UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the Matter of
Medtronic, Inc., a corporation.
File No. 981-0324
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission"), having initiated an
investigation of the Acquisition of all of the voting stock of Physio-Control
International Corporation ("Physio-Control") by Medtronic, Inc.
("Medtronic"), and it now appearing that Medtronic, hereinafter sometimes
referred to as "Proposed Respondent," is willing to enter into an Agreement
Containing Consent Order ("Agreement") to refrain from certain acts and provide
for certain other relief:
IT IS HEREBY AGREED by and between Proposed Respondent, by its duly
authorized officers and its attorneys, and counsel for the Commission that:
- 1. Proposed Respondent, Medtronic, Inc., is a corporation organized, existing, and doing
business under and by virtue of the laws of Minnesota, with its principal executive
offices located at 7000 Central Avenue, Northwest, Minneapolis, Minnesota 55432.
- 2. Proposed Respondent admits all the jurisdictional facts set forth in the draft of
complaint here attached.
- 3. Proposed Respondent waives:
- a. any further procedural steps;
- b. the requirement that the Commission's decision contain a statement of findings of
fact and conclusions of law;
- c. all rights to seek judicial review or otherwise to challenge or contest the validity
of the order entered pursuant to this Agreement; and
- d. any claims under the Equal Access to Justice Act.
- 4. This Agreement shall not become part of the public record of the proceeding unless
and until it is accepted by the Commission. If this Agreement is accepted by the
Commission it, together with the draft of complaint contemplated thereby, will be placed
on the public record for a period of sixty (60) days and information in respect thereto
publicly released. The Commission thereafter may either withdraw its acceptance of this
Agreement and so notify the Proposed Respondent, in which event it will take such action
as it may consider appropriate, or issue and serve its complaint (in such form as the
circumstances may require) and decision, in disposition of the proceeding.
- 5. This Agreement is for settlement purposes only and does not constitute an admission
by the Proposed Respondent that the law has been violated as alleged in the draft of
complaint here attached, or that the facts as alleged in the draft complaint, other than
jurisdictional facts, are true.
- 6. This Agreement contemplates that, if it is accepted by the Commission, and if such
acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of
Section 2.34 of the Commission's Rules, the Commission may, without further notice to
Proposed Respondent, (1) issue its complaint corresponding in form and substance with the
draft of complaint here attached and its decision containing the following order to
refrain from certain acts, and providing for other relief in disposition of the
proceeding, and (2) make information public with respect thereto. When so entered, the
order shall have the same force and effect and may be altered, modified, or set aside in
the same manner and within the same time provided by statute for other orders. The order
shall become final upon service. Delivery by the United States Postal Service of the
complaint and decision containing the agreed-to order to Medtronic, Inc. shall constitute
service. Proposed Respondent waives any right it may have to any other manner of service.
The complaint may be used in construing the terms of the order, and no agreement,
understanding, representation, or interpretation not contained in the order or the
Agreement may be used to vary or contradict the terms of the order.
- 7. Proposed Respondent has read the proposed complaint and order contemplated hereby.
Proposed Respondent understands that once the order has been issued, it will be required
to file one or more compliance reports showing it has fully complied with the order.
Proposed Respondent agrees to comply with the proposed order from the date the Acquisition
is consummated. Proposed Respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the order after it becomes
IT IS ORDERED that, as used in this order, the following definitions
- A. "Medtronic" or "Respondent" means Medtronic, Inc., its directors,
officers, employees, agents, representatives, successors, and assigns; its subsidiaries,
divisions, groups and affiliates controlled by Medtronic, Inc, not including SurVivaLink
Corporation, and the respective directors, officers, employees, agents, representatives,
successors, and assigns of each.
- B. "SurVivaLink" means SurVivaLink Corporation, a corporation organized,
existing and doing business under the laws of Minnesota with its headquarters located at
5420 Feltl Road, Minnetonka, Minnesota, 55343, its directors, officers, employees, agents,
representatives, successors, and assigns; its subsidiaries, divisions, groups and
affiliates controlled by SurVivaLink Corporation, and the respective directors, officers,
employees, agents, representatives, successors, and assigns of each.
- C. "Physio-Control" means Physio-Control International Corporation, a
corporation organized, existing and doing business under the laws of Washington with its
headquarters located at 11811 Willows Road, N.E., Redmond, Washington 98073, its
directors, officers, employees, agents, representatives, successors, and assigns; its
subsidiaries, divisions, groups and affiliates controlled by Physio-Control International
Corporation, and the respective directors, officers, employees, agents, representatives,
successors, and assigns of each.
- D. "Commission" means the Federal Trade Commission.
- E. "Ownership Interest" means any right(s), present or contingent, to hold
voting or nonvoting interest(s), equity interest(s), and/or beneficial ownership(s) in the
capital stock of SurVivaLink.
- F. "Voting Agreements" means the Agreement Regarding The Election of Director
by and among SurVivaLink Corporation, the purchasers of the Company's Series A Convertible
Preferred Stock and the persons named in Appendix B of that agreement ("the
Shareholders") and the Agreement Regarding Election of Directors made on June 12,
1997, by and among SurVivaLink and its stockholders.
- G. "The Rights of First Refusal Agreement" means the Rights of First Refusal
Agreement signed by Medtronic, Inc. on May 8, 1997.
- H. "Contractual Agreements" means the following agreements: the Investment
Agreement made and entered into as of April 29, 1994, by and among SurVivaLink Corporation
and Medtronic and the following shareholders of SurVivaLink: Byron L. Gilman, Karl J.F.
Kroll, Kenneth C. Maki, and Mark W. Kroll; the Investment Agreement made and entered into
as of October 31, 1996, by and among SurVivaLink Corporation and Medtronic, Inc.; Voting
Agreements; the Rights of First Refusal Agreement; the Amended and Restated Promissory
Note dated May12, 1997, between Medtronic and SurVivaLink; and any other agreements
between Medtronic and SurVivaLink relating to Medtronic's Ownership Interest in
IT IS FURTHER ORDERED that:
- A. Within ten (10) days of the date on which the Commission accepts the Agreement
Containing Consent Order for public comment, Respondent shall delegate its voting rights
held pursuant to all of its Ownership Interests to SurVivaLink in a manner that directs
and authorizes SurVivaLink to cast any votes related to such interest in each class of
SurVivaLink capital stock in an amount and manner proportional to the vote of all other
votes cast by other SurVivaLink shareholders in such class on a particular matter; provided,
however, that in any voting matter to which either or both of the Voting
Agreements may apply, such delegation shall direct and authorize SurVivaLink to cast any
votes related to Medtronic's Ownership Interests in accordance with such Voting
Agreement(s). Should any such delegation expire by operation of Minnesota law or
otherwise, Respondent shall redelegate its rights to SurVivaLink prior to such expiration.
Provided, however, that Respondent's delegation of its rights as to a
particular Ownership Interest may terminate upon Respondent's complete and absolute
divestiture of that Ownership Interest.
- B. Respondent shall not sell or otherwise transfer any of its Ownership Interest to an
acquirer without permitting SurVivaLink the opportunity to purchase such interest in
accordance with the terms of the Rights of First Refusal Agreement, including Section 6 of
- C. Respondent shall not join a partnership, limited partnership, syndicate or other
group, or otherwise act in concert with any other person, for the purpose of acquiring,
holding, voting, or disposing of an Ownership Interest in SurVivaLink.
- D. Respondent shall not acquire or exercise any present or contingent right to acquire
any additional Ownership Interest in SurVivaLink without providing thirty (30) days' prior
written notice to the Commission. In the event that Respondent learns that one of its
respective employees, agents, or representatives has engaged in such an acquisition or
exercise on his or her own initiative and not on behalf of Respondent, Respondent shall
provide written notice of such acquisition or exercise to the Commission within ten (10)
days after Respondent learns of such acquisition or exercise. Nothing in Paragraph II.D.
shall be construed to prevent Medtronic from receiving stock dividends which are issued to
SurVivaLink shareholders in proportion to their respective voting Ownership Interests.
Medtronic shall provide written notice to the Commission of its receipt of any such
dividend within ten (10) days of such receipt.
IT IS FURTHER ORDERED that Respondent shall not:
- A. exercise any right to name, nominate or vote for a member of SurVivaLink's Board of
- B. participate in the formulation, determination or direction of any business decisions
- C. propose corporate action requiring the approval of SurVivaLink shareholders;
- D. have any of its directors, officers or employees serve simultaneously as an officer
or director of SurVivaLink;
- E. inspect or otherwise obtain access to the books and records of SurVivaLink (other
than the stock register), even if Respondent is entitled to such access pursuant to
Minnesota Law, the Contractual Agreements, or otherwise; provided, however,
that nothing in Paragraph III.E. shall prohibit Medtronic, after written notice to the
Commission, from seeking or obtaining discovery in any litigation or other proceeding to
resolve a claim between SurVivaLink and Medtronic in accordance with the procedures of the
forum before which the dispute is pending. With respect to any such discovery, Respondent
shall enter into a protective order to prevent any information from being used for any
purpose other than providing legal representation or evidence as to the particular dispute
and to prevent any information from being disclosed to any person(s) not necessary to the
resolution of such dispute; and
- F. obtain information from SurVivaLink other than documents available to the general
public, except as permitted under Paragraph III.E.
IT IS FURTHER ORDERED that Respondent shall designate an outside agent
to receive such information from SurVivaLink as required to be provided by SurVivaLink
pursuant to applicable state law and such additional information as would normally be
provided to the other shareholders of SurVivaLink. Such information is limited to
information provided to a shareholder by virtue of such shareholder's ownership of the
shares of SurVivaLink and not as a result of such shareholder's position as an officer,
director or employee of SurVivaLink. Such information shall not be disseminated to
Respondent but may only be used by the outside agent to solicit offers for Respondent's
Ownership Interests or to render an opinion to the Respondent as to the overall percentage
and value of Respondent's Ownership Interests. Such an opinion may disclose the types of
information relied upon in formulating such an opinion but shall not disclose any specific
information regarding SurVivaLink. Respondent shall notify the Commission and SurVivaLink
as to the identity of such outside agent and any change as to the identity of the outside
agent to which this information is to be sent.
IT IS FURTHER ORDERED that within ten (10) days of the date on which
the Commission accepts the Agreement Containing Consent Order for public comment,
Respondent shall return or submit to SurVivaLink all documents, including all copies,
whether created by SurVivaLink or any other person, in the possession of Medtronic that
contain any trade secrets or other confidential non-public information, commercial
information or financial information, other than the Contractual Agreements, received from
or relating to SurVivaLink, including, but not limited to, all documents received from
SurVivaLink pursuant to the Contractual Agreements.
IT IS FURTHER ORDERED that within thirty (30) days of
the date on which this Order becomes final, Respondent shall distribute a copy of this
Order to each of its U.S. based directors, officers and employees.
IT IS FURTHER ORDERED that within ten (10) days of the date on
which the Commission accepts the Agreement Containing Consent Order for public comment,
Respondent shall deliver a copy of this Agreement to SurVivaLink by certified or
registered U.S. mail.
IT IS FURTHER ORDERED that within sixty (60) days of the date this Order
becomes final and annually thereafter on the anniversary of the date this Order becomes
final, Medtronic shall submit to the Commission a verified written report setting forth in
detail the manner and form in which it intends to comply, is complying, and has complied
with the provisions of this Order. Medtronic shall include in its compliance reports,
among other things that are required from time to time, a full description of the efforts
being made to comply with this Order, including a description of all substantive contacts
or negotiations with SurVivaLink, including the identity of all parties contacted.
Medtronic shall include in its compliance reports copies of all written communications
between Medtronic and SurVivaLink, and all written communications between Medtronic and
the outside agent designated in Paragraph IV.
IT IS FURTHER ORDERED that, for the purpose of determining or
securing compliance with this Order, and subject to any legally recognized privilege, upon
written request and on reasonable notice to Respondent, Respondent shall permit any duly
authorized representatives of the Commission:
- A. Access, during office hours and in the presence of counsel, to any
facilities and access to inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under the control of
Respondent, relating to any matters contained in this consent order; and
- B. Upon five (5) days' notice to Respondent, and without restraint or interference from
Respondent, to interview officers or employees of Respondent, who may have counsel
present, regarding such matters.
IT IS FURTHER ORDERED that Respondent shall notify the Commission at least
thirty (30) days prior to any change in Respondent such as dissolution, assignment or sale
resulting in the emergence of a successor, the creation or dissolution of subsidiaries or
any other change that may affect compliance obligations arising out of the Order.
IT IS FURTHER ORDERED that this Order shall terminate on the earliest of: (1)
Respondent's absolute and complete divestiture of all of its Ownership Interest in
SurVivaLink; (2) Respondent's absolute and complete divestiture of all of the assets or
securities of Physio-Control held by Medtronic; or (3) the date twenty (20) years after
the date this Order becomes final.
Signed this day of _____________, 1998.
|FEDERAL TRADE COMMISSION
BUREAU OF COMPETITION
Norman A. Armstrong, Jr.
Richard G. Parker
Senior Deputy Director
William J. Baer
Bureau of Competition
Philip C. Larson
Melinda Reid Hatton
Hogan & Hartson L.L.P.
Counsel for Medtronic, Inc.