<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 1995
AMERICAN MEDICAL ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 0-11758 41-1428758
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
250 E. ARAPAHO ROAD
RICHARDSON, TEXAS 75081
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (214) 918-8300
( Pages Total)
<PAGE> 2
ITEM 5. OTHER EVENTS
On May 8, 1995, American Medical Electronics, Inc., a Minnesota
corporation ("AME"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Orthofix International, N.V., a corporation organized under
the laws of the Netherlands Antilles ("Orthofix"), and Othello Acquiring Corp.,
a Minnesota corporation and a wholly-owned subsidiary of Orthofix ("Merger
Sub"), pursuant to which AME will merge (the "Merger") with and into Merger
Sub, and thereby become a wholly-owned subsidiary of Orthofix.
Pursuant to the terms of the Merger Agreement, each outstanding share
of common stock, no par value, of AME ("AME Common Stock") will be converted
into the right to receive (i) such number of shares of common stock, $.10 par
value per share, of Orthofix ("Orthofix Common Stock") as have a value of
$10.00, or at the election of the holders of AME Common Stock, $10 in cash,
subject to pro-ration in certain circumstances, and (ii) contingent rights to
receive a pro-rata portion of up to $18 million upon AME meeting certain
revenue or earnings targets prior to December 31, 1997. Upon the terms of the
Merger Agreement, approximately 43% of the total consideration will be paid in
shares of Orthofix Common Stock, with the remainder to be paid in cash.
Consummation of the Merger is contingent upon the approval of the shareholders
of AME and Orthofix and is subject to certain other conditions.
AME also entered into a Distribution Agreement, dated May 8, 1995,
with Inter Medical Supplies Limited, a subsidiary of Orthofix, pursuant to
which AME will have the right to distribute certain products of Orthofix in
the United States for a period of one year beginning June 1, 1995.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
Not applicable
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1 -- Agreement and Plan of Merger dated May 8, 1995, among
American Medical Electronics, Inc., Orthofix
International, N.V., and Othello Acquiring Corp.
2.2 -- Distribution Agreement dated May 8, 1995, between
American Medical Electronics, Inc. and Inter Medical
Supplies Limited
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN MEDICAL ELECTRONICS, INC.
Date: May 10, 1995 By: /s/ Ellis A. Regenbogen
---------------------------------------
Ellis A. Regenbogen,
Vice President/Law and Administration
3
<PAGE> 4
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1 -- Agreement and Plan of Merger dated May 8, 1995, among
American Medical Electronics, Inc., Orthofix
International, N.V., and Othello Acquiring Corp.
2.2 -- Distribution Agreement dated May 8, 1995, between
American Medical Electronics, Inc. and Inter Medical
Supplies Limited
<PAGE> 1
EXECUTION EXHIBIT 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
Among
ORTHOFIX INTERNATIONAL, N.V.,
OTHELLO ACQUIRING CORP.
and
AMERICAN MEDICAL ELECTRONICS, INC.
Dated May 8, 1995
================================================================================
<PAGE> 2
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ARTICLE I
THE MERGER
1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Effective Time; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04. Articles of Incorporation; By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.02. Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.03. Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.04. Stock Options; Warrants; and other Rights to Company Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.06. Contingent Payment Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization and Qualification; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.02. Articles of Incorporation and By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.04. Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.06. Permits; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.07. SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.08. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.09. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.10. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.11. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.12. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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3.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.15. Company Products; Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.16. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.17. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.18. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.19. Tangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.20. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.21. Parachute Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.22. Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.23. Real Property and Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND PARENT SUB
4.01. Corporate Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.02. Certificate of Incorporation and By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.04. Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.06. SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.07. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.08. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.10. Ownership of Parent Sub; No Prior Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.11. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.12. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.13. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by the Company Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.02. Conduct of Business by Parent Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Registration Statement; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.02. Shareholders' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.03. Appropriate Action; Consents; Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.04. Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.05. No Solicitation of Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.06. Directors' and Officers' Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.07. Obligations of Parent Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.08. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.09. Delivery of SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.10. Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.11. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.12. Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.13. Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.14. Tax Representation Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.15. Osteogenics Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.16. Non-Tax Election Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.17. Directorships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.18. Determination of Earnout and Bonus Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.19. Employee Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to the Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.02. Conditions to the Obligations of Parent and Parent Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.03. Conditions to the Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.02. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.04. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . 57
9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.03. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.05. Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.06. Incorporation of Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.07. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.09. Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.12. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.13. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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DEFINED TERMS
<TABLE>
<CAPTION>
Term Location
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<S> <C>
affiliate 9.03
Agreement recitals
AICPA Statement 7.02(b)
Alex. Brown 4.12
AME Committee Members 6.18(b)
AME Products 2.06(a)
AME Revenue Minimum 2.06(b)
AME Revenues 2.06(a)
Articles of Merger 1.02
Average Trading Price 2.01(c)
beneficial owner 9.03
Bonus 2.06(a)
Bonus Factor 2.06(d)
Blue Sky Laws 3.05(b)
Business Combination Transaction 8.02(b)
Business Combination Transaction Proposal 8.01(e)
business day 9.03
Cancelable Shares 2.01(a)
Cash Election 2.01(d)
Cash Election Number 2.01(b)
Cash Election Shares 2.01(e)
Cash Fraction 2.01(e)
Certificates 2.02(b)
Code 2.02(h)
Combined Revenues 2.06(a)
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<TABLE>
<CAPTION>
Term Location
---- --------
<S> <C>
Company recitals
Company Common Stock 2.01(a)
Company Disclosure Schedule Article III
Company Employment Contracts 3.10
Company Fee 8.02(b)
Company Intellectual Property 3.12
Company Licenses 3.12
Company Options 2.04(a)
Company Permits 3.06
Company Preferred Stock 3.03
Company Products 3.15
Company Revenue 6.18
Company SEC Reports 3.07(a)
Company Stock Option Plans 2.04(a)
Confidentiality Agreement 9.13
control 9.03
controlled by 9.03
Determinable Osteogenics Rights 2.04(d)
Determination Date 2.01(c)
Dissenting Shares 2.05(a)
Earnout 2.06(a)
Effective Time 1.02
Election Deadline 2.01(h)
Elections 2.01(d)
Environmental Claims 3.14(b)
Environmental Laws 3.14(a)
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<CAPTION>
Term Location
---- --------
<S> <C>
Environmental Permits 3.14(b)
ERISA 3.10
Exchange Act 3.05(b)
Exchange Agent 2.02(a)
Exchange Fund 2.02(a)
Exchange Ratio 2.01(a)
Exchanged Shares 2.01(b)
Expenses 8.02(f)
FDA 3.15
5% Shareholders 6.16
Form of Election 2.01(h)
Governmental Authority 3.06
Gross Revenues 2.06(a)
Hazardous Substances 3.14(a)
Indemnified Parties 6.06(b)
Laws 3.05(a)
Material Adverse Effect 3.01
Material Contract 3.20
Maximum Bonus 2.06(a)
Maximum Earnout 2.06(a)
Merger recitals
Merger Consideration 2.01(a)
Minnesota Law recitals
NASD 6.08
NASDAQ 2.01(c)
Net Income 2.06(a)
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<TABLE>
<CAPTION>
Term Location
---- --------
<S> <C>
1994 Balance Sheet 3.07(c)
Non-Election 2.01(d)
Non-Election Fraction 2.01(g)
Non-Election Shares 2.01(e)
Non-Tax Election Shareholder 6.16
Order 7.01(b)
Orthofix Committee Members 6.18(b)
Orthofix Products 2.06(a)
Orthofix Revenues 2.06(a)
Osteogenics Rights 2.04(d)
Parent recitals
Parent Common Stock 2.01(a)
Parent Disclosure Schedules Article IV
Parent Fee 8.02(a)
Parent SEC Reports 4.06(a)
Parent Sub recitals
Parent Subsidiary 4.03
Payout Date 2.06(a)
Per Share Amount 2.01(a)
person 9.03
Plans 3.10
Proxy Statement 6.01(a)
Record Holder 2.06(a)
Registration Statement 6.01(a)
Reorganization Agreement 2.04(d)
Representative 2.01(d)
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<TABLE>
<CAPTION>
Term Location
---- --------
<S> <C>
Revenue Minimum 2.06(b)
Revenue Target 2.06(b)
Review Committee 6.18(b)
Rights 2.01(a)
Secretary 1.02
Securities Act 3.05(b)
Shareholders' Meetings 6.02
Stock Election 2.01(d)
Stock Election Number 2.01(b)
Stock Election Shares 2.01(e)
Stock Fraction 2.01(e)
Subsequent Combination 2.06(g)
Subsidiary 3.01
subsidiary/subsidiaries 9.03
Substitute Options 2.04(a)
Substitute Warrants 2.04(c)
Surviving Corporation 1.01
Terminating Company Breach 8.01(g)
Terminating Parent Breach 8.01(h)
Third Party Provisions 9.05
Transactions recitals
under common control with 9.03
U.S. GAAP 3.07(b)
Vector 3.16
Warrants 2.04(c)
</TABLE>
<PAGE> 11
AGREEMENT AND PLAN OF MERGER, dated as of May 8, 1995 (this
"Agreement"), among ORTHOFIX INTERNATIONAL, N.V., a corporation organized under
the laws of the Netherlands Antilles ("Parent"), OTHELLO ACQUIRING CORP., a
Minnesota corporation and a direct, wholly owned subsidiary of Parent ("Parent
Sub"), and AMERICAN MEDICAL ELECTRONICS, INC., a Minnesota corporation (the
"Company").
WHEREAS, the Company, upon the terms and subject to the
conditions of this Agreement and in accordance with the Minnesota Business
Corporation Act ("Minnesota Law"), will merge with and into Parent Sub (the
"Merger");
WHEREAS, the Board of Directors of the Company (i) has
determined that the Merger is in the best interests of the Company and its
shareholders and approved and adopted this Agreement and the transactions
contemplated hereby ("Transactions") and (ii) has recommended approval and
adoption of this Agreement and approval of the Merger by, and directed that
this Agreement and the Merger be submitted to a vote of, the shareholders of
the Company; and
WHEREAS, the Boards of Directors of Parent and Parent Sub (i)
have determined that the Merger is in the best interests of Parent, Parent Sub
and their shareholders and have approved and adopted this Agreement and the
Transactions and (ii) the Board of Directors of Parent has unanimously
recommended approval of the issuance of the additional shares of Parent Common
Stock necessary to give effect to this Agreement and the Merger and directed
that such matters be submitted to a vote of the shareholders of Parent;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Parent Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement (including Article VII), and in
accordance with Minnesota Law, at the Effective Time (as hereinafter defined),
the Company shall be merged with and into Parent Sub. As a result of the
Merger, the separate corporate existence of the Company shall cease and Parent
Sub shall continue as the surviving corporation of the Merger (the "Surviving
Corporation"). The name of the Surviving Corporation shall be Orthofix Inc.
SECTION 1.02. Effective Time; Closing. As promptly as
practicable and in no event later than the first business day following the
satisfaction or, if permissible, waiver
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of the conditions set forth in Article VII (or such other date as may be agreed
in writing by each of the parties hereto), the parties hereto shall cause the
Merger to be consummated by filing articles of merger (the "Articles of
Merger") with the Secretary of State of the State of Minnesota (the
"Secretary") in such form as is required by, and executed in accordance with
the relevant provisions of, Minnesota Law. The term "Effective Time" means the
date and time of the filing of the Articles of Merger with the Secretary (or
such later time as may be agreed in writing by each of the parties hereto and
specified in the Articles of Merger). Immediately prior to the filing of the
Articles of Merger, a closing will be held at the New York City offices of
Shearman & Sterling (or such other place and time as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable provisions of
Minnesota Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the rights, privileges, immunities, powers
and franchises (of a public as well as of a private nature) of the Company and
Parent Sub and all property (real, personal and mixed) of the Company and
Parent Sub and all debts due to either the Company or Parent Sub on any
account, including subscriptions to shares, and all other choses in action, and
every other interest of or belonging to or due to each of the Company and
Parent Sub shall vest in the Surviving Corporation, and all debts, liabilities,
obligations and duties of each of the Company and Parent Sub shall become the
debts, liabilities, obligations and duties of the Surviving Corporation and may
be enforced against the Surviving Corporation to the same extent as if such
debts, liabilities, obligations and duties had been incurred or contracted by
the Surviving Corporation. The title to any real estate or any interest
therein vested, by deed or otherwise, in the Company or Parent Sub shall not
revert or in any way become impaired by reason of the Merger, and all rights of
creditors and all liens upon any property of the Company or Parent Sub shall be
preserved unimpaired following the Merger.
SECTION 1.04. Articles of Incorporation; By-laws. (a) At
the Effective Time, the Articles of Incorporation of Parent Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Articles of Incorporation, except that Article I of the Articles of
Incorporation of the Surviving Corporation shall be deemed amended at the
Effective Time by operation of this Agreement and by virtue of the Merger
without any further action by the shareholders or directors of the Surviving
Corporation, the Company or Parent Sub to change the name of the Surviving
Corporation to Orthofix Inc.
(b) At the Effective Time, the By-laws of Parent Sub, as
in effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation and such By-laws.
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SECTION 1.05. Directors and Officers. The directors of
Parent Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Articles of Incorporation and By-laws of the Surviving Corporation until a
successor is elected and has qualified or until the earliest of the death,
resignation, removal or disqualification of one or more of the directors, and
the officers of the Company immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified, or as
otherwise provided in the By-laws of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent Sub,
the Company or the holders of any of the following shares of capital stock:
(a) Subject to the other provisions of this Section 2.01
and to Section 2.02:
(i) each share of common stock, no par value, of
the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (excluding any shares
held by the Company, Parent or Parent Sub or any other direct
or indirect wholly owned subsidiary of Parent or the Company
immediately prior to the Merger (the "Cancelable Shares") and
Dissenting Shares (as defined in Section 2.05)) shall be
converted into the right to receive (A) (v) that number of
shares (the "Exchange Ratio") of common stock, $0.10 par value
("Parent Common Stock"), of Parent as shall have on the
Determination Date (as hereinafter defined) a value equal to
$10 (the "Per Share Amount") as calculated in accordance with,
and subject to, Section 2.01(c), or (w) the Per Share Amount
in cash, without interest, or (x) a combination of shares of
Parent Common Stock and cash, without interest, determined in
accordance with this Section 2.01 plus (B) the contingent
contract right ("Rights") to receive (y) the Earnout (as
hereafter defined), and (z) the Bonus (as hereafter defined;
the Rights, together with the non-contingent consideration
described in clause (A) above, the "Merger Consideration").
At the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and automatically shall be
cancelled and cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the
right to receive the Merger Consideration. The holders of
certificates previously evidencing such shares of Company
Common
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Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of
Company Common Stock except as otherwise provided herein or by
Minnesota Law. Such certificates previously evidencing shares
of Company Common Stock shall be exchanged for the Merger
Consideration, without interest, in accordance with the
allocation procedures of this Section 2.01 and upon the
surrender of such certificates in accordance with the
provisions of Section 2.02;
(ii) each Cancelable Share shall automatically be
cancelled and cease to exist, and no Merger Consideration or
other consideration shall be paid or payable in respect of
such shares; and
(iii) each share of common stock, par value $.01
per share, of Parent Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become
one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation at the Effective
Time, and the Surviving Corporation thereafter shall have no
other equity securities.
(b) The aggregate number of shares of Company Common
Stock to be converted into the right to receive cash in the Merger
(the "Cash Election Number") shall be equal to (i) 57% of (w) the
number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time less (x) the number of
Cancelable Shares (the "Exchanged Shares"), less (ii) the number of
Dissenting Shares which are not to be treated as Non-Electing Shares
in accordance with Section 2.05. The aggregate number of shares of
Company Common Stock to be converted into the right to receive Parent
Common Stock in the Merger (the "Stock Election Number") shall be
equal to (y) the number of Exchanged Shares less (z) the sum of the
Cash Election Number and the number of Dissenting Shares which are not
to be treated as Non-Electing Shares in accordance with Section 2.05.
(c) The Exchange Ratio shall be equal to the Per Share
Amount divided by the average of the closing prices of Parent Common
Stock, as quoted on The National Association of Securities Dealers
Automated Quotations - National Market System ("NASDAQ"), for the 20
NASDAQ trading days immediately preceding and including the
Determination Date (the "Average Trading Price"). The term
"Determination Date" shall mean the date which is five (5) business
days (or such greater number of days as may be required by applicable
law) prior to the date of the Shareholders' Meeting of the Company or,
if such date is not a NASDAQ trading day, the NASDAQ trading day first
immediately preceding such date.
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(d) Subject to the allocation and election procedures set
forth in this Section 2.01, each record holder of shares of Company
Common Stock (other than Non-Tax Election Shareholders (as hereafter
defined)) immediately prior to the Effective Time will be entitled
with respect to the Merger Consideration (i) to elect to receive cash
and Rights for all, but not less than all, of such shares (a "Cash
Election"), (ii) to elect to receive Parent Common Stock and Rights
for all, but not less than all, of such shares (a "Stock Election"),
or (iii) to indicate that such record holder has no preference as to
the receipt of cash or Parent Common Stock for such shares (a
"Non-Election"; collectively with the Cash Election and the Stock
Election, the "Elections"). Record holders of shares of Company
Common Stock shall have no right to make elections with respect to,
and no investment discretion in connection with, the Rights. Each
such record holder shall, however, receive Rights regardless of
whether such holder makes a Cash Election, a Stock Election or a Non-
Election. Holders of record of shares of Company Common Stock who
hold such shares as nominees, trustees or in other representative
capacities (a "Representative") may submit multiple Forms of Election,
provided that such Representative certifies that each such Form of
Election covers all the shares of Company Common Stock held by such
Representative for a particular beneficial owner. Holders of record
of shares of Company Common Stock who are Non-Tax Election
Shareholders will be deemed to have made a Cash Election.
(e) If the aggregate number of shares covered by Cash
Elections (the "Cash Election Shares") exceeds the Cash Election
Number, all shares of Company Common Stock covered by Stock Elections
(the "Stock Election Shares") and all shares of Company Common Stock
covered by Non-Elections (the "Non-Election Shares") shall be
converted into the right to receive Parent Common Stock, and the Cash
Election Shares shall be converted into the right to receive, in
addition to the Rights, Parent Common Stock and cash in the following
manner:
each Cash Election Share shall be converted into the right to
receive (i) an amount in cash, without interest, equal to the
product of (x) the Per Share Amount and (y) a fraction (the
"Cash Fraction"), the numerator of which shall be the Cash
Election Number and the denominator of which shall be the
total number of Cash Election Shares, and (ii) a number of
shares of Parent Common Stock equal to the product of (x) the
Exchange Ratio and (y) a fraction equal to one minus the Cash
Fraction.
(f) If the aggregate number of Stock Election Shares
exceeds the Stock Election Number, all Cash Election Shares and all
Non-Election Shares shall be converted into the right to receive cash,
and the Stock Election Shares shall be converted into the right to
receive, in addition to the Rights, Parent Common Stock and cash in
the following manner:
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each Stock Election Share shall be converted into the right to
receive (i) a number of shares of Parent Common Stock equal to
the product of (x) the Exchange Ratio and (y) a fraction (the
"Stock Fraction"), the numerator of which shall be the Stock
Election Number and the denominator of which shall be the
total number of Stock Election Shares, and (ii) an amount in
cash, without interest, equal to the product of (x) the Per
Share Amount and (y) a fraction equal to one minus the Stock
Fraction.
(g) In the event that neither Section 2.01(e) nor Section
2.01(f) above is applicable, all Cash Election Shares shall be
converted into the right to receive cash, all Stock Election Shares
shall be converted into the right to receive Parent Common Stock, and
the Non-Election Shares shall be converted into the right to receive,
in addition to the Rights, Parent Common Stock and cash in the
following manner:
each Non-Election Share shall be converted into the right to
receive (i) an amount in cash, without interest, equal to the
product of (x) the Per Share Amount and (y) a fraction (the
"Non-Election Fraction"), the numerator of which shall be the
excess of the Cash Election Number over the total number of
Cash Election Shares and the denominator of which shall be the
excess of (A) the number of Exchanged Company Shares over (B)
the sum of the total number of Cash Election Shares and the
total number of Stock Election Shares and (ii) a number of
shares of Parent Common Stock equal to the product of (x) the
Exchange Ratio and (y) a fraction equal to one minus the
Non-Election Fraction.
(h) All Elections shall be made on a form designed for
that purpose, which shall include a letter of transmittal (a "Form of
Election"). Elections shall be made by holders of Company Common
Stock by mailing to the Exchange Agent (as hereafter defined) a Form
of Election, which shall specify that delivery shall be effected, and
risk of loss and title to any Certificates (as hereinafter defined)
shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify. All Certificates so
surrendered shall be subject to the exchange procedures set forth in
Section 2.02(b). To be effective, a Form of Election must be properly
completed, signed and submitted to the Exchange Agent and accompanied
by the Certificates as to which the election is being made. Parent
will have the discretion, which it may delegate in whole or in part to
the Exchange Agent, to determine whether Forms of Election have been
properly completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. The decision of Parent (or
the Exchange Agent) in such matters shall be conclusive and binding.
Neither Parent nor the Exchange Agent will be under any obligation to
notify any person of any defect in a Form of Election submitted to the
Exchange Agent. The Exchange Agent shall also
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make all computations contemplated by this Section 2.01 and all such
computations shall be conclusive and binding on the holders of Company
Common Stock absent manifest error. The Form of Election and the
Certificates must be received by the Exchange Agent by the close of
business on the last business day prior to the Effective Time (the
"Election Deadline") in order to be effective. An election may be
revoked, but only by written notice received by the Exchange Agent
prior to the Election Deadline. Upon any such revocation, unless a
duly completed Election Form, accompanied by a Certificate, is
thereafter submitted in accordance with this paragraph (h), such
shares shall be deemed to be Non-Election Shares. In the event that
this Agreement is terminated pursuant to the provisions hereof and any
Certificates have been transmitted to the Exchange Agent pursuant to
the provisions hereof, such Certificates shall promptly be returned
without charge to the person submitting the same.
(i) For the purposes hereof, a holder of Company Common
Stock who does not make a valid Election prior to the Election
Deadline, including as a result of revocation, shall be deemed to have
made a Non-Election. If Parent or the Exchange Agent shall determine
that any purported Cash Election or Stock Election was not properly
made, such purported Cash Election or Stock Election shall be deemed
to be of no force and effect and the shareholder making such purported
Cash Election or Stock Election shall for purposes hereof be deemed to
have made a Non-Election.
(j) Parent and the Company shall mail the Form of
Election to each person who is a holder of record of Company Common
Stock on the record date for the Company's Shareholder Meeting (as
defined in Section 6.02) and shall each use its best efforts to mail
the Form of Election to all persons who become holders of Company
Common Stock during the period between (i) such record date and (ii)
the date seven calendar days prior to the anticipated Effective Time
and to make the Form of Election available to all persons who become
holders of Company Common Stock subsequent to the date described in
clause (ii) and no later than the close of business on the business
day prior to the Effective Time.
(k) Notwithstanding anything to the contrary provided in
Section 2.01(a), each share of Company Common Stock, if any, that has
been acquired by the Company and is subject to an outstanding pledge
by the Company immediately prior to the Effective Time to secure the
future payment of the purchase price therefor and each share of
Company Common Stock, if any, owned by Parent, Parent Sub or any other
direct or indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be deemed to be a
Cancelable Share and shall be cancelled and cease to exist and no
payment shall be made with respect thereto.
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(l) If between the date of this Agreement and the
Effective Time the outstanding shares of Parent Common Stock or
Company Common Stock shall have been changed into a different number
of shares or a different class, by reason of any stock dividend,
reclassification, recapitalization, split, division, combination or
exchange of shares, the Exchange Ratio and the Per Share Amount shall
be correspondingly adjusted to reflect such stock dividend,
reclassification, recapitalization, split, division, combination or
exchange of shares.
(m) If the tax opinion referred to in Section 7.01(d)
cannot be rendered (as reasonably determined by Baker & McKenzie and
reasonably concurred in by Shearman & Sterling) as a result of the
Merger potentially failing to satisfy continuity of interest
requirements under applicable federal income tax principles relating
to reorganizations under section 368(a) of the Code, then Parent
shall, on a pro rata basis, reduce to the minimum extent necessary to
enable such tax opinion to be rendered, the number of Cash Election
Shares and increase the number of Stock Election Shares by the minimum
number of such shares necessary to render such tax opinion.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
As of or before the Effective Time, Parent shall deposit, or shall cause to be
deposited, with a bank or trust company organized under the laws of, and having
an office in, the United States or any state thereof and designated by Parent
and not unreasonably disapproved of by the Company (the "Exchange Agent"), for
the benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II, through the Exchange Agent, (i) certificates
evidencing such number of shares of Parent Common Stock equal to the Exchange
Ratio multiplied by the Stock Election Number and (ii) cash in the amount equal
to the Per Share Amount multiplied by the Cash Election Number (such
certificates for shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, and cash, being hereinafter referred to as
the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions from Parent, deliver the Parent Common Stock and cash contemplated
to be issued pursuant to Section 2.01 out of the Exchange Fund. The Exchange
Fund shall not be used for any other purpose; provided, however, that the
Exchange Fund may be invested by the Exchange Agent, pursuant to instructions
from Parent, in obligations of or guaranteed by the United States of America or
any agency thereof and backed by the full faith and credit of the United States
of America, in commercial paper obligations rated A-1 or P-1 or better by
Moody's Investors Services, Inc. or Standard & Poor's Corporation,
respectively, or in deposit accounts, certificates of deposit or banker's
acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar
time deposits purchased from, commercial banks located in the United States
with capital, surplus and undivided profits aggregating in excess of $75
million (based on the most recent financial statements of such bank which are
then publicly available at the SEC or otherwise); provided further that any
such investment or resulting payment of earnings shall not delay the
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receipt by holders of shares of Company Common Stock of the Merger
Consideration or otherwise impair such holders' respective rights hereunder.
In the event the Exchange Fund shall realize a loss on any such investment,
Parent shall promptly thereafter deposit in such Exchange Fund cash in an
amount sufficient to enable such Exchange Fund to satisfy all remaining
obligations originally contemplated to be paid out of such Exchange Fund. Any
net profit resulting from, or interest or income produced by, such investments
shall be payable to the Surviving Corporation or Parent, as Parent directs.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Parent will instruct the Exchange Agent
to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of Company
Common Stock (other than Dissenting Shares and Cancelable Shares) (the
"Certificates") and who did not make a valid Election pursuant to Section 2.01,
(i) a letter of transmittal and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates evidencing shares of
Parent Common Stock or cash. Upon surrender of a Certificate for cancellation
to the Exchange Agent together with such letter of transmittal, duly executed,
and such other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration and the Certificate so surrendered
shall forthwith be cancelled. Subject to Section 2.02(i), under no
circumstances will any holder of a Certificate be entitled to receive any part
of the Merger Consideration until such holder shall have surrendered such
Certificate. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the Company,
the Merger Consideration may be paid in accordance with this Article II to the
transferee if the Certificate evidencing such shares of Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.02 (but subject to Section 2.05), each Certificate shall be deemed at
any time after the Effective Time to evidence only the right to receive upon
such surrender the Merger Consideration. No interest shall be paid on the
Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares of
Parent Common Stock. No dividends or other distributions declared or made
after the Effective Time with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock evidenced
thereby, until the holder of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of such Certificate, in addition
to the Merger Consideration as provided in 2.02(b), without interest, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to the whole shares of Parent
Common Stock evidenced by such Certificate.
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(d) No Further Rights in Company Common Stock. All
Merger Consideration issued or paid upon conversion of the shares of Company
Common Stock in accordance with the terms hereof shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock.
(e) No Fractional Shares. (i) No certificates or scrip
evidencing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a shareholder of
Parent.
(ii) As soon as practicable after the Effective Time, the
Exchange Agent shall sell such fractional share interests, as agent of the
holder, and remit such proceeds to the holder.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of Company Common
Stock for one year after the Effective Time shall be delivered to Parent, upon
demand, and, subject to Section 2.02(g), any holders of Company Common Stock
who have not theretofore complied with this Article II shall thereafter look
only to Parent for the Merger Consideration to which they are entitled.
(g) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any shares of Parent Common Stock or cash (or dividends or distributions with
respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding Rights. Parent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as
Parent is required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "Code"), or
any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was
made by Parent.
(i) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
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Certificate the Merger Consideration payable, and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect thereof
pursuant to this Agreement.
SECTION 2.03. Stock Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Parent for any reason shall be
converted into the Merger Consideration.
SECTION 2.04. Stock Options; Warrants; and other Rights to
Company Common Stock. (a) All options (the "Company Options") outstanding,
whether or not exercisable, whether or not vested, and whether or not
performance-based, at the Effective Time under the Company's 1983 Incentive
Stock Option Plan, as amended, and 1990 Incentive Plan, as amended
(collectively, the "Company Stock Option Plans"), shall remain outstanding
following the Effective Time. At the Effective Time, the Company Options
shall, by virtue of the Merger and without any further action on the part of
the Company or the holder thereof, be assumed by Parent in such manner that
Parent (i) is a corporation "assuming a stock option in a transaction to which
Section 424(a) applied" within the meaning of Section 424 of the Code or (ii)
to the extent that Section 424 of the Code does not apply to any such Company
Options, would be such a corporation were Section 424 of the Code applicable to
such Company Options. From and after the Effective Time, all references to the
Company in the Company Stock Option Plans and the applicable stock option
agreements issued thereunder shall be deemed to refer to Parent, which shall
have assumed the Company Stock Option Plans as of the Effective Time by virtue
of this Agreement and without any further action. Each Company Option assumed
by Parent (each a "Substitute Option") shall be exercisable upon the same terms
and conditions as under the applicable Company Stock Option Plan and the
applicable option agreement issued thereunder, except that (A) each such
Company Option shall be exercisable for, and represent the right to acquire,
that whole number of shares of Parent Common Stock (rounded up or down to the
nearest whole share) equal to the number of shares of Company Common Stock
subject to such Company Option multiplied by the Exchange Ratio, plus a number
of Rights equal to the number of shares of Company Common Stock subject to such
Company Option; (B) the option price per share of Parent Common Stock shall be
an amount equal to the option price per share of Company Common Stock subject
to such Company Option in effect immediately prior to the Effective Time
divided by the Exchange Ratio (the option price per share, as so determined,
being rounded upward to the nearest full cent); and (C) with respect to any
Company Option which is performance-based, the performance targets may be
adjusted following the Effective Time in the good faith judgment of the Board
of Directors of Parent, taking into account the recommendation of Messrs.
Schwalm and Clifford, to fairly reflect the impact, if any, of the
Transactions. No payment shall be made for fractional interests. If, after
the Effective Time, Earnout or Bonus payments are made while a Substitute
Option is outstanding, then upon exercise of that Substitute Option such
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option holder shall be entitled to receive the value of any Earnout or Bonus
payments to which such option holder would have been entitled to receive if
such Substitute Option had been exercised prior to the date of such payment.
Such pro-rata share of an Earnout or Bonus payment allocable to a Company
Option holder will be determined by the Review Committee pursuant to Section
6.18.
(b) As soon as practicable after the Effective Time,
Parent shall deliver to each holder of an outstanding Company Option an
appropriate notice setting forth such holder's rights pursuant thereto and such
Company Option shall continue in effect on the same terms and conditions
(including any antidilution provisions, and subject to the adjustments required
by this Section 2.04 after giving effect to the Merger). Parent shall comply
with the terms of all such Company Options and ensure, to the extent required
by, and subject to the provisions of, the Company Stock Option Plans that
Company Options which qualified as incentive stock options under Section 422 of
the Code prior to the Effective Time continue to qualify as incentive stock
options after the Effective Time. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of Substitute Options pursuant to the
terms set forth in this Section 2.04. As of the Effective Time, the shares of
Parent Common Stock subject to Company Options and the employee stock purchase
plan to be adopted by the Surviving Corporation will be covered by an effective
registration statement on Form S-8 (or any successor form) or another
appropriate form and Parent shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements for so
long as Substitute Options remain outstanding or shares of Parent Company Stock
remain issuable pursuant to the Surviving Corporation's employee stock purchase
plan. In addition, Parent shall use all reasonable efforts to cause the shares
of Parent Common Stock subject to Company Options and the employee stock
purchase plan to be adopted by the Surviving Corporation to be listed on
NASDAQ.
(c) The warrants to acquire 320,000 shares of Company
Common Stock (the "Warrants") referred to in Section 3.03 hereof shall remain
outstanding following the Effective Time. At the Effective Time, the Warrants
shall, by virtue of the Merger and without any further action on the part of
the Company or the holder thereof, be exercisable upon the terms and conditions
of each applicable agreement providing for a Warrant. Each Warrant from and
after the Effective Time (each a "Substitute Warrant") (i) shall be exercisable
for, and represent the right to acquire, that whole number of shares of Parent
Common Stock (rounded up or down to the nearest whole share) equal to the
number of shares of Company Common Stock subject to such Warrant multiplied by
the Exchange Ratio, plus a number of Rights equal to the number of shares of
Company Common Stock subject to such Warrant; and (ii) the exercise price per
share of Parent Common Stock shall be an amount equal to the exercise price per
share of Company Common Stock subject to such Warrant in effect immediately
prior to the Effective Time divided by the Exchange Ratio (the exercise price
per share, as so determined, being rounded upward to the nearest
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full cent). Prior to the Effective Time, Parent shall assume by written
instrument, executed and mailed to the holders of the Warrants, at the last
address of such holders appearing on the books of the Company, the obligation
to deliver to such holders such shares of Parent Common Stock, as, in
accordance with the Warrants and this Agreement, such holders may be entitled
to purchase. If, after the Effective Time, Earnout or Bonus payments are made
while a Substitute Warrant is outstanding, the exercise price of that
Substitute Warrant shall be reduced by the value of any payments to which such
warrant holder would have been entitled if such Substitute Warrant had been
exercised prior to the date of such payment. Such pro-rata share of a Earnout
or Bonus payment allocable to a Warrant holder will be determined by the Review
Committee pursuant to Section 6.18.
(d) The rights (the "Osteogenics Rights") to be issued up
to (i) 110,000 shares of Company Common Stock plus (ii) an undetermined number
of shares of Company Common Stock reserved for future issuance for no
additional consideration pursuant to the Agreement and Plan of Reorganization,
dated October 5, 1994, among the Company, Osteogenics Inc. ("Osteogenics") and
Gina Mangone 1992 GST Trust, Michael Mangone 1992 GST Trust, Joseph Mangone
1992 GST Trust and Elizabeth Mangone 1992 GST Trust, as amended (the
"Reorganization Agreement"), shall continue in full force and effect following
the Effective Time, except that such Osteogenics Rights shall represent the
right to receive shares of Parent Common Stock. At the Effective Time, by
virtue of the Merger and without any further action on the part of the Company
or the holder thereof, (A) the Osteogenics Rights specified in (i) above shall
represent the right to receive up to that whole number of shares of Parent
Common Stock (rounded up or down to the nearest whole share) equal to the
number of shares of Company Common Stock subject to such Osteogenics Rights
multiplied by the Exchange Ratio, and (B) the Osteogenics Rights specified in
(ii) above shall represent the right to receive shares of Parent Common Stock
having an aggregate Market Value (as such term is defined in the Reorganization
Agreement, but referring to Parent Common Stock instead of Company Common
Stock) of $3,023,125 determined as of the Trigger Date (as such term is defined
in the Reorganization Agreement). If Parent Common Stock is issued for the
Osteogenics Rights specified in (i) above (prior to which time, such
Osteogenics Rights shall be referred to as "Determinable Osteogenics Rights"),
the holders of such shares of Parent Common Stock shall be entitled to receive
their pro-rata share of any Earnout or Bonus payments made before or after such
issuance. If, after the Effective Time, Earnout or Bonus payments are made
while Determinable Osteogenics Rights are outstanding, the holders of such
Determinable Osteogenics Rights shall, upon their conversion, be entitled to
the value of any payments to which such holder would have been entitled if such
Determinable Osteogenics Rights had been converted prior to the date of such
payment. Such pro-rata share of any Earnout or Bonus payment allocable to a
Determinable Osteogenics Right holder will be determined by the Review
Committee pursuant to Section 6.18.
<PAGE> 24
14
SECTION 2.05. Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, any issued and outstanding shares
of Company Common Stock which are held by shareholders of the Company who shall
have not voted in favor of the Merger and who shall have filed with the
Company, prior to the taking of the vote of the shareholders of the Company on
the Merger, a written notice of intent to demand payment of the fair value for
such shares of Company Common Stock and, after the taking of such vote, shall
make written demand for payment of the fair value of such shares in accordance
with and otherwise comply with Section 302A.473 of Minnesota Law (collectively,
the "Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such shareholders shall be entitled to
receive payment of the fair value of such Dissenting Shares held by them in
accordance with the provisions of Section 302A.473 of Minnesota Law, except
that all Dissenting Shares held by shareholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such shares of Company Common Stock under Section 302A.473 of
Minnesota Law shall thereupon be deemed to have been converted into, as of the
Effective Time, the right to receive the Merger Consideration as if such shares
were Non-Election Shares, without any interest thereon, upon surrender, in the
manner provided in Sections 2.01 and 2.02, of the Certificate or Certificates
that formerly evidenced such shares of Company Common Stock.
(b) The Company shall give Parent (i) prompt notice upon
receipt by the Company, at any time prior to the Effective Time, of any notice
of intent to demand payment of the fair value of shares of Company Common Stock
in accordance with Section 302A.473 of Minnesota Law and withdrawals of any
such notice and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for fair value under Section 302A.473 of
Minnesota Law. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for the fair value of
shares of Company Common Stock or offer to settle or settle any such demands.
SECTION 2.06. Contingent Payment Rights. (a) Definitions.
"AME Products", means products of the Surviving Corporation
which were included in the most recent price list of AME published prior to the
Effective Time, products which are derived from Company Intellectual Property
as it exists as of the date hereof or acquired prior to the Effective Time, and
products of third parties, the distribution or license rights for which are
acquired by the Surviving Corporation after the Effective Time without payment
of any upfront consideration, and shall exclude Orthofix Products and any
products the rights to which were purchased or acquired for value (including
through the payment of purchase price, pre-paid royalties or advance fees) by
the Surviving Corporation, but includes any such new product as the Review
Committee reasonably may determine should be included as an AME Product for
purposes of this Agreement.
<PAGE> 25
15
"AME Revenues", for any period, means the Gross Revenues of
the Surviving Corporation and its consolidated Subsidiaries derived from (i)
the sale, rental or use of AME Products or (ii) the license, sublicense or
other use of Company Intellectual Property as it exists as of the date hereof
or at the Effective Time, during such period.
"Bonus", means the contingent contract right to receive a
pro-rata share of a payment of up to $12 million calculated in the manner
described in Section 2.06(d).
"Combined Revenues", means, for any period, the sum of the AME
Revenues and the Orthofix Revenues of the Surviving Corporation and its
consolidated Subsidiaries during such period.
"Earnout", means the contingent contract right to receive a
pro-rata share (along with other Record Holders) of a payment of up to $6
million calculated in the manner described in Sections 2.06(b) and (c).
"Gross Revenues", means, for any period, all amounts
recognized as revenue during such period, determined in accordance with U.S.
GAAP applied on a basis consistent with the past practice of AME.
"Maximum Bonus", means $12 million in the aggregate over the
life of the Bonus, provided that such amount shall be reduced by the amount of
all Bonus payments previously made pursuant to this Section 2.06.
"Maximum Earnout", means $6 million in the aggregate over the
life of the Earnout, provided that such amount shall be reduced by the amount
of all Earnout payments previously made pursuant to this Section 2.06.
"Net Income", during any period, means net income after taxes
of the Surviving Corporation for such period, determined in accordance with
U.S. GAAP applied on a basis consistent with the past practice of AME.
"Orthofix Products", means products of Orthofix and its
subsidiaries (other than the Surviving Corporation) which are distributed or
licensed by AME, or after the Effective Time, the Surviving Corporation.
"Orthofix Revenues", for any period, means the Gross Revenues
of AME, or, after the Effective Time, the Surviving Corporation derived from
the sale, rental or use of Orthofix Products during such period. For the
period ending December 31, 1995, Orthofix Revenues shall be deemed to include
$20,000,000 in Gross Revenue in respect of sales of Orthofix Products by the
former distributor thereof.
<PAGE> 26
16
"Payout Date", means a date within 30 days of the date the
Review Committee approves the calculation of the Earnout or Bonus payments.
"Record Holder" means a holder of record of AME Common Stock
at the Effective Time (excepting those holders who have validly exercised their
dissenters' rights under Minnesota Law and excepting Cancelable Shares) or a
holder of Options or Warrants outstanding immediately prior to the Effective
Time who has exercised Substitute Options or Substitute Warrants or a holder of
Osteogenics Rights described in Section 2.04(d)(i) who has been issued Parent
Common Stock.
(b) Calculation of Earnout based on Combined Revenues
(i) The Maximum Earnout (or, in the event of any prior
partial payment of the Earnout pursuant to paragraph (ii) below, any remaining
Earnout) shall be paid upon the first to occur of any of the following:
(A) if Combined Revenues for the year ending December 31,
1995 are in excess of $73 million and AME Revenues for such year are
at least $36 million;
(B) if Combined Revenues for the year ending December 31,
1996 are in excess of $78 million and AME Revenues for such year are
at least $33 million; or
(C) if Combined Revenue for the year ending December 31,
1997 are in excess of $83 million and AME Revenues for such year are
at least $30 million.
Once the Maximum Earnout is paid pursuant to this section, any other section or
any combination thereof, no further Earnout is payable pursuant to this
Agreement.
(ii) A portion of the Earnout payable pursuant to this
Section 2.06(b) (or, in the event of any prior partial payment of the Earnout
pursuant to this paragraph, a portion of any remaining Earnout) is payable for
the calendar year ending December 31, 1996 or December 31, 1997, provided that
the AME Revenue Minimum is met for such year, the amount of which shall be
determined by multiplying the unpaid Maximum Earnout then available for payment
by a fraction, the numerator of which is the difference between (A) the
Combined Revenues for such period less the Revenue Minimum for such period and
(B) the denominator of which is the difference between the Revenue Target for
such period and the Revenue Minimum for such period. For purposes of applying
the foregoing formula, the "Revenue Minimum" is equal to Combined Revenues of
$72.9 million and $76.9 million, the "AME Revenue Minimum" is equal to $33
million and $30 million, and the "Revenue Target" is equal to $78 million, and
$83 million, respectively, for each of the calendar years ending December 31,
1996 and 1997, respectively. If Combined Revenue is less than the
<PAGE> 27
17
Revenue Target in 1996, the amount of such revenue shortfall shall be added to
and increase the amount of the Revenue Target in 1997.
(c) Calculation of Earnout based on Revenues
(i) The Maximum Earnout (or, in the event of any prior
partial payment of the Earnout pursuant to paragraph (ii) below, any remaining
Earnout) shall be paid upon the first to occur of any of the following:
(A) if AME Revenues for the year ending December 31, 1995
are at least $41 million;
(B) if AME Revenues for the year ending December 31, 1996
are at least $42 million; or
(C) if AME Revenues for the year ending December 31, 1997
are at least $43 million.
(ii) A portion of the Earnout payable pursuant to this
Section 2.06(c) (or, in the event of any prior partial payment of the Earnout
pursuant to this paragraph, a portion of any remaining Earnout) is payable for
the calendar year ending December 31, 1996 or December 31, 1997, provided that
AME Revenue is at least $36.9 million for each such year, the amount of which
shall be determined by multiplying the unpaid Maximum Earnout then available
for payment by a fraction, the numerator of which is the difference between (A)
the AME Revenues for such period less $36.9 million and (B) the denominator of
which is the difference between $42 million (in the case of 1996) or $43
million (in the case of 1997) and $36.9 million. If AME Revenue is less than
the $42 million in 1996, the amount of such revenue shortfall shall be added to
and increase the amount of the $43 million in AME Revenue which must be
obtained in 1997.
(d) Calculation of Earnout based on Net Income. (i) The
Maximum Earnout (or, in the event of any prior partial payment of the Earnout
pursuant to Section 2.06(b)(ii) or Section 2.06(c)(ii), any remaining Earnout)
shall be paid upon the first to occur of any of the following:
(A) Net Income for the year ended December 31, 1995
shall be at least $3.5 million;
(B) Net Income for the year ended December 31, 1996 shall
be at least $5 million; or
<PAGE> 28
18
(C) cumulative Net Income for the two-year period ended
December 31, 1997 shall be at least $11.5 million,
(ii) No pro-rata portion of the Earnout will be payable
under this Section 2.06(d).
(iii) Any Earnout payments, without regard to whether such
payments are distributed in cash or Parent Common Stock, shall be made on the
applicable Payout Date and shall reflect interest earned on the value thereof
at a rate equal to the rate received by Parent from time to time on its cash
balances on deposits with ABN AMRO Bank (or, if Parent no longer banks with ABN
AMRO Bank as of the applicable Payout Date, the rate it would be receiving if
it still were doing so) from the Effective Date to the Payout Date.
(e) Calculation of Bonus Payments. (i) The amount of
Bonus payments to be made shall be determined as follows:
(A) for the year ending December 31, 1995, provided that
Orthofix Revenues for such year were at least $32 million, an amount
equal to (i) the excess of Combined Revenues for such year over $73
million, multiplied by (ii) the Bonus Factor;
(B) for the year ending December 31, 1996, provided that
Orthofix Revenues for such year were at least $36 million, an amount
equal to (i) the excess of cumulative Combined Revenues for the
two-year period then ending over $151 million, multiplied by (ii) the
Bonus Factor; or
(C) for the year ending December 31, 1997, provided that
Orthofix Revenues for such year were at least $40 million, an amount
equal to (i) the excess of cumulative Combined Revenues for the
three-year period then ending over $234 million, multiplied by (ii)
the Bonus Factor,
(ii) Once the Maximum Bonus is paid pursuant to this
section, no further Bonus is payable pursuant to the Agreement. For purposes
of this section, "Bonus Factor" means 1.164383562.
(iii) Bonus payments made pursuant to this Section 2.06(e)
shall be made on the Payout Date.
(f) The aggregate consideration payable in respect of any
Earnout or Bonus payout shall be payable 43% in Parent Common Stock and 57% in
cash (subject to the last sentence of this paragraph); provided, however, that
(i) each Record Holder which received the non-contingent portion of the Merger
Consideration entirely in cash shall receive Earnout
<PAGE> 29
19
or Bonus payments in cash, (ii) each Record Holder which received the
non-contingent portion of the Merger Consideration entirely in shares of Parent
Common Stock will receive Earnout or Bonus payments in shares of Parent Common
Stock, and (iii) each Record Holder which received the non-contingent portion
of the Merger Consideration in a combination of cash and shares of Parent
Common Stock, and all Record Holders who became entitled to receive Earnout or
Bonus payments upon exercise of Substitute Options or Substitute Warrants, or
upon the issuance of Parent Common Stock for the Osteogenics Rights specified
in Section 2.04(d)(i), shall receive either all cash, or all shares of Parent
Common Stock, such allocation to be made by lot in a manner to be determined by
the Review Committee. In determining the number of shares of Parent Common
Stock to be issued in connection with any Earnout or Bonus payout, such shares
shall be valued at the Average Trading Price of Parent Common Stock as of the
fifth Business Day prior to the Payout Date. Notwithstanding anything else in
this paragraph, the aggregate number of shares of Parent Common Stock to be
issued in connection with any Earnout or Bonus payout shall be limited to the
lessor of (i) the product of (x) two, multiplied by (y) $7,740,000 divided by
the Average Trading Price, or (ii) an amount equal to the number of shares of
Parent Common Stock issued to holders of Company Common Stock at the Effective
Time.
Fractional share interests payable in connection with any
Earnout or Bonus will be aggregated and sold in the market, with the proceeds
being remitted to the Record Holders.
(g) Merger or Consolidation of Parent. In the event of
(i) a consolidation or merger of Parent with or into another corporation in
which Parent is not the surviving corporation, or (ii) a merger in which Parent
is the surviving corporation but the shares of Parent's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, or (iii) in case of any sale of all or substantially all of Parent's
assets to another corporation (each of the events described in (i), (ii) or
(iii) above being a "Subsequent Combination"), then, as a condition of such
Subsequent Combination, lawful and adequate provision will be made whereby each
holder of Rights will thereafter have the contingent right to receive upon the
payment of any Earnout or Bonus (x) the cash portion of such Earnout or Bonus,
and/or (y) the kind of stock and other securities and property (including,
without limitation, cash) paid in connection with the Subsequent Combination
which, based upon the fair market value of such stock and other securities and
property (including, without limitation, cash) on the date of such Earnout or
Bonus, would have a value equal to the portion of such Earnout or Bonus which
would have been paid in Parent Common Stock prior to the Subsequent
Combination.
<PAGE> 30
20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by
the Company and signed by the Company and Parent for identification prior to
the execution and delivery of this Agreement (the "Company Disclosure
Schedule"), which shall identify exceptions by specific section references, the
Company hereby represents and warrants to Parent and Parent Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries.
The Company and each subsidiary of the Company (a "Subsidiary") is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and, except as set forth in Section 3.01 of the Company's
Disclosure Schedule, all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not
have individually or in the aggregate a Material Adverse Effect. As used in
this Agreement, the term "Material Adverse Effect" means with respect to any
person, any change or effect that is or is reasonably likely to be materially
adverse to the financial condition, business or results of operations of such
person and its subsidiaries, taken as a whole. The Company and each Subsidiary
is duly qualified or licensed as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. As of the date hereof, a true
and complete list of all Subsidiaries, together with the jurisdiction of
incorporation of each Subsidiary and the percentage of the outstanding capital
stock of each Subsidiary owned by the Company and each other Subsidiary, is set
forth in Section 3.01 of the Company Disclosure Schedule. Except as disclosed
in Section 3.01 of the Company Disclosure Schedule, the Company does not
directly or indirectly own any voting equity or similar voting interest in, or
any interest convertible into or exchangeable or exercisable for, any voting
equity or similar voting interest in, any corporation, partnership, joint
venture or other business association or entity.
SECTION 3.02. Articles of Incorporation and By-laws. The
Company has heretofore furnished or made available to Parent a complete and
correct copy of its Articles of Incorporation, By-laws or equivalent
organizational documents, each as amended to date, of the Company and each
Subsidiary. Neither the Company nor any Subsidiary is in violation of any
provision of its Articles of Incorporation, By-laws or equivalent
organizational documents.
<PAGE> 31
21
SECTION 3.03. Capitalization. The authorized capital stock
of the Company consists of 30,000,000 shares of Company Common Stock and
10,000,000 shares of preferred stock, without par value ("Company Preferred
Stock"). As of April 30, 1995 (a) 7,696,676 shares of Company Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable and not subject to preemptive rights, (b) no shares of Company
Common Stock were held by the Subsidiaries, (c) 684,168 shares of Company
Common Stock are issuable pursuant to outstanding Company Options and the
Company's Employee Stock Purchase Plan for the plan year ending June 30, 1995,
(d) 320,000 shares were reserved for future issuance pursuant to the Warrants
and (e) 110,000 shares of Company Common Stock plus an undetermined number of
shares of Company Common Stock were reserved for future issuance pursuant to
the terms and conditions of the Reorganization Agreement. No shares of
Preferred Stock are issued and outstanding and no shares of capital stock of
the Company have been acquired by the Company that are subject to outstanding
pledges by the Company to secure the future payment of some or all of the
purchase price for such shares. Except as set forth in this Section 3.03 and
Section 3.03 of the Company Disclosure Schedule, as of the date of this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any Subsidiary obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. Between April 30, 1995 and the
date of this Agreement, no shares of Company Common Stock have been issued by
the Company, except pursuant to the exercise of the stock options, stock
incentive rights and warrants described above that were outstanding on April
30, 1995, in each case in accordance with their respective terms. All shares
of Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any shares of
Company Common Stock or any capital stock of, or any equity interests in, any
Subsidiary. Except as described in Section 3.03 of the Company Disclosure
Schedule, each outstanding share of capital stock of each Subsidiary, other
than those Subsidiaries that, individually or in the aggregate, are not
material to the business, results of operation or financial condition of the
Company and the Subsidiaries taken as a whole, is duly authorized, validly
issued, fully paid and nonassessable and each such share owned by the Company
or another Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
the Company's or such other Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to This Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and, with respect to the Merger, upon the approval and adoption
of the Merger by the Company's shareholders in accordance with this Agreement
and Minnesota Law, to perform its
<PAGE> 32
22
obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the approval and adoption of this
Agreement by the holders of a majority of the then outstanding shares of
Company Common Stock and the filing and recordation of appropriate Articles of
Merger with the Secretary as required by Minnesota Law). This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery of this Agreement by Parent and
Parent Sub, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not subject to, (x) with
respect to the Merger, obtaining the requisite approval and adoption of the
Merger by the Company's shareholders in accordance with this Agreement and
Minnesota Law, and (y) obtaining the consents, approvals, authorizations and
permits and making the filings described in this Section 3.05(b) and Section
3.05(b) of the Company Disclosure Schedule, (i) conflict with or violate the
Articles of Incorporation or By-laws or equivalent organizational documents of
the Company or any Subsidiary, (ii) conflict with or violate any domestic
(federal, state or local) or foreign law, rule, regulation, order, judgment or
decree (collectively, "Laws") applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) except as specified in Section 3.05(a)(iii) of the Company
Disclosure Schedule, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of the Company or any Subsidiary or require the consent
of any third party pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or
any Subsidiary or any property or asset of the Company or any Subsidiary is
bound or affected except for any such conflicts or violations described in
clause (ii) or breaches, defaults, rights of termination, amendment,
acceleration or cancellation, creations of liens or encumbrances described in
clause (iii) which would not, or consents which the failure of the Company to
obtain would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or
<PAGE> 33
23
regulatory authority, domestic, foreign or supranational, except (i) for
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act of 1933, as amended (the
"Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"), and
filing and recordation of appropriate Articles of Merger with the Secretary as
required by Minnesota Law, (ii) as specified in Section 3.05(b) of the Company
Disclosure Schedule and (iii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent the Company
from performing its obligations under this Agreement.
SECTION 3.06. Permits; Compliance. Except as disclosed in
Section 3.06 of the Company Disclosure Schedule, each of the Company and the
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any United States (federal, state or local) or foreign
government, or governmental, regulatory or administrative authority, agency or
commission or court of competent jurisdiction ("Governmental Authority")
necessary for the Company or any Subsidiary to own, lease and operate its
properties or to carry on its business as it is now being conducted (the
"Company Permits") and, as of the date hereof, no suspension or cancellation of
any of the Company Permits is pending or, to the knowledge of the Company,
threatened. Except as disclosed in Section 3.06 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary is in conflict with, or in
default or violation of, (i) any Law applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary
is bound or affected, (ii) any of the Company Permits or (iii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary or any property or asset of the
Company or any Subsidiary is bound or affected, except, with respect to (i) and
(iii) only, as would not have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 1992 (collectively, the "Company SEC Reports").
The Company SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations thereunder and (ii) did not, at
the time they were filed (or at the effective date thereof in the case of
registration statements), contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Subsidiary is currently
required to file any form, report or other document with the SEC under Section
12 of the Exchange Act.
<PAGE> 34
24
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company SEC
Reports was prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis ("U.S. GAAP") throughout
the periods indicated (except as may be indicated in the notes thereto and
except that financial statements included with quarterly reports on Form 10-Q
do not contain all U.S. GAAP notes to such financial statements) and each
fairly presented in all material respects the consolidated financial position,
results of operations and changes in shareholders' equity and cash flows of the
Company and the consolidated Subsidiaries as at the respective dates thereof
and for the respective periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have a Material
Adverse Effect).
(c) Except as (i) and to the extent set forth on the
consolidated balance sheet of the Company and the consolidated Subsidiaries as
at December 31, 1994, including the notes thereto (the "1994 Balance Sheet"),
(ii) set forth in Section 3.07(c) of the Company Disclosure Schedule or (iii)
disclosed in any SEC Report filed by the Company after December 31, 1994,
neither the Company nor any Subsidiary has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with U.S. GAAP, except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since December
31, 1994 which would not, individually or in the aggregate, be material in
amount.
(d) The Company has heretofore furnished to Parent
complete and correct copies of all amendments and modifications (if any) that
have not been filed by the Company with the SEC to all agreements, documents
and other instruments that previously had been filed by the Company as exhibits
to the Company SEC Reports and are currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since
December 31, 1994, except as contemplated by, or disclosed pursuant to, this
Agreement including Section 3.08 of the Company Disclosure Schedule or
disclosed by the Company to Parent in writing on the date hereof, or disclosed
in any Company SEC Report filed since December 31, 1994 and prior to the date
of this Agreement, the Company and the Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since December 31, 1994, there has not been (a) any event or
events (whether or not covered by insurance), individually or in the aggregate,
having a Material Adverse Effect other than changes or effects affecting the
medical devices industry generally, (b) any material change by the Company in
its accounting methods, principles or practices, (c) any entry by the Company
or any Subsidiary into any commitment or transaction material to the Company or
the Subsidiaries, except in the ordinary course of business and consistent with
past practice, (d) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition
<PAGE> 35
25
of any of its securities or (e) other than pursuant to the Plans (as defined in
Section 3.10), any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan, except in the ordinary
course of business consistent with past practice.
SECTION 3.09. Absence of Litigation. Except as disclosed in
Section 3.09 of the Company Disclosure Schedule or the Company SEC Reports
filed prior to the date of this Agreement, there is no claim, action,
proceeding or investigation pending or, to the best knowledge of the Company,
threatened against the Company or any Subsidiary, before any arbitrator or
Governmental Authority which (a) individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, (b) seeks to and is
reasonably likely to significantly delay or prevent the consummation of the
Merger, or (c) arises out of a warranty covering any of the Company's current
or past products. Neither the Company nor any Subsidiary nor any property or
asset of the Company or any Subsidiary is in violation of any order, writ,
judgment, injunction, decree, determination or award having, individually or in
the aggregate, a Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. Section 3.10 of the
Company Disclosure Schedule lists (i) all material employee benefit plans,
programs and arrangements maintained for the benefit of any current or former
employee, officer or director of the Company or any Subsidiary (the "Plans")
and (ii) all written contracts and agreements relating to employment and all
severance agreements, with any of the directors, officers or employees of the
Company or the Subsidiaries (other than, in each case, any such contract or
agreement that is terminable by the Company or any Subsidiary at will without
penalty or other adverse consequence) (the "Company Employment Contracts").
Section 3.10 of the Company Disclosure Schedule sets forth the name of each
officer or employee of the Company or any of the Subsidiaries with an annual
base compensation greater than $125,000 and the annual base compensation
applicable to each such officer or employee. The Company has furnished Parent
with a copy of each Plan and has made available upon request each material
document prepared in connection with each Plan and each Company Employment
Contract. None of the Plans is a multiemployer plan within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). None of
the Plans promises or provides retiree medical or life insurance benefits to
any person. Each Plan intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service that it is so qualified and nothing has occurred since the date of such
letter to affect the qualified status of such Plan. Each Plan has been
operated in accordance with its terms and the requirements of applicable law
except where the failure to so operate would not have a Material Adverse
Effect. Neither the Company nor any Subsidiary has incurred any direct or
indirect material liability under, arising out of or by operation of Title IV
of ERISA in connection with the termination of, or withdrawal from, any Plan or
other retirement plan or arrangement and, as of the date hereof, no fact exists
or event has occurred that would reasonably be expected to give rise to
<PAGE> 36
26
any such liability. No Plan is or has been covered by Title IV of ERISA or
Section 412 of the Code. The Company and the Subsidiaries have not incurred
any liability under, and have complied in all respects with, the Worker
Adjustment Retraining Notification Act and no fact or event exists that could
give rise to liability under such act, except for such occurrences,
noncompliances and liabilities as would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.11. Labor Matters. Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any Subsidiary.
SECTION 3.12. Intellectual Property. "Company Intellectual
Property" means all trademarks, trademark rights, trade names, trade name
rights, patents, patent rights, industrial models, inventions, copyrights,
servicemarks, trade secrets, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and the Subsidiaries as currently conducted, together with all applications
currently pending for any of the foregoing. Except as disclosed in Section
3.12 of the Company Disclosure Schedule or in the Company SEC Reports filed
prior to the date of this Agreement, and to the best knowledge of the Company,
there is no assertion or claim challenging the validity of any Company
Intellectual Property which, individually or in the aggregate, would have a
Material Adverse Effect. Section 3.12(a) of the Company Disclosure Schedule
lists all licenses or other agreements pursuant to which the Company has the
right to use Company Intellectual Property in connection with a product that
accounted for five percent (5%) or more of the consolidated revenues of the
Company and its consolidated Subsidiaries in the fiscal year ended December 31,
1994, or that is currently budgeted to account for five percent or more of the
consolidated revenues of the Company and its consolidated Subsidiaries in the
current fiscal year or which, in financial statement projections provided by
the Company to Parent, accounts for five percent (5%) or more of the
consolidated revenues of the Company and its consolidated Subsidiaries in any
fiscal year included within such forecast (the "Company Licenses"). Except as
disclosed in Section 3.12(b) of the Company Disclosure Schedule, to the best
knowledge of the Company, there is no breach that would have a Material Adverse
Effect or cause a loss of material rights under any Company License. Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement
or in Section 3.12(c) of the Company Disclosure Schedule, there are no notices
from third parties regarding actual or potential infringements by any Company
Intellectual Property which, individually or in the aggregate, are reasonably
likely to have a Material Adverse Effect.
SECTION 3.13. Taxes. (a) The Company and each of the
Subsidiaries have (i) filed all federal, state, local and foreign tax returns
required to be filed by them prior to the date of this Agreement (taking into
account extensions), (ii) paid or accrued all taxes shown to be due on such
returns and have paid all applicable ad valorem and value added
<PAGE> 37
27
taxes as are due and (iii) paid or accrued all taxes for which a notice of
assessment or collection has been received (other than amounts being contested
in good faith by appropriate proceedings), except in the case of clause (i),
(ii) or (iii) for any such filings, payments or accruals which would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
set forth on Section 3.13(a) of the Company Disclosure Schedule, neither the
Internal Revenue Service nor any other taxing authority has asserted any claim
for taxes, or to the best knowledge of the Company, is threatening to assert
any claims for taxes, which claims, individually or in the aggregate, would
have a Material Adverse Effect. The Company has open years for federal tax
returns only as set forth in the Section 3.13(a) of Company Disclosure
Schedule. The Company and each of its Subsidiaries has withheld or collected
and paid over to the appropriate governmental authorities (or are properly
holding for such payment) all taxes required by law to be withheld or
collected, except for amounts which would not, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has made an election under Section 341(f) of the Code. There are
no liens for taxes upon the assets of the Company or any of its Subsidiaries
(other than liens for taxes that are not yet due or that are being contested in
good faith by appropriate proceedings), except for liens which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Neither the Company nor the Subsidiaries has taken or
agreed to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
SECTION 3.14. Environmental Matters. (a) For purposes of
this Agreement, the following terms shall have the following meanings: (i)
"Hazardous Substances" means (A) those substances defined in or regulated under
the following federal statutes and their state counterparts, as each may be
amended from time to time, and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act, the Toxic Substances Control Act
and the Clean Air Act; (B) petroleum and petroleum products, byproducts and
breakdown products including crude oil and any fractions thereof; (C) natural
gas, synthetic gas, and any mixtures thereof; (D) polychlorinated biphenyls;
(E) any other chemicals, materials or substances defined or regulated as toxic
or hazardous or as a pollutant or contaminant or as a waste under any
applicable Environmental Law; and (F) any substance with respect to which a
federal, state or local agency requires environmental investigation,
monitoring, reporting or remediation; and (ii) "Environmental Laws" means any
federal, state or local law, rule or regulation, now or hereafter in effect and
as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to pollution or protection of the environment, health, safety or
natural resources, including without limitation, those relating to (A) releases
<PAGE> 38
28
or threatened releases of Hazardous Substances or materials containing
Hazardous Substances or (B) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances or materials containing
Hazardous Substances.
(b) Except as described in Section 3.14 of the Company
Disclosure Schedule or as would not individually or in the aggregate result in
or be likely to result in any fine, tax, assessment, penalty, loss, cost,
damage, liability, expense or other payment related thereto in excess of
$200,000: (i) the Company and its Subsidiaries are and have been in
compliance with all applicable Environmental Laws; (ii) the Company and the
Subsidiaries have obtained all permits, approvals, identification numbers,
licenses or other authorizations required under any applicable Environmental
Laws ("Environmental Permits") and are and have been in compliance with their
requirements; (iii) such Environmental Permits are transferable to the Parent
Sub pursuant to the Merger without the consent of any Governmental Authority;
(iv) there are no underground or aboveground storage tanks or any surface
impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Substances are being or have been treated, stored or disposed of on any owned
or leased real property or on any real property formerly owned, leased or
occupied by the Company or any Subsidiary; (v) there is, to the best knowledge
of the Company, no asbestos or asbestos-containing material on any owned or
leased real property in violation of applicable Environmental Laws; (vi) the
Company and the Subsidiaries have not released, discharged or disposed of
Hazardous Substances on any owned or leased real property or on any real
property formerly owned, leased or occupied by the Company or the Subsidiaries
and none of such property is contaminated with any Hazardous Substances; (vii)
the Company is not undertaking, and has not completed, any investigation or
assessment or remedial or response action relating to any such release,
discharge or disposal of or contamination with Hazardous Substances at any
site, location or operation, either voluntarily or pursuant to the order of any
Governmental Authority or the requirements of any Environmental Law; (viii)
there are no past, pending or threatened actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, notices of
liability or potential liability, investigations, proceedings, consent orders
or consent agreements relating in any way to Environmental Laws, any
Environmental Permits or any Hazardous Substances ("Environmental Claims")
against the Company or the Subsidiaries or any of their property, and there are
no circumstances that can reasonably be expected to form the basis of any such
Environmental Claim, including without limitation with respect to any off-site
disposal location presently or formerly used by the Company or any Subsidiary
or any of their predecessors; and (ix) the Company and the Subsidiaries can
maintain present production levels or any planned expansion of production
levels upon which financial projections provided to Parent Sub have been based
without requiring any material capital or operating expenditures to comply with
applicable Environmental Laws and without any modification of its Environmental
Permits or obtaining any additional Environmental Permits.
<PAGE> 39
29
(c) The Company and the Subsidiaries have provided Parent
Sub with copies of any environmental reports, studies or analyses in their
possession or under their control relating to owned or leased real property or
the operations of the Company or the Subsidiaries.
SECTION 3.15. Company Products; Regulation. Except as
disclosed in Section 3.15 of the Company Disclosure Schedule, (a) there have
been no written notices, citations or decisions by any Governmental Authority
that any product produced, manufactured, marketed or distributed at any time by
the Company or any Subsidiary (the "Company Products") is defective or fails to
meet any applicable standards promulgated by any such Governmental Authority,
(b) the Company and the Subsidiaries have complied in all material respects
with the laws, regulations and specifications with respect to design,
manufacture, labelling, testing and inspection of Company Products promulgated
by the Food and Drug Administration ("FDA"), (c) there have been no recalls or
seizures ordered or threatened by any such Governmental Authority with respect
to any of the Company Products and (d) none of the Company or the Subsidiaries
has received any warning letter from the FDA.
SECTION 3.16. Opinion of Financial Advisor. The Company has
received the written opinion of Vector Securities International, Inc.
("Vector") on the date of this Agreement to the effect that the Merger
Consideration is fair from a financial point of view to the Company's
shareholders as of the date thereof, and the Company will promptly, after the
date of this Agreement, deliver a copy of such opinion to Parent. A copy of
the Vector engagement letter, dated February 3, 1995, has previously been
delivered to Parent.
SECTION 3.17. Vote Required. The affirmative vote of the
holders of a majority of the then outstanding shares of Company Common Stock is
the only vote of the holders of any class or series of capital stock of the
Company necessary to approve the Merger.
SECTION 3.18. Brokers. No broker, finder or investment
banker (other than Vector) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of the Company. The Company has heretofore furnished to Parent
a correct copy of all agreements between the Company and Vector pursuant to
which such firm would be entitled to any payment relating to the Transactions.
SECTION 3.19. Tangible Property. The Company and its
Subsidiaries have sufficient title to all their tangible properties and assets
to conduct their respective businesses, with only such exceptions as,
individually or in the aggregate, would not have a Material Adverse Effect.
<PAGE> 40
30
SECTION 3.20. Material Contracts. Section 3.20 of the
Company Disclosure Schedule lists each contract which is required by its terms
or is currently expected to result in the payment or receipt by the Company or
its Subsidiaries of more than $500,000 and which is not terminable by the
Company without the payment of any penalty or fine on not more than three
months' notice (a "Material Contract") to which the Company or any of its
Subsidiaries is a party, other than contracts which have been filed as an
exhibit to or has been incorporated by reference in any Company SEC Report.
Each Material Contract is in full force and effect and is enforceable against
the parties thereto (other than the Company or any such Subsidiary) in
accordance with its terms and no condition or state of facts exists that, with
notice or the passage of time, or both, would constitute a material default by
the Company or any such Subsidiary or, to the best knowledge of the Company,
any third party under such Material Contracts. The Company or the applicable
Subsidiary has duly complied in all material respects with the provision of
each Material Contract to which it is a party.
SECTION 3.21. Parachute Payments. Except as disclosed in
Section 3.21 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries has entered into any agreement that would result in the making
of "parachute payments," as defined in Section 280G of the Code, to any person.
SECTION 3.22. Certain Business Practices. As of the date of
this Agreement, except for such actions which would not have a Material Adverse
Effect, neither the Company nor any Subsidiary nor any director, officer, or,
to the best knowledge of the Company, any agent or employee of the Company or
any Subsidiary has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or
(iii) made any other unlawful payment.
SECTION 3.23. Real Property and Leases. The Company and the
Subsidiaries have sufficient title or leasehold interests to all their real
properties to conduct their respective businesses as currently conducted.
SECTION 3.24. Insurance. All material assets and risks of
the Company are covered by valid and currently effective insurance policies in
such types and amounts as are consistent with customary practices and standards
of companies engaged in businesses and operations similar to those of the
Company.
<PAGE> 41
31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND PARENT SUB
Except as set forth in the Disclosure Schedules delivered by
Parent to the Company and signed by the Company and Parent for identification
prior to the execution and delivery of this Agreement (the "Parent Disclosure
Schedules"), which shall identify exceptions by specific section references,
Parent and Parent Sub hereby, jointly and severally, represent and warrant to
the Company that:
SECTION 4.01. Corporate Organization and Qualification.
Parent and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where the failure
to have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Material Adverse Effect. Parent and
each of its subsidiaries is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing as would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.02. Certificate of Incorporation and By-laws.
Parent has heretofore furnished or made available to the Company a complete and
correct copy of the Deed of Incorporation, By-laws and equivalent
organizational documents of Parent, and the Articles of Incorporation, By-laws
and equivalent organizational documents of Parent Sub, each as amended to date.
Neither Parent nor Parent Sub is in violation of any provision of its Deed of
Incorporation, Articles of Incorporation, By-laws or equivalent organizational
documents.
SECTION 4.03. Capitalization. As of the date of this
Agreement, the authorized capital stock of Parent consists of 30,000,000 shares
of Parent Common Stock. As of March 31, 1995, (a) 10,333,350 shares of Parent
Common Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable, (b) 160,340 shares of Parent Common Stock were
held in the treasury of Parent and (c) 2,418,450 shares of Parent Common Stock
were reserved for future issuance pursuant to outstanding stock options or
stock incentive rights granted pursuant to Parent's stock option plans. The
authorized capital stock of Parent Sub consists of 1,000 shares of Parent Sub
Common Stock, of which, as of the date of this Agreement, 100 shares are issued
and outstanding and held by Parent. Except as contemplated by this Agreement
and as set forth in Parent's employee
<PAGE> 42
32
stock purchase plan and as set forth in this Section 4.03 and Section 4.03 of
the Parent Disclosure Schedule, as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Parent or any
subsidiary of Parent, including Parent Sub ("Parent Subsidiary"), obligating
Parent or any Parent Subsidiary to issue or sell any shares of capital stock
of, or other equity interests in, Parent or any Parent Subsidiary. Between
March 31, 1995 and the date of this Agreement, no shares of Parent Common Stock
have been issued by Parent, except pursuant to the exercise of the stock
options and stock incentive rights described above that were outstanding on
March 31, 1995, in each case, in accordance with their respective terms. There
are no outstanding contractual obligations of Parent or any Parent Subsidiary
to repurchase, redeem or otherwise acquire any shares of Parent Common Stock,
or any capital stock of, or any equity interests in, any Parent Subsidiary.
The shares of Parent Common Stock to be issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights created by statute, Parent's Deed of Incorporation or
By-laws or any agreement to which Parent is a party or by which Parent is bound
and will, when issued, be registered under the Securities Act and the Exchange
Act and registered or exempt from registration under applicable Blue Sky Laws.
SECTION 4.04. Authority Relative to This Agreement. Each of
Parent and Parent Sub has all necessary corporate power and authority to
execute and deliver this Agreement and, with respect to the Merger, upon the
approval by the shareholders of Parent of the issuance of shares of Parent
Common Stock to the shareholders of the Company in accordance with this
Agreement and Netherlands Antilles law, to perform its obligations hereunder
and to consummate the Transactions. The execution and delivery of this
Agreement by Parent and Parent Sub and the consummation by Parent and Parent
Sub of the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Parent or
Parent Sub are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the issuance of Parent Common Stock
pursuant to the Merger, the approval of such issuance by holders of a majority
of the outstanding shares of Parent Common Stock pursuant to Netherlands
Antilles Law and the applicable rules and regulations of NASDAQ, and with
respect to the Merger, the approval and adoption of this Agreement by the sole
holder of the outstanding shares of Parent Sub and the filing and recordation
of appropriate Articles of Merger with the Secretary as required by Minnesota
Law). This Agreement has been duly and validly executed and delivered by
Parent and Parent Sub and, assuming the due authorization, execution and
delivery of this Agreement by the Company, constitutes a legal, valid and
binding obligation of each of Parent and Parent Sub enforceable against each of
Parent and Parent Sub in accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Parent Sub do
not, and the
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33
performance of this Agreement by Parent and Parent Sub will not subject to, (x)
with respect to the Merger, obtaining the requisite approval by the
shareholders of Parent of the issuance of shares of Parent Common Stock to the
shareholders of the Company in accordance with this Agreement and Netherlands
Antilles law, and (y) obtaining the consents, approvals, authorizations and
permits and making the filings described in this Section 4.05(b) and Section
4.05(b) of the Parent Disclosure Schedule, (i) conflict with or violate the
Deed of Incorporation, Articles of Incorporation or By-laws or equivalent
organizational documents of either Parent or any Parent Subsidiary, (ii)
conflict with or violate any Law applicable to Parent or any Parent Subsidiary
or by which any property or asset of any of them is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Parent
or any Parent Subsidiary or require the consent of any third party pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any
Parent Subsidiary is a party or by which Parent or Parent Sub or any property
or asset of any of them is bound or affected, except for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent Parent and Parent Sub from performing
their respective obligations under this Agreement and consummating the
Transactions.
(b) The execution and delivery of this Agreement by
Parent and Parent Sub do not, and the performance of this Agreement by Parent
and Parent Sub will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) for applicable requirements, if any,
of the Exchange Act, the Securities Act, Blue Sky Laws, and filing and
recordation of appropriate Articles of Merger with the Secretary as required by
Minnesota Law, (ii) as specified in Section 4.05(b) of the Parent Disclosure
Schedule, and (iii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Transactions, or otherwise prevent Parent
or Parent Sub from performing their respective obligations under this
Agreement.
SECTION 4.06. SEC Filings; Financial Statements. (a) Parent
has filed all forms, reports and documents required to be filed by it with the
SEC since December 31, 1992 (collectively, the "Parent SEC Reports"). The
Parent SEC Reports (i) were prepared in all material respects in accordance
with the requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations thereunder and (ii) did not, at the time
they were filed (or at the effective date thereof in the case of registration
statements), contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. No subsidiary
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34
of Parent is currently required to file any form, report or other document with
the SEC under Section 12 of the Exchange Act.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Parent SEC
Reports, the consolidated financial statements of Parent and its consolidated
Parent Subsidiaries for the year ended December 31, 1994 and the unaudited
consolidated financial statements of Parent and its consolidated Parent
Subsidiaries for the quarter ended March 31, 1995 was prepared in accordance
with U.S. GAAP throughout the periods indicated (except as may be indicated in
the notes thereto and except that financial statements included with interim
reports do not contain all U.S. GAAP notes to such financial statements) and
each fairly presented in all material respects the consolidated financial
position, results of operations and changes in shareholders' equity and cash
flows of Parent and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to have a
Material Adverse Effect.
SECTION 4.07. Absence of Certain Changes or Events. Since
December 31, 1994, except as contemplated by, or disclosed pursuant to, this
Agreement including Section 4.07 of the Parent Disclosure Schedule or disclosed
by Parent to the Company in writing on the date hereof, or disclosed in any
Parent SEC Report filed since December 31, 1994 and prior to the date of this
Agreement, Parent and the Parent Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since December 31, 1994, there has not been (a) any event or events (whether or
not covered by insurance), individually or in the aggregate, having a Material
Adverse Effect other than changes or effects affecting the medical devices
industry generally, (b) any material change by Parent in its accounting
methods, principles or practices, (c) any entry by Parent or any Parent
Subsidiary into any commitment or transaction material to Parent or the Parent
Subsidiaries, except in the ordinary course of business and consistent with
past practice, (d) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Parent or any redemption,
purchase or other acquisition of any of its securities or (e) other than
pursuant to Parent's benefit plans any increase in or establishment of any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option, stock purchase or other employee benefit plan, except in
the ordinary course of business consistent with past practice.
SECTION 4.08. Absence of Litigation. Except as disclosed in
Section 4.08 of the Parent Disclosure Schedule or the Parent SEC Reports filed
prior to the date of this Agreement, there is no claim, action, proceeding or
investigation pending or, to the best knowledge of Parent, threatened against
Parent or any subsidiary, before any arbitrator or Governmental Authority,
which (a) individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect or (b) seeks to delay or prevent the
<PAGE> 45
35
consummation of the Merger. Neither Parent nor any Parent Subsidiary nor any
property or asset of Parent or any subsidiary is in violation of any order,
writ, judgment, injunction, decree, determination or award having, individually
or in the aggregate, a Material Adverse Effect.
SECTION 4.09. Taxes. (a) Parent and each Parent Subsidiary
have (i) filed all federal and foreign tax returns required to be filed by it
prior to the date of this Agreement (taking into account extensions), (ii) paid
or accrued all taxes shown to be due on such returns and has paid all
applicable ad valorem and value added taxes as are due and (iii) paid or
accrued all taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clause (i), (ii) or (iii) for any such
filings, payments or accruals which would not, individually or in the
aggregate, have a material adverse effect on Parent. Except as set forth on
Section 4.09 of the Parent Disclosure Schedule, neither the Internal Revenue
Service nor any other taxing authority has asserted any claim for taxes, or to
the best knowledge of Parent, is threatening to assert any claims for taxes,
which claims, individually or in the aggregate, would have a Material Adverse
Effect on Parent. Parent and each Parent Subsidiary have withheld or collected
and paid over to the appropriate governmental authorities (or are properly
holding for such payment) all taxes required by law to be withheld or
collected, except for amounts which would not, individually or in the
aggregate, have a Material Adverse Effect. Parent has not made an election
under Section 341(f) of the Code. There are no liens for taxes upon the assets
of Parent or any Parent Subsidiary (other than liens for taxes that are not yet
due or that are being contested in good faith by appropriate proceedings),
except for liens which would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Parent has not taken or agreed to take any action
that would prevent the Merger from constituting a reorganization qualifying
under the provisions of Section 368(a) of the Code.
SECTION 4.10. Ownership of Parent Sub; No Prior Activities.
(a) Parent Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except
for obligations or liabilities incurred in connection with its incorporation or
organization and the Transactions and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Parent Sub has not
and will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any person.
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SECTION 4.11. Vote Required. The affirmative vote of the
holders of a majority of the outstanding shares of Parent Common Stock is the
only vote of the holders of any class or series of capital stock of Parent
necessary to approve the issuance of shares of Parent Common Stock to the
shareholders of the Company.
SECTION 4.12. Brokers. No broker, finder or investment
banker (other than Alex. Brown & Sons Incorporated ("Alex. Brown")) is entitled
to any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or Parent
Sub.
SECTION 4.13. Financing. Parent has, or will have available
to it at the time Parent Sub is required to pay the Merger Consideration for
shares of Company Common Stock pursuant to the Merger, and will make available
to Parent Sub, (i) sufficient funds to permit Parent Sub to acquire the Cash
Election Number of shares of Company Common Stock and (ii) sufficient
authorized but unissued shares of Parent Common Stock to acquire the Stock
Election Number of shares of Company Common Stock, in each case pursuant to the
Merger.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, except as set forth in Section 5.01 of the
Company Disclosure Schedule or as described in the Company SEC Reports or as
contemplated by any other provision of this Agreement, unless Parent shall
otherwise agree in writing (which agreement shall not be unreasonably
withheld), (1) the businesses of the Company and the Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner substantially
consistent with past practice, (2) the Company shall use all reasonable efforts
to preserve substantially intact its business organization, to keep available
the services of the current officers, management and sales employees and
consultants of the Company and the Subsidiaries and to preserve the current
relationships of the Company and the Subsidiaries with customers, suppliers and
other persons with which the Company or any Subsidiary has significant business
relations and (3) the Company shall not:
(a) amend or otherwise change its Articles of
Incorporation or By-laws or equivalent organizational documents;
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(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of, (i) any shares of capital stock of the Company or any
Subsidiary of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of the Company or any Subsidiary
(except for the issuance of shares of capital stock issuable pursuant
to (i) currently outstanding Company Options and Warrants, (ii) rights
under the Stock Purchase Plan and pursuant to Plans currently in
effect on the date hereof), (iii) the Reorganization Agreement or (iv)
any of the Company's or the Subsidiaries' assets, except for sales in
the ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) reclassify, combine, split, divide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) any interest
in any corporation, partnership, other business organization or any
division thereof or any assets, other than the acquisition of assets
in the ordinary course of business consistent with past practice; (ii)
incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, or make any
loans or advances, except for indebtedness incurred in the ordinary
course of business and consistent with past practice and other
indebtedness with a maturity of not more than one year in a principal
amount not, in the aggregate, in excess of $200,000; (iii) enter into
any contract or agreement material to the business, results of
operations or financial condition of the Company and the Subsidiaries
taken as a whole other than in the ordinary course of business,
consistent with past practice; (iv) authorize any capital expenditure,
other than capital expenditures set forth in Section 5.01(e)(iv) of
the Company Disclosure Schedule; or (v) enter into or amend any
contract, agreement, commitment or arrangement with respect to any
matter set forth in this subsection (e);
(f) except in the ordinary course of business consistent
with past practice and except in the case of officers for annual
increases in compensation payable or to become payable to any officer
of the Company consistent with past practices of the Company, (i)
increase the compensation payable or to become payable to any
director, officer or other employee, or grant any bonus, to, or grant
any severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee of
the Company or any Subsidiary or enter into or
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amend any collective bargaining agreement, or (ii) establish, adopt,
enter into or amend any bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation or other plan, trust or fund for the benefit of any
director, officer or class of employees; or
(g) settle or compromise any pending or threatened
litigation which is material or which relates to the transactions
contemplated hereby, provided that nothing in this Section 5.01(g)
will prohibit the Company's Board of Directors from settling or
compromising any such litigation if, after consultation with
independent counsel, the Company's Board of Directors believes that
such action is necessary to comply with its fiduciary duties.
SECTION 5.02. Conduct of Business by Parent Pending the
Merger. Parent covenants and agrees that, between the date of this Agreement
and the Effective Time, except as set forth in Section 5.02 of the Parent
Disclosure Schedule or as contemplated by any other provision of this
Agreement, unless the Company shall otherwise agree in writing (which agreement
will not be unreasonably withheld), (i) the businesses of the Parent and each
Parent Subsidiary shall be conducted only in, and the Parent shall not, and
shall cause each Parent Subsidiary not to, take any action except in, the
ordinary course of business consistent with past practice, and (ii) Parent
shall not amend any of the terms or provisions of the Parent Common Stock.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Proxy Statement. (a)
As promptly as practicable after the execution of this Agreement, Parent shall
prepare and file with the SEC a registration statement on Form F-4 (together
with all amendments thereto, the "Registration Statement") including therein a
combined proxy statement to be sent to the shareholders of the Company (the
"Proxy Statement") and Prospectus, in connection with the registration under
the Securities Act of the shares of Parent Common Stock to be issued to the
shareholders of the Company pursuant to the Merger. Parent and the Company
each shall use all reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable, and, prior to the effective date
of the Registration Statement, Parent shall take all or any action required
under any applicable federal or state securities laws in connection with the
issuance of shares of Parent Common Stock pursuant to the Merger. Each of the
Company and Parent shall pay its own expenses incurred in connection with the
Registration Statement, Proxy Statement and Shareholders' Meetings, including,
without limitation, the fees and disbursements of their respective counsel,
accountants and other representatives, except that the Company and Parent each
shall pay one-half of any printing,
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39
filing and other fees and expenses incurred in connection therewith. The
Company shall furnish all information concerning the Company as Parent may
reasonably request in connection with such actions and the preparation of the
Registration Statement and Proxy Statement. As promptly as practicable after
the Registration Statement shall have become effective, the Company shall mail
the Proxy Statement to its shareholders. The Proxy Statement shall include the
recommendation of the Board of Directors of the Company in favor of the Merger,
unless otherwise necessary due to the applicable fiduciary duties of the
directors of the Company, as determined by such directors in good faith after
consultation with independent legal counsel (who may be such party's regularly
engaged independent legal counsel), subject to Section 6.05.
No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Parent or the Company without the
approval of the other party, which shall not be unreasonably withheld. Parent
and the Company each will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information.
Parent shall promptly prepare and submit to NASDAQ a listing
application covering the shares of Parent Common Stock issuable in the Merger,
and shall use its reasonable best efforts to obtain, prior to the Effective
Time, approval for the listing of such Parent Common Stock, subject to official
notice of issuance and the Company shall cooperate with Parent with respect to
such listing.
(b) Parent represents, warrants and agrees that the
information supplied by Parent for inclusion in the Registration Statement and
the Proxy Statement shall not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to the shareholders of Parent and the
Company, (iii) the time of each of the Shareholders' Meetings, and (iv) the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to
any material fact, or omits to state any material fact required to be stated
therein, or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Shareholders' Meetings
which shall have become false or misleading. If at any time prior to the
Effective Time any event or circumstance relating to Parent or any Parent
Subsidiary, or their respective officers or directors, should be discovered by
Parent which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, Parent shall promptly inform the
Company. Notwithstanding the foregoing, Parent and Parent Sub make no
representation
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40
or warranty with respect to any information supplied by the Company or any of
its representatives which is contained in the Proxy Statement documents. All
documents that the Company is responsible for filing with the SEC in connection
with the transactions contemplated herein will comply as to form and substance
in all material aspects with the applicable requirements of the Securities Act
and the rules and regulations promulgated thereunder and the Exchange Act and
the rules and regulations promulgated thereunder.
(c) The Company represents, warrants and agrees that the
information supplied by the Company for inclusion in the Registration Statement
and the Proxy Statement shall not, at (i) the time the Registration Statement
is declared effective, (ii) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the shareholders of the
Company and Parent, (iii) the time of each of the Shareholders' Meetings, and
(iv) the Effective Time, contain any statement which, at such time and in light
of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact required to
be stated therein, or necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders'
Meetings which shall have become false or misleading. If at any time prior to
the Effective Time any event or circumstance relating to the Company or any
Subsidiary, or their respective officers or directors, should be discovered by
the Company which should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, the Company shall promptly inform
Parent. Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by Parent or any of its
representatives in the Proxy Statement documents. All documents that Parent is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations promulgated thereunder and the Exchange Act and the rules and
regulations promulgated thereunder.
(d) The Company, Parent and Parent Sub each hereby (i)
consents to the use of its name and, on behalf of its subsidiaries and
affiliates, the names of such subsidiaries and affiliates and to the inclusion
of financial statements and business information relating to such party and its
subsidiaries and affiliates (in each case, to the extent required by applicable
securities laws) in the Registration Statement or the Proxy Statement; (ii)
agrees to use all reasonable efforts to obtain the written consent of any
person or entity retained by it which may be required to be named (as an expert
or otherwise) in the Registration Statement or the Proxy Statement; and (iii)
agrees to cooperate, and agrees to use all reasonable efforts to cause its
subsidiaries and affiliates to cooperate, with any legal counsel, investment
banker, accountant or other agent or representative retained by any of the
parties specified in clause (i) above in connection with the preparation of any
and all information required, as determined after consultation with each
party's counsel, to be disclosed by applicable securities laws in the
Registration Statement or the Proxy Statement.
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SECTION 6.02. Shareholders' Meetings. The Company shall call
and hold a meeting of its shareholders and Parent shall call and hold a meeting
of its shareholders (the "Shareholders' Meetings") as promptly as practicable
for the purpose of voting upon, in the case of the Company, the approval of the
Merger and, in the case of Parent, the approval of the issuance of additional
shares of Parent Common Stock pursuant to the Merger, and the Company and
Parent shall use all reasonable efforts to hold the Shareholders' Meetings on
the same day and as soon as practicable after the date on which the
Registration Statement becomes effective. The Company and Parent shall use all
reasonable efforts to solicit from their respective shareholders proxies in
favor of the approval of, in the case of the Company, the Merger and, in the
case of Parent, the issuance of additional shares of Parent Common Stock
pursuant to the Merger, and shall take all other action reasonably necessary or
advisable to secure the vote or consent of shareholders required by Minnesota
Law or the laws of the Netherlands Antilles, as the case may be, to obtain such
approvals (including unanimously recommending such approval), unless otherwise
necessary and mandatory under the applicable fiduciary duties of the directors
of the Company or Parent, as determined by such directors in good faith after
consultation with independent legal counsel (who may be such party's regularly
engaged independent legal counsel).
SECTION 6.03. Appropriate Action; Consents; Filings. (a)
The Company and Parent shall use their best reasonable efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or required to be
taken by any Governmental Authority or otherwise to consummate and make
effective the Transactions as promptly as practicable, (ii) obtain from any
Governmental Authorities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent or the
Company or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
Transactions, including, without limitation, the Merger, and (iii) as promptly
as practicable, make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Merger required
under (A) the Securities Act and the Exchange Act, and any other applicable
federal or state securities Laws, (B) the rules and regulations of the NASD,
(C) Minnesota Law and (D) any other applicable Law; provided that Parent and
the Company shall cooperate with each other in connection with the making of
all such filings, including providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to accept
all reasonable additions, deletions or changes suggested in connection
therewith. The Company and Parent shall use reasonable best efforts to furnish
to each other all information required for any application or other filing to
be made pursuant to the rules and regulations of any applicable Law (including
all information required to be included in the Proxy Statement and the
Registration Statement) in connection with the transactions contemplated by
this Agreement.
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(b) (i) Each of Parent and the Company shall give (or
shall cause their respective subsidiaries to give) any notices to third
parties, and use, and cause their respective subsidiaries to use, their
reasonable best efforts to obtain any third party consents (including those set
forth in Section 3.05(a)(iii)), (A) necessary to consummate the Transactions,
(B) disclosed or required to be disclosed in the Company Disclosure Schedule or
the Parent Disclosure Schedule or (C) required to prevent a Material Adverse
Effect from occurring prior to or after the Effective Time.
(ii) In the event that Parent or the Company shall fail to
obtain any third party consent described in subsection (b)(i) above, it shall
use all reasonable efforts, and shall take any such actions reasonably
requested by the other party, to minimize any adverse effect upon the Company
and Parent, their respective subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
(c) From the date of this Agreement until the Effective
Time, each party shall promptly notify the other party of any pending, or to
the best knowledge of the first party, threatened, action, proceeding or
investigation by or before any Governmental Authority or any other person (i)
challenging or seeking material damages in connection with the Merger or the
conversion of the Company Common Stock into Parent Common Stock pursuant to the
Merger or (ii) seeking to restrain or prohibit the consummation of the Merger
or otherwise limit the right of Parent or, to the knowledge of such first
party, any Parent subsidiary to own or operate all or any portion of the
businesses or assets of the Company or the Subsidiaries, which in either case
is reasonably likely to have a Material Adverse Effect on the Company and the
Subsidiaries prior to the Effective Time, or a Material Adverse Effect on the
Parent and the Parent Subsidiaries (including the Surviving Corporation) after
the Effective Time.
SECTION 6.04. Access to Information; Confidentiality.
Subject to the Confidentiality Agreement (as hereinafter defined), from the
date hereof to the Effective Time, Parent and the Company will each provide to
the other, during normal business hours and upon reasonable notice, access to
all information and documents which the other may reasonably request regarding
the business, assets, liabilities, employees and other aspects of the other
party, other than information and documents that in the opinion of such other
party's counsel may not be disclosed under applicable Law.
SECTION 6.05. No Solicitation of Transactions. Neither the
Company nor any Subsidiary shall, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase
of all or any material portion of the assets of, or any equity interest in, the
Company or any Subsidiary or any merger, consolidation, share exchange,
business combination or other similar transaction with the Company or any
Subsidiary or
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participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that nothing
contained in this Section 6.05 shall prohibit the Board from authorizing the
Company or the Board's other designees to review or to furnish information to,
or entering into discussions or negotiations with, any person in connection
with an unsolicited proposal in writing by such person to acquire the Company
pursuant to a merger, consolidation, share exchange, business combination or
other similar transaction or to acquire all or substantially all of the assets
of the Company or any of its Subsidiaries received by the Board after the date
of the Agreement, if, and only to the extent that, (a) the Board, after
consultation with its independent legal and financial advisors and taking into
consideration the advice of such advisors, determines in good faith that (i)
such action is required for the Board to comply with its fiduciary duties to
shareholders imposed by Minnesota Law and (ii) such unsolicited offer is
superior to the Transactions and (b) prior to furnishing such information to,
or entering into discussions or negotiations with, such person, the Company (i)
gives Parent and Parent Sub as promptly as practicable prior written notice of
the Company's intention to furnish such information or begin such discussions
and (ii) receives from such person an executed confidentiality agreement on
terms no less favorable to the Company than those contained in the
Confidentiality Agreement. The Company shall notify Parent promptly if any
proposal or offer, or any inquiry or contact with any person with respect
thereto, is made and shall, in any such notice to Parent, indicate in
reasonable detail the terms and conditions of such proposal, offer, inquiry or
contact. The Company agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which the Company
is a party. The Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing.
SECTION 6.06. Directors' and Officers' Indemnification and
Insurance. (a) The Articles of Incorporation and By-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article 6 of the By-laws of the Company,
which provisions shall not be amended, repealed or otherwise modified for a
period of five years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who immediately prior to the
Effective Time were directors, officers or employees of the Company or any
Subsidiary, unless such modification shall be required by Minnesota Law.
(b) The Company shall indemnify and hold harmless, and,
after the Effective Time, the Surviving Corporation shall indemnify and hold
harmless, to the fullest extent permitted by Minnesota Law, each present and
former director, member of the Review Committee, officer and employee of the
Company and each Subsidiary (collectively, the "Indemnified Parties") against
all costs and expenses (including reasonable attorneys' fees), judgments,
fines, penalties, losses, claims, damages, liabilities and settlement amounts
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paid in connection with any claim, or any threatened, pending or completed
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative, arbitral or
investigative, arising out of or pertaining to any action or omission in their
official capacity as an officer, director, employee, fiduciary or agent,
whether occurring before or after the Effective Time, for a period of five
years after the date hereof. In the event of any such claim, or any
threatened, pending or completed action, suit, proceeding or investigation, (i)
the Company or the Surviving Corporation, as the case may be, shall to the
fullest extent permitted by Minnesota Law, pay, or advance, as appropriate, the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, promptly after statements therefor are received and (ii) the
Company or the Surviving Corporation shall cooperate with the Indemnified
Parties in the defense of any such matter; provided, however, that, except as
otherwise required by Minnesota Law, neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); provided further
that neither the Company nor the Surviving Corporation shall be obligated
pursuant to this Section 6.06 to pay the fees and expenses of more than one
counsel for all Indemnified Parties in any single action except to the extent
that two or more of such Indemnified Parties shall have conflicting interests
in the outcome of such action or as otherwise required by Minnesota Law; and
provided further that, in the event that any claim for indemnification is
asserted or made within such five-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.
(c) Prior to the Effective Time the Company shall, and
after the Effective Time the Surviving Corporation shall, to the fullest extent
permitted by Minnesota Law, make reasonable advances to the Indemnified Parties
to cover expenses for which such Indemnified Parties would otherwise be
entitled to indemnification pursuant to this Section 6.06.
(d) The Surviving Corporation shall use its best efforts
to maintain in effect for three years from the Effective Time, if available,
the current directors' and officers' liability insurance policies maintained by
the Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which
are not materially less favorable) with respect to matters occurring prior to
the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 6.06(d) more than
$200,000 per year.
(e) In the event the Company or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the
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Company or the Surviving Corporation, as the case may be, or at Parent's
option, Parent, shall assume the obligations set forth in this Section 6.06.
(f) Parent hereby unconditionally guaranties the
Surviving Corporation's obligations to the Indemnified Parties pursuant to this
Section 6.06, and, to the fullest extent permitted by Minnesota Law, the
Company's indemnification agreements with its directors and officers in the
form attached as an exhibit to the Company SEC Reports.
SECTION 6.07. Obligations of Parent Sub. Parent shall take
all action necessary to cause Parent Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to conditions
set forth in this Agreement.
SECTION 6.08. Public Announcements. (a) Parent and the
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or any
Transaction and shall not issue any such press release or make any such public
statement prior to such consultation and (b) prior to the Determination Date,
Parent will not issue any other press release or otherwise make any statements
regarding its business other than in accordance with its past practices, except
as may be required by Law or any listing agreement with the National
Association of Securities Dealers, Inc. (the "NASD") or any national securities
exchange to which Parent or the Company is a party. The parties have agreed on
the text of a joint press release by which Parent and the Company will announce
the execution of this Agreement.
SECTION 6.09. Delivery of SEC Documents. Each of the Company
and Parent shall promptly deliver to the other true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of this
Agreement.
SECTION 6.10. Environmental Assessment. The Company agrees
that Parent may perform or have performed on its behalf an environmental
assessment of the owned or leased real property. The Company and its
Subsidiaries will give Parent and the officers, directors, employees, agents,
consultants and representatives of Parent access to the owned or leased real
property, including without limitation, access to enter upon and investigate
and collect air, surface water, groundwater and soil samples, in order to
conduct the environmental assessment. The Company and its Subsidiaries will
cooperate with Parent in connection with such assessment, including without
limitation scheduling site visits as necessary to complete the assessment prior
to the Effective Time. The environmental assessment conducted by Parent or on
Parent's behalf shall be satisfactory to Parent in its sole and absolute
discretion.
SECTION 6.11. Notification of Certain Matters. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which
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would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate and (ii) any failure of the Company,
Parent or Parent Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.11 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.12. Further Action. At any time and from time to
time, each party to this Agreement agrees, subject to the terms and conditions
of this Agreement, to take such actions and to execute and deliver such
documents as may be necessary to effectuate the purposes of this Agreement at
the earliest practicable time.
SECTION 6.13. Employee Benefits. Subject to Section 9.05:
(a) The Surviving Corporation agrees that, during the
period commencing at the Effective Time and ending on the first anniversary
thereof, the employees of the Company will continue to be provided with
benefits under employee benefit plans that are no less favorable in the
aggregate than those currently provided by the Company to such employees.
(b) Parent will cause the Surviving Corporation to honor
all employee benefit obligations to current and former employees and directors
under the Company's employee benefit plans in existence on the date hereof and
disclosed in Section 3.10 of the Company Disclosure Schedule and all employment
or severance agreements or indemnification agreements entered into by the
Company or adopted by the Board of Directors of the Company prior to the date
hereof and disclosed in Section 6.13(b) of the Company Disclosure Schedule;
provided, however, that nothing shall prevent Parent or the Surviving
Corporation from taking any action with respect to such plans, obligations or
agreements or refraining from taking any such action which is permitted or
provided for under the terms thereof or under applicable law.
(c) Employees of the Surviving Corporation shall be given
credit for all actual service with the Company and the Subsidiaries under all
employee benefit plans, programs and policies of the Surviving Corporation or
Parent in which they become participants for all purposes thereunder, except to
the extent that such crediting would produce duplication of benefits.
SECTION 6.14. Tax Representation Letter. At least two
business days prior to the date the Proxy Statement is first mailed to
shareholders of the Company, Parent shall execute a tax representation letter
substantially in the form of Annex A hereto addressed to Baker & McKenzie,
which letter shall be updated as of the Effective Time.
<PAGE> 57
47
SECTION 6.15. Osteogenics Registration Rights. Subject to
Section 9.05, after the Effective Time, Parent and Parent Sub shall honor the
registration rights granted to certain former shareholders of Osteogenics in
connection with the Company's acquisition of Osteogenics to the extent provided
in the Reorganization Agreement.
SECTION 6.16. Non-Tax Election Shareholders. Prior to the
Effective Time, Parent and Company shall cooperate to identify any of the
Company's shareholders which immediately prior to the Effective Time will own
five per cent (5%) or more of the outstanding Company Common Stock ("5%
Shareholders"). Parent and the Company will cooperate to obtain from such 5%
Shareholders a tax representation letter reasonably acceptable to their
respective counsel. Any 5% Shareholder which fails to execute such tax
representation letter prior to the Election Deadline shall be treated for
purposes of this Agreement as having made a Cash Election ("Non-Tax Election
Shareholder").
SECTION 6.17. Directorships. (a) The Board of Directors of
Parent shall nominate, propose for election and recommend the election of Mr.
Schwalm and Mr. Clifford to the shareholders of Parent at Parent's
Shareholders' Meeting.
(b) Parent shall cause the Board of Directors of the
Surviving Corporation, immediately after the Effective Time, to be comprised of
five directors, three of whom shall be elected by Parent from among candidates
of its choosing. Mr. Schwalm and Mr. Gero shall be the other directors of the
Surviving Corporation, and Mr. Schwalm shall be the Chairman of the Surviving
Corporation's Board of Directors. If any of Mr. Schwalm or Mr. Gero or their
successors ceases to be a director of the Surviving Corporation for any reason,
the other director or his successor shall designate such former director's
replacement, and Parent shall cause such replacement director to be elected.
Parent's obligations under this Section 6.17(b) shall terminate upon the
earlier to occur of December 31, 1997 or the date on which the Maximum Earnout
and the Maximum Bonus are paid.
SECTION 6.18. Determination of Earnout and Bonus Payments.
Until the earlier to occur of December 31, 1997 or the payment of the Maximum
Earnout and Maximum Bonus, the provisions of this section will be applicable.
(a) Operation of Surviving Corporation. After the
Effective Time, the Board of Directors of the Surviving Corporation shall use
its best reasonable efforts to operate its business, and the Board of Directors
of Parent shall use its best reasonable efforts to cause the business of the
Surviving Corporation to be operated, in a manner designed to maximize, to the
extent practicable, the amount of the Earnout and the Bonus, and the likelihood
that the Earnout and the Bonus will be paid. Nothing in this Section 6.18(a)
shall be deemed to require the Board of Directors of either the Surviving
Corporation or Parent to operate or cause the business of the Surviving
Corporation to be operated in a manner
<PAGE> 58
48
inconsistent with the best interests of the Surviving Corporation or interfere
with such Boards' fiduciary responsibilities to their respective shareholders.
(b) Review Committee. At the Effective Time, there
shall be established a special committee (the "Review Committee") having the
duties set forth in this Section 6.18 and consisting of four members, two of
whom shall be selected by AME (the "AME Committee Members") and two of whom
shall be selected by Orthofix (the "Orthofix Committee Members"). The initial
AME Committee Members shall be Messrs. Gero and Schwalm and the initial
Orthofix Committee members shall be Messrs. Gaines Cooper and Clifford. Any
vacancy in the Review Committee caused by the death, resignation or incapacity
of an AME Committee Member shall be filled by the remaining AME Committee
Member; any vacancy in the Review Committee caused by the death, resignation or
incapacity of an Orthofix Committee Member shall be filled by Orthofix. The
normal operating expenses of the Review Committee shall be borne by the
Surviving Corporation.
(c) Actions of Review Committee. Meetings of the Review
Committee may be held either in person or by means of conference telephone and
may be called by any member of the Committee upon written notice mailed to each
other member of the Committee, addressed to each member's residence or place of
business, with a copy sent to him at such place by telegram or telecopy, or
telephoned or delivered to him personally, not later than two days before the
day on which the meeting is to be held. Notice of any meeting need not be
given to any member who shall attend such meeting or who shall waive notice
thereof, before or after such meeting. Two members of the Review Committee
shall constitute a quorum for the transaction of business and may act on any
question brought before such meeting, provided that at least one AME Committee
Member and at least one Orthofix Committee Member vote in favor of such action.
Review Committee actions may also be taken without the holding of a meeting by
unanimous written consent. All actions properly taken by the Committee shall
be binding and conclusive on the parties to this Merger Agreement and the
Record Holders.
(d) Determination of Contingent Payments. As promptly as
practicable after the end of each calendar year, but in any event within sixty
(60) days after the end of such year, the Surviving Corporation shall calculate
the amount, if any, of Earnout or Bonus to be paid in respect of such year.
The amount of AME Revenue, Orthofix Revenue, Combined Revenue or Net Income for
any year to be used in such calculations shall be derived from the audited
financial statements of the Surviving Corporation prepared in accordance with
U.S. GAAP for such year, taking into account any adjustments to such amounts
previously established by the Review Committee pursuant to this Section 6.18(d)
or by the arbitrators pursuant to Section 6.18(f) below, and confirmed by the
Surviving Corporation's accountants. Parent shall cause the Surviving
Corporation to prepare such audited financial statements in accordance with
U.S. GAAP within sixty (60) days after the end of each calendar year. The
Surviving Corporation will deliver to the Review Committee
<PAGE> 59
49
copies of the relevant audited financial statements of the Surviving
Corporation which were used to calculate the Bonus and Earnout amount
(including work papers and other financial records) as promptly as practicable
after the completion of such audited financial statements. Within fifteen (15)
days of the delivery of such materials, the Review Committee shall review the
calculations of the Bonus and Earnout payments to be made pursuant to this
Section 6.18. If the Review Committee deems it necessary, it may consult with
an internationally recognized independent accounting firm and make such further
investigations as it shall deem appropriate. The Review Committee shall have
the authority to (i) interpret the provisions of this Agreement insofar as it
relates to Bonus or Earnout payments hereunder, and (ii) determine whether the
Boards of Directors of the Surviving Corporation and Parent have operated, and
caused the operation of, the Surviving Corporation in the manner specified in
Section 6.18(a). If any member of the Review Committee reasonably believes
that the Surviving Corporation is not being operated in the manner specified in
Section 6.18(a), then any such member may call a meeting of the Review
Committee for the purpose of reviewing and determining whether any equitable
adjustment of the Earnout or Bonus formulae is appropriate. In the event that
after due discussion and deliberation, including full consideration of the
intent of the parties, as set forth in Section 6.18(a) above, the Review
Committee is unable to reach the requisite majority with respect to a matter,
then any member of the Review Committee may request that the unresolved matter
be submitted to binding arbitration in accordance with the provisions of
Section 6.18(f) below. Nothing in Section 6.18 shall be deemed to allow the
Review Committee to prevent the Boards of Directors of the Surviving
Corporation and Parent from operating the business of the Surviving Corporation
in the manner specified in Section 6.18(a).
(e) Pro-Rata Allocation. (i) The Review Committee shall
have the sole responsibility for performing the calculations described in (ii)
below to determine the relative interests of Record Holders, holders of
unexercised Substitute Options, holders of unexercised Substitute Warrants and
holders of Determinable Osteogenics Rights in and to any Bonus or Earnout
payments made by Orthofix and the succession or assignment of such relative
interests, and Orthofix's sole obligation hereunder shall be to make available
the cash or number of shares of Orthofix Common Stock, as determined herein,
for distribution to the Record Holders.
(ii) Earnout and Bonus payments will be allocated on a
pro-rata basis among all (A) Record Holders and (B) holders of then unexercised
Substitute Options, holders of then unexercised Substitute Warrants and holders
of Osteogenics Rights. For purposes of determining pro-rata allocation, the
holders specified in (B) above shall be treated as if their Substitute Options
and Substitute Warrants had been exercised for, or their Osteogenics Rights had
been triggered and received, shares of Company Common Stock immediately prior
to the Effective Time. If Substitute Options or Substitute Warrants expire
during the period in which Earnout or Bonus is still payable, the pro-rata
portion of any previous Earnout or Bonus allocable to such expired Substitute
Option and Substitute
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50
Warrants shall be reallocated among the holders specified in (A) and (B) above,
and distributed on the next Payout Date.
(f) Arbitration. Any dispute, controversy or claim
arising in connection with the provisions of this Merger Agreement relating to
payments of Earnout or Bonus or the actions, determinations or calculations
contemplated hereby shall be settled by arbitration by three arbitrators to be
appointed pursuant to the Rules of the American Arbitration Association, and
said arbitration shall be conducted in accordance with the Rules of said
Association. The arbitration shall be held in New York City. The
determination of the arbitrators shall be final and binding on the parties.
The expense of the arbitration shall be borne as determined by the arbitrators.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction. Approval of this Merger Agreement shall constitute the
appointment of the Review Committee as the representatives of the Record
Holders in any arbitration conducted pursuant to this Section 6.18(f). The
Review Committee may have Orthofix withhold from any payment of cash or shares
of Parent Common Stock to be made pursuant to this payment and deliver to the
Review Committee such amount of cash or number of shares as the Review
Committee deems necessary to pay for the reasonable expenses (including, but
not limited to, legal fees incurred by the Review Committee) of the Review
Committee incurred or to be incurred in connection with its activities pursuant
to this Agreement. The approval of this Agreement by the shareholders of AME
shall constitute their agreement to hold the Review Committee harmless for all
actions taken pursuant to this Merger Agreement in the absence of gross
negligence or willful misconduct on the part of the Review Committee.
(g) Disputed Amounts. In the event that the payment of a
portion of the Earnout or Bonus to be paid pursuant to this Section 6.18 is in
dispute, the undisputed portion of the Earnout or Bonus, as the case may be,
shall be promptly paid in accordance with the provisions of this Agreement and
the disputed portion shall be paid upon resolution of the dispute.
(h) Assignability. The right of each Record Holder to
receive Bonus or Earnout payments pursuant to this Merger Agreement may not be
assigned or transferred in any manner whatsoever except by operation of law or
by will.
SECTION 6.19. Employee Stock Purchase Plan. Parent
acknowledges that the Company's Employee Stock Purchase Plan will continue in
effect until the Effective Time. The Surviving Corporation will adopt a plan
having the same terms as the Company's Employee Stock Purchase Plan to replace
such plan, pursuant to which Parent Common Shares will be issued for the new
plan year pursuant to the terms of such replacement plan based on the share
price of such Parent Common Stock as of July 1, 1995.
<PAGE> 61
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party.
The obligations of the Company, Parent and Parent Sub to consummate the Merger
are subject to the satisfaction of the following conditions:
(a) this Agreement and the Transactions contemplated
hereby shall have been approved and adopted by the affirmative vote of
the shareholders of the Company in accordance with Minnesota Law and
the Company's Articles of Incorporation and the shareholders of Parent
in accordance with Netherlands Antilles law, Parent's Deed of
Incorporation and the rules of the NASD;
(b) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay,
decree, judgment or injunction (each an"Order") or statute, rule,
regulation which is in effect and which has the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger;
(c) the Registration Statement shall have been declared
effective, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect;
(d) Parent and the Company shall each have received an
opinion of Baker & McKenzie, reasonably satisfactory in form and
substance to the Company and to Parent and its counsel Shearman &
Sterling, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization qualifying under the
provisions of section 368(a) of the Code, which shall be dated on or
about the date that is two business days prior to the date the Proxy
Statement is first mailed to shareholders of the Company and which
shall be updated as of the Effective Time; and
(e) Parent and the Company shall have received from
NASDAQ evidence that the shares of Parent Common Stock to be issued to
the shareholders of the Company in the Merger shall be quoted on
NASDAQ immediately following the Effective Time.
SECTION 7.02. Conditions to the Obligations of Parent and
Parent Sub. The obligations of Parent and Parent Sub to consummate the Merger
are subject to the satisfaction of the following further conditions:
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52
(a) the Company shall have performed or complied in all
material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time and each of the representations and warranties of the
Company contained in this Agreement shall be true and correct in all
material respects as of the Effective Time as though made on and as of
the Effective Time, except that those representations and warranties
which address matters only as of a particular date shall remain true
and correct as of such date and Parent shall have received a
certificate of an executive officer of the Company to that effect; and
(b) Parent shall have received from the Company "cold
comfort" letters of Ernst & Young LLP of the kind contemplated by the
Statement of Auditing Standards with respect to Letters to
Underwriters promulgated by the American Institute of Certified Public
Accountants (the "AICPA Statement") dated the date on which the
Registration Statement shall become effective and the Effective Time,
respectively, and addressed to Parent, in form and substance
reasonably satisfactory to Parent, in connection with the procedures
undertaken by them with respect to the financial statements of the
Company and the Subsidiaries contained in the Registration Statement
and the other matters contemplated by the AICPA Statement and
customarily included in comfort letters relating to transactions
similar to the Merger.
SECTION 7.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) Parent and Parent Sub shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on
or prior to the Effective Time and each of the representations and
warranties of Parent and Parent Sub contained in this Agreement shall
be true and correct in all material respects as of the Effective Time,
as though made on and as of the Effective Time, except that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date and the
Company shall have received a certificate of an executive officer of
Parent to that effect; and
(b) the opinion of Vector, in the form included in the
Proxy Statement, shall not have been withdrawn or modified in any
materially adverse respect.
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53
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Merger and the other Transactions may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions, as follows:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and the Company;
(b) by either Parent or the Company, if either (i) the
Effective Time shall not have occurred on or before October 31, 1995;
provided, however, that the right to terminate this Agreement under
this Section 8.01(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or
before such date; or (ii) there shall be any Order which is final and
nonappealable preventing the consummation of the Merger, except if the
party relying on such Order has not complied with its obligations
under Section 6.03(a);
(c) by Parent, if (i) the Board of Directors of the
Company shall have withdrawn its recommendation of this Agreement or
the Merger or shall have resolved to do so, or (ii) the Board of
Directors of the Company shall have recommended to the shareholders of
the Company any Business Combination Transaction (as hereinafter
defined) or resolved to do so, or (iii) a tender offer or exchange
offer for 50% or more of the outstanding shares of capital stock of
the Company is commenced, and the Board of Directors of the Company
shall have failed to recommend against the shareholders of the Company
tendering their shares into such tender offer or exchange offer;
(d) by the Company, if (i) the Board of Directors of
Parent shall have withdrawn its recommendation of approval of the
issuance of additional shares of Parent Common Stock pursuant to the
Merger or shall have resolved to do so, or (ii) the Board of Directors
of the Parent shall have recommended to the shareholders of the
Company the approval of, or the issuance of additional shares of
Parent Common Stock pursuant to, any Business Combination Transaction
(as hereinafter defined) or resolved to do so, or (iii) a tender offer
or exchange offer for 50% or more of the outstanding shares of capital
stock of the Parent is commenced, and the Board of Directors of the
Parent shall have failed to recommend against the shareholders of the
Parent tendering their shares into such tender offer or exchange
offer;
<PAGE> 64
54
(e) by the Company, if, in the exercise of its good faith
judgment (subject to Section 6.05) as to its fiduciary duties under
Minnesota Law, the Board of Directors of the Company determines, after
consultation with their financial advisers and Minnesota counsel and
in reliance on the written opinion of such counsel, that such
termination is required by such fiduciary duties by reason of a
proposal that either constitutes a Business Combination Transaction or
may reasonably be expected to lead to a Business Combination
Transaction (a "Business Combination Transaction Proposal"); provided
that any termination of this Agreement by the Company pursuant to this
Section 8.01(e) shall not be effective until the Company has made
payment of the full Parent Fee required by Section 8.02(a) hereof;
(f) by either Parent or the Company, if the shareholders
of the Company or Parent shall have failed to approve and adopt this
Agreement, the Merger and the Transactions at a meeting duly convened
therefor;
(g) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth
in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set
forth in Section 7.02(a) would not be satisfied (a "Terminating
Company Breach"); provided, however, that, if such Terminating Company
Breach is curable by the Company through the exercise of its best
efforts and for so long as the Company continues to exercise such best
efforts, Parent may not terminate this Agreement under this Section
8.01(g); or
(h) by the Company, upon breach of any representations,
warranty, covenant or agreement on the part of Parent set forth in
this Agreement, or if any representation or warranty of Parent shall
have become untrue, in either case such that the conditions set forth
in Section 7.03(a) would not be satisfied ("Terminating Parent
Breach"); provided, however, that, if such Terminating Parent Breach
is curable by Parent through best efforts and for so long as Parent
continues to exercise such best efforts, the Company may not terminate
this Agreement under this Section 8.01(h).
(i) by either Parent or the Company if the Average
Trading Price is less than $12.28 or more than $24.28.
SECTION 8.02. Fees and Expenses. (a) The Company shall pay
Parent a fee (a "Parent Fee") of $4 million in immediately available funds,
which amount is inclusive of all Expenses (as hereinafter defined), if:
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(i) this Agreement is terminated pursuant to Section
8.01(c) or (e), in which case the Parent Fee will be paid on the
Business Day immediately following such termination; or
(ii) this Agreement is terminated pursuant to Section
8.01(f) as a result of the failure of the shareholders of the Company
to approve the Merger and a Business Combination Transaction Proposal
shall have been made prior to such termination, and any Business
Combination Transaction involving the Company is thereafter
consummated within 18 months of such termination, in which case the
Parent Fee will be paid on the Business Day immediately following such
consummation.
(b) Parent shall pay the Company a fee (a "Company Fee")
of $1 million in immediately available funds, which amount is inclusive of all
of Expenses (as hereinafter defined), if:
(i) this Agreement is terminated pursuant to Section
8.01(d), in which case the Company Fee will be paid on the Business
Day immediately following such termination; or
(ii) this Agreement is terminated pursuant to Section
8.01(f) as a result of the failure of the shareholders of Parent to
approve the issuance of additional shares of Parent Common Stock and a
Business Combination Transaction Proposal shall have been made prior
to such termination, and any Business Combination Transaction
involving Parent is thereafter consummated within 18 months of such
termination, in which case the Company Fee will be paid on the
Business Day immediately following such consummation.
As used herein, the term "Business Combination Transaction" shall mean any of
the following involving the Company or any Subsidiary or Parent or any Parent
Subsidiary, as applicable: (1) any merger, consolidation, share exchange,
business combination or other similar transaction (other than the
Transactions); (2) any sale, lease, exchange, transfer or other disposition
(other than a pledge or mortgage) of 25% or more of the assets of the Company
and the Subsidiaries or Parent and the Parent Subsidiaries, as applicable,
taken as a whole, in a single transaction or series of transactions; or (3) the
acquisition by a person or entity or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder) of
beneficial ownership of 33% or more of the shares of Company Common Stock or
Parent Common Stock, as applicable, whether by tender offer, exchange offer or
otherwise.
(c) Parent shall be entitled to receive its Expenses (but
not the Parent Fee) in immediately available funds in the event that this
Agreement is terminated by Parent pursuant to Section 8.01(g) or terminated by
the Company pursuant to Section 8.01(i).
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(d) the Company shall be entitled to receive its Expenses
(but not the Company Fee) in immediately available funds in the event that this
Agreement is terminated by the Company pursuant to Section 8.01(h) or
terminated by Parent pursuant to Section 8.01(i).
(e) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to Section 8.01, all obligations of the
parties hereto shall terminate except the obligations of the parties pursuant
to this Section 8.02 and Sections 8.03, 8.04, 9.03, 9.04, 9.05, 9.06, 9.07,
9.08, 9.09, 9.11 and 9.12 and pursuant to the Confidentiality Agreement. No
termination of this Agreement pursuant to Section 8.01(g) or 8.01(h) shall
prejudice the ability of a non-breaching party to seek damages from any other
party for any breach of this Agreement, including, without limitation,
attorneys' fees and the right to pursue any remedy at law or in equity. If
either of Parent or the Company is required to file suit to seek the Parent Fee
or the Company Fee, as the case may be, and it ultimately succeeds on the
merits, it shall be entitled to receive (in addition to the Parent Fee or the
Company Fee, as the case may be, or any other Expenses) all expenses,
including, without limitation, attorneys' fees and expenses, which it has
incurred in enforcing its rights under this Section 8.02.
(f) As used herein, "Expenses" means all out-of-pocket
expenses and fees actually incurred or accrued by Parent or Parent Sub or the
Company, as applicable, or on their respective behalf in connection with the
Transactions prior to the termination of this Agreement (including, without
limitation, all fees and expenses of counsel, financial advisors, banks or
other entities providing financing to Parent (including financing, commitment
and other fees payable thereto), accountants, environmental and other experts
and consultants, and all registration fees and expenses and all printing and
advertising expenses) and in connection with the negotiation, preparation,
execution, performance and termination of this Agreement, the structuring of
the Transactions, any agreements relating thereto and any filings to be made in
connection therewith. In the case of the Expenses of Parent, Expenses shall be
capped at $1.2 million. In the case of the Expenses of the Company, Expenses
shall be capped at $600,000.
(g) Except as set forth in this Section and Section 6.01,
all costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses, whether or not
any Transaction is consummated.
SECTION 8.03. Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however, that,
after the approval and adoption of this Agreement and the Transactions by the
shareholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each share of Company
Common Stock shall be converted upon consummation of the
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Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective
Time, any party hereto may (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive any inaccuracy in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
and any certificate delivered pursuant hereto by any person shall terminate at
the Effective Time, except that the agreements set forth in Articles I and II
and Sections 6.06, 6.07, 6.10, 6.13, 6.15, 6.17, 6.18 and 6.19 shall survive
the Effective Time indefinitely.
SECTION 9.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in
person, by cable, facsimile, telegram or telex or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 9.02):
if to Parent or Parent Sub:
Robert Gaines Cooper
Chairman
Orthofix International, N.V.
Northfield House
Northfield End
Henley-on-Thames
Oxon RG9 2JG
England
Facsimile: 44-1491-412-929
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with a copy to:
John A. Marzulli, Jr., Esq.
Shearman & Sterling
199 Bishopgate
London EC2M 3TY
England
Facsimile: 44-171-920-9020
if to the Company:
Ellis A. Regenbogen
American Medical Electronics, Inc.
250 East Arapaho Road
Richardson, Texas 75081
Facsimile: (214) 918-8480
with a copy to:
John D. Curtis, Esq.
Baker & McKenzie
4500 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Facsimile: (214) 978-3099
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a specified person means a person who,
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified
person;
(b) "beneficial owner" with respect to any shares means a
person who shall be deemed to be the beneficial owner of such shares
(i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or
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59
any of its affiliates or associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote pursuant to any agreement, arrangement or understanding,
(iii) which are beneficially owned, directly or indirectly, by any
other persons with whom such person or any of its affiliates or
associates or any person with whom such person or any of its
affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any such shares, or (iv) pursuant to Section 13(d) of the
Exchange Act and any rules or regulations promulgated thereunder;
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on
which banks are not required or authorized to close in the City of
London;
(d) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management and policies of a person, whether
through the ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation,
partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of any person means
any corporation, partnership, joint venture or other legal entity of
which such person (either above or through or together with any other
subsidiary), owns or has rights to acquire, directly or indirectly,
more than 50% of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity.
SECTION 9.04. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the
<PAGE> 70
60
parties as closely as possible in a mutually acceptable manner in order that
the Transactions be consummated as originally contemplated to the fullest
extent possible.
SECTION 9.05. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except
for the provisions of Article II and Sections 6.06 and 6.15 (collectively, the
"Third Party Provisions"), nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 9.06. Incorporation of Schedules. The Company
Disclosure Schedule and the Parent Disclosure Schedule referred to herein and
signed for identification by the parties hereto are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
SECTION 9.07. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
SECTION 9.08. Governing Law. EXCEPT TO THE EXTENT THAT
MINNESOTA LAW IS MANDATORILY APPLICABLE TO THE MERGER AND THE RIGHTS OF THE
SHAREHOLDERS OF THE COMPANY AND PARENT SUB, THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE PERFORMED WHOLLY IN THAT STATE.
ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE HEARD AND DETERMINED IN ANY FEDERAL COURT SITTING IN THE CITY OF NEW YORK.
SECTION 9.09. Forum. Parent and the Company for themselves,
their successors and assigns, hereby (a) irrevocably submit to the exclusive
jurisdiction of the federal courts located in the State of New York and agree
and consent that service of process may be made upon any of them in any legal
proceeding arising exclusively out of or in connection with this Agreement or
the Transactions by service of process as provided by New York law, (b)
irrevocably waives, to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of venue of any litigation arising
exclusively out of or in connection with this Agreement or the Transactions
brought in the
<PAGE> 71
61
federal courts located in the State of New York, (c) for such purposes
irrevocably waives any claims that any litigation brought in any such court has
been brought in an inconvenient forum, (d) agrees to designate and maintain an
agent for service of process in the State of New York, in connection with any
such litigation and to deliver to the other party evidence thereof, (e)
irrevocably consents to the service of process with respect to any of the
aforementioned courts in any such litigation by the mailing of copies thereof
by certified mail, return receipt requested, postage prepaid, to such party and
its counsel at their addresses set forth herein, and (f) irrevocably agrees
that any legal proceeding against Parent or the Company arising out of or in
connection with this Agreement or its obligations hereunder shall be brought in
the federal courts of the State of New York. Parent and the Company
irrevocably designate, appoint and empower The Prentice-Hall Corporation
System, Inc., 375 Hudson Street, New York, New York 10014 as their authorized
agent to receive service of process which may be served in any action or
proceeding with respect to this Agreement or the Transactions, documents or
agreements attached as exhibits hereto, or any other documents or agreements
executed in connection therewith. Service in such manner upon the agent is
hereby acknowledged by Parent and the Company to be binding upon them in every
respect. In the event that, for any reason, the agent named above shall no
longer serve as the agent of Parent or the Company to receive process in the
State of New York, Parent and the Company shall appoint a successor so to
serve. Nothing herein shall effect the right of any party to attempt to serve
process in any other manner permitted by applicable law.
SECTION 9.10. Headings. The descriptive headings contained
in this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 9.12. Waiver of Jury Trial. Each of Parent, the
Company and Parent Sub hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the actions of
Parent, the Company or Parent Sub in the negotiation, administration,
performance and enforcement thereof.
SECTION 9.13. Entire Agreement. This Agreement, the Company
Disclosure Schedule, the Parent Disclosure Schedule, the confidentiality
agreement, dated November 16, 1994, as amended (the "Confidentiality
Agreement"), between the Company and Parent, and any documents delivered by the
parties in connection herewith constitute the
<PAGE> 72
62
entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto. During the term of this Agreement, neither party
hereto shall terminate the Confidentiality Agreement.
<PAGE> 73
IN WITNESS WHEREOF, Parent, Parent Sub and the Company have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
ORTHOFIX INTERNATIONAL, N.V.
By /s/ Edgar Wallner
Name: Edgar Wallner
Title: President and CEO
OTHELLO ACQUIRING CORP.
By /s/ Edgar Wallner
Name: Edgar Wallner
Title: President
AMERICAN MEDICAL ELECTRONICS, INC.
By /s/ John F. Clifford
Name: John F. Clifford
Title: President and CEO
<PAGE> 1
EXHIBIT 2.2
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT entered into this 8th day of May 1995 by
and between INTER MEDICAL SUPPLIES LIMITED, a company organized and existing
under the laws of Cyprus with registered offices at c/o Orthofix International,
N.V., Cedar Court Business Centre 9/11 Fairmile, Henley-on-Thames, Oxon, RG9
2JR, Great Britain (hereinafter called "MANUFACTURER") and AMERICAN MEDICAL
ELECTRONICS, INC., a company organized and existing under the laws of the State
of Minnesota, United States of America with its principal office at 250 East
Arapho Road, Richardson, Texas, 75081, United States of America (hereinafter
called "DISTRIBUTOR").
WITNESSETH:
WHEREAS, MANUFACTURER supplies goods manufactured in Italy for
exportation and sale throughout the world, and in particular, the products
described in Annex 1 attached hereto (hereinafter called the "Products");
WHEREAS, DISTRIBUTOR is a distributor of medical products which
desires to obtain distribution rights for the Products;
WHEREAS, DISTRIBUTOR has an existing distribution network and sales
organization, has specific experience and commercial know-how in the medical
technology field, is well introduced in the United States market and is in a
position to sell the Products in the Territory (as defined below) as
contemplated by this Agreement;
WHEREAS, MANUFACTURER desires to distribute the Products in the
Territory through DISTRIBUTOR; and
NOW THEREFORE, in consideration of the above premises and of the
mutual promises and covenants hereinafter set forth, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
APPOINTMENT
Section 1.01. MANUFACTURER hereby appoints DISTRIBUTOR, effective
June 1, 1995, as the exclusive distributor of the Products within the United
States and Canada (the "Territory").
<PAGE> 2
Section 1.02. DISTRIBUTOR hereby accepts such appointment and
agrees to distribute the Products throughout the Territory utilizing its
distribution and sales organization to sell the Products in accordance with the
minimum sales requirements set out in Annex 2 (the "Minimum Sales
Requirements").
ARTICLE 2
ORDERS
Section 2.01. Commencing with the month of November 1995,
DISTRIBUTOR shall place firm orders for the Products with MANUFACTURER within
the first fifteen (15) days of each month for delivery no sooner than two (2)
months from the date of the order, which order shall reasonably represent
DISTRIBUTOR's expected requirements for a one-month period commencing with the
expected date of delivery. With each of said orders DISTRIBUTOR shall provide
MANUFACTURER with a written forecast of its expected requirements for Products
for the three (3) subsequent months commencing from the end of the two (2)
month period for which the said delivery of shipments are intended. Such
forecasts shall not be binding on either party and are intended for
informational purposes only.
Section 2.02. DISTRIBUTOR and MANUFACTURER shall mutually agree
on DISTRIBUTOR's expected requirements for Products for each of the six months
in the six-month period commencing June 1, 1995. Upon such mutual agreement,
DISTRIBUTOR shall place a firm order for such agreed amount of Products.
MANUFACTURER shall use its best efforts (but shall be under no obligation) to
deliver Products in the amount of such order.
Section 2.03. MANUFACTURER shall acknowledge receipt of an order
within seven (7) business days of such receipt. MANUFACTURER shall notify
DISTRIBUTOR within thirty (30) days of receipt of such order if MANUFACTURER
does not expect to be able to deliver the Products covered by the order within
the time period requested by DISTRIBUTOR.
ARTICLE 3
PRICES AND CONDITIONS OF SALE
Section 3.01. Prices for the Products shall be those set out in
the price list issued by MANUFACTURER from time to time and in force at the
time an order is made. Price changes will be communicated to DISTRIBUTOR in
writing, and new prices will come into force ninety (90) days from the date of
such writing; provided that prices shall not be increased by MANUFACTURER more
than twice during any year. The prices will be in U.S. dollars F.O.B. London.
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<PAGE> 3
Section 3.02. Following delivery of the Products to Distributor,
payment for the Products shall be due 45 days from the date of MANUFACTURER's
invoice to DISTRIBUTOR, which shall be furnished to DISTRIBUTOR with each
shipment of Products.
Section 3.03. After consultation with MANUFACTURER, DISTRIBUTOR
may fix or change the prices of the Products in the Territory.
Section 3.04. MANUFACTURER shall not be obligated to accept the
return of any Product unless a Product is damaged at the time of delivery or is
defective.
Section 3.05. DISTRIBUTOR acknowledges that MANUFACTURER has
reserved the right to change the design of the Products, to modify them or to
discontinue the manufacture thereof at any time with ninety (90) days written
notice to DISTRIBUTOR, but no change shall affect orders submitted prior to
DISTRIBUTOR's receipt of such notice unless such change is required by
applicable law or to correct a defect in a Product.
Section 3.06. Except as otherwise provided in this Article 3 with
respect to the price of the Products, all orders accepted by MANUFACTURER shall
be accepted on the terms and conditions established by MANUFACTURER from time
to time, which may be changed by MANUFACTURER upon thirty (30) days written
notice to DISTRIBUTOR.
Section 3.07. MANUFACTURER shall provide to DISTRIBUTOR one set
of the mutually agreed upon Products for each of DISTRIBUTOR's regional
managers and salespersons involved in the sale of the Products at 50% of the
prices indicated on MANUFACTURER'S price list. MANUFACTURER shall provide to
DISTRIBUTOR such mutually agreed upon Products as DISTRIBUTOR shall reasonably
require for use at workshops or conventions at 50% of the prices indicated on
MANUFACTURER'S price list. Such Products shall not be resold or otherwise used
for patient treatment and are to be used by such regional managers and
salespersons and at such workshops and conventions for demonstration purposes
only.
ARTICLE 4
DUTIES OF MANUFACTURER
MANUFACTURER agrees during the term of this Agreement:
(i) not to sell the Products within the Territory;
(ii) not to sell the Products to customers located outside the
Territory if MANUFACTURER shall know or have reason to know
(without inquiry) that the Products are to be used or resold
within the Territory;
(iii) to supply to DISTRIBUTOR, free of charge or at cost, such
information, documentation, data, printed material and
catalogues in reasonable quantities
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<PAGE> 4
as are available to MANUFACTURER from time to time, which
describe the Products;
(iv) to refer immediately to DISTRIBUTOR all inquiries made by
potential purchasers of the Products located in the Territory;
(v) that it has the right to enter into this Agreement;
(vi) to procure and secure, at its cost and expense, all
export/import licenses, authorizations, approvals (including
approvals and clearances of the United States Food and Drug
Administration), product registrations or similar documents as
may be required or desirable under applicable laws,
regulations or practices, in connection with the promotion and
distribution of the Products in any part of the Territory.
Such licenses, authorizations, approvals, clearances and
registrations shall be procured or secured in the name of
MANUFACTURER whenever possible under said laws, regulations or
practices;
(vii) to supply DISTRIBUTOR, at no cost, technical and maintenance
information and assistance that DISTRIBUTOR may reasonably
request in order that it might carry out its obligations under
Article 5(i);
(viii) to provide from time to time, as DISTRIBUTOR shall reasonably
request, such of MANUFACTURER'S employees or agents to provide
(i) training to DISTRIBUTOR's salespersons, and to doctors,
hospital staff or other potential customers and (ii) support
at major trade shows and conventions; and
(ix) to maintain for the term of this Agreement and for two years
thereafter commercially reasonably product liability
insurance.
ARTICLE 5
DUTIES OF DISTRIBUTOR
DISTRIBUTOR agrees, during the term of this Agreement:
(i) to provide the purchasers and end-users of the Products in the
Territory with all reasonably needed technical assistance
regarding the Products and their maintenance, without charge
to MANUFACTURER, except for those expenses as may be approved
in writing from time to time by MANUFACTURER before they are
incurred; under no circumstances shall DISTRIBUTOR repair or
attempt to repair any Products;
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<PAGE> 5
(ii) to show the Products in trade fairs and exhibitions which may
take place from time to time in the Territory; to advertise
the Products in reputable medical journals; to carry out
mailings to potential purchasers of the Products; to
distribute product literature, all of which shall be done at
DISTRIBUTOR's expense in DISTRIBUTOR's sole discretion;
(iii) to maintain throughout the term of this Agreement such
management, sales and administrative organization with respect
to DISTRIBUTOR's distribution of the Products as MANUFACTURER
shall reasonably require for the proper distribution and
promotion of the Products in the Territory;
(iv) not to distribute, sell, promote the sale of, or in any way
handle, in the Territory, during the term of this Agreement
and for two (2) years after termination by DISTRIBUTOR, any
external fixation product which could reasonably be considered
to compete with the Products;
(v) to forward to MANUFACTURER (x) monthly sales reports regarding
each Product and, upon reasonable request by MANUFACTURER,
reports on the market conditions in the Territory, as well as
on the distribution and promotional efforts exerted by
DISTRIBUTOR and/or by its sub-distributors and/or agents
therein, and on the general legal conditions in the Territory
as may relate to the Products and to the liability of the
manufacturers of medical devices under product liability
principles or other laws or regulations in general; and (y)
quarterly reports indicating the quantity of Products
comprising DISTRIBUTOR's inventory;
(vi) to confer at least quarterly to review DISTRIBUTOR's
activities and to mutually agree with MANUFACTURER upon future
sales programs and policies to be pursued by DISTRIBUTOR, and
that MANUFACTURER's views with respect to DISTRIBUTOR's sales
shall be accorded substantial weight in connection with the
implementation by DISTRIBUTOR of such future sales programs
and policies;
(vii) to distribute and promote the sale of Products in the
Territory under MANUFACTURER's tradenames and trademarks or
under such other names and marks as the parties hereto may
hereafter agree upon. DISTRIBUTOR shall be entitled to hold
itself out as MANUFACTURER's exclusive distributor in and for
the Territory of MANUFACTURER's Products;
(viii) to meet the Minimum Sales Requirements;
(ix) subject to Article 9 hereof, to maintain in its inventory, at
all times, a quantity of Products reasonably necessary to meet
its projected resale requirements for at least two (2) months;
and
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<PAGE> 6
(x) to maintain for the term of this Agreement and for two (2)
years after its last sale of Products, commercially reasonable
product liability insurance the terms of which shall be
reasonably acceptable to MANUFACTURER.
ARTICLE 6
CONFIDENTIAL INFORMATION
Each party to this Agreement shall not disclose or divulge to third
parties any Confidential Information (as defined below) concerning the business
of the other party which it acquires in the course of its activities under this
Agreement during the term of this Agreement and for a period of ten (10) years
after its expiration or termination. Each party shall take all reasonable
precautions to prevent any disclosure of Confidential Information by any of its
employees, officers or directors to whom disclosure of Confidential Information
is made. "Confidential Information" shall include trade or manufacturing
secrets, specifications, drawings, designs, know-how, trading data, or any
other proprietary information that one party may acquire about the other by
reason of this Agreement. Confidential Information shall not include
DISTRIBUTOR's Product customer list.
ARTICLE 7
TRADEMARKS, COPYRIGHTS AND PATENTS; INDEMNITY
Section 7.01. DISTRIBUTOR acknowledges MANUFACTURER's right, title
and interest in and to any trademarks, trade names, copyrights and patents
related to MANUFACTURER or the Products which MANUFACTURER has adopted, used,
or registered in the Territory, including the trademark "[Othello]"
(collectively, the "Intellectual Property"). DISTRIBUTOR will not register the
name "[Othello]" as a trade name or trademark nor use it as part of its
corporate designation without MANUFACTURER's express written consent.
Section 7.02. MANUFACTURER shall notify DISTRIBUTOR of any
infringement of its Intellectual Property rights relating to the Products and
take such action as it shall deem necessary to prevent any such further
infringement and protect the purpose and intent of this Agreement.
Section 7.03. MANUFACTURER will indemnify and hold DISTRIBUTOR
harmless from and against all costs, claims, demands, liabilities, actions or
proceedings arising from any breach of third party intellectual property rights
resulting from the distribution of the Products, and this provision shall
survive the termination of this Agreement.
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<PAGE> 7
ARTICLE 8
LEGAL AUTHORITY
Nothing herein contained shall make DISTRIBUTOR the legal
representative of MANUFACTURER for any purpose whatsoever. DISTRIBUTOR agrees
that in all matters relating to this Agreement it is acting as an independent
contractor. DISTRIBUTOR is not granted any authority, express or implied, to
negotiate and conclude contracts on MANUFACTURER's behalf nor to bind
MANUFACTURER in any manner whatsoever.
ARTICLE 9
FORCE MAJEURE
Section 9.01. If DISTRIBUTOR shall be unable to distribute
Products as provided in this Agreement, or if MANUFACTURER shall be unable to
supply Products as provided herein, in either case as a consequence of force
majeure (as defined below), deliveries of Products by MANUFACTURER, and the
obligations of DISTRIBUTOR to purchase, advertise, promote and sell Products,
under this Agreement shall be adjusted, curtailed or suspended, as may be
necessary.
Section 9.02. "Force majeure" shall mean: (a) the occurrence of
a contingency, the non-occurrence of which was a basic assumption on which this
Agreement was made, including but not limited to fires, explosions, accidents,
labor disturbances, strikes, floods, droughts, earthquakes, refusal to permit
exports or imports, embargoes, seizures of cargo, wars (whether or not
declared), civil commotion, acts of God or the public enemy, action of any
government, legislature, court or other governmental agency or authority,
action by any authority, representative or organization exercising or claiming
to exercise powers of a government or governmental authority, delays or
failures of carriers, blockades, power failures or curtailments, epidemics,
inadequacy or shortage or failure of supply of materials or equipment and the
invocation of force majeure by any other party to an agreement under which
MANUFACTURER purchases materials used to manufacture the Products to be
supplied pursuant to this Agreement, or (b) compliance in good faith with any
applicable foreign or domestic governmental regulation or order, whether or not
it later proves to be invalid, or (c) any other event beyond the reasonable
control of MANUFACTURER or DISTRIBUTOR, including, without limitation,
inability under such circumstances to obtain a license to import, export or
make payment or to receive delivery from carriers under the conditions agreed
upon between the parties hereto.
Section 9.03. If the performance of either party's obligations
hereunder is, or in the reasonable belief of such party may be, affected by
force majeure, such party (the "affected party") shall promptly give written
notice thereof to the other party. In either such case, the affected party
shall within five business days of such notice furnish the other party with
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<PAGE> 8
written particulars of the relevant event and supporting evidence that its
performance is or may be prevented or delayed due to force majeure. Such
particulars shall include an estimate of the probable time for and the extent
to which the affected party will or may be delayed in or prevented from
performing its obligations under this Agreement.
Section 9.04. If a force majeure event occurs or is likely to
occur, the affected party shall take all reasonable steps to remove the cause
or causes thereof and to resume, with the least possible delay, compliance with
its obligations under this Agreement. When the force majeure has ceased to
exist, the affected party shall promptly give notice by telex, cable or
facsimile transmission to be followed by written notice to the other party that
such event has ceased to exist.
Section 9.05. Should the cause or causes giving rise to a force
majeure event persist for a continuous period in excess of 180 days from the
effective date of a notice under Section 9.03, then the party receiving such
notice shall have the right, during the period beginning on the 181st day and
ending on the 190th day after the effective date of such notice, to terminate
this Agreement by notice to the affected party.
Section 9.06. If not terminated in accordance with Section 9.05,
the remaining term of this Agreement shall be automatically extended for a
period equal to the duration of any force majeure.
ARTICLE 10
WARRANTY AND INDEMNITY
Section 10.01. MANUFACTURER warrants that (i) each Product will at
the time of shipment to DISTRIBUTOR be of merchantable quality and in
compliance with the specifications for such Product, which specifications will
be furnished to DISTRIBUTOR by MANUFACTURER from time to time, (ii) it will
deliver good title thereto and (iii) the Products will be delivered free from
any lawful security interest or other lien or encumbrance. MANUFACTURER
further warrants that the Products sold to DISTRIBUTOR hereunder will not
infringe any patent, trademark or other intellectual property right of any
third party. MANUFACTURER MAKES NO OTHER WARRANTY WITH RESPECT TO THE
PRODUCTS, EXPRESS OR IMPLIED, INCLUDING AS TO THEIR FITNESS FOR A PARTICULAR
PURPOSE. THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION ON THE
FACE HEREOF. MANUFACTURER SHALL NOT BE LIABLE TO DISTRIBUTOR FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES FROM ANY BREACH OF THIS AGREEMENT.
Section 10.02. MANUFACTURER undertakes to replace defective
Products upon their being returned (at no cost to DISTRIBUTOR) to its plant.
MANFACTURER'S
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<PAGE> 9
warranty shall extend to defective products whether the defect is discovered
upon receipt or discovered at the time of use. Notice that the Products are
defective shall be given by DISTRIBUTOR within ten (10) days of discovery of
the defect.
Section 10.03. If requested by DISTRIBUTOR, MANUFACTURER shall
indemnify and keep indemnified DISTRIBUTOR from any and all losses, damages,
liabilities and costs (including legal fees) arising from any claim of Product
defect. DISTRIBUTOR shall give prompt notice to MANUFACTURER of any claim in
respect of which indemnity may be sought hereunder. MANUFACTURER may, and if
requested shall, assume the defense of DISTRIBUTOR in connection with any such
claim for which indemnity is requested. If MANUFACTURER assumes the defense of
a claim, DISTRIBUTOR may also participate at its own expense in the defense of
such claim. MANUFACTURER shall not be obligated to indemnify DISTRIBUTOR
against any losses, damages, liabilities or costs (including legal fees) in
respect of a settlement of any claim to which MANUFACTURER did not expressly
consent in writing.
Section 10.04. DISTRIBUTOR shall indemnify MANUFACTURER for any
and all losses, damages, liabilities and costs (including legal fees) arising
from the gross negligence or willful misconduct of DISTRIBUTOR in connection
with its distribution of Products. MANUFACTURER shall give prompt notice to
DISTRIBUTOR of any claim in respect of which indemnity may be sought hereunder.
DISTRIBUTOR may, and if requested shall, assume the defense of MANUFACTURER in
connection with any claim for which indemnity is requested. If DISTRIBUTOR
assumes the defense of a claim, MANUFACTURER may also participate at its own
expenses in the defense of such claim. DISTRIBUTOR shall not be obligated to
indemnify MANUFACTURER against any losses, damages, liabilities or costs
(including legal fees) in respect of a settlement of any claim to which
DISTRIBUTOR did not expressly consent in writing.
ARTICLE 11
TERM
Section 11.01. This Agreement shall be in force and effect, unless
terminated pursuant to Section 9.05, Article 12 or otherwise, for a term of one
(1) year starting from June 1, 1995. MANUFACTURER shall have the option of
extending this Agreement for a term of two (2) years after completion of the
initial term, exercisable in its sole discretion by the giving of notice at
least 60 days prior to the otherwise scheduled expiration date. The
termination of this Agreement for whatever reason shall be subject to the
continuing right of DISTRIBUTOR to sell any Products it holds in its inventory.
Section 11.02. Upon the occurrence of the Reimbursement Conditions
(as defined below) MANUFACTURER shall reimburse DISTRIBUTOR for Reimbursement
Costs (as defined below). The Reimbursement Conditions are: (i) MANUFACTURER
shall not have
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exercised its option granted in Section 11.01 or otherwise entered into an
agreement for the distribution of Products, or a substantial portion thereof,
with DISTRIBUTOR, (ii) this Agreement shall have expired in accordance with its
terms and shall not have been terminated by either party and (iii) there shall
not have been, and there shall be no agreement, executed or otherwise, that
contemplates, a change of control (as defined below) of DISTRIBUTOR.
Reimbursement Costs are costs incurred by DISTRIBUTOR in connection with the
performance of its obligations under this Agreeement that are not capable of
being used by DISTRIBUTOR except in connection with the distribution,
advertising or promotion of Products. To the extent that such assets are
capable of being transferred or assigned, DISTRIBUTOR shall transfer or assign
such assets to MANUFACTURER upon payment of the Reimbursement Costs.
ARTICLE 12
TERMINATION
Section 12.01. In the event either party materially and
substantially breaches this Agreement, or makes an assignment for the benefit
of creditors, or is adjudicated a bankrupt, or suffers the appointment of a
receiver or trustee of its business or properties by reason of insolvency or
liquidation, or files or has filed against it a petition in bankruptcy or for
reorganization under the United States Bankruptcy Code or under the provisions
of any law of like import which remains in effect for more than sixty (60) days
(each such event being hereinafter called a "default"), the other party shall
(in addition to any other rights or remedies or may have hereunder or by law)
have the right to notify the affected party of such other party's intention to
terminate this Agreement, setting out in sufficient detail the basis for such
termination, and this Agreement shall terminate if such default is not cured
within forty-five (45) days of such notification.
Section 12.02. DISTRIBUTOR's failure to perform the obligations
contemplated by Article 5(viii), as and when required, may be viewed by
MANUFACTURER as a default that is incapable of being cured and termination
shall occur forty-five (45) days after notice to DISTRIBUTOR. Such termination
shall be MANUFACTURER's sole remedy for such breach.
Section 12.03. MANUFACTURER may terminate this Agreement by giving
DISTRIBUTOR thirty (30) days written notice of termination if (i) DISTRIBUTOR
shall have failed to make payment as provided in Section 3.02 unless payment
shall be made during the 30-day notice period or (ii) on a change of control
(as defined below) of DISTRIBUTOR. For the purposes of this Article, a change
of control is deemed to have occurred if:
(i) Any person, as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), becomes, is discovered to be, or files a report on Schedule 13D or 14D-1
(or any successor schedule, form or
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report) disclosing that such person is, a beneficial owner (as defined in Rule
13d-3 under the Exchange Act or any successor rule or regulation), directly or
indirectly, of securities of DISTRIBUTOR representing 20% or more of the
combined voting power of DISTRIBUTOR's then outstanding securities entitled to
vote generally in the election of directors (unless such person is already such
beneficial owner on the date of this Agreement);
(ii) Individuals who, as of the date hereof, constitute the Board
of Directors of DISTRIBUTOR cease for any reason to constitute at least a
majority of the Board of Directors of DISTRIBUTOR, unless such change is
approved by a unanimous vote of the members of the Board of Directors of
DISTRIBUTOR immediately prior to such cessation;
(iii) DISTRIBUTOR is merged, consolidated or reorganized into or
with another corporation or other legal person, or securities of DISTRIBUTOR
are exchanged for securities of another corporation or other legal person, and
immediately after such merger, consolidation, reorganization or exchange less
than a majority of the combined voting power of the then-outstanding securities
of such corporation or person immediately after such transaction are held,
directly or indirectly, in the aggregate by the holders of securities entitled
to vote generally in the election of directors of DISTRIBUTOR immediately prior
to such transaction;
(iv) DISTRIBUTOR, in any transaction or series of related
transactions, sells all or substantially all of its assets to any other
corporation or other legal person, and less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such sale or sales are held, directly or indirectly, in the
aggregate by the holders of securities entitled to vote generally in the
election of directors of DISTRIBUTOR immediately prior to such sale;
(v) DISTRIBUTOR and its affiliates shall sell or dispose of (in a
single transaction or series of related transactions) business operations that
generated two-thirds of the consolidated revenues (determined on the basis of
DISTRIBUTOR's four most recently completed fiscal quarters for which reports
have been filed under the Exchange Act) of DISTRIBUTOR and its subsidiaries
immediately prior thereto;
(vi) DISTRIBUTOR files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form-8K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of DISTRIBUTOR has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(vii) any other transaction or series of related transactions occur
that have substantially the effect of the transactions specified in any of the
preceding clauses in this sentence.
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ARTICLE 13
ASSIGNMENT
This Agreement shall not be assigned, including by operation of law,
by one party hereto without the express written consent of the other. In the
event that, after an assignment to an affiliate of DISTRIBUTOR or MANUFACTURER,
such affiliate ceases to be wholly-owned by the assigning party, such
assignment shall be void, and all rights, interests, obligations or claims
assigned thereby shall return to the assigning party or its successors. For
purposes of this Article, "affiliate" means any entity which is now, or
hereafter becomes, controlled by, in control of, or under common control with,
either party to this Agreement. "Control" means a greater than fifty percent
(50%) ownership of issued and outstanding voting securities or greater than
fifty percent (50%) of voting rights in a partnership, directly or indirectly.
ARTICLE 14
DISPUTE RESOLUTION
The parties shall in good faith attempt to settle any controversy or
dispute arising out of or in connection with this Agreement, its
interpretation, performance or termination. Any such controversy or dispute
which cannot be settled amicably thereunder may be submitted to arbitration by
either party and, if so submitted by either party, shall be finally settled by
arbitration proceedings conducted in accordance with the rules of arbitration
of the American Arbitration Association (AAA). Any such arbitration shall take
place in the City of New York, or at such other place as the parties may
mutually agree upon. Appointing authority, where necessary, shall be the
President of the American Arbitration Association. The decision by the
arbitrators shall be final, binding and conclusive upon the parties, their
successors and assigns, and [shall constitute the sole and exclusive remedy for
any dispute between the involved parties]. The parties shall comply with such
decision in good faith, and each party hereby submits itself to the
jurisdiction of the courts of the place where the arbitration is held, but only
for the entry of judgment upon the award may be entered in any court where the
arbitration takes place, or any court having jurisdiction.
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ARTICLE 15
NOTICES
All notices and other communications provided for hereunder shall be
in writing (including facsimile transmission) and shall become effective, if
hand-delivered, upon delivery; if mailed by registered or certified mail
(postage prepaid, return receipt requested), on the date of receipt or refusal
indicated on the return receipt; or if sent by facsimile transmission, when
transmitted and electronic confirmation received; provided that notices
delivered or transmitted after 5:00 p.m. on a working day in the place of
receipt shall be deemed to be given the next working day in such place. The
addresses for such notice shall be:
If to MANUFACTURER:
c/o Robert Gaines Cooper
Chairman
Orthofix International, N.V.
Northfield House
Northfield End
Henley-on-Thames
Oxon RG9 2JG
England
Facsimile: 44-1491-412-929
with a copy to:
John A. Marzulli, Jr., Esq.
Shearman & Sterling
199 Bishopgate
London EC2M 3TY
England
Facsimile: 44-171-920-9020
If to DISTRIBUTOR:
Ellis A. Regenbogen
American Medical Electronics, Inc.
250 East Arapaho Road
Richardson, Texas 75081
Facsimile: (214) 918-8480
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with a copy to:
John D. Curtis, Esq.
Baker & McKenzie
4500 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Facsimile: (214) 978-3099
or at such other address or facsimile number as any parties hereto shall from
time to time designate in writing to the other parties hereto by like notice.
ARTICLE 16
MISCELLANEOUS
Section 16.01. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter set forth herein and supersedes
any and all other agreements, oral or written, relating to the same subject
matter. Although this Agreement may be translated into another language for
the convenience of MANUFACTURER, the English version hereof shall control for
purposes of any interpretation of the terms and conditions of this Agreement.
Section 16.02. Any modification or addition hereto must be in
writing and signed by both parties.
Section 16.03. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA
(EXCLUSIVE OF ITS CONFLICT OF LAW PROVISIONS) AND SUCH LAWS SHALL ALSO GOVERN
IN THE SETTLEMENT BY ARBITRATION OR OTHERWISE OF ANY AND ALL DISPUTES ARISING
BETWEEN THE PARTIES HERETO AS WELL AS THE VALIDITY OF THE ARBITRATION
PROVISIONS OF ARTICLE 12 HEREOF. THE UNITED NATIONS CONVENTION ON CONTRACTS
FOR THE INTERNATIONAL SALE OF GOODS IS HEREBY EXCLUDED FROM APPLICATION TO THIS
AGREEMENT AND ANY TRANSACTION PURSUANT TO THIS AGREEMENT.
Section 16.04. The captions under the Article numbers of this
Agreement are for convenience and reference only and in no way define, limit,
or describe the scope of intent of this Agreement.
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Section 16.05. If any provision of this Agreement should be or
become fully or partly invalid or unenforceable for any reason whatsoever or
should violate any applicable law, this Agreement is to be considered divisible
as to such provision and such provision is to be deemed deleted from this
Agreement, and the remainder of this Agreement shall be valid and binding as if
such provision were not included herein. There shall be substituted for any
such provision deemed to be deleted a suitable provision which, as far as is
legally possible, comes nearest to what the parties desired or would have
desired according to the sense and purpose of this Agreement, had they
considered the point when concluding this Agreement.
Section 16.06. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original for all purposes, but all such counterparts shall together
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives on the day and year first
above written.
AMERICAN MEDICAL ELECTRONICS, INC.
By: /s/ John F. Clifford
Name: John F. Clifford
Title: President and CEO
INTER MEDICAL SUPPLIES LIMITED
By: /s/ Peter W. Clarke
Name: Peter W. Clarke
Title: Finance Director
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ANNEX 1
DESCRIPTION OF THE PRODUCTS
As per current MANUFACTURER Catalogue and future improvements of the product(s)
- - including any extensions and additions - described therein.
N.B. Particular agreements may be reached from time to time with regard to new
MANUFACTURER products if any.
<PAGE> 18
ANNEX 2
MINIMUM QUANTITIES OF PRODUCTS TO BE SOLD BY DISTRIBUTOR
DURING THE TERM OF THE AGREEMENT:
PERIOD NET SALES BY DISTRIBUTOR
June 1, 1995 - December 31, 1995 Average of $ 1,600,000 per month
January 1, 1996 - May 31, 1996 $12,083,333
June 1, 1996 - December 31, 1996 $16,916,667
January 1, 1997 - May 31, 1997 $13,333,333
June 1, 1997 - December 31, 1997 $18,666,667
January 1, 1998 - May 31, 1998 $13,333,333
