EXHIBIT 2.5
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"), dated as of
January 13, 2003, is by and among CONMED Corporation, a New York corporation
(the "Purchaser"), Arrow Merger Corporation, a Delaware corporation and wholly
owned subsidiary of the Purchaser ("Merger Sub"), and Bionx Implants, Inc., a
Pennsylvania corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Purchaser and the Board of
Directors of the Company have each determined that it is advisable to merge the
Merger Sub with and into the Company (the "Merger") pursuant to this Merger
Agreement, with the result that the holders of the outstanding shares (the
"Shares") of Common Stock of the Company, par value $.0019 per share (the
"Company Common Stock"), shall receive a payment in cash for each Share as
provided in this Merger Agreement and the Company shall become a wholly owned
subsidiary of the Purchaser;
WHEREAS, the respective Boards of Directors of the Purchaser and the
Company have determined that the Merger is in furtherance of and consistent with
their respective business strategies and is in the best interest of their
respective shareholders, and the Purchaser has approved this Merger Agreement
and the Merger as the sole shareholder of Merger Sub; and
WHEREAS, as a condition to and inducement to the Purchaser's and Merger
Sub's willingness to enter into this Merger Agreement, simultaneously with the
execution of this Merger Agreement, certain shareholders of the Company are
entering into voting agreements with the Purchaser and Merger Sub (the "Voting
Agreements").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Purchaser, Merger Sub and the Company hereby agree as
follows:
1. THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
herein, at the Effective Time (as defined in Section 1.4 hereof), in accordance
with this Merger Agreement and the Pennsylvania Business Corporation Law of
1988, as amended (the "Pennsylvania Law"), Merger Sub shall be merged with and
into the Company, the separate existence of Merger Sub (except as may be
continued by operation of law) shall cease, and the Company shall continue as
the surviving corporation. The Company hereinafter sometimes is referred to as
the "Surviving Corporation".
1.2 Effect of the Merger. The Merger shall have the effects set forth in
Section 1929 of the Pennsylvania Law.
1.3 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx at 9:00 A.M. on
the first business day after the date on which the last to be fulfilled or
waived of the conditions set forth in Article 7 (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be satisfied or waived in
accordance with this Merger Agreement or (ii) at such other place and time
and/or on such other date as the Company and Purchase may agree in writing (the
"Closing Date").
1.4 Consummation of the Merger. As soon as is practicable after the
Closing, the parties hereto will cause the Merger to be consummated by filing
Articles of Merger with the Department of State of the Commonwealth of
Pennsylvania, in such form as required by, and executed in accordance with, the
relevant provisions of applicable law. The time of the filing of the Articles of
Merger with the Department of State of the Commonwealth of Pennsylvania is
referred to herein as the "Effective Time".
1.5 Articles of Incorporation; By Laws. The Articles of Incorporation and
By-Laws of the Company, as in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation and By-Laws of the Surviving Corporation,
and thereafter shall continue to be its Articles of Incorporation and By-Laws
until amended as provided therein and under Pennsylvania Law.
1.6 Directors and Officers of Surviving Corporation.
(a) The directors of Merger Sub shall be the initial directors of
the Surviving Corporation and shall hold office from the Effective Time until
their respective successors are duly elected or appointed and qualify in the
manner provided in the Articles of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
(b) The officers of Merger Sub at the Effective Time shall be the
initial officers of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualify in the manner provided in the Articles of Incorporation and By-Laws
of the Surviving Corporation, or as otherwise provided by law.
1.7 Dissenters Rights. In accordance with Section 1571 of the Pennsylvania
Law, no appraisal rights shall be available to holders of Shares in connection
with the Merger.
2. CONVERSION AND PAYMENT
2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holder of any of the securities of the Company or Merger Sub:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 2.1(b)
hereof) shall be canceled and extinguished and be converted into and represent
the right to receive from the Surviving Corporation $4.35 in cash, without
interest (the "Merger Consideration"). All such Shares, by virtue of the Merger
and without any action on the part of the holders of the Shares, shall no longer
be outstanding and shall be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such Shares shall thereafter cease
to have any rights with respect
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to such Shares, except the right to receive the Merger Consideration for such
Shares upon the surrender of such certificate in accordance with Section 2.3.
(b) Each Share issued and outstanding immediately prior to the
Effective Time that is (i) held in the treasury of the Company or (ii) owned by
the Purchaser or any direct or indirect subsidiary of the Purchaser (including
the Merger Sub) shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, shall be canceled and
retired and no payment shall be made with respect thereto.
(c) Each share of common stock, par value $.0019 per share, of the
Surviving Corporation issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
non-assessable share of common stock, no par value, of the Surviving
Corporation.
2.2 Payment Fund. Immediately prior to the Effective Time, the Purchaser
shall deposit or shall cause to be deposited with the Disbursing Agent (as
defined in Section 2.3 hereof) in a separate fund established for the benefit of
the holders of Shares, for payment in accordance with this Article 2 through the
Disbursing Agent (the "Payment Fund"), immediately available funds in amounts
necessary to make the payments pursuant to this Article 2 to holders of Shares
(other than the Company, the Purchaser, Merger Sub or any other subsidiary of
the Purchaser). The Disbursing Agent shall, pursuant to irrevocable instructions
delivered prior to the Effective Time, pay the Merger Consideration out of the
Payment Fund.
The Disbursing Agent shall invest portions of the Payment Fund as the
Purchaser directs in obligations of or guaranteed by the United States of
America, in commercial paper obligations receiving the highest investment grade
rating from both Xxxxx'x Investors Service, Inc. and Standard & Poor's Ratings
Services, a Division of The XxXxxx-Xxxx Companies, or in certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial banks
with capital exceeding $1,000,000,000 (collectively, "Permitted Investments");
provided, however, that the maturities of Permitted Investments shall be such as
to permit the Disbursing Agent to make prompt payment to former holders of
Shares entitled thereto as contemplated by this Article 2. The Purchaser shall
cause the Payment Fund to be promptly replenished to the extent of any losses
incurred as a result of Permitted Investments. All earnings of Permitted
Investments shall be paid to the Purchaser. If, for any reason (including losses
incurred as a result of Permitted Investments), the Payment Fund is inadequate
to pay the amounts to which holders of Shares shall be entitled under this
Article 2, the Purchaser shall in any event be liable for payment thereof. The
Payment Fund shall not be used for any purpose except as expressly provided in
this Merger Agreement.
2.3 Payment of Cash for Shares. Each holder of a certificate or
certificates representing Shares canceled upon consummation of the Merger
pursuant to Section 2.1(a) hereof may thereafter surrender such certificate to a
disbursing agent to be designated by the Purchaser and reasonably satisfactory
to the Company (the "Disbursing Agent"), as agent for such holders of Shares, to
effect the surrender of such certificates on their behalf for a period ending
twelve months after the Effective Time. The Purchaser agrees that promptly after
the Effective Time it will distribute to such holders a form of letter of
transmittal and instructions (in the form and substance of a letter of
transmittal and instructions to be approved by the Company
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prior to the Effective Time, such approval not to be unreasonably withheld) for
use in effecting the surrender of the certificates which, immediately prior to
the Effective Time, represented Shares in exchange for payment therefor. Each
such holder shall be entitled upon surrender of one or more certificates
formerly representing Shares, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, to receive
in exchange therefor a check representing the amount to which such holder is
entitled in respect of the canceled Shares represented by such certificates
after giving effect to any required federal, state or local withholding,
transfer, stamp, sales or similar Taxes. Until so surrendered and exchanged,
each such certificate shall, after the Effective Time, be deemed to represent
only the right to receive such amount. If payment is to be made to a person
other than the person in whose name a surrendered certificate is registered, it
shall be a condition to such payment that the certificate so surrendered shall
be endorsed or shall be otherwise in proper form for transfer, with the
registered owner's signature guaranteed by a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or by a commercial bank or trust company having an
office or correspondent in the United States, and that the person requesting
such payment shall have paid any transfer and other Taxes required by reason of
such payment in a name other than that of the registered holder of the
certificate surrendered or shall have established to the satisfaction of the
Purchaser or the Disbursing Agent that such Tax either has been paid or is not
payable. If any of the cash deposited with the Disbursing Agent pursuant to
Section 2.2 hereof for purposes of payment in exchange for such Shares remains
unclaimed following the expiration of 180 days after the Effective Time, such
cash shall be delivered to the Purchaser by the Disbursing Agent, and thereafter
the Disbursing Agent shall not be liable to any persons claiming any amount of
such cash and the surrender and exchange shall be effected directly with the
Purchaser. None of Purchaser, the Surviving Corporation, the Disbursing Agent or
any other Person shall be liable to any former holder of Shares for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws. No interest shall accrue or be payable with
respect to any amounts which any holder shall be entitled to receive. The
Purchaser or the Disbursing Agent shall be authorized to pay the cash
attributable to any certificate theretofore issued which has been lost or
destroyed, but only upon receipt of satisfactory evidence of ownership of the
Shares represented thereby and of appropriate indemnification. From and after
the Effective Time, the holders of certificates evidencing ownership of Shares
outstanding immediately prior to the Merger shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by law.
2.4 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Merger Agreement and to vest the Surviving Corporation with
full rights, title and possession to all assets, properties, rights, privileges,
immunities and franchises of either the Company or Merger Sub, the officers and
directors of each such corporation are fully authorized in the name of such
corporation or otherwise to take, and shall take, all such lawful and necessary
action.
2.5 Transfer of Shares After Effective Time. No transfers of Shares shall
be made on the stock transfer books of the Surviving Corporation at or after the
Effective Time.
2.6 Exercise and Cancellation of Company Options. Prior to the Effective
Time, the Board of Directors of the Company or, if appropriate, a committee
thereof shall adopt appropriate resolutions and take all other actions necessary
and appropriate to provide that,
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immediately prior to the Effective Time, each unexpired and unexercised option
or similar right to purchase Company Common Stock (the "Company Options or the
"Stock Options") under the Company's Stock Option Plan (as defined in Section
4.4 hereof) or Investment Plan (as defined in Section 4.4 hereof) or any stock
option plan, agreement or arrangement of the Company (collectively, the "Company
Stock Option Plans") shall become exercisable and vested with respect to all of
the shares of Company Common Stock subject thereto, and, immediately prior to
the Effective Time shall be cancelled (except to the extent that such
cancellation is not permitted under the terms of the Company's Investment Plan)
and, in exchange therefore, each former holder of any such cancelled Company
Option shall be entitled to receive, in consideration of the cancellation of
such Company Option and in settlement therefore, a payment in cash (subject to
any applicable Taxes required by applicable law to be withheld) in an amount
equal to the product of (A) the total number of shares of Company Common Stock
previously subject to such Company Option and (B) the excess, if any, of the
Merger Consideration over the exercise price per share of Company Common Stock
previously subject to such Company Option (such amounts payable hereunder with
respect to all Company Options being referred to as the "Option Payments"). From
and after the Effective Time, any such cancelled Company Option shall no longer
be exercisable by the former holder thereof, but shall only entitle such holder
to the payment of the Option Payment. The Company shall use its best efforts to
ensure that former holders of Company Options will have no rights other than the
right to receive their respective portion of the Option Payments, including
obtaining consents from holders of Company Options under the Company's
Investment Plan. The Company has delivered to the Purchaser consents signed by
holders of Company Options covering all but 18,624 of the shares issuable upon
exercise of Company Options granted pursuant to the Company's Investment Plan
and shall use its best efforts to obtain similar consents from all other holders
of such Company Options as soon as practicable. The Purchaser shall cause the
Surviving Corporation to pay any Option Payment not paid prior to the Effective
Time.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
3.1 Organization and Qualification. Each of the Purchaser and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite corporate power
to carry on its respective business as now conducted. The Purchaser is duly
qualified as a foreign corporation to do business and is in good standing in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified is not reasonably likely to have a material adverse
effect on the Purchaser and its subsidiaries taken as a whole.
3.2 Authority Relative to this Merger Agreement. Each of the Purchaser and
Merger Sub has the requisite corporate power and authority to enter into this
Merger Agreement and to carry out its respective obligations hereunder. The
execution and delivery of this Merger Agreement by the Purchaser and Merger Sub
and the consummation by the Purchaser and Merger Sub of the transactions
contemplated hereby have been duly authorized by the respective
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Boards of Directors of the Purchaser and Merger Sub and by the Purchaser as the
sole shareholder of Merger Sub, and no other corporate proceedings on the part
of the Purchaser or Merger Sub are necessary to authorize this Merger Agreement
and the transactions contemplated hereby. This Merger Agreement has been duly
executed and delivered by the Purchaser and Merger Sub and constitutes a valid
and binding obligation of each such entity. Neither the Purchaser nor Merger Sub
is subject to or obligated under any provision of (i) its respective Certificate
or Articles of Incorporation or By-Laws, (ii) any contract, agreement, mortgage,
indenture or other document, (iii) any license, franchise or permit or (iv) any
law, regulation, order, judgment or decree, which would be breached or violated
or in respect of which a right of termination or acceleration or any encumbrance
on any of its assets would be created by its execution and performance of this
Merger Agreement, except (as to (ii), (iii) or (iv) above) where such breach,
violation or right would not individually, or in the aggregate, prevent or
materially delay the Purchaser or Merger Sub from performing its obligations
under this Merger Agreement. The consummation of Merger by the Purchaser and
Merger Sub will not require the consent or approval of any party other than (i)
satisfaction of applicable requirements, if any, of the Securities Exchange Act
of 1934 (the "Exchange Act"), state "blue sky" or takeover laws and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) filing and recordation of appropriate merger documents as required
by the Pennsylvania Law and (iii) where failure to obtain such consents or
approvals would not prevent or materially delay the Purchaser or Merger Sub from
performing its obligations under this Merger Agreement.
3.3 Financing. The Purchaser has cash, marketable securities or credit
available for use in connection with the acquisition of the Company in an
aggregate amount sufficient to consummate the transactions contemplated hereby.
3.4 Merger Sub Formation. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Merger Agreement. Since the
date of its incorporation, Merger Sub has not carried on any business or
conducted any operations other than execution of this Merger Agreement, the
performance of its obligations hereunder and related ancillary matters.
3.5 Ownership of Company Common Stock. As of the date of this Merger
Agreement, the Purchaser does not own any shares of Company Common Stock.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections or subsections of the
disclosure letter delivered to the Purchaser by the Company prior to entering
into this Merger Agreement (the "Disclosure Letter" or "Company Disclosure
Schedule"), the Company hereby represents and warrants to the Purchaser and
Merger Sub that:
4.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the requisite corporate power to carry on
its business as it is now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its
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activities makes such qualification necessary, except where the failure to be so
qualified would not have a "Material Adverse Effect". As used in this Merger
Agreement, the term "Material Adverse Effect" shall mean any development, effect
or change that, individually, or in the aggregate with such other developments,
effects or changes, has had, or could reasonably be expected to have, a material
adverse effect on the financial condition, business, revenues, results of
operations, properties, assets or liabilities of the Company and its
Subsidiaries (as defined in Section 9.4 hereof), taken as a whole, other than
any such development, effect or change resulting from (i) the loss of revenues
from the Company's sales agents, distributors or dealers ("Distributors")
resulting from the announcement of this Merger Agreement or any payments made by
the Company to Distributors as described in Section 6.10 of the Disclosure
Letter, (ii) changes in general economic conditions in the United States or
abroad (including, without limitation, any effect that acts of terrorism or
outbreak of war have on such general economic conditions), or (iii) legal,
governmental or regulatory factors (including, without limitation, any effect
that acts or terrorism or outbreak of war have on such legal, governmental or
regulatory factors) generally affecting companies in the Company's industry;
provided, in each case of clauses (ii) and (iii), that the Company is not
materially disproportionately affected, as compared to other companies in the
Company's industry, by such developments, effects, changes or factors.
4.2 Articles of Incorporation and By-Laws. The Articles of Incorporation
and By-Laws in the form attached to Section 4.2 of the Disclosure Letter are the
Articles of Incorporation and By-Laws of the Company as in effect on the date of
this Merger Agreement.
4.3 Subsidiaries. Each of the Company's Subsidiaries is a corporation or
other entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite power (corporate
or otherwise) to carry on its business as it is now being conducted. Each such
Subsidiary is duly qualified as a foreign corporation or other entity to do
business, and is in good standing, in each jurisdiction where the character of
its properties, owned or leased, or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified is not
reasonably likely to have a Material Adverse Effect. All of the outstanding
shares of capital stock or ownership interests of each of the Company's
Subsidiaries are validly issued, fully paid and nonassessable and are owned by
the Company or by a wholly owned Subsidiary of the Company, free and clear of
all liens, claims, pledges or encumbrances, and there are no proxies outstanding
with respect to such shares or interests. Section 4.3 of the Disclosure Letter
sets forth a true and complete list of the ownership interests of the Company or
its Subsidiaries in the Subsidiaries and in any other corporation, partnership,
joint venture or other business association or entity.
4.4 Capitalization. The authorized capital stock of the Company consists
of 8,000,000 shares of preferred stock, par value $.001 per share (the
"Preferred Stock"), and 31,600,000 shares of Company Common Stock. As of the
date hereof, (i) no shares of Preferred Stock were outstanding, (ii) 10,773,397
shares of Company Common Stock were outstanding, all of which were validly
issued, fully paid and nonassessable, (iii) 99,716 shares of Company Common
Stock were held in the treasury of the Company, (iv) 2,181,313 shares of Company
Common Stock were reserved for issuance pursuant to the Company's 1996 Stock
Option Plan (the "Stock Option Plan"), a copy of which has been furnished
previously to the Purchaser, (v) 394,536 shares of Company Common Stock were
reserved for issuance pursuant to the
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Company's Investment Plan (the "Investment Plan"), a copy of which has been
furnished previously to the Purchaser, (vi) options to purchase 1,095,479 shares
of Company Common Stock were outstanding under the Stock Option Plan, and (vii)
options to purchase 149,639 shares were outstanding under the Investment Plan.
Section 4.4 of the Disclosure Letter sets forth a true and complete listing of
all Stock Options outstanding on the date hereof, showing, as of the date
hereof, the names of the holders of such Stock Options, the number of Stock
Options so held and the exercise prices of such Stock Options. Except as set
forth above and except as set forth in Section 4.4 of the Disclosure Letter,
there are not now, and at the Effective Time there will not be, any shares of
capital stock or other securities of the Company or its Subsidiaries issued or
outstanding, any preemptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements, calls, commitments or rights of any kind that
obligate the Company or any of its Subsidiaries to issue or sell any shares of
capital stock or other securities of the Company or any of its Subsidiaries or
any securities or obligations convertible or exchangeable into or exercisable
for, or giving any Person a right to subscribe for or acquire, any securities of
the Company or any of its Subsidiaries, and no securities or obligations
evidencing such rights are or will be at the Effective Time authorized, issued
or outstanding. The Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter. After the Effective Time, the
Surviving Corporation will have no obligation to issue, transfer or sell any
Shares or common stock of the Surviving Corporation pursuant to any Benefit Plan
(as defined in Section 4.9(a), other than with respect to Company Options
granted under the Investment Plan that have not been cancelled).
4.5 Authority Relative to this Merger Agreement; Approval; Fairness. The
Company has all requisite corporate power and authority to enter into this
Merger Agreement and to perform its obligations hereunder. The execution and
delivery of this Merger Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Merger Agreement and the
transactions contemplated hereby, except for any required approval of the Merger
by holders of a majority of the votes cast at the Company Shareholders' Meeting
by holders of the Company Common Stock (assuming a quorum is present) as set
forth in Section 6.2 of this Merger Agreement (the "Company Requisite Vote").
This Merger Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable in
accordance with its terms. The Board of Directors of the Company (A) has
unanimously approved this Merger Agreement and the Merger and other transactions
contemplated hereby and (B) has received the opinion of its financial advisors,
U.S. Bancorp Xxxxx Xxxxxxx, to the effect that the consideration to be received
by the holders of the Shares in the Merger is fair to such holders from a
financial point of view, a copy of which opinion shall be delivered to the
Purchaser within one (1) business day after the date hereof. The execution,
delivery and performance of this Merger Agreement by the Company do not, and the
consummation by the Company of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, the articles of incorporation or by-laws of the Company
or the comparable governing instruments of any of its Subsidiaries, (B) a breach
or violation of, a default under, the acceleration of any obligations under or
the creation of a lien, pledge, security interest or other encumbrance on the
assets of the
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Company or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any agreement, lease, license, contract, note, mortgage,
indenture, arrangement or other obligation ("Contracts") binding upon the
Company or any of its Subsidiaries or any Law (as defined in Section 4.13
hereof) or permit, franchise or license to which the Company or any of its
Subsidiaries is subject or (C) any change in the rights or obligations of any
party under any of the Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Merger Agreement. Section 4.5 of the Disclosure Letter sets forth a correct and
complete list of Contracts of the Company and its Subsidiaries pursuant to which
consents or waivers are or may be required prior to consummation of the
transactions contemplated by this Merger Agreement (whether or not subject to
the exception set forth with respect to clauses (B) and (C) above). Except as
set forth in Section 4.5 of the Disclosure Letter, the consummation of the
Merger by the Company and the other transactions contemplated hereby will not
require the consent or approval of or registration or filing with any Federal,
state or local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign, other
than (i) approval of the Company's shareholders, (ii) applicable requirements,
if any, of the Exchange Act, state "blue sky" or takeover laws and the HSR Act
and (iii) filing and recordation of appropriate merger documents as required by
the Pennsylvania Law. To the knowledge of the Company, no state takeover statute
or similar statute or regulation (each, a "Takeover Statute") applies or
purports to apply to the Merger, this Merger Agreement or any of the
transactions contemplated hereby. To the full extent possible, the Company has
opted out of Sections 1715, 2538, 25E, 25F, 25G and 25H of the Pennsylvania Law.
By virtue of resolutions approved by the Company's Board of Directors, the
Merger, this Merger Agreement and the transactions contemplated hereby will not
be subject to the provisions set forth in Article 11 of the Company's articles
of incorporation. Pursuant to Pennsylvania Law, no shareholder of the Company
shall have any dissenters or appraisal rights with respect to the Merger.
4.6 Commission Filings. The Company has previously delivered to the
Purchaser (i) its Annual Report on Form 10-K for the year ended December 31,
2001, and any amendments thereto, as filed with the Securities and Exchange
Commission (the "SEC") (as amended through the date hereof, the "10-K"), (ii)
its proxy statement relating to the Company's meetings of shareholders (whether
annual or special) during 2002, as filed with the SEC, and (iii) all other
reports filed by the Company with the SEC under the Exchange Act since January
1, 2000 (collectively, the "SEC Documents"). As of their respective dates, the
SEC Documents complied as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC promulgated
thereunder and applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company and its Subsidiaries included
in the SEC Documents previously provided to the Purchaser comply as to form in
all material respects with applicable accounting requirements and published
rules of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto and
except, in the case of unaudited statements, as permitted by Form 10-Q and
Regulation S-X of
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the SEC) and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations, changes in shareholders' equity (to the extent
applicable) and statements of cash flow for the periods then ended, subject, in
the case of the unaudited consolidated interim financial statements, to normal
year-end adjustments and any other adjustments described therein. The
consolidated unaudited financial statements of the Company and its Subsidiaries
for the period ended September 30, 2002 (the "Unaudited Third Quarter Financial
Statements") previously provided to the Purchaser have been prepared using the
same accounting principles and policies and in a manner consistent with the
consolidated financial statements of the Company and its Subsidiaries for the
year ended December 31, 2001 included in the 10-K and fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as of September 30, 2002 and the consolidated results of their operations and
statement of cash flows for the nine months ended September 30, 2002. As of the
date hereof, the Company has not filed any definitive reports or statements with
the SEC since November 22, 2002. The Company will provide the Purchaser with
each draft version of the Company's Annual Report on Form 10-K, including
documents incorporated therein by reference, for the year ended December 31,
2002, promptly after preparation of such draft.
4.7 Absence of Certain Changes or Events. Since December 31, 2001, except
as set forth in Section 4.7 of the Disclosure Letter or SEC Documents, neither
the Company nor any of its Subsidiaries has: (a) suffered any Material Adverse
Effect or any development, event, change or condition that could reasonably be
expected to have a Material Adverse Effect; (b) conducted its business and
operations, or engaged in any material transaction, other than in the ordinary
course of business and consistent with past practices except, subsequent to the
date hereof, as permitted by Section 5.1 hereof, (c) suffered any material
damage, destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of its
Subsidiaries, whether or not covered by insurance, (d) made any declaration,
setting aside or payment of any dividend or other distribution in cash, stock or
property in respect of the capital stock of the Company or (e) made any change
in accounting principles, practices or methods other than as required by
generally accepted accounting principles. Since December 31, 2001, except as
provided for herein or as disclosed in the SEC Documents and other than in the
ordinary course, there has not been any increase in the compensation payable or
which could become payable by the Company and its Subsidiaries to their officers
or key employees, or any amendment of any Benefit Plans.
4.8 Litigation and Liabilities. Except as disclosed in Section 4.8 of the
Disclosure Letter or SEC Documents, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of the Company,
threatened against the Company or any of its affiliates or (ii) material
obligations or liabilities, whether or not accrued, contingent, unasserted or
otherwise and whether or not required to be disclosed, or any other facts or
circumstances of which the executive officers of the Company have knowledge that
could result in any claims against, or obligations or liabilities of, the
Company or any of its affiliates except for, in the case of clause (ii),
obligations or liabilities arising in the ordinary course of business consistent
with past practices. Section 4.8 of the Disclosure Letter identifies and sets
forth the amount of the obligations or liabilities, whether or not accrued,
contingent, unasserted or otherwise and whether or not required to be disclosed,
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of the Company or any of its affiliates resulting from the execution of this
Merger Agreement or the consummation of the transactions contemplated hereby.
4.9 Employee Benefits.
(a) True and complete copies of all documents comprising Benefit
Plans have been provided to the Purchaser. For purposes of this Merger
Agreement, the term "Benefit Plan" includes any plan, contract or arrangement
(regardless of whether funded or unfunded, or foreign or domestic) which is
sponsored by the Company or any of its Subsidiaries, or to which the Company or
any of its Subsidiaries makes contributions or which covers any employee of the
Company or any Subsidiary of the Company in his or her capacity as an employee
or to which the Company or any Subsidiary of the Company has any obligation with
respect to any current or former employee, and which is (i) an "Employee Benefit
Plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (ii) a severance contract with (an)
employee(s) or any severance plan applicable to employees, or (iii) a stock
option plan or any other plan of deferred compensation.
(b) All Benefit Plans are valid and binding and in full force and
effect and there are no material defaults thereunder. Each Benefit Plan complies
currently, and has complied in the past, in all material respects in form and
operation, with all applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), and other applicable law, except for failures to
comply which is not reasonably likely to have a Material Adverse Effect. Except
as set forth in Section 4.9 of the Disclosure Letter, the Company does not
sponsor any "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA ("Pension Plan") which is intended to be qualified under Section 401(a)
of the Code or provide any retiree health and life benefits under any Benefit
Plan (excluding (i) continuation coverage required under the Consolidated
Omnibus Budget Reconciliation Act of 1985 and (ii) as set forth in Section 4.9
of the Disclosure Letter, to the extent not material, any written arrangements
for post-termination of employment medical or life coverage between the Company
and any individual). There is no pending or, to the knowledge of senior
management of the Company, threatened litigation relating to the Benefit Plans,
except for pending or threatened litigation that is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has engaged in, or failed to engage in, a
transaction with respect to any Benefit Plan that is reasonably likely to
subject the Company or any of its Subsidiaries to a Tax or penalty imposed by
either Section 4975 or 4980B of the Code or Section 502(i), 502(c), 502(1) and
601 through 608 of ERISA in an amount which would have a Material Adverse
Effect.
(c) No Benefit Plan subject to Title IV of ERISA (including any
"multiemployer plan" as defined in ERISA) has been sponsored or contributed to
by the Company or any Subsidiary during the six-year period immediately
preceding the date of this Merger Agreement.
(d) All contributions required to be made, and claims to be paid,
under the terms of any Benefit Plan have been timely made or reserves therefor
on the balance sheet of the Company have been established, which reserves are
adequate in all material respects.
-11-
4.10 Taxes. For the purposes of this Section 4.10, the term "Tax" shall
include all Taxes, charges, withholdings (including, without limitation, any
income, social security and employment Tax withholding for all types of
compensation), fees, levies, penalties, additions, interest or other assessments
imposed by any United States federal, state or local authority or any other
Taxing authority on the Company or any of its Tax Affiliates (as defined below)
as to their respective income, profit, franchise, gross receipts, payroll,
sales, employment, worker's compensation, use, property, withholding, excise,
occupancy, environmental and other Taxes, duties or assessments of any nature
whatsoever. The Company has filed or caused to be filed timely (taking into
account all extensions validly applied by the Company) all material federal,
state, local and foreign Tax returns including all informational returns
required to be filed by each of it and any member of its consolidated, combined,
unitary or similar group (each such member, a "Tax Affiliate"). Such returns,
reports and other information are accurate and complete in all material
respects. The Company has made available to Purchaser true and correct copies of
the United States federal income Tax returns and Pennsylvania corporate income
Tax and capital stock and franchise Tax returns for each of the three most
recent years ending on or before December 31, 2002. The Company has timely paid
or caused to be paid or has made adequate provision or set up an adequate
accrual or reserve on its balance sheet (in accordance with generally accepted
accounting principles) for the payment of, all Taxes due or payable (without
regard to whether such Taxes have been assessed) in respect of the periods for
which returns are due, and has established (or will establish at least
quarterly) an adequate accrual or reserve for the payment of all Taxes due or
payable (without regard to whether such Taxes have been assessed) in respect of
the first period following the last period for which returns are due. Neither
the Company nor any of its Tax Affiliates has any material liability for Taxes
in excess of the amount so paid or accruals or reserves so established. No
deficiencies for any Tax in excess of the amount reserved or provided therefor
has, to the knowledge of the senior management of the Company, been threatened,
claimed, proposed or assessed. No waiver or extension of time to assess any
Taxes has been given or requested and remains in effect on the date hereof. As
of the date hereof and except as disclosed in its SEC Documents or in Section
4.10 of the Disclosure Letter, there is no outstanding audit examination,
deficiency, refund litigation or outstanding waivers or agreements extending the
applicable statute of limitations for the assessment of collection of any Taxes
for any period with respect to any Taxes of the Company or any of its Tax
Affiliates. Neither the Company nor any of its Tax Affiliates is a party to any
Tax sharing, indemnification or similar agreement or any agreement pursuant to
which the Company or any of its Tax Affiliates has any obligation to any party
(other than Company or one of its Tax Affiliates) with respect to any Taxes or
is or was a member of any affiliated group filing combined, consolidated or
unitary Tax returns other than a group of which the Company is or was the common
parent. Neither the Company nor any of its Tax Affiliates has been a party to
any distribution occurring during the last two (2) years in which the parties to
such distribution treated such distribution as one to which Section 355 of the
Code applied. No liens with respect to Taxes exist with respect to Company or
any of its Tax Affiliates other than statutory liens for Taxes not yet due and
payable or that are being contested in good faith and reserved for (in
accordance with generally accepted accounting principles) on the Company's
balance sheet.
4.11 Information Supplied. Any proxy statement mailed by the Company to
the holders of Shares after the date hereof and all amendments and supplements
thereto will comply as to form in all material respects with the applicable
requirements of the Exchange Act and the
-12-
rules and regulations thereunder and will not, at the time of (a) the first
mailing thereof or (b) the meeting called pursuant to Section 6.2, if any,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by the Purchaser or Merger Sub expressly for inclusion in
such proxy statement.
4.12 Licenses and Permits; Governmental Notices.
(a) The Company and its Subsidiaries have obtained all material
licenses and permits necessary to conduct their respective businesses and to own
and operate their respective assets and such licenses and permits are valid and
in full force and effect. No material defaults or violations exist or have been
recorded in respect of any such license or permit. No proceeding is pending or,
to the knowledge of the Company, threatened looking toward the revocation,
limitation or non-renewal of any such license or permit.
(b) Since December 31, 2001, except as set forth in the SEC
Documents and Section 4.12 of the Disclosure Letter, the Company has not
received any written notice regarding, and has not been made a party to, any
proceeding alleging that (a) the Company is, or may be in, violation of any law,
governmental regulation or order, (b) the Company must change any of its
business practices to remain in compliance with any law, governmental regulation
or order, (c) the Company has failed to obtain any license or permit required
for the conduct of its business, or (d) the Company is in default under or
violation of any license or permit.
4.13 Compliance with Laws. Except as set forth in the SEC Reports filed
prior to the date hereof and Section 4.13 of the Disclosure Letter, the
businesses of each of the Company and its Subsidiaries have not been, and are
not being, conducted in violation in any material respect of any federal, state,
local or foreign law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree, arbitration award, agency requirement, license or permit of
any governmental authority (collectively, "Laws"). Except as set forth in the
SEC Reports filed prior to the date hereof, no investigation or review by any
governmental authority with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company, threatened, nor has any
governmental authority indicated an intention to conduct the same. To the
knowledge of the Company, no material change is required in the Company's or any
of its Subsidiaries' processes, properties or procedures in connection with any
such Laws, and the Company has not received any notice or communication of any
material noncompliance with any such Laws that has not been cured as of the date
hereof.
4.14 Insurance. As of the date hereof, the Company and each of its
Subsidiaries are covered under insurance policies and programs which provide
coverage to the Company and its Subsidiaries by insurers, reasonably believed by
the Company to be of recognized financial responsibility and solvency, against
such losses and risks and in such amounts as are customary in the businesses in
which they are engaged. All material policies of insurance and fidelity or
surety bonds insuring the Company or any of its Subsidiaries or their respective
businesses, assets, employees, officers and directors of which the Company has
copies have previously been made available for inspection by the Purchaser and
are in full force and effect. Except as otherwise set forth in Section 4.14 of
the Disclosure Letter or SEC Documents, as of the date
-13-
hereof, there are no material claims by the Company or any Subsidiary under any
such policy or instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause other than a customary
reservation of rights clause. All necessary notifications of claims have been
made to insurance carriers other than those where the failure to so notify is
not reasonably expected to have a Material Adverse Effect.
4.15 Contracts. Section 4.15 of the Disclosure Letter sets forth a true
and complete list of the following contracts to which the Company or its
Subsidiaries is a party (the "Material Contracts"):
(a) any contract with respect to which revenues of $50,000 or more
were generated in 2002 or any contract committing the Company to expenses of
$50,000 or more in the United States, or $100,000 or more outside the United
States, in 2003;
(b) any lease of real property or any lease of personal property
with an annual rental of more than $20,000;
(c) any contract or agreement for capital expenditures in excess of
$20,000;
(d) any employee collective bargaining agreement or other contract
with any labor union;
(e) any covenant not to compete or contract or agreement that
purports to limit in any material respect either the type of business in which
the Company or its Subsidiaries (or, after giving effect to the Merger,
Purchaser or its Subsidiaries) may engage or the manner or locations in which
any of them may so engage in any business;
(f) any agreement, contract or other arrangement under which the
Company or any Subsidiary has borrowed any money from, or issued any note, bond,
debenture or other evidence of indebtedness to, any third-party, other than with
respect to indebtedness that has been repaid in full;
(g) any agreement, contract or other arrangement providing for (A)
the acquisition, directly or indirectly, whether by merger, consolidation or
otherwise, of assets (whether tangible or intangible) or the capital stock or
other equity interests of another entity (other than the acquisition of
inventory in the ordinary course) or (B) the disposition, directly or
indirectly, whether by merger, consolidation or otherwise, of assets (whether
tangible or intangible) or the capital stock of the Company or its Subsidiaries,
other than sales or dispositions of assets in the ordinary course of business or
in connection with the disposition of obsolete inventory;
(h) any agreement, contract or other arrangement to which the
Company or any Subsidiary is a party or by or to which it or any of its assets
or business is bound or subject which has an aggregate future liability to any
entity in excess of $125,000 and is not terminable by the Company or any
Subsidiary by notice of not more than 60 days for a cost of less than $25,000;
and
-14-
(i) any agreement with any executive officer or other key employee
of the Company or any Subsidiary (A) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a transaction
involving the Company or any Subsidiary of the nature of any of the transactions
contemplated by this Merger Agreement, (B) providing any term of employment or
compensation guarantee extending for a period longer than three years or (C)
providing severance benefits or other benefits after the termination of
employment of such executive officer or key employee not comparable to benefits
available to employees generally.
All written Material Contracts are legally valid and binding obligations of the
Company and in full force and effect, and there are no defaults by the Company
or any Subsidiary thereunder, except those defaults that would not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect.
The Company has previously made available for inspection by the Purchaser all
Material Contracts.
4.16 Title to Properties. Except as set forth in Section 4.16 of the
Disclosure Letter, the Company and its Subsidiaries have good title to all real,
personal and intangible property reflected in the Company's September 30, 2002
consolidated balance sheet previously delivered to Purchaser (except as disposed
of since such date in the ordinary course of business), free and clear of all
mortgages, security interests, liens, encumbrances, restrictions and other
burdens ("Liens"), other than statutory liens for current Taxes or assessments
not yet due or delinquent or the validity or amount of which is being contested
in good faith by appropriate proceedings and has been reserved for (to the
extent required under generally accepted accounting principles) on the Company's
balance sheet, (ii) mechanics', carriers', workers', repairers' and other
similar liens arising or incurred in the ordinary course of business relating to
obligations as to which there is no default on the part of the Company or its
Subsidiaries or the validity or amount of which is being contested in good faith
by appropriate proceedings, or pledges, deposits or other liens securing the
performance of bids, trade contracts, leases or statutory obligations (including
workers' compensation, unemployment insurance or other social security
legislation), (iii) zoning, entitlement, conservation restriction and other land
use and environmental regulations by governmental authorities which,
individually or in the aggregate, do not materially interfere with the present
use or operation of the assets or business of the Company and its Subsidiaries,
and (iv) all exceptions, restrictions, easements, charges, rights-of-way and
other encumbrances set forth in any state, local or municipal franchise under
which such business is conducted which, individually or in the aggregate, do not
materially interfere with the present use or operation of such assets or
business.
4.17 Labor Matters. Except as set forth in Section 4.17 of the Disclosure
Letter, there are no collective bargaining or other labor union agreements to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound. To the knowledge of the Company, since January 1, 2000, neither the
Company nor any of its Subsidiaries has encountered any labor union organizing
activity, or had any actual or threatened employee strikes, work stoppages,
slowdowns or lockouts.
4.18 Environmental Matters. Except as disclosed in the SEC Reports prior
to the date hereof and except for such matters that, alone or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, (i) the
Company and its Subsidiaries have complied
-15-
at all times with all applicable Environmental Laws; (ii) to the knowledge of
the executive officers of the Company, no property currently owned or operated
by the Company or any of its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) is contaminated with any Hazardous
Substance; (iii) to the knowledge of the executive officers of the Company, no
property formerly owned or operated by the Company or any of its Subsidiaries
was contaminated with any Hazardous Substance during or prior to such period of
ownership or operation; (iv) to the knowledge of the executive officers of the
Company, neither the Company nor any of its Subsidiaries is subject to liability
for any Hazardous Substance disposal or contamination on any third party
property; (v) neither the Company nor any of its Subsidiaries has released or
threatened to release of any Hazardous Substance; (vi) neither the Company nor
any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that the Company or any of its Subsidiaries may
be in violation of or subject to liability under any Environmental Law; (vii)
neither the Company nor any of its Subsidiaries is subject to any order, decree,
injunction or other arrangement with any governmental authority or any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) to the
knowledge of the executive officers of the Company, there are no other
circumstances or conditions involving the Company or any of its Subsidiaries
that could reasonably be expected to result in any claim, liability,
investigation, cost or restriction on the ownership, use, or transfer of any
property pursuant to any Environmental Law. The Company has delivered to
Purchaser copies of all environmental reports, studies, assessments, sampling
data and other environmental information in its possession relating to Company
or its Subsidiaries or their respective current and former properties or
operations.
As used herein, the term "Environmental Law" means any federal,
state, local or foreign statute, law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health, safety, or
natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, indoor air,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property relating to any Hazardous Substance.
As used herein, 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
material or radon; and (C) any other substance which may be the subject of
regulatory action by any governmental entity in connection with any
Environmental Law.
4.19 Intellectual Property. Except as set forth in Section 4.19 of the
Disclosure Letter:
(a) the Company and/or its Subsidiaries owns all right, title and
interest to the Intellectual Property Rights identified in Section 4.19 of the
Disclosure Letter, and the Company has the right to use pursuant to a license
each of the Intellectual Property Rights conveyed in the licenses identified in
Section 4.19 of the Disclosure Letter;
(b) each such Intellectual Property Right specified in subparagraph
(a) of this Section 4.19 will be owned or, to the Company's best knowledge and
belief, available for use by the Surviving Corporation or its Subsidiaries
immediately subsequent to the Effective Time;
-16-
(c) to the Company's best knowledge and belief, all issued patents
and trademark registrations owned by the Company or its Subsidiaries are valid
and enforceable;
(d) neither the Company nor any of its Subsidiaries is, nor will the
Company or any of its Subsidiaries be, as a result of the execution and delivery
of this Merger Agreement or the performance of its obligations hereunder, in
violation of any license, sublicense, or other agreement as to which the Company
or any of its Subsidiaries is a party and pursuant to which the Company or any
of its Subsidiaries is authorized to use any third-party Intellectual Property
Rights;
(e) neither the Company nor any of its Subsidiaries has had notice
of any claim, nor does the Company have knowledge of any valid grounds for any
bona fide claim against the Company or its Subsidiaries that the Intellectual
Property Rights used in the business of the Company and its Subsidiaries as
presently conducted (excluding in connection with products under development)
infringe, misappropriate or violate any Intellectual Property Rights of any
other person. To the Company's best knowledge and belief, except as otherwise
disclosed in Section 4.19 of the Disclosure Letter, no third party is presently
interfering with, infringing upon, misappropriating, or otherwise coming into
conflict with any Intellectual Property Rights of the Company or its
Subsidiaries in any material respect;
(f) up to the date hereof, the Company has paid all maintenance and
annuity fees for all patents and patent applications listed on Section 4.19 of
the Disclosure Letter, which includes patents and patent applications used in
the business of the Company and its Subsidiaries as presently conducted;
(g) Section 4.19 of the Disclosure Letter identifies each patent,
each trademark and service xxxx registration and each copyright registration
currently in effect, owned by the Company or its Subsidiaries; identifies each
pending patent application and pending application for registration of a
trademark or service xxxx currently in effect that the Company or its
Subsidiaries has made with respect to their Intellectual Property Rights; and
identifies each license, agreement or other permission that the Company or its
Subsidiaries has granted to any third party with respect to any of its owned
Intellectual Property Rights. The Company has delivered to the Purchaser correct
and complete copies of all such patents, registrations, applications, licenses,
agreements and permissions (as amended to date). With respect to each such
Intellectual Property Right that the Company or its Subsidiaries owns and is
identified in Section 4.19 of the Disclosure Letter, except as otherwise set
forth in Section 4.19 of the Disclosure Letter:
(i) the Company or its Subsidiaries possesses all right, title,
and interest in and to the Intellectual Property Right, free
and clear of any security interest, license, or other
restriction of which the Company is aware;
(ii) the Intellectual Property Right is not subject to any
outstanding injunction, judgment, order, decree, or ruling;
(iii) to the Company's best knowledge and belief, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or demand is pending or
-17-
threatened, which challenges the legality, validity,
enforceability, use or ownership of the Intellectual Property
Right; and
(iv) the Company and its Subsidiaries have not agreed to indemnify
any person for or against any interference, infringement,
misappropriation, or other conflict with respect to the
Intellectual Property Right;
(h) Section 4.19 of the Disclosure Letter identifies each
Intellectual Property Right that the Company and/or its Subsidiaries use
pursuant to license, sublicense, agreement, or permission. The Company has
delivered to Purchaser correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each such Intellectual Property Right identified in Section 4.19 of the
Disclosure Letter:
(i) to the Company's best knowledge and belief, the license,
sublicense, agreement, or permission covering the Intellectual
Property Right is legal, valid, binding, enforceable in
accordance with its terms, and in full force and effect in all
material respects;
(ii) to the Company's best knowledge and belief, no party to the
license, sublicense, agreement, or permission is in material
breach or default, and no event has occurred which with notice
or lapse of time would constitute a material breach or default
or permit termination, modification, or acceleration
thereunder; and
(iii) the Company and its Subsidiaries have not granted any
sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
As used in this Merger Agreement, the term "Intellectual Property
Rights" means: (1) United States and foreign patents, patent applications,
continuations, continuations-in-part, continuing prosecution applications,
divisions, reissues, extensions or re-examinations; (2) United States, state,
foreign, and common law trademarks, service marks, domain names, logos, trade
dress and trade names (including all assumed or fictitious names under which the
Company and each Subsidiary is conducting its business), whether registered or
unregistered, and pending applications to register the foregoing; (3)
copyrightable expressions fixed in tangible form, United States and foreign
copyrights therein, whether registered or unregistered, and pending applications
to register the same; and (4) trade secrets, know-how, concepts, methods,
processes, formulae, reports, data, customer lists, mailing lists, business
plans and other information that is confidential and proprietary, in each case
either owned or used pursuant to a license.
4.20 FDA and Other Approval Status. All Products (as herein defined),
including any accessories to be sold, are marketable, and currently are being
manufactured and marketed in substantial compliance with the Federal Food, Drug
and Cosmetic Act and other United States and foreign legal requirements. As used
in this Merger Agreement, the term "Products" means any products related to the
businesses of the Company or its Subsidiaries that are manufactured or sold
through the Company or its Subsidiaries.
-18-
4.21 Inventory. All raw materials, work-in-progress and finished goods
inventory is recorded in accordance with the Company's inventory policy attached
as Schedule 4.21 of the Disclosure Letter. The Company's inventory reserves for
excess and obsolete inventory are adequate.
4.22 Customers and Suppliers. Since September 30, 2002, no material
customer or supplier of the Company has indicated that it will stop or
materially decrease the rate of business done with the Company, nor is any
receivable for any such customer over 90 days past due for which adequate
reserves have not been made.
4.23 ISO 9001 Certification. Except as set forth in Section 4.13 of the
Disclosure Letter, the Company's manufacturing facilities used in connection
with its businesses are ISO 9001 certified and comply in all material respects
with all requirements for such ISO 9001 certification.
4.24 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of the Company, other than
arrangements with U.S. Bancorp Xxxxx Xxxxxxx. A true and complete copy of the
engagement letter between the Company and U.S. Bancorp Xxxxx Xxxxxxx has
previously been delivered to the Purchaser.
5. CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, prior to the Effective Time, unless the Purchaser
shall otherwise agree in writing (such agreement not to be unreasonably
withheld) or as otherwise expressly contemplated by this Merger Agreement:
(a) the businesses of the Company and its Subsidiaries shall be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and consistent with past
practice;
(b) the Company shall not (i) sell or pledge or agree to sell or
pledge any stock owned by it in any of its Subsidiaries; (ii) amend its Articles
of Incorporation or By-Laws; or (iii) split, combine or reclassify any shares of
its outstanding capital stock or declare, set aside or pay any dividend or other
distribution payable in cash, stock or property or redeem or otherwise acquire
any shares of its capital stock or shares of the capital stock of any of its
Subsidiaries;
(c) except as set forth Section 5.1 of the Disclosure Letter, the
Company shall not, and shall cause each of its Subsidiaries not to, (i)
authorize for issuance, issue or sell any additional shares of, or rights of any
kind to acquire any shares of, its capital stock of any class (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise), except for Shares reserved for issuance upon
the exercise of Stock Options in accordance with their existing terms, as such
Stock Options may be accelerated pursuant to their existing terms; (ii) acquire,
dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or
other assets other than in the ordinary course of business and consistent with
past practices; (iii) incur, assume or prepay any material indebtedness or any
other material
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liabilities other than the incurrence of liabilities in the ordinary course of
business and borrowings under the credit agreement described in Section 5.1 of
the Disclosure Letter for working capital purposes up to the credit limit
described in Section 5.1 of the Disclosure Letter; (iv) assume, endorse (other
than in the ordinary course of business consistent with past practices),
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the material obligations of any other person
(other than a Subsidiary); (v) make any loans, advances or capital contributions
to, or investments in, any other person, other than to its Subsidiaries, or
otherwise enter into any Material Contract; (vi) make any loans to employees,
other than advances in the ordinary course of business consistent with past
practices; (vii) fail to maintain adequate insurance consistent with past
practices for their businesses and properties (to the extent available at
commercially reasonable prices); and (viii) make capital expenditures in excess
of $25,000 individually or $250,000 in the aggregate;
(d) the Company shall use reasonable business efforts to preserve
intact the business organization of the Company and its Subsidiaries, to keep
available the services of its and their present officers and key employees, and
to preserve the goodwill of those having business relationships with it and
them;
(e) the Company shall not and shall cause its Subsidiaries not to
(i) enter into any new agreements (other than in its ordinary course of business
consistent with past practice) or amend or modify any existing agreements (other
than in its ordinary course of business consistent with past practice) with any
of their respective officers, directors or employees or with any "disqualified
individuals" (as defined in Section 280G(c) of the Code), (ii) grant any
increases in the compensation of their respective directors, officers and
employees or any "disqualified individuals" other than increases in the ordinary
course of business and consistent with past practice to persons who are not
directors or corporate officers of or "disqualified individuals" with respect to
the Company or any Subsidiary, (iii) enter into, adopt, amend or terminate, or
grant any new benefit not presently provided for under, any employee benefit
plan or arrangement, except as required by law or to maintain the Tax qualified
status of the plan; provided, however, it is understood that the Company is
permitted to pay bonuses to the extent described in Section 5.1 of the
Disclosure Letter; or (iv) except as contemplated by Section 6.14, take any
action with respect to the grant of any severance or termination pay other than
in the ordinary course of business and consistent with past practice and
pursuant to policies or practices in effect on the date of this Merger
Agreement;
(f) the Company shall not, and shall not permit any Subsidiary to,
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other than
in the ordinary course of business) that are material, individually or in the
aggregate, to the Company and its Subsidiaries taken as a whole;
(g) except as set forth in Section 5.1 of the Disclosure Letter,
neither the Company nor any of its Subsidiaries shall settle or compromise any
material claims or litigation or, except in the ordinary and usual course of
business modify, amend or terminate any of its Material Contracts or waive,
release or assign any material rights or claims;
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(h) neither the Company nor any of its Subsidiaries shall make any
material Tax election or permit any insurance policy naming it as a beneficiary
or loss-payable payee to be cancelled or terminated except in the ordinary and
usual course of business;
(i) neither the Company nor any of its Subsidiaries shall take any
action or omit to take any action that would cause any of its representations
and warranties herein to become untrue in any material respect;
(j) neither the Company nor any of its Subsidiaries will authorize
or enter into an agreement to do any of the foregoing; and
(k) except as required by the Pennsylvania Law or the Company's
By-Laws, the Company will not call any meeting of its shareholders to be held
prior to December 31, 2003 other than a special or annual meeting of
shareholders to consider and vote upon the Merger.
6. ADDITIONAL AGREEMENTS
6.1 Proxy Statement. Promptly after the date hereof, the Company shall
prepare and (subject to the Purchaser's approval, which shall not be
unreasonably withheld) file with the SEC under the Exchange Act, and shall use
all reasonable efforts to have promptly cleared by the SEC and promptly mailed
to the Company's shareholders, a proxy statement (the "Proxy Statement") with
respect to the meeting of the Company's shareholders referred to in Section 6.2.
The Company agrees, as to itself and its Subsidiaries, that none of the
information supplied or to be supplied by it or its Subsidiaries for inclusion
or incorporation by reference in the Proxy Statement and any amendment thereof
or supplement thereto will, at the date of mailing to stockholders and at the
time of the meeting of stockholders of the Company to be held in connection with
the Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Purchaser agrees that none of the information supplied or to
be supplied by the Purchaser or Merger Sub in writing to the Company for
inclusion in the Proxy Statement and any amendment thereof or supplement thereto
will, at the date of mailing to stockholders and at the time of the Company
Shareholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements contained therein, in light to the circumstances under
which they were made, not misleading. The Company will cause the Proxy Statement
to comply as to form in all material respects with the applicable provisions of
the Exchange Act and the rules and regulations thereunder. Subject to the
fiduciary duty obligations of the Board of Directors of the Company under
Pennsylvania Law, the Proxy Statement shall contain the recommendation of the
Board of Directors of the Company in favor of the Merger and for approval and
adoption of this Merger Agreement.
6.2 Meeting of Shareholders of the Company. Promptly after the date
hereof, the Company shall take all action necessary in accordance with the
Pennsylvania Law and the Company's Articles of Incorporation and By-Laws to
convene a meeting of its shareholders (the "Company Shareholders' Meeting") to
consider and vote upon this Merger Agreement and the Merger and shall use its
best efforts to convene the Company Shareholders' Meeting prior to May 15, 2003.
Subject to the fiduciary duty obligations of the Board of Directors of the
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Company under Pennsylvania Law, the Board of Directors of the Company will
recommend that the shareholders of the Company vote to adopt and approve the
Merger and this Merger Agreement and the Company shall use all reasonable
efforts to solicit from shareholders of the Company proxies in favor of such
adoption and approval.
6.3 Other Actions by the Company and Purchaser. If any Takeover Statute is
or may become applicable to the Merger or the other transactions contemplated by
this Merger Agreement, each of Purchaser and the Company shall use their best
efforts to grant such approvals and take such actions as are necessary so that
such transactions may be consummated as promptly as practicable on the terms
contemplated by this Merger Agreement or by the Merger and otherwise use their
best efforts to eliminate or minimize the effects of such statute or regulation
on such transactions.
6.4 Acquisition Proposals. The Company agrees that neither it nor any of
its Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or 25% or more of the assets or 25% or more of any equity
securities of, it or any of its Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall direct and use its
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any Person relating to an Acquisition
Proposal. The Company agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposals. The Company
agrees that it will take the necessary steps to promptly inform the individuals
or entities referred to in the first sentence hereof who may be involved in any
such discussion of the obligations undertaken in this Section and in the
Confidentiality Agreement (as defined in Section 9.7). The Company agrees that
it will notify Purchaser immediately if any such inquiries, proposals or offers
are received by, any such information is requested from, or any such discussions
or negotiations are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep Purchaser informed, on a current basis, as to the status
and terms of any such proposals or offers. The Company also agrees that it will
promptly request each Person that has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring it or any of its
Subsidiaries to return or destroy all confidential information heretofore
furnished to such Person by or on behalf of it or any of its Subsidiaries.
6.5 Stock Exchange De-listing. The Surviving Corporation shall use its
best efforts to cause the Shares to no longer be quoted on the Nasdaq National
Market System and de-registered under the Exchange Act as soon as practicable
following the Effective Time.
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6.6 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Merger and all other transactions contemplated by
this Merger Agreement, including (i) filing the Articles of Merger referred to
in Section 1.4, (ii) using reasonable efforts to remove any legal impediment to
the consummation or effectiveness of such transactions, (iii) satisfying the
conditions to each other parties' obligation to consummate the Merger as
contemplated hereby and (iv) using reasonable efforts to obtain all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings, including, but not limited to, filings under the HSR Act, if
applicable, and submissions of information requested by governmental
authorities. Subject to applicable laws relating to the exchange of information,
Purchaser shall have the right to review in advance, and consult with the
Company on, all filings made with, or written materials submitted to, any third
party and/or any governmental authority in connection with the Merger and the
other transactions contemplated by this Merger Agreement.
6.7 Expenses. The Surviving Corporation shall pay all charges and
expenses, including those of the Disbursing Agent, in connection with the
transactions contemplated in Article II hereof, and Purchaser shall reimburse
the Surviving Corporation for such charges and expenses. Except as otherwise
provided in Section 8.5(b), whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Merger Agreement and the Merger
and the other transactions contemplated by this Merger Agreement shall be paid
by the party incurring such expense.
6.8 Indemnification, Exculpation and Insurance.
(a) From and after the Effective Time, Purchaser agrees that it will
indemnify and hold harmless each present and former director and officer of the
Company (when acting in such capacity) determined immediately prior to the
Effective Time (the "Indemnified Persons"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of 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 the Company would have been
permitted under Pennsylvania law and its articles of incorporation or by-laws in
effect on the date hereof to indemnify such Indemnified Person (and Purchaser
shall also advance expenses as incurred to the fullest extent permitted under
applicable law, provided the Indemnified Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such Indemnified Person is not entitled to indemnification); and provided,
further, that any determination required to be made with respect to whether an
officer's or director's conduct complies with the standards set forth under
Pennsylvania law and the Company's articles of incorporation and by-laws shall
be made by independent counsel reasonably acceptable to both the Surviving
Corporation and the Indemnified Person.
(b) Any Indemnified Person wishing to claim indemnification under
paragraph (a) of this Section 6.8, upon learning of any such claim, action,
suit, proceeding or
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investigation, shall promptly notify Purchaser thereof, but the failure to so
notify shall not relieve Purchaser of any liability it may have to such
Indemnified Person if such failure does not materially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i)
Purchaser or the Surviving Corporation shall have the right to assume the
defense thereof and Purchaser shall not be liable to such Indemnified Persons
for any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Persons in connection with the defense thereof,
except that if Purchaser or the Surviving Corporation elects not to assume such
defense or counsel for the Indemnified Persons advises that there are issues
which raise conflicts of interest between Purchaser or the Surviving Corporation
and the Indemnified Persons, the Indemnified Persons may retain counsel
satisfactory to them, and Purchaser or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Persons
promptly as statements therefor are received; provided, however, that Purchaser
shall be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel for all Indemnified Persons in any jurisdiction, (ii) the Indemnified
Persons will cooperate in the defense of any such matter and (iii) Purchaser
shall not be liable for any settlement effected without its prior written
consent; and provided, further, that Purchaser shall not have any obligation
hereunder to any Indemnified Person if and when a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Person in the manner
contemplated hereby is prohibited by applicable law.
(c) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its properties
and assets to any person, then, and in each such case, the Purchaser shall cause
proper provision to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 6.8.
(d) For six (6) years after the Effective Time, the Purchaser shall
maintain in effect a directors' and officers' liability insurance policy
covering only those persons currently covered by the Company's current
directors' and officers' liability insurance policy (the "Insured Parties") for
acts or omissions occurring prior to the Effective Time on terms with respect to
such coverage and amounts no less favorable in any material respect to such
Insured Parties than the terms in effect under the Company's directors' and
officers' liability insurance policy as in effect on the date of this Merger
Agreement; provided that the Purchaser shall not be required to pay an annual
premium therefor to the extent in excess of 300% of the last annual premium
payable prior to the date hereof; provided further that if the annual premiums
for such coverage exceeds such maximum amount, the Purchaser shall be obligated
to obtain a policy with the greatest standard coverage amount available for a
cost not exceeding such maximum amount. The Purchaser shall use its reasonable
best efforts to obtain the insurance policy or policies maintained under this
Section 6.8(d) from a reputable insurance carrier that has a financial strength
rating from A.M. Best (or its successor) that is equal to or better than the
financial strength rating that was assigned by A.M. Best to the Company's
current directors' and officers' liability insurance carrier on May 5, 2002. The
Purchaser's obligation to maintain the insurance policy or policies pursuant to
this Section 6.8(d) shall be contingent on the cooperation of the Insured
Parties in responding to reasonable requests for information from the Purchaser,
with all such communications to be made through a single intermediary designated
by the Insured
-24-
Parties. Any costs and expenses incurred by any Insured Party or the
intermediary designated by the Insured Parties in connection with any such
requests shall be paid by the Insured Parties.
(e) The provisions of this Section 6.8 are intended to be for the
benefit of, and will be enforceable by, each Indemnified Person, his or her
heirs and his or her representatives.
6.9 Notification of Certain Matters. The Company shall give prompt notice
to the Purchaser, and the Purchaser shall give prompt notice to the Company, of
(i) the occurrence, or failure to occur, of any event, which occurrence or
failure would be likely to cause any representation or warranty contained in
this Merger Agreement to be untrue or inaccurate in any material respect at any
time from the date hereof to the Effective Time, provided that each party's
obligation hereunder is limited to events of which its senior management has
knowledge, and (ii) any material failure of the Company or the Purchaser, as the
case may be, or any officer, director, employee or agent thereof, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder. The Company and Purchaser each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
substantive communications received by Purchaser or the Company, as the case may
be, or any of its Subsidiaries, from any third party and/or any governmental
authority with respect to the Merger and the other transactions contemplated by
this Merger Agreement. The Company shall give prompt notice to Purchaser of any
change that could result in a Material Adverse Effect.
6.10 Access; Communications with Distributors. The Company shall, and
shall cause its Subsidiaries, officers, directors, employees and agents to,
afford the officers, employees and agents of the Purchaser complete access at
all reasonable times, from the date hereof to the Effective Time, to its
officers, employees, agents, properties, books and records and shall furnish the
Purchaser all financial, operating and other data and information as the
Purchaser, through its officers, employees or agents, may reasonably request.
All such information shall be governed by the terms of the Confidentiality
Agreement. From the date hereof to the Effective Time, the Company and the
Purchaser agree to take the actions set forth in Section 6.10 of the Disclosure
Letter.
6.11 Employee Benefits. The Purchaser and the Company agree that all
employees of the Company and its Subsidiaries immediately prior to the Effective
Time shall be employed by the Surviving Corporation and its subsidiaries
immediately after the Effective Time, it being understood that, except for
employees of the Company and its subsidiaries with employment agreements as set
forth in Section 6.14, the Purchaser shall not have any obligation to continue
employing such employees for any length of time thereafter. Except as set forth
in Section 6.11 of the Disclosure Letter, the Purchaser and the Company agree
that, after the Effective Time, all employees of the Company and its
Subsidiaries shall, at the Purchaser's option (i) continue to be entitled to and
shall receive the same benefits currently provided to the employees of the
Company and its Subsidiaries under the existing Company benefit plans ("Company
Plans") for three (3) months from the Effective Time so long as the continued
provision of such Company Plans to such employees does not cause any Purchaser
benefit plan to be in violation of any law or regulation governing such plans,
or (ii) shall be offered benefits similar to those available to the Purchaser's
employees. From and after three (3) months from the Effective Time, the then
employees of the Surviving Corporation and its subsidiaries shall be entitled to
and shall receive
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such benefits as the then constituted management of the Surviving Corporation
deems necessary and appropriate for the Purchaser, subject to consent and advice
from the Purchaser's executive management. With respect to any such benefit
arrangements ("Ultimate Plans"), the Purchaser shall grant all employees of the
Company and its Subsidiaries, who become participants in the Ultimate Plans
after the Effective Time, credit for all service with the Company and its
Subsidiaries, or their respective predecessors (or any other party for which
service has been recognized by the Company), prior to the Effective Time for all
purposes for which such service was recognized by the Company prior to the
Effective Time. To the extent that the Company Plans or Ultimate Plans provide
medical or dental welfare benefits after the Effective Time, the Purchaser shall
cause all pre-existing condition exclusions and actively-at-work requirements,
to the extent such requirements would have been met at the Company, to be waived
and the Purchaser shall provide that any expenses incurred on or before the
Effective Time shall be taken into account under the Ultimate Plans for purposes
of satisfying the applicable deductible, coinsurance and maximum out-of-pocket
provisions. Subject to the rules governing eligibility, vesting and all other
terms of any 401(k) plan or other qualified retirement plan or ERISA pension
plan maintained by the Purchaser and its subsidiaries (the "Retirement Plans"),
the employees of the Company and its Subsidiaries shall be eligible to
participate in the Retirement Plans on terms similar to the benefits provided to
similarly situated employees of the Purchaser and its subsidiaries, with credit
granted for purposes of eligibility and vesting for prior service with the
Company and its Subsidiaries, but not for purposes of accrual. The Purchaser
shall permit the Company to fully vest the accounts of the participants under
the Company's 401k Plan effective as of the Effective Time.
6.12 Antitrust Laws. As promptly as practicable, the Company, the
Purchaser and Merger Sub shall make any and all filings and submissions under
the HSR Act as may be reasonably required to be made in connection with this
Merger Agreement and the transactions contemplated hereby. Subject to Section
6.10 hereof, the Company will furnish to the Purchaser and Merger Sub, and the
Purchaser and Merger Sub will furnish to the Company, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. Subject to Section 6.10 hereof,
the Company will provide the Purchaser and Merger Sub, and the Purchaser and
Merger Sub will provide the Company, with copies of all correspondence, filings
or communications (or memoranda setting forth the substance thereof) between
such party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Merger Agreement and the transactions contemplated hereby;
provided, however, that the Purchaser and Merger Sub shall not be required to
provide the Company with copies of confidential documents or information
included in any filings and submissions made by the Purchaser under the HSR Act
and the Company shall not be required to provide the Purchaser or Merger Sub
with copies of confidential documents or information included in any filings and
submissions made by the Company under the HSR Act.
6.13 Public Announcements. The Purchaser and Merger Sub, on the one hand,
and the Company, on the other hand, agree that they will use reasonable efforts
to consult with the other party prior to issuing any press release or otherwise
making any public statement, including, without limitation, making any filing
with any third party or governmental authority, or responding to any press
inquiry with respect to this Merger Agreement or the transactions contemplated
hereby, except as may be required by applicable law, court process or by
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obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system.
6.14 Employment Arrangements. The Purchaser shall cause the Surviving
Corporation to (a) assume and perform each of the employment agreements
described in Section 6.14A of the Disclosure Letter, including, without
limitation, the "Change in Control" and severance provisions thereof and (b)
assume and perform each of the agreements and obligations described in Section
6.14B of the Disclosure Letter.
7. CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Merger Agreement shall have been duly
approved by holders of Shares constituting the Company Requisite Vote in
accordance with applicable law and the articles of incorporation and by-laws of
the Company.
(b) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, if applicable, and, other than the filing provided for in Section
1.4, all notices, reports and other filings required to be made prior to the
Effective Time by the Company or Purchaser or any of their respective
Subsidiaries with, and all consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by the
Company or Purchaser or any of their respective Subsidiaries from, any
governmental authority (collectively, "Governmental Consents") in connection
with the execution and delivery of this Merger Agreement and the consummation of
the Merger and the other transactions contemplated hereby by the Company,
Purchaser and Merger Sub shall have been made or obtained (as the case may be).
(c) Litigation. No court or governmental authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, law, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger or the
other transactions contemplated by this Merger Agreement (collectively, an
"Order"), and no governmental authority shall have instituted any proceeding
seeking any such Order.
7.2 Conditions to Obligations of Purchaser and Merger Sub. The obligations
of Purchaser and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Purchaser at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Merger Agreement shall be true and
correct as of the date of this Merger Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date), and
Purchaser shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer of the Company to such effect (containing the
following proviso); provided,
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however, that notwithstanding anything herein to the contrary, this Section
7.2(a) shall be deemed to have been satisfied even if such representations or
warranties are not so true and correct unless the failure of such
representations or warranties to be so true and correct, individually or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect or could prevent or materially burden or materially impair the ability of
the Company to consummate the transactions contemplated by this Merger
Agreement.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all material obligations required to be
performed by it under this Merger Agreement at or prior to the Closing Date, and
Purchaser shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer of the Company to such effect.
(c) Consents Under Agreements. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
under the Contracts identified with an asterisk in Section 4.5 of the Disclosure
Letter.
(d) Resignations. Purchaser shall have received the resignations of
each person who at the Closing is a director or officer of the Company and each
of its Subsidiaries.
(e) Employment Agreements. The Company's employment agreements with
Xxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxxx shall be in full force and effect and
neither party shall be in material default thereunder.
7.3 Conditions to Obligation of the Company. The obligation of the Company
to effect the Merger is also subject to the satisfaction or waiver by the
Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser and Merger Sub set forth in this Merger Agreement shall
be true and correct as of the date of this Merger Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the extent
any such representation and warranty expressly speaks as of an earlier date) and
the Company shall have received a certificate signed on behalf of Purchaser by
the President of Purchaser and the President of Merger Sub to such effect
(containing the following proviso); provided, however, that notwithstanding
anything herein to the contrary, this Section 7.3(a) shall be deemed to have
been satisfied even if such representations or warranties are not so true and
correct unless the failure of such representations or warranties to be so true
and correct, individually or in the aggregate, could prevent or materially
burden or materially impair the ability of Purchaser to consummate the
transactions contemplated by this Merger Agreement.
(b) Performance of Obligations of Purchaser and Merger Sub. Each of
Purchaser and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Merger Agreement at or
prior to the Closing Date, and the Company shall have received a certificate
signed on behalf of Purchaser and Merger Sub by the President of Purchaser to
such effect.
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8. TERMINATION, AMENDMENT AND WAIVER
8.1 Termination by Mutual Consent. This Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Purchaser by action
of their respective Boards of Directors.
8.2 Termination by Either Purchaser or the Company. This Merger Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of either Purchaser or the
Company if (i) the Merger shall not have been consummated by July 31, 2003,
whether such date is before or after the date of approval by the stockholders of
the Company (the "Termination Date"), (ii) the approval of the Company's
stockholders required by Section 7.1(a) shall not have been obtained at a
meeting duly convened therefor or at any adjournment or postponement thereof, or
(iii) any Order permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable (whether before
or after the approval by the stockholders of the Company); provided, that the
right to terminate this Merger Agreement pursuant to clause (i) above shall not
be available to any party that has breached in any material respect its
obligations under this Merger Agreement in any manner that shall have
proximately contributed to the occurrence of the failure of the Merger to be
consummated by the Termination Date.
8.3 Termination by the Company. This Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by action of the Board of Directors of the Company if there has
been a breach of any representation, warranty, covenant or agreement made by
Purchaser or Merger Sub in this Merger Agreement, or any such representation and
warranty shall have become untrue after the date of this Merger Agreement, such
that Section 7.3(a) or 7.3(b) would not be satisfied and such breach or
condition is not curable or, if curable, is not cured within 30 days after
written notice thereof is given by the Company to Purchaser.
8.4 Termination by Purchaser. This Merger Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by action of
the Board of Directors of Purchaser if (a) the Board of Directors of the Company
shall have withdrawn or adversely modified in any material respect its approval
or recommendation of this Merger Agreement or failed to reconfirm its
recommendation in favor of this Merger Agreement within five business days after
a written request by Purchaser to do so, (b) there has been a breach of any
representation, warranty, covenant or agreement made by the Company in this
Merger Agreement, or any such representation and warranty shall have become
untrue after the date of this Merger Agreement, such that Section 7.2(a) or
7.2(b) would not be satisfied and such breach or condition is not curable or, if
curable, is not cured within 30 days after written notice thereof is given by
Purchaser to the Company, or (c) the Company or any of the other Persons
described in Section 6.4 as affiliates, representatives or agents of the Company
who have reason to be involved in the activities proscribed by Section 6.4 shall
take any of the actions that would be proscribed by Section 6.4.
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8.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Merger Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Merger Agreement
(other than as set forth in Section 9.1) shall become void and of no effect with
no liability on the part of any party hereto (or of any of its directors,
officers, employees, agents, legal and financial advisors or other
representatives); provided, however, except as otherwise provided herein, no
such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Merger Agreement.
(b) In the event that this Merger Agreement is terminated by
Purchaser pursuant to Section 8.4 (a) or (c), then the Company shall promptly,
but in no event later than two days after the date of such termination, pay
Purchaser a termination fee of $2,500,000 (the "Termination Fee") and shall
promptly, but in no event later than two days after being notified of such by
Purchaser, pay all of the out-of-pocket charges and expenses (but excluding any
investment banking fees), including those of the Disbursing Agent, incurred by
Purchaser or Merger Sub in connection with this Merger Agreement and the
transactions contemplated by this Merger Agreement, in each case payable by wire
transfer of same day funds. The Company acknowledges that the agreements
contained in this Section 8.5(b) are an integral part of the transactions
contemplated by this Merger Agreement, and that, without these agreements,
Purchaser and Merger Sub would not enter into this Merger Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
this Section 8.5(b), and, in order to obtain such payment, Purchaser or Merger
Sub commences a suit which results in a judgment against the Company for the fee
set forth in this paragraph (b), the Company shall pay to Purchaser or Merger
Sub its costs and expenses (including attorneys' fees) in connection with such
suit, together with interest on the amount of the fee at the prime rate of
JPMorgan Chase Bank in effect on the date such payment was required to be made.
8.6 Amendment. This Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
8.7 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto or (b) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of such party by a duly
authorized officer.
9. GENERAL PROVISIONS
9.1 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS MERGER
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The
parties hereby irrevocably submit to the jurisdiction of the courts of the State
of New York and the Federal courts of the United States of America located in
the State of New York solely in respect of the interpretation and enforcement of
the provisions of this Merger Agreement and of the documents referred to in this
Merger Agreement, and in respect of the transactions contemplated hereby, and
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hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Merger Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a New York State or Federal court. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 9.3 or in such other manner as may be permitted by law shall be valid
and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS MERGER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS MERGER AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS MERGER
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND
(iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS MERGER AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.1.
9.2 Survival. This Article 9 and the agreements of the Company, Purchaser
and Merger Sub contained in Sections 2.6 (Exercise and Cancellation of Company
Options), 6.5 (Stock Exchange De-listing), 6.7 (Expenses), 6.8 (Indemnification;
Directors' and Officers' Insurance) and 6.11 (Employee Benefits) shall survive
the consummation of the Merger. This Article 9, the agreements of the Company,
Purchaser and Merger Sub contained in Section 6.7 (Expenses), Section 8.5
(Effect of Termination and Abandonment) and the Confidentiality Agreement shall
survive the termination of this Merger Agreement. All other representations,
warranties, covenants and agreements in this Merger Agreement shall not survive
the consummation of the Merger or the termination of this Merger Agreement.
9.3 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile,
by overnight courier or sent by certified or registered mail, postage prepaid,
and shall be deemed given when so delivered personally, or when so received by
facsimile or courier, or if mailed, three calendar days after the date of
mailing, as follows (or at such other address for a party as shall be specified
by like notice):
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(a) if to the Purchaser or Merger Sub:
CONMED Corporation
000 Xxxxxx Xxxx
Xxxxx, Xxx Xxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
CONMED Corporation
000 Xxxxxx Xxxx
Xxxxx, Xxx Xxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Linvatec Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000)-000-0000
Facsimile: (000)-000-0000
(b) if to the Company:
Bionx Implants, Inc.
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Facsimile (000) 000-0000
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With copies to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telephone: (000)-000-0000
Facsimile: (000)-000-0000
9.4 Interpretation. When a reference is made in this Merger Agreement to
subsidiaries of the Purchaser or the Company, the word "subsidiaries" or
"Subsidiaries" means any corporation or entity more than fifty percent (50%) of
whose outstanding voting securities or equity interests are directly or
indirectly owned by the Purchaser or the Company, as the case may be. The
headings contained in this Merger Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Merger
Agreement.
9.5 No Third Party Beneficiaries. Except for the current and former
officers and directors of the Company (who are third-party beneficiaries of the
provisions set forth in Section 6.8 hereof), there are no third party
beneficiaries of this Merger Agreement and nothing in this Merger Agreement,
express or implied, is intended to or shall confer upon any person other than
the parties hereto and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities.
9.6 Counterparts. This Merger Agreement may be executed in one or more
counterparts, which together shall constitute a single agreement.
9.7 Entire Agreement; NO OTHER REPRESENTATIONS. This Merger Agreement
(including any exhibits hereto), the Disclosure Letter and the Confidentiality
Agreement, dated November 20, 2001, between Purchaser and the Company (the
"Confidentiality Agreement") constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.
9.8 Severability. The provisions of this Merger Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Merger Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Merger Agreement and the application of
such provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.9 Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Merger Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof. Where a reference in this Merger Agreement is made to a Section, such
reference shall be to a Section of this Merger Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Merger Agreement, they shall be deemed to be followed by the words "without
limitation."
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9.10 Assignment. This Merger Agreement shall not be assignable by
operation of law or otherwise; provided, however, that Purchaser may designate,
by written notice to the Company, another wholly-owned direct or indirect
subsidiary to be a constituent corporation in lieu of Merger Sub, in which event
all references herein to Merger Sub shall be deemed references to such other
subsidiary, except that (i) the representations and warranties in Sections 3.1
through 3.4 made herein with respect to Merger Sub as of the date of this Merger
Agreement shall be deemed made with respect to such other subsidiary as of the
date of such designation and (ii) the representation and warranty in Section 3.5
made herein with respect to Merger Sub as of the date of this Merger Agreement
shall be deemed made with respect to such other subsidiary as of the date of
this Merger Agreement.
9.11 Defined Terms. The following terms are defined in the following
sections of this Merger Agreement:
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Acquisition Proposal 6.4
Benefit Plans 4.9(a)
Closing 1.3
Closing Date 1.3
Code 4.9(b)
Company Lead-in
Company Disclosure Schedule Opening Paragraph of Article IV
Company Options 2.6
Company Plans 6.11
Company Requisite Vote 4.5
Company Shareholders Meeting 6.2
Company Stock Option Plans 2.6
Contracts 4.5
Costs 6.8(a)
Disbursing Agent 2.3
Disclosure Letter Opening Paragraph of Article IV
Disqualified Individuals 5.1(e)
Distributors 4.1
Effective Time 1.4
Environmental Law 4.18
ERISA 4.9(a)
Exchange Act 3.2
HSR Act 3.2
Indemnified Person 6.8(a)
Insured Parties 6.8(d)
Intellectual Property Rights 4.19
Investment Plan 4.4
Laws 4.13
Liens 4.16
Material Adverse Effect 4.1
Material Contracts 4.15
Merger Recital
Merger Agreement Lead-in
Merger Consideration 2.1(a)
Merger Sub Lead-in
Option Payments 2.6
Payment Fund 2.2
Pennsylvania Law 1.1
Pension Plans 4.9(b)
Permitted Investments 2.2
Products 4.20
Proxy Statement 6.1
Purchaser Lead-in
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Retirement Plans 6.11
SEC 4.6(a)
SEC Documents 4.6(a)
Shares Recital
Stock Option Plan 4.4
Stock Options 4.4
Subsidiary or subsidiary 9.4
Surviving Corporation 1.1
Takeover Statute 4.5
Tax 4.10
Tax Affiliate 4.10
Termination Date 8.2
Termination Fee 8.5(b)
Ultimate Plans 6.11
Unaudited Third Quarter Financial Statements 4.6
Voting Agreements Recital
10-K 4.6
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IN WITNESS WHEREOF, the Purchaser, Merger Sub and the Company have caused
this Merger Agreement to be executed as of the date first written above by their
respective duly authorized officers.
CONMED CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Title: Assistant Secretary
ARROW MERGER CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Title: Assistant Secretary
BIONX IMPLANTS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Title: President and
Chief Executive Officer
