AGREEMENT AND PLAN OF MERGER
DATED AS OF
JUNE 1, 2000
AMONG
IMAGE GUIDED TECHNOLOGIES, INC.,
STRYKER CORPORATION
AND
IGT ACQUISITION CO.
1. DEFINITIONS......................................................................... 2
2. MERGER; CLOSING; EFFECTIVE TIME.....................................................10
2.1 THE MERGER....................................................................10
2.2 CLOSING.......................................................................10
2.3 ARTICLES OF INCORPORATION.....................................................10
2.4 THE BYLAWS....................................................................10
2.5 DIRECTORS AND OFFICERS........................................................10
2.6 MERGER CONSIDERATION..........................................................11
2.7 CONVERSION OF COMPANY COMMON STOCK............................................11
2.8 CONVERSION OF MERGER SUB SHARES...............................................11
2.9 TERMINATION OF OPTIONS AND WARRANTS...........................................12
2.10 EXCHANGE OF CERTIFICATES......................................................12
2.11 NO FURTHER TRANSFERS..........................................................14
2.12 NO FRACTIONAL SHARES..........................................................14
2.13 STOCK LEGENDS; AGREEMENTS BY CERTAIN SHAREHOLDERS.............................14
2.14 DISSENTERS' RIGHTS............................................................14
2.15 ADJUSTMENTS...................................................................15
2.16 RETURN OF EXCHANGE FUND.......................................................15
2.17 FURTHER ASSURANCES............................................................15
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................16
3.1 ORGANIZATION..................................................................16
3.2 CAPITAL STRUCTURE.............................................................16
3.3 AUTHORITY; NO CONFLICT........................................................17
3.4 TITLE TO PROPERTIES; ENCUMBRANCES.............................................18
3.5 SEC DOCUMENTS.................................................................19
3.6 NO UNDISCLOSED LIABILITIES....................................................20
3.7 TAXES.........................................................................20
3.8 NO MATERIAL ADVERSE CHANGE....................................................21
3.9 EMPLOYEE BENEFITS.............................................................21
3.10 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS...............23
3.11 LEGAL PROCEEDINGS; ORDERS.....................................................24
3.12 ABSENCE OF CERTAIN CHANGES AND EVENTS.........................................25
3.13 CONTRACTS; NO DEFAULTS........................................................26
3.14 ENVIRONMENTAL MATTERS.........................................................29
3.15 EMPLOYEES.....................................................................31
3.16 LABOR RELATIONS; COMPLIANCE...................................................32
3.17 INTELLECTUAL PROPERTY.........................................................32
3.18 REGULATORY MATTERS............................................................35
3.19 CERTAIN PAYMENTS..............................................................36
3.20 STRYKER REGISTRATION STATEMENT; COMPANY PROXY STATEMENT.......................36
3.21 STATE TAKEOVER STATUTES.......................................................37
3.22 DISCLOSURE....................................................................37
3.23 TRANSACTIONS WITH RELATED PERSONS.............................................37
3.24 BROKERS.......................................................................37
4. REPRESENTATIONS AND WARRANTIES OF STRYKER AND MERGER SUB............................38
4.1 ORGANIZATION AND GOOD STANDING................................................38
4.2 CAPITALIZATION................................................................38
4.3 AUTHORITY; NO CONFLICT........................................................38
4.4 CERTAIN PROCEEDINGS...........................................................39
4.5 SEC DOCUMENTS; UNDISCLOSED LIABILITIES........................................39
4.6 INFORMATION SUPPLIED..........................................................40
4.7 INTERIM OPERATIONS OF MERGER SUB..............................................40
4.8 NO OTHER REPRESENTATIONS OR WARRANTIES........................................40
5. COVENANTS OF THE COMPANY............................................................40
5.1 ACCESS AND INVESTIGATION......................................................40
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES.........................41
5.3 NEGATIVE COVENANT.............................................................41
5.4 REQUIRED APPROVALS............................................................41
5.5 NOTIFICATION..................................................................41
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS....................................42
5.7 NO SOLICITATION BY THE COMPANY................................................42
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5.8 PREPARATION OF THE STRYKER REGISTRATION STATEMENT AND COMPANY
PROXY STATEMENT: COMPANY SHAREHOLDERS MEETING.................................44
5.9 LETTER OF THE COMPANY'S ACCOUNTANTS; LETTER OF STRYKER'S ACCOUNTANTS..........45
5.10 BEST EFFORTS..................................................................45
6. COVENANTS OF STRYKER AND MERGER SUB.................................................45
6.1 REQUIRED APPROVALS............................................................45
6.2 BEST EFFORTS..................................................................45
6.3 OFFICERS' AND DIRECTORS' INDEMNIFICATION......................................45
7. CONDITIONS PRECEDENT................................................................46
7.1 CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..........46
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF STRYKER AND MERGER SUB.................47
7.3 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS.............................48
7.4 FRUSTRATION OF CLOSING CONDITIONS.............................................48
8. NON-SURVIVAL OF REPRESENTATION AND WARRANTIES.......................................48
9. TERMINATION.........................................................................48
9.1 TERMINATION EVENTS............................................................48
9.2 RIGHTS AND OBLIGATIONS UPON TERMINATION.......................................49
10. GENERAL PROVISIONS..................................................................50
10.1 FEES AND EXPENSES.............................................................50
10.2 PUBLIC ANNOUNCEMENTS..........................................................50
10.3 AFFILIATES....................................................................50
10.4 LISTINGS......................................................................51
10.5 CONFIDENTIALITY...............................................................51
10.6 NOTICES.......................................................................51
10.7 WAIVER........................................................................52
10.8 ENTIRE AGREEMENT AND MODIFICATION.............................................52
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS............................52
10.10 SEVERABILITY..................................................................52
10.11 SECTION HEADINGS, CONSTRUCTION................................................53
10.12 GOVERNING LAW.................................................................53
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10.13 COUNTERPARTS..................................................................53
10.14 PERFORMANCE BY MERGER SUB.....................................................53
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("AGREEMENT") is made as of June 1, 2000
among Image Guided Technologies, Inc., a Colorado corporation (the "COMPANY"),
Stryker Corporation, a Michigan corporation ("STRYKER"), and IGT Acquisition
Co., a Colorado corporation and a wholly-owned subsidiary of Stryker ("MERGER
SUB").
RECITALS
A. The Company is a Colorado corporation with its registered office
located at 5710-B Flatiron Parkway, Boulder, Colorado 80301, and has authorized
10,000,000 shares of common stock, no par value per share ("COMPANY COMMON
STOCK"), of which 4,293,782 shares of Company Common Stock are issued and
outstanding, and 2,416,668 shares of preferred stock, no par value per share
("COMPANY PREFERRED STOCK"), of which 383,142 shares of Company Preferred Stock
are issued and outstanding and are designated Series B Preferred Stock, all of
which are owned by Stryker.
B. Stryker is a Michigan corporation with its registered office located
at 2725 Fairfield Road, Kalamazoo, Michigan 49002.
C. Merger Sub is a wholly-owned subsidiary of Stryker and was formed to
merge with and into the Company so that, as a result of the merger, the Company
will survive and become a wholly-owned subsidiary of Stryker. Merger Sub is a
Colorado corporation with its registered office located at 1675 Broadway,
Denver, Colorado 80202, and has authorized an aggregate of 1,000 shares of
common stock, no par value ("MERGER SUB COMMON STOCK").
D. The Board of Directors of each of Stryker, Merger Sub and the Company
has determined that this Agreement and the merger of Merger Sub with and into
the Company, in accordance with the provisions of the Colorado Business
Corporation Act (the "CBCA") and subject to the terms and conditions of this
Agreement, is advisable and in the best interests of Stryker, Merger Sub and the
Company and their respective shareholders.
E. The Board of Directors of each of Stryker, Merger Sub and the Company
have approved this Agreement, the Merger and the transactions contemplated
hereby.
F. The parties intend that, for United States federal income tax
purposes, the Merger shall qualify as a reorganization within the meaning of
Section 368(a)(2)(E) of the IRC and that this Agreement shall constitute a plan
of reorganization.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANY" -- each of the Company and Springfield Surgical
Instruments, Inc.
"ACQUISITION AGREEMENT" -- as defined in Section 5.7(b).
"AFFILIATE" -- with respect to a specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such person.
"APPLICABLE PERIOD" -- as defined in Section 5.7(a).
"ARTICLES" -- as defined in Section 2.3.
"BALANCE SHEET" -- as defined in Section 3.4.
"BENEFIT PLAN" -- each funded or unfunded, written or oral, employee
benefit plan, contract, agreement, incentive, salary, wage or other compensation
plan or arrangement, including but not limited to each pension and profit
sharing plan, savings plan, bonus, deferred compensation, incentive
compensation, stock purchase, supplemental retirement, severance or termination
pay, stock option, hospitalization, medical, life insurance, dental, disability,
salary continuation, vacation, supplemental unemployment benefit, union
contract, employment contract, consulting agreement, retiree benefit severance
agreement and each other employee benefit program, plan, policy or arrangement,
maintained, contributed to, or required to be contributed to by any Acquired
Company for the benefit of the employees, former employees, directors, agents or
consultants of the Acquired Companies, or for which the Acquired Companies may
be responsible or with respect to which they may have any liability, whether or
not subject to ERISA and whether legally binding or not. For purposes of this
definition, any reference to the term "Acquired Company" shall be deemed to
refer also to any entity that is under common control or affiliated with any
Acquired Company within the meaning of Section 4001 of ERISA, and the rules and
regulations promulgated thereunder and/or Section 414(b), (c), (m) or (o) of the
IRC and the rules and regulations promulgated thereunder.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible. An obligation to use Best Efforts under this
Agreement does not require the Person subject to that obligation to take actions
that would result in a materially adverse change in the benefits to such Person
of this Agreement and the Contemplated Transactions or that would conflict with
such Person's fiduciary obligations to shareholders.
"BYLAWS" -- as defined in Section 2.4.
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"CBCA" -- as defined in the Recitals.
"CLOSING" -- as defined in Section 2.2.
"CLOSING DATE" -- the date and time as of which the Closing actually takes
place.
"COLORADO ARTICLES OF MERGER" -- as defined in Section 2.2.
"COMPANY" -- as defined in the Preamble of this Agreement.
"COMPANY COMMON STOCK" -- as defined in the Recitals.
"COMPANY PREFERRED STOCK" -- as defined in the Recitals.
"COMPANY PROXY STATEMENT" -- as defined in Section 3.3(c).
"COMPANY SHAREHOLDERS MEETING" -- as defined in Section 5.8(b).
"COMPANY SEC DOCUMENTS" -- as defined in Section 3.5.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by this
Agreement, including:
(a) the Merger; and
(b) the performance by Stryker, Merger Sub and the Company of their
respective obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"COPYRIGHTS" -- as defined in Section 3.17(a).
"DISCLOSURE LETTER" -- the disclosure letter delivered by the Company to
Stryker concurrently with the execution and delivery of this Agreement.
"DISSENTING SHAREHOLDERS" -- shareholders of the Company properly
exercising appraisal rights with respect to Shares pursuant to Section 7-113-101
ET SEQ. of the CBCA.
"EFFECTIVE TIME" -- as defined in Section 2.2.
"ENCUMBRANCE" -- any charge, claim, equitable interest, lien, option,
pledge, security interest, or right of first refusal, restriction, covenant,
easement, license, lease, mortgage, obligation, title defect or imperfection or
other encumbrance or right of others, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.
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"ENVIRONMENT" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwater, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" -- any cost, damages,
expense, liability, obligation, Encumbrance or other responsibility arising from
or relating to the existence, use, storage, handling, treatment, generation,
manufacture, disposal, recycling, transportation, arrangement for transportation
or disposal, release, spill, discharge, or threatened release of Hazardous
Materials or chemical substances at any location or noncompliance with any
Environmental Law or Occupational Safety and Health Law including, without
limitation:
(a) any cost, damages, expense, liability, obligation, Encumbrance or
other responsibility consisting of or relating to any environmental, health, or
safety matters or conditions (including on-site or off-site contamination,
occupational safety and health, and regulation of chemical substances or
products);
(b) fines, penalties, fees, interest, taxes, Encumbrances, judgments,
awards, settlements, legal or administrative proceedings, damages, losses,
claims, demands and response, monitoring, operation and maintenance,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, treatment, containment, or other remediation or
response actions ("Cleanup") related to Hazardous Materials or Hazardous
Activities at any location, required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages;
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law; or
(e) any cost, damage, expense, liability, obligation or other
responsibility for personal injury or threatened personal injury (including
sickness, disease and death) or injury or threatened injury to property or
natural resources, foreseeable or unforeseeable.
The terms "removal," "remedial," and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA") and similar state and local laws.
"ENVIRONMENTAL LAW" -- any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
threatened, intended or actual Releases of pollutants or hazardous substances or
Hazardous Materials, violations of
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discharge limits, or other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have significant impact
on the Environment;
(b) preventing or reducing to acceptable levels the Release or threatened
Release of pollutants or Hazardous Materials into the Environment;
(c) reporting, investigating, reducing the quantities, preventing the
release, or minimizing the hazardous characteristics of wastes that are
generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the Environment
when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of Hazardous Materials, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up Hazardous Materials that have been Released, preventing
the Release or threat of Release, or paying the costs of such cleanup or
prevention;
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets; or
(i) pollution or the protection, cleanup or restoration of the
environment, or to safety or health, including, but not limited to, any of the
same relating to the presence, discharge, emission, Release or threatened
Release of Hazardous Materials into the air, land, surface water, groundwater,
or the effects thereof, or relating to the generation, treatment, storage,
disposal, manufacturing, distribution, sale, handling or any other activity
involving Hazardous Materials, or the effects thereof.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"EXCHANGE ACT" -- the United States Securities Exchange Act of 1934, as
amended.
"EXCHANGE AGENT" -- as defined in Section 2.10(a).
"FACILITIES" -- any real property, leaseholds, or other interests currently
or formerly owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment currently or formerly owned or operated by any Acquired
Company.
"FDA" -- the United States Food and Drug Administration.
"GAAP" -- generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements included in the Company SEC Documents were prepared.
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"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(a) federal, state, county, city, town, village, district, or other
jurisdiction of any nature, domestic or foreign;
(b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental body of any nature (including any
governmental agency, branch, department, official, or entity and any
court or other tribunal and the European Union).
"HAZARDOUS ACTIVITY" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any mixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.17(a).
"IRC" -- the Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such individual is actually aware of such
fact or other matter or (b) a prudent individual could be expected to discover
or otherwise become aware of such fact or other matter because of the nature of
his position with, or responsibilities on behalf of, a Person. The Company will
be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or who has at any time served as an officer or
director of any Acquired Company, has, or at any time had Knowledge of such fact
or other matter.
"LEGAL REQUIREMENT" -- any order, constitution, law, ordinance, regulation,
statute, directive, code, binding policy, rule, permit, authorization or treaty
of any Governmental Body.
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"MARKS" -- as defined in Section 3.17(a).
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the business,
assets, properties, condition (financial or otherwise), operations or results of
operations of the Acquired Companies taken as a whole.
"MDRS" -- as defined in Section 3.18(c).
"MERGER" -- as defined in Section 2.1.
"MERGER CONSIDERATION" -- as defined in Section 2.6.
"MERGER SUB COMMON STOCK" -- as defined in the Recitals.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"OPTIONS" -- as defined in Section 2.9.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any Governmental Body
or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day operations of
such Person;
(b) such action is not required to be authorized by the board of directors
of such Person; and
(c) with respect to an Acquired Company, such action is similar in nature
and magnitude to actions customarily taken, without authorization by
the board of directors in the ordinary course of the Acquired Company.
"ORGANIZATIONAL DOCUMENTS" -- the articles or certificate of incorporation
and the bylaws of any corporation and any amendment thereto.
"PATENTS" -- as defined in Section 3.17(a).
"PENSION PLAN" -- as defined in Section 3.9.
"PER SHARE MERGER CONSIDERATION" -- as defined in Section 2.7(a).
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"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PROPRIETARY INFORMATION" -- as defined in Section 3.17(a).
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse and former spouses, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
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"RELEASE" -- any release, discharge, spill, leaking, emission, pumping,
pouring, injection, deposit, disposal, escaping, leaching, dumping or migrating
into the Environment, whether intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SEC" -- the United States Securities and Exchange Commission.
"SECURITIES ACT" -- the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"STRYKER COMMON STOCK" -- as defined in Section 2.7(a).
"STRYKER REGISTRATION STATEMENT" -- as defined in Section 3.20.
"STRYKER SEC DOCUMENTS" -- as defined in Section 4.5.
"SUBMISSIONS" -- as defined in Section 3.18(a).
"SUPERIOR PROPOSAL" -- as defined in Section 5.7(b).
"SURVIVING CORPORATION" -- as defined in Section 2.1.
"TAKEOVER PROPOSAL" -- as defined in Section 5.7(a).
"TAX" -- any tax (including any income tax, franchise tax, capital gains
tax, value-added tax, excise tax, sales tax, payroll tax, property tax, gift
tax, or estate tax), levy, assessment, tariff, duty (including any customs
duty), deficiency, or other fee commonly referred to as a tax, and any related
charge or amount (including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other Contract
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency, or fee.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstance exists, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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"WARRANTS" -- as defined in Section 2.9.
2. MERGER; CLOSING; EFFECTIVE TIME
2.1 THE MERGER
Subject to the terms and conditions of this Agreement, at the Effective
Time, Merger Sub will be merged with and into the Company and the separate
corporate existence of Merger Sub will cease (the "MERGER"). The Company will be
the surviving corporation in the Merger (sometimes referred to as the "SURVIVING
CORPORATION") and will continue to be governed by the laws of the State of
Colorado. The Merger will have the effects set forth in the CBCA. Without
limiting the generality of the foregoing, upon the Merger, the rights,
privileges, immunities, powers, franchises and authority of the Company and the
Merger Sub will vest in the Surviving Corporation and all obligations of the
Company and the Merger Sub will be the obligations of the Surviving Corporation.
2.2 CLOSING
The Closing of the Merger (the "CLOSING") will take place at the offices of
Ireland, Stapleton, Pryor & Pascoe, P.C., Suite 2600, 1675 Broadway, Denver,
Colorado, at 10:00 a.m., Mountain Time, on the day which is no later than the
fifth business day after the last to be fulfilled or waived of the conditions
set forth in Section 7 of this Agreement, unless another date or place is agreed
to in writing by the parties hereto. At the Closing, the Company and Stryker
will cause Articles of Merger (the "COLORADO ARTICLES OF MERGER") to be executed
and filed with the Secretary of State of the State of Colorado as provided in
Section 7-111-105 of the CBCA. The Merger will become effective when the
Colorado Articles of Merger have been duly filed with the Secretary of State of
the State of Colorado (the "EFFECTIVE TIME").
2.3 ARTICLES OF INCORPORATION
The articles of incorporation of the Company (the "ARTICLES") in effect
immediately prior to the Effective Time will be the articles of incorporation of
the Surviving Corporation, until amended in accordance with the terms of the
Articles and the CBCA, except that no such amendment will violate Section 6.3.
2.4 THE BYLAWS
The Bylaws of Merger Sub in effect immediately prior to the Effective Time
will be the Bylaws of the Surviving Corporation (the "BYLAWS") until amended in
accordance with the Articles, such Bylaws and the CBCA, except that no such
amendment will violate Section 6.3.
2.5 DIRECTORS AND OFFICERS
The directors and officers of Merger Sub at the Effective Time will, from
and after the Effective Time, be the directors and officers of the Surviving
Corporation until their successors have been duly elected or appointed or until
their earlier death, resignation or removal in accordance with the Articles and
the Bylaws.
10
2.6 MERGER CONSIDERATION
The aggregate consideration to be delivered by Stryker to the holders of
issued and outstanding Company Common Stock shall be that number of shares of
Stryker Common Stock determined by dividing $12,000,000 by the average closing
price of Stryker's Common Stock as reported in THE WALL STREET JOURNAL for New
York Stock Exchange - Composite Transactions during the 30 consecutive trading
day period beginning on the 35th trading day prior to the Company Shareholders
Meeting and rounding the result upward to the next whole share (the "MERGER
CONSIDERATION").
2.7 CONVERSION OF COMPANY COMMON STOCK
At the Effective Time, by virtue of the Merger and without any action on
the part of the Company, Stryker or the Merger Sub:
(a) Each share of Company Common Stock issued and outstanding at the
Effective Time (other than shares of Company Common Stock canceled in accordance
with Section 2.7(c) and other than shares of Company Common Stock that are held
by Dissenting Shareholders) will be converted into the right to receive that
number of shares of common stock, par value $.10 per share, of Stryker (the
"STRYKER COMMON STOCK") determined by dividing the Merger Consideration by the
number of shares of Company Common Stock issued and outstanding immediately
prior to the Merger and rounding the result to six decimal places (the "PER
SHARE MERGER CONSIDERATION").
(b) All the shares of Company Common Stock, by virtue of the Merger and
without any action on the part of the holders, will no longer be issued and
outstanding and will be canceled and retired and will cease to exist, and each
holder of a certificate representing shares of Company Common Stock will
thereafter cease to have any rights with respect to the shares of Company Common
Stock, except the right to receive the Per Share Merger Consideration upon the
surrender of the respective certificate(s) in accordance with Section 2.10 or
the right, if any, to receive payment as a Dissenting Shareholder from the
Surviving Corporation as determined in accordance with Sections 7-113-101 ET
SEQ. of the CBCA.
(c) At the Effective Time, each share of Company Common Stock issued and
held in the Company's treasury immediately prior to the Effective Time and each
share of Company Common Stock or Company Preferred Stock owned by Stryker,
Merger Sub, or any other subsidiary of Stryker, will, by virtue of the Merger
and without any other action, be canceled and retired without payment of any
consideration and will cease to exist.
2.8 CONVERSION OF MERGER SUB SHARES
At the Effective Time, each share of Merger Sub common stock issued and
outstanding immediately prior to the Effective Time will, by virtue of the
Merger and without any action on the part of Merger Sub or the holder of the
Merger Sub Common Stock, be converted into one validly issued, fully paid and
nonassessable share of common stock, no par value per share, of the Surviving
Corporation.
11
2.9 TERMINATION OF OPTIONS AND WARRANTS
IGT shall take such action as is necessary to accelerate the vesting date
of all outstanding options to purchase shares of Company Common Stock granted
pursuant to the Company's 1994 Stock Option Plan, 1997 Stock Option Plan or
otherwise (the "OPTIONS") and outstanding warrants to purchase shares of Company
Common Stock (the "WARRANTS") that are not vested as of the date of this
Agreement in order that they are fully vested prior to the Effective Time. In
addition, IGT shall use its Best Efforts to take such action as is necessary,
which action shall not obligate IGT to make any cash payment in an amount, or
distribute any other asset or with a value, in the aggregate in excess of
$25,000, in order that the Options and Warrants that have not been exercised
prior thereto shall be terminated as of the Effective Time and may not be
exercised thereafter.
2.10 EXCHANGE OF CERTIFICATES
(a) As of the Effective Time, Stryker shall deposit with an exchange agent
reasonably satisfactory to Stryker and the Company (the "EXCHANGE AGENT") for
the benefit of the holders of the shares of Company Common Stock, certificates
representing the Merger Consideration. Such shares of Stryker Common Stock,
together with any dividends or distributions thereon with respect to Sections
2.10(b) and 2.15 are referred to as the "EXCHANGE FUND" for purposes of this
Agreement.
(b) After the Effective Time, each holder of a certificate formerly
evidencing shares of Company Common Stock which have been converted pursuant to
Section 2.7(a), upon surrender of the same to the Exchange Agent as provided in
Section 2.10(c) hereof, shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of Stryker
Common Stock into which such shares of Company Common Stock shall have been
converted as provided in this Article 2 and, as provided in Section 2.12, cash
in lieu of any fractional share of Stryker Common Stock into which such shares
of Company Common Stock would have otherwise been converted, without any
interest thereon. Until so surrendered, each certificate formerly evidencing
shares of Company Common Stock which have been so converted will be deemed for
all corporate purposes to evidence ownership of the number of whole shares of
Stryker Common Stock for which the shares of Company Common Stock formerly
represented thereby were exchanged; PROVIDED, HOWEVER, that until such
certificate is so surrendered, no dividend payable to holders of record of
Stryker Common Stock as of any date subsequent to the Effective Time shall be
paid to the holder of such certificate in respect of the shares of Stryker
Common Stock evidenced thereby and such holder shall not be entitled to vote
such shares of Stryker Common Stock. Upon surrender of a certificate formerly
evidencing shares of Company Common Stock which have been so converted, there
shall be paid to the record holder of the certificates of Stryker Common Stock
issued in exchange therefor (i) at the time of such surrender, the amount of
dividends and any other distributions theretofore paid with respect to such
shares of Stryker Common Stock as of any date subsequent to the Effective Time
to the extent the same has not yet been paid to a public official pursuant to
abandoned property, escheat or similar laws and (ii) at the appropriate payment
date, the amount of dividends and any other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of Stryker Common Stock. No
interest shall be payable with respect to the payment of such dividends. All
12
certificates representing shares of Stryker Common Stock delivered upon the
surrender for exchange of the certificates representing shares of Company Common
Stock in accordance with the terms hereof (including any cash paid pursuant to
Section 2.12) shall be deemed to have been delivered (and paid) in full
satisfaction of all rights pertaining to the Company Common Stock previously
represented by such certificates.
(c) As soon as practicable after the Effective Time, the Exchange Agent
shall send a notice and a transmittal form to each holder of certificates
formerly evidencing shares of the Company Common Stock (other than certificates
formerly representing shares of the Company Common Stock to be canceled pursuant
to Section 2.7(c) and certificates representing Dissenting Shares) advising such
holder of the effectiveness of the Merger and the procedure for surrendering to
the Exchange Agent (who may appoint forwarding agents with the approval of
Stryker) such certificates for exchange into certificates evidencing Stryker
Common Stock (including cash in lieu of any fractional share). Each holder of
certificates theretofore evidencing shares of the Company Common Stock, upon
proper surrender thereof to the Exchange Agent together and in accordance with
such transmittal form, shall be entitled to receive in exchange therefor
certificates evidencing Stryker Common Stock (including cash in lieu of any
fractional share) deliverable in respect of the shares of the Company Common
Stock theretofore evidenced by the certificates so surrendered. Notwithstanding
the foregoing, neither the Exchange Agent nor any party hereto shall be liable
to a holder of certificates theretofore representing shares of the Company
Common Stock for any amount which may be required to be paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(d) If any certificate evidencing shares of Stryker Common Stock is to be
delivered to a Person other than the Person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to the
issuance of such certificate evidencing shares of Stryker Common Stock, that the
certificates so surrendered shall be properly endorsed or accompanied by
appropriate stock powers and otherwise in proper form for transfer, that such
transfer otherwise be proper and that the Person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of the
foregoing or establish to the satisfaction of the Exchange Agent that such taxes
have been paid or are not required to be paid. Stryker or the Exchange Agent
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 Stryker or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the IRC, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Stryker or the Exchange Agent, 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 Stryker or the Exchange Agent. All amounts in respect of
taxes received or withheld by Stryker shall be disposed of by Stryker in
accordance with the IRC or such state, local or foreign tax law, as applicable.
(e) In the event 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, the Surviving Corporation will
issue in exchange for such lost, stolen or destroyed certificate the certificate
evidencing shares of Stryker Common Stock deliverable in respect thereof and pay
any cash, dividends or other distributions, in each case as determined in
13
accordance with this Article 2. When authorizing such issue of the certificate
of shares of Stryker Common Stock in exchange therefor, the Board of Directors
of the Surviving Corporation may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen or destroyed
certificate to give the Surviving Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Surviving
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
(f) Adoption of this Agreement by the shareholders of the Company shall
constitute, as an integral part of the Merger, ratification of the appointment
of, and the reappointment of, said Exchange Agent.
2.11 NO FURTHER TRANSFERS
At the close of business on the day on which the Effective Time occurs, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of shares of Company Common Stock on the
records of the Company.
2.12 NO FRACTIONAL SHARES
Neither certificates nor scrip for fractional shares of Stryker Common
Stock will be issued upon surrender for exchange of certificates representing
shares of Company Common Stock, but in lieu thereof each holder of Company
Common Stock otherwise entitled to a fraction of a share of Stryker Common Stock
shall receive from Stryker an amount in cash (without interest), in an amount
rounded to the nearest whole cent, determined by multiplying the per share
closing price of a share of Stryker Common Stock, as reported in THE WALL STREET
JOURNAL for New York Stock Exchange - Composite Transactions for the day
immediately preceding the date on which the Effective Time occurs (or, if the
Stryker Common Stock did not trade on the New York Stock Exchange such date, the
last day of trading in the Stryker Common Stock prior to the Effective Time) by
the fractional share of Stryker Common Stock to which such shareholder would be
otherwise entitled. No Stryker stock split or dividend shall relate to any
fractional share interest, and no such fractional share interest shall entitle
the owner thereof to vote or to any rights of a shareholder of Stryker. Stryker
shall make available to the Exchange Agent the cash necessary for this purpose.
2.13 STOCK LEGENDS; AGREEMENTS BY CERTAIN SHAREHOLDERS
Certificates representing shares of Stryker Common Stock issued to Persons
deemed to be affiliates of the Company (as that term is used for purposes of
Rule 145 under the Securities Act) on the date of the Company Shareholders
Meeting shall bear the legend referred to in paragraph 4 of Exhibit I hereto.
2.14 DISSENTERS' RIGHTS
No Dissenting Shareholder will be entitled to any portion of the Merger
Consideration under this Section 2 unless and until the holder has failed to
perfect or has effectively withdrawn or lost their right to dissent from the
Merger under the CBCA. Any Dissenting Shareholder will be entitled to receive
only the payment provided by Sections 7-113-101 ET SEQ. of the CBCA with respect
to Shares owned by such Dissenting Shareholder. If any Person who otherwise
14
would be deemed a Dissenting Shareholder has failed to properly perfect or has
effectively withdrawn or has lost the right to dissent with respect to any
Shares, those Shares will be converted into the right to receive the Per Share
Merger Consideration as provided by Section 2.7(a), without interest or
dividends thereon.
2.15 ADJUSTMENTS
If, between the date that the Merger Consideration is determined pursuant
to Section 2.6 and the Effective Time, the outstanding shares of Stryker Common
Stock shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, stock split, stock
dividend or combination, or a record date with respect to any of the foregoing
should occur within such period, the Merger Consideration specified in Section
2.6 shall be correspondingly adjusted and thereafter all references to the
Merger Consideration and the Per Share Merger Consideration shall be deemed to
be to the Merger Consideration and the Per Share Merger Consideration as so
adjusted.
2.16 RETURN OF EXCHANGE FUND
Any portion of the Exchange Fund which remains undistributed to the former
holders of Company Common Stock for six months after the Effective Time shall be
delivered to Stryker, upon its request, and any such former holders who have not
theretofore surrendered to the Exchange Agent the certificates representing
shares of Company Common Stock owned by them in compliance herewith shall
thereafter look only to Stryker for payment of their claim for shares of Stryker
Common Stock, any cash in lieu of fractional shares of Stryker Common Stock and
any dividends or distributions with respect to such shares of Stryker Common
Stock. None of Stryker, Merger Sub, the Exchange Agent or the Company shall be
liable to any former holder of Company Common Stock for any such shares of
Stryker Common Stock held in the Exchange Fund (and any cash, dividends and
distributions payable in respect thereof) which are delivered to a public
official pursuant to an official request under any applicable abandoned
property, escheat or similar law.
2.17 FURTHER ASSURANCES
If at any time after the Effective Time the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments or assurances
or any other acts or things are necessary, desirable or proper (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of either the Company or Merger Sub or (b)
otherwise to carry out the purposes of this Agreement, the Surviving Corporation
and its proper officers and directors or their designees shall be authorized to
execute and deliver, in the name and on behalf of either the Company or Merger
Sub, all such deeds, bills of sale, assignments and assurances and do, in the
name and on behalf of the Company or Merger Sub, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of the Company or Merger Sub, as applicable, and otherwise
to carry out the purposes of this Agreement.
15
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Stryker as follows:
3.1 ORGANIZATION
Part 3.1 of the Disclosure Letter contains a complete and accurate list for
each Acquired Company of its name, its jurisdiction of incorporation and any
other jurisdictions in which it is authorized to do business. Each Acquired
Company is a corporation duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation, with the corporate power
and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, and to perform all
its obligations under its Contracts. Each Acquired Company is duly licensed or
qualified to do business as a foreign corporation in good standing in each
domestic or foreign jurisdiction in which the nature of the business conducted
by it or the character or location of the properties owned or leased by it makes
such licensing or qualification necessary. Copies of (i) the Organizational
Documents of each Acquired Company, (ii) the minute books of the Acquired
Companies and (iii) the stock transfer books of the Acquired Companies,
heretofore delivered, furnished or made available to Stryker or its
representatives, are true and complete as of the date hereof. The Organizational
Documents of each Acquired Company are in full force and effect, and no Acquired
Company is in violation or breach of any of the provisions of its Organizational
Documents.
3.2 CAPITAL STRUCTURE
(a) The authorized capital stock of the Company consists of 10,000,000
shares of Company Common Stock and 2,416,668 shares of Company Preferred Stock.
As of December 31, 1999 (i) 4,061,945 shares of Company Common Stock were issued
and outstanding; (ii) 1,290,036 shares of Company Common Stock were subject to
outstanding Options; (iii) 590,000 shares of Company Common Stock were subject
to outstanding Warrants; (iv) no shares of Company Common Stock were held in the
treasury of the Company; and (v) no shares of Company Preferred Stock were
issued and outstanding. Except as set forth in Part 3.2(a) of the Disclosure
Letter, since December 31, 1999 through the date of this Agreement, (A) no
Options or Warrants to purchase shares of Company Common Stock have been
granted, (B) no shares of Company Common Stock have been issued other than
pursuant to the exercise of Options and Warrants outstanding on December 31,
1999 and (C) no shares of Company Preferred Stock have been issued other than
the 383,142 shares of Company Preferred Stock issued to Stryker. Part 3.2(a) of
the Disclosure Letter sets forth a complete and correct list, as of the date
hereof, of all holders of Options and Warrants including such person's name, the
number of Options (vested, unvested and total) or Warrants held by such person,
the date of grant and the exercise price for each such Option or Warrant.
(b) All the outstanding shares of Company Common Stock and Company
Preferred Stock are duly authorized, validly issued, fully paid and
non-assessable. Except as set forth in paragraph (a) above, (i) there are no
shares of capital stock of the Company authorized, issued or outstanding, (ii)
there are no authorized or outstanding options, warrants, calls, preemptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character obligating any Acquired Company to issue, transfer or sell or
cause to be issued, transferred or
16
sold any shares of capital stock or other equity interest in any Acquired
Company or securities convertible into or exchangeable for such shares or equity
interests, or obligating any Acquired Company to grant, extend or enter into any
such option, warrant, call, subscription or other right, agreement, arrangement
or commitment, and (iii) there are no outstanding contractual obligations of any
Acquired Company to repurchase, redeem or otherwise acquire any shares or other
capital stock of any Acquired Company or to provide funds to make any investment
(in the form of a loan, capital contribution or otherwise) in any Acquired
Company (other than an Acquired Company that is wholly owned, directly or
indirectly, by the entity obligated to provide such funds) or other entity.
3.3 AUTHORITY; NO CONFLICT
(a) This Agreement is a legal, valid, and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
Company has all requisite right, power and authority to execute and deliver this
Agreement and, subject to approval of its shareholders, to perform its
obligations under this Agreement. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
Contemplated Transactions have been duly authorized by the Board of Directors of
the Company and, other than approval and adoption of this Agreement by the
holders of at least a majority of the voting power of the Company, no other
corporate proceedings on the part of the Company are necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation of the Contemplated Transactions. The Board of Directors of the
Company has determined that the Merger Consideration is fair to the shareholders
of the Company and has recommended approval by the shareholders of the Company
of this Agreement and the Merger.
(b) Except as set forth in Part 3.3(b) of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or performance
by the Company of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Acquired Companies, or any
resolution adopted by the directors or the shareholders of any Acquired
Company;
(ii) contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which any Acquired Company, or
any of the assets owned or used by any Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Acquired Company or that otherwise
relates to the business of, or any of the assets owned or used by, any
Acquired Company;
17
(iv) cause any Acquired Company to become subject to, or to become
liable for the payment of, any Tax;
(v) cause any of the assets owned by any Acquired Company to be
reassessed or revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract; or
(vii) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by any Acquired Company.
(c) No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any Governmental Body
is required by or with respect to any Acquired Company in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the Contemplated Transactions except for (i) the filing with the
SEC of (A) a proxy statement relating to the Company Shareholders Meeting for
the approval by the shareholders of the Company of the Merger (such proxy
statement, as amended or supplemented from time to time, the "COMPANY PROXY
STATEMENT"), and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a) of
the Exchange Act as may be required in connection with this Agreement and the
Contemplated Transactions; (ii) the filing of the Articles of Merger with the
Secretary of State of the State of Colorado and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business; (iii) filings with Governmental Bodies to satisfy the applicable
requirements of state securities or "blue sky" laws; and (iv) the required vote
of the Company shareholders. Except as set forth in Part 3.3(c) of the
Disclosure Letter, no Acquired Company is or will be required to obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.4 TITLE TO PROPERTIES; ENCUMBRANCES
(a) The Acquired Companies own all of the properties and assets (whether
real, personal or mixed and whether tangible or intangible) that they purport to
own, including all of the properties and assets reflected in the consolidated
balance sheet at March 31, 2000 contained in the Company's quarterly report on
Form 10-Q for the quarter then ended (the "BALANCE SHEET") or acquired after the
date thereof (except for personal property sold since the date of the Balance
Sheet in the Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by the Acquired Companies since the date of the
Balance Sheet (except for personal property acquired and sold since the date of
the Balance Sheet in the Ordinary Course of Business and consistent with past
practice). All assets reflected in the Balance Sheet are free and clear of all
Encumbrances other than security interests listed in Part 3.4(a) of the
Disclosure Letter.
(b) The Acquired Companies do not own any real property. Part 3.4(b) of
the Disclosure Letter contains a complete list of all real property leases
(collectively, the "REAL
18
PROPERTY LEASES") to which any of the Acquired Companies is a party. The
Acquired Companies have a valid leasehold interest in all of the real property
leased pursuant to the Real Property Leases (the "LEASED REAL PROPERTY") and
each of the Real Property Leases is in full force and effect in accordance with
its terms and there exists no breach or default thereunder on the part of any
Acquired Company or, to the Knowledge of the Company, the other party thereto,
and no event that, with the giving of notice or passage of time, or both, would
constitute a default on the part of the Company or, to the Knowledge of the
Company, on the part of the other party thereto, has occurred and is continuing
unremedied or unwaived. The Contemplated Transactions will not alter or impair
any of the rights presently enjoyed by any of the Acquired Companies in any of
the Leased Real Property. The buildings and improvements constituting part of
the Leased Real Property, and the operation or maintenance thereof as now
operated and maintained, do not (i) contravene any zoning or building law or
ordinance or administrative regulation or (ii) violate any restrictive covenant
or any provision of Contract or Legal Requirement, the effect of which would
interfere with or prevent the continued use of such properties for the purposes
for which they are now being used. All of the plants, buildings and structures
constituting part of the Leased Real Property are in reasonably good operating
condition and in a state of reasonable maintenance and repair to the extent
necessary for the efficient operation of the business of the Acquired Companies
being conducted therein. There exists no pending or, to the Knowledge of the
Company, threatened condemnation, eminent domain or similar proceeding with
respect to, or which could affect, any Leased Real Property or the buildings or
improvements thereon.
(c) Except for items disposed of since the date of the Balance Sheet in
the Ordinary Course of Business, all machinery, tools, equipment and other
tangible assets (i) reflected in the Balance Sheet (other than inventories),
(ii) leased by any Acquired Company or (iii) acquired by any Acquired Company
since the date of the Balance Sheet, currently are used, useable by or useful to
the Acquired Companies in the Ordinary Course of Business and in the manufacture
and sale of the products of the Acquired Companies, and are in reasonably good
operating condition and in a state of reasonable maintenance and repair. Except
as set forth in Part 3.4(c) of the Disclosure Letter, the inventories reflected
in the Balance Sheet were on the date thereof in good condition; such
inventories, and any inventories acquired by the Acquired Companies after the
date of the Balance Sheet to the extent not sold or otherwise disposed of in the
Ordinary Course of Business, are in good condition, are used, useable by or
useful to the Company in the Ordinary Course of Business and in the manufacture
and sale of the products of the Acquired Companies, and are not in excess of
reasonable requirements for the next 12 months. No item of inventory reflected
in the Balance Sheet was valued in excess of the lower of cost (on a first-in,
first-out basis) or market value. Except as indicated in the Balance Sheet, the
accounts receivable reflected in the Balance Sheet, or acquired by the Company
after the date of the Balance Sheet, have been collected or are collectible in
amounts not less than the aggregate amount recorded in the Balance Sheet, in the
case of receivables reflected in the Balance Sheet, or not less than the
aggregate amount recorded on the Company's books, in the case of receivables
acquired after the date of the Balance Sheet.
3.5 SEC DOCUMENTS
The Company has filed with the SEC since January 1, 1999, all required
registration statements, reports, schedules, forms, statements, proxy or
information statements and other
19
documents (including exhibits and all other information incorporated therein)
(the "COMPANY SEC DOCUMENTS"). As of their respective dates, the Company SEC
Documents complied or, with respect to those not yet filed, will comply in all
material respects with the requirements of the Securities Act, or the Exchange
Act, as the case may be, and, in each case, the rules and regulations of the SEC
promulgated thereunder and, except to the extent that information contained in
any Company SEC Document has been revised and superseded by or restated in a
later filed Company SEC Document, did not or, with respect to those not yet
filed, will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal recurring year-end audit adjustments).
3.6 NO UNDISCLOSED LIABILITIES
Except for liabilities (i) reflected in such financial statements or in the
notes thereto, (ii) incurred in the ordinary course of business consistent with
past practice since the date of the most recent audited financial statements
included in the Company SEC Documents, (iii) incurred in connection with this
Agreement or the transactions contemplated hereby or thereby, or (iv) disclosed
in Item 3.6 of the Disclosure Letter, no Acquired Company has any liabilities or
obligations of any nature which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the Company.
3.7 TAXES
(a) The Acquired Companies have filed or caused to be filed on a timely
basis all Tax Returns that are or were required to be filed by or with respect
to any of them, either separately or as a member of a group of corporations. The
Acquired Companies have paid, or made provision for the payment of, all Taxes
that have become due whether or not shown on those Tax Returns, or pursuant to
any assessment received by any Acquired Company, except such Taxes, if any, as
are being contested in good faith and as to which adequate reserves (determined
in accordance with GAAP) have been provided in the Balance Sheet. The Company
has made available to Stryker copies of, and Part 3.7(a) of the Disclosure
Letter contains a complete and accurate list of, all such Tax Returns relating
to income and franchise taxes filed since December 31, 1994.
(b) The federal, state and foreign Tax Returns of each Acquired Company
subject to such Taxes have been audited by the IRS or relevant state or foreign
tax authorities or are closed by the applicable statute of limitations for all
taxable years through 1995. Part 3.7(b) of the Disclosure Letter contains a
complete and accurate list of all audits of all such Tax Returns,
20
including a reasonably detailed description of the nature and outcome of each
audit. All deficiencies proposed as a result of such audits have been paid,
reserved against, settled, or, as described in Part 3.7(b) of the Disclosure
Letter, are being contested in good faith by appropriate proceedings. Part
3.7(b) of the Disclosure Letter describes all adjustments to the Tax Returns
filed by any Acquired Company or any group of corporations including any
Acquired Company for all taxable years since December 31, 1994, and the
resulting deficiencies proposed by the IRS or relevant state or foreign tax
authorities. Except as described in Part 3.7(b) of the Disclosure Letter, no
Acquired Company has given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of any Acquired
Company or for which any Acquired Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of each Acquired Company are adequate (determined in accordance
with GAAP) and are at least equal to that Acquired Company's liability for
Taxes. There exists no proposed tax assessment against any Acquired Company
except as disclosed in the Balance Sheet or in Part 3.7 of the Disclosure
Letter. No consent to the application of Section 341(f)(2) of the IRC has been
filed with respect to any property or assets held, acquired, or to be acquired
by any Acquired Company. All Taxes that any Acquired Company is or was required
by Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated basis) any
Acquired Company are true, correct, and complete. There is no tax sharing
agreement that will require any payment by any Acquired Company after the date
of this Agreement.
3.8 NO MATERIAL ADVERSE CHANGE
Except as set forth in Part 3.8 of Disclosure Letter, as of the date of
this Agreement, there has not been since the date of the Balance Sheet any
material adverse change in the business, operations, properties, prospects,
assets, or condition of any Acquired Company and no event has occurred or
circumstance exists that may result in such a material adverse change.
3.9 EMPLOYEE BENEFITS
(a) Part 3.9(a) of the Disclosure Letter contains a true and complete list
of all Benefit Plans.
(b) The Company has delivered to Stryker true and complete copies of all
documents embodying or relating to Benefit Plans. Each of the Benefit Plans
listed in Part 3.9(a) of the Disclosure Letter is and has at all times been in
compliance in all respects with all applicable provisions of ERISA, the IRC and
other laws.
(c) Each "employee pension benefit plan" as defined in Section 3(2) of
ERISA (each a "PENSION PLAN") which is intended to meet the requirements of
Section 401(a) of the IRC now meets, and since its inception has met, the
requirements for qualification under Section 401(a) of the IRC and nothing
has occurred which would adversely affect the qualified status of any such
Pension Plan. Except as set forth in Part 3.9(c) of the Disclosure Letter,
the IRS has issued a
21
favorable determination letter with respect to the qualification under the IRC
of each Pension Plan and the IRS has not taken any action to revoke any such
letter.
(d) Each fiduciary and every plan official of each Benefit Plan are bonded
to the extent required by Section 412 of ERISA. Those sections of all annual
reports heretofore filed with the IRS, the Department of Labor and the Pension
Benefit Guaranty Corporation by or on behalf of every Benefit Plan which were
required to be certified were only certified without qualification by the
accountants or actuaries of such Benefit Plan.
(e) Except as set forth in Part 3.9(e) of the Disclosure Letter, the
execution and performance of the transactions contemplated by this Agreement
will not (either alone or upon the occurrence of any additional or subsequent
event) constitute an event under any Benefit Plan or individual agreement that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, vesting or increase in benefits with respect to any employee,
former employee, consultant, agent or director of any Acquired Company. No
payment which will be or may be made by any Acquired Company to any employee,
former employee, director, consultant or agent thereof will or could be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the IRC.
(f) At no time has any Acquired Company contributed to, been required to
contribute to, or incurred any withdrawal liability (within the meaning of
Section 4201 of ERISA) to any Benefit Plan which is a multiemployer plan as
defined in Section 3(37) of ERISA.
(g) No Acquired Company maintains any Benefit Plan which is funded by an
association described in Section 501(c)(9) of the IRC.
(h) Each "group health plan" (within the meaning of Section 4980B of the
IRC) maintained by any Acquired Company has been administered in compliance with
the coverage continuation requirements contained in the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") and as provided under Section 4980B
of the IRC and any regulations promulgated or proposed under the IRC.
(i) The Acquired Companies have made all contributions required to be made
to each Benefit Plan under the terms of the plan and applicable law. No
prohibited transaction (as defined in Section 4975 of the IRC or Section 406 of
ERISA) has occurred with respect to any Benefit Plan listed, which could subject
any Benefit Plan or any related trust, any Acquired Company, any affiliate,
Stryker or any director or employee of any of them to any tax or penalty imposed
under Section 4975 of the IRC or Section 502(i) or 502(1) of ERISA, either
directly or indirectly, and whether by way of indemnity or otherwise.
(j) Except as set forth in Part 3.9(k) of the Disclosure Letter, no
Acquired Company maintains, sponsors or contributes to, or has in the past
maintained, sponsored or contributed to, any plan or program providing retiree
medical or life insurance benefits.
(k) No Acquired Company has ever contributed to a Pension Plan subject to
Title IV of ERISA or Section 412 of the IRC.
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(l) There are no pending or threatened lawsuits or other claims (other
than routine claims for benefits under the plan) against or involving (i) any
Benefit Plan or (ii) any fiduciary (within the meaning of Section 3(21)(A) of
ERISA) of any Benefit Plan brought on behalf of any participant, beneficiary, or
fiduciary thereunder, nor to the Knowledge of the Company is there any
reasonable basis for any such claim.
(m) There are no proceedings or investigations, either currently in
progress or expected to be instituted in the future, relating to any Benefit
Plan, by any local, state, or federal administrative agency.
(n) All reports, notices, and other disclosure relating to Benefit Plans
required to be filed with, or furnished to, Governmental Bodies, plan
participants, or plan beneficiaries have been timely filed and furnished in
accordance with applicable law.
(o) None of the persons performing services for any Acquired Company have
been improperly classified as independent contractors or as being exempt from
the payment of wages for overtime.
3.10 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.10(a) of the Disclosure Letter:
(i) each Acquired Company is, and at all times since January 1, 1995
has been, in substantial compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a
violation by any Acquired Company of, or a failure on the part of any
Acquired Company to comply with, any Legal Requirement, or (B) may give
rise to any obligation on the part of any Acquired Company to undertake, or
to bear all or any portion of the cost of, any remedial action of any
nature; and
(iii) no Acquired Company has received, at any time since January 1,
1995, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential obligation
on the part of any Acquired Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
(b) Part 3.10(b) of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or to any of the assets owned or used
by, any Acquired Company. Each Governmental Authorization listed or required to
be listed in Part 3.10(b) of the Disclosure Letter is valid and in full force
and effect. Except as set forth in Part 3.10(b) of the Disclosure Letter:
23
(i) each Acquired Company is, and at all times since January 1, 1995
has been, in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part
3.10(b) of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or required to be
listed in Part 3.10(b) of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Part 3.10(b) of the Disclosure Letter;
(iii) no Acquired Company has received, at any time since January 1,
1995, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to, any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal of
the Governmental Authorizations listed or required to be listed in Part
3.10(b) of the Disclosure Letter have been duly filed on a timely basis
with the appropriate Governmental Bodies, and all other filings required to
have been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.10(b) of the Disclosure
Letter collectively constitute all of the Governmental Authorizations necessary
to permit the Acquired Companies to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses and
to permit the Acquired Companies to own and use their assets in the manner in
which they currently own and use such assets. The Company has made available to
Stryker copies of all periodic monitoring reports and records maintained or
filed by the Acquired Companies since January 1, 1995 in compliance with the
requirements of any Governmental Authorization.
3.11 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.11 of the Disclosure Letter, there is no
pending Proceeding:
(i) that has been commenced by or against any Acquired Company or
that otherwise relates to or may affect the business of, or any of the
assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
24
Except as set forth in Part 3.11(a) of the Disclosure Letter, to the
Knowledge of the Company, (1) no such Proceeding has been Threatened, and (2) no
event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding. The Company has delivered to
Stryker copies of all pleadings and correspondence between opposing counsel
relating to each Proceeding listed in Part 3.11 of the Disclosure Letter. The
Proceedings listed in Part 3.11 of the Disclosure Letter will not have a
material adverse effect on the business, operations, assets, condition, or
prospects of any Acquired Company.
(b) Except as set forth in Part 3.11(b) of the Disclosure Letter:
(i) there is no Order to which any of the Acquired Companies, or any
of the assets owned or used by any Acquired Company, is subject;
(ii) no Acquired Company is subject to any Order that relates to the
business of, or any of the assets owned or used by, any Acquired Company;
and
(iii) no officer, director, agent, or employee of any Acquired Company
is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of any Acquired Company.
(c) Except as set forth in Part 3.11(c) of the Disclosure Letter:
(i) each Acquired Company is, and at all times since July 1, 1995
has been, in full compliance with all of the terms and requirements of each
Order to which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may constitute
or result in (with or without notice or lapse of time) a violation of or
failure to comply with any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired
Company, is subject; and
(iii) no Acquired Company has received, at any time since July 1,
1995, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which any Acquired Company, or any of the
assets owned or used by any Acquired Company, is or has been subject.
3.12 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.12 of the Disclosure Letter, since the date
of the Balance Sheet, the Acquired Companies have conducted their businesses
only in the Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital stock;
grant of any Options or right to purchase shares of capital stock of any
Acquired Company; issuance of any
25
security convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by any Acquired Company
of any shares of any such capital stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired Company;
(c) payment or increase by any Acquired Company of any bonuses, salaries,
or other compensation to any shareholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
(e) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurances;
(f) entry into, termination of, or receipt of notice of termination of (i)
any license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any Contract or transaction involving a
total remaining commitment by or to any Acquired Company of at least $25,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of any Acquired
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of any Acquired Company, including the sale,
lease, or other disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to any
Acquired Company in excess of $25,000;
(i) material change in the accounting methods used by any Acquired
Company; or
(j) agreement, whether oral or written, by any Acquired Company to do any
of the foregoing.
3.13 CONTRACTS; NO DEFAULTS
(a) Part 3.13(a) of the Disclosure Letter identifies, and the Company has
furnished to Stryker true and complete copies of:
(i) each Contract that involves performance of services or delivery
of goods or materials by one or more Acquired Companies of an amount or
value in excess of $25,000;
26
(ii) each Contract that involves performance of services or delivery
of goods or materials to one or more Acquired Companies of an amount or
value in excess of $25,000;
(iii) each Contract that was not entered into in the Ordinary Course
of Business and that involves expenditures or receipts of one or more
Acquired Companies in excess of $10,000;
(iv) each Contract for borrowed money;
(v) each lease, rental or occupancy agreement, license, installment
and conditional sales agreement, and other Contract affecting the ownership
of, leasing of, title to, use of, or any leasehold or other interest in,
any real or personal property to which an Acquired Company is a party
(except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
$10,000 or with terms of less than one year);
(vi) each licensing agreement or other Contract with respect to
patents, tr ademarks, copyrights or other intellectual property to which an
Acquired Company is a party;
(vii) each collective bargaining agreement and other Contract to
which an Acquired Company is a party to or with any labor union or other
employee representative of a group of employees;
(viii) each joint venture, partnership, and other Contract (however
named) involving a sharing of profits, losses, costs, or liabilities by any
Acquired Company with any other Person;
(ix) each Contract to which an Acquired Company is a party
containing covenants that in any way purport to restrict the business
activity of any Acquired Company or limit the freedom of any Acquired
Company to engage in any line of business or compete with any Person;
(x) each Contract providing for payments to or by any Person based
on sales, purchases, or profits, other than direct payments for goods;
(xi) each power of attorney that is currently effective and
outstanding;
(xii) each Contract that contains or provides for an express
undertaking by any Acquired Company to be responsible for consequential
damages;
(xiii) each Contract for capital expenditures in excess of $25,000;
27
(xiv) each written warranty, guaranty and or other similar undertaking
with respect to contractual performance extended by any Acquired Company
other than in the Ordinary Course of Business; and
(xv) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
(b) Part 3.13(b) of the Disclosure Letter accurately describes all
warranties and service policies of the Company relating to its products
currently in effect or in effect at any time during the last three years. Other
than normal product returns pursuant to the foregoing warranties and except as
disclosed on Part 3.13(b) of the Disclosure Letter, there are no pending or, to
the knowledge of the Company threatened, claims of a customer, consumer,
distributor, government agency or other person based upon an alleged defect in
or otherwise relating to products assembled, manufactured or sold by the
Company.
(c) To the Knowledge of the Company, no officer, director, agent,
employee, consultant, or contractor of any Acquired Company is bound by any
Contract that purports to limit the ability of such officer, director, agent,
employee, consultant, or contractor to (i) engage in or continue any conduct,
activity, or practice relating to the business of any Acquired Company, or (ii)
assign to any Acquired Company or to any other Person any rights to any
invention, improvement, or discovery.
(d) Except as set forth in Part 3.13(d) of the Disclosure Letter, each
Contract identified or required to be identified in Part 3.13(a) of the
Disclosure Letter is in full force and effect and is valid and enforceable in
accordance with its terms.
(e) Except as set forth in Part 3.13(e) of the Disclosure Letter:
(i) each Acquired Company is, and at all times since January 1, 1995
has been, in full compliance with all applicable terms and requirements of
each Contract under which such Acquired Company has or had any obligation
or liability or by which such Acquired Company or any of the assets owned
or used by such Acquired Company is or was bound;
(ii) each other Person that has or had any obligation or liability
under any Contract under which an Acquired Company has or had any rights
is, and at all times since July 1, 1995 has been, in full compliance with
all applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result
in a violation or breach of, or give any Acquired Company or other Person
the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Contract; and
28
(iv) no Acquired Company has given to or received from any other
Person, at any time since January 1, 1995, any notice or other
communication (whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default under, any
Contract.
(f) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to any
Acquired Company under current or completed Contracts with any Person and, to
the Knowledge of the Company, no such Person has made written demand for such
renegotiation.
(g) The Contracts relating to the sale, design, manufacture, or provision
of products or services by the Acquired Companies have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
3.14 ENVIRONMENTAL MATTERS
Except as set forth in Part 3.14 of the Disclosure Letter:
(a) Each Acquired Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. Each Acquired Company holds, and has been and is in
compliance with, all Governmental Authorizations and Consents required under
Environmental Laws, and has made, timely and proper filings for renewal of all
such Governmental Authorizations and Consents. No Acquired Company has Knowledge
of or any basis to expect, nor has any Acquired Company or any other Person for
whose conduct an Acquired Company is or may be held to be responsible received,
any actual or Threatened order, notice, claim or other communication from (i)
any Governmental Body or private citizen acting in the public interest, (ii) the
current or prior owner or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual or
Threatened obligation to undertake or bear the cost of any Environmental,
Health, and Safety Liabilities with respect to any of the Facilities or any
other properties or assets (whether real, personal, or mixed) in which any
Acquired Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by any Acquired Company, or
any other Person for whose conduct any Acquired Company is or may be held
responsible, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of the Company, Threatened
claims, Encumbrances, or other restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the Facilities or any
other properties and assets (whether real, personal, or mixed) in which any
Acquired Company has or had an interest.
29
(c) The Company does not have Knowledge or any basis to expect, nor has
any Acquired Company or any other Person for whose conduct any Acquired Company
is or may be held responsible received, any citation, directive, inquiry,
notice, Order, summons, warning, claim or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which any Acquired Company had an interest, or with respect to any property
or facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by any Acquired Company, or any other
Person for whose conduct any Acquired Company is or may be held responsible,
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(d) No Acquired Company, or any other Person for whose conduct any
Acquired Company is or may be held responsible, has any Environmental, Health,
and Safety Liabilities with respect to the Facilities or, to the Knowledge of
the Company, with respect to any other properties and assets (whether real,
personal, or mixed) in which any Acquired Company (or any predecessor), has or
had an interest, or at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
(e) There are no Hazardous Materials being stored at the Facilities, or
present on or in the Environment at the Facilities or at any geologically or
hydrologically adjoining property, including any Hazardous Materials contained
in barrels, above or underground storage tanks, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other part of
the Facilities or such adjoining property, or incorporated into any structure
therein or thereon. No Acquired Company, any other Person for whose conduct any
Acquired Company is or may be held responsible, or to the Knowledge of the
Company, any other Person, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to the Facilities or any other
properties or assets (whether real, personal, or mixed) in which any Acquired
Company has or had an interest.
(f) There has been no Release or, to the Knowledge of the Company, Threat
of Release, of any Hazardous Materials in, at, on, about, under, beneath or
emanating from the Facilities or at any other locations where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facilities, or from or by any other
properties and assets (whether real, personal, or mixed) in which any Acquired
Company has or had an interest, or to the Knowledge of the Company any
geologically or hydrologically adjoining property, whether by any Acquired
Company or any other Person.
(g) The Company has delivered to Stryker true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by any Acquired Company and any permits, registrations or
authorizations pertaining to Hazardous Materials or Hazardous Activities in, at,
on, about, under or beneath the Facilities, or concerning compliance by any
Acquired Company, or any other Person for whose conduct any Acquired Company is
or may be held responsible, with Environmental Laws.
30
(h) Neither the execution of this Agreement nor the consummation of the
transactions contemplated by this Agreement requires any filings, disclosures,
Consents, Governmental Authorizations or notices under Environmental Laws and
will not result in increased costs of compliance with Environmental Laws
relating to the Acquired Companies.
3.15 EMPLOYEES
(a) Part 3.15(a) of the Disclosure Letter contains a complete and accurate
list of the following information for each employee or director of the Acquired
Companies, including each employee on leave of absence or layoff status:
employer; name; job title; current compensation paid or payable and any change
in compensation since January 1, 2000; vacation accrued; and service credited
for purposes of vesting and eligibility to participate under any Benefit Plan.
(b) Part 3.15(b) of the Disclosure Letter includes a complete and accurate
list of each (a) employment or severance agreement not terminable without
liability or obligation (either individually or collectively); (b) agreement
with any director, executive officer or other employee of any acquired Company
(i) the benefits of which are contingent, or the terms of which are materially
altered, on the occurrence of a transaction involving the Acquired Company of
the nature of any of the Contemplated Transactions or relating to an actual or
potential change in control of the Acquired Company or (ii) providing any term
of employment or other compensation guarantee or extending severance benefits or
other benefits after termination not comparable to benefits available to
employees of the Acquired Companies generally; (c) agreement, plan or
arrangement under which any person may receive payments as a result of the
Contemplated Transactions that may be subject to tax imposed by Section 4999 of
the IRC or included in the determination of such person's "parachute payment"
under Section 280G of the IRC; and (d) agreement or plan, including any stock
option plan, stock appreciation right plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be triggered, increased, or the
vesting of the benefits of which will be triggered or accelerated, by the
occurrence of any of the Contemplated Transactions or the value of any of the
benefits of which will be calculated on the basis of any of the Contemplated
Transactions. Except as provided for by the terms of any agreement, plan or
arrangement, the existence of which is disclosed in Part 3.15(b) of the
Disclosure Letter, the consummation of the Contemplated Transactions, without
regard to any other event following the Effective Time, will not (i) entitle any
current or former employee or officer of any Acquired Company to severance pay,
unemployment compensation or any other payment, or (ii) accelerate the time of
payment or vesting or increase the amount of compensation due any such employee
or officer.
(c) No employee or director of any Acquired Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such employee or
director and any other Person that in any way adversely affects or will affect
(i) the performance of his duties as an employee or director of the Acquired
Companies, or (ii) the ability of any Acquired Company to conduct its business.
Except as set forth in Part 3.15(c) of the Disclosure Letter, to the Knowledge
of the Company, no officer or other key employee of any Acquired Company intends
to terminate his employment with such Acquired Company.
31
(d) Part 3.15(d) of the Disclosure Letter contains a complete and accurate
list of the following information for each retired employee or director of the
Acquired Companies, or their dependents, receiving benefits or scheduled to
receive benefits in the future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance coverage, and other
benefits.
3.16 LABOR RELATIONS; COMPLIANCE
No Acquired Company has been or is a party to any collective bargaining or
other labor Contract. There has not been, there is not presently pending or
existing, and there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
any Acquired Company relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable Governmental
Body, organizational activity, or other labor or employment dispute against or
affecting any of the Acquired Companies or their premises, or (c) any
application for certification of a collective bargaining agent. No event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by any
Acquired Company, and no such action is contemplated by any Acquired Company.
Each Acquired Company has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing. No Acquired Company is liable for the payment of any compensation,
damages, taxes, fines, penalties, or other amounts, however designated, for
failure to comply with any of the foregoing Legal Requirements.
3.17 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets -- The term "INTELLECTUAL PROPERTY
ASSETS" includes:
(i) the names Image Guided Technologies, Inc. and Springfield
Surgical Instruments, Inc., all fictional business names, trading names,
registered and unregistered trademarks and service marks, registrations and
applications (collectively, "MARKS");
(ii) all patents, patent applications, and inventions improvements
and other developments that may be patentable (collectively, "PATENTS");
(iii) all other know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, blue prints and other proprietary information
(collectively, "PROPRIETARY INFORMATION"); and
(iv) all copyrights in both published works and unpublished works
(collectively, "COPYRIGHTS").
owned, used, or licensed by any Acquired Company as licensee or licensor.
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(b) AGREEMENTS -- Part 3.17(b) of the Disclosure Letter contains a
complete and accurate list and summary description, including any royalties paid
or received by the Acquired Companies, of all Contracts relating to the
Intellectual Property Assets to which any Acquired Company is a party or by
which any Acquired Company is bound, except for any license implied by the sale
of a product and perpetual, paid-up licenses for commonly available software
programs with a value of less than $25,000 under which an Acquired Company is
the licensee. There are no outstanding and, to the Knowledge of the Company, no
Threatened disputes or disagreements with respect to any such agreement.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS
(i) The Intellectual Property Assets are all those necessary for the
operation of the Acquired Companies' businesses as they are currently
conducted. Except as set forth in Part 3.17(c) of the Disclosure Letter,
one or more of the Acquired Companies is the owner of all right, title, and
interest in and to each of the Intellectual Property Assets, free and clear
of all Encumbrances and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual Property Assets.
(ii) The Contemplated Transactions will not alter or impair any of
the rights presently enjoyed by any Acquired Company with respect to the
Intellectual Property Assets.
(iii) Except as set forth in Part 3.17(c) of the Disclosure Letter,
all former and current employees of each Acquired Company have executed
written Contracts with one or more of the Acquired Companies that assign to
one or more of the Acquired Companies all rights to any inventions,
improvements, developments or other information relating to the business of
any Acquired Company. No employee of any Acquired Company has entered into
any Contract that restricts or limits in any way the scope or type of work
in which the employee may be engaged or requires the employee to transfer,
assign, or disclose information concerning his work to anyone other than
one or more of the Acquired Companies.
(d) PATENTS
(i) Part 3.17(d) of the Disclosure Letter contains a complete and
accurate list and summary description of all Patents owned or used
(pursuant to license agreements or otherwise) by the Acquired Companies
and, in the case of Intellectual Property Assets that are so owned, the
jurisdictions in or by which such assets have been registered, filed or
issued.
(ii) All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable,
and are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the Closing Date.
(iii) Except as set forth in Part 3.17(d) of the Disclosure Letter, no
Patent has been or is now involved in any interference, reissue,
reexamination, or opposition
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proceeding. To the Knowledge of the Company, there is no potentially
interfering patent or patent application of any third party.
(iv) Except as set forth in Part 3.17(d) of the Disclosure Letter, to
the Knowledge of the Company, no Patent has been challenged or threatened
in any way. None of the products manufactured and sold, nor any process or
know-how used, by any Acquired Company infringes or is alleged to infringe
any patent or other proprietary right of any other Person.
(e) MARKS
(i) Part 3.17(e) of Disclosure Letter contains a complete and
accurate list and summary description of all Marks.
(ii) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all formal
legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid
and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(iii) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to the Knowledge of the Company, no such
action is Threatened with respect to any of the Marks.
(iv) To the Knowledge of the Company, there is no potentially
interfering trademark or trademark application of any third party.
(v) To the Knowledge of the Company, no Mark has been challenged or
threatened in any way. None of the Marks used by any Acquired Company
infringes or is alleged to infringe any trade name, trademark, or service
mark of any third party.
(f) COPYRIGHTS
(i) Part 3.17(f) of the Disclosure Letter contains a complete and
accurate list and summary description of all Copyrights.
(ii) All the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the date of Closing.
(iii) To the Knowledge of the Company, no Copyright has been
challenged or threatened in any way. None of the subject matter of any of
the Copyrights infringes or is alleged to infringe any copyright of any
third party or is a derivative work based on the work of a third party.
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(g) PROPRIETARY INFORMATION
(i) With respect to each item of Proprietary Information, the
documentation relating to such item of Proprietary Information is current,
accurate, and sufficient in detail and content to identify and explain it
and to allow its full and proper use without reliance on the knowledge or
memory of any individual.
(ii) The Acquired Companies have taken all reasonable precautions to
protect any secrecy, confidentiality and value of their Proprietary
Information.
(iii) The Proprietary Information is not part of the public knowledge
or literature, and, to the Knowledge of the Company, has not been used,
divulged, or appropriated either for the benefit of any Person (other than
one or more of the Acquired Companies) or to the detriment of the Acquired
Companies. No Proprietary Information is subject to any adverse claim or
has been challenged or threatened in any way.
3.18 REGULATORY MATTERS
(a) Part 3.18(a) of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or to any of the assets owned or used
by, any Acquired Company, including but not limited to product approvals and
clearances issued by the FDA and similar foreign Governmental Bodies and product
submissions to the FDA and similar foreign Governmental Bodies which are
currently in process (the "SUBMISSIONS"). Except for the Submissions, each
Governmental Authorization issued by a United States Governmental Body, and, to
the Knowledge of the Company, each Governmental Authorization issued by a
foreign Governmental Body, listed or required to be listed in Part 3.11(b) of
the Disclosure Letter is valid and in full force and effect.
(b) Except as set forth in Part 3.11(b) of the Disclosure Letter, to the
Knowledge of the Company, the Governmental Authorizations listed in Part 3.18(a)
of the Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Acquired Companies to lawfully conduct
and operate their businesses in the manner they currently conduct and operate
such businesses and to permit the Acquired Companies to own and use their assets
in the manner in which they currently own and use such assets.
(c) In calendar year 1999, the Company recorded no "complaints" (as such
term is defined in 21 C.F.R. Section 820.198) and reported no Medical Device
Reports ("MDRS"). From January 1, 2000 through the date of this Agreement, the
Company recorded no "complaints" and reported no MDRs. Except as set forth in
Part 3.18(c) of the Disclosure Letter, to the Knowledge of the Company, these
"complaints" and MDRs would not reasonably lead to the conclusion that there is
a trend or failure mode with respect to a particular product.
(d) The Acquired Companies manufacture and for the past three years have
manufactured their products in all material respects in accordance with all
applicable FDA rules and regulations (including the Good Manufacturing Practices
and the Quality System regulations promulgated by the FDA) and the European
Medical Device Directive (93142/ECC) and quality control procedures of the
Acquired Companies in effect at the time of manufacture. To the
35
extent required, all of the products currently sold by the Acquired Companies
have been approved for sale by the FDA and all other applicable federal, state,
local and foreign regulatory agencies. The Acquired Companies are authorized by
their "notified body" to apply the "CE" mark to the products listed in Part
3.18(d) of the Disclosure Letter. No Acquired Company has received any notice
from the FDA or any other federal, state, local or foreign regulatory agency
questioning its manufacturing practices or threatening to revoke or curtail any
product approval, and no Acquired Company is aware of any intent to deliver any
such notice. Part 3.18(d) of the Disclosure Letter contains a complete list of
all products manufactured or marketed by the Acquired Companies, including those
that require the approval of or notice to, or registration with, the FDA or any
other United States federal or state or foreign governmental agency or bureau
under any existing law, regulation or policy, specifying the type of approval or
notice of registration required and the reference number or identification of
each currently effective approval or notice and registration. Since January 1,
1995, none of the Acquired Companies has received any FDA "warning letter." None
of the products identified in Part 3.18(d) of the Disclosure Letter has been the
subject of any voluntary or involuntary recall or any governmental investigation
other than routine inspections of the Acquired Companies' facilities and all
United States and, except as set forth in Part 3.18(d) of the Disclosure Letter,
international regulatory approvals therefor are owned by and registered in the
name of an Acquired Company and are in full force and effect.
3.19 CERTAIN PAYMENTS
Since January 1, 1995, no Acquired Company or director, officer, agent, or
employee of any Acquired Company, or to the Knowledge of the Company any other
Person associated with or acting for or on behalf of any Acquired Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Acquired Company or any
Affiliate of an Acquired Company, or (iv) in violation of any Legal Requirement,
or (b) established or maintained any fund or asset that has not been recorded in
the books and records of the Acquired Companies.
3.20 STRYKER REGISTRATION STATEMENT; COMPANY PROXY STATEMENT
None of the information supplied or to be supplied by the Company
specifically for inclusion or incorporation by reference in (i) the registration
statement on Form S-4 to be filed with the SEC by Stryker in connection with the
issuance of Stryker Common Stock in the Merger, together with all amendments
thereto (the "STRYKER REGISTRATION STATEMENT"), will, at the time the Stryker
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
or (ii) the Company Proxy Statement will, at the date it is first mailed to the
Company's shareholders and the time of the Company Shareholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The
36
Company Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except -that no representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied by Stryker specifically for inclusion or incorporation by reference in
the Company Proxy Statement.
3.21 STATE TAKEOVER STATUTES
To the Knowledge of the Company, no state takeover statute is applicable to
the Merger or any other Contemplated Transaction.
3.22 DISCLOSURE
(a) No representation or warranty of the Company in this Agreement and no
statement in the Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
(c) There is no fact known to any Acquired Company that has specific
application to any Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as any Acquired
Company can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of the Acquired
Companies (on a consolidated basis) that has not been set forth in this
Agreement or the Disclosure Letter.
3.23 TRANSACTIONS WITH RELATED PERSONS
Except as set forth in Part 3.23 of the Disclosure Letter, no Related
Person of any Acquired Company has, or since January 1, 1995 has had, any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to the Acquired Companies' businesses.
Except as set forth in Part 3.23 of the Disclosure Letter, no Related Person of
any Acquired Company is, or since January 1, 1995 has owned (of record or as a
beneficial owner) an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial interest
in any transaction with any Acquired Company or (ii) engaged in competition with
any Acquired Company with respect to any line of the products or services of
such Acquired Company in any market presently served by such Acquired Company.
Except as set forth in Part 3.23 of the Disclosure Letter, no Related Person of
any Acquired Company is a party to any Contract with, or has any claim or right
against, any Acquired Company.
3.24 BROKERS
Other than as set forth in Part 3.24 of the Disclosure Letter, the Company
has not incurred and will not incur any obligation for any finder's or broker's
fee or agents' commission or other similar payment in connection with the
Contemplated Transactions.
37
4. REPRESENTATIONS AND WARRANTIES OF STRYKER AND MERGER SUB
Each of Stryker and Merger Sub represents and warrants to the Company as
follows:
4.1 ORGANIZATION AND GOOD STANDING
Stryker is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Michigan. Merger Sub is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Colorado.
4.2 CAPITALIZATION
The authorized capital stock of Stryker consists of (i) 500,000,000 shares
of Stryker Common Stock and (ii) 500,000 shares of preferred stock, $1.00 par
value. As of May 31, 2000, (i) 194,919,275 shares of Stryker Common Stock were
issued and outstanding and (ii) no shares of Stryker Preferred Stock were issued
and outstanding. As of the date of this Agreement, no bonds, debentures, notes
or other indebtedness of Stryker having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of Stryker may vote are issued or outstanding. All
outstanding shares of Stryker Common Stock are, and all shares of Stryker Common
Stock that may be issued pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
4.3 AUTHORITY; NO CONFLICT
(a) This Agreement is a legal, valid, and binding obligation of Stryker
and Merger Sub, enforceable against each in accordance with its terms. The
execution, delivery and performance by Stryker and Merger Sub of this Agreement
and the consummation by Stryker and Merger Sub of the Contemplated Transactions
have been duly authorized by the respective boards of directors of Stryker and
Merger Sub and no other corporate proceedings on the part of Stryker or Merger
Sub are necessary to authorize the execution, delivery and performance of this
Agreement by Stryker and Merger Sub and the consummation of the Contemplated
Transactions.
(b) Neither the execution and delivery of this Agreement by Stryker or
Merger Sub nor the consummation or performance of any of the Contemplated
Transactions by Stryker or Merger Sub will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
(i) any provision of Stryker's or Merger Sub's Organizational
Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Stryker or Merger Sub;
(iii) any Legal Requirement or Order to which Stryker or Merger Sub
may be subject; or
(iv) any Contract to which Stryker or Merger Sub is a party or by
which Stryker or Merger Sub may be bound.
38
(c) No consent, approval, order or authorization of, action by, or in
respect of, or registration, declaration or filing with, any Governmental Body
is required by or with respect to Stryker or Merger Sub in connection with the
execution and delivery of this Agreement by Stryker and Merger Sub or the
consummation by Stryker and Merger Sub of the transactions contemplated by this
Agreement, except for (i) the filing with the SEC of (A) the Stryker
Registration Statement and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Exchange Act as may be required in connection with this Agreement
and the Contemplated Transactions; (ii) the filing of the Articles of Merger
with the Secretary of State of the State of Colorado and appropriate documents
with the relevant authorities of other states in which Stryker is qualified to
do business; (iii) such filings with and approvals of the New York Stock
Exchange to permit the shares of Stryker Common Stock that are to be issued in
the Merger to be listed on the New York Stock Exchange; (iv) filings with
Governmental Bodies to satisfy the applicable requirements of state securities
or "blue sky" laws and (v) such consents, approvals, orders or authorizations
the failure of which to be made or obtained individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against either
Stryker or Merger Sub that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To the Knowledge of Stryker, no such Proceeding has been
threatened.
4.5 SEC DOCUMENTS; UNDISCLOSED LIABILITIES
Stryker has filed all required reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated
therein) with the SEC since January 1, 1999 (the "STRYKER SEC DOCUMENTS"). As of
their respective dates, the Stryker SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Stryker SEC Documents. Except to the extent that information
contained in any Stryker SEC Document has been revised or superseded by a later
filed Stryker SEC Document, none of the Stryker SEC Documents when filed
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Stryker included in the Stryker SEC
Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of Stryker and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments). Except for liabilities (i) reflected in
such financial statements or in the notes thereto, (ii) incurred in the ordinary
course of business consistent with past practice since the date of the most
recent audited financial statements included in the Stryker
39
SEC Documents or (iii) incurred in connection with this Agreement or the
transactions contemplated hereby or thereby neither Stryker nor any of its
Subsidiaries has any liabilities or obligations of any nature which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.6 INFORMATION SUPPLIED
None of the information supplied or to be supplied by Stryker specifically
for inclusion or incorporation by reference in (i) the Stryker Registration
Statement will, at the time the Stryker Registration Statement becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) the Company Proxy Statement
will, at the date it is first mailed to the Company's shareholders or at the
time of the Company Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Stryker
Registration Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by Stryker with respect to
statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
in the Stryker Registration Statement.
4.7 INTERIM OPERATIONS OF MERGER SUB
Merger Sub was formed solely for the purpose of engaging in transactions of
the type contemplated hereby, has engaged in no other business activities and
has conducted its operations only as contemplated hereby.
4.8 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Agreement,
neither Stryker nor Merger Sub makes any representation or warranty, and hereby
disclaims any such representations by Stryker or Merger Sub with respect to the
execution and delivery of the Agreement or the Contemplated Transactions.
5. COVENANTS OF THE COMPANY
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, the Company will,
and will cause each Acquired Company (other than the Company) and the
Representatives of each Acquired Company (other than the Company) to, (a) afford
Stryker and its Representatives full and free access during normal business
hours to each Acquired Company's personnel, contracts, books and records, and
other documents and data, as Stryker may reasonably request and (b) furnish
Stryker and its Representatives with copies of all such contracts, books and
records and other documents and data as Stryker or its Representatives may
reasonably request.
40
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, except as
specifically contemplated by this Agreement and the Disclosure Letter, the
Company will, and will cause each Acquired Company other than the Company to:
(a) conduct the business of such Acquired Company only in the Ordinary
Course of Business;
(b) use their Best Efforts to preserve intact the current business
organization of such Acquired Company, keep available the services of the
current officers, employees, and agents of such Acquired Company, and maintain
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with such Acquired
Company;
(c) confer with Stryker concerning operational matters of a material
nature; and
(d) otherwise report periodically to Stryker concerning the status of the
business, operations and finances of such Acquired Company.
5.3 NEGATIVE COVENANT
Between the date of this Agreement and the Closing Date, except as
specifically permitted by this Agreement and the Disclosure Letter, the Company
will not, and will cause each other Acquired Company not to, without the prior
consent of Stryker, take any affirmative action, or fail to take any reasonable
action within their or its control as a result of which any of the changes or
events listed in Section 3.12 is likely to occur.
5.4 REQUIRED APPROVALS
Between the date of this Agreement and the Closing Date, the Company will,
and will cause each other Acquired Company and each of its and their Related
Person to, cooperate with Stryker with respect to all filings that Stryker is
required by Legal Requirements to make in connection with the Contemplated
Transactions.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, the Company will
promptly notify Stryker in writing if the Company or any other Acquired Company
becomes aware of any fact or condition that causes or constitutes a Breach of
any of the Company's representations and warranties as of the date of this
Agreement, or if the Company or any other Acquired Company becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any fact or condition require any change in the Disclosure
Letter if the Disclosure Letter were dated the date of the occurrence or
discovery of any such fact or condition, the Company will promptly deliver to
Stryker a supplement to the Disclosure Letter specifying such change. During the
same period, the
41
Company will promptly notify Stryker of the occurrence of any Breach of any
covenant of the Company in this Section 5 or of the occurrence of any event that
may make the satisfaction of the conditions in Section 7 impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
The Company will cause all indebtedness owed to any Acquired Company by any
Related Person of any Acquired Company to be paid in full prior to Closing.
5.7 NO SOLICITATION BY THE COMPANY
(a) The Company shall not, nor shall it permit any other Acquired Company
to, nor shall it authorize or permit any of its directors, officers or employees
or any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly or
indirectly through another person, (i) solicit, initiate or encourage (including
by way of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any Takeover Proposal;
provided, however, that if, at any time prior to the date of the Company
Shareholders Meeting (the "APPLICABLE PERIOD"), the Board of Directors of the
Company determines in good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its fiduciary duties to the
Company's shareholders under applicable law, the Company and its representatives
may, in response to a Superior Proposal which was not solicited by it or which
did not otherwise result from a breach of this Section 5.7(a), and subject to
providing prior written notice of its decision to take such action to Stryker
and compliance with Section 5.7(c), (x) furnish information with respect to the
Company and its Subsidiaries to any person making a Superior Proposal pursuant
to a customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (y) participate in discussions or
negotiations regarding such Superior Proposal. For purposes of this Agreement,
"TAKEOVER PROPOSAL" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of assets of the
Company other than in the Ordinary Course of Business, or any shares of any
class or series of equity securities of the Company or any of its Subsidiaries,
any tender offer or exchange offer for shares of any class or series of equity
securities of the Company or any of its Subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries, other
than the transactions contemplated by this Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify,
in a manner adverse to Stryker, the approval or recommendation by such Board of
Directors or such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal,
or (iii) approve or recommend, or propose to approve or recommend, or execute or
enter into, any letter of intent, agreement in principle, merger agreement,
acquisition agreement, option agreement or other similar agreement or propose
publicly or agree to do any of the foregoing (each, an "ACQUISITION AGREEMENT")
related to any Takeover Proposal, other than any such agreement entered into
concurrently with a termination pursuant to the next
42
sentence in order to facilitate such action. Notwithstanding the foregoing,
during the Applicable Period, in response to a Superior Proposal which was not
solicited by the Company and which did not otherwise result from a breach of
Section 5.7(a), if the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's shareholders under
applicable law, the Board of Directors of the Company may (subject to this and
the following sentence) terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause the Company to enter into any
Acquisition Agreement with respect to any Superior Proposal), but only at a time
that is during the Applicable Period and is after the tenth business day
following Stryker's receipt of written notice advising Stryker that the Board of
Directors of the Company is prepared to accept a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. For purposes of this Agreement, a
"SUPERIOR PROPOSAL" means any proposal made by a third party to acquire,
directly or indirectly, including pursuant to a tender offer, exchange offer,
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of the
Company Common Stock then outstanding or all or substantially all the assets of
the Company and otherwise on terms which the Board of Directors of the Company
determines in its good faith judgment (based on the advice of its financial
advisor referred to in Part 3.24 of the Disclosure Letter) to be more favorable
to the Company's shareholders than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of the
Board of Directors of the Company, is reasonably capable of being obtained by
such third party.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 5.7, the Company shall promptly (and no later than
48 hours) advise Stryker orally and in writing of any request for information or
of any Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the Person making such request or Takeover
Proposal. The Company will keep Stryker informed of the status and material
terms and conditions (including amendments or proposed amendments) of any such
request or Takeover Proposal.
(d) Nothing contained in this Section 5.7 shall prohibit the Company from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law; PROVIDED, that,
except as expressly permitted by this Section 5.7, neither the Company nor its
Board of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose publicly to approve
or recommend, a Takeover Proposal.
43
5.8 PREPARATION OF THE STRYKER REGISTRATION STATEMENT AND COMPANY PROXY
STATEMENT: COMPANY SHAREHOLDERS MEETING
(a) As soon as practicable following the date of this Agreement, the
Company shall prepare and file with the SEC the Company Proxy Statement and
Stryker shall prepare and file with the SEC the Stryker Registration Statement,
in which the Company Proxy Statement will be included as a prospectus. Each of
the Company and Stryker shall use its reasonable best efforts to have the
Stryker Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. The Company will use its reasonable
best efforts to cause the Company Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after the Stryker Registration Statement
is declared effective under the Securities Act. Stryker shall also take any
action (other than qualifying to do business in any jurisdiction in which it is
not now so qualified or to file a general consent to service of process)
required to be taken under any applicable state securities laws in connection
with the issuance of Stryker Common Stock in the Merger and the Company shall
furnish all information concerning the Company and the holders of Company Common
Stock as may be reasonably requested in connection with any such action. No
filing of, or amendment or supplement to, the Stryker Registration Statement
will be made by Stryker, or the Company Proxy Statement will be made by the
Company, without providing the other party the opportunity to review and comment
thereon. Stryker will advise the Company, promptly after it receives notice
thereof, of the time when the Stryker 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 Stryker 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 Stryker Registration Statement or
comments thereon and responses thereto or requests by the SEC for additional
information. The Company will inform Stryker, promptly after it receives notice
thereof, of any request by the SEC for the amendment of the Company Proxy
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to the Company or Stryker, or any of their respective
affiliates, officers or directors, should be discovered by the Company or
Stryker which should be set forth in an amendment or supplement to any of the
Stryker Registration Statement or the Company Proxy Statement, so that any of
such documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the shareholders of the Company.
(b) The Company shall, as soon as practicable following the date of this
Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its shareholders (the "COMPANY SHAREHOLDERS MEETING")
solely for the purpose of obtaining the Company Shareholder Approval. The
Company shall, through its Board of Directors, recommend to its shareholders the
approval and adoption of this Agreement, the Merger and the other transactions
contemplated hereby. Without limiting the generality of the foregoing but
subject to its right to
44
terminate this Agreement pursuant to Section 5.7(b), the Company agrees that its
obligations pursuant to the first sentence of this Section 5.8(b) shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal.
5.9 LETTER OF THE COMPANY'S ACCOUNTANTS; LETTER OF STRYKER'S ACCOUNTANTS
(a) The Company shall use its reasonable best efforts to cause its
independent public accountants to deliver to Stryker two letters from the
Company's independent public accountants, one dated the date on which the
Stryker Registration Statement is declared effective by the SEC and one dated
the Closing Date, each addressed to Stryker, in form and substance reasonably
satisfactory to Stryker and customary in scope and substance for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Stryker Registration Statement.
(b) Stryker shall use its reasonable best efforts to cause its independent
public accountants to deliver to the Company two letters from Stryker's
independent public accountants, one dated the date on which the Stryker
Registration Statement is declared effective by the SEC and one dated the
Closing Date, each addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Stryker Registration Statement.
5.10 BEST EFFORTS
Between the date of this Agreement and the Closing Date, the Company will
use its Best Efforts to cause the conditions in Sections 7.1 and 7.2 to be
satisfied.
6. COVENANTS OF STRYKER AND MERGER SUB
6.1 REQUIRED APPROVALS
Between the date of this Agreement and the Closing Date, Stryker will, and
will cause each of its Related Persons to, cooperate with the Company with
respect to all filings that the Company is required by Legal Requirements to
make in connection with the Contemplated Transactions.
6.2 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Stryker will use
its Best Efforts to cause the conditions in Sections 7.1 and 7.3 to be
satisfied.
6.3 OFFICERS' AND DIRECTORS' INDEMNIFICATION
(a) Stryker will cause the Surviving Corporation to keep in effect in each
of its Articles and Bylaws provisions providing for exculpation and
indemnification of the respective officers and directors of the Company to the
fullest extent permitted under Colorado law.
45
(b) For a period of six years after the Effective Time, Stryker shall
cause to be maintained in effect the current officers' and directors' liability
insurance maintained by the Company with respect to its officers and directors
covering acts or omissions occurring prior to the Effective Time; provided that
Stryker may substitute therefor policies of at least the same coverage and
amounts that contain terms and conditions that are no less advantageous to the
officers and directors of the Company than such existing insurance and provided,
further, that if the existing coverage cannot be maintained or equivalent
coverage cannot be obtained or can be obtained only by paying an annual premium
in excess of $35,000, Stryker shall only be required to obtain as much coverage
as can be obtained by paying an annual premium equal to $35,000.
(c) In the event Stryker or any of its successors or assigns (i)
consolidates with or merges into any other person and will not be the continuing
or surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary to effectuate
the purposes of this Section 6.3, proper provision will be made so that the
successors and assigns of Stryker assume the obligations set forth in this
Section 6.3 and none of the actions described in clauses (i) or (ii) will be
taken until such provision is made.
(d) Any person seeking indemnification under this Section 6.3 shall be
entitled to such indemnification only if such person notifies Stryker promptly
after such person becomes aware of any claim, action, suit or proceeding in
respect of which such person is making a claim hereunder and cooperate in the
defense thereof. Absent a conflict of interest under standards of professional
conduct, Stryker is entitled to select counsel to represent the indemnitee,
which selection must be approved by the indemnitee, such approval not to be
unreasonably withheld. So long as the proceeding (or settlement) involves only
the payment of money by Stryker, Stryker is entitled to control the conduct of
the proceeding.
(e) Present and former officers and directors of the Company are intended
third-party beneficiaries of the provisions set forth in this Section 6.3 and
will be entitled to enforce such provisions against Stryker and Merger Sub and
their successors and assigns.
(f) Notwithstanding the foregoing, no person who is or was an officer or
director of the Company prior to the Effective Time shall be entitled to the
benefit of the provisions set forth in subsections (a), (c) and (d) of this
Section 6.3 with respect to any loss, claim, damage or expense incurred in
connection with a matter as to which such person had knowledge that should have
been, but was not, set forth in the Disclosure Letter and the Articles and
Regulations may be amended to so provide.
7. CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party hereto to effect the Merger shall be
subject to the fulfillment or satisfaction, prior to or on the Closing Date of
each of the following conditions precedent:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the shares of
Company Common Stock.
46
There shall not have been written demands or objections made and not withdrawn
or otherwise terminated under Section 7-113-101 ET. SEQ. of the CBCA by
shareholders of the Company holding in the aggregate more than 200,000 shares of
Company Common Stock.
(b) NO LITIGATION. No judgment, order, decree, statute, law, ordinance,
rule or regulation, entered, enacted, promulgated, enforced or issued by any
court or other Governmental Body of competent jurisdiction or other legal
restraint or prohibition (collectively, "RESTRAINTS") shall be in effect, and
there shall not be pending any suit, action or proceeding by any Governmental
Body (i) preventing the consummation of the Merger or (ii) which otherwise is
reasonably likely to have a Material Adverse Effect on the Company or Stryker,
as applicable; PROVIDED, that each of the parties shall have used its reasonable
best efforts to prevent the entry of any such Restraints and to appeal as
promptly as possible any such Restraints that may be entered.
(c) STRYKER REGISTRATION STATEMENT. The Stryker Registration Statement
shall have become effective in accordance with the provisions of the Securities
Act. No stop order suspending the effectiveness of the Stryker Registration
Statement shall have been issued by the SEC and no proceedings for that purpose
shall have been initiated.
(d) STOCK EXCHANGE LISTING. The shares of Stryker Common Stock issuable in
accordance with the Merger shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF STRYKER AND MERGER SUB. All
obligations of Stryker and Merger Sub under this Agreement are subject to the
fulfillment or satisfaction, prior to or on the Closing Date, of each of the
following additional conditions precedent:
(a) PERFORMANCE OF OBLIGATIONS, REPRESENTATIONS AND WARRANTIES. The
Company shall have performed and complied in all material respects with all
agreements and conditions contained in this Agreement that are required to be
performed or complied with by it prior to or at the Closing. Each of the
Company's representations and warranties contained in Section 3 of this
Agreement shall be true and correct as of the date hereof and as of the Closing
with the same effect as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and could not
reasonably be expected to result, individually or in the aggregate, in losses,
liabilities, claims, damages (including incidental and consequential damages),
expenses and diminution in value, whether or not involving a third party claim,
in an amount exceeding $600,000. Stryker and Merger Sub shall have received a
certificate dated the Closing Date and signed by the Chairman, President or a
Vice-President of the Company, certifying that, the conditions specified in this
Section 7.2(a) have been satisfied.
(b) EMPLOYMENT AGREEMENTS. Paul L. Ray and Waldean A. Schulz, Ph.D. shall
each have entered into an Employment Agreement with the Surviving Corporation,
substantially in the form of Exhibits II and III, respectively, hereto, and such
agreements shall be in full force and effect.
47
(c) AFFILIATES. Stryker shall have received from each Person referred to
in Section 2.13, an executed copy of an agreement substantially in the form of
Exhibit I.
(d) TERMINATION OF OPTIONS AND WARRANTS. IGT shall have taken action to
terminate all options and warrants that have not been exercised as contemplated
by Section 2.9.
7.3 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. All obligations of
the Company under this Agreement are subject to the fulfillment or satisfaction,
prior to or on the Closing Date, of each of the following additional conditions
precedent:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. Stryker
and Merger Sub shall have performed and complied in all material respects with
all agreements and conditions contained in this Agreement that are required to
be performed or complied with by them prior to or at the Closing. Each of the
representations and warranties of Merger Sub and Stryker contained in Section 4
of this Agreement shall be true and correct as of the date hereof and as of the
Closing with the same effect as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Stryker. The Company shall have received certificates dated
the Closing Date and signed by the President or a Vice-President of Stryker and
Merger Sub, certifying that the conditions specified in this Section 7.3(a) have
been satisfied.
(b) TAX OPINION. The Company shall have received a written opinion from
Ireland, Stapleton, Pryor & Pascoe, P.C., counsel to the Company, on the date on
which the Stryker Registration Statement is declared effective by the SEC and on
the Closing Date, in each case dated as of such respective date, to the effect
that on the basis of certain facts, representations and assumptions set forth in
such opinion, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
7.4 FRUSTRATION OF CLOSING CONDITIONS. None of the Company, Stryker or
Merger Sub may rely on the failure of any condition set forth in Sections 7.1,
7.2 or 7.3, as the case may be, to be satisfied if such failure was caused by
such party's failure to use reasonable efforts to consummate the Merger and the
other transactions contemplated by this Agreement.
8. NON-SURVIVAL OF REPRESENTATION AND WARRANTIES. None of the representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time. This Section shall not limit any
covenant or agreement by the parties which expressly requires performance after
the Effective Time.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by written notice given prior to or at the Closing, be
terminated:
48
(a) by Stryker if any of the conditions in Section 7.1 or 7.2 have not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Stryker to comply with
its obligations under this Agreement) and Stryker has given Company written
notice of Stryker's intent to terminate at least 30 days before the effective
date of the proposed termination, and the Company has not satisfied the
condition nor provided reasonable assurances that the condition will, in due
course, be satisfied on or before the Closing Date;
(b) by the Company if any of the conditions in Section 7.1 or 7.3 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of the Company to comply
with its obligations under this Agreement) and the Company has given Stryker
written notice of the Company's intent to terminate at least 30 days before the
effective date of the proposed termination, and Stryker has not satisfied the
condition nor provided reasonable assurances that the condition will, in due
course, be satisfied on or before the Closing Date;
(c) by the agreement of each of the Board of Directors of Stryker, Merger
Sub and the Company;
(d) by Stryker, if the Company or any of its directors or officers shall
participate in discussions or negotiations or furnish information in breach of
Section 5.7;
(e) by the Company in accordance with Section 5.7(b); provided that, in
order for the termination of this Agreement pursuant to this paragraph (e) to be
deemed effective, the Company shall have complied with all provisions of Section
5.7, including the notice provisions therein, and with applicable requirements,
including the payment of the Termination Fee;
(f) by either Stryker or the Company if (i) the requisite approval of the
shareholders of the Company shall not have been obtained at a Company
Shareholders Meeting duly convened therefor or at any adjournment or
postponement thereof or (ii) the Closing has not occurred (other than through
the failure of any party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before December 31, 2000.
9.2 RIGHTS AND OBLIGATIONS UPON TERMINATION
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated by a party because of the breach of this Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired. If
this Agreement is terminated pursuant to Section 9.1, all further obligations of
the parties under this Agreement will terminate, except that the obligations in
Sections 10.1 and 10.5 will survive.
49
10. GENERAL PROVISIONS
10.1 FEES AND EXPENSES
(a) Except as provided in this Section 10.1, all fees and expenses
incurred in connection with the Merger, this Agreement and the Contemplated
Transactions shall be paid by the party incurring such fees or expenses whether
or not the Merger is consummated.
(b) In the event that (i) a bona fide Takeover Proposal shall have been
made directly to the shareholders of the Company generally or shall have
otherwise become publicly known or any Person shall have publicly announced an
intention (whether or not conditional) to make a Takeover Proposal and
thereafter this Agreement is terminated by either Stryker or the Company
pursuant to Section 9.1(f), or (ii) this Agreement is terminated by the Company
pursuant to Section 9.1(e) or (iii) this Agreement is terminated by Stryker
pursuant to Section 9.1(d), then the Company shall promptly, but in no event
later than the date of such termination, pay Stryker a fee equal to $600,000
(the "TERMINATION FEE"), payable by wire transfer of same day funds; PROVIDED,
that no Termination Fee shall be payable to Stryker pursuant to clause (i) of
this Section 10.1(b) unless within nine (9) months of such termination the
Company or any of its Subsidiaries enters into any definitive agreement with
respect to, or consummates, any Takeover Proposal. The Company acknowledges that
the agreements contained in this Section 5.10(b) are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
Stryker would not enter into this Agreement. Accordingly, if the Company fails
promptly to pay the amount due pursuant to this Section 10.1(b), and, in order
to obtain such payment, Stryker commences a suit which results in a judgment
against the Company for the fee set forth in this Section 10.1(b), the Company
shall pay to Stryker its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the amount of
the fee at the prime rate of Citibank, N.A. in effect on the date such payment
was required to be made.
10.2 PUBLIC ANNOUNCEMENTS
Stryker and the Company will consult with each other before issuing, and
provide each other the opportunity to review, comment upon and concur with, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as either party may determine is required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange or national trading system. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement shall be in the form heretofore agreed to by the parties.
10.3 AFFILIATES
As soon as practicable after the date hereof, the Company shall deliver to
Stryker a letter identifying all Persons who are, at the time this Agreement is
submitted for adoption by the shareholders of the Company, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company shall use
its reasonable best efforts to cause each such Person to
50
deliver to Stryker as of the Closing Date, a written agreement substantially in
the form attached as EXHIBIT I hereto.
10.4 LISTINGS
Stryker shall use its reasonable best efforts to cause the Stryker Common
Stock issuable in the Merger to be approved for listing on the NYSE, subject to
official notice of issuance, as promptly as practicable after the date hereof,
and in any event prior to the Closing Date.
10.5 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date or, if this
Agreement is terminated pursuant to the provisions of Article 9 hereof, for a
period of two years thereafter, Stryker and the Company will maintain in
confidence and will not use except for the purposes set forth herein, and will
cause the respective Representatives of Stryker and the Acquired Companies to
maintain in confidence, any information furnished by another party or an
Acquired Company in connection with this Agreement or the Contemplated
Transactions, unless (a) such information was already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings. If the
transactions contemplated hereby are not closed, Stryker shall return to the
Company all data, information and other written material relating to the Company
obtained by it from the Company in connection with this Agreement or its
negotiation.
10.6 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand, (b) sent by telecopier (with confirmation of receipt), or (c)
received by the addressee, if sent by a nationally recognized overnight delivery
service, in each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate by notice to the other parties):
Company: Image Guided Technologies, Inc.
5710-B Flatiron Parkway
Boulder, Colorado 80301
Attention: Paul L. Ray
Facsimile No.: (303) 473-9059
51
with a copy to: Ireland, Stapleton, Pryor & Pascoe, P.C.
Suite 2600
1675 Broadway
Denver, Colorado 80202-4685
Attention: William E. Tanis
Facsimile No.: (303) 623-2062
Stryker or Merger Sub: Stryker Corporation
2725 Fairfield Road
Kalamazoo, Michigan 49002
Attention: David J. Simpson
Facsimile No.: (616) 385-2216
with a copy to: Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, New York 10166
Attention: John H. Denne
Facsimile No.: (212) 351-3131
10.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. The failure or any delay by any party in exercising any right,
power, or privilege under this Agreement is not a waiver of such right, power,
or privilege, and no single or partial exercise of any right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
10.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes a complete and exclusive statement
of the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties.
10.10 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and
52
effect. Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
10.11 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
10.12 GOVERNING LAW
This Agreement is governed by the laws of the State of Colorado without
giving effect to its principles of conflicts of laws.
10.13 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, are one and the same Agreement.
10.14 PERFORMANCE BY MERGER SUB
Stryker will cause Merger Sub to comply with its obligations hereunder and
cause Merger Sub to consummate the Merger as contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
IMAGE GUIDED TECHNOLOGIES, INC.
By:
----------------------------
Name:
Title:
STRYKER CORPORATION
By:
----------------------------
Name:
Title:
IGT ACQUISITION CO.
By:
----------------------------
Name:
Title:
54