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Baxter International / North American Vaccine - Share Exchange Agreement Dated 11/17/99
Exhibit 1
SHARE EXCHANGE AGREEMENT
among
BAXTER INTERNATIONAL INC.,
NEPTUNE ACQUISITION CORP.
and
NORTH AMERICAN VACCINE, INC.
Dated as of November 17, 1999
TABLE OF CONTENTS
Page
---- ARTICLE I DEFINITIONS...................................................... 2
SECTION 1.01 Certain Defined Terms.................................. 2
ARTICLE II THE ARRANGEMENT................................................. 8
SECTION 2.01 The Arrangement........................................ 8
SECTION 2.02 Interim Order.......................................... 8
SECTION 2.03 Mailing of Proxy Statement............................. 8
SECTION 2.04 Final Order............................................ 8
SECTION 2.05 Filing of Articles of Arrangement...................... 9
SECTION 2.06 Effective Time......................................... 9
ARTICLE III EXCHANGE OF SHARES............................................. 9
SECTION 3.01 Exchange of Shares..................................... 9
SECTION 3.02 No Fractional Share Certificates....................... 11
SECTION 3.03 Options and Warrants to Purchase Company Common Shares. 11
SECTION 3.04 Certain Adjustments.................................... 12
SECTION 3.05 Lost, Stolen or Destroyed Certificates................. 12
SECTION 3.06 Taking of Necessary Action; Further Action............. 12
SECTION 3.07 Dissenting Shareholders................................ 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY....................... 13
SECTION 4.01 Organization and Qualification; Subsidiaries........... 13
SECTION 4.02 Certificate of Incorporation and Bylaws................ 13
SECTION 4.03 Capitalization......................................... 13
SECTION 4.04 Authority Relative to this Agreement................... 14
SECTION 4.05 No Conflict; Required Filings and Consents............. 15
SECTION 4.06 Permits; Compliance with Laws.......................... 15
SECTION 4.07 SEC Filings; Financial Statements...................... 16
SECTION 4.08 Absence of Certain Changes or Events................... 17
SECTION 4.09 Employee Benefit Plans; Labor Matters.................. 17
SECTION 4.10 Contracts.............................................. 20
SECTION 4.11 Litigation............................................. 21
SECTION 4.12 Environmental Matters.................................. 21
SECTION 4.13 Intellectual Property.................................. 22
SECTION 4.14 Taxes.................................................. 24
SECTION 4.15 Insurance.............................................. 25
SECTION 4.16 Properties............................................. 25
SECTION 4.17 Affiliates............................................. 26
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Page
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SECTION 4.18 Opinion of Financial Advisor........................ 26
SECTION 4.19 Brokers............................................. 26
SECTION 4.20 Certain Business Practices.......................... 26
SECTION 4.21 Business Activity Restriction....................... 27
SECTION 4.22 WARN Act............................................ 27
SECTION 4.23 FDA Matters......................................... 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUIRECO........ 28
SECTION 5.01 Organization and Qualification; Subsidiaries........ 28
SECTION 5.02 Certificate of Incorporation and Bylaws............. 28
SECTION 5.03 Capitalization...................................... 28
SECTION 5.04 Authority........................................... 29
SECTION 5.05 No Conflict; Required Filings and Consents.......... 29
SECTION 5.06 Absence of Certain Changes or Events................ 30
SECTION 5.07 SEC Filings; Financial Statements................... 30
SECTION 5.08 Brokers............................................. 30
SECTION 5.09 No Prior Activities................................. 31
ARTICLE VI COVENANTS.................................................... 31
SECTION 6.01 Conduct of Business by Company Pending the Effective
Time................................................ 31
SECTION 6.02 Notices of Certain Events........................... 33
SECTION 6.03 Access to Information; Confidentiality.............. 34
SECTION 6.04 No Solicitation of Transactions..................... 34
SECTION 6.05 Control of Operations............................... 35
SECTION 6.06 Further Action; Consents; Filings................... 35
SECTION 6.07 Additional Reports.................................. 37
SECTION 6.08 Company Stock Plans and Warrants.................... 37
SECTION 6.09 United Kingdom Filings.............................. 37
SECTION 6.10 Company Indebtedness................................ 38
ARTICLE VII ADDITIONAL AGREEMENTS....................................... 38
SECTION 7.01 Registration Statement; Proxy Statement............. 38
SECTION 7.02 Shareholders' Meeting............................... 40
SECTION 7.03 Affiliates.......................................... 40
SECTION 7.04 Directors' and Officers' Indemnification and
Insurance........................................... 40
SECTION 7.05 No Shelf Registration............................... 41
SECTION 7.06 Public Announcements................................ 41
SECTION 7.07 NYSE Listing........................................ 41
SECTION 7.08 Blue Sky............................................ 41
Page
---- ARTICLE VIII CONDITIONS....................................................... 42
SECTION 8.01 Conditions to the Obligations of Each Party............... 42
SECTION 8.02 Conditions to the Obligations of Company.................. 43
SECTION 8.03 Conditions to the Obligations of Parent and Acquireco..... 43
SECTION 8.04 Merger of Conditions...................................... 44
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.................................. 44
SECTION 9.01 Termination............................................... 44
SECTION 9.02 Effect of Termination..................................... 46
SECTION 9.03 Amendment................................................. 46
SECTION 9.04 Waiver.................................................... 47
SECTION 9.05 Termination Fee; Expenses................................. 47
ARTICLE X GENERAL PROVISIONS.................................................. 48
SECTION 10.01 Non-Survival of Representations and Warranties............ 48
SECTION 10.02 Notices................................................... 48
SECTION 10.03 Severability.............................................. 49
SECTION 10.04 Assignment; Binding Effect; Benefit....................... 49
SECTION 10.05 Incorporation of Exhibits................................. 49
SECTION 10.06 Governing Law............................................. 49
SECTION 10.07 Waiver of Jury Trial...................................... 50
SECTION 10.08 Specific Performance...................................... 50
SECTION 10.09 Headings; Interpretation.................................. 50
SECTION 10.10 Counterparts.............................................. 50
SECTION 10.11 Entire Agreement.......................................... 50
ANNEXES
ANNEX A Plan of Arrangement ANNEX B Form of Company Shareholder Agreement ANNEX C Form of Warrant Termination Letter ANNEX D Form of Affiliate Letter ANNEX E Form of Opinion of Thomas J. Sabatino, Jr., General Counsel of Parent ANNEX F Form of Opinion of Special Patent Counsels to Company ANNEX G-1 Form of Opinion of U.S. Counsel to Company ANNEX G-2 Form of Opinion of Canadian Counsel to Company ANNEX H Term Sheet to Tax Side Letter
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of November 17, 1999, among BAXTER INTERNATIONAL INC., a Delaware corporation ("Parent"), NEPTUNE ACQUISITION CORP., an unlimited liability company existing under the laws of the Province of Nova Scotia and a wholly owned subsidiary of Parent ("Acquireco"), and NORTH AMERICAN VACCINE, INC., a corporation existing under the federal laws of Canada ("Company"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS the Company and Acquireco desire to propose to the shareholders of Company an Arrangement (as hereinafter defined) under the CBCA (as hereinafter defined) substantially on the terms and subject to the conditions set forth in the Plan of Arrangement attached hereto as Annex A;
WHEREAS in order to implement Acquireco's proposal referred to above, Company intends to propose to its shareholders an Arrangement under Section 192 of the CBCA involving Company, Acquireco and the shareholders of Company;
WHEREAS the board of directors of Company has unanimously determined that the Arrangement is fair and is in the best interests of Company and the shareholders of Company and has agreed to enter into this Agreement and to recommend that the shareholders of Company vote in favor of the Arrangement Resolution (as hereinafter defined), all on the terms and subject to the conditions contained herein;
WHEREAS the board of directors of Parent and Acquireco have approved the transactions contemplated by this Agreement, including the Arrangement;
WHEREAS the parties acknowledge that the transactions contemplated by this Agreement are intended to result in a "qualified stock purchase" within the meaning of Section 338(d)(3) of the Code (as hereinafter defined) and that an election pursuant to Section 338(g) of the Code will be made with respect to such purchase;
WHEREAS, concurrently with the execution of this Agreement and as an inducement to Parent to enter into this Agreement, certain shareholders of Company have entered into a shareholder agreement (each, a "Company Shareholder Agreement") in the form attached hereto as Annex B;
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. Unless the context otherwise requires, the following terms, when used in this Agreement, shall have the respective meanings specified below (such meanings to be equally applicable to the singular and plural forms of the terms defined):
"Affiliate" shall mean, with respect to any Person, any other Person that controls, is controlled by or is under common control with the first Person.
"Agreement" shall mean this Share Exchange Agreement and includes the Plan of Arrangement attached hereto as Annex A as the same may be supplemented or amended from time to time.
"Arrangement" shall mean the arrangement under Section 192 of the CBCA, pursuant to which all of the issued and outstanding Company Common Shares and Company Preferred Shares shall be acquired by Acquireco from the holders of such shares for the consideration set forth in Section 3.01 hereof, substantially on the terms and subject to the conditions set forth in this Agreement and the Plan of Arrangement attached hereto as Annex A.
"Arrangement Resolution" shall mean the resolution or resolutions of the shareholders of Company approving the Arrangement as required by applicable law and the Interim Order, substantially in the form attached to the Proxy Statement (as defined in Section 7.01).
"Articles of Arrangement" shall mean the articles of arrangement in respect of the Arrangement in the form required by the CBCA to be sent to the Director after the Final Order is made.
"ASE" shall mean the American Stock Exchange.
"Best Knowledge" shall mean, with respect to Company, that any one of the following employees of Company is actually aware of a fact or other matter, or should have become aware of a fact or other matter, based upon due inquiry and investigation: Chief Executive Officer; Chief Financial Officer; Acting General Counsel; Vice President, Marketing and Sales; Vice President, Regulatory Affairs; Director of Human Resources.
"Blue Sky Laws" shall mean state and provincial securities or "blue sky" laws.
"Business Day" shall mean any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized by law or executive order to close in the City of New York.
"CBCA" shall mean the Canada Business Corporations Act, as amended from time to time.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Competing Transaction" shall mean any of the following involving Company (other than the Arrangement):
(i) any merger, consolidation, amalgamation, arrangement, share
exchange, business combination or other similar transaction;
(ii) any sale, lease, exchange, transfer or other disposition of
10% or more of the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of transactions, other than in the
ordinary course of business consistent with past practice;
(iii) any license, sublicense or sale of Company Intellectual
Property (as defined in Section 4.13(a)) or similar contract, agreement,
arrangement, or commitment with respect to Company Intellectual Property
(except for any express or implied license in connection with the sale of
Company's products in the ordinary course of business consistent with past
practice);
(iv) any tender offer or exchange offer for 10% or more of the
outstanding voting securities of the Company or the filing of a
registration statement under the Securities Act in connection therewith;
(v) any Person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) having been formed (other
than a Person or group consisting exclusively of those Persons who execute
a Company Shareholder Agreement (the execution of which shall not be deemed
to be an admission that such Person is a "group" as defined under Section
13(d) of the Exchange Act)) which beneficially owns or has the right to
acquire beneficial ownership of, 10% or more of the outstanding voting
securities of the Company;
(vi) any solicitation in opposition to the approval of this
Agreement by the stockholders of Company; or
(vii) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
"Company Disclosure Schedule" shall mean the disclosure schedule delivered by Company to Parent prior to the execution of this Agreement and forming a part hereof.
"Company Material Adverse Effect" shall mean (1) any change in or effect on the business of Company and the Company Subsidiaries that, individually or in the aggregate (taking into account all other such changes or effects), is, or is reasonably likely to be, materially adverse to the business, assets, liabilities, prospects, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, or (2) any significant loss of personnel of Company or the Company Subsidiaries, which personnel cannot be retained by offering additional compensation (consistent with the terms of Section 6.01(h)) or replaced by
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Company or Parent, as the case may be, using commercially reasonable efforts, within a reasonable period of time after such departure(s) so as to avoid any material adverse change in Company's performance or prospects or, with respect to the period of time from the date hereof until March 31, 2000, from Company's performance set forth in Company's financial projections as set forth in the balance sheets, statements of cash flows, and comparative statements of operations (2000 forecast) for Company dated October 25, 1999 included in Schedule 1 to the Company Disclosure Schedule ("Company Projections")) (including but not limited to losses of institutional knowledge, know how or other intangible intellectual property that could prevent or materially delay Company from meeting such projections) provided, however, that clause (1) of this definition shall not include (i) a decrease in the trading price of Company Common Shares or (ii) any circumstances or events (including, without limitation, any loss of personnel, loss of customers, loss of suppliers or the delay or cancellation of any orders for products) (a) relating to the economy in general, (b) relating to the industry in which Company operates in general, (c) relating to any actions taken by the ASE with respect to its letter to Company dated September 24, 1999, (d) arising primarily out of or resulting primarily from actions contemplated by Company and Parent in connection with, or which is attributable primarily to, the announcement of this Agreement and/or the transactions contemplated hereby or (e) relating to the release of Company's financial results or Company's failure to meet any publicized financial projections for so long as Company's revenue and expenses are substantially in accordance with the Company Projections. Notwithstanding anything to the contrary contained in this Agreement, a Company Material Adverse Effect shall be deemed to have occurred if any of the following shall have occurred: Company shall have failed to (i) obtain the regulatory approvals for NeisVac-C necessary to perform its obligations under the Supply Agreement dated July 7, 1999 ("Supply Agreement") between Company and NHS Supplies Authority, (ii) manufacture, fill and prepare for shipping such number of doses of NeisVac-C as shall equal the minimum requirements for delivery for the months of April and May, 2000 under the Supply Agreement, or (iii) ensure that it will not be prohibited by U.S. governmental authorities from exporting NeisVac-C, in each case on or before April 1, 2000.
"Company Stock Plans" shall mean the Company's Share Option Plan, the Company's 1995 Share Option Plan, the Company's 1997 Share Option Plan, the Company's Non-Employee Director and Senior Executive Stock Option Plan, the Company's 1995 Non-Employee Director and Senior Executive Stock Option Plan and the Company's 1999 Non-Employee Director and Senior Executive Stock Option Plan.
"Confidentiality Agreement" shall mean the confidentiality agreement, dated as of April 27, 1999, between Parent and Company, as amended from time to time.
"Court" shall mean the Ontario Superior Court of Justice.
"Depository" shall mean the bank, trust company or other entity selected by Parent and reasonably acceptable to Company to act as depository in connection with the Arrangement.
"Director" shall mean the Director appointed under Section 260 of the CBCA.
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"Dissent Procedures" has the meaning ascribed thereto in Article 4 of the Plan of Arrangement.
"Dissent Rights" shall mean the rights of dissent which each Dissenting Shareholder is entitled to exercise, under the Interim Order and the Final Order and strictly in the manner set out in Section 190 of the CBCA and the Plan of Arrangement, in respect of the Arrangement Resolution.
"Dissenting Shareholder" shall mean a shareholder of Company who dissents from the Arrangement Resolution in strict compliance with the Dissent Procedures and the CBCA.
"$" shall mean United States Dollars.
"Effective Date" shall mean the date upon which the Plan of Arrangement became effective as established by the date set forth in the certificate of arrangement issued by the Director giving effect to the Arrangement.
"Effective Time" shall mean the time of the filing of the Articles of Arrangement implementing the Arrangement.
"Encumbrances" shall mean all claims, security interests, liens, pledges, charges, escrows, options, proxies, rights of first refusal, preemptive rights, mortgages, hypothecations, prior assignments, title retention agreements, indentures, security agreements or any other encumbrance of any kind.
"Environmental Law" shall mean any Law and any enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to pollution or protection of the environment or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Material.
"Environmental Permit" shall mean any permit, approval, identification number, license or other authorization required under or issued pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.
"Expenses" shall mean, with respect to any party hereto, all reasonable out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its Affiliates) incurred by such party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of its obligations pursuant to this Agreement and the completion of the Arrangement, the preparation, printing, filing and mailing
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of the Registration Statement (as defined in Section 7.01) and the Proxy Statement (as defined in Section 7.01), the solicitation of shareholder approvals, the filing of HSR Act notice, if any, the requirements of the Competition Act, if any, and all other matters related to the transactions contemplated hereby and the completion of the Arrangement.
"Final Order" shall mean the final order of the Court approving the Arrangement.
"Governmental Entity" shall mean any United States Federal, state or local or any Canadian or other foreign governmental, regulatory or administrative authority, agency or commission or any court, tribunal or arbitral body.
"Governmental Order" shall mean any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity.
"Hazardous Material" shall mean (i) any petroleum, petroleum products, by-products or breakdown products, radioactive materials, friable asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant or contaminant or waste under any applicable Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, together with the rules and regulations promulgated thereunder.
"Interim Financing Documents" shall mean the following documents dated as of November 1, 1999: (i) Letter Loan Agreement between Bank of America, N.A. ("Lender") and Company; (ii) Security Agreement between Parent and Company; (iii) Security Agreement between Lender and Company; (iv) Patent and Trademark Assignment and Security Agreement between Parent and Company; (v) Patent and Trademark Assignment and Security Agreement between Lender and Company; (vi) Guaranty by Parent for the benefit of Company; (vii) Reimbursement Agreement between Company and Parent; (viii) Fee Letter Agreement between Lender and Company; and (ix) Break-up Fee Letter between Parent and Company.
"Interim Order" shall mean the interim order of the Court approving the Arrangement.
"IRS" shall mean the United States Internal Revenue Service.
"Law" shall mean any United States Federal, state, foreign or local statute, law, ordinance, regulation, rule, code, order, judgment, decree, other requirement or rule of law of the United States or any other jurisdiction, and any other similar act or law.
"NYSE" shall mean the New York Stock Exchange.
"Parent Disclosure Schedule" shall mean the disclosure schedule delivered by Parent to Company prior to the execution of this Agreement and forming a part hereof.
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"Parent Material Adverse Effect" shall mean any change in or effect on the business of Parent and its subsidiaries that, individually or in the aggregate (taking into account all other such changes or effects), is, or is reasonably likely to be, materially adverse to the business, assets, liabilities, prospects, financial condition or results of operations of Parent and its subsidiaries, taken as a whole, provided, however, that Parent Material Adverse Effect shall not include (i) a decrease in the trading price of Parent Common Stock or (ii) any circumstances or events (including, without limitation, any loss of personnel, loss of customers, loss of suppliers or the delay or cancellation of any orders for products) (a) relating to the economy in general, (b) relating to the industry in which Parent operates in general, or (c) arising primarily out of or resulting primarily from actions contemplated by Company and Parent in connection with, or which is attributable primarily to, the announcement of this Agreement and/or the transactions contemplated hereby.
"Permitted Encumbrances" shall mean (i) liens for Taxes, assessments and other governmental charges not yet due and payable, (ii) immaterial unfiled mechanics', workmen's, repairmen's, warehousemen's, carriers' or other like liens arising or incurred in the ordinary course of business which are not yet due and payable and (iii) equipment leases with third parties entered into in the ordinary course of business.
"Person" shall mean an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including, without limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act), trust, association, entity or government or political subdivision, agency or instrumentality of a government.
"Plan of Arrangement" shall mean the plan of arrangement proposed under Section 192 of the CBCA substantially in the form attached as Annex A to this Agreement, as the same may be supplemented or amended from time to time in accordance herewith and any order of the Court;
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.
"Subsidiary" shall mean, with respect to any Person, any corporation, limited liability company, partnership, joint venture or other legal entity of which such Person (either alone or through or together with any other Subsidiary of such Person) owns, directly or indirectly, a majority of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.
"Tax" shall mean (i) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Entity or taxing authority ("Taxing Authority"), including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment
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compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license, registration and documentation fees; and customers' duties, tariffs and similar charges; (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of an affiliated, combined, consolidated or unitary group for any taxable period; and (iii) any liability for the payment of amounts of the type described in (i) or (ii) as a result of being a transferee of, or a successor in interest to, any Person or as a result of an express or implied obligation to indemnify any Person.
"Tax Return" shall mean any return, statement or form (including, without limitation, any estimated tax report or return, withholding tax report or return and information report or return) required to be filed with respect to any Taxes.
"U.S. GAAP" shall mean United States generally accepted accounting principles.
ARTICLE II
THE ARRANGEMENT
SECTION 2.01 The Arrangement. Company and Acquireco hereby agree that the Arrangement shall be implemented in accordance with and subject to the terms and conditions contained in this Agreement and the Plan of Arrangement.
SECTION 2.02 Interim Order. As soon as reasonably practicable after the date hereof, Company shall bring an application (the form and substance of which shall be reasonably satisfactory to it and Acquireco) before the Court pursuant to subsection 192(3) of the CBCA for the Interim Order providing for, among other things, the calling and holding of the Company Shareholders' Meeting (as defined in Section 7.01), the determination of the approvals required from the Company's shareholders in respect of the Arrangement and the granting of the Dissent Rights.
SECTION 2.03 Mailing of Proxy Statement. (a) As soon as practicable after the later of the effective date of the Registration Statement (as defined in Section 7.01) and the date on which the Interim Order is obtained, Company shall mail the Proxy Statement (as defined in Section 7.01) to the Company's shareholders.
SECTION 2.04 Final Order. If the Arrangement is approved at the Company Shareholders' Meeting by the Arrangement Resolution as required by the Interim Order, Company shall bring an application, as soon as reasonably practicable after the Company Shareholders' Meeting, before the Court pursuant to subsection 192(3) of the CBCA for a Final Order approving the Arrangement.
SECTION 2.05 Filing of Articles of Arrangement. If the Final Order is obtained, as soon as reasonably practicable thereafter but in no event earlier than April 3, 2000, and with the approval of Acquireco, subject to the satisfaction, waiver or release of the conditions set forth in Article VIII, Company shall file Articles of Arrangement, and such other documents as may be required under the CBCA, with the Director to give effect to the Arrangement pursuant to subsection 192(7) of the CBCA. Notwithstanding the foregoing, if the
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proposed date of filing of the Articles of Arrangement and the completion of the Arrangement, as determined in accordance with this Section 2.05, would result in the Effective Date occurring within fifteen (15) trading days after the record date set by Parent for its stockholders with respect to the spin-off of Parent's cardiovascular business, then the date of filing of the Articles of Arrangement and the completion of the Arrangement shall be postponed to a date that would result in the Effective Date occurring no sooner than fifteen (15) trading days after such record date.
SECTION 2.06 Effective Time. The Arrangement shall become effective at the Effective Time.
ARTICLE III
EXCHANGE OF SHARES
SECTION 3.01 Exchange of Shares. At the Effective Time, the following shall be deemed to occur in the order specified in the following paragraphs, without any further authorization, act or formality:
(a) Subject to Section 4.1 of the Plan of Arrangement, each Common Share of Company ("Company Common Share") issued and outstanding immediately before the Effective Time shall be exchanged by Acquireco, for consideration consisting of:
(i) the fraction of a share (calculated and rounded to the nearest ten-thousandth of one share) of Common Stock, par value $1.00 per share, of Parent ("Parent Common Stock"), (A) the numerator of which fraction shall be $6.97 (the "Share Consideration"), and (B) the denominator of which shall be the Parent Stock Price (as defined in Section 3.01(a)(iii) below); and
(ii) a cash payment of $.03 per Company Common Share (the "Cash Consideration" together with the Share Consideration, the "Arrangement Consideration");
provided, however, that in the event the Company Capitalization (as defined in Section 4.03) shall be greater or less than the amount set forth in Section 4.03 by more than 10,000 Company Common Shares, the Share Consideration and Cash Consideration shall each be adjusted by multiplying it by a fraction, the numerator of which is the Company Capitalization as set forth in Section 4.03 and the denominator of which is the actual Company Capitalization at the Effective Time.
(iii) The "Parent Stock Price" shall be an amount equal to the average closing sale price of a share of Parent Common Stock as reported in The Wall Street Journal under the caption New York Stock Exchange ("NYSE") Composite Transactions or, if not available, such other authoritative publication as may be reasonably selected by Parent, for the ten consecutive trading days ending on and including the fifth trading day prior to the Effective Date. In the event Parent changes (or establishes a record date for changing) the number shares of Parent Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, distribution, recapitalization, reclassification, reorganization or similar
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transaction with respect to the outstanding Parent Common Stock and the record date therefor shall be prior to the Effective Time, the Share Consideration shall be proportionately adjusted in such manner as Parent, Acquireco and the Company shall agree, which adjustment may include, as appropriate, the issuance of securities, property or cash on the same basis as any of the foregoing shall have been issued, distributed or paid to the holders of shares of Parent Common Stock generally.
(b) Subject to Section 4.1 of the Plan of Arrangement, each share of Series A Preferred Stock, no par value per share, of Company ("Company Preferred Share") issued and outstanding immediately before the Effective Time shall be exchanged by Acquireco for consideration consisting of (i) the number of shares of Parent Common Stock equal to the product of (x) the number of Company Common Shares into which such Company Preferred Share is conve...
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