UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(Rule 14d-101)
Solicitation/Recommendation Statement
under Section 14(d)(4) of the Securities Exchange Act of 1934
(Amendment No. 3)
Vocera Communications, Inc.
(Name of Subject Company)
Vocera Communications, Inc.
(Name of Person(s) Filing Statement)
Common Stock, par value $0.0003 per share
(Title of Class of Securities)
92857F 10 7
(CUSIP Number of Class of Securities)
Brent D. Lang
Chief Executive Officer and Chairman of the Board
Vocera Communications, Inc.
525 Race Street
San Jose, California 95126
(408) 882-5100
(Name, address and telephone number of person authorized to receive notice and communications
on behalf of the persons filing statement)
With copies to:
|
Amanda Rose, Esq. Kris Withrow, Esq. Scott Behar, Esq. Steven Jean, Esq. Fenwick & West LLP 555 California Street, 12th Floor San Francisco, California 94104 (415) 875-2300 |
Doug Carlen General Counsel Vocera Communications, Inc. 525 Race Street San Jose, California 95126 (408) 882-5100 |
| ☐ |
Check the box below if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
This Amendment No. 3 (this “Amendment”) to Schedule 14D-9 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 previously filed by Vocera Communications, Inc., a Delaware corporation (“Vocera”), with the Securities and Exchange Commission on January 25, 2022 (as amended or supplemented from time to time, the “Schedule 14D-9”), relating to the offer by Voice Merger Sub Corp. (“Purchaser”), a Delaware corporation and a direct or indirect wholly owned subsidiary of Stryker Corporation, a Michigan corporation (“Stryker”), to purchase all of the outstanding shares of Vocera’s common stock, par value $0.0003 per share (the “Shares”) at a purchase price of $79.25 per Share, net to the holder in cash, without interest, and subject to any applicable withholding of taxes, upon the terms and subject to the conditions set forth in the Agreement and Plan of Merger, dated as of January 6, 2022, among Stryker, Purchaser and Vocera (as it may be amended from time to time, the “Merger Agreement”), the Offer to Purchase, dated January 25, 2022 and the related Letter of Transmittal, each of which may be amended or supplemented from time to time.
Except as otherwise set forth in this Amendment, the information set forth in the Schedule 14D-9 remains unchanged and is incorporated herein by reference to the extent relevant to the items in this Amendment. Capitalized terms used but not defined herein have the meanings ascribed to them in the Schedule 14D-9.
Item 3. Past Contacts, Transactions, Negotiations and Agreements
The section of Item 3 of the Schedule 14D-9 entitled “Past Contacts, Transactions, Negotiations and Agreements—Non-Compete Agreements” is hereby amended as follows:
The following disclosure replaces the heading entitled “Non-Compete Agreements” on page 5 and the paragraph that follows:
Restrictive Covenant and Compensation Recovery Agreements
On February 8, 2022, Stryker and each of Brent D. Lang, Vocera’s Chief Executive Officer, Paul T. Johnson, Vocera’s Chief Commercial Officer, Douglas A. Carlen, Vocera’s General Counsel, and Steven J. Anheier, Vocera’s Chief Financial Officer (each, a “Restricted Executive”) entered into a Restrictive Covenant and Compensation Recovery Agreement (each, a “Restrictive Covenant Agreement”). Each Restrictive Covenant Agreement requires that each Restricted Executive, for a period of three (3) years following the date upon which the Merger is consummated (the “Closing Date”): (i) not compete, directly or indirectly, with Vocera’s business as it exists as of the Closing Date, (ii) not solicit certain employees and independent contractors of Vocera and (iii) not solicit the business of certain current, prospective of past customers of Vocera. Certain violations by a Restricted Executive of the applicable Restrictive Covenant Agreement may require such executive to repay to Stryker a designated amount of the consideration received by the Restricted Executive in connection with the Merger. The Restrictive Covenant Agreements are contingent upon and effective as of the consummation of the Merger. Other than the Restrictive Covenant Agreements, none of the Restricted Executives have entered into any other agreements with Stryker or any of its affiliates.
This summary does not purport to be complete and is qualified in its entirety by reference to the form of Restrictive Covenant Agreement filed as Exhibit (e)(13) hereto and incorporated herein by reference.
Item 4. The Solicitation or Recommendation
The section of Item 4 of the Schedule 14D-9 entitled “Background of the Merger Agreement; Reasons for Recommendation—Background of the Merger Agreement” is hereby amended as follows:
The second to last paragraph on page 17 is amended and restated as follows (new language underlined):
From 2015 to 2020, as the Board was aware, representatives of Vocera and representatives of Stryker met various times to discuss Vocera’s business, as well as business development and other strategic opportunities. As described below, and as the Board was aware, these meetings continued from January through November 2021.
The last paragraph on page 18 (which continues on page 19) is amended and restated as follows (new language underlined):
On November 17, 2021, Mr. Lang sent the Board a status update via email informing the Board that members of Vocera’s management team were continuing to monitor the situation with Party A and provided an update on the outreach by the aforementioned financial advisors. At that time, Mr. Lang formed an informal advisory team with a subset of the Board and members of Vocera’s management team. The advisory team was formed in the interest of administrative ease and to act as a resource to help advise Vocera’s management team through potential strategic discussions, including with respect to the selection
of a financial advisor. The team was made up of Board members Mr. Howard Janzen, Vocera’s lead independent director, Mr. John McMullen, the head of the Board audit committee, Mr. Bharat Sundaram, and Mr. Lang and senior leadership members including Mr. Steve Anheier, Vocera’s Chief Financial Officer, Mr. Born, and Mr. Doug Carlen, Vocera’s General Counsel.
The third full paragraph on page 21 is amended and restated as follows (new language underlined; deleted language struck through):
On December 10, 2021, Vocera executed a non-disclosure agreement with Party A. ThisThe non-disclosure agreement entered into with Party A, and all of the non-disclosure agreements Vocera entered into with potential acquirers (including Stryker) as described
below, included a customary 12- or 18-month standstill provision that generally prohibited the parties receiving Vocera’s confidential information
from making public proposals to acquire Vocera or taking similar actions (but permitted such parties to make private, non-public proposals to the Board or senior management of Vocera), a “fallaway”
that provided that the standstill provision would terminate on customary events, including upon Vocera’s entry into a definitive sale agreement, and did not contain a provision prohibiting such parties from making any request that Vocera
waive the standstill restriction.
The sixth full paragraph on page 21 is amended and restated as follows (deleted language struck through):
On December 12, 2021, Vocera executed a non-disclosure agreement with Stryker. This non-disclosure agreement included a customary standstill provision similar to that agreed with Party A.
The eighth full paragraph on page 21 is amended and restated as follows (deleted language struck through):
Between December 12 and December
2119, 2021, Vocera executed non-disclosure agreements with Party B, Party C, Party D, Party E, and Party F. Each non-disclosure agreement
included a customary standstill provision similar to that agreed with Party A and Stryker.
The section of Item 4 of the Schedule 14D-9 entitled “Opinion of Vocera’s Financial Advisor—Summary of Evercore’s Financial Analyses—Discounted Cash Flow Analysis” is hereby amended as follows:
The second full paragraph on page 34 is amended and restated as follows (new language underlined):
Evercore performed discounted cash flow analyses of Vocera to calculate the estimated present value of the Unlevered After-tax Free Cash Flow (as defined in “—Management Projections”), that Vocera was forecasted to generate during Vocera’s fiscal years 2022 through 2026 based on the Management Projections. Evercore calculated terminal values for Vocera by (i) applying perpetuity growth rates of 5.0% to 6.0%, which range was selected based on Evercore’s professional judgment and experience, to the Base Case, the Upside Case and the Downside Case 2026 terminal year (the “Terminal Year”) estimates of the Unlevered After-tax Free Cash Flow that Vocera was forecasted to generate based on the Management Projections, and (ii) applying terminal multiples of 15.0x—20.0x, 20.0x—25.0x and 10.0x—15.0x, which ranges were selected based on Evercore’s professional judgment and experience, to Vocera’s estimated Adjusted EBITDA (as set forth in the Management Projections) in the Terminal Year under the Base Case, the Upside Case and the Downside Case. The cash flows and terminal values in each case were then discounted to present value as of December 31, 2021, using discount rates ranging from 8.0% to 9.0%, which were based on an estimate of Vocera’s weighted average cost of capital, and the mid-year cash flow discounting convention to derive ranges of implied enterprise values for Vocera under each of Base Case, the Upside Case and the Downside Case. Evercore estimated Vocera’s weighted average cost of capital based on application of the capital asset pricing model and its professional judgement given the nature of Vocera’s business and its industry. Based on these ranges of implied enterprise values, Vocera’s estimated net cash of $45 million (calculated as cash and cash equivalents, less total debt, which includes the principal amount of convertible debt) as of December 31, 2021, and the number of fully diluted Shares as of December 31, 2021 (which was 39.4 million assuming consideration of $79.25 per Share in the Transactions), which reflects the equity dilution impact of the conversion premium of convertible debt, except any potential impact from Vocera’s capped call transactions, in each case as provided by Vocera’s management, this analysis indicated ranges of implied equity values per Share as shown below, compared to the consideration of $79.25 per Share in the Transactions.
The section of Item 4 of the Schedule 14D-9 entitled “Opinion of Vocera’s Financial Advisor—Summary of Evercore’s Financial Analyses—Selected Public Company Trading Analysis” is hereby amended as follows:
The first paragraph on page 36 is amended and restated as follows (new language underlined):
Based on the multiples it derived for the selected companies and based on its professional judgment and experience, Evercore (i) selected a reference range of enterprise value / revenue multiples of 8.0x—11.0x and applied this range of multiples to Vocera’s estimated total revenue in calendar year 2021 as set forth in the Management Projections, and (ii) selected a reference range of enterprise value / revenue multiples of 7.0x—9.0x and applied this range of multiples to Vocera’s estimated total revenue in calendar year 2022 under the Base Case, the Upside Case and the Downside Case, in each case as set forth in the Management Projections. Based on this range of implied enterprise values, Vocera’s estimated net cash of $45 million (calculated as cash and cash equivalents, less total debt, which includes the principal amount of convertible debt) as of December 31, 2021, and the number of fully diluted Shares as of December 31, 2021 (which was 39.4 million assuming consideration of $79.25 per Share in the Transactions), which reflects the equity dilution impact of the conversion premium of convertible debt, except any potential impact from Vocera’s capped call transactions, in each case as provided by Vocera’s management, this analysis indicated ranges of implied equity values per Share as shown below, compared to the consideration of $79.25 per Share in the Transactions.
The section of Item 4 of the Schedule 14D-9 entitled “Opinion of Vocera’s Financial Advisor—Summary of Evercore’s Financial Analyses—Selected Transactions Analysis” is hereby amended as follows:
The last paragraph on page 37 is amended and restated as follows (new language underlined):
Based on the multiples it derived from the selected transactions and based on its professional judgment and experience, Evercore (i) selected a reference range of enterprise value to LTM Revenue multiples of 9.0x to10.0x and applied this range of multiples to Vocera’s LTM Revenue as of December 31, 2021, as set forth in the Management Projections, and (ii) selected a reference range of enterprise value to NTM Revenue multiples of 8.0x to 9.0x and applied this range of multiples to the Base Case, the Upside Case and the Downside Case NTM Revenue as of December 31, 2021, as set forth in the Management Projections. Based on this range of implied enterprise values, Vocera’s estimated net cash of $45 million (calculated as cash and cash equivalents, less total debt, which includes the principal amount of convertible debt) as of December 31, 2021, and the number of fully diluted Shares as of December 31, 2021 (which was 39.4 million assuming consideration of $79.25 per Share in the Transactions), which reflects the equity dilution impact of the conversion premium of convertible debt, except any potential impact from Vocera’s capped call transactions, in each case as provided by Vocera’s management, this analysis indicated ranges of implied equity values per Share as shown below, compared to the consideration of $79.25 per Share in the Transactions.
The section of Item 4 of the Schedule 14D-9 entitled “Opinion of Vocera’s Financial Advisor—Summary of Evercore’s Financial Analyses—Equity Research Analyst Price Targets” is hereby amended as follows:
The second paragraph on page 38 is amended and restated as follows (new language underlined; new table inserted):
Evercore reviewed selected public market trading price targets for the Shares prepared and published by equity research analysts that were publicly available as of January 5, 2022, the last full trading day prior to the delivery by Evercore of its opinion to the Board. These price targets reflect analysts’ estimates of the future public market trading price of the Shares at the time the price target was published. As of January 5, 2022, the range of selected equity research analyst price targets per Share was $36.00 to $71.00, as shown below. Public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for the Shares and these target prices and the analysts’ earnings estimates on which they were based are subject to risk and uncertainties, including factors affecting the financial performance of Vocera and future general industry and market conditions.
|
Equity Research Analyst |
Target Price Per Share of Vocera
Common Stock |
|
|
Craig-Hallum |
$71.00 | |
|
Jefferies |
$70.00 | |
|
BTIG |
$70.00 | |
|
Piper Sandler |
$68.00 | |
|
Stephens |
$65.00 | |
|
Morgan Stanley |
$60.00 | |
|
Baird |
$60.00 | |
|
RBC |
$51.00 | |
|
SVB Leerink |
$36.00 |
The section of Item 4 of the Schedule 14D-9 entitled “Management Projections—Cautionary Note About the Management Projections” is hereby amended as follows:
The last paragraph on page 41 is amended and restated as follows (new language underlined):
Certain of the Management Projections may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used in the Management Projections may not be comparable to similarly titled measures used by other companies. Vocera has not provided reconciliations of the non-GAAP Management Projections to the comparable GAAP measure because there are no reasonably accessible or reliable comparable GAAP measures for these measures and because of the inherent difficulty in forecasting and quantifying these measures that are necessary for such reconciliation. Further, financial measures included in forecasts provided to a financial advisor for use in connection with a business combination transaction are excluded from the definition of non-GAAP financial measures and, therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures that would otherwise require a reconciliation. In the view of Vocera’s management, the Management Projections were prepared on a reasonable basis based on the information available to Vocera’s management at the time of their preparation.
Item 8. Additional Information
The section of Item 8 of the Schedule 14D-9 entitled “Regulatory Approvals—U.S. Antitrust Laws” is hereby amended as follows:
The second full paragraph on page 52 is amended and restated as follows (new language underlined):
The FTC and the Antitrust Division may scrutinize the legality under U.S. federal antitrust laws of transactions such as Purchaser’s proposed acquisition of Vocera. At any time before or after Purchaser’s acceptance for payment of Shares pursuant to the Offer, if the Antitrust Division or the FTC believes that the Offer would violate the U.S. federal antitrust laws by substantially lessening competition in any line of commerce affecting U.S. consumers, the FTC and the Antitrust Division have the authority to challenge the Transactions by seeking a federal court order enjoining the Transactions or, if Shares have already been acquired, the disposition of those Shares, or the divestiture of substantial assets of Purchaser, Vocera, or any of their respective subsidiaries or affiliates, or seeking other conduct relief. At any time before or after consummation of the Transactions, notwithstanding the early termination or expiration of the applicable waiting period under the HSR Act, U.S. state attorneys general and private persons may also bring legal action under the antitrust laws seeking similar relief or seeking conditions to the completion of the Offer. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if a challenge is made, what the result will be. Stryker filed a Premerger Notification and Report Form on January 21, 2022. Vocera filed a Premerger Notification and Report Form on January 21, 2022. The required waiting period under the HSR Act with respect to the Offer expired at 11:59 p.m., Eastern Time, on February 7, 2022. Accordingly, the condition to the Offer relating to the expiration or termination of the waiting period under the HSR Act has been satisfied.
The section of Item 8 of the Schedule 14D-9 entitled “Certain Litigation” is hereby amended as follows:
The following disclosure is added as a new fourth paragraph to this section (new language underlined):
On February 7, 2022, Jordan Wilson, a purported stockholder of Vocera, filed a complaint against Vocera and each member of the Vocera Board in the United States District Court for the District of Delaware, captioned Jordan Wilson v. Vocera Communications, Inc., et al., Case No. 1:99-mc-09999 (the “Wilson Complaint”). The Wilson Complaint alleges that the defendants violated Sections 14(e) and 14(d) of the Exchange Act, and Rule 14d-9 promulgated thereunder, by misrepresenting and/or omitting material information in the Schedule 14D-9 and that the individual members of the Vocera Board acted as controlling persons of Vocera within the meaning of Section 20(a) of the Exchange Act. The Wilson Complaint seeks, among other things, an order enjoining consummation of the Transactions unless the defendants disclose and disseminate certain information identified in the Wilson Complaint; rescission or rescissory damages in the event the Transactions are consummated; and an award of plaintiff’s costs, including reasonable allowance for attorneys’ fees and experts’ fees.
The foregoing summary does not purport to be complete, but is qualified in its entirety by reference to the as-filed pleading. A copy of the Wilson Complaint is also filed as Exhibit (a)(5)(K) to Amendment No. 2 to Purchaser’s Schedule TO.
The following disclosure is added at the end of the section (new language underlined):
Vocera believes that the claims asserted in the Wilson Complaint, Stein Complaint, Espinoza Complaint and Whitfield Complaint (collectively, the “Stockholder Complaints”) are without merit and deny the allegations in each of those actions. However, in light of the costs, risks and uncertainties inherent in litigation, and to furnish further information to shareholders, Vocera is providing certain additional disclosures (“Supplemental Disclosures”) in this
supplement to the Schedule 14D-9. Counsel for plaintiffs in each of the Stockholder Complaints have confirmed that the Supplemental Disclosures will moot their claims and that they will accordingly dismiss those actions with prejudice as to the named plaintiffs, and without prejudice as to other shareholders. The Supplemental Disclosures should not be regarded as an indication that Vocera, Stryker, or their respective affiliates, officers, directors or other representatives, or any recipient of this information, considered or now considers the information contained in the Supplemental Disclosures to be material; rather, Vocera believes that the Schedule 14D-9 disclosed all necessary information and deny that any additional disclosures are or were required under any federal or state law.
Books and Records Demands
On February 2, 2022, Bernard Panone, a purported stockholder of Vocera, sent the Vocera Board a books and records demand pursuant to Section 220 of the DGCL in connection with such purported stockholder’s investigation of, among other things, (i) the independence and disinterestedness of certain members of the Vocera Board and/or Vocera’s executive officers in connection with the Merger Agreement and the Transactions, (ii) whether wrongdoing, mismanagement, and/or material non-disclosure has taken place, and (iii) the value of such purported stockholder’s Shares.
On February 2, 2022, Robert Garfield, a purported stockholder of Vocera, sent the Vocera Board a books and records demand pursuant to Section 220 of the DGCL in connection with such purported stockholder’s investigation of, among other things, (i) the independence and disinterestedness of certain members of the Vocera Board and management in connection with the Merger Agreement and the Transactions, (ii) whether wrongdoing, mismanagement, and/or material non-disclosure has taken place, and (iii) the value of such purported stockholder’s Shares.
Vocera is reviewing the scope and appropriateness of the books and records requests and expects to respond to the purported stockholders in the time provided for in Section 220.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment No. 3 to Schedule 14D-9 is true, complete and correct.
| Vocera Communications, Inc. | ||
| By: | /s/ Steven J. Anheier | |
| Name: Steven J. Anheier | ||
| Title: Chief Financial Officer | ||
Date: February 8, 2022
Item 9. Exhibits
The following Exhibits are attached hereto:
|
(a)(1)(A)† |
Offer to Purchase, dated January 25, 2022 (incorporated by reference to Exhibit (a)(1)(A) to the Tender Offer Statement on Schedule TO filed with the SEC by Stryker and Voice Merger Sub Corp. on January 25, 2022 (“Schedule TO”)). | |
|
(a)(1)(B)† |
Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on IRS Form W-9) (incorporated by reference to Exhibit (a)(1)(B) to the Schedule TO). | |
|
(a)(1)(C)† |
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(C) to the Schedule TO). | |
|
(a)(1)(D)† |
Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(D) to the Schedule TO). | |
|
(a)(1)(E)† |
Summary Advertisement, published January 25, 2022 in The New York Times (incorporated by reference to Exhibit (a)(1)(E) to the Schedule TO). | |
|
(a)(1)(F)† |
Press Release issued by Stryker Corporation, dated January 6, 2022 (incorporated by reference to Exhibit 99.1 to the Tender Offer Statement on Schedule TO-C filed with the SEC by Stryker Corporation on January 7, 2022 (Accession No. 0001193125-22-003677)). | |
|
(a)(1)(G)† |
Press Release of Stryker Corporation, announcing the launch of the Offer, dated January 25, 2022 (incorporated by reference to Exhibit (a)(5)(F) to the Schedule TO). | |
|
(a)(1)(H)** |
Employee letter posted by Vocera Communications, Inc. on January 25, 2022. | |
|
(a)(2) |
None. | |
|
(a)(3) |
None. | |
|
(a)(4) |
None. | |
|
(a)(5)(A)** |
Opinion of Evercore, dated January 5, 2022 (included as Annex A to the Schedule 14D-9). | |
|
(b) |
None. | |
|
(c) |
None. | |
|
(d) |
None. | |
|
(e)(1)† |
Agreement and Plan of Merger, dated January 6, 2022, by and among Stryker Corporation, Voice Merger Sub Corp. and Vocera Communications, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC by Vocera Communications, Inc. on January 6, 2022). | |
|
(e)(2)† |
Non-Disclosure Agreement between Vocera Communications, Inc. and Stryker Corporation, dated December 12, 2021 (incorporated by reference to Exhibit (d)(2) to the Schedule TO). | |
|
(e)(3) |
None. | |
|
(e)(4)† |
2012 Equity Incentive Plan and forms of award agreements (incorporated by reference to Exhibit 10.01 to the Current Report on Form 8-K filed with the SEC by Vocera Communications on June 6, 2018 and Exhibit 10.01 to the Current Report on Form 8-K filed with the SEC by Vocera Communications, Inc. on May 6, 2020). | |
|
(e)(5)† |
2021 Equity Incentive Plan, and forms of award agreements (incorporated by reference to Exhibits 10.02, 10.03 and 10.04 to the Quarterly Report on Form 10-Q filed with the SEC on August 4, 2021). | |
|
(e)(7)† |
2020 Equity Inducement Plan (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 filed with the SEC by Vocera Communications, Inc. on August 25, 2020). | |
|
(e)(8)† |
Amended and Restated 2012 Employee Stock Purchase Plan (incorporated by reference to Appendix B to the Definitive Proxy Statement on Schedule 14A filed with the SEC by Vocera Communications, Inc. on April 15, 2021). | |
|
(e)(9)† |
Form of Change of Control Severance Agreement (incorporated by reference to Exhibit 10.07 to the Quarterly Report on Form 10-Q filed with the SEC by Vocera Communications, Inc. on August 4, 2021). | |
|
(e)(10)† |
Vocera’s Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.01 to the Registration Statement on Form S-1 filed with the SEC by Vocera Communications, Inc. on August 24, 2012). | |
|
(e)(11)† |
Vocera’s Amended and Restated Bylaws (incorporated by reference to Exhibit 3.02 to the Registration Statement on Form S-1 filed with the SEC by Vocera Communications, Inc. on August 24, 2012). | |
|
(e)(12)† |
Form of Indemnity Agreement entered into by and between Vocera and each of its executive officers and directors (incorporated by reference to Exhibit 10.01 to the Registration Statement on Form S-1 filed with the SEC by Vocera Communications, Inc. on August 1, 2011). | |
|
(e)(13)* |
Form of Restrictive Covenant Agreement entered into by and among Stryker and each of Brent D. Lang, Paul T. Johnson, Douglas A. Carlen, and Steven J. Anheier on February 8, 2022. | |
|
(f) |
None. | |
|
(g) |
None. | |
|
(h) |
None. | |
| * |
Filed herewith. |
| ** |
Previously filed on January 25, 2022 as an exhibit to the Schedule 14D-9. |
| † |
Previously incorporated by reference as an exhibit to the Schedule 14D-9. |
Exhibit (e)(13)
RESTRICTIVE COVENANT AND COMPENSATION RECOVERY AGREEMENT
This RESTRICTIVE COVENANT AND COMPENSATION RECOVERY AGREEMENT (this “Agreement”) is entered into as of February __, 2022, by and among Stryker Corporation, a Michigan corporation (“the Corporation”) and _________, an individual (“Covenantor”).
RECITALS
A. The Corporation, Vocera Communications, Inc. (“Vocera”) and Voice Merger Sub Corp. (“Merger Sub”) the other parties thereto have entered into that certain Agreement and Plan of Merger, dated as of January 6, 2022 (as the same may be amended from time to time, the “Merger Agreement”), pursuant to which the Corporation shall make a tender offer (the “Tender Offer”), to purchase all the outstanding shares of common stock, par value $0.0003 per share, of Vocera (the “Shares”), at a price per Share of $79.25, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Merger Agreement, and, following consummation of the Tender Offer and on the terms and subject to the conditions set forth in the Merger Agreement, to merge the Merger Sub with and into Vocera, with Vocera continuing as the surviving corporation in the merger (the “Merger”).
B. Covenantor owns a substantial number of Shares of Vocera and will derive a substantial and direct benefit from the transactions contemplated by the Merger Agreement, and Covenantor has agreed to enter into this Agreement in order to protect the value of the businesses of Vocera.
C. Covenantor has obtained and developed extensive and valuable knowledge and confidential information concerning the business of Vocera.
D. Covenantor, in the course of conducting the business of Vocera, has also developed on behalf of Vocera significant goodwill that is now a significant part of the value of Vocera. This goodwill extends throughout the Restricted Territory.
E. The Corporation wishes to protect its investment in the assets, business and goodwill of Vocera, including the confidential and proprietary information possessed by Covenantor, and which Covenantor acknowledges possessing, by restricting the activities of Covenantor that might compete with or harm such assets, business or goodwill. The Corporation intends to employ Vocera’s confidential and proprietary information and goodwill in extending Vocera’s business throughout the Restricted Territory.
F. In connection with Covenantor’s duties with Vocera, Covenantor has had access to, been provided with and/or prepared and created confidential and proprietary business information and trade secrets belonging to Vocera.
G. In connection with the closing of the Merger, Covenantor will or may become entitled to payment of the Merger Consideration (as defined in the Merger Agreement) in respect of each share of Company Common Stock (as defined in the Merger Agreement) underlying Covenantor’s award(s) of Company PSUs (as defined in the Merger Agreement) in exchange for the cancellation of such Company PSUs that are held by Covenantor as of immediately prior to the closing of the Merger, as determined pursuant to Section 2.10(c) of the Merger Agreement (the “Company PSU Payment”).
G. The effectiveness of this Agreement is contingent upon the Closing and, if such Closing does not occur, this Agreement shall not take effect, and shall be null and void.
-1-
AGREEMENT
In consideration of the foregoing and the mutual premises, representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Incorporation of Definitions; Effectiveness.
1.1 For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement.
1.2 This Agreement shall only be effective from and after the Closing.
2. Certain Definitions.
2.1 “Restricted Business” means any business that competes with the Vocera business as it exists as of the date of the Closing, which includes all products, services and mobile applications related to Vocera’s software platform, wearables and devices, and product support and services. For avoidance of doubt, “Restricted Business” includes, but is not limited to, any business producing, developing or marketing products, services, or applications and/or preparing to produce, develop or market products, services, or applications that compete with and/or are used for the same purpose as or in connection with the following: (i) clinical communication and workflow solutions products such as Vocera Communication Platform, Vocera Badge and Smart Badge; (ii) clinical subscription services and mobile applications such as Vocera’s voice communication and secure text messaging, Engage, Vina, Ease, and Edge; and (iii) implementation, development or deployment of Vocera product maintenance and support.
2.2 “Restricted Period” means three (3) years from the date of this Agreement.
2.3 “Restricted Territory” shall mean: the United States; provided, however, that if a court determines such a geographic scope is unenforceable, Restricted Territory shall mean the states of any geographic area where Vocera products or services were sold or proposed to be sold at any time during the twenty-four (24) month period preceding the termination of Covenantor’s employment ; provided, however, that if a court determines such a geographic scope is unenforceable, Restricted Territory shall mean within a 50-mile radius of any Vocera office or location where the Restricted Business is conducted.
3. Restrictive Covenants
3.1 Non-Competition. During the Restricted Period, the Covenantor shall not, directly or indirectly, form or assist others in forming, be employed by, render services of an executive, employee, employee, consultant, contractor, agent, or otherwise or otherwise engage in, or own any ownership interest in any Person engaged in a business that competes with or Covenantor has knowledge of a current intent to compete with the Restricted Business within the Restricted Territory. Notwithstanding the foregoing, the above shall not apply to (i) the passive ownership of less than five percent (5%) of the outstanding stock of any publicly-traded corporation listed on a national stock exchange; (ii) the provision of services to or making investments in any investment funds that make investments in entities that may be engaged in the Restricted Business provided that Covenantor does not participate in the management of such entities or provide services relating to evaluating competing businesses for investment; or (iii) the provision of services to an entity that has a business unit or division that is engaged in the Restricted Business provided that Covenantor does not provide services to such business unit or division.
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3.2 Non-Solicitation of Employees. During the Restricted Period, the Covenantor shall not, directly or indirectly, solicit, hire, employ, or otherwise engage as an employee, independent contractor, or otherwise, any individual who is an officer, director, management level employee or other employee of Vocera as of the date of this Agreement; provided, that nothing herein shall prohibit the Covenantor and his affiliates from (i) general solicitations of employment not specifically directed at such individuals or (ii) soliciting, hiring or employing any individual who either was involuntarily terminated by the Corporation or has not been an employee of Vocera during the six (6) month period prior to the date of such solicitation hire or employment.
3.3 Non-Solicitation of Customers. During the Restricted Period, the Covenantor shall not, directly or indirectly, solicit the business of any current, prospective or past (within the last three (3) years) customers of Vocera to provide services similar or related to the Restricted Business.
3.4 Non-Disparagement. During the Restricted Period, the Covenantor agrees, for himself or any other Person acting on his behalf, to not, directly or indirectly, make any statement or release any information to any Person, or encourage any Person to make any statement or release any information to any other Person, that is designed to embarrass, criticize or otherwise disparage Vocera, the Corporation or any of its affiliates; provided, however, that such restrictions shall not apply to any (i) confidential communications with any Governmental Entity, or (ii) non-public communications with such Covenantor’s affiliates or Representatives.
3.5 If at any time any of the provisions of these Sections 3.1, 3.2, 3.3 and 3.4 shall be determined to be invalid or unenforceable by reason of being vague or unreasonable as to duration, area or scope of activity, or otherwise, then these Sections 3.1, 3.2, 3.3 and 3.4 shall be considered divisible (with the other provisions to remain in full force and effect) and the invalid or unenforceable provisions shall become and be deemed to be immediately amended to include only such time, area, scope of activity and other restrictions as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter, and the parties expressly agree that this Agreement, as so amended, shall be valid and binding as though any invalid or unenforceable provision had not been included herein. Without limiting the foregoing, if the length of the Restricted Period is determined to be unacceptable under applicable Law in any applicable jurisdiction, the Restricted Period shall be modified in relation to such jurisdiction as determined by a court or other agency of competent jurisdiction or statute, as applicable, to be of the maximum length permitted under Law in such jurisdiction.
3.6 Confidential Information.
3.7 During the Restricted Period, the Covenantor shall not, directly or indirectly, disclose to any Person any Company Information except as required by Law or as otherwise directed by the Corporation. If the Covenantor is required by Law to disclose any Company Information, the Covenantor shall promptly notify the Corporation in writing, which notification shall include the nature of the legal requirement and the extent of the required disclosure, and the Covenantor shall cooperate with the Corporation to preserve the confidentiality of such information consistent with such applicable legal requirement.
3.8 For purposes of this Agreement, the term “Company Information” means know-how, trade secrets, and technical, business and financial information and any other non-public information in any way learned by, disclosed to, or developed by the Covenantor during his employment with the Corporation, including, but not limited to (a) prices, renewal dates and other detailed terms of customer or supplier contracts and proposals; (b) information concerning the Corporation’s customers, clients, referral sources and vendors, and potential customers, clients, referral sources and vendors, including, but not limited to, names of these entities or their employees or representatives, preferences,
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needs or requirements, purchasing or sales histories, or other customer or client-specific information; (c) supplier and distributor lists; (d) pricing policies, methods of delivering services and products, and marketing and sales plans or strategies; (e) products, product know-how, product technology and product development strategies and plans; (f) employees, personnel or payroll records or information; (g) forecasts, budgets and other non-public financial information; (h) acquisitions, divestitures, expansion plans, management policies and other business strategies; (i) inventions, research, development, manufacturing, purchasing, finance processes, technologies, machines, computer software, computer hardware, automated systems, methods, engineering, marketing, merchandising, and selling; and (j) information belonging to third parties which has been disclosed to the Corporation in confidence. Company Information shall not include information that is or becomes part of the public domain, such that it is readily available to the public, through no fault of the Covenantor.
3.9 Defend Trade Secrets Act. Pursuant to 18 U.S.C. § 1833(b), the Covenantor will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret of the Corporation or Vocera that (i) is made (A) in confidence to a Federal, State, or local government official, either directly or indirectly, or to the Covenantor’s attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If the Covenantor files a lawsuit for retaliation by the Corporation for reporting a suspected violation of law, the Covenantor may disclose the trade secret to the Covenantor’s attorney and use the trade secret information in the court proceeding, if Covenantor (i) files any document containing the trade secret under seal, and (ii) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such section.
3.10 Permitted Disclosures. Nothing in this Agreement or any other agreement by and between the Covenantor and either the Corporation or Vocera shall prohibit or restrict the Covenantor from (i) voluntarily communicating with an attorney retained by the Covenantor, (ii) voluntarily communicating with any law enforcement, government agency, including the, the Equal Employment Opportunity Commission, or a local commission on human rights, or any self-regulatory organization regarding possible violations of Law, in each case without advance notice to the Corporation, or otherwise initiating, testifying, assisting, complying with a subpoena from, or participating in any manner with an investigation conducted by such government agency, (iii) disclosing any Company Information to a court or other administrative or legislative body in response to a subpoena, provided that the Covenantor first promptly notifies and provides the Corporation with the opportunity to seek, and join in its efforts at the sole expense of the Corporation, to challenge the subpoena or obtain a protective order limiting its disclosure, or other appropriate remedy, or (iv) filing or disclosing any facts necessary to receive unemployment insurance, Medicaid or other public benefits to which the Covenantor is entitled.
3.11 Reasonable Constraints. The Covenantor agrees that Sections 3.1, 3.2, 3.3 and 3.4, including the provisions relating to duration, geographical area, and scope, are reasonable and necessary to protect and preserve the Corporation’s legitimate business interests and the value of Vocera and its respective businesses, and to prevent an unfair advantage from being conferred on Covenantor.
3.12 Further Acknowledgements. The Covenantor acknowledges and agrees that (a) Vocera’s reputation and goodwill are an integral part of their business success; (b) if the Covenantor deprives Vocera of any such goodwill in competition with Vocera in a manner inconsistent with the restrictions set forth in this Agreement, the Corporation and Vocera may be deprived of the benefits they bargained for pursuant to the Merger Agreement; and (c) by virtue of the Merger Agreement, the Corporation is purchasing the trade secrets, including but not limited to, customer/client identities, confidential information and business practices, of Vocera, which are protectable business interests that could be deprived of value if the Covenantor takes actions inconsistent with this Agreement.
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4. Repayment of Certain Amounts in the Event of Breach. In the event Covenantor breaches Section 3.1 of this Agreement, Covenantor acknowledges and agrees that Covenantor shall repay to the Corporation the portion of the Company PSU Payment set forth on Schedule A hereto, which payment must be made by Covenantor to the Corporation within thirty (30) calendar days immediately following the date of such breach.
5. Miscellaneous.
5.1 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing, shall be deemed duly given when delivered personally, when sent by confirmed electronic mail (provided, that such confirmation is not automated), one (1) Business Day after being sent by overnight courier service (providing written proof of delivery) or three (3) Business Days after being mailed by certified or registered mail, return receipt requested, with postage prepaid to the persons at the addresses set forth below:
If to Covenantor, to the address on file with Vocera or the Corporation, as applicable.
If to the Corporation:
Stryker Corporation
2825 Airview Boulevard
Kalamazoo, Michigan 49002
Telephone No.: (269) 385-2600
Email: generalcounsel@stryker.com
Attention: General Counsel
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, Meagher & Flom LLP
155 North Wacker Drive
Chicago, IL 60606
Telephone No.: (312) 407-0784
Email: richard.witzel@skadden.com
Attention: Richard C. Witzel, Jr.
provided, that each party hereto shall promptly notify the other parties hereto in writing of any change in its contact information, which revised contact information shall thereafter be used for the purposes of this Section 5.1 until further revised.
5.2 Assignment; Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, and assigns. This Agreement and the rights hereunder are not assignable by any party hereto unless such assignment is consented to in writing by the other parties hereto; provided, however, that the Corporation may assign any or all of its rights, together with its obligations hereunder, to any of its affiliates or to any successor to all or a portion of its assets.
5.3 Entire Agreement; Amendment. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof.
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5.4 Amendment and Waiver. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. No amendment, supplement, modification or waiver of this Agreement will be binding unless executed in writing by the party or parties to be bound thereby. Except as otherwise provided in this Agreement, any failure of any party hereto to comply with any obligation, covenant, agreement or condition herein may be waived by the party hereto entitled to the benefits thereof only by a written instrument signed by the party hereto granting such waiver, but such waiver or failure to insist upon strict compliance with such obligations, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
5.5 Interpretation. In this Agreement, unless the context otherwise requires: (a) words of the masculine or neuter gender will include the masculine, neuter and/or feminine gender, and words in the singular number or in the plural number will each include, as applicable, the singular number or the plural number; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term; (d) any agreement or Law defined or referred to herein or in any agreement that is referred to herein means such agreement or Law as from time to time amended, modified or supplemented, including (in the case of agreements) by waiver or consent and (in the case of Laws) by succession of comparable successor Laws and references to all attachments thereto and instruments incorporated therein; and (e) the headings of the Sections of this Agreement are for convenience only and in no way modify, interpret or construe the meaning of specific provisions of this Agreement.
5.6 Governing Law; Venue; Waiver of Jury Trial. This Agreement, and all actions, claims, matters, Proceedings or counterclaims (whether based on contract, tort or otherwise) arising out of, relating to or based on this Agreement shall be governed by the Laws of the State of Delaware applicable to agreements made and to be performed within such State, without regard to the conflict of laws principles of such State to the extent that the application of the Laws of another jurisdiction would be required. The parties hereto do hereby irrevocably consent and submit to the sole and exclusive venue and jurisdiction of any federal court located in Wilmington, Delaware (or, if such court lacks jurisdiction, any state court located in Wilmington, Delaware) for such relevant matters, and further agree that, in the event of any action or suit as to any relevant matters among the parties, service of process may be made upon the other parties by mailing a copy of the summons and/or complaint to the other parties at the addresses set forth herein. Each party further waives any objection that it may now or hereafter have to the venue of any such action, Proceeding or counterclaim in any such court or that such action, Proceeding or counterclaim was brought in an inconvenient forum and agrees not to plead or claim the same; and agrees that it will not bring any action, Proceeding or counterclaim relating to any relevant matter hereby in any court other than the aforesaid courts. Notwithstanding anything to the contrary contained herein, the parties may seek to enforce any final judgment of any such federal or state court residing in Wilmington, Delaware in any other jurisdiction in any manner provided by applicable Law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING DIRECTLY OR INDIRECTLY TO ANY RELEVANT MATTERS. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.6.
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5.7 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Corporation shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement against Covenantor, this being in addition to any other remedy to which they are entitled at law or in equity. Covenantor agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief. In the event that the Corporation seeks an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the terms and provisions of this Agreement, such party shall not be required to provide any bond or other security or to prove actual damages in connection with any such injunction or other order, decree, ruling or judgment.
5.8 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Further, this Agreement may be executed by transfer of an originally signed document by facsimile or e-mail in PDF format, each of which will be as fully binding as an original document.
5.9 Severability. In case any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions will not in any way be affected or impaired. Except as otherwise set forth in Section 3.5 hereof, any illegal or unenforceable term will be deemed to be void and of no force and effect only to the minimum extent necessary to bring such term within the provisions of applicable Law and such term, as so modified, and the balance of this Agreement will then be fully enforceable.
5.10 Closing Date. This Agreement shall become effective upon the Closing Date. This Agreement shall terminate and be of no further force or effect upon the termination of the Merger Agreement in accordance with its term
5.11 Expenses. All fees and expenses incurred in connection with this Agreement and the transaction contemplated hereby shall be paid by the party incurring such fees.
5.12 Representations of Covenantor. The Covenantor represents and warrants to the Corporation as of the date of this Agreement and as of the Closing Date that Covenantor has the requisite capacity and authority to execute and deliver this Agreement and to perform his respective obligations hereunder.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above.
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Covenantor: |
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[__________] |
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___________________________________ |
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Corporation:
Stryker Corporation, a Michigan corporation |
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| By: | /s/ Andy Pierce | |
| Andy Pierce | ||
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Group President, MedSurg and Neurotechnology |
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Shedule A
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Name of Covenantor |
Portion of Company PSU Payment Subject to Repayment by Covenantor Upon Breach |