Exhibit 2.1
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT ("Agreement") is made as of November 21,
2007, by and among the Persons whose names and addresses are set forth on the
signature page of this Agreement (hereinafter referred to individually, as
"Seller" and collectively as "Sellers"), P MEDICAL HOLDING SA, a societe anonyme
organized and existing under the laws of Switzerland ("PMH"); GREATBATCH, INC.,
a Delaware corporation ("Greatbatch") and GREATBATCH LTD., a New York
corporation and an indirect, wholly-owned subsidiary of Greatbatch
("Purchaser").
RECITALS
Sellers desire to sell, and Purchaser desires to purchase, all of the shares of
PMH for the consideration and on the terms and conditions set forth in this
Agreement.
AGREEMENT
Greatbatch, Purchaser, PMH and Sellers, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
1.1. Certain Definitions. For purposes of this Agreement, in addition to those
terms defined in the introductory paragraph and Recitals to this Agreement, the
following terms have the meanings specified or referred to in this Section 1.1:
"Acquired Companies" -- PMH, Precimed SA, Swiss Orthopedic Solutions, SA,
Precimed UK, Ltd., Precimed, Inc., Precimed CMP, Inc., Precimed Japan, Inc.,
Tech-MIM SA, Precimed China, SPO SA and Precimed France SAS, collectively.
"Applicable Contract" -- any Contract (a) under which any Acquired Company
has or may acquire any rights, (b) under which any Acquired Company has or may
become subject to any obligation or liability, or (c) by which any Acquired
Company or any of the assets owned or used by it is or may become bound.
"Applicable GAAP" -- generally accepted accounting principles, as in effect
in the applicable jurisdiction at the time of preparation of the subject
financial statement or financial account.
"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, with due consideration for timing, cost, and other
relevant factors where appropriate; provided, however, that 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.
"Breach" -- a "Breach" of a representation, warranty, covenant, obligation
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been any
inaccuracy in or breach of, or any failure to perform or comply with such
representation, warranty, covenant, obligation or other provision, and the term
"Breach" means any such inaccuracy, breach, failure, claim, occurrence or
circumstance.
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"Business" -- consists of the business operated by the Acquired Companies
of designing, developing, manufacturing and selling precision medical
instruments, implants and other products, including, but not limited to, for the
orthopedic industry, and including but not limited to, reamers, drills and taps,
broaches, handles, screwdrivers, screws and plates, trauma sets,
minimally-invasive instrumentation, implants and trays and cases.
"Business Day" -- a day (other than a Saturday or Sunday) on which banks in
both New York, New York (USA) and Zurich, Switzerland are open for general
business.
"CHF" -- means Swiss Francs, being the lawful currency of Switzerland.
"Closing Date" -- the date as of which the Closing actually takes place.
"CMP 2008 Earn-Out" -- any contingent payments that may become due and
owing pursuant to Section 2.5(b)(iv) of a certain Asset Purchase Agreement,
dated as of August 14, 2006, by and between Precimed, Inc. and The Carr Metal
Products Group.
"Competition Law" -- any Legal Requirement intended to prohibit or regulate
mergers, restraints of trade or monopolization of trade, including the HSR Act
and Council Regulation (EEC) No. 4064/89 or similar laws within Switzerland,
France or other applicable jurisdictions.
"Consent" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" -- all of the transactions contemplated by this
Agreement, and any agreement entered into in connection herewith, including:
(a) the Pre-Closing Transfers;
(b) the sale of the Shares by the Sellers to Purchaser; and
(c) the performance by the parties of their respective covenants and
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.
"Deductible" - means the actual amount of the retention amount or
deductible payable in connection with the R&W Insurance Policy, such amount to
be determined once the R&W Insurance Policy is obtained by Purchaser in
accordance with Section 6.10 hereof.
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"Deeds of Transfer"-- means any and all forms of assignment, stock powers,
conveyance, notorial or other deeds of transfer necessary to assign and transfer
complete title and necessary to transfer ownership of the Shares to Purchaser
under applicable Legal Requirements.
"Effective Time" - 11:59:59 p.m. on the Closing Date.
"Encumbrance" -- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal or any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
"Environment" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins and
wetlands), groundwaters, 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 or other responsibility arising from the
requirements for compliance with or arising from the violation of any applicable
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any actions required to be taken to comply with applicable law or
regulation relating to 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, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial or inspection costs and expenses resulting from any
requirements under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under any Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment or other remediation or response
actions ("Cleanup") 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) with authority to
require such Cleanup; or
(d) any other compliance, corrective, investigative or remedial measures
required under the applicable Environmental Law or Occupational Safety and
Health Law.
"Environmental Law" -- any Legal Requirement that requires:
(a) advising appropriate authorities, employees and the public of intended
or actual releases of pollutants or hazardous substances or materials,
violations of 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;
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(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) 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 substances, pollutants, oil or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(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.
"Escrow Agent" means any escrow agent mutually acceptable to the Parties.
"Escrow Agreement" means an Escrow Agreement to be executed and delivered
at Closing by and among the Escrow Agent, Sellers and Purchaser, which includes
the release terms set forth herein and otherwise which includes such customary
terms and conditions as the Escrow Agent, Sellers and Purchaser may agree upon.
"Escrow Amount" means CHF 6,000,000 plus the amount of the Deductible.
"Facilities" -- any real property, leaseholds or other interests currently
or formerly owned or operated by any of the Acquired Companies and any
buildings, structures or equipment (including motor vehicles, tank cars and
rolling stock) currently or formerly owned or operated by any of the Acquired
Companies for which Purchaser or any of the Acquired Companies could have any
legal liability under Environmental Law.
"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.
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"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official or entity and any court or
other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.
"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, and any other act, business, operation or thing
that materially increases the danger, or risk of danger, or poses an
unreasonable risk of harm to persons or property or the Environment on or off
the Facilities.
"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 admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefore and asbestos or asbestos-containing materials.
"HSR Act" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, together with all regulations promulgated thereunder.
"Indebtedness" -- without duplication with respect to any Person:
(a) all indebtedness of such Person for borrowed money (including accrued
and unpaid interest on, and prepayment premiums, penalties or similar
contractual charges arising as a result of the discharge of, any such
obligation);
(b) except for the CMP 2008 Earn-Out, all obligations of such Person for
the deferred purchase price of property or services (other than trade payables
created in the Ordinary Course of Business) including, but not limited to, the
earn-outs payable by an Acquired Company (but only to the extent the obligations
exist as of or beyond the Closing) pursuant to the terms of (i) a certain
Intellectual Property Purchase Agreement, dated December 14, 2006, by and among
Precimed SA, Patrick White and Elast-O-Loc Technologies, LLC, (ii) a certain
Share Purchase Investment Agreement, dated July 1, 2005, by and among the
"Shareholders", the "Investors" (as such terms are defined therein), Precimed SA
and Swiss Orthopedic Solutions, (iii) a certain Asset Purchase Agreement, dated
as of August 14, 2006, by and between Precimed, Inc. and The Carr Metal Products
Group, and (iv) a certain Convention De Vente D'Actions (the "Tech-Mim
Agreement"), dated December 21, 2006, by and between Vital Valli and Precimed SA
(for purposes hereof, the amount to be accrued as Indebtedness on account of the
earn-out payable pursuant to the Tech-Mim Agreement will be the maximum amount
payable thereunder);
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(c) indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the lender or seller under such agreement in
the event of default are limited to repossession or sale of such property);
(d) all obligations of such Person as lessee under leases that have been in
accordance with GAAP, recorded as capital leases;
(e) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, that have been in accordance
with GAAP, recorded as indebtedness;
(f) the Acquired Companies' outstanding, unfunded pension obligation in the
amount of CHF 3,000,000;
(g) the lesser of (i) R&W Insurance Policy premium, or (ii) CHF 1,200,000;
and
(h) Indebtedness of others referred to in clauses (a) through (e) above
guaranteed in any manner by such Person, or in effect guaranteed by such Person
under or pursuant to one or more Contracts.
"Indebtedness Adjustment" -- means the amount determined by subtracting (i)
all cash or cash equivalents of the Acquired Companies as of the Effective Time
and any deposits paid in connection with the Pyramid Transactions by the
Acquired Companies on or prior to the Closing from (ii) a sum equal to (x) US
$1,000,000 (but stated in terms of Swiss Francs, which amount shall be
determined at the Closing based on the exchange rate in effect on the Closing as
reported by the Wall Street Journal) and (y) the aggregate Indebtedness of the
Acquired Companies as of the Effective Time, together with for purposes of this
clause (y), but not limited to, all accrued and unpaid interest as of the
Effective Time and any premiums, prepayment penalties or other charges payable
by reason of the prepayment of any such Indebtedness as of the Closing Date.
"Independent Accountants" -- means any independent accounting firm mutually
acceptable to the Parties.
"Knowledge" -- (a) when applied to any Seller means the actual knowledge of
such Seller; (b) when applied to PMH, means the actual knowledge, after
reasonable investigation, of any officer or director of PMH, and (c) with
respect to any of the Acquired Companies, means the actual knowledge, after
reasonable investigation, of any officer or director of such Acquired Company.
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"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute or treaty applicable to
any of the Acquired Companies.
"Management Sellers" -- Patrick Berdoz, John Ayliffe, and Patrick White.
"Material Adverse Effect" -- an effect that is or would reasonably be
expected to be materially adverse (a) to the business, results of operations and
financial condition of the Acquired Companies, considered as a whole; or (b) to
Sellers' ability to perform any of their material obligations under this
Agreement or to consummate the transactions contemplated in this Agreement;
provided, however, that in determining whether a Material Adverse Effect has
occurred there shall be excluded any effect on the referenced party the cause of
which is: (i) general changes in conditions in the medical device or health care
industry, in the financial markets or in the global or the United States or any
other national economy, so long as any such change does not materially affect
the referenced party to a materially different extent than other similarly
situated Persons, (ii) any action or omission of Sellers in contemplation of the
transactions set forth in the Agreement, and (iii) the announcement of the
transactions contemplated hereby.
"Non-Management Sellers" -- all Sellers, other than the Management Sellers.
"Occupational Safety and Health Law" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards.
"Order" -- any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other 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" if 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.
"Organizational Documents" -- (a) the articles or certificate or deed of
incorporation, shareholders register and the bylaws of a corporation, (b) the
partnership agreement and any statement of partnership of a general partnership,
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership, (d) the certificate or deed of formation and limited
liability company agreement, articles of association, memorandum of association
or operating agreement and shareholders register of a limited liability company,
(e) any charter or similar document adopted or filed in connection with the
creation, formation or organization of a Person, and (f) any amendment to or
restatement of any of the foregoing.
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"Permitted Encumbrances" -- (i) Encumbrances for Taxes not yet due and
payable, (ii) any mechanic's, carrier's, supplier's or vendor's lien if payment
is not yet due on the underlying obligation, (iii) Encumbrances reflected in the
Financial Statements, (iv) Encumbrances disclosed in the Sellers' Disclosure
Schedule, (v) Encumbrances arising under the Securities Act of 1933, as amended
(the "Securities Act") or any other applicable securities laws, and (vi)
Encumbrances created by this Agreement.
"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.
"Pre-Closing Selling Shareholders" -- means BV Holding AG and Renaissance
PME.
"Pre-Closing Share Transfers" -- means the contemplated purchase by certain
Sellers of the Shares owned by the Pre-Closing Selling Shareholders, and the
assignment and transfer of such Shares.
"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.
"PST Contracts" -- mean any and all Contracts by and among certain Sellers
and the Pre-Closing Selling Shareholders that set forth the rights and
obligations of such Sellers with respect to the Pre-Closing Share Transfers.
"Purchaser's Accountants" -- means Deloitte LLP.
"Pyramid Contract" -- the agreement entitled "VENTE D'UNE BRACHE D'ACTIVITE
(sous conditions suspensive)" between DePuy France SAS and Precimed France SAS,
dated on or about August 10, 2007.
"Pyramid Transactions" -- means the actions contemplated in the Pyramid
Contract with respect to the acquisition by Precimed France SAS of a line of
business from DePuy France SAS.
"Related Person" -- with respect to a particular individual:
(a) each other member of such individual's immediately family (i.e.,
spouse, parents and children, natural or adopted) (the "Family");
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(b) any Person that is directly or indirectly controlled by such individual
or one or more members of such individual's Family.
(c) With respect to a specified Person other than an individual:
(d) 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;
(e) any Person that holds a direct or beneficial ownership interest in such
specified Person of not less than 4% of the voting interests in such Person; and
(f) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
"Release" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping or other releasing 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 which has
been designated by a Person and acknowledged by the other Party which are
limited in number to those reasonably necessary to accomplish the required
activities under this Agreement.
"Sellers' Accountants" -- KPMG LLP.
"Sellers' Disclosure Schedule" -- means the set of Schedules addressing
disclosure matters under Sections 3 and 4 and other provisions of this Agreement
delivered by PMH and Sellers to Purchaser under cover of a letter dated the date
hereof, including any and all attachments thereto.
"Shares" -- shall mean, until the delivery of the Fully-Diluted Cap Table
by the Sellers' Representative in accordance with Section 7.7 hereof, 928,152
fully paid in registered shares of PMH, each with a nominal value of CHF 1,
which constitute 100% of the outstanding shares and ownership interests in PMH
on the date hereof. At the Closing, the term "Shares" shall mean the aggregate
number of shares of PMH set forth on the Fully-Diluted Cap Table to be delivered
by the Sellers' Representative in accordance with Section 7.7 hereof, which
shares shall be fully paid in registered shares of PMH, each with a nominal
value of CHF 1, and shall constitute 100% of the outstanding shares and
ownership interests in PMH as of the Closing Date.
"Subsidiary" -- with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of that Person.
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"Tax" and "Taxes" -- any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer, transfer
pricing, registration, value added, alternative or add-on minimum, estimated or
other tax of any kind whatsoever applicable to any of the Acquired Companies,
including any interest, penalty or addition thereto, whether disputed or not.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form or other document or information required to
be 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.
"Threat of Release" -- a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"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 circumstances exist, that would
lead a prudent Person with adequate Knowledge of all of the relevant facts 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.
"Transaction Expenses" -- all fees, costs, expenses and disbursements,
incurred by Sellers in connection with the Contemplated Transactions (other than
the Pyramid Transactions), including: (a) the fees and expenses of any legal
counsel retained by Sellers, (b) the fees and expenses of any investment or
financial advisors retained by Sellers or the Acquired Companies, (c) the fees
and expenses of Sellers' Accountants, (d) any amounts payable by Sellers in
accordance with Section 11.3(g), (e) any incentive or similar bonuses or any
severance or similar payments payable to any Person by Sellers in connection
with the Contemplated Transactions, (f) Sellers' share of the fees and expenses
of the Independent Accounting Firm, if any, and (g) any fees and expenses of any
other counsel, accountants or other similar professionals for services rendered
to Sellers or the Acquired Companies (to the extent those services involved
investigation and advice regarding any Seller's tax position or any Pre-Closing
Share Transfers) in connection with the Contemplated Transactions (other than
the Pyramid Transactions).
1.2. OTHER DEFINED TERMS. The following terms shall have meanings defined
for such terms in the Sections set forth below:
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Term Section
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2008 EBITDA 2.3(b)
Accounts Receivable 4.8
Audited Financial Statements 4.4
Balance Sheet 4.4
Bank Accounts 4.24
Benefit Arrangements 4.13(m)
Benefits 4.13(p)
Closing 2.4
Closing Date Financial Report 2.2(c)
Closing Purchase Price 2.2(a)
Closing Purchase Price Reconciliation 2.2(d)
COBRA 4.13(h)
Company Copyrights 4.22(f)
Company IPR's 4.22(c)(i)
Company Marks 4.22(e)(i)
Company Patents 4.22(d)(i)
Contingent Payments 2.3(a)
Copyrights 4.22(a)(iii)
Damages 11.1(b)
Dispute 11.12(a)
Dispute Notice 11.12(a)
Earn-Out Amount 2.3(d)
Earn-Out Period 2.3(a)
EBITDA Report 2.3(e)(i)
Employee Plans 4.13(a)
ERISA Affiliate 4.13(e)
Financial Statements 4.4
Fully-Diluted Cap Table 7.7
Fundamental Warranties 11.1(b)
Indemnified Party 11.1(b)
Indemnifying Party 11.1(b)
Interim Financial Statements 4.4
International Plan 4.13(p)
Intellectual Property 4.22(a)(v)
Known Environmental Liabilities 11.2(g)
Marks 4.22(a)(i)
M&T Bank 10.3(a)
Notice Periods 11.5(a)(iii)
Patents 4.22(a)(ii)
Pension Plans 4.13(a)
Power-of-Attorney 2.6(a)
Preliminary Closing Purchase Price 2.2(b)
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Property Taxes 11.3(b)(i)
Proprietary Rights Agreement 4.20(b)
Purchase Price 2.2(a)
Purchaser Indemnified Persons 11.1(b)
Purchaser's Advisors 6.1(a)
Purchaser's Closing Documents 5.2(a)
Purchaser Termination Fee Escrow Fund 10.3(a)
R&W Insurance Policy 6.10
Seller Indemnified Persons 11.1(b)
Sellers' Closing Documents 3.1(a)
Sellers' Representative 2.6
Shortfall Amount 6.12(b)
Straddle Period 11.3(b)
Target Date 10.1(d)
Tax Claim 11.3(c)
Termination Fee Escrow Agreement 10.3(a)
Threshold 11.6(a)
Trade Secrets 4.22(a)(iv)
Transfer Taxes 11.3(g)
Welfare Plans 4.13(a)
2. SALE AND TRANSFER OF SHARES; CLOSING.
2.1. SHARES. Subject to the terms and conditions of this Agreement, Sellers
hereby agree to sell the Shares to Purchaser, and Purchaser hereby agrees to
purchase the Shares from Sellers.
2.2. CONSIDERATION.
(a) The total consideration payable by Purchaser for the purchase of the
Shares (the "Purchase Price") shall be (i) CHF 123,000,000 minus (ii) the amount
of the Indebtedness Adjustment (the "Closing Purchase Price"), together with the
Contingent Payments, if any, as provided for in Section 2.3 below. The Closing
Purchase Price will be paid to Sellers pro-rata in accordance with the ownership
percentage of each of the Sellers as is set forth on the Fully-Diluted Cap
Table, net of any applicable withholding Taxes.
(b) At least three (3) Business Days prior to the Closing Date, the chief
financial officer of PMH shall deliver to Purchaser PMH's good faith estimate of
the amount of the Indebtedness and the cash and cash equivalents of the Acquired
Companies as of the Effective Time, and, based thereon, a preliminary
calculation of the Indebtedness Adjustment. As soon as practicable prior to the
Closing Date and based on PMH's good faith estimate referred to above, Purchaser
and Sellers' Representative shall jointly calculate the amount of the Closing
Purchase Price to be paid at Closing subject to adjustment as provided for in
Section 2.2(c) (the "Preliminary Closing Purchase Price"). The Closing shall
occur and the payments to be made at Closing as provided for in Section 2.5
shall be based upon the notice provided for herein, and upon such joint
calculations.
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(c) As promptly as possible and in any event, not later than 30 days after
the Closing, PMH, under the direction of Purchaser shall prepare and deliver to
Purchaser and Sellers' Representative a report setting forth the Indebtedness
and the cash and cash equivalents of the Acquired Companies as of the Effective
Time determined by Purchaser's Accountants in accordance with PMH's accounting
policies and procedures in effect as of the date hereof, as modified by this
Agreement, and, based thereon, the Indebtedness Adjustment (the "Closing Date
Financial Report"). Any third party expenses or fees incurred by PMH in
preparing or in connection with the Closing Date Financial Report and the
Closing Adjustment (including the fees of Purchaser's Accountants) shall be
borne by the Purchaser. The Purchaser and Purchaser's Accountants shall make
available any work papers or other information relating to the Closing Date
Financial Report requested by Sellers' Representative. Any expenses incurred by
Sellers' Accountants in reviewing the Closing Date Financial Report, such work
papers and other information and in providing Sellers' Representative with its
report thereon shall be borne by Sellers. If Sellers' Representative does not
object, or otherwise fails to respond, to the Closing Date Financial Report
within 30 days after delivery to Sellers' Representative, such Closing Date
Financial Report shall automatically become final and conclusive. In the event
that Sellers' Representative objects to the Closing Date Financial Report within
such 30 day review period, Sellers' Representative and Purchaser shall promptly
meet and endeavor to reach agreement as to the content of the Closing Date
Financial Report. If Sellers' Representative and Purchaser agree on the final
content of the Closing Date Financial Report, such Closing Date Financial Report
shall become final and conclusive. If Sellers' Representative and Purchaser are
unable to reach agreement within 30 days after the end of Sellers'
Representative 30-day review period, then the Independent Accountants shall
promptly be retained to undertake a determination of the Closing Date Financial
Report, which determination shall be made as quickly as possible (it being
understood that the parties shall direct the Independent Accountants to complete
their work within 30 days). The Independent Accountants shall be directed by
Sellers' Representative and by Purchaser to employ policies and procedures
consistent with PMH's accounting policies and procedures in effect as of the
date hereof as modified by this Agreement. Only disputed items shall be
submitted to the Independent Accountants for review. In resolving any disputed
item, the Independent Accountants may not assign a value to such item greater
than the greatest value for such item claimed by either party or less than the
lowest value for such item claimed by either party, in each case as presented to
the Independent Accountants. Such determination of the Independent Accountants
shall be final and binding on Sellers and Purchaser. All expenses of the
Independent Accountants shall be borne equally by Sellers and Purchaser. The
Closing Purchase Price and the payments required to be made after the Closing
Date pursuant to Section 2.2(d) shall be finally determined on the basis of the
Closing Date Financial Report and the Indebtedness Adjustment (as herein
provided for).
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(d) Within five (5) Business Days after the final determination of the
Indebtedness Adjustment, Purchaser or Sellers' Representative (on behalf of
Sellers), as the case may be, shall pay to the other the amount by which the
Closing Purchase Price, as adjusted by the final Indebtedness Adjustment, is
greater or less than the Preliminary Closing Purchase Price (such difference
being the "Closing Purchase Price Reconciliation"). If the Closing Purchase
Price Reconciliation is positive, Purchaser shall pay such difference to
Sellers. If the Closing Purchase Price Reconciliation is negative, Sellers'
Representative (on behalf of Sellers) shall authorize the Escrow Agent to pay
such difference to Purchaser from the Escrow Amount. If (i) Purchaser fails to
pay any amount owing to Sellers pursuant to this subsection (d), or (ii) Sellers
fail to authorize the Escrow Agent to pay any amount owing to Purchaser pursuant
to this subsection (d), within the specified five (5) Business Day period, then
the amount so owing shall be payable on demand and interest compounded daily
shall accrue on the unpaid amount at the rate of 18% per annum.
2.3. CONTINGENT PAYMENTS.
(a) Upon the terms and subject to the conditions set forth in this Section
2.3, Purchaser agrees to pay to the Sellers, net of any applicable withholding
Taxes, an amount determined under this Section 2.3 and based upon the Earn-Out
Amount, if any (collectively, the "Contingent Payments"). The Earn-Out Amount
(as defined in Section 2.3(d) below) shall be determined on the basis of the
2008 EBITDA of the Acquired Companies on a combined basis, calculated in
accordance with Section 2.3(b) below, for the full 2008 fiscal year of the
Acquired Companies ending on or about December 31, 2008 (the "Earn-Out Period").
(b) For purposes hereof, "2008 EBITDA" means the earnings before interest,
taxes, depreciation and amortization for the Acquired Companies for the Earn-Out
Period and it shall be determined in accordance with Applicable GAAP applied in
the manner in which the Acquired Companies currently apply such principles and
as such principles were utilized in preparing the Audited Financial Statements.
Purchaser agrees that it will make adjustments in good faith to the calculation
of 2008 EBITDA to the extent Purchaser or any Acquired Company takes any action,
or Purchaser permits any Acquired Company to take any action, which is outside
the ordinary course of business as currently conducted with respect to Acquired
Companies that detracts from 2008 EBITDA. For purposes of clarifying the
previous sentence, the Pyramid Transactions and any other merger, acquisition,
or similar activity undertaken by the Acquired Companies shall be deemed to be
outside the ordinary course of business as currently conducted with respect to
the Acquired Companies. When calculating EBITDA and the Earn-Out Amount, the
Parties agree that they will use a currency exchange ratio of CHF 1.20 : US $1.
(c) Payment of any Contingent Payments shall be made on the tenth (10th)
Business Day in 2009 following receipt by Purchaser and the Seller
Representative of a binding EBITDA Report showing a positive Earn-Out Amount for
the EBITDA Period. At such time, Purchaser shall pay, or shall cause to be paid,
to each Seller a cash amount equal to (i) the applicable Earn-Out Amount
multiplied by (ii) the ownership percentage of such Seller as set forth on the
Fully-Diluted Cap Table; provided, however, in the event that the Earn-Out
Amount is equal to or greater than CHF 2,000,000, the Earn-Out Amount payable to
each Seller will be reduced by such Seller's pro-rata portion of an amount equal
to the lesser of (A) CHF 2,000,000, or (B) the balance of any outstanding
actuarially-determined, unfunded pension liability attributable to the Acquired
Companies that is not included within the Indebtedness Adjustment.
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(d) As used herein, "Earn-Out Amount" shall mean:
(i) If the 2008 EBITDA is CHF 10,000,000 or less, then the Earn-Out
Amount is zero.
(ii) If the 2008 EBITDA is CHF 14,000,000, then the Earn-Out Amount is
CHF 10,000,000.
(iii) If the 2008 EBITDA is CHF 15,000,000 or more, then the Earn-Out
Amount is CHF 12,000,000.
(iv) If the 2008 EBITDA is greater than CHF 10,000,000 and less than
CHF 14,000,000, then the Earn-Out Amount will be determined by multiplying
CHF 10,000,000 by a fraction (i) the numerator of which is the amount by
which the 2008 EBITDA exceeds CHF 10,000,000, and (ii) the denominator of
which is CHF 4,000,000.
(v) If the 2008 EBITDA is greater than CHF 14,000,000 and less than
CHF 15,000,000, the Earn-Out Amount will be equal to CHF 10,000,000 plus an
amount determined by multiplying CHF 2,000,000 by a fraction (i) the
numerator of which is the amount by which the 2008 EBITDA exceeds CHF
14,000,000, and (ii) the denominator of which is CHF 1,000,000.
(e) Audit:
(i) Purchaser shall cause Purchaser's Accountants (or such other
accounting firm selected by Purchaser) to audit the financial statements of
the Acquired Companies for the fiscal year ending on or about December 31,
2008. Purchaser shall use its reasonable best efforts, upon the written
request of the Sellers' Representative given to Purchaser prior to the end
of 2008, to cause the Purchaser's Accountants to deliver to the Sellers'
Representative, by on or about March 1, 2009, a letter of the Purchaser's
Accountants stating its determination of the 2008 EBITDA for the Earn-Out
Period. Such letter delivered by the Purchaser's Accountants is herein
referred to as the "EBITDA Report".
(ii) The EBITDA Report shall state that such determination was made in
accordance with the provisions of this Section 2.3 and shall specify the
2008 EBITDA of the Acquired Companies. Purchaser's Accountants
determination of 2008 EBITDA set forth in the EBITDA Report shall be final,
binding and conclusive unless, within 60 days of the delivery of such
EBITDA Report to the Sellers' Representative (the "Seller Review Period"),
the Sellers' Representative shall notify Purchaser in writing that the
Sellers' Representative believes that such determination is incorrect and
that such determination should be reviewed and recalculated by the Sellers'
Accountants in accordance with the provisions of this Section 2.3. During
the Seller Review Period, the Sellers' Representative and its
Representatives shall be permitted to review the working papers of
Purchaser and the Acquired Companies relating to the EBITDA Report, and to
the extent reasonably necessary, shall be permitted to have reasonable
access to the books and records of the Acquired Companies to the extent
they relate to the items reflected on or referred to in the EBITDA Report;
provided, however, that all such access shall be subject to a reasonable
confidentiality agreement.
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(iii) In the event written notice of such a dispute is received by
Purchaser from Sellers' Representative during the Seller Review Period, the
Sellers' Accountants shall calculate the 2008 EBITDA and, to the extent its
determination is in disagreement with that of Purchaser's Accountants,
Purchaser's Accountants and the Sellers' Accountants shall attempt in good
faith to reconcile their differences, and any resolution by them as to the
amount of 2008 EBITDA shall be final, binding and conclusive. If the
Sellers' Accountants and Purchaser's Accountants are unable to reach a
resolution with such effect within 20 Business Days after receipt of such
written notice of dispute, the Sellers' Accountants and Purchaser's
Accountants shall submit the items remaining in dispute for resolution to
the Independent Accounting Firm, which shall, within 30 days after such
submission, determine the 2008 EBITDA and prepare an EBITDA Report, and
such report shall be final, binding and conclusive. If the Independent
Accounting Firm shall be advised by both the Sellers' Accountants and
Purchaser's Accountants of any agreed upon values, amounts, procedures or
other factors integral to the calculation of 2008 EBITDA, then the
Independent Accounting Firm shall presume the validity of such values,
amounts, procedures and other factors for purposes of its determination.
(iv) The costs and expenses of the Sellers' Accountants and
Purchaser's Accountants shall be borne by the Sellers and Purchaser,
respectively. The costs and expenses of the Independent Accounting Firm in
connection with such review and recalculation shall be allocated
between the Sellers and Purchaser by the Independent Accounting Firm on the
basis of the relative merits of the claims made by the Sellers'
Representative and Purchaser, respectively. Such costs and expenses shall
be paid by the Sellers or Purchaser or both, as the case may be, within 30
days of the date of allocation. If the Sellers shall fail to pay any cost
or expense so allocated to the Sellers, and Purchaser or any Acquired
Company shall pay or bear such cost or expense, Purchaser may, at its
option, set off the amount of such cost or expense against any Contingent
Payment required to be made pursuant to this Section 2.3, submit a notice
to the Escrow Agent and receive a disbursement from the Escrow Amount to
cover such cost or expense, or recover such cost or expense by any remedy
available at law or in equity.
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(v) In acting under this Agreement, the Sellers' Accountants,
Purchaser's Accountants and the Independent Accounting Firm shall be
entitled to the privileges and immunities of arbitrators.
2.4. CLOSING. The transfer of the Shares (the "Closing") provided for in this
Agreement will take place at the offices of Precimed SA located in Orvin,
Switzerland as soon as all of the conditions to Closing set forth in Sections 7
and 8 have been or can be satisfied, on a date, subject to the foregoing, to be
reasonably specified by Purchaser by written notice at least five (5) Business
Days in advance or at such other time and place as the parties may agree.
Subject to the provisions of Section 10, failure to consummate the purchase and
sale provided for in this Agreement on the date and time and at the place
determined pursuant to this Section 2.4 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
2.5. CLOSING OBLIGATIONS. At the Closing:
(a) PMH will deliver to Purchaser:
(i) a certificate executed by an officer of PMH certifying to
Purchaser that each of PMH's representations and warranties in this
Agreement were accurate in all respects (in the case of any representation
and warranty containing a materiality qualification) and in all material
respects (in the case of any representation and warranty without a
materiality qualification) as of the date of this Agreement and are
accurate in all respects (in the case of any representation and warranty
containing a materiality qualification) and in all material respects (in
the case of any representation and warranty without a materiality
qualification) as of the Closing Date as if made on the Closing Date
(giving full effect to any supplements to and schedules or exhibits
attached hereto that were delivered to Purchaser prior to the Closing Date
in accordance with Section 6.5); and
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(ii) resignations, effective as of the Closing, of such directors and
officers of the Acquired Companies as may be designated by the Purchaser
prior to Closing.
(b) Sellers will deliver to Purchaser:
(i) a certificate executed by Seller's Representative certifying to
Purchaser that each representation and warranty of Sellers in this
Agreement was accurate in all respects (in the case of any representation
and warranty containing a materiality qualification) and in all material
respects (in the case of any representation and warranty without a
materiality qualification) as of the date of this Agreement and is accurate
in all respects (in the case of any representation and warranty containing
a materiality qualification) and in all material respects (in the case of
any representation and warranty without a materiality qualification) as of
the Closing Date as if made on the Closing Date (giving full effect to any
supplements to and schedules or exhibits attached hereto that were
delivered to Purchaser prior to the Closing Date in accordance with Section
6.5);
(ii) certificates representing the Shares endorsed in blank where
necessary (or to the extent such shares are not certificated, valid
assignments in writing relating to the Shares); and
(iii) a resolution of the board of directors of PMH that the Deeds of
Transfer and the entry of Purchaser in the shareholders' register of PMH
with voting rights with respect to all of the Shares has been approved.
(c) Purchaser will deliver:
(i) the amount of the Preliminary Closing Purchase Price reduced by
the Escrow Amount and any applicable withholding Taxes, by wire transfer to
an account to be specified by Sellers' Representative not less than three
Business Days prior to Closing;
(ii) the Escrow Amount by wire transfer to an account specified under
the Escrow Agreement; and
(iii) a certificate executed by Purchaser certifying to Sellers that
each of Purchaser's representations and warranties in this Agreement were
accurate in all respects (in the case of any representation and warranty
containing a materiality qualification) and in all material respects (in
the case of any representation and warranty without a materiality
qualification) as of the date of this Agreement and are accurate in all
respects (in the case of any representation and warranty containing a
materiality qualification) and in all material respects (in the case of any
representation and warranty without a materiality qualification) as of the
Closing Date as if made on the Closing Date.
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2.6. APPOINTMENT OF SELLERS' REPRESENTATIVE; POWER-OF-ATTORNEY.
(a) Each of the Sellers hereby appoints Patrick Berdoz and Ulrich
Geilinger, acting jointly, (collectively, the "Sellers' Representative") as such
Seller's agent, representative and attorney-in-fact, to act in such Seller's
name, place and stead pursuant to the Power-of-Attorney set forth in this
Section 2.6(a) and enforceable against such Seller under applicable Legal
Requirements (the "Power-of-Attorney"). The Power-of-Attorney set forth in this
Section 2.6(a) hereby authorizes the Sellers' Representative to execute,
acknowledge, deliver and file such deeds, transfers, conveyances, assignments,
instruments, certificates, agreements and documents (including, without
limitation, the Sellers' Closing Documents (as defined in Section 3.1(a)
hereof)) and to take such other actions in the name, place and stead of the
Sellers as the Sellers' Representative may find reasonably necessary or
appropriate to effectuate or carry out the intent of any provision of this
Agreement on or after the date of this Agreement. Each of the Sellers shall be
bound by the acts of the Sellers' Representative to the extent authorized in
this Agreement, and the Purchaser shall be entitled to conclusively rely on such
appointment and authority. Each of the Sellers consents and agrees that any
notice delivered to the Sellers' Representative pursuant to this Agreement shall
constitute a notice to such Seller.
(b) Any action taken by the Sellers' Representative on behalf of the
Sellers pursuant to the foregoing Power-of-Attorney shall have, to the extent
permitted by applicable Legal Requirements, the same force and effect as if such
action had been taken directly and in person by such Seller, and Seller, for
itself, himself, herself and its, his or her heirs, permitted successors and
assigns, does hereby exonerate the Sellers' Representative and his respective
heirs, permitted successors and assigns, and, to the fullest extent permitted by
law, does hereby waive any suit, claim, demand or cause of action of any kind
which Seller might have or be entitled to assert at any time hereafter arising
from or in connection with any exercise or failure or decline to exercise the
foregoing Power-of-Attorney, absent the Sellers' Representative's bad faith or
willful misconduct. No failure or decline to take action on behalf of any Seller
pursuant to the foregoing Power-of-Attorney shall excuse or relieve such Seller
from any obligation under this Agreement. The Power-of-Attorney set forth herein
is coupled with an interest, is irrevocable and shall survive the disability,
incompetence, insolvency, bankruptcy, liquidation, dissolution or any other
occurrence with respect to any Seller, to the fullest extent permitted by
applicable law.
2.7. PRE-CLOSING TRANSFERS. Purchaser acknowledges and agrees that the
Pre-Closing Selling Shareholders are not parties to this Agreement and will not
be required to become parties to this Agreement on or prior to the Closing. The
Sellers who are a party to one or more of the PST Contracts agree to use their
Best Efforts to complete the Pre-Closing Share Transfers prior to the Closing,
subject to satisfaction of all of the conditions to Closing set forth in Section
9. Purchaser agrees to provide its reasonable cooperation to Sellers in
connection with the Pre-Closing Share Transfers. The Sellers agree to indemnify
Purchaser and other Purchaser Indemnified Persons against (a) any and all costs,
expenses and Taxes incurred in connection with the Pre-Closing Share Transfers,
which costs, expenses and Taxes shall be borne by Sellers and subject to
Purchaser's indemnification rights under Section 11.2(h) and (b) the failure to
complete the Pre-Closing Share Transfers.
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3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each Seller severally represents
and warrants to Purchaser the following with respect to such Seller, and PMH
joins in each such Seller's representations and warranties, with the effect that
PMH and such Seller hereby jointly and severally make such representations and
warranties:
3.1. AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
such Seller, enforceable against such Seller in accordance with its terms. The
Power-of-Attorney set forth herein and, upon the execution and delivery by
Sellers' Representative of the Escrow Agreement (the "Sellers' Closing
Documents"), will constitute the legal, valid and binding obligations of such
Seller, enforceable against such Seller in accordance with their respective
terms. Such Seller has all the necessary right, power, authority and capacity to
execute and deliver this Agreement and the Sellers' Closing Documents and to
perform such Seller's obligations under this Agreement and the Sellers' Closing
Documents.
(b) Except as set forth in Schedule 4.2(b), neither the execution and
delivery of this Agreement nor the consummation or performance 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 (A) any
provision of the Organizational Documents of such Seller, or (B) any
resolution adopted by the board of directors (or functional equivalent) or
the shareholders (or functional equivalent) of such Seller;
(ii) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which such
Seller may be subject;
(iii) Except as set forth in Schedule 4.2(b), require such Seller to
give any notice to or 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.
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3.2. TITLE.
(a) Such Seller has full legal and beneficial title to all of the Shares
owned by such Seller free and clear of any third party rights and is entitled to
sell and transfer the full legal and beneficial ownership of such Shares under
the terms of this Agreement. Except as set forth on Schedule 3.2, none of the
Shares owned by such Seller are subject to any pledge or other Encumbrance or to
any pre-emptive rights, or similar claim.
(b) The Sellers who are purchasing Shares in connection with the
Pre-Closing Share Transfers (a) have the binding right under the PST Contracts
to purchase all of the Shares owned by the Pre-Closing Selling Shareholders
subject to no condition other than those solely within the control of such
Sellers (which, for purposes hereof, includes the conditions to Closing set
forth in Section 9), and (b) warrant and guarantee that they will have full
legal and beneficial title to such Shares, free and clear of all Encumbrances,
as of the Closing.
3.3. PMH REPRESENTATIONS. The representations and warranties made by PMH in
Section 4 are true and correct in all respects.
4. REPRESENTATIONS AND WARRANTIES OF PMH. PMH represents and warrants to
Purchaser as follows:
4.1. ORGANIZATION AND GOOD STANDING.
(a) Schedule 4.1(a)(1) contains a complete and accurate list for each
Acquired Company (other than those Acquired Companies listed on Schedule
4.1(a)(2)) of: (i) its name, (ii) its jurisdiction of incorporation or
formation, (iii) other jurisdictions in which it is authorized to do business,
and (iv) its capitalization (including the identity of each shareholder and the
number of shares or other ownership interests held by each). Except as set forth
in Schedule 4.1(a)(2), each Acquired Company is duly organized, validly existing
and in good standing, to the extent such concept is relevant in its jurisdiction
of incorporation or formation, under the laws of its jurisdiction of
incorporation or formation, with full 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
Applicable Contracts. Each Acquired Company, other than those Acquired Companies
listed on Schedule 4.1(a)(2), is duly qualified to do business as a foreign
corporation or other entity and is in good standing under the laws of each other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification where the lack of such qualification would have a Material Adverse
Effect on the Business.
(b) PMH has delivered to Purchaser copies of the Organizational Documents
of each Acquired Company, as currently in effect, other than those Acquired
Companies listed on Schedule 4.1(a)(2).
4.2. AUTHORITY; NO CONFLICT.
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(a) This Agreement constitutes the legal, valid, and binding obligation of
PMH, enforceable against PMH in accordance with its terms. The Sellers' Closing
Documents to which PMH is a party will constitute the legal, valid and binding
obligations of PMH, enforceable against PMH to the extent of its obligations
thereunder, in accordance with their respective terms. PMH has all the necessary
right, power, authority and capacity to execute and deliver this Agreement and
the Sellers' Closing Documents to which it is a party and to perform its
obligations under this Agreement and the Sellers' Closing Documents to which it
is a party.
(b) Except as set forth in Schedule 4.2(b), neither the execution and
delivery of this Agreement nor the consummation or performance 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 (A) any
provision of the Organizational Documents of any of the Acquired Companies,
or (B) any resolution adopted by the board of 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 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 or otherwise in connection with the Business, may be subject;
(iii) contravene, conflict with or result in a violation of any of the
terms or requirements of, any Governmental Authorization that is held by
any Acquired Company or that otherwise relates to the Business or the
business of, or any of the assets owned or used by, any Acquired Company;
(iv) cause any Acquired Company to become subject to, or to become
liable for the payment of, any Tax;
(v) contravene 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 Applicable Contract; or
(vi) result in the imposition or creation of any Encumbrance (other
than as imposed or created by this Agreement) upon or with respect to any
of the assets owned or used by any Acquired Company or otherwise in
connection with the Business.
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Except as set forth in Schedule 4.2(b), no Acquired Company is or will be
required to give any notice to or 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.
4.3. CAPITALIZATION.
(a) All Shares have been validly authorized and issued in compliance with
all Legal Requirements. All Shares are fully paid up and the Shares constitute
100% of all outstanding shares or other securities in PMH.
(b) To PMH's Knowledge, and except for the rights created under the PST
Contracts, each of the Sellers has full legal and beneficial title to all of the
Shares owned by such Seller free and clear of any third party rights and is
entitled to sell and transfer the full legal and beneficial ownership of such
Shares under the terms of this Agreement.
(c) Except as set forth on Schedule 3.2 and for the rights created under
the PST Contracts, to PMH's Knowledge, none of the Shares is subject to any
pledge or other Encumbrance or to any pre-emptive rights, or similar claim.
(d) No depository receipts are issued in relation to any of the Shares.
(e) All of the outstanding equity securities and other securities of each
Acquired Company (other than PMH) are owned of record and beneficially by PMH or
by one or more of the Acquired Companies, free and clear of all Encumbrances
other than Permitted Encumbrances and the rights created under the PST
Contracts. No legend or other reference to any purported Encumbrance appears
upon any certificate representing equity securities of any Acquired Company. All
of the outstanding equity securities of each Acquired Company have been duly
authorized and validly issued and are fully paid and non-assessable. Except as
set forth in Schedule 4.3(e)(1) and under the PST Contracts, there are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of any Acquired Company. Except as set forth in Schedule
4.3(e)(2), there is no voting trust, proxy or other agreement with respect to
the voting of any Shares of the Acquired Companies. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of any Legal Requirement.
(f) Except for the Pyramid Contract and except as set forth in Schedule
4.3(f), no Acquired Company owns, or has any Contract to acquire, any equity
securities or other securities of any Person (other than Acquired Companies) or
any direct or indirect equity or ownership interest in any other business.
4.4. FINANCIAL STATEMENTS. PMH has delivered to Purchaser: (a) financial
statements for the Acquired Companies (other than PMH) on a consolidated basis
as of December 31 for the year 2005 and for the Acquired Companies on a
consolidated basis as of December 31 for the year 2006 (consisting, in each
case, of a balance sheet, statement of income, profit and loss, and a statement
of cash flows), which have been audited by Sellers' Accountants (the "Audited
Financial Statements") and (b) unaudited interim financial statements for the
Acquired Companies on a consolidated basis for the nine months ended September
30, 2007 (consisting of a balance sheet and a statement of income, profit and
loss) (the "Interim Financial Statements"), all of which are included as part of
Schedule 4.4 (collectively, the "Financial Statements"). The balance sheet as of
September 30, 2007 included in the Interim Financial Statements is hereinafter
referred to as the "Balance Sheet." Except as set forth on Schedule 4.4, the
Financial Statements fairly present the financial condition and the results of
operations of the Acquired Companies as of their respective dates and for the
periods then ended, and have been prepared in accordance with Applicable GAAP,
except that the Interim Financial Statements do not contain footnotes and are
subject to year-end adjustments applied on a basis consistent with PMH's past
experience.
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4.5. BOOKS AND RECORDS. The books of account, minute books, stock record books,
and other records of the Acquired Companies (to the extent the Acquired Company
exists) for the period of time as the Acquired Companies have been controlled by
PMH, all of which have been made available to Purchaser, are complete and
correct in all material respects and have been maintained in accordance with
reasonable business practices, including the maintenance of an adequate system
of internal controls. Such minute books contain records of all meetings held of,
and corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of the applicable Persons, which are
accurate and complete in all material respects and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books, where the
absence of such record would have a Material Adverse Effect on the Acquired
Companies. At the Closing, all of those books and records will be in the
possession of the Acquired Companies.
4.6. TITLE TO PROPERTIES; ENCUMBRANCES.
(a) Schedule 4.6(a) contains a complete and accurate list of all real
property, leaseholds or other interests therein used by the Acquired Companies
in connection with the Business. PMH has delivered or made available to
Purchaser copies of the deeds and other instruments (as recorded) by which one
of the Acquired Companies acquired such real property and/or interests, and
copies of all title insurance policies, opinions, abstracts and surveys that are
in the possession of the Acquired Companies and relating to such real property
or interests.
(b) Except as set forth on Schedule 4.6(b), the Acquired Companies own, or
will as of the Closing Date own, (with good title in the case of owned property,
subject only to the matters permitted by Section 4.6(c) below) (i) all the
properties and assets (whether personal or mixed and whether tangible or
intangible) that are used in connection with the Business other than any
Intellectual Property licensed under Contracts listed in Schedule 4.22(b), (ii)
the properties and assets reflected as owned in the books and records of the
Acquired Companies, including all of the properties and assets reflected in the
Balance Sheet (except for assets held under capitalized leases disclosed in
Schedule 4.6(b) and personal property sold since the date of the Balance Sheet
in the Ordinary Course of Business), and (iii) all of the material properties
and assets purchased or otherwise acquired by the Acquired Companies in
connection with the Business 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).
25
(c) All material properties and assets reflected in the Balance Sheet are
free and clear of all Encumbrances other than Permitted Encumbrances and are
not, in the case of real property, subject to any rights of way, building use
restrictions, exceptions, variances, reservations or limitations of any material
nature except, with respect to all such properties and assets, (i) mortgages or
security interests shown on the Balance Sheet as securing specified liabilities
or obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (ii) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no material default (or event that, with notice or lapse of time or both,
would constitute a default) exists, (iii) liens for current taxes not yet due,
and (iv) with respect to real property, any restrictions which have been
identified in documents of ownership or title insurance. All buildings, plants
and structures owned by the Acquired Companies or otherwise used by any of them
in connection with the Business lie wholly within the boundaries of the real
property owned or leased by the Acquired Companies and to PMH's Knowledge, do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
4.7. CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth on Schedule 4.7,
the buildings, structures and equipment used by the Acquired Companies in the
Business are structurally sound, in good operating condition and repair,
adequate for the uses to which they are being put, and sufficient for the
continued conduct of the Business immediately after the Closing in substantially
the same manner as conducted prior to the Closing. To PMH's Knowledge, none of
such buildings, structures or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
4.8. ACCOUNTS RECEIVABLE. All trade accounts receivable of the Acquired
Companies that are reflected on the Balance Sheet and all accounts receivable of
the Business that will be reflected on the accounting records of the Acquired
Companies as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. The Accounts
Receivable will be collectible in the Ordinary Course of Business, net of the
respective reserves shown on the Balance Sheet or on the accounting records of
the Acquired Companies as of the Closing Date, as applicable, which reserves are
calculated consistent with Applicable GAAP and, in the case of any reserve as of
the Closing Date, will be so calculated. Except as set forth in Schedule 4.8,
there is no contest, claim or right of set-off which has been and continues to
be asserted by any account debtor, other than those incurred in the Ordinary
Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
26
4.9. INVENTORY. All inventory of the Acquired Companies, whether or not
reflected in the Balance Sheet, is owned by the Acquired Companies and consists,
in the determination of PMH's management acting reasonably and consistently with
past practice, of a quality and quantity usable and salable in the Ordinary
Course of Business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Balance Sheet or on the accounting records of the Acquired
Companies as of the Closing Date, as the case may be. All inventories not
written off have been priced at the lower of cost or net realizable value.
4.10. NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule 4.10 or
Schedule 4.19, to PMH's Knowledge, the Acquired Companies have no material
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
except for liabilities or obligations reflected or reserved against in the
Balance Sheet, such liabilities as may have been incurred in the Ordinary Course
of Business since the date thereof, and liabilities for the future performance
of Contracts to which any of the Acquired Companies is a party.
4.11. TAXES.
(a) Except as set forth in Schedule 4.11(a), each of the Acquired Companies
has filed or caused to be filed all Tax Returns that are or were required to be
filed by any of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. PMH has made available
to Purchaser or its Representatives complete copies of, and Schedule 4.11(a)
contains a complete and accurate list of, all such Tax Returns since January 1,
2004. The Acquired Companies have paid, or made provision for the payment of,
all Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by any Acquired Company,
except such Taxes, if any, as are listed in Schedule 4.11(a) and are being
contested in good faith and as to which adequate reserves (determined in
accordance with Applicable GAAP) have been provided in the Balance Sheet.
(b) There is no dispute or claim concerning any Tax liability of any
Acquired Company as to which PMH has Knowledge. Schedule 4.11(b) contains a
complete and accurate list of all audits of all Tax Returns of each Acquired
Company relating to tax periods ended on or after December 31, 2003, 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 Schedule 4.11(b), are being contested in
good faith by appropriate proceedings.
(c) Except as described in Schedule 4.11(c), none of the Acquired Companies
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.
27
(d) To PMH's Knowledge, the charges, accruals and reserves with respect to
Taxes on the respective books of each Acquired Company are adequate for that
Acquired Company's expected liability for Taxes. To PMH's Knowledge, there
exists no proposed tax assessment against any Acquired Company except as
disclosed in the Balance Sheet or in Schedule 4.11(d).
(e) To PMH's Knowledge, all material 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.
(f) All Tax Returns filed by (or that include on a consolidated basis) each
Acquired Company are true, correct and complete in all material respects. There
is no tax sharing agreement that will require any payment by any Acquired
Company after the date of this Agreement.
(g) Except as set forth on Schedule 4.11(g) and except for current Taxes
not yet due and payable, (i) there are no federal, state, local or foreign tax
liens or other Encumbrances upon any of the properties or assets of any Acquired
Company or on the Shares that arose in connection with any failure (or alleged
failure) by any Person to pay any Tax, and (ii) there are no unpaid Taxes which
are or could become a lien on the proprieties or assets of any Seller or any
Acquired Company or the Shares.
(h) No pending or, to PMH's Knowledge, threatened audit, proceeding,
examination or litigation or similar claim has been commenced or is presently
pending with respect to any Taxes or Tax Return of the Acquired Companies.
(i) No written claim has been made by any Tax authority in a jurisdiction
where the Acquired Companies do not file a Tax Return that the Acquired
Companies are or may be subject to taxation in that jurisdiction.
(j) None of the Acquired Companies have participated in a "reportable
transaction" within the meaning of U.S. Treasury Regulations Section
1.6011-4(b).
(k) None of the Acquired Companies are, and none have been, United States
real property holding corporations (as defined in Section 897(c)(2) of the U.S.
Internal Revenue Code of 1986, as amended (the "Code")) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
(l) None of the Acquired Companies have been required to include in income
any adjustment pursuant to Section 481 of the Code by reason of a voluntary
change in accounting method initiated by the Acquired Companies, and the U.S.
Internal Revenue Service has not initiated or to PMH's Knowledge proposed any
such adjustment or change in accounting method.
28
(m) None of the Acquired Companies have been a "distributing corporation"
or a "controlled corporation" in a distribution intended to qualify under
Section 355 of the Code within the past five years.
(n) The Acquired Companies have disclosed on all relevant Tax Returns any
positions taken therein that could give rise to a substantial understatement of
Taxes within the meaning of Section 6662 of the Code.
4.12. NO MATERIAL ADVERSE EFFECT. Except as disclosed on Schedule 4.12, since
December 31, 2006, there has not been any event or circumstance that has caused
a Material Adverse Effect and no event has occurred or circumstance exists that
would reasonably be expected to result in such a Material Adverse Effect.
4.13. EMPLOYEE BENEFITS
(a) Attached hereto as Schedule 4.13(a)(1) is a list identifying each
"employee pension benefit plan," as defined in Section 3(2) of ERISA, including
any "multiemployer plan," as defined in Section 3(37) of ERISA, (the "Pension
Plans") and as Schedule 4.13(a)(2), a list identifying each "employee welfare
benefit plan," as defined in Section 3(1) of ERISA, (the "Welfare Plans") that,
in either case, are maintained, administered or contributed to by any Acquired
Company, or which cover any employee or former employee of any Acquired Company.
Collectively, the Pension Plans and the Welfare Plans shall hereafter be
referred to as the "Employee Plans". Except as otherwise identified on Schedule
4.13(a)(1) and Schedule 4.13(a)(2) and on Schedule 4.13(m), (i) no Employee Plan
or Benefit Arrangement (as defined in Section 4.13(m) of this Agreement) is
maintained, administered or contributed to by any entity other than the Acquired
Companies, and (ii) no Employee Plan is maintained under any trust arrangement
which covers any employee benefit arrangement which is not an Employee Plan.
(b) PMH delivered to Purchaser true and complete copies of (i) the Employee
Plans (including related trust agreements, adoption agreements, and other
funding arrangements, if any), (ii) any amendments to the Employee Plans, (iii)
written interpretations of the Employee Plans, (iv) material employee
communications by the plan administrator of any Employee Plan (including, but
not limited to, summary plan descriptions and summaries of material
modifications as defined under ERISA), (v) the three most recent annual reports
(e.g., the complete Form 5500 series) prepared in connection with each Employee
Plan (if any such report was required), including all schedules (including
without limitation the actuarial valuation reports) and (vi) the three most
recent actuarial valuation reports prepared in connection with each Employee
Plan (if any such report was required).
(c) Each Employee Plan has been maintained in material compliance with its
terms and the requirements under the Code and ERISA which are applicable to such
Employee Plan.
29
(d) No Acquired Company has received service or other written notice of,
and to the Knowledge of PMH, there are no Threatened claims, suits or other
Proceedings by any employees, former employees or plan participants or the
beneficiaries, spouses or representatives of any of them, against any Employee
Plan, the assets held thereunder, the trustee of any such assets, or any
Acquired Company relating to any of the Employee Plans, any other employee
benefit plans, Contracts or arrangements, other than ordinary and usual claims
for benefits by participants or beneficiaries. Furthermore, no Acquired Company
has received service or other written notice of, and to the Knowledge of PMH,
there are no Threatened Proceedings by any Governmental Body of or against any
Employee Plan, the trustee of any assets held thereunder, or any Acquired
Company relating to any of the Employee Plans, any other employee benefit plans,
Contracts or arrangements.
(e) No liability has been incurred by any Acquired Company or by a trade or
business, whether or not incorporated, which is deemed to be under common
control or affiliated with any Acquired Company within the meaning of Section
4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code (an "ERISA
Affiliate") for any excise tax, penalty or other liability with respect to any
Employee Plan.
(f) With respect to any Employee Plan, no Acquired Company, "party in
interest" (as defined in Section 3(14) of ERISA), nor any "disqualified person"
(as defined in Section 4975(c)(2) of the Code) has engaged in any "prohibited
transaction" as defined in Section 406 of ERISA, or of Section 4975(c) of the
Code, which transaction is not exempt under Section 408 of ERISA or Section
4975(d) of the Code.
(g) No Employee Plan provides benefits, including without limitation, any
severance or other post-employment benefit, salary continuation, termination,
death, disability, health or medical benefits (whether or not insured), life
insurance or similar benefits with respect to current or former employees of the
Acquired Companies (or their spouses or dependents) beyond their retirement or
other termination of service other than (i) coverage mandated by applicable
Legal Requirements, (ii) death, disability or retirement benefits under any
Pension Plan, (iii) deferred compensation benefits accrued as liabilities on the
Financial Statements, (iv) benefits, the full cost of which is borne by the
current or former employee (or his or her beneficiary) or (v) severance payments
under severance agreements or arrangements disclosed on Schedule 4.13(m).
(h) Each Welfare Plan that is a group health plan (as defined in Section
607(1) of ERISA or Section 5001(b)(1) of the Code) has complied in all material
respects, and will continue to comply through the Closing Date, with
requirements of Section 4980B of the Code and Part 6, Subtitle B of Title I of
ERISA ("COBRA"). Each of the Acquired Companies, or its agents who administer
any of the Welfare Plans, have complied in all material respects and will
continue to comply through the Closing Date, with the notification and written
notice requirements of COBRA. Further, each Welfare Plan that is a group health
plan, within the meaning of Section 9832(a) of the Code, has complied in all
material respects with the Health Insurance Portability and Accountability Act
of 1996, as amended, and the regulations promulgated thereunder ("HIPAA").
30
(i) Each Pension Plan is intended to be "qualified" within the meaning of
Section 401(a) of the Code and each trust created thereunder is intended to be
tax-exempt under Section 501(a) of the Code. Furthermore, no Acquired Company
has received service or other written notice of, and to the Knowledge of PMH,
there are no Threatened Proceedings in which the "qualified" status of any
Pension Plan is at issue or had been revoked. No such Pension Plan has been
amended or operated, since the receipt of the most recent determination letter,
in a manner that would adversely affect the "qualified" status of the Plan. No
distributions have been made from any of the Pension Plans that would violate in
any respect the restrictions under Treas. Reg. Section 1.401(a)(4)-5(b)
(regarding pre-termination restrictions), and none will have been made by the
Closing Date. To the Knowledge of PMH, there has been no partial termination of
any Pension Plan invoking the application of Section 411(d) of the Code and the
regulations thereunder.
(j) All required contributions under each Pension Plan have been made on a
timely basis or, if not yet due, adequate accruals therefore have been provided
for in the Financial Statements. No Pension Plan has incurred any "accumulated
funding deficiency" within the meaning of Section 302 of ERISA or Section 412 of
the Code and no Pension Plan has applied for or received a waiver of the minimum
funding standards imposed by Section 412 of the Code.
(k) Neither any Acquired Company nor any ERISA Affiliate has ever adopted,
established or maintained a Pension Plan that is covered by Title IV of ERISA.
(l) None of the Acquired Companies nor any of its ERISA Affiliates have
been liable to contribute to any "multiemployer plan" (as defined in Section
3(37) of ERISA). No amount is due from, or owed by, any Acquired Company or any
ERISA Affiliate on account of a "multiemployer plan" (as defined in Section
3(37) of ERISA) or on account of any withdrawal therefrom.
(m) Schedule 4.13(m) contains a list identifying each employment, severance
or similar contract, arrangement or policy (exclusive of any such contract which
is terminable within thirty (30) days without liability to any Acquired
Company), and each plan or arrangement providing for insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental employment benefits, vacation benefits, retirement
benefits, deferred compensation, bonuses, profit-sharing, stock options, stock
appreciation rights, or other forms of incentive compensation or post-retirement
compensation or benefit which (i) is not an Employee Plan, (ii) has been entered
into or maintained, as the case may be, by any Acquired Company, and (iii)
covers any employee or former employee of any Acquired Company. Such contracts,
plans and arrangements are hereinafter referred to collectively as the "Benefit
Arrangements". True and complete copies or descriptions of the Benefit
Arrangements have been or will be delivered to Purchaser. Each Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangements.
31
(n) There has been no amendment to, written interpretation or announcement
(whether or not written) by any Acquired Company relating to, or change in
employee participation or coverage under, any Employee Plan or Benefit
Arrangement that would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of expense incurred in
respect of such Employee Plan or Benefit Arrangement for the most recent plan
year with respect to Employee Plans or the most recent plan year with respect to
Benefit Arrangements.
(o) Except as set forth on Schedule 4.13(o), the execution of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not constitute an event under any Employee Plan or Benefit Arrangement
that will or may result in (i) any payment, acceleration, vesting or increase in
benefits to any employee, former employee or director of any Acquired Company,
or (ii) satisfy a condition to the payment of compensation to any employee or
former employee of any Seller or Acquired Company, that would, in combination
with any other payment, result in an "excess parachute payment" within the
meaning of Section 280G of the Code.
(p) "International Plan" means (i) any written employment agreement
providing for annual salary in excess of CHF 75,000 or any severance or similar
contract or arrangement providing for compensation (including retirement
benefits) in excess of CHF 50,000 that (A) is not an Employee Plan or a Benefit
Arrangement and (B) is entered into between any of the Acquired Companies and
any current or former employee, agent or independent contractor of any of the
Acquired Companies who is employed by any of the Acquired Companies in
Switzerland, the United Kingdom, Japan, China or France or who while employed by
any of the Acquired Companies was employed in Switzerland, the United Kingdom,
Japan, China or France; or (ii) any written plan, policy, fund, program,
arrangement, or contract of or with any of the Acquired Companies or any of
their affiliates in respect of service with any of the Acquired Companies
covering a group of employees who are employed by any of the Acquired Companies
in Switzerland, the United Kingdom, Japan, China or France or who while employed
by any of the Acquired Companies were employed in the United Kingdom, Japan,
China or France; providing for (A) retirement benefits (including pension,
health, medical or life insurance), but excluding any retirement scheme fund,
plan or program (x) sponsored by any government or (y) providing benefits
statutorily mandated under the laws of the applicable jurisdiction either at the
minimum level statutorily mandated or pursuant to a statute which does not
specify a minimum benefit, or (B) bonus (including post employment bonus),
profit sharing, stock option, or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, life insurance (including
any self insured arrangements), health or medical benefits, disability benefits,
supplemental unemployment benefits or severance benefits (cumulatively
"Benefits"), other than any plan, policy, fund, program, arrangement or contract
providing for Benefits statutorily mandated by the Legal Requirements of the
applicable jurisdiction either at the minimum level statutorily mandated or
pursuant to a statute which does not specify a minimum benefit that (A) is not
an Employee Plan or a Benefit Arrangement and (B) is entered into, maintained,
administered, or contributed to by any of the Acquired Companies or the
affiliates of any of them. Schedule 4.13(p) lists each International Plan. True
and complete copies of each International Plan and all amendments thereto have
been delivered to Purchaser. Each International Plan has been established,
maintained, administered and operated in accordance with its terms and in
compliance with Legal Requirements. With respect to each International Plan, all
necessary or appropriate Governmental Authorizations have been obtained and no
event has occurred or condition exists which would cause the loss of any such
Governmental Authorizations. All social security, pension fund, benefit plan or
similar payments due with respect to periods ending on or prior to the Closing
by the Acquired Companies in favor of their employees under any Legal
Requirements or any International Plan have been fully paid or provisioned in
the Financial Statements. All contributions required to be made with respect to
the periods ending on or prior to the Closing under the terms of any Legal
Requirements or of any International Plan have been made in a timely manner or
have been adequately provisioned in the Financial Statements. None of the
International Plans has any accumulated funding deficiency in accordance with
Applicable GAAP, and none of the International Plans has any accumulated funding
deficiency on a projected benefit obligations basis in accordance with
Applicable GAAP.
32
(q) Except as disclosed on Schedule 4.13(q), the execution and delivery of
this Agreement does not, and the consummation of the Contemplated Transactions
and compliance with the provisions thereof will not, result in an increase in
the amount of compensation or benefits or accelerate the vesting or timing of
payment of any compensation or benefits payable by any of the Acquired Companies
to any International Plan or to any employee of any of the Acquired Companies
thereunder.
(r) Schedule 4.13(r) contains a list of all retirement benefits (including
pension, health, medical or life insurance), but excluding any retirement scheme
fund, plan or program (x) sponsored by any Governmental Body or (y) providing
benefits statutorily mandated under the laws of the applicable jurisdiction
covering any employees of the Acquired Companies.
(s) To PMH's Knowledge, the Acquired Companies are in compliance with all
applicable pension and social security laws. All social security, pension fund,
benefit plan or similar payments due by the Acquired Companies in favor of the
employees under any Legal Requirements or any International Plan for any period
ending before the Closing Date have been fully paid or provided for.
4.14. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
33
(a) Except as set forth in Schedule 4.14(a):
(i) each Acquired Company is, and at all times since January 1, 2003
has been, and the Business has been conducted at all times since January 1,
2003, in full 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 except for any such failure that
would not result in a Material Adverse Effect; and
(ii) no Acquired Company has received at any time since January 1,
2003 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 which would have a Material Adverse Effect on any Acquired
Company, or (B) any actual, alleged or potential obligation on the part of
any Acquired Company arising under any applicable Legal Requirement to
undertake, or to bear any material portion of the cost of, any remedial
action of any material nature.
(b) The Governmental Authorizations listed in Schedule 4.14(b) collectively
constitute all of the Governmental Authorizations necessary to permit the
Acquired Companies to lawfully conduct the Business in the manner it is
currently conducted in all material respects and to permit the Acquired
Companies to own and use their assets in the manner in which they currently own
and use such assets in all material respects. Each Governmental Authorization is
listed on Schedule 4.14(b) and is valid and in full force and effect. Except as
set forth in Schedule 4.14(b):
(i) all of the material terms and requirements of each Governmental
Authorization identified or required to be identified in Schedule 4.14(b)
have been at all required times complied with by each Acquired Company in
all material respects;
(ii) no material event has occurred or circumstance exists that would
reasonably be expected to (with or without notice or lapse of time) (A)
constitute or result in a violation of or a failure to comply with any
material term or requirement of any Governmental Authorization listed or
required to be listed in Schedule 4.14(b), or (B) result in the revocation,
withdrawal, suspension, cancellation or termination of, or any material
modification to, any Governmental Authorization listed or required to be
listed in Schedule 4.14(b);
(iii) no Acquired Company has received, at any time since January 1,
2003, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged or
potential violation of, or failure to comply with, any material term or
requirement of any Governmental Authorization, or (B) any actual, proposed
or potential revocation, withdrawal, suspension, cancellation, termination
of or material modification to any Governmental Authorization; and
34
(iv) all material applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed
in Schedule 4.14(b) have been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other material 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.
4.15. LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Schedule 4.15 or Schedule 4.19, there is no
pending Proceeding:
(i) that has been commenced by or, to PMH's Knowledge, against any
Acquired Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with in any material way,
any of the Contemplated Transactions.
Except as set forth on Schedule 4.15, to PMH's Knowledge, no such Proceeding has
been Threatened. PMH has delivered to Purchaser copies of all pleadings,
correspondence and other documents relating to each Proceeding listed in
Schedule 4.15.
(b) Except as set forth in Schedule 4.15:
(i) there is no material Order to which any of the Acquired Companies
is named as being subject to such Order; and
(ii) no officer, director, agent or employee of any Acquired Company
is named as being subject to any Order that prohibits such Person from
engaging in or continuing any conduct, activity or practice relating to the
business of any Acquired Company which would have a Material Adverse Effect
on any Acquired Company.
(c) Except as set forth in Schedule 4.15, each Acquired Company is in full
compliance with all of the terms and requirements of each material Order to
which they, or any of the assets owned or used by them, is or has been subject.
35
4.16. ABSENCE OF CERTAIN CHANGES AND EVENTS.
Except as set forth in Schedule 4.16, since December 31, 2006 the business
of the Acquired Companies has been conducted in the Ordinary Course of Business
and, without limiting the foregoing, there has not been any:
(a) other than as set forth in the capitalization table set forth in
Schedule 4.16 and provided for under any PST Contract, issuance of any equity or
other ownership interests in, or shares of any Acquired Company (other than
PMH); grant of any stock option or right to purchase equity or other ownership
interests in, or shares of, any Acquired Company (other than PMH); issuance of
any security convertible into such interests or shares; grant of any
registration rights; purchase, redemption, retirement or other acquisition by
any Acquired Company (other than PMH) of any ownership interests or shares
therein; or declaration or payment of any dividend or other distribution or
payment in respect of shares;
(b) amendment to the Organizational Documents of any of any Acquired
Company;
(c) payment or increase by any Acquired Company of any management fee or
any bonuses, salaries, or other compensation to any stockholder, director,
officer or employee or entry into any employment, severance or similar Contract
with any director, officer or employee outside the Ordinary Course of Business;
(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 insurance, materially and adversely
affecting the properties, assets, business or financial condition of the
Acquired Companies, taken as a whole;
(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 which would have a Material Adverse Effect on the
Acquired Companies, or (ii) any Contract or transaction involving a total
remaining commitment by or to any Acquired Company of at least CHF 50,000;
(g) sale, 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 other
than, in any case, in the Ordinary Course of Business, 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 CHF 50,000;
36
(i) material change in the accounting methods used by any Acquired Company
other than as prescribed by GAAP or the functional equivalent thereof; or
(j) agreement, whether oral or written, by any Seller or any Acquired
Company to do any of the foregoing.
4.17. CONTRACTS; NO DEFAULTS.
(a) Schedule 4.17(a) contains a complete and accurate list, and PMH has
delivered to Purchaser true and complete copies, of each of the following:
(i) each Applicable Contract that involves performance of services or
delivery of goods or materials by one or more Acquired Companies or
otherwise in connection with the Business of an amount or value in excess
of CHF 50,000;
(ii) each Applicable Contract that involves performance of services or
delivery of goods or materials to one or more Acquired Companies or
otherwise in connection with the Business of an amount or value in excess
of CHF 50,000;
(iii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of
one or more Acquired Companies or otherwise in connection with the Business
in excess of CHF 50,000, which are also set forth on Schedule 4.17(a)(iii);
(iv) each lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Applicable Contract affecting the
ownership of, leasing of, title to, use of or any leasehold or other
interest in, any real or personal property (except personal property leases
and installment and conditional sales agreements having a value per item or
aggregate payments of less than CHF 50,000 and with terms of less than one
year);
(v) each licensing agreement or other Applicable Contract with respect
to patents, trademarks, copyrights or other intellectual property,
including agreements with current or former employees which are still in
effect, consultants or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets other than those
agreements with employees entered into in the Ordinary Course of Business;
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(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a
group of employees, which are also set forth on Schedule 4.17(a)(vi);
(vii) each joint venture, partnership and other Applicable Contract
(however named) involving a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person, which are also
set forth on Schedule 4.17(a)(vii);
(viii) each Applicable Contract containing covenants that in any
material way purport to restrict the business activity of any Acquired
Company or any Related Person of an Acquired Company or limit the freedom
of any Acquired Company or any Related Person of an Acquired Company in any
material way to engage in any of its line of business or to compete with
any Person in its lines of business, which are also set forth on Schedule
4.17(a)(viii);
(ix) each Applicable Contract providing for payments to or by any
Person based on sales, purchases or profits, other than direct payments for
goods;
(x) each power of attorney that is currently effective and outstanding
for any Acquired Company, which are also set forth on Schedule 4.17(a)(x);
(xi) each Applicable Contract entered into that contains or provides
for an express undertaking by any Acquired Company to be responsible for
indirect, consequential or punitive damages;
(xii) each Applicable Contract for capital expenditures in excess of
CHF 50,000;
(xiii) each written warranty, guaranty and other similar undertaking
with respect to contractual performance extended by any Acquired Company
other than in the Ordinary Course of Business; and
(xiv) each material amendment, supplement and modification (whether
oral or written) in respect of any of the foregoing.
Schedule 4.17(a) sets forth sufficient details concerning such Contracts to
identify the Contracts.
(b) To PMH's Knowledge, no officer or employee of any Acquired Company is
bound by any Contract that purports to limit the ability of such officer or
employee to (A) engage in or continue any conduct, activity or practice relating
to the business of any Acquired Company, or (B) assign to any Acquired Company
any material rights to any invention, improvement or discovery made in the
course of said officer's or employee's employment.
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(c) Except as set forth in Schedule 4.17(c), each Contract identified or
required to be identified in Schedule 4.17(a) is in full force and effect and is
valid and enforceable in accordance with its terms in all material respects.
(d) Except as set forth in Schedule 4.17(d):
(i) Each Acquired Company is, and at all times has been, in compliance
in all material respects 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) to PMH's Knowledge, 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 has been, in compliance in all
material respects with all applicable terms and requirements of such
Contract;
(iii) to PMH's Knowledge, no event has occurred or circumstance exists
that (with or without notice or lapse of time) would reasonably be expected
to contravene, conflict with or result in a material 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 Applicable Contract;
and
(iv) No Acquired Company has given to or received from any other
Person any notice or other communication (whether oral or written)
regarding any actual, alleged potential material violation or breach of, or
default under, any Contract, which violation, breach or default has not
been cured.
(e) There are no renegotiations of any material amounts paid or payable to
any Acquired Company under current or completed Contracts with any Person and no
such Person has made written demand for such renegotiation.
4.18. INSURANCE.
(a) PMH has delivered to Purchaser a true and complete list of all policies
of insurance to which any Acquired Company is a party or under which the
Business, any Acquired Company, or any director of any Acquired Company, is or
has been covered at any time within the five (5) years preceding the date of
this Agreement and a list of all pending applications for policies of insurance;
(b) Schedule 4.18(b) describes:
39
(i) any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of insurance,
for the transfer or sharing of any risk by any Acquired Company; and
(iii) all obligations of the Acquired Companies to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is
provided.
(c) Schedule 4.18(c) sets forth, by year, for the current policy year and
each of the five (5) preceding policy years, a summary of the loss experience
under each policy;
(d) Except as set forth on Schedule 4.18(d), to PMH's Knowledge:
(i) All policies to which any Acquired Company is a party or will be a
party at the Effective Time, or that provide coverage to any Acquired
Company or any director or officer of an Acquired Company in all material
respects:
(A) are valid, outstanding and enforceable;
(B) are issued by an insurer that is financially sound and
reputable;
(C) taken together, provide adequate insurance coverage for the
assets and the operations of the Acquired Companies;
(D) are sufficient for compliance with all Legal Requirements and
Contracts to which any Acquired Company is a party, by which any
Acquired Company is bound or otherwise to the extent insurance is
customarily available therefor;
(E) will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(F) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of any Acquired Company.
(ii) No Acquired Company has received (A) any refusal of coverage or
any notice that a defense will be afforded with reservation of rights, or
(B) any notice of cancellation or any other indication that any insurance
policy is no longer in full force or effect or will not be renewed or that
the issuer of any policy is not willing or able to perform its obligations
thereunder.
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(iii) The Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations, under each policy
to which any Acquired Company is a party or that provides coverage to any
Acquired Company or director thereof.
(iv) The Acquired Companies have given notice to the insurer of all
claims that may be insured thereby.
4.19. ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.19 or as
described in the reports supplied by PMH or obtained by Purchaser and each of
which reports is specifically listed on Schedule 4.19:
(a) Each of the Acquired Companies is in compliance in all material
respects with, and is not in violation of or liable under in any material
respect, any Environmental Law. No Acquired Company has received any actual or
Threatened order or notice from (i) any Governmental Body or private citizen
acting in the public interest, or (ii) the current or prior owner or operator of
any Facilities, of any actual or potential material violation or material
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 or any Acquired Company
has or 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 they are 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 Threatened claims, Encumbrances, or other
material 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.
(c) No Acquired Company or any other Person for whose conduct they are or
may be held responsible has received any written citation, directive, inquiry,
notice, Order, summons or warning 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 Seller, any Acquired Company, or any other Person for whose conduct
they are or may be held responsible, have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
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(d) No Acquired Company nor any other Person for whose conduct they are or
may be held responsible has any material Environmental, Health, and Safety
Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which any Acquired
Company (or any predecessor thereof), has or had an interest, or at any property
geologically or hydrologically adjoining the Facilities or any such other
property or assets.
(e) Except in material compliance with or as permitted by applicable
Environmental Law, there are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically adjoining
property in material quantities that emanated from any Acquired Company (or any
predecessor thereof), 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. Except in material compliance with or as permitted by
applicable Environmental Law, no Acquired Company nor any other Person for whose
conduct they are or may be held responsible 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) Except in material compliance with or as permitted by applicable
Environmental Law, there has been no Release or Threat of Release, of any
material amounts of Hazardous Materials at or from the Facilities.
(g) PMH has delivered or made available to Purchaser true and complete
copies and results of all material reports, studies, analyses, tests, or
monitoring possessed or initiated by or on behalf of any Acquired Company
pertaining to Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by any Acquired Company, or any other
Person for whose conduct they are or may be held responsible, with Environmental
Laws.
4.20. EMPLOYEES.
(a) Schedule 4.20(a) contains a complete and accurate list of the following
information for each employee of the Acquired Companies whose compensation in
2007 will exceed CHF 75,000, 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, 2006, vacation accrued and
service credited for purposes of vesting and eligibility to participate under
any Acquired Company's severance pay plan.
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(b) To PMH's Knowledge, and except as otherwise disclosed on Schedule
4.20(b) or Schedule 4.22, 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 ("Proprietary Rights Agreement") that
in any material way adversely affects or will affect (i) the performance of his
or her duties as an employee or director of the Acquired Companies, or (ii) the
ability of any Acquired Company to conduct its business, including any
Proprietary Rights Agreement with the Acquired Companies by any such employee or
director. To PMH's Knowledge, no director, officer or other key employee of any
Acquired Company intends to terminate his or her employment with such Acquired
Company.
4.21. LABOR RELATIONS; COMPLIANCE.
(a) Except as set forth on Schedule 4.21(a), no Acquired Company has been
or is a party to or bound by any collective bargaining or other material labor
Contract.
(b) Except as set forth on Schedule 4.21(b), since January 1, 2004, there
has not been, there is not presently pending or existing and, to PMH's
Knowledge, there is not Threatened, (i) any strike, work stoppage or material
employee grievance process, (ii) any Proceeding against or affecting any
Acquired Company relating to the alleged material violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with any Governmental Body,
organizational activity or other material labor or employment dispute against or
affecting any of the Acquired Companies or their premises, or (iii) any
application for certification of a collective bargaining agent. No event has
occurred or circumstance exists that could on any reasonable basis provide the
basis for any work stoppage or other labor dispute. There is no lockout of any
employees by or any Acquired Company, and no such action is contemplated by any
Acquired Company.
(c) Except as set forth on Schedule 4.21(c), each Acquired Company has
complied in all material 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. Except as set
forth on Schedule 4.21(c), no Acquired Company is liable for the payment of any
material compensation, damages, taxes, fines, penalties or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements.
4.22. INTELLECTUAL PROPERTY.
(a) For purposes of this Agreement, the following terms shall have the
meanings described below:
(i) "Marks" means fictional business names, trading names, registered
and unregistered trademarks, service marks and applications;
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(ii) "Patents" means patents, patent applications and inventions that
may be reasonably patentable;
(iii) "Copyrights" means copyrights in both published works and
unpublished works;
(iv) "Trade Secrets" means know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings and blue prints; and
(v) "Intellectual Property" means, collectively, Marks, Patents,
Copyrights, Trade Secrets, internet domain names, and inventions,
discoveries and technology.
(b) Schedule 4.22(b) contains a complete and accurate list and brief
summary description, including any royalties paid or received by the Acquired
Companies, of all Contracts (including, without limitation, licenses) relating
to any Intellectual Property used in the Business to which any Acquired Company
is a party or by which any Acquired Company is bound and under which royalties
paid or received exceed CHF 10,000, 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 CHF 10,000 under which an Acquired Company is
the licensee. There are no outstanding and, to PMH's Knowledge, no Threatened
disputes or disagreements of a material nature with respect to any such
Contract.
(c) Know-How Necessary for the Business.
(i) The Intellectual Property items listed on Schedule 4.22(d)(i),
Schedule 4.22(e), Schedule 4.22(f), Schedule 4.22(g) and Schedule 4.22(h)
(the "Company IPR's"), together with any Intellectual Property licensed
under Contracts listed in Schedule 4.22(b), include all the Intellectual
Property necessary for the operation of the Business as it is currently
conducted. One or more of the Acquired Companies is the owner of all right,
title and interest in and to each of the Company IPR's which are, except as
set forth on Schedule 4.22(c)(i), free and clear of all Encumbrances, and
has the right to use all of the Company IPR's without payment to a third
party.
(ii) Except as set forth in Schedule 4.22(c)(ii), all 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 Intellectual Property relating to the
Business. To the Knowledge of PMH, no employee, officer or director of any
Acquired Company has entered into any Contract that requires such person to
transfer, assign or disclose information concerning his or her work to
anyone other than one of the Acquired Companies.
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(d) Patents.
(i) Schedule 4.22(d)(i) contains a complete and accurate list of all
Patents owned or held by an Acquired Company ("Company Patents"), the
jurisdiction and a brief summary description of all Company Patents
currently used in, or which may be used in future, by the Business. One or
more of the Acquired Companies is the owner of all right, title and
interest in and to each of the Company Patents, free and clear of all
Encumbrances.
(ii) Except as set forth on Schedule 4.22(d)(ii), all of the issued
Company 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, to PMH's Knowledge, are
not subject to any maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date.
(iii) No Company Patent has been or is now involved in any
interference, reissue, reexamination or opposition proceeding. To PMH's
Knowledge, there is no potentially interfering Patent or Patent application
of any third party.
(iv) Except as set forth on Schedule 4.22(d)(iv), no Company Patent is
infringed or, to PMH's Knowledge, 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) Trademarks.
(i) Schedule 4.22(e) contains a complete and accurate list and summary
description of all Marks owned by an Acquired Company ("Company Marks").
One or more of the Acquired Companies is or will be at Closing the owner of
all right, title, and interest in and to each of the Company Marks, free
and clear of all Encumbrances.
(ii) All Company Marks that have been registered are currently in
compliance with all formal Legal Requirements applicable thereto.
(iii) To PMH's Knowledge, no Company Mark is infringed or, to PMH's
Knowledge, has been challenged or threatened in any way. None of the
Company Marks or any other Marks used by any Acquired Company infringes or
is alleged to infringe any trade name, trademark or service mark of any
third party.
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(f) Schedule 4.22(f) contains a complete and accurate list of all
copyrights of the Acquired Companies ("Company Copyrights"). To PMH's Knowledge,
no Company Copyright is infringed or has been challenged or threatened in any
way. To PMH's Knowledge, none of the subject matter of any of the Company
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
(g) Schedule 4.22(g) lists all internet domain names and related
registrations used by the Acquired Companies.
(h) Schedule 4.22(h) lists all Trade Secrets of the Acquired Company for
which records are maintained. The Acquired Companies have taken all reasonable
precautions to protect the secrecy, confidentiality and value of their Trade
Secrets.
4.23. CERTAIN PAYMENTS. No Acquired Company or, to PMH's Knowledge (without
investigation and not including any publicly available information), DePuy
France SA, or any director, officer, agent or employee of any Acquired Company,
or, to PMH's Knowledge (without investigation and not including any publicly
available information), any director, officer, agent or employee of DePuy France
SA, or any other Person associated with or acting for or on behalf of any
Acquired Company, or, to PMH's Knowledge (without investigation and not
including any publicly available information), any other Person associated with
or acting for or on behalf of DePuy France SA, has directly or indirectly (a)
made any contribution, gift, bribe, special 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 Related Person 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.
4.24. BANK ACCOUNTS. Schedule 4.24 contains true, complete and correct lists of
all bank accounts and safe deposit boxes maintained by any of the Acquired
Companies (the "Bank Accounts"), and all Persons entitled to draw thereon, to
withdraw therefrom or, with access thereto.
4.25. RELATIONSHIPS WITH RELATED PERSONS. Except as set forth on Schedule 4.25,
no Seller nor any Related Person of any Seller or of any Acquired Company
currently has, or since January 1, 2003 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 other than business dealings or
transactions conducted in the Ordinary Course of Business with the Acquired
Companies at substantially prevailing market prices and on substantially
prevailing market terms except for less than four percent (4%) of the
outstanding capital stock of any such business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as set forth in
Schedule 4.25, neither any Seller nor any Related Person of any Seller or of any
Acquired Company is a party to any Contract with, or has any claim or right
against, any Acquired Company.
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4.26. BROKERS OR FINDERS. Except as set forth in Schedule 4.26, none of the
Sellers, the Acquired Companies nor any Representatives thereof have incurred
any obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement.
4.27. DISCLOSURE.
(a) No representation or warranty of PMH and the Sellers in this Agreement
and no statement in Schedule in the Sellers' Disclosure Schedule 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 6.5 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.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser and Greatbatch
represent and warrant to Sellers and PMH as follows:
5.1. ORGANIZATION AND GOOD STANDING. Each of Purchaser and Greatbatch is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full 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
Applicable Contracts. Each of Purchaser and Greatbatch is duly qualified to do
business as a foreign corporation or other entity and is in good standing under
the laws of each other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification where the lack of such qualification would have a
Material Adverse Effect on Purchaser or Greatbatch.
5.2 AUTHORITY; NO CONFLICT.
(a) The execution and delivery by Purchaser and Greatbatch of this
Agreement and the Escrow Agreement (the "Purchaser's Closing Documents"), the
Purchaser's Closing Documents will constitute the legal, valid and binding
obligations of Purchaser and Greatbatch, enforceable against each of them in
accordance with their respective terms. Each of Purchaser and Greatbatch has all
the necessary rights, power and authority to execute and deliver this Agreement
and the Purchaser's Closing Documents and to perform their obligations under
this Agreement and the Purchaser's Closing Documents.
(b) Except as set forth in Schedule 5.2, neither the execution and delivery
of this Agreement by Purchaser and Greatbatch nor the consummation or
performance of any of the Contemplated Transactions by Purchaser and Greatbatch
will contravene, conflict with or result in a violation of or give any
Governmental Body or other Person the right to challenge, prevent, delay or
otherwise interfere with any of the Contemplated Transactions or exercise any
remedy or obtain any relief under or pursuant to:
47
(i) any provision of Purchaser's or Greatbatch's Organizational
Documents;
(ii) any Legal Requirement or Order to which Purchaser or Greatbatch
may be subject; or
(iii) any Contract to which Purchaser or Greatbatch is a party or by
which Purchaser or Greatbatch may be bound.
Except as set forth in Schedule 5.2, neither Purchaser nor Greatbatch is, or
will be, required to give notice to, or 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.
5.2. CERTAIN PROCEEDINGS. There is no pending Proceeding that has been commenced
against Purchaser or Greatbatch 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 Purchaser, no such Proceeding has
been Threatened.
5.3. BROKERS OR FINDERS. Except for Credit Suisse, Purchaser and Greatbatch have
not, nor have any respective officers or Representatives, incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement, and Purchaser and Greatbatch will indemnify and hold Sellers harmless
from the payment of any such fees, commissions and expenses.
5.4. ADEQUATE FUNDS. At the Closing, Purchaser will have adequate funds to
complete the Contemplated Transactions.
5.5. INVESTMENT INTENT. Purchaser is acquiring the Shares for investment and not
with a view towards distribution thereof.
5.6. OWNERSHIP OF COMPETITORS. Neither Greatbatch nor any of its Subsidiaries
owns any equity interests in, nor are they controlled by or under common-control
with, Synthes/Stratec, Wright Medical, Aesculap, Exactch, Encore Medical, Biomet
Inc., DePuy, Inc., Smith & Nephew, PLC, or Stryker Corporation.
6. ADDITIONAL COVENANTS OF SELLERS AND PURCHASER.
6.1. ACCESS AND INVESTIGATION.
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(a) Between the date of this Agreement and the Closing Date, PMH will, and
will cause each Acquired Company and its Representatives to, (a) afford
Purchaser and its Representatives and lenders and their Representatives
(collectively, "Purchaser's Advisors") reasonable access to each Acquired
Company's personnel, properties, contracts, books and records, and other
documents and data, (b) furnish Purchaser and Purchaser's Advisors with copies
of all such material contracts, books and records, and other existing documents
and data as Purchaser may reasonably request, and (c) furnish Purchaser and
Purchaser's Advisors with such additional financial, operating and other data
and information as Purchaser may reasonably request.
(b) In addition to any environmental investigations and audits conducted by
Purchaser or their Representatives prior to the date of this Agreement,
Purchaser shall be permitted to cause further environmental audits of the
Facilities to be conducted as are reasonably necessary for assessing the
presence and or disposition of Hazardous Materials and compliance with
Environmental Laws, including such Phase II environmental audits as Purchaser
and PMH may mutually agree upon. PMH hereby agrees to permit Purchaser's
qualified environmental consultants to enter upon the Facilities, upon giving
PMH reasonable notice, with individuals and materials reasonably necessary to
conduct such environmental audits. In connection with any such environmental
audits and at the request of PMH, Purchaser shall from time to time enter into
agreements relating to indemnification for damages and confidentiality of audit
results.
6.2. OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES. Except as provided
for in Section 7, between the date of this Agreement and the Closing Date, PMH
and Sellers will cause each Acquired Company to:
(a) conduct its business only in the Ordinary Course of Business,
including, but not limited to, the payment of accounts payable and the
collection of Accounts Receivable;
(b) use its Best Efforts to preserve intact the current business
organization of the Acquired Companies, keep available the services of the
current officers, employees and agents of the Acquired Companies and maintain
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents and others having business relationships with the Acquired
Companies;
(c) consult with Purchaser concerning operational matters of a material
nature (subject to any Legal Requirement limiting any such consultation); and
(d) otherwise report periodically to Purchaser concerning the status of the
business, operations and finances of the Acquired Companies.
6.3. NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, PMH and
Sellers will not, and will cause each Acquired Company not to, without the prior
written consent of Purchaser, 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 4.16 is reasonably likely to occur.
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6.4. REQUIRED APPROVALS.
(a) As promptly as practicable after the date of this Agreement, PMH,
Sellers and Purchaser will, and PMH will cause each Acquired Company to, make
all filings required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions, including all filings under any
applicable Competition Laws. In addition, each of the parties agrees that if any
Governmental Body requests additional information under any applicable
Competition Laws or any other Legal Requirement, such party will use its
reasonable commercial efforts to comply with such requests as promptly as
possible.
(b) Between the date of this Agreement and the Closing Date, PMH and
Sellers will, and will cause each Acquired Company to, (i) cooperate with
Purchaser with respect to all filings that Purchaser is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (ii)
cooperate with Purchaser in obtaining all consents identified in Schedule 4.2,
provided that this Agreement will not require PMH or any Seller to dispose of or
make any change in any portion of its business or to incur any other burden to
obtain a Governmental Authorization.
(c) Between the date of this Agreement and the Closing Date, Purchaser
will, and will cause each Related Person to, (i) cooperate with PMH and the
Sellers with respect to all filings that PMH or any Seller is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (ii)
cooperate with PMH and the Sellers in obtaining all consents identified in
Schedule 4.2(b); provided that this Agreement will not require Purchaser to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
6.5. NOTIFICATION. Between the date of this Agreement and the Closing Date, each
party will promptly notify the other parties in writing if such party becomes
aware of any fact or condition that causes or constitutes a Breach of any of
such party's representations and warranties as of the date of this Agreement, or
that such party 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. If any such fact or condition requires any
change in any Schedule if the Schedule were dated the date of the occurrence or
discovery of any such fact or condition, the party responsible for the Schedule
will promptly deliver to the other party a supplement to the Schedule specifying
such change. During the same period, either party will promptly notify the other
party of the occurrence of any Breach of any covenant of a party in this
Agreement or of the occurrence of any event that may make the satisfaction of
the conditions in the Agreement impossible or unlikely. Notwithstanding anything
to the contrary contained in this Agreement, if a party so notifies the other
parties in accordance with this Section 6.5 of any such fact or condition that
requires any change in any Schedule and the other parties nonetheless consummate
the Closing, such disclosure will be deemed to have been made in the Schedules
as of the date of this Agreement and, except with respect to the Fundamental
Warranties under Section 11.2(a), the parties receiving such disclosure shall
not be entitled to seek indemnification for any damages that may be suffered as
a result of the facts and circumstances disclosed pursuant to this Section 6.5.
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6.6. NO NEGOTIATION. Until such time, if any, as this Agreement is terminated
pursuant to Section 10, PMH and the Sellers will not, and will cause each
Acquired Company and each of their Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than Purchaser) relating to any transaction involving the sale of the business
or assets (other than in the Ordinary Course of Business) of any Acquired
Company, or any of the capital stock of any Acquired Company, or any merger,
consolidation, business combination, or similar transaction involving the
Acquired Company.
6.7. BEST EFFORTS. Between the date of this Agreement and the Closing Date,
Purchaser, PMH and Sellers will use their Best Efforts to cause the conditions
in Section 8 and 9 to be satisfied except as set forth in the provisos to
Section 6.4(b) and 6.4(c), as applicable.
6.8. STATUTE OF LIMITATIONS. Prior to the Closing, Sellers shall not permit any
Acquired Company to agree with any Governmental Body to extend the statute of
limitations with respect to any Taxes, without the prior written consent of
Purchaser.
6.9. INTERIM FINANCIAL STATEMENTS. From the date of this Agreement through the
Closing Date, PMH will prepare monthly financial statements for each of the
Acquired Companies (beginning with the month of October 2007), and will promptly
(and in any event not later than the last Business Day of the month following
the end of the month to which a statement relates) deliver them to Purchaser.
These unaudited financial statements will be prepared in a manner consistent
with the basis of presentation used in the Interim Financial Statements referred
to in Section 4.4, and will fairly present, in all material respects, the
consolidated financial position and results of operations, of the Acquired
Companies as at and for the periods indicated.
6.10. REPRESENTATION AND WARRANTY INSURANCE COVERAGE. On or prior to the Closing
Date, the parties understand and agree that Purchaser will apply for and obtain
a buyers-side representation and warranty insurance policy from AIG or another
reputable insurance company acceptable to the Sellers' Representative (a) naming
Greatbatch, Purchaser and Sellers as named insureds, (b) having coverage limits
of at least CHF 35,000,000, (c) providing the same or better coverage than the
AIG proposal previously provided by the Sellers to Purchaser, and (d) requiring
a maximum aggregate Deductible for all covered claims of no more than CHF
2,000,000 (the "R&W Insurance Policy"). The R&W Insurance Policy shall be
subject to the approval of the Sellers' Representative before issuance, which
approval shall not be unreasonably withheld, conditioned or delayed. All
premiums, taxes and costs of the R&W Insurance Policy, up to a maximum amount of
CHF 1,200,000 (the "Maximum Premium Amount") will be borne solely by the Sellers
and may be included by the Purchaser in, and paid through, the Indebtedness
Adjustment. Any amounts in excess of the Maximum Premium Amount will be borne by
Purchaser. Purchaser is entitled to seek indemnification from the Sellers for
the Deductible.
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6.11. US TAX FILINGS. At Purchaser's sole option, after the Closing Date
Purchaser may file Tax Returns with respect to one or more of the Acquired
Companies for tax periods that ended prior to or on the Closing Date. Sellers'
Representative shall have the right to review and approve the contents of such
Tax Returns before they are filed with respect only to the accuracy of the
factual statements regarding the Acquired Companies contained therein, which
approval will not be unreasonably withheld. However, Greatbatch will not be
prohibited from filing any such tax return without the approval of the Sellers'
Representative in the event that such filing is necessary to address any
concerns of Purchaser's Accountants with regard to Greatbatch's financial
statements under Financial Accounting Standards Board Interpretation (FIN) No.
48, or Applicable GAAP.
6.12. POST-CLOSING MATTERS.
(a) Purchaser and Greatbatch covenant and agree that, in the event that all
of the capital stock or assets of Precimed Inc. and/or Precimed CMP, Inc. are
transferred or sold following the Closing Date to a Greatbatch or Purchaser
Related Person, the purchase price for such transfer or sale will be completed
using a third-party valuation of the fair market value of such capital stock or
assets.
(b) If the actual aggregate amount of earn-out payable under the Tech-Mim
Agreement is less than the amount included in the Indebtedness Adjustment (such
difference between such amounts being the "Shortfall Amount"), the Purchaser
will either (i) pay the Shortfall Amount to the Escrow Agent to be held and
released under the terms of the Escrow Agreement, or (ii) if the Escrow
Agreement has been terminated, pay the Shortfall Amount to the Sellers in the
same pro rata manner as payments are to be made to the Sellers under the Escrow
Agreement.
7. CERTAIN ACTIONS PRIOR TO CLOSING DATE; TRANSITION AND EMPLOYEE MATTERS
7.1. PAYMENT OF INDEBTEDNESS. PMH and the Sellers will cause all Indebtedness
owed by any Acquired Company to any Seller (or any Related Person of any
Seller), or owed to any Acquired Company by any Seller (or any Related Person of
any Seller), to be paid in full on or prior to Closing.
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7.2. ESCROW. The Purchaser and Sellers, prior to Closing, will retain the Escrow
Agent and will negotiate in good faith the terms and conditions of an Escrow
Agreement using a form acceptable to the Escrow Agent; provided, however, that
the Escrow Agreement must include the release conditions set forth in
subsections (a), (b) and (c) below, and provided further that Purchaser will be
solely responsible for the standard fees of the Escrow Agent, but with Purchaser
and Sellers' Representative equally sharing any additional costs and expenses
incurred by the Escrow Agent. In that regard, the Purchaser and Sellers agree
that:
(a) the Escrow Agreement will provide that, on the eighteen (18) month
anniversary of the Closing Date, the Escrow Agent will deliver and pay over to
the Sellers an amount equal to each Seller's pro-rata portion (to be determined
based on each Seller's ownership percentage set forth on the Fully-Diluted Cap
Table) of the Deductible, reduced by the sum of (i) any applicable withholding
tax, (ii) the amount of any indemnification claims that have been paid by the
Escrow Agent plus, and (iii) the amount of any indemnification claims previously
made by any Purchaser Indemnified Person which have not been fully resolved;
(b) the Escrow Agreement will provide that on the third anniversary or, if
later, on the date as of which no Tax periods prior to or including the Closing
Date are subject to an open Tax audit by any Governmental Body, the balance of
the Escrow Amount reduced by (i) any applicable withholding tax, and (ii) the
amount of any indemnification claims by any Purchaser Indemnified Person which
have not been finally resolved, will be delivered and paid over to the Sellers,
who shall be entitled to receive an amount equal to each Seller's pro-rata
portion (to be determined based on each Seller's ownership percentage set forth
on the Fully-Diluted Cap Table) of such balance.
(c) the Escrow Agreement will provide for cross-notices to the parties of
any disbursement notices to the Escrow Agent, and the Escrow Agreement will be
terminated when all unresolved indemnification claims have been finally resolved
and otherwise in accordance with the terms of the Escrow Agreement; and
(d) the Escrow Agreement will provide that the Escrow Amount will be held
at all time in an interest-bearing escrow account at a major financial
institution acceptable to Purchaser and Sellers' Representative.
7.3. INTERCOMPANY CONTRACTS. The Sellers and Purchaser agree that all Contracts
(written and oral) between (a) any Seller or any of its Related Persons and (b)
the Acquired Companies will be terminated prior to the Closing unless otherwise
mutually agreed upon by Purchaser and such Seller. For purposes of clarity,
nothing in this Section 7.3 requires the cancellation, termination or
modification of that certain Asset Purchase Agreement, dated as of August 14,
2006, by and between Precimed, Inc. and The Carr Metal Products Group.
7.4. CONTINUATION OF PRECIMED PENSION FUND. Between the date of this Agreement
and the Closing Date, PMH will provide such documentation or assurances
necessary to the "Caisse de pension Precimed" fund manager to ensure the
continuation of this pension fund following the Closing Date.
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7.5. PRE-CLOSING SHARE TRANSFERS. Prior to or simultaneous with the Closing
Date, the Sellers will have completed the Pre-Closing Share Transfers.
7.6. STOCK OPTIONS.
(a) Between the date of this Agreement and the Closing Date, each then
outstanding stock option granted by PMH, whether or not then fully exercisable
or vested, will either be:
(i) cancelled and PMH will obtain a release from the option holder
acknowledging the cancellation of the option and releasing PMH from any
claims such Person may have to any equity ownership in any Acquired Company
or payment of any amounts arising in connection therewith; or
(ii) exercised and the holder of such option will: (A) execute a
joinder agreement whereby such holder hereby joins as a party to, and
agrees to be bound by, all of the terms and conditions of this Agreement
with the same force and effect as if originally named herein as a "Seller",
and (B) deliver their Shares to the Sellers' Representative who will hold
such Shares in escrow pending the Closing Date and the ultimate delivery of
all outstanding Shares to the Purchaser.
(b) PMH agrees that it will (i) cause all outstanding stock option plans to
terminate on or prior to the Closing Date and cause the provisions in any other
plan, program or arrangement providing for the issuance or grant by PMH of any
interest in respect of the capital stock of PMH (except as provided for in any
PST Contract) to terminate and have no further force or effect as of the Closing
Date, and (ii) ensure that following the Closing Date no one other than
Purchaser shall hold or have any right to acquire any equity securities of PMH
or an other Acquired Company.
7.7. FULLY-DILUTED CAP TABLE. On or prior to the Closing Date, the Sellers'
Representative shall deliver to Purchaser a fully-diluted capitalization table
of PMH, which capitalization table shall list in sufficient detail the
following: (i) all of the Persons who own Shares as of the Closing Date, (ii)
the name and address of each such Person, (ii) the number of Shares owned by
each such Person, (iii) the aggregate number of Shares that are issued and
outstanding to the Persons set forth on such capitalization table, and (iv) the
ownership percentage of PMH of each of the Persons set forth on such
capitalization table. For purposes of this Agreement, the capitalization table
delivered by the Sellers' Representative pursuant to this Section 7.7 shall be
referred to as the "Fully-Diluted Cap Table" and shall be attached hereto as
Schedule 7.7 on the Closing Date.
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7.8. TERMINATION FEE ESCROW FUND. On or prior to November 30, 2007, (a)
Purchaser and Sellers' Representative will enter into the Termination Fee Escrow
Agreement with M&T Bank, and (b) Purchaser will have fully funded the
Termination Fee Escrow Fund.
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
Purchaser's obligation to purchase the Shares and to take the other actions
required to be taken by Purchaser at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Purchaser, in whole or in part):
8.1. ACCURACY OF REPRESENTATIONS. All of representations and warranties of PMH
and Sellers in this Agreement (considered collectively), and each of these
representations and warranties of PMH and Sellers (considered individually),
must have been accurate in all respects (in the case of any representation and
warranty containing a materiality qualification) and in all material respects
(in the case of any representation and warranty without a materiality
qualification) as of the date of this Agreement, and must be accurate in all
respects (in the case of any representation and warranty containing a
materiality qualification) and in all material respects (in the case of any
representation and warranty without a materiality qualification) as of the
Closing Date as if made on the Closing Date.
8.2. PMH AND SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that PMH and the Sellers are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of such covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.5 must
have been delivered, and each of the other covenants and obligations in Sections
6.4 and 6.7 must have been performed and complied with in all respects.
8.3. CONSENTS. Each of the Consents identified in Schedule 4.2 must have been
obtained and must be in full force and effect.
8.4. ADDITIONAL DOCUMENTS. Each of the following documents must have been
delivered to or obtained by the Purchaser:
(a) employment agreements, in form and substance mutually satisfactory to
both Purchaser and the Sellers' Representative, executed by Persons listed on
Schedule 8.4(a);
(b) a confidentiality, non-competition and non-solicitation agreements, in
form and substance satisfactory to Purchaser, executed by the Management
Sellers;
(c) confidentiality and non-solicitation agreements, in form and substance
satisfactory to Purchaser, executed by the Non-Management Sellers;
(d) release and acknowledgement of option cancellation, in form and
substance satisfactory to Purchaser, executed by each Person listed on Schedule
8.4(d);
(e) such other documents as Purchaser may reasonably request for the
purpose of (i) evidencing the accuracy of any of the representations and
warranties of PMH and Sellers, (ii) evidencing the performance by PMH and the
Sellers of, or the compliance by PMH and the Sellers with, any covenant or
obligation required to be performed or complied with by any of them, (iii)
evidencing the satisfaction of any condition referred to in this Section 8, or
(iv) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
8.5. NO PROCEEDINGS. Since the date of this Agreement, there must not have been
commenced or Threatened against Purchaser, or against any Person affiliated with
Purchaser, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
8.6. NO CLAIM REGARDING SHARE OWNERSHIP OR SALE PROCEEDS. There must not have
been made or Threatened by any Person any claim asserting that such Person (a)
is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any Shares, or any other voting, equity or
ownership interest in, any of the Acquired Companies, or (b) is entitled to all
or any portion of the Purchase Price payable for the Shares, other than a claim
for applicable withholding Taxes.
8.7. ISSUANCE OF R&W INSURANCE POLICY. The Purchaser will have been issued the
R&W Insurance Policy as described in Section 6.10.
8.8. PRE-CLOSING SHARE TRANSFERS. The Sellers will have delivered to Purchaser
the executed PST Contracts and such other documentation evidencing completion of
the Pre-Closing Share Transfers in compliance with all applicable Legal
Requirements as Purchaser may reasonably request.
9. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS TO CLOSE.
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by or on behalf of Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Sellers' Representative, in whole or in
part):
9.1. ACCURACY OF REPRESENTATIONS. All of Purchaser's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all respects (in the case of any representation and warranty
containing a materiality qualification) and in all material respects (in the
case of any representation and warranty without a materiality qualification) as
of the date of this Agreement, and must be accurate in all respects (in the case
of any representation and warranty containing a materiality qualification) and
in all material respects (in the case of any representation and warranty without
a materiality qualification) as of the Closing Date as if made on the Closing
Date.
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9.2. PURCHASER'S PERFORMANCE.
(a) All of the covenants and obligations that Purchaser is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Purchaser must have delivered each of the documents required to be
delivered by Purchaser pursuant to Section 2.5, and each of the other covenants
and obligations in Section 6.4 and 6.7 must have been performed and complied in
all respects and (ii) made the cash payments required to be made by Purchaser
pursuant to Sections 2.5(c)(i).
9.3. CONSENTS. Each of the Consents identified in Schedule 4.2 must have been
obtained and must be in full force and effect.
9.4. ADDITIONAL DOCUMENTS. Purchaser must have caused to be delivered to the
Sellers' Representative such other documents as the Sellers' Representative may
reasonably request for the purpose of (a) evidencing the accuracy of any
representation or warranty of Purchaser, (b) evidencing the performance by
Purchaser of, or the compliance by Purchaser with, any covenant or obligation
required to be performed or complied with by Purchaser, (c) evidencing the
satisfaction of any condition referred to in this Section 9, or (d) otherwise
facilitating the consummation of any of the Contemplated Transactions.
9.5. NO PROCEEDINGS. Since the date of this Agreement, there must not have been
commenced or Threatened against PMH or any Seller, or against any Person
affiliated with PMH or any Seller, any Proceeding (a) involving any challenge
to, or seeking damages or other relief in connection with any of the
Contemplated Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.
9.6. NO CLAIM REGARDING SHARE OWNERSHIP OR SALE PROCEEDS. There must not have
been made or Threatened by any Person any claim asserting that such Person (a)
is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, the Shares, or any other voting, equity or
ownership interest in, any of the Acquired Companies, or (b) is entitled to all
or any portion of the Purchase Price payable for the Shares, other than a claim
for applicable withholding Taxes. For clarification, the failure of the Sellers
to complete the Pre-Closing Share Transfers will not constitute a condition,
under this Section 9.6, to the Sellers' obligation to complete the Closing.
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10. TERMINATION.
10.1. TERMINATION EVENTS. This Agreement may, by notice given prior to or at the
Closing, be terminated:
(a) by Purchaser or the Sellers' Representative (on behalf of Sellers) if a
material Breach of any provision of this Agreement has been committed prior to
Closing by the other party and such Breach either has not been waived or has not
been cured within 15 Business Days after notice of such Breach is given by such
non-breaching party;
(b) (i) by Purchaser if any of the conditions in Section 8 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 Purchaser to comply with
its obligations under this Agreement) and Purchaser has not waived such
condition on or before the Closing Date; or
(ii) by the Sellers' Representative (on behalf of Sellers), if any of
the conditions in Section 9 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of PMH or the Sellers to comply with its obligations under this
Agreement) and the Sellers' Representative (on behalf of Seller) has not waived
such condition on or before the Closing Date;
(c) by mutual written consent of Purchaser and the Sellers' Representative
(on behalf of Sellers); or
(d) by either Purchaser or the Sellers' Representative (on behalf of
Sellers) if 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 January 31, 2008 (the "Target Date"), or such
later date as the parties may agree upon. If any Governmental Body with
jurisdiction over the enforcement of any Competition Laws requests additional
information relating to the Contemplated Transactions or the parties and/or if
any waiting period has not expired or any clearance or approval under any such
Competition Law has not been satisfied or obtained by the Target Date, the
Target Date will automatically be extended for such period of time as may be
reasonably necessary for the parties to have complied with the Competition Laws
and all such requests for information thereunder to the extent applicable to the
Contemplated Transactions, but in no event shall the Target Date be extended by
this sentence beyond April 30, 2008.
10.2. EFFECT OF TERMINATION.
(a) Each party's right of termination under Section 10.1 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.
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(b) If this Agreement is terminated pursuant to Section 10.1, all further
obligations of the parties under this Agreement, including under this Section
10, will terminate, except that the obligations in Sections 12.1 and 12.3 will
survive; provided, however, that 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 (but not any remedies under this Section 10) will
survive such termination unimpaired.
10.3. PAYMENT BY PURCHASER OF TERMINATION FEE.
(a) On or prior to November 30, 2007, pursuant to the terms of an escrow
agreement (the "Termination Fee Escrow Agreement") to be entered into by and
between Purchaser, Sellers' Representative and Manufactures and Traders Trust
Company ("M&T Bank"), Purchaser will deposit an amount equal to $1,400,000 (US)
into a M&T Bank escrow account (the "Purchaser Termination Fee Escrow Fund").
(b) In the event that the Sellers' Representative (on behalf of the
Sellers) terminates this Agreement prior to the Target Date pursuant to Section
10.1(a) and otherwise pursuant to the terms of the Termination Fee Escrow
Agreement, the parties will direct M&T Bank to immediately release and pay the
full amount of the Purchaser Termination Fee Escrow Fund to the Sellers'
Representative.
(c) On the earlier of the Closing Date or the Target Date, pursuant to the
terms of the Termination Fee Escrow Agreement, the parties will direct M&T Bank
to immediately release and pay the full amount of the Purchaser Termination Fee
Escrow Fund to the Purchaser.
10.4. PAYMENT BY SELLERS OF TERMINATION FEE. If the Purchaser terminates this
Agreement pursuant to Sections 10.1(a) hereof, then the Sellers will pay to
Purchaser a termination fee, in immediately available funds, in an amount equal
to CHF 1,700,000, payable within 15 calendar days of such termination.
11. INDEMNIFICATION; REMEDIES; DISPUTE RESOLUTION
11.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE; DEFINITIONS.
(a) All representations, warranties, covenants and obligations in this
Agreement, the Schedules, the supplements to the Schedules, the certificate
delivered pursuant to Section 2.5(a)(i) and any other certificate or document
delivered pursuant to this Agreement will survive the Closing as set forth in
this Section 11. The right to indemnification, payment of Damages or other
remedy based on such representations, warranties, covenants and obligations will
not be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation, and the waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants and obligations.
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(b) For purposes of this Section 11, the following terms have the meanings
specified or referred to in this Section 11.1(b):
"Purchaser Indemnified Persons" -- means Purchaser, the Acquired Companies
and their respective Representatives and Related Persons.
"Seller Indemnified Persons"-- means each Seller and its or his
Representatives and Related Persons.
"Damages" -- means any loss, liability, claim, damage (but excluding
incidental, consequential or indirect damages), expense (including costs of
investigation and defense and reasonable attorneys' fees and expenses of
attorneys, accountants, engineers and other experts and consultants), fine,
penalty or obligation, whether or not involving a third-party claim; provided,
however, that for clarification purposes, Damages shall include incidental,
consequential and or indirect damages and losses only to the extent (i) payable
by an Indemnified Party to an unaffiliated Person, or (ii) arising from the
failure of the Sellers to either complete the Closing or the Pre-Closing Share
Transfers, for reason other than that the conditions to Closing set forth in
Section 9 have not been satisfied.
"Indemnified Party" -- any Person entitled to indemnification under this
Section 11.
"Indemnifying Party" -- any Person required to indemnify another Person
under this Section 11.
"Fundamental Warranties" -- means the representations and warranties set
forth in Sections 3.1, 3.2, 4.2, and 4.3.
11.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. Subject to the
conditions and limitations set forth in this Agreement, in particular Sections
11.6, 11.10 and 11.14, Sellers, jointly and severally, will indemnify and hold
harmless the Purchaser Indemnified Persons, for, and will pay to the Purchaser
Indemnified Persons the amount of, any Damages, to the extent directly arising
from or in connection with:
(a) any Breach of any Fundamental Warranties made by PMH or Sellers in this
Agreement (without giving effect to any supplement to any Schedule) or any other
certificate or document delivered by Sellers' Representative pursuant to this
Agreement;
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(b) any Breach of any representation or warranty made by PMH or Sellers in
this Agreement other than the Fundamental Warranties (after giving effect to any
supplement to any Schedule) or any other certificate or document delivered by
Sellers' Representative pursuant to this Agreement;
(c) any Breach by PMH or any Seller of any covenant or obligation of PMH or
such Seller in this Agreement;
(d) any unpaid employee-related costs, expenses and Taxes (and any fines or
penalties for non-payment thereof) that have not been accrued or reserved as a
liability in Balance Sheet relating to all periods through the Closing Date;
(e) the Proceedings and contingent liabilities disclosed in Schedule
11.2(e);
(f) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding made by any such
Person with PMH, any Seller or any Acquired Company (or any Representative
acting on their behalf) in connection with any of the Contemplated Transactions;
(g) any (i) Environmental, Health and Safety Liabilities to the extent
arising out of or relating to: (A) the ownership, operation or condition at any
time on or prior to the Closing Date of the Facilities, including but not
limited to any fact, event, condition, circumstance, incident, operation or
practice identified or covered in any of the reports listed in Schedule 4.19
("Known Environmental Liabilities"), or (B) any Hazardous Materials or other
contaminants, wherever located, that were generated, transported, stored,
treated, Released or otherwise handled by any Acquired Company at any time on or
prior to the Closing Date; and (ii) any bodily injury (including illness,
disability and death, and regardless of when any such bodily injury occurred,
was incurred or manifested itself), property damage (including trespass,
nuisance, wrongful eviction and deprivation of the use of real property), or
other damage of or to any Person, in any way arising from (A) any Hazardous
Activity conducted with respect to the Facilities or the operation of the
Acquired Companies on or prior to the Closing Date, or (B) from Hazardous
Material that was (x) present on or before the Closing Date on or at the
Facilities (or present on any other property, if such Hazardous Material
emanated from any of the Facilities and was present on any of the Facilities on
or prior to the Closing Date) or (y) Released by any Acquired Company or any
other Person for whose conduct they are or may be held responsible, at any time
on or prior to the Closing Date; provided, however, that the foregoing
indemnification obligations of the Sellers set forth in this Section 11.2(g)
shall not be triggered and shall not be enforceable by any of the Purchaser
Indemnified Persons if Purchaser conducts an independent investigation or
sampling at any of the Facilities without a reasonable business purpose and the
applicable liability is discovered as a result of such investigation or
sampling, and provided further, however, that the foregoing proviso will not
apply to any Known Environmental Liabilities, and for clarification and without
expanding the scope of such proviso, it will not apply to any investigation or
sampling, nor any Environmental, Health and Safety Liability arising as a result
thereof, (A) resulting from the accidental discovery of Hazardous Materials at
any Facility, (B) undertaken in connection with work done at any Facilities for
which a Purchaser Indemnified Person has a business purpose for performing, and
(C) that may be required by an Legal Requirement, including but not limited to
any Environmental Law, an amendment to any Environmental Law and any new
Environmental Law; and
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(h) any and all losses that the Purchaser Indemnified Persons may suffer,
sustain, incur or become subject to arising out of or due to the failure of
Sellers to pay in full all Transaction Expenses.
11.3. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS - TAX MATTERS.
(a) In addition to the provisions of Section 11.2, Sellers shall, jointly
and severally, indemnify each Purchaser Indemnified Person and hold them
harmless from (i) all liability for Taxes that may be imposed or assessed
against the Acquired Companies or the assets of the Acquired Companies based on
income attributable to all taxable periods ending on or before the Closing Date
reduced without duplication by the actual payment of Taxes prior to the Closing
Date and any reserves with respect to Taxes set forth on the Balance Sheet, (ii)
all liability for Taxes of any Person (other than any of the Acquired Companies)
with which any of the Acquired Companies is or has been affiliated or has filed
or has been required to file a consolidated, combined or unitary Tax Return,
(iii) all liability for Taxes of the Sellers in respect of their Share ownership
and (iv) subject to Section 11.3(d), all liability for reasonable legal,
accounting, consulting or similar fees and expenses incurred by reason of any
liability described in clauses (i), (ii) or (iii) of this sentence.
(b) In the case of any taxable period that includes (but does not end on)
the Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("Property Taxes") of
the Acquired Companies attributable to all taxable periods ending on or
before the Closing Date will be equal to the amount of such property Taxes
for the entire Straddle Period multiplied by a fraction, the numerator of
which is the number of days during the Straddle Period that are in all
taxable periods ending on or before the Closing Date and the denominator of
which is the number of days in the Straddle Period; and
(ii) the Taxes of the Acquired Companies (other than Property Taxes)
attributable to all taxable periods straddling the Closing Date will be
computed as if such taxable period ended as of the close of business on the
Closing Date and, in the case of any Taxes attributable to the ownership by
any of the Acquired Companies of any equity interest in any non U.S.
corporation, partnership or other "flow through" entity, as if a taxable
period of such corporation, partnership or other "flow through" entity
ended as of the closing of business on the Closing Date.
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(c) If a claim is made by any Governmental Body, which, if successful,
would result in an indemnity payment to any Indemnified Person pursuant to
Sections 11.3(a) or (b), then Purchaser shall give notice to the Sellers'
Representative in writing of such claim within thirty (30) days after receipt of
such a claim (a "Tax Claim"); provided, however, the failure to give such notice
shall not affect the indemnification provided pursuant to Section 11.3(a) or (b)
except to the extent that Sellers have been actually prejudiced as a result of
such failure. Notice to the Sellers' Representative hereunder will constitute
notice to Sellers.
(d) The Sellers' Representative and Purchaser shall jointly control and
participate in all proceedings taken in connection with any Tax Claim relating
to Taxes of the Acquired Companies for a Straddle Period or any Tax Claim
relating to a taxable period ending on or prior to the Closing Date. Neither the
Sellers' Representative nor Purchaser shall settle any such Tax Claim without
the prior written consent of the other parties, which consent shall not be
unreasonably withheld, conditioned or delayed. Each party shall pay its own
expenses with respect to any such Tax Claim.
(e) Purchaser shall control all proceedings with respect to any Tax Claim
relating to a taxable period beginning after the Closing Date.
(f) Purchaser and the Acquired Companies on the one hand, and the Sellers'
Representative on the other, shall reasonably cooperate in contesting any Tax
Claim, which cooperation will include the retention and, upon request, the
provision to the requesting Person of records and information which are
reasonably relevant to such Tax Claim, and making employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided hereunder or to testify at proceedings relating to such
Tax Claim.
(g) Sellers shall pay and shall hold each Purchaser Indemnified Person
harmless from all withholding, transfer, documentary, sales, use, registration
and similar Taxes (including all applicable real estate transfer or gains taxes
and state transfer taxes, and related fees, including any penalties interest and
additions to Tax) attributable to or resulting from the sale of the Shares and
for which Sellers are responsible under Legal Requirements ("Transfer Taxes").
The procedures set forth in Section 11.3(a) and (b) apply to Transfer Taxes. On
or prior to the Closing, the Sellers' Representative shall present Tax receipts
or other documents, satisfactory to Purchaser, demonstrating that all Transfer
Taxes for which Sellers are responsible have been paid in full.
11.4. INDEMNIFICATION AND PAYMENT OF DAMAGES BY PURCHASER. Purchaser agrees to
indemnify and hold harmless the Seller Indemnified Persons, and will pay to
Seller Indemnified Persons the amount of any Damages arising, directly or
indirectly, from or in connection with:
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(a) any Breach of any representation or warranty made by Purchaser in this
Agreement or by Purchaser (without giving effect to any supplement to any
Schedule) or any other certificate or document delivered by Purchaser pursuant
to this Agreement (provided, however, that this Section 11.4(a) shall only apply
if the Closing shall not occur),
(b) any Breach of any representation or warranty made by Purchaser in this
Agreement as if such representation or warranty were made on and as of the
Closing Date (without giving effect to any supplement to any Schedule), other
than any such Breach that is disclosed in a supplement to any Schedule and is
expressly identified in the certificate delivered pursuant to Section
2.5(c)(iii) as having caused the condition specified in Section 9.1 not to be
satisfied;
(c) any Breach by Purchaser of any covenant or obligation of Purchaser in
this Agreement;
(d) any employee-related costs, expenses and Taxes (and any fines or
penalties for non-payment thereof) relating to all periods on or after the
Closing Date;
(e) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding made by such
Person with Purchaser (or any Person acting on Purchaser's behalf) in connection
with any of the Contemplated Transactions;
(f) any (i) Environmental, Health and Safety Liabilities to the extent
arising out of or relating to: (A) the operation at any time after the Closing
Date of the Facilities, or (B) any Hazardous Materials or other contaminants,
wherever located, that were generated, transported, stored, treated, Released by
any Acquired Company at any time after the Closing Date; and (ii) any bodily
injury (including illness, disability and death, and regardless of when any such
bodily injury occurred, was incurred or manifested itself), property damage
(including trespass, nuisance, wrongful eviction and deprivation of the use of
real property), or other damage of or to any Person, in any way arising from (A)
any Hazardous Activity conducted with respect to the Facilities or the operation
of the Facilities after the Closing Date on or at the Facilities (or present on
any other property, if such Hazardous Material emanated from any of the
Facilities and was Released from any of the Facilities after the Closing Date)
or (B) Released by any Acquired Company or any other Person for whose conduct
they are or may be held responsible, at any time after the Closing Date; and
(g) any liability for Taxes imposed on the Acquired Companies at the
corporate level which result solely from any post-Closing restructuring or
recapitalization of any of the Acquired Companies by Purchaser or Greatbatch.
For the avoidance of doubt, there is no indemnification provided by Purchaser or
Greatbatch with respect to any withholding or other Taxes that may be imposed as
a result of either (i) the sale of the Shares or (ii) any of the theories
described on Schedule 4.2(b).
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11.5. TIME LIMITATIONS.
(a) If the Closing occurs, Sellers will have no liability (for
indemnification or otherwise) with respect to:
(i) any representation or warranty unless notice is given to the
Sellers' Representative prior to the expiration of the following periods:
(A) for the Fundamental Warranties, four (4) years after the
Closing Date;
(B) for the representations and warranties set forth in Section
4.11, until 60 days following the expiration of all applicable statute
of limitations;
(C) for all other representations and warranties until eighteen
(18) months after the Closing Date,
(ii) any covenant or obligation, other than under this Section 11, to
be performed and complied with by PMH or Sellers prior to or after the
Closing Date unless Purchaser notifies Sellers' Representative on or before
the second anniversary of the Closing Date; or
(iii) indemnifiable matters under the following clauses of Section
11.2 and under Section 11.3, unless notice is given to the Sellers'
Representative prior to the expiration of the periods ("Notice Periods")
set forth below:
(A) For Section 11.2(g), the Notice Period shall continue for
four (4) years after the Closing Date;
(B) For Sections 11.2(e), 11.2(f) and 11.2(h), there shall be no
time limitation; and
(C) For Section 11.3, the Notice Period shall run until 60 days
after the expiration of all applicable statute of limitations.
The parties hereby expressly waive Purchaser's obligations pursuant to, and the
application of, art. 201 of the Swiss Code of Obligations.
(b) If the Closing occurs, Purchaser will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date unless, on or before the first anniversary of the Closing Date, the
Sellers' Representative notifies Purchaser of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Sellers.
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(c) If the Closing does not occur, Sellers and Purchaser will have
liability under Section 11.2 or 11.4, respectively, only if notice is given to
the other party(s) within one year after this Agreement has been terminated.
(d) The Indemnifying Party's obligations to indemnify for any matter notice
of which is given within the applicable notice period will continue thereafter
until satisfied.
11.6. LIMITATIONS ON AMOUNT--SELLERS.
(a) Sellers will have no liability (for indemnification or otherwise) with
respect to the matters described in Sections 11.2(b), 11.2(d) and 11.2(g) until
Purchaser has suffered Damages in excess of a CHF 480,000 aggregate threshold
(the "Threshold"), at which point Sellers will be obligated to indemnify
Purchaser from and against all such Damages, regardless of the Threshold,
including those Damages counted in reaching the Threshold. For clarification
purposes, the Threshold shall not apply with respect to Sellers' indemnification
obligations under Section 11.2(a), 11.2(c), 11.2(e), 11.2(f) and 11.2(h) or
Section 11.3.
(b) Notwithstanding anything to the contrary in this Agreement, but subject
to Sections 11.6(c) and 11.6(d) below, the aggregate liability of the Sellers
under or in connection with this Agreement or the Contemplated Transactions
shall be limited to CHF 13,000,000.
(c) This Section 11.6 does not apply to any representation or warranty that
was made by PMH or the Sellers fraudulently, and Sellers will be liable for all
Damages with respect to Breaches of any such representation or warranty;
provided, however, that in no event will any of the Sellers who shall not have
made such fraudulent representation or warranty have liability for Damages
arising therefrom in an amount in excess of the then remaining balance of the
Escrow Amount.
(d) To the extent that any Purchaser Indemnified Person has a claim with
respect to matters described in Sections 11.2(a), 11.2(c), 11.2(f) and 11.2(h),
and such claim is not fully covered by either (i) the Escrow Amount, or (ii) the
terms of the R&W Insurance Policy, then the maximum amount of liability each
Seller will have for indemnification to the Purchaser Indemnified Person for
such claim will be the amount of the Purchase Price received by such Seller.
11.7. LIMITATIONS ON AMOUNT--PURCHASER.
(a) Purchaser will have no liability (for indemnification or otherwise)
with respect to the matters described in clause (a) or (b) of Section 11.4 until
Sellers shall has suffered Damages in excess of a CHF 480,000 threshold, (at
which point Purchaser will be obligated to indemnify the Seller Indemnified
Persons from and against all such Damages, regardless of the threshold,
including those Damages counted in reaching the Threshold.
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(b) This Section 11.7 will not apply to, and Purchaser will be liable for
all Damages with respect to (i) any Breach of any representation or warranty
that was made by Purchaser under Section 5.1, 5.2 or 5.4, (ii) any
representation or warranty that was made by Purchaser fraudulently, and (iii)
Purchaser's indemnification obligations pursuant to Section 11.4(g).
11.8. PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Party under Section 11.2 or
11.4 of notice of the commencement of any Proceeding against it, such
Indemnified Party will, if a claim is to be made against an Indemnifying Party
under such Section, give notice to the Indemnifying Party of the commencement of
such claim, but the failure to notify the Indemnifying Party will not relieve
the Indemnifying Party of any liability that it may have to any Indemnified
Party, except to the extent that the Indemnifying Party demonstrates that (i)
the defense of such action is prejudiced by the Indemnifying Party's failure to
give such notice, or (ii) the notice was delivered after the expiration of the
applicable indemnification time limitation set forth in Section 11.5. above
(b) If any Proceeding referred to in Section 11.8(a) is brought against an
Indemnified Party and, in accordance with this Section 11.8 and Section 12.4
hereof, it gives notice to the Indemnifying Party of the commencement of such
Proceeding, the Indemnifying Party will, unless the claim involves Taxes, be
entitled to participate in such Proceeding and, to the extent that it wishes
(unless (i) the Indemnifying Party is also a party to such Proceeding and the
Indemnified Party determines in good faith that joint representation would be
inappropriate, or (ii) the Indemnifying Party fails to provide reasonable
assurance to the Indemnified Party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding), to
assume the defense of such Proceeding with counsel satisfactory to the
Indemnified Party and, after notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such Proceeding, the
Indemnifying Party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Party under this Section 11 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the Indemnified Party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
Indemnifying Party assumes the defense of a Proceeding, (A) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (B) no
compromise or settlement of such claims may be effected by the Indemnifying
Party without the Indemnified Party's consent unless (Y) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
Indemnified Party, and (Z) the sole relief provided is monetary damages that are
paid in full by the Indemnifying Party; and (C) the Indemnified Party will have
no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an Indemnifying Party of the
commencement of any Proceeding and the Indemnifying Party does not, within ten
Business Days after the Indemnified Party's notice is given, give notice to the
Indemnified Party of its election to assume the defense of such Proceeding, the
Indemnifying Party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the Indemnified Party.
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(c) Notwithstanding the foregoing, if an Indemnified Party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive
right to defend, compromise, or settle such Proceeding, but the Indemnifying
Party will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which consent may not be
unreasonably withheld, conditioned or delayed).
11.9. PROCEDURE FOR INDEMNIFICATION-- OTHER CLAIMS. A claim for indemnification
under Sections 11.2, 11.3 or 11.4 (as applicable) for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought which notice shall set forth in reasonable detail the
basis for such claim to the extent their known by such party.
11.10. OTHER RECOVERIES. The amount which an Indemnifying Party is required to
pay to, for, or on behalf of any Indemnified Party pursuant to this Section 11
will be reduced by (a) any insurance proceeds actually recovered by the
Indemnified Party, pursuant to the R&W Insurance Policy or otherwise, in
reduction of the related indemnifiable Damages net of (i) any reasonable costs
incurred in recovering such amounts under such insurance policies, and (ii)
co-payment, retrospective premium adjustment, and increased premiums resulting
from or related to the event resulting in indemnifiable Damages, (b) the Tax
benefit actually realized by the Indemnified Party relating to the event
resulting in indemnifiable Damages, (c) the amount of which the Damages of the
Indemnified Party arises as a result of any new Legal Requirement not in force
on the date of this Agreement (other than as contemplated by the proviso to
Section 11.2(g)), (d) the amount, on a proportionate basis, by which the Damages
have been increased by a negligent or intentional failure of the Indemnified
Party or its Related Persons to mitigate the Damages; provided, however, that
under no circumstances will any action by any Indemnified Party taken to comply
with any applicable Legal Requirement constitute a failure to mitigate damages,
and (e) with respect to claims of the Purchaser Indemnified Persons for the
matters described in Section 11.2, the amount by which the Damage is covered by
any reserve made for this specific category of claim set forth in the Interim
Financial Statements.
11.11. EXCLUSIVITY. The parties agree that, except in the case of fraud, their
sole and exclusive remedy for, under or in connection with this Agreement,
including any violations or any breach of this Agreement, is a claim under and
in accordance with the provisions of this Section 11.
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11.12. DISPUTE RESOLUTION.
(a) If any dispute arises (i) out of or relating to, this Agreement or any
alleged Breach thereof, (ii) with respect to any of the transactions or events
contemplated hereby or (iii) with respect to any Person's right to
indemnification ("Dispute"), the party desiring to resolve such Dispute shall
deliver a written notice describing such Dispute with reasonable specificity to
the other parties ("Dispute Notice"). If any party delivers a Dispute Notice
pursuant to this Section 11.12, the Chief Executive Officers of the parties or
their designees involved in the Dispute shall meet at least twice within the 30
day period commencing with the date of the Dispute Notice and in good faith
shall attempt to resolve such Dispute, including any rejected indemnification
claim. If any Dispute is not resolved or settled by the parties as a result of
negotiation pursuant to Section 11.12, the parties shall submit the Dispute to
arbitration in accordance with Section 12.11.
(b) The provisions of this Section 11.12 and of Section 12.11 will not
preclude Purchaser from seeking an injunction or other equitable relief to
enforce the provisions of Section 12.3 of this Agreement.
11.13. NO RECOURSE AGAINST DIRECTORS.
(a) From the Closing Date, Purchaser, Greatbatch and the Acquired Companies
shall not make any claim against any director of any Acquired Company in
connection with his acts or omissions as a director of such Acquired Company
during the period ending with the Closing Date, under Swiss law including,
without limitation, in accordance with article 752 et seq. of the Swiss Code of
Obligations, except for fraud or criminal or willful misconduct on the part of
such director. Any such potential claims (whether known at date hereof or not)
are hereby unconditionally and irrevocably waived by the Purchaser on its own
behalf and on behalf of Greatbatch and, as from the Closing Date, on behalf of
the Acquired Companies.
(b) Purchaser shall ensure that the first shareholders' meetings of the
Acquired Companies following the Closing Date will grant discharge to the
resigning members of the board of directors of the Acquired Companies in
connection with their acts or omissions as directors of the Acquired Companies
for their time of service during the period of the business year 2007 ending
with the Closing Date. Purchaser will hold such shareholders' meeting either on
the Closing Date or as soon as permissible thereafter, pursuant to applicable
Legal Requirements.
11.14. PRE-CLOSING SELLING SHAREHOLDERS. Subject to completion of the Closing
and completion of the Pre-Closing Share Transfers, the Pre-Closing Selling
Shareholders will have no obligation of any kind whatsoever to indemnify
Purchaser or any other Purchaser Indemnified Person under this Section 11.
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11.15. PMH NOT AN INDEMNIFYING PARTY. All of the parties covenant and agree
that, after Closing, under no circumstances whatsoever will any Person have any
claim against PMH for indemnification under this Agreement (or otherwise) on
account of the representations and warranties of PMH contained in Sections 3 and
4 and that Sellers are assuming any and all legal responsibilities for a breach
of any such representations and warranties by PMH on the terms and subject to
the conditions contained in this Section 11.
12. GENERAL PROVISIONS
12.1. EXPENSES.
(a) Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, accountants and investment bankers. In furtherance of the foregoing,
Sellers shall specifically bear all Transaction Expenses.
(b) Purchaser and Sellers will each pay one half of the fees in connection
with any required filing under any Competition Law.
(c) Purchaser and Sellers will each pay one half of any notary fees or
charges required in connection with the Deeds of Transfer.
(d) In the event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
12.2. PUBLIC ANNOUNCEMENTS.
(a) PMH, Sellers and Purchaser agree that, promptly after the execution and
delivery of this Agreement or at such times as otherwise agreed upon by the
parties, they shall each issue a press release in form reasonably acceptable to
the other. Unless required by Legal Requirements, any other public announcement
or similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued prior to the Closing, if at all, at such time and in
such manner as Purchaser and PMH may mutually determine. Prior to the Closing,
Purchaser and PMH will consult with each other concerning the means by which the
Acquired Companies' employees, customers and suppliers and others having
dealings with the Acquired Companies will be informed of the Contemplated
Transactions, and Purchaser will have the right to be present for any such
communication.
(b) With respect to public communications on the Closing Date or otherwise
with respect to the Closing, PMH, the Sellers' Representative and Purchaser
shall consult in good faith regarding appropriate press releases and, unless
otherwise required by Legal Requirements, the form and content of, any press
release, public announcement or similar publicity relating to the Closing, the
Acquired Companies and the parties will be mutually determined.
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12.3. CONFIDENTIALITY.
(a) Between the date of this Agreement and the Closing Date, each of the
parties will maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Purchaser and the Acquired Companies to
maintain in confidence, and not use to the detriment of another party or an
Acquired Company any written, oral or other information obtained in confidence
from another party or an Acquired Company in connection with this Agreement or
the Contemplated Transactions, unless (i) such information is 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, (ii) 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 (iii) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
(b) If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
(c) Nothing herein contained is intended to void, replace in whole or in
part or limit the application of any Confidentiality Agreements previously
entered into by and between the parties or their Related Persons which shall
remain in full force and effect in accordance with the terms thereof.
12.4. 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 (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), 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):
Sellers or Sellers' Representative:
-----------------------------------
Patrick Berdoz
50 Devyn Drive
Chester Springs, PA 19425-2220
Facsimile: +41 32 358 01 00
and
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Ulrich Geilinger
Lowenstrasse 29
CH-80001 Zurich
Facsimile: +41 43 888 7172
PMH:
----
P Medical Holding S.A.
Precimed SA (Switzerland) - World Headquarters
L'Echelette 7
2534 Orvin
Switzerland
Attention: Patrick Berdoz, President
Facsimile: +41 32 358 01 00
in each case, with a copy to:
Fox Rothschild LLP
747 Constitution Drive, Suite 100
Exton, PA 19341
Attention: Michael S. Harrington, Esq.
Facsimile: 610-458-7337
Purchaser:
----------
c/o Greatbatch, Inc.
9645 Wehrle Drive
Clarence, NY 14031
Attention: Corporate General Counsel
Facsimile No.: 716-759-5815
with a copy to:
Hodgson Russ LLP
The Guaranty Building
140 Pearl Street
Buffalo, New York 14202
Attention: Robert B. Fleming, Jr.
Kristy L. Berner
Facsimile No.: 716-849-0349
12.5. FURTHER ASSURANCES; INFORMATION.
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(a) The parties agree (i) to furnish upon request to each other such
further information, (ii) to execute and deliver to each other such other
documents, and (iii) to do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
(b) From and after the Closing, the Sellers' Representative will be
allowed, upon reasonable request, to inspect and copy at Sellers' expense the
business records and accounts of PMH. Purchaser agrees with Sellers that PMH
shall not destroy or abandon any business records or accounts relating to the
Acquired Companies except upon thirty (30) days' advance written notice to the
Sellers' Representative for a period of five (5) years thereafter. If the
Sellers' Representative requests the surrender of such records or accounts, then
PMH shall surrender, at Sellers' Representative expense, such records or
accounts so required rather than proceeding with such destruction.
12.6. PREVAILENCE. The parties expressly agree that in case of discrepancy this
Agreement shall prevail on all agreements entered into to give effect to the
sale of the Shares.
12.7. WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such 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. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party, (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given, and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
12.8. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including
without limitation the Letter of Intent between Greatbatch, Inc. and Precimed SA
dated on or about September 25, 2007) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. The
Sellers' Disclosure Schedule is intended to qualify Sellers' disclosures under
this Agreement and to have legal effect in relation thereto, but not to be a
part of this Agreement. This Agreement may not be amended except by a written
agreement executed by the party to be charged with the amendment.
12.9. 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, except that Purchaser may assign any of its rights under this
Agreement to any Subsidiary of Purchaser or in connection with any financing,
only so long as such assignment does not in any manner adversely change the tax
treatment of the Contemplated Transactions for any of the Sellers. 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. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
73
12.10. 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 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.
12.11. ARBITRATION. Subject to Section 11.12, any dispute, controversy or claim
arising out of relating to this Agreement, including the termination, validity,
invalidity, or any breach thereof, shall be settled by arbitration in accordance
with the Swiss Rules of International Arbitration of the Swiss Chamber of
Commerce in force on the date when the notice of arbitration is submitted in
accordance with these rules. There shall be three arbitrators, named in
accordance with such rules. The arbitration will be conducted in the English
language in the city of Geneva, Switzerland. The fees and expenses of the
arbitrators in any arbitration conducted pursuant to this Section 12.11 shall be
borne by Sellers and Purchaser in inverse proportion as they may prevail on the
matters resolved by the arbitrators, which proportionate allocation will also be
determined by the arbitrators and be included in the final decision of the
arbitrators. The determination of the arbitrators, absent fraud, shall be deemed
a final arbitration award that is binding on Purchaser and Sellers, and no party
shall seek further recourse to courts, other tribunals or otherwise, other than
to enforce to the final decision of the arbitrators. Judgment may be entered to
enforce the final decision of the arbitrators in any court having proper
jurisdiction.
12.12. 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 references to
"Schedule" or "Schedules" refer to the corresponding Schedule or Schedules
attached to or set forth in the Sellers' Disclosure Schedule. 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.
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12.13. TIME OF ESSENCE. With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
12.14. GOVERNING LAW. This Agreement is governed by the laws of Switzerland,
without regard to conflicts of laws principles.
12.15. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
[SIGNATURES APPEAR ON NEXT PAGE]
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
PURCHASER: GREATBATCH LTD.
- ----------
By:_________________________________________
Name: Thomas J. Mazza
Title: Senior Vice President and Chief
Financial Officer
GREATBATCH: GREATBATCH, INC.
- -----------
By:_________________________________________
Name: Thomas J. Mazza
Title: Senior Vice President and Chief
Financial Officer
PMH: P MEDICAL HOLDING SA
- ----
By:_________________________________________
Name:
Title:
SELLERS' REPRESENTATIVE:
- ------------------------ --------------------------------------------
Patrick Berdoz, as Sellers' Representative
--------------------------------------------
Ulrich Geilinger, as Sellers' Representative
SELLERS:
- -------- ----------------------------------------------
John Ayliffe
----------------------------------------------
Patrick Berdoz
----------------------------------------------
Fabien Berdoz
----------------------------------------------
Andre Lechot
NATIONAL CHRISTIAN CHARITABLE FOUNDATION, INC.
By:___________________________________________
Name:
Title:
----------------------------------------------
Patrick White
----------------------------------------------
Antonio Fiorentini
----------------------------------------------
Pierre-David Bourgeois
----------------------------------------------
Hugh Davies
----------------------------------------------
Barbara Lyons
HBM BIOVENTURES (CAYMAN) LTD.
By:___________________________________________
Name:
Title
HBM BIOCAPITAL (EUR) L.P.
By:___________________________________________
Name:
Title:
HBM BIOCAPITAL (US) L.P.
By:___________________________________________
Name:
Title:
PRIVATE LIFE BIOMED AG
By:___________________________________________
Name:
Title:
ALSTERTOR PRIVATE LIFE GMBH & CO. KG
By:___________________________________________
Name:
Title:
HEB SALES INC.
By:___________________________________________
Name:
Title:
----------------------------------------------
Philippe Fehlbaum
----------------------------------------------
Yasmin Sagara
----------------------------------------------
Jeff Stello