Agmt And Plan Of Merger J2261

EXECUTION COPY


AGREEMENT AND PLAN OF MERGER


Among


MEDISENSE, INC.,


ABBOTT LABORATORIES


and


AAC ACQUISITION, INC.


dated as of March 29, 1996


TABLE OF CONTENTS


PAGE


ARTICLE I
THE OFFER. . . . . . . . . . . . 2


Section 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Company Action. . . . . . . . . . . . . . . . . . . 3
Section 1.3 Boards of Directors and Committees;
Section 14(f) . . . . . . . . . . . . . . . . . . . 5


ARTICLE II
THE MERGER . . . . . . . . . . . 6


Section 2.1 The Merger. . . . . . . . . . . . . . . . . . . . . 6
Section 2.2 Effective Time; Closing . . . . . . . . . . . . . . 6
Section 2.3 Effects of the Merger; Subsequent
Actions . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.4 Articles of Organization; By-Laws . . . . . . . . . 7
Section 2.5 Directors . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6 Officers. . . . . . . . . . . . . . . . . . . . . . 7
Section 2.7 Conversion of Securities. . . . . . . . . . . . . . 7
Section 2.8 Stock Options . . . . . . . . . . . . . . . . . . . 8
Section 2.9 Company Employee Stock Purchase Plan. . . . . . . . 8
Section 2.10 Stockholders' Meeting . . . . . . . . . . . . . . . 8


ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES. . . . . 9


Section 3.1 Dissenting Shares . . . . . . . . . . . . . . . . 10
Section 3.2 Exchange of Certificates. . . . . . . . . . . . . 10


ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . 11


Section 4.1 Organization and Qualification;
Subsidiaries. . . . . . . . . . . . . . . . . . . 12
Section 4.2 Capitalization of the Company and
Its Subsidiaries. . . . . . . . . . . . . . . . . 13
Section 4.3 Authority Relative to This Agreement. . . . . . . 13
Section 4.4 Non-Contravention; Required Filings
and Consents... . . . . . . . . . . . . . . . . . 14
Section 4.5 SEC Reports.... . . . . . . . . . . . . . . . . . 15
Section 4.6 Absence of Certain Changes; Derivatives . . . . . 16
Section 4.7 Schedule 14D-9; Offer Documents;
Proxy Statement . . . . . . . . . . . . . . . . . 16
Section 4.8 Finder's Fee... . . . . . . . . . . . . . . . . . 17
Section 4.9 Absence of Litigation . . . . . . . . . . . . . . 17
Section 4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . 17


Section 4.11 Employee Benefits . . . . . . . . . . . . . . . . 19
Section 4.12 Compliance. . . . . . . . . . . . . . . . . . . . 20
Section 4.13 Environmental Matters . . . . . . . . . . . . . . 21
Section 4.14 Intellectual Property . . . . . . . . . . . . . . 23
Section 4.15 Insurance . . . . . . . . . . . . . . . . . . . . 24
Section 4.16 Properties. . . . . . . . . . . . . . . . . . . . 24
Section 4.18 Labor Matters . . . . . . . . . . . . . . . . . . 25
Section 4.19 Voting Requirements . . . . . . . . . . . . . . . 26
Section 4.20 State Takeover Laws . . . . . . . . . . . . . . . 26


ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND ACQUISITION . . . . . . . . . 26


Section 5.1 Organization. . . . . . . . . . . . . . . . . . . 26
Section 5.2 Authority Relative to this Agreement. . . . . . . 27
Section 5.3 Non-Contravention; Required Filings
and Consents. . . . . . . . . . . . . . . . . . . 27


Section 5.4 Offer Documents; Schedule 14D-9;
Proxy Statement . . . . . . . . . . . . . . . . . 28
Section 5.5 No Prior Activities . . . . . . . . . . . . . . . 28
Section 5.6 Financing . . . . . . . . . . . . . . . . . . . . 29


ARTICLE VI
COVENANTS. . . . . . . . . . . 29


Section 6.1 Conduct of Business of the Company. . . . . . . . 29
Section 6.2 Access to Information . . . . . . . . . . . . . . 31
Section 6.3 Reasonable Best Efforts . . . . . . . . . . . . . 32
Section 6.4 Public Announcements. . . . . . . . . . . . . . . 32
Section 6.5 Indemnification . . . . . . . . . . . . . . . . . 33
Section 6.6 Notification of Certain Matters . . . . . . . . . 33
Section 6.7 Termination of Stock Plans. . . . . . . . . . . . 34
Section 6.8 No Solicitation34


ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER. . . 35


Section 7.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . 35


ARTICLE VIII
TERMINATION; EXPENSES; AMENDMENT; WAIVER. . . 35


Section 8.1 Termination . . . . . . . . . . . . . . . . . . . 35
Section 8.2 Effect of Termination . . . . . . . . . . . . . . 37
Section 8.3 Fees and Expenses . . . . . . . . . . . . . . . . 38
Section 8.4 Amendment . . . . . . . . . . . . . . . . . . . . 38
Section 8.5 Extension; Waiver . . . . . . . . . . . . . . . . 38


ARTICLE IX
MISCELLANEOUS. . . . . . . . . . 38


Section 9.1 Nonsurvival of Representations
and Warranties. . . . . . . . . . . . . . . . . . 38
Section 9.2 Entire Agreement; Assignment. . . . . . . . . . . 38
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . . 39
Section 9.4 Governing Law . . . . . . . . . . . . . . . . . . 40
Section 9.5 Parties in Interest . . . . . . . . . . . . . . . 40
Section 9.6 Specific Performance. . . . . . . . . . . . . . . 40
Section 9.7 Severability. . . . . . . . . . . . . . . . . . . 40
Section 9.8 Descriptive Headings. . . . . . . . . . . . . . . 40
Section 9.9 Certain Definitions . . . . . . . . . . . . . . . 40
Section 9.10 Counterparts. . . . . . . . . . . . . . . . . . . 41


ANNEXES AND SCHEDULES


Annex A - Offer Conditions Annex B - Press Release


Schedule 4.6 Schedule 4.9 Schedule 4.11 Schedule 4.14 Schedule 4.17 Schedule 4.18


AGREEMENT AND PLAN OF MERGER


THIS AGREEMENT AND PLAN OF MERGER, dated as of March 29, 1996, is among MediSense, Inc., a Massachusetts corporation (the "Company"), Abbott Laboratories, an Illinois corporation ("Parent") and AAC Acquisition, Inc., a Massachusetts corporation and a wholly owned subsidiary of Parent ("Acquisition").


WHEREAS, the Board of Directors of Parent, Acquisition and the Company have each approved the acquisition of the Company by Parent upon the terms and subject to the conditions set forth in this Agreement;


WHEREAS, in furtherance thereof, it is proposed that Acquisition shall make a tender offer to acquire all outstanding shares of common stock, par value $0.01 per share, of the Company (the "Common Stock") and all outstanding shares of class B common stock, par value $0.01 per share,of the Company (the "Class B Common Stock" and together with the Common Stock, the "Shares"), for a cash amount of $45.00 per Share (such amount, or any greater amount per Share paid pursuant to the tender offer, being hereinafter referred to as the "Per Share Amount") in accordance with the terms and subject to the conditions provided for herein (the "Offer");


WHEREAS, the Board of Directors of the Company (the "Board") has (i) determined that the consideration to be paid for each Share in the Offer and the Merger (as defined below) is fair to and in the best interests of the stockholders of the Company and (ii) approved this Agreement and the transactions contemplated hereby and resolved to recommend acceptance of the Offer and approval and adoption of this Agreement by the stockholders of the Company; and


WHEREAS, the Boards of Directors of Parent and Acquisition have each approved the merger (the "Merger") of Acquisition with and into the Company following the Offer in accordance with the General Laws of the Commonwealth of Massachusetts ("Massachusetts Law") upon the terms and subject to the conditions set forth herein.


NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Company, Parent and Acquisition hereby agree as follows;


ARTICLE I


THE OFFER


Section 1.1 THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with Section 8.1, as promptly as practicable, but in no event later than the fifth business day following the public announcement of the terms of this Agreement, Acquisition shall commence the Offer. The obligation of Acquisition to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject to the condition that a number of Shares representing not less than a majority of the Company's outstanding voting power (assuming the exercise of all outstanding options to purchase shares of Common Stock and the conversion of all outstanding shares of Class B Common Stock into Common Stock) shall have been validly tendered and not withdrawn prior to the expiration date of the Offer (the "Minimum Condition"), and the obligation of Acquisition to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject to the other conditions set forth in Annex A hereto. It is agreed that the Minimum Condition and the other conditions set forth in Annex A hereto are for the sole benefit of Acquisition and may be asserted by Acquisition regardless of the circumstances giving rise to any such condition unless Parent, Acquisition or their affiliates shall have caused the circumstances giving rise to such condition. Acquisition expressly reserves the right in its sole discretion to waive, in whole or in part, at any time or from time to time, any such condition (other than the Minimum Condition, which may not be waived without the prior written consent of the Company), to increase the price per Share payable in the Offer or to make any other changes in the terms and conditions of the Offer; PROVIDED that, unless previously approved by the Company in writing, no change may be made that decreases the price per Share payable in the Offer, changes the form of consideration payable in the Offer, reduces the maximum number of Shares to be purchased in the Offer or imposes conditions to the Offer in addition to those set forth in Annex A hereto. Acquisition covenants and agrees that, subject to the conditions of the Offer set forth in Annex A hereto, Acquisition shall accept for payment and pay for Shares which have been validly tendered and not withdrawn pursuant to the Offer as soon as it is permitted to do so under applicable law; PROVIDED that, if the number of Shares that have been validly tendered and not withdrawn represent less than 90% of the Shares outstanding on a fully diluted basis, Acquisition may extend the Offer up to the tenth business day following the date on which all conditions to the Offer shall first have been satisfied or waived. The Per Share Amount payable in the Offer shall be paid net to the seller in cash, upon the terms and subject to the conditions of the Offer. Acquisition agrees that


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if all conditions set forth in Annex A are not satisfied on the initial expiration date of the Offer, Acquisition shall extend (and re-extend) the Offer through June 30, 1996 to provide time to satisfy such conditions; PROVIDED that, if Acquisition shall not have purchased Shares pursuant to the Offer prior to June 30, 1996 as the result of the receipt by the Company of an Acquisition Proposal (as defined below) or as a result a failure of the applicable waiting period under the HSR Act (as defined below) to expire or the failure to obtain any necessary governmental or regulatory approvals, Acquisition shall extend (and re-extend) the Offer through September 30, 1996.


(b) As soon as practicable on the date of commencement of the Offer, Parent and Acquisition shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will contain the offer to purchase and form of the related letter of transmittal (together with any supplements or amendments thereto, the "Offer Documents"). Parent, Acquisition and the Company each agrees promptly to correct any information provided by it for use in the Offer Documents if and to the extent that any such information shall have become false or misleading in any material respect and Parent and Acquisition each further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents prior to their filing with the SEC and shall be provided with any comments Parent, Acquisition and their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after receipt of such comments.


Section 1.2 COMPANY ACTION. (a) The Company hereby approves of and consents to the Offer and represents and warrants that the Board, at a meeting duly called and held on March 29, 1996, unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company, (ii) approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger and (iii) resolved to recommend that the stockholders of the Company accept the Offer, tender their Shares thereunder to Acquisition and, if required by applicable law, approve and adopt this Agreement and the Merger. The Company further represents and warrants that Alex. Brown & Sons Incorporated ("Alex. Brown") has delivered to the Board its written opinion to the effect that, as of the date of such opinion, the consideration to be received by the holders of Shares pursuant to the Offer and the Merger is fair to such holders from a financial point of view. The Company has been authorized by Alex. Brown to permit the inclusion of such


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fairness opinion in the Offer Documents and the Schedule 14D-9 referred to below and the Proxy Statement referred to in Section 4.7. Subject to the fiduciary duties of the Board under applicable law (as determined in good faith after consultation with independent counsel), the Company hereby consents to the inclusion in the Offer Documents of the recommendations of the Board described in this Section 1.2(a).


(b) As soon as practicable on the date of commencement of the Offer, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "Schedule 14D-9") and shall mail the Schedule 14D-9 to the stockholders of the Company promptly after the commencement of the Offer. The Schedule 14D-9 shall, subject to the fiduciary duties of the Board under applicable law (as determined in good faith after consultation with independent counsel), at all times contain the determinations, approvals and recommendations described in Section 1.2(a). Parent, Acquisition and the Company each agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that any such information shall have become false or misleading in any material respect and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Parent, Acquisition and their counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 prior to its filing with the SEC and shall be provided with any comments the Company and its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of such comments.


(c) In connection with the Offer, the Company will promptly furnish Acquisition with mailing labels, security position listings and any available listing or computer file containing the names and addresses of the record holders of the Shares as of a recent date and shall furnish Acquisition with such additional information and assistance (including, without limitation, updated lists of stockholders, mailing labels and lists of securities positions) as Acquisition or its agents may reasonably request in communicating the Offer to the record and beneficial holders of Shares. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Merger, Acquisition and its affiliates and associates shall hold in confidence the information contained in any such labels, listings and files, will use such information only in connection with the Offer and the Merger, and, if this Agreement shall be terminated, will deliver to the Company all copies of such information then in their possession.


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Section 1.3 BOARDS OF DIRECTORS AND COMMITTEES; SECTION 14(f). (a) Promptly upon the purchase by Acquisition of Shares pursuant to the Offer and from time to time thereafter, Acquisition shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board that equals the product of (i) the total number of directors on the Board (giving effect to the election of any additional directors pursuant to this Section) and (ii) the percentage that the number of Shares owned by Acquisition and its affiliates (including any Shares purchased pursuant to the Offer) bears to the total number of outstanding Shares, and the Company shall, upon request by Acquisition, subject to the provisions of Section 1.3(b), promptly either increase the size of the Board (and shall, if necessary, amend the Company's By- Laws to permit such an increase) or use its reasonable best efforts to secure the resignation of such number of directors as is necessary to enable Acquisition's designees to be elected to the Board and shall cause Acquisition's designees to be so elected. Promptly upon request by Acquisition, the Company will, subject to the provisions of Section 1.3(b), use its reasonable best efforts to cause persons designated by Acquisition to constitute the same percentage as the number of Acquisition's designees to the Board bears to the total number of directors on the Board on (i) each committee of the Board, (ii) each board of directors or similar governing body or bodies of each subsidiary of the Company designated by Acquisition and (iii) each committee of each such board or body.


(b) The Company's obligations to appoint designees to the Board shall be subject to Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.3 and shall include in the Schedule 14D-9 or a separate Rule 14f-1 Statement provided to shareholders such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1. Parent or Acquisition will supply to the Company in writing and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1.


(c) Following the election or appointment of Acquisition's designees pursuant to this Section 1.3 and prior to the Effective Time (as defined below), any amendment of this Agreement or the Restated Articles of Organization or By- Laws of the Company, any termination of this Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Acquisition or any waiver of any of the Company's rights hereunder will require


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the concurrence of a majority of the directors of the Company then in office who are not designees of Acquisition or employees of the Company.


ARTICLE II


THE MERGER


Section 2.1 THE MERGER. At the Effective Time (as defined below) and upon the terms and subject to the conditions of this Agreement and Massachusetts Law, Acquisition shall be merged with and into the Company whereupon the separate corporate existence of Acquisition shall cease and the Company shall continue as the surviving corporation (the "Surviving Corporation"). At Acquisition's option, the Merger may be structured so that any direct or indirect subsidiary of Parent is merged with and into the Company. In the event of such election, the parties agree to execute an appropriate amendment to this Agreement in order to reflect such election.


Section 2.2 EFFECTIVE TIME; CLOSING. As soon as practicable after the satisfaction or waiver of the conditions set forth in Article VII, the parties hereto will file articles of merger with the Secretary of the Commonwealth of Massachusetts and make all other filings or recordings required by Massachusetts Law in connection with the Merger. The Merger shall become effective at such time as the articles of merger are duly filed with the Secretary of the Commonwealth of Massachusetts, or at such later time as is specified in the articles of merger (the "Effective Time"). Prior to such filing, a closing shall be held at the offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603, or such other place as the parties shall agree, for the purpose of confirming the satisfaction or waiver of the conditions set forth in Article VII.


Section 2.3 EFFECTS OF THE MERGER; SUBSEQUENT ACTIONS. (a) The Merger shall have the effects set forth in Massachusetts Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Acquisition shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Acquisition shall become the debts, liabilities and duties of the Surviving Corporation.


(b) If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its


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right, title or interest in, to or under any of the rights, properties or assets of the Company or Acquisition acquired or to be acquired by the Surviving Corporation as a result of or in connection with the Merger, or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of the Company or Acquisition, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm of record or otherwise any and all right, title and interest in, to and under such rights, properties or assets of the Surviving Corporation or otherwise to carry out this Agreement.


Section 2.4 ARTICLES OF ORGANIZATION; BY-LAWS. (a) Subject to Section 6.5, at the Effective Time, the Articles of Organization of Acquisition in effect immediately prior to the Effective Time shall be the Articles of Organization of the Surviving Corporation until amended in accordance with applicable law; PROVIDED, however, that at the Effective Time, Article I of the Articles of Organization of the Surviving Corporation shall be amended to read as follows: "The name by which the corporation shall be known is MediSense, Inc."


(b) The By-Laws of Acquisition in effect at the Effective Time shall be the By-Laws of the Surviving Corporation until amended in accordance with applicable law.


(c) The Articles of Organization of the Surviving Corporation shall state that the purpose of the Surviving Corporation shall be to carry on any manufacturing, mercantile, selling, management, service or other business, operation or activity which may be lawfully carried on by a corporation organized under Massachusetts Law. The Surviving Corporation initially shall be authorized to issue up to 1,000 shares of its common stock, par value $0.01 per share.


Section 2.5 DIRECTORS. The directors of Acquisition at the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Articles of Organization and By-Laws of the Surviving Corporation and until his or her successor is duly elected and qualified.


Section 2.6 OFFICERS. The officers of the Company at the Effective Time, and any additional individuals designated by Parent, shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the Articles of Organization and By-Laws of the Surviving Corporation and until his or her successor is duly appointed and qualified.


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Section 2.7 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Acquisition, the Company or the holder of any of the following securities:


(a) Each Share issued and outstanding immediately prior to the Effective Time (other than Shares to be cancelled pursuant to Section 2.7(b) hereof and Dissenting Shares (as defined in Section 3.1)), shall by virtue of the Merger and without any action on the part of the holder thereof be cancelled and extinguished and be converted into the right to receive an amount equal to the Per Share Amount (the "Merger Consideration").


(b) Each Share issued and outstanding immediately prior to the Effective Time and owned by Parent or Acquisition or any direct or indirect subsidiary of Parent or Acquisition, or which is held in the treasury of the Company or any of its subsidiaries, shall be cancelled and retired and no payment of any consideration shall be made with respect thereto.


(c) Each share of common stock, par value $0.01 per share, of Acquisition issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.


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