) The
Articles of Incorporation of the Company
(the "Company Articles") shall be
amended at the Effective Time to be in the
form of Exhibit A and, as so
amended, such Company Articles shall be the
Restated Articles of Incorporation
of the Surviving Corporation until
thereafter changed or amended as provided
therein or by applicable Law.
(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.
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.
<PAGE>
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. At 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 Parent or
Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of
Sub shall be converted into and become one validly
issued, fully
paid and nonassessable share of common stock, without par
value, of the
Surviving Corporation.
(b) CANCELATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each
share
of Company
Common Stock that is directly owned by the Company, Parent or
Sub immediately
prior to the Effective Time shall automatically be
canceled and
shall cease to exist, and no consideration shall be
delivered in
exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
2.02(e),
each share of
Company Common Stock issued and outstanding immediately
prior to the
Effective Time (other than shares to be canceled in
accordance with
Section 2.01(b)) shall be converted into the right to
receive (i) that
number (rounded to the nearest 1/10,000 of a share) (the
"Exchange
Ratio") of validly issued, fully paid and nonassessable shares
of Parent Common
Stock (the "Stock Portion") equal to the number
determined by
dividing $45.60 by the Average Parent Stock Price;
provided,
however, that (x) if the number determined by dividing $45.60
by the Average Parent
Stock Price is less than or equal to 0.6797, the
Exchange Ratio
shall be 0.6797 and (y) if the number determined by
dividing $45.60
by the Average Parent Stock Price is greater than or
equal to 0.8224,
the Exchange Ratio shall be 0.8224 and (ii) $30.40 in
cash, without
interest (the "Cash Portion" and, together with the Stock
Portion, the
"Merger Consideration"). At the Effective Time, all such
shares of
Company Common Stock shall no longer be outstanding and shall
automatically be
canceled 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 (each, a "Certificate") shall cease
to have any
rights with respect thereto, except the right to receive the
Merger
Consideration, any dividends or other distributions payable
pursuant to
Section 2.02(c) and cash in lieu of any fractional shares
payable pursuant
to Section 2.02(e), in each case to be issued or paid in
consideration
therefor upon surrender of such Certificate in accordance
with Section
2.02(b), without interest. Notwithstanding the foregoing, if
between the date
of this Agreement and the Effective Time, (A) 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, exchange
of
shares or
similar transaction, (B) Parent declares or pays cash dividends
in any fiscal
quarter in excess of 200% of the amount of regularly
quarterly
dividends paid by the Parent immediately prior to the date
hereof or (C)
Parent engages in any spin-off or split-off, then in any
such case the
Exchange Ratio shall be appropriately adjusted to reflect
such action. The
right
<PAGE>
4
of any holder of
a Certificate to receive the Merger Consideration, any
dividends or
other distributions payable pursuant to Section 2.02(c) and
cash in lieu of
any fractional shares payable pursuant to Section 2.02(e)
shall be subject
to and reduced by the amount of any withholding that is
required under
applicable tax Law. "Average Parent Stock Price" means the
average of the
volume weighted averages of the trading prices of Parent
Common Stock, as
such price is reported on the New York Stock Exchange,
Inc. (the
"NYSE") Composite Transaction Tape (as reported by Bloomberg
Financial
Markets or such other source as the parties shall agree in
writing), for
the 15 trading days ending on the third trading day
immediately
preceding the Effective Time.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Prior
to
the Effective Time, Parent shall appoint
EquiServe Trust Company or another
bank or trust company that is reasonably
satisfactory to the Company to act as
exchange agent (the "Exchange Agent") for
the payment of the Merger
Consideration. At the Effective Time,
Parent shall deposit, or cause the
Surviving Corporation to deposit, with the
Exchange Agent, for the benefit of
the holders of Certificates, certificates
representing shares of Parent Common
Stock and cash in an amount sufficient to
pay the aggregate Merger
Consideration required to be paid pursuant
to Section 2.01(c). In addition,
Parent shall deposit with the Exchange
Agent, as necessary from time to time
after the Effective Time, any dividends or
other distributions payable
pursuant to Section 2.02(c) and cash in
lieu of any fractional shares payable
pursuant to Section 2.02(e). All shares of
Parent Common Stock, cash,
dividends and distributions deposited with
the Exchange Agent pursuant to this
Section 2.02(a) shall hereinafter be
referred to as the "Exchange Fund".
(b) Exchange Procedures. As soon as reasonably practicable after
the
Effective Time, Parent shall cause the
Exchange Agent to mail to each holder
of record of a Certificate whose shares of
Company Common Stock were converted
into the right to receive the Merger
Consideration, any dividends or other
distributions payable pursuant to Section
2.02(c) and cash in lieu of any
fractional shares payable pursuant to
Section 2.02(e) (i) a form of letter of
transmittal (which shall specify that
delivery shall be effected, and risk of
loss and title to the Certificates shall
pass, only upon proper delivery of
the Certificates to the Exchange Agent and
which shall be in customary form
and contain customary provisions) and (ii)
instructions for use in effecting
the surrender of the Certificates in
exchange for the Merger Consideration,
any dividends or other distributions
payable pursuant to Section 2.02(c) and
cash in lieu of any fractional shares
payable pursuant to Section 2.02(e).
Each holder of record of one or more
Certificates shall, upon surrender to the
Exchange Agent of such Certificate or
Certificates, together with such letter
of transmittal, duly executed, and such
other documents as may reasonably be
required by the Exchange Agent, be entitled
to receive in exchange therefor
(i) the amount of cash to which such holder
is entitled pursuant to Section
2.01(c), (ii) a certificate or certificates
representing that number of whole
shares of Parent Common Stock (after taking
into account all Certificates
surrendered by such holder) to which such
holder is entitled pursuant to
Section 2.01(c) (which shall be in
uncertificated book entry form unless a
physical certificate is requested), (iii)
any dividends or distributions
payable pursuant to Section 2.02(c) and
(iv) cash in lieu of any fractional
shares payable pursuant to Section 2.02(e),
and the Certificates 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, payment of the
Merger Consideration in accordance with
this Section 2.02(b) may be made to a
person other than the person in whose
name the Certificate so surrendered is
registered if such Certificate
<PAGE>
5
shall be properly endorsed or otherwise be
in proper form for transfer and the
person requesting such payment shall pay
any transfer or other taxes required
by reason of the payment of the Merger
Consideration, any dividends or other
distributions payable pursuant to Section
2.02(c) and cash in lieu of any
fractional shares payable pursuant to
Section 2.02(e) to a person other than
the registered holder of such Certificate
or establish to the reasonable
satisfaction of Parent that such taxes have
been paid or are 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
Merger Consideration, any dividends
or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to
Section 2.02(e). No interest shall
be paid or will accrue on any payment to
holders of Certificates pursuant to
the provisions of this Article II.
(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 that the holder
thereof has the right to receive upon the
surrender thereof, and no cash
payment in lieu of fractional shares of
Parent Common Stock shall be paid to
any such holder pursuant to Section
2.02(e), in each case until the holder of
such Certificate shall have surrendered
such Certificate in accordance with
this Article II. Following the surrender of
any 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
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 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 (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. The
Merger
Consideration, any dividends or other
distributions payable pursuant to
Section 2.02(c) and cash in lieu of any
fractional shares payable pursuant to
Section 2.02(e) paid upon the surrender of
Certificates in accordance with the
terms of this Article II shall be deemed to
have been paid in full
satisfaction of all rights pertaining to
the shares of Company Common Stock
formerly represented by such Certificates.
At the close of business on the day
on which the Effective Time occurs, the
share transfer books of the Company
shall be closed, and there shall be no
further registration of transfers on
the share transfer books of the Surviving
Corporation of the shares of Company
Common Stock that were outstanding
immediately prior to the Effective Time.
If, after the Effective Time, any
Certificate is presented to the Surviving
Corporation for transfer, it shall be
canceled against delivery of the Merger
Consideration, any dividends or other
distributions payable pursuant to
Section 2.02(c) and cash in lieu of any
fractional shares payable pursuant to
Section 2.02(e) to the holder thereof 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, no dividends
or other distributions of Parent
shall relate to such fractional share
interests and
<PAGE>
6
such fractional share interests will not
entitle the owner thereof to vote or
to any rights of a shareholder of
Parent.
(ii) In lieu of such fractional share interests, Parent shall pay
to
each holder of a Certificate an amount in
cash equal to the product obtained
by multiplying (A) the fractional share
interest to which such holder (after
taking into account all shares of Company
Common Stock formerly represented by
all Certificates surrendered by such
holder) would otherwise be entitled by
(B) the per share closing price of Parent
Common Stock on the Closing Date
(the "Closing Price"), as such price is
reported on the NYSE Composite
Transaction Tape (as reported by Bloomberg
Financial Markets or such other
source as the parties shall agree in
writing).
(f) TERMINATION OF THE 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 the
Merger Consideration, any dividends
or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to
Section 2.02(e) in accordance with
this Article II.
(g) NO LIABILITY. None of Parent, Sub, the Company, the
Surviving
Corporation or the Exchange Agent shall be
liable to any person in respect of
any shares of Parent Common Stock, cash,
dividends or other distributions from
the Exchange Fund properly delivered to a
public official pursuant to any
applicable abandoned property, escheat or
similar Law. If any Certificate
shall not have been surrendered prior to
four years after the Effective Time
(or immediately prior to such earlier date
on which any Merger Consideration
(and any dividends or other distributions
payable with respect thereto
pursuant to Section 2.02(c) and cash in
lieu of any fractional shares payable
with respect thereto pursuant to Section
2.02(e)) would otherwise escheat to
or become the property of any Governmental
Entity), any such Merger
Consideration (and any dividends or other
distributions payable with respect
thereto pursuant to Section 2.02(c) and
cash in lieu of any fractional shares
payable with respect thereto pursuant to
Section 2.02(e)) shall, to the extent
permitted by applicable Law, become the
property of Parent, free and clear of
all claims or interest of any person
previously entitled thereto.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
the
cash included in the Exchange Fund as
directed by Parent. Any interest and
other income resulting from such
investments shall be paid to and be income of
Parent. If for any reason (including
losses) the cash in the Exchange Fund
shall be insufficient to fully satisfy all
of the payment obligations to be
made in cash by the Exchange Agent
hereunder, Parent shall promptly deposit
cash into the Exchange Fund in an amount
which is equal to the deficiency in
the amount of cash required to fully
satisfy such cash payment obligations.
(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 Parent, the posting by such
person of a bond in such reasonable
amount as Parent may direct as indemnity
against any claim that may be made
against it with respect to such
Certificate, the Exchange Agent shall deliver
in exchange for such lost,
<PAGE>
7
stolen or destroyed Certificate the Merger
Consideration, any dividends or
other distributions payable pursuant to
Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to
Section 2.02(e), in each case
pursuant to this Article II.
(j) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or
the
Exchange Agent shall be entitled to deduct
and withhold from the consideration
otherwise payable pursuant to this
Agreement to any holder of Certificates
such amounts as Parent, the Surviving
Corporation or the Exchange Agent is
required to deduct and withhold with
respect to the making of such payment
under the Internal Revenue Code of 1986, as
amended (the "Code"), or any
provision of state, local or foreign tax
Law. To the extent that amounts are
so withheld and paid over to the
appropriate taxing authority by Parent, the
Surviving Corporation or the Exchange
Agent, such withheld amounts shall be
treated for all purposes of this Agreement
as having been paid to the holder
of Certificates in respect of which such
deduction and withholding was made by
Parent, the Surviving Corporation or the
Exchange Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except
as disclosed in the Company SEC Documents
filed by the Company and publicly
available prior to the date of this
Agreement ("Filed Company SEC Documents")
and except as set forth in the disclosure
schedule (with specific reference to
the particular Section or subsection of
this Agreement to which the
information set forth in such disclosure
schedule relates; provided, however,
that any information set forth in one
section of the Company Disclosure
Schedule shall be deemed to apply to each
other Section or subsection thereof
to which its relevance is readily apparent
on its face) 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. Each of the
Company
and its
Subsidiaries has been duly organized, and is validly existing
and
in good standing
(with respect to jurisdictions that recognize that
concept) under
the Laws of the jurisdiction of its incorporation or
formation, as
the case may be, and has all requisite power and authority
and possesses
all governmental licenses, permits, authorizations and
approvals
necessary to enable it to use its corporate or other name and
to own, lease or
otherwise hold and operate its properties and other
assets and to
carry on its business as currently conducted, except where
the failure to
have such governmental licenses, permits, authorizations
or approvals
individually or in the aggregate has not had and would not
reasonably be
expected to have a Material Adverse Effect. Each of the
Company and its
Subsidiaries is duly qualified or licensed to do business
and is in good
standing (with respect to jurisdictions that recognize
that concept) in
each jurisdiction in which the nature of its business or
the ownership,
leasing or operation of its properties makes such
qualification,
licensing or good standing necessary, other than in such
jurisdictions
where the failure to be so qualified, licensed or in good
standing
individually or in the aggregate has not had and would not
reasonably be
expected to have a Material
<PAGE>
8
Adverse Effect.
The Company has made available to Parent, prior to the
execution of
this Agreement, complete and accurate copies of the Company
Articles and the
Company's By-laws (the "Company By-laws"), and the
comparable
organizational documents of each Significant Subsidiary (as
such term is
defined in Rule 12b-2 under the Exchange Act), in each case
as amended to
the date hereof.
(b) SUBSIDIARIES. Section 3.01(b) of the Company Disclosure
Schedule
lists, as of the
date hereof, (i) each Significant Subsidiary of the
Company
(including its state of incorporation or formation) and (ii)
each
other Subsidiary
of the Company. All of the outstanding capital stock of,
or other equity
interests in, each Significant Subsidiary of the Company,
is directly or
indirectly owned by the Company. All the issued and
outstanding
shares of capital stock of, or other equity interests in,
each such
Subsidiary owned by the Company have been validly issued and
are fully paid
and nonassessable and are owned directly or indirectly by
the Company free
and clear of all pledges, liens, charges, encumbrances
or security
interests of any kind or nature whatsoever (other than liens,
charges and
encumbrances for current taxes not yet due and payable)
(collectively,
"Liens"), and free of any restriction on the right to
vote, sell or
otherwise dispose of such capital stock or other equity
interests.
Except with respect to securities of non-Affiliates that, to
the Knowledge of
the Company, do not constitute a 20% or greater interest
in such
non-Affiliates (or a 5% or greater interest in such
non-Affiliates
if the Company's investment therein is greater than
$20,000,000),
and except for the capital stock of, or voting securities
or equity
interests in, its Subsidiaries, the Company does not own,
directly or
indirectly, as of the date hereof, any capital stock of, or
other voting
securities or equity interests in, any corporation,
partnership,
joint venture, association or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company
consists of
1,000,000,000 shares of Company Common Stock and 50,000,000
shares of
preferred stock, without par value ("Company Preferred Stock").
1,500,000 shares
of Company Preferred Stock have been designated as
Series A
Participating Preferred Stock, without par value (the "Company
Series A
Preferred Stock"). At the close of business on December 14,
2004, (i)
321,485,774 shares of Company Common Stock were issued and
outstanding
(which number includes (A) 535,645 shares of Company Common
Stock held by
the Company in its treasury, (B) 1,934,116 shares of
Company Common
Stock held by the trust established under The Guidant
Employee Savings
and Stock Ownership Plan and (C) 919,276 shares of
Company Common
Stock subject to vesting and restrictions on transfer
("Company
Restricted Stock")), (ii) 41,590,880 shares of
Company Common
Stock were reserved and available for issuance pursuant to
the Company's
1994 Stock Plan, as amended, 1996 Nonemployee Director
Stock Plan, as
amended, 1998 Stock Plan, as amended, and 2001 Employee
Stock Purchase
Plan (the "ESPP") (such plans, collectively, the "Company
Stock Plans"),
of which 35,485,818 shares of Company Common Stock were
subject to
outstanding Company Stock Options or agreements to issue
Company Stock
Options, and (iii) no shares of Company Preferred Stock
(including
Company Series A Preferred Stock) were issued or outstanding
or were held by
the Company as treasury shares. Except as set forth above
in this Section
3.01(c), at the close of business on December 14, 2004,
no shares of
capital stock or other voting securities or equity interests
of the Company
were
<PAGE>
9
issued, reserved
for issuance or outstanding. At the close of business on
December 14,
2004, there were no outstanding stock appreciation rights,
"phantom" stock
rights, restricted stock units, performance units, rights
to receive
shares of Company Common Stock on a deferred basis or other
rights (other
than Company Stock Options) that are linked to the value of
Company Common
Stock (collectively, "Company Stock-Based Awards"). All
outstanding
options to purchase shares of Company Common Stock exclusive
of rights under
the ESPP (collectively, "Company Stock Options") and
shares of
Company Restricted Stock are evidenced by stock option
agreements,
restricted stock purchase agreements or other award
agreements. All
outstanding shares of capital stock of the Company are,
and all shares
which may be issued pursuant to the Company Stock Options
or Company
Stock-Based Awards 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, or exchangeable for, securities having the
right to vote) on any
matters on which shareholders of the Company may
vote. Except as
set forth above in this Section 3.01(c) and for issuances
of shares of
Company Common Stock pursuant to the Company Stock Options
set forth above
in this Section 3.01(c) and subject to Section 4.01(a),
(x) there are
not issued, reserved for issuance or outstanding (A) any
shares of
capital stock or other voting securities or equity interests of
the Company, (B)
any securities of the Company convertible into or
exchangeable or
exercisable for shares of capital stock or other voting
securities or
equity interests of the Company, (C) any warrants, calls,
options or other
rights to acquire from the Company or any of its
Subsidiaries,
and no obligation of the Company or any of its Subsidiaries
to issue, any
capital stock, voting securities, equity interests or
securities
convertible into or exchangeable or exercisable for capital
stock or voting
securities of the Company or (D) any Company Stock-Based
Awards and (y)
there are not any outstanding obligations of the Company
or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any
such securities
or to issue, deliver or sell, or cause to be issued,
delivered or
sold, any such securities. Neither the Company nor any of
its Subsidiaries
is a party to any voting Contract with respect to the
voting of any
such securities. Except as set forth above in this Section
3.01(c) and
subject to Section 4.01(a), there are no outstanding (1)
securities of
the Company or any of its Subsidiaries convertible into or
exchangeable or
exercisable for shares of capital stock or voting
securities or
equity interests of any Subsidiary of the Company, (2)
warrants, calls,
options or other rights to acquire from the Company or
any of its
Subsidiaries, and no obligation of the Company or any of its
Subsidiaries to
issue, any capital stock, voting securities, equity
interests or
securities convertible into or exchangeable or exercisable
for capital
stock or voting securities of any Subsidiary of the Company
or (3)
obligations of the Company or any of its Subsidiaries to
repurchase,
redeem or otherwise acquire any such outstanding securities
or to issue,
deliver or sell, or cause to be issued, delivered or sold,
any such
securities.
(d) AUTHORITY; NONCONTRAVENTION. The Company has all requisite
corporate power
and authority to execute and deliver this Agreement and,
subject to
receipt of the Shareholder Approval, to consummate the
transactions
contemplated by this Agreement. The execution and delivery
of this
Agreement by the Company and the consummation by the Company of
the transactions
contemplated by this Agreement have been duly
<PAGE>
10
authorized by
all necessary corporate action on the part of the Company
and no other
corporate proceedings on the part of the Company are
necessary to
authorize this Agreement or to consummate the transactions
contemplated by
this Agreement, subject, in the case of the consummation
of the Merger,
to the obtaining of the Shareholder Approval. This
Agreement has
been duly executed and delivered by the Company and,
assuming the due
authorization, execution and delivery by each of the
other parties
hereto, constitutes a legal, valid and binding obligation
of the Company,
enforceable against the Company in accordance with its
terms, subject
to bankruptcy, insolvency, fraudulent transfer,
moratorium,
reorganization or similar Laws affecting the rights of
creditors
generally and the availability of equitable remedies
(regardless of
whether such enforceability is considered in a proceeding
in equity or at
law). The Board of Directors of the Company, at a meeting
duly called and
held, duly and unanimously adopted by all directors
present,
resolutions (i) adopting this Agreement, the Merger and the
other
transactions contemplated by this Agreement, (ii) declaring that
it
is in the best
interests of the Company and the shareholders of the
Company that the
Company enter into this Agreement and consummate the
Merger and the
other transactions contemplated by this Agreement on the
terms and
subject to the conditions set forth in this Agreement, (iii)
directing that
the Company use its reasonable best efforts to submit the
approval of this
Agreement to a vote at a meeting of the shareholders of
the Company
within 120 days of the date hereof and (iv) recommending that
the shareholders
of the Company approve this Agreement, which
resolutions, as
of the date of this Agreement, have not been subsequently
rescinded,
modified or withdrawn in any way. The execution and delivery
of this
Agreement by the Company do not, and the consummation by the
Company of the
Merger and the other transactions contemplated by this
Agreement and
compliance by the Company with the provisions of this
Agreement will
not, conflict with, or result in any violation or breach
of, or default
(with or without notice or lapse of time, or both) under,
or give rise to
a right of, or result in, termination, cancelation or
acceleration of
any obligation or to the loss of a benefit under, or
result in the
creation of any Lien in or upon any of the properties or
other assets of
the Company or any of its Subsidiaries under, (x) the
Company Articles
or the Company By-laws or the comparable organizational
documents of any
of its Subsidiaries, (y) any loan or credit agreement,
bond, debenture,
note, mortgage, indenture, lease, supply agreement,
license
agreement, development agreement or other contract, agreement,
obligation,
commitment or instrument that is intended by the Company,
Parent or any of
their respective Subsidiaries, as applicable, to be
legally binding,
(each, including all amendments thereto, a "Contract"),
to which the
Company or any of its Subsidiaries is a party or any of
their respective
properties or other assets is subject or (z) subject to
the obtaining of
the Shareholder Approval and the governmental filings
and other
matters referred to in the following sentence, any (A) statute,
law, ordinance,
rule or regulation (each, a "Law") applicable to the
Company or any
of its Subsidiaries or their respective properties or
other assets or
(B) order, writ, injunction, decree, judgment or
stipulation
(each, an "Order") applicable to the Company or any of its
Subsidiaries or
their respective properties or other assets, other than,
in the case of
clauses (y) and (z), any such conflicts, violations,
breaches,
defaults, rights of termination, cancelation or acceleration,
losses or Liens
that individually or in the aggregate have not had and
would not
reasonably be expected to (x) have a Material Adverse Effect,
(y) impair in
any material respect the
<PAGE>
11
ability of the
Company to perform its obligations under this Agreement or
(z) prevent or materially
impede, interfere with, hinder or delay the
consummation of
the transactions contemplated by this Agreement. No
consent,
approval, order or authorization of, action by or in respect
of,
or registration,
declaration or filing with, any Federal, state, local or
foreign
government, any court, administrative, regulatory or other
governmental
agency, commission or authority or any organized securities
exchange (each,
a "Governmental Entity") is required by or with respect
to the Company
or any of its Subsidiaries in connection with the
execution and
delivery of this Agreement by the Company or the
consummation of
the Merger or the other transactions contemplated by this
Agreement,
except for (1) (A) the filing of a premerger notification and
report form by
the Company under the Hart-Scott-Rodino Antitrust
Improvements Act
of 1976, as amended, and the rules and regulations
thereunder (the
"HSR Act") and the termination of the waiting period
required
thereunder, (B) all required notifications and filings by the
Company under
Article 4 of Council Regulation 139/2004 of the European
Community, as
amended (the "EC Merger Regulation"), and the receipt of a
decision under
Article 6(1)(b), 8(1) or 8(2) thereunder declaring the
Merger
compatible with the EC Common Market and (C) the receipt,
termination or
expiration, as applicable, of approvals or waiting periods
required under
any other applicable competition, merger control,
antitrust or
similar Law, (2) the filing with the Securities and Exchange
Commission (the
"SEC") of (X) a proxy statement relating to the adoption
by the
shareholders of the Company of this Agreement (as amended or
supplemented
from time to time, the "Proxy Statement") and (Y) such
reports under
the Securities Exchange Act of 1934, as amended (including
the rules and
regulations promulgated thereunder, the "Exchange Act"), as
may be required
in connection with this Agreement and the transactions
contemplated by
this Agreement, (3) the filing of the Articles of Merger
with the
Secretary of State of the State of Indiana and appropriate
documents with
the relevant authorities of other states in which the
Company or any
of its Subsidiaries is qualified to do business, (4) any
filings with and
approvals of the NYSE and (5) such other consents,
approvals,
orders, authorizations, actions, registrations, declarations
and filings the
failure of which to be obtained or made individually or
in the aggregate
has not had and would not reasonably be expected to (x)
have a Material
Adverse Effect, (y) impair in any material respect the
ability of the
Company to perform its obligations under this Agreement or
(z) prevent or
materially impede, interfere with, hinder or delay the
consummation of
the transactions contemplated by this Agreement.
(e) COMPANY SEC DOCUMENTS. (i) The Company has filed all
reports,
schedules,
forms, statements and other documents (including exhibits and
other
information incorporated therein) with the SEC required to be
filed
by the Company
since January 1, 2003 (such documents, together with any
documents filed
during such period by the Company with the SEC on a
voluntary basis
on Current Reports on Form 8-K, the "Company SEC
Documents"). As
of their respective filing dates, the Company SEC
Documents
complied in all material respects with, to the extent in effect
at the time of
filing, the requirements of the Securities Act of 1933, as
amended
(including the rules and regulations promulgated thereunder,
the
"Securities
Act"), the Exchange Act and the Sarbanes-Oxley Act of 2002
(including the
rules and regulations promulgated thereunder, "SOX")
applicable to
such Company SEC Documents, and none of the Company SEC
Documents
contained any untrue statement of a material fact or
<PAGE>
12
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 Company SEC Document has been
revised,
amended, supplemented or superseded by a later-filed Company
SEC
Document, none
of the Company 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,
which
individually or in the aggregate would require an amendment,
supplement or
corrective filing to such Company SEC Documents. Each of
the financial
statements (including the related notes) of the Company
included in the
Company SEC Documents complied at the time it was filed
as to form in
all material respects with the applicable accounting
requirements and
the published rules and regulations of the SEC with
respect thereto
in effect at the time of filing, had been prepared in
accordance with
generally accepted accounting principles in the United
States ("GAAP")
(except, in the case of unaudited statements, as
permitted by the
rules and regulations of the SEC) applied on a
consistent basis
during the periods involved (except as may be indicated
in the notes
thereto) and fairly presented in all material respects the
consolidated
financial position of the Company and its consolidated
Subsidiaries as
of the dates thereof and the consolidated results of
their operations
and cash flows for the periods then ended (subject, in
the case of
unaudited statements, to normal year-end audit adjustments).
Neither the
Company nor any of its Subsidiaries has any liabilities or
obligations of
any nature (whether accrued, absolute, contingent or
otherwise) which
individually or in the aggregate have had or would
reasonably be
expected to have a Material Adverse Effect. None of the
Subsidiaries of
the Company are, or have at any time since January 1,
2003 been,
subject to the reporting requirements of Section 13(a) or
15(d) of the
Exchange Act.
(ii) Each of the principal executive officer of the Company and
the
principal
financial officer of the Company (or each former principal
executive
officer of the Company and each former principal financial
officer of the
Company, as applicable) has made all certifications
required by Rule
13a-14 or 15d-14 under the Exchange Act and Sections 302
and 906 of SOX
with respect to the Company SEC Documents, and the
statements
contained in such certifications are true and accurate. For
purposes of this
Agreement, "principal executive officer" and "principal
financial
officer" shall have the meanings given to such terms in SOX.
Neither the
Company nor any of its Subsidiaries has outstanding, or has
arranged any
outstanding, "extensions of credit" to directors or
executive
officers within the meaning of Section 402 of SOX.
(iii) The Company maintains a system of internal accounting
controls
sufficient to
provide reasonable assurance that (A) transactions are
executed in
accordance with management's general or specific
authorizations;
(B) access to assets is permitted only in accordance with
management's
general or specific authorization; and (C) the recorded
accountability
for assets is compared with the existing assets at
reasonable
intervals and appropriate action is taken with respect to any
differences.
(iv) The Company's "disclosure controls and procedures" (as
defined
in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably
designed to
ensure
<PAGE>
13
that all
information (both financial and non-financial) required to be
disclosed by the
Company in the reports that it files or submits under
the Exchange Act
is recorded, processed, summarized and reported within
the time periods
specified in the rules and forms of the SEC, and that
all such
information is accumulated and communicated to the Company's
management as
appropriate to allow timely decisions regarding required
disclosure and
to make the certifications of the chief executive officer
and chief
financial officer of the Company required under the Exchange
Act with respect
to such reports.
(f) INFORMATION SUPPLIED. None of the information supplied or to
be
supplied by or
on behalf of the Company specifically 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
shares of Parent
Common Stock in the Merger (as amended or supplemented
from time to
time, the "Form S-4") will, at the time the Form S-4 is
filed with the
SEC 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 or (ii) the Proxy Statement will, at the
date it is first
mailed to the shareholders of the Company and at the
time of the
Shareholders' Meeting, contain any untrue statement of a
material fact or
omit to state any material fact required to be stated
therein or
necessary in order to make the statements therein, in light of
the
circumstances under which they are made, not misleading, except
that
no
representation or warranty is made by the Company with respect
to
statements made
or incorporated by reference therein based on information
supplied by or
on behalf of Parent or Sub specifically for inclusion or
incorporation by
reference in the Form S-4 or the Proxy Statement. The
Proxy Statement
will comply as to form in all material respects with the
requirements of
the Exchange Act.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for
liabilities
incurred in
connection with this Agreement or as expressly permitted
pursuant to
Section 4.01(a)(i) through (xvi), since the date of the most
recent financial
statements included in the Filed Company SEC Documents,
the Company and
its Subsidiaries have conducted their respective
businesses only
in the ordinary course consistent with past practice, and
there has not
been any Material Adverse Change, and from such date until
the date hereof
there has not been (i) any declaration, setting aside or
payment of any
dividend or other distribution (whether in cash, stock or
property) with
respect to any capital stock of the Company or any of its
Subsidiaries,
other than (x) cash dividends payable by the Company in
respect of
shares of Company Common Stock consistent with past practice
and not
exceeding $0.10 per share of Company Common Stock per fiscal
quarter or (y)
dividends or distributions by a direct or indirect wholly
owned Subsidiary
of the Company to its shareholders, (ii) any purchase,
redemption or
other acquisition by the Company or any of its Subsidiaries
of any shares of
capital stock or any other securities of the Company or
any of its
Subsidiaries or any options, warrants, calls or rights to
acquire such
shares or other securities, other than in connection with
net share
withholding in connection with the vesting of Company
Restricted
Stock, (iii) any split, combination or reclassification of any
capital stock of
the Company or any of its Subsidiaries 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 their respective capital
stock,
<PAGE>
14
(iv) (A) any
granting by the Company or any of its Subsidiaries to any
current or
former (1) director of the Company or any of its Subsidiaries
or (2) employee
of the Company or any of its Subsidiaries who is treated
as a Tier I
Employee (a "Tier I Employee") or Tier II Employee (a "Tier
II Employee")
for purposes of the Company's Change in Control Severance
Pay Plan for
Select Employees (all individuals described in the foregoing
clauses (1) and
(2) of this clause (A), collectively, the "Key
Personnel") of
any increase in compensation, bonus or fringe or other
benefits, except
for normal increases in cash compensation (including
cash bonuses) in
the ordinary course of business consistent with past
practice or as
was required under any Company Benefit Agreement or
Company Benefit
Plan, (B) any granting by the Company or any of its
Subsidiaries to
any Key Personnel of (1) any increase in severance or
termination pay
or (2) any right to receive any severance or termination
pay except for
severance or termination pay received in the ordinary
course of
business consistent with past practice or as was required under
any Company
Benefit Agreement or Company Benefit Plan, (C) any entry by
the Company or
any of its Subsidiaries into, or any amendments of, (1)
any employment,
deferred compensation, consulting, severance, change of
control,
termination or indemnification Contract with any Key Personnel
or (2) any
Contract with any Key Personnel the benefits of which are
contingent, or
the terms of which are materially altered, upon the
occurrence of a
transaction involving the Company of a nature
contemplated by
this Agreement (all such Contracts under this clause (C),
collectively,
"Company Benefit Agreements"), (D) the removal or
modification of
any restrictions in any Company Benefit Agreement or
Company Benefit
Plan or awards made thereunder, except as required to
comply with
applicable Law or any Company Benefit Agreement or Company
Benefit Plan in
effect as of the date hereof or (E) the adoption,
amendment or
termination of any Company Benefit Plan, other than, in the
cases of clauses
(A), (B), (C) and (D), such increases, amendments, new
agreements,
removals, modifications or terminations with respect to Tier
II Employees that (1)
do not provide for any increase in compensation or
benefits for any
individual Tier II Employee that is material in relation
to such Tier II
Employee's compensation or benefits prior to such
increase and (2)
in the aggregate do not result in any material increase
in compensation,
benefits or other similar expenses of the Company and
its
Subsidiaries, (v) any damage, destruction or loss, whether or
not
covered by
insurance, that individually or in the aggregate has had or
would reasonably
be expected to have a Material Adverse Effect, (vi) any
change in
accounting methods, principles or practices by the Company
materially
affecting its assets, liabilities or businesses, except
insofar as may
have been required by a change in GAAP or (vii) any
material tax
election or any settlement or compromise of any material
income tax
liability.
(h) LITIGATION. Except with respect to taxes, which are the
subject
of Section
3.01(n), there is no suit, action or proceeding pending or, to
the Knowledge of
the Company, threatened against or affecting the Company
or any of its
Subsidiaries or any of their respective assets that
individually or
in the aggregate has had or would reasonably be expected
to have a
Material Adverse Effect, nor is there any demand, letter or
Order of any
Governmental Entity or arbitrator outstanding against, or,
to the Knowledge
of the Company, investigation by any Governmental Entity
involving, the
Company or any of its Subsidiaries or any of their
respective
assets that individually or in
<PAGE>
15
the aggregate
has had or would reasonably be expected to have a Material
Adverse
Effect.
(i) CONTRACTS. (1) As of the date hereof, neither the Company
nor
any of its
Subsidiaries is a party to, and none of their respective
properties or
other assets is subject to, any Contract that is a
"material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K
of the SEC) (a "Material Contract"). None of the Company,
any of its
Subsidiaries or, to the Knowledge of the Company, any other
party thereto is in
violation of or 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 by the Company
or any of its
Subsidiaries or, to the Knowledge of the Company, any other
party thereto
under) any Contract to which it is a party or by which it
or any of its
properties or other assets is bound, except for violations
or defaults that
individually or in the aggregate have not had and would
not reasonably
be expected to have a Material Adverse Effect. Neither the
Company nor any
of its Subsidiaries has entered into any Contract that is
currently in
effect that is required to be disclosed pursuant to Item 404
of Regulation
S-K of the SEC.
(2) Section 3.01(i)(2) of the Company Disclosure Schedule contains
a
complete and
accurate list, as of the date hereof, of (A) each material
Contract
restricting or purporting to restrict any of the Company's
Affiliates'
ability to compete (other than each such Contract that only
restricts the
Company's Subsidiaries' ability to compete) in any line of
business,
geographic area or customer segment, (B) each material Contract
restricting the
Company's or any of its Subsidiaries' ability to compete
in any line of
business, geographic area or customer segment and (C) each
material
Contract relating to distribution, sale, supply, licensing,
co-promotion or
manufacturing of any products or services of the Company
or any of its
Subsidiaries or any products licensed by the Company or any
of its
Subsidiaries.
(j) COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i) Except
with
respect to
Environmental Laws, the Employee Retirement Income Security
Act of 1974, as
amended ("ERISA"), taxes and regulatory compliance, which
are the subjects
of Sections 3.01(j)(ii), 3.01(l), 3.01(n) and 3.01(u),
respectively,
each of the Company and its Subsidiaries is in compliance
with all Laws
and Orders (collectively, "Legal Provisions") applicable to
it, its
properties or other assets or its business or operations,
except
for failures to
be in compliance that individually or in the aggregate
have not had and would
not reasonably be expected to have a Material
Adverse Effect.
Each of the Company and its Subsidiaries has in effect
all approvals,
authorizations, certificates, filings, franchises,
licenses,
notices and permits of or with all Governmental Entities
(collectively,
"Permits"), including all Permits under the Federal Food,
Drug and
Cosmetic Act of 1938, as amended (including the rules and
regulations
promulgated thereunder, the "FDCA"), necessary for it to own,
lease or operate
its properties and other assets and to carry on its
business and
operations as currently conducted, except where the failure
to have such
Permits individually or in the aggregate has not had and
would not
reasonably be expected to have a Material Adverse Effect. Since
January 1, 2000,
there has occurred no default under, or violation of,
any such Permit,
except for any such default or violation that
individually or
in the aggregate has not had and would not
<PAGE>
16
reasonably be
expected to have a Material Adverse Effect. The
consummation of
the Merger, in and of itself, would not cause the
revocation or
cancelation of any such Permit that individually or in the
aggregate would
reasonably be expected to have a Material Adverse Effect.
(ii) Except for those matters that individually or in the
aggregate
have not had and
would not reasonably be expected to have a Material
Adverse Effect:
(A) during the period of ownership or operation by the
Company or any
of its Subsidiaries of any of its currently or formerly
owned, leased or
operated properties, there have been no Releases of
Hazardous
Materials in, on, under or affecting any properties which would
subject the
Company or any of its Subsidiaries to any liability under any
Environmental
Law or require any expenditure by the Company or any of its
Subsidiaries for
remediation to meet applicable standards thereunder; (B)
prior to and
after, as applicable, the period of ownership or operation
by the Company
or any of its Subsidiaries of any of its currently or
formerly owned,
leased or operated properties, to the Knowledge of the
Company, there
were no Releases of Hazardous Materials in, on, under or
affecting any
properties which would subject the Company or any of its
Subsidiaries to
any liability under any Environmental Law or require any
expenditure by
the Company or any of its Subsidiaries for remediation to
meet applicable
standards thereunder; (C) neither the Company nor any of
its Subsidiaries
is subject to any indemnity obligation or other Contract
with any person
relating to obligations or liabilities under
Environmental
Laws; and (D) to the Knowledge of the Company, there are no
facts,
circumstances or conditions that would reasonably be expected
to
form the basis
for any investigation, suit, claim, action, proceeding or
liability
against or affecting the Company or any of its Subsidiaries
relating to or
arising under Environmental Laws. The term "Environmental
Laws" means all
applicable Federal, state, local and foreign Laws
(including the
common law), Orders, notices, Permits or binding Contracts
issued,
promulgated or entered into by any Governmental Entity,
relating
in any way to
the environment, preservation or reclamation of natural
resources or the
presence, management, Release of, or exposure to,
Hazardous
Materials, or to human health and safety. The term "Hazardous
Materials" means
(1) petroleum products and by-products, asbestos and
asbestos-containing materials, urea formaldehyde foam insulation,
medical
or infectious
wastes, polychlorinated biphenyls, radon gas, radioactive
substances,
chlorofluorocarbons and all other ozone-depleting substances
and (2) any
other chemical, material, substance, waste, pollutant or
contaminant that
is prohibited, limited or regulated by or pursuant to
any
Environmental Law. The term "Release" means any spilling,
leaking,
pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching,
dumping, disposing or migrating into or through the environment
or any natural
or man-made structure.
(k) LABOR RELATIONS. From the date of the most recent financial
statements
included in the Filed Company SEC Documents through the date
hereof, there
has not been any adoption, material amendment or
termination by
the Company or any of its Subsidiaries of any collective
bargaining or
other labor union Contract to which the Company or any of
its Subsidiaries
is a party or by which the Company or any of its
Subsidiaries is
bound. There are no collective bargaining or other labor
union Contracts
to which the Company or any of its Subsidiaries is a
party or by
which the Company or any of its Subsidiaries is bound. As of
the date of this
Agreement, none of the employees
<PAGE>
17
of the Company
or any of its Subsidiaries are represented by any union
with respect to
their employment by the Company or such Subsidiary. Since
January 1, 2003,
neither the Company nor any of its Subsidiaries has
experienced any
material labor disputes, union organization attempts or
work stoppages,
slowdowns or lockouts due to labor disagreements.
(l) ERISA COMPLIANCE. (i) Section 3.01(l)(i) of the Company
Disclosure
Schedule contains a complete and accurate list of each
employment,
bonus, pension, profit sharing, deferred compensation,
incentive
compensation, stock ownership, stock purchase, stock
appreciation,
restricted stock, stock option, "phantom" stock,
performance,
retirement, thrift, savings, stock bonus, paid time off,
perquisite,
fringe benefit, vacation, severance, disability, death
benefit,
hospitalization, medical, welfare benefit or other plan,
program, policy
or Contract maintained, contributed to or required to be
maintained or
contributed to by the Company or any of its Subsidiaries or
any other 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
(each, a
"Commonly Controlled Entity") (exclusive of any such plan,
program, policy
or Contract mandated by and maintained solely pursuant to
applicable law),
in each case providing benefits to any current or former
director,
officer or employee of the Company or any of its Subsidiaries
(collectively,
but exclusive of individual option and restricted award
agreements issued
under the Company Stock Plans, the "Company Benefit
Plans") and each
Company Benefit Agreement (exclusive of local offer
letters mandated
under applicable non-U.S. law that do not impose any
severance
obligations other than any mandatory statutory severance). Each
Company Benefit
Plan that is an "employee pension benefit plan" (as
defined in
Section 3(2) of ERISA) is sometimes referred to herein as a
"Company Pension
Plan" and each Company Benefit Plan that is an "employee
welfare benefit
plan" (as defined in Section 3(1) of ERISA) is sometimes
referred to
herein as a "Company Welfare Plan".
(ii) The Company has provided to Parent complete and accurate
copies
of (A) each
Company Benefit Plan or, at the Company's option, in the case
of Company
Benefit Plans maintained primarily for the benefit of
individuals
regularly employed outside the United States, a summary
thereof (or, in
either case, with respect to any unwritten Company
Benefit Plans,
descriptions thereof) and Company Benefit Agreements
(exclusive of
local offer letters mandated under applicable non-U.S. law
that do not
impose any severance obligations other than any mandatory
statutory
severance), (B) the two most recent annual reports on Form 5500
required to be
filed with the Internal Revenue Service (the "IRS") with
respect to each
Company Benefit Plan (if any such report was required),
(C) the most
recent summary plan description for each Company Benefit
Plan for which
such summary plan description is required and (D) each
trust Contract
and insurance or group annuity Contract relating to any
Company Benefit
Plan.
(iii) Each Company Benefit Plan has been administered in all
material
respects in accordance with its terms. The Company, its
Subsidiaries and
all the Company Benefit Plans are all in compliance in
all material
respects with the applicable provisions of
<PAGE>
18
ERISA, the Code
and all other applicable Laws, including Laws of foreign
jurisdictions,
and the terms of all collective bargaining Contracts.
(iv) All Company Pension Plans intended to be tax-qualified
have
received
favorable determination letters from the IRS with respect to
"TRA" (as
defined in Section 1 of IRS Rev. Proc. 93-39), and have timely
filed with the
IRS determination letter applications (or have received
such a
determination letter) with respect to "GUST" (as defined in
Section 1 of IRS
Notice 2001-42), to the effect that such Company Pension
Plans are
qualified and exempt from Federal income taxes under Sections
401(a) and
501(a), respectively, of the Code, no such determination
letter has been
revoked (nor, to the Knowledge of the Company, has
revocation been
threatened) and to the Knowledge of the Company, no event
has occurred
since the date of the most recent determination letter or
application
therefor relating to any such Company Pension Plan that would
reasonably be
expected to adversely affect the qualification of such
Company Pension
Plan or materially increase the costs relating thereto or
require security
under Section 307 of ERISA. The Company has provided to
Parent a
complete and accurate copy of the most recent determination
letter received
prior to the date hereof with respect to each Company
Pension Plan, as
well as a complete and accurate copy of each pending
application for
a determination letter, if any. The Company has also
provided to
Parent a complete and accurate list of all amendments to any
Company Pension
Plan as to which a favorable determination letter has not
yet been
received.
(v) Neither the Company nor any Commonly Controlled Entity has,
during the
six-year period ending on the date hereof, maintained,
contributed to
or been required to contribute to any Company Pension Plan
that is subject
to Title IV of ERISA or Section 412 of the Code, or any
"multiemployer
plan" as defined in Section 3(37) or 4001(a)(3) of ERISA.
Except as has
not had and would not reasonably be expected to have a
Material Adverse
Effect, neither the Company nor any Commonly Controlled
Entity has any
unsatisfied liability under Title IV of ERISA. To the
Knowledge of the
Company, no condition exists that presents a material
risk to the
Company or any Commonly Controlled Entity of incurring a
material
liability under Title IV of ERISA. The Pension Benefit Guaranty
Corporation has
not instituted proceedings under Section 4042 of ERISA to
terminate any
Company Benefit Plan and, to the Knowledge of the Company,
no condition
exists that presents a material risk that such proceedings
will be
instituted.
(vi) Except as has not had and would not reasonably be expected
to
have a Material
Adverse Effect, (A) all reports, returns and similar
documents with
respect to all Company Benefit Plans required to be filed
with any
Governmental Entity or distributed to any Company Benefit Plan
participant have
been duly and timely filed or distributed, (B) none of
the Company or
any of its Subsidiaries has received notice of, and to the
Knowledge of the
Company, there are no investigations by any Governmental
Entity with
respect to, termination proceedings or other claims (except
claims for
benefits payable in the normal operation of the Company
Benefit Plans),
suits or proceedings against or involving any Company
Benefit Plan or
asserting any rights or claims to benefits under any
Company Benefit
Plan that could reasonably be expected to give rise to
any material
<PAGE>
19
liability and
(C) to the Knowledge of the Company, there are not any
facts that could
give rise to any liability in the event of any such
investigation,
claim, suit or proceeding.
(vii) Except as has not had and would not reasonably be expected
to
have a Material
Adverse Effect, (A) all contributions, premiums and
benefit payments
under or in connection with the Company Benefit Plans
that are
required to have been made as of the date hereof in accordance
with the terms
of the Company Benefit Plans have been timely made or have
been reflected
on the most recent consolidated balance sheet filed or
incorporated by
reference into the Filed Company SEC Documents and (B) no
Company Pension
Plan has an "accumulated funding deficiency" (as such
term is defined
in Section 302 of ERISA or Section 412 of the Code),
whether or not
waived.
(viii) With respect to each Company Benefit Plan, except as has
not
had and would
not reasonably be expected to have a Material Adverse
Effect, (A)
there has not occurred any prohibited transaction (within the
meaning of
Section 406 of ERISA or Section 4975 of the Code) in which the
Company or any
of its Subsidiaries or any of their respective employees,
or, to the
Knowledge of the Company, any trustee, administrator or other
fiduciary of
such Company Benefit Plan, or any agent of the foregoing,
has engaged that
could reasonably be expected to subject the Company or
any of its
Subsidiaries or any of their respective employees, or any such
trustee,
administrator or other fiduciary, to the tax or penalty on
prohibited
transactions imposed by Section 4975 of the Code or the
sanctions
imposed under Title I of ERISA and (B) neither the Company, any
of its
Subsidiaries or any of their respective employees nor, to the
Knowledge of the
Company, any trustee, administrator or other fiduciary
of any Company
Benefit Plan nor any agent of any of the foregoing, has
engaged in any
transaction or acted in a manner, or failed to act in a
manner, that
could reasonably be expected to subject the Company or any
of its
Subsidiaries or any of their respective employees or, to the
Knowledge of the
Company, any such trustee, administrator or other
fiduciary, to
any liability for breach of fiduciary duty under ERISA or
any other applicable
Law.
(ix) Each Company Welfare Plan may be amended or terminated
(including with
respect to benefits provided to retirees and other former
employees)
without material liability to the Company or any of its
Subsidiaries at any time after the
Effective Time. Each of the Company
and its
Subsidiaries complies in all material respects with the
applicable
requirements of Section 4980B(f) of the Code, Sections 601-
609 of ERISA or
any similar state or local Law with respect to each
Company Benefit
Plan that is a group health plan, as such term is defined
in Section
5000(b)(1) of the Code or such state Law. Neither the Company
nor any of its
Subsidiaries has any material obligations for health or
life insurance
benefits following termination of employment under any
Company Benefit
Plan (other than for continuation coverage required under
Section
4980(B)(f) of the Code).
(x) None of the execution and delivery of this Agreement, the
obtaining of the
Shareholder Approval or the consummation of the Merger
or any other
transaction contemplated by this Agreement (alone or in
conjunction with
any other event, including as a result of any
termination of
employment on or following the Effective Time) will (A)
entitle any
current or former director, officer, employee or consultant
of the
<PAGE>
20
Company or any
of its Subsidiaries to severance or termination pay, (B)
accelerate the
time of payment or vesting, or trigger any payment or
funding (through
a grantor trust or otherwise) of, compensation or
benefits under,
increase the amount payable or trigger any other material
obligation
pursuant to, any Company Benefit Plan or Company Benefit
Agreement or (C)
result in any breach or violation of, or a default
under, any
Company Benefit Plan or Company Benefit Agreement.
(xi) Neither the Company nor any of its Subsidiaries has any
material
liability or obligations, including under or on account of a
Company Benefit
Plan, arising out of the hiring of persons to provide
services to the
Company or any of its Subsidiaries and treating such
persons as
consultants or independent contractors and not as employees of
the Company or
any of its Subsidiaries. No current or former independent
contractor that
provides or provided personal services to the Company or
its Subsidiaries
(other than a current or former director) is entitled to
any material
fringe or other benefits (other than cash consulting fees)
pursuant to any
plan, program, policy or Contract to which the Company or
any of its
Subsidiaries is a party or which is maintained, sponsored or
contributed to
by the Company or any of its Subsidiaries.
(xii) No material deduction by the Company or any of its
Subsidiaries in
respect of any "applicable employee remuneration" (within
the meaning of
Section 162(m) of the Code) has been disallowed or is
subject to
disallowance by reason of Section 162(m) of the Code. For each
of the Key
Personnel, the Company has previously provided to Parent (A)
accurate Form
W-2 information for the 1999, 2000, 2001, 2002 and 2003
calendar years,
(B) annual base salary as of the date hereof, actual
bonus earned for
the 2003 calendar year and target annual bonus for the
2004 calendar
year and (C) a list, as of the date hereof, of all
outstanding
Company Stock Options, Company Restricted Stock and Company
Stock-Based
Awards granted under the Company Stock Plans or otherwise
(other than
rights under the ESPP), together with (as applicable) the
number of shares
of Company Common Stock subject thereto, and the grant
dates,
expiration dates, exercise or base prices and vesting schedules
thereof, (D)
estimated current annual cost of welfare benefits and (E)
estimated cost
of the pension benefit enhancement under Section 8 of the
Company's Change
in Control Severance Plan for Select Employees.
(m) NO PARACHUTE GROSS UP. Except as provided in accordance with
the
Company's Change
in Control Severance Pay Plan for Select Employees, no
current or
former employee or director of the Company or any of its
Subsidiaries is
entitled to receive any additional payment from the
Company or any
of its Subsidiaries or the Surviving Corporation by reason
of the excise
tax required by Section 4999(a) of the Code being imposed
on such person
by reason of the transactions contemplated by this
Agreement.
(n) TAXES. Except as has not had and would not reasonably be
expected to have
a Material Adverse Effect:
(i) All tax returns required by applicable Law to have been
filed
with any taxing
authority by, or on behalf of, the Company or any of its
Subsidiaries
have been
<PAGE>
21
filed in a
timely manner (taking into account any valid extension) in
accordance with
all applicable Laws, and all such tax returns are true
and complete in
all material respects.
(ii) The Company and each of its Subsidiaries has paid (or has
had
paid on its
behalf) all taxes due and owing, and the Company's most
recent financial
statements included in the Filed Company SEC Documents
reflect an
adequate accrual for all taxes payable by Company and its
Subsidiaries for
all taxable periods and portions thereof accrued through
the date of such
financial statements.
(iii) There are no Liens or encumbrances for taxes on any of
the
assets of the
Company or any of its Subsidiaries other than for taxes not
yet due and
payable.
(iv) The Company and its Subsidiaries have complied with all
applicable Laws
relating to the payment and withholding of taxes.
(v) No written notification has been received by the Company or
any
of its
Subsidiaries that any federal, state, local or foreign audit,
examination or
similar proceeding is pending, proposed or asserted with
regard to any
taxes or tax returns of the Company or its Subsidiaries.
(vi) There is no currently effective Contract extending, or
having
the effect of
extending, the period of assessment or collection of any
federal, state
and, to the Knowledge of the Company, foreign taxes with
respect to the
Company or any of its Subsidiaries nor has any request
been made for
any such extension.
(vii) No written notice of a claim of pending investigation has
been
received from
any state, local or other jurisdiction with which the
Company or any of its
Subsidiaries currently does not file tax returns,
alleging that
the Company or any of its Subsidiaries has a duty to file
tax returns and
pay taxes or is otherwise subject to the taxing authority
of such
jurisdiction.
(viii) Neither the Company nor any of its Subsidiaries joins or
has
joined, for any
taxable period during the eight years prior to the date
of this
Agreement, in the filing of any affiliated, aggregate,
consolidated,
combined or unitary federal, state, local and, to the
Knowledge of the
Company, foreign tax return other than consolidated tax
returns for the
consolidated group of which the Company is the common
parent.
(ix) Neither the Company nor any of its Subsidiaries is a party
to
or bound by any
tax sharing agreement or tax indemnity agreement,
arrangement or
practice (including any advance pricing agreement, closing
agreement or
other agreement relating to taxes with any taxing
authority).
(x) Neither the Company nor any of its Subsidiaries has
constituted
either a
"distributing corporation" or a "controlled corporation" in a
distribution of
stock qualifying for tax-free treatment under Section 355
of the Code in
the two years prior to the date of this Agreement.
<PAGE>
22
(xi) Neither the Company nor any of its Subsidiaries will be
required to
include in a taxable period ending after the Effective Time
taxable income
attributable to income that accrued in a prior taxable
period (or
portion of a taxable period) but was not recognized for tax
purposes in any
prior taxable period as a result of (A) an open
transaction
disposition made on or before the Effective Time, (B) a
prepaid amount
received on or prior to the Effective Time, (C) the
installment
method of accounting, (D) the long-term contract method of
accounting, (E)
the cash method of accounting or Section 481 of the Code
or (F) any
comparable provisions of state or local tax Law, domestic or
foreign, or for
any other reason, other than any amounts that are
specifically
reflected in a reserve for taxes on the most recent
financial
statements of the Company included in the Filed Company SEC
Documents.
(xii) Neither the Company nor any of its Subsidiaries has
entered
into a "listed
transaction" within the meaning of Treasury Regulation
{section}
1.6011-4(b)(2)
(xiii) As used in this Agreement (A) "tax" means (i) any tax,
duty,
governmental fee
or other like assessment or charge of any kind
whatsoever
(including withholding on amounts paid to or by any person and
liabilities with
respect to unclaimed funds), together with any related
interest,
penalty, addition to tax or additional amount, and any
liability for
any of the foregoing as transferee, (ii) in the case of the
Company or any
of its Subsidiaries, liability for the payment of any
amount of the
type described in clause (i) as a result of being or having
been before the
Effective Time a member of an affiliated, consolidated,
combined or
unitary group, or a party to any Contract as a result of
which liability
of the Company or any of its Subsidiaries is determined
or taken into
account with reference to the activities of any other
person and (iii)
in the case of the Company or any of its Subsidiaries,
liability of the
Company or any of its Subsidiaries for the payment of
any amount as a
result of being party to any tax sharing Contract or with
respect to the
payment of any amount imposed on any person of the type
described in (i)
or (ii) as a result of any existing Contract (including
an
indemnification Contract); (B) "taxing authority" means any
Federal,
state, local or
foreign government, any subdivision, agency, commission
or authority
thereof, or any quasi-governmental body exercising tax
regulatory
authority; and (C) "tax return" means any report, return,
document,
declaration or other information or filing required to be filed
with respect to
taxes (whether or not a payment is required to be made
with respect to
such filing), including information returns, any
documents with
respect to or accompanying payments of estimated taxes, or
with respect to
or accompanying requests for the extension of time in
which to file
any such report, return, document, declaration or other
information.
(o) TITLE TO PROPERTIES. Each of the Company and its
Subsidiaries
has valid title
to, or valid leasehold or sublease interests or other
comparable
contract rights in or relating to all of its real properties
and other
tangible assets necessary for the conduct of its business as
currently
conducted, except 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
have not had and would not reasonably be expected to have a
Material Adverse
Effect. Each of the Company and its Subsidiaries has
complied with
the terms of all leases or subleases to which it is a party
and under which
it is in occupancy, and all leases to which the Company
is a party
and
<PAGE>
23
under which it
is in occupancy are in full force and effect, except for
such failure to
comply or be in full force and effect that individually
or in the
aggregate has not had and would not reasonably be expected to
have a Material
Adverse Effect. Neither the Company nor any of its
Subsidiaries has
received any written notice of any event or occurrence
that has
resulted or could result (with or without the giving of notice,
the lapse of
time or both) in a default with respect to any lease or
sublease to
which it is a party, which defaults individually or in the
aggregate have
had or would reasonably be expected to have a Material
Adverse
Effect.
(p) INTELLECTUAL PROPERTY. (i) Section 3.01(p)(i) of the
Company
Disclosure
Schedule sets forth, as of the date hereof, a complete and
accurate list
(in all material respects) of all patents and applications
therefor,
registered trademarks and applications therefor, domain name
registrations
and copyright registrations (if any) that, in each case,
are owned by or
licensed to the Company or any of its Subsidiaries and
are material to
the conduct of the business of the Company and its
Subsidiaries,
taken as a whole, as currently conducted. Such intellectual
property rights
required to be listed in Section 3.01(p)(i) of the
Company
Disclosure Schedule, together with any tradename rights, trade
secret or know
how rights, service mark rights, trademark rights, patent
rights,
intellectual property rights in computer programs or software
or
other type of
intellectual property rights, in each case, that are owned
or licensed by
the Company or any of its Subsidiaries and are material to
the conduct of
the business of the Company and its Subsidiaries, taken as
a whole, as
currently conducted, are collectively referred to herein as
"Intellectual
Property Rights". All Intellectual Property Rights are
either (x) owned
by the Company or a Subsidiary of the Company free and
clear of all
Liens or (y) licensed to the Company or a Subsidiary of the
Company free and
clear (to the Knowledge of the Company) of all Liens,
except where the
failure to so own or license such Intellectual Property
Rights
individually or in the aggregate has not had and would not
reasonably be
expected to have a Material Adverse Effect. There are no
claims pending
or, to the Knowledge of the Company, threatened with
regard to the
ownership or, to the Knowledge of the Company, licensing by
the Company or
any of its Subsidiaries of any Intellectual Property
Rights which
individually or in the aggregate has had or would reasonably
be expected to
have a Material Adverse Effect. Each of the Company and
its Subsidiaries
owns, is validly licensed or otherwise has the right to
use all
Intellectual Property Rights, except where the failure to own,
have a valid
license or otherwise have rights to use individually or in
the aggregate
has not had and would not reasonably be expected to have a
Material Adverse
Effect. The execution and delivery of this Agreement by
the Company do
not, and the consummation by the Company of the Merger and
the other
transactions contemplated by this Agreement and compliance by
the Company with
the provisions of this Agreement will not, conflict
with, or result
in any violation or breach of, or default (with or
without notice
or lapse of time, or both) under, or give rise to a right
of, or result
in, termination, cancelation or acceleration of any
obligation or to
the loss of a benefit under, or result in the creation
of any Lien in
or upon, any Intellectual Property Right, in each case
that
individually or in the aggregate has had or would reasonably be
expected to have
a Material Adverse Effect. Section 3.01(p)(i) of the
Company
Disclosure Schedule sets forth, as of the date hereof, all
Contracts under
which the Company or any of its Subsidiaries is obligated
to make payments
to third parties for use of any Intellectual Property
Rights with
respect to the
<PAGE>
24
commercialization of any products that are, as of the date hereof,
being
sold,
manufactured by or under development by the Company or any of
its
Subsidiaries and
for which such payments are in excess of $2,000,000 per
year for any
single product. The aggregate amount of all such payments
that the Company
and its Subsidiaries are obligated to make under any
Contract of the
type described in the immediately preceding sentence that
are not required
to be disclosed pursuant to such sentence does not
exceed
$10,000,000 per year.
(ii) There are no pending or, to the Knowledge of the Company,
threatened
claims that the Company or any of its Subsidiaries has
infringed or is
infringing (including with respect to the manufacture,
use or sale by
the Company or any of its Subsidiaries of any products or
to the
operations of the Company and its Subsidiaries) any
intellectual
property rights
of any person which individually or in the aggregate has
had or would
reasonably be expected to have a Material Adverse Effect. To
the Knowledge of
the Company, as of the date of this Agreement, there are
no facts,
circumstances or conditions that would reasonably be expected
to form the
basis for any claim by a person to exclude or prevent the
Company or any
of its Subsidiaries from freely using its Intellectual
Property Rights
and that individually or in the aggregate would
reasonably be
expected to have a Material Adverse Effect.
(iii) All patents required to be listed in Section 3.01(p)(i) of
the
Company
Disclosure Schedule that are owned by the Company or any of its
Subsidiaries
have been duly registered and/or filed with or issued by
each appropriate
Governmental Entity, all necessary affidavits of
continuing use have
been timely filed, and all necessary maintenance fees
have been timely
paid to continue all such rights in effect, other than
failures to be
duly registered, filed, issued or paid which individually
or in the
aggregate have not had and would not reasonably be expected to
have a Material
Adverse Effect. None of the patents required to be listed
in Section
3.01(p)(i) of the Company Disclosure Schedule that are owned
by the Company
or any of its Subsidiaries has expired or been declared
invalid, in
whole or in part, by any Governmental Entity, other than such
expirations or
declarations of invalidity which individually or in the
aggregate have
not had and would not reasonably be expected to have a
Material Adverse
Effect. There are no ongoing interferences, oppositions,
reissues,
reexaminations or other proceedings challenging any of the
patents or
patent applications required to be listed in Section
3.01(p)(i) of
the Company Disclosure Schedule and owned by the Company or
any of its
Subsidiaries (or, to the Company's Knowledge, challenging any
such patents or
patent applications licensed to the Company or any of its
Subsidiaries),
including ex parte and post-grant proceedings, in the
United States
Patent and Trademark Office or in any foreign patent office
or similar
administrative agency, other than such interferences,
oppositions,
reissues, reexaminations or proceedings that individually or
in the aggregate have not
had and would not reasonably be expected to
have a Material
Adverse Effect.
(iv) Except as has not had and would not reasonably be expected
to
have a Material
Adverse Effect, the Company and its Subsidiaries have
used
commercially reasonable efforts to maintain their material
trade
secrets in
confidence.
<PAGE>
25
(q) VOTING REQUIREMENTS. The affirmative vote of holders of a
majority of the
outstanding shares of Company Common Stock at the
Shareholders'
Meeting or any adjournment or postponement thereof to
approve this
Agreement (the "Shareholder Approval") is the only vote of
the holders of
any class or series of capital stock of the Company
necessary to
approve this Agreement and the transactions contemplated by
this
Agreement.
(r) STATE TAKEOVER LAWS; COMPANY ARTICLES PROVISIONS. The Board
of
Directors of the
Company has unanimously adopted, by all directors
present, this
Agreement, the terms of this Agreement and the consummation
of the Merger
and the other transactions contemplated by this Agreement,
and such
adoption represents all the actions necessary to render
inapplicable to
this Agreement, the Merger and the other transactions
contemplated by
this Agreement, the restrictions (i) on "business
combinations"
(as defined in Section 23-1-43-5 of the IBCL) set forth in
Section
23-1-43-18 of the IBCL and (ii) on the actions or transactions
set forth in
Paragraph 6 of the Company Articles ("Paragraph 6"), in each
case to the
extent, if any, such restrictions would otherwise be
applicable to
this Agreement, the Merger and the other transactions
contemplated by
this Agreement. For purposes of Paragraph 6, the approval
of the Board of
Directors of the Company referred to in the immediately
preceding
sentence constitutes the approval of the Merger and the other
transactions
contemplated by this Agreement by the "Continuing Directors"
(as defined in
Paragraph 6) pursuant to clause (c) of Paragraph 6. No
other similar
provision of the Company Articles or the Company By-laws
or, to the
Knowledge of the Company, other state takeover Law or similar
Law applies or
purports to apply to this Agreement, the Merger or the
other
transactions contemplated by this Agreement.
(s) BROKERS AND OTHER ADVISORS. No broker, investment banker,
financial
advisor or other person (other than J.P. Morgan Securities Inc.
and Morgan
Stanley & Co. Incorporated), the fees and expenses of which
will be paid by
the 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 based upon arrangements
made by or on
behalf of the Company. The Company has delivered to Parent
complete and
accurate copies of all Contracts under which any such fees
or expenses are
payable and all indemnification and other Contracts
related to the
engagement of the persons to whom such fees are payable.
(t) OPINION OF FINANCIAL ADVISORS. The Company has received the
opinions of each
of J.P. Morgan Securities Inc. and Morgan Stanley & Co.
Incorporated, in
each case dated the date hereof, to the effect that, as
of such date,
the Merger Consideration is fair, from a financial point of
view, to the
holders of shares of Company Common Stock, a signed copy of
which opinion
has been, or will promptly be, delivered to Parent.
(u) REGULATORY COMPLIANCE. (i) As to each product subject to
the
FDCA or similar
Legal Provisions in any foreign jurisdiction that are
developed,
manu
