UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
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 __. (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
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ___
(b) _X_
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D)OR 2(E) ___
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
685,222
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
685,222
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
SCHEDULE 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kirschner Acquisition Corp. 35-1928713
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ___
(b) _X_
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D)OR 2(E) ___
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
685,222
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
685,222
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Item 4. Purpose of Transaction
As of July 16, 1994, Biomet, Inc. ("Biomet"), Biomet
Acquisition Corp. ("BAC"), a wholly-owned subsidiary of Biomet,
and Kirschner Medical Corporation ("Kirschner") entered into an
Agreement and Plan of Merger. On September 15, 1994, Biomet,
BAC, Kirschner and Kirschner Acquisition Corp. ("KAC") entered
into a First Amendment to the Agreement and Plan of Merger. The
Agreement and Plan of Merger, as amended by the First Amendment
is hereinafter referred to as the "Merger Agreement". As
amended, the Merger Agreement provides that KAC, also a wholly-
owned subsidiary of Biomet formed for purposes of the Merger, is
substituted for BAC as a party to the Merger Agreement and is
granted all of the rights and shall be responsible for the
performance of all of the obligations of BAC as described in the
Merger Agreement. BAC has been released and discharged from any
and all obligations under the Merger Agreement.
The Merger Agreement provides for the survival of KAC as a
result of the Merger whereby Kirschner will be merged with and
into KAC in the event Biomet elects to pay the Merger
consideration by delivering (1) Biomet Common Shares in exchange
for 50% of the outstanding Kirschner Common Shares (other than
Kirschner Common Shares held by Biomet, KAC or their respective
subsidiaries) (the "Converted Kirschner Shares") and (2) cash in
exchange for the remaining 50% of the Converted Kirschner Shares
in the amount of $10.75 per share (the "Stock Election"). Biomet
exercised the Stock Election on September 28, 1994.
The number of Biomet Common Shares to be delivered will be
determined by multiplying the number of Converted Kirschner
Shares to be exchanged for Biomet Common Shares by a fraction
(the "Conversion Ratio") the numerator of which is $10.75 and the
denominator of which is 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 of the Merger (the
"Average Price"); provided, however, that in no event shall the
Conversion Ratio be less than 0.9.
As of the Effective Time, the Kirschner Common Shares will
no longer represent any interest in the equity of Kirschner, and
all certificates formerly representing Kirschner Common Shares
shall be deemed cancelled and shall represent only the right to
receive the Merger consideration.
The holders of the Converted Kirschner Shares as of 12:01
a.m. on the date immediately following the date of filing of a
Certificate of Merger with the Delaware Secretary of State (the
"Effective Time") (other than (a) Kirschner Common Shares
subject, as of the Effective Time, to restrictions set forth in
grants of restricted stock ("Restricted Kirschner Shares") made
under the Kirschner 1994 Incentive Stock Option and Restricted
Stock Plan (the "Kirschner Plan") and (b) Kirschner Common Shares
held by persons who properly exercise their statutory rights to
appraisal ("Dissenting Shareholders") will, by virtue of the
Merger and without any action on the part of Kirschner, be
entitled to receive, at the election of each Kirschner
shareholder and subject to the conditions and limitations set
forth in Merger Agreement, either (i) all cash in the amount of
$10.75 per share, or (ii) all Biomet Common Shares, or (iii) a
combination of cash and Biomet Common Shares. Each Kirschner
Common Share as to which a valid shareholder election to receive
Biomet Common Shares is made ("Electing Shares") will be
converted in the Merger into the greater of (i) the number of
Biomet Common Shares determined by dividing $10.75 by the Average
Biomet Price, or (ii) 0.9 Biomet Common Shares. Except as
described below, each Kirschner Common Share as to which a
shareholder election to receive Biomet Common Shares is not
properly made will be converted into the right to receive cash in
the amount of $10.75 per share.
Restricted Kirschner Shares will be converted into Biomet
Common Shares on the basis described above. Kirschner Common
Shares held by Dissenting Shareholders will not be converted into
the Merger consideration unless and until the Dissenting
Shareholders shall withdraw the demand for payment or shall fail
to establish the right to payment of the value of those shares as
provided by Delaware law.
If the aggregate number of Biomet Common Shares which would
be issuable in exchange for Electing Shares (the "Requested
Shares") exceeds the number of Biomet Common Shares to be
delivered as part of the Merger consideration (the "Delivered
Shares"), then each holder of Electing Shares will be entitled to
receive Biomet Common Shares for that number of whole Electing
Shares determined by multiplying the number of Delivered Shares
by a fraction, the numerator of which is the number of Electing
Shares held by the particular Kirschner shareholder and the
denominator of which is the number of all Electing Shares. Each
Electing Share not converted into Biomet Common Shares will be
converted into the right to receive cash in the amount of $10.75
per share.
If the number of Delivered Shares exceeds the number of
Requested Shares, the Delivered Shares shall be distributed first
to the holders of Restricted Kirschner Shares issued pursuant to
the Kirschner Plan; then to the holders of Kirschner Common
Shares as to which no shareholder election is properly made, in
the order determined by random lot; and finally to the holders of
Kirschner Common Shares as to which a shareholder election to
receive cash is properly made, in the order determined by random
lot, each such holder to receive Delivered Shares with respect to
one-half of the Merger consideration to which that holder is
entitled and cash with respect to the remainder of the Merger
consideration to which that holder is entitled.
If the sum of the amount of cash which would be payable to
Dissenting Shareholders at the rate of $10.75 per share would
exceed the amount of cash which would be delivered by Biomet
under the provisions of the Stock Election, the Stock Election
shall automatically be revoked and the Merger consideration shall
be paid in cash at the rate of $10.75 per Kirschner Common Share
in accordance with the Merger Agreement as if the Stock Election
had not been made and KAC shall merge with and into Kirschner.
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 Merger, and (assuming
payment of the Note when due November 1, 1995 at face value) to
reduce the total amount of consideration ultimately paid by
Biomet pursuant to the Merger Agreement, if the Merger is
consummated.
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 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 a third-party acquisition of Kirschner should
occur prior to Closing. The Deposit may be applied by Kirschner
as of August 30, 1994 to repay amounts outstanding under its
revolving credit facility with First Union Commercial Corporation
dated May 26, 1994.
The Merger Agreement provides that consummation of the
Merger is contingent upon the fulfillment or waiver of certain
conditions, including but not limited to, the following: (1) the
expiration of a preferential right of Figgie International, Inc.
to purchase certain Kirschner technology; (2) the redemption of
all outstanding rights to purchase Kirschner Common Shares under
Kirschner's Shareholder Rights Plan, or the amendment of the
Shareholder Rights Plan so that the Kirschner Rights do not
become exercisable as a result of the Merger; (3) the amendment
of the terms of certain outstanding grants of Restricted
Kirschner Shares to impose certain additional conditions on the
elimination of the restrictions on the Biomet Common Shares to be
issued in replacement of the Restricted Kirschner Shares; (4) the
assumption by Biomet of Kirschner's obligations with respect to
its outstanding incentive stock options, and the issuance by
Biomet of new options to C. Scott Harrison and to other members
of management of Kirschner (the "Kirschner Managers"); (5) the
execution by the Kirschner Managers of non-compete agreements;
(6) the completion by Biomet and Kirschner to its satisfaction of
a due diligence review of the other; (7) the absence of any
material adverse change in the financial condition of Kirschner
or Biomet; (8) the expiration or termination of the waiting
period under Title II of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended; (9) the continued
effectiveness of the Registration Statement under applicable
federal and state securities laws and the eligibility of Biomet
Common Shares to be issued in the Merger for quotation on NASDAQ-
NMS upon notice of issuance; (10) receipt by Kirschner of an
opinion from Dain Bosworth that the Merger is fair to Kirschner's
shareholders from a financial point of view; (11) the approval of
the Merger by Kirschner's shareholders and by Biomet, as sole
stockholder of KAC; and (12) receipt by Kirschner and Biomet of a
legal opinion to the effect that the Merger will be treated as a
qualifying reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended.
The Board of Directors of Biomet, the KAC and Kirschner have
approved the Merger. The question of approval of the Merger is
expected to be submitted to a vote of the Kirschner shareholders
at a meeting to be held November 4, 1994. The Closing is expected
to occur on the next business day following the Kirschner
shareholders meeting.
Other than provided for the transaction provided for in the
Merger Agreement and the transaction provided for in the Purchase
Agreement described in response to Item 6, neither Biomet nor KAC
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.
The foregoing is qualified in its entirety by reference to
the Agreement and Plan of Merger, a copy of which was included as
part of the Schedule 13D filed on August 20, 1994, and a copy of
the First Amendment, a copy of which is included herewith as
Exhibit A.
Item 7. Material to be Filed as Exhibits
Page in Sequential
Description of Exhibits Numbering System
----------------------- ------------------
Purchase Agreement dated August 12,
1994 by and between Figgie
International, Inc. and Kirschner
Acquisition Corp. (1)
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. (1)
First Amendment to Agreement and
Plan of Merger by and among Biomet,
Inc., Biomet Acquisition Corp. and
Kirschner Medical Corporation,
dated September 15, 1994. (2)
_____________________________
1 Included as part of the Schedule 13D filed on
August 20, 1994.
2 Included herewith.
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: October 4, 1994 By: /s/ Gregory D. Hartman
Gregory D. Hartman
Vice President (Finance)
KIRSCHNER ACQUISITION CORP.
Date: October 4, 1994 By: /s/ Gregory D. Hartman
Gregory D. Hartman, Treasurer
EXHIBIT A
First Amendment
to
Agreement and Plan of Merger
by and among
Biomet, Inc.
Biomet Acquisition Corp.
and
Kirschner Medical Corporation
Dated
September 15, 1994
FIRST AMENDMENT
to
AGREEMENT AND PLAN OF MERGER
This First Amendment (the "First Amendment") to the
Agreement and Plan of Merger dated July 16, 1994 (the
"Agreement"), by and among Biomet, Inc., an Indiana corporation
("Biomet"), Biomet Acquisition Corporation, a Delaware
corporation ("BAC") and Kirschner Medical Corporation, a Delaware
corporation ("Kirschner") is made and entered into as of this
15th day of September, 1994 by and among Biomet, BAC, Kirschner
and Kirschner Acquisition Corp., a Delaware corporation ("KAC").
Preliminary Statement
On July 16, 1994, Biomet, BAC and Kirschner executed the
Agreement for the purpose of providing for the merger of BAC and
Kirschner. Biomet, BAC and Kirschner desire to modify the terms
and conditions of the Agreement.
KAC is a wholly-owned subsidiary of Biomet that conducts no
active business operations. The capital structure of KAC
consists of 1,000 shares of Common Stock, without par value, of
which 100 shares are outstanding and owned by Biomet.
The Boards of Directors of Biomet and BAC deem it in the
best interest of Biomet and BAC, respectively, to substitute KAC
as a party for BAC in the Agreement and to effect a merger
between KAC and Kirschner (the "Merger"). The Board of Directors
of Kirschner deems the Merger in the best interest of Kirschner
and its shareholders. The Board of Directors of KAC deems the
Merger in the best interest of KAC. The Boards of Directors of
Biomet, BAC, KAC and Kirschner have, by resolutions duly adopted,
approved this First Amendment. 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, as
provided in the Agreement.
Terms and Conditions
In consideration of the mutual covenants and agreements
herein contained and of other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending
to be legally bound, Biomet, BAC, Kirschner and KAC hereby
covenant and agree as follows:
Section 1. Parties to the Agreement. KAC shall be
substituted for BAC as a party to the Agreement. KAC shall have
all of the rights and shall be responsible for the performance of
all of the obligations of BAC as described in the Agreement as
amended hereby. BAC is hereby released and discharged from any
and all obligations under the Agreement.
Section 2. Amendments to the "Preliminary Statement" of the
Agreement. The Preliminary Statement of the Agreement
erroneously states that "3,607,330" shares of Kirschner Common
and an equal number of Kirschner Rights are issued and
outstanding. The Preliminary Statement is hereby amended to
reflect that 3,607,730 shares of Kirschner Common and Kirschner
Rights are issued and outstanding.
Section 3. Amendments to Article I.
(a) The first sentence of Section 1.1 of the Agreement is
amended to read as follows:
"Upon the terms and subject to the satisfaction of the
conditions precedent contained in this Agreement, (a) if
Biomet makes a Stock Election (as defined in Section
3.2(d)), Kirschner shall be merged with and into KAC and KAC
shall survive the Merger, or (b) if Biomet does not make a
Stock Election, or if a Stock Election is revoked pursuant
to Section 3.1, KAC shall be merged with and into Kirschner
and Kirschner shall survive the Merger."
(b) A new sentence is added at the end of Section 1.5(a) to
read as follows:
"Biomet agrees that pending consummation of the Merger
or the refund of the Deposit as provided for herein, the
Deposit may be applied by Kirschner as of August 30, 1994 to
repay amounts outstanding under its revolving credit
facility with First Union Commercial Corporation dated
May 26, 1994."
Section 4. Amendments to Article III.
(a) Section 3.1 of the Agreement is amended to read as
follows:
"Section 3.1. Treatment of Shares of KAC. If the
Surviving Corporation is Kirschner, the shares of KAC issued
and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the
part of KAC or Biomet, be converted into an equal number of
common shares of the Surviving Corporation, and all
certificates formerly representing shares of KAC shall be
deemed cancelled and of no further effect, and a new
certificate representing the shares of the Surviving
Corporation shall be issued and delivered to Biomet. If the
Surviving Corporation is KAC, the outstanding shares of KAC
as of the Effective Time shall be unaffected by the Merger
and the certificates representing those shares shall
continue to represent the outstanding shares of the
Surviving Corporation following the Effective Time."
(b) Section 3.2 of the Agreement is amended to read as
follows:
"Section 3.2. Conversion of Kirschner Common.
(a) All shares of Kirschner Common held as treasury
shares and all shares of Kirschner Common held by Biomet,
KAC or any of their respective subsidiaries immediately
prior to the Effective Time (collectively, the "Cancelled
Shares") shall, by virtue of the Merger, be cancelled 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, other
than (i) the Cancelled Shares, (ii) shares of Kirschner
Common (the "Restricted Shares") held as of the Effective
Time subject to the restrictions set forth in grants of
restricted stock (the "Grants") made under the Kirschner
1994 Incentive Stock Option and Restricted Stock Plan (the
"Kirschner Plan") and (iii) shares of Kirschner Common (the
"Dissenting Shares") held by persons who properly exercise
their statutory rights to appraisal under Section 262 of the
DGCL ("Dissenting Shareholders"), 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 (i) to
receive cash in the amount of $10.75 per share or, (ii) if
Biomet makes a Stock Election (as defined in Section
3.2(d)), to receive, at the election of the holders of
Kirschner Common and subject to the conditions and
limitations set forth in Section 3.3, that number of Biomet
Common Shares determined in accordance with Section 3.3(a)
and/or cash in the amount of $10.75 per share. The
aggregate amount of cash and Biomet Common Shares, if any,
to be delivered pursuant to this Agreement are hereinafter
referred to as the "Merger Consideration."
(b) Each Restricted Share 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
that number of Biomet Common Shares determined in accordance
with Section 3.3(a)(i).
(c) Dissenting Shares shall not be converted into the
Merger Consideration as contemplated by this Agreement;
provided, however, that each Dissenting Share outstanding at
the Effective Time and held by any Dissenting Shareholder
who shall subsequently withdraw the demand for payment of
the value of such shares or fail to establish the right to
be paid the value of such shares as provided by applicable
Delaware law, shall thereupon be deemed to be converted into
the right to receive cash or Biomet Common Shares (if any)
in the same manner as provided for other outstanding shares
of Kirschner Common in Section 3.3. After the Effective
Time, the Surviving Corporation and each Dissenting
Shareholder shall have the rights, duties and obligations
with respect to the Dissenting Shares as are set forth in
Section 262 of the DGCL.
(d) For purposes of this Agreement, a "Stock Election"
shall mean an election by Biomet to pay the Merger
Consideration by delivering (i) Biomet Common Shares in
exchange for 50% of the Converted Kirschner Shares (as
defined herein); and (ii) cash at the rate of $10.75 for
each share of Kirschner Common in exchange for 50% of the
Converted Kirschner Shares. For purposes of clause (i) of
this Section 3.2(d), "Converted Kirschner Shares" shall mean
all shares of Kirschner Common outstanding immediately prior
to the Effective Time that are not held by Biomet, KAC or
their respective subsidiaries. The number of Biomet Common
Shares to be delivered pursuant to clause (i) of this
Section 3.2(d) shall be determined by multiplying the number
of Converted Kirschner Shares to be exchanged for Biomet
Common Shares by a fraction (the "Conversion Ratio") the
numerator of which is $10.75 and the denominator of which is
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"), provided, however, that in no event shall the
Conversion Ratio be less than 0.9. Biomet shall be entitled
to make a Stock Election at any time prior to the first
mailing to Kirschner shareholders of the proxy statement
prepared by Kirschner (the "Proxy Statement") for use in
connection with the shareholders meeting to be held pursuant
to Section 6.3 (the "Kirschner Shareholders Meeting"). If
(i) Biomet makes a Stock Election and (ii) the sum of (1)
the amount of cash which would be payable to holders of
fractional share interests pursuant to Section 3.3(c), plus
(2) the amount of cash which would be necessary to pay the
holders of Dissenting Shares (as defined in Section 3.2(a))
at the rate of $10.75 per Dissenting Share, would exceed the
amount of cash which would be delivered by Biomet pursuant
to Section 3.2(d) following a Stock Election, Biomet's Stock
Election shall automatically be revoked and the Merger
Consideration shall be paid in cash in accordance with this
Agreement as if a Stock Election had not been made and
Kirschner shall be the Surviving Corporation.
(e) As of the Effective Time, all shares of Kirschner
Common shall no longer represent any interest in the equity
of Kirschner, and all certificates formerly representing
shares of Kirschner Common shall be deemed cancelled and
shall represent only the right to receive the Merger
Consideration."
(c) Section 3.3 of the Agreement is amended to read as
follows:
"Section 3.3. Surrender and Payment for Kirschner
Shares.
(a) If Biomet makes a Stock Election,
(i) Each share of Kirschner Common as to which a
valid Shareholder Election (as defined herein) to
receive Biomet Common Shares is made pursuant to
Section 3.3(a)(ii) shall, subject to the limitations
set forth in Sections 3.3(a)(iii) and 3.3(a)(iv), be
converted in the Merger into the greater of (1) the
number of Biomet Common Shares determined by dividing
$10.75 by the Average Price, or (2) 0.9 Biomet Common
Shares. Except as otherwise provided in
Section 3.3(a)(iv), each share of Kirschner Common as
to which a Shareholder Election to receive Biomet
Common Shares is not properly made shall be converted
into the right to receive cash in the amount of $10.75
per share.
(ii) Subject to Sections 3.3(a)(iii) and
3.3(a)(iv), any registered holder of a certificate or
certificates representing shares of Kirschner Common
outstanding as of the Effective Time may elect to
receive either Biomet Common Shares or cash for all or
a portion of the shares of Kirschner Common held by
such holder as hereinafter provided (a "Shareholder
Election"). A form of election (which may be included
on the letter of transmittal to be sent to Kirschner
shareholders pursuant to Section 3.3(e)) (the "Form of
Election") shall be mailed promptly after the Effective
Time to shareholders of Kirschner of record as of the
Effective Time, together with the results of the vote
on the Merger at the Kirschner Shareholders Meeting.
Any Shareholder Election to receive Biomet Common
Shares or cash with respect to any share of Kirschner
Common as contemplated by this Section 3.3(a)(ii) shall
have been properly made only if the Exchange Agent (as
defined herein) shall have received a properly
completed Form of Election on or before the 30th day
after the Effective Time (the "Election Deadline").
Shares of Kirschner Common as to which a Shareholder
Election to receive Biomet Common Shares has been
properly made are referred to herein as "Electing
Shares".
(iii) If the aggregate number of Biomet Common
Shares which would be issuable in exchange for shares
of Kirschner Common as to which Shareholder Elections
to receive Biomet Common Shares are properly made in
accordance with Section 3.3(a)(ii) (determined without
regard to this paragraph) (the "Requested Shares")
exceeds the number of Biomet Common Shares to be
delivered pursuant to Section 3.2(d)(i) (the "Delivered
Shares"), then each holder of Electing Shares shall be
entitled to receive Biomet Common Shares pursuant to
Section 3.3(a)(i) for that number of whole Electing
Shares determined by multiplying the number of
Delivered Shares (less the number of Biomet Common
Shares to be exchanged for Restricted Shares) by a
fraction, the numerator of which is the number of
Electing Shares held by the particular Kirschner
shareholder and the denominator of which is the number
of all Electing Shares. Each Electing Share not
converted into Biomet Common Shares shall be converted
into the right to receive cash in the amount of $10.75
per share.
(iv) If the number of Delivered Shares exceeds
the number of Requested Shares, the Delivered Shares
shall be distributed in the following order until
exhausted: first, to the holders of Restricted Shares;
then to the holders of Electing Shares; then to the
holders of shares of Kirschner Common as to which no
Shareholder Election is properly made, in the order
determined by random lot; and finally to the holders of
shares of Kirschner Common as to which a Shareholder
Election to receive cash is made, in the order
determined by random lot, each such holder to receive
Delivered Shares with respect to one-half of the
portion of the Merger Consideration to which that
holder is entitled and cash with respect to the
remainder of the Merger Consideration to which that
holder is entitled.
(v) To the extent the allocation of the Delivered
Shares provided for in Section 3.3(a)(iii) or
Section 3.3(a)(iv) results in the creation of
fractional share interests, the number of whole Biomet
Common Shares representing the aggregate of such
fractional share interests (the "Unallocated Biomet
Shares") shall be distributed by random lot to the
holders of shares of Kirschner Common who were entitled
to receive Biomet Common Shares as a result of such
allocation, and the holders of the remaining fractional
share interests shall be paid cash in lieu thereof in
accordance with Section 3.3(c). No Kirschner
shareholder shall receive more than one Unallocated
Biomet Share pursuant to this paragraph.
(vi) Biomet shall have discretion to determine
whether or not Shareholder Elections have been properly
made pursuant to this Section 3.3 and when elections
were received. If Biomet determines that any
Shareholder Election to receive Biomet Common Shares
was not properly made with respect to shares of
Kirschner Common, such shares shall be treated for all
purposes as shares which are not Electing Shares and,
subject to Sections 3.3(a)(iii) and 3.3(a)(iv), such
shares shall be converted into the right to receive
cash in the amount of $10.75 per share. The Exchange
Agent shall mark the date and time of its receipt of
each letter of transmittal and Form of Election on the
face thereof. After the Election Deadline, the
Exchange Agent shall make all computations as to the
allocations and the prorations contemplated by this
Section 3.3 and any such computation shall be
conclusive and binding on the holders of Kirschner
Common. The Exchange Agent may, with the consent of
Biomet, make such equitable changes in the procedures
for implementation of the Shareholder Elections
provided for in this Section 3.3 as shall be necessary
or desirable to fully distribute the Delivered 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 Biomet makes a
Stock Election, a number of Biomet Common Shares, from
either or both of its authorized but unissued or treasury
shares, and an amount in cash, both determined in accordance
with Section 3.2(d), 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 Converted Kirschner Shares;
provided, that, in either case, Biomet shall withhold from
the cash delivered an amount equal to $10.75 multiplied by
the number of shares of Kirschner Common held by all
Dissenting Shareholders. None of the Biomet Common Shares
delivered to the Exchange Agent, if any, shall be sold to
generate cash to pay for fractional share interests or used
for any purpose other than the exchange of shares provided
for in this Section 3.3. Any cash required in lieu of
fractional shares shall be paid by the Exchange Agent out of
the cash transferred to it by Biomet.
(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. Any holder of
Kirschner Common who would otherwise be entitled to receive
a fractional Biomet Common Share in exchange for Kirschner
Common hereunder shall be entitled upon surrender of
certificates for Kirschner Common in accordance with
Section 3.3(e) to receive in lieu of such fractional share
an amount in cash equal to the amount of such fraction
multiplied by the Average Price.
(d) As soon as practicable after the Effective Time,
Kirschner shall deliver or cause to be delivered to Biomet
and the Exchange Agent a list setting forth (i) the name,
address and taxpayer identification number of each Kirschner
shareholder as of the Effective Time, and (ii) the number of
shares of Kirschner Common held by each such shareholder
(the "Shareholder Listing"). The Shareholder Listing shall
identify each Dissenting Shareholder.
(e) Promptly after the Effective Time, Biomet shall
cause to be sent to each holder of Kirschner Common as of
the Effective Time (other than Dissenting Shareholders) at
the address set forth on the Shareholder Listing a letter of
transmittal for use by such holder to surrender certificates
for Kirschner Common in exchange for the portion of the
Merger Consideration to which the holder is entitled and, if
Biomet makes a Stock Election, the Form of Election and
other information required by Section 3.3(a)(ii). Each
holder of shares of Kirschner Common as of the Effective
Time (other than Dissenting Shareholders) shall be entitled
to receive the Merger Consideration to which the holder is
entitled 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 and, if Biomet
makes a Stock Election, shall be entitled, prior to the
Election Deadline, to make a Shareholder Election pursuant
to Section 3.3(a)(ii).
(f) 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.
(g) 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 cancelled and exchanged
for the Merger Consideration as provided for, and in
accordance with the procedures set forth, in this Agreement.
(h) 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.
(i) 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."
Section 5. Amendments to Article VI.
(a) Section 6.7 of the Agreement is amended to read as
follows:
"Section 6.7. Redemption of Kirschner Rights;
Amendment of 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; provided that
no such redemption shall be required if Kirschner's Board of
Directors amends the Rights Agreement to exclude Biomet from
the definition of an "Acquiring Person" under the Rights
Agreement and to exempt the transaction contemplated by the
Merger Agreement as an event that would cause the Kirschner
Rights to become exercisable. Kirschner shall not amend the
Rights Agreement in any other respect without Biomet's prior
written consent."
(b) Section 6.8 of the Agreement is amended to read as
follows:
"Section 6.8. Treatment of Restricted Stock Grants.
Kirschner agrees that, prior to the Closing, it shall use
its best efforts to cause each holder of a Grant under the
Kirschner Plan to enter into an agreement with Biomet (the
"Biomet Restricted Stock Agreement") which subjects the
Biomet Common Shares received in exchange for the Restricted
Shares to the same restrictions on the same terms and
conditions as the Restricted Shares under the Kirschner
Plan, except that, notwithstanding the provisions of Section
6.f. of the Kirschner Plan or the provisions of any
Restricted Stock Agreement, each Biomet Restricted Stock
Agreement shall provide that the restrictions on the Biomet
Common Shares shall lapse prior to 12:00 midnight on
March 17, 1999 only upon the first to occur of the
following: (a) the holder's employment with Biomet or its
subsidiaries is terminated by Biomet, (b) the holder resigns
as a result of a change by Biomet in the location of the
performance by the holder of his services to Biomet or its
subsidiaries to a location that, in the holder's reasonable
judgment, is unacceptable, (c) the holder's compensation
from Biomet is materially reduced, or (d) the holder dies or
becomes totally disabled, or (e) solely with regard to C.
Scott Harrison if he is either (i) not elected to the Board
of Directors of Biomet within 60 days following the
Effective Time or (ii) if elected, is not reelected to the
Board of Directors by the shareholders or is removed from
that office."
(c) A new Section 6.18 is added to read as follows:
"Section 6.18. Non-Compete Agreements. Kirschner
shall use its best efforts to cause C. Scott Harrison, Roger
Van Broeck, Lewis E. S. Parker, Nicholas L. Gounaris and
Warren M. Gitt to enter into agreements with Biomet
containing terms consistent with those set forth on Schedule
11.2(e) (the "Non-Compete Agreements").
Section 6. Amendments to Article VII.
(a) Sections 7.3(a) and 7.3(b) of the Agreement are amended
to read as follows:
"Section 7.3. Registration Statement; NASDAQ-NMS
Listing.
(a) Biomet shall promptly prepare and file with the
SEC under the Securities Act the Registration Statement.
(b) If Biomet has made a Stock Election, Biomet (i)
shall use all reasonable efforts to cause the Registration
Statement to be declared effective as promptly as
practicable; (ii) 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; and (iii) 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."
(b) Section 7.3(c) of the Agreement shall be renumbered as
Section 7.4.
(c) Section 7.4 of the Agreement shall be renumbered as
Section 7.5.
(d) Section 7.5 of the Agreement shall be renumbered as
Section 7.6.
Section 7. Amendments to Article VIII.
(a) Section 8.5 of the Agreement is amended to read as
follows:
"Section 8.5. Amendment of Restricted Stock Grants.
The holders of the Grants of Restricted Shares shall have
entered into the agreements with Biomet described in Section
6.8."
(b) A new Section 8.11 is added to read as follows:
"Section 8.11. Execution of Non-Compete Agreements.
The individuals specified in Section 6.18 shall have entered
into the Non-Compete Agreements."
Section 8. Amendments to Article IX. Section 9.6 of the
Agreement is amended to read as follows:
"Section 9.6. Roll-over of Kirschner Stock Options;
Stock Option Grants.
(a) Biomet shall have assumed all of the obligations
of Kirschner as of the Effective Time with respect to each
"incentive" option (as defined in Section 422 of the Code)
to purchase Kirschner Common granted pursuant to any stock
option plan of Kirschner (other than options held by members
of the Board of Directors of Kirschner) held by each person
who is an employee of the Surviving Corporation immediately
following the Effective Time; provided, however, that those
persons shall not obtain any additional benefits which they
did not have under the Kirschner options or any other
benefits not permitted in a transaction satisfying the
requirements of Section 424(a) of the Code.
(b) Biomet shall have made provision for the issuance,
immediately following the Effective Time:
(i) of an option to purchase Biomet Common Shares
that shall not be an incentive option to each person
who is or was a member of the Board of Directors of
Kirschner holding, as of the Effective Time, an option
to purchase Kirschner Common; and
(ii) of a warrant to purchase Biomet Common Shares
to the holder of the Kirschner Warrant;
in each case on terms and conditions that shall preserve to
the extent possible the benefit held by each such person as
of the Effective Time under the options and the Kirschner
Warrant (including the term and vesting period of the
options but determined, in the case of the options, without
consideration of the tax consequences of the grant or
exercise of the option).
(c) In addition to the provisions for issuance of
options pursuant to any other section of this Agreement, as
soon as practicable after the Effective Time Biomet shall
(i) issue a non-incentive option to purchase 30,000 Biomet
Common Shares to C. Scott Harrison and (ii) issue options to
purchase Biomet Common Shares under the Biomet Option Plan
to the following individuals in the following amounts:
Name Option Shares
Roger Van Broeck 30,000
Lewis E. S. Parker 30,000
Nicholas L. Gounaris 20,000
Warren M. Gitt 20,000
All such options shall vest in equal, annual increments of
one-seventh of the total amount of the grant, shall be
exercisable during the two-year period following the date of
vesting thereof and shall contain such other terms and
conditions as shall be prescribed by Biomet's Stock Option
Committee."
Section 9. Amendments to Article XI.
(a) A new Section 11.2(h) is added to read as follows:
"(h) If Biomet has made a Stock Election, an opinion
of Manatt, Phelps & Phillips, dated as of the Closing Date,
in form and substance acceptable to both Biomet and
Kirschner to the effect that the Merger constitutes a
qualifying reorganization under Code Section 368(a)(1)(A)
and 368(a)(2)(D), subject to receipt by Manatt, Phelps &
Phillips of customary representations from both Biomet and
Kirschner."
(b) A new Section 11.3(d) is added to read as follows:
"(d) If Biomet has made a Stock Election, an opinion
of Manatt, Phelps & Phillips, dated as of the Closing Date,
in form and substance acceptable to both Biomet and
Kirschner to the effect that the Merger constitutes a
qualifying reorganization under Code Section 368(a)(1)(A)
and 368(a)(2)(D), subject to receipt by Manatt, Phelps &
Phillips of customary representations from both Biomet and
Kirschner."
Section 10. Amendments to Article XII. A new Section 12.4
is added to read as follows:
Section 12.4. Registration of Option Shares. Biomet
shall, at its expense, prepare and file with the Securities
and Exchange Commission a registration statement on Form S-3
for the purpose of registering under the Securities Act the
Biomet Common Shares acquired upon the exercise of the
options described in Section 9.6(c)(i) and Section 9.6(b)(i)
for resale by the original holders thereof, within a
reasonable time following the receipt of a request therefor
from any such holder; provided, however, that Biomet shall
have no obligations hereunder with respect to any shares
then eligible for sale pursuant to the provisions of SEC
Rule 144.
Section 11. Definitions. All terms defined in the
Agreement and used herein shall have the meanings assigned in the
Agreement unless otherwise expressly provided herein.
Section 12. Continued Effect of the Agreement. All terms
and conditions of the Agreement, other than those amended herein,
shall be unaffected by this First Amendment and shall continue in
full force and effect until amended as provided in the Agreement.
<PAGE>
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
KIRSCHNER ACQUISITION CORP.
By: /s/ Dane A. Miller
Dane A. Miller, Ph.D.
President
Attest: /s/ Daniel P. Hann
Daniel P. Hann
Secretary
