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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 11, 1998
AMONG
INTERPORE INTERNATIONAL,
A CALIFORNIA CORPORATION,
BUCKEYE INTERNATIONAL, INC.,
A DELAWARE CORPORATION
AND
CROSS MEDICAL PRODUCTS, INC.,
A DELAWARE CORPORATION
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TABLE OF CONTENTS
Page
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ARTICLE I. THE MERGER.......................................................................2
Section 1.1. The Merger..............................................................2
Section 1.2. Effective Time of the Merger............................................2
Section 1.3. Closing.................................................................2
Section 1.4. Effect of the Merger....................................................2
ARTICLE II. CONVERSION OF SECURITIES........................................................3
Section 2.1. Conversion of Cross Capital Stock.......................................3
Section 2.2. Exchange of Certificates................................................3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF CROSS........................................6
Section 3.1. Organization of Cross...................................................7
Section 3.2. Cross Capital Structure.................................................7
Section 3.3. Authority; No Conflict; Required Filings and Consents...................8
Section 3.4. SEC Filings; Financial Statements......................................10
Section 3.5. No Undisclosed Liabilities.............................................10
Section 3.6. Absence of Certain Changes or Events...................................10
Section 3.7. Taxes..................................................................11
Section 3.8. Properties.............................................................12
Section 3.9. Intellectual Property..................................................12
Section 3.10. Regulation............................................................13
Section 3.11. Agreements, Contracts and Commitments.................................14
Section 3.12. Litigation............................................................15
Section 3.13. Environmental Matters.................................................16
Section 3.14. Employee Benefit Plans................................................17
Section 3.15. Compliance With Laws..................................................18
Section 3.16. Accounting and Tax Matters............................................18
Section 3.17. Registration Statement; Joint Proxy Statement/Prospectus..............22
Section 3.18. Labor Matters.........................................................22
Section 3.19. Insurance.............................................................22
Section 3.20. Opinion of Financial Advisor..........................................23
Section 3.21. No Existing Discussions...............................................23
Section 3.22. Section 203 of the DGCL Not Applicable................................23
Section 3.23. Warn Act..............................................................23
Section 3.24. Transactions with Related Parties.....................................23
Section 3.25. Suppliers and Customers...............................................24
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF INTERPORE....................................24
Section 4.1. Organization of Interpore..............................................24
Section 4.2. Interpore Capital Structure............................................25
Section 4.3. Authority; No Conflict; Required Filings and Consents..................26
Section 4.4. SEC Filings; Financial Statements......................................27
Section 4.5. No Undisclosed Liabilities.............................................27
Section 4.6. Absence of Certain Changes or Events...................................28
Section 4.7. Taxes..................................................................28
Section 4.8. Properties.............................................................29
Section 4.9. Intellectual Property..................................................29
Section 4.10. Regulation............................................................31
Section 4.11. Agreements, Contracts and Commitments.................................32
Section 4.12. Litigation............................................................33
Section 4.13. Environmental Matters.................................................33
Section 4.14. Employee Benefit Plans................................................34
Section 4.15. Compliance With Laws..................................................35
Section 4.16. Accounting and Tax Matters............................................35
Section 4.17. Registration Statement; Joint Proxy Statement/Prospectus..............38
Section 4.18. Labor Matters.........................................................39
Section 4.19. Insurance.............................................................39
Section 4.20. Opinion of Financial Advisor..........................................39
Section 4.21. No Existing Discussions...............................................40
Section 4.22. Interpore Rights Plan.................................................40
Section 4.23. Section 203 of the DGCL Not Applicable................................40
Section 4.24. Warn Act..............................................................40
Section 4.25. Transactions with Related Parties.....................................40
Section 4.26. Suppliers and Customers...............................................41
ARTICLE V. COVENANTS.......................................................................41
Section 5.1. Conduct of Business....................................................41
Section 5.2. Cooperation; Notice; Cure..............................................43
Section 5.3. No Solicitation........................................................43
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement...............44
Section 5.5. NASDAQ Quotation and Listing...........................................45
Section 5.6. Access to Information..................................................45
Section 5.7. Stockholders' Meetings.................................................45
Section 5.8. Legal Conditions to Merger.............................................46
Section 5.9. Public Disclosure......................................................47
Section 5.10. Nonrecognition Exchange...............................................47
Section 5.11. Pooling Accounting....................................................47
Section 5.12. Affiliate Agreements..................................................47
Section 5.13. NASDAQ Listing........................................................48
Section 5.14. Cross Stockholder Agreement Legend....................................48
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Section 5.15. Interpore Stockholder Agreement Legend................................48
Section 5.16. Stock Plans...........................................................48
Section 5.17. Brokers or Finders....................................................49
Section 5.18. Indemnification.......................................................50
Section 5.19. Stock Option Agreements...............................................50
Section 5.20. No Warn Act Activities................................................50
Section 5.21. Post-Merger Corporate Governance; Employment Arrangements.............51
Section 5.22. Conveyance Taxes......................................................52
Section 5.23. Transfer Taxes........................................................52
Section 5.24. Stockholder Litigation................................................52
Section 5.25. Employee Benefits; Severance..........................................52
Section 5.26. Supplemental Indenture................................................53
Section 5.27. No Tax Offset Payments................................................53
ARTICLE VI. CONDITIONS TO MERGER...........................................................53
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.............53
Section 6.2. Additional Conditions to Obligations of Cross..........................54
Section 6.3. Additional Conditions to Obligations of Interpore......................55
ARTICLE VII. TERMINATION AND AMENDMENT.....................................................56
Section 7.1. Termination............................................................56
Section 7.2. Effect of Termination..................................................58
Section 7.3. Fees and Expenses......................................................58
Section 7.4. Amendment..............................................................60
Section 7.5. Extension; Waiver......................................................60
ARTICLE VIII. MISCELLANEOUS................................................................60
Section 8.1. Nonsurvival of Representations, Warranties and Agreements..............60
Section 8.2. Notices................................................................60
Section 8.3. Interpretation.........................................................61
Section 8.4. Counterparts...........................................................61
Section 8.5. Entire Agreement; No Third Party Beneficiaries.........................61
Section 8.6. Governing Law..........................................................62
Section 8.7. Assignment.............................................................62
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EXHIBITS
Exhibit A Stockholder Agreement (Cross)
Exhibit B Stockholder Agreement (Interpore)
Exhibit C Stock Option Agreement (Cross)
Exhibit D Stock Option Agreement (Interpore)
Exhibit E Form of Cross Affiliate Agreement
Exhibit F Form of Interpore Affiliate Agreement
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TABLES OF DEFINED TERMS
CROSS REFERENCE
TERMS IN AGREEMENT
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Acquisition Proposal Section 5.3(a)
Affiliate Section 5.12
Affiliate Agreement Section 5.12
Agreement Preamble
Alternative Transaction Section 7.3(e)
Bankruptcy and Equity Exception Section 3.3(a)
CCC Section 4.3(a)
Certificate of Merger Section 1.2
Certificates Section 2.2(b)
Closing Section 1.3
Closing Date Section 1.3
Code Preamble
Confidentiality Agreements Section 5.3(a)
Cross Preamble
Cross Balance Sheet Section 3.4(b)
Cross Claims Section 3.12
Cross Common Stock Preamble
Cross Disclosure Schedule Article III
Cross Employee Plans Section 3.14(a)
Cross Employees Section 5.24(b)
Cross Exchange Ratio Section 2.1(b)
Cross Intellectual Property Section 3.9(a)
Cross Material Adverse Effect Section 3.1
Cross Material Contracts Section 3.11(a)
Cross Preferred Stock Section 3.2(a)
Cross Products Section 3.10(a)
Cross SEC Reports Section 3.4(a)
Cross Stock Option Section 5.15(a)
Cross Stock Option Agreement Preamble
Cross Stock Plans Section 3.2(a)
Cross Stockholder Agreement Preamble
Cross Stockholders' Meeting Section 3.17
Debentures Section 5.26
DGCL Section 1.1
Effective Time Section 1.2
Environmental Law Section 3.13(b)
ERISA Section 3.14(a)
ERISA Affiliate Section 3.14(a)
Exchange Act Section 3.3(c)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
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CROSS REFERENCE
TERMS IN AGREEMENT
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Existing Indenture Section 5.26
FDA Section 3.10(a)
Governmental Entity Section 3.3(c)
Hazardous Substance Section 3.3(c)
Indemnified Parties Section 5.17(a)
Interpore Preamble
Interpore Balance Sheet Section 4.4(b)
Interpore Claims Section 4.12
Interpore Common Stock Preamble
Interpore Disclosure Schedule Article IV
Interpore Employee Plans Section 4.14(a)
Interpore Employees Section 5.24(b)
Interpore Intellectual Property Section 4.9(a)
Interpore Material Adverse Effect Section 4.1
Interpore Material Contracts Section 4.11(c)
Interpore Preferred Stock Section 4.2(a)
Interpore Products Section 4.10(a)
Interpore Rights Plan Section 4.2(b)
Interpore SEC Reports Section 4.4(a)
Interpore Stock Option Agreement Preamble
Interpore Stock Plans Section 4.2(a)
Interpore Stockholder Agreement Preamble
Interpore Stockholders' Meeting Section 3.17
IRS Section 3.7(b)
Joint Proxy Statement/Prospectus Section 3.17
Liens Section 3.2(a)
Merger Preamble
Order Section 5.8(b)
Outside Date Section 7.1(b)
Person Section 3.9(b)
Registration Statement Section 3.17
SEC Section 3.3(c)
Securities Act Section 2.2(k)
Stockholder Agreement Preamble
Sub Preamble
Subsidiary Section 3.1
Superior Proposal Section 5.3(a)
Supplemental Indenture Section 5.26
Tax Section 3.7(a)
Third Party Section 5.3(a)
Transfer Taxes Section 5.22
WARN Act Section 3.24
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of February 11,
1998, by and between INTERPORE INTERNATIONAL, a California corporation
("Interpore"), BUCKEYE INTERNATIONAL, INC., a Delaware corporation and a
wholly-owned subsidiary of Interpore ("Sub") and CROSS MEDICAL PRODUCTS, INC., a
Delaware corporation ("Cross").
WHEREAS, the respective Boards of Directors of Interpore, Sub and Cross,
and Interpore, acting as the sole shareholder of Sub, have approved the merger
of Sub with and into Cross (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of Common Stock, par value $.01 per share, of Cross ("Cross Common
Stock"), other than Cross Common Stock owned by Interpore, Sub or Cross, will be
converted into the right to receive Common Stock, no par value of Interpore
("Interpore Common Stock");
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Interpore's willingness to enter into this
Agreement, Interpore and certain affiliate stockholders of Cross have entered
into a Stockholder Agreement dated as of the date of this Agreement and attached
hereto as Exhibit A (the "Cross Stockholder Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Cross's willingness to enter into this
Agreement, Cross and certain affiliate stockholders of Interpore have entered
into a Stockholder Agreement dated as of the date of this Agreement and attached
hereto as Exhibit B (the "Interpore Stockholder Agreement" and collectively with
the Cross Stockholder Agreement, the "Stockholder Agreements"));
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to each of Cross's and Interpore's willingness
to enter into this Agreement, Cross and Interpore have entered into (i) a Stock
Option Agreement dated as of the date of this Agreement and attached hereto as
Exhibit C (the "Cross Stock Option Agreement"), pursuant to which Interpore
granted Cross an option to purchase shares of common stock of Interpore under
certain circumstances, and (ii) a Stock Option Agreement dated as of the date of
this Agreement and attached hereto as Exhibit D (the "Interpore Stock Option
Agreement" and, together with the Cross Stock Option Agreement, the "Stock
Option Agreements"), pursuant to which Cross granted Interpore an option to
purchase shares of common stock of Cross under certain circumstances;
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization described in Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated by this Agreement shall be accounted for as a pooling of interests;
and
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WHEREAS, the Boards of Directors of Cross and Interpore have approved
this Agreement, the Stockholder Agreements and the Stock Option Agreements, as
applicable;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as defined in Section 1.2 hereof), Sub shall
merge with and into Cross. Cross shall be the surviving corporation in the
Merger, and shall continue its corporate existence under the laws of the State
of Delaware. Upon consummation of the Merger, the separate corporate existence
of Sub shall terminate. At the election of Interpore, any newly-created direct
or indirect wholly-owned Subsidiary (as defined in Section 3.1) of Interpore may
be substituted for Sub as a constituent corporation in the Merger.
Section 1.2. Effective Time of the Merger. Subject to the provisions of
this Agreement, a certificate of merger with respect to the Merger in such form
as is required by the relevant provisions of the DGCL (the "Certificate of
Merger") shall be duly prepared, executed and acknowledged and thereafter
delivered to the Secretary of State of the State of Delaware for filing, as
provided in the DGCL, as early as practicable on the Closing Date (as defined in
Section 1.3). The Merger shall become effective at such time as is specified in
the Certificate of Merger (the time at which the Merger has become fully
effective being hereinafter referred to as the "Effective Time").
Section 1.3. Closing. The closing of the Merger (the "Closing") will
take place at 8:00 a.m., local time, at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on a date to be
specified by Interpore and Cross, which shall be no later than the second
business day after satisfaction or, if permissible, waiver of the conditions set
forth in Article VI (the "Closing Date"), unless another date is agreed to in
writing by Interpore and Cross.
Section 1.4. Effect of the Merger. As a result of the Merger, the
separate corporate existence of Sub shall cease and Cross shall continue as the
surviving corporation. Upon becoming effective, the Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of Sub shall vest in Cross, and all debts, liabilities and
duties of Sub shall become the debts, liabilities and duties of Cross.
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ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of Cross Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of any of the parties
hereto or the holders of any shares of Cross Common Stock:
(a) Cancellation of Treasury Stock and Interpore-Owned Stock. All
shares of Cross Common Stock that are owned by Cross as treasury stock and any
shares of Cross Common Stock owned by Interpore, Sub or any other wholly-owned
Subsidiary (as defined in Section 3.1) of Interpore shall be canceled and
retired and shall cease to exist and no stock of Interpore or other
consideration shall be delivered in exchange therefor.
(b) Exchange Ratio for Cross Common Stock. Subject to Section
2.2(e), each issued and outstanding share of Cross Common Stock (other than
shares to be canceled in accordance with Section 2.1(a) or Dissenting Shares (as
defined in Section 2.3) in respect of which appraisal rights are properly
exercised and perfected under Section 262 of the DGCL) shall be converted into
the right to receive 1.275 shares (the "Cross Exchange Ratio") of Interpore
Common Stock. All such shares of Cross Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any ownership or other rights with respect thereto, except
the right to receive the shares of Interpore Common Stock and an amount equal to
certain dividends and other distributions described in Section 2.2(c), without
interest, upon the surrender of such certificate in accordance with Section 2.2.
Section 2.2. Exchange of Certificates. The procedures for exchanging
certificates which prior to the Effective Time represented shares of Cross
Common Stock for certificates representing Interpore Common Stock pursuant to
the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, Interpore shall
deposit with a bank or trust company or other entity mutually agreeable to
Interpore and Cross (the "Exchange Agent"), for the benefit of the holders of
shares of Cross Common Stock outstanding immediately prior to the Effective
Time, for exchange in accordance with this Section 2.2, through the Exchange
Agent, certificates representing the shares of Interpore Common Stock and an
estimated amount of cash in lieu of fractional shares (such shares of Interpore
Common Stock and cash in lieu of fractional shares, together with any dividends
or distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"), issuable pursuant to Section 2.1 in exchange for shares of
Cross Common Stock outstanding immediately prior to the Effective Time.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Cross Common Stock (collectively, the
"Certificates") whose shares were converted pursuant to Section 2.1 into the
right to receive shares of Interpore Common Stock (i) a letter of transmittal
(which
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shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Interpore may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates representing shares of Interpore
Common Stock (plus cash in lieu of fractional shares, if any, of Interpore
Common Stock as provided below). Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Interpore, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Interpore Common
Stock, the amount of any cash payable in lieu of fractional shares of Interpore
Common Stock, if any, and an amount equal to certain dividends and other
distributions which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
immediately be canceled. In the event of a transfer of ownership of Cross Common
Stock prior to the Effective Time which is not registered in the transfer
records of Cross, a certificate representing the number of shares of Interpore
Common Stock issuable and any amounts payable in accordance with this Agreement
may be issued and paid to a transferee if the Certificate representing such
Cross Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid.
(c) Distributions With Respect to Unexchanged Shares. No amount
in respect of dividends or other distributions declared or made after the
Effective Time with respect TO Interpore Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Interpore Common Stock which the holder thereof is
entitled to receive in respect thereof and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to subsection (e) below until
the holder of record of such Certificate shall surrender such Certificate to
Interpore in accordance herewith. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Interpore Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Interpore Common Stock to which such holder is entitled pursuant to subsection
(e) below and an amount equal to the amount of dividends or other distributions
with a record date after the Effective Time previously paid with respect to
whole shares of Interpore Common Stock, and (ii) at the appropriate payment
date, an amount equal to the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to whole shares of Interpore Common
Stock, in each case without interest.
(d) No Further Ownership Rights in Cross Common Stock. All shares
of Interpore Common Stock issued upon the surrender for exchange of Certificates
in accordance with the terms hereof (including any cash paid pursuant to
subsection (c) or (e) of this Section 2.2) shall be deemed to have been issued
in full satisfaction of all rights pertaining to the shares of Cross Common
Stock theretofore represented by such Certificates, subject, however, to
Interpore's obligation to pay any dividends or make any other distributions with
a record date prior to the Effective Time which may have been declared or made
by Cross on such shares of Cross Common Stock in accordance with the terms of
this Agreement (to the extent permitted
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under Section 5.1) prior to the date hereof and which remain unpaid at the
Effective Time, and from and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of Cross of the shares of
Cross Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to Interpore or
Cross for any reason, such Certificates shall be canceled and exchanged as
provided in this Section 2.2.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Interpore Common Stock shall be issued upon the surrender
for exchange of Certificates representing shares of Cross Common Stock, and such
fractional share interests will not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent. Notwithstanding any other provision of
this Agreement, each holder of shares of Cross Common Stock outstanding
immediately prior to the Effective Time exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Interpore
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of Interpore Common Stock multiplied by
the average closing sale price per share of Interpore Common Stock (as reported
on the NASDAQ National Market) for the ten (10) consecutive trading days
immediately prior to the Effective Time.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the former stockholders of Cross for 180
days after the Effective Time shall be delivered to Interpore upon demand, and
any former stockholder of Cross who has not previously complied with this
Section 2.2 shall thereafter look only to Interpore for payment of such former
stockholder's claim for Interpore Common Stock, any cash in lieu of fractional
shares of Interpore Common Stock and any amounts in respect of dividends or
distributions with respect to Interpore Common Stock.
(g) No Liability. None of Cross, Interpore, or the Exchange Agent
shall be liable to any holder of shares of Cross Common Stock, as the case may
be, for any shares of Interpore Common Stock (or cash in lieu of fractional
shares of Interpore Common Stock or any dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Interpore, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Interpore.
(i) Withholding Rights. Interpore shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Certificates which prior to the Effective Time represented shares
of Cross Common Stock such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by
Interpore, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Cross Common Stock
in respect of which such deduction and withholding was made.
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(j) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Interpore, the posting by such person of a bond in such reasonable amount as
Interpore may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Interpore Common Stock
and any cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Interpore Common Stock deliverable in respect thereof
pursuant to this Agreement.
(k) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as defined in Section
5.12) of Cross or Interpore shall not be exchanged until (i) Interpore has
received an Affiliate Agreement (as defined in Section 5.12) from such Affiliate
or (ii) until the later of such date as such shares of Interpore Common Stock
are freely tradable without jeopardizing the pooling of interests accounting
treatment of the Merger and without violating the Securities Act of 1933, as
amended (the "Securities Act").
Section 2.3. Dissenting Shares. Subject to Section 6.3(e), Shares of
Cross Common Stock that are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have properly exercised
appraisal rights with respect thereto under Section 262 of the DGCL (the
"Dissenting Shares") shall not be converted into or represent the right to
receive shares of Interpore Common Stock as provided in Section 2.1, but the
holders of Dissenting Shares shall be entitled to receive such payment of the
appraised value of such shares of Cross Common Stock held by them from Interpore
(or the Exchange Agent, if applicable) as shall be determined pursuant to
Section 262 of the DGCL; provided, however, that if any such holder shall have
failed to perfect or shall withdraw or lose the right to appraisal and payment
under the DGCL, each such holder's shares of Cross Common Stock shall thereupon
be deemed to have been converted as of the Effective Time into the right to
receive the shares of Interpore Common Stock as provided in Section 2.1, without
any interest thereon and less any required withholding of taxes, upon surrender
of the Certificate(s) representing such shares of Cross Common Stock, in the
manner provided in Section 2.2 and such shares of Cross Common Stock shall no
longer be Dissenting Shares.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF CROSS
Cross represents and warrants to Interpore that the statements contained
in this Article III are true and correct, except as set forth herein and in the
disclosure schedule delivered by Cross to Interpore on or before the date of
this Agreement (the "Cross Disclosure Schedule"). The Cross Disclosure Schedule
shall be arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Article III and the disclosure in any paragraph
shall qualify other paragraphs in this Article III only to the extent that it is
reasonably apparent from a reading of such disclosure that it also qualifies or
applies to such other paragraphs. Whenever a statement in this Article III is
qualified by "to the best knowledge of Cross" or a similar phrase, it is
intended
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to indicate that the executive officers of Cross do not have current actual
knowledge of the inaccuracy of such statement.
Section 3.1. Organization of Cross. Each of Cross and its Subsidiaries
(as defined below) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
to own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, properties, financial condition or results of
operations of Cross and its Subsidiaries, taken as a whole (an "Cross Material
Adverse Effect"). A true and correct copy of the Certificate of Incorporation
and Bylaws of Cross and each Subsidiary of Cross has been delivered to
Interpore. Except as set forth in Cross SEC Reports (as defined in Section 3.4)
filed prior to the date hereof, neither Cross nor any of its Subsidiaries
directly or indirectly owns (other than ownership interests in Cross or in one
or more of its Subsidiaries) any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity, excluding
(i) securities in any publicly traded company held for investment by Cross and
comprising less than five percent (5%) of the outstanding stock of such company
and (ii) any investment or series of related investments with a book value of
less than $50,000. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any other Subsidiary
of such party is a general partner (excluding partnerships the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the economic interests in such partnership) or
(ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
Section 3.2. Cross Capital Structure.
(a) The authorized capital stock of Cross consists of 40,000,000
shares of Common Stock, $.01 par value, and 10,000,000 shares of Preferred
Stock, $.01 par value ("Cross Preferred Stock"). As of the date hereof, (i)
5,259,314 shares of Cross Common Stock were issued and outstanding, all of which
are validly issued, fully paid and nonassessable and (ii) no shares of Cross
Common Stock were held in the treasury of Cross or by Subsidiaries of Cross. The
Cross Disclosure Schedule shows the number of shares of Cross Common Stock
reserved for future issuance pursuant to stock options granted and outstanding
as of the date hereof and the plans under which such options were granted
(collectively, the "Cross Stock Plans"). As of the date of this Agreement, no
shares of Cross Preferred Stock are issued or outstanding and no dividends or
other distributions have been declared or made by Cross in respect of any of its
capital stock. There are no obligations, contingent or otherwise, of Cross or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Cross Common Stock or the capital stock of any Subsidiary or to provide funds to
or make any material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees of
bank obligations or indebtedness for borrowed money of Subsidiaries entered
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into in the ordinary course of business and other than any obligation the
failure of which to perform or satisfy would not have a Cross Material Adverse
Effect. All of the outstanding shares of capital stock or other ownership
interests of each of Cross's Subsidiaries are duly authorized, validly issued,
fully paid and nonassessable and all such shares (other than directors'
qualifying shares in the case of foreign Subsidiaries) are owned by Cross or
another Subsidiary of Cross free and clear of all security interests, liens,
claims, pledges, agreements, limitations in Cross's voting rights, charges or
other encumbrances of any nature (collectively, "Liens").
(b) Except as set forth in this Section 3.2 or as reserved for
future grants of options under the Cross Stock Plans or the Interpore Stock
Option Agreement, (i) there are no shares of capital stock of any class of
Cross, or any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding; (ii) there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which Cross or any of its Subsidiaries is a party or by
which it is bound obligating Cross or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other ownership interests of Cross or any of its Subsidiaries or
obligating Cross or any of its Subsidiaries to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) to the best knowledge of Cross, there are no
voting trusts, proxies or other voting agreements or understandings with respect
to the shares of capital stock of Cross. All shares of Cross Common Stock
subject to issuance as specified in this Section 3.2 are duly authorized and,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall be validly issued, fully paid and
nonassessable.
Section 3.3. Authority; No Conflict; Required Filings and Consents.
(a) Cross has all requisite corporate power and authority to
enter into this Agreement, the Interpore Stockholder Agreement and the Stock
Option Agreements and to consummate the transactions contemplated by this
Agreement, the Interpore Stockholder Agreement and the Stock Option Agreements.
The execution and delivery of this Agreement, the Interpore Stockholder
Agreement and the Stock Option Agreements and the consummation of the
transactions contemplated by this Agreement, the Interpore Stockholder Agreement
and the Stock Option Agreements by Cross have been duly authorized by all
necessary corporate action on the part of Cross, subject only to the approval
and adoption of this Agreement and the Merger by Cross's stockholders under the
DGCL. This Agreement, the Interpore Stockholder Agreement and the Stock Option
Agreements have been duly executed and delivered by Cross and constitute the
valid and binding obligations of Cross, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").
(b) The execution and delivery of this Agreement, the Interpore
Stockholder Agreement and the Stock Option Agreements by Cross does not, and the
consummation of the transactions contemplated by this Agreement, the Interpore
Stockholder Agreement and the Stock Option Agreements will not, (i) conflict
with, or result in any violation or breach of, any provision of the Certificate
of Incorporation or Bylaws of Cross or any of its Subsidiaries,
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(ii) result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Cross or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound or (iii) conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Cross or any of its Subsidiaries or any of its or their properties
or assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which (x) are
not, individually or in the aggregate, reasonably likely to have a Cross
Material Adverse Effect or (y) would not substantially impair or delay the
consummation of the Merger.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Cross or any of its Subsidiaries in
connection with the execution and delivery of this Agreement, Stockholder
Agreements and the Stock Option Agreements or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of a
Certificate of Merger with respect to the Merger with the Delaware Secretary of
State, (ii) the filing of the Joint Proxy Statement/Prospectus (as defined in
Section 3.17 below) with the Securities and Exchange Commission (the "SEC") in
accordance with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Securities Act, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the laws of any foreign country and (iv)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not (x) be reasonably likely to have a Cross
Material Adverse Effect or (y) substantially impair or delay the consummation of
the Merger.
(d) The affirmative vote of the holders of a majority of the
outstanding shares of Cross Common Stock at the Cross Stockholders Meeting (as
defined in Section 3.17) or any adjournment or postponement thereof to approve
this Agreement is the only vote of the holders of any class or series of Cross's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
Section 3.4. SEC Filings; Financial Statements.
(a) Cross has filed and made available to Interpore all forms,
reports and documents required to be filed by Cross with the SEC since January
1, 1996 (collectively, the "Cross SEC Reports"). The Cross SEC Reports (i) at
the time filed, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Cross SEC Reports or necessary in order to make
the statements in such Cross SEC Reports, in the light of the
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circumstances under which they were made, not misleading. None of Cross's
Subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) of Cross contained in the Cross SEC Reports
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q under the Exchange Act) and fairly presented the consolidated
financial position of Cross and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount. The audited balance sheet of Cross as of December 31,
1997 is referred to herein as the "Cross Balance Sheet."
Section 3.5. No Undisclosed Liabilities. Except as disclosed in the
Cross SEC Reports filed prior to the date hereof, and as of the Closing Date
except as set forth in the audited financial statements of Cross as of December
31, 1997, and except for normal or recurring liabilities incurred since December
31, 1997 in the ordinary course of business consistent with past practices,
Cross and its Subsidiaries do not have any liabilities, either accrued,
contingent or otherwise (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), and
whether due or to become due, which individually or in the aggregate are
reasonably likely to have a Cross Material Adverse Effect.
Section 3.6. Absence of Certain Changes or Events. Except as disclosed
in the Cross SEC Reports filed prior to the date of this Agreement, since the
date of the Cross Balance Sheet, Cross and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any event, development,
state of affairs or condition, or series or combination of events, developments,
states of affairs or conditions, which, individually or in the aggregate, has
had or is reasonably likely to have a Cross Material Adverse Effect (other than
events, developments, states of affairs or conditions that are the effect or
result of actions taken by Interpore or economic factors affecting the economy
as a whole or the industry in which Cross competes); (ii) any damage,
destruction or loss (whether or not covered by insurance) with respect to Cross
or any of its Subsidiaries which is reasonably likely to have a Cross Material
Adverse Effect; (iii) any material change by Cross in its accounting methods,
principles or practices to which Interpore has not previously consented in
writing; (iv) any revaluation by Cross of any of its assets which is reasonably
likely to have a Cross Material Adverse Effect; or (v) any other action or event
that would have required the consent of Interpore pursuant to Section 5.1 of
this Agreement had such action or event occurred after the date of this
Agreement other than such actions or events that, individually or in the
aggregate, have not had or are not reasonably likely to have a Cross Material
Adverse Effect.
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Section 3.7. Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. For purposes of this Agreement,
"Taxes" also includes any obligations under any agreements or arrangements with
any other person with respect to Taxes of such other person (including pursuant
to Treas. Reg. Section 1.1502-6 or comparable provisions of state, local or
foreign tax law) and including any liability for Taxes of any predecessor
entity.
(b) Cross and each of its Subsidiaries have (i) filed all
federal, state, local and foreign Tax returns and reports required to be filed
by them prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or in
the aggregate, to have a Cross Material Adverse Effect. Neither the Internal
Revenue Service (the "IRS") nor any other taxing authority has asserted any
claim for Taxes, or to the actual knowledge of the executive officers of Cross,
is threatening to assert any claims for Taxes, which claims, individually or in
the aggregate, are reasonably likely to have a Cross Material Adverse Effect.
Cross and each of its Subsidiaries have withheld or collected and paid over to
the appropriate governmental authorities (or are properly holding for such
payment) all Taxes required by law to be withheld or collected, except for
amounts that are not reasonably likely, individually or in the aggregate, to
have a Cross Material Adverse Effect. Neither Cross nor any of its Subsidiaries
has made an election under Section 341(f) of the Code, except for any such
election that shall not have a Cross Material Adverse Effect. There are no liens
for Taxes upon the assets of Cross or any of its Subsidiaries (other than liens
for Taxes that are not yet due or delinquent or that are being contested in good
faith by appropriate proceedings), except for liens that are not reasonably
likely, individually or in the aggregate, to have a Cross Material Adverse
Effect.
(c) Neither Cross nor any of its Subsidiaries is or has been a
member of an affiliated group of corporations filing a consolidated federal
income tax return (or a group of corporations filing a consolidated, combined or
unitary income tax return under comparable provisions of state, local or foreign
tax law) for any taxable period beginning on or after the taxable period ending
December 31, 1993, other than a group the common parent of which is or was Cross
or any Subsidiary of Cross.
(d) Neither Cross nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for Taxes of any predecessor entity, except for obligations that
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are not reasonably likely, individually or in the aggregate, to have a Cross
Material Adverse Effect.
Section 3.8. Properties.
(a) Cross and each of its Subsidiaries has good and valid title
to, or valid leasehold interests in, all its material properties and assets
except for such as are no longer used in the conduct of the businesses of Cross
and its Subsidiaries or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants and
similar encumbrances that individually or in the aggregate would not have a
Cross Material Adverse Effect. All such material assets and properties, other
than assets and properties in which Cross or any of its Subsidiaries has a
leasehold interest, are free and clear of all Liens and except for Liens that
individually or in the aggregate would not have a Cross Material Adverse Effect.
(b) Cross and each of its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are in full force and
effect, except for such noncompliance or failure to be in full force and effect,
except for such noncompliance or failure to be in full force and effect as would
not individually or in the aggregate have a Cross Material Adverse Effect. Cross
and each of its Subsidiaries enjoys peaceful and undisturbed possession under
all such material leases, except for failures to do so that would not
individually or in the aggregate have a Cross Material Adverse Effect.
Section 3.9. Intellectual Property.
(a) Cross and its Subsidiaries own or possess adequate rights to
use all intellectual and similar property of every kind and nature relating to
or used or necessary in the operation of the business of Cross and its
Subsidiaries, including, without limitation, (i) all patents and trademarks
associated with the business of Cross and its Subsidiaries (including all
Governmental Entity trademarks, service marks, logos and designs, all
registrations and recordings thereof, and all applications in the United States
or any other Governmental Entity, all goodwill symbolized thereby or associated
therewith and all extensions or renewals thereof, all of which are set forth on
Section 3.9 of the Cross Disclosure Schedule), (ii) copyrights associated solely
with the business of Cross and its Subsidiaries, including all copyrights,
United States and foreign copyright registrations, and applications to register
copyrights which are set forth on Section 3.9 of the Cross Disclosure Schedule,
(iii) inventions, formulae, processes, designs, know-how or other data or
information, (iv) confidential or proprietary technical and business
information, processes and trade secrets, (v) computer software, (vi) technical
manuals and documentation made or used in connection with any of the foregoing,
and (vii) licenses or rights with respect to any of the foregoing or property of
like nature (collectively, "Cross Intellectual Property").
(b) (i) Section 3.9 of the Cross Disclosure Schedule sets forth a
complete and accurate list of all registered copyrights, patents and trademarks
owned by or under obligation of assignment to Cross or any of its Subsidiaries,
currently used in the conduct of the business of Cross or its Subsidiaries, and
all applications therefor;
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(ii) Section 3.9 of the Cross Disclosure Schedule sets
forth a complete and accurate list of the owners of the Cross Intellectual
Property. Each owner listed in Section 3.9 of the Cross Disclosure Schedule is
listed in the records of the appropriate Governmental Entity as the sole owner
of record;
(iii) Section 3.9 of the Cross Disclosure Schedule sets
forth a complete and accurate list of all agreements between Cross, on the one
hand, and any corporation, individual, limited liability company, joint stock
company, joint venture, partnership, unincorporated association, Governmental
Entity, trust or other entity (any of the foregoing, a "Person"), on the other
hand, granting any right to use or practice any rights with respect to any Cross
Intellectual Property;
(iv) there is no encumbrance on the right of Cross and its
Subsidiaries to transfer any of the Cross Intellectual Property, as herein
contemplated;
(v) no trade secret, formula, process, invention, design,
know-how or any other information currently used in the conduct of the business
of Cross and its Subsidiaries has been disclosed or authorized to be disclosed
to any Person, except in the ordinary course of business or pursuant to an
obligation of confidentiality binding upon said Person;
(vi) there are no pending proceedings by or before any
Governmental Entity, including oppositions, interferences, proceedings or suits,
relating to such Cross Intellectual Property, and no such proceedings are
threatened;
(vii) the conduct of the business of Cross and its
Subsidiaries and the exercise of rights relating to the patents which are part
of the Cross Intellectual Property does not infringe upon or otherwise violate
any rights of any Person with respect to the Cross Intellectual Property;
(viii) to Cross's knowledge, no Person is infringing upon
or otherwise violating any patents which are part of the Cross Intellectual
Property;
(ix) Neither Cross nor any of its Subsidiaries has
received notice of any claims, obligations or liabilities and there are no
pending claims, obligations or liabilities, of an Persons relating to the scope,
ownership or use of any of the Cross Intellectual Property; and
(x) each copyright registration, patent and registered
trademark and application therefor listed in Section 3.9 of the Cross Disclosure
Schedule is in proper form, has not been disclaimed and has been duly
maintained, including the submission of all necessary filings in accordance with
the legal and administrative requirements of the appropriate jurisdictions.
Section 3.10. Regulation.
(a) Except as is not reasonably likely to have a Cross Material
Adverse Effect, since March 1, 1993, there have been no written notices,
citations or decisions by any governmental or regulatory body that any product
produced, manufactured, marketed or distributed at any time by Cross or any of
its Subsidiaries (the "Cross Products") is defective or
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fails to meet any applicable standards promulgated by any such governmental or
regulatory body. Cross and each of its Subsidiaries has complied in all material
respects with the laws, regulations, policies, procedures and specifications
with respect to the design, manufacture, labeling, testing and inspection of
Cross Products and the operation of manufacturing facilities promulgated by the
Food and Drug Administration (the "FDA"), except where the failure so to comply
is not likely to have a Cross Material Adverse Effect. Except as described in
the Cross SEC Reports, since March 1, 1993, there have been no recalls, field
notifications or seizures ordered or, to Cross's knowledge, threatened by any
such governmental or regulatory body with respect to any of the Cross Products.
Cross has not received, and does not reasonably believe that any facts or
circumstances exist that are reasonably likely to result in, any warning letter,
or Section 305 notices from the FDA. Section 3.10(a) of the Cross Disclosure
Schedule sets forth summary information concerning all 510(k) applications,
Premarket Approvals and Investigation Device Exemptions obtained by Cross or any
of its Subsidiaries from the FDA or required in connection with the
manufacturing, marketing and sale of any Cross Product, including title, date
issued, summary and type of FDA action.
(b) Cross has obtained, in all countries where Cross or any of
its Subsidiaries is marketing or has marketed the Cross Products, all applicable
licenses, registrations, approvals, clearances and authorizations required by
local, state or federal agencies (including the FDA) in such countries
regulating the safety, effectiveness and market clearance of the Products that
are currently marketed by Cross or any of its Subsidiaries (collectively, "Cross
Licenses"), except for any such failures that are not reasonably likely,
individually or in the aggregate, to have a Cross Material Adverse Effect.
Section 3.10(b) of the Cross Disclosure Schedule (i) contains a complete and
accurate list of all Cross Licenses and (ii) identifies all material information
relating to regulation of the Cross Products, including licenses, registrations,
approvals, permits, device listings, inspections, Cross's and its Subsidiaries'
recalls and product actions, audits and Cross's and its Subsidiaries' ongoing
clinical studies. Other than as set forth on Section 3.10(b) of the Cross
Disclosure Schedule, there are no Cross Licenses or material information of the
type described in clause (ii) of the immediately preceding sentence.
(c) With respect to Cross Products sold during the last five
years, neither Cross nor any Subsidiary has marketed any of its products for
uses other than uses approved by the FDA.
Section 3.11. Agreements, Contracts and Commitments.
(a) Subsections (i) through (vii) of Section 3.11(a) of the Cross
Disclosure Schedule contain a list of the following types of contracts and
agreements to which Cross or any Subsidiary is a party (such contracts,
agreements and arrangements as are required to be set forth in Section 3.11(a)
of the Cross Disclosure Schedule being referred to herein collectively as the
"Cross Material Contracts"):
(i) all distributor, manufacturer's representative,
broker, franchise, agency and dealer contracts and agreements to which Cross or
any Subsidiary is a party;
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(ii) all contracts with physicians and any scientific
advisory board members;
(iii) all contracts with independent contractors or
consultants (or similar arrangements) to which Cross or any Subsidiary is a
party and which: (A) are reasonably likely to involve consideration of more than
$150,000 in the aggregate during the calendar year ended December 31, 1998, or
(B) are reasonably likely to involve consideration of more than $150,000 in the
aggregate over the remaining term of the contract;
(iv) all contracts and agreements (excluding routine
checking account overdraft agreements involving ▇▇▇▇▇ cash amounts) under which
Cross or any Subsidiary has created, incurred, assumed or guaranteed (or may
create, incur, assume or guarantee) indebtedness or under which Cross or any
Subsidiary has imposed (or may impose) a lien on any of its assets, whether
tangible or intangible, to secure indebtedness;
(v) all contracts and agreements that limit the ability of
Cross or any Subsidiary or, after the Effective Time, Interpore or any of its
affiliates, to compete in any line of business or with any person or in any
geographic area or during any period of time, or to solicit any customer or
client;
(vi) all contracts and agreements between or among Cross
or any Subsidiary, on the one hand, and any affiliate of Cross (other than a
wholly owned Subsidiary), on the other hand; and
(vii) all other contracts or agreements (A) which are
material to Cross and its Subsidiaries or the conduct of their respective
businesses or (B) the absence of which would have a Cross Material Adverse
Effect or (C) which are believed by Cross to be of unique value to Cross even
though not material to the business of Cross.
(b) Except as would not, individually or in the aggregate, have a
Cross Material Adverse Effect, each contract referred to in paragraphs (ii) and
(vii) above and each other material contract or agreement of Cross or any
Subsidiary which would have been required to be disclosed in Sections
3.11(a)(ii) and (vii) of the Cross Disclosure Schedule had such contract or
agreement been entered into prior to the date of this Agreement, is a legal,
valid and binding agreement, and none of the Cross Material Contracts is in
default by its terms or had been canceled by the other party; Cross and its
Subsidiaries are not in receipt of any claim of default under any such
agreement; and none of Cross or any of its Subsidiaries anticipates any
termination or change to, or receipt of a proposal with respect to, any such
agreement as a result of the Merger or otherwise. Cross has furnished Interpore
with true and complete copies of all Cross Material Contracts and any and all
amendments thereto.
Section 3.12. Litigation.
(a) Section 3.12(a) of the Cross Disclosure Schedule sets forth a
complete and accurate list, of all claims, actions, litigations, proceedings,
product liability claims and investigations pending or, to Cross's knowledge,
threatened against Cross or any of its
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Subsidiaries, or any property or asset of Cross or any of its Subsidiaries,
before any Governmental Authority or arbitrator (collectively, "Cross Claims").
Each Cross Claim is cross-referenced in Section 3.12 of the Cross Disclosure
Schedule by the insurer or insurers from which Cross or any Subsidiary has
claimed coverage for such Cross Claim. There is no Cross Claim, which,
individually or when aggregated with other Cross Claims which are reasonably
likely to result from facts and circumstances that have given rise to such a
Cross Claim, is reasonably likely to have a Cross Material Adverse Effect. As of
the date hereof, neither Cross nor any of its Subsidiaries nor any property or
asset of Cross or any Subsidiary is subject to any order, writ, judgment,
injunction, decree, determination or award having, individually or in the
aggregate, a Cross Material Adverse Effect.
(b) As of the date hereof, to Cross's knowledge, neither Cross
nor any of its Subsidiaries has received notice from any source that Cross or
any of its Subsidiaries may be liable with respect to product liability or
worker's compensation claims, except for such claims that are not reasonably
likely to have, individually or in the aggregate, a Cross Material Adverse
Effect.
Section 3.13. Environmental Matters.
(a) To the knowledge of Cross and except as disclosed in the
Cross SEC Reports filed prior to the date hereof and except for such matters
that, individually or in the aggregate, are not reasonably likely to have a
Cross Material Adverse Effect: (i) Cross and its Subsidiaries have complied with
all applicable Environmental Laws (as defined in Section 3.13(b)); (ii) the
properties currently owned, leased or operated by Cross and its Subsidiaries
(including soils, groundwater, surface water, buildings or other structures) are
not contaminated with any Hazardous Substances (as defined in Section 3.13(c));
(iii) the properties formerly owned, leased or operated by Cross or any of its
Subsidiaries were not contaminated with Hazardous Substances during the period
of ownership or operation by Cross or any of its Subsidiaries; (iv) neither
Cross nor its Subsidiaries are subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) neither Cross nor any
of its Subsidiaries has been associated with any release or threat of release of
any Hazardous Substance; (vi) neither Cross nor any of its Subsidiaries has
received any notice, demand, letter, claim or request for information alleging
that Cross or any of its Subsidiaries may be in violation of or liable under any
Environmental Law; (vii) neither Cross nor any of its Subsidiaries is subject to
any orders, decrees, injunctions or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement with any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and (viii) there are no circumstances or conditions involving Cross
or any of its Subsidiaries that could reasonably be expected to result in any
claims, liability, investigations, costs or restrictions on the ownership, use
or transfer of any property of Cross or any of its Subsidiaries pursuant to any
Environmental Law.
(b) As used in this Agreement, the term "Environmental Law" means
any federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
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(c) As used in this Agreement, the term "Hazardous Substance"
means any substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is the subject
of regulatory action by any Governmental Entity pursuant to any Environmental
Law.
Section 3.14. Employee Benefit Plans.
(a) For purposes of this Agreement, the "Cross Employee Plans"
shall mean all "employee benefit plans" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans, and
all unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Cross or any trade or business
(whether or not incorporated) which is under common control with Cross within
the meaning of Section 414 of the Code (an "ERISA Affiliate"), or any Subsidiary
of Cross (together, the "Cross Employee Plans"). Cross has listed in Section
3.14 of the Cross Disclosure Schedule all Cross Employee Plans.
(b) With respect to each Cross Employee Plan, Cross has made
available to Interpore, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Cross Employee Plan and all
amendments thereto, (iii) each trust agreement and group annuity contract, if
any, and all amendments thereto relating to such Cross Employee Plan and (iv)
the most recent actuarial report or valuation relating to a Cross Employee Plan
subject to Title IV of ERISA.
(c) With respect to the Cross Employee Plans, individually and in
the aggregate, no event has occurred, and to the knowledge of Cross, there
exists no condition or set of circumstances in connection with which Cross could
be subject to any liability that is reasonably likely to have a Cross Material
Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Cross Employee Plans, individually and in
the aggregate, there are no funded benefit obligations for which contributions
have not been made or properly accrued and there are no unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
footnoted in accordance with generally accepted accounting principles, on the
financial statements of Cross, except for obligations which, individually or in
the aggregate, are not reasonably likely to have a Cross Material Adverse
Effect.
(e) Except as disclosed in the Cross SEC Reports filed prior to
the date of this Agreement, and except as provided for in this Agreement,
neither Cross nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any officer or other key employee of Cross or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Cross of the
nature contemplated by this Agreement, (ii) agreement with any officer of Cross
providing any term of
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employment or compensation guarantee extending for a period longer than one year
from the date hereof and for the payment of compensation in excess of $100,000
per annum, or (iii) 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 increased, the vesting of the benefits of which
will be accelerated or the funding of benefits of which will be required, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(f) There is no contract, agreement, plan or arrangement covering
any employee or former employee of Cross or any of its Subsidiaries (with
respect to their relationship with such entities) that, individually or
collectively, provides for the payment by Cross of any amount (i) that is not
deductible under Section 162(a)(1) of the Code or (ii) that is an "excess
parachute payment" pursuant to Section 280G of the Code.
Section 3.15. Compliance With Laws. Cross has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation, including without
limitation, Federal Medicare and Medicaid statutes, including without
limitation, 42 U.S.C. Section 1320a-7b and 42 U.S.C. Section 1395nn or related
statutes or regulations, with respect to the conduct of its business, or the
ownership or operation of its business, except for failures to comply or
violations which, individually or in the aggregate, have not had and are not
reasonably likely to have a Cross Material Adverse Effect.
Section 3.16. Accounting and Tax Matters.
(a) To the best knowledge of Cross, after consulting with its
independent auditors with respect to clause (i) below and its tax advisors with
respect to clause (ii) below, neither Cross nor any of its Affiliates (as
defined in Section 5.12) has taken or agreed to take any action which would (i)
prevent Interpore from accounting for the business combination to be effected by
the Merger as a pooling of interests or (ii) prevent the Merger from qualifying
as a reorganization described in Section 368(a) of the Code. Except as
contemplated by the Cross Option Agreement, neither Cross nor any of its
Subsidiaries owns any shares of Interpore Common Stock or other securities
convertible into shares of Interpore Common Stock (exclusive of any shares owned
by Cross's employee benefit plans).
(b) The terms of the exchange of the outstanding shares of Cross
Common Stock for Interpore Common Stock were arrived at as a result of arm's
length negotiations. Based on the fairness opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
pursuant to Section 3.20 and based on the value of the Interpore Common Stock
and Cross Common Stock at the date of this Agreement, the fair market value of
the Interpore Common Stock (and, if applicable, cash in lieu of fractional
shares) received by each stockholder of Cross will be approximately equal to the
fair market value of Cross Common Stock surrendered in the Merger. The only
consideration to be issued in the Merger is Interpore Common Stock, except for
cash paid for fractional shares and cash paid to dissenters.
(c) Cross knows of no plan or intention of any of the
stockholders of Cross to (i) sell, exchange, or otherwise dispose of a number of
shares of Interpore Common Stock
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received pursuant to the Merger that would reduce the Cross Stockholders'
aggregate ownership of Interpore Common Stock to a number of shares having a
value, as of the Effective Time, of less than 50 percent of the value of all the
formerly outstanding Cross Common Stock as of the same date (but including
distributions by Cross and the value of Cross Common Stock redeemed or
surrendered by dissenters for cash or other property in connection with the
Merger, regardless of whether such distribution, redemption or surrender
occurred or occurs prior to the Effective Time) or (ii) enter into any
transaction or arrangement that would eliminate substantially all of the
economic benefits and burdens of beneficial ownership of any shares of Interpore
Common Stock.
(d) Following consummation of the Merger, (i) Cross will hold at
least 90 percent of the fair market value of its net assets and at least 70
percent of the fair market value of its gross assets held immediately prior to
the Merger and at least 90 percent of the fair market value of Sub's net assets
and 70 percent of the fair market value of Sub's gross assets and (ii) Cross and
its Subsidiaries, on a combined basis, and disregarding any shares of stock of
any such Subsidiary, will hold 90% of the fair market value of their net assets,
and at least 70% of the fair market value of their gross assets, held
immediately prior to the Merger. For purposes of this representation, amounts
paid by Cross or Sub to stockholders of Cross who receive cash or other
property, either as dissenters' rights or in lieu of fractional shares, amounts
used by Cross to pay its expenses related to the Merger and all redemptions or
distributions made by Cross in connection with the Merger are included in
computing Cross's and Sub's assets held immediately prior to the Merger.
(e) Cross has no plan or intention to issue additional shares of
its stock or other securities (or any options, warrants, or other similar
rights) that would result in Interpore losing "control" of Cross within the
meaning of Section 368(c) of the Code or owning less than 80% of any class of
outstanding capital stock of Cross after the Merger.
(f) Cross and its stockholders will pay their respective
expenses, if any, incurred in connection with the transaction and neither Cross
or its stockholders will pay the expenses of Interpore or Sub.
(g) No intercorporate indebtedness exists between Cross and
either Interpore or Sub that was issued, acquired, or will be settled at a
discount.
(h) None of the shares of Cross Common Stock issued and
outstanding at any time prior to the Merger have been sold, exchanged, redeemed
or otherwise disposed of prior to the Merger in a transaction or transactions
related to the Merger (or otherwise in connection with the Merger) for
consideration other than Interpore Common Stock, except for shares of Cross
Common Stock surrendered by dissenters or exchanged for cash in lieu of
fractional shares of Interpore Common Stock.
(i) Except for any shares of Cross Common Stock subject to
dissenters rights of appraisal or exchanged for cash in lieu of fractional
shares, and assuming that the Merger will be validly effected pursuant to the
laws of the State of Delaware, all of the issued and outstanding shares of all
classes of the capital stock of Cross immediately prior to the Merger will be
converted and exchanged in the Merger solely for Interpore Common Stock.
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(j) As of the Effective Time, the fair market value of the assets
of Cross will exceed the sum of its liabilities, plus the liabilities, if any,
to which its assets are subject, and all liabilities were incurred by Cross in
the ordinary course of its business.
(k) Cross has not filed for protection from creditors under the
U.S. bankruptcy laws or otherwise made a general assignment of its assets for
the benefit of creditors.
(l) Cross is not an investment company within the meaning of
Section 368(a)(2)(F) of the Code. Generally, a corporation is an "investment
company" under that provision of the Code if 50% or more of its assets (by
value) consist of stock or securities and 80% or more of its assets (by value)
are held for investment. For purposes of these 50% and 80% tests, however, stock
of a subsidiary corporation is ignored and Interpore is deemed to own a ratable
portion of its subsidiary's assets directly. (A corporation is a subsidiary for
this purpose if the parent owns 50% or more of its stock by vote or value.)
(m) Immediately after the time of the Merger, Cross will not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person can acquire stock in Cross, that if exercised
or converted, would affect Interpore's acquisition or retention of "control" of
Cross within the meaning of Section 368(c) of the Code.
(n) Stockholders of Cross will receive Interpore Common Stock in
the Merger that has a value, as of the date of the Merger, of at least 80
percent of the value of all of the formerly outstanding Cross Common Stock as of
the same date and at least 80 percent of the total number of shares of all other
classes of stock, in exchange solely for voting stock of Interpore. For purposes
of this representation, Cross shares exchanged for cash or other property
originating with Interpore will be treated as outstanding Cross Common Stock on
the date of the Merger. Moreover, in making this representation, we have
considered shares of Cross Common Stock and Interpore Common Stock held by the
stockholders of Cross and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger.
(o) No part of any consideration paid to any stockholder of Cross
for services performed by such stockholder for Cross or pursuant to any other
contractual relationship between Cross and such stockholder constitutes separate
or additional consideration for the shares of Cross Common Stock tendered in the
Merger, and, no part of the Interpore Common Stock transferred to such
stockholder of Cross pursuant to the Merger constitutes separate or additional
consideration attributable to such services or other contractual relationships.
(p) Following the Merger, Cross and its Subsidiaries each intend
to continue its historic business or use a significant portion of its historic
business assets in a business.
(q) Cross has no plan or intention to liquidate, merge into
another corporation, or to sell or otherwise dispose of any of its assets,
except for dispositions made in the ordinary course of business.
(r) Cross is entering into the Merger for business reasons and
not for the principal purpose of avoiding federal income tax.
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(s) Cross has not paid or declared dividends with respect to its
stock prior to the Merger.
(t) There are no restrictions or agreements with respect to the
stock of Cross, except for the Cross Stockholders Agreement and the Cross Stock
Option Agreement.
(u) The Merger will be consummated in compliance with the
material terms of this Agreement, and none of the material terms and conditions
therein has been waived or modified, and Cross has no plan or intention to waive
or modify any such material condition. No side agreements exist between Cross
and any of its stockholders, Interpore or Sub related to the Merger which set
forth terms or conditions or call for payment of consideration by any party not
set forth in this Agreement, except as listed on Section 3.16(u) of the Cross
Disclosure Schedule.
(v) To the best knowledge of Cross, No shares of Cross Common
Stock are owned or have been owned, directly or indirectly, at any time during
the past five years by Interpore or Sub.
(w) All the outstanding debt of Cross has been, and will be,
treated by Cross as debt, and not as equity, for all financial accounting and
tax purposes. At the time of the issuance of the debt, it was anticipated that
the existing cash flow of Cross would be more than adequate to enable Cross to
timely make all scheduled payments of interest and principal on the debt. Cross
has in fact timely made all payments of principal and interest on the debt as
such payments have become due.
(x) Amounts, if any, paid to dissenters will be paid solely out
of funds of Cross and not from any consideration paid by Interpore.
(y) Cross knows of no stockholder of Cross who acquired his or
her shares of Cross Stock in contemplation of the Merger.
(z) Cross has not repurchased any shares of its outstanding stock
since January 1, 1995.
(aa) The payment of cash in lieu of fractional shares of
Interpore Common Stock does not represent separately bargained for
consideration. The total cash consideration that will be paid in the Merger to
stockholders of Cross instead of issuing fractional shares of Interpore Common
Stock will not exceed one percent of the total consideration that will be issued
in the Merger to stockholder of Cross for their shares of Cross Common Stock.
The fractional share interests of each stockholder of Cross will be aggregated,
and no stockholder of Cross will receive cash in an amount greater than the
value of one full share of Interpore Common Stock.
(bb) To the best of Cross's knowledge, none of the compensation
received by any stockholder of Cross who is also an employee or independent
contractor of Cross from Interpore will be separate or additional consideration
for, or allocable to any of their shares of Cross Common Stock; none of the
shares of Interpore Common Stock received by any such stockholder will be
separate or additional consideration for, or allocable to, any employment
agreement with Interpore or other agreement to perform services for Interpore;
and the
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compensation paid to any such stockholder by Interpore will be for services
actually rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
(cc) To the best of Cross's knowledge and based on the
representations of Interpore, Cross has no reason to believe that the
representations made by Interpore in Section 4.16 are not true, correct and
complete in all material respects.
Section 3.17. Registration Statement; Joint Proxy Statement/Prospectus.
The information to be supplied by Cross for inclusion in the registration
statement on Form S-4 pursuant to which shares of Interpore Common Stock issued
in the Merger will be registered under the Securities Act (the "Registration
Statement"), shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information supplied by Cross for inclusion in the joint proxy
statement/prospectus to be sent to the stockholders of Interpore and Cross in
connection with the meeting of Cross's stockholders (the "Cross Stockholders'
Meeting") and the meeting of Interpore's stockholders (the "Interpore
Stockholders' Meeting") to consider this Agreement and the Merger (the "Joint
Proxy Statement/Prospectus") shall not, on the date the Joint Proxy
Statement/Prospectus is first mailed to stockholders of Cross or Interpore, at
the time of the Cross Stockholders' Meeting and the Interpore Stockholders'
Meeting and at the Effective Time, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, omit to state any material fact
necessary in order to make the statements made in the Joint Proxy
Statement/Prospectus not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Cross Stockholders' Meeting or the Interpore
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Cross or any of its Affiliates,
officers or directors should be discovered by Cross which should be set forth in
an amendment to the Registration Statement or a supplement to the Joint Proxy
Statement/Prospectus, Cross shall promptly inform Interpore.
Section 3.18. Labor Matters. Neither Cross nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor, as of the date hereof, is Cross or any of its Subsidiaries
the subject of any material proceeding asserting that Cross or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel it
to bargain with any labor union or labor organization nor, as of the date of
this Agreement, is there pending or, to the knowledge of the executive officers
of Cross, threatened, any material labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving Cross or any of its Subsidiaries.
Section 3.19. Insurance.
(a) Section 3.19(a) of the Cross Disclosure Schedule sets forth a
complete and accurate list of all material fire and casualty, general liability,
business interruption, product liability, directors and officers and other
insurance policies maintained by Cross or any of its
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Subsidiaries. All such policies are with reputable insurance carriers, provide
full and adequate coverage for all normal risks incident to the business of
Cross and its Subsidiaries and their respective properties and assets, and are
in character and amount at least equivalent to that carried by persons engaged
in similar businesses and subject to the same or similar perils or hazards,
except for any such failures to maintain insurance policies that, individually
or in the aggregate, are not reasonably likely to have a Cross Material Adverse
Effect.
(b) Section 3.19(b) of the Cross Disclosure Schedule sets forth a
complete and accurate list of all products liability insurance policies which
Cross or any of its Subsidiaries has maintained since June 30, 1991. Copies of
all such products liability insurance policies have been provided to Interpore
prior to the date hereof. Cross has continuous insurance coverage in amounts
equal to $5 million or more per occurrence and in the aggregate for products
liability claims, on a claims made basis from January 1, 1990 through January 1,
1999 covering each of its products sold during such periods.
Section 3.20. Opinion of Financial Advisor. The financial advisor of
Cross, ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., has delivered to Cross an opinion dated the date of
this Agreement to the effect that the consideration to be received in the Merger
by Cross's stockholders is fair to Cross's stockholders from a financial point
of view, a signed copy of which opinion has been promptly delivered to
Interpore.
Section 3.21. No Existing Discussions. As of the date hereof, Cross is
not engaged, directly or indirectly, in any material discussions or negotiations
with any other party with respect to an Acquisition Proposal (as defined in
Section 5.3).
Section 3.22. Section 203 of the DGCL Not Applicable. The restrictions
contained in Section 203 of the DGCL applicable to a "business combination" (as
defined in DGCL Section 203) will not apply to the authorization, execution,
delivery and performance of this Agreement, the Stockholder Agreement or the
Stock Option Agreements by Cross or by the parties thereto or the consummation
of the Merger by Cross. No other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is applicable
to Cross or (by reason of Cross's participation therein) the Merger or the other
transactions contemplated by this Agreement.
Section 3.23. Warn Act. Since the enactment of the Work Adjustment and
Retraining Notification Act of 1988 ("WARN Act"), neither Cross nor any of its
Subsidiaries have effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more operating units within any site
of employment of Cross or any of its Subsidiaries, or (ii) a "mass layoff" (as
defined in the WARN Act) affecting Cross or any of its Subsidiaries; nor has
Cross been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar state or
local law. None of the employees of any of Cross or its Subsidiaries has
suffered an "employment loss" (as defined in the WARN Act) during the ninety-day
period prior to the Effective Date of this Agreement.
Section 3.24. Transactions with Related Parties. No officer or director
of Cross or its Subsidiaries or
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any affiliate thereof, or any business or entity in which Cross or its
Subsidiaries or any affiliate thereof, or relative of any such person, has any
direct or material indirect interest (collectively, "Related Parties"):
(a) has borrowed money or loaned money to Cross or any
Subsidiary;
(b) has made or threatened any contractual or other claim of any
kind whatsoever against Cross or any Subsidiary;
(c) has any interest in any property or assets used by Cross or
any Subsidiary in its business;
(d) has been engaged in any other transaction with Cross or any
Subsidiary (other than employment relationships disclosed in Section 3.14);
(e) owns or holds any capital stock or other ownership interest
in Interpore; or
(f) since December 1, 1997, has purchased or sold any of the
capital stock or other ownership interests of Cross or Interpore.
Section 3.25. Suppliers and Customers. Section 3.25 of the Cross
Disclosure Schedule contains a list of Cross's top five suppliers and top ten
customers, determined in each case by aggregate purchases. No supplier or
customer accounted for more than ten percent of Cross's and its Subsidiaries'
sales or purchases in either of the past two years and no other supplier or
customer material to the business of Cross and its Subsidiaries, taken as a
whole, has materially decreased its supplies or orders, as the case may be, or
terminated its relationship with Cross or any Subsidiary.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF INTERPORE
Interpore represents and warrants to Cross that the statements contained
in this Article IV are true and correct, except as set forth in the disclosure
schedule delivered by Interpore to Cross on or before the date of this Agreement
(the "Interpore Disclosure Schedule"). The Interpore Disclosure Schedule shall
be arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article IV and the disclosure in any paragraph shall qualify
other paragraphs in this Article IV only to the extent that it is reasonably
apparent from a reading of such document that it also qualifies or applies to
such other paragraphs. Whenever a statement in this Article IV is qualified by
"to the best knowledge of Interpore" or a similar phrase, it is intended to
indicate that the executive officers of Interpore do not have current actual
knowledge of the inaccuracy of such statement.
Section 4.1. Organization of Interpore. Each of Interpore and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do
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business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, properties, financial condition or results of
operations of Interpore and its Subsidiaries, taken as a whole (a "Interpore
Material Adverse Effect"). A true and correct copy of the Certificate of
Incorporation and Bylaws of Interpore and each Subsidiary of Interpore has been
delivered to Cross. Except as set forth in the Interpore SEC Reports (as defined
in Section 4.4) filed prior to the date of this Agreement, neither Interpore nor
any of its Subsidiaries directly or indirectly owns (other than ownership
interests in Interpore or in one or more of its Subsidiaries) any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity, excluding (i) securities in any publicly traded company
held for investment by Interpore and comprising less than five percent (5%) of
the outstanding stock of such company and (ii) any investment or series of
related investments with a book value of less than $50,000.
Section 4.2. Interpore Capital Structure.
(a) The authorized capital stock of Interpore consists of
20,000,000 shares of Common Stock, no par value, and 372,951 shares of Preferred
Stock ("Interpore Preferred Stock"). As of the date hereof, (i) 7,105,898 shares
of Interpore Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable; (ii) 76,593 shares of Interpore Preferred
Stock were issued and outstanding; and (iii) no shares of Interpore Common Stock
were held in the treasury of Interpore or by Subsidiaries of Interpore. As of
the date of this Agreement no dividends or other distributions have been
declared or made by Interpore in respect of any of its capital stock. The
Interpore Disclosure Schedule shows the number of shares of Interpore Common
Stock reserved for future issuance pursuant to stock options granted and
outstanding as of the date hereof and the plans under which such options were
granted (collectively, the "Interpore Stock Plans"). There are no obligations,
contingent or otherwise, of Interpore or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Interpore Common Stock or the capital
stock of any Subsidiary or to provide funds to or make any material investment
(in the form of a loan, capital contribution or otherwise) in any such
Subsidiary or any other entity other than guarantees of bank obligations or
indebtedness for borrowed money of Subsidiaries entered into in the ordinary
course of business and other than any obligation the failure of which to perform
or satisfy would not have an Interpore Material Adverse Effect. All of the
outstanding shares of capital stock or other ownership interests of each of
Interpore's Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and all such shares are owned by Interpore or another Subsidiary
of Interpore free and clear of all Liens.
(b) Except as set forth in this Section 4.2 or as reserved for
future grants of options under the Interpore Stock Plans or the Cross Stock
Option Agreement, and except for the preferred stock purchase rights issued and
issuable under the Rights Agreement dated as of August 29, 1995 between
Interpore and U.S. Stock Transfer Corporation (the "Interpore Rights Plan"), (i)
there are no shares of capital stock of any class of Interpore, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding; (ii) there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
Interpore or any of its Subsidiaries is a party or by which it is bound
obligating Interpore or any of its Subsidiaries to issue, deliver or sell, or
cause to be
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issued, delivered or sold, additional shares of capital stock or other ownership
interests of Interpore or any of its Subsidiaries or obligating Interpore or any
of its Subsidiaries to grant, extend, accelerate the vesting of or enter into
any such option, warrant, equity security, call, right, commitment or agreement;
and (iii) to the best knowledge of Interpore, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of Interpore. All shares of Interpore Common Stock subject to
issuance as specified in this Section 4.2 are duly authorized and, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, shall be validly issued, fully paid and nonassessable.
Section 4.3. Authority; No Conflict; Required Filings and Consents.
(a) Interpore has all requisite corporate power and authority to
enter into this Agreement, the Cross Stockholder Agreement and the Stock Option
Agreements and to consummate the transactions contemplated by this Agreement,
the Cross Stockholder Agreement and the Stock Option Agreements. The execution
and delivery of this Agreement, the Cross Stockholder Agreement and the Stock
Option Agreements and the consummation of the transactions contemplated by this
Agreement, the Cross Stockholder Agreement and the Stock Option Agreements by
Interpore have been duly authorized by all necessary corporate action on the
part of Interpore, subject only to the approval and adoption of this Agreement
and the Merger by Interpore's stockholders under the California Corporations
Code (the "CCC"). This Agreement, the Cross Stockholder Agreement and the Stock
Option Agreements have been duly executed and delivered by Interpore and
constitute the valid and binding obligations of Interpore, enforceable in
accordance with their terms, subject to the Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement, the Cross
Stockholder Agreement and the Stock Option Agreements by Interpore does not, and
the consummation of the transactions contemplated by this Agreement, the Cross
Stockholder Agreement and the Stock Option Agreements will not, (i) conflict
with, or result in any violation or breach of, any provision of the Articles of
Incorporation or Bylaws of Interpore or any of its Subsidiaries, (ii) result in
any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Interpore or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
or (iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Interpore or any of its Subsidiaries or any of its or their properties or
assets, except in the case of (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which (x) are not,
individually or in the aggregate, reasonably likely to have an Interpore
Material Adverse Effect or (y) would not substantially impair or delay the
consummation of the Merger.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Interpore or any of its Subsidiaries in connection with the
execution and delivery of this Agreement, the Cross
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Stockholder Agreement and the Stock Option Agreements or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of a
Certificate of Merger with respect to the Merger with the Delaware Secretary of
State, (ii) the filing of the Joint Proxy Statement/Prospectus with the SEC in
accordance with the Exchange Act and the Securities Act, (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the laws of any
foreign country and (iv) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not (x) be reasonably
likely to have an Interpore Material Adverse Effect or (y) substantially impair
or delay the consummation of the Merger.
(d) The affirmative votes of the holders of majorities of the
outstanding shares of (i) Interpore Common Stock and (ii) Interpore Series E
Preferred Stock at the Interpore Stockholders Meeting or any adjournment or
postponement thereof to approve this Agreement are the only votes of the holders
of any class or series of Interpore's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
Section 4.4. SEC Filings; Financial Statements.
(a) Interpore has filed and made available to Cross all forms,
reports and documents required to be filed by Interpore with the SEC since
January 1, 1996 (collectively, the "Interpore SEC Reports"). The Interpore SEC
Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Interpore SEC Reports or necessary
in order to make the statements in such Interpore SEC Reports, in the light of
the circumstances under which they were make, not misleading. None of
Interpore's Subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) of Interpore contained in the Interpore SEC
Reports complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q under the Exchange Act) and fairly presented the
consolidated financial position of Interpore and its Subsidiaries as of the
dates and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount. The audited balance sheet of
Interpore as of December 31, 1997 is referred to herein as the "Interpore
Balance Sheet."
Section 4.5. No Undisclosed Liabilities. Except as disclosed in the
Interpore SEC Reports filed prior to the date hereof, and as of the Closing
Date, except as set forth in the audited financial statements of Interpore as of
December 31, 1997, and except for normal or recurring liabilities incurred since
December 31, 1997 in the ordinary course of business consistent
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with past practices, Interpore and its Subsidiaries do not have any liabilities,
either accrued, contingent or otherwise (whether or not required to be reflected
in financial statements in accordance with generally accepted accounting
principles), and whether due or to become due, which individually or in the
aggregate, are reasonably likely to have an Interpore Material Adverse Effect.
Section 4.6. Absence of Certain Changes or Events. Except as disclosed
in the Interpore SEC Reports filed prior to the date hereof, since the date of
the Interpore Balance Sheet, Interpore and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any event, development,
state of affairs or condition, or series or combination of events, developments,
states of affairs or conditions, which, individually or in the aggregate, has
had or which is reasonably likely to have an Interpore Material Adverse Effect
(other than events, developments, states of affairs or conditions that are the
effect or result of actions taken by Cross or economic factors affecting the
economy as a whole or the industry in which Interpore competes); (ii) any
damage, destruction or loss (whether or not covered by insurance) with respect
to Interpore or any of its Subsidiaries which is reasonably likely to have an
Interpore Material Adverse Effect; (iii) any material change by Interpore in its
accounting methods, principles or practices to which Cross has not previously
consented in writing; (iv) any revaluation by Interpore of any of its assets
which is reasonably likely to have an Interpore Material Adverse Effect; or (v)
any other action or event that would have required the consent of Cross pursuant
to Section 5.1 of this Agreement had such action or event occurred after the
date of this Agreement, other than such actions or events that, individually or
in the aggregate, have not had or are not reasonably likely to have an Interpore
Material Adverse Effect.
Section 4.7. Taxes.
(a) Interpore and each of its Subsidiaries have (i) filed all
federal, state, local and foreign Tax returns and reports required to be filed
by them prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or in
the aggregate, to have an Interpore Material Adverse Effect. Neither the IRS nor
any other taxing authority has asserted any claim for Taxes, or to the actual
knowledge of the executive officers of Interpore, is threatening to assert any
claims for Taxes, which claims, individually or in the aggregate, are reasonably
likely to have an Interpore Material Adverse Effect. Interpore and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts that are not
reasonably likely, individually or in the aggregate, to have an Interpore
Material Adverse Effect. Neither Interpore nor any of its Subsidiaries has made
an election under Section 341(f) of the Code, except for any such election that
shall not have an Interpore Material Adverse Effect. There are no liens for
Taxes upon the assets of Interpore or any of its Subsidiaries (other than liens
for Taxes that are not yet due or delinquent or that are being contested in good
faith by appropriate proceedings),
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except for liens that are not reasonably likely, individually or in the
aggregate, to have an Interpore Material Adverse Effect.
(b) Neither Interpore nor any of its Subsidiaries is or has been
a member of an affiliated group of corporations filing a consolidated federal
income tax return (or a group of corporations filing a consolidated, combined or
unitary income tax return under comparable provisions of state, local or foreign
tax law) for any taxable period beginning on or after the taxable period ending
December 31, 1993, other than a group the common parent of which is or was
Interpore or any Subsidiary of Interpore.
(c) Neither Interpore nor any of its Subsidiaries has any
obligation under any agreement or arrangement with any other person with respect
to Taxes of such other person (including pursuant to Treas. Reg. Section
1.1502-6 or comparable provisions of state, local or foreign tax law) and
including any liability for Taxes of any predecessor entity, except for
obligations that are not reasonably likely, individually or in the aggregate, to
have an Interpore Material Adverse Effect.
Section 4.8. Properties.
(a) Interpore and each of its Subsidiaries has good and valid
title to, or valid leasehold interests in, all its material properties and
assets except for such as are no longer used in the conduct of the businesses of
Interpore and its Subsidiaries or as have been disposed of in the ordinary
course of business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate would
not have an Interpore Material Adverse Effect. All such material assets and
properties, other than assets and properties in which Interpore or any of its
Subsidiaries has a leasehold interest, are free and clear of all Liens and
except for Liens that individually or in the aggregate would not have an
Interpore Material Adverse Effect.
(b) Interpore and each of its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are in full force and
effect, except for such noncompliance or failure to be in full force and effect,
except for such noncompliance or failure to be in full force and effect as would
not individually or in the aggregate have an Interpore Material Adverse Effect.
Interpore and each of its Subsidiaries enjoys peaceful and undisturbed
possession under all such material leases, except for failures to do so that
would not individually or in the aggregate have an Interpore Material Adverse
Effect.
Section 4.9. Intellectual Property.
(a) Interpore and its Subsidiaries own or possess adequate rights
to use all intellectual and similar property of every kind and nature relating
to or used or necessary in the operation of the business of Interpore and its
Subsidiaries, including, without limitation, (i) all patents and trademarks
associated with the business of Interpore and its Subsidiaries (including all
Governmental Entity trademarks, service marks, logos and designs, all
registrations and recordings thereof, and all applications in the United States
or any other Governmental Entity, all
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goodwill symbolized thereby or associated therewith and all extensions or
renewals thereof, all of which are set forth on Section 4.9 of the Interpore
Disclosure Schedule), (ii) copyrights associated solely with the business of
Interpore and its Subsidiaries, including all copyrights, United States and
foreign copyright registrations, and applications to register copyrights which
are set forth on Section 4.9 of the Interpore Disclosure Schedule, (iii)
inventions, formulae, processes, designs, know-how or other data or information,
(iv) confidential or proprietary technical and business information, processes
and trade secrets, (v) computer software, (vi) technical manuals and
documentation made or used in connection with any of the foregoing, and (vii)
licenses or rights with respect to any of the foregoing or property of like
nature (collectively, "Interpore Intellectual Property").
(b) (i) Section 4.9 of the Interpore Disclosure Schedule sets
forth a complete and accurate list of all registered copyrights, patents and
trademarks owned by or under obligation of assignment to Interpore or any of its
Subsidiaries, currently used in the conduct of the business of Interpore or its
Subsidiaries, and all applications therefor;
(ii) Section 4.9 of the Interpore Disclosure Schedule sets
forth a complete and accurate list of the owners of the Interpore Intellectual
Property. Each owner listed in Section 4.9 of the Interpore Disclosure Schedule
is listed in the records of the appropriate Governmental Entity as the sole
owner of record;
(iii) Section 4.9 of the Interpore Disclosure Schedule
sets forth a complete and accurate list of all agreements between Interpore, on
the one hand, and any Person, on the other hand, granting any right to use or
practice any rights with respect to any Interpore Intellectual Property;
(iv) there is no encumbrance on the right of Interpore and
its Subsidiaries to transfer any of the Interpore Intellectual Property, as
herein contemplated;
(v) no trade secret, formula, process, invention, design,
know-how or any other information currently used in the conduct of the business
of Interpore and its Subsidiaries has been disclosed or authorized to be
disclosed to any Person, except in the ordinary course of business or pursuant
to an obligation of confidentiality binding upon said Person;
(vi) there are no pending proceedings by or before any
Governmental Entity, including oppositions, interferences, proceedings or suits,
relating to such Interpore Intellectual Property, and no such proceedings are
threatened;
(vii) the conduct of the business of Interpore and its
Subsidiaries and the exercise of rights relating to the patents which are part
of the Interpore Intellectual Property does not infringe upon or otherwise
violate any rights of any Person with respect to the Interpore Intellectual
Property;
(viii) to Interpore's knowledge, no Person is infringing
upon or otherwise violating any patents which are part of the Interpore
Intellectual Property;
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(ix) Neither Interpore nor any of its Subsidiaries has
received notice of any claims, obligations or liabilities and there are no
pending claims, obligations or liabilities, of an Persons relating to the scope,
ownership or use of any of the Interpore Intellectual Property; and
(x) each copyright registration, patent and registered
trademark and application therefor listed in Section 4.9 of the Interpore
Disclosure Schedule is in proper form, has not been disclaimed and has been duly
maintained, including the submission of all necessary filings in accordance with
the legal and administrative requirements of the appropriate jurisdictions.
Section 4.10. Regulation.
(a) Except as is not reasonably likely to have an Interpore
Material Adverse Effect, since March 1, 1993, there have been no written
notices, citations or decisions by any governmental or regulatory body that any
product produced, manufactured, marketed or distributed at any time by Interpore
or any of its Subsidiaries (the "Interpore Products") is defective or fails to
meet any applicable standards promulgated by any such governmental or regulatory
body. Interpore and each of its Subsidiaries has complied in all material
respects with the laws, regulations, policies, procedures and specifications
with respect to the design, manufacture, labeling, testing and inspection of
Interpore Products and the operation of manufacturing facilities promulgated by
the Food and Drug Administration (the "FDA"), except where the failure so to
comply is not likely to have an Interpore Material Adverse Effect. Except as
described in the Interpore SEC Reports, since March 1, 1993, there have been no
recalls, field notifications or seizures ordered or, to Interpore's knowledge,
threatened by any such governmental or regulatory body with respect to any of
the Interpore Products. Interpore has not received, and does not reasonably
believe that any facts or circumstances exist that are reasonably likely to
result in, any warning letter, or Section 305 notices from the FDA. Section
4.10(a) of the Interpore Disclosure Schedule sets forth summary information
concerning all 510(k) applications, Premarket Approvals and Investigation Device
Exemptions obtained by Interpore or any of its Subsidiaries from the FDA or
required in connection with the manufacturing, marketing and sale of any
Interpore Product, including title, date issued, summary and type of FDA action.
(b) Interpore has obtained, in all countries where Interpore or
any of its Subsidiaries is marketing or has marketed the Interpore Products, all
applicable licenses, registrations, approvals, clearances and authorizations
required by local, state or federal agencies (including the FDA) in such
countries regulating the safety, effectiveness and market clearance of the
Products that are currently marketed by Interpore or any of its Subsidiaries
(collectively, "Interpore Licenses"), except for any such failures that are not
reasonably likely, individually or in the aggregate, to have an Interpore
Material Adverse Effect. Section 4.10(b) of the Interpore Disclosure Schedule
(i) contains a complete and accurate list of all Interpore Licenses and (ii)
identifies all material information relating to regulation of the Interpore
Products, including licenses, registrations, approvals, permits, device
listings, inspections, Interpore's and its Subsidiaries' recalls and product
actions, audits and Interpore's and its Subsidiaries' ongoing clinical studies.
Other than as set forth on Section 4.10(b) of the Interpore Disclosure Schedule,
there are no Interpore Licenses or material information of the type described in
clause (ii) of the immediately preceding sentence.
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(c) With respect to Interpore Products sold during the last five
years, neither Interpore nor any Subsidiary has marketed any of its products for
uses other than uses approved by the FDA.
Section 4.11. Agreements, Contracts and Commitments.
(a) Subsections (i) through (vii) of Section 4.11(a) of the
Interpore Disclosure Schedule contain a list of the following types of contracts
and agreements to which Interpore or any Subsidiary is a party (such contracts,
agreements and arrangements as are required to be set forth in Section 4.11(a)
of the Interpore Disclosure Schedule being referred to herein collectively as
the "Interpore Material Contracts"):
(i) all distributor, manufacturer's representative,
broker, franchise, agency and dealer contracts and agreements to which Interpore
or any Subsidiary is a party;
(ii) all contracts with physicians and any scientific
advisory board members;
(iii) all contracts with independent contractors or
consultants (or similar arrangements) to which Interpore or any Subsidiary is a
party and which: (A) are reasonably likely to involve consideration of more than
$150,000 in the aggregate during the calendar year ended December 31, 1998, or
(B) are reasonably likely to involve consideration of more than $150,000 in the
aggregate over the remaining term of the contract;
(iv) all contracts and agreements (excluding routine
checking account overdraft agreements involving ▇▇▇▇▇ cash amounts) under which
Interpore or any Subsidiary has created, incurred, assumed or guaranteed (or may
create, incur, assume or guarantee) indebtedness or under which Interpore or any
Subsidiary has imposed (or may impose) a lien on any of its assets, whether
tangible or intangible, to secure indebtedness;
(v) all contracts and agreements that limit the ability of
Interpore or any Subsidiary or, after the Effective Time, Interpore or any of
its affiliates, to compete in any line of business or with any person or in any
geographic area or during any period of time, or to solicit any customer or
client;
(vi) all contracts and agreements between or among
Interpore or any Subsidiary, on the one hand, and any affiliate of Interpore
(other than a wholly owned Subsidiary), on the other hand; and
(vii) all other contracts or agreements (A) which are
material to Interpore and its Subsidiaries or the conduct of their respective
businesses or (B) the absence of which would have an Interpore Material Adverse
Effect or (C) which are believed by Interpore to be of unique value to Interpore
even though not material to the business of Interpore.
(b) Except as would not, individually or in the aggregate, have
an Interpore Material Adverse Effect, each contract referred to in paragraphs
(ii) and (vii) above and each other material contract or agreement of Interpore
or any Subsidiary which would have been
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required to be disclosed in Sections 4.11(a)(ii) and (vii) of the Interpore
Disclosure Schedule had such contract or agreement been entered into prior to
the date of this Agreement, is a legal, valid and binding agreement, and none of
the Interpore Material Contracts is in default by its terms or had been canceled
by the other party; Interpore and its Subsidiaries are not in receipt of any
claim of default under any such agreement; and none of Interpore or any of its
Subsidiaries anticipates any termination or change to, or receipt of a proposal
with respect to, any such agreement as a result of the Merger or otherwise.
Interpore has furnished Interpore with true and complete copies of all Interpore
Material Contracts and any and all amendments thereto.
Section 4.12. Litigation
(a) Section 4.12(a) of the Interpore Disclosure Schedule sets
forth a complete and accurate list, of all claims, actions, litigations,
proceedings, product liability claims and investigations pending or, to
Interpore's knowledge, threatened against Interpore or any of its Subsidiaries,
or any property or asset of Interpore or any of its Subsidiaries, before any
Governmental Authority or arbitrator (collectively, "Interpore Claims"). Each
Interpore Claim is cross-referenced in Section 4.12 of the Interpore Disclosure
Schedule by the insurance policy or policies under which Interpore or any of its
Subsidiaries has claimed coverage for such Interpore Claim. There is no
Interpore Claim, which, individually or when aggregated with other Interpore
Claims which are reasonably likely to result from facts and circumstances that
have given rise to such an Interpore Claim, is reasonably likely to have an
Interpore Material Adverse Effect. As of the date hereof, neither Interpore nor
any of its Subsidiaries nor any property or asset of Interpore or any Subsidiary
is subject to any order, writ, judgment, injunction, decree, determination or
award having, individually or in the aggregate, an Interpore Material Adverse
Effect.
(b) As of the date hereof, to Interpore's knowledge, neither
Interpore nor any of its Subsidiaries has received notice from any source that
Interpore or any of its Subsidiaries may be liable with respect to product
liability or worker's compensation claims, except for such claims that are not
reasonably likely to have, individually or in the aggregate, an Interpore
Material Adverse Effect.
Section 4.13. Environmental Matters. To the knowledge of Interpore and
except as disclosed in the Interpore SEC Reports filed prior to the date hereof
and except for such matters that, individually or in the aggregate, are not
reasonably likely to have an Interpore Material Adverse Effect: (i) Interpore
and its Subsidiaries have complied with all applicable Environmental Laws; (ii)
the properties currently owned, leased or operated by Interpore and its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances; (iii) the
properties formerly owned, leased or operated by Interpore or any of its
Subsidiaries were not contaminated with Hazardous Substances during the period
of ownership or operation by Interpore or any of its Subsidiaries; (iv) neither
Interpore nor its Subsidiaries are subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (v) neither
Interpore nor any of its Subsidiaries has been associated with any release or
threat of release of any Hazardous Substance; (vi) neither Interpore nor any of
its Subsidiaries has received any notice, demand, letter, claim or request for
information alleging that Interpore or any of its Subsidiaries may be in
violation of or liable under any Environmental Law; (vii) neither Interpore nor
any of its Subsidiaries is subject to any orders, decrees, injunctions or
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other arrangements with any Governmental Entity or is subject to any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving Interpore or any of its Subsidiaries that
could reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use or transfer of any property of
Interpore or any of its Subsidiaries pursuant to any Environmental Law.
Section 4.14. Employee Benefit Plans.
(a) For purposes of this Agreement, the "Interpore Employee
Plans" shall mean all "employee benefit plans" (as defined in Section 3(3) of
ERISA), all "employee welfare benefit plans" (as defined in Section 3(1) of
ERISA) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, and all unexpired severance agreements, written or otherwise, for
the benefit of, or relating to, any current or former employee of Interpore or
any ERISA Affiliate of Interpore, or any Subsidiary of Interpore (together, the
"Interpore Employee Plans"). Interpore has listed in Section 4.14 of the
Interpore Disclosure Schedule all Interpore Employee Plans.
(b) With respect to each Interpore Employee Plan, Interpore has
made available to Cross, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Interpore Employee Plan and all
amendments thereto, (iii) each trust agreement and group annuity contract, if
any, and all amendments thereto relating to such Interpore Employee Plan and
(iv) the most recent actuarial report or valuation relating to an Interpore
Employee Plan subject to Title IV of ERISA.
(c) With respect to the Interpore Employee Plans, individually
and in the aggregate, no event has occurred, and to the knowledge of Interpore,
there exists no condition or set of circumstances in connection with which
Interpore could be subject to any liability that is reasonably likely to have an
Interpore Material Adverse Effect under ERISA, the Code or any other applicable
law.
(d) With respect to the Interpore Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with generally accepted accounting principles,
on the financial statements of Interpore, except for obligations which,
individually or in the aggregate, are not reasonably likely to have an Interpore
Material Adverse Effect.
(e) Except as disclosed in the Interpore SEC Reports filed prior
to the date of this Agreement, and except as provided for in this Agreement,
neither Interpore nor any of its Subsidiaries is a party to any oral or written
(i) agreement with any officer or other key employee of Interpore or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Interpore of
the nature contemplated by this Agreement, (ii) agreement with any officer of
Interpore providing any term of employment or compensation guarantee extending
for a period longer than one year from the date hereof or for the payment of
compensation in excess of $100,000 per annum, or
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(iii) 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 increased, the vesting of the benefits of which will be
accelerated or the funding of benefits of which will be required, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(f) There is no contract, agreement, plan or arrangement covering
any employee or former employee of Interpore or any of its Subsidiaries (with
respect to their relationship with such entities) that, individually or
collectively, provides for the payment by Interpore of any amount (i) that is
not deductible under Section 162(a)(1) of the Code or (ii) that is an "excess
parachute payment" pursuant to Section 280G of the Code.
Section 4.15. Compliance With Laws. Interpore has complied with, is not
in violation of, and has not received any notices of violation with respect to,
any federal, state or local statute, law or regulation, including without
limitation, Federal Medicare and Medicaid statutes, including without
limitation, 42 U.S.C. Section 1320a-7b and 42 U.S.C. Section 1395nn or related
statutes or regulations, with respect to the conduct of its business, or the
ownership or operation of its business, except for failures to comply or
violations which, individually or in the aggregate, have not had and are not
reasonably likely to have an Interpore Material Adverse Effect.
Section 4.16. Accounting and Tax Matters.
(a) To the best knowledge of Interpore, after consulting with its
independent auditors with respect to clause (i) below and its tax advisors with
respect to clause (ii) below, neither Interpore nor any of its Affiliates (as
defined in Section 5.12) has taken or agreed to take any action which would (i)
prevent Interpore from accounting for the business combination to be effected by
the Merger as a pooling of interests, or (ii) prevent the Merger from qualifying
as a reorganization described in Section 368(a) of the Code. Except as
contemplated by the Interpore Option Agreement, neither Interpore nor any of its
Subsidiaries owns any shares of Cross Common Stock or other securities
convertible into shares of Cross Common Stock (exclusive of any shares owned by
Interpore's employee benefit plans).
(b) The terms of the exchange of the outstanding shares of Cross
Common Stock for Interpore Common Stock were arrived at as a result of arm's
length negotiations. Based on the fairness opinion of Genesis Merchant Group
Securities LLC pursuant to Section 4.20 and based on the value of the Interpore
Common Stock and Cross Common Stock at the date of this Agreement, the fair
market value of the Interpore Common Stock (and, if applicable, cash in lieu of
fractional shares) received by each stockholder of Cross will be approximately
equal to the fair market value of Cross Common Stock surrendered in the Merger.
The only consideration to be issued in the Merger is Interpore Common Stock,
except for cash paid for fractional shares and cash paid to dissenters.
(c) Following consummation of the Merger, (i) Interpore will
cause Cross to hold at least 90 percent of the fair market value of its net
assets and at least 70 percent of the fair market value of its gross assets held
immediately prior to the Merger and at least 90 percent of
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the fair market value of Sub's net assets and 70 percent of the fair market
value of Sub's gross assets and (ii) Cross and its Subsidiaries, on a combined
basis, and disregarding any shares of stock of any such Subsidiary, will hold
90% of the fair market value of their net assets, and at least 70% of the fair
market value of their gross assets, held immediately prior to the Merger. For
purposes of this representation, amounts paid by Cross or Sub to stockholders of
Cross who receive cash or other property, either as dissenters' rights or in
lieu of fractional shares, amounts used by Cross to pay its expenses related to
the Merger and all redemptions or distributions made by Cross in connection with
the Merger are included in computing Cross's and Sub's assets held immediately
prior to the Merger.
(d) Immediately prior to the Merger, Interpore will own directly
all of the outstanding stock of Sub. Sub is being used solely in order to
consummate the Merger, and at no time will Sub conduct any business activities
or other operations of any kind prior to the Closing Date.
(e) Interpore has no intention or plan to cause Cross to issue
additional shares of its stock that would result in Interpore losing "control"
of Cross within the meaning of Section 368(c) of the Code.
(f) Interpore has no plan or intention to reacquire any of the
Interpore Common Stock issued in the Merger.
(g) To the best knowledge of Interpore, after the Merger,
Interpore will be the sole shareholder of Cross. Interpore has no plan or
intention to liquidate Cross; to merge Cross into another corporation; to cause
Cross to sell or otherwise dispose of any of its assets, except for dispositions
made in the ordinary course of business; to sell or otherwise dispose of any
Cross Common Stock, except for transfers of Cross Common Stock to a corporation
controlled by Interpore within the meaning of Section 368(c) of the Code; or to
cause Cross to issue any stock to any third party.
(h) Sub will have no liabilities assumed by Cross, and will not
transfer to Cross any assets subject to liabilities in the Merger.
(i) Following the Merger, Interpore will cause Cross and each of
its Subsidiaries to continue its historic business or use a significant portion
of its historic business assets in a business.
(j) Interpore and Sub will pay their respective expenses, if any,
incurred in connection with the Merger and neither Interpore nor Sub will pay
the expenses of Cross or its stockholders.
(k) No intercorporate indebtedness exists between Cross and
either Interpore or Sub that was issued, acquired, or will be settled at a
discount.
(l) To the best knowledge of Interpore, in the Merger, Interpore
will acquire shares of Cross Common Stock possessing at least 80 percent of the
total combined voting power of all classes of stock entitled to vote and at
least 80 percent of the total number of shares of all
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other classes of capital stock of Cross in exchange solely for Interpore Common
Stock. For purposes of this representation, shares of Cross Common Stock
exchanged for cash or other property originating with Interpore will be treated
as outstanding Cross Common Stock on the date of the Merger.
(m) To the best knowledge of Interpore, none of the shares of
Cross Common Stock issued and outstanding at any time prior to the Merger have
been sold, exchanged, redeemed or otherwise disposed of prior to the Merger in a
transaction or transactions related to the Merger (or otherwise in connection
with the Merger) for consideration other than Interpore Common Stock, except for
shares of Cross Common Stock surrendered by dissenters or exchanged for cash in
lieu of fractional shares of Interpore Common Stock.
(n) To the best knowledge of Interpore and based on the
representations of Cross, except for any shares of Cross Common Stock subject to
dissenters rights of appraisal or exchanged for cash in lieu of fractional
shares, and assuming that the Merger will be validly effected pursuant to the
laws of the State of Delaware, all of the issued and outstanding shares of all
classes of the capital stock of Cross immediately prior to the Merger will be
converted and exchanged in the Merger solely for Interpore Common Stock.
(o) The payment of cash in lieu of fractional shares of Interpore
Common Stock is solely for the purpose of avoiding the expense and inconvenience
of issuing fractional shares and does not represent separately bargained for
consideration. The total cash consideration that will be paid in the Merger to
stockholders of Cross instead of issuing fractional shares of Interpore Common
Stock will not exceed one percent of the total consideration that will be issued
in the Merger to stockholders of Cross for their shares of Cross Common Stock.
The fractional share interests of each stockholder of Cross will be aggregated,
and no stockholder of Cross will receive cash in an amount greater than the
value of one full share of Interpore Common Stock.
(p) Interpore has not filed for protection from creditors under
the U.S. bankruptcy laws or otherwise made a general assignment of its assets
for the benefit of creditors.
(q) Interpore is not an investment company within the meaning of
Section 368(a)(2)(F) of the Code.
(r) No liabilities of any stockholder of Cross will be assumed by
Interpore pursuant to or in connection with the Merger.
(s) To the extent any of the stockholders of Cross or its
Subsidiaries has ever performed services for Interpore or has ever entered into
any other contractual relationship with Interpore, no part of any consideration
paid to such stockholder of Cross for such services or pursuant to such
relationship constitutes separate or additional consideration for the shares of
Cross Common Stock tendered in the Merger.
(t) Interpore is entering into the Merger for business reasons
and not for the principal purpose of avoiding federal income tax.
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(u) Except as set forth on Section 4.16(t) of the Interpore
Disclosure Schedule, the Merger will be consummated in compliance with the
material terms of this Agreement, and none of the material terms and conditions
therein has been waived or modified, and Interpore has no plan or intention to
waive or modify any such material condition. No side agreements exist between
Interpore or Sub and any of the stockholders of Cross related to the Merger
which set forth terms or conditions or call for payment of consideration by any
party not set forth in this Agreement, except as listed on Section 4.16(u) of
the Interpore Disclosure Schedule.
(v) To the best knowledge of Interpore, no shares of Cross Common
Stock are owned or have been owned, directly or indirectly, at any time during
the past five years by Interpore or Sub.
(w) No amounts, if any, paid to dissenters will be paid, directly
or indirectly, by Interpore, nor will Interpore, directly or indirectly,
reimburse Cross for any payments made to dissenters.
(x) None of the compensation received by any stockholder of Cross
who is also an employee or independent contractor of Cross from Interpore will
be separate or additional consideration for, or allocable to any of their shares
of Cross Common Stock; none of the shares of Interpore Common Stock received by
any such stockholder will be separate or additional consideration for, or
allocable to, any employment agreement with Interpore or other agreement to
perform services for Interpore; and the compensation paid to any such
stockholder by Interpore will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(y) Interpore knows of no plan or intention of any of the
stockholders of Cross to (i) sell, exchange, or otherwise dispose of a number of
shares of Interpore Common Stock received pursuant to the Merger that would
reduce the Cross stockholders' aggregate ownership of Interpore Common Stock to
a number of shares having a value, as of the Effective Time, of less than 50
percent of the value of all the formerly outstanding Cross Common Stock as of
the same date (but including distributions by Cross and the value of Cross
Common Stock redeemed or surrendered by dissenters for cash or other property in
connection with the Merger, regardless of whether such distribution, redemption
or surrender occurred or occurs prior to the Effective Time) or (ii) enter into
any transaction or arrangement that would eliminate substantially all of the
economic benefits and burdens of beneficial ownership of any shares of Interpore
Common Stock.
(z) To the best of Interpore's knowledge and based on the
representations of Cross, Interpore has no reason to believe that the
representations made by Cross in Section 3.16 are not true, correct and complete
in all material respects.
Section 4.17. Registration Statement; Joint Proxy Statement/Prospectus.
The information to be supplied by Interpore for inclusion in the Registration
Statement shall not at the time the Registration Statement is declared effective
by the SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
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circumstances under which they were made, not misleading. The information to be
supplied by Interpore for inclusion in the Joint Proxy Statement/Prospectus
shall not, on the date the Joint Proxy Statement/Prospectus is first mailed to
stockholders of Interpore or Cross, at the time of the Interpore Stockholders'
Meeting and the Cross Stockholder's Meeting and at the Effective Time, contain
any statement which, at such time and in light of the circumstances under which
it shall be made, is false or misleading with respect to any material fact, omit
to state any material fact necessary in order to make the statements made in the
Joint Proxy Statement/Prospectus not false or misleading, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Interpore Stockholders'
Meeting or the Cross Stockholders' Meeting which has become false or misleading.
If at any time prior to the Effective Time any event relating to Interpore or
any of its Affiliates, officers or directors should be discovered by Interpore
which should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, Interpore shall promptly
inform Cross.
Section 4.18. Labor Matters . Neither Interpore nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is Interpore or any of its
Subsidiaries the subject of any material proceeding asserting that Interpore or
any of its Subsidiaries has committed an unfair labor practice or is seeking to
compel it to bargain with any labor union or labor organization nor, as of the
date of this Agreement, is there pending or, to the knowledge of the executive
officers of Interpore, threatened, any material labor strike, dispute, walkout,
work stoppage, slow-down or lockout involving Interpore or any of its
Subsidiaries.
Section 4.19. Insurance.
(a) Section 4.19(a) of the Interpore Disclosure Schedule sets
forth a complete and accurate list of all material fire and casualty, general
liability, business interruption, product liability, directors and officers and
other insurance policies maintained by Interpore or any of its Subsidiaries. All
such policies are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of Interpore and its
Subsidiaries and their respective properties and assets, and are in character
and amount at least equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards, except for any
such failures to maintain insurance policies that, individually or in the
aggregate, are not reasonably likely to have an Interpore Material Adverse
Effect.
(b) Section 4.19(b) of the Interpore Disclosure Schedule sets
forth a complete and accurate list of all products liability insurance policies
which Interpore or any of its Subsidiaries has maintained since January 1, 1994.
Copies of all such products liability insurance policies have been provided to
Cross prior to the date hereof.
Section 4.20. Opinion of Financial Advisor. The financial advisor of
Interpore, Genesis Merchant Group Securities LLC, has delivered to Interpore an
opinion dated the date of this Agreement to the effect that the consideration to
be received in the Merger by Interpore's shareholders is fair to Interpore's
shareholders from a financial point of view, a signed copy of which opinion has
been promptly delivered to Cross.
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Section 4.21. No Existing Discussions. As of the date hereof, Interpore
is not engaged, directly or indirectly, in any material discussions or
negotiations with any other party with respect to an Acquisition Proposal (as
defined in Section 5.3).
Section 4.22. Interpore Rights Plan. Under the terms of the Interpore
Rights Plan, neither the execution of this Agreement or the Cross Stock Option
Agreement, nor the transactions contemplated hereby or thereby will cause a
Distribution Date to occur or cause the rights issued pursuant to the Interpore
Rights Plan to become exercisable, and all such rights shall become
non-exercisable at the Effective Time.
Section 4.23. Section 203 of the DGCL Not Applicable. The restrictions
contained in Section 203 of the DGCL applicable to a "business combination" (as
defined in DGCL Section 203) will not apply to the authorization, execution,
delivery and performance of this Agreement, the Stockholder Agreement or the
Stock Option Agreements by Cross or by the parties thereto or the consummation
of the Merger by Interpore. No other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is applicable
to Interpore or (by reason of Interpore's participation therein) the Merger or
the other transactions contemplated by this Agreement.
Section 4.24. Warn Act. Since the enactment of the WARN Act, neither
Interpore nor any of its Subsidiaries have effectuated (i) a "plant closing" (as
defined in the WARN Act) affecting any site of employment or one or more
operating units within any site of employment of Interpore or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting
Interpore or any of its Subsidiaries; nor has Interpore been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. None of the
employees of any of Interpore or its Subsidiaries has suffered an "employment
loss" (as defined in the WARN Act) during the ninety-day period prior to the
Effective Date of this Agreement.
Section 4.25. Transactions with Related Parties. No Related Party:
(a) has borrowed money or loaned money to Interpore or any
Subsidiary;
(b) has made or threatened any contractual or other claim of any
kind whatsoever against Interpore or any Subsidiary;
(c) has any interest in any property or assets used by Interpore
or any Subsidiary in its business;
(d) has been engaged in any other transaction with Interpore or
any Subsidiary (other than employment relationships disclosed in Section 4.14);
(e) owns or holds any capital stock or other ownership interest
in Cross; or
(f) since December 1, 1997, has purchased or sold any of the
capital stock or other ownership interests of Cross or Interpore.
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Section 4.26. Suppliers and Customers. Section 4.26 of the Interpore
Disclosure Schedule contains a list of Interpore's top five suppliers and top
ten customers, determined in each case by aggregate purchases. No supplier or
customer accounted for more than ten percent of Interpore's and its
Subsidiaries' sales or purchases in either of the past two years and no other
supplier or customer material to the business of Interpore and its Subsidiaries,
taken as a whole, has materially decreased its supplies or orders, as the case
may be, or terminated its relationship with Interpore or any Subsidiary.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Cross and Interpore each agrees as to itself
and its respective Subsidiaries (except to the extent that the other party shall
otherwise consent in writing) to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to pay
its debts and taxes when due subject to good faith disputes over such debts or
taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, and others
having business dealings with it. Except as expressly contemplated by this
Agreement or the Stock Option Agreements or as set forth in Section 5.1 of the
Cross Disclosure Schedule or Section 5.1 of the Interpore Disclosure Schedule,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Cross and
Interpore each shall not (and shall not permit any of its respective
Subsidiaries to), without the written consent of the other party:
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock granted under any employee stock plan of such party
or authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements
(including severance agreements) in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into shares of its capital stock, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than (i) the grant
of options consistent with past practices to employees, consultants or
directors, which options represent in the aggregate the right to acquire no more
than 200,000 shares (net of
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cancellations) of Cross Common Stock or Interpore Common Stock, as the case may
be, (ii) the issuance of shares of Cross Common Stock or Interpore Common Stock,
as the case may be, pursuant to the exercise of options, warrants or other
convertible securities outstanding on the date of this Agreement, and (iii) the
issuance of capital stock under the Interpore Rights Plan if required by the
terms thereof; provided, however, that if either party takes any of the actions
listed in clauses (i), (ii) or (iii), such party shall promptly give written
notice of such action to the other party;
(d) Acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership
or other business organization or division, or otherwise acquire or agree to
acquire any assets (other than properties, inventory and other immaterial
assets, in each case in the ordinary course of business);
(e) Sell, lease, license or otherwise dispose of any of its
material properties or assets, except for transactions (including sales, leases,
licenses or dispositions of properties, inventory and other immaterial assets)
in the ordinary course of business;
(f) (i) Increase or agree to increase the compensation payable or
to become payable to its officers or employees, except for increases in salary
or wages of employees (other than officers) in accordance with past practices;
provided, however that if either party increases the salary or wages of its
employees, such party shall promptly give written notice of such action to the
other party, (ii) grant any additional severance or termination pay to, or enter
into any employment or severance agreements with, any employees or officers,
(iii) enter into any collective bargaining agreement (other than as required by
law or extensions to existing agreements in the ordinary course of business),
(iv) establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(g) Amend or propose to amend its Certificate of Incorporation,
Articles of Incorporation or Bylaws except as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than in the
ordinary course of business;
(i) Take any action that would or is reasonably likely to result
in a material breach of any provision of this Agreement or the Stock Option
Agreements or in any of its representations and warranties set forth in this
Agreement or the Stock Option Agreements being untrue on and as of the Closing
Date;
(j) Make or rescind any material express or deemed election
relating to Taxes, settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or make any material change to any of its methods of
reporting income or deductions for federal income tax purposes from those
employed
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in the preparation of its federal income tax return for the taxable year ending
December 31, 1996, except as may be required by applicable law;
(k) Settle any litigation relating to the transactions
contemplated hereby other than any settlement which would not (i) have a Cross
Material Adverse Effect (if settled by Cross) or an Interpore Material Adverse
Effect (if settled by Interpore) or (ii) adversely affect the consummation of
the transactions contemplated hereby;
(l) Settle or take any other material action with respect to any
pending litigation;
(m) Cancel or amend any insurance policy; or
(n) Take, or agree in writing or otherwise to take, any of the
actions described in subsections (a) through (m) above.
Section 5.2. Cooperation; Notice; Cure. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Cross and
Interpore shall confer on a regular and frequent basis with one or more
representatives of the other party to report on the general status of ongoing
operations and shall promptly provide the other party or its counsel with copies
of all filings made by such party with any Governmental Entity in connection
with this Agreement, the Merger and the transactions contemplated hereby and
thereby. Each of Cross and Interpore shall promptly notify the other in writing
of, and will use all commercially reasonable efforts to cure before the Closing
Date, any event, transaction or circumstance, as soon as practical after it
becomes known to such party, that causes or will cause any covenant or agreement
of Cross or Interpore under this Agreement to be breached or that renders or
will render untrue any representation or warranty of Cross or Interpore
contained in this Agreement. No notice given pursuant to this paragraph shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.
Section 5.3. No Solicitation.
(a) Cross and Interpore each shall not, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction involving such party
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions with any person (or group of persons) other than Cross or Interpore
or their respective affiliates (a "Third Party") concerning, or provide any
non-public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to or recommend any Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent Cross or
Interpore, or their respective Board of Directors, from (A) furnishing
non-public
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information to, or entering into discussions or negotiations with, any person or
entity in connection with an unsolicited bona fide written Acquisition Proposal
by such person or entity or modifying or withdrawing its recommendation with
respect to the transactions contemplated hereby or recommending an unsolicited
bona fide written Acquisition Proposal to the stockholders of such party, if and
only to the extent that (1) the Board of Directors of such party believes in
good faith (after consultation with its financial advisor) that such Acquisition
Proposal is reasonably capable of being completed on the terms proposed and,
after taking into account the strategic benefits anticipated to be derived from
the Merger and the prospects of Cross and Interpore as a combined company,
would, if consummated, result in a transaction more favorable to the
stockholders of such party over the long term than the transaction contemplated
by this Agreement (a "Superior Proposal") and the Board of Directors of such
party determines in good faith after consultation with outside legal counsel
that such action is required for such Board of Directors to comply with its
fiduciary duties to stockholders under applicable law and (2) prior to
furnishing such non-public information to, or entering into discussions or
negotiations with, such person or entity, such Board of Directors receives from
such person or entity an executed confidentiality and standstill agreement with
terms no less favorable to such party than those contained in the
Confidentiality Agreements, each dated October 10, 1997 between Interpore and
Cross (the "Confidentiality Agreements"); or (B) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal. Each
of Cross and Interpore agrees not to release any Third Party from, or waive any
provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another person who has made, or who may
reasonably be considered likely to make, an Acquisition Proposal, unless its
Board of Directors determines in good faith after consultation with outside
legal counsel that such action is required for such Board of Directors to comply
with its fiduciary duties to stockholders under applicable law.
(b) Cross and Interpore shall each notify the other party
immediately after receipt by Cross or Interpore (or any of their advisors) of
any Acquisition Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties, books or records
of such party by any person or entity that informs such party that it is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the identity
of the offeror and the terms and conditions of such proposal, inquiry or
contact. Such party shall continue to keep the other party hereto informed, on a
current basis, of the status of any such discussions or negotiations and the
terms being discussed or negotiated.
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practical after the execution of this
Agreement, Cross and Interpore shall prepare and file with the SEC the Joint
Proxy Statement/Prospectus and the Registration Statement in which the Joint
Proxy Statement/Prospectus will be included as a prospectus, provided that Cross
and Interpore may delay the filing of the Registration Statement until
preliminary approval of the Joint Proxy Statement/Prospectus by the SEC. Cross
and Interpore shall use all reasonable efforts to cause the Registration
Statement to become effective as soon after such filing as practical. The Joint
Proxy Statement/Prospectus shall include the recommendation of the Board of
Directors of Cross in favor of adoption of this Agreement and
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the Merger and the recommendation of the Board of Directors of Interpore in
favor of adoption of this Agreement and the Merger; provided that the Board of
Directors of either party may modify or withdraw such recommendation if such
Board of Directors believes in good faith after consultation with outside legal
counsel that the modification or withdrawal of such recommendation is required
for such Board of Directors to comply with its fiduciary duties under applicable
law.
(b) Cross and Interpore shall make all necessary filings with
respect to the Merger under the Securities Act, the Exchange Act, applicable
state blue sky laws and the rules and regulations thereunder.
(c) If at any time prior to the Effective Time any event relating
to Cross or any of its Affiliates, officers or directors should be discovered by
Cross which should be set forth in an amendment to the Registration Statement or
a supplement to the Joint Proxy Statement/Prospectus, Cross shall promptly
inform Interpore. If at any time prior to the Effective Time any event relating
to Interpore or any of its Affiliates, officers or directors should be
discovered by Interpore which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement/Prospectus,
Interpore shall promptly inform Cross.
Section 5.5. NASDAQ Quotation and Listing. Each of Cross and Interpore
agrees to continue the quotation and listing of Cross Common Stock and Interpore
Common Stock, respectively, on NASDAQ SmallCap Market and the NASDAQ National
Market, respectively, during the term of this Agreement.
Section 5.6. Access to Information. Upon reasonable notice, Cross and
Interpore shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its personnel, properties, books,
contracts, commitments and records and, during such period, each of Cross and
Interpore shall, and shall cause each of their respective Subsidiaries to,
furnish promptly to the other (a) copies of monthly financial reports and
development reports, (b) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws and (c) all other information concerning
its business, properties and personnel as such other party may reasonably
request. The parties will hold any such information which is nonpublic in
confidence in accordance with the Confidentiality Agreements. No information or
knowledge obtained in any investigation pursuant to this Section 5.6 shall
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger.
Section 5.7. Stockholders' Meetings. Cross and Interpore each shall
call a meeting of its respective stockholders to be held as promptly as
practicable for the purpose of voting upon this Agreement and the Merger.
Subject to Sections 5.3 and 5.4, Cross and Interpore shall, through their
respective Boards of Directors, recommend to their respective stockholders
adoption of this Agreement and approval of such matters and shall coordinate and
cooperate with respect to the timing of such meetings and shall use their best
efforts to hold such meetings on the same day and as soon as practicable after
the date hereof. Unless otherwise required to comply
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with the applicable fiduciary duties of the respective directors of Cross and
Interpore, as determined by such directors in good faith after consultation with
outside legal counsel, each party shall use all reasonable efforts to solicit
from stockholders of such party proxies in favor of such matters. Cross and
Interpore intend to submit additional proposals to their respective stockholders
at the Cross Stockholders' Meeting and the Interpore Stockholders' Meeting,
respectively, separate from the proposals referred to in the first sentence of
this Section 5.7, including Interpore's proposal to reincorporate by merger into
a Delaware corporation. The approval by Cross's stockholders or Interpore's
stockholders, as the case may be, of such additional proposals shall not be a
condition to the closing of the Merger under this Agreement.
Section 5.8. Legal Conditions to Merger.
(a) Cross and Interpore shall each use all reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper under applicable law to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by Cross or Interpore or any of their Subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby including, without
limitation, the Merger, and (iii) as promptly as practicable, make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Merger required under (A) the Securities Act and the
Exchange Act, and any other applicable federal or state securities laws, and (B)
any other applicable law. Cross and Interpore shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. Cross and Interpore shall use their reasonable efforts
to furnish to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Joint Proxy
Statement/Prospectus and the Registration Statement) in connection with the
transactions contemplated by this Agreement.
(b) Cross and Interpore agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective reasonable
efforts to obtain any government clearances required for Closing (including
through compliance with any applicable foreign government reporting
requirements), to respond to any government requests for information, and to
contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that restricts, prevents or prohibits the consummation
of the Merger or any other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to any federal, state or foreign antitrust or fair trade law.
Cross and Interpore shall cooperate and work together in any proceedings or
negotiations with any Governmental Entity relating to any of the foregoing.
Notwithstanding
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anything to the contrary in this Section 5.8, neither Cross nor Interpore, nor
any of their respective Subsidiaries, shall be required to take any action that
would reasonably be expected to substantially impair the overall benefits
expected, as of the date hereof, to be realized from the consummation of the
Merger.
(c) Each of Cross and Interpore shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, all reasonable efforts to obtain any
third party consents related to or required in connection with the Merger.
Section 5.9. Public Disclosure. Cross and Interpore shall use all
reasonable efforts to agree on the form and content of their respective press
releases, which press releases shall (i) announce the transactions contemplated
hereby and (ii) contain disclosure of Cross's and Interpore's respective
financial results for the quarter and year ended December 31, 1997. Thereafter,
Cross and Interpore shall consult with each other before issuing, and use all
reasonable efforts to agree upon, any press release or other public statement
with respect to any of the transactions contemplated hereby and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law.
Section 5.10. Nonrecognition Exchange. From and after the date hereof
and until the Effective Time, neither Cross nor Interpore, nor any of their
respective Subsidiaries or other Affiliates shall knowingly take any action, or
knowingly fail to take any action, that is reasonably likely to jeopardize the
treatment of the Merger as a reorganization described in Section 368(a) of the
Code. Each party shall provide reasonable cooperation to Porter, Wright, ▇▇▇▇▇▇
& ▇▇▇▇▇▇ to enable Porter, Wright, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ to issue their opinion as
set forth in Section 6.2(c).
Section 5.11. Pooling Accounting. From and after the date hereof and
until the Effective Time, neither Cross nor Interpore, nor any of their
respective Subsidiaries or other Affiliates shall knowingly take any action, or
knowingly fail to take any action, that is reasonably likely to jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes. Cross
and Interpore shall each provide reasonable cooperation to Coopers & ▇▇▇▇▇▇▇,
L.L.P. and Ernst & Young LLP to enable them to issue their respective letters as
set forth in Section 6.1(e).
Section 5.12. Affiliate Agreements.
(a) Upon the execution of this Agreement, Cross will provide
Interpore with a list of those persons who are, in Cross's reasonable judgment,
"affiliates" of Cross, within the meaning of Rule 145 or for purposes (each such
person who is an "affiliate" of Cross within the meaning of Rule 145 is referred
to as an "Affiliate") promulgated under the Securities Act ("Rule 145"). Cross
shall provide Interpore such information and documents as Interpore shall
reasonably request for purposes of reviewing such list and shall notify
Interpore in writing regarding any change in the identity of its Affiliates
prior to the Closing Date. Cross shall use all reasonable efforts to deliver or
cause to be delivered to Interpore within 30 days following the date hereof (and
in any case at least 30 days prior to the Effective Time) from each of its
Affiliates, an executed Affiliate Agreement, in substantially the form of
Exhibit E attached hereto (each, a "Cross Affiliate Agreement," and together,
the "Cross Affiliate Agreements").
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(b) Upon the execution of this Agreement, Interpore will provide
Cross with a list of those persons who are, in Interpore's reasonable judgment,
Affiliates of Interpore. Interpore shall provide Cross such information and
documents as Cross shall reasonably request for purposes of reviewing such list
and shall notify Cross in writing regarding any change in the identity of its
Affiliates prior to the Closing Date. Interpore shall use all reasonable efforts
to deliver or cause to be delivered to Interpore within 30 days following the
date hereof (and in any case at least 30 days prior to the Effective Time) from
each of its Affiliates, an executed Affiliate Agreement, in substantially the
form of Exhibit F attached hereto (each, a "Interpore Affiliate Agreement," and
together, the "Interpore Affiliate Agreements").
Section 5.13. NASDAQ Listing. Interpore shall use all reasonable efforts
to cause the shares of Interpore Common Stock to be issued in the Merger and
upon exercise of Cross Stock Options to be authorized for inclusion in the
NASDAQ National Market, prior to the Effective Time, subject to official notice
of issuance.
Section 5.14. Cross Stockholder Agreement Legend. Cross will inscribe
upon any Certificate representing Subject Shares tendered by a Stockholder (as
defined in the Cross Stockholder Agreement) for such purpose the following
legend: "THE SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF CROSS
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER AGREEMENT DATED AS
OF FEBRUARY 11, 1998, AND ARE SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF CROSS."
Section 5.15. Interpore Stockholder Agreement Legend. Interpore will
inscribe upon any Certificate representing Subject Shares tendered by a
Stockholder (as defined in the Interpore Stockholder Agreement) for such purpose
the following legend: "THE SHARES OF COMMON STOCK, NO PAR VALUE PER SHARE, OF
INTERPORE REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER AGREEMENT
DATED AS OF FEBRUARY 11, 1998, AND ARE SUBJECT TO THE TERMS THEREOF. COPIES OF
SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF INTERPORE."
Section 5.16. Stock Plans.
(a) At the Effective Time, each outstanding option to purchase
shares of Cross Common Stock (an "Cross Stock Option") under the Cross Stock
Plans, whether vested or unvested, shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such Cross
Stock Option, the same number of shares of Interpore Common Stock as the holder
of such Cross Stock Option would have been entitled to receive pursuant to the
Merger, had such holder exercised such option in full immediately prior to the
Effective Time (rounded downward to the nearest whole number), at a price per
share (rounded downward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of Cross Common Stock purchasable pursuant to such
Cross Stock Option immediately prior to the Effective Time divided by (z) the
number of full shares of Interpore Common Stock deemed purchasable pursuant to
such Cross Stock Option in accordance with the foregoing.
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(b) As soon as practicable after the Effective Time, Interpore
shall deliver to the participants in the Cross Stock Plans appropriate notice
setting forth such participants' rights pursuant thereto and the grants pursuant
to Cross Stock Plans shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.15 after giving effect to
the Merger).
(c) Interpore shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Interpore Common Stock for
delivery under Cross Stock Plans assumed in accordance with this Section 5.16.
As soon as practicable after the Effective Time, Interpore shall amend its
registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of Interpore Common Stock deemed purchasable
pursuant to the Cross Stock Options and shall use its reasonable efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus contained therein) for so long as such options
remain outstanding.
(d) The Board of Directors of Cross shall, prior to or as of the
Effective Time, take all necessary actions, pursuant to and in accordance with
the terms of the Cross Stock Plans and the instruments evidencing the Cross
Stock Options, to provide for the conversion of the Cross Stock Options into
options to acquire Interpore Common Stock in accordance with this Section 5.16
without obtaining consent of the holders of the Cross Stock Options in
connection with such conversion; provided, however, that Cross shall use all
reasonable efforts to obtain from each holder of Cross Stock Options a waiver of
any right of such holder to receive any cash payment which may become due with
respect to any Cross Stock Options that are exercisable immediately prior to the
Effective Time as a result of the consummation of the transactions contemplated
hereby.
(e) The Board of Directors of Cross shall, prior to or as of the
Effective Time, take appropriate action to approve the deemed cancellation of
the Cross Stock Options for purposes of Section 16(b) of the Exchange Act. The
Board of Directors of Interpore shall, prior to or as of the Effective Time,
take appropriate action to approve the deemed grant of options to purchase
Interpore Common Stock under the Cross Stock Options (as converted pursuant to
this Section 5.16) for purposes of Section 16(b) of the Exchange Act.
Section 5.17. Brokers or Finders. Each of Cross and Interpore
represents, as to itself, its Subsidiaries and its Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
except ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., whose fees and expenses will be paid by Cross in
accordance with Cross's agreement with such firm (a copy of which has been
delivered by Cross to Interpore prior to the date of this Agreement), and
Genesis Merchant Group Securities LLC, whose fees and expenses will be paid by
Interpore in accordance with Interpore's agreement with such firm (a copy of
which has been delivered by Interpore prior to the date of this Agreement). Each
of Interpore and Cross agrees to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any such
fees, commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
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Section 5.18. Indemnification.
(a) From and after the Effective Time, each of Cross and
Interpore agrees that it will indemnify and hold harmless each present and
former director and officer of Cross and Interpore and their respective
Subsidiaries, determined as of the Effective Time (the "Indemnified Parties"),
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that Cross or Interpore, as the case may be, would have been permitted
under Delaware or California law, as applicable, and its certificate or articles
of incorporation or bylaws in effect on the date hereof to indemnify such
Indemnified Party (and such party shall also advance expenses as incurred to the
fullest extent permitted under applicable law, provided the Indemnified Party to
whom expenses are advanced provides an undertaking to repay such advances if it
is ultimately determined that such Indemnified Party is not entitled to
indemnification).
(b) For a period of six years after the Effective Time, Interpore
shall maintain (to the extent available in the market) in effect a directors'
and officers' liability insurance policy covering those persons who are
currently covered by Cross's or Interpore's directors' and officers' liability
insurance policy (copies of which have been heretofore delivered by Cross and
Interpore to each other) with coverage in amount and scope at least as favorable
as Cross's or Interpore's existing coverage; provided that in no event shall
Interpore be required to expend in the aggregate in excess of 200% of the annual
premium currently paid by Cross and Interpore for such coverage; and if such
premium would at any time exceed 200% of the such amount, then Interpore shall
maintain insurance policies which provide the maximum and best coverage
available at an annual premium equal to 200% of such amount.
(c) The provisions of this Section 5.18 are intended to be an
addition to the rights otherwise available to the current officers and directors
of Cross and Interpore by law, charter, statute, bylaw or agreement, and shall
operate for the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
Section 5.19. Stock Option Agreements. Interpore and Cross each agree to
fully perform their respective obligations under the Stock Option Agreements.
Section 5.20. No Warn Act Activities. From the date hereof through the
Closing Date, Cross shall not effectuate (i) a "plant closing" (as defined in
the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of Cross's or the
Subsidiaries' business, of (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of Cross's or the Subsidiaries'
business without giving all notices required by the WARN Act, or any similar
state law or regulation and Cross shall assume all liability for any alleged
failure to give such notice and indemnify and hold harmless Interpore and its
Affiliates for any and all claims asserted under the WARN Act or any similar
state law or regulation because of a "plant closing" or a "mass layoff"
occurring on or before the
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Closing Date. For purposes of this Agreement, the Closing Date is the "effective
date" for purposes of the WARN Act.
Section 5.21. Post-Merger Corporate Governance; Employment Arrangements.
(a) Immediately following the Effective Time, the total number of
persons serving on the Board of Directors of Interpore shall be six (unless
otherwise agreed in writing by Interpore and Cross prior to the Effective Time),
three of whom shall be Interpore Directors and three of whom shall be Cross
Directors (as such terms are defined below). In the event that, prior to the
Effective Time, any person so selected to serve as an Interpore Director after
the Effective Time is unable or unwilling to serve in such position, the Board
of Directors of Interpore shall designate, at its sole discretion, another of
its members to serve in such person's stead. In the event that, prior to the
Effective Time, any person so selected to serve as a Cross Director after the
Effective Time is unable or unwilling to serve in such position, the Board of
Directors of Cross shall designate, at its sole discretion, another of its
members to serve in such person's stead. The persons to serve initially on the
Board of Directors of Interpore immediately after the Effective Time who are
"Interpore Directors" shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and G.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and the persons to serve initially on the Board of Directors of
Interpore at the Effective Time who are "Cross Directors" shall be ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. The Board of Directors of
Interpore immediately following the Effective Time shall be divided into three
classes, and the Interpore Directors and Cross Directors shall be evenly spread
between Interpore's three classes of directors as follows: Messrs. ▇▇▇▇▇▇ and
Mussey shall serve until the third annual meeting of Interpore's stockholders
following the Effective Time; (ii) Messrs. Eisenecher and Funk shall serve until
the second annual meeting of Interpore's stockholders following the Effective
Time; and (iii) Messrs. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall serve until the first annual
meeting of Interpore's stockholders following the Effective Time.
(b) Immediately following the Effective Time: (i) ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, the current President and Chief Executive Officer of Interpore, shall
hold the position of Chief Executive Officer and Chairman of the Board of
Interpore, (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the current President and Chief Executive
Officer of Cross, shall hold the position of President and Chief Operating
Officer of Interpore, (iii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the current Vice President and
Chief Financial Officer of Interpore, shall hold the position of Senior Vice
President and Chief Financial Officer of Interpore and (iv) ▇▇▇▇ ▇. ▇▇▇▇▇▇, the
current Vice President and Chief Financial Officer of Cross, shall hold the
position of Vice President, Administration and Business Development of
Interpore. If any of the persons identified above in this Section 5.21(b) is
unable or unwilling to hold such offices as set forth above, his successor shall
be selected by the Board of Directors of Interpore in accordance with the Bylaws
of Interpore. None of Messrs. Mercer, Mussey, ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ shall have any
right, remedy or cause of action under this Section 5.21, nor shall they be
third party beneficiaries of this Section 5.21.
(c) Each of Interpore and Cross shall cause Interpore to
incorporate the provisions contained in this Section 5.21(a), as appropriate,
into the Bylaws of Interpore in effect at the Effective Time, which provisions
shall thereafter be amended only with the approval of 75% of the members of the
Board of Directors of Interpore.
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Section 5.22. Conveyance Taxes. Cross and Interpore shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees or any similar taxes which become payable
in connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
Section 5.23. Transfer Taxes. Cross shall pay, and Interpore shall pay,
on behalf of the stockholders of Cross and Interpore, respectively, any transfer
taxes imposed on the stockholders of Cross and Interpore, respectively, by any
State of the United States (and any interest with respect to such taxes) (the
"Transfer Taxes"), which become payable in connection with the transactions
contemplated by this Agreement. Cross and Interpore shall cooperate in the
preparation, execution and filing of any required returns with respect to such
Transfer Taxes (including returns on behalf of the stockholders of Cross and
Interpore). The Joint Proxy Statement/Prospectus shall provide that the
stockholders of Cross and Interpore shall be deemed to have (i) authorized Cross
and Interpore, respectively, to prepare, execute and file any tax returns
relating to Transfer Taxes and pay any Transfer Taxes arising in connection with
the Merger, in each case, on behalf of such holders and (ii) agreed to be bound
by the values and allocations established by Cross and Interpore in the
preparation of any return with respect to the Transfer Taxes, if applicable.
Section 5.24. Stockholder Litigation. Each of Cross and Interpore shall
give the other the reasonable opportunity to participate in the defense of any
stockholder litigation against Cross or Interpore, as applicable, and its
directors relating to the transactions contemplated hereby.
Section 5.25. Employee Benefits; Severance.
(a) After the Effective Time, Interpore's management shall submit
to Interpore's Board of Directors for its approval an annual bonus plan for
management employees for the 1998 fiscal year, which plan shall replace the
current Cross and Interpore annual bonus plans, and shall calculate the amounts
payable to participants thereunder in accordance with the terms of such plan.
(b) For purposes of determining eligibility to participate,
vesting, entitlement to benefits and in all other respects where length of
service is relevant (except for pension benefit accruals) under any employee
benefit plan or arrangement covering employees of Cross and its Subsidiaries
("Cross Employees") or employees of Interpore and its Subsidiaries ("Interpore
Employees") following the Effective Time, Interpore shall cause such plans or
arrangements to recognize service credit for service with Cross or Interpore (as
applicable) and any of their respective Subsidiaries to the same extent such
service was recognized under the applicable employee benefit plans immediately
prior to the Effective Time.
(c) Immediately prior to the Effective Time, Cross shall
terminate the ▇▇▇▇▇▇▇▇▇ Medical Technology, Inc. Retirement Express Savings Plan
(the "Cross 401(k) Plan"), and as soon as practicable following the Effective
Time, Cross shall prepare and file with the IRS
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an application for a determination letter with respect to the qualified status
of the Cross 401(k) Plan.
(d) Interpore agrees to use all reasonable efforts, including
obtaining any necessary employee consents, to prevent the automatic funding of
any escrow, trust or similar arrangement pursuant to any employment agreement,
arrangement or benefit plan that arises in connection with the execution of this
Agreement or the consummation of any of the transactions contemplated hereby.
Section 5.26. Supplemental Indenture. Within a reasonable time after the
Effective Time, Interpore agrees to enter into a Supplemental Indenture (the
"Supplemental Indenture") with the Trustee under that certain Indenture between
Cross and Fifth Third Bank, dated as of May 15, 1996 (the "Existing Indenture"),
in connection with the issuance by Cross of its 8.5% Convertible Subordinated
Debentures Due 2003 (the "Debentures"). The Supplemental Indenture shall provide
that after the Effective Time, the holder of each Debenture shall have the right
to convert such Debenture into the same number of shares of Interpore Common
Stock that such holder would have been entitled to receive in the Merger if such
Debenture had been converted into Cross Common Stock immediately prior to the
Effective Time, subject to adjustment pursuant to Section 5.04 of the Existing
Indenture.
Section 5.27. No Tax Offset Payments. Cross shall not make any "Tax
Offset Payment" (as such term is defined in Section 10 of the ▇▇▇▇▇▇▇▇▇ Medical
Technology, Inc. 1994 Stock Option Plan).
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or waiver by each party prior to the
Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved in the manner required under the DGCL and the CCC by the
respective holders of the issued and outstanding shares of capital stock of
Cross and Interpore.
(b) Approvals. Other than the filings provided for by Section
1.2, all authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Entities, the failure of which to file, obtain or occur is reasonably likely to
have a Cross Material Adverse Effect or an Interpore Material Adverse Effect,
shall have been filed, been obtained or occurred. Without limiting the foregoing
sentence, the SEC shall have not indicated its opposition to the pooling of
interests accounting treatment of the Merger.
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(c) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(d) No Injunctions. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any order, executive order, stay,
decree, judgment or injunction or statute, rule, regulation which is in effect
and which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(e) Pooling Letters. Cross and Interpore shall have received
letters, dated as of the Closing Date, from Coopers & ▇▇▇▇▇▇▇, L.L.P. and Ernst
& Young LLP, respectively, addressed to Cross and Interpore (i) regarding their
concurrence with the respective conclusions of management of Cross and
Interpore, as to the appropriateness of the pooling of interests accounting,
under Accounting Principles Board Opinion No. 16 for the transactions
contemplated hereby and (ii) stating that the basis for such concurrence is
their belief that the criteria for such accounting treatment have been met, it
being agreed that Cross and Interpore shall each provide reasonable cooperation
to Coopers & ▇▇▇▇▇▇▇, L.L.P. and Ernst & Young LLP to enable them to issue such
letters.
(f) NASDAQ Listing. The shares of Interpore Common Stock to be
issued in the Merger and upon exercise of Cross Stock Options shall have been
authorized for inclusion in the NASDAQ National Market, subject to official
notice of issuance.
Section 6.2. Additional Conditions to Obligations of Cross. The
obligation of Cross to effect the Merger is subject to the satisfaction of each
of the following conditions prior to the Effective Time, any of which may be
waived in writing exclusively by Cross:
(a) Representations and Warranties. The representations and
warranties of Interpore set forth in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such representations
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except for, (i) changes contemplated by this Agreement and
(ii) inaccuracies or changes which, individually or in the aggregate, have not
had and are not reasonably likely to have an Interpore Material Adverse Effect
or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Cross shall have received a certificate signed on
behalf of Interpore by the chief executive officer and the chief financial
officer of Interpore to such effect.
(b) Performance of Obligations of Interpore. Interpore shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Cross shall have
received a certificate signed on behalf of Interpore by the chief executive
officer and the chief financial officer of Interpore to such effect.
(c) Tax Opinion. Cross shall have received the opinion of Porter,
Wright, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Cross, based upon reasonably requested
representation letters and dated the Closing Date, to the effect that the Merger
will be treated as a reorganization described in Section 368(a) of the Code.
This condition shall be deemed to have been waived by Cross if
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Cross fails to take all reasonable steps, including making all necessary
representations, to enable Porter, Wright, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ to issue their
opinion. In rendering such tax opinion, Porter, Wright, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall be
entitled to make certain reasonable qualifications and assumptions and to rely
upon the representations contained in Sections 3.16 and 4.16 of this Agreement
and such other representations as it reasonably deems necessary, including,
without limitation, representations of Cross's officers and stockholders holding
in excess of five percent (5%) of the outstanding Cross Common Stock, and
representations of officers of Interpore, in each case reasonably satisfactory
in form and substance to Porter, Wright, ▇▇▇▇▇▇ & ▇▇▇▇▇▇.
(d) No Trigger of Interpore Rights Plan. No event shall have
occurred that has or would result in the triggering of any right or entitlement
of stockholders of Interpore under the Interpore Rights Plan, or will occur as a
result of the consummation of the Merger.
Section 6.3. Additional Conditions to Obligations of Interpore. The
obligations of Interpore to effect the Merger are subject to the satisfaction of
each of the following conditions prior to the Effective Time, any of which may
be waived in writing exclusively by Interpore:
(a) Representations and Warranties. The representations and
warranties of Cross set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except for, (i) changes contemplated by this
Agreement and (ii) inaccuracies or changes which, individually or in the
aggregate, have not had and are not reasonably likely to have a Cross Material
Adverse Effect, or a material adverse effect upon the consummation of the
transactions contemplated hereby; and Interpore shall have received a
certificate signed on behalf of Cross by the chief executive officer and the
chief financial officer of Cross to such effect.
(b) Performance of Obligations of Cross. Cross shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date; and Interpore shall
have received a certificate signed on behalf of Cross by the chief executive
officer and the chief financial officer of Cross to such effect.
(c) Resignation of ▇▇▇▇▇▇ ▇. ▇▇▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇ shall have
resigned his employment with Cross and its Subsidiaries, and Cross shall have
terminated (i) ▇▇. ▇▇▇▇'▇ current employment agreements with Cross and its
Subsidiaries, (ii) that certain Split Dollar Insurance Plan between Cross and
▇▇▇▇▇▇ ▇. ▇▇▇▇ Irrevocable Trust Life Insurance Trust #1 as the Owner dated
11/10/88 and (iii) that certain Split Dollar Insurance Plan between Cross and
▇▇▇▇▇▇ ▇. ▇▇▇▇ Irrevocable Trust Life Insurance Trust #2 as the Owner dated
11/10/88.
(d) Insurance. Cross shall have obtained products liability
insurance policies covering any Cross spinal fixation products used in surgeries
on or after January 1, 1995 and on or before December 31, 1996, for claims
brought on or before December 31, 2003, without regard to the date of injury,
with coverage in an amount equal to $5 million per occurrence and $5 million in
the aggregate per calendar year, for a total purchase price not to exceed
$400,000; provided such policies shall not contain exclusions other than those
reasonably acceptable to Interpore. Such insurance coverage shall be in addition
to Cross's existing coverage.
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(e) Appraisal Rights. Stockholders of Cross making written demand
pursuant to Section 262(d)(1) of the DGCL to exercise appraisal rights with
respect to the Merger shall hold fewer than five percent (5%) of the outstanding
shares of Cross Common Stock.
(f) Dissenters' Rights. Stockholders of Interpore making written
demand pursuant to Chapter 13 of the CCC to exercise dissenters' rights with
respect to the Merger shall hold fewer than five percent (5%) of the outstanding
shares of Interpore Common Stock.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(h), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Cross or Interpore:
(a) by mutual written consent of Cross and Interpore; or
(b) by either Cross or Interpore if the Merger shall not have
been consummated by June 30, 1998 (provided that (i) either Cross or Interpore
may extend such date to August 31, 1998 by providing written notice thereof to
the other party on or prior to June 30, 1998 (August 31, 1998, as it may be so
extended, shall be referred to herein as the "Outside Date") and (ii) the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Cross or Interpore if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger; or
(d) (i) by Cross or Interpore, if, at the Interpore Stockholders'
Meeting (including any adjournment or postponement), the requisite vote of the
stockholders of Interpore in favor of the approval and adoption of this
Agreement and the Merger shall not have been obtained; or (ii) by Interpore or
Cross if, at the Cross Stockholders' Meeting (including any adjournment or
postponement), the requisite vote of the stockholders of Cross in favor of the
approval and adoption of this Agreement and the Merger shall not have been
obtained; or
(e) by Cross, if (i) the Board of Directors of Interpore shall
have withdrawn or modified its recommendation of this Agreement or the Merger
(provided that Cross's right to terminate this Agreement under such clause
(e)(i) shall not be available if at such time Interpore would be entitled to
terminate this Agreement under Section 7.1(h) without giving effect to the cure
period); (ii) after the receipt by Interpore of an Acquisition Proposal, Cross
requests in writing that the Board of Directors of Interpore reconfirm its
recommendation of this Agreement and the Merger to the stockholders of Interpore
and the Board of Directors of Interpore fails to
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do so within 10 business days after its receipt of Cross's request; (iii) the
Board of Directors of Interpore shall have recommended to the stockholders of
Interpore an Alternative Transaction (as defined in Section 7.3(e)); (iv) a
tender offer or exchange offer for 20% or more of the outstanding shares of
Interpore Common Stock is commenced (other than by Cross or an Affiliate of
Cross) and the Board of Directors of Interpore recommends that the stockholders
of Interpore tender their shares in such tender or exchange offer; or (v) for
any reason Interpore fails to call and hold the Interpore Stockholders' Meeting
by the Outside Date (provided that Cross's right to terminate this Agreement
under such clause (e)(v) shall not be available if at such time Interpore would
be entitled to terminate this Agreement under Section 7.1(h) without giving
effect to the cure period); or
(f) by Interpore, if (i) the Board of Directors of Cross shall
have withdrawn or modified its recommendation of this Agreement or the Merger
(provided that Interpore's right to terminate this Agreement under such clause
(f)(i) shall not be available if at such time Cross would be entitled to
terminate this Agreement under Section 7.1(h) without giving effect to the cure
period); (ii) after the receipt by Cross of an Acquisition Proposal, Interpore
requests in writing that the Board of Directors of Cross reconfirm its
recommendation of this Agreement and the Merger to the stockholders of Interpore
and the Board of Directors of Cross fails to do so within 10 business days after
its receipt of Interpore's request; (iii) the Board of Directors of Cross shall
have recommended to the stockholders of Cross an Alternative Transaction (as
defined in Section 7.3(e)); (iv) a tender offer or exchange offer for 20% or
more of the outstanding shares of Cross Common Stock is commenced (other than by
Interpore or an Affiliate of Interpore) and the Board of Directors of Cross
recommends that the stockholders of Cross tender their shares in such tender or
exchange offer; or (v) for any reason Cross fails to call and hold the Cross
Stockholders' Meeting by the Outside Date (provided that Interpore's right to
terminate this Agreement under such clause (f)(v) shall not be available if at
such time Cross would be entitled to terminate this Agreement under Section
7.1(h) without giving effect to the cure period); or
(g) by Cross or Interpore, prior to the approval of this
Agreement by the stockholders of such party, if, as a result of a Superior
Proposal received by such party from a Third Party, the Board of Directors of
such party determines in good faith after consultation with outside legal
counsel that accepting such Superior Proposal is required for such Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law; provided, however, that no termination shall be effective pursuant to this
Section 7.1(g) under circumstances in which a termination fee is payable by the
terminating party pursuant to Section 7.3(b)(iii) or (c)(iii), unless
concurrently with such termination, such termination fee is paid in full by the
terminating party in accordance with Section 7.3(b)(iii) or (c)(iii), as
applicable; or
(h) by Cross or Interpore, if (A) there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) will cause the conditions set
forth in Section 6.2(a) or (b) (in the case of termination by Cross) or 6.3(a)
or (b) (in the case of termination by Interpore) not to be satisfied, and (ii)
shall not have been cured within 20 business days following receipt by the
breaching party of written notice of such breach from the other party; or (B)
any event shall have occurred which makes it
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impossible for the conditions set forth in Article VI hereof (other than Section
6.1(a), 6.1(e), 6.2(d) and 6.3(c)) to be satisfied, provided that any
termination pursuant to this clause (B) shall not be effective until 20 business
days after notice thereof is delivered by the party seeking to terminate to the
other party, and shall be automatically rescinded if (1) such condition is
solely for the benefit of the party receiving such notice and (2) such party,
prior to such 20th business day, irrevocably waives satisfaction of such
condition based on such event.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Cross,
Interpore, or their respective officers, directors, stockholders or Affiliates,
except as set forth in Sections 5.17 and 7.3 and except that such termination
shall not limit liability for a willful breach of this Agreement; provided that,
the provisions of Sections 5.17 and 7.3 of this Agreement, the Stock Option
Agreements and the Confidentiality Agreements shall remain in full force and
effect and survive any termination of this Agreement.
Section 7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated.
(b) Cross shall pay Interpore a termination fee of $2.0 million
upon the earliest to occur of the following events:
(i) the termination of this Agreement by either Interpore
or Cross pursuant to Section 7.1(d)(ii), but only if a proposal for an
Alternative Transaction (as defined below) involving Cross shall have been
publicly announced prior to the Cross Stockholders' Meeting and either a
definitive agreement for an Alternative Transaction is entered into, or an
Alternative Transaction is consummated, within eighteen months of such
termination;
(ii) the termination of this Agreement by Interpore
pursuant to Section 7.1(f); or
(iii) the termination of this Agreement by Cross pursuant
to Section 7.1(g).
Cross's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Interpore against Cross and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment. Notwithstanding the foregoing, if and to the extent that Interpore
has purchased shares of Cross Common Stock pursuant to the Interpore Stock
Option Agreement prior to the payment of the $2.0 million fee provided for
herein (the "Fee Payment Date"), the amount payable to Interpore under this
Section 7.3(b), together with (i)(x) the net cash amount received by Interpore
prior to the Fee Payment Date pursuant to Cross's repurchase of Shares (as
defined in the Interpore Stock Option Agreement) pursuant to Section 7 of the
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Interpore Stock Option Agreement, less (y) Interpore's purchase price for such
Shares, and (ii)(x) the amounts received by Interpore prior to the Fee Payment
Date pursuant to the sale of Shares (or any other securities into which such
Shares are converted or exchanged), less (y) Interpore's purchase price for such
Shares, shall not exceed $2.0 million.
(c) Interpore shall pay Cross a termination fee of $2.0 million
upon the earliest to occur of the following events:
(i) the termination of this Agreement by either Cross or
Interpore pursuant to Section 7.1(d)(i), but only if a proposal for an
Alternative Transaction (as defined below) involving Interpore shall have been
publicly announced prior to the Interpore Stockholders' Meeting and either an
Alternative Transaction is entered into, or an Alternative Transaction is
consummated, within eighteen months of such termination;
(ii) the termination of this Agreement by Cross pursuant
to Section 7.1(e); or
(iii) the termination of this Agreement by Interpore
pursuant to Section 7.1(g).
Interpore's payment of a termination fee pursuant to this
subsection shall be the sole and exclusive remedy of Cross against Interpore and
any of its Subsidiaries and their respective directors, officers, employees,
agents, advisors or other representatives with respect to the occurrences giving
rise to such payment. Notwithstanding the foregoing, if and to the extent that
Cross has purchased shares of Interpore Common Stock pursuant to the Cross Stock
Option Agreement prior to the Fee Payment Date, the amount payable to Cross
under this Section 7.3(c), together with (i)(x) the net cash amount received by
Cross prior to the Fee Payment Date pursuant to Interpore's repurchase of Shares
(as defined in the Cross Stock Option Agreement) pursuant to Section 7 of the
Cross Stock Option Agreement, less (y) Cross's purchase price for such Shares,
and (ii)(x) the amounts received by Cross prior to the Fee Payment Date pursuant
to the sale of Shares (or any other securities into which such Shares are
converted or exchanged), less (y) Cross's purchase price for such Shares, shall
not exceed $2.0 million.
(d) The fees payable pursuant to Section 7.3(b) or 7.3(c) shall
be paid concurrently with the first to occur of the events described in Section
7.3(b)(i), (ii) or (iii) or 7.3(c)(i), (ii) or (iii), respectively.
(e) As used in this Agreement, "Alternative Transaction" means
either (i) a transaction pursuant to which any Third Party acquires more than
20% of the outstanding shares of Cross Common Stock or Interpore Common Stock,
as the case may be, pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving Cross or Interpore
pursuant to which any Third Party (or the stockholders of a Third Party)
acquires more than 20% of the outstanding shares of Cross Common Stock or
Interpore Common Stock, as the case may be, or the entity surviving such merger
or business combination, (iii) any other transaction pursuant to which any Third
Party acquires control of assets (including for this purpose the outstanding
equity securities of Subsidiaries of Cross or Interpore, and the entity
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surviving any merger or business combination including any of them) of Cross or
Interpore having a fair market value (as determined by the Board of Directors of
Cross or Interpore, as the case may be, in good faith) equal to more than 20% of
the fair market value of all the assets of Cross or Interpore, as the case may
be, and their respective Subsidiaries, taken as a whole, immediately prior to
such transaction, or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
Section 7.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Cross or Interpore, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained here. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 1.4, 2.1, 2.2, 5.17, 5.18,
5.20 and 5.24 and Article VIII, the agreements of the Affiliates delivered
pursuant to Section 5.12 and the Confidentiality Agreements.
Section 8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Cross, to
Cross Medical Products, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to
Porter, Wright, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Interpore, to
Interpore International
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.3. Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
February 11, 1998.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third Party Beneficiaries. This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.17 are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder;
provided that the Confidentiality Agreements shall remain in full force and
effect until the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this
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Agreement, neither Cross nor Interpore makes any other representations or
warranties, and each hereby disclaims any other representations and warranties
made by itself or any of its officers, directors, employees, agents, financial
and legal advisors or other representatives, with respect to the execution and
delivery of this Agreement or the transactions contemplated hereby,
notwithstanding the delivery or disclosure to the other or the other's
representatives of any documentation or other information with respect to any
one or more of the foregoing.
Section 8.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
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IN WITNESS WHEREOF, Cross and Interpore have caused this Agreement to be
signed by their respective duly authorized officers as of the date first written
above.
INTERPORE INTERNATIONAL, A CALIFORNIA
CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
BUCKEYE INTERNATIONAL, INC., A DELAWARE
CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
CROSS MEDICAL PRODUCTS, INC., A DELAWARE
CORPORATION
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
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