Pages where confidential treatment has been requested are stamped "Confidential
material omitted and filed separately with the Securities and Exchange
Commission." The appropriate section has been marked at the appropriate place
with an "*."
Exhibit 2.1
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF
MARCH 19, 1998
AMONG
ACROMED CORPORATION,
DEPUY, INC.
AND
DP MERGER SUB, INC.
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TABLE OF CONTENTS
Page
----
1. DEFINITIONS...........................................................1
2. MERGER; CLOSING; EFFECTIVE TIME.......................................9
2.1 THE MERGER..........................................9
2.2 CLOSING............................................10
2.3 ARTICLES OF INCORPORATION..........................10
2.4 THE REGULATIONS....................................10
2.5 DIRECTORS AND OFFICERS.............................10
2.6 MERGER CONSIDERATION...............................10
2.7 CONVERSION.........................................10
2.8 CONVERSION OF MERGER SUB SHARES....................11
2.9 CONVERSION OF OPTIONS..............................11
2.10 PAYMENT FOR SHARES AND OPTIONS.....................12
2.11 DISSENTERS' RIGHTS.................................12
2.12 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME........13
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................13
3.1 ORGANIZATION.......................................13
3.2 CAPITALIZATION.....................................13
3.3 AUTHORITY; NO CONFLICT.............................14
3.4 FINANCIAL STATEMENTS...............................15
3.5 TITLE TO PROPERTIES; ENCUMBRANCES..................15
3.6 NO UNDISCLOSED LIABILITIES.........................16
3.7 TAXES..............................................16
3.8 NO MATERIAL ADVERSE CHANGE.........................17
3.9 EMPLOYEE BENEFITS..................................18
3.10 TERMINATION, SEVERANCE AND EMPLOYMENT AGREEMENTS...19
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS........................19
3.12 LEGAL PROCEEDINGS; ORDERS..........................21
3.13 ABSENCE OF CERTAIN CHANGES AND EVENTS..............21
3.14 CONTRACTS; NO DEFAULTS.............................22
3.15 ENVIRONMENTAL MATTERS..............................24
3.16 LABOR RELATIONS; COMPLIANCE........................25
3.17 INTELLECTUAL PROPERTY..............................26
3.18 BROKERS............................................27
3.19 TRANSACTIONS WITH RELATED PERSONS..................27
3.20 SETTLEMENT AGREEMENT...............................28
3.21 PRODUCTS; MANUFACTURING............................28
i
Page
----
3.22 DISCLOSURE.........................................28
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES.............28
4. REPRESENTATIONS AND WARRANTIES OF DEPUY AND
MERGER SUB...........................................................28
4.1 ORGANIZATION AND GOOD STANDING.....................28
4.2 AUTHORITY; NO CONFLICT.............................29
4.3 CERTAIN PROCEEDINGS................................29
4.4 AVAILABLE FUNDS....................................30
4.5 BROKERS............................................30
4.6 NO OTHER REPRESENTATIONS OR WARRANTIES.............30
5. COVENANTS OF THE COMPANY.............................................30
5.1 ACCESS AND INVESTIGATION...........................30
5.2 OPERATION OF THE BUSINESSES OF THE
ACQUIRED COMPANIES.................................30
5.3 NEGATIVE COVENANT..................................31
5.4 REQUIRED APPROVALS.................................31
5.5 SUPPLEMENTATION AND REVISION OF DISCLOSURE LETTER..31
5.6 PAYMENT OF INDEBTEDNESS BY SHAREHOLDERS............32
5.7 BEST EFFORTS.......................................32
5.8 NO NEGOTIATION.....................................32
6. COVENANTS OF DEPUY AND MERGER SUB....................................33
6.1 APPROVALS OF GOVERNMENTAL BODIES...................33
6.2 BEST EFFORTS.......................................33
6.3 OFFICERS' AND DIRECTORS' INDEMNIFICATION...........33
7. CONDITIONS PRECEDENT TO DEPUY'S AND THE MERGER SUB'S OBLIGATION
TO CLOSE.............................................................34
7.1 ACCURACY OF REPRESENTATIONS........................34
7.2 THE COMPANY'S PERFORMANCE..........................34
7.3 NO PROCEEDINGS.....................................34
7.4 NO INJUNCTION......................................35
7.5 NO PROHIBITION.....................................35
7.6 HSR APPROVAL.......................................35
7.7 SHAREHOLDER VOTE...................................35
7.8 OPINION............................................35
ii
Page
----
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION
TO CLOSE.............................................................35
8.1 ACCURACY OF REPRESENTATIONS........................35
8.2 DEPUY'S AND MERGER SUB'S PERFORMANCE...............36
8.3 NO PROCEEDINGS.....................................36
8.4 NO INJUNCTION......................................36
8.5 NO PROHIBITION.....................................36
8.6 HSR APPROVAL.......................................36
8.7 SHAREHOLDER VOTE...................................36
8.8 OPINION............................................36
9. TERMINATION..........................................................37
9.1 TERMINATION EVENTS.................................37
9.2 RIGHTS AND OBLIGATIONS UPON TERMINATION............38
10. GENERAL PROVISIONS...................................................38
10.1 EXPENSES...........................................38
10.2 PUBLIC ANNOUNCEMENTS...............................38
10.3 CONFIDENTIALITY....................................38
10.4 NOTICES............................................39
10.5 FURTHER ASSURANCES.................................39
10.6 WAIVER.............................................40
10.7 ENTIRE AGREEMENT AND MODIFICATION..................40
10.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.40
10.9 SEVERABILITY.......................................40
10.10 SECTION HEADINGS, CONSTRUCTION.....................40
10.11 GOVERNING LAW......................................41
10.12 COUNTERPARTS.......................................41
10.13 PERFORMANCE BY MERGER SUB..........................41
Exhibit A Form of Opinion of Company counsel
Exhibit B Form of Opinion of DePuy's counsel
Disclosure Letter
iii
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("AGREEMENT") is dated as of March 19,
1998 among AcroMed Corporation, an Ohio corporation (the "COMPANY"), DePuy,
Inc., a Delaware corporation ("DEPUY"), and DP Merger-Sub, Inc., an Ohio
corporation and a wholly-owned subsidiary of DePuy ("MERGER SUB").
RECITALS
The Boards of Directors of DePuy, Merger Sub and the Company have each
approved the merger of Merger Sub with and into the Company in accordance with
the provisions of the Ohio General Corporation Law (the "OGCL"), on the terms
and subject to the conditions set forth in this Agreement.
The Board of Directors of the Company has determined that the Merger
Consideration (as the term is hereinafter defined) is fair to the shareholders
of the Company and the Merger (as such term is hereinafter defined) is otherwise
in the best interests of the Company and its shareholders and has resolved to
approve and adopt this Agreement and the transactions contemplated hereby and to
recommend approval and adoption by the shareholders of the Company of this
Agreement and the Merger.
Simultaneously with the execution of this Agreement, (i) shareholders of
the Company holding more than 60% of the issued and outstanding common shares of
the Company (including the shareholders who are also Directors of the Company)
are executing letters promising to vote their Shares in favor of the
consummation of the Merger and (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ has entered into a
non-competition agreement with DePuy and the Company to become effective on the
Closing Date.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES"-- the Company, AcroMed Export Inc., AcroMed, Inc.
d/b/a ▇▇▇▇▇▇ Medical Inc., AcroMed Holding B.V., AcroMed B.V., AcroMed UK Ltd.,
and the Inactive Subsidiaries, collectively.
"ACTUAL KNOWLEDGE"--an individual will be deemed to have "Actual Knowledge"
of a particular fact or other matter if such individual is actually aware of
such fact or other matter. The Company will be deemed to have "Actual Knowledge"
of a particular fact or other matter if the Company's office of the CEO, the
Company's chief financial officer or the Company's general counsel has Actual
Knowledge of such fact or other matter.
"AFFILIATE"--with respect to a specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such person.
"AGGREGATE OPTION EXERCISE AMOUNT"--the aggregate exercise price of all
outstanding Options that are not exercised prior to the Effective Time.
"ANTITRUST DIVISION"--as defined in Section 5.7.
"ARTICLES"--as defined in Section 2.3.
"BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible. An obligation to use Best Efforts under this
Agreement does not require the Person subject to that obligation to take actions
that would result in a materially adverse change in the benefits to such Person
of this Agreement and the Contemplated Transactions nor does it require the
payment of money in any manner that is inconsistent with past practice.
"CERTAIN TRANSACTION COSTS"--the sum of (i) fees (and expenses) to be paid
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., (ii) fees (and expenses) to be paid by the Company to
its outside counsel in connection with this Agreement and the Contemplated
Transactions, (iii) fees (and expenses) to be paid by the Company to its
accountants in connection with this Agreement and the Contemplated Transactions,
plus (iv) amounts to be paid by the Company under severance agreements with
----
employees that entitle the employee to terminate his or her employment with the
Company as a result of the Merger, on the assumption that such amounts will be
so paid.
"CLOSING"--as defined in Section 2.2.
"CLOSING DATE"--the date and time as of which the Closing actually takes
place.
"COMPANY"--as defined in the Preamble of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
2
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by this
Agreement, including, but not limited to:
(a) the Merger; and
(b) the performance by DePuy, Merger Sub and the Company of their
respective obligations under this Agreement.
"CONTRACT"--any written agreement, contract, obligation, promise, or
undertaking that is legally binding.
"COPYRIGHTS"--as defined in Section 3.17(a).
"DISCLOSURE LETTER"--the disclosure letter delivered by the Company to
DePuy concurrently with the execution and delivery of this Agreement.
"DISSENTING SHAREHOLDERS"--shareholders of the Company properly exercising
appraisal rights with respect to Shares pursuant to Section 1701.84 et seq. of
the OGCL.
"EFFECTIVE TIME"--as defined in Section 2.2.
"ENCUMBRANCE"--any charge, claim, equitable interest, lien, option, pledge,
security interest, or right of first refusal, restriction, covenant, easement,
license, lease, mortgage, obligation, title defect or imperfection or other
encumbrance or right of others.
"ENVIRONMENT"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
3
(c) financial responsibility under Environmental Law or Occupational Safety
and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S) 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement of any Governmental Body in the
United States that requires or relates to:
(a) advising appropriate authorities, employees, and the public of intended
or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the Environment
when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
4
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA AFFILIATE"--with respect to an Acquired Company, any other person
that, together with the Company or Acquired Company, would be treated as a
single employer under IRC (S)414.
"EXCESS AMOUNT"--the amount, if any, that the sum of Certain Transaction
Costs exceeds $9 million.
"FACILITIES"--any real property, leaseholds, or other interests currently
or formerly owned or operated by any Acquired Company and any buildings, plants
or structures currently or formerly owned or operated by any Acquired Company
"FDA"--the Food and Drug Administration.
"FTC"--as defined in Section 5.7.
"GAAP"--generally accepted United States accounting principles, applied on
a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4. were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental body of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal and the European Union).
"HAZARDOUS ACTIVITY"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment.
5
"HAZARDOUS MATERIALS"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"HSR ACT"--the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"INACTIVE SUBSIDIARIES"--AcroBase Corporation, AcroMed Holding Corporation,
AcroMed Inc., AcroMed Incorporated and AcroMed Asia Limited.
"INQUIRY KNOWLEDGE"--an individual will be deemed to have Inquiry Knowledge
of a particular fact or other matter if the individual has Actual Knowledge, or
if a prudent individual could be expected to discover or otherwise become aware
of such fact or other matter either (i) in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter or (ii) because of the nature of his position with, or responsibilities
on behalf of, a Person. The Company will be deemed to have "Inquiry Knowledge"
of a particular fact or other matter if the Company's office of the CEO, the
Company's chief financial officer or the Company's general counsel has Inquiry
Knowledge of such fact or other matter.
"INTELLECTUAL PROPERTY ASSETS"--as defined in Section 3.17(a).
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986, as amended, or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"LEGAL REQUIREMENt"--any administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty of any
Governmental Body.
"MARKS"--as defined in Section 3.17(a).
"MATERIAL ADVERSE EFFECT"--a material adverse effect on the business,
assets, properties, condition (financial or otherwise), operations or results of
operations of the Acquired Companies taken as a whole.
"MDRs"--as defined in Section 3.11(d).
"MERGER--as defined in Section 2.1.
6
"MERGER CONSIDERATION"--as defined in Section 2.6.
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement of any
Governmental Body in the United States designed to provide safe and healthful
working conditions and to reduce occupational safety and health hazards.
"OGCL"--as defined in the recitals.
"OHIO CERTIFICATE OF MERGER"--as defined in Section 2.2.
"OPTIONS"--as defined in Section 2.6.
"ORDER"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict (other than any Legal Requirement) entered, issued, made,
or rendered by any Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the board of directors
of such Person; and
(c) with respect to an Acquired Company, such action is similar in nature
and magnitude to actions customarily taken, without authorization by the board
of directors in the ordinary course of the normal day to day operations of the
Acquired Company.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws or regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles of organization and the operating
agreement of a limited liability company; (e) any charter or similar document
adopted or filed in connection with the creation, formation, or organization of
a Person; and (f) any amendment to any of the foregoing.
"PATENTS"--as defined in Section 3.17(a).
"PBGC"--the Pension Benefit Guaranty Corporation.
"PER SHARE MERGER CONSIDERATION"--as defined in Section 2.7(a).
7
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLANS"--as defined in Section 3.9.
"PROCEEDING"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"REAL PROPERTY LEASES"--as defined in Section 3.5(b).
"REGULATIONS"--as defined in Section 2.4.
"REGULATIONS AMENDMENT"--as defined in Section 7.7
"RELATED PERSON"--with respect to any specified Person:
(i) any Affiliate of such specified Person; and
(ii) each Person that serves as a director or officer, of such
Person.
"RELEASE"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933, as amended, or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"SETTLEMENT AGREEMENT AND ORDER"--as defined in Section 3.20.
"SHARES"--as defined in Section 2.6.
"SUBMISSIONS"--as defined in Section 3.11(b).
"SUBSIDIARY"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
8
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"SURVIVING CORPORATION"--as defined in Section 2.1.
"TAX"--any tax (including any income tax, capital gains tax, value-added
tax, sales tax, property tax, gift tax, estate tax or payroll, employment or
social security tax) levy, assessment, tariff, duty (including any customs
duty), deficiency, or other fee commonly referred to as a tax, and any related
charge or amount (including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other Contract
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency, or fee.
"TAX RETURN"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter is
"Threatened" if any demand has been made in writing or if any oral demand that
has been made is reflected in any writing created by or in the possession of the
Company.
"TRADE SECRETS"--as defined in Section 3.17(a).
2. MERGER; CLOSING; EFFECTIVE TIME
2.1 THE MERGER
Subject to the terms and conditions of this Agreement, at the Effective
Time, Merger Sub will be merged with and into the Company and the separate
corporate existence of Merger Sub will cease (the "MERGER"). The Company will be
the surviving corporation in the Merger (sometimes referred to as the "SURVIVING
CORPORATION") and will continue to be governed by the laws of the State of Ohio.
The Merger will have the effects set forth in the OGCL. Without limiting the
generality of the foregoing, upon the Merger, the rights, privileges,
immunities, powers, franchises and authority of the Company and the Merger Sub
will vest in the Surviving Corporation and all obligations of the Company and
the Merger Sub will be the obligations of the Surviving Corporation.
9
2.2 CLOSING
The Closing of the Merger (the "CLOSING") will take place at the offices of
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ at 10:00
a.m., Eastern Time, on the day which is no later than the fifth business day
after the last to be fulfilled or waived of the conditions set forth in Sections
7 and 8 of this Agreement, unless another date or place is agreed to in writing
by the parties hereto. At the Closing, the Company and DePuy will cause a
Certificate of Merger (the "OHIO CERTIFICATE OF MERGER") to be executed and
filed with the Secretary of State of the State of Ohio as provided in Section
1701.81 of the OGCL and DePuy will make the payments required by Section 2.10.
The Merger will become effective when the Ohio Certificate of Merger has been
duly filed with the Secretary of State of the State of Ohio (the "EFFECTIVE
TIME").
2.3 ARTICLES OF INCORPORATION
The articles of incorporation of Merger Sub (the "ARTICLES") in effect
immediately prior to the Effective Time will be the articles of incorporation of
the Surviving Corporation, until amended in accordance with the terms of the
Articles and the OGCL.
2.4 THE REGULATIONS
The Regulations of Merger Sub in effect immediately prior to the Effective
Time will be the Regulations of the Surviving Corporation (the "REGULATIONS")
until amended in accordance with the Articles, such Regulations and the OGCL.
2.5 DIRECTORS AND OFFICERS
The directors and officers of Merger Sub at the Effective Time will, from
and after the Effective Time, be the directors and officers of the Surviving
Corporation until their successors have been duly elected or appointed or until
their earlier death, resignation or removal in accordance with the Articles and
the Regulations.
2.6 MERGER CONSIDERATION
The aggregate consideration to be delivered by DePuy to the holders of (i)
issued and outstanding common shares, without par value, of the Company (the
"SHARES") and (ii) options to purchase shares of the capital stock of the
Company (the "OPTIONS") in consideration of the Merger will be $325 million less
any Excess Amount (the "MERGER CONSIDERATION").
2.7 CONVERSION
At the Effective Time, by virtue of the Merger and without any action on
the part of the Company, DePuy or the Merger Sub:
10
(a) Each Share issued and outstanding at the Effective Time (other than
Shares canceled in accordance with Section 2.7(c) and other than Shares that are
held by Dissenting Shareholders) will be converted into the right to receive,
without interest, the quotient of: (i) the sum of the Merger Consideration plus
the Aggregate Option Exercise Amount divided by (ii) the number of fully-diluted
Shares issued and outstanding (assuming all Options are exercised) immediately
prior to the Merger (the "PER SHARE MERGER CONSIDERATION").
(b) All the Shares, by virtue of the Merger and without any action on the
part of the holders, will no longer be issued and outstanding and will be
canceled and retired and will cease to exist, and each holder of a certificate
representing Shares will thereafter cease to have any rights with respect to the
Shares, except the right to receive the Per Share Merger Consideration upon the
surrender of the respective certificate(s) in accordance with Section 2.10 or
the right, if any, to receive payment as a Dissenting Shareholder from the
Surviving Corporation as determined in accordance with Sections 1701.84 et seq.
-- ---
of the OGCL.
(c) At the Effective Time, each Share issued and held in the Company's
treasury immediately prior to the Effective Time and each Share owned by DePuy,
Merger Sub, or any other subsidiary of DePuy, will, by virtue of the Merger and
without any other action, be canceled and retired without payment of any
consideration and will cease to exist.
2.8 CONVERSION OF MERGER SUB SHARES
At the Effective Time, each share of common stock, without par value, of
Merger Sub issued and outstanding immediately prior to the Effective Time will,
by virtue of the Merger and without any action on the part of Merger Sub or the
holders of such Shares, be converted into one common share, without par value,
of the Surviving Corporation.
2.9 CONVERSION OF OPTIONS
(a) At the Effective Time, each Option will be converted into the right to
receive, without interest, a portion of the Merger Consideration equal to the
amount by which the Per Share Merger Consideration exceeds the exercise price
per Share payable under the Option, subject to applicable withholding Taxes that
have not otherwise been paid by the holder of the Options.
(b) All Options, by virtue of the Merger and without any action on the part
of the holders, will be canceled and will cease to exist, and each holder of
Options will thereafter cease to have any rights with respect to the Options,
except the right to receive the amount set forth in Section 2.9(a) above in
accordance the procedures set forth in Section 2.10.
(c) At least five business days prior to the Closing (and again if there
are any changes before the Closing), the Company will provide DePuy an update to
Part 3.2 of the Disclosure
11
Letter listing the Options held by each optionee (including the date of grant,
the number of Shares issuable upon exercise of each Option, and the Merger
Consideration to which each optionee is entitled for their respective Options).
(d) The Company will obtain the written acknowledgment of each Person
holding an Option that payment of the amount of cash referred to above will
satisfy in full the Company's obligation to such person pursuant to such Option.
2.10 PAYMENT FOR SHARES AND OPTIONS
(a) Prior to the Closing, the Company will deliver (i) letters of
transmittal (in a form mutually agreed to by the Company and DePuy) to the
holders of Shares and (ii) instructions for payment (in a form mutually agreed
to by the Company and DePuy), which will include appropriate provision for the
payment of applicable withholding Taxes to holders of Options so that such
Shares and payment instructions may be delivered to the Company to be delivered
to DePuy for payment at the Effective Time. At the Closing, upon delivery to
DePuy of (i) certificates for Shares, together with the letter of transmittal,
duly executed and completed, and (ii) the payment instructions with respect to
Options, duly executed and delivered, DePuy will pay the Merger Consideration in
immediately available funds pursuant to Sections 2.7(a) and 2.9(a) to holders of
issued and outstanding Shares and granted Options, respectively, in each case
subject to any required Tax withholding or, as set forth in the letter of
transmittal, stock transfer taxes payable by the holder. Not more than three
business days after delivery to DePuy of (i) certificates for Shares, together
with the letter of transmittal, duly executed and completed, or (ii) the payment
instructions with respect to Options, duly executed and delivered, that were not
delivered at the Closing, DePuy will pay the Merger Consideration in immediately
available funds pursuant to Sections 2.7(a) and 2.9(a), in each case subject to
any required Tax withholding. No interest will be paid or will accrue on the
amounts payable pursuant to Sections 2.7(a) and 2.9(a).
(b) If payment is to be made to a person other than the registered holder
of the certificate surrendered, it will be a condition of payment that the
certificate so surrendered will be properly endorsed or otherwise in proper form
for transfer and that the person requesting payment will pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of the certificate surrendered or establish to the
satisfaction of the Surviving Corporation that the tax has been paid or is not
applicable.
2.11 DISSENTERS' RIGHTS
No Dissenting Shareholder will be entitled to any portion of the Merger
Consideration under this Section 2 unless and until the holder has failed to
perfect or has effectively withdrawn or lost their right to dissent from the
Merger under the OGCL. Any Dissenting Shareholder will be entitled to receive
only the payment provided by Sections 1701.84 et seq. of the OGCL with respect
-- ---
to Shares owned by such Dissenting Shareholder. If any Person who otherwise
would be deemed a Dissenting Shareholder has failed to properly perfect or has
effectively withdrawn or
12
has lost the right to dissent with respect to any Shares, those Shares will be
converted into the right to receive the Merger Consideration as provided by
Section 2.7(a), without interest or dividends thereon.
2.12 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME
No transfers of Shares will be made on the share transfer books of the
Surviving Corporation and no Options may be exercised at or after the Effective
Time.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to DePuy as follows:
3.1 ORGANIZATION
Part 3.1 of the Disclosure Letter contains a complete and accurate list for
each Acquired Company of its name, its jurisdiction of incorporation and any
other jurisdictions in which it is authorized to do business. Each Acquired
Company (other than the Inactive Subsidiaries) is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with the corporate power and authority to conduct its business as
it is now being conducted, to own or use the properties and assets that it owns
or uses, and to perform all its obligations under Contracts. Except as set forth
in Part 3.1 of the Disclosure Letter, each Acquired Company is a corporation
duly qualified to do business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which either the ownership
or use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification. The failure of any Inactive
Subsidiary to be duly organized, validly existing or in good standing would not
have a Material Adverse Effect.
3.2 CAPITALIZATION
The authorized equity securities of the Company consist of 250,000 Shares,
of which 29,225 shares are issued and outstanding. On the date of this
Agreement, each shareholder is the record owner of the number of Shares set
opposite his, her or its name in Part 3.2 of the Disclosure Letter. All of the
issued and outstanding equity securities and other securities of each Acquired
Company other than the Company are owned of record and beneficially by one or
more of the Acquired Companies, free and clear of all Encumbrances. Any issued
and outstanding equity securities of the Acquired Companies have been duly
authorized and validly issued and are fully paid and nonassessable. Not more
than 12,475 Shares are issuable upon the exercise of Options. Except as set
forth in Part 3.2 of the Disclosure Letter, there are no Contracts to which the
Company is a party or Organizational Documents obligating any Acquired Company
to issue or sell any equity securities or other securities or restricting the
transfer of any equity securities or other securities of the Company. No
Acquired Company has any Contract to acquire any equity securities or other
securities of any Person (other than Acquired Companies) or any direct or
indirect equity or ownership interest in any other business. Except as set forth
in Part 3.2 of the
13
Disclosure Letter, none of the outstanding equity securities or
other securities of any Acquired Company was issued in violation of the
Securities Act or other Legal Requirement. The only Subsidiaries of the Company
are the Acquired Companies (other than the Company).
3.3 AUTHORITY; NO CONFLICT
(a) This Agreement is a legal, valid, and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
Company has all requisite right, power and authority to execute and deliver this
Agreement and, subject to approval of its shareholders, to perform its
obligations under this Agreement. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
Contemplated Transactions have been duly authorized by the Directors of the
Company and, other than approval and adoption of this Agreement by the holders
of at least a majority of the voting power of the Company, no other corporate
proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement by the Company and the consummation
of the Contemplated Transactions. The Board of Directors of the Company has
determined that the Merger Consideration is fair to the shareholders of the
Company and has recommended approval and adoption by the shareholders of the
Company of this Agreement and the Merger.
(b) Except as set forth in Part 3.3(b) of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or performance
by the Company of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of any Acquired Company, or any
resolution adopted by the directors or the shareholders of any Acquired
Company;
(ii) contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which any Acquired Company, or
any of the assets owned or used by any Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Acquired Company or that otherwise
relates to the business of, or any of the assets owned or used by, any
Acquired Company;
14
(iv) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract; or
(v) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by any Acquired Company.
(c) Except for the filing under the HSR Act and the expiration or earlier
termination of the applicable waiting period thereunder and the required vote of
the Company shareholders, the Company is not and will not be required to obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.4 FINANCIAL STATEMENTS
The Company has delivered to DePuy: (a) consolidated balance sheets of the
Acquired Companies as at June 30 in each of the years 1993 through 1996, and the
related consolidated statements of income, changes in shareholders' equity, and
cash flow for each of the fiscal years then ended, together with the report
thereon of Deloitte & Touche LLP, independent certified public accountants, (b)
a consolidated balance sheet of the Acquired Companies as at June 30, 1997
(including the notes thereto, the "BALANCE SHEET"), and the related consolidated
statements of income, changes in shareholders' equity, and cash flow for the
fiscal year then ended, together with the report thereon of Deloitte & Touche
LLP, independent certified public accountants, and (c) an unaudited consolidated
balance sheet of the Acquired Companies as at December 31, 1997 (the "INTERIM
BALANCE SHEET") and the related unaudited consolidated statements of income,
changes in shareholders' equity, and cash flow for the 6 months then ended,
including in each case the notes thereto. Such financial statements and notes
fairly present in all material respects the financial condition and the results
of operations, changes in shareholders' equity, and cash flow of the Acquired
Companies as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP, subject, in the case of
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not individually or in the aggregate have a Material
Adverse Effect) and the absence of notes. The financial statements referred to
in this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in the notes to
such financial statements.
3.5 TITLE TO PROPERTIES; ENCUMBRANCES
(a) Except for Intellectual Property Assets (covered in Section 3.17), the
Acquired Companies own all the assets that they purport to own (whether real,
personal or mixed and whether tangible or intangible), including, but not
limited to, all assets reflected in the Balance Sheet and the Interim Balance
Sheet, except for personal property sold since the date of the Balance Sheet and
Interim Balance Sheet in the Ordinary Course of Business. All assets reflected
15
in the Balance Sheet and the Interim Balance Sheet are free and clear of all
Encumbrances other than (i) security interests incurred in connection with the
purchase of property or assets after the date of the Interim Balance Sheet (such
security interests being limited to the property or assets so required), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (ii) liens for current taxes not yet
due, (iii) security interests listed in Part 3.5(a) of the Disclosure Letter and
(iv) liens of carriers, warehousemen, mechanics and materialmen, liens in
connection with workers compensation, unemployment insurance or other forms of
governmental insurance or benefits (other than Tax Encumbrances).
(b) The Acquired Companies do not own any real property. Part 3.5(b) of the
Disclosure Letter contains a complete list of all real property leases
(collectively, the "REAL PROPERTY LEASES") to which any of the Acquired
Companies is a party. The Acquired Companies have a valid leasehold interest in
all of the Real Property Leases, free and clear of Encumbrances other than (i)
current taxes not yet due and payable, (ii) zoning laws and other land use
restrictions that do not impair the present or anticipated use of the Real
Property Leases by the Acquired Companies, (iii) rights of way, building use
restrictions, exceptions, variances, reservations, or limitations of any nature
other than restrictions, covenants, conditions and easements of record, (iv)
minor imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the Real Property
Leases subject thereto, or impairs the operations of any Acquired Company, and
(v) any landlord/owner financing permitted under the terms of such Real Property
Leases. The Acquired Companies are not now in default under any of the Real
Property Leases and, to the Inquiry Knowledge of the Company, there is no
default by any other party thereto which, after the passage of time or
otherwise, could lead to a default thereunder.
3.6 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.6 of the Disclosure Letter, the Acquired
Companies have no liabilities or obligations of any nature (whether known or
unknown and whether absolute, actual, contingent or otherwise) that are required
to be reflected on a balance sheet prepared in accordance with GAAP except for
liabilities reflected or reserved against in the Balance Sheet or the Interim
Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the respective dates thereof that will not have a Material
Adverse Effect.
3.7 TAXES
(a) The Acquired Companies have filed or caused to be filed on a timely
basis all United States federal Tax Returns and foreign income Tax Returns that
are or were required to be filed by or with respect to any of them, either
separately or as a member of a group of corporations. The Acquired Companies
have paid, or made provision for the payment of, all Taxes that have become due
pursuant to those Tax Returns, or pursuant to any assessment received by any
Acquired Company, except such Taxes, if any, as are listed in Part 3.7(a) of the
Disclosure Letter and are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided in the Balance
Sheet and the Interim
16
Balance Sheet. The United States federal Tax Returns of each Acquired Company
subject to such Taxes have been audited or are closed by the applicable statute
of limitations through June 30, 1995.
(b) The Acquired Companies are not delinquent in the payment of any United
States federal Tax, there is no United States federal Tax deficiency or
delinquency asserted against any Acquired Company and there is no unpaid
assessment, proposal for additional United States federal Taxes asserted by any
Governmental Body. No United States federal audit is pending or Threatened and
the results of any completed audits are properly reflected in the financial
statements referred to in Section 3.4.
(c) Part 3.7(c) of the Disclosure Letter sets forth the state Tax Returns
that have been filed by the Acquired Companies and all such Returns have been
timely filed. There is no unpaid assessment, proposal for additional state
Taxes, deficiency or delinquency in the payment of any state Taxes asserted by
any Governmental Body.
(d) Except as described in Part 3.7(d) of the Disclosure Letter, no
Acquired Company has given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of any Acquired
Company or for which any Acquired Company may be liable. There exists no
proposed tax assessment against any Acquired Company except as disclosed in the
Balance Sheet or in Part 3.7(d) of the Disclosure Letter. No consent to the
application of Section 341(f)(2) of the IRC has been filed with respect to any
property or assets held, acquired, or to be acquired by any Acquired Company.
All Taxes that any Acquired Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
(e) Except as set forth in Part 3.7(e) of the Disclosure Letter, to the
Inquiry Knowledge of the Company, the Acquired Companies have filed all foreign
Tax Returns (other than foreign income Tax Returns which are covered in Section
3.7(a)) that are or were required to be filed by or with respect to any of them
and paid (or made provision to pay) all Taxes that have become due pursuant to
such Returns.
3.8 NO MATERIAL ADVERSE CHANGE
Except as set forth in Part 3.8 of Disclosure Letter, there has not been
since the date of the Balance Sheet any change in the business, operations,
assets, or condition of any Acquired Company that has resulted, or could
reasonably be expected to result in a Material Adverse Effect.
17
3.9 EMPLOYEE BENEFITS
(a) Except as disclosed in Part 3.9 of the Disclosure Letter, (i) each
"employee benefit plan" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and all other employee
benefit, bonus, incentive, stock option (or other equity-based), severance,
change in control, welfare (including post-retirement medical and life
insurance) and fringe benefit plans (whether or not subject to ERISA) maintained
or sponsored by the Company or any other United States trade or business,
whether or not incorporated, that would be deemed a "single employer" within the
meaning of Section 4001 of ERISA (an "ERISA Affiliate"), for the benefit of any
employee or former employee of any Acquired Company or any of its ERISA
Affiliates (individually, a "Plan", and collectively, the "Plans") is, and has
been operated in accordance with its terms and in material compliance (including
the making of governmental filings) with all applicable laws, including ERISA
and the applicable provisions of the IRC, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the IRC has been determined
by the IRS to be so qualified, (iii) no "reportable event," as such term is
defined in Section 4043(c) of ERISA (for which the 30-day notice requirement to
the Pension Benefit Guaranty Corporation ("PBGC") has not been waived), has
occurred with respect to any Plan that is subject to Title IV of ERISA which
presents a risk of liability to any Governmental Body or other person, and (iv)
there are no pending, or to the Actual Knowledge of the Company Threatened,
claims (other than routine claims for benefits) by, on behalf of or against, any
of the Plans or any trusts related thereto. No Plan is a "multiemployer plan"
(within the meaning of ERISA) nor has any Acquired Company or any ERISA
Affiliate ever contributed or been required to contribute to any multiemployer
plan. Parts 3.9 and 3.10 of the Disclosure Letter contain a complete and
accurate list of all Plans. To the Inquiry Knowledge of the Company, the
Acquired Companies that are organized and operate outside the United States do
not maintain or contribute to any employee benefit plans that represent material
liabilities of such Acquired Companies.
(b) (i) No Plan has incurred an "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the IRC), whether or not
waived and (ii) no Acquired Company nor any ERISA Affiliate has incurred any
liability under Title IV of ERISA except for required premium payments to the
PBGC, which payments have been made when due, and no events have occurred which
are reasonably likely to give rise to any liability of an Acquired Company or an
ERISA Affiliate under Title IV of ERISA or which could reasonably be anticipated
to result in any claims being made against any Acquired Company by the PBGC.
(c) No Acquired Company or any ERISA Affiliate has failed to make any
contribution or payment to any Plan which has resulted or could result in the
imposition of a lien or the posting of a bond or other security under ERISA or
the IRC.
18
3.10 TERMINATION, SEVERANCE AND EMPLOYMENT AGREEMENTS
Part 3.10 of the Disclosure Letter includes a complete and accurate list of
each (a) employment or severance agreement not terminable without liability or
obligation (either individually or collectively); (b) agreement with any
director, executive officer or other employee of any Acquired Company (i) the
benefits of which are contingent, or the terms of which are materially altered,
on the occurrence of a transaction involving the Acquired Company of the nature
of any of the Contemplated Transactions or relating to an actual or potential
change in control of the Acquired Company or (ii) providing any term of
employment or other compensation guarantee or extending severance benefits or
other benefits after termination not comparable to benefits available to
employees of the Acquired Companies generally; (c) agreement, plan or
arrangement under which any person may receive payments as a result of the
Contemplated Transactions that may be subject to tax imposed by (S)4999 of the
IRC or included in the determination of such person's "parachute payment" under
(S)280G of the IRC; and (d) agreement or plan, including any stock option plan,
stock appreciation right plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be triggered, increased, or the vesting of the
benefits of which will be triggered or accelerated, by the occurrence of any of
the Contemplated Transactions or the value of any of the benefits of which will
be calculated on the basis of any of the Contemplated Transactions. Except as
provided for by the terms of any agreement, plan or arrangement, the existence
of which is disclosed in Part 3.10 of the Disclosure Schedule, the consummation
of the Contemplated Transactions, without regard to any other event following
the Effective Time, will not (i) entitle any current or former employee or
officer of any Acquired Company or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, or (ii) accelerate the time of
payment or vesting or increase the amount of compensation due any such employee
or officer. All of the Employee Stock Option Agreements (other than the one for
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.) listed under Part 3.2 of the Disclosure Letter under the
headings Executives and Key Employees include a covenant in the form of Sections
---------- -------------
7 and 8 of the Employee Stock Option Agreement between the Company and ▇▇▇▇▇ ▇.
▇▇▇▇▇ dated as of July 23, 1997, a true and accurate copy of which has
previously been delivered to DePuy. A true and accurate copy of both the
Employment Agreement and the Stock Option Agreement between the Company and W.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. have been delivered to DePuy. After the Closing, no payments
will be due to ▇▇. ▇▇▇▇▇▇▇▇ from the Company.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) To the Inquiry Knowledge of the Company, except as set forth in Part
3.11(a) of the Disclosure Letter:
(i) each Acquired Company is, and at all times since January 1, 1994
has been, in compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
19
(ii) the Acquired Companies have not received, at any time since
January 1, 1994, any written notice or other written communication from any
Governmental Body or any other Person regarding any violation of, or
failure to comply with, any Legal Requirement, or any obligation on the
part of the Acquired Companies to undertake, or to bear all or any portion
of the cost of, remedial action under any Environmental Law.
(b) Part 3.11(b) of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or to any of the assets owned or used
by, any Acquired Company, including but not limited to product approvals and
clearances issued by the Food and Drug Administration ("FDA") and similar
foreign Governmental Bodies and product submissions to the FDA and similar
foreign Governmental Bodies which are currently in process (the "SUBMISSIONS").
Except for the Submissions, each Governmental Authorization issued by a United
States Governmental Body, and, to the Inquiry Knowledge of the Company, each
Governmental Authorization issued by a foreign Governmental Body, listed or
required to be listed in Part 3.11(b) of the Disclosure Letter is valid and in
full force and effect.
(c) Except as set forth in Part 3.11(c) of the Disclosure Letter, to the
Inquiry Knowledge of the Company, the Governmental Authorizations listed in Part
3.11(b) of the Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Acquired Companies to lawfully conduct
and operate their businesses in the manner they currently conduct and operate
such businesses and to permit the Acquired Companies to own and use their assets
in the manner in which they currently own and use such assets.
(d) In calendar year 1997, the Company recorded * "complaints" (as such
term is defined in 21 C.F.R. (S)820.198) and reported 21 Medical Device Reports
("MDRs"). From January 1, 1998 through February 28, 1998, the Company recorded *
"complaints" and reported 5 MDRs. Except as set forth in Part 3.11(d) of the
Disclosure Letter, to the Inquiry Knowledge of the Company, these "complaints"
and MDRs would not reasonably lead to the conclusion that there is a trend or
failure mode with respect to a particular product.
(e) To the Inquiry Knowledge of the Company, all products manufactured by
any Acquired Company are manufactured, distributed and marketed in compliance
with currently applicable FDA laws and regulations. The Acquired Companies are
authorized by their "notified body" to apply the "CE" ▇▇▇▇ to the products
listed on Part 3.11(e) of the Disclosure Letter.
(f) Since January 1, 1992, none of the Acquired Companies has received any
FDA "warning letters." No devices currently sold by any of the Acquired
Companies are subject to a voluntary or FDA-mandated recall.
-------------
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
20
3.12 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.12(a) of the Disclosure Letter, there is
no pending Proceeding and, to the Inquiry Knowledge of the Company, no such
Proceeding has been Threatened (i) by or against any Acquired Company or (ii)
that challenges any of the Contemplated Transactions..
(b) Except as set forth in Part 3.12(b) of the Disclosure Letter:
(i) there is no Order to which any Acquired Company is a party;
(ii) to the Actual Knowledge of the Company, no officer, director or
employee of any Acquired Company is subject to any Order that prohibits
such officer, director or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of any Acquired
Company.
(c) Except as set forth in Part 3.12(c) of the Disclosure Letter, each
Acquired Company is, and at all times since January 1, 1994 has been, in full
compliance with all of the terms and requirements of each Order to which it, or
any of the assets owned or used by it, is or has been subject.
3.13 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.13 of the Disclosure Letter, since the date
of the Balance Sheet, the Acquired Companies have conducted their businesses
only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital stock; grant of
any Options or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by any Acquired Company of any bonuses, salaries,
or other compensation to any shareholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
21
(e) damage to or destruction or loss of any asset or property of any
Acquired Company not covered by insurance;
(f) entry into, termination of, or material modification of any license,
distributorship, dealer, sales representative, or joint venture credit or
similar agreement;
(g) entry into, termination of, or receipt of notice of termination of any
Contract or transaction, including incurrence of obligations for borrowed money,
involving a total remaining commitment by or to any Acquired Company of at least
$50,000 other than in the Ordinary Course of Business;
(h) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of any Acquired
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of any Acquired Company;
(i) material change in the accounting methods used by any Acquired Company;
or
(j) agreement, whether oral or written, by any Acquired Company to do any
of the foregoing.
3.14 CONTRACTS; NO DEFAULTS
(a) Part 3.14(a) of the Disclosure Letter identifies:
(i) each Contract that involves performance of services or delivery of
goods or materials by one or more Acquired Companies of an amount or value
in excess of $50,000 other than sales orders for the sale by an Acquired
Company of goods or services in the Ordinary Course of Business;
(ii) each Contract that involves performance of services or delivery
of goods or materials to one or more Acquired Companies of an amount or
value in excess of $50,000 other than purchase orders for the purchase by
an Acquired Company of goods or services in the Ordinary Course of
Business;
(iii) each Contract that was not entered into in the Ordinary Course
of Business and that involves expenditures or receipts of one or more
Acquired Companies in excess of $25,000;
(iv) each Contract for borrowed money;
(v) each lease, rental or occupancy agreement, license, installment
and conditional sales agreement, and other Contracts affecting the
ownership of, leasing of, title to, use of, or any leasehold or other
interest in, any real or personal property to which
22
an Acquired Company is a party (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $25,000 or with terms of less than one year);
(vi) each licensing agreement or other Contract with respect to
patents, trademarks or copyrights to which an Acquired Company is a party;
(vii) each collective bargaining agreement and other Contract to which
an Acquired Company is a party to or with any labor union or other employee
representative of a group of employees;
(viii) each joint venture, partnership, and other Contract (however
named) involving a sharing of profits, losses, costs, or liabilities by any
Acquired Company with any other Person;
(ix) each Contract to which an Acquired Company is a party containing
covenants that in any way purport to restrict the business activity of any
Acquired Company;
(x) each Contract to which an Acquired Company is a party for capital
expenditures in excess of $50,000;
(xi) to the extent not listed elsewhere in Part 3.14(a) of the
Disclosure Letter, each Contract providing for payments by or to any Person
based on sales, purchases or profits, other than direct payment for goods;
(xii) each written warranty, guaranty or similar undertaking with
respect to contractual performance extended by any Acquired Company other
than in the Ordinary Course of Business; and
(xiii) each written amendment, supplement and modification in respect
of any of the foregoing.
(b) Except as set forth in Part 3.14(b) of the Disclosure Letter, to the
Inquiry Knowledge of the Company, each Contract identified or required to be
identified in Part 3.14(a) of the Disclosure Letter is in full force and effect
and is valid and enforceable in accordance with its terms.
(c) Except as set forth in Part 3.14(c) of the Disclosure Letter, to the
Inquiry Knowledge of the Company:
23
(i) each Acquired Company is in substantial compliance with each
Contract listed in Part 3.14(a) of the Disclosure Letter under which such
Acquired Company has or had any obligation or liability or by which such
Acquired Company or any of the assets owned or used by such Acquired
Company is or was bound;
(ii) each other Person that has or had any obligation or liability
under any Contract listed in Part 3.14(a) of the Disclosure Letter under
which an Acquired Company has any rights is in substantial compliance with
such Contract; and
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result
in a violation or breach of, or give any Acquired Company or other Person
the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Contract.
3.15 ENVIRONMENTAL MATTERS
Except as set forth in Part 3.15 of the Disclosure Letter:
(a) Each Acquired Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. No Acquired Company has any basis to expect, nor has any of
them or any other Person for whose conduct they are or may be held to be
responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which any Acquired Company has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
transported, generated, manufactured, refined, transferred, imported, used, or
processed by, any Acquired Company, or any other Person for whose conduct they
are or may be held responsible.
(b) There are no pending or, to the Actual Knowledge of the Company,
Threatened claims, Encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health, and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal, or mixed)
in which any Acquired Company has or had an interest.
(c) No Acquired Company has any basis to expect, nor has any of them or any
other Person for whose conduct they are or may be held responsible, received,
any citation, directive, inquiry, notice, Order, summons, warning, or other
communication that relates to Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or
24
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which any Acquired Company had an interest, or with
respect to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used, or processed by, any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(d) No Acquired Company or any other Person for whose conduct they are or
may be held responsible, has any Environmental, Health, and Safety Liabilities
with respect to the Facilities or with respect to any other properties and
assets (whether real, personal, or mixed) in which any Acquired Company (or any
predecessor), has or had an interest.
(e) Except for the Hazardous Materials that are reasonably necessary to
operate the business of the Company in the ordinary course and that are managed
in compliance with all applicable Environmental Laws, there are no Hazardous
Materials present on or in the Environment at the Facilities, including any
Hazardous Materials contained in barrels, above or underground storage tanks,
landfills, land deposits, dumps, equipment (whether moveable or fixed) or other
containers, either temporary or permanent, and deposited or located in land,
water, sumps, or any other part of the Facilities or such adjoining property, or
incorporated into any structure therein or thereon. No Acquired Company, any
other Person for whose conduct they are or may be held responsible, or any other
Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which any Acquired Company has or had an
interest.
(f) There has been no Release or, to the Actual Knowledge of the Company,
Threatened Release, of any Hazardous Materials at or from the Facilities or at
or from any other locations where any Hazardous Materials generated by any
Acquired Company were treated or disposed, or from or by any other properties
and assets (whether real, personal, or mixed) in which any Acquired Company has
or had an interest, whether by any Acquired Company or any other Person.
(g) The Acquired Companies have delivered to DePuy true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by any Acquired Company pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by any
Acquired Company or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.
3.16 LABOR RELATIONS; COMPLIANCE
Since January 1, 1992, no Acquired Company has been or is a party to any
collective bargaining or other labor Contract. There is not presently pending or
existing, and to the Inquiry Knowledge of the Company there is not Threatened,
any strike, slowdown, picketing, work stoppage, or employee grievance process,
any Proceeding against or affecting any Acquired Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations
25
or employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting any Acquired Company or
their premises, or any application for certification of a collective bargaining
agent. To the Inquiry Knowledge of the Company, each Acquired Company has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and employment
taxes, occupational safety and health, and plant closing.
3.17 INTELLECTUAL PROPERTY
(a) INTELLECTUAL PROPERTY ASSETS--The term "INTELLECTUAL PROPERTY ASSETS"
includes all intellectual property Assets of the Acquired Companies including,
but not limited to:
(i) the name "AcroMed Corporation," all fictional business names,
trade names, registered trademarks, service marks, and applications
(collectively, "MARKS");
(ii) all patents and patent applications (collectively, "PATENTS");
(iii) all copyrights in both published works and unpublished works
(collectively, "COPYRIGHTS"); and
(iv) all know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, "TRADE SECRETS"); owned, used, or
licensed by any Acquired Company as licensee or licensor.
(b) Part 3.17(b) of the Disclosure Letter contains a complete and accurate
list of:
(i) all Patents, registered Marks and registered Copyrights, owned or
used (pursuant to license agreements or otherwise) by any Acquired Company
and, in the case of Intellectual Property Assets which are so owned, the
jurisdictions in or by which such assets have been registered, filed or
issued; and
(ii) to the extent not listed in Part 3.14(a) of the Disclosure
Letter, all Contracts pursuant to which the Company has authorized any
Person to use any of the Intellectual Property Assets which are so owned.
Except as set forth in Part 3.17(b) of the Disclosure Letter, to the
Inquiry Knowledge of the Company, the Acquired Companies own, possess or
license all right, title and interest in and to the Intellectual Property
Assets without, to the Inquiry Knowledge of the Company, conflict with the
rights of others and free and clear of all Encumbrances and other adverse
claims. The Intellectual
26
Property Assets constitute all of the intellectual property assets
necessary to permit the Acquired Companies to conduct and operate their
businesses in the manner in which they currently conduct and operate such
businesses.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter, (i) the
Contemplated Transactions will not alter or impair any of the rights presently
enjoyed by any Acquired Company under the Intellectual Property Assets, and (ii)
no Acquired Company has received any notice or claim of infringement or any
claim challenging or questioning the validity or effectiveness of any
Intellectual Property Assets and (iii) no Acquired Company is liable, nor has it
made any Contract whereby it may become liable, to any Person for any royalty or
other compensation for use of any of the Intellectual Property Assets.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter, to the
Inquiry Knowledge of the Company, none of the products manufactured, sold or
being developed by or on behalf of any Acquired Company, nor any process or
know-how used by any Acquired Company infringes or is alleged to infringe any
patent or proprietary right of any other Person. Except as set forth in Part
3.17(d) of the Disclosure Letter, to the Inquiry Knowledge of the Company, none
of the Marks infringes or is alleged to infringe any trade name, trademark or
service ▇▇▇▇ of any third party.
3.18 BROKERS
Other than payments to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. contemplated in the letter
agreement dated as of June 7, 1996, by and among the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co., a true and correct copy of which has been made available to DePuy, no
Acquired Company has incurred and no Acquired Company will incur any obligation
for any finder's or broker's fee or commission in connection with the
Contemplated Transactions.
3.19 TRANSACTIONS WITH RELATED PERSONS
Except as set forth in Part 3.19 of the Disclosure Letter, to the Inquiry
Knowledge of the Company:
(a) no Related Person of any Acquired Company has any interest in any
property used in or pertaining to any Acquired Company's business; and
(b) no Related Person of any Acquired Company owns any equity interest or
other financial interest in a Person that has had business dealings or a
material financial interest in any transaction with any Acquired Company other
than business dealings or transactions conducted in the Ordinary Course of
Business with any Acquired Company at substantially prevailing market terms.
27
3.20 SETTLEMENT AGREEMENT
At the time of the Closing, the AcroMed Corporation Settlement Agreement
dated January 8, 1997, as amended and as approved in the Final Order and
Judgment (Pretrial Order No. 1117) entered on October 17, 1997, in the United
States District Court for the Eastern District of Pennsylvania in the
Multidistrict Proceeding entitled In re: Orthopedic Bone Screw Products
Liability Litigation, MDL Docket No. 1014, and the Final Order and Judgment
itself (collectively the "SETTLEMENT AGREEMENT AND ORDER"), will be final and
are binding upon the Company and the members of the "Settlement Class" as
defined therein.
3.21 PRODUCTS; MANUFACTURING
(a) No material used or ever used in the AcroFlex(R) artificial lumbar disc
under development by the Company is an additive listed in 21 C.F.R. Part 81.
(b) No Acquired Company manufactures products outside the United States.
(c) As of the date of this Agreement, the Company has raw material
inventory of * pounds of PEKEKK.
3.22 DISCLOSURE
The representations and warranties made by the Company in this Agreement
including the matters set forth in the Disclosure Letter (including Part 3.22 of
the Disclosure Letter), taken as a whole, do not omit to state a material fact
necessary to make the statements herein, in light of the circumstances in which
they were made, not misleading.
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Agreement,
the Company makes no representation or warranty, and hereby disclaims any such
representations by the Company with respect to the execution and delivery of
this Agreement, the Contemplated Transactions or the Acquired Companies.
4. REPRESENTATIONS AND WARRANTIES OF DEPUY AND MERGER SUB
Each of DePuy and Merger Sub represents and warrants to the Company as
follows:
4.1 ORGANIZATION AND GOOD STANDING
DePuy is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Merger Sub is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Ohio.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
28
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement is a legal, valid, and binding obligation of DePuy and
Merger Sub, enforceable against each in accordance with its terms. Each of DePuy
and Merger Sub has the right, power, and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. The execution,
delivery and performance by DePuy and Merger Sub of this Agreement and the
consummation by DePuy and Merger Sub of the Contemplated Transactions have been
duly authorized by the respective boards of directors of DePuy, Merger Sub and
any other Person that directly or indirectly controls DePuy and no other
corporate proceedings on the part of DePuy, Merger Sub or any other Person that
directly or indirectly controls DePuy are necessary to authorize the execution,
delivery and performance of this Agreement by DePuy and Merger Sub and the
consummation of the Contemplated Transactions.
(b) Neither the execution and delivery of this Agreement by DePuy or Merger
Sub nor the consummation or performance of any of the Contemplated Transactions
by DePuy or Merger Sub will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of DePuy's or Merger Sub's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
shareholders of DePuy or Merger Sub;
(iii) any Legal Requirement or Order to which DePuy or Merger Sub may
be subject; or
(iv) any Contract to which DePuy or Merger Sub is a party or by which
DePuy or Merger Sub may be bound.
(c) Except for Consents necessary under the HSR Act, neither DePuy nor
Merger Sub is or will be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against either DePuy
or Merger Sub that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To DePuy's Actual Knowledge, no such Proceeding has been
Threatened.
29
4.4 AVAILABLE FUNDS
DePuy has available to it all funds necessary to pay the aggregate Merger
Consideration payable pursuant to the terms of this Agreement and to satisfy
DePuy's and Merger Sub's other obligations under this Agreement.
4.5 BROKERS
Other than payments to ▇▇▇▇▇ & Company, DePuy and Merger Sub have not
incurred and will not incur any obligation for any finder's or broker's fee or
commission in connection with the Contemplated Transactions.
4.6 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Agreement,
neither DePuy nor Merger Sub makes any representation or warranty, and hereby
disclaims any such representations by DePuy or Merger Sub with respect to the
execution and delivery of the Agreement or the Contemplated Transactions.
5. COVENANTS OF THE COMPANY
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, the Company will,
and will cause each Acquired Company (other than the Company) and the
Representatives of each Acquired Company (other than the Company) to (a) afford
DePuy its lenders and their Representatives access during normal business hours
to each Acquired Company's personnel, contracts, books and records, and other
documents and data, as they may reasonably request to accomplish the
Contemplated Transactions, (b) furnish DePuy and its Representatives with copies
of all such contracts, books and records, and other existing documents and data
as DePuy or its Representatives may reasonably request to accomplish the
Contemplated Transactions, (c) furnish DePuy, its lender and their respective
Representatives with such additional financial, operating, and other data and
information as DePuy, its lender or their respective Representatives may
reasonably request to accomplish the Contemplated Transactions; and (d)
otherwise cooperate with and facilitate the due diligence review of the Acquired
Companies by DePuy, its lender and their respective Representatives as they may
reasonably request to accomplish the Contemplated Transactions.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, except as
specifically contemplated by this Agreement and the Disclosure Letter, the
Company will, and will cause each Acquired Company other than the Company to (a)
conduct the business of such Acquired Company only in the Ordinary Course of
Business and (b) use their Best Efforts to preserve
30
intact the current business organization of such Acquired Company, keep
available the services of the current officers and employees of such Acquired
Company, and maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with such Acquired Company.
5.3 NEGATIVE COVENANT
Between the date of this Agreement and the Closing Date, except as
specifically permitted by this Agreement and the Disclosure Letter, the Company
will not, and will cause each Acquired Company not to, without the prior consent
of DePuy, take any affirmative action, or fail to take any reasonable action
within their or its control that would result in any of the changes or events
listed in Section 3.13.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, (a) the
Company will, and will cause each Acquired Company to, make all filings required
to be made by them under the HSR Act, and (b) the Company will cause a meeting
of its shareholders to be called to approve the Merger and the Regulations
Amendment. The Company will give DePuy a reasonable opportunity to review and
comment on such filings. Between the date of this Agreement and the Closing
Date, the Company will, and will cause each Acquired Company to, (a) cooperate
with DePuy with respect to all filings that DePuy is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with DePuy to cause early termination of any applicable waiting period
under the HSR Act or comply as promptly as practicable with any second request
for information received from a Governmental Body under the HSR Act.
5.5 SUPPLEMENTATION AND REVISION OF DISCLOSURE LETTER
(a) Between the date of this Agreement and the Closing Date, the Company
will, by delivery of a revised or updated Disclosure Letter, supplement the
information set forth in the Disclosure Letter previously delivered by the
Company pursuant to this Agreement if the Company becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition.
(b) Not less than 5 business days before the Closing, the Company will
provide to DePuy a statement of the Company's calculation of Certain Transaction
Costs, together with reasonable supporting information.
31
5.6 PAYMENT OF INDEBTEDNESS BY SHAREHOLDERS
The Company either will cause all indebtedness owed to any Acquired Company
by any shareholder of the Company to be paid in full prior to Closing or will
obtain from each such individual written authorization for DePuy to set off
against the amount of any Merger Consideration payable to him or her pursuant to
this Agreement an amount equal to any indebtedness that such individual owes to
any Acquired Company. Such written authorization will contain a specific
acknowledgment by the shareholder that DePuy will set off such indebtedness
against the Merger Consideration at the Closing.
5.7 BEST EFFORTS
(a) Between the date of this Agreement and the Closing Date, the Company
will use its Best Efforts to cause the conditions in Sections 7 and 8 to be
satisfied. Without limiting the foregoing, the Company will, as soon as
practicable, file Notification and Report Forms under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "ANTITRUST DIVISION") and will use Best Efforts to
respond as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation.
(b) Between the date of this Agreement and the Closing Date, the Company
will use its Best Efforts, and cooperate with DePuy, to cause ▇▇▇▇▇▇ ▇▇▇▇, Inc.
to consent to the assignment caused by the Merger.
5.8 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, the Company will not, and will cause each Acquired Company and each
of their Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss, negotiate or enter into any
agreement with, provide any non-public information to, or consider the merits of
any inquiries or proposals from, any Person (other than DePuy) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of any Acquired Company, or any of the capital
stock of any Acquired Company, or any merger, consolidation, business
combination, or similar transaction involving any Acquired Company.
32
6. COVENANTS OF DEPUY AND MERGER SUB
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, DePuy will,
and will cause each of its Related Persons to, make all filings required to be
made by them under the HSR Act. DePuy will give the Company a reasonable
opportunity to review and comment on such filings. Between the date of this
Agreement and the Closing Date, DePuy will, and will cause each of its Related
Persons to, (a) cooperate with the Company with respect to all filings that the
Company is required by Legal Requirements to make in connection with the
Contemplated Transactions, and (b) cooperate with the Company to cause early
termination of any applicable waiting period under the HSR Act or comply as
promptly as practicable with any second request for information received from a
Governmental Body under the HSR Act.
6.2 BEST EFFORTS
(a) Between the date of this Agreement and the Closing Date, DePuy will use
its Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
Without limiting the foregoing, DePuy will, as soon as practicable, file (or
cause its "ultimate parent entity" within the meaning of the HSR Act to file)
Notification and Report Forms under the HSR Act with the FTC and Antitrust
Division and shall use Best Efforts to respond as promptly as practicable to all
inquiries received from the FTC or the Antitrust Division for additional
information or documentation.
(b) Between the date of this Agreement and the Closing Date, DePuy will use
its Best Efforts, and cooperate with the Company, to cause ▇▇▇▇▇▇ ▇▇▇▇, Inc. to
consent to the assignment caused by the Merger.
6.3 OFFICERS' AND DIRECTORS' INDEMNIFICATION
(a) For four years from and after the Effective Time, DePuy agrees to
indemnify and hold harmless the officers and directors of the Company to the
same extent such persons are indemnified as of the date of this Agreement
pursuant to the Articles and Regulations as in effect on the date hereof for
acts or omissions occurring at or prior to the Effective Time.
(b) In the event DePuy or any of its successors or assigns (i) consolidates
with or merges into any other person and will not be the continuing or surviving
corporation or entity of such consolidation or merger, or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary to effectuate the purposes
of this Section 6.3, proper provision will be made so that the successors and
assigns of DePuy assume the obligations set forth in this Section 6.3 and none
of the actions described in clauses (i) or (ii) will be taken until such
provision is made.
33
(c) Any person seeking indemnification under this Section 6.3 shall be
entitled to such indemnification only if such person notifies DePuy promptly
after such person becomes aware of any claim, action, suit or proceeding in
respect of which such person is making a claim hereunder and cooperates in the
defense thereof. Absent a conflict of interest under standards of professional
conduct, DePuy is entitled to select counsel to represent the indemnitee, which
selection must be approved by the indemnitee, such approval not to be
unreasonably withheld. So long as the proceeding (or settlement) involves only
the payment of money by DePuy, DePuy is entitled to control the conduct of the
proceeding.
(d) Present and former officers and directors of the Company are intended
third-party beneficiaries of the provisions set forth in this Section 6.3 and
will be entitled to enforce such provisions against DePuy and their successors
and assigns.
7. CONDITIONS PRECEDENT TO DEPUY'S AND THE MERGER SUB'S OBLIGATION TO CLOSE
DePuy's and the Merger Sub's obligation to effect the Merger and to take
the other actions required to be taken by DePuy and the Merger Sub at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by DePuy, in whole or in
part):
7.1 ACCURACY OF REPRESENTATIONS
The Company's representations and warranties in this Agreement must be
accurate as of the Closing Date, except to the extent that any inaccuracies,
individually or in the aggregate do not result in a Material Adverse Effect.
7.2 THE COMPANY'S PERFORMANCE
The covenants the Company is required to perform pursuant to this Agreement
at or prior to the Closing, must have been duly performed and complied with,
except to the extent that any non-performance or non-compliance, individually or
in the aggregate, does not result in a Material Adverse Effect.
7.3 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against DePuy, or against any Person affiliated with DePuy, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
34
7.4 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that prohibits the consummation of the Merger.
7.5 NO PROHIBITION
No statute, rule, order, decree or regulation shall have been enacted or
promulgated by any Governmental Body of competent jurisdiction (whether
temporary, preliminary or permanent) which is in effect and has the effect of
prohibiting the consummation of the Merger or making the Merger illegal.
7.6 HSR APPROVAL
The applicable waiting period under the HSR Act with respect to the actions
contemplated by this Agreement must have expired or been terminated.
7.7 SHAREHOLDER VOTE
This Agreement and an amendment to Article V of the Company's Regulations
to permit the Merger (the "REGULATIONS AMENDMENT") must have been approved and
adopted by the affirmative vote of the holders of Shares entitling them to
exercise at least a majority of the voting power of the Company and the holders
of no more than twenty percent of the Shares are Dissenting Shareholders.
7.8 OPINION
Parent shall have received a favorable opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, dated the Effective Time, as set forth in Exhibit A.
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE
The Company's obligation to effect the Merger and to take the other actions
required to be taken by the Company at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Company, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All representations and warranties of the DePuy and Merger Sub in this
Agreement, must be accurate in all material respects as of the Closing Date as
if made on the Closing Date.
35
8.2 DEPUY'S AND MERGER SUB'S PERFORMANCE
The covenants and obligations that DePuy and Merger Sub are required to
perform pursuant to this Agreement at or prior to the Closing, must have been
performed in all material respects.
8.3 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against the Company, or against any Person affiliated with the
Company, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
8.4 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that prohibits the consummation of the Merger.
8.5 NO PROHIBITION
No statute, rule, order, decree or regulation shall have been enacted or
promulgated by any Governmental Body of competent jurisdiction (whether
temporary, preliminary or permanent) which is in effect and has the effect of
prohibiting the consummation of the Merger or making the Merger illegal.
8.6 HSR APPROVAL
The applicable waiting period under the HSR Act with respect to the actions
contemplated by this Agreement must have expired or been terminated.
8.7 SHAREHOLDER VOTE
This Agreement and the Regulations Amendment must have been approved and
adopted by the affirmative vote of the holders of Shares entitling them to
exercise at least a majority of the voting power of the Company.
8.8 OPINION
The Company shall have received a favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
dated the Effective Time, as set forth in Exhibit B.
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9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by written notice given prior to or at the Closing, be
terminated:
(a) by the Company, if any representation or warranty of DePuy or Merger
Sub is untrue in any material respect when made, except that, if any such breach
is curable by DePuy or Merger Sub through the exercise of its reasonable Best
Efforts, then, for 30 days, the Company may not terminate this Agreement;
(b) by DePuy, if any representation or warranty of the Company is
inaccurate in any material respect when made, except (i) to the extent that any
inaccuracies, individually or in the aggregate, will not result in a Material
Adverse Effect or (ii) that, if any such breach is curable by the Company
through the exercise of its reasonable Best Efforts, then, for 30 days, DePuy
may not terminate this Agreement;
(c) by DePuy if any of the conditions in Section 7 has not been satisfied
as of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of DePuy to comply with its
obligations under this Agreement) and DePuy has given Company written notice of
DePuy's intent to terminate at least 30 days before the effective date of the
proposed termination, and the Company has not satisfied the condition nor
provided reasonable assurances that the condition will, in due course, be
satisfied on or before the Closing Date;
(d) by the Company if any of the conditions in Section 8 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of the Company to comply with
its obligations under this Agreement) and the Company has given DePuy written
notice of the Company's intent to terminate at least 30 days before the
effective date of the proposed termination, and DePuy has not satisfied the
condition nor provided reasonable assurances that the condition will, in due
course, be satisfied on or before the Closing Date;
(e) by mutual consent of DePuy and the Company; or
(f) by either DePuy or the Company if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before the 120th
day following the date hereof, or, if a second request for information is made
by the FTC or the Antitrust Division under the HSR Act, December 31, 1998.
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9.2 RIGHTS AND OBLIGATIONS UPON TERMINATION
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated by a party because of the breach of this Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired. If
this Agreement is terminated pursuant to Section 9.1, all further obligations of
the parties under this Agreement will terminate, except that the obligations in
Sections 10.1 and 10.3 will survive.
10. GENERAL PROVISIONS
10.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its own expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. DePuy will pay one-half and the Company will pay
one-half of the HSR filing fee.
10.2 PUBLIC ANNOUNCEMENTS
DePuy will not issue or cause the publication of any press release or other
public announcement with respect to the Merger, this Agreement or the other
Contemplated Transactions without the prior consultation of the Company, except
as may be required by law or by any listing agreement with a national securities
exchange if all reasonable efforts have been made to consult with the Company.
Promptly following execution and delivery of this Agreement, the Company plans
to make an announcement to its employees with respect to the Merger, this
Agreement and the Contemplated Transactions, but will only make that
announcement after consultation with DePuy.
10.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, DePuy and the
Company will maintain in confidence, and will cause the respective directors,
officers, employees, agents, and advisors of DePuy and the Acquired Companies to
maintain in confidence, any information furnished by another party or an
Acquired Company in connection with this Agreement or the Contemplated
Transactions, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
38
necessary or appropriate in connection with legal proceedings. Except as
modified by the foregoing sentence, the letter agreement, between DePuy and
Company, dated as of January 7, 1998, continues in full force and effect, and
will survive any termination of this Agreement.
10.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand, (b) sent by telecopier (with confirmation of receipt), or (c)
received by the addressee, if sent by a nationally recognized overnight delivery
service, in each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate by notice to the other parties):
Company: AcroMed Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
North Point
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
DePuy or Merger Sub: DePuy, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. Bridge
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out this Agreement.
39
10.6 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. The failure or any delay by any party in exercising any right,
power, or privilege under this Agreement is not a waiver of such right, power,
or privilege, and no single or partial exercise of any right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
10.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the letter agreement
identified in and as modified by Section 10.3) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
10.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that DePuy may assign its rights
under this Agreement to DePuy Motech, Inc. or any wholly-owned Subsidiary of
DePuy provided that either of such assignee agrees in writing to be bound by
this Agreement. Any such assignment by DePuy to DePuy Motech, Inc. or a
wholly-owned Subsidiary of DePuy shall not relieve DePuy of any of its
obligations hereunder. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties.
10.9 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.10 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
40
10.11 GOVERNING LAW
This Agreement is governed by the laws of the State of Ohio without giving
effect to its principles of conflicts of laws.
10.12 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, are one and the same Agreement.
10.13 PERFORMANCE BY MERGER SUB
DePuy will cause Merger Sub to comply with its obligations hereunder and
cause Merger Sub to consummate the Merger as contemplated by this Agreement.
41
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
AcroMed Corporation DePuy, Inc.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- ----------------------------
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and CEO Senior Vice President
DP Merger Sub, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
42