Exhibit 2.1
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
among
INTEGRA LIFESCIENCES HOLDINGS CORPORATION,
ICE MERGERCORP, INC.
and
ISOTIS, INC.
Dated as of August 6, 2007
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I. THE MERGER.......................................................................................... 1
Section 1.1. The Merger............................................................................ 1
Section 1.2. Closing............................................................................... 1
Section 1.3. Effective Time........................................................................ 2
Section 1.4. Effects of the Merger................................................................. 2
Section 1.5. Certificate of Incorporation.......................................................... 2
Section 1.6. Bylaws................................................................................ 2
Section 1.7. Directors; Officers................................................................... 2
Section 1.8. Effect on Capital Stock............................................................... 2
Section 1.9. Treatment of Options.................................................................. 4
ARTICLE II. EXCHANGE OF CERTIFICATES.................................................................... 4
Section 2.1. Exchange Fund......................................................................... 4
Section 2.2. Exchange Procedures................................................................... 4
Section 2.3. No Further Ownership Rights in Company Common Stock................................... 5
Section 2.4. Termination of Exchange Fund.......................................................... 5
Section 2.5. No Liability.......................................................................... 5
Section 2.6. Lost Certificates..................................................................... 5
Section 2.7. Withholding Rights.................................................................... 6
Section 2.8. Further Assurances.................................................................... 6
Section 2.9. Stock Transfer Books.................................................................. 6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................... 6
Section 3.1. Corporate Organization................................................................ 7
Section 3.2. Qualification to Do Business.......................................................... 7
Section 3.3. No Conflict or Violation.............................................................. 7
Section 3.4. Consents and Approvals................................................................ 7
Section 3.5. Authorization and Validity of Agreement............................................... 8
Section 3.6. Capitalization and Related Matters.................................................... 8
Section 3.7. Subsidiaries and Equity Investments................................................... 10
Section 3.8. Company SEC Reports................................................................... 10
Section 3.9. Absence of Certain Changes or Events.................................................. 10
Section 3.10. Tax Matters........................................................................... 12
Section 3.11. Absence of Undisclosed Liabilities.................................................... 13
Section 3.12. Company Property...................................................................... 14
Section 3.13. Assets of the Company and its Subsidiaries............................................ 15
Section 3.14. Intellectual Property................................................................. 15
Section 3.15. Software.............................................................................. 16
Section 3.16. Licenses and Permits.................................................................. 17
- i -
Section 3.17. Regulatory Matters.................................................................... 17
Section 3.18. Certifications; Product Safety........................................................ 20
Section 3.19. Compliance with Law................................................................... 21
Section 3.20. Litigation............................................................................ 21
Section 3.21. Contracts............................................................................. 22
Section 3.22. Employee Plans........................................................................ 24
Section 3.23. Insurance............................................................................. 26
Section 3.24. Affiliate Transactions................................................................ 26
Section 3.25. Vendors and Customers................................................................. 27
Section 3.26. Labor Matters......................................................................... 27
Section 3.27. Environmental Matters................................................................. 28
Section 3.28. No Brokers; Other Advisors............................................................ 29
Section 3.29. State Takeover Statutes............................................................... 29
Section 3.30. Opinion of Financial Advisor.......................................................... 29
Section 3.31. Information Supplied.................................................................. 29
Section 3.32. Board Approval........................................................................ 30
Section 3.33. Vote Required......................................................................... 30
Section 3.34. Illegal or Unauthorized Payments; Political Contributions............................. 30
Section 3.35. Exchange Offer........................................................................ 31
Section 3.36. Product Warranty...................................................................... 32
Section 3.37. Export................................................................................ 32
Section 3.38. Inventory............................................................................. 33
Section 3.39. No Other Representations or Warranties................................................ 33
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.................................... 33
Section 4.1. Organization.......................................................................... 33
Section 4.2. No Conflict or Violation.............................................................. 33
Section 4.3. Consents and Approvals................................................................ 34
Section 4.4. Authorization and Validity of Agreement............................................... 34
Section 4.5. No Brokers............................................................................ 34
Section 4.6. Information Supplied.................................................................. 34
Section 4.7. Merger Sub............................................................................ 35
Section 4.8. No Other Representations or Warranties................................................ 35
ARTICLE V. COVENANTS OF THE COMPANY................................................................... 35
Section 5.1. Conduct of Business Before the Closing Date........................................... 35
Section 5.2. Notice of Breach...................................................................... 38
Section 5.3. Affiliate Letter...................................................................... 38
Section 5.4. FDA Correspondence.................................................................... 38
Section 5.5. Section 409A.......................................................................... 38
- ii -
ARTICLE VI. COVENANTS OF PARENT AND MERGER SUB................................................................. 38
Section 6.1. Employee Benefits..................................................................... 38
Section 6.2. Indemnification Continuation.......................................................... 39
ARTICLE VII. ADDITIONAL COVENANTS OF THE PARTIES............................................................... 40
Section 7.1. Preparation of Proxy Statement, Company Stockholders Meeting.......................... 40
Section 7.2. Access to Information................................................................. 41
Section 7.3. Efforts............................................................................... 41
Section 7.4. Acquisition Proposals................................................................. 43
Section 7.5. Stockholder Litigation................................................................ 46
Section 7.6. Maintenance of Insurance.............................................................. 46
Section 7.7. Public Announcements.................................................................. 46
Section 7.8. No Shareholder Rights Plan............................................................ 46
ARTICLE VIII. CONDITIONS PRECEDENT............................................................................. 47
Section 8.1. Conditions to Each Party's Obligation to Effect the Merger............................ 47
Section 8.2. Additional Conditions to Obligations of Parent and Merger Sub......................... 47
Section 8.3. Additional Conditions to Obligations of the Company................................... 48
ARTICLE IX. TERMINATION........................................................................................ 49
Section 9.1. Termination........................................................................... 49
Section 9.2. Effect of Termination................................................................. 50
Section 9.3. Amendment............................................................................. 52
Section 9.4. Extension; Waive...................................................................... 52
ARTICLE X. MISCELLANEOUS....................................................................................... 52
Section 10.1. Non-Survival of Representations, Warranties and Agreements............................ 52
Section 10.2. Disclosure Schedules.................................................................. 52
Section 10.3. Successors and Assigns................................................................ 52
Section 10.4. Governing Law; Jurisdiction........................................................... 53
Section 10.5. Expenses.............................................................................. 54
Section 10.6. Severability; Construction............................................................ 54
Section 10.7. Notices............................................................................... 54
Section 10.8. Entire Agreement...................................................................... 55
Section 10.9. Parties in Interest................................................................... 55
Section 10.10. Section and Paragraph Headings........................................................ 56
Section 10.11. Counterparts.......................................................................... 56
Section 10.12. Definitions........................................................................... 56
- iii -
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 6, 2007 (this
"Agreement"), among INTEGRA LIFESCIENCES HOLDINGS CORPORATION, a Delaware
corporation ("Parent"), ICE MERGERCORP, INC., a Delaware corporation and a
direct wholly owned Subsidiary of Parent ("Merger Sub"), and ISOTIS, INC., a
Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have each approved and declared advisable the merger of Merger
Sub with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, pursuant to which each outstanding share
of common stock, par value $0.0001 per share, of the Company ("Company Common
Stock") issued and outstanding immediately prior to the Effective Time, other
than shares owned or held directly or indirectly by Parent or the Company and
Appraisal Shares, will be converted into the right to receive $7.25 per share in
cash;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the
conditions hereof, at the Effective Time, Merger Sub shall be merged with and
into the Company and the separate existence of Merger Sub shall thereupon cease,
and the Company, as the surviving corporation in the Merger (the "Surviving
Corporation"), shall by virtue of the Merger continue its existence under the
laws of the State of Delaware.
SECTION 1.2. CLOSING. Unless this Agreement shall have been
terminated pursuant to the provisions of Section 9.1, the closing of the Merger
(the "Closing") will take place on the third Business Day after the satisfaction
or waiver (subject to applicable law) of the conditions (excluding conditions
that, by their terms, cannot be satisfied until the Closing Date, but subject to
the satisfaction or, where permitted, waiver of those conditions as of the
Closing) set forth in Article VIII, unless another time or date is agreed to in
writing by the parties hereto (the date of the Closing, the "Closing Date"). The
Closing shall be held at the offices of Xxxxxxx Xxxx & Xxxxxxxxx LLP, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another place is agreed to in
writing by the parties hereto.
SECTION 1.3. EFFECTIVE TIME. Upon the Closing, the parties shall
file with the Secretary of State of the State of Delaware a certificate of
merger (the "Certificate of Merger"). The Merger shall become effective at such
time as the Certificate of Merger is duly filed with and accepted by the
Secretary of State of the State of Delaware or at such subsequent time as Parent
and the Company shall agree and as shall be specified in the Certificate of
Merger (the date and time the Merger becomes effective being the "Effective
Time").
SECTION 1.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the property, rights,
privileges, powers, and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.5. CERTIFICATE OF INCORPORATION. At the Effective Time,
the certificate of incorporation of the Company shall be amended to read in its
entirety as the certificate of incorporation of Merger Sub as in effect
immediately prior to the Effective Time, except that the name of the Company
shall continue to be "IsoTis, Inc." and the provisions of the certificate of
incorporation of the Company related to the incorporator of the Company shall
not be amended, and as so amended shall be the certificate of incorporation of
the Surviving Corporation after the Effective Time, and thereafter may be
amended as provided therein or by law.
SECTION 1.6. BYLAWS. The bylaws of Merger Sub as in effect at the
Effective Time shall be the bylaws of the Surviving Corporation, and thereafter
may be amended as provided therein or by law.
SECTION 1.7. DIRECTORS; OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and the officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected and qualified or until their death,
resignation or removal in accordance with the DGCL and the certificate of
incorporation and bylaws of the Surviving Corporation.
SECTION 1.8. EFFECT ON CAPITAL STOCK. At the Effective Time by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than treasury shares and any
shares held directly or indirectly by Parent and, except as provided in Section
1.8(e), Appraisal Shares) shall be converted into the right to receive $7.25 in
cash, without interest (the "Merger Consideration").
(b) All shares of Company Common Stock shall cease to be outstanding
and shall be canceled and retired and shall cease to exist, and each holder of a
certificate which immediately prior to the Effective Time represented any such
shares of Company Common
- 2 -
Stock (a "Certificate") shall thereafter cease to have any rights with respect
to such shares of Company Common Stock, except the right to receive the Merger
Consideration. Each Treasury Share at the Effective Time shall, by virtue of the
Merger, cease to be outstanding and shall be canceled and no Merger
Consideration or other consideration shall be delivered in exchange therefor.
(c) Each share of common stock, par value $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(d) If prior to the Effective Time, the Company should split,
combine or otherwise reclassify the Company Common Stock, or pay a stock
dividend or other stock distribution in Company Common Stock, or otherwise
change the Company Common Stock into any other securities, or make any other
such stock dividend or distribution in capital stock of the Company in respect
of the Company Common Stock, then the Merger Consideration will be appropriately
adjusted to reflect such split, combination, dividend or other distribution or
change. For avoidance of doubt, the issuance of shares of Company Common Stock
pursuant to the Exchange Offer shall not give rise to any adjustment
contemplated by this Section 1.8(d).
(e) Notwithstanding anything in this Agreement to the contrary,
shares (the "Appraisal Shares") of Company Common Stock issued and outstanding
immediately prior to the Effective Time that are held by any holder who is
entitled to demand and properly demands appraisal of such shares pursuant to,
and who complies in all respects with, the provisions of Section 262 of the DGCL
("Section 262"), shall not be converted into the right to receive the Merger
Consideration as provided in Section 1.8(a), but instead such holder shall be
entitled to payment of the fair value of such Appraisal Shares in accordance
with the provisions of Section 262. At the Effective Time, the Appraisal Shares
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of a certificate that immediately prior to the
Effective Time represented Appraisal Shares shall cease to have any rights with
respect thereto, except the right to receive the fair value of such shares in
accordance with the provisions of Section 262. Notwithstanding the foregoing, if
any such holder shall fail to perfect or otherwise shall waive, withdraw or lose
the right to appraisal under Section 262 or a court of competent jurisdiction
shall determine that such holder is not entitled to the relief provided by
Section 262, then the right of such holder to be paid the fair value of such
holder's Appraisal Shares under Section 262 shall cease and such Appraisal
Shares shall be deemed to have been converted at the Effective Time into, and
shall have become, the right to receive the Merger Consideration as provided in
Section 1.8(a). The Company shall serve prompt notice to Parent of any demands
for appraisal of any shares of Company Common Stock, withdrawals of any such
demands and any other related instruments served pursuant to the DGCL received
by the Company, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, without the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands, or agree to do or commit to
do any of the foregoing.
- 3 -
SECTION 1.9. TREATMENT OF OPTIONS.
(a) Each option to purchase shares of Company Common Stock
(individually a "Company Option" and collectively, the "Company Options")
outstanding immediately prior to the Effective Time pursuant to any Company
Stock Plan or otherwise will at the Effective Time be cancelled and the holder
of such Company Option will, in full settlement of such Company Option, receive
from the Company an amount (subject to any applicable withholding), if any, in
cash equal to the product of (x) the excess, if any, of the Merger Consideration
over the exercise price per share of Company Common Stock underlying such
Company Option multiplied by (y) the number of shares of Company Common Stock
subject to such Company Option, whether or not vested or exercisable; provided
that the aggregate amount of such payment shall be rounded down to the nearest
whole cent. If the applicable exercise price of any Company Option equals or
exceeds the Merger Consideration, such Company Option shall be cancelled without
payment of additional consideration, and all rights with respect to such Company
Option shall terminate as of the Effective Time. Parent shall pay, or shall
cause the Surviving Corporation to pay, the amount of cash payable in respect of
each Company Option as soon as practicable following the Effective Time, but in
any event no later than ten (10) Business Days following the Effective Time. The
holders of Stock Options will have no further rights in respect of any Company
Options from and after the Effective Time.
(b) Prior to the Effective Time, the Company will adopt such
resolutions and take such other actions as are necessary in order to (i)
effectuate the actions contemplated by this Section 1.9 or to otherwise cancel
the Company Options prior to the Effective Time, and (ii) terminate each Company
Stock Plan, in each case without paying any consideration or incurring any debts
or obligations on behalf of the Company or the Surviving Corporation, provided
that such resolutions and actions shall expressly be conditioned upon the
consummation of the Merger and the other transactions contemplated hereby and
shall be of no effect if this Agreement is terminated.
ARTICLE II.
EXCHANGE OF CERTIFICATES
SECTION 2.1. EXCHANGE FUND. At or prior to the Effective Time,
Parent shall deposit with American Stock Transfer and Trust Company or such
other bank or trust company as Parent shall determine and who shall be
reasonably satisfactory to the Company (the "Exchange Agent"), in trust for the
benefit of holders of shares of Company Common Stock, for exchange in accordance
with Section 1.8, the cash to be paid pursuant to this Agreement in exchange for
outstanding Company Common Stock. Any cash deposited with the Exchange Agent
shall hereinafter be referred to as the "Exchange Fund."
SECTION 2.2. EXCHANGE PROCEDURES. As promptly as practicable after
the Effective Time, the Exchange Agent will send to each record holder of a
Certificate, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in a
form and have such other provisions as Parent may reasonably specify) and (ii)
- 4 -
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. As soon as reasonably practicable after the
Effective Time, each holder of a Certificate, upon surrender of a Certificate to
the Exchange Agent together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent, shall
be entitled to receive in exchange therefor a check in the amount equal to the
per share cash amount of the Merger Consideration (after giving effect to any
required tax withholdings), which such holder has the right to receive pursuant
to Section 1.8. The Exchange Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. No interest will be paid or will accrue on any cash payable upon due
surrender of the Certificates. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of the
Company, the Merger Consideration with respect to such Company Common Stock
shall be paid to such a transferee only if the Certificate representing such
shares of Company Common Stock is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid.
SECTION 2.3. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
The Merger Consideration paid upon conversion of shares of Company Common Stock
in accordance with the terms of Article I and this Article II shall be deemed to
have been paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock.
SECTION 2.4. TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of Certificates for
twelve months after the Effective Time shall be delivered to the Surviving
Corporation or otherwise on the instruction of the Surviving Corporation, and
any holders of Certificates who have not theretofore complied with this Article
II shall thereafter look only to the Surviving Corporation and Parent (subject
to abandoned property, escheat or other similar laws) for the Merger
Consideration with respect to the shares of Company Common Stock formerly
represented thereby to which such holders are entitled pursuant to Section 1.8.
SECTION 2.5. NO LIABILITY. None of Parent, Merger Sub, the Company,
the Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
SECTION 2.6. LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate
or other documentation (including an indemnity in customary form) reasonably
requested by Parent, the Exchange Agent will deliver in exchange for such lost,
stolen or destroyed Certificate the applicable Merger Consideration with respect
to the shares of Company Common Stock formerly represented thereby.
- 5 -
SECTION 2.7. WITHHOLDING RIGHTS. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock and any holder of Company Options such amounts as it is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
regulations promulgated thereunder ("Treasury Regulations"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or Parent, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or Parent, as the case may
be.
SECTION 2.8. FURTHER ASSURANCES. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
SECTION 2.9. STOCK TRANSFER BOOKS. At the close of business, New
York time, on the day the Effective Time occurs, the stock transfer books of the
Company shall be closed and there shall be no further registration of transfers
of shares of Company Common Stock thereafter on the records of the Company. From
and after the Effective Time, the holders of Certificates shall cease to have
any rights with respect to such shares of Company Common Stock formerly
represented thereby, except as otherwise provided herein or by law. On or after
the Effective Time, any Certificates presented to the Exchange Agent or Parent
for any reason shall be converted into the Merger Consideration with respect to
the shares of Company Common Stock formerly represented thereby.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Letter delivered by
the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Letter") (provided that the disclosures in any section or subsection
of the Company Disclosure Letter shall qualify other sections and subsections of
this Agreement as to which such information may be applicable only if (a) it is
readily apparent on the face of any such section of the Company Disclosure
Letter that the matters, facts or circumstances disclosed therein are applicable
to another section of the Company Disclosure Letter or (b) such disclosure is
cross-referenced to in such other section of the Company Disclosure Letter) and
subject to Section 10.2 hereof, the Company hereby represents and warrants to
Parent and Merger Sub as follows:
- 6 -
SECTION 3.1. CORPORATE ORGANIZATION. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite corporate,
limited liability company or limited partnership power (as the case may be) to
own its properties and assets and to conduct its business as now conducted.
Copies of the Company Organizational Documents and the organizational documents
of each Subsidiary of the Company, with all amendments thereto to the date
hereof, have been made available to Parent or its representatives, and such
copies are accurate and complete as of the date hereof. A complete and correct
chart showing the Company and all of its direct and indirect Subsidiaries is set
forth on Section 3.1 of the Company Disclosure Letter.
SECTION 3.2. QUALIFICATION TO DO BUSINESS. Each of the Company and
its Subsidiaries is duly qualified to do business as a foreign corporation,
limited liability company or partnership (as the case may be) and is in good
standing in every jurisdiction in which the character of the properties owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Company Material
Adverse Effect. Section 3.2 of the Company Disclosure Letter sets forth for each
of the Company and its Subsidiaries all jurisdictions in which each of the
Company and its Subsidiaries are qualified to do business.
SECTION 3.3. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by the Company of this Agreement does not and will not (i) violate
or conflict with any provision of any Company Organizational Document or any of
the organizational documents of the Subsidiaries of the Company, (ii) violate
any provision of law, or any order, judgment or decree of any Governmental
Entity, (iii) except as set forth on Section 3.3 of the Company Disclosure
Letter, violate or result in a breach of or constitute (with due notice or lapse
of time or both) a default under any Contract or result in the creation or
imposition of any Lien (other than any Permitted Lien) upon any of the assets,
properties or rights of either of the Company or any of its Subsidiaries or
result in or give to others any rights of cancellation, modification, amendment,
acceleration, revocation or suspension of any of the Contracts or obligations
thereunder, or Licenses and Permits or (iv) violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
contract, agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which it is bound or to which any of its
properties or assets is subject, except with respect to clauses (iii) and (iv),
for any violations, breaches, conflicts or other occurrences which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.4. CONSENTS AND APPROVALS. No consent, waiver,
authorization or approval of any Governmental Entity, and no declaration or
notice to or filing or registration with any Governmental Entity, is required in
connection with the execution and delivery of this Agreement by the Company or
the performance by the Company or its Subsidiaries of their obligations
hereunder or thereunder, except for: (i) any required competition or other
regulatory approvals required of foreign or domestic authorities; (ii)
applicable requirements of the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act") and of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act") and the rules and
- 7 -
regulations of Nasdaq; (iii) the consents, waivers, authorizations or approvals
of any Governmental Entity set forth on Section 3.4 of the Company Disclosure
Letter; (iv) the amendment of Establishment Registrations and Device Listings
under the United States Food and Drug Administration's ("FDA") Establishment
Registration and Device Listing regulations, as set forth in 21 C.F.R. Part 807;
and (v) such other consents, waivers, authorizations, approvals, declarations,
notices, filings or registrations, which if not obtained or made would not,
individually or in the aggregate, have a Company Material Adverse Effect..
SECTION 3.5. AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the performance by the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of the Company and all other necessary corporate
action on the part of the Company, other than the adoption of this Agreement by
the stockholders of the Company, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and, assuming due execution and delivery by Parent and
Merger Sub, shall constitute a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms, subject to (i) the
effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law) and (iii) an implied covenant of good faith and fair
dealing.
SECTION 3.6. CAPITALIZATION AND RELATED MATTERS.
(a) As of the date hereof, the authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock and 10,000,000
shares of Company Preferred Stock. As of the close of business on August 3,
2007:
(i) 7,099,229 shares of Company Common Stock are issued and
outstanding, and there are no shares of Company Preferred Stock
issued or outstanding;
(ii) 1,300,000 shares of Company Common Stock are reserved for
issuance and issuable upon or otherwise deliverable under the
Company's 2006 Incentive Award Plan, the IsoTis, S.A. Stock Option
Plan 2003/0, the IsoTis, S.A. Stock Option Plan 2003/1, the IsoTis,
S.A. Stock Option Plan 2003/2 (collectively, the "Company Stock
Plans") in connection with the exercise of outstanding Company
Options. Section 3.6(a)(ii) of the Company Disclosure Letter sets
forth, for each outstanding Company Option, whether or not vested,
the (x) name of the holder of such Company Option, (y) the exercise
price per share for such Company Option and (z) the expiration date
of such Company Option; and
- 8 -
(iii) 681,297 shares of Company Common Stock were reserved for
issuance, and were issued, pursuant to the consummation of the Swiss
Merger.
The outstanding shares of Company Common Stock (i) have been duly authorized and
validly issued and are fully paid and nonassessable and (ii) were issued in
compliance with all applicable federal, state and foreign securities laws. All
grants of Company Options were validly issued and properly approved by the
Company's Board of Directors or a duly authorized committee thereof (and all
required approvals by the stockholders of the Company have been obtained) no
later than the date on which the grant of such Company Stock Option was by its
terms to be effective in accordance with all applicable law and all grants of
options to purchase equity interests of IsoTis, S.A. which were subsequently
converted into Company Options were validly issued and properly approved by
IsoTis, S.A.'s Board of Directors or a duly authorized committee thereof (and
all required approvals by the stockholders of IsoTis, S.A. have been obtained)
no later than the date on which the grant of such option was by its terms to be
effective in accordance with all applicable law and, neither the Company nor
IsoTis, S.A. has knowingly granted, and there is no and has been no policy or
intentional practice by the Company or IsoTis, S.A. to grant, Company Stock
Options or options to purchase equity interests of IsoTis, S.A., as applicable,
prior to, or otherwise intentionally coordinate the grant of such options with,
the release of material information regarding the Company or its Subsidiaries.
Each Company Option was properly accounted for in all material respects in
accordance with GAAP in the financial statements (including the related notes)
of the Company and its Subsidiaries and disclosed in the filings of the Company
and its Subsidiaries with the SEC in accordance with the Exchange Act and other
applicable securities laws. Except as set forth above in Section 3.6(a), no
shares of capital stock of the Company are outstanding and the Company does not
have outstanding any securities convertible into or exchangeable for any shares
of capital stock, including Company Options, any rights to subscribe for or to
purchase or any options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or known claims
of any other character relating to the issuance of, any capital stock, or any
stock or securities convertible into or exchangeable for any capital stock; and
the Company is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire, or to register under the Securities
Act, any shares of capital stock. Except as set forth above in Section 3.6(a),
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.
(b) All of the outstanding shares of capital stock, or membership
interests or other ownership interests of, each Subsidiary of the Company, as
applicable, is validly issued, fully paid and nonassessable and is owned of
record and beneficially by the Company, directly or indirectly. The Company has,
as of the date hereof and shall have on the Closing Date, valid and marketable
title to all of the shares of capital stock of, or membership interests or other
ownership interests in, each Subsidiary of the Company, free and clear of any
Liens other than Permitted Liens. Such outstanding shares of capital stock of,
or membership interests or other ownership interests in, the Subsidiaries of the
Company, as applicable, are the sole outstanding securities of such
Subsidiaries; the Subsidiaries of the Company do not have outstanding any
securities convertible into or exchangeable for any capital stock of, or
membership interests or other ownership interests in, such Subsidiaries, any
rights to subscribe
- 9 -
for or to purchase or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any other character relating to the issuance of, any
capital stock of, or membership interests or other ownership interests in, such
Subsidiaries, or any stock or securities convertible into or exchangeable for
any capital stock of, or membership interests or other ownership interests in,
such Subsidiaries; and neither the Company or any of its Subsidiaries is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire, or to register under the Securities Act, any capital stock of, or
membership interests or other ownership interests in, any Subsidiary of the
Company.
SECTION 3.7. SUBSIDIARIES AND EQUITY INVESTMENTS. The Company and
its Subsidiaries do not directly or indirectly own, or hold any rights to
acquire, any capital stock or any other securities, interests or investments in
any other Person other than investments that constitute cash or cash
equivalents.
SECTION 3.8. COMPANY SEC REPORTS. (a) The Company and its
Subsidiaries, including, without limitation, IsoTis, S.A., have filed each
registration statement, prospectus, definitive proxy statement or information
statement, form, report, schedule and other document (together with all
amendments thereof and supplements thereto) required to be filed by the Company
or any of its Subsidiaries pursuant to the Exchange Act or the Securities Act or
comparable foreign law or regulation with the SEC or any comparable foreign
regulatory authority or exchange since January 1, 2004 (as such documents have
since the time of their filing been amended or supplemented, the "Company SEC
Reports"). As of their respective dates, after giving effect to any amendments
or supplements thereto filed prior to the date hereof, the Company SEC Reports
(i) complied as to form in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable, and (ii) did not contain any
untrue statement of a material fact or omit to state a 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.
(b) The audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case, the notes,
if any, thereto) included in the Company SEC Reports complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited
interim financial statements included therein, to normal year-end adjustments
and the absence of complete footnotes) in all material respects the consolidated
financial position of the Company or its predecessor and its consolidated
Subsidiaries as of the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended.
SECTION 3.9. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth in Section 3.9(a) of the Company Disclosure
Letter, since December 31, 2006, there has not been:
- 10 -
(i) any Company Material Adverse Effect;
(ii) any loss, damage, destruction or other casualty to the
material assets or properties of either of the Company or any of its
Subsidiaries (other than any for which insurance awards have been
received or guaranteed);
(iii) any material change in any method of accounting or
accounting practice of either of the Company or any of its
Subsidiaries except for any such change required by reason of a
concurrent change in GAAP; or
(iv) any loss of the employment, services or benefits of the
chief executive officer of the Company and members of the Company's
senior management who report directly to such chief executive
officer.
(b) Since December 31, 2006, each of the Company and each of its
Subsidiaries has operated in the ordinary course of its business and consistent
with past practice and, except as set forth on Section 3.9(b) of the Company
Disclosure Letter, has not:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise) except in the ordinary
course of business and consistent with past practice;
(ii) failed to discharge or satisfy any Lien or pay or satisfy
any material obligation or liability (whether absolute, accrued,
contingent or otherwise), other than Permitted Liens and liabilities
being contested in good faith and for which adequate reserves have
been provided;
(iii) mortgaged, pledged or subjected to any Lien (other than
Permitted Liens) any of its material assets, properties or rights;
(iv) sold or transferred any of its material assets, or
cancelled any material debts or claims or waived any material
rights;
(v) disposed of any patents, trademarks or copyrights or any
patent, trademark or copyright applications;
(vi) defaulted on any material obligation;
(vii) granted any increase in the compensation or benefits of
its key employees other than increases in the ordinary course of
business not exceeding 20% of the key employee's annual compensation
then in effect or entered into any employment, change of control,
retention or severance agreement or arrangement with any of them;
(viii) contractually committed to make any capital expenditure
for any periods after the date hereof or additions to property,
plant and equipment used in its operations other than ordinary
repairs and maintenance in excess of $100,000 in the aggregate;
- 11 -
(ix) laid off any significant number of its employees;
(x) received notice from any domestic distributor of its
intention to terminate its relationship or contract with the Company
or any of its Subsidiaries or had any such relationship or contract
terminated by any distributor;
(xi) received notice from any international distributor of its
intention to terminate its material relationship or material
contract with the Company or any of its Subsidiaries or had any such
relationship or contract terminated by any distributor;
(xii) discontinued the offering of any material services or
product;
(xiii) incurred any obligation or liability for the payment of
severance benefits;
(xiv) declared, paid, or set aside for payment any dividend or
other distribution in respect of shares of its capital stock,
membership interests or other securities, or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of its
capital stock, membership interests or other securities, or agreed
to do so; or
(xv) entered into any agreement or made any commitment to do
any of the foregoing.
SECTION 3.10. TAX MATTERS. Except as set forth on Section 3.10 of
the Company Disclosure Letter:
(a) The Company and each of its Subsidiaries have filed when due all
material Tax Returns required by applicable law to be filed with respect to the
Company and each of its Subsidiaries; (ii) all such Tax Returns were true,
correct and complete in all material respects as of the time of such filing;
(iii) all material Taxes owed by the Company and each of its Subsidiaries, if
required to have been paid, have been paid (except for Taxes which are being
contested in good faith); and (iv) any material liability of the Company or any
of its Subsidiaries for Taxes not yet due and payable, or which are being
contested in good faith, has been provided for on the financial statements of
the Company in accordance with GAAP.
(b) There is no material action, suit, proceeding, investigation,
audit or claim now pending with respect to the Company or any of its
Subsidiaries in respect of any Tax, nor has any material claim for additional
Tax been asserted in writing by any taxing authority.
(c) Since January 1, 2002, no claim has been made in writing by any
taxing authority in a jurisdiction where the Company or any of its Subsidiaries
has not filed a Tax Return that it is or may be subject to Tax by such
jurisdiction.
(d) (i) There is no outstanding request for any extension of time
for the Company or any of its Subsidiaries to pay any Taxes or file any Tax
Returns; (ii) there has
- 12 -
been no waiver or extension of any applicable statute of limitations for the
assessment or collection of any Taxes of the Company or any of its Subsidiaries
that is currently in force; and (iii) neither the Company nor any of its
Subsidiaries is a party to or bound by any agreement, whether written or
unwritten, providing for the payment of Taxes, payment for Tax losses,
entitlements to refunds or similar Tax matters, other than agreements among the
Company and its Subsidiaries and other than customary Tax indemnifications or
allocations in commercial lending or lease agreements.
(e) The Company and each of its Subsidiaries have withheld and paid
all material Taxes required to be withheld in connection with any amounts paid
or owing to any employee, creditor, independent contractor or other third party.
(f) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(g) Neither the Company nor any of its Subsidiaries has distributed
stock of another Person, or has had its stock distributed by another Person, in
a transaction that was purported or intended to be governed in whole or in part
by Section 355 or Section 361 of the Code.
(h) There is no material Lien, other than a Permitted Lien,
affecting any of the assets, properties or rights of the Company and its
Subsidiaries that arose in connection with any failure or alleged failure to pay
any Tax.
(i) Neither the Company nor any of its Subsidiaries (i) has been a
member of an affiliated group (within the meaning of Code Section 1504(a))
filing a consolidated federal income Tax Return (other than a group the common
parent of which is the Company) or (ii) has any liability for the Taxes of any
Person (other than any of the Company and its Subsidiaries) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
SECTION 3.11. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set
forth on Section 3.11 of the Company Disclosure Letter, there are no material
liabilities or obligations of the Company or any Subsidiary thereof of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
that could be reasonably expected to result in such a liability or obligation,
other than (A) liabilities or obligations disclosed and provided for in the
consolidated balance sheet of the Company as of March 31, 2007 included in the
Company SEC Reports filed prior to the date hereof or referred to in the notes
thereto, (B) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since March 31, 2007 or (C) liabilities
or obligations which would not, individually or in the aggregate, have a Company
Material Adverse Effect. Neither of the Company or any of its Subsidiaries is
directly or indirectly liable upon or with respect to (by discount, repurchase
agreements or otherwise), or obliged in any other way to provide funds in
respect of, or to guarantee or assume, any material debt, obligation or dividend
of any Person, except
- 13 -
endorsements in the ordinary course of business in connection with the deposit,
in banks or other financial institutions, of items for collection.
SECTION 3.12. COMPANY PROPERTY.
(a) Section 3.12(a) of the Company Disclosure Letter contains a true
and complete description of all real property owned by the Company and its
Subsidiaries (the "Owned Real Property") as of the date hereof. The Company has
made available to Parent copies of any title insurance policies (together with
copies of any documents of record listed as exceptions to title on such
policies) currently insuring each Owned Real Property and copies of the most
recent surveys of the same. The Company and its Subsidiaries have good,
marketable and valid fee title to all of the Owned Real Property free and clear
of Liens other than Permitted Liens.
(b) Section 3.12(b) of the Company Disclosure Letter sets forth a
list of all leases, licenses (for real property), subleases and occupancy
agreements, together with all amendments thereto, in which either of the Company
or its Subsidiaries has a leasehold interest or similar occupancy rights,
whether as lessor or lessee, and (i) are material to the operation of the
Company and its Subsidiaries, taken as a whole, or (ii) involve payments by the
Company or its Subsidiaries in excess of $150,000 per year (each, a "Lease" and
collectively, the "Leases"; the property covered by Leases under which either of
the Company or its Subsidiaries is a lessee is referred to herein as the "Leased
Real Property"; the Leased Real Property, together with the Owned Real Property,
collectively being the "Company Property"). Neither the Company nor any of its
Subsidiaries is a party to any Contract (other than a Lease) with the lessor of
any of the Leased Real Properties, which gives such lessor any right to
terminate or adversely alter the terms of the Lease to which such lessor is a
party. The Company or its Subsidiaries enjoys peaceful and undisturbed
possession of, the Leased Real Property pursuant to the Leases. No option has
been exercised under any of such Leases, except options whose exercise has been
evidenced by a written document, a true, complete and accurate copy of which has
made available to Parent with the corresponding Lease. The transactions
contemplated by this Agreement do not require the consent or approval of the
other party or parties to the Leases.
(c) With respect to each Lease, (i) such Lease is in full force and
effect, (ii) all rents, required deposits and additional rents due to date
pursuant to each Lease have been paid in full, (iii) the Company has not prepaid
rent or any other amounts due under a Lease more than thirty (30) days in
advance, and (iv) no party has any rights of offset against any rents, required
security deposits or additional rents payable under such Lease, including, but
not limited to the security deposits paid by the Company pursuant to the Leases
for the Unit B Premises (as hereinafter defined) and the Leased Real Property.
As of the date hereof, no Lease has been materially modified or amended. That
certain Industrial Real Estate Lease between New Goodyear, LTD. ("Goodyear
Landlord") and GenSci Regeneration Laboratories, Inc. dated as of December 28,
1998, as amended by that certain (i) Rider No. 1 between Goodyear Landlord and
GenSci Regeneration Laboratories, Inc. dated as of December 28, 1998, (ii)
Option to Extend Lease Term Rider between Goodyear Landlord and GenSci
- 14 -
Regeneration Laboratories, Inc. dated as of December 28, 1998, and (iii) Rider
No. 2 between Goodyear Landlord, and the Company, as successor-in-interest to
GenSci Regeneration Laboratories, Inc. dated as of December 9, 2003, with
respect to the premises commonly known as Unit B in the building located at 2
Goodyear, Irvine, CA (the "Unit B Premises"), has expired and the Company has no
further obligations to Goodyear Landlord thereunder.
(d) Except as set forth in Section 3.12(d) of the Company Disclosure
Letter, none of the Company Property is subject to any option, lease, sublease,
license or other agreement granting to any Person or entity any right to the
use, occupancy or enjoyment of such property or any portion thereof or to obtain
title to all or any portion of such property.
(e) Except as set forth in Section 3.12(e) of the Company Disclosure
Letter, all material improvements, systems, equipment, machinery and fixtures on
the Company Property are in good operating condition and repair and generally
are adequate and suitable in all material respects for the present and continued
use, operation and maintenance thereof as now used, operated or maintained. All
improvements on the Company Property constructed by or on behalf of the Company
or any Subsidiary were constructed, to the Knowledge of the Company, in
compliance in all material respects with applicable laws, ordinances and
regulations affecting such Company Property, including but not limited to the
American with Disabilities Act.
SECTION 3.13. ASSETS OF THE COMPANY AND ITS SUBSIDIARIES.
(a) The assets, properties and rights of each of the Company and its
Subsidiaries constitute all of the assets, properties and rights which are used
in the operation of their business as currently conducted. There are no assets,
properties, rights or interests of any kind or nature that either of the Company
or any of its Subsidiaries has been using, holding or operating in their
business prior to the Closing that will not be used, held or owned by each of
the Company or its Subsidiaries immediately following the Closing.
(b) Each of the Company and its Subsidiaries has good and marketable
fee simple title, free and clear of any Liens other than Permitted Liens, to, or
a valid leasehold interest under enforceable leases in, all of its material
assets, properties and rights.
SECTION 3.14. INTELLECTUAL PROPERTY.
(a) The Company and its Subsidiaries own all right, title and
interest in and to, or have valid and enforceable licenses to use, all the
Intellectual Property, and such Intellectual Property represents all
intellectual property rights necessary for the conduct of their business as and
where conducted on the date hereof and on the Closing. The Company and its
Subsidiaries are in compliance in all material respects with all licenses
relating to the protection of such of the Intellectual Property as it uses
pursuant to license or other agreement. To the Knowledge of the Company, there
are no conflicts with or infringements of any Intellectual Property by any third
party. To the Knowledge of the Company, the conduct of the business of the
Company and its Subsidiaries does not conflict with, violate, misappropriate,
misuse or infringe any proprietary or intellectual property right of any third
party. Except as set forth on Section 3.14(a) of the Company Disclosure Letter,
there is no claim, suit, action or proceeding pending or, to the Knowledge of
the Company, threatened
- 15 -
against the Company or its Subsidiaries: (i) alleging any such conflict,
violation, misappropriation, misuse or infringement with any third party's
proprietary or intellectual property rights; or (ii) challenging the Company's
or its Subsidiaries' ownership or use of, or the validity or enforceability of
any Intellectual Property.
(b) Section 3.14(b) of the Company Disclosure Letter sets forth a
complete and current list of all registrations, certificates, applications,
filings or other material documents issued by, filed with, or recorded by, any
Governmental Entity pertaining to the Intellectual Property ("Registered
Intellectual Property") as of the date hereof and the owner of record, date of
application or issuance, and relevant jurisdiction as to each. All Registered
Intellectual Property is owned by the Company and/or its Subsidiaries, free and
clear of all Liens other than Permitted Liens. All Registered Intellectual
Property is valid, subsisting, unexpired, and all renewal fees and other
maintenance fees that have fallen due on or prior to the Closing have been paid.
Except as listed on Section 3.14(b)(iv) of the Company Disclosure Letter, no
Registered Intellectual Property is the subject of any proceeding before any
governmental, registration or other authority in any jurisdiction. The
consummation of the transactions contemplated by this Agreement will not alter
or impair any Intellectual Property.
(c) Section 3.14(c) of the Company Disclosure Letter sets forth a
complete list of all license agreements pertaining to Intellectual Property as
of the date hereof, except for agreements pertaining to commercially available,
off-the-shelf software. The Company and its Subsidiaries are in compliance in
all material respects with all agreements pertaining to the Intellectual
Property, and, except as set forth in Section 3.14(c) of the Company Disclosure
Letter are not under any obligation to pay royalties or other payments in
connection with any agreement, nor restricted from assigning its rights
respecting Intellectual Property, such rights including the right to xxx and
obtain damages for past and future infringements thereof, nor will the Company
or its Subsidiaries otherwise be, as a result of the execution and delivery of
this Agreement or the performance of its obligations under this Agreement, in
breach of any agreement relating to the Intellectual Property. Neither the
Company nor its Subsidiaries is in material default of any such agreement.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has made any claim of a
violation, infringement, misuse or misappropriation by any third party
(including any employee or former employee of the Company or its Subsidiaries)
of its rights to, or in connection with, any Intellectual Property, which claim
is pending. Neither the Company nor any of its Subsidiaries has entered into any
agreement to indemnify any other Person against any charge of infringement of
any Intellectual Property.
SECTION 3.15. SOFTWARE.
(a) To the Knowledge of the Company, none of the operating and
applications computer software programs and databases used by the Company and
its Subsidiaries that are material to the conduct of their business
(collectively, the "Software"), nor any use thereof, conflicts with, infringes
upon or violates any intellectual property or other proprietary right of
- 16 -
any other Person and, no claim, suit, action or other proceeding with respect to
any such infringement or violation is pending, or to the Knowledge of the
Company, threatened.
(b) The Company and its Subsidiaries have not purchased any material
amount of telecommunications equipment without procuring a software license for
the imbedded software in such equipment nor is the Company or its Subsidiaries
subject to any claim for failing to procure such a license.
SECTION 3.16. LICENSES AND PERMITS.
(a) The Company and its Subsidiaries own or possess all right, title
and interest in and to each of their respective material licenses, permits,
franchises, registrations, authorizations and approvals issued or granted to any
of the Company or its Subsidiaries by any Governmental Entity (the "Licenses and
Permits") and has taken all necessary action to maintain such Licenses and
Permits. Each License and Permit has been duly obtained, is valid and in full
force and effect, and is not subject to any pending or, to the Knowledge of the
Company, threatened administrative or judicial proceeding to revoke, cancel,
suspend or declare such License and Permit invalid in any respect. The Licenses
and Permits are sufficient and adequate in all material respects to permit the
continued lawful conduct of the business of the Company and its Subsidiaries,
and none of the operations of the Company or its Subsidiaries are being
conducted in a manner that violates in any material respects any of the terms or
conditions under which any License and Permit was granted.
(b) No petition, action, investigation, notice of violation or
apparent liability, notice of forfeiture, order to show cause, complaint, or
proceeding seeking to revoke, reconsider the grant of, cancel, suspend, or
modify any of the Licenses and Permits is pending or, to the Knowledge of the
Company, threatened before any Governmental Entity. No notices have been
received by and, to the Knowledge of the Company, no claims have been filed
against the Company or its Subsidiaries alleging a failure to hold any requisite
permits, regulatory approvals, licenses or other authorization.
SECTION 3.17. REGULATORY MATTERS.
(a) The Company and its Subsidiaries manufacture, market, test and
distribute and for the past three years have manufactured, marketed, tested and
distributed their products in material compliance with the Federal Food, Drug,
and Cosmetic Act (the "FDCA") and all applicable rules and regulations of the
FDA or similar laws in any state or foreign jurisdiction (including, but not
limited to, the "Good Manufacturing Practices" otherwise known as the "Quality
System Regulation," the "Medical Device Reporting" regulations and those related
to investigational use or pre-market notification for medical devices and
approval of abbreviated applications to market new drugs, regulations regarding
labeling, advertising and record-keeping, and regulations addressing human
cells, tissues, and cellular and tissue-based products) and in material
compliance with the Company's and its Subsidiaries' quality control procedures
in effect at the time of manufacture. Except as set forth on Section 3.17(a) of
the Company Disclosure Letter, all of the products currently sold by the Company
and its Subsidiaries have been approved or cleared for marketing by the FDA and
all other applicable federal, state and foreign regulatory agencies and the
Company and its Subsidiaries have
- 17 -
obtained all necessary authorizations, consents and approvals from any
applicable Governmental Entity and neither the Company nor any of its
Subsidiaries promotes or, to the Knowledge of the Company, has promoted any
"off-label" use for such products or received any notice from any other Person
alleging such promotion. Neither the Company nor any Subsidiary has received any
notice or other communication from the FDA, Person or any other federal, state
or foreign regulatory agency questioning its manufacturing practices or
threatening to revoke or curtail any product clearance or approval or otherwise
alleging any violation applicable to any products of the Company or its
Subsidiaries, and the Company is not aware of any intent to deliver any such
notice to it or the Company's Subsidiaries. Section 3.17(a) of the Company
Disclosure Letter contains a complete list of all products manufactured or
marketed by the Company and its Subsidiaries, including those which require the
approval of, or premarket notification to, or listing with the FDA or any other
United States federal or state or foreign governmental agency or bureau under
any existing law, regulation or policy, specifying (i) with respect to each
domestic product, the type of approval, premarket notification or listing
required and the reference number or identification of each currently effective
approval, notice and registration and (ii) with respect to each foreign product,
the regulatory status of such product. None of the products of the Company or
its Subsidiaries have been recalled, withdrawn, suspended or discontinued by the
Company or its Subsidiaries in the United States or outside the United States
whether voluntary or involuntary and to the Company's Knowledge, there exists no
basis for any action by the FDA or any other Governmental Entity to revoke,
suspend, cancel or withdraw any product approval, clearance, registration,
license or other authorization or permit with respect to any product of the
Company or its Subsidiaries. All United States and international regulatory
approvals or premarket notifications therefor are owned by and registered in the
name of the Company or one of its Subsidiaries and are in full force and effect.
(b) Neither the Company nor any of its Subsidiaries has failed to
file with the applicable regulatory authorities (including, without limitation,
the FDA or any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA) any
material required filing, declaration, listing, registration, report or
submission; all such filings, declarations, listings, registrations, reports or
submissions were in compliance with applicable laws when filed and no
deficiencies have been asserted by any applicable regulatory authority with
respect to any such filings, declarations, listing, registrations, reports or
submissions.
(c) Any clinical, pre-clinical and other studies and tests conducted
by or on behalf of or sponsored by the Company or its Subsidiaries were and, if
still pending, are being conducted in accordance with all United States and
foreign statutes, laws, rules, directives and regulations, as applicable. The
Company has no knowledge of other studies or tests the results of which are
inconsistent with the Company's or its Subsidiaries' studies or tests or
otherwise call into question the safety or efficacy of the Company's or its
Subsidiaries' current or previous products. Neither the Company nor any of its
Subsidiaries has received any notices or other correspondence from the FDA or
any other foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA with respect to any
ongoing clinical or pre-clinical studies or tests requiring the termination,
suspension or material modification of such studies or tests.
- 18 -
(d) To the Knowledge of the Company, there are no facts,
circumstances or conditions that would reasonably be expected to form the basis
for any investigation, suit, claim or action or proceeding against or affecting
the Company or its Subsidiaries relating to or arising under the FDCA or the
regulations of the FDA promulgated thereunder or similar foreign regulations,
except for any such investigation, suit, claim, action or proceeding that is not
material.
(e) Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of the Company, any employee of the Company or any of its Subsidiaries
or any Person retained by the Company or any of its Subsidiaries, has made on
behalf of the Company or any of its Subsidiaries any false statement or material
omissions in any application or other Submission relating to products governed
by the FDA or other Governmental Entity.
(f) Except as set forth in Section 3.17(f) of the Company Disclosure
Letter, to the Knowledge of the Company, all of the manufacturing facilities and
operations of the suppliers of the Company and its Subsidiaries of products sold
in the United States are in material compliance with applicable FDA regulations,
including current Good Manufacturing Practices, and meet sanitation standards
set by the FDCA.
(g) Except as set forth in Section 3.17(g) of the Company Disclosure
Letter, to the Knowledge of the Company, no legislative or regulatory proposal
or other proposal for a change in any applicable law or the interpretations
thereof has been adopted or is pending which could materially adversely affect
the Company or its Subsidiaries or the business of the Company or its
Subsidiaries.
(h) All of the products sold by the Company and its Subsidiaries are
classified as Class I and Class II Medical Devices (as defined in 21 U.S.C.
Section 360c(a)(1)(A) and (B) and applicable rules thereunder. Except as set
forth on Section 3.17(h) of the Company Disclosure Letter, the Company and its
Subsidiaries, and the products sold by the Company and its Subsidiaries, are in
compliance in all material respects with all current and otherwise applicable
statutes, rules, regulations or orders administered or issued by the FDA and all
other Governmental Entities (except for environmental agencies or bodies) having
regulatory authority over the products of the Company and its Subsidiaries
(except with respect to environmental matters) and the Company and its
Subsidiaries.
(i) Except as set forth on Section 3.17(i) of the Company Disclosure
Letter, since their founding neither the Company nor any of its Subsidiaries has
received any of the following communications and, to the Knowledge of the
Company, no facts exist which furnish any reasonable basis for, any Notice of
Inspectional Observation (Form FDA 483), Notice of Adverse Findings, FDA Warning
Letter, Section 305 notice, subpoena, an Unacceptable Determination under the
Government-Wide Quality Assurance Program (GWQAP) or other similar communication
by any Governmental Entity.
(j) Except as set forth on Section 3.17(j) of the Company Disclosure
Letter, since their founding, neither the Company nor any of its Subsidiaries
has either filed any premarket approval applications ("PMA") or received any
premarket notification ("510(k)") clearance or concurrence letters from the FDA.
Section 3.17(j) of the Company Disclosure
- 19 -
Letter contains a complete list of all of the products of the Company and its
Subsidiaries not marketed under an approved PMA or 510(k).
(k) Since their founding, neither the Company nor any of its
Subsidiaries has filed any investigational device exemptions ("IDE") or
conducted any clinical investigations under an IDE.
(l) Except as set forth on Section 3.17(l) of the Company Disclosure
Letter, since January 1, 2002, neither the Company nor any of its Subsidiaries
has received any FDA inspection reports and the FDA has not inspected the
Company's or any of its Subsidiaries' facilities. The Company has furnished
Parent with access to material internal audit reports (as required by 21 C.F.R.
Part 820, Section 820.22) conducted by the Company and its Subsidiaries since
January 1, 2002. Section 3.17(l) of the Company Disclosure Letter contains an
accurate and complete list of all such internal audit reports.
(m) The Company has made available to Parent all complaints
maintained by the Company and its Subsidiaries (as required by 21 C.F.R. Part
820) and all Product Experience Reports received or compiled by the Company and
its Subsidiaries since January 1, 2003. Section 3.17(m) of the Company
Disclosure Letter contains a complete list of all such complaints and Product
Experience Reports received or compiled by the Company and its Subsidiaries
since January 1, 2003. Except as set forth on Section 3.17(m) of the Company
Disclosure Letter, since January 1, 2003, the Company has not filed any Medical
Device Reports (pursuant to 21 C.F.R. Part 803).
SECTION 3.18. CERTIFICATIONS; PRODUCT SAFETY.
(a) All operations of the Company and its Subsidiaries have achieved
and maintained all required ISO (International Organization for Standardization)
and quality certifications and are compliant, in all material respects, with the
applicable FDA Quality System Regulations, and there is no pending or
threatened, action to audit, repeal, fail to renew or challenge any such
certification. Except as set forth in Section 3.18(a) of the Company Disclosure
Letter, since January 1, 2003, neither the Company nor any of its Subsidiaries
has been required to file any notification or other report with or provide
information to any product safety agency, commission, board or other
governmental entity of any jurisdiction concerning actual or potential hazards
with respect to any product purchased, distributed, sold or leased, or with
respect to services rendered, by the Company or any of its Subsidiaries. Each
product distributed, sold, or leased, or service rendered, by the Company and
its Subsidiaries complies in all material respects with all product safety
standards of each applicable product safety agency, commission, board or other
governmental entity having jurisdiction over the Company. The Company and its
Subsidiaries, or an agent of the Company or its Subsidiaries, manufactures each
product of the Company and its Subsidiaries in material compliance with each
device master record (as such term is defined in the FDA Quality System
Regulations) maintained by the Company and its Subsidiaries, or an agent of the
Company or its Subsidiaries, for each product of the Company and its
Subsidiaries.
(b) Except as set forth on Section 3.18 of the Company Disclosure
Letter, no product liability claims related to the Company or its Subsidiaries
or any of the Company's or
- 20 -
its Subsidiaries' products have been made against the Company or its
Subsidiaries since January 1, 2003.
SECTION 3.19. COMPLIANCE WITH LAW.
(a) Except as set forth on Section 3.19(a) of the Company Disclosure
Letter, the operations of the business of the Company and its Subsidiaries have
been conducted in accordance in all material respects with all laws,
regulations, orders and other requirements of all Governmental Entities having
jurisdiction over such entity and its assets, properties and operations. Since
January 1, 2005, none of the Company or its Subsidiaries has received notice of
any violation (or any investigation with respect thereto) of any such law,
regulation, order or other legal requirement, and none of the Company or its
Subsidiaries is in material default with respect to any order, writ, judgment,
award, injunction or decree of any foreign, national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign,
applicable to any of its assets, properties or operations.
(b) The Company and each of its officers are in compliance in all
material respects with (i) the applicable provisions of the Xxxxxxxx-Xxxxx Act
of 2002 and the related rules and regulations promulgated under such act or the
Exchange Act (the "Xxxxxxxx-Xxxxx Act") and (ii) the applicable listing and
corporate governance rules and regulations of Nasdaq. The Company has previously
disclosed to Parent the information required to be disclosed by the Company and
certain of its officers to the Company's Board of Directors or any committee
thereof pursuant to the certification requirements contained in Form 10-K and
Form 10-Q under the Exchange Act. Except as permitted by the Exchange Act,
including, without limitation, Sections 13(k)(2) and (3), since the enactment of
the Xxxxxxxx-Xxxxx Act, neither the Company nor any of its Affiliates has made,
arranged or modified personal loans to any executive officer or director of the
Company.
(c) The management of the Company has (i) implemented (x) disclosure
controls and procedures to ensure that material information relating to the
Company, including its consolidated Subsidiaries, is made known to the
management of the Company by others within those entities and (y) a system of
internal control over financial reporting sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP, and (ii)
has disclosed, based on its most recent evaluation prior to the date hereof, to
the Company's auditors and the audit committee of the Company's Board of
Directors (A) any significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's ability to record,
process, summarize and report financial data and have identified for the
Company's auditors any material weaknesses in internal controls and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's internal controls. The Company has made
available to Parent a summary of any such disclosure made by management to the
Company's auditors and audit committee.
SECTION 3.20. LITIGATION. Except as set forth in Section 3.20 of the
Company Disclosure Letter, there are no claims, actions, suits, proceedings,
subpoenas or, to the Knowledge of the Company, investigations (each, an
"Action") pending or, to the Knowledge
- 21 -
of the Company, threatened, before any Governmental Entity, or before any
arbitrator of any nature, brought by or against any of the Company or its
Subsidiaries or any of their officers or directors involving or relating to the
Company or its Subsidiaries, the material assets, properties or rights of any of
the Company and its Subsidiaries or the transactions contemplated by this
Agreement. There is no judgment, decree, injunction, rule or order of any
Governmental Entity or before any arbitrator of any nature outstanding, or to
the Knowledge of the Company, threatened, against either of the Company or its
Subsidiaries.
SECTION 3.21. CONTRACTS.
(a) Section 3.21 of the Company Disclosure Letter sets forth a
complete and correct list of all Contracts as of the date hereof.
(b) Each Contract is in full force and effect, valid, binding and
enforceable against the Company or its Subsidiaries and, to the Knowledge of the
Company, against the other parties thereto in accordance with its terms, subject
to (i) the effect of bankruptcy, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, (ii) general equitable principles (whether
considered in a proceeding in equity or at law) and (iii) an implied covenant of
good faith and fair dealing. Each of the Company and its Subsidiaries has
performed all obligations required to be performed by it to date under, and is
not in default or delinquent in performance, status or any other respect
(claimed or actual) in connection with, any Contract, and no event has occurred
which, with due notice or lapse of time or both, would constitute such a
default, except as would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company has sent no notices of default under any
Contract, which default remains uncured, and to the Knowledge of the Company, no
other party to any Contract is in material default in respect thereof, and no
event has occurred which, with due notice or lapse of time or both, would
constitute such a default. The Company has made available to Parent or its
representatives true and complete originals or copies of all the Contracts.
(c) A "Contract" means any agreement, contract or commitment, oral
or written, to which either of the Company or any of its Subsidiaries is a party
or by which it or any of its assets are bound constituting:
(i) a contract or agreement (A) with a customer of the Company
or any of its Subsidiaries pursuant to which the Company or any of
its Subsidiaries has sold goods and/or services and derived revenue
(when taken together with any revenue derived from any other
contracts or agreements with that customer) of at least $150,000 for
the year ended December 31, 2006, or (B) with any customer that
contains "most-favored nation," pursuant to which the Company or any
of its Subsidiaries has sold goods and/or services (the Contracts
set forth in subsection (A) and (B) collectively, the "Customer
Contracts");
(ii) a contract or agreement with (A) a vendor of the Company
or any of its Subsidiaries pursuant to which the Company and its
Subsidiaries
- 22 -
paid (when taken together with any amounts paid to that vendor
pursuant to any other contracts or agreements) at least $150,000 to
such vendor for the year ended December 31, 2006 or (B) with any
tissue bank (the Contracts set forth in subsection (A) and (B)
collectively, the "Vendor Contracts");
(iii) a mortgage, indenture, security agreement, guaranty,
pledge and other agreement or instrument relating to the borrowing
of money or extension of credit (other than accounts receivable or
accounts payable in the ordinary course of business and consistent
with past practice);
(iv) an employment, change of control, retention, severance or
material consulting agreement or a collective bargaining agreement
or other material agreement with any association representing
employees;
(v) any agreement with a hospital under which payments in
excess of $150,000 in the aggregate have been or are expected to be
made over the term of the agreement; and
(vi) any agreement with a GPO, surgeon or hospital
organization;
(vii) a joint venture, partnership or limited liability
company agreement with third parties;
(viii) a non-competition agreement or any other agreement or
obligation which purports to limit in any material respect (i) the
manner in which, or the localities in which, the business of the
Company or its Subsidiaries may be conducted or (ii) the ability of
either of the Company or its Subsidiaries to provide any type of
service presently conducted by the Company or its Subsidiaries;
(ix) an agreement containing any exclusivity clause or
most-favored-nations clause;
(x) a Lease;
(xi) an agreement limiting or restricting the ability of
either of the Company or its Subsidiaries to make distributions or
declare or pay dividends in respect of its capital stock or
membership interests, as the case may be;
(xii) a distribution, dealership, representative, broker,
sales agency, consulting or material advertising contract;
(xiii) an agreement requiring capital expenditures in excess
of $100,000;
(xiv) an agreement or offer to acquire all or a substantial
portion of the capital stock, business, property or assets of any
other Person or sell,
- 23 -
transfer or otherwise dispose of any assets or capital stock of the
Company or any of its Subsidiaries;
(xv) any agreement to indemnify any other Person against any
charge of infringement of any Intellectual Property;
(xvi) any power of attorney; or
(xvii) any other material agreement not in the ordinary course
of the business of the Company and its Subsidiaries.
SECTION 3.22. EMPLOYEE PLANS.
(a) Section 3.22(a) of the Company Disclosure Letter sets forth a
list: (i) all "employee benefit plans", as defined in Section 3(3) of ERISA, and
all other employee benefit agreements, plans, programs, policies or
arrangements, including, without limitation, any such agreements, plans,
programs, policies or arrangements providing severance pay, sick leave,
employment, severance, retention, change in control, consulting, vacation pay,
salary continuation for disability, retirement benefits, deferred compensation,
bonus pay, incentive pay, stock options or stock awards, hospitalization
insurance, medical insurance, life insurance, cafeteria benefits, dependent care
reimbursements, prepaid legal benefits, scholarships or tuition reimbursements,
maintained or sponsored by the Company or any of its Subsidiaries or to which
the Company or any of its Subsidiaries is obligated to contribute thereunder for
current or former employees, officers, directors, agents, consultants and
independent contractors of the Company and its Subsidiaries (the "Employee
Benefit Plans"), and (ii) all "employee pension plans", as defined in Section
3(2) of ERISA, maintained or sponsored by the Company or any trade or business
(whether or not incorporated) which is under control or treated as a single
employer with the Company under Section 414(b), (c), (m), or (o) of the Code (a
"ERISA Affiliate") or to which the Company or any ERISA Affiliate has
contributed or has been obligated to contribute thereunder (the "Pension
Plans").
(b) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans and Pension Plans, have been
made available to Parent, to the extent applicable: (i) all plans and related
trust documents, and amendments thereto; (ii) Forms 5500 filed for the three
most recent plan years; (iii) the most recent IRS determination letter, if any,
regarding the tax-qualified status of such Employee Benefit Plan or Pension
Plan; (iv) the most recent summary plan descriptions, annual reports and
material modifications; (v) the most recent actuarial report, if any; (vi)
written descriptions of the terms of all non-written agreements relating to the
Employee Benefit Plans or Pension Plans; and (vii) the most recent written
results of all compliance testing required pursuant to Sections 125, 401(a)(4),
401(k), 401(m), 410(b), 415 and 416 of the Code.
(c) None of the Employee Benefit Plans or Pension Plans is a
multiemployer plan, as defined in Section 3(37) of ERISA ("Multiemployer Plan")
or subject to Title IV or Section 302 of ERISA or Sections 412 or 4971 of the
Code. None of the Company or any ERISA Affiliate has withdrawn at any time
within the preceding six years from any Multiemployer Plan or incurred any
withdrawal liability which remains unsatisfied and no
- 24 -
circumstances have occurred or exist which could reasonably be expected to
result in any such liability to the Company or any Subsidiary.
(d) Each Pension Plan that is intended to qualify under Section
401(a) of the Code has received a determination letter from the IRS or can rely
on an opinion letter as to its qualification and the trust maintained pursuant
thereto is exempt from federal income taxation under Section 501(a) of the Code,
and nothing has occurred with respect to the operation of any such Pension Plan
that would reasonably be expected to cause the loss of such qualification or
exemption or the imposition of any material liability, penalty or tax under
ERISA or the Code.
(e) All contributions (including all employer contributions and
employee salary reduction contributions) and all premiums required to have been
paid under any of the Employee Benefit Plans or Pension Plans or by law (without
regard to any waivers granted under Section 412 of the Code) to any funds or
trusts established thereunder or in connection therewith have been made by the
due date thereof (including any valid extension) and all contributions for any
period ending on or before the Closing Date which are not yet due will be paid
or accrued prior to the Closing Date.
(f) To the Knowledge of the Company, there has been no material
violation of ERISA or the Code with respect to the filing of applicable reports,
documents and notices regarding the Employee Benefit Plans with the Secretary of
Labor or the Secretary of the Treasury or the furnishing of required reports,
documents or notices to the participants or beneficiaries of the Employee
Benefit Plans.
(g) There are no pending actions, claims or lawsuits (other than
claims for benefits in the ordinary course) which have been instituted or, to
the Knowledge of the Company, asserted against the Employee Benefit Plans or
Pension Plans, the assets of any of the trusts under such plans or the plan
sponsor or the plan administrator, or against any fiduciary of the Employee
Benefit Plans or Pension Plans with respect to the operation or administration
of such plans or the investment of the assets of such plans (other than routine
benefit claims), nor does the Company have Knowledge of facts which could
reasonably form the basis for any such claim or lawsuit. No Employee Benefit
Plan or Pension Plan has been the subject of an audit, investigation or
examination by any Governmental Entity to the Knowledge of the Company.
(h) The Employee Benefit Plans and Pension Plans have been
maintained, in all material respects, in accordance with their terms and with
all provisions of ERISA and the Code (including rules and regulations
thereunder) and other applicable federal and state laws and regulations. None of
the Company, its Subsidiaries, or, to the Knowledge of the Company, any "party
in interest" or "disqualified person" with respect to the Employee Benefit Plans
or Pension Plans, as applicable, has engaged in a non-exempt "prohibited
transaction" within the meaning of Section 406 of ERISA or 4975 of the Code
pursuant to which the tax or penalty could be material. No stock or other
security issued by the Company or any Affiliate forms or has formed a part of
the assets of any Employee Benefit Plan or Pension Plan.
- 25 -
(i) Except as set forth in Section 3.22(i) of the Company Disclosure
Letter, none of the Employee Benefit Plans or Pension Plans provide retiree
life, health or death benefits except as may be required under COBRA or any
similar state or local law at the retirees own expense.
(j) Except as set forth in Section 3.22(j) of the Company Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, either alone or
together with the occurrence of subsequent events (i) increase any benefits
otherwise payable under any Employee Benefit Plan or Pension Plan; (ii) result
in the acceleration of the time of payment or vesting of any benefits under any
Employee Benefit Plan, Pension Plan or Contract to any current or former
employee; or (iii) result in the payment of any amount that would, individually
or in combination with any other such payment, fail to be deductible by reason
of Section 280G of the Code.
(k) Except as set forth on Section 3.22(k) of the Company Disclosure
Letter, no Contract, Employee Benefit Plan, warrant or other compensatory or
equity-based arrangement with any employee, officer or director of the Company
contains any provision requiring the Company to pay on behalf of, or otherwise
reimburse, any such individual for any income or excise taxes due by such
individual upon payment of any benefits by the Company, other than any such
obligations as required by applicable laws or regulations.
(l) Each "nonqualified deferred compensation plan" (as defined in
Section 409A(d)(1) of the Code) of the Company has been operated in good faith
compliance with Section 409A of the Code, IRS Notice 2005-1, or the proposed
regulations or final regulations promulgated under Section 409A of the Code.
(m) All Company Employee Benefit Plans and all Company Pension Plans
subject to the laws of any jurisdiction outside of the United States (i) have
been maintained in material compliance with all applicable requirements, (ii) if
they are intended to qualify for special tax treatment, meet all requirements
for such treatment, and (iii) if they are intended to be funded and/or
book-reserved, are fully funded and/or book reserved, as appropriate, based upon
reasonable actuarial assumptions.
SECTION 3.23. INSURANCE. The Company has made available to Parent
true, complete and accurate copies of all material surety bonds, fidelity bonds
and all material policies of title, liability, fire, casualty, business
interruption, workers' compensation and other forms of insurance insuring each
of the Company and its Subsidiaries and their assets, properties and operations.
All such policies and bonds are in full force and effect. None of the Company or
its Subsidiaries is in material default under any provisions of any such policy
of insurance nor has any of the Company or its Subsidiaries received notice of
cancellation of or cancelled any such insurance. For all material claims made
under such policies and bonds, the Company and its Subsidiaries have timely
complied with any applicable notice provisions.
SECTION 3.24. AFFILIATE TRANSACTIONS. Except as set forth in the
Company SEC Reports (including the exhibits thereto) filed prior to the date
hereof, there are no transactions, agreements, arrangements or understandings
between the Company or any of its Subsidiaries, on the one hand, and any
director or executive officer of the Company, on the
- 26 -
other hand, that would be required to be disclosed under Item 404 of Regulation
S-K under the Securities Act other than ordinary course of business employment
agreements and similar employee arrangements otherwise set forth on Section 3.24
of the Company Disclosure Letter to the extent required to be set forth therein
(or any such ordinary course employment agreements and similar arrangements not
required to be set forth on Section 3.24 of the Company Disclosure Letter by the
limitations contained in the representation and warranty set forth in Section
3.21 of this Agreement).
SECTION 3.25. VENDORS AND CUSTOMERS.
(a) Section 3.25(a) of the Company Disclosure Letter sets forth a
list of the vendors that are parties to the Vendor Contracts. No such vendor has
expressed in writing or, to the Knowledge of the Company, verbally to the
Company or any of its Subsidiaries its intention to cancel or otherwise
terminate or materially reduce or modify its relationship with the Company or
any of its Subsidiaries.
(b) Section 3.25(b) of the Company Disclosure Letter sets forth a
list of the customers that are parties to the Customer Contracts. No customer
under any such Customer Contract has expressed in writing or, to the Knowledge
of the Company, verbally to the Company or any of its Subsidiaries its intention
to cancel or otherwise terminate or materially reduce or modify its relationship
with the Company or any of its Subsidiaries.
(c) No GPO or hospital contracting with the Company or any of its
Subsidiaries nor any Person who is a licensor to the Company, has expressed in
writing or, to the Knowledge of the Company, verbally to the Company or any of
its Subsidiaries its intention to cancel or otherwise terminate or materially
reduce or modify its relationship with the Company or any of its Subsidiaries.
SECTION 3.26. LABOR MATTERS.
(a) Neither the Company nor any of its Subsidiaries is a party to
any collective bargaining agreement or other labor union contract or similar
scheme or arrangement applicable to its employees nor does the Company have
Knowledge of any activities or proceedings of any labor union to organize any
such employees.
(b) Each of the Company and its Subsidiaries is in compliance in all
material respects with all applicable laws relating to employment and employment
practices, the classification of employees, wages, hours, collective bargaining,
unlawful discrimination, civil rights, safety and health, workers' compensation
and terms and conditions of employment. There are no charges with respect to or
relating to either of the Company or its Subsidiaries pending or, to the
Knowledge of the Company, threatened before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the prevention
of unlawful employment practices. Neither the Company nor any of its
Subsidiaries has received any notice from any national, state, local or foreign
agency responsible for the enforcement of labor or employment laws of an
intention to conduct an investigation of either of the Company or its
Subsidiaries and no such investigation is in progress.
- 27 -
(c) There has been no "mass layoff" or "plant closing" as defined by
the Worker Adjustment and Retraining Notification Act or any similar state or
local "plant closing" law ("WARN") with respect to the current or former
employees of the Company or its Subsidiaries.
(d) Except as set forth on Section 3.26(d) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has any severance plan
or severance obligation with respect to its employees.
SECTION 3.27. ENVIRONMENTAL MATTERS.
(a) Each of the Company and its Subsidiaries is, and has been, in
compliance in all material respects with all Environmental Laws. Each of the
Company and its Subsidiaries has in effect all material licenses, permits and
other authorizations required under all Environmental Laws and all such
licenses, permits and other authorizations are in full force and effect and the
Company is in compliance in all material respects with all such licenses,
permits and authorizations and such licenses, permits and authorizations are
transferable without cost.
(b) There is no material litigation or other proceeding or
investigation pending, or to the Knowledge of the Company, threatened against
the Company, any of its Subsidiaries or any of their respective properties under
any Environmental Law, and the Company and its Subsidiaries have not received
any notice of material violation or potential liability under any Environmental
Laws from any Person or any Governmental Entity inquiry, request for
information, or demand letter under any Environmental Law relating to operations
or properties of the Company or its Subsidiaries. None of the Company, its
Subsidiaries or respective properties or operations is subject to any orders
arising under Environmental Laws nor are there any administrative, civil or
criminal actions, suits, proceedings or investigations pending or, to the
Knowledge of the Company, threatened, against the Company or its Subsidiaries
under any Environmental Law. None of the Company or its Subsidiaries has entered
into any agreement pursuant to which the Company or its Subsidiaries has assumed
or will assume any material liability under Environmental Laws, including
without limitation, any obligation for costs of remediation, of any other
Person.
(c) To the Knowledge of the Company, there has been no release or
threatened release of any Hazardous Material, on, at or beneath any of the
Company Property or other properties currently or previously owned or operated
by the Company or its Subsidiaries or any surface waters or groundwater's
thereon or thereunder which requires any material disclosure, investigation,
cleanup, remediation, monitoring, abatement, deed or use restriction by the
Company, or which would be expected to give rise to any actual or alleged
material liability for personal injury, property damage, natural resources
damage or other material liability or damages to the Company or its Subsidiaries
under any Environmental Laws.
(d) None of the Company or its Subsidiaries has sent or arranged for
the disposal of any Hazardous Material, or transported any Hazardous Material,
that reasonably would be expected to give rise to any material liability for any
damages or costs of
- 28 -
investigation, remediation or any other action to respond to the release or
threatened release of any Hazardous Material.
(e) The Company has made available to Parent copies of all
environmental studies, investigations, reports or assessments concerning the
Company, its Subsidiaries, the Company Property and any owned real property
currently or previously owned or operated by the Company or its Subsidiaries.
(f) None of the Company and its Subsidiaries is or will be required
to incur material cost or expense in order to cause their operations or
properties to comply with applicable Environmental Laws.
SECTION 3.28. NO BROKERS; OTHER ADVISORS.
(a) No broker, finder or similar intermediary has acted for or on
behalf of, or is entitled to any broker's, finder's or similar fee or other
commission from the Company or its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby other than Xxxxxx Xxxxxx
Partners LLC. The Company has heretofore furnished to Parent a complete and
correct copy of all agreements between the Company and Xxxxxx Xxxxxx Partners
LLC pursuant to which Xxxxxx Xxxxxx Partners LLC would be entitled to any
payment relating to the transactions contemplated hereby.
(b) Other than the agreements with Xxxxxx Xxxxxx Partners LLC
described in Section 3.28(a), each engagement letter or other contract between
the Company or any of its Subsidiaries and any of its legal, accounting or other
advisors in connection with the transactions contemplated by this Agreement
entitles the applicable advisor to receive compensation only at its usual hourly
rates, without any premium, bonus or similar payment in connection with the
transactions contemplated by this Agreement.
SECTION 3.29. STATE TAKEOVER STATUTES. The Board of Directors of the
Company has taken all action necessary to ensure that any restrictions on
business combinations contained in the DGCL, including Section 203 of the DGCL,
or in the Company Organizational Documents will not apply to the Agreement, the
Merger and the transactions contemplated by this Agreement. No other "fair
price", "moratorium", "control share acquisition" or other similar anti-takeover
statute or regulation or any anti-takeover provision in the Company's
Organizational Documents is, or at the Effective Time will be, applicable to the
Company, the Company Common Stock, the Agreement, the Merger or the other
transactions contemplated by this Agreement.
SECTION 3.30. OPINION OF FINANCIAL ADVISOR. The Board of Directors
of the Company has received the opinion of Xxxxxx Xxxxxx Partners LLC, dated as
of the date hereof, to the effect that, as of such date, the Merger
Consideration to be received by the holders of the Company Common Stock pursuant
to the Merger is fair from a financial point of view to the holders of such
Company Common Stock. A written copy of such opinion has been delivered to
Parent.
SECTION 3.31. INFORMATION SUPPLIED. The information supplied or to
be supplied by the Company specifically for inclusion in the proxy statement or
any amendment
- 29 -
or supplement thereto (the "Proxy Statement") and to be sent to the stockholders
of the Company in connection with the Company stockholders meeting to adopt this
Agreement and the Merger (the "Company Stockholders Meeting") shall not, on the
date the Proxy Statement is first mailed to the stockholders of the Company or
at the time of the Company Stockholders Meeting or at the Effective Time,
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 Proxy Statement will, at the time of the Company Stockholders
Meeting, comply as to form in all material respects with the requirements of the
Exchange Act.
SECTION 3.32. BOARD APPROVAL. The Board of Directors of the Company,
at a meeting duly called and held, by unanimous vote (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
advisable and fair to, and in the best interests of, the Company and its
stockholders, (ii) approved this Agreement and the transactions contemplated
hereby, including the Merger, and (iii) resolved, subject to Section 7.4, to
recommend that the holders of the shares of Company Common Stock approve and
adopt this Agreement and the transactions contemplated hereby, including the
Merger. The Company hereby agrees to the inclusion in the Proxy Statement of the
recommendation of the Board of Directors of the Company described in this
Section 3.32 (subject to the right of the Board of Directors of the Company to
withdraw, amend or modify such recommendation in accordance with Section 7.4).
SECTION 3.33. VOTE REQUIRED. The affirmative vote of the holders of
a majority of the outstanding shares of Company Common Stock entitled to vote
thereon (the "Required Company Vote") is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve and adopt
this Agreement and the transactions contemplated hereby, including the Merger.
SECTION 3.34. ILLEGAL OR UNAUTHORIZED PAYMENTS; POLITICAL
CONTRIBUTIONS.
(a) Neither the Company or its Subsidiaries nor, to the Knowledge of
the Company (after reasonable inquiry of its officers and directors), any of the
officers, directors, employees, agents or other representatives of the Company
or its Subsidiaries or any other business entity or enterprise with which the
Company or any of its Subsidiaries is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment, contribution or gift of
money, property, or services, whether or not in contravention of applicable law,
(a) as a kickback or bribe to any Person or (b) to any political organization,
or the holder of or any aspirant to any elective or appointive public office
except for personal political contributions not involving the direct or indirect
use of funds of the Company or any of its Subsidiaries.
(b) None of the Company, any Subsidiary or, to the Knowledge of the
Company, any directors or officers, agents or employees of the Company or any
Subsidiary, has (i) provided remuneration or received any remuneration in
violation of 42 U.S.C. 1320a-7b(b), the "Federal anti-kickback statute" or any
similar Law, or (ii) participated in providing financial or reimbursement
information to customers that was reported to government
- 30 -
reimbursement agencies and that was untrue or misleading in violation of 31
U.S.C. 3729, the "Federal False Claims Act" or any similar Law.
SECTION 3.35. EXCHANGE OFFER.
(a) Through a public exchange offer (the "Exchange Offer"), the
Company acquired, through its wholly owned Swiss subsidiary, IsoTis
International S.A. (the "Swiss SPV"), 64,180,460 of the common shares of IsoTis,
S.A., pursuant to Offer Memoranda (the "Offer Memoranda") and other
informational materials made available to IsoTis, S.A. shareholders in
Switzerland, the Netherlands, Canada and the United States and such Exchange
Offer and the transactions contemplated therein complied with the applicable
securities laws and any other applicable laws of the above referenced
jurisdictions (such laws, the "Applicable Securities Laws") as well as the
pertinent recommendations of the Swiss Takeover Board dated December 12, 2006.
(b) The Offer Memoranda and other informational materials made
available to IsoTis, S.A. shareholders in connection with the Exchange Offer,
conformed, in all material respects, to the requirements of the Applicable
Securities Laws, and, as of the date thereof, did not contain an untrue
statement of a material fact or omit 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;
(c) The Company and the Swiss SPV, as applicable, has taken all
corporate action necessary to merge IsoTis, S.A. into a wholly owned subsidiary
of the Company and to hold and acquire all of the shares of capital stock in the
merged entity and thereby to exchange all of the remaining shares of capital
stock of IsoTis, S.A. into shares of Company Common Stock in compliance with the
Applicable Securities Laws, including without limitation, the Swiss Federal Act
on Mergers, De-Mergers, Transformations and Transfers of Assets of October 3,
2003, as amended from time to time, and the Swiss Federal Act on Stock Exchanges
and Securities Trading of March 24, 1995, as amended from time to time (the
"Swiss Merger") and has terminated as of July 30, 2007 the listing of shares of
capital stock of IsoTis, S.A. on each of the SWX Swiss Exchange, Euronext
Amsterdam N.V. and the Toronto Stock Exchange (collectively, the "Listing
Terminations") in compliance with the Applicable Securities Laws;
(d) The Swiss SPV is a corporation duly organized and validly
existing under the laws of Switzerland with full corporate power and authority
to conduct the Swiss Merger. As of the date hereof, the Company owns 100% of the
issued and outstanding capital stock of the Swiss SPV and all of the assets and
liabilities of IsoTis, S.A., and IsoTis, S.A. has been dissolved; and
(e) The Exchange Offer, the Swiss Merger, the Listing Terminations
and the consummation of all transactions in connection therewith did not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give rise to a right of
termination under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to which
any of the property or
- 31 -
assets of the Company or any of its subsidiaries is subject, except for such
breaches or violations as would not, individually or in the aggregate, have a
Company Material Adverse Effect, nor did such action result in any violation of
the provisions of the Certificate of Incorporation or Bylaws of the Company or
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or any
of their properties.
SECTION 3.36. PRODUCT WARRANTY. No product of the Company or any of
its Subsidiaries manufactured, sold, leased or delivered by the Company or any
of its Subsidiaries is subject to any oral or written guaranty, warranty or
other indemnity to its customers with respect to the quality or absence of
defects of such product beyond the Company's and its Subsidiaries' applicable
regular or standard or usual terms and conditions of sale or lease or as
otherwise provided by applicable law. Except as set forth in Section 3.36 of the
Company Disclosure Letter, there are no claims pending, or to the Knowledge of
the Company, anticipated or threatened against the Company or any of its
Subsidiaries with respect to the quality of, or existence of defects in, any of
their products. The Company has made available to Parent information which is
accurate and complete in all material respects, regarding all returns of
defective or expired products given or promised to customers since January 1,
2003, and such information in each case accurately describes as best known to
the Company the cause which resulted in the return, allowance or credit. Neither
the Company nor any of its Subsidiaries has since January 1, 2004 paid or been
required to pay or received a request or demand for payment of any damages,
including any direct, incidental or consequential damages, to any Person in
connection with any product.
SECTION 3.37. EXPORT.
(a) In the three-year period prior to the date hereof, the Company
and its Subsidiaries and, to the Knowledge of the Company, any and all
distributors of the Company's and its Subsidiaries' products have (i) complied
with all applicable laws or regulations related to the sale, marketing,
promotion or export of goods promulgated or enforced by the Office of Foreign
Assets Control in the United States Department of the Treasury, the United
States Department of Commerce or any other department or agency of the United
States federal government, including, without limitation, the Arms Export
Control Act, the trading with the Enemy Act, the International Emergency
Economic Powers Act, the Export Xxxxxxxxxxxxxx Xxx, xxx 0000 Xxxxxx Xxx, the
Foreign Corrupt Practices Act, the Export Administration Regulations, the
International Traffic in Arms Regulations, the United States Customers
Regulations (the "Trade Laws") and (ii) made reasonable efforts to ensure that
no products have been sold directly or indirectly to any entity where such sales
are, or were at any time during the previous two years, prohibited by these
Trade Laws or other regulations, including, without limitation, in the case of
each of clause (i) and (ii) with respect to any sales made in Iran or to any
Person in Iran.
(b) Neither the Company nor any of its Subsidiaries has received
notice that it has been the subject of any investigation, complaint or claim of
any violation of any Trade Law by any Governmental Entity.
- 32 -
SECTION 3.38. INVENTORY. Section 3.38 of the Company Disclosure
Letter sets forth a complete and accurate list of addresses at which amounts of
the inventory of the Company and its Subsidiaries is located and except as set
forth therein, no amounts of inventory are held by any Person (including any
Affiliate of the Company or any of its Subsidiaries) on consignment. All
inventory reflected on the Company's financial statements included in the
Company SEC Reports and all other inventory acquired by the Company or any of
its Subsidiaries was acquired in the ordinary course of business and in a manner
consistent with each of the Company's and each of its Subsidiary's regular
inventory practices. Adequate reserves have been established on the Company's
financial statements and on the books and records of the Company and each of its
Subsidiaries with respect to excessive and obsolete inventory (it being agreed
that, for purposes of this Section 3.38 the term "excessive and obsolete
inventory" shall refer to any inventory which (i) cannot be sold at current
prices in the ordinary course of business, (ii) are not usable in the production
of current products of the Company and its Subsidiaries or (iii) consists of
on-hand quantities in excess of one year's historical sales or usage).
SECTION 3.39. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article III, neither the
Company nor any other Person makes any other express or implied representation
or warranty on behalf of the Company with respect to the Company and its
Subsidiaries.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
SECTION 4.1. ORGANIZATION. Each of Parent and Merger Sub is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all requisite corporate power to own its properties and
assets and to conduct its businesses as now conducted.
SECTION 4.2. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Parent and Merger Sub of this Agreement do not and will not (i)
violate or conflict with any provision of any Parent Organizational Document or
the organizational documents of Merger Sub, (ii) violate any provision of law,
or any order, judgment or decree of any Governmental Entity, (iii) result in the
creation or imposition of any Lien (other than any Permitted Lien) upon any of
the assets, properties or rights of either Parent or Merger Sub or (iv) violate
or result in a breach of or constitute (with due notice or lapse of time or
both) a default under any material contract, agreement or instrument to which
Parent or Merger Sub is a party or by which it is are bound or to which any of
its properties or assets is subject, except in each case as would not,
individually or in the aggregate, prevent or materially delay the ability of
Parent and Merger Sub to perform their respective obligations under this
Agreement or to consummate the transactions contemplated hereby.
- 33 -
SECTION 4.3. CONSENTS AND APPROVALS. No consent, waiver,
authorization or approval of any Governmental Entity, and no declaration or
notice to or filing or registration with any Governmental Entity, is required in
connection with the execution and delivery of this Agreement by Parent or Merger
Sub or the performance by Parent or its Subsidiaries or Merger Sub of their
obligations hereunder or thereunder, except for (i) any required competition or
other regulatory approvals required of foreign or domestic authorities, (ii)
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of Nasdaq, (iii) the consents, waivers, authorizations or
approvals of any Governmental Entity set forth on Section 4.3 of the Parent
Disclosure Letter; (iv) the amendment of Establishment Registrations and Device
Listings under the FDA's Establishment Registration and Device Listing
regulations, as set forth in 21 C.F.R. Part 807; and (v) such other consents,
waivers, authorizations, approvals, declarations, notices, filings or
registrations, which if not obtained or made, would prevent or materially delay
the ability of Parent and Merger Sub to perform their respective obligations
under this Agreement or to consummate the transactions contemplated hereby.
SECTION 4.4. AUTHORIZATION AND VALIDITY OF AGREEMENT. Parent and
Merger Sub have all requisite corporate power and authority to execute, deliver
and perform their obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub and the performance by Parent and Merger Sub of their
obligations hereunder and the transactions contemplated hereby have been duly
authorized by the Board of Directors of each of Parent and Merger Sub and all
other necessary corporate action on the part of Parent and Merger Sub, and no
other corporate proceedings on the part of Parent and Merger Sub are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming due execution and delivery by the Company, shall constitute
their legal, valid and binding obligation, enforceable against them in
accordance with its terms, subject to (i) the effect of bankruptcy, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting the enforcement of creditors' rights generally, (ii) general equitable
principles (whether considered in a proceeding in equity or at law) and (iii) an
implied covenant of good faith and fair dealing.
SECTION 4.5. NO BROKERS. No broker, finder or similar intermediary
has acted for or on behalf of, or is entitled to any broker's, finder's or
similar fee or other commission from Parent in connection with this Agreement or
the transactions contemplated hereby.
SECTION 4.6. INFORMATION SUPPLIED. The information supplied or to be
supplied by Parent specifically for inclusion in the Proxy Statement shall not,
on the date the Proxy Statement is first mailed to the stockholders of the
Company or at the time of the Company Stockholders Meeting or at the Effective
Time, 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.
- 34 -
SECTION 4.7. MERGER SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement. All of
the outstanding capital stock of Merger Sub is directly owned of record and
beneficially by Parent. Except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement, Merger Sub has not and will not have incurred,
directly or indirectly, through any Subsidiary or Affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangement with any other Person. Merger Sub
has no Subsidiaries.
SECTION 4.8. SUFFICIENCY OF FUNDS. Subject to the satisfaction of
the condition set forth in Section 8.2(f), Parent will have sufficient funds at
the Effective Time for the payment of the Merger Consideration and to perform
its obligations with respect to the transactions contemplated by this Agreement.
SECTION 4.9. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article IV, none of Parent,
Merger Sub or any other Person makes any other express or implied representation
or warranty on behalf of Parent or Merger Sub with respect to Parent and its
Subsidiaries.
ARTICLE V.
COVENANTS OF THE COMPANY.
The Company hereby covenants as follows:
SECTION 5.1. CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. (a) The
Company covenants and agrees that, during the period from the date hereof to the
earlier of the termination of this Agreement in accordance with its terms and
the Effective Time (except as otherwise specifically contemplated by the terms
of this Agreement), unless Parent shall otherwise consent in writing (which
consent shall not be unreasonably withheld): (i) the businesses of the Company
and its Subsidiaries shall be conducted, in all material respects, in the
ordinary course of business and in a manner consistent with past practice and,
in all material respects, in compliance with applicable laws; (ii) the Company
shall and shall cause its Subsidiaries to continue to maintain, in all material
respects, its assets, properties, rights and operations in accordance with
present practice in a condition suitable for their current use; and (iii) the
Company shall use its commercially reasonable efforts consistent with the
foregoing to preserve substantially intact the business organization of the
Company and its Subsidiaries, to keep available the services of the present
officers and key employees of the Company and its Subsidiaries and to preserve,
in all material respects, the present relationships of the Company and its
Subsidiaries with persons with which the Company or any of its Subsidiaries has
significant business relations. Without limiting the generality of the
foregoing, neither the Company nor any of its Subsidiaries shall (except as
specifically contemplated by the terms of this Agreement), between the date of
this Agreement and the earlier of the termination of this Agreement in
accordance with its terms and the Effective Time, directly or indirectly do, any
of the following without the prior written consent of Parent (which consent,
with respect to clauses (vi) (but only with respect to non-officers of the
Company), (viii), (xi) and (xii), shall not be unreasonably withheld):
- 35 -
(i) make any change in any of its organizational documents;
issue any additional shares of capital stock (other than (A) upon
the exercise of options to purchase shares of Company Common Stock
outstanding on the date hereof and (B) the issuance of Company
Common Stock upon consummation of the Exchange Offer), membership
interests or partnership interests or other equity securities or
grant any option, warrant or right to acquire any capital stock,
membership interests or partnership interests or other equity
securities or issue any security convertible into or exchangeable
for such securities or alter in any way any its outstanding
securities or make any change in outstanding shares of capital
stock, membership interests or partnership interests or other
ownership interests or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, stock dividend or otherwise;
(ii) make any sale, assignment, transfer, abandonment,
sublease, assignment or other conveyance of its material assets,
Company Property or rights or any part thereof, other than
dispositions of worn-out or obsolete equipment for fair or
reasonable value in the ordinary course of business and consistent
with past practice;
(iii) subject any of its assets, properties or rights or any
part thereof, to any Lien or suffer such to exist other than
Permitted Liens;
(iv) redeem, retire, purchase or otherwise acquire, directly
or indirectly, any shares of the capital stock, membership interests
or partnership interests or other ownership interests of the Company
and its Subsidiaries or declare, set aside or pay any dividends or
other distribution in respect of such shares or interests, except
for the issuance of Company Common Stock upon consummation of the
Exchange Offer;
(v) acquire, lease or sublease any assets, raw materials or
properties (including any real property), or enter into any other
transaction, other than in the ordinary course of business and
consistent with past practice;
(vi) enter into any new (or amend any existing to increase
benefits) employee benefit plan, program or arrangement or any new
(or amend any existing to increase benefits) employment, severance,
change of control or consulting agreement, grant any general
increase in the compensation of officers or employees (including any
such increase pursuant to any bonus, pension, profit-sharing or
other plan or commitment) or grant any increase in the compensation
payable or to become payable to any employee, except as otherwise
provided pursuant to the terms of any plan or agreement, as required
by law, to the extent necessary to avoid imposition of any taxes
under Section 409A (but only to the extent such amendment does not
materially increase the cost of such plan, program or arrangement to
the Company, without regard to the time value of money) or for
increases in compensation to employees in accordance with
pre-existing contractual provisions;
- 36 -
(vii) pay (other than with respect to compensatory payments to
current or former employees, officers, consultants or directors, in
each case (a) in the ordinary course of business consistent with
past practice, (b) pursuant to agreements in effect as of the date
hereof or (c) which have been accrued for on the Company's balance
sheet), lend or advance any amount to, or sell, transfer or lease
any properties or assets to, or enter into any agreement or
arrangement with, any of its Affiliates (other than wholly owned
Subsidiaries);
(viii) fail to keep in full force and effect insurance
comparable in amount and scope to coverage maintained as of the date
hereof;
(ix) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change
required by reason of a concurrent change in GAAP, or write off as
uncollectible any accounts receivable except in the ordinary course
of business and consistent with past practice;
(x) make or change any material Tax election, change an annual
accounting period, adopt or change any accounting method, file any
amended Tax Return, enter into any closing agreement, settle any
material Tax claim or assessment relating to the Company or any of
its Subsidiaries, surrender any right to claim a refund of a
material amount of Taxes or consent to any extension or waiver of
the limitation period applicable to any material Tax claim or
assessment relating to the Company or any of its Subsidiaries;
(xi) settle, release or forgive any material claim or
litigation or waive any right thereto which has not been properly
reserved on the books of the Company or its Subsidiaries;
(xii) make, enter into, modify, amend in any manner that would
be reasonably expected to have an adverse effect on the Company and
its Subsidiaries or terminate, or waive any right or remedy under,
any Contract, bid or expenditure, where such Contract, bid or
expenditure is for a Contract entailing payments in excess of
$100,000, other than in the ordinary course of business and
consistent with past practice;
(xiii) lend money to any Person, or incur or guarantee any
indebtedness for borrowed money in excess of $100,000 in the
aggregate, or enter into any capital lease obligation; or
(xiv) commit to do any of the foregoing.
(b) Nothing contained in this Agreement shall give to Parent or
Merger Sub, directly or indirectly, rights to control or direct the operations
of the Company or its Subsidiaries prior to the Closing Date. Prior to the
Closing Date, the Company and its Subsidiaries shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision of
its and its Subsidiaries' operations.
- 37 -
SECTION 5.2. NOTICE OF BREACH. From and after the date hereof and
until the earlier to occur of the Closing Date or the termination of this
Agreement pursuant to Article IX hereof, the Company shall promptly give written
notice with particularity upon having Knowledge of any matter that constitutes a
breach of any representation, warranty, agreement or covenant contained in this
Agreement.
SECTION 5.3. AFFILIATE LETTER. The Company shall deliver no later
than ten (10) days prior to the Company Stockholders Meeting, a letter to Parent
identifying all persons who, to the Knowledge of the Company, are "affiliates"
of the Company for purposes of Rule 145 under the Securities Act.
SECTION 5.4. FDA CORRESPONDENCE. The Company will (i) consult with
Parent prior to any communication or correspondence with, or delivery of notice,
supplemental reports or materials to, the FDA in connection with the Company's
efforts to obtain 510(k) clearance for the Accell Products and (ii) promptly
provide Parent with copies of any correspondence with the FDA and any written
comments, notices, supplemental reports or materials received from or provided
to the FDA and promptly advise Parent of any oral communications with the FDA.
SECTION 5.5. SECTION 409A. To the extent requested by Parent, the
Company will work with Parent in good faith to amend each Company Employee
Benefit Plan and Company Pension Plan to comply with or be exempt from Section
409A of the Code (if applicable).
ARTICLE VI.
COVENANTS OF PARENT AND MERGER SUB.
SECTION 6.1. EMPLOYEE BENEFITS.
(a) Employees of Company and its Subsidiaries who continue their
employment with the Surviving Corporation or who become employees of Parent or
any subsidiary of Parent ("Continuing Employees") shall be given credit for all
service with the Company and its Subsidiaries (and their respective
predecessors) (or service credited by the Company and its Subsidiaries for
similar plans, programs or policies) under all employee benefit and fringe
benefit plans, programs and policies of the Parent or its affiliates in which
they become participants for purposes of eligibility, vesting and level of
benefits (except to the extent such service credit will result in benefit
accrual under any defined benefit pension plans or otherwise result in a
duplication of benefits).
(b) If a Continuing Employee becomes eligible to participate in any
medical, dental or health plan of the Parent or any of its affiliates, Parent
shall cause such plan to (A) waive any preexisting condition limitations for
conditions covered under the applicable medical, health or dental plans of the
Company (the "Company Welfare Plans") and (B) honor any deductible and
out-of-pocket expenses incurred by such employee and his or her beneficiaries
under the Company Welfare Plans during the portion of the applicable plan year
preceding the Closing.
- 38 -
(c) Except as provided in this Section 6.1, nothing in this
Agreement shall limit or restrict the right of Parent or any of its Subsidiaries
to modify, amend, terminate or establish employee benefit plans or arrangements,
in whole or in part, at any time after the Effective Time.
(d) No provision of this Section 6.1 shall create any third party
beneficiary rights in any Continuing Employee or any current or former director
or consultant of the Company or its Subsidiaries located in the United States in
respect of continued employment (or resumed employment) or any other matter.
SECTION 6.2. INDEMNIFICATION CONTINUATION.
(a) For purposes of this 6.2, (i) "Indemnified Person" shall mean
any person who is now, or has been at any time prior to the Effective Time, an
officer or director of the Company or who was serving at the request of the
Company as an officer or director of another corporation, joint venture or other
enterprise, and can provide evidence thereof to Parent acceptable to Parent in
its sole discretion and (ii) "Proceeding" shall mean any claim, action, suit,
proceeding or investigation.
(b) From and after the Effective Time, Parent shall, or Parent shall
cause the Surviving Corporation, to provide indemnification to each Indemnified
Person to the same extent and under similar conditions and procedures as such
Indemnified Person is entitled on the date hereof in connection with any
Proceeding based directly or indirectly (in whole or in part) on, or arising
directly or indirectly (in whole or in part) out of, the fact that such
Indemnified Person is or was an officer or director of the Company, or is or was
serving at the request of the Company as an officer or director of another
corporation, joint venture or other enterprise or general partner of any
partnership or a trustee of any trust, whether pertaining to any matter arising
before or after the Effective Time. An Indemnified Person shall repay the
Surviving Corporation for any expenses incurred by Surviving Corporation in
connection with the indemnification of such Indemnified Person pursuant to this
Section 6.2 if it is ultimately determined that such Indemnified Person did not
meet the standard of conduct necessary for indemnification by the Surviving
Corporation.
(c) Parent shall, or shall cause the Surviving Corporation to,
provide or maintain in effect for six years from the Effective Time (the "Tail
Period"), through the purchase of run-off coverage or otherwise, directors' and
officers' liability insurance covering the Indemnified Persons who are covered
by the directors' and officers' liability insurance policy provided for
directors and officers of the Company and its Subsidiaries as of the date hereof
(the "Existing Policy") on terms substantially comparable in the aggregate to
the Existing Policy; provided, however, that in no event shall the Surviving
Corporation be required to expend in the aggregate in excess of 200% of the
current annual premium paid by the Company for such insurance with respect to
the Tail Period, and if the premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to maintain or obtain a
policy with the greatest coverage available for a cost not exceeding such
amount. In lieu of the foregoing, the Company or the Surviving Corporation may
purchase, a six-year "tail" prepaid officers' and directors' liability insurance
policy in respect of acts or omissions occurring at or prior to the Effective
Time covering each such Indemnified Person.
- 39 -
(d) The provisions of this Section 6.2 shall survive the
consummation of the Merger for a period of six years and are expressly intended
to benefit each of the Indemnified Persons; provided, however, that in the event
that any claim or claims for indemnification are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims.
(e) In the event that Parent or the Surviving Entity or any of their
respective 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, Parent
shall cause proper provisions to be made so that the successors and assigns of
Parent or the Surviving Entity, as the case may be, assume the obligations set
forth in this Section 6.2.
ARTICLE VII.
ADDITIONAL COVENANTS OF THE PARTIES.
SECTION 7.1. PREPARATION OF PROXY STATEMENT, COMPANY STOCKHOLDERS
MEETING.
(a) As promptly as practicable, the Company shall prepare and file
the Proxy Statement with the SEC provided, that the Company shall consult with
Parent and provide Parent a reasonable opportunity to review and comment on such
preliminary Proxy Statement prior to filing. The parties shall reasonably
cooperate with each other in the preparation of the Proxy Statement and to have
such document cleared by the SEC as promptly as practicable after such filing.
The Proxy Statement shall include the recommendation of the Board of Directors
of the Company in favor of approval and adoption of this Agreement and the
Merger, except to the extent the Board of Directors of the Company shall have
withdrawn or modified its approval or recommendation of this Agreement to the
extent such action is permitted by Section 7.4. The Company shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to its
stockholders as promptly as practicable upon the earlier of (x) receiving
notification that the SEC is not reviewing the Proxy Statement and (y) the
conclusion of any SEC review of the Proxy Statement. The Company shall promptly
provide copies, consult with Parent and prepare written responses with respect
to any written comments received from the SEC with respect to the Proxy
Statement and advise Parent of any oral comments received from the SEC. The
Proxy Statement shall comply as to form in all material respects with the rules
and regulations promulgated by the SEC under the Exchange Act.
(b) The Company shall make all necessary filings with respect to the
Merger and the transactions contemplated thereby under the Exchange Act and the
rules and regulations thereunder. The Company will advise Parent, promptly after
it receives notice thereof, of any request by the SEC for amendment of the Proxy
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. No amendment or supplement to the Proxy Statement shall
be filed without the prior approval of Parent, which approval shall not be
unreasonably withheld or delayed. If at any time prior to
- 40 -
the Effective Time, any information relating to Parent or the Company, or any of
their respective Affiliates, officers or directors, should be discovered by
Parent or the Company that should be set forth in an amendment or supplement to
the Proxy Statement, so that such documents would not include any misstatement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company.
(c) The Company shall cause the Company Stockholders Meeting to be
duly called and held as soon as reasonably practicable for the purpose of
obtaining the Required Company Vote. In connection with such meeting, the
Company will (i) subject to Section 7.4(b), use its reasonable best efforts to
obtain the Required Company Vote and (ii) otherwise comply with all legal
requirements applicable to such meeting.
SECTION 7.2. ACCESS TO INFORMATION. Upon reasonable notice, the
Company shall (and shall cause its Subsidiaries to) afford to Parent and its
representatives reasonable access during normal business hours, during the
period prior to the Effective Time, to all its officers, employees, properties,
offices, plants and other facilities and to all books and records and, during
such period, the Company shall (and shall cause its Subsidiaries to) furnish
promptly to Parent and its representatives, consistent with its legal
obligations, all other information concerning its business, properties and
personnel as Parent may reasonably request; provided, however, that the Company
may restrict the foregoing access to the extent that, in the Company's
reasonable judgment, (i) providing such access would result in the disclosure of
any trade secrets of third parties or violate any of its obligations with
respect to confidentiality if the Company shall have used all reasonable efforts
to obtain the consent of such third party to such access, or (ii) any law,
treaty, rule or regulation of any Governmental Entity applicable to the Company
requires the Company or its Subsidiaries to preclude Parent and its
representatives from gaining access to any properties or information. Parent
will hold any such information that is non-public in confidence to the extent
required by, and in accordance with, the provisions of that certain
Confidentiality Agreement, dated May 14, 2007 (the "Confidentiality Agreement"),
between the Company and Parent.
SECTION 7.3. EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each
party will use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the Merger and
the other transactions contemplated by this Agreement as soon as practicable
after the date hereof. In furtherance and not in limitation of the foregoing, if
applicable, each party hereto agrees to make any filing required by any
applicable Regulatory Law (as defined below) with respect to the transactions
contemplated hereby as promptly as practicable, and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to such applicable Regulatory Law and to take all other
actions necessary to cause the expiration or termination of the applicable
waiting periods under such applicable Regulatory Law as soon as practicable.
- 41 -
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 7.3 to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under any
Regulatory Law (as defined below), use its commercially reasonable best efforts
to (i) cooperate in all respects with each other in connection with any filing
or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party; (ii) promptly inform the
other party of any communication received by such party from, or given by such
party to any governmental authority and of any material communication received
or given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby, and (iii) permit the
other party to review any communication given by it to, and consult with each
other in advance of any meeting or conference with any governmental authority
or, in connection with any proceeding by a private party, with any other Person,
and to the extent permitted by the applicable governmental authority or other
Person, give the other party the opportunity to attend and participate in such
meetings and conferences. For purposes of this Agreement, "Regulatory Law" means
the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976, as amended, the Federal Trade Commission Act,
as amended, and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition. In furtherance and not
in limitation of the covenants of the parties contained in Section 7.3 and this
Section 7.4(b), each party hereto shall use its reasonable best efforts to
resolve objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any Regulatory Law. Notwithstanding
anything to the contrary contained in this Agreement, in connection with any
filing or submission required or action to be taken by either Parent or the
Company to consummate the Merger, in no event shall Parent or any of its
Subsidiaries or Affiliates be obligated to propose or agree to accept any
undertaking or condition, to enter into any consent decree, to make any
divestiture, or accept any operational restriction, or take or commit to take
any action that could reasonably be expected to limit (A) the freedom of action
of Parent or its Subsidiaries or Affiliates with respect to the operation of, or
Parent's or its Subsidiaries' or Affiliates' ability to retain, the Company or
any businesses, product lines or assets of the Company, or (B) the ability to
retain, own or operate any portion of the businesses, product lines, or assets,
of Parent or any of its Subsidiaries or Affiliates, or alter or restrict in any
way the business or commercial practices of the Company, Parent or its
Subsidiaries or Affiliates.
(c) The parties shall use their commercially reasonable efforts to
obtain all consents, waivers, authorizations and approvals of all third parties,
including Governmental Entities, necessary, proper or advisable for the
consummation of the transactions contemplated by this Agreement; provided that,
without the prior written consent of Parent, the Company shall not incur any
significant expense or liability or agree to any significant modification to any
contractual arrangement to obtain such consents or certificates, and to provide
any notices to third parties required to be provided prior to the Effective
Time.
- 42 -
SECTION 7.4. ACQUISITION PROPOSALS.
(a) None of the Company or any of its Subsidiaries shall (whether
directly or indirectly through Affiliates, directors, officers, employees,
representatives or other intermediaries), nor shall (directly or indirectly) the
Company authorize or permit any of its or their officers, directors,
representatives or other intermediaries or Subsidiaries to, (i) solicit,
initiate or take any action to knowingly facilitate or encourage the submission
of inquiries, proposals or offers from any Person (other than Parent and Merger
Sub) relating to any Acquisition Proposal, or agree to or endorse any
Acquisition Proposal; (ii) enter into any agreement to (x) knowingly facilitate
or consummate, any Acquisition Proposal or (y) approve or endorse any
Acquisition Proposal; (iii) enter into or participate in any discussions or
negotiations in connection with any Acquisition Proposal or inquiry with respect
to any Acquisition Proposal, or furnish to any Person any information with
respect to its business, properties or assets in connection with any Acquisition
Proposal or inquiry with respect to any Acquisition Proposal; or (iv) agree to
resolve or take any of the actions prohibited by clause (i), (ii) or (iii) of
this sentence. The Company shall immediately cease, and cause its
representatives and other intermediaries to immediately cease, any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing and shall demand the return or
destruction of any information previously provided with respect to such
activities, discussion, or negotiations. For purposes of this Section 7.4, the
term "Person" means any person, corporation, entity or "group," as defined in
Section 13(d) of the Exchange Act, other than Parent or any Subsidiaries of
Parent.
"Acquisition Proposal" means any offer or proposal for a merger,
reorganization, recapitalization, consolidation, share exchange, business
combination or other similar transaction involving the Company or any of the
Subsidiaries (excluding the transactions contemplated by the Exchange Offer) or
any proposal or offer to acquire, directly or indirectly, securities
representing more than 20% of the voting power of the Company or more than 20%
of the assets of the Company and the Subsidiaries taken as a whole, other than
the Merger contemplated by this Agreement.
(b) Notwithstanding the foregoing, the Board of Directors of the
Company, directly or indirectly through representatives or other intermediaries,
may, in the event of an Acquisition Proposal, (i) comply with Rule 14d-9 and
Rule 14e-2 promulgated under the Exchange Act with regard to any Acquisition
Proposal, provided that the Board of Directors of the Company may not withdraw,
modify or amend its recommendation of the Merger except to the extent such
action is permitted by clause (iv) of this Section 7.4(b), (ii) engage in
negotiations or discussions with any Person that has made an unsolicited bona
fide written Acquisition Proposal not resulting from or arising out of a breach
of Section 7.4(a), (iii) furnish to any Person that has made an unsolicited bona
fide written Acquisition Proposal not resulting from or arising out of a breach
of Section 7.4(a) nonpublic information relating to the Company or any of the
Subsidiaries pursuant to a confidentiality and standstill agreement (the
"Competing Confidentiality Agreement") with terms that are no less favorable to
the Company than those contained in the Confidentiality Agreement (it being
understood that the standstill provision contained in such Competing
Confidentiality Agreement may permit such Person to convey confidentially an
Acquisition Proposal to the Board of Directors of the Company under
circumstances in which the Company is permitted under this Section 7.4 to
- 43 -
participate in discussions regarding an Acquisition Proposal), and/or (iv) if
prior to the Company Stockholders Meeting, withdraw or modify or change in a
manner adverse to Parent its approval or recommendation of this Agreement or the
Merger; provided that, the Board of Directors of the Company shall be permitted
to take an action described in the foregoing clauses (i), (ii), (iii) or (iv)
if, and only if, prior to taking such particular action, the Board of Directors
of the Company has determined in good faith by a majority vote that (x) such
Acquisition Proposal would result in, or would reasonably be expected to result
in, a Superior Proposal, in the case of any of the foregoing clauses (i), (ii)
or (iii), or constitutes a Superior Proposal, in the case of the foregoing
clause (iv), and (y) (after considering the advice of outside legal counsel)
failing to take such action in the case of any of the foregoing clauses (i),
(ii) or (iii) would reasonably be expected to result in a breach of its
fiduciary duties under the DGCL or in the case of the foregoing clause (iv)
would result in a breach of its fiduciary duties under the DGCL. Notwithstanding
the foregoing, in response to an Intervening Event, the Board of Directors of
the Company may withdraw or modify or change in a manner adverse to Parent its
approval or recommendation of this Agreement or the Merger, if and only if, the
Board of Directors of the Company, after considering the advice of outside legal
counsel, has determined that failing to take such action would result in a
breach of its fiduciary duties under the DGCL.
i) "Superior Proposal" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by a
third party to enter into any transaction involving an
Acquisition Proposal that the Board of Directors of the
Company determines in its good faith judgment (following
consultation with an independent financial advisor) to be more
favorable to the Company's stockholders than this Agreement
and the Merger, taking into account all terms and conditions
of such transaction (including any break-up fees, expense
reimbursement provision and financial terms, the anticipated
timing, conditions and prospects for completion of such
transaction, including the prospects for obtaining regulatory
approvals and financing, and any third party approvals) and
that is reasonably likely to be consummated, except that the
reference to "more than 20%" in the definition of "Acquisition
Proposal" shall be deemed to be a reference to "more than
50%". Reference to "this Agreement" and "the Merger" in this
paragraph shall be deemed to include any proposed alteration
of the terms of this Agreement or the Merger that are agreed
to by Parent after it receives written notice from the Company
pursuant to Section 7.4(d) of the existence of, the identity
of the Person making, and the terms and conditions of, any
Acquisition Proposal.
(c) Notwithstanding anything in this Section 7.4 to the contrary,
if, at any time prior to the Company Stockholders Meeting, the Company's Board
of Directors determines in good faith, after consultation with its financial
advisors and outside legal counsel, in response to an Acquisition Proposal that
was unsolicited and that did not otherwise result from a breach of Section
7.4(a), that such proposal is a Superior Proposal, the Company or its Board of
Directors may, pursuant to and subject to complying with Section 9.1(f), accept
such Superior Proposal; provided, however, that prior to any such acceptance of
such Superior
- 44 -
Proposal, the Company shall have given Parent five (5) Business Days' written
notice (it being understood and agreed that any amendment to the amount or form
of consideration of the Superior Proposal shall require a new notice pursuant to
this Section 7.4(c) except that all references in this Section 7.4(c) to five
(5) Business Days shall be deemed to be references to three (3) Business Days in
such event) advising Parent that the Company's Board of Directors intends to
cause the Company to accept such Superior Proposal, specifying the material
terms and conditions of the Superior Proposal and that the Company shall, during
such five (5) Business Day period, negotiate in good faith with Parent to make
such adjustments to the terms and conditions of this Agreement such that such
Acquisition Proposal would no longer constitute a Superior Proposal and provided
further, however, that after the expiration of such five (5) Business Day period
and prior to the termination of this Agreement pursuant to Section 9.1(f), the
Company's Board of Directors shall have confirmed (after taking into account any
such adjustments to the terms and conditions of this Agreement) that the
Acquisition Proposal continues to be a Superior Proposal.
(d) The Company shall notify Parent promptly (but in any event
within one Business Day) after receipt or occurrence of (i) any Acquisition
Proposal, (ii) any request for information with respect to any Acquisition
Proposal, (iii) any inquiry, proposal, discussions or negotiation with respect
to any Acquisition Proposal, and (iv) the material terms and conditions of any
such Acquisition Proposal, request for information, inquiry, proposal,
discussion or negotiation and the identity of the Person making any such
Acquisition Proposal, request for information, inquiry or proposal or with whom
discussions or negotiations are taking place. In addition, the Company shall
promptly (but in any event within one Business Day) after the receipt thereof,
provide to Parent copies of any written documentation material to understanding
such Acquisition Proposal, request for information, inquiry, proposal,
discussion or negotiation ("Other Acquisition Documentation") which is received
by the Company from the Person (or from any representatives or agents of such
Person) making such Acquisition Proposal, request for information, inquiry or
proposal or with whom such discussions or negotiations are taking place. The
Company shall not, and shall cause each of its Subsidiaries not to, terminate,
waive, amend or modify any provision of any existing standstill or
confidentiality agreement to which it or any of its Subsidiaries is a party, and
the Company shall, and shall cause its Subsidiaries to, enforce the provisions
of any such agreement (it being understood that the Company may waive any
standstill provision to the extent necessary to permit any Person subject to
such standstill provision to convey confidentially an Acquisition Proposal to
the Board of Directors of the Company under circumstances in which the Company
is permitted under this Section 7.4 to participate in discussions regarding an
Acquisition Proposal). The Company shall keep Parent reasonably informed of the
status and details (including any material amendments or proposed material
amendments) of any such Acquisition Proposal or request for information and keep
Parent reasonably informed as to the material details of any information
requested of or provided by the Company and as to the material details of all
substantive discussions or negotiations with respect to any such Acquisition
Proposal, request for information, inquiry or proposal and shall provide to
Parent within one Business Day after receipt thereof all copies of any
additional Other Acquisition Documentation received by the Company from the
Person (or from any representatives or agents of such Person) making such
Acquisition Proposal, request for information, inquiry or proposal or with whom
such discussions or negotiations are taking place. The Company shall promptly
provide to Parent any non-public information concerning
- 45 -
the Company provided to any other Person in connection with any Acquisition
Proposal that was not previously provided to Parent. The Board of Directors of
the Company shall promptly consider in good faith (in consultation with its
outside legal counsel and financial advisors) any proposed alteration of the
terms of this Agreement or the Merger proposed by Parent in response to any
Acquisition Proposal.
SECTION 7.5. STOCKHOLDER LITIGATION. The Company shall keep Parent
informed of, and cooperate with Parent in connection with, any stockholder
litigation or claim against the Company and/or its directors or officers
relating to the Merger or the other transactions contemplated by this Agreement;
provided, however, that no settlement in connection with such stockholder
litigation shall be agreed to without Parent's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed.
SECTION 7.6. MAINTENANCE OF INSURANCE. The Company will use
reasonable best efforts to maintain in full force and effect through the Closing
Date all material insurance policies applicable to the Company and its
Subsidiaries and their respective properties and assets in effect on the date
hereof. If and as requested by Parent, the Company will use reasonable best
efforts to cause the Company's insurers to waive any provisions in such
insurance policies that would allow the insurer to terminate or adversely modify
coverage upon consummation of the Merger.
SECTION 7.7. PUBLIC ANNOUNCEMENTS. Each of the Company, Parent and
Merger Sub agrees that no public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
written consent of the Company and Parent (which consent shall not be
unreasonably withheld or delayed), except as such release or announcement may be
required by law or the rules or regulations of any applicable United States
securities exchange, in which case the party required to make the release or
announcement shall use its reasonable best efforts to allow each other party
reasonable time to comment on such release or announcement in advance of such
issuance, it being understood that the final form and content of any such
release or announcement, to the extent so required, shall be at the final
discretion of the disclosing party; provided, however, that upon prior
consultation with the other party, each of the parties may make statements that
are not inconsistent with previous press releases, public disclosures or public
statements made by any of the parties in compliance with this Section 7.7.
SECTION 7.8. NO SHAREHOLDER RIGHTS PLAN. From the date hereof
through the earlier of termination of this Agreement and the Effective Time, the
Company will not adopt, approve, or agree to adopt, a shareholder rights plan.
SECTION 7.9. EUROPEAN RESTRUCTURING. The Company shall use
commercially reasonable efforts to complete the restructuring of its European
operations, including using commercially reasonable efforts to accomplish the
each of the actions set forth on Section 7.9 of the Company Disclosure Letter.
- 46 -
ARTICLE VIII.
CONDITIONS PRECEDENT
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The obligations of the Company, Parent and Merger Sub to effect the
Merger are subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Stockholder Approval. The Company shall have obtained the
Required Company Vote in connection with the approval and adoption of this
Agreement by the stockholders of the Company.
(b) No Injunctions or Restraints, Illegality. No statute, rule,
regulation, executive order, decree, ruling, shall have been adopted or
promulgated, and no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other U.S. governmental authority
of competent jurisdiction shall be in effect, having the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger; provided,
however, that the provisions of this Section 8.1(b) shall not be available to
any party whose failure to fulfill its obligations pursuant to Section 7.3 shall
have been the cause of, or shall have resulted in, such order or injunction.
(c) Governmental Entity Approvals. All material consents, orders or
approvals of, declarations or filings with, and expirations of waiting periods
imposed by, any Governmental Entity that are required for the consummation of
the transactions contemplated hereby, if any, shall have been obtained and in
effect, except for such consents, orders, approvals, declarations and filings
the failure of which to be obtained or made would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect business,
assets, condition (financial or otherwise) or results of operations of Parent
and its Subsidiaries, taken as a whole.
SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND
MERGER SUB. The obligations of Parent and Merger Sub to effect the Merger are
subject to the satisfaction of, or waiver by Parent, on or prior to the Closing
Date of the following additional conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in Section 3.6 (Capitalization and Related
Matters) and Section 3.33 (Vote Required) shall be true and correct in all
respects (except, in the case of Section 3.6 for such inaccuracies as are de
minimis in the aggregate), in each case both when made and at and as of the
Closing Date, as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such date) and (ii) each of the
other representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects both when made and at and as
of the Closing Date, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date). Parent
shall have received a certificate of the chief executive officer and the chief
financial officer of the Company to such effect.
- 47 -
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects and complied in all material respects
with all agreements and covenants required to be performed or complied with by
it under this Agreement at or prior to the Closing Date. Parent shall have
received a certificate of the chief executive officer and the chief financial
officer of the Company to such effect.
(c) Company Material Adverse Effect. During the period from the date
hereof to the Closing Date, there shall not have been a Company Material Adverse
Effect.
(d) Accell Products. The Company shall have obtained clearance for
the 510(k), K061880, submitted to the FDA on June 28, 2006 and currently under
review by the FDA for the Accell Products for the indication set forth on
Section 8.2(d) of the Company Disclosure Letter.
(e) European Structuring. The Company shall have completed the each
of the actions relating to the restructuring of its European operations set
forth on Section 8.2(e) of the Company Disclosure Letter, in a manner
satisfactory to Parent.
(f) Credit Agreement. The Credit Agreement, dated as of December 22,
2005, as amended, among Parent and the lenders party thereto, shall have been
amended, or the lenders party thereto shall have granted Parent a waiver, in
either case, to permit the consummation of the transactions contemplated by this
Agreement, including the Merger, and to provide for such other revisions as
Parent shall deem necessary or advisable in its sole and absolute discretion
(the "Credit Agreement Amendment").
(g) Appraisal Rights. Holders of no more than 10% of the number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall have exercised their appraisal rights in the Merger in accordance
with Section 262.
SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to effect the Merger are subject to the
satisfaction of, or waiver by the Company, on or prior to the Closing Date of
the following additional conditions:
(a) Representations and Warranties. (i) Each of the representations
and warranties of Parent and Merger Sub set forth in this Agreement that is
qualified as to materiality or Material Adverse Effect shall be true and correct
both when made and at and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which case
as of such date) and (ii) each of the other representations and warranties of
Parent and Merger Sub set forth in this Agreement shall be true and correct in
all material respects both when made and at and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date). The Company shall have received a
certificate of an executive officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects and complied in all material respects with
all agreements and covenants required to be performed or complied with by it
under this Agreement at or prior to the
- 48 -
Closing Date. The Company shall have received a certificate of an executive
officer of Parent to such effect.
ARTICLE IX.
TERMINATION.
SECTION 9.1. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided below,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company:
(a) By mutual written consent of Parent and the Company, by action
of their respective Boards of Directors;
(b) By either the Company or Parent if the Effective Time shall not
have occurred on or before February 6, 2008 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 9.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the primary cause of the failure of the Effective
Time to occur on or before the Termination Date and such action or failure to
perform constitutes a breach of this Agreement;
(c) By either the Company or Parent if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting or making illegal the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable;
(d) By either the Company or Parent if the approval by the
stockholders of the Company required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the Required Company
Vote at the Company Stockholders Meeting (or any adjournment or postponement
thereof) at which the vote to adopt this Agreement and the Merger is taken;
(e) By Parent if (i) prior to the Company Stockholders Meeting, the
Board of Directors of the Company shall have failed to recommend or shall have
withdrawn or modified or changed in a manner adverse to Parent its approval or
recommendation of this Agreement or the Merger or shall have approved or
recommended a Superior Proposal (or the Board of Directors of the Company
resolves to do any of the foregoing), whether or not permitted by Section 7.4,
(ii) the Company shall fail to call or hold the Company Stockholders Meeting in
accordance with Section 7.1(c) and such breach shall not have been cured prior
to fifteen (15) days following receipt of notice of such breach from Parent or
(iii) the Company shall have materially and knowingly breached any of its
material obligations under Section 7.4; provided that with respect to clause
(i), it being understood that neither the disclosure of any Acquisition Proposal
that is not being recommended by the Company's Board of Directors nor disclosure
of any facts or circumstances, together with a statement that the Company's
Board of Directors continues to recommend this Agreement and the Merger, shall
be considered to be a withdrawal, modification or change to the Company's Board
of
- 49 -
Directors' approval or recommendation of this Agreement or the Merger or
approval or recommendation of a Superior Proposal;
(f) By the Company, prior to the Company Stockholders Meeting, to
accept a Superior Proposal in accordance with, and subject to the terms and
conditions of, Section 7.4(c); provided, however, that any such purported
termination pursuant to this Section 9.1(f) shall be void and of no force or
effect unless the Company has concurrently complied with Section 9.2(e);
(g) By the Company if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of Parent or Merger
Sub contained in this Agreement such that the conditions set forth in Sections
8.3(a) or 8.3(b) would not be satisfied and (A) such breach is not reasonably
capable of being cured or (B) in the case of a breach of a covenant or
agreement, if such breach is reasonably capable of being cured, such breach
shall not have been cured prior to the earlier of (I) 20 days following notice
of such breach and (II) the Termination Date; provided that the Company shall
not have the right to terminate this Agreement pursuant to this Section 9.1(g)
if the Company is then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement; or
(h) By Parent if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of the Company
contained in this Agreement such that the conditions set forth in Sections
8.2(a) or 8.2(b) would not be satisfied and (A) such breach is not reasonably
capable of being cured or (B) in the case of a breach of a covenant or
agreement, if such breach is reasonably capable of being cured, such breach
shall not have been cured prior to the earlier of (I) 20 days following notice
of such breach and (II) the Termination Date; provided that Parent shall not
have the right to terminate this Agreement pursuant to this Section 9.1(h) if
Parent or Merger Sub is then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
(i) By the Company if the Credit Agreement Amendment has not been
executed on or prior to September 7, 2007 or such later date as is mutually
agreed to by Parent and the Company; provided that the Company shall not have
the right to terminate this Agreement pursuant to this Section 9.1(i) if Parent
agrees to waive satisfaction of the condition in Section 8.2(f).
SECTION 9.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either the
Company or Parent as provided in Section 9.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent
or the Company or their respective officers or directors except with respect to
this Section 9.2, Article X and the last sentence of Section 7.2, provided that
the termination of this Agreement shall not relieve any party from any liability
for any willful breach of any covenant, agreement, representation or warranty in
this Agreement occurring prior to termination.
(b) If the Company or Parent shall terminate this Agreement pursuant
to Section 9.1(d), the Company shall reimburse Parent for all the Parent
Expenses up to a
- 50 -
maximum of $1,500,000, within two Business Days after delivery to the Company of
written notice of the amount of such Parent Expenses and a documented
itemization setting forth such expenses in reasonable detail.
(c) If (i) the Company or Parent shall terminate this Agreement
pursuant to Section 9.1(b) and (ii) at the time of termination there shall have
been made known to or proposed to the Company or otherwise publicly disclosed or
announced an Acquisition Proposal, the Company shall reimburse Parent for all
the Parent Expenses up to a maximum of $1,500,000, within two Business Days
after delivery to the Company of written notice of the amount of such Parent
Expenses and a documented itemization setting forth such expenses in reasonable
detail.
(d) If Parent shall terminate this Agreement pursuant to Section
9.1(e), then the Company shall pay to Parent, not later than two Business Days
following such termination, an amount equal to $2,250,000 (the "Termination
Fee").
(e) If the Company shall terminate this Agreement pursuant to
Section 9.1(f), then the Company shall pay to Parent, prior to or concurrently
with such termination, the Termination Fee.
(f) If (i) the Company or Parent shall terminate this Agreement
pursuant to Section 9.1(b) or 9.1(d), (ii) at or prior to the time of the event
giving rise to such termination, an Acquisition Proposal shall have been made
known or proposed to the Company or otherwise publicly disclosed or announced
and (iii) within 12 months of the termination of this Agreement, the Company
enters into a definitive agreement with respect to, or consummates, an
Acquisition Proposal, then the Company shall pay to Parent, not later than two
Business Days after the execution of the definitive agreement or consummation of
the transaction, as applicable, the Termination Fee (less any amounts previously
reimbursed to Parent as Parent Expenses).
(g) For purposes of this Section 9.2, the term "Acquisition
Proposal" shall have the meaning assigned to such term in Section 7.4(a), except
that the reference to "more than 20%" in the definition of "Acquisition
Proposal" shall be deemed to be a reference to "more than 50%".
(h) All payments under this Section 9.2 shall be made by wire
transfer of immediately available funds to an account designated by Parent.
(i) The Company acknowledges that the agreements contained in this
Section 9.2 are an integral part of the transactions contemplated by this
Agreement and are not a penalty, and that, without these agreements, Parent
would not enter into this Agreement. If the Company fails to pay promptly the
fee due pursuant to this Section 9.2, the Company will also pay to Parent
Parent's reasonable costs and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the amount of the
unpaid fee under this Section 9.2, accruing from its due date, at an interest
rate per annum equal to two percentage points in excess of the prime commercial
lending rate quoted by Bank of America. Any change in the
- 51 -
interest rate hereunder resulting from a change in such prime rate will be
effective at the beginning of the date of such change in such prime rate. If
applicable, the Termination Fee shall not be payable by the Company more than
once pursuant to this Section 9.2.
SECTION 9.3. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 9.4. EXTENSION; WAIVE. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE X.
MISCELLANEOUS.
SECTION 10.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants and other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of such
representations, warranties, covenants and other agreements, shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein that by their terms apply or are to be performed in whole or in part
after the Effective Time and this Article X.
SECTION 10.2. DISCLOSURE SCHEDULES. The inclusion of any information
in the disclosure schedules accompanying this Agreement will not be deemed an
admission or acknowledgment, in and of itself, solely by virtue of the inclusion
of such information in such schedules, that such information is required to be
listed in such schedules or that such information is material to any Party or
the conduct of the business of any Party.
SECTION 10.3. SUCCESSORS AND ASSIGNS. No party hereto shall assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the other parties hereto and any such attempted assignment without
such prior written consent shall be void and of no force and effect; provided,
that, without the prior consent of the Company, Merger Sub may assign any of its
rights hereunder to its Affiliates. This Agreement shall
- 52 -
inure to the benefit of and shall be binding upon the successors and permitted
assigns of the parties hereto.
SECTION 10.4. GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be construed, performed and enforced in
accordance with, and governed by, the laws of the State of Delaware. The parties
hereto irrevocably elect as the sole judicial forum for the adjudication of any
matters arising under or in connection with this Agreement, and consent to the
jurisdiction of, the courts of the State of Delaware.
(b) Each party hereto irrevocably submits to the jurisdiction of (i)
the Chancery Court of the State of Delaware (or other appropriate state court in
the State of Delaware), and (ii) the United States District Court for the
District of Delaware, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each party
hereto agrees to commence any action, suit or proceeding relating hereto in the
Chancery Court of the State of Delaware or, if such suit, action or other
proceeding may not be brought in such court for reasons of subject matter
jurisdiction in the United States District Court for the District of Delaware.
Each party hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (A) the Chancery Court of the State
of Delaware, or (B) the United States District Court for the District of
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. Each party
hereto further irrevocably consents to the service of process out of any of the
aforementioned courts in any such suit, action or other proceeding by the
mailing of copies thereof by mail to such party at its address set forth in this
Agreement, such service of process to be effective upon acknowledgment of
receipt of such registered mail; provided that nothing in this Section 10.4
shall affect the right of any party to serve legal process in any other manner
permitted by law. The consent to jurisdiction set forth in this Section 10.4
shall not constitute a general consent to service of process in the State of
Delaware and shall have no effect for any purpose except as provided in this
Section 10.4. The parties hereto agree that a final judgment in any such suit,
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(c) The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms on a timely basis or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to seek an
injunction or other equitable relief to prevent breaches of this Agreement and
to seek to enforce specifically the terms and provisions of this Agreement in
any court identified in Section 10.4(b), this being in addition to any other
remedy to which they are entitled at law or in equity.
(d) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, IN ANY MATTERS (WHETHER
SOUNDING IN TORT, CONTRACT OR
- 53 -
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH, THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.5. EXPENSES. All fees and expenses incurred in connection
with the Merger including, without limitation, all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred
by a party in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby, shall be
the obligation of the respective party incurring such fees and expenses, except
(a) Parent and the Company shall each bear and pay one-half of the expenses
incurred in connection with the filing, printing and mailing of the Registration
Statement and Proxy Statement and (b) as provided in Section 9.2.
SECTION 10.6. SEVERABILITY; CONSTRUCTION.
(a) In the event that any part of this Agreement is declared by any
court or other judicial or administrative body to be null, void or
unenforceable, said provision shall survive to the extent it is not so declared,
and all of the other provisions of this Agreement shall remain in full force and
effect.
(b) The Parties have participated jointly in the negotiation and
drafting of this Agreement. If any ambiguity or question of intent arises, this
Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring any Party
because of the authorship of any provision of this Agreement.
SECTION 10.7. NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given; (ii) on the day after delivery to Federal
Express or similar overnight courier or the Express Mail service maintained by
the United States Postal Service; or (iii) on the fifth day after mailing, if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid and properly addressed, to the party as
follows:
If to the Company:
IsoTis, Inc.
2 Goodyear
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Chief Executive Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
Copy to (such copy not to constitute notice):
Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx
B. Xxxxxx Xxxxxxx
- 54 -
If to Parent or Merger Sub:
Integra LifeSciences Holdings Corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
Copy to (such copy not to constitute notice):
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Boston
Tel: (000) 000-0000
Fax: (000) 000-0000
Any party may change its address for the purpose of this Section by
giving the other party written notice of its new address in the manner set forth
above.
SECTION 10.8. ENTIRE AGREEMENT. This Agreement and the
Confidentiality Agreement contain the entire understanding among the parties
hereto with respect to the transactions contemplated hereby and supersede and
replace all prior and contemporaneous agreements and understandings, oral or
written, with regard to such transactions. All Exhibits and Schedules hereto and
any documents and instruments delivered pursuant to any provision hereof are
expressly made a part of this Agreement as fully as though completely set forth
herein.
SECTION 10.9. PARTIES IN INTEREST. Except for (i) the rights of the
Company stockholders to receive the Merger Consideration following the Effective
Time in accordance with the terms of this Agreement (of which the stockholders
are the intended beneficiaries following the Effective Time) and (ii) the rights
to continued indemnification and insurance pursuant to Section 6.2 hereof (of
which the Persons entitled to indemnification or insurance, as the case may be,
are the intended beneficiaries following the Effective Time), nothing in this
Agreement is intended to confer any rights or remedies under or by reason of
this Agreement on any Persons other than the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligations or liability of any third Persons to the
Company or Parent. No provision of this Agreement shall give any third parties
any right of subrogation or action over or against the Company or Parent.
- 55 -
SECTION 10.10. SECTION AND PARAGRAPH HEADINGS. The section and
paragraph headings in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
SECTION 10.11. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
SECTION 10.12. DEFINITIONS. As used in this Agreement:
"510(k)" shall have the meaning set forth in Section 3.17(j).
"Accell Products" shall mean the Company's line of demineralized
bone matrix products included in the 510(k), K061880, submitted to the FDA on
June 28, 2006 and currently under review by the FDA, including, Accell Putty
(A2i), Accell DBM 100, Accell TBM, and Accell Connexus.
"Acquisition Proposal" shall have the meaning set forth in Section
7.4(a).
"Action" shall have the meaning set forth in Section 3.20.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly, or through one or more intermediaries, controls or is controlled
by or is under common control with such Person.
"Agreement" shall have the meaning set forth in the Preamble hereto.
"Applicable Securities Laws" shall have the meaning set forth in
Section 3.35(a).
"Appraisal Shares" shall have the meaning set forth in Section
1.8(e).
"Board of Directors" shall mean the Board of Directors of any
specified Person and any committees thereof.
"Business Day" shall mean any day on which banks are not required or
authorized to close in the City of New York.
"Certificate" shall have the meaning set forth in Section 1.8(b).
"Certificate of Merger" shall have the meaning set forth in Section
1.3.
"Closing" shall have the meaning set forth in Section 1.2.
"Closing Date" shall have the meaning set forth in Section 1.2.
"Code" shall have the meaning set forth in Section 2.7.
"Company" shall have the meaning set forth in the Preamble hereto.
- 56 -
"Company Common Stock" shall have the meaning set forth in the
Recitals hereto.
"Company Disclosure Letter" shall have the meaning set forth in
Article III.
"Company Material Adverse Effect" shall mean any event, change,
circumstance, effect, development or state of facts that, individually or in the
aggregate, (a) is or is reasonably likely to become, materially adverse to the
business, assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries, taken as a whole; provided, however, that
Company Material Adverse Effect shall not include the effect of any event,
change, circumstance, effect, development or state of facts arising out of or
attributable to (i) general economic conditions in the U.S., any U.S. state or
any foreign country in which the Company and any of its Subsidiaries operate,
(ii) the industry in which the Company and its Subsidiaries operate, and (iii)
the execution and public announcement of this Agreement and the pendency of the
transactions contemplated hereby, except, in the case of the foregoing clauses
(i) and (ii), to the extent that such event, change, circumstance, effect,
development or state of facts affects the Company and its Subsidiaries in a
materially disproportionate manner when compared to the effect of such event,
change, circumstance, effect, development or state of facts on other Persons in
the industry in which the Company and its Subsidiaries operate, or (b) would
prevent or materially delay the ability of the Company to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby.
"Company Options" shall have the meaning set forth in Section
1.9(a).
"Company Organizational Documents" shall mean the Certificate of
Incorporation and the Bylaws of the Company, together with all amendments
thereto.
"Company Preferred Stock" shall mean the preferred stock, par value
$.01 per share, of the Company.
"Company Property" shall have the meaning set forth in Section
3.12(b).
"Company SEC Reports" shall have the meaning set forth in Section
3.8(a).
"Company Stock Plans" shall have the meaning set forth in Section
3.6(a).
"Company Stockholders Meeting" shall have the meaning set forth in
Section 3.31.
"Company Welfare Plans" shall have the meaning set forth in Section
6.1(b).
"Competing Confidentiality Agreement" shall have the meaning set
forth in Section 7.4(b).
"Confidentiality Agreement" shall have the meaning set forth in
Section 7.2.
"Continuing Employees" shall have the meaning set forth in Section
6.1(a).
- 57 -
"Contract" shall have the meaning set forth in Section 3.21(c).
"Credit Agreement Amendment" shall have the meaning set forth in
Section 8.2(f).
"Customer Contracts" shall have the meaning set forth in Section
3.21(c).
"DGCL" shall mean the Delaware General Corporation Law.
"Effective Time" shall have the meaning set forth in Section 1.3.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.22(a).
"Encumbrances" shall mean any claim, lien, pledge, option, right of
first refusal or offer, preemptive right, charge, easement, security interest,
deed of trust, mortgage, right-of-way, covenant, condition, restriction,
encumbrance or other rights of third parties.
"Environmental Laws" shall mean any federal, state, local or
foreign, statute, regulation, ordinance, order, decree, directive or other
requirement of law (including, without limitation, common law) relating to human
health, safety or welfare, wildlife, natural resources, flora, fauna or the
environment (including, without limitation, indoor or outdoor air, water, water
vapor, groundwater, drinking water, surface or subsurface land, noise and odor),
or to the identification, generation, use, labeling, processing, control,
transportation, handling, discharge, emission, treatment, storage, disposal,
investigation, removal, remediation, import/export, or monitoring of, or
exposure to, any pollutant, contaminant, hazardous or solid waste, or any
hazardous or toxic substance, or material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" shall have the meaning set forth in Section
3.22(a).
"Exchange Act" shall have the meaning set forth in Section 3.4.
"Exchange Agent" shall have the meaning set forth in Section 2.1.
"Exchange Fund" shall have the meaning set forth in Section 2.1.
"Exchange Offer" shall have the meaning set forth in Section 3.35.
"Existing Policy" shall have the meaning set forth in Section
6.2(c).
"FDA" shall have the meaning set forth in Section 3.4.
"FDCA" shall have the meaning set forth in Section 3.17(a).
"GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"Goodyear Landlord" shall have the meaning set forth in Section
3.12(c).
- 58 -
"Governmental Entity" shall mean any federal, state, local or
foreign governmental, regulatory or administrative authority, branch, agency or
commission or any court, tribunal or judicial body.
"Hazardous Material" shall mean any product, substance, gas,
chemical, microbial matter, material or waste, whose presence, nature, quantity
or concentration, either by itself or in combination with other materials is (a)
potentially injurious to human health or safety, the environment or natural
resources; or (b) regulated, monitored or subject to reporting by any
Governmental Entity relating to Environmental Laws.
"IDE" shall have the meaning set forth in Section 3.17(k).
"Indemnified Person" shall have the meaning set forth in Section
6.2(a).
"Intellectual Property" shall mean all of the following, owned or
used by the Company and its Subsidiaries: material (i) trademarks and service
marks, trade dress, product configurations, trade names and other indications of
origin, applications or registrations in any jurisdiction pertaining to the
foregoing and all goodwill associated therewith; (ii) inventions (whether or not
patentable), discoveries, improvements, ideas, know-how, formula methodology,
processes, technology, software (including password unprotected interpretive
code or source code, object code, development documentation, programming tools,
drawings, specifications and data) and applications and patents in any
jurisdiction pertaining to the foregoing, including re-issues, continuations,
divisions, continuations-in-part, renewals or extensions; (iii) trade secrets,
including confidential information and the right in any jurisdiction to limit
the use or disclosure thereof; (iv) copyrighted and copyrightable writings,
designs, software, mask works or other works, applications or registrations in
any jurisdiction for the foregoing and all moral rights related thereto; (v)
database rights; (vi) Internet Web sites, domain names and applications and
registrations pertaining thereto and all intellectual property used in
connection with or contained in all versions of the Web sites of the Company and
its Subsidiaries; (vii) rights under all agreements relating to the foregoing;
(viii) books and records pertaining to the foregoing; and (ix) claims or causes
of action arising out of or related to past, present or future infringement or
misappropriation of the foregoing.
"Intervening Event" shall mean a material event with respect to the
Company's business, neither known by the Board of Directors of the Company nor
reasonably foreseeable as of the date hereof, which event (or any material
consequence of which) becomes known to or by (or understood by) the Board of
Directors of the Company prior to the Company Stockholders Meeting; provided,
however, that in no event shall (i) any event resulting from a breach of this
Agreement by the Company or any of its Subsidiaries or (ii) the receipt,
existence or terms of a Acquisition Proposal or any matter relating thereto or
consequence thereof, constitute an Intervening Event.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" shall mean, with respect to the Company, the actual
knowledge of the executives of the Company listed on Section 10.12(a) of the
Company Disclosure Letter
- 59 -
after due inquiry of the senior employees of the Company and its Subsidiaries
who have administrative or operational responsibility for the particular subject
matter in question.
"Leases" shall have the meaning set forth in Section 3.12(b).
"Leased Real Property" shall have the meaning set forth in Section
3.12(b).
"Licenses and Permits" shall have the meaning set forth in Section
3.16(a).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance or title defect, lease, lien (statutory or other), conditional sale
agreement, claim, charge, limitation or restriction.
"Listing Terminations" shall have the meaning set forth in Section
3.35(c).
"Merger" shall have the meaning set forth in the Recitals hereto.
"Merger Consideration" shall have the meaning set forth in Section
1.8(a).
"Merger Sub" shall have the meaning set forth in the Preamble
hereto.
"Multiemployer Plan" shall have the meaning set forth in Section
3.22(c).
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"Other Acquisition Documentation" shall have the meaning set forth
in Section 7.4(d).
"Offer Memoranda" shall have the meaning set forth in Section
3.35(a).
"Owned Real Property" shall have the meaning set forth in Section
3.12(a).
"Parent" shall have the meaning set forth in the Preamble hereto.
"Parent Expenses" shall mean all of Parent's actual and reasonably
documented out-of-pocket fees and expenses (including fees and expenses of
counsel, accountants, financial advisors or consultants and commitment and
funding fees) actually incurred by Parent and its respective affiliates on or
prior to the termination of this Agreement in connection with the transactions
contemplated by this Agreement, including the financing thereof.
"Parent Organizational Documents" shall mean the Amended and
Restated Certificate of Incorporation and the Amended and Restated Bylaws of
Parent, together with all amendments thereto.
"Pension Plans" shall have the meaning set forth in Section 3.22(a).
"Permitted Liens" shall mean (a) liens for utilities and current
Taxes and assessments not yet due and payable, (b) mechanics', carriers',
workers', repairers',
- 60 -
materialmen's, warehousemen's, lessor's, landlord's and other similar liens
arising or incurred in the ordinary course of business not yet due and payable,
if the same shall not at the time be delinquent or thereafter can be paid
without penalty or are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been included on the balance sheet of
the applicable Person, (c) easements, restrictive covenants and similar
Encumbrances (which Parent has determined are acceptable and shall be deemed
Permitted Liens), (d) minor encroachments or any state of facts an accurate
survey of the Company would disclose which individually or in the aggregate do
not materially interfere with an entity's business or the operation of the
property as currently conducted to which they apply, (e) Liens disclosed to
Parent (which Parent has determined are acceptable and shall be deemed Permitted
Liens), (f) Liens granted in respect of any Debt or securing any obligations
with respect thereto and other Liens as set forth on Section 10.12(b) of the
Company Disclosure Letter, (g) customary Liens arising out of pledges or
deposits under worker's compensation laws, unemployment insurance, old age
pensions or other social security or retirement benefits or similar legislation,
(h) customary deposits securing liability to insurance carriers under insurance
or self-insurance arrangements, (i) customary deposits to secure the performance
of bids, tenders, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business, (j) Liens arising from protective filings,
and (k) Liens in favor of a banking institution arising as a matter of
applicable law encumbering deposits (including the right of set-off) held by
such banking institution incurred in the ordinary course of business and which
are within the general parameters customary in the banking industry.
"Person" shall mean an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
"Proceeding" shall have the meaning set forth in Section 6.2(a).
"Proxy Statement" shall have the meaning set forth in Section 3.31.
"PMA" shall have the meaning set forth in Section 3.17(j).
"Registered Intellectual Property" shall have the meaning set forth
in Section 3.14(b).
"Regulatory Law" shall have the meaning set forth in Section 7.3(b).
"Required Company Vote" shall have the meaning set forth in Section
3.33.
"Xxxxxxxx-Xxxxx Act" shall have the meaning set forth in Section
3.19(b).
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall have the meaning set forth in Section 3.4.
"Section 262" shall have the meaning set forth in Section 1.8(e).
- 61 -
"Software" shall have the meaning set forth in Section 3.15(a).
"Subsidiary" when used with respect to any party shall mean any
corporation, partnership or other organization, whether incorporated or
unincorporated, (i) of which such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
"Superior Proposal" shall have the meaning set forth in Section
7.4(b).
"Surviving Corporation" shall have the meaning set forth in Section
1.1.
"Swiss Merger" shall have the meaning set forth in Section 3.35(c).
"Swiss SPV" shall have the meaning set forth in Section 3.35(a).
"Tail Period" shall have the meaning set forth in Section 6.2(c).
"Tax Return" shall mean any report, return, information return,
filing, claim for refund or other information, including any schedules or
attachments thereto, and any amendments to any of the foregoing required to be
supplied to a taxing authority in connection with Taxes.
"Taxes" shall mean all federal, state, local or foreign taxes,
including, without limitation, income, gross income, gross receipts, production,
excise, employment, sales, use, transfer, ad valorem, value added, profits,
license, capital stock, franchise, severance, stamp, withholding, Social
Security, employment, unemployment, disability, worker's compensation, payroll,
utility, windfall profit, custom duties, personal property, real property, taxes
required to be collected from customers on the sale of services, registration,
alternative or add-on minimum, estimated and other taxes, governmental fees or
like charges of any kind whatsoever, whether disputed or not, including any
interest, penalties or additions thereto; and "Tax" shall mean any one of them.
"Termination Date" shall have the meaning set forth in Section
9.1(b).
"Termination Fee" shall have the meaning set forth in Section
9.2(d).
"the other party" shall mean, with respect to the Company, Parent
and shall mean, with respect to Parent, the Company.
"Trade Laws" shall have the meaning set forth in Section 3.37(a).
"Treasury Regulations" shall have the meaning set forth in Section
2.7.
- 62 -
"Unit B Premises" shall have the meaning set forth in Section
3.12(c).
"Vendor Contracts" shall have the meaning set forth in Section
3.21(c).
"WARN" shall have the meaning set forth in Section 3.26(c).
- 63 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
INTEGRA LIFESCIENCES HOLDINGS
CORPORATION
By: /s/ Xxxx X. Xxxxxxxx, III
------------------------------------
Name: Xxxx X. Xxxxxxxx, III
Title: Executive Vice President
and Chief Administrative
Officer
ICE MERGERCORP, INC.
By: /s/ Xxxx X. Xxxxxxxx, III
------------------------------------
Name: Xxxx X. Xxxxxxxx, III
Title: Vice President and Assistant
Secretary
ISOTIS, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
- 64 -
