UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)
KIRSCHNER MEDICAL CORPORATION
(Name of Issuer)
Common Stock, $.10 Par Value
(Title of Class of Securities)
497660 10 0
(CUSIP Number)
Daniel P. Hann, Biomet, Inc.
Airport Industrial Park, P.O. Box 587
Warsaw, Indiana 46580 (800) 348-9500
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 12, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule l3D, and is filing this
schedule because of Rule l3d-1(b)(3) or (4), check the following box __.
Check the following box if a fee is being paid with the statement _X_. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule l3d-l(a) for other parties to whom copies are to be
sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act
of 1934 ("Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
Total pages: ________
SCHEDULE 13D
CUSIP No. 497660 10 0 Page _________ of _________ Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Biomet, Inc. 35-1480613
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ___
(b) _X_
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D)OR 2(E) ___
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
U.S.A.
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
685,222
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8 SHARED VOTING POWER
-0-
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9 SOLE DISPOSITIVE POWER
685,222
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10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
685,222
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES ___
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.0%
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14 TYPE OF REPORTING PERSON
CO
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SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF
THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS)
OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kirschner Acquisition Corp. 35-1928713
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ___
(b) _X_
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D)OR 2(E) ___
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
U.S.A.
- --------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
685,222
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8 SHARED VOTING POWER
-0-
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9 SOLE DISPOSITIVE POWER
685,222
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10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
685,222
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES ___
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.0%
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14 TYPE OF REPORTING PERSON
CO
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SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF
THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS)
OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
Item 1. Security and Issuer.
This statement relates to the Common Stock, $.10 par value (the
"Common Stock"), of Kirschner Medical Corporation ("Kirschner"), a Delaware
corporation with its principal offices at 9690 Deereco Road, Timonium,
Maryland 21093.
Item 2. Identity and Background.
This statement is filed by Biomet, Inc., an Indiana corporation ("Biomet"),
and Kirschner Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Biomet (the "Subsidiary").
The address of the principal executive offices of Biomet and the Subsidiary
is P.O. Box 587, Airport Industrial Park, Warsaw, Indiana 46581-0587.
Biomet, Inc. and its subsidiaries design, manufacture and market
products used primarily by orthopedic medical specialists in both surgical and
non-surgical therapy, including reconstructive and trauma devices, electrical
bone growth stimulators, orthopedic support devices, operating room supplies,
powered surgical instruments, general surgical instruments, arthroscopy
products and oral-maxillofacial products and instruments. Headquartered in
Warsaw, Indiana, Biomet and its subsidiaries currently distribute products in
approximately 100 countries. The Subsidiary was formed for the purpose of
acquiring the Common Stock to which this report relates (the "Acquired
Shares") and completing the Proposed Merger described in response to Item 4.
The name, business address, citizenship, present principal occupation or
employment and the name, principal business and address of any corporation
or other organization in which such employment is conducted of each
executive officer and director of Biomet and the Subsidiary are set forth in
Schedule A and Schedule B, respectively, to this statement and are
incorporated herein by reference.
During the last five years, none of Biomet, the Subsidiary or any of their
directors or executive officers have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which any such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration
The Acquired Shares were purchased together with a Commercial Loan
Promissory Note issued by a subsidiary of Kirschner in the amount of
329,500,000 Spanish pesetas, from Figgie International, Inc. pursuant to the
Purchase Agreement described in Item 6. Biomet paid an aggregate of $8.7
million for the Acquired Shares and the Note. The funds for the purchase of
the Acquired Shares were provided from the cash held by Biomet as part of its
working capital, and contributed to the Subsidiary for purposes of the
transaction.
Item 4. Purpose of Transaction
As of July 16, 1994, Biomet, the Subsidiary and Kirschner entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which a
wholly-owned subsidiary of Biomet (the "Merger Sub") would be merged with
and into Kirschner. As a result of the merger, the corporate existence of
Kirschner (the "Surviving Corporation") would continue unaffected, the
separate existence of the Merger Sub as a corporation would cease and the
Merger Sub and Kirschner would be a single corporation under Delaware law
(the "Proposed Merger"). At consummation of the Proposed Merger (the
"Closing"), each share of common stock, no par value, of the Merger Sub
outstanding immediately prior to the Proposed Merger would be
converted automatically into one share of common stock, no par value, of the
Surviving Corporation, and each share of Common Stock outstanding
immediately prior to the Proposed Merger would be converted into a right to
receive either (1) $10.75 in cash (the "Cash Option"), or (2) such number of
common shares of Biomet (the "Biomet Common Shares") as shall equal the
greater of (a) $10.75 divided by the average of the last sale prices for Biomet
Common Shares, as reported by the National Association of Securities Dealers
Automated Quotation System - National Market System ("NASDAQ-NMS"), for the
ten consecutive trading days ending on the fifth trading day prior to Closing
and (b) 0.9 Biomet Common Shares (the "Equity Option"). Biomet has the
right to elect the Cash Option or Equity Option, which right must be exercised
on or before the date of a proxy statement to be distributed to Kirschner
stockholders in connection with a meeting to approve the Proposed Merger.
The acquisition of the Acquired Shares was for the purpose of providing
Biomet with a significant ownership interest in Kirschner pending the
consummation of the Proposed Merger, and (assuming payment of the Note
described in Item 6 at face value when due, January 1, 1995) to reduce the
total amount of consideration ultimately paid by Biomet pursuant to the Merger
Agreement, if the Merger is consummated.
Under the terms of the Merger Agreement, Biomet has delivered to
Kirschner an earnest money deposit of $2,000,000 (the "Deposit"). All or a
portion of the Deposit would be refundable to Biomet unless the Proposed
Merger is not consummated for certain specified reasons, in which case
Kirschner would be entitled to keep all of the Deposit as liquidated damages in
consideration for Kirschner's time and expense. In addition, Kirschner would
be obligated to return the Deposit and/or pay Biomet $1,000,000 as liquidated
damages in consideration for Biomet's time and expense if certain specified
actions related to the acquisition of Kirschner by a third party should occur
prior to Closing.
The Closing would be contingent upon fulfillment or waiver of certain
conditions set forth in the Merger Agreement.
The Board of Directors of Biomet, the Merger Sub and Kirschner have
approved the Proposed Merger. Approval of the Proposed Merger is expected
to be submitted to a vote of the Kirschner stockholders at a meeting to be held
as soon as practicable. The Closing is expected to occur on the next business
day following the Kirschner stockholders meeting.
For a more complete description of the Proposed Merger, see the Merger
Agreement included herewith as Exhibit 2. Other than the Merger Agreement and
the transactions provided for in the Purchase Agreement described in response to
Item 6, neither Biomet nor the Subsidiary have any plans or proposals relating
to or which would result in (a) the acquisition by any person of additional
securities of Kirschner, or the disposition of securities of Kirschner: (b)
an extraordinary corporate transaction, such as a merger, reorganization
or liquidation, involving Kirschner or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of Kirschner or any of its subsidiaries;
(d) any change in the present board of directors or management of Kirschner,
including any plans or proposals to change the number or term of directors
or to fill any existing vacancies on the board; (e) any material change
in the present capitalization or dividend policy of Kirschner; (f) any other
material change in Kirschner's business or corporate structure; (g) changes in
Kirschner's charter, bylaws or instruments corresponding thereto or other
actions which may impede the acquisition of control of Kirschner by any
person; (h) causing a class of securities of Kirschner to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of Kirschner becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Act; or (j) any action
similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
As of the close of business on August 12, 1994, Biomet and the Subsidiary
were the beneficial owners of 685,222 shares of Common Stock. Based upon
the most recent information available to the reporting persons, these shares
constitute approximately 19.0 percent of the issued and outstanding Common
Stock.
Biomet and the Subsidiary collectively hold sole power to vote or to direct
the vote and sole power to dispose or to direct the disposition of the Acquired
Shares.
Neither Biomet nor the Subsidiary has effected any other transactions in
the Common Stock during the past 60 days. However, see the description of
the Proposed Merger included in the response to Item 4.
No person other than Biomet and the Subsidiary have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the Acquired Shares.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
See the response to Item 4 for a description of the Proposed Merger. The
Acquired Shares were purchased pursuant to a Purchase Agreement between
the Subsidiary and Figgie International, Inc. ("Figgie") dated August 12, 1994
(the "Purchase Agreement"). The terms of that Purchase Agreement provide
for the purchase by the Subsidiary of the Acquired Shares and a certain
Commercial Loan Promissory Note dated July 16, 1993 in the principal amount
of 329,500,000 Spanish pesetas (approximately $2,500,000) (the "Note")
issued to Figgie by a subsidiary of Kirschner. The Note is due January 1, 1995
and is secured by certain collateral of Kirschner as evidenced by a Security
Agreement dated July 16, 1993 which was assigned to the Subsidiary pursuant
to the Purchase Agreement. The Purchase Agreement provides that for tax
purposes the Note is to be valued at face value.
Other than as described above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named
in Item 2 and between such persons and any person with respect to any
securities of Kirschner.
Item 7. Material to be Filed as Exhibits
Page in Sequential
Description of Exhibit Numbering System
--------------------------------------------- ------------------
Purchase Agreement dated August 12, 1994 by
and between Figgie International, Inc. and
Kirschner Acquisition Corp.
Agreement and Plan of Merger by and among
Biomet, Inc., Biomet Acquisition Corp. and
Kirschner Medical Corporation, dated July 16,
1994. None of the Exhibits or Schedules
attached to this agreement have been
included. The Reporting Persons agree to
furnish supplementally a copy of any omitted
Exhibit or Schedule to the Commission upon
request.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
BIOMET, INC.
Date: August 22, 1994 By: /s/ Gregory D. Hartman
----------------------------------
Gregory D. Hartman
Vice President (Finance)
KIRSCHNER ACQUISITION CORP.
Date: August 22, 1994 By: /s/ Gregory D. Hartman
----------------------------------
Gregory D. Hartman, Treasurer
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF BIOMET
The following table sets forth the name, business address, title or position
with Biomet, present principal occupation or employment and the name, principal
business and address of any corporation or other organization in which such
occupation or employment is conducted, of the directors and executive officers
of Biomet. Each executive officer and each director of Biomet is a citizen of
the United States of America. The address of Biomet and, except as otherwise
noted, the business address of each person named below is Airport Industrial
Park, P.O. Box 587, Warsaw, Indiana 46581-0587.
Name and Position Present Principal
Business address with Biomet Occupation or Employment
- --------------------------------------------------------------------------------
Dane A. Miller President, Chief Executive President, Chief Executive
Officer and Director Officer and Director of
Biomet
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Niles L. Noblitt Chairman of the Board Chairman of the Board
of Directors of Biomet
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M. Ray Harroff Director President of Stonehenge
R.R. 3 Golf Club (golf course)
Box 123 and Stonehenge Links
Warsaw, IN 46580 Village Development (real
estate development)
R.R. 3
Box 123
Warsaw, IN 46580
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Jerry L. Ferguson Director Former owner of Classic
R.R. 7 Car Centre (auto
Box 43 dealership); since
Warsaw, IN 46580 December 1993, Special
Projects Advisor to
Biomet
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Kenneth V. Miller Director Principal in Havirco, Inc.
405 W. Michigan (private investment
Suite 120 management firm) since
Kalamazoo, MI 49007 January 1989
405 W. Michigan
Suite 120
Kalamazoo, MI 49007
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Jerry L. Miller Director Principal in Havirco, Inc.
405 W. Michigan (private investment
Suite 120 management firm) since
Kalamazoo, MI 49007 January 1989
405 W. Michigan
Suite 120
Kalamazoo, MI 49007
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Thomas F. Kearns, Jr. Director Retired partner of
27 Deepwood Road Bear, Stearns & Co., Inc.
Daven, CT 06820 (investment banking firm)
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Marilyn Tucker Quayle Director Attorney
One Indiana Square, Krieg, Devault,
#2800 Alexander and Capehart
Indianapolis, IN 46204 One Indiana Square,
#2800
Indianapolis, IN 46204
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L. Gene Tanner Director Chairman of the Board
20 North Meridian Street Raffensperger, Hughes
Indianapolis, IN 46204 & Co., Incorporated
(investment banking firm)
20 North Meridian Street
Indianapolis, IN 46204
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James M. Norris Director Retired; formerly Vice
President of Biomet
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Charles E. Niemier Senior Vice President - Senior Vice President -
International Operations International Operations
and Director of Biomet
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Garry L. England Senior Vice President - Senior Vice President -
Warsaw Operations Warsaw Operations of
Biomet
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Daniel P. Hann Vice President - Vice President -
General Counsel and General Counsel and
Secretary Secretary of Biomet
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Joel P. Pratt Vice President and Vice President and
General Manager of General Manager of
Biomet Medical Products Biomet Medical Products
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Gregory D. Hartman Vice President - Finance Vice President - Finance
of Biomet
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James W. Haller Controller Controller of Biomet
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David L. Montgomery Vice President - Sales Vice President - Sales
and Marketing and Marketing of
Biomet
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Anthony L. Fleming Vice President - Vice President -
Research and Research and
Development Development of Biomet
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SCHEDULE B
DIRECTORS AND EXECUTIVE OFFICERS OF KIRSCHNER ACQUISITION CORP.
The following table sets forth the name, business address, title or position
with Kirschner Acquisition Corp., present principal occupation or employment
and the name, principal business and address of any corporation or other
organization in which such occupation or employment is conducted, of the
directors and executive officers of Kirschner Acquisition Corp. Each executive
officer and each director of Kirschner Acquisition Corp. is a citizen of the
United States of America. The address of Kirschner Acquisition Corp. and,
except as otherwise noted, the business address of each person named below
is Airport Industrial Park, P.O. Box 587, Warsaw, Indiana 46581-0587.
Position
Name and with Kirschner Present Principal
Business Address Acquisition Corp. Occupation or Employment
- -------------------------------------------------------------------------------
Dane A. Miller President and Director President, Chief
Executive Officer and
Director of Biomet
- -------------------------------------------------------------------------------
Daniel P. Hann Secretary and Director Vice President - General
Counsel and Secretary of
Biomet
- -------------------------------------------------------------------------------
Gregory D. Hartman Treasurer and Director Vice President - Finance
of Biomet
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PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made and entered
into as of the 12th day of August, 1994, by and between Figgie
International Inc. (the "Seller") and Kirschner Acquisition Corp.
(the "Buyer").
Preliminary Statements
A. Seller is the holder of a certain Commercial Loan
Promissory Revolver Note dated July 16, 1993 (the "Note") issued to
it by Industrias Quirurgicas de Levante, S.A. ("IQL") pursuant to
a Revolver Loan Agreement between Seller and IQL dated as of July
16, 1993 (the "Loan Agreement"). Seller has provided to Buyer true
and correct copies of the Note, the Loan Agreement and the Security
Agreement described in the Loan Agreement (the "Security
Agreement").
B. Seller is the owner of record and beneficially of 685,222
shares of Common Stock, $.10 par value per share, of Kirschner
Medical Corporation (the "Stock"), represented by certificate nos.
AA3278 and AA3391 (the "Certificates"). The Stock was issued to
Seller and is held by it pursuant to the terms and conditions of a
Share Purchase Agreement between Kirschner Medical Corporation
("Kirschner") and Seller dated as of December 4, 1992 (the "Share
Purchase Agreement"). Seller has provided to Buyer a true and
correct copy of the Share Purchase Agreement.
C. Seller desires to sell the Note and the Stock to Buyer,
and Buyer is willing to purchase the same, on the terms and
conditions of this Agreement.
Terms and Conditions
In consideration of the premises and the mutual promises
herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is
agreed as follows:
1. Sale and Purchase of the Stock and the Note.
1.1 Seller hereby sells, transfers, assigns and delivers the
Stock and the Note to Buyer. Buyer, in reliance on the
representations and warranties of Seller contained in this
Agreement, hereby purchases the Stock and the Note.
1.2 Upon the execution of this Agreement, Seller shall
deliver the Note, duly endorsed "Pay to the Order of Kirschner
Acquisition Corp.", via overnight delivery to Buyer. Upon
execution of this Agreement, Seller, as agent for Buyer, shall also
cause the Certificates to be delivered via overnight delivery to
Kirschner's transfer agent, together with instructions to register
the Stock in the name of Buyer and to deliver the certificate(s)
representing the transferred Stock to Buyer via overnight delivery.
The Certificates to be delivered to Kirschner's transfer agent
shall be accompanied by appropriate stock powers executed by an
authorized officer of Seller with signatures guaranteed by a
commercial bank with offices in the United States or by a firm
which is a member of a registered national securities exchange and
with all required transfer taxes paid.
1.3 As full consideration for the transfer of the Stock and
the Note, Buyer has paid to Seller the sum of $8,700,000 by wire
transfer to Seller's account number 23177-5 (ABA No. 031-100-092)
at Wilmington Trust, receipt of which is acknowledged by Seller.
2. Assignment of the Loan Agreement, the Security Agreement
and the Share Purchase Agreement. Seller hereby assigns and
transfers unto Buyer all of its right, title and interest under and
pursuant to the Loan Agreement, the Security Agreement (including
without limitation the "Collateral" described therein) and the
Share Purchase Agreement and any related documents described
therein, including but not limited to the present and future right
to receive any and all amounts payable pursuant to the Loan
Agreement, to bring actions under the Loan Agreement, the Security
Agreement and the Share Purchase Agreement or for the enforcement
thereof, and to do any and all things which Seller is or may become
entitled to do thereunder.
3. Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer that:
3.1 Seller is the sole record and beneficial owner of the
Note and the Stock and has good and marketable title to the Note
and the Stock, free and clear of all liens, pledges, claims
security interests, encumbrances, limitations, restrictions, rights
of third parties or other interests of any kind or character.
Seller has not entered into any other agreement to sell or
otherwise transfer the Note or the Stock.
3.2 The officers of Seller executing this Agreement on behalf
of Seller are duly authorized to do so pursuant to its governing
instruments; Seller has all requisite power and authority to enter
into and consummate this Agreement; this Agreement and each
instrument of Seller being delivered herewith are the legal, valid
and binding agreements and obligations of Seller, enforceable
against Seller in accordance with their respective terms; and
Seller has obtained all necessary consents and authorizations, if
any, required to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
3.3 Neither the execution and delivery of this Agreement nor
consummation of the transactions contemplated hereby nor compliance
with or fulfillment of the terms and provisions of this Agreement
or of any other agreement or instrument contemplated hereby will
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or any
event creating rights or termination or cancellation under, any
instrument, agreement, mortgage, judgment, order, award, decree or
other restriction pertaining to the Note or the Stock to which
Seller is a party or to which the Note or the Stock is subject, or
(ii) result in a violation of any statute, other law or regulatory
provision affecting the Seller, the Note or the Stock, or (iii)
require the approval, consent or authorization of, or the making of
any declaration, filing or registration with, any third party or
any foreign, federal, state or local court, governmental authority
or regulatory body.
3.4 Seller acknowledges that the investment banking firm of
Carleton, McCreary, Holmes & Co. has acted on its behalf and will
receive a commission or fee for its services to consummate this
Agreement. Buyer shall not be responsible for the payment of such
fee or commission.
3.5 The Note is not overdue, it has not been dishonored and,
to the knowledge of Seller, there is no other defense against or
claim to the Note on the part of any person.
3.6 All of the obligations of Seller under the Loan Agreement
and the Share Purchase Agreement have been fully performed by
Seller.
4. Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Seller that:
4.1 The officers of Buyer executing this Agreement on behalf
of Buyer are duly authorized to do so pursuant to its governing
instruments; Buyer has all requisite power and authority to enter
into and consummate this Agreement; this Agreement and each
instrument of Buyer being delivered herewith are the legal, valid
and binding agreements and obligations of Buyer, enforceable
against Buyer in accordance with their respective terms; and Buyer
has obtained the necessary authorizations, if any, required to
execute and deliver this Agreement and to consummate the
transaction contemplated hereby.
4.2 Neither Buyer nor any party acting on its behalf has paid
or will become obligated to pay any fee or commission to any
broker, finder or intermediary for or an account of the
transactions contemplated by this Agreement.
4.3 Buyer is an "Accredited Investor" as that term is defined
in Rule 501 promulgated under the Securities Act of 1933, as
amended (the "1933 Act"). Buyer is able to bear the economic risk
of an investment of the size contemplated. Buyer is acquiring the
Note and the Stock for its own account, for investment, and not
with a view toward the distribution or resale thereof. Buyer
understands that (i) the shares of Stock are "restricted
securities" as defined in Rule 144 of the Securities and Exchange
Commission under the 1933 Act, (ii) Buyer may transfer the Stock
only if the same is registered under the 1933 Act or in a
transaction exempt from such registration and (iii) any proposed
transfer of the Stock must be supported by a legal opinion
satisfactory to Kirschner Medical Corporation stating that such
transfers will not violate applicable federal and state securities
laws or require registration under any such laws.
5. Indemnification. From and after the closing of the
transactions contemplated by this Agreement, each of the parties
shall defend, indemnify and hold the other harmless from and
against all demands, claims, actions or causes of action,
assessments, losses expenses (including without limitation,
reasonable attorneys' fees and legal expenses), damages and
liabilities asserted against, suffered or incurred by the other as
a direct or indirect result of any misrepresentation in or breach
of its representations and warranties or its failure to perform any
covenant or obligation contained in this Agreement or in any other
instrument or document furnished or to be furnished by it in
connection with the transactions contemplated hereby.
6. Miscellaneous.
6.1 The representations, warranties and covenants and
agreements set forth in this Agreement and any certificate or
instrument delivered in connection herewith shall survive the
closing.
6.2 In the event of any dispute hereunder, the laws of the
State of Indiana (other than the conflicts of laws provisions
thereof) shall govern the interpretation, validity, performance,
enforcement and any other aspect of this Agreement. The parties
expressly agree that any and all actions concerning any dispute
arising under this Agreement shall be filed and maintained only in
a state or federal court of competent jurisdiction sitting in the
State of Indiana, and the parties hereby submit to such
jurisdiction.
6.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and
assigns.
6.4 This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof and shall
be deemed to supersede all prior agreements, whether written or
oral, and the terms and provisions of any such agreement shall be
deemed to have been merged in to this Agreement.
6.5 The parties agree to execute and deliver such other
documents and instruments and to take such other actions as
hereafter may be required in order to fully carry out the
transactions contemplated by this Agreement.
6.6 The parties agree that the fair market value of the Note
is its adjusted issue price as defined in Section 1272(a)(iv) of
the Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement on the date first above written.
KIRSCHNER ACQUISITION CORP. FIGGIE INTERNATIONAL INC.
By: /s/ Gregory D. Hartman By: /s/ Steven Siemborski
Title: Treasurer Title: Senoir Vice President and
Chief Financial Officer
Agreement and Plan of Merger
by and among
Biomet, Inc.
Biomet Acquisition Corp.
and
Kirschner Medical Corporation
Dated
July 16, 1994
Table of Contents
Preliminary Statement. . . . . . . . . . . . . . . . . . . . . 1
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I The Merger. . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Merger . . . . . . . . . . . . . . . . . . 2
Section 1.2. Effective Time of Merger . . . . . . . . . 2
Section 1.3. Legal Effect . . . . . . . . . . . . . . . 2
Section 1.4. Name . . . . . . . . . . . . . . . . . . . 2
Section 1.5. Earnest Money Deposit. . . . . . . . . . . 3
Section 1.6. Liquidated Damages Payment . . . . . . . . 3
Section 1.7. Other Actions. . . . . . . . . . . . . . . 4
ARTICLE II Corporate Governance. . . . . . . . . . . . . . . 4
Section 2.1. Certificate of Incorporation; Bylaws . . . 4
Section 2.2. Directors and Officers . . . . . . . . . . 4
ARTICLE III Conversion of Shares. . . . . . . . . . . . . . . 4
Section 3.1. Conversion of Shares of BAC. . . . . . . . 4
Section 3.2. Conversion of Kirschner Common . . . . . . 4
Section 3.3. Surrender and Payment
for Kirschner Shares . . . . . . . . . . . 5
ARTICLE IV Representations and Warranties of Kirschner . . . 7
Section 4.1. Organization; Power. . . . . . . . . . . . 7
Section 4.2. Capital Stock. . . . . . . . . . . . . . . 8
Section 4.3. Authority; No Violation. . . . . . . . . . 8
Section 4.4. Consents and Approvals . . . . . . . . . . 9
Section 4.5. Transactions with Certain Persons. . . . . 9
Section 4.6. Books and Records. . . . . . . . . . . . . 10
Section 4.7. SEC Reports and Financial Statements . . . 10
Section 4.8. Absence of Undisclosed Liabilities . . . . 11
Section 4.9. Tax Matters. . . . . . . . . . . . . . . . 11
Section 4.10. Absence of Changes or Events . . . . . . . 13
Section 4.11. Compliance with Laws; No Default
or Litigation. . . . . . . . . . . . . . . 14
Section 4.12. Property . . . . . . . . . . . . . . . . . 16
Section 4.13. Inventory. . . . . . . . . . . . . . . . . 16
Section 4.14. Contracts. . . . . . . . . . . . . . . . . 17
Section 4.15. Licenses and Permits . . . . . . . . . . . 18
Section 4.16. Proprietary Information. . . . . . . . . . 19
Section 4.17. Title to Assets and Related Matters. . . . 19
Section 4.18. Environmental Matters. . . . . . . . . . . 19
Section 4.19. Labor Relations; Employees . . . . . . . . 20
Section 4.20. Employee Benefit Plans . . . . . . . . . . 21
Section 4.21. Insurance. . . . . . . . . . . . . . . . . 25
Section 4.22. Brokers' or Finders' Fees. . . . . . . . . 25
Section 4.23. Disclosure . . . . . . . . . . . . . . . . 26
Section 4.24. Termination of Agreements with Orthomet. . 26
Section 4.25. Representations and Warranties
as of Date Hereof. . . . . . . . . . . . . 27
ARTICLE V Representations and Warranties of
Biomet and BAC. . . . . . . . . . . . . . . . . . 27
Section 5.1. Organization; Power. . . . . . . . . . . . 27
Section 5.2. Capital Stock. . . . . . . . . . . . . . . 27
Section 5.3. Authority; No Violation; Etc.. . . . . . . 27
Section 5.4. Consents and Approvals . . . . . . . . . . 28
Section 5.5. Reports. . . . . . . . . . . . . . . . . . 28
Section 5.6. Absence of Undisclosed Liabilities . . . . 29
Section 5.7. Due Authorization of Shares. . . . . . . . 29
Section 5.8. Tax Matters. . . . . . . . . . . . . . . . 29
Section 5.9. Compliance with Laws; No Default
or Litigation. . . . . . . . . . . . . . . 30
Section 5.10. Licenses and Permits . . . . . . . . . . . 32
Section 5.11. Environmental Matters. . . . . . . . . . . 33
Section 5.12. Brokers' or Finders' Fees. . . . . . . . . 33
Section 5.13. Disclosure . . . . . . . . . . . . . . . . 33
Section 5.14. Representations and Warranties
as of Date Hereof. . . . . . . . . . . . . 34
ARTICLE VI Certain Pre-Closing Covenants of Kirschner. . . . 34
Section 6.1. Maintenance of Corporate Status. . . . . . 34
Section 6.2. No Change in Capitalization. . . . . . . . 35
Section 6.3. Shareholders Meeting; Proxy Material . . . 35
Section 6.4. Operation of the Business. . . . . . . . . 35
Section 6.5. Other Offers . . . . . . . . . . . . . . . 36
Section 6.6. Termination of Option of
Figgie International Inc . . . . . . . . . 36
Section 6.7. Redemption of Kirschner Rights;
Rights Agreement . . . . . . . . . . . . . 37
Section 6.8. Rescission of Restricted Stock Grants. . . 37
Section 6.9. Compliance with the Securities Act . . . . 37
Section 6.10. Taxes. . . . . . . . . . . . . . . . . . . 37
Section 6.11. Access; Review . . . . . . . . . . . . . . 37
Section 6.12. Insurance. . . . . . . . . . . . . . . . . 38
Section 6.13. Monthly Financial Statements . . . . . . . 38
Section 6.14. Approvals, Notices and Consents. . . . . . 38
Section 6.15. Kirschner's Actions; Supplements to
Representations and Warranties . . . . . . 39
Section 6.16. Notice of Material Adverse Change. . . . . 39
Section 6.17. Cooperation. . . . . . . . . . . . . . . . 39
ARTICLE VII Certain Pre-Closing Covenants of Biomet . . . . . 40
Section 7.1. Required Consents and Approvals. . . . . . 40
Section 7.2. Premerger Notification . . . . . . . . . . 40
Section 7.3. Registration Statement; NASDAQ-NMS
Listing. . . . . . . . . . . . . . . . . . 40
Section 7.4. Notice of Material Adverse Change. . . . . 41
Section 7.5. Cooperation. . . . . . . . . . . . . . . . 41
ARTICLE VIII Conditions Precedent to the Performance of
Biomet. . . . . . . . . . . . . . . . . . . . . . 41
Section 8.1. Accuracy of Representations and
Warranties of Kirschner. . . . . . . . . . 41
Section 8.2. Compliance . . . . . . . . . . . . . . . . 41
Section 8.3. Corporate Approval . . . . . . . . . . . . 41
Section 8.4. Consents and Approvals . . . . . . . . . . 41
Section 8.5. Cancellation of Restricted Stock Grants. . 42
Section 8.6. Authorizations . . . . . . . . . . . . . . 42
Section 8.7. Due Diligence Examination. . . . . . . . . 42
Section 8.8. Litigation . . . . . . . . . . . . . . . . 42
Section 8.9. No Material Adverse Change . . . . . . . . 42
Section 8.10. Closing Deliveries . . . . . . . . . . . . 42
ARTICLE IX Conditions Precedent to Performance
of Kirschner . . . . . . . . . . . . . . . 43
Section 9.1. Accuracy of Representations and
Warranties of Biomet and BAC . . . . . . . 43
Section 9.2. Compliance . . . . . . . . . . . . . . . . 43
Section 9.3. Corporate Approval . . . . . . . . . . . . 43
Section 9.4. Consents and Approvals . . . . . . . . . . 43
Section 9.5. Registration Statement . . . . . . . . . . 43
Section 9.6. Roll-over of Kirschner Stock Options . . . 44
Section 9.7. Litigation . . . . . . . . . . . . . . . . 44
Section 9.8. No Material Adverse Change . . . . . . . . 44
Section 9.9. HSR Act Waiting Periods. . . . . . . . . . 44
Section 9.10. Fairness Opinion . . . . . . . . . . . . . 44
Section 9.11. Closing Deliveries . . . . . . . . . . . . 44
ARTICLE X Termination . . . . . . . . . . . . . . . . . . . 45
Section 10.1. Termination by Mutual Agreement. . . . . . 45
Section 10.2. Termination by Biomet. . . . . . . . . . . 45
Section 10.3. Termination by Kirschner . . . . . . . . . 45
Section 10.4. Effect of Termination on Certificate
of Merger. . . . . . . . . . . . . . . . . 45
Section 10.5. Final Termination. . . . . . . . . . . . . 45
ARTICLE XI The Closing . . . . . . . . . . . . . . . . . . . 46
Section 11.1. Time and Place . . . . . . . . . . . . . . 46
Section 11.2. Deliveries to Biomet at the Closing. . . . 46
Section 11.3. Deliveries to Kirschner at the Closing . . 47
ARTICLE XII Additional Agreements . . . . . . . . . . . . . . 47
Section 12.1. Confidentiality. . . . . . . . . . . . . . 47
Section 12.2. Employee Benefit Matters . . . . . . . . . 47
Section 12.3. Directors' and Officers' Liability
Insurance. . . . . . . . . . . . . . . . . 47
ARTICLE XIII Miscellaneous Provisions. . . . . . . . . . . . . 48
Section 13.1. Counterparts . . . . . . . . . . . . . . . 48
Section 13.2. Entire Agreement . . . . . . . . . . . . . 48
Section 13.3. Exhibits and Schedules . . . . . . . . . . 48
Section 13.4. Expenses . . . . . . . . . . . . . . . . . 48
Section 13.5. Gender . . . . . . . . . . . . . . . . . . 48
Section 13.6. Governing Law. . . . . . . . . . . . . . . 48
Section 13.7. Headings . . . . . . . . . . . . . . . . . 48
Section 13.8. Modification and Waiver. . . . . . . . . . 48
Section 13.9. Notices. . . . . . . . . . . . . . . . . . 49
Section 13.10. Press Releases . . . . . . . . . . . . . . 50
Section 13.11. Rights of Parties. . . . . . . . . . . . . 50
Section 13.12. Successors . . . . . . . . . . . . . . . . 50
Section 13.13. Non-Survival of Representations
and Warranties . . . . . . . . . . . . . . 50
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") dated as
of July 16, 1994, is by and among Biomet, Inc., an Indiana
corporation ("Biomet"), Biomet Acquisition Corp., a Delaware
corporation ("BAC"), and Kirschner Medical Corporation, a Delaware
corporation ("Kirschner").
Preliminary Statement
Biomet and its subsidiaries design, develop, manufacture and
market products used primarily by orthopedic medical specialists in
both surgical and non-surgical therapy. BAC is a wholly-owned
subsidiary of Biomet that conducts no active business operations.
Kirschner and its subsidiaries manufacture and market total joint
reconstruction products and surgical instrumentation and orthopedic
support products.
The capital structure of Biomet consists of 500,000,000
authorized Common Shares, of which approximately 115,000,000 are
outstanding (the "Biomet Common Shares"), an equal number of common
share purchase rights (the "Biomet Rights") and 5,250 Preferred
Shares, none of which have been issued. The capital structure of
BAC consists of 1,000 authorized shares of Common Stock, without
par value, of which 100 are outstanding and owned by Biomet. The
capital structure of Kirschner consists of 10,000,000 authorized
shares of Common Stock, $.10 par value, of which approximately
3,607,330 shares are issued and outstanding (the "Kirschner
Common"), an equal number of common share purchase rights (the
"Kirschner Rights") and 200,000 shares of Preferred Stock, no par
value, none of which have been issued (the "Kirschner Preferred").
The Kirschner Common, the Kirschner Rights and the Kirschner
Preferred are referred to collectively herein as the "Kirschner
Shares."
The Boards of Directors of Biomet and BAC deem a merger of BAC
and Kirschner pursuant to the terms of this Agreement (the
"Merger") desirable and in the best interests of Biomet and BAC,
respectively. The Board of Directors of Kirschner deems the Merger
desirable and in the best interests of Kirschner. The Board of
Directors of Biomet has, by resolutions duly adopted, approved this
Agreement. The Board of Directors and shareholder of BAC have, by
resolutions duly adopted, approved this Agreement. The Board of
Directors of Kirschner has, by resolutions duly adopted, approved
this Agreement. The question of approval of the Merger will be
submitted to, and consummation of the Merger is subject to approval
by, the shareholders of Kirschner.
Terms and Conditions
In consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and
intending to be legally bound thereby, Biomet, BAC and Kirschner
agree to the following terms and conditions.
ARTICLE I
The Merger
Section 1.1. Merger. Upon the terms and subject to the
satisfaction of the conditions precedent contained in this
Agreement, BAC shall be merged with and into Kirschner. The
corporation to survive the Merger is hereinafter referred to as the
"Surviving Corporation" and the corporation not to survive the
Merger is hereinafter referred to as the "Merging Corporation."
The Merger shall be effected pursuant to the provisions of and with
the effect provided in the Delaware General Corporation Law (the
"DGCL"). Upon the consummation of the Merger, the separate
existence of the Merging Corporation shall cease, the corporate
existence of the Surviving Corporation with all its purposes,
powers and objects shall continue unaffected and unimpaired by the
Merger, and the Merging Corporation and the Surviving Corporation
shall be a single corporation.
Section 1.2. Effective Time of Merger. If (a) all of the
conditions precedent to the Merger as set forth in Article VIII and
Article IX of this Agreement are satisfied or waived, and (b) this
Agreement is not terminated prior to the Closing (as defined in
Section 11.1) as permitted by the provisions of this Agreement,
then as soon as reasonably practicable following the Closing, the
Surviving Corporation shall cause a Certificate of Merger
conforming to the requirements of the DGCL (the "Certificate of
Merger") to be filed with the Secretary of State of the State of
Delaware (the "Delaware Secretary of State") in the manner provided
under the DGCL. The Merger shall become effective as of
12:01 a.m., Delaware time, on the date following the date of filing
of the Certificate of Merger with the Delaware Secretary of State
(the "Effective Time").
Section 1.3. Legal Effect. At and after the Effective Time,
the Surviving Corporation shall possess all of the rights,
privileges, immunities, powers and franchises of BAC and Kirschner
and shall be subject to and shall assume all the duties and
liabilities of BAC and Kirschner as a corporation organized and
existing under the laws of Delaware.
Section 1.4. Name. As of and after the Effective Time, the
name of the Surviving Corporation shall be "Kirschner Medical
Corporation."
Section 1.5. Earnest Money Deposit.
(a) Prior to 10:00 a.m. (Eastern Daylight Savings Time)
on July 21, 1994, Biomet shall pay to Kirschner the sum of
$2,000,000 as an earnest money deposit (the "Deposit") in
connection with the transactions contemplated by this
Agreement, which Kirschner shall promptly deposit in an
interest bearing account; provided that if, prior to the time
the Deposit would otherwise have been paid to Kirschner, a
third party makes an Acquisition Proposal (as defined in
Section 6.5), the Deposit shall be paid to Kirschner within 24
hours of receipt by Biomet of written notice from Kirschner
following the termination of discussions or negotiations with
such third party.
(b) Upon the Closing of the Merger, Kirschner shall
transfer the Deposit, plus any interest earned thereon, to
Biomet. Kirschner shall retain the entire amount of the
Deposit, plus any interest earned thereon, if this Agreement
is terminated (1) by Kirschner pursuant to Section 10.3(a) or
(b) as a result of a willful and intentional act or failure to
act by Biomet or (2) by Biomet other than pursuant to Section
10.2 hereof; [Confidential treatment has been requested.].
If this Agreement is terminated prior to Closing for any
reason not set forth in the immediately preceding sentence,
Kirschner shall return the full amount of the Deposit, plus
any interest earned thereon, to Biomet.
(c) Any portion of the Deposit which Kirschner shall be
entitled to retain hereunder shall be retained as liquidated
damages (and not as a penalty) in consideration of Kirschner's
time and expense in connection with the transactions
contemplated by this Agreement. Except as otherwise provided
herein, any refund of the Deposit by Kirschner to Biomet shall
be made within 24 hours after it is required hereunder and
shall include all interest earned on the amount refunded.
Section 1.6. Effect of Acquisition Proposal. Notwithstanding
the foregoing,
(a) if any person (i) commences a tender offer for the
outstanding Kirschner Common, or (ii) solicits, announces that
it intends to solicit, or makes any filing with the Securities
and Exchange Commission (the "SEC") in connection with any
solicitation of proxies in opposition to management in
connection with the shareholders meeting to be held pursuant
to Section 6.3 or any adjournment thereof, then
(1) upon the announcement of such tender offer or
solicitation, Kirschner shall notify Biomet in
writing and, if it has received the Deposit, shall
return to Biomet the entire amount of the Deposit,
plus any interest earned thereon; and
(2) if, at any time prior to Closing, any person making
a tender offer or solicitation acquires or obtains
the right to vote a majority of the outstanding
shares of Kirschner Common, Kirschner shall
immediately pay to Biomet the sum of $1,000,000 as
liquidated damages (and not as a penalty) in
consideration of Biomet's time and expenses in
connection with the transactions contemplated by
this Agreement.
(b) If any person (an "Offeror") makes an Acquisition
Proposal as defined in Section 6.5 (other than a hostile
tender offer or hostile proxy solicitation referred to above),
or if Kirschner elects to cooperate with a hostile tender
offeror or proxy solicitor by providing to the Offeror or any
of its representatives (i) any nonpublic information relating
to Kirschner, or (ii) access to the personnel, properties,
books or records of Kirschner other than a list of Kirschner's
shareholders, then
(1) prior to the time the information or access
described in this Section 1.6(b) is first provided
to the Offeror or any such person or any of their
respective representatives, Kirschner shall notify
Biomet in writing and, if it has received the
Deposit, shall return to Biomet the entire amount
of the Deposit, plus any interest earned thereon;
and
(2) on or prior to the fourteenth day following the
date such information or access is first provided
as described in this Section 1.6(b), Kirschner
shall either (A) terminate all negotiations and
discussions with the Offeror concerning the
Acquisition Proposal or with such tender offeror or
proxy solicitor and notify Biomet in writing to
such effect, in which case the Deposit shall be
paid to Kirschner, deposited by Kirschner in an
interest bearing account and held subject to the
terms of this Agreement; or (B) pay to Biomet the
sum of $1,000,000 as liquidated damages (and not as
a penalty) in consideration of Biomet's time and
expenses in connection with the transactions
contemplated by this Agreement.
Section 1.7. Other Actions. If after the Effective Time any
further action is necessary or desirable to carry out the purposes
of this Agreement, the officers and directors of Biomet, BAC and
Kirschner shall have the authority to take that action.
ARTICLE II
Corporate Governance
Section 2.1. Certificate of Incorporation; Bylaws. The
Certificate of Incorporation and Bylaws of BAC as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws, respectively, of the Surviving
Corporation until amended or repealed as provided by law.
Section 2.2. Directors and Officers. The persons set forth
in Schedule 2.2 shall become the directors and officers,
respectively, of the Surviving Corporation, to serve until their
successors shall have been elected or appointed and qualify in the
manner provided in the Certificate of Incorporation and Bylaws of
the Surviving Corporation, or as otherwise provided by law.
ARTICLE III
Conversion of Shares
Section 3.1. Conversion of Shares of BAC. The shares of BAC
issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part
of BAC or Biomet, be converted into an equal number of common
shares of the Surviving Corporation, and all certificates formerly
representing shares of BAC shall be deemed cancelled and of no
further effect. As soon as practicable following the Closing, a
certificate representing the shares of the Surviving Corporation
described in the preceding sentence shall be issued and delivered
to Biomet.
Section 3.2. Conversion of Kirschner Common. All shares of
Kirschner Common held as treasury shares immediately prior to the
Effective Time shall, by virtue of the Merger, be canceled as of
the Effective Time and no payment shall be made with respect
thereto. Each share of Kirschner Common issued and outstanding
immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Kirschner, be
converted as of the Effective Time into the right to receive
$10.75, payable, at the election of Biomet, either in cash, or by
delivery of a number of Biomet Common Shares determined in
accordance with Section 3.3(a) (the "Merger Consideration").
Biomet shall make its election with respect to the payment of the
Merger Consideration no later than the date the proxy statement
prepared by Kirschner for use in connection with the shareholders
meeting to be held pursuant to Section 6.3 (the "Proxy Statement")
is mailed to the shareholders of Kirschner. As of the Effective
Time, all shares of Kirschner Common shall be canceled and shall no
longer represent any interest in the equity of Kirschner, and all
certificates formerly representing shares of Kirschner Common shall
be deemed canceled and shall represent only the right to receive
the Merger Consideration.
Section 3.3. Surrender and Payment for Kirschner Shares.
(a) If Biomet elects to pay the Merger Consideration
using Biomet Common Shares, the number of Biomet Common Shares
into which each share of Kirschner Common shall be converted
in the Merger shall be the greater of (i) the number of Biomet
Common Shares determined by dividing $10.75 by the average of
the last sale prices for the Biomet Common Shares as reported
by the National Association of Securities Dealers Automated
Quotation System - National Market System ("NASDAQ-NMS") for
the ten consecutive trading days ending on the fifth trading
day prior to the Closing (the "Average Price") or (ii) 0.9
Biomet Common Shares.
(b) At the Closing Biomet shall, on behalf of the
holders of Kirschner Common, transfer to a bank or trust
company that is mutually acceptable to Biomet and to Kirschner
(the "Exchange Agent"), (i) if the Merger Consideration is to
be paid using Biomet Common Shares, a number of Biomet Common
Shares, from either or both of its authorized but unissued or
treasury shares, that is sufficient to deliver the Merger
Consideration to each holder of record of Kirschner Common as
of the Effective Time or (ii) if the Merger Consideration is
to be paid using cash, an amount in cash equal to $10.75
multiplied by the number of issued and outstanding shares of
Kirschner Common as of the Effective Time.
(c) No certificates or scrip representing fractional
Biomet Common Shares shall be issued in the Merger and no
holder of any such fractional share interest shall be entitled
to vote, to receive any dividends or other distributions paid
or declared on Biomet Common Shares, or to exercise any other
rights as a shareholder of Biomet with respect to such
fractional share interest. If the Merger Consideration is to
be paid using Biomet Common Shares, each holder of Kirschner
Common who would otherwise be entitled to receive a fractional
Biomet Common Share in exchange for such holder's Kirschner
Common hereunder shall be entitled upon surrender of
certificates for Kirschner Common in accordance with Section
3.3(d) to receive in lieu of such fractional share an amount
in cash equal to the amount of such fraction multiplied by the
Average Price. Not later than the close of business on the
second business day after the Closing, Biomet shall transfer
to the Exchange Agent an amount in cash which is sufficient to
pay each former Kirschner shareholder for the fractional
shares which would otherwise have been issued pursuant to this
Agreement.
(d) Promptly after the Effective Time, Biomet shall
cause to be sent to each holder of Kirschner Common as of the
Effective Time a letter of transmittal for use by such holder
to surrender certificates for Kirschner Common in exchange for
the Merger Consideration. Each holder of shares of Kirschner
Common as of the Effective Time shall be entitled to receive
the Merger Consideration upon surrender to the Exchange Agent
of the certificates representing the shares of Kirschner
Common owned by the shareholder, together with a properly
completed letter of transmittal covering such shares.
(e) If any portion of the Merger Consideration is to be
paid to a person other than the registered holder of the
Kirschner Common represented by the certificate or
certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates
so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the person requesting such
payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a person other
than the registered holder of such shares or establish to the
satisfaction of the Exchange Agent that such tax has been paid
or is not payable. In the event that any certificate
representing Kirschner Common is lost, stolen or destroyed,
Biomet or the Exchange Agent may require as a condition to the
payment of the Merger Consideration with respect to such
Kirschner Common pursuant to this Agreement that the holder of
such Kirschner Common execute such affidavits and provide such
indemnities, including without limitation the posting of a
bond, as either of them in their sole discretion shall
determine.
(f) After the Effective Time, there shall be no further
registration of transfers of Kirschner Common outstanding
prior to the Effective Time. If after the Effective Time
certificates representing Kirschner Common outstanding prior
to the Effective Time are presented to the Surviving
Corporation, they shall be canceled and exchanged for the
Merger Consideration as provided for, and in accordance with
the procedures set forth, in this Agreement.
(g) Any portion of the Merger Consideration deposited
with the Exchange Agent that remains unclaimed by the former
holders of Kirschner Common on the six-month anniversary of
the Closing shall be returned to Biomet, and all former
holders of Kirschner Common who have not surrendered their
certificates for the Merger Consideration prior to that time
shall look only to Biomet with respect thereto. Neither
Biomet nor the Surviving Corporation shall be liable to any
former holder of Kirschner Common for any amount paid to a
public official pursuant to any law relating to abandoned
property. Any part of the Merger Consideration remaining
unclaimed immediately prior to the time that it would
otherwise escheat to or become the property of any
governmental entity shall, to the extent permitted by
applicable law, become the property of Biomet or the Surviving
Corporation, as the case may be, free and clear of any claims
or interest of any person previously entitled thereto.
(h) No interest shall be paid upon the Merger
Consideration. Any dividends or other distributions upon
Biomet Common Shares that are payable to shareholders of
record of Biomet as of a date subsequent to the Effective Time
but prior to the delivery of certificates representing Biomet
Common Shares to be issued in connection with the Merger, if
any, shall be paid upon Biomet Common Shares issued as a part
of the Merger Consideration at such time as certificates
representing those Biomet Common Shares are delivered in
accordance with the provisions of this Agreement.
ARTICLE IV
Representations and Warranties of Kirschner
For purposes of this Article IV, each of the representations
and warranties of Kirschner shall be deemed to have been made with
respect to Kirschner and with respect to each of its subsidiaries.
As a material inducement to Biomet and BAC to enter into this
Agreement and to consummate the transactions contemplated hereby,
Kirschner represents and warrants to Biomet and BAC that:
Section 4.1. Organization; Power. Kirschner is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. Kirschner is qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction, if any, in which the conduct of its business or the
ownership or leasing of its properties requires it to be so
qualified except for those jurisdictions where the failure to so
qualify would not have a material adverse effect on Kirschner or
the operation of its business. Each business entity in which
Kirschner owns an equity interest, together with such entity's
jurisdiction of organization and Kirschner's percentage ownership
interest therein and the states in which Kirschner and each such
entity are qualified as a foreign corporation are listed on
Schedule 4.1. Except as set forth in Schedule 4.1, Kirschner has
all requisite corporate power and authority to own, lease and
operate its business as it is now being conducted, and to enter
into, execute and deliver this Agreement, to consummate the
transactions contemplated hereby, and to comply with and fulfill
the terms and conditions hereof. Kirschner has delivered to Biomet
(a) true and complete copies of its Restated Certificate of
Incorporation, including all amendments thereto, certified by the
Delaware Secretary of State, (b) Certificates of Good Standing of
Kirschner issued by the Delaware Secretary of State and by any
other state in which it is qualified to do business and (c) a copy
of its Bylaws, as currently in effect, certified as true and
complete by Kirschner's Secretary.
Section 4.2. Capital Stock. The authorized capital stock of
Kirschner is as set forth in the Preliminary Statement of this
Agreement. All issued and outstanding shares of Kirschner Common
are validly issued and outstanding, fully paid and nonassessable.
There are no outstanding warrants, options, agreements, convertible
securities or other commitments pursuant to which Kirschner is or
may become obligated to issue any Kirschner Shares or other
securities of Kirschner, except for the Kirschner Rights, options
to purchase 456,000 shares of Kirschner Common issued pursuant to
Kirschner's stock option plans, 398,860 of which are, or prior to
December 31, 1994 will become, exercisable in accordance with their
terms, and a warrant to purchase 100,000 shares of Kirschner Common
at $6.00 per share, which is currently exercisable (the "Kirschner
Warrant") or the issuance of Kirschner Common pursuant to the
Kirschner Employee Stock Purchase Plan. There are not outstanding
any agreements or commitments pursuant to which Kirschner is or may
become obligated to purchase or redeem any shares of Kirschner
Common or other securities other than to fund its obligations under
the Kirschner Employee Stock Purchase Plan.
Section 4.3. Authority; No Violation.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action
on the part of Kirschner. This Agreement is and upon
execution and delivery at the Closing the Certificate of
Merger will be a valid and binding obligation of Kirschner,
enforceable against Kirschner in accordance with its
respective terms and conditions, except as the enforcement
hereof and thereof may be limited by bankruptcy, insolvency,
moratorium or other laws relating to or limiting creditors'
rights generally or by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding at law or in equity.
(b) Except as set forth in Schedule 4.3, neither the
execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, nor compliance by
Kirschner with any of the provisions hereof, will:
(i) conflict with, violate, result in a breach of,
constitute a default (or an event that, with notice or
lapse of time, or both, would constitute a default)
under, or give rise to any right of termination,
cancellation or acceleration under any provision of the
Restated Certificate of Incorporation or Bylaws of
Kirschner, any of the terms, conditions or provisions of
any note, lien, bond, mortgage, indenture, license,
lease, contract, commitment, agreement, understanding,
arrangement, restriction or other instrument or
obligation to which Kirschner is a party or by which
Kirschner may be bound;
(ii) violate any law, rule or regulation of any
government or governmental agency or body, or any
judgment, order, writ, injunction or decree of any court,
administrative agency or governmental agency or body
applicable to Kirschner; or
(iii) constitute an event that, with or without
notice, lapse of time or action by a third party, could
result in the creation of any lien, charge or encumbrance
upon any of the assets of Kirschner or cause the maturity
of any liability, obligation or debt of Kirschner to be
accelerated or increased.
Section 4.4. Consents and Approvals. Except in connection
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR Act"), the Securities Act of 1933, as amended
("Securities Act"), the Securities Exchange Act of 1934, as amended
("Exchange Act"), the approval of the shareholders of Kirschner
under the DGCL and as set forth in Schedule 4.4, the execution,
delivery and performance of this Agreement by Kirschner, and the
consummation of the transactions contemplated hereby, will not
require any notice to, action of, filing with, or consent,
authorization, order or approval from any court, administrative
agency or other governmental authority or agency, or any
individual, corporation, partnership, joint venture, association,
firm, organization, group or any other entity or enterprise. Any
and all notices, actions, filings, consents, authorizations, orders
and approvals necessary to consummate the transactions contemplated
by this Agreement shall have been made and obtained on or prior to
and shall be in effect as of the Effective Time.
Section 4.5. Transactions with Certain Persons. Except as
set forth in Schedule 4.5, during the past three years Kirschner
has not, directly or indirectly, in the ordinary course of business
or otherwise, purchased, leased or otherwise acquired any property
or obtained any services from, or sold, leased or otherwise
disposed of any property or furnished any services (except with
respect to remuneration for services rendered as a director,
officer or employee of Kirschner in the ordinary course of
business) to, any current or former director, officer, employee or
consultant of Kirschner, any person who is the beneficial owner
(within the meaning of Rule 13d-3 of the SEC under the Exchange
Act) of 5% or more of the outstanding Kirschner Shares or any
"affiliate" of Kirschner as defined in Rule 12b-2 under the
Exchange Act (individually an "Affiliate"). Kirschner does not owe
any amount to, or have any contract with or commitment to, any
Affiliate (other than compensation for current services not yet due
and payable and reimbursement of expenses arising in the ordinary
course of business), and no such Affiliate owes any amount to
Kirschner. No properties or assets owned by any Affiliate or by
any subsidiary or affiliate of any Affiliate is used by Kirschner
in connection with its business. No Affiliate is or during the
past three years has been the direct or indirect owner of any
interest in any entity that is a competitor or supplier or a
potential competitor or supplier of Kirschner, nor does any
Affiliate receive or has any Affiliate received income from any
source other than Kirschner that relates to the business of
Kirschner or should properly accrue to Kirschner.
Section 4.6. Books and Records. The minute books of
Kirschner as previously made available to Biomet contain accurate
records of all meetings of and corporate actions or written
consents by the respective Board of Directors, any committee
thereof, and the shareholders of Kirschner. There have been no
transactions involving the business of Kirschner that should have
been set forth in the books of account, minute book, stock record
book or stock transfer ledger, but which have not been accurately
set forth therein.
Section 4.7. SEC Reports and Financial Statements. Kirschner
has filed all required forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities laws
and the rules and regulations of the SEC thereunder (the "Kirschner
SEC Reports"), each of which complied, at the time such Kirschner
SEC Report was filed, in all material respects with the then
applicable requirements of the Securities Act, the Exchange Act or
both as the case may be, and the rules and regulations thereunder.
None of the Kirschner SEC Reports, including without limitation any
financial statements or schedules included therein, at the time
filed, contained any untrue statement of a material fact or omitted
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. The
audited consolidated financial statements and unaudited interim
financial statements of Kirschner included in the Kirschner SEC
Reports were prepared from Kirschner's books and records in
accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated therein
or in the notes thereto) and fairly present the financial position
of Kirschner and its consolidated subsidiaries as at the dates
thereof and the results of their operations and their cash flows
for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal, recurring year-end
adjustments and any other adjustments described therein.
Section 4.8. Absence of Undisclosed Liabilities. Except as
set forth in Schedule 4.8, as of the date of the balance sheet of
Kirschner included in its Annual Report on Form 10-K for the Year
Ended December 31, 1993 ("Kirschner Balance Sheet"), Kirschner had
no debts, liabilities or obligations of any nature whatsoever
(known or unknown, matured or unmatured, absolute, accrued, fixed,
contingent, or otherwise, including without limitation any foreign
or domestic tax liabilities or deferred tax liabilities incurred in
respect of or measured by Kirschner's income, and products
liability or any other liability attributable to defects in
products, materials or workmanship which was not covered by
insurance), that are required by GAAP to be set forth or reserved
against on the face of the Kirschner Balance Sheet (excluding the
notes thereto) that are not so set forth or reserved against. All
reserves established by Kirschner and set forth on the Kirschner
Balance Sheet are and will be adequate.
Section 4.9. Tax Matters.
(a) All material federal, state, county, local, foreign
and other taxes, including without limitation income
(including gross, adjusted gross and supplemental net income
taxes), receipts, sales, use, franchise, value added, excise,
recording, filing, real and personal property, employees'
income, unemployment, social security taxes (including
withholding obligations for trust fund taxes), and all other
material taxes (together with all interest and penalties
imposed thereon) ("Taxes"), due and payable by or on behalf of
Kirschner have been timely paid in full or timely and fully
withheld and paid, as the case may be, except for Taxes being
contested in good faith by appropriate proceedings as
described in Schedule 4.9. Kirschner has timely filed with
the Internal Revenue Service or other appropriate governmental
authority, or provided to its employees, shareholders,
consultants or other persons all tax returns, statements,
forms or reports ("Returns") required to be filed or provided
by it, and all Returns are true, correct and complete in all
respects and reflect all income, deductions, credits,
liability for Taxes and information required therein of
Kirschner. Kirschner has not been delinquent in the payment
of any Tax assessment (whether proposed or final) or
governmental charge or deposit of any kind or character.
(b) All accrued but unpaid Taxes accrued for tax periods
or portions thereof ending on or prior to December 31, 1993
are duly reflected as a liability or reserved against on the
Kirschner Balance Sheet and Kirschner has established and
maintained adequate reserves for Taxes for all prior tax
periods.
(c) Kirschner (i) has no Tax deficiency or claim
outstanding, proposed or assessed against it and there is no
basis for any such deficiency or claim; (ii) has no audit,
action, suit, proceeding or investigation for Taxes pending or
threatened against it; and (iii) has not received any notice
that any deficiency, claim, audit, action, suit, proceeding or
investigation may be made against or with respect to it.
Except as described in Schedule 4.9, during its existence
Kirschner has not received any notice of any material
deficiency which has not been satisfactorily resolved or other
adjustment from the Internal Revenue Service or any other
Taxing Authority, and, except as set forth in Schedule 4.9,
Kirschner's Returns have been audited by the Internal Revenue
Service through December 31, 1991.
(d) Except as described in Schedule 4.9, there is not
now in force any extension of time with respect to the date on
which any Return was or is due to be filed or provided by or
on behalf of or with respect to Kirschner or any waiver or
agreement by Kirschner for an extension of time for the
assessment of any Tax. No election has been made to treat
Kirschner as a "collapsible corporation" under Section 341(f)
of the Internal Revenue Code of 1986, as amended ("Code").
Kirschner is not subject to any penalty by reason of a
violation of any order, rule or regulation of, or a default
with respect to any Return required to be filed with any
governmental authority. Except as described in Schedule 4.9,
Kirschner has no pending requests with any governmental
authority for rulings as to payment of any Tax.
(e) All leases have been properly reported as either
"capital" leases or "true" leases, as those terms are commonly
used for federal income tax purposes. None of the property
owned or used by Kirschner is subject to a tax benefit
transfer lease executed in accordance with Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended by the
Economic Recovery Tax Act of 1981.
(f) There are no liens for Taxes upon any of Kirschner's
assets, except liens for current Taxes not yet due. Except as
described in Schedule 4.9, Kirschner is not currently under
any contractual obligation to indemnify any other person with
respect to Taxes and is not a party to any agreement providing
for payments with respect to Taxes. Kirschner will not be
required, as a result of a change in method of accounting, to
include any adjustment under Section 481(c) of the Code in any
period ending after the Closing Date. Except as set forth in
Schedule 4.9, no agreement exists that may cause any payment
by Kirschner to be nondeductible in full or in part under
Section 280G of the Code. Since January 1, 1990, Kirschner
has not been a member of an affiliated group of corporations
within the meaning of Section 1504 of the Code but Kirschner
is a common parent of such an affiliated group.
Section 4.10. Absence of Changes or Events. Except as set
forth in Schedule 4.10, since December 31, 1993 the business of
Kirschner has been conducted only in the ordinary course and
consistent with historical practices and, since December 31, 1993,
Kirschner has not:
(a) Declared, set aside or made any payment of dividends
or other distributions to its shareholders upon or in respect
of any Kirschner Shares or purchased, retired or redeemed any
Kirschner Shares or other securities issued by it;
(b) Mortgaged, pledged or subjected to lien, mortgage,
pledge, claim, security interest, charge, encumbrance or
restriction any material portion of its tangible or intangible
property, business or assets;
(c) Sold, transferred, leased to others or otherwise
disposed of any material portion of its tangible or intangible
assets or properties, except for inventory sold in the
ordinary course of business;
(d) Encountered any actual or threatened labor union
organizing activity or collective bargaining agreement
negotiation, had any actual or threatened employee strikes,
work stoppages, slow-downs or lock-outs, or had any material
change in its relationship with its employees, agents,
consultants, salespersons, distributors or independent
contractors;
(e) Transferred or granted any concessions, leases,
licenses, agreements or other rights with respect to or under,
or entered into any settlement regarding the breach or
infringement of, any United States or foreign license, patent,
copyright, trademark, service mark, trade name, invention or
similar rights, or modified any existing rights with respect
thereto;
(f) Made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration
payable, or paid or agreed to pay, conditionally or otherwise,
any bonus, extra compensation, pension, severance or vacation
pay, to any director, officer, employee, consultant, sales
representative, distributor or independent contractor of
Kirschner other than normal annual increases consistent with
past practice, entered into any employment contract with any
officer or salaried employee, instituted any employee welfare,
bonus, stock option, profit-sharing, retirement or similar
plan or arrangement, or made any loan or advance to any third
party except those made pursuant to normal trade terms
extended to customers;
(g) Issued or sold any shares of its capital stock,
bonds, notes or other securities, or issued, granted or sold
any options, rights or warrants with respect thereto, or
acquired any capital stock or other securities of any
corporation or any interest in any business enterprise, or
otherwise made any loan or advance to or investment in any
third party;
(h) Changed its accounting methods or practices,
including without limitation changes in depreciation or
amortization policies or rates and in the method of accounting
for inventory;
(i) Suffered any change, event or condition that, in any
case or in the aggregate, has had or may have a material
adverse effect on Kirschner's condition (financial or
otherwise), properties, assets, liabilities, operations or
prospects;
(j) Entered into any transaction, contract or
commitment, other than in the ordinary course of business; or
(k) Entered into any agreement or contract, made any
commitment or otherwise obligated itself to take any of the
types of action described in Subsections (a) through (j) of
this Section 4.10.
Section 4.11. Compliance with Laws; No Default or
Litigation. Except as set forth in Schedule 4.11:
(a) To Kirschner's knowledge, Kirschner is not in
default of and has not violated (nor is there any event or
condition which, with notice or lapse of time or both, would
constitute a default or violation of) in any respect (i) any
material contract, agreement, lease, consent order or other
written commitment or instrument to which it is a party or by
which the assets or business of Kirschner are bound, or (ii)
any law, rule, regulation, ordinance, writ, injunction,
development order, permit, resolution, approval, order,
decree, policy or guideline of any court or any foreign,
federal, state, local or other governmental department,
commission, board, bureau, agency or instrumentality
(including without limitation applicable laws, rules and
regulations relating to environmental protection, antitrust,
civil rights, health and occupational health and safety)
except where such default or violation would not, individually
or in the aggregate with all other defaults and/or violations,
have a material adverse effect on Kirschner, its assets or its
business;
(b) Except as disclosed in Kirschner's most recent Form
10-K report, there are no actions, suits, claims,
investigations or proceedings pending or, to the knowledge of
Kirschner, threatened against Kirschner or involving any of
its assets or its business, whether at law or in equity,
whether civil or criminal in nature, or whether before or by
a federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or
instrumentality which if adversely determined could have a
material adverse effect on Kirschner, its assets or its
business. Since January 1, 1990, Kirschner has not received
any notice of any violation of any law, rule, regulation,
ordinance, writ, injunction, order or decree relating to
Kirschner or its officers, directors, employees, assets or
business except where such violation would not, individually
or in the aggregate with all other violations, have a material
adverse effect on Kirschner, its assets or its business.
Schedule 4.11 also contains an indication as to whether or not
such claims and violations are insured or uninsured;
(c) Kirschner is not aware of any proposed laws, rules,
regulations, ordinances, orders, judgments, decrees,
governmental takings, condemnations or other proceedings that
if adopted or issued would be reasonably likely to have a
material adverse effect on Kirschner, its assets or its
business; and
(d) For purposes of this Article, "to the knowledge of"
or words of like import mean that the party to which the
statement is attributed:
(i) has made such investigations, and has made such
inquiries of directors, officers and responsible
employees of Kirschner and of legal counsel, independent
auditors, actuaries and other persons who have performed
services for Kirschner as shall be reasonably necessary
to determine the accuracy of such representation or
warranty; and
(ii) nothing has come to the person's attention in
the course of such investigation and review or otherwise,
which would cause the person, in the exercise of
reasonable care (in accordance with the standards of what
a reasonable person in similar circumstances would have
done to satisfy himself as to the accuracy of the
representation and warranty), to believe that such
representation and warranty is not true and correct in
all respects.
Section 4.12. Property.
(a) Schedule 4.12 contains (i) the street address and
legal description of each parcel of all real property owned or
leased from third parties by Kirschner, including all
buildings, structures and improvements located thereon ("Real
Property") and (ii) a brief description of the use to which
each parcel of the Real Property is being employed and/or the
use for which it is currently intended.
(b) Kirschner owns or leases from third parties all
tools, furniture, machinery, computer hardware and software,
supplies, vehicles, equipment and other items of tangible
personal property that are required to conduct its business
("Personal Property").
(c) Except as set forth in Schedule 4.12, the Real
Property and each item of the Personal Property conforms in
all material respects to applicable federal, state, local and
foreign laws, regulations and ordinances, including without
limitation, in the case of the Real Property, those related to
zoning, use or construction, and the Real Property is zoned
for the purposes for which it presently is used. The Real
Property and each item of the Personal Property is in good
operating condition and repair, subject to normal wear and
tear, and is suitable for its intended use by Kirschner.
(d) With respect to each parcel of Real Property and
each item of Personal Property that is leased from third
parties ("Leased Property"), Kirschner is the owner and holder
of the entire interest in the leasehold estates purported to
be granted by the leases or agreements, each of which is in
full force and effect and constitutes a legal, valid and
binding obligation of the respective parties thereto,
enforceable in accordance with its terms. No consent of any
lessor of the Leased Property is required in connection with
the transactions contemplated by this Agreement, except as set
forth in Schedule 4.12.
Section 4.13. Inventory. Except to the extent provided for
in Kirschner's inventory reserve or as set forth in Schedule 4.13,
each item of Kirschner's inventory, raw materials, components,
repair parts, work-in-process and finished goods ("Inventory") is
(a) good and saleable in the ordinary course of business, or
suitable and usable for the production or completion of products
that will be good and saleable in the ordinary course of business,
as first quality goods at normal mark-ups, or (b) Inventory
awaiting the approval of the United States Food and Drug
Administration, and none of the Inventory consists of any items
that are slow-moving, obsolete or of below-standard quality.
Section 4.14. Contracts.
(a) Schedule 4.14(a) lists all contracts, leases (other
than those described in Schedule 4.12), commitments, purchase
orders, work orders, agreements, consent orders and other
arrangements, including all amendments thereto, to which
Kirschner is a party or is subject or by which Kirschner, its
assets, or its business is bound, that fall into one or more
of the following categories ("Contracts"):
(i) All loans, lines of credit, security
agreements, guaranties or other payment obligations;
(ii) All employment agreements, contracts, policies
and commitments with or between Kirschner and any of its
employees, directors or officers, individually or as one
or more groups, including without limitation those
relating to severance;
(iii) All agreements of guaranty or
indemnification;
(iv) All agreements, contracts and commitments
containing any covenant limiting the right of Kirschner
to engage in any line of business or compete with any
person;
(v) Each agreement, contract and commitment
relating to capital expenditures in excess of $50,000;
(vi) All agreements, contracts and commitments
entered into otherwise than in the ordinary course of
business that individually involve the payment of $50,000
or more over their remaining terms (including any period
of extension or renewal);
(vii) All material agreements, contracts and
commitments relating to the grant or receipt of any
license or royalty;
(viii) All agreements, contracts and commitments
that require consent by any other person in connection
with the consummation of the transactions contemplated by
this Agreement and the Merger Documents either to prevent
a breach or to continue the effectiveness thereof; and
(ix) All agreements with any Affiliate of Kirschner.
(b) All of the Contracts are valid and binding
obligations of the respective parties thereto, enforceable in
accordance with their respective terms, are in full force and
effect, and the Surviving Corporation will be entitled to the
full benefits thereof. None of the Contracts is, either when
considered singly or in the aggregate with others, unduly
burdensome, onerous or adverse to Kirschner, its assets, or
its business or likely, either before or after the Closing, to
result in any loss or liability. None of the Contracts is
subject to renegotiation with any governmental body.
Section 4.15. Licenses and Permits.
(a) Schedule 4.15 contains a true and complete list of
franchises, licenses, permits, certificates, approvals,
resolutions, development orders, consents and other
authorizations necessary to own, lease or operate Kirschner's
assets or to conduct its business in compliance with
applicable law ("Permits") and, with respect to each Permit,
the name of the licensor or grantor, a description of the
subject matter, the termination date, and the terms of any
renewal options. Kirschner has delivered to Biomet true and
complete copies of all of the Permits.
(b) Kirschner lawfully obtained and currently possesses
the Permits and has fulfilled and performed its obligations
under each of the Permits. No event has occurred and no
condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or
default under any of the Permits or would allow revocation or
termination of any of the Permits, or which might adversely
affect the rights of Kirschner under any of the Permits. No
notice of cancellation, of default, or of any dispute
concerning any of the Permits, or of any event, condition or
state of facts described in the preceding sentence, has been
received by, or is known to, Kirschner or its officers,
directors or employees. Each of the Permits is valid,
subsisting and in full force and effect, and will continue in
full force and effect after the Merger, in each case without
(i) the occurrence of any breach, default or forfeiture of
rights thereunder, or (ii) the consent, approval or act of, or
the making of any filing with, any governmental body,
regulatory commission or other person.
(c) Neither Kirschner nor its officers, directors or
employees is aware of any pending or proposed federal, state,
local or foreign statutory or regulatory changes that will or
may affect the terms of any of the Permits or otherwise have
an adverse effect on the Surviving Corporation's ability to
use Kirschner's assets or conduct its business after the
Closing in accordance with the Permits.
(d) The Permits include all applicable environmental,
land use and growth management obligations required by any
federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or
instrumentality.
Section 4.16. Proprietary Information. Schedule 4.16
contains a true and complete list and brief description of all
Intellectual Property, directly or indirectly related to the
products, services or operations of Kirschner or necessary to use
the assets or conduct the business of Kirschner as presently used
or conducted. Kirschner owns or possesses the licenses or other
rights to use the name "Kirschner Medical Corporation," and all the
Intellectual Property identified in Schedule 4.16. Except as set
forth in Schedule 4.16, to its knowledge, Kirschner is not
infringing upon or otherwise acting adversely to any Intellectual
Property, the rights to which are owned by any other person. There
is no claim or action by any person pending or, to the knowledge of
Kirschner threatened, with respect thereto. For the purposes of
this Agreement, "Intellectual Property" means the names "Kirschner
Medical Corporation" (and any and all variations thereof) and all
the corporate names, trade names, trademarks, trademark
applications, service marks, service mark applications, theme
concepts, copyrights, copyright applications, patents, patent
applications, inventions, trade secrets, shop rights, know-how,
business plans and strategies, proprietary processes and formulae,
data bases, telephone numbers and all other proprietary technical
information, whether patentable or unpatentable, directly or
indirectly related to the products, services or operations of the
business or necessary to conduct the business as it is now being
conducted.
Section 4.17. Title to Assets and Related Matters. Kirschner
has good, marketable and insurable title to all of the assets owned
by it, free and clear of all mortgages, liens, pledges, charges,
claims, security interests, encumbrances, easements, encroachments,
limitations, restrictions, rights of third parties or other
interests of any kind or character, except as set forth in
Schedule 4.17 and except for liens for Taxes not yet due and
payable.
Section 4.18. Environmental Matters.
(a) All of the Real Property and all operations
conducted thereon, including without limitation Kirschner's
use of its assets and the Real Property, are currently in
compliance with all applicable federal, state, local and
foreign environmental, land use and growth management laws,
regulations, rules, ordinances, permits, development orders,
approvals, resolutions and orders, including all consent
orders.
(b) With respect to the Real Property, there exists no
state of affairs and to Kirschner's knowledge there has
occurred no event that currently requires, or is currently
expected to require in the future, reporting or disclosure by
the Surviving Corporation to any federal, state, local or
foreign agency concerned with environmental protection and
management or land use control or growth management.
(c) There are no pending or, to Kirschner's knowledge,
threatened claims by any private parties or governmental
agencies, and there are no pending or threatened judicial or
administrative actions, alleging violations of any federal,
state, local or foreign environmental, land use or growth
management laws, regulations, rules, ordinances, permits,
development orders, approvals, resolutions or orders on or
connected with the Real Property, the assets or the operations
conducted thereon or at any time prior to the Closing Date.
(d) Schedule 4.18 contains a list and brief description
of all material written and oral communications between
Kirschner and any federal, state or local governmental
authority with respect to any removal, remediation or clean-up
required to be undertaken, the results of any inspection or
compliance review, potential liability arising under or
potential violations of the Clean Air Act, the Clean Water
Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Comprehensive Environmental
Response, Compensation and Liability Act and equivalent state
and local laws, regulations, rules, ordinances and all court
and administrative orders issued pursuant thereto, since
January 1, 1990.
Section 4.19. Labor Relations; Employees.
(a) Kirschner employs approximately 507 employees.
Kirschner is not a party to any collective bargaining
agreement with respect to its workforce or any portion
thereof. Except as set forth in Schedule 4.19:
(i) Kirschner enjoys a good employer-employee
relationship with all its employees;
(ii) Kirschner has paid in full to all its employees
all due and owing wages, salaries, commissions, bonuses,
fringe benefit payments and all other direct and indirect
compensation of any kind for all services performed by
them and each of them to the date hereof;
(iii) Kirschner is in substantial compliance
with (1) all federal, state, local and foreign laws,
regulations, rules, ordinances and court and
administrative orders dealing with employment and
employment practices of any kind, (2) all of the terms
and conditions of employment of any kind with respect to
its business, and (3) all wages and hours requirements
and regulations;
(iv) there is no unfair labor practice, safety,
health, discrimination or wage claim, charge, complaint
suit, arbitration or proceeding pending or to Kirschner's
knowledge threatened against or involving Kirschner
before the National Labor Relations Board, Occupational
Safety and Health Administration, Equal Employment
Opportunity Commission, Department of Labor or any other
federal, state, local or foreign agency;
(v) there is no labor dispute, strike, work
stoppage, interference with production or slowdown in
progress or to Kirschner's knowledge threatened against
or involving Kirschner;
(vi) there is no question of representation under
the National Labor Relations Act, as amended, or any
similar state statute, pending with respect to the
employees of Kirschner;
(vii) there is no grievance pending or to
Kirschner's knowledge threatened which might have a
material adverse effect on Kirschner or on the conduct of
its business; and
(viii) there is no collective bargaining
agreement currently being negotiated or subject to
negotiation or renegotiation by Kirschner.
Section 4.20. Employee Benefit Plans.
(a) "Pension Benefit Plan" means an "employee pension
benefit plan" (as defined in Section 3 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
and any other employee pension or profit sharing plan, program
arrangement or agreement, whether insured or uninsured, funded
or unfunded, including without limitation each deferred
compensation plan, bonus plan, stock option plan, employee
stock purchase plan, severance plan or policy and any other
employee benefit plan, agreement, arrangement or commitment
maintained by, or promised by, Kirschner, or to which
Kirschner contributes, or is legally obligated to contribute,
for its employees.
(b) "Welfare Benefit Plan" means an "employee welfare
benefit plan" (as defined in Section 3 of ERISA) and any other
employee benefit plan, program, arrangement or agreement
whether insured or uninsured, funded or unfunded, maintained
by Kirschner, or to which Kirschner contributes, or is legally
obligated to contribute, for its employees other than a
Pension Benefit Plan.
(c) Schedule 4.20 contains a list of each Welfare
Benefit Plan and each Pension Benefit Plan.
(d) The funding method used in connection with each
Pension Benefit Plan has at all times satisfied and will as of
the Closing Date satisfy in all material respects any and all
applicable requirements under ERISA or the Code. Except as
set forth in Schedule 4.20 there is as of the date hereof no
"accumulated funding deficiency" as defined in Section
302(a)(2) of ERISA or Code Section 412(a) (whether or not
waived) which exists, asserted or unasserted, with respect to
any plan year of any Pension Benefit Plan.
(e) Except as set forth in Schedule 4.20, there are no
material liabilities of Kirschner, contingent or otherwise,
accrued or unaccrued, asserted or unasserted, with respect to
any Pension Benefit Plan or any Welfare Benefit Plan. Except
to the extent provided in Schedule 4.20, each defined benefit
Pension Plan, if terminated on the date of this Agreement,
would have sufficient assets to provide all plan liabilities,
as determined in accordance with the PBGC assumptions for
terminating single employer plans.
(f) With respect to each Pension Benefit Plan and each
Welfare Benefit Plan, Schedule 4.20 sets forth the amount of
any contribution made in the most recent fiscal year ended
prior to July 15, 1994.
(g) Except as set forth in Schedule 4.20, each Pension
Benefit Plan has at all times qualified under Section 401(a)
of the Code and been tax exempt under Section 501(a) of the
Code, and the Internal Revenue Service has made a favorable
determination as to the qualification under the Code of each
of the Pension Benefit Plans.
(h) Schedule 4.20 contains a list of each separate trust
agreement, custodial agreement, investment management
agreement, administrative services agreement and insurance
policy or annuity contract associated with or related to each
Welfare Benefit Plan and each Pension Benefit Plan.
(i) Except as set forth in Schedule 4.20, since
January 1, 1990, each Welfare Benefit Plan and each Pension
Benefit Plan has been operated and administered at all times
and in all material respects in compliance with the
requirements of ERISA and the Code, and all other applicable
laws, rules and regulations. All reports and disclosures
required by any governmental agency with respect to each
Welfare Benefit Plan and each Pension Benefit Plan have been
timely filed with each appropriate governmental agency and
distributed to all required persons in an appropriate and
timely manner and in compliance with all applicable laws,
rules and regulations.
(j) No plan fiduciary of any Welfare Benefit Plan or any
Pension Benefit Plan has engaged in or authorized any
transaction in violation of Section 406(a) or (b) of ERISA or
any "prohibited transaction" (as defined in Section 4975(c)(1)
of the Code) which would result in any material amount of
liability. Neither Kirschner nor any entity under common
control with it ("Common Control Entity") has incurred any
material amount of penalty or tax under Section 502(i) of
ERISA or Section 4975 of the Code. Schedule 4.20 sets forth
the name and business address of each Common Control Entity
other than Kirschner.
(k) Except as set forth in Schedule 4.20, no Pension
Benefit Plan has ever acquired or held any "employer security"
or "employer real property" each as defined in Section 407(d)
of ERISA, and any such acquisition or holding as so set forth
has at all times been in compliance with ERISA, the Code and
all other applicable laws, rules and regulations.
(l) There are no premiums due currently to the Pension
Benefit Guaranty Corporation ("PBGC") for any Pension Benefit
Plan and neither Kirschner nor any Common Control Entity has
incurred any material amount of liability to the PBGC or
otherwise under Sections 4062, 4063 or 4064 of ERISA.
(m) Except as set forth in Schedule 4.20, no filing has
been made by Kirschner or any Common Control Entity with the
PBGC (and no proceeding has been commenced by the PBGC) to
terminate any Pension Benefit Plan maintained, or wholly or
partially funded, by Kirschner or any Common Control Entity.
(n) Neither Kirschner nor any Common Control Entity has
ever contributed to a multiemployer plan (as defined in
Section 3(37) of ERISA). No entity that Kirschner has ever
been in common control with has ever contributed to a
multiemployer plan.
(o) Kirschner has delivered to Biomet true and complete
copies of the Welfare Benefit Plans and the Pension Benefit
Plans listed in Schedule 4.20, related trust agreements,
custodial agreements, insurance policies or annuity contracts
(or any other funding instruments), the most recent
determination letter issued by the Internal Revenue Service
with respect to each Pension Benefit Plan, and the Annual
Reports on the Form 5500 Series required to be filed with any
governmental agency for each Welfare Benefit Plan and each
Pension Benefit Plan for the two most recent plan years.
(p) Kirschner is not a member of an affiliated service
group within the meaning of Code Section 414(m).
(q) Kirschner does not have any leased employees within
the meaning of Code Section 414(n).
(r) Kirschner does not have any employees within the
meaning of the regulations under Code Section 414(o).
(s) None of the employees of Kirschner is a member of
any voluntary employees' beneficiary association within the
meaning of Code Section 501(c)(9).
(t) Neither Kirschner nor any Common Control Entity is
a "substantial employer" under Section 4063 of ERISA.
(u) Neither Kirschner nor any Common Control Entity has
any obligation to provide any medical or health benefits to
any former employees, retired employees or their dependents,
except to the extent required by Title X of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA").
(v) Kirschner and each Common Control Entity has
complied with the requirements of Title X of COBRA and the
rules and regulations thereunder.
(w) Kirschner has not contributed to a voluntary
employees' beneficiary association in any year, nor claimed a
deduction under Section 419(a)(2) of the Code for any taxable
year in excess of any welfare benefit funds' qualified cost
for the taxable year as determined under Section 419(c) of the
Code, nor made any additions to any qualified asset account in
excess of the account limit as determined under
Section 419A(c) of the Code.
(x) There is no contract, agreement, plan, promise or
arrangement covering any current or former employee of
Kirschner that could give rise to any other payments,
benefits, obligations or liabilities other than as disclosed
on the schedules to this Section 4.20.
(y) No condition or circumstance exists that would
prevent Kirschner, Biomet or the Company from amending or
terminating any Pension Benefit Plan or Welfare Benefit Plan.
(z) Schedule 4.20 contains a true and complete list of
any other plans, programs or arrangements that benefit
employees that are not otherwise described in this Section
4.20.
Section 4.21. Insurance.
(a) Kirschner is insured by financially sound and
reputable insurers with respect to its properties and the
conduct of its businesses.
(b) Schedule 4.21 contains (i) a true and complete list
of all policies of liability, theft, fidelity, life, fire,
product liability, workers' compensation, health and other
forms of insurance held by Kirschner and specifies the
insurer, amount of coverage, type of insurance and policy
number; and (ii) for the past five fiscal years, an accurate
description of any prior claims, any cancellation or
significant increase in premiums and any pending claims under
those or predecessor policies.
(c) The policies listed in Schedule 4.21 are
outstanding, in full force and effect and all premiums billed
with respect to those policies have been paid. The insurance
coverage provided by the policies listed in Schedule 4.21
satisfies all contractual and statutory requirements
applicable to Kirschner, its assets or its business and is in
such amounts and insures against such liabilities and hazards
as is consistent with past practice and as is customarily
maintained by other companies operating in similar businesses.
Kirschner has not, during the past five fiscal years, been
denied or had revoked or rescinded by a carrier any policy of
insurance.
Section 4.22. Brokers' or Finders' Fees. No agent, broker,
investment banker or other person or firm acting on behalf of
Kirschner or any of its directors or executive officers, or under
the authority of any of them, is or will be entitled to any
broker's or finder's fee or any other commission or similar fee,
directly or indirectly, from either of the parties hereto in
connection with any of the transactions contemplated hereby, except
for those fees or commissions set forth and described in Schedule
4.22 which Kirschner shall have paid in full prior to or at the
Closing, and evidence of payment for which shall have been
delivered to Biomet at the Closing.
Section 4.23. Disclosure.
(a) No representation or warranty by Kirschner contained
in this Agreement and no statement made by Kirschner with
respect to a matter of material significance to the
transactions contemplated hereby contained in any certificate
or other instrument delivered or to be delivered with this
Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or
therein not misleading. All information in any Schedule,
Exhibit or any contract delivered on behalf of Kirschner
pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to have been relied upon
by Biomet and BAC and constitute representations and
warranties by Kirschner herein.
(b) None of the information supplied or to be supplied
by Kirschner for inclusion in (i) the Proxy Statement, or (ii)
the registration statement on Form S-4 or other appropriate
registration form to be filed with the SEC by Biomet in
connection with the offer and issuance of the Biomet Common
Shares and Biomet Rights in or as a result of the Merger (the
"Registration Statement"), including the Proxy Statement
included therein, will, in the case of the Proxy Statement, at
the time of mailing of the Proxy Statement to the Kirschner
shareholders and at the time of the meeting of such
shareholders to be held in accordance with Section 6.3,
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 are made, not misleading or
will, in the case of the Registration Statement, at the time
the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and
the rules and regulations thereunder, except that no
representation is made by Kirschner with respect to
information supplied by Biomet or BAC for inclusion therein.
Section 4.24. Termination of Agreements with
Orthomet. Kirschner has taken, or prior to the Effective Time will
take, all action as may be required to be taken by it to terminate
all of its obligations to Orthomet relating to or arising out of a
letter of intent between Kirschner and Orthomet dated May 25, 1994
relating to a proposed business combination of Kirschner and
Orthomet and upon the taking of such action Kirschner shall have no
material liability to Orthomet with respect thereto. Kirschner has
disclosed to Biomet all material facts concerning the circumstances
surrounding the letter of intent with Orthomet and the transactions
contemplated thereby and there are no agreements, understandings or
arrangements between Kirschner and Orthomet concerning or relating
to a business combination between Kirschner and Orthomet that have
not been disclosed to Biomet.
Section 4.25. Representations and Warranties as of Date
Hereof. The representations and warranties contained in the
foregoing Sections 4.1 through 4.24 inclusive are made as of the
date hereof, except as otherwise expressly indicated therein.
ARTICLE V
Representations and Warranties of Biomet and BAC
For purposes of this Article V, each of the representations
and warranties of Biomet shall be deemed to have been made with
respect to Biomet and with respect to each of its subsidiaries. As
a material inducement to Kirschner to enter into this Agreement and
to consummate the transactions contemplated hereby, Biomet and BAC
represent and warrant to Kirschner that:
Section 5.1. Organization; Power. Biomet is a corporation
duly organized and validly existing under the laws of the State of
Indiana, for which all required annual reports have been filed with
the Indiana Secretary of State and for which no Articles of
Dissolution appear as having been filed with the Indiana Secretary
of State. BAC is a corporation duly organized and validly existing
under the laws of the State of Delaware. Each of Biomet and BAC
has all the requisite corporate power and authority to own, lease
and operate its business as it is now being conducted and to enter
into this Agreement, to consummate the transactions contemplated
hereby, and to comply with and fulfill the terms and conditions of
this Agreement.
Section 5.2. Capital Stock. The authorized shares of Biomet
and BAC are as set forth in the Preliminary Statement to this
Agreement. All issued and outstanding Biomet Common Shares are
validly issued and outstanding, fully paid and nonassessable.
Section 5.3. Authority; No Violation; Etc..
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action
on the part of Biomet and BAC. This Agreement is a valid and
binding obligation of Biomet and BAC, enforceable against
Biomet and BAC in accordance with its terms and conditions,
except as the enforcement hereof and thereof may be affected
by bankruptcy, insolvency, moratorium or other laws relating
to or limiting creditors' rights generally or by general
principles of equity, regardless of whether such
enforceability is considered in equity or law.
(b) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby,
nor compliance by Biomet and BAC with any of the provisions
hereof, will:
(i) conflict with, violate, result in a breach of,
constitute a default (or an event that, with notice or
lapse of time, or both, would constitute a default)
under, or give rise to any right of termination,
cancellation or acceleration under any provision of the
Articles or Certificate of Incorporation or Bylaws of
Biomet or BAC, any of the terms, conditions or provisions
of any note, lien, bond, mortgage, indenture, license,
lease, contract, commitment, agreement, understanding,
arrangement, restriction or other instrument or
obligation to which Biomet or BAC is a party or by which
Biomet or BAC may be bound;
(ii) violate any law, rule or regulation of any
government or governmental agency or body, or any
judgment, order, writ, injunction or decree of any court,
administrative agency or governmental agency or body
applicable to Biomet or BAC; or
(iii) constitute an event that, with or without
notice, lapse of time or action by a third party, could
result in the creation of any lien, charge or encumbrance
upon any of the assets of Biomet or BAC or cause the
maturity of any liability, obligation or debt of Biomet
or BAC to be accelerated or increased.
Section 5.4. Consents and Approvals. Except in connection
with the HSR Act, the Securities Act and the Exchange Act and the
approval of this Agreement by Biomet as the shareholder of BAC, the
execution, delivery and performance of this Agreement by Biomet and
BAC and the consummation of the transactions contemplated hereby
will not require any notice to, action of, filing with or consent,
authorization, order or approval from any court, administrative
agency or other governmental authority or agency, or any
individual, corporation, partnership, joint venture, association,
firm, organization, group or any other entity or enterprise.
Section 5.5. Reports. Biomet has filed all required forms,
reports and documents with the SEC required to be filed by it
pursuant to the federal securities laws and the rules and
regulations of the SEC thereunder (the "Biomet SEC Reports"), each
of which complied, at the time such form, report or document was
filed, in all material respects with the then applicable
requirements of the Securities Act and the Exchange Act, and the
rules and regulations thereunder. None of the Biomet SEC Reports,
including without limitation any financial statements or schedules
included therein, at the time filed, contained any untrue statement
of a material fact or omitted 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. The audited consolidated financial statements and
unaudited interim financial statements of Biomet included in the
Biomet SEC Reports were prepared from Biomet's books and records in
accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of Biomet
and its consolidated subsidiaries as at the dates thereof and the
results of their operations and their cash flows for the periods
then ended, subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end adjustments and any other
adjustments described therein.
Section 5.6. Absence of Undisclosed Liabilities. Except as
set forth or reserved against on the face of the balance sheet of
Biomet included in the Biomet Audited Financial Statements ("Biomet
Balance Sheet") or in Schedule 5.6, as of the date of the Biomet
Balance Sheet, Biomet had no debts, liabilities or obligations of
any nature whatsoever (known or unknown, matured or unmatured,
absolute, accrued, fixed, contingent or otherwise, without
limitation, any foreign or domestic tax liabilities or deferred tax
liabilities incurred in respect of or measured by Biomet's income,
and products liability or any other liability attributable to
defects in products, materials or workmanship not covered by
insurance) that are required by generally accepted accounting
principles to be so set forth or reserved against that are not set
forth or reserved against on the Biomet Balance Sheet.
Section 5.7. Due Authorization of Shares. The Biomet Common
Shares and Biomet Rights to be issued at the Closing will, when
issued, be duly authorized Common Shares and common share purchase
rights of Biomet and, when delivered, will be duly and validly
issued, fully paid and nonassessable and qualified for quotation on
NASDAQ-NMS subject to notice of issuance.
Section 5.8. Tax Matters.
(a) All Taxes due and payable by or on behalf of Biomet
have been timely paid in full or timely and fully withheld and
paid, as the case may be, except for Taxes being contested in
good faith by appropriate proceedings as described in Schedule
5.8. Biomet has timely filed with the Internal Revenue
Service or other appropriate governmental authority, or
provided to its employees, shareholders, consultants or other
persons all Returns required to be filed or provided by it,
and all Returns are true, correct and complete in all respects
and reflect all income, deductions, credits, liability for
Taxes and information required therein of Biomet. Biomet has
not been delinquent in the payment of any Tax assessment
(whether proposed or final) or governmental charge or deposit
of any kind or character.
(b) All accrued but unpaid Taxes accrued for tax periods
or portions thereof ending on or prior to May 31, 1993 are
duly reflected as a liability or reserved against on the
Biomet Balance Sheet and Biomet has established and maintained
adequate reserves for Taxes for all prior tax periods.
(c) Biomet (i) has no Tax deficiency or claim
outstanding, proposed or assessed against it and there is no
basis for any such deficiency or claim; (ii) has no audit,
action, suit, proceeding or investigation for Taxes pending or
threatened against it; and (iii) has not received any notice
that any deficiency, claim, audit, action, suit, proceeding or
investigation may be made against or with respect to it.
Except as described in Schedule 5.8, during its existence
Biomet has not received any notice of any material deficiency
which has not been satisfactorily resolved or other adjustment
from the Internal Revenue Service or any other Taxing
Authority.
Section 5.9. Compliance with Laws; No Default or
Litigation. Except as set forth in Schedule 5.9:
(a) To Biomet's knowledge, Biomet is not in default of
and has not violated (nor is there any event or condition
which, with notice or lapse of time or both, would constitute
a default or violation of) in any respect (i) any material
contract, agreement, lease, consent order or other written
commitment or instrument to which it is a party or by which
the assets or business of Biomet are bound, or (ii) any law,
rule, regulation, ordinance, writ, injunction, development
order, permit, resolution, approval, order, decree, policy or
guideline of any court or any foreign, federal, state, local
or other governmental department, commission, board, bureau,
agency or instrumentality (including without limitation
applicable laws, rules and regulations relating to
environmental protection, antitrust, civil rights, health and
occupational health and safety) except where such violation
would not, individually or in the aggregate with all other
violations, have a material adverse effect on Biomet, its
assets or its business;
(b) Except as disclosed in Biomet's most recent Form 10-
K report, there are no actions, suits, claims, investigations
or proceedings pending or, to the knowledge of Biomet,
threatened against Biomet or involving any of its assets or
its business, whether at law or in equity, whether civil or
criminal in nature, or whether before or by a federal, state,
local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality which if adversely
determined could have a material adverse effect on Biomet, its
assets or its business. Since January 1, 1990, Biomet has not
received any notice of any violation of any law, rule,
regulation, ordinance, writ, injunction, order or decree
relating to Biomet or its officers, directors, employees,
assets or business except where such violation would not,
individually or in the aggregate with all other violations,
have a material adverse effect on Biomet, its assets or its
business. Schedule 5.9 also contains an indication as to
whether or not such claims and violations are insured or
uninsured;
(c) No action, suit or proceeding has been instituted
or, to the knowledge of Biomet, threatened to restrain or
prohibit or otherwise challenge the legality or validity of or
to seek damages resulting from the transactions contemplated
by this Agreement;
(d) Biomet is not aware of any proposed laws, rules,
regulations, ordinances, orders, judgments, decrees,
governmental takings, condemnations or other proceedings that
if adopted or issued would be reasonably likely to have a
material adverse effect on Biomet, its assets or its business;
and
(e) For purposes of this Article, "to the knowledge of"
or words of like import mean that the party to which the
statement is attributed:
(i) has made such investigations, and has made such
inquiries of directors, officers and responsible
employees of Biomet and of legal counsel, independent
auditors, actuaries and other persons who have performed
services for Biomet as shall be reasonably necessary to
determine the accuracy of such representation or
warranty; and
(ii) nothing has come to the person's attention in
the course of such investigation and review or otherwise,
which would cause the person, in the exercise of
reasonable care (in accordance with the standards of what
a reasonable person in similar circumstances would have
done to satisfy himself as to the accuracy of the
representation and warranty), to believe that such
representation and warranty is not true and correct in
all respects.
Section 5.10. Licenses and Permits.
(a) Schedule 5.10 contains a true and complete list of
franchises, licenses, permits, certificates, approvals,
resolutions, development orders, consents and other
authorizations necessary to own, lease or operate Biomet's
assets or to conduct its business in compliance with
applicable law ("Permits") and, with respect to each Permit,
the name of the licensor or grantor, a description of the
subject matter, the termination date, and the terms of any
renewal options. Biomet has delivered to Kirschner true and
complete copies of all of the Permits.
(b) Biomet lawfully obtained and currently possesses the
Permits and has fulfilled and performed its obligations under
each of the Permits. No event has occurred and no condition
or state of facts exists which constitutes or, after notice or
lapse of time or both, would constitute a breach or default
under any of the Permits or would allow revocation or
termination of any of the Permits, or which might adversely
affect the rights of Biomet under any of the Permits. No
notice of cancellation, of default, or of any dispute
concerning any of the Permits, or of any event, condition or
state of facts described in the preceding sentence, has been
received by, or is known to, Biomet or its officers, directors
or employees. Each of the Permits is valid, subsisting and in
full force and effect, and will continue in full force and
effect after the Merger, in each case without (i) the
occurrence of any breach, default or forfeiture of rights
thereunder, or (ii) the consent, approval or act of, or the
making of any filing with, any governmental body, regulatory
commission or other person.
(c) Neither Biomet nor its officers, directors or
employees is aware of any pending or proposed federal, state,
local or foreign statutory or regulatory changes that will or
may affect the terms of any of the Permits.
(d) The Permits include all applicable environmental,
land use and growth management obligations required by any
federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or
instrumentality.
Section 5.11. Environmental Matters.
(a) All of the real property owned or leased from third
parties by Biomet and all operations conducted thereon,
including without limitation Biomet's use of its assets and
such real property, are currently in compliance with all
applicable federal, state, local and foreign environmental,
land use and growth management laws, regulations, rules,
ordinances, permits, development orders, approvals,
resolutions and orders, including all consent orders.
(b) With respect to the real property described above,
there exists no state of affairs and to Biomet's knowledge
there has occurred no event that currently requires, or is
currently expected to require in the future, reporting or
disclosure by Biomet to any federal, state, local or foreign
agency concerned with environmental protection and management
or land use control or growth management.
(c) Schedule 5.11 contains a list and brief description
of all material written and oral communications between Biomet
and any federal, state or local governmental authority with
respect to any removal, remediation or clean-up required to be
undertaken, the results of any inspection or compliance
review, potential liability arising under or potential
violations of the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response,
Compensation and Liability Act and equivalent state and local
laws, regulations, rules, ordinances and all court and
administrative orders issued pursuant thereto, since
January 1, 1990.
Section 5.12. Brokers' or Finders' Fees. No agent, broker,
investment banker or other person or firm acting on behalf of
Biomet or any of its directors or executive officers, or under the
authority of any of them, is or will be entitled to any broker's or
finder's fee or any other commission or similar fee, directly or
indirectly, from either of the parties hereto in connection with
any of the transactions contemplated hereby.
Section 5.13. Disclosure.
(a) No representation or warranty by Biomet or BAC
contained in this Agreement and no statement made by Biomet or
BAC with respect to a matter of material significance to the
transactions contemplated hereby contained in any certificate
or other instrument delivered or to be delivered with this
Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or
therein not misleading. All information in any Schedule,
Exhibit or any contract delivered on behalf of Biomet or BAC
pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to have been relied upon
by Kirschner and constitute representations and warranties by
Biomet or BAC herein.
(b) None of the information supplied or to be supplied
by Biomet or BAC for inclusion in (i) the Proxy Statement, or
(ii) the Registration Statement, including the Proxy Statement
included therein, will, in the case of the Proxy Statement, at
the time of mailing of the Proxy Statement to the Kirschner
shareholders and at the time of the meeting of such
shareholders to be held in accordance with Section 6.3,
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 are made, not misleading or
will, in the case of the Registration Statement, at the time
the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading. The Registration Statement will comply as to form
in all material respects with the provisions of the Securities
Act and the rules and regulations thereunder, except that no
representation is made by Biomet or BAC with respect to
information supplied by Kirschner for inclusion therein.
Section 5.14. Representations and Warranties as of Date
Hereof. The representations and warranties contained in the
foregoing Sections 5.1 through 5.13 inclusive are made as of the
date hereof, except as otherwise expressly indicated therein.
ARTICLE VI
Certain Pre-Closing Covenants of Kirschner
Kirschner covenants and agrees that between the date hereof
and the Closing:
Section 6.1. Maintenance of Corporate Status. Kirschner
shall be maintained at all times as a corporation validly existing
and in good standing under the laws of the State of Delaware and in
good standing as a foreign corporation in all states in which it is
currently qualified to do business. Except as otherwise provided
in this Agreement, no amendment shall be made to the Restated
Certificate of Incorporation or Bylaws of Kirschner without the
prior written consent of Biomet.
Section 6.2. No Change in Capitalization. No change will be
made in the number of issued and outstanding Kirschner Shares,
other than as a result of the exercise of outstanding warrants or
options to purchase Kirschner Common in accordance with the terms
of such warrants or options, the redemption of the Kirschner Rights
as required by Section 6.7 and the rescission of the grants of
restricted Kirschner Common as may be required by Section 6.8. No
option, warrant or any other right to purchase or to convert any
obligation or security into Kirschner Shares will be sold, issued
or granted by Kirschner. Any obligations to provide Kirschner
Common pursuant to Kirschner's Employee Stock Purchase Plan will be
satisfied by market purchases.
Section 6.3. Shareholders Meeting; Proxy Material. Kirschner
shall cause a meeting of its shareholders to be duly called and
held as soon as practicable following the effectiveness of the
Registration Statement for the purpose of voting on the approval
and adoption of this Agreement and the Merger. The Board of
Directors of Kirschner shall, subject to their fiduciary duties,
recommend approval and adoption of this Agreement and the Merger by
Kirschner's shareholders. In connection with such meeting,
Kirschner:
(a) will cooperate with Biomet in the prompt preparation
of the Registration Statement and use its best efforts to have
the Registration Statement cleared by the SEC, and will
thereafter mail to its shareholders as promptly as practicable
the Proxy Statement and all other solicitation materials for
use in connection with the meeting of shareholders;
(b) will use its best efforts to obtain the necessary
approvals by its shareholders of this Agreement and the
Merger, including without limitation the solicitation of
proxies from Kirschner shareholders voting in favor of the
approval, in compliance with the rules of the SEC under the
Exchange Act; and
(c) will otherwise comply with all legal requirements
applicable to such meeting.
Section 6.4. Operation of the Business. Kirschner shall
operate its business diligently and only in the regular and
ordinary course and manner as it has previously been operated.
Without limiting the generality of the foregoing, Kirschner shall
use all reasonable efforts to (i) preserve its present business
organization intact and conserve its goodwill; (ii) keep available
and maintain the services of all officers, employees, agents and
representatives on the same or substantially the same terms; (iii)
continue and preserve good relationships with suppliers, customers,
lenders and others having business dealings or relationships with
Kirschner; (iv) maintain in full force and effect all Permits
required for the operation of the business as presently conducted;
and (v) maintain and keep in good order, consistent with past
practice, all of Kirschner's tangible assets, ordinary wear and
tear excepted. Kirschner shall not, without the prior written
consent of Biomet: (i) incur any indebtedness to any third party,
except trade payables incurred in the ordinary course of business
consistent with past practices; (ii) declare, set aside or pay any
dividends or other distributions or payments on or in respect of
its outstanding shares, or purchase, redeem or otherwise acquire,
or agree to purchase, redeem or otherwise acquire any Kirschner
Shares other than the redemption of the Kirschner Rights as
required by Section 6.7 and the rescission of the grants of
restricted Kirschner Common as may be required by Section 6.8;
(iii) knowingly do any act or omit any act or permit any omission
to act within its control, which will cause a breach or default in
any of Kirschner's contracts, commitments or obligations; (iv)
except in the ordinary course of business consistent with past
practices, change or increase the rate of compensation paid by
Kirschner to any of its directors, officers, employees or agents,
including without limitation the payment of bonuses and
arrangements for severance pay, or (v) enter into any agreement to
do any of the foregoing.
Section 6.5. Other Offers. From the date of this Agreement
until it is terminated in accordance with Article X, Kirschner
shall not and shall cause its officers, directors, employees and
other agents not to, directly or indirectly, take any action to
solicit, initiate or encourage the making of any Acquisition
Proposal (as hereinafter defined); provided, however, that the
Board of Directors may respond to and conduct negotiations with
respect to any unsolicited Acquisition Proposal from a third party
to the extent necessary to discharge the fiduciary duties of the
Board of Directors to the shareholders of Kirschner. Until this
Agreement shall be terminated in accordance with Article X,
Kirschner will not enter into any agreement to merge or consolidate
with, issue Kirschner Shares to, exchange Kirschner Shares with, or
sell a substantial portion of its assets to, any person or entity.
Kirschner will promptly notify Biomet after receipt of any
Acquisition Proposal or any request for nonpublic information
relating to Kirschner in connection with an Acquisition Proposal or
for access to the personnel, properties, books or records of
Kirschner by any person or entity that informs the Board of
Directors that it is considering making, or has made, an
Acquisition Proposal. The term "Acquisition Proposal" as used
herein means any offer or proposal for, or any indication of
interest in, a merger or other business combination involving
Kirschner or the acquisition of a majority of the equity interest
in, or a majority or the assets of, Kirschner, other than the
transactions contemplated by this Agreement.
Section 6.6. Termination of Option of Figgie International
Inc. Kirschner agrees that, prior to the Effective Time, the
preferential right of Figgie International Inc. ("FII") with
respect to the Merger pursuant to Section 8 of the Manufacturing
and Technology Exchange Agreement dated December 4, 1992 between
Kirschner and FII shall have expired.
Section 6.7. Redemption of Kirschner Rights; Rights
Agreement. Kirschner agrees that, no later than immediately prior
to the Effective Time, it will redeem, in accordance with the terms
of the Rights Agreement, all the outstanding Kirschner Rights at a
redemption price of $.01 per Kirschner Right. Kirschner shall not
amend the Rights Agreement without Biomet's prior written consent.
Section 6.8. Rescission or Amendment of Restricted Stock
Grants. If Biomet elects to pay the Merger Consideration using
Biomet Common Shares and requests that Kirschner rescind all grants
of restricted stock made under the Kirschner 1994 Incentive Stock
Option and Restricted Stock Plan (the "Grants") in order for the
transactions contemplated hereby to be accounted for using the
pooling of interests method of accounting, Kirschner agrees that,
prior to the Closing, it shall use its best efforts to rescind all
such grants of restricted stock in a manner that is acceptable to
Biomet. If Biomet does not request rescission of the Grants,
Kirschner agrees that, prior to the Closing, it shall use its best
efforts to amend the Grants so that they impose the same
restrictions on the Merger Consideration to be paid with respect to
the shares of Kirschner Common covered thereby as they currently
impose on such shares of Kirschner Common; provided, however, that
the Grants shall be amended so that the restrictions imposed
thereby shall lapse prior to the date such restrictions expire only
upon the involuntary termination of the holder's employment by
Biomet or the material reduction by Biomet of the holder's
compensation or employment duties or responsibilities.
Section 6.9. Compliance with the Securities Act. If Biomet
elects to pay the Merger Consideration using Biomet Common Shares,
Kirschner shall use its best efforts to cause each person who is an
"affiliate", as that term is used in paragraphs (c) and (d) of Rule
145 under the Securities Act, of Kirschner to deliver to Kirschner
at or prior to the Effective Time a written agreement to the effect
that such person will not offer to sell, sell or otherwise dispose
of any Biomet Common Shares issued in the Merger, except, in each
case, pursuant to an effective registration statement or in
compliance with Rule 145, as amended from time to time, or in a
transaction that, in the opinion of legal counsel satisfactory to
Biomet, is exempt from the registration requirements of the
Securities Act.
Section 6.10. Taxes. Kirschner shall timely file all Tax
reports and Returns required to be filed with the United States
government, with the State of Maryland and with each other state or
other jurisdiction wherein the nature of its activities is such as
to require the filing thereof, and shall promptly pay, when due,
all federal, state, local and foreign taxes, assessments,
governmental charges, fees, interest and penalties lawfully levied
or assessed upon it or its properties.
Section 6.11. Access; Review. Kirschner shall provide to
Biomet, its attorneys, accountants, appraisers and other authorized
representatives or retained experts full and complete access upon
reasonable notice to all the premises, books, records, personnel
and income tax returns of or relating to Kirschner during normal
business hours and shall furnish to such persons such financial and
operating data and other information as Biomet or such persons may
from time to time reasonably request. In addition, Kirschner shall
authorize its independent certified public accountants to give
Biomet's independent certified public accountants access to books
and records and work papers regarding Kirschner's financial
statements. Kirschner shall make available to Biomet, its counsel,
accountants, appraisers and other authorized representatives or
retained experts all work papers in Kirschner's possession (or that
of a representative thereof) related to any audits of Kirschner.
Kirschner shall also make available any work papers in Kirschner's
possession (or that of any representative thereof) pertaining to
any tax returns of Kirschner. Kirschner shall deliver to Biomet
all internal reports relating to the operations of its business as
such reports are made available to the management of Kirschner. No
investigation, test, examination or inquiry by Biomet shall affect
the representations and warranties contained in this Agreement.
Section 6.12. Insurance. Kirschner shall maintain the types
and levels of insurance currently in effect to insure its assets
and its business against the risk of loss or damage attributable to
casualty, storm, fire, theft, burglary or riot.
Section 6.13. Monthly Financial Statements. On or prior to
the twenty-fifth day of each calendar month, Kirschner shall
deliver to Biomet copies (initialed by Kirschner's chief financial
officer and identified with a reference to this Section 6.13) of
unaudited monthly balance sheets of Kirschner and unaudited
statements of income for the month then ended (the "monthly
statements"), prepared in a manner consistent with that used in
preparing the unaudited financial statements included in
Kirschner's Form 10-Q reports, all of which when delivered, shall
be complete and correct, prepared from the books and records of
Kirschner in accordance with generally accepted accounting
principles (except for the omission of notes thereto) consistently
applied and maintained throughout such months, and shall fairly
present the financial condition of Kirschner as at their respective
dates and the results of the operations of its business for the
months covered thereby.
Section 6.14. Approvals, Notices and Consents. Promptly
after the execution of this Agreement, Kirschner shall file all
forms, applications and reports, including without limitation all
filings under the HSR Act, and take such other action which is
required to be taken or filed with any governmental agency or
authority in connection with the transactions contemplated by this
Agreement. Kirschner shall cooperate with Biomet in promptly
producing such additional information as those authorities may
require to allow early termination of the notice period provided by
the HSR Act or as otherwise necessary to comply with statutory
requirements and requests of the Federal Trade Commission or the
Department of Justice. Kirschner shall give all additional notices
to third parties and take such other action required to be given or
taken by it under any authorization, lease, note, mortgage,
indenture, agreement or other instrument or any law, rule,
regulation, demand or court or administrative order in connection
with the transactions contemplated by this Agreement, and shall use
its best efforts to obtain all consents and approvals necessary to
enable it to consummate the transactions contemplated by this
Agreement.
Section 6.15. Kirschner's Actions; Supplements to
Representations and Warranties. From the date of this Agreement
through the Closing, (a) Kirschner shall use its best efforts to
cause the conditions to the obligations of Kirschner set forth in
Article IX to be satisfied to the extent that the satisfaction of
such conditions is within the control of Kirschner; provided,
however, the foregoing shall not constitute a limitation upon the
covenants and obligations of Kirschner otherwise set forth in this
Agreement; (b) Kirschner shall not take any action or omit to take
any action within its control to the extent such action or omission
might result in a breach of any term or condition of this Agreement
or in any representation or warranty contained in this Agreement
being inaccurate or incorrect on and as of the Closing Date; and
(c) Kirschner shall deliver to Biomet, as soon as possible after
discovery thereof, but not later than at the Closing, supplemental
information updating the information set forth in the
representations and warranties of Kirschner set forth in this
Agreement to reflect subsequent occurrences, if any, (along with a
notice stating the representations and warranties, including the
schedules referred to therein, to which such supplemental
information relates) so that such representations and warranties as
supplemented by such information will be true and correct as of the
Closing as if then made. The foregoing provisions shall not be
deemed to permit any transaction between the date hereof and the
Closing not otherwise contemplated or permitted by this Agreement
nor shall any action taken by Kirschner pursuant to the foregoing
provisions impair the exercise by Biomet of its rights as set forth
in Section 10.2.
Section 6.16. Notice of Material Adverse Change. Kirschner
shall promptly advise Biomet in writing of any claim made, or the
institution of any litigation against or relating to, or of any
material adverse change in Kirschner, its assets or the financial
condition, results of operations, businesses or properties of
Kirschner.
Section 6.17. Cooperation. Kirschner shall generally
cooperate with Biomet and its officers, employees, attorneys,
accountants and other agents and, generally, do such other acts and
things in good faith as may be reasonable, necessary, or
appropriate to timely effectuate the intents and purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
ARTICLE VII
Certain Pre-Closing Covenants of Biomet
Biomet covenants and agrees that between the date hereof and
the Closing:
Section 7.1. Required Consents and Approvals. It shall use
all reasonable efforts to obtain all consents and approvals
necessary to enable it to consummate the transactions contemplated
by this Agreement.
Section 7.2. Premerger Notification. It shall file with the
proper authorities all forms and other documents necessary to be
filed pursuant to the HSR Act and regulations issued thereunder as
promptly as possible and shall cooperate with Kirschner in promptly
producing such additional information as such authorities may
require to allow early termination of the notice period provided by
the HSR Act or as otherwise necessary to comply with statutory
requirements and requests of the Federal Trade Commission or the
Department of Justice.
Section 7.3. Registration Statement; NASDAQ-NMS
Listing. Unless Biomet elects to pay the Merger Consideration
using cash,
(a) Biomet shall promptly prepare and file with the SEC
under the Securities Act the Registration Statement and shall
use all reasonable efforts to cause the Registration Statement
to be declared effective as promptly as practicable. Biomet
shall take all reasonable action required to be taken under
applicable state securities or Blue Sky laws in connection
with the issuance of Biomet Common Shares and Biomet Rights in
the Merger.
(b) Biomet shall take all such action as is reasonably
necessary to qualify the Biomet Common Shares to be issued in
the Merger for quotation in NASDAQ-NMS, effective upon notice
of issuance.
(c) Biomet as the sole shareholder of BAC shall vote to
approve or consent in writing to the approval of this
Agreement and the Merger. Subject to the satisfaction of the
conditions to Biomet's obligations set forth in Article VIII,
Biomet shall cause BAC to execute and deliver all documents
reasonably considered necessary for the consummation of the
transactions contemplated hereby.
Section 7.4. Notice of Material Adverse Change. Biomet shall
promptly advise Kirschner in writing of any claim made, or the
institution of any litigation against or relating to, or of any
material adverse change in Biomet, its assets or the financial
condition, results of operations, businesses or properties of
Biomet.
Section 7.5. Cooperation. Biomet shall generally cooperate
with Kirschner and its officers, employees, attorneys, accountants
and other agents, and, generally, do such other acts and things in
good faith as may be reasonable, necessary or appropriate to timely
effectuate the intents and purposes of this Agreement and the
consummation of the transactions contemplated hereby.
ARTICLE VIII
Conditions Precedent to the Performance of Biomet
The obligations of Biomet pursuant to the terms of this
Agreement are subject to the satisfaction, at the Closing, of each
of the following conditions:
Section 8.1. Accuracy of Representations and Warranties of
Kirschner. Each of the representations and warranties of Kirschner
contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force
and effect as if made at and as of the Closing Date. For purposes
of this Section 8.1, all references in such representations and
warranties to "the date hereof," "the date of this Agreement" and
like language shall mean the Closing Date.
Section 8.2. Compliance. Kirschner shall have performed,
complied with and fulfilled in all material respects all the
covenants, agreements, obligations and conditions required by this
Agreement to be performed, complied with or fulfilled by it at or
prior to the Closing.
Section 8.3. Corporate Approval. The execution and delivery
of this Agreement by Kirschner, and the performance of Kirschner's
covenants and obligations hereunder, shall have been duly
authorized by all necessary corporate action on the part of
Kirschner.
Section 8.4. Consents and Approvals. All consents,
approvals, orders and authorizations necessary to the consummation
by Kirschner of the transactions contemplated by this Agreement, or
necessary or appropriate or otherwise pertaining to the matters
covered by this Agreement shall have been obtained on terms and
conditions reasonably satisfactory to Biomet.
Section 8.5. Cancellation or Amendment of Restricted Stock
Grants. If Biomet elects to pay the Merger Consideration using
Biomet Common Shares and makes the request described in Section
6.8, Kirschner shall have recovered all Kirschner Shares that are
the subject of the Grants in a manner that is acceptable to Biomet.
If such a request is not made (regardless of the form of the Merger
Consideration), the terms of the Grants shall have been amended as
described in Section 6.8.
Section 8.6. Authorizations. All permits, authorizations,
approvals and consents of and notices to any federal, state or
local governmental body, agency or authority or any other third
party, which may be required by law, regulation, rule, ordinance,
order, decree, agreement, indenture, lease or other instrument or
document to which Kirschner is a party or by which it or its assets
are bound or which Biomet may otherwise require in connection with
the execution of this Agreement or effectuation of the transactions
contemplated by this Agreement shall have been obtained and made by
Kirschner.
Section 8.7. Due Diligence Examination. Biomet shall have
completed an inspection and examination of the assets, business,
records, financial condition and results of operations of Kirschner
and shall not have notified Kirschner on or prior to August 6, 1994
that as a result of such inspection and examination Biomet
discovered facts or circumstances, not previously disclosed by
Kirschner to Biomet, which Biomet reasonably believes have had or
are likely to have a material adverse effect upon the assets,
business, financial condition or results of operations of Kirschner
and its subsidiaries, taken as a whole. It is understood and
agreed that any and all information set forth on any Schedule to
this Agreement shall not limit or preclude further investigation of
the matters disclosed, nor shall such disclosure operate as a
limitation or waiver of Biomet's rights hereunder.
Section 8.8. Litigation. No order, decree or ruling of any
governmental authority or court shall have been entered, and no
governmental or other action, suit, claim, investigation or
proceeding shall be pending or threatened, against any of
Kirschner, Biomet, BAC or their respective officers or directors,
pertaining to the transactions contemplated by this Agreement,
including but not limited to any action, suit or claim by Orthomet.
Section 8.9. No Material Adverse Change. In the judgment of
Biomet, between August 6, 1994 and the Closing, there shall not
have been any material adverse change or any event which is likely
to result in any material adverse change in the assets, business,
financial condition or results of operations of Kirschner and its
subsidiaries, taken as a whole.
Section 8.10. Closing Deliveries. Biomet shall have received
from Kirschner all of the instruments, documents and considerations
described in Section 11.2, and the form and substance of all such
deliveries shall be reasonably satisfactory in all material
respects to Biomet.
ARTICLE IX
Conditions Precedent to Performance of Kirschner
The obligations of Kirschner pursuant to the terms of this
Agreement are subject to the satisfaction, at the Closing, of each
of the following conditions:
Section 9.1. Accuracy of Representations and Warranties of
Biomet and BAC. Each of the representations and warranties of
Biomet and BAC contained in this Agreement shall be true and
correct in all material respects at the Closing with the same force
and effect as if made at the Closing. For purposes of this Section
9.1, all references in such representations and warranties to "the
date hereof," "the date of this Agreement" and like language shall
mean the Closing Date.
Section 9.2. Compliance. Biomet and BAC each shall have
performed, complied with and fulfilled in all material respects all
the covenants, agreements, obligations and conditions required by
this Agreement to be performed, complied with or fulfilled by it at
or prior to the Closing.
Section 9.3. Corporate Approval. The execution and delivery
of this Agreement by Biomet and BAC, and the performance by Biomet
and BAC of all of their respective covenants and obligations
hereunder and thereunder, shall have been duly authorized by all
necessary corporate action on the part of Biomet and BAC.
Section 9.4. Consents and Approvals. Kirschner shall have
received, upon terms and conditions satisfactory to it, all
consents, approvals, orders and authorizations necessary to the
consummation by Kirschner of the transactions contemplated by this
Agreement.
Section 9.5. Registration Statement. If Biomet elects to pay
the Merger Consideration using Biomet Common Shares, the
Registration Statement shall have become effective under the
Securities Act and the Biomet Common Shares and Biomet Rights to be
issued in the Merger shall have become qualified or registered (or
shall be exempt from qualification or registration under)
comparable state securities laws, and at or prior to the Effective
Time no stop order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Biomet Common
Shares and Biomet Rights to be issued in the Merger under the Blue
Sky laws of any jurisdiction shall have been issued and no
proceeding for that purpose shall have been initiated or shall be
threatened or contemplated by the SEC or the authorities of any
such jurisdictions, and the Biomet Common Shares shall be eligible
for quotation in NASDAQ-NMS upon notice of issuance.
Section 9.6. Roll-over of Kirschner Stock Options. Biomet
shall have made provision for (a) the issuance to each person other
than the directors of Kirschner holding, as of the Effective Time,
an unexercised option to purchase Kirschner Common granted pursuant
to any stock option plan of Kirschner an option to purchase Biomet
Common Shares pursuant to the Biomet Employee Stock Option Plan,
(b) the issuance to directors of Kirschner who hold, as of the
Effective Time, unexercised options to purchase Kirschner Common an
option to purchase nonregistered Biomet Common Shares and (c) the
issuance to the holder of the Kirschner Warrant a warrant to
purchase Biomet Common Shares, in each case on terms and conditions
that shall preserve to the extent possible the benefit held by each
such optionee, director and warrant holder, as the case may be, as
of the Effective Time.
Section 9.7. Litigation. No order, decree or ruling of any
governmental authority or court shall have been entered, and no
governmental or other action, suit, claim, investigation or
proceeding shall be pending or threatened, pertaining to the
transactions contemplated by this Agreement.
Section 9.8. Due Diligence Examination. Kirschner shall have
completed an inspection and examination of the assets, business,
records, financial condition and results of operations of Biomet
and shall not have notified Biomet on or prior to July 23, 1994
that as a result of such inspection and examination Kirschner
discovered facts or circumstances, not previously disclosed by
Biomet to Kirschner, which Kirschner reasonably believes have had
or are likely to have a material adverse effect upon the assets,
business, financial condition or results of operations of Biomet
and its subsidiaries, taken as a whole. It is understood and
agreed that any and all information set forth on any Schedule to
this Agreement shall not limit or preclude further investigation of
the matters disclosed, nor shall such disclosure operate as a
limitation or waiver of Kirschner's rights hereunder.
Section 9.9. No Material Adverse Change. In the judgment of
Kirschner, between July 23, 1994 and the Closing, there shall not
have been any material adverse change or any event which is likely
to result in any material adverse change in the assets, business,
financial condition or results of operations of Biomet and its
subsidiaries, taken as a whole.
Section 9.10. HSR Act Waiting Periods. Biomet and Kirschner
shall have filed all notifications required by the HSR Act with the
Department of Justice and the Federal Trade Commission and the
applicable waiting periods with respect thereto (including any
extension thereof by reason of a request for additional
information) shall have expired or been terminated.
Section 9.11. Fairness Opinion. Kirschner shall have
received an opinion from Dain Bosworth Incorporated to the effect
that the Merger is fair to the shareholders of Kirschner from a
financial point of view.
Section 9.12. Closing Deliveries. Kirschner shall have
received from Biomet all of the instruments, documents and
considerations described in Section 11.3, and the form and
substance of all such deliveries shall be reasonably satisfactory
in all material respects to Kirschner.
ARTICLE X
Termination
Section 10.1. Termination by Mutual Agreement. This
Agreement may be terminated by the mutual agreement in writing of
the parties hereto at any time prior to the Closing.
Section 10.2. Termination by Biomet. This Agreement and any
obligations of Biomet hereunder (other than its obligations under
Section 13.4 and the Confidentiality Agreement referred to in
Section 13.2) may be terminated upon written notice to that effect
by Biomet at any time prior to or at the Closing, if in the
judgment of Biomet (a) Kirschner shall have breached or failed to
perform in any material respect any of its covenants or obligations
under this Agreement; (b) any representation or warranty of
Kirschner contained in this Agreement is false or misleading in any
material respect; or (c) any other material condition precedent to
Biomet's performance of its obligations under this Agreement is not
capable of being met.
Section 10.3. Termination by Kirschner. This Agreement and
any obligations of Kirschner hereunder (other than its obligations
under Section 13.4 and the Confidentiality Agreement referred to in
Section 13.2) may be terminated upon written notice to that effect
by Kirschner at any time prior to or at the Closing if in the
judgment of Kirschner (a) Biomet shall have breached or failed to
perform in any material respect any of its covenants or obligations
under this Agreement; (b) any representation or warranty of Biomet
contained in this Agreement is false or misleading in any material
respect; (c) any other material condition precedent to Kirschner's
performance of its obligations under this Agreement is not capable
of being met; or (d) the appropriate discharge of the fiduciary
duties of its Board of Directors consistent with Section 6.5
requires Kirschner to terminate this Agreement.
Section 10.4. Effect of Termination on Certificate of
Merger. Unless otherwise provided in the Certificate of Merger,
the termination of this Agreement shall also terminate the
effectiveness of the Certificate of Merger.
Section 10.5. Final Termination. This Agreement and all
obligations of the parties hereunder (other than the parties
obligations under Section 13.4 and the Confidentiality Agreement
referred to in Section 13.2) shall be terminated if the Merger has
not been consummated by December 31, 1994.
ARTICLE XI
The Closing
Section 11.1. Time and Place. The closing of the
transactions contemplated by this Agreement shall take place at the
offices of Ice Miller Donadio & Ryan, One American Square, 34th
Floor, Indianapolis, Indiana, at 10:00 a.m. Indianapolis time on
the next business day following the date of the Kirschner
shareholders meeting held pursuant to Section 6.3, or on such other
date as the parties hereafter agree (the "Closing").
Section 11.2. Deliveries to Biomet at the Closing. At the
Closing, and simultaneously with the deliveries to Kirschner
specified in Section 11.3, Kirschner shall deliver or cause to be
delivered to Biomet the following:
(a) Certificates of the President and Chief Financial
Officer of Kirschner as to the accuracy of its representations
and warranties contained in this Agreement and as to its
compliance with and fulfillment of all covenants, agreements,
obligations and conditions required by this Agreement.
(b) Copies of all resolutions adopted by the Board of
Directors and the shareholders of Kirschner authorizing the
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, together with a
certificate, duly executed by the Secretary of Kirschner,
stating that such copies are true, complete and correct, and
that the resolutions have been duly adopted by the Board of
Directors and the shareholders, as the case may be, have not
been amended since adoption, and remain in full force and
effect.
(c) Copies of all consents and approvals required to be
obtained pursuant to Section 8.4.
(d) An opinion of Manatt Phelps & Phillips, counsel to
Kirschner, dated the Closing Date, in the form of Exhibit
11.2(d).
(e) Agreements between the Surviving Corporation and
each of C. Scott Harrison, Warren M. Gitt, Nicholas L.
Gounaris, Lewis E.S. Parker and Roger Van Broeck, containing
terms consistent with those set forth on Schedule 11.2(e) and
such other terms and conditions as to which the parties may
mutually agree.
(f) The resignations of the directors of Kirschner,
dated as of the Closing.
(g) If required by Section 6.9, the written agreements
described in Section 6.9 from each "affiliate" of Kirschner
referred to in such Section.
Section 11.3. Deliveries to Kirschner at the Closing. At the
Closing, and simultaneously with the deliveries to Biomet specified
in Section 11.2, Biomet shall deliver or cause to be delivered to
Kirschner the following:
(a) Certificates of the President and Chief Financial
Officer of Biomet as to the accuracy of its representations
and warranties contained in this Agreement and as to its
compliance with and fulfillment of all covenants, agreements,
obligations and conditions required by this Agreement.
(b) Copies of all consents and approvals required to be
obtained pursuant to Section 9.4.
(c) An opinion of Ice Miller Donadio & Ryan, counsel to
Biomet, dated the Closing Date, in the form of
Exhibit 11.3(c).
ARTICLE XII
Additional Agreements
Section 12.1. Confidentiality. Biomet and Kirschner agree
that the confidentiality agreement dated June 29, 1994 between them
shall remain in full force and effect at all times prior to the
Effective Time and after any termination of this Agreement, and
each agrees to comply with the terms of that agreement.
Section 12.2. Employee Benefit Matters. Biomet and BAC agree
to continue in full force and effect the Pension Plans and Welfare
Benefit Plans of Kirschner referred to in Schedule 4.20 and
existing at the Effective Time until those employees of Kirschner
who become employees of the Surviving Corporation in the Merger
become eligible to participate in the employee benefit plans of
Biomet. Biomet will recognize such transferred employees' service
with Kirschner or any Common Control Entity for purposes of
eligibility and vesting under such Biomet plans. Nothing set forth
in this Agreement shall be construed to impose any obligation on
Biomet or BAC to continue the employment of any person after the
Effective Time or give any person any rights to such employment.
Section 12.3. Directors' and Officers' Liability
Insurance. From the Effective Time to the fourth anniversary of
the Effective Time, Biomet shall provide continuing insurance
coverage (which may include a self-insurance program) for directors
and officers of Kirschner immediately prior to the Effective Time
in amounts, with deductibles, retentions and exclusions and
insuring against such risks as Kirschner's directors' and officers'
liability insurance policy provides on the date of this Agreement,
and shall cause the Surviving Corporation to assume the obligation
of Kirschner to pay or provide for the amount of any applicable
deductible or retention, consistent with Kirschner's historical
practice.
ARTICLE XIII
Miscellaneous Provisions
Section 13.1. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.
Section 13.2. Entire Agreement. This Agreement and the
Confidentiality Agreement between the parties dated June 29, 1994
constitute the entire agreement among the parties pertaining to the
subject matter contained herein and therein and supersede all other
prior and contemporaneous agreements, representations and
understandings of the parties.
Section 13.3. Exhibits and Schedules. All exhibits and
schedules attached to this Agreement are incorporated herein and
made a part hereof in the same manner as if such exhibits and
schedules were set forth at length herein.
Section 13.4. Expenses. Each of the parties shall pay all
costs and expenses incurred or to be incurred by it in negotiating
and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement, except as otherwise
expressly provided for herein.
Section 13.5. Gender. Any reference to the masculine gender
shall be deemed to include the feminine and neuter genders unless
the context otherwise requires.
Section 13.6. Governing Law. This Agreement and all
transactions contemplated hereby shall be governed, construed and
enforced in accordance with the laws of the State of Indiana,
notwithstanding any state's choice of law rules to the contrary.
Section 13.7. Headings. The subject headings of the articles
and sections of this Agreement are included for purposes of
convenience only, and shall not affect the construction or
interpretation of any of its provisions.
Section 13.8. Modification and Waiver. No supplement,
modification or amendment of this Agreement shall be binding unless
executed in writing by the parties. The party for whose benefit a
warranty, representation, covenant or condition is intended may in
writing waive any inaccuracies in the warranties and
representations contained in this Agreement or waive compliance
with any of the covenants or conditions contained herein and so
waive performance of any of the obligations of the other party
hereto, and any defaults hereunder; provided, however, that such
waiver shall not affect or impair the waiving party's rights with
respect to any other warranty, representation or covenant or any
default hereunder, nor shall any waiver constitute a continuing
waiver.
Section 13.9. Notices. All notices, requests, demands,
waivers and other communications required to be given under this
Agreement shall be in writing and shall be deemed to have been duly
given on (a) the date of service if served personally on the party
to whom notice is to be given, (b) the date sent if given by
telegram, confirmed facsimile transmission or telex addressed to
the party to whom notice is to be given or (c) the third day after
mailing if mailed to the party to whom notice is to be given by
certified mail, return receipt requested, and properly addressed as
follows:
If to Biomet:
Dr. Dane A. Miller
Biomet, Inc.
P.O. Box 587
Airport Industrial Park
Warsaw, Indiana 46581
Fax: (219) 267-8137
With a copy to:
Berkley W. Duck
Ice Miller Donadio & Ryan
Box 82001
One American Square
Indianapolis, Indiana 46282
Fax: (317) 236-2219
If to Kirschner:
Dr. C. Scott Harrison
Kirschner Medical Corporation
9690 Deereco Road
Timonium, Maryland 21093
Fax: (410) 560-3376
With a copy to:
Peter R. Gilbert
Manatt Phelps & Phillips
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Fax: (202) 463-4394
Any party may change the address to which notice is to be sent or
the telephone number for facsimile transmission pursuant to this
Section 13.9 by giving written notice thereof in compliance with
this section.
Section 13.10. Press Releases. Biomet and Kirschner shall
consult with each other with respect to the form and substance of
any press release or other public disclosure of matters related to
this Agreement or any of the transactions contemplated hereby.
Section 13.11. Rights of Parties. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any person other
than the parties to it and their respective successors and assigns,
nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third person to any party to
this Agreement, nor shall any provision give any third person any
right of subrogation or action over or against any party to this
Agreement.
Section 13.12. Successors. This Agreement shall be binding
on, and shall inure to the benefit of, the parties and their
respective successors and assigns.
Section 13.13. Non-Survival of Representations and
Warranties. The representations and warranties of the parties made
herein shall expire at the Effective Time. After the Effective
Time, no party to this Agreement shall be entitled to initiate any
legal action at law or in equity which is directly or indirectly
related to or based upon a breach of such representations or
warranties.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
BIOMET, INC.
By: /s/ Dane A. Miller
Dane A. Miller, Ph.D.
President and Chief Executive
Officer
Attest: /s/ Daniel P. Hann
Daniel P. Hann
Secretary
BIOMET ACQUISITION CORP.
By: /s/ Dane A. Miller
Dane A. Miller, Ph.D.
President
Attest: /s/ Daniel P. Hann
Daniel P. Hann
Secretary
KIRSCHNER MEDICAL CORPORATION
By: /s/ C. Scott Harrison
C. Scott Harrison, M.D.
President and Chief Executive
Officer
Attest: /s/ Nicholas L. Gounaris
Nicholas L. Gounaris
Secretary
Agreement and Plan of Merger
By and Among
Biomet, Inc.
Biomet Acquisition Corporation and
Kirschner Medical Corporation
Schedule 11.2(e)
The terms of the agreements referenced in Section 11.2(e)
shall include the following:
1. Agreement by the named individual not to engage,
directly or indirectly, in competition with Biomet or the
Surviving Corporation or their respective subsidiaries during
the term of their employment by the Surviving Corporation.
2. If the named individual voluntarily terminates his
employment at any time prior to the first anniversary of the
Effective Time (the "Anniversary"), Biomet may, at its
election, enforce the noncompetition covenant for a one-year
period following the date of termination of employment (the
"Noncompetition Period"). If the covenant is enforced, Biomet
will pay the individual an amount equal to his base salary as
of the date of termination of employment, such amount to be
paid monthly during the Noncompetition Period.
3. If the named individual's employment is terminated
by Biomet prior to the Anniversary, the noncompetition
covenant shall continue in effect for the Noncompetition
Period and Biomet will pay the individual an amount equal to
his base salary as of the date of termination of employment,
such amount to be paid monthly during the Noncompetition
Period.
4. The geographic area to be included in the noncompete
will be North America and, in the case of Mr. Van Broeck,
North America and Western Europe.
5. Customary provisions regarding specific enforcement
of the agreements and such other provisions as the parties
shall agree shall also be included.
