THEKEN SPINE UNIT PURCHASE AGREEMENT
Exhibit 10.1
THEKEN SPINE UNIT PURCHASE AGREEMENT
THIS THEKEN SPINE UNIT PURCHASE AGREEMENT, dated as of July
23, 2008 (this
“Agreement”), by and among Integra LifeSciences Holdings Corporation, a Delaware
corporation (the “Buyer”), Theken Spine, LLC, an Ohio limited liability company (the
“Company”), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a resident of the state of Ohio and a Member of the Company
(“RRT”), and the other Members of the Company signatory hereto (such Members together with
RRT, each a “Seller”, collectively, the “Sellers”). Each of the Buyer, the Company
and the Sellers is sometimes referred to herein as a “Party” and, collectively, as the
“Parties”.
WHEREAS, the Buyer wishes to purchase and acquire from the Sellers, and the Sellers wish to
transfer and sell to the Buyer, 100% of the Company’s issued and outstanding Units (as defined
below) of the Company according to the terms and conditions set forth herein;
WHEREAS, as a condition to the closing of the transactions contemplated hereby, RRT and the
Company shall cause each Appreciation Rights Holder (as defined below) to enter into an
Appreciation Rights Closure Agreement (as defined below), and each Ex-Appreciation Rights Holder
(as defined below) to enter into an Appreciation Rights Termination Agreement (as defined below),
in either case with the Company, whereby all Appreciation Rights (as defined below) held by such
Appreciation Rights Holder or Ex-Appreciation Rights Holder shall be cancelled and extinguished
upon the terms and conditions set forth in the Appreciation Rights Closure Agreement and
Appreciation Rights Termination Agreement respectively;
WHEREAS, the board of directors of the Buyer, and the Manager and Members of the Company have
approved this Agreement and the transactions contemplated hereby;
WHEREAS, concurrently herewith, the Buyer, RRT, Theken Disc, LLC, an Ohio limited liability
company (“Theken Disc”), and the other members of Theken Disc shall enter into that certain
Theken Disc Unit Purchase Agreement, pursuant to which the Buyer shall purchase and acquire 100% of
the outstanding membership units of Theken Disc according to the terms set forth therein (the
“Theken Disc Purchase Agreement”); and
WHEREAS, concurrently herewith, the Buyer, RRT, Therics, LLC, an Ohio limited liability
company (“Therics”), and AFBS, Inc., a Virginia corporation, shall enter into that certain
Therics Unit Purchase Agreement, pursuant to which the Buyer shall purchase and acquire 100% of the
outstanding membership units of Therics according to the terms set forth therein (the “Therics
Purchase Agreement”, and together with this Agreement and the Theken Disc Purchase Agreement,
collectively, the “Purchase Agreements”) (the transactions referred to in the Purchase
Agreements referred to herein, collectively as the “Transactions”).
NOW, THEREFORE, in consideration of the mutual covenants and premises contained in this
Agreement and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties to this Agreement agree as follows:
ARTICLE I.
DEFINITIONS
DEFINITIONS
Section 1.1 Certain Defined Terms. As used in this Agreement the following terms
shall have the following meanings:
“Adjusted LIBOR” means a rate of interest equal to the sum of (i) the rate published
in The Wall Street Journal from time to time as the one year “London interbank offered rate, or
Libor”, plus (ii) two percent (2%).
1
“Affiliate” as applied to any specified Person means (a) any director, officer or
employee of such Person, (b) any direct or indirect holder of ten percent (10%) or more of any
class of stock (or other equity interest) of such Person, (c) any spouse, parent, sibling, or
descendant (by blood or adoption) of such Person, (d) any corporation, company, trust, partnership
(limited or general), or limited liability company that is, in whole or in part, for the benefit of
or owned by such Person or any Person specified in clauses (a), (b) or (c) hereof, and (e) any
other Person that, directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, “control” (including with
correlative meanings, the terms “controlling,” “controlled by,” and “under
common control with”) as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of that Person,
whether through ownership of voting securities or by contract or otherwise. For the avoidance of
doubt, each of the Theken Companies shall be considered to be an Affiliate of the Buyer, and vice
versa, after the Closing.
“Allocation Schedule” means the schedule attached hereto as Exhibit A;
provided, however, that the Parties agree that the Allocation Schedule and Schedule 5.2.2
of the Company Disclosure Schedule shall be updated by Sellers immediately prior to the Closing
to reflect any changes permitted under Section 7.1.4 between the date hereof and the
Closing Date.
“Ancillary Agreements” means the RRT Employment Agreement, the Non-Competition
Agreements, Appreciation Rights Closure Agreements, Appreciation Rights Termination Agreements,
Real Estate Leases, Equipment Lease, and the Aircraft Usage Agreement.
“Appreciation Right(s)” means those appreciation rights granted by the Company to any
Person under any Appreciation Rights Plan, including, without limitation, any ancillary documents
and agreements related thereto or entered into in connection therewith. For the avoidance of any
doubt, specifically excluded from the definition of “Appreciation Rights” are any and all Units.
“Appreciation Rights Closure Agreements” means the agreements, in the form attached
hereto as Exhibit B, to be entered into between the Company and each of the applicable
Appreciation Rights Holders identified on Schedule 5.2.2 of the Company Disclosure Schedule
prior to the Closing Date; provided, however, that the Parties may agree to modify the form of
the Appreciation Rights Closure Agreement which terminates the Appreciation Rights granted
pursuant to the Theken Spine, LLC Appreciation Rights Plan for Employees and Distributors dated
January 1, 2005.
2
“Appreciation Rights Holder” means the holder of any Appreciation Rights immediately
prior to the Closing, and specifically does not mean any Ex-Appreciation Rights Holder. A schedule
of the holders of Appreciation Rights as of the date of this Agreement is attached hereto as
Schedule 5.2.2 of the Company Disclosure Schedule, which Schedule 5.2.2 of the
Company Disclosure Schedule indicates which holders of Appreciation Rights the Parties contemplate
will be, immediately prior to Closing, Appreciation Rights Holders and Ex-Appreciation Rights
Holders respectively; provided, further, that the Parties agree that Schedule 5.2.2 of the
Company Disclosure Schedule shall be updated by Sellers immediately prior to the Closing to reflect
any change between the date hereof and the Closing Date and thereby reflect on said schedule the
actual Appreciation Rights Holders and actual Ex-Appreciation Rights Holders as of the Closing
Date.
“Appreciation Rights Plans” means the following: (i) the Theken Surgical, LLC
Appreciation Rights Plan dated December 31, 2003, (ii) the Theken Spine, LLC Appreciation Rights
Plan for Executive Presidents dated January 1, 2005, (iii) the Theken Spine, LLC Appreciation
Rights Plan for Employees and Distributors dated January 1, 2005, and (iv) the Theken Spine, LLC
Appreciation Rights Plan for Consultants dated January 1, 2005, amended as of March 11, 2005,
including any ancillary documents and agreements related thereto or entered into in connection
therewith (e.g., unit appreciation agreements, non-competition agreements, etc.), and any other
similar plan, agreement or arrangement maintained by the Company at any time prior to Closing
pursuant to which Appreciation Rights or other deferred compensation incentives have been or may be
granted. For the avoidance of any doubt, there is no “Theken Spine, LLC Appreciation Rights Plans
for Employees, Distributors and Medical Advisors dated January 1, 2006”, and as such, any unit
appreciation agreement or non-competition agreement referencing the same was actually issued
pursuant to the Theken Spine, LLC Appreciation Rights Plan for Employees and Distributors dated
January 1, 2005.
“Appreciation Rights Termination Agreements” means the agreements to be entered into
between the Company and each of the applicable Ex-Appreciation Rights Holders identified on
Schedule 5.2.2 of the Company Disclosure Schedule prior to the Closing Date, which shall be
in form and substance reasonably satisfactory to Buyer.
“Appreciation Unit” means a measure of an Appreciation Rights Holder’s Appreciation
Rights.
“Business Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by Law to be closed in the State of New York.
“Buyer Material Adverse Effect” means a material adverse effect on the business,
assets, liabilities, financial condition, prospects, cash flows or results of operations of the
Buyer, or on the ability of the Buyer to complete the Closing pursuant to the terms hereof or
comply with its obligations hereunder taken as a whole, other than to the extent such effects are
due to: (a) the announcement of the transactions contemplated by this Agreement; (b) economic
factors
affecting the national, regional or world economy; (c) factors generally affecting the
industry or markets, in which the Buyer operates; or (d) any act or omission of any Seller, any
Appreciation Rights Holder or, prior to the Closing, the Company.
3
“Change of Control Event” means: (i) the sale or other disposition of all or
substantially all of the consolidated assets of Buyer (or any successor thereto) and its
Subsidiaries, taken as a whole, in one transaction or series of related transactions to a Person
(who is not an Affiliate of the Buyer) (irrespective of the structure or form that such asset sale
or disposition takes – e.g., asset sale, stock sale, merger or consolidation involving
Subsidiaries of the Buyer); (ii) a merger, consolidation, refinancing or recapitalization as a
result of which the holders of the Buyer’s issued and outstanding voting securities immediately
before such transaction own or control less than fifty percent (50%) of the total voting power of
all classes of securities entitled to vote generally in the election of the board of directors or
similar governing body of the continuing or surviving entity immediately after such transaction;
(iii) the acquisition (in one or more transactions) by any Person or Persons acting together or
constituting a “group” under Section 13(d) of the Exchange Act (other than ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and/or any of his Affiliates), together with any Affiliates thereof of beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act), of securities representing more than fifty percent
(50%) of the total voting power of all classes of securities entitled to vote generally in the
election of the Buyer’s board of directors or similar governing body, excluding any acquisition of
such securities by the Buyer or any Person owned, directly or indirectly, by the stockholders of
Buyer in substantially the same proportions as such stockholders’ ownership of the Buyer; or (iv) a
merger, consolidation, sale, refinancing or recapitalization or other transaction, pursuant to
which a Person (who is not an Affiliate of the Buyer) acquires, directly or indirectly (including,
without limitation, through the acquisition of a direct or indirect parent of the Company (other
than Buyer)), all or substantially all of the equity interests or assets of the Company; provided,
however, none of the transactions described under clause (ii) shall constitute a Change of Control
Event if, immediately following such transaction, no Person or Persons acting together or
constituting a “group” under Section 13(d) of the Exchange Act (other than ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and/or any of his Affiliates) beneficially own, directly or indirectly, more than thirty percent
(30%) of the total voting power of all classes of securities entitled to vote generally in the
election of the Buyer’s board of directors or similar governing body; provided, further, that none
of the transactions described under clauses (ii) and (iii), shall constitute a Change of Control
Event if, at all times following such transaction and prior to the end of the Second Earn-Out
Period, at least a majority of the board of directors of the Buyer (or the equivalent governing
body of any surviving entity from such transaction) are individuals who were members of the board
of directors of Buyer immediately prior to such transaction, or individuals whose appointment or
election was endorsed by a majority of the individuals who were members of the board of directors
of Buyer immediately prior to such transaction.
“Closing Cash Amount” means the actual cash and cash equivalents of the Company at the
Closing, as determined pursuant to the terms of Section 2.4.
“Closing Funds Flow Memo” means the instructions, substantially in the form of
Exhibit C, attached hereto, which shall be executed by the Member Representative and the
Buyer prior to Closing and pursuant to which the Member Representative shall provide to the Buyer,
consistent with the Allocation Schedule and the terms and conditions of this Agreement and the
Ancillary Agreements, instructions for payments to be made by the Buyer hereunder at Closing.
“Closing Payment Holdback Amount” means Two Hundred Thousand Dollars ($200,000).
4
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
“Code” means the Internal Revenue Code of 1986, as amended.
“Combined Closing Payment Amount” means Seventy-Five Million Dollars ($75,000,000), as
the applicable portion of such amount may be adjusted pursuant to: (i) Section 2.4 of this
Agreement, (ii) Section 2.4 of the Theken Disc Purchase Agreement, and/or (iii) Section 2.4 of the
Therics Purchase Agreement, as the case may be.
“Company Business” means the business and operations of the Company in the manner in
which the same have been conducted on or prior to the date hereof.
“Company Disclosure Schedule” means the disclosure schedules delivered by the Company
and Sellers to the Buyer in connection with this Agreement.
“Company Expenses” means all fees and expenses incurred by the Company prior to
Closing, including but not limited to Transfer Taxes, in connection with this Agreement and the
other Transactions, including all fees and expenses of agents and/or representatives of the
Company, professionals and third-party service providers, but excluding any trade payables incurred
in the ordinary course of the Company Business and consistent with past practice of the Company
Business, all of which shall be set forth in reasonable detail on the Company Expense/Indebtedness
Certificate.
“Company Guarantees” means that certain (i) Corporate Guaranty, dated October 24,
2005, made by the Company in favor of Avfuel Corporation of Overland Park, Kansas, and (ii)
Guaranty, dated October 31, 2005, made by the Company in favor of Cessna Finance Corporation.
“Company Material Adverse Effect” means a material adverse effect on the business,
assets, liabilities, financial condition, prospects, cash flows or results of operations of the
Company, or on the ability of the Company or any Sellers to complete the Closing pursuant to the
terms hereof or comply with their obligations hereunder or that has a material adverse effect on
the Buyer’s ability to conduct and operate the Company Business after the Closing taken as a whole,
other than to the extent such effects are due to: (a) the announcement of the transactions
contemplated by this Agreement; (b) any changes in the national, regional or world economy or
capital, financial or securities markets generally, including changes in interest or exchange
rates; (c) factors generally affecting the industry or markets, in which the Company operates; (d)
any act or omission of the Buyer; (e) any events, circumstances, changes or effects arising from
the compliance with the terms of, or the taking of any action required by, this Agreement; (f) any
action taken (or omitted to be taken) by the Company, the Sellers or any of
their Affiliates at the written request or with the written consent of the Buyer; (g) changes
in Law, GAAP or applicable regulatory accounting requirements, or changes in interpretations
thereof by any Governmental Authority, except, in each case, as may have a material
disproportionate effect on the Company or any of its Affiliates relative to other comparable
companies operating in the industry in which the Company operates; or (h) any proposed Law, or any
proposed amendment to any existing Law, except, in each case, as may have a material
disproportionate effect on the Company or any of its Affiliates relative to other comparable
companies operating in the industry in which the Company operates, and not enacted into Law prior
to the Closing Date.
5
“Company Products” means those products developed and sold by the Company.
“Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of
September 13, 2006, between RRT, the Buyer, the Company and the other parties thereto.
“Contract(s)” means any and all written or oral contracts, agreements, evidences of
Indebtedness, loans, letters of credit, guarantees, leases (whether of real or personal property),
mortgage, notes, indentures, security or pledge agreements, franchise agreements, purchase orders,
licenses, easements, permits, instruments, commitments, arrangements, undertakings, options, powers
of attorney, covenants not to compete, covenants not to ▇▇▇, employment agreements, settlement
agreements or executory commitments to which the Company is a party or by which any of the
Company’s properties or assets are bound.
“Copyrights” means copyrights, copyright registrations, or any applications therefor,
in the United States or any foreign country, or any other right corresponding thereto throughout
the world, including, without limitation, moral rights.
“Damages” means any and all losses, liabilities, claims, deficiency, actions, causes
of action, awards, Judgments, payments, costs, expenses, interest, penalties, fines and other
damages, whether direct or indirect, all costs and expenses of investigating and defending any
Proceeding and any appeal therefrom (including reasonable attorneys’ fees) and all amounts paid
incident to any compromise or settlement of any such Proceeding, in each case, whether or not
involving a third-party claim.
“Earn-Out Acceleration Event” means the occurrence of either (a) a Change of Control
Event or (b) an Insolvency Event.
“Earn-Out Deductions” means any amounts deducted from, offset against or held back
from the First Earn-Out Amount and/or Second Earn-Out Amount by the Buyer pursuant to: (i)
Section 2.4.4(d) with respect to any Working Capital Deficiency Payment; (ii)
Section 11.6.1 (with respect to any Resolved Claim Amounts); and/or (iii) Section
11.6.2 with respect to any Unresolved Claims/Unresolved Claim Amounts.
“Earn-Out Payments” means the sum of (i) the First Earn-Out Payment, if any,
plus (ii) the First Earn-Out Adjustment Payment, if any, plus (iii) the Second
Earn-Out Payment, if any, plus (iv) the Second Earn-Out Adjustment Payment, if any,
plus (v) the Earn-Out
Acceleration Payment, if any, plus (vi) any Excess Holdback Payments, if any,
less (vii) any interest paid on any amounts listed in items (i)-(vi) of this definition.
“Earn-Out Period” means the twenty-four (24) month period commencing on the first day
of the fiscal quarter of the Buyer that immediately follows the fiscal quarter of the Buyer during
which the Closing occurs (e.g., if the Closing occurs during the third quarter of 2008, the
Earn-Out Period shall mean the 24-month period from October 1, 2008, through September 30, 2010);
provided, that if the Closing Date is on the first day of Buyer’s fiscal quarter, the Earn-Out
Period shall commence on the Closing Date.
6
“Encumbrance” means any lien (statutory or otherwise), pledge, option, mortgage,
security interest, claim, charge, easement, limitation, restrictive license, commitment, community
property interest, condition, equitable interest, right of first refusal, encroachment, restriction
(other than a restriction on transferability imposed solely by federal or state securities Laws) or
other encumbrance of any kind or nature whatsoever (whether absolute or contingent).
“Environmental Laws” means all applicable federal, state, and local laws, and all
rules or regulations promulgated thereunder, relating to pollution, protection of the environment
(including without limitation ambient air, surface water, ground water, land surface, subsurface
strata, wildlife, plants, or other natural resources), and/or protection of the health and safety
of persons from exposures to pollutants, contaminants, or hazardous substances in the environment,
including without limitation (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (“CERCLA”), (ii) the Toxic Substances Control Act, (iii) the
Hazardous Materials Transportation Act, (iv) the Resource Conservation and Recovery Act, (v) the
Clean Water Act, (vi) the Safe Drinking Water Act, (vii) the Clean Air Act, (viii) the Occupational
Safety and Health Act, (ix) the Federal Insecticide, Fungicide, Rodenticide Act, (x) the Atomic
Energy Act, and (xi) the Emergency Planning and Community Right-to-Know Act.
“Environmental Permit” means any permit, approval, identification number, license and
other authorization required under any applicable Environmental Law.
“Ex-Appreciation Rights Holder” means any former holder of Appreciation Rights who
enters into an Appreciation Rights Termination Agreement prior to the Closing Date thereby
terminating such holder’s Appreciation Rights, and specifically does not mean any Appreciation
Rights Holder. A schedule of the holders of Appreciation Rights with respect to whom it is
contemplated shall, immediately prior to Closing, be Appreciation Rights Holders and
Ex-Appreciation Rights Holders respectively is attached hereto as Schedule 5.2.2 of the
Company Disclosure Schedule; provided, further, that the Parties agree that Schedule 5.2.2
of the Company Disclosure Schedule shall be updated by Sellers immediately prior to the Closing
to reflect any change between the date hereof and the Closing Date and thereby reflect on said
schedule the actual Appreciation Rights Holders and actual Ex-Appreciation Rights Holders as of the
Closing Date.
“Excess or Obsolete Inventory” means any Inventory which, as of the date hereof: (i)
cannot be sold at current prices in the ordinary course of the Company Business, (ii) is not usable
in the production of current Company Products, or (iii) consists of on hand quantities in excess of
two (2) year’s projected sales or usage.
“Exchange” means the NASDAQ Global Select Market and/or any other stock exchange or
trading system on which the Buyer’s securities are listed or approved for trading, or otherwise
applicable to the Buyer.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“FDA” means the United States Food and Drug Administration, or any successor agency
thereto.
7
“First Earn-Out Adjustment Payment Date” means the date that is five (5) Business Days
following the date on which the final determination of the matters in dispute set forth in the
First Earn-Out Dispute Notice occurs in accordance with Section 2.5.1.
“First Earn-Out Amount” means an amount equal to the lesser of:
(i) Two Hundred Million Dollars ($200,000,000), less the Combined Closing Payment
Amount; and
(ii) an amount equal to two and one-half (2.5) times the First Earn-Out Period Trade
Sales, less the Combined Closing Payment Amount; provided, that if such amount is a
negative number the First Earn-Out Amount shall be zero.
“First Earn-Out Payment Date” means the date on which the First Earn-Out Payment is to
be made by Buyer, and specifically, is the date on which the First Earn-Out Statement is delivered
by Buyer to the Member Representative in accordance with Section 2.5.1.
“First Earn-Out Period” means the first twelve (12) months of the Earn-Out Period.
“First Earn-Out Period Trade Sales” means the Trade Sales during the First Earn-Out
Period.
“GAAP” means United States generally accepted accounting principles as in effect from
time to time, consistently applied.
“Governmental Authority” means any United States or foreign government, any state or
provincial or other political subdivision thereof, any province, city or municipality, any entity
exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the SEC, the IRS or any other United States or foreign
government authority, agency, department, board, commission or instrumentality of the United
States, any state of the United States or any political subdivision thereof or any foreign
jurisdiction, and any court, tribunal or arbitrator(s) of competent jurisdiction, and any United
States or foreign governmental or non-governmental self-regulatory organization, agency or
authority.
“Hazardous Materials” means (i) any petroleum, petroleum products, byproducts or
breakdown products, radioactive materials, asbestos-containing materials or polychlorinated
biphenyls, or (ii) any chemical, material or other substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any applicable Environmental Law.
“Health Care Laws” means (i) any and all federal and state fraud and abuse laws,
anti-bribery and anti-kickback laws, including, without limitation, the federal Anti-Kickback
Statute (42 U.S.C. § 1320a-7b(b)), the ▇▇▇▇▇ Law (42 U.S.C. § 1395nn), the civil False Claims Act
(31 U.S.C. § 3729), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code, the
regulations promulgated pursuant to such statutes and any and all other manual provisions, policies
or administrative guidance issued with respect to such fraud and abuse laws and which are
applicable to and binding upon the Company; (ii) the Health Insurance Portability and
Accountability Act of 1996 (Pub. L. No. 104-191) and the regulations promulgated thereunder and
which are applicable to and binding upon the Company; (iii) Medicare (Title XVIII of the Social
Security Act), the regulations promulgated thereunder and any and all other manual provisions,
policies or administrative guidance issued by the Center for Medicare and Medicaid Services and
which are applicable to and binding upon the Company; (iv) Medicaid (Title XIX of the Social
Security Act), the regulations promulgated thereunder and any and all other manual provisions,
policies or administrative guidance issued by the Center for Medicare and Medicaid Services and
which are applicable to and binding upon the Company; and (v) the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173) and the regulations promulgated
thereunder and which are applicable to and binding upon the Company; each of (i) though (v) as were
in effect at the time of Closing.
8
“Health Care Professionals” refers to the various individuals or entities (e.g.,
hospitals and hospital purchase managers, physicians, medical practice groups and managers, group
purchasing organizations, third-party payors, etc.) that purchase, lease, recommend, use, arrange
for the purchase or lease of, or prescribe the Company’s products in the United States.
“HSR Act” means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended.
“Indebtedness” of any Person means, without duplication, (i) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind; (ii) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments; (iii) all obligations
of such Person upon which interest charges are customarily paid (excluding obligations to pay
salary or benefits under deferred compensation or other benefit programs and any other pension
obligations); (iv) all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person; (v) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding current accounts payable
incurred in the ordinary course of business); (vi) all Indebtedness (excluding prepaid interest
thereon) of others secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Encumbrance on property owned or acquired by such
Person, whether or not the indebtedness secured thereby has been assumed; (vii) all guaranty
obligations of such Person; (viii) except for those items set
forth on Schedule 1.1 — Retained
Leases, all capital lease obligations of such Person; (ix) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit and letters of
guaranty; and (x) all obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances, surety bonds and performance bonds, whether or not matured.
Notwithstanding the above, Indebtedness does not include any trade payables incurred in the
ordinary course of the Company Business and consistent with past practice of the Company Business.
“Insolvency Event” shall occur when either the Buyer or LifeSciences, or their
respective successors: (i) institutes, commences or consents to the institution of (or otherwise
has instituted or commenced against either of them) any Proceeding related to its or their
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally; (ii) is unable to, or admits in writing its inability to, pay its
debts when they become due; (iii) dissolves or otherwise ceases its business operations.
9
“Intellectual Property Rights” means any or all of the following and all rights in,
arising out of, or associated therewith: all United States, international or foreign (i) Patents;
(ii) trade secrets and/or nonpublic know-how, including, for example, inventions, discoveries,
improvements, concepts, ideas, methods, processes, designs, schematics, drawings, formulae,
technical data, specifications, research and development information, technology, databases,
inventions for which patent applications have not yet been filed and other technical information,
and other rights in know-how and confidential or proprietary information; (iii) Copyrights;
(iv) rights in world wide web addresses and domain names and sites and applications and
registrations therefor; (v) Trademarks; and (vi) similar, corresponding or equivalent rights to any
of the foregoing anywhere in the world, including, without limitation, moral rights.
“Inventory” means inventories used in the Company Business, including the Company
Products, finished goods (including packaging material and promotional materials such as samples,
demos, loaners and prototypes), work-in-progress, raw materials, supplies, manufactured and
purchased parts and other materials, and any Excess or Obsolete Inventory.
“IRS” means the Internal Revenue Service of the United States, or any successor agency
thereto.
“Judgment” means any judgment, decision, consent decree, injunction, ruling or order
of any federal, state or local court or Governmental Authority or arbitrator that is binding on any
Person or its property under Applicable Law.
“Knowledge” means, with reference to the Company, the actual knowledge of any of the
following individuals after reasonable inquiry, and shall include all similar uses of the concept,
including “aware,” “known to” and “knowledge of”: RRT, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇.
“Law” means each provision of any currently existing federal, provincial, state, local
or foreign law, statute, by-law, ordinance, order, code, rule or regulation, promulgated or issued
by any Governmental Authority, as well as any Judgments or agreements issued or entered into by any
Governmental Authority and the common law of any jurisdiction.
“Liability” means direct or indirect, primary or secondary, liability, Indebtedness,
obligation, penalty, cost, or expense, claim, deficiency, guaranty or endorsement of or by any
Person of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.
“LifeSciences” means Integra LifeSciences Corporation, a Delaware corporation, and the
sole direct subsidiary of Buyer.
“Line of Credit” means that certain Commercial Note: Demand Line of Credit, dated
September 22, 2003, as modified by that certain Note Modification Agreement, dated as of May 2,
2005, by and between National City Bank N.A., a national banking association organized under the
laws of the United States, and the Company, as set forth on Schedule 5.7.1, items 294-296
of the Company Disclosure Schedule, as the same may be amended or modified prior to the Closing.
10
“Management Agreement” means that certain Management Agreement, dated as of October 1,
2005, by and between the Company and the Manager.
“Manager” means Foxtrot-Papa Management Company, LLC, an Ohio limited liability
company and the manager of the Company.
“Members” means the members of the Company (i.e., the holders and owners of the Units
of the Company as of the date of this Agreement) it being understood that said members are also
defined at times herein as the “Sellers”.
“Minor Modification” shall mean a modification in the packaging, labeling, design,
formulation, configuration or manufacturing methods of any product that does not require 510(k)
clearance or an approved PMA for such modified product to be placed on the market.
“Ohio LLC Act” means the Ohio Revised Code Title 17, Chapter 1705 et seq., as amended
from time to time.
“Operating Agreement” means the Company’s Amended and Restated Operating Agreement,
dated as of December 20, 2004, as amended by the following: (i) a certain Addendum to Certain
Agreements for Theken Spine, LLC effective as of December 20, 2004, (ii) a certain Addendum #2 to
Certain Agreements for Theken Spine, LLC effective as of December 20, 2004, (iii) a certain
Amendment to Addendum #2 to Certain Agreements for Theken Spine, LLC effective as of December 20,
2004, and (iv) a certain Amendment to the Theken Spine, LLC Amended and Restated Operating
Agreement effective April 1, 2005.
“Patents” means (i) patents, utility models, design registrations, certificates of
invention, patents of addition or substitution, or other governmental grants for the protection of
inventions or industrial designs anywhere in the world, including, any reissue, renewal,
re-examination or extension thereof; and (ii) any application for any of the foregoing, including
any international, provisional, divisional, continuation, continuation-in-part, or continued
prosecution application.
“Permitted Encumbrances” means (a) Encumbrances for current Taxes not yet due and
payable; and (b) mechanics’, carriers’, workers’, repairs’ and other similar liens arising or
incurred in the ordinary course of business relating to obligations as to which there is no default
on the part of the Company, in each case which liens do not materially impair the ownership or
operation of any assets of the Company or which do not have, or could not reasonably be expected to
have, a Company Material Adverse Effect.
“Person” means any individual, corporation (including any nonprofit corporation),
company, partnership (limited or general), limited liability company, joint venture, association,
estate, trust or unincorporated organization, labor union, Governmental Authority or other entity.
11
“Post-Closing Tax Period” means any Tax Period beginning after the Closing Date and
that portion of any Straddle Period beginning after the Closing Date.
“Pre-Closing Tax Period” means any Tax Period ending on or before the Closing Date and
that portion of any Straddle Period ending on the Closing Date.
“Proprietary Rights” means any and all Technology and any and all Intellectual
Property Rights that is or are owned or otherwise controlled (in whole or in part) by or licensed
to the Company.
“SEC” means the United States Securities and Exchange Commission, and any successor
thereto.
“Second Earn-Out Adjustment Payment Date” means the date that is five (5) Business
Days following the date on which the final determination of the matters in dispute set forth in the
Second Earn-Out Dispute Notice occurs in accordance with Section 2.5.2.
“Second Earn-Out Amount” means an amount equal to the lesser of:
(i) Two Hundred Million Dollars ($200,000,000), less the Combined Closing Payment
Amount, less the First Earn-Out Amount; and
(ii) an amount equal to two and one-half (2.5) times the Second Earn-Out Period Trade
Sales, less the Combined Closing Payment Amount, less the First Earn-Out Amount;
provided, that if such amount is a negative number the Second Earn-Out Amount shall be zero.
“Second Earn-Out Payment Date” means the date on which the Second Earn-Out Payment is
to be made by Buyer, and specifically, is the date on which the Second Earn-Out Statement is
delivered by Buyer to the Member Representative in accordance with Section 2.5.2.
“Second Earn-Out Period” means the second twelve (12) months of the Earn-Out Period.
“Second Earn-Out Period Trade Sales” means the Trade Sales during the Second Earn-Out
Period.
“Securities Act” means the United States Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
“Straddle Period” means any Tax Period beginning before the Closing Date and ending
after the Closing Date.
“Subsidiary” means, with respect to any Person, any and all corporations,
partnerships, limited liability companies, joint ventures, associations and other entities or
organizations controlled, directly or indirectly, by such Person.
12
“Substitute Product” shall mean any Integra Product (other than an Existing Integra
Product) that the Buyer and RRT agree, after good faith negotiation:
(a) has the same composition as a then-existing Theken Company Product, it being agreed, by
way of example but not by way of limitation:
(1) for products comprised of metal and other non-orthobiologic materials, the parties agree
that (A) a product comprised of metal shall, for the purposes of this Agreement, be considered as
having the same composition as a product comprised of the same metal, another metal or other
non-orthobiologic substances or any combination thereof (e.g., a product comprised of titanium
shall, for the purposes of this Agreement, be considered as having the same composition as a
product comprised of stainless steel, of polyetheretherketone (“PEEK”), or of PEEK in
combination with carbon fiber), and (B) such products shall not, for the purposes of this
Agreement, be considered having the same composition as products comprised of orthobiologic
materials; or
(2) for products comprised of orthobiologic materials (i.e., natural or synthetic materials
used to repair or regenerate tissue, including, without limitation, bone, tendon, cartilage,
ligament, muscle, and dermis), the parties agree that (A) a product comprised of an orthobiologic
substance shall not, for the purposes of this Agreement, be considered as having the same
composition as a product comprised of a different orthobiologic substance, or a different
combination of orthobiologic substances (e.g., (i) a product comprised of human bone/demineralized
bone does not have the same composition as a product comprised of collagen, tri-calcium phosphate
(“TCP”), or any combination thereof, (ii) a product comprised of collagen does not have the
same composition as a product comprised of TCP, and (iii) a product comprised of collagen and TCP
does not have the same composition as a product comprised of TCP), and (B) such products shall
not, for the purposes of this Agreement, be considered having the same composition as
products comprised of metal or other non-orthobiologic materials;
and
(b) has the same indication for use as such Theken Company Product; and
(c) for products comprised of orthobiologic materials, has the same configuration (e.g.,
putty, strip, morsels) as such Theken Company Product; and
(d) is a substitute for such Theken Company Product (i.e., a reasonable spine surgeon would
view such product as interchangeable with the applicable Theken Company Product);
provided, however, that, notwithstanding the foregoing, Minor Modifications of Integra Products
shall not be considered Substitute Products; provided, further, that, for the avoidance of doubt,
the Parties agree that notwithstanding the exclusion of certain Integra Products (specifically,
those defined in clauses (ii) and (iii) of the definition thereof) from the definition of Theken
Company Products, such Integra Products may nonetheless constitute Substitute Products and,
therefore, be taken into account for the purposes of determining Trade Sales hereunder; provided,
further, Schedule 1.1 – Substitute Products sets forth a list of existing products on the
date hereof which the Parties agree are in fact Substitute Products.
13
“Takeover Statute” means any “fair price,” “moratorium,” “control share acquisition”
or other similar antitakeover statute or regulation enacted under state or federal Laws in the
United States.
“Target Working Capital Amount” means Three Million Eight Hundred Twenty-Nine Thousand
Eight Hundred Fifty-Seven Dollars ($3,829,857).
“Tax” or “Taxes” means any and all taxes, charges, fees, levies, tariffs,
duties, liabilities, impositions or other assessments in the nature of a tax (together with any and
all interest, penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Authority, including, without limitation, income, gross receipts,
profits, excise, real or personal property, environmental, sales, use, ad valorem, withholding,
social security, retirement, employment, unemployment, workers’ compensation, occupation, service,
license, net worth, capital stock, payroll, franchise, gains, stamp, transfer and recording taxes,
escheat, and shall include any Liability for the Taxes of any other Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Tax Law), or as a
transferee or successor, by contract, or otherwise.
“Tax Period” means any period prescribed by any Governmental Authority for which a Tax
Return is required to be filed or a Tax is required to be paid.
“Tax Return” means any report, return (including any information return), claim for
refund, election, estimated Tax filing or payment, request for extension, document, declaration or
other filing required to be supplied to any Governmental Authority with respect to Taxes, including
all attachments thereto and amendments thereof.
“Technology” means any or all of the following: (i) works of authorship including,
without limitation, computer programs, source code and executable code, whether embodied in
software, firmware or otherwise, documentation, designs, files, net lists, records, data and mask
works; (ii) inventions (whether or not patentable), improvements, and technology; (iii) proprietary
or confidential information, including technical data and customer and supplier lists, trade
secrets, discoveries, processes, formulas, and know how; (iv) databases, data compilations and
collections and technical data; (v) tools, methods and processes; and (vi) all instantiations of
the foregoing in any form and embodied in any media.
“Theken Companies” means, collectively, the Company, Theken Disc and Therics.
“Theken Company Products” means all:
(a) products of the Theken Companies which are currently marketed by any Theken Company as of
the date hereof (a true and complete list of which is set forth on Exhibit E-1), in
addition to, all improvements, modifications (including Minor Modifications), alterations,
revisions, enhancements, variations, adaptations, redesigns and new generations of the same;
14
(b) products of the Theken Companies which are currently under development by any Theken
Company as of the date hereof (a true and complete list of which is set forth on
Exhibit E-2), in addition to, all improvements, modifications (including Minor
Modifications), alterations, revisions, enhancements, variations, adaptations, redesigns and new
generations of the same;
(c) products of the Theken Companies that:
(i) a Theken Company (or one or more employees or representatives of, or consultants
to, a Theken Company) substantially conceives, discovers, develops, designs or manufactures
(including products that incorporate Intellectual Property Rights or Proprietary Rights that
a Theken Company purchases or in-licenses from third parties to enable the further
development of products by a Theken Company), and
(ii) are placed into the market by or on behalf of a Theken Company pursuant to a
newly-obtained 510(k) clearance, approved PMA or any other applicable regulatory approval or
notice at any time prior to the end of the Earn-Out Period,
including, without limitation, all improvements, modifications (including Minor Modifications),
alterations, revisions, enhancements, variations, adaptations, redesigns and new generations of the
same; or
(d) Integra Products (as defined below) to which the Therics three-dimensional printing
process is applied (notwithstanding the definition of the term “Minor Modification”, such
application shall not be deemed a Minor Modification to such Integra Product (which would otherwise
cause it to be excluded from the definition of Theken Company Products)).
Notwithstanding the foregoing, but subject to the definition of “Substitute Product” above,
“Theken Company Products” shall not include, without limitation, any of the following
(collectively, “Integra Products”):
(i) any products of the Buyer or its Affiliates (other than the Theken Companies or their
Subsidiaries) existing on the Closing Date, including any products that are in-licensed or marketed
by the Buyer or its Affiliates (other than the Theken Companies or their Subsidiaries) as of such
date (collectively, the “Existing Integra Products”), including Minor
Modifications thereof by any Theken Company (or one or more employees of or consultants to any
Theken Company) following the Closing Date;
(ii) any products that the Buyer or its Affiliates (other than the Theken Companies or their
Subsidiaries) or one or more employees of or consultants to the Buyer or its Affiliates (other than
the Theken Companies or their Subsidiaries) (A) substantially conceives, discovers, develops,
designs, manufactures, or in-licenses for sale or license, and (B) are placed into the market by or
on behalf of Buyer or its Affiliates pursuant to a newly-obtained 510(k) clearance, approved PMA or
any other applicable regulatory approval or notice at any time after the Closing Date, including
those that incorporate Minor Modifications by any Theken Company (or one or more employees or
representatives of, or consultants to, any Theken Company); or
(iii) any products that the Buyer or its Affiliates (including, following the Closing, any of
the Theken Companies) acquire or in-license for sale or license after the Closing Date and that at
the time of such acquisition or licensing already have 510(k) clearance, approved PMA or other
applicable regulatory approval or notice to be placed on the market, including Minor Modifications
thereof by any Theken Company (or one or more employees or representatives of, or consultants to,
any Theken Company).
15
“Theken Disc Adjusted Purchase Price” means Twenty Million Dollars ($20,000,000) as
such amount may be adjusted pursuant to Section 2.4 of the Theken Disc Purchase Agreement.
“Therics Adjusted Purchase Price” means Eight Million Dollars ($8,000,000) as such
amount may be adjusted pursuant to Section 2.4 of the Therics Purchase Agreement.
“Trade Sales” means, without duplication, during the First Earn-Out Period or Second
Earn-Out Period, as applicable, and as determined in accordance with GAAP, the aggregate amount of:
(a) the worldwide gross sales actually invoiced by the Buyer or any of its Affiliates or
Subsidiaries (including, without limitation, any of the Theken Companies) for any and all sales of
Theken Company Products to third parties/unaffiliated Persons, plus (b) any Transferred
Trade Sales, less, (c) the sum of the following deductions with respect to the sales
referenced in item (a) of this definition: (i) actual transportation charges to the extent
separately invoiced; (ii) normal and customary trade, quantity or cash discounts or rebates to the
extent taken; (iii) normal credits, adjustments or allowances, if any, given or made on account of
price adjustments or returns; (iv) any and all governmental rebates, whether in existence now or
enacted later; (v) any Tax upon or measured by the sale or use of such products (except Taxes based
on income from such products); (vi) any actual freight, duty or transportation insurance; (vii)
fees paid to group purchasing organizations; and (viii) specific write-offs for uncollectible
accounts (provided that no write-off for an uncollectible account shall count against the
definition of Trade Sales for purposes of this agreement until RRT is given at least one hundred
twenty (120) days prior notice of such uncollectible account and after such one hundred twenty
(120) day period the account remains uncollected and Buyer offers to assign such uncollectible
account to the Member Representative so that the Member Representative is provided with the
opportunity to collect on such account); plus, (d) any amounts actually received by the
Buyer or any of its Affiliates or Subsidiaries (including, without limitation, any of the Theken
Companies) in respect of revenues from the licensing by Buyer or any of its Affiliates or
Subsidiaries
(including, without limitation any of the Theken Companies) of any Theken Company Products,
devices, concepts, manufacturing methods, Intellectual Property Rights or Proprietary Rights of any
of the Theken Companies to a third party (net of any related licensing expenses paid to third
parties). In the event that the Buyer, prior to a Change of Control Event, directly or through one
or more if its Affiliates and/or Subsidiaries, acquires or develops a Substitute Product, then the
definition of “Trade Sales” shall also include the worldwide gross sales actually invoiced by the
Buyer or any of its Affiliates or Subsidiaries (including, without limitation, any of the Theken
Companies after the Closing), or otherwise paid to any such parties, for any and all sales of such
Substitute Product, less, the worldwide gross sales of such Substitute Product actually
invoiced in the twelve (12) months prior to the acquisition or development of such Substitute
Product, if any, less each of the deductions referred to in clauses (c)(i) through
(c)(viii) above as relates to sales of such Substitute Product, but in no event less than zero.
Notwithstanding any provision in this Agreement to the contrary (including, without limitation,
this definition of “Trade Sales” and the definitions of “Substitute Product”, “Theken Company
Product”, “Integra Products”, “Existing Integra Products” and “Transferred Trade Sales”), Trade
Sales shall not include any sales of any products by the Buyer or any of its Affiliates or
Subsidiaries (including, without limitation, any of the Theken Companies) that are comprised of
bone (including demineralized bone) and/or collagen, and no Earn-Out Payment shall be due or
payable to Sellers in respect thereof; provided, however, that this exclusion shall not apply to
any Integra Products that constitute Theken Company Products under clause (d) of the definition
thereof, sales of which shall be taken into account for the purposes of determining Trade Sales and
the Earn-Out Payments.
16
“Trademarks” means trade names, trade dress, brand names, logos, common law trademarks
and service marks, trademark and service ▇▇▇▇ registrations and applications therefor and all
goodwill associated therewith throughout the world.
“Transfer Taxes” means any and all transfer, documentary, sales, use, gross receipts,
stamp, registration, value added, recording, escrow and other similar Taxes (including interest and
penalties thereon) incurred in connection with the Sellers’ sale of their Units as contemplated by
this Agreement. For the avoidance of doubt, only Taxes are intended to be included within the
definition of “Transfer Taxes” and fees and other associated costs which are not in the nature of a
tax are intended to be excluded from such definition (e.g., filing fees required to be paid by the
“acquiring person” under the HSR Act).
“Transferred Trade Sales” means, regarding any Theken Company Product with respect to
which Buyer (or its Affiliates) sells or otherwise transfers, prior to the end of the Earn-Out
Period, the rights to market and sell such Theken Company Product (a “Transferred Theken
Company Product”) to a Person who is not an Affiliate of the Buyer (a “Transfer
Event”), the estimated sales of such Transferred Theken Company Product to be calculated as
follows:
(i) in the calendar month during which such Transfer Event occurs and each of the eleven (11)
calendar months thereafter, the product of: (x) the worldwide gross sales actually invoiced by the
Buyer or any of its Affiliates or Subsidiaries (including, without limitation, any of the Theken
Companies) for any and all sales of such Transferred Theken Company Product to third
parties/unaffiliated Persons, as determined in accordance with GAAP,
during the twelve (12) full calendar months prior to such Transfer Event, net of all
deductions listed in subsection “(c)” of the definition of Trade Sales as said deductions relate to
the sales referenced in item (x) of this paragraph, multiplied by (y) 0.10; and
(ii) for each calendar month thereafter, the product of: (x) the worldwide gross sales
actually invoiced by the Buyer or any of its Affiliates or Subsidiaries (including, without
limitation, any of the Theken Companies) for any and all sales of such Transferred Theken Company
Product to third parties/unaffiliated Persons, as determined in accordance with GAAP, during the
twelve (12) full calendar months prior to such Transfer Event, net of all deductions listed in
subsection “(c)” of the definition of Trade Sales as said deductions relate to the sales referenced
in item (x) of this paragraph, multiplied by (y) 0.12.
For Transfer Events which occur during the First Earn-Out Period, the calculation of Transferred
Trade Sales with respect to the First Earn-Out Period shall include the estimated sales for the
month of such Transfer Event and for each month through the end of the First Earn-Out Period, and
the calculation of Transferred Trade Sales with respect to the Second Earn-Out Period shall include
the estimated sales for all twelve (12) months of the Second Earn-Out Period. For Transfer Events
which occur during the Second Earn-Out Period, the calculation of Transferred Trade Sales with
respect to the Second Earn-Out Period shall include the estimated sales for the month of such
Transfer Event and for each month through the end of the Second Earn-Out Period.
17
By way of example, if a Transfer Event occurs on the 5th day of the 7th month
of the First Earn-Out Period and is with respect to a Transferred Theken Company Product that
achieved sales of $1,200,000 over the twelve (12) full calendar month period prior to the Transfer
Event, then the Transferred Trade Sales of such product for each of the remaining six (6) months of
the First Earn-Out Period would be $720,000 (equal to $1,200,000 multiplied by 0.10 multiplied by
6). Transferred Trade Sales during the Second Earn-Out Period would be $1,584,000 (equal to the
sum of (i) $1,200,000 multiplied by 0.10 multiplied by 6, plus (ii) $1,200,000 multiplied by 0.12
multiplied by 6).
“Treasury Regulation” means the regulations promulgated under the Code.
“Unit” means the measure of a Member’s equity interest and membership interest in the
Company. The Units of the Company are comprised of two (2) separate classes, class A units and
class B units, which classes are identical in all respects except as set forth in Section 7 of the
Operating Agreement (pertaining to Allocations and Distributions as defined therein). For the
avoidance of any doubt, specifically excluded from the definition of “Unit” are any and all
Appreciation Rights.
“Unit Appreciation Agreement” means an agreement evidencing the award of Appreciation
Rights under an Appreciation Rights Plan.
“Working Capital” means, with respect to the Company as of the Closing Date and after
giving effect to the payment of Indebtedness and Company Expenses and excluding all intercompany
transactions involving the Company and any of its Affiliates:
(i) the sum of:
(a) trade accounts receivable, net of allowances for bad debts and other customer allowances,
(b) current and non-current inventories, less reserves for excess or obsolete inventory,
and (c) prepaid expenses and other current assets;
less
(ii) the sum of:
(a) trade accounts payable, (b) accrued commissions, and (c) other accrued expenses and
liabilities (including accrued Taxes),
in each case calculated based on the amounts therefor as reflected on the Closing Date Balance
Sheet, as well as the format set forth on Exhibit D, and consistent with Section
2.4. For the avoidance of doubt, “accrued Taxes” shall include the employer portion of all
federal, state, and local employment and payroll Taxes, including the Federal Insurance
Contributions Act, as amended (Sections 3101-3128 of the Code), and the Federal Unemployment Tax
Act, as amended (Sections 3301-3311 of the Code), related to payments made to each Appreciation
Rights Holder pursuant to Section 2.3.2(c).
18
“Working Capital Adjustment Payment Date” means the date that is five (5) Business
Days after the determination of the Final Working Capital Amount.
Section 1.2 Other Defined Terms. Each of the following terms have the meaning
assigned to such term in the Section indicated:
| Term | Section | |
401(k) Plan |
7.9.2 | |
510(k) |
5.8.3 | |
Accounts Receivable |
5.5.3 | |
Acquisition Proposal |
7.6 | |
Agreement |
Preamble | |
Aircraft Usage Agreement |
3.2.1(v) | |
Allowable Activities |
7.10.1 | |
Appreciation Rights Closing Payment |
2.3.2(c) | |
Audited Balance Sheet |
5.5.1 | |
Audited Financial Statements |
5.5.1 | |
Buyer |
Preamble | |
Buyer Indemnified Party |
11.2.1 | |
Cap |
11.4.1(b) | |
Claim Notice |
11.3.2 | |
Closing |
3.1 | |
Closing Date |
3.1 | |
Closing Date Balance Sheet |
2.4.2 | |
Company |
Preamble | |
Company Assets |
5.18 | |
Company Benefit Plan |
5.9.1 | |
Company Expense/Indebtedness Certificate |
3.2.1(n) | |
Company Insurance Policies |
5.15 | |
Competing Activity |
7.10.1 | |
Confidential Information |
5.16.6 | |
Consolidated Audited Balance Sheet |
5.5.1 | |
Consolidated Audited Financial Statements |
5.5.1 | |
Consolidated Interim Balance Sheet |
5.5.1 | |
Consolidated Interim Financial Statements |
5.5.1 | |
Continuing Employees |
7.9.1 | |
Deductible |
11.4.1(a) | |
Delivered Opinions |
3.2.1(u) | |
Earn-Out Acceleration Net Amount |
2.5.4(a)(ii) | |
Earn-Out Acceleration Payment |
2.5.4(a) | |
EBITIA |
7.14.2(a) | |
Equipment Lease |
3.2.1(i) | |
ERISA |
5.9.1 | |
ERISA Affiliate |
5.9.1 | |
Excess Holdback Payment |
11.6.2 | |
Excess Working Capital Amount |
2.4.4(a) | |
Existing Integra Products |
1.1 (See Definition of “Theken Company Products”) |
19
| Term | Section | |
Extended Duration Representations |
11.1.1 | |
Final Working Capital Amount |
2.4.3(c) | |
Financing Proposal |
7.6 | |
First Earn-Out Adjustment Payment |
2.5.1(b) | |
First Earn-Out Dispute Notice |
2.5.1(b) | |
First Earn-Out Payment |
2.5.1(a) | |
First Earn-Out Review Period |
2.5.1(b) | |
First Earn-Out Statement |
2.5.1(a) | |
IDE |
5.8.4 | |
Indemnification Escrow Amount |
2.5.6(c) | |
Indemnified Party |
11.3.1 | |
Indemnifying Party |
11.3.1 | |
Indemnity Dispute Notice |
11.3.3 | |
Intellectual Property Rights Agreements |
5.16.9 | |
Integra Products |
1.1 (See Definition of “Theken Company Products”) | |
Interim Balance Sheet |
5.5.1 | |
Interim Financial Statements |
5.5.1 | |
Interim Monthly Financial Statements |
5.5.2 | |
Member Representative |
12.1 | |
Multiemployer Plan |
5.9.6 | |
Non-Assumable Third Party Claims |
11.3.3 | |
Non-Competition Agreements |
3.2.1(g) | |
Orthobiologic |
1.1 (See Definition of “Substitute Product”) | |
Partnership Income Tax Returns |
8.1 | |
Party(ies) |
Preamble | |
PEEK |
1.1 (See Definition of “Substitute Product”) | |
Per Diem Taxes |
11.5.2 | |
Permits |
5.12.1 | |
PMA |
5.8.3 | |
Post-Closing Buyer Payment |
2.5.6 | |
Preliminary Closing Cash Amount |
2.4.2 | |
Preliminary Working Capital Amount |
2.4.2 | |
Proceedings |
5.11.1 | |
PTO |
5.16.1 | |
Purchase Agreements |
Recitals | |
Purchase Price |
2.3.1 | |
Real Estate Leases |
3.2.1(h) | |
Released Claims |
13.1 | |
Released Parties |
13.1 | |
Releasing Parties |
13.1 | |
Releasor |
13.1 | |
Resolved Claim Amount |
11.6.1 | |
Restricted Parties |
7.10.1 | |
Restricted Period |
7.10.1 | |
Review Period |
2.4.3(a) | |
RRT |
Preamble | |
RRT Employment Agreement |
3.2.1(f) | |
Scheduled Contracts |
5.7.1 | |
Second Earn-Out Adjustment Payment |
2.5.2(b) | |
Second Earn-Out Dispute Notice |
2.5.2(b) | |
Second Earn-Out Payment |
2.5.2(a) |
20
| Term | Section | |
Second Earn-Out Review Period |
2.5.2(b) | |
Second Earn-Out Statement |
2.5.2(a) | |
Seller(s) |
Preamble | |
Sellers’ Closing Payment |
2.3.2(d) | |
Seller Indemnified Party |
11.2.4 | |
Settlement Accountant |
2.4.3(b) | |
Statement of Objections |
2.4.3(a) | |
Successor Representative |
12.3 | |
Tax Claim |
11.5.4 | |
TCP |
1.1 (See Definition of “Substitute Product”) | |
Theken Disc |
Preamble | |
Theken Disc Purchase Agreement |
Preamble | |
Therics |
Preamble | |
Therics Purchase Agreement |
Preamble | |
Third-Party Claim |
11.3.2 | |
Threshold Amount |
11.4.1(a) | |
Trade Laws |
5.24.1 | |
Transactions |
Preamble | |
Transfer Event |
1.1 (See Definition of “Transferred Trade Sales”) | |
Transferred Theken Company Product |
1.1 (See Definition of “Transferred Trade Sales”) | |
Unresolved Claim |
11.6.2 | |
Unresolved Claim Amount |
11.6.2 | |
Working Capital Deficiency |
2.4.4(b) | |
Working Capital Deficiency Amount |
2.4.4(d) |
Section 1.3 Other Definitional Provisions.
Section 1.3.1 When a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated.
Section 1.3.2 The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
Section 1.3.3 Terms defined in the singular have a comparable meaning when used in the plural,
and vice versa.
Section 1.3.4 The gender of any pronouns shall include the other gender.
Section 1.3.5 References to a Person are also to its predecessors, successors and permitted
assigns.
Section 1.3.6 The term “Dollars” and “$” means United States Dollars.
Section 1.3.7 The word “including” means “including without limitation” and the words
“include” and “includes” have corresponding meanings.
21
ARTICLE II.
PURCHASE AND SALE OF MEMBERSHIP UNITS
PURCHASE AND SALE OF MEMBERSHIP UNITS
Section 2.1 Purchase and Sale of the Units. Subject to the terms and conditions
contained herein, at the Closing, the Sellers shall sell, transfer, convey, assign and deliver to
the Buyer, free and clear of all Encumbrances, and the Buyer shall purchase and accept from the
Sellers, one hundred percent (100%) of the issued and outstanding Units of the Company with the
number of issued and outstanding Units owned and being sold by such Seller set forth beside such
Seller’s name on the Allocation Schedule.
Section 2.2 Appreciation Rights Closing Payments. The Appreciation Rights Closing
Payments shall be made pursuant to Section 2.3.2(c) and the Appreciation Rights Closure
Agreements.
Section 2.3 Purchase Price; Payment of Purchase Price.
Section 2.3.1 Purchase Price. The aggregate purchase price for the Units and the
non-competition and non-solicitation covenants provided for in Section 7.10 shall consist
of (a) Forty-Seven Million Dollars ($47,000,000) payable under Sections 2.3.2 and
2.4 and subject to adjustment post-Closing pursuant to Section 2.4, plus
(b) the Earn-Out Payments, if any, payable under Sections 2.5 and 11.6.2,
plus (c) the aggregate amount of all Resolved Claim Amounts offset and deducted pursuant to
Section 11.6.1 (collectively, the “Purchase Price”).
Section 2.3.2 Closing Payments. The Buyer shall pay at Closing, Forty-Six Million
Eight Hundred Thousand Dollars ($46,800,000) of the Purchase Price as follows, and in accordance
with the payment instructions for such payments as set forth in the Closing Funds Flow Memo:
(a) the Company Expenses as listed on the Company Expense/Indebtedness Certificate shall be
paid to the Persons entitled thereto;
(b) the Indebtedness of the Company as listed on the Company Expense/Indebtedness Certificate
shall be paid to the Persons entitled thereto;
(c) an amount equal to the aggregate gross amount payable to the Appreciation Rights Holders
at Closing under the Appreciation Rights Closure Agreements, in connection with the cancellation of
all Appreciation Rights held by the Appreciation Rights Holders, as indicated on the Closing Funds
Flow Memo (such aggregate amount, the “Appreciation Rights Closing Payment”) shall be paid
to the Company (it being agreed that as soon as practicable thereafter, the Member Representative
and Buyer shall cause the Company to pay to each Appreciation Rights Holder an amount in accordance
with each such Appreciation Rights Holder’s allocable share of the Appreciation Rights Closing
Payment as set forth in the Closing Funds Flow Memo (for payments made to any Appreciation Rights
Holder, the allocable share owed to such Appreciation Rights Holder shall be determined using the
percentage set forth beside such Appreciation Rights Holder’s name in the column of the Allocation
Schedule titled “Percentage”), less any amounts required to be withheld therefrom as
contemplated by Section 2.6); and
(d) an amount equal to Forty-Six Million Eight Hundred Thousand Dollars ($46,800,000),
less the sum of the amounts provided for in the preceding clauses of this
Section 2.3.2 (the “Sellers’ Closing Payment”) shall be paid to Sellers as set
forth in the Closing Funds Flow Memo.
22
Section 2.4 Closing Payment Adjustment.
Section 2.4.1 Closing Payment Holdback Amount. At the Closing, the Closing Payment
Holdback Amount shall be withheld by the Buyer and shall not be due and
payable to the Sellers or Appreciation Rights Holders, or released to the Sellers or
Appreciation Rights Holders, except pursuant to and in accordance with this Section 2.4.
Section 2.4.2 Closing Date Balance Sheet. Within ninety (90) days after the Closing
Date, the Buyer shall prepare, or cause to be prepared, and deliver to the Member Representative an
unaudited balance sheet of the Company as of the close of business on the Closing Date (the
“Closing Date Balance Sheet”), together with the Buyer’s calculation of: (i) the Working
Capital derived therefrom and prepared in accordance with the definitions and procedures set forth
herein (the “Preliminary Working Capital Amount”), and (ii) the cash and cash equivalents
of the Company at the Closing (the “Preliminary Closing Cash Amount”). The Closing Date
Balance Sheet shall be prepared in accordance with GAAP on a basis consistent with the accounting
policies, methods and practices used to prepare the Audited Balance Sheet.
Section 2.4.3 Closing Date Balance Sheet Review, Dispute Resolution.
(a) Upon receipt of the Closing Date Balance Sheet, the Member Representative shall have
forty-five (45) days (the “Review Period”) to review the Closing Date Balance Sheet and
related computations of the Preliminary Working Capital Amount and the Preliminary Closing Cash
Amount. Upon reasonable advance written request by the Member Representative, the Member
Representative, and/or his representatives, shall be given reasonable access to the Buyer’s books
and records to the extent necessary to enable the Member Representative to verify, within the
Review Period, the information and computations in the Closing Date Balance Sheet and related
computations of the Preliminary Working Capital Amount and the Preliminary Closing Cash Amount.
If the Member Representative accepts such Closing Date Balance Sheet and related computations of
the Preliminary Working Capital Amount and Preliminary Closing Cash Amount by the delivery of a
written acceptance of the same to the Buyer prior to the expiration of the Review Period, or
alternatively, if the Member Representative does not give written notice to the Buyer setting forth
in reasonable detail each of the objections of the Member Representative to such Closing Date
Balance Sheet and related computations of the Preliminary Working Capital Amount and Preliminary
Closing Cash Amount (a “Statement of Objections”) prior to the expiration of the Review
Period, then in either case such Closing Date Balance Sheet shall be final and binding upon the
Parties, and the Preliminary Working Capital Amount shall be deemed the final, definitive Working
Capital amount and the Preliminary Closing Cash Amount shall be deemed the final, definitive
Closing Cash Amount. In the event that the Member Representative delivers a Statement of
Objections to the Buyer during the Review Period, the Member Representative and the Buyer shall use
their commercially reasonable efforts to resolve any disputed items, and thereby attempt to agree
in writing on the final, definitive Working Capital amount and/or final, definitive Closing Cash
Amount, within thirty (30) days following the receipt by the Buyer of the Statement of Objections.
23
(b) If the Parties are unable to reach an agreement in writing as to the final, definitive
Working Capital amount and/or final, definitive Closing Cash Amount
within such thirty (30) day period as set forth in Section 2.4.3(a), then the matter
shall be submitted to an independent accounting firm or valuation specialist as shall be mutually
agreed in writing between the Buyer and the Member Representative (the “Settlement
Accountant”). The Settlement Accountant shall determine the matters still in dispute as
identified in the Statement of Objections (as the same may be modified in writing by the Parties as
a result of their commercially reasonable efforts to resolve any disputed items) and establish the
final, definitive Working Capital amount and/or final, definitive Closing Cash Amount. The
Settlement Accountant shall make its determination of the final, definitive Working Capital amount
and/or final, definitive Closing Cash Amount (which in no event shall be more favorable to the
Buyer than the Preliminary Working Capital Amount, and/or Preliminary Closing Cash Amount, derived
from the Closing Date Balance Sheet, nor more favorable to the Sellers than the Working Capital
amount, and/or Closing Cash Amount, shown on the Statement of Objections) within thirty (30) days
(or as soon as practicable thereafter if the Settlement Accountant notifies the Parties that it
requires additional time to make such determination) following the submission of the matter to the
Settlement Accountant for resolution. The Parties shall deliver to the Settlement Accountant a
copy of this Agreement, a copy of the Closing Date Balance Sheet together with all documents
delivered to the Member Representative by the Buyer under Section 2.4.2 and a copy of the
Statement of Objections together with all documents delivered by the Member Representative under
Section 2.4.3(a). In addition, in connection with the written agreement naming the
Settlement Accountant the Parties may also agree to any additional procedures and/or process issues
with respect to the Settlement Accountant’s determination hereunder (e.g., prohibition of ex parte
discussions with the Settlement Accountant). The fees and expenses of the Settlement Accountant
shall be allocated ratably among the Sellers, on one hand, and the Buyer, on the other hand, in the
same proportion that the aggregate dollar amount of items unsuccessfully disputed by each such
Party (as finally determined by the Settlement Accountant) bears to the aggregate dollar amount of
all disputed items submitted to the Settlement Accountant. With respect to other costs, the
Sellers, on one hand, and the Buyer and the Company, on the other hand, shall pay their own costs
in connection with the determination made pursuant to this Section 2.4.3, including the
fees and expenses of their respective attorneys and accountants, if any.
(c) The sum of the Working Capital amount plus the Closing Cash Amount, in each case
as finally agreed or determined in accordance with this Section 2.4.3 shall be referred to
herein as the “Final Working Capital Amount.”
24
Section 2.4.4 Adjustment Payments.
(a) In the event that the Final Working Capital Amount is greater than the Target Working
Capital Amount, such excess is referred to herein as the “Excess Working Capital Amount.”
(b) In the event that the Final Working Capital Amount is less than the Target Working Capital
Amount, the amount equal to the Target Working Capital Amount minus the Final Working
Capital Amount is referred to herein as the “Working Capital Deficiency.”
(c) If there is a Working Capital Deficiency and it is less than the Closing Payment Holdback
Amount, the Buyer shall, on or prior to the Working Capital Adjustment Payment Date, pay an amount
equal: (i) to the Closing Payment Holdback Amount minus the Working Capital Deficiency,
plus (ii) an amount equal to interest thereon at the rate published in The Wall Street
Journal from time to time as the “prime rate” for the period from the Closing Date through the
Working Capital Adjustment Payment Date, which amount shall be paid, in accordance with both the
Allocation Schedule and Section 2.5.6, (x) to the Member Representative for the benefit of
all Sellers, and (y) to the Appreciation Rights Holders.
(d) If there is a Working Capital Deficiency and it is greater than the Closing Payment
Holdback Amount, the Buyer shall retain the full amount of the Closing Payment Holdback Amount and
shall be entitled to deduct from the amount otherwise payable as the First Earn-Out Amount an
amount equal to: (i) the Working Capital Deficiency minus the Closing Payment Holdback
Amount, plus (ii) an amount equal to the interest thereon for the period from the Closing
Date through to date of the First Earn-Out Payment at the rate published in The Wall Street Journal
from time to time as the “prime rate” for the period from the Closing Date through the date such
payment is made (such sum, the “Working Capital Deficiency Payment”) (it being agreed that
in the event that the Working Capital Deficiency Payment is greater than the amount otherwise
payable as the First Earn-Out Payment, the Buyer shall be entitled to deduct such remaining amount
from the amount otherwise payable as the Second Earn-Out Payment).
(e) If there is an Excess Working Capital Amount, the Buyer shall, on or prior to the Working
Capital Adjustment Payment Date, pay an amount equal to: (i) the Excess Working Capital Amount,
plus (ii) the Closing Payment Holdback Amount, plus (iii) an amount equivalent to
interest thereon (i.e., interest on the sum of (i) and (ii) above) at the rate published in The
Wall Street Journal from time to time as the “prime rate” for the period from the Closing Date
through the Working Capital Adjustment Payment Date, which amount shall be paid, in accordance with
both the Allocation Schedule and Section 2.5.6, (x) to the Member Representative for the
benefit of all Sellers, and (y) to the Appreciation Rights Holders.
Section 2.5 Earn-Out Payments.
Section 2.5.1 First Earn-Out Statement.
(a) Within forty-five (45) days following the expiration of each fiscal quarter during the
First Earn-Out Period (other than the last fiscal quarter of the First Earn-Out Period), the Buyer
shall deliver to the Member Representative a report (in a format to be reasonably agreed to by the
Parties) indicating the Buyer’s good faith calculation of the Trade Sales for the previous quarter
(it being agreed that such quarterly reports shall be non-binding on the Parties and are intended
for general informational purposes only). Within sixty (60) days following the expiration of the
First Earn-Out Period, the Buyer shall prepare and deliver to the Member Representative a statement
(the “First Earn-Out Statement”), setting forth the Buyer’s calculation of: (i) the First
Earn-Out Amount, less (ii) as applicable, the amount of any Earn-Out Deductions to be
deducted from, offset against or held back from the First Earn-Out Amount
pursuant to the terms of this Agreement, and less (iii) the amount of any Earn-Out
Acceleration Payment previously paid and credited in accordance with Section 2.5.4(b), if
any (such net amount, the “First Earn-Out Payment”). The Buyer shall deliver with the
First Earn-Out Statement the supporting financial information used in making the computations of
the First Earn-Out Payment. The First Earn-Out Payment shall be payable on the First Earn-Out
Payment Date, in accordance with both the Allocation Schedule and Section 2.5.6, (x) to the
Member Representative for the benefit of all Sellers, and (y) to the Appreciation Rights Holders.
25
(b) Upon receipt of the First Earn-Out Statement, the Member Representative shall have sixty
(60) days (the “First Earn-Out Review Period”) following the Member Representative’s
receipt of the First Earn-Out Statement to review the First Earn-Out Statement. Upon reasonable
advance written request by the Member Representative, the Member Representative, along with his
representatives, shall be given reasonable access to the Buyer’s books and records to the extent
reasonably necessary to verify the information and computations contained in the First Earn-Out
Statement. If the Member Representative accepts the First Earn-Out Statement by delivery of a
written acceptance of the same to the Buyer prior to the expiration of the First Earn-Out Review
Period, or alternatively, if the Member Representative does not give the Buyer written notice
setting forth in reasonable detail each of the objections of the Member Representative to the First
Earn-Out Statement (the “First Earn-Out Dispute Notice”) prior to the expiration of the
First Earn-Out Review Period, then in either case the First Earn-Out Payment as set forth therein
shall be final and binding upon the Parties. In the event that the Member Representative does not
accept such First Earn-Out Statement as provided above, then the Member Representative shall
deliver to the Buyer the First Earn-Out Dispute Notice during the First Earn-Out Review Period and
such notice shall set forth in reasonable detail the basis for each of the Member Representative’s
objections including a schedule setting forth the computations of the First Earn-Out Amount (and
the Earn-Out Acceleration Net Amount, if applicable) by the Member Representative together with
supporting financial information used in making its computations thereof. In the event the Member
Representative delivers a First Earn-Out Dispute Notice to the Buyer during the First Earn-Out
Review Period, the Member Representative and the Buyer shall use their commercially reasonable
efforts to resolve any disputed items as soon as practicable following the Buyer’s receipt of the
First Earn-Out Dispute Notice and for a period of sixty (60) days thereafter. If the Parties are
unable to reach an agreement in writing regarding the First Earn-Out Statement during such sixty
(60) day period, then during such sixty (60) day period they shall also discuss in good faith the
appropriate third party dispute resolution procedure; provided, however, that, in all cases, the
Parties agree (and shall agree as part of any such third party dispute resolution procedure) that
the fees, costs and expenses of the Person (including, as applicable, any accountant, court or
arbitrator) resolving such dispute shall be allocated ratably among the Sellers, on one hand, and
the Buyer, on the other hand, in the same proportion that the aggregate dollar amount of items
unsuccessfully disputed by each such Party(ies) (as finally determined by third party dispute
resolution procedure) bears to the aggregate dollar amount of all disputed items submitted in
connection therewith. Upon the final determination of the matters in dispute set forth in the
First Earn-Out Dispute Notice, and in the event that as part of such final determination it is
determined that the Buyer shall be required to pay any amounts in excess of the First Earn-Out
Payment, then the Buyer shall pay, on the First Earn-Out Adjustment Payment Date, (i) any such
excess amount, plus (ii) an amount equal to interest on such excess amount at
Adjusted LIBOR for the period from the date of the First Earn-Out Payment Date through the
First Earn-Out Adjustment Payment Date (such amount, the “First Earn-Out Adjustment
Payment”), in accordance with both the Allocation Schedule and Section 2.5.6, (x) to
the Member Representative for the benefit of all Sellers, and (y) to the Appreciation Rights
Holders. With respect to other fees, costs and expenses, the Sellers, on one hand, and the Buyer
and the Company, on the other hand, shall pay their own fees, costs and expenses in connection with
the determination made pursuant to this Section 2.5.1, including the fees, costs and
expenses of their respective attorneys and accountants, if any.
26
Section 2.5.2 Second Earn-Out Statement.
(a) Within forty-five (45) days following the expiration of each fiscal quarter during the
Second Earn-Out Period (other than the last fiscal quarter of the Second Earn-Out Period), the
Buyer shall deliver to the Member Representative a report (in a format to be reasonably agreed to
by the Parties) indicating the Buyer’s good faith calculation of the Trade Sales for the previous
quarter (it being agreed that such quarterly reports shall be non-binding on the Parties and are
intended for general informational purposes only). Within sixty (60) days following the expiration
of the Second Earn-Out Period, the Buyer shall prepare and deliver to the Member Representative a
statement (the “Second Earn-Out Statement”), setting forth the Buyer’s calculation of: (i)
the Second Earn-Out Amount, less (ii) as applicable, the amount of any Earn-Out Deductions
to be deducted from, offset against or held back from the Second Earn-Out Amount pursuant to the
terms of this Agreement, and less (iii) the amount of any Earn-Out Acceleration Payment
previously paid and credited in accordance with Section 2.5.4(b), if any (such net amount,
the “Second Earn-Out Payment”). The Buyer shall deliver with the Second Earn-Out Statement
the supporting financial information used in making the computations of the Second Earn-Out
Payment. The Second Earn-Out Payment shall be payable on the Second Earn-Out Payment Date, in
accordance with both the Allocation Schedule and Section 2.5.6, (x) to the Member
Representative for the benefit of all Sellers, and (y) to the Appreciation Rights Holders.
(b) Upon receipt of the Second Earn-Out Statement, the Member Representative shall have sixty
(60) days (the “Second Earn-Out Review Period”) following the Member Representative’s
receipt of the Second Earn-Out Statement to review the Second Earn-Out Statement. Upon reasonable
advance written request by the Member Representative, the Member Representative, along with his
representatives, shall be given reasonable access to the Buyer’s books and records to the extent
reasonably necessary to verify the information and computations contained in the Second Earn-Out
Statement. If the Member Representative accepts the Second Earn-Out Statement by delivery of a
written acceptance of the same to the Buyer prior to the expiration of the Second Earn-Out Review
Period, or alternatively, if the Member Representative does not give the Buyer written notice
setting forth in reasonable detail each of the objections of the Member Representative to the
Second Earn-Out Statement (the “Second Earn-Out Dispute Notice”) prior to the expiration of
the Second Earn-Out Review Period, then in either case the Second Earn-Out Payment as set forth
therein shall be final and binding upon the Parties.
27
In the event that the Member Representative
does not accept such Second Earn-Out Statement as provided above, then the Member Representative
shall deliver to the Buyer the Second Earn-Out Dispute Notice during the Second Earn-Out Review
Period and such notice shall set forth in reasonable detail the basis for each of the Member
Representative’s
objections,
including a schedule setting forth the computations of the Second Earn-Out Amount
(and the Earn-Out Acceleration Net Amount, if applicable) by the Member Representative together
with supporting financial information used in making its computations thereof. In the event the
Member Representative delivers a Second Earn-Out Dispute Notice to the Buyer during the Second
Earn-Out Review Period, the Member Representative and the Buyer shall use their commercially
reasonable efforts to resolve any disputed items as soon as practicable following the Buyer’s
receipt of the Second Earn-Out Dispute Notice and for a period of sixty (60) days thereafter. If
the Parties are unable to reach an agreement in writing regarding the Second Earn-Out Statement
during such sixty (60) day period, then during such sixty (60) day period they shall also discuss
in good faith the appropriate third party dispute resolution procedure; provided, however, that, in
all cases, the Parties agree (and shall agree as part of any such third party dispute resolution
procedure) that the fees, costs and expenses of the Person (including, as applicable, any
accountant, court or arbitrator) resolving such dispute shall be allocated ratably among the
Sellers, on one hand, and the Buyer, on the other hand, in the same proportion that the aggregate
dollar amount of items unsuccessfully disputed by each such Party(ies) (as finally determined by
third party dispute resolution procedure) bears to the aggregate dollar amount of all disputed
items submitted in connection therewith. Upon the final determination of the matters in dispute
set forth in the Second Earn-Out Dispute Notice, and in the event that as part of such final
determination it is determined that the Buyer shall be required to pay any amounts in excess of the
Second Earn-Out Payment, then the Buyer shall pay, on the Second Earn-Out Adjustment Payment Date,
(i) any such excess amount, plus (ii) an amount equal to interest on such excess amount at
Adjusted LIBOR for the period from the date of the Second Earn-Out Payment Date through the Second
Earn-Out Adjustment Payment Date (such amount, the “Second Earn-Out Adjustment Payment”),
in accordance with both the Allocation Schedule and Section 2.5.6, (x) to the Member
Representative for the benefit of all Sellers, and (y) to the Appreciation Rights Holders. With
respect to other fees, costs and expenses, the Sellers, on one hand, and the Buyer and the Company,
on the other hand, shall pay their own fees, costs and expenses in connection with the
determination made pursuant to this Section 2.5.2, including the fees, costs and expenses
of their respective attorneys and accountants, if any.
Section 2.5.3 Cap on Earn-Out Payments. Notwithstanding anything herein to the
contrary, the aggregate amount of the Earn-Out Payments that the Buyer shall be required to pay to
the Sellers and Appreciation Rights Holders pursuant to Sections 2.5.1, 2.5.2,
2.5.4 and 11.6.2 shall not exceed an amount equal to: (i) Two Hundred Million
Dollars ($200,000,000), less (ii) the Combined Closing Payment Amount, and less
(iii) the aggregate amount of any Resolved Claim Amounts offset pursuant to Section 11.6.1.
28
Section 2.5.4 Payment Upon the Occurrence of an Earn-Out Acceleration Event. Upon the
occurrence of an Earn-Out Acceleration Event prior to the end of the Second Earn-Out Period:
(a) The Buyer shall immediately pay, or cause to be paid, in accordance with both the
Allocation Schedule and Section 2.5.6, (x) to the Member Representative for the benefit of
all Sellers, and (y) to the Appreciation Rights Holders, an amount (the “Earn-Out Acceleration
Payment”) equal to the greater of:
(i) Fifty-Five Million Dollars ($55,000,000), less the aggregate sum of (A) any
Earn-Out Payments previously paid, if any, (B) any Resolved Claim Amounts, and (C) any Unresolved
Claim Amounts; and
(ii) two and one-half (2.5) times the Trade Sales for the twelve (12) month period ending on
the last day of the month immediately prior to the occurrence of such Earn-Out Acceleration Event
(the “Earn-Out Acceleration Net Amount”), less the aggregate sum of (A) the
Combined Closing Payment Amount, (B) any Earn-Out Payments previously paid, if any, (C) any
Resolved Claim Amounts, and (D) any Unresolved Claim Amounts.
(b) The amount of such Earn-Out Acceleration Payment shall be credited towards any other
Earn-Out Payments due hereunder, and the provisions of this Section 2.5 shall otherwise
continue pursuant to its terms.
Section 2.5.5 No Continued Service Required for Appreciation Rights Holders. For
purposes of clarification, an Appreciation Rights Holder’s right to receive his/her/its applicable
share of any Earn-Out Payment(s) pursuant to this Section 2.5 and Section 11.6.2 is
not subject to such Appreciation Rights Holder’s continued employment or continued services with
the Company or the Buyer following the Closing, but such right to receive payment shall remain
subject to the terms and conditions of such Appreciation Rights Holder’s Appreciation Rights
Closure Agreement. Provided that an Appreciation Rights Holder holds Appreciation Rights
immediately prior to the Closing, in the event that the Earn-Out Payment(s) become payable pursuant
to this Section 2.5 and Section 11.6.2, the Earn-Out Payment(s) shall be paid to
such Appreciation Rights Holder in accordance with the Allocation Schedule and
Section 2.5.6, regardless of whether such Appreciation Rights Holder remains an employee or
service provider of the Company after the Closing.
Section 2.5.6 Post-Closing Payments to Sellers and Appreciation Rights Holders. For
payments to be made by Buyer after the Closing pursuant to Sections 2.4, 2.5 or
11.6.2 (each, a “Post-Closing Buyer Payment”):
(a) For payments made to any Seller or Appreciation Rights Holder, the allocable amount owed
to such Person shall be determined using the percentage set forth beside such Person’s name in the
column of the Allocation Schedule titled “Percentage”.
(b) All amounts payable to any Appreciation Rights Holder shall be made by Buyer (or the
Company on behalf of Buyer) and shall be net of any amounts required to be withheld therefrom as
contemplated by Section 2.6.
(c) The Member Representative may deliver a written notice, at least three (3) Business Days
prior to the date of any Post-Closing Buyer Payment, instructing Buyer to deposit a specified
portion of such Post-Closing Buyer Payment (the “Indemnification Escrow Amount”) with a
third party escrow agent designated by the Member Representative and pursuant to the terms of an
escrow agreement provided by the Member Representative and enclosed with such notice. The
Indemnification Escrow Amount shall be deducted
proportionately from the amounts otherwise payable to each Seller and Appreciation Rights
Holder in accordance with Section 2.5.6(a).
29
Section 2.6 Withholding. The Buyer (or, as applicable, the Company) shall be entitled
to deduct and withhold from any consideration otherwise payable pursuant to this Agreement such
amounts as it may be required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of applicable Tax Law. To the extent that amounts are so withheld
or paid over to or deposited with the relevant Governmental Authority by the Buyer (or, as
applicable, the Company), such amounts shall be treated for all purposes of this Agreement as
having been paid to the applicable Person in respect of which the Buyer (or, as applicable, the
Company) made such deduction and withholding.
ARTICLE III.
CLOSING AND DELIVERIES
CLOSING AND DELIVERIES
Section 3.1 Closing. Upon the terms and subject to the conditions set forth herein,
the closing of the transactions contemplated by this Agreement (the “Closing”) shall take
place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m. Central Time, on the third Business Day after the date on which the last of the
conditions set forth in Article IX hereof are fulfilled or waived (other than those
conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions) in accordance with this Agreement, or at such other place and time
and/or on such other date as the Buyer and the Member Representative may agree in writing. The
date on which the Closing actually occurs is hereinafter referred to as the “Closing Date.”
Section 3.2 Closing Deliveries.
Section 3.2.1 Closing Deliveries by the Sellers. At the Closing, the Sellers shall
deliver, or shall cause to be delivered, to the Buyer:
(a) any and all membership certificates evidencing ownership of the Units, which certificates
shall be accompanied by duly executed assignments separate from certificate and other instruments
of conveyance which are necessary or desirable to effect the transfer of the Units from each of the
Sellers to the Buyer;
(b) organizational documents and certificates of good standing (i) certified by the Secretary
of State of the State of Ohio for the Company and (ii) certified by the Secretary of State of each
state in which the Company is qualified to do business as a foreign entity, each dated not more
than ten (10) Business Days prior to the Closing Date with a bring-down good standing certificate
dated as of the Closing Date (or verbal or online confirmation);
(c) the Appreciation Rights Closure Agreements or Appreciation Rights Termination Agreements,
as applicable, duly executed by each Appreciation Rights Holder or Ex-Appreciation Rights Holder
respectively as indicated on Schedule 5.2.2 of the Company Disclosure Schedule, together
with copies of the Appreciation Rights Plans;
30
(d) a certificate, dated as of the Closing Date and executed by the Member Representative and
the Manager of the Company, as to the fulfillment of each of the conditions set forth in
Sections 9.3.1 and 9.3.2 by the Sellers and the Company, respectively;
(e) terminations and releases in form and substance satisfactory to the Buyer, terminating and
releasing all of the Company’s obligations related to the Company Guarantees, duly executed by each
party thereto;
(f) an Employment Agreement and related Confidentiality Invention Disclosure and Non-Compete
Agreement, each duly executed by the Company and RRT, to become effective at the Closing and in the
form attached hereto as Exhibit F-1 (collectively, the “RRT Employment Agreement”);
(g) non-competition agreement amendments, duly executed by the Company and each of (i) ▇▇▇▇▇▇
▇▇▇▇▇▇, and (ii) ▇▇▇▇ ▇▇▇▇▇, each to become effective at the Closing and in the form attached
hereto as Exhibit F-2 and Exhibit F-3 (collectively, the “Non-Competition
Agreements”);
(h) real estate lease agreements, duly executed by the Company and FPR Properties, LLC, each
to become effective at the Closing for the following facilities: (i) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ and (ii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, which shall be in the form attached
hereto as Exhibit G-1 and Exhibit G-2, respectively (collectively, the “Real
Estate Leases”);
(i) equipment lease agreement, duly executed by the Company and Theken Orthopedic, Inc., to
become effective at the Closing, which shall be in the form attached hereto as Exhibit H
(collectively, the “Equipment Lease”);
(j) aircraft lease and management agreement and fuel program agreement, each duly executed by
Theken Aviation LLC and Hawker Beechcraft Charter & Management, Inc.;
(k) copies of all third party and governmental consents, approval and filings required in
connection with the consummation of the transactions contemplated by this Agreement set forth on
Schedule 5.4;
(l) copies of all consents, licenses, waivers, approvals and authorizations for which Sellers
are responsible as set forth on Exhibit I, which shall have been obtained, given or made
and shall be in full force and effect;
(m) a statement executed by the Company, in form and substance reasonably satisfactory to the
Buyer, that satisfies the requirements of Treasury Regulation Section 1.1445-11T(d)(2);
(n) a certificate in the form attached hereto as Exhibit J (the “Company
Expense/Indebtedness Certificate”), duly executed by the Member Representative on behalf of the
Sellers, setting forth in sufficient detail the aggregate amount as of the Closing Date of any and
all obligations of the Company for (i) Indebtedness and (ii) unpaid Company Expenses (including
payee and bank account wire transfer instructions);
31
(o) the Closing Funds Flow Memo, duly executed by the Member Representative, setting forth in
sufficient detail (including bank account wire transfer instructions) a listing of the amount to be
paid to each Seller, Appreciation Rights Holder and other Person (and specifying any withholding
Taxes associated therewith) in connection with the Closing;
(p) a payoff letter, in form and substance reasonably satisfactory to the Buyer, with respect
to any Indebtedness, if any, set forth in the Company Expense/Indebtedness Certificate;
(q) appropriate UCC-3 termination statements under the Ohio Uniform Commercial Code and other
instruments as may be requested by the Buyer to extinguish all Indebtedness of the Company and all
Encumbrances related thereto to the extent directed by the Buyer;
(r) an IRS Form W-8 or W-9, as applicable, with respect to each Seller and Appreciation Rights
Holder;
(s) the original minute books, Unit records and similar organizational documents of the
Company;
(t) an agreement, in form and substance satisfactory to the Buyer, extending the term of that
certain agreement set forth on item 437 of Schedule 5.7.1 of the Company Disclosure
Schedule;
(u) non-infringement opinions, in form and substance satisfactory to the Buyer (the
“Delivered Opinions”), from the Company’s counsel regarding the matter set forth on item 7
of Schedule 5.11.1 of the Company Disclosure Schedule;
(v) an aircraft usage agreement in the form attached hereto as Exhibit K (the
“Aircraft Usage Agreement”), duly executed by the Buyer, the Member Representative on
behalf of the Sellers, and Theken Aviation, LLC related to the Company’s use of the aircraft after
the Closing Date;
(w) an amended
and restated agreement, in form and substance satisfactory to the Buyer, which amends and
restates that certain agreement set forth on item 441 of Schedule 5.7.1 of the Company Disclosure
Schedule; and
(x) such other documents and instruments as may be necessary or desirable to effect or
evidence the Transactions that the Buyer may reasonably request.
Section 3.2.2 Closing Deliveries by the Buyer. At the Closing, the Buyer shall
deliver, or shall cause to be delivered, the following:
(a) The Buyer shall pay Forty-Six Million Eight Hundred Thousand Dollars ($46,800,000) by wire
transfer of immediately available funds in accordance with Section 2.3 and the Closing
Funds Flow Memo;
(b) the Ancillary Agreements to which the Buyer is a party, duly executed by the Buyer;
32
(c) certified organizational documents and certificates of good standing issued by the
Secretary of State of the States of Delaware, Ohio and New Jersey, as applicable, for the Buyer,
dated not more than ten (10) Business Days prior to the Closing Date with a bring-down good
standing certificate dated as of the Closing Date (or verbal or online confirmation);
(d) copies of all third party and/or governmental consents, approvals and filings required by
the Buyer in connection with the consummation of the transactions contemplated by this Agreement
set forth on Schedule 3.2.2(d);
(e) a certificate, dated as of the Closing Date and executed by a duly elected, qualified and
acting officer of the Buyer, as to the fulfillment of each of the conditions set forth in
Sections 9.2.1 and 9.2.2; and
(f) such other documents and instruments as may be necessary or desirable to effect or
evidence the Transactions that the Member Representative may reasonably request.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE SELLERS
AND THE UNITS
REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE SELLERS
AND THE UNITS
Each Seller severally, and not jointly with any other Seller, hereby represents and warrants
to the Buyer as of the date of this Agreement and as of the Closing Date as follows (it being
understood and agreed that the disclosures in any section or subsection of the Disclosure Schedules
shall qualify other sections and subsections of this Article IV and Article V as to
which such information may be applicable solely to the extent that the relevance of such disclosure
to such other section or subsection of this Article IV and Article V is reasonably
apparent from such disclosure or if otherwise cross-referenced):
Section 4.1 Organization and Standing. Such Seller, if an entity, is an entity, duly
formed or organized, validly existing and in good standing in the jurisdiction of its formation or
organization, as applicable.
Section 4.2 Power and Authority of Seller. Such Seller has the full right, power and capacity to execute, deliver and perform this
Agreement and each Ancillary Agreement to which such Seller is a party and to consummate the
transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements to which
such Seller is a party have been duly and validly executed and delivered by such Seller or, in the
case of any Ancillary Agreements to be executed and delivered hereafter, such Ancillary Agreements
will have been duly and validly executed and delivered by such Seller as of the Closing. This
Agreement and the Ancillary Agreements to which such Seller is a party each constitute, or in the
case of any Ancillary Agreements to be executed hereafter, such documents will constitute as of the
Closing, such Seller’s legal, valid and binding obligations, enforceable in accordance with their
terms against such Seller, except as the enforceability thereof may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or affecting the
rights of creditors generally and the availability of equitable relief (whether in Proceedings at
law or in equity). The execution, delivery and performance by such Seller of this Agreement and
the Ancillary Agreements to which such Seller is a party and the consummation of the transactions
contemplated hereby and thereby (including the sale of the Units) will not, with or without the
giving of notice or the passing of time, or both, (a) violate any provision of any material
applicable Law to which such Seller is subject, (b) violate any order, Judgment or decree
applicable to such Seller, or (c) violate, conflict with, or result in a breach or default under,
or cause the termination of, any term or condition of any court order, trust document, will,
agreement, document or other instrument to which such Seller is a party or by which such Seller or
such Seller’s properties (including the Units) are bound.
33
Section 4.3 Acknowledgment of Understanding by Seller. Such Seller (a) has carefully
reviewed this Agreement and the Ancillary Agreements to be executed and delivered by such Seller,
(b) has had the opportunity to independently consult with its own counsel, and (c) understands the
effect of the representations and warranties, covenants, conditions and other terms herein and
therein, including such Seller’s obligations to indemnify the Buyer in accordance with Article
XI of this Agreement.
Section 4.4 Ownership of the Units. Except for certain rights set forth in the
Operating Agreement (which such Seller has waived pursuant to Section 7.13 below), such
Seller owns good and marketable record and beneficial title to the number of Units set forth
opposite such Seller’s name on Schedule 4.4 of the Company Disclosure Schedule, and such
Units (a) have been duly authorized, and are validly issued, fully paid, nonassessable and free of
any preemptive rights, and (b) are free and clear of any Encumbrance. Other than the Units set
forth opposite such Seller’s name on Schedule 4.4 of the Company Disclosure Schedule, such
Seller does not own any Units or any other equity or debt security of the Company or any right of
any kind to have any such equity or debt security issued to such Seller. Except for certain rights
set forth in the Operating Agreement (which such Seller has waived pursuant to Section 7.13
below), there are no outstanding contractual obligations of any of the Sellers or the Company to
repurchase, redeem or otherwise acquire any Units. Upon consummation of the Closing, the Buyer
shall have obtained good and valid title to the Units purchased from such Seller, free and clear of
any Encumbrance. Except for certain rights set forth in the Operating Agreement (which such Seller
has waived pursuant to Section 7.13 below) and in this Agreement including Article
XII, such Seller has the exclusive right, power and authority to vote the Units, and such
Person owns and has granted no outstanding proxy as to any of such Units. Except for certain
rights set forth in the Operating Agreement (which such Seller has waived pursuant to Section
7.13 below), such Seller is not a party to or bound by any agreement or any other Contract
affecting or relating to such Seller’s right to sell or otherwise transfer or vote the Units held
by such Seller (except such as shall be terminated in full on or prior to the Closing), and such
Seller’s sale of the Units to the Buyer hereunder will not violate the legal rights of any Person
or give any Person any cause of action or claim against such Seller or the Buyer.
34
Section 4.5 Legal Proceedings; Conflict. Except as set forth on Schedule 4.5 of
the Company Disclosure Schedule, there are no Proceedings pending against the Seller or, as
applicable, any of its officers, directors, shareholders, managers, members, trustees or other
representatives (in their capacity as such) that challenge the validity or propriety of the
transactions contemplated hereunder. Such Seller has not been permanently or temporarily enjoined
or barred by any Judgment of any Governmental Authority or private arbitration tribunal from
engaging in or continuing any conduct or practice in connection with the Company. Except as set
forth on Schedule 4.5 of the Company Disclosure Schedule, such Seller does not own,
directly or indirectly, any interest in (excepting less than five percent (5%) stock holdings for
investment purposes in securities of publicly held and traded companies), or is not an officer,
director, employee or consultant of, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent, customer or client of the Company
Business.
Section 4.6 Potential Conflicts of Interest. Except as otherwise set forth on
Schedule 4.6 of the Company Disclosure Schedule, no Seller:
Section 4.6.1 owns, directly or indirectly, any interest in (excepting less than five percent
(5%) stock holdings for investment purposes in securities of publicly traded companies), or is an
officer, member, employee or consultant of, any Person that carries on business in competition with
the Company; or
Section 4.6.2 has any cause of action or other claim whatsoever against, or owes any amount
to, the Company, except for any Liabilities reflected in the Audited Financial Statements.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
The Company and RRT, jointly and severally, hereby represent and warrant to the Buyer as of
the date of this Agreement and as of the Closing Date as follows (it being understood and agreed
that the disclosures in any section or subsection of the Disclosure Schedules shall qualify other
sections and subsections of this Article IV and Article V as to which such
information may be applicable solely to the extent that the relevance of such disclosure to such
other section or subsection of this Article IV and Article V is reasonably
apparent from such disclosure or if otherwise cross-referenced):
Section 5.1 Organization and Standing. The Company is a limited liability company,
duly organized, validly existing and in good standing under the Laws of the State of Ohio. The
Company does not have any Subsidiaries. The Company has all requisite power and authority and
possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to
carry on the Company Business in the manner as currently being conducted and to own, lease and
operate all of its properties and assets. Schedule 5.1 of the Company Disclosure Schedule
sets forth a true, accurate and complete list of each jurisdiction in which the Company is
qualified to do business as a foreign entity. Except as set forth on Schedule 5.1 of the
Company Disclosure Schedule, the Company is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the character or location of
the properties and assets owned, leased or operated by it make such qualification or licensure
necessary, unless the failure of such licensure or qualification will not result in a Company
Material Adverse Effect. The copies of the Company’s articles of organization and Operating
Agreement delivered by the Company to the Buyer prior to the execution of this Agreement are
accurate, complete and correct copies of such instruments as in effect on the date hereof.
35
Section 5.2 Capitalization.
Section 5.2.1 Authorized, Issued and Outstanding Units. As of the date of this
Agreement and as of the Closing Date, there are an aggregate of 1,040,323.00000 Units of which
(i) 714,140.12658 are designated class A Units and (ii) 326,182.87342 are designated class B Units.
The Company has no other Units authorized, issued or outstanding, and all such Units have been
issued in compliance with all applicable state and federal securities Laws. Schedule 5.2.1
of the Company Disclosure Schedule sets forth the name of each holder of Units, as well as the
number of class A Units and class B Units held by each such holder.
Section 5.2.2 Appreciation Rights. As of the date of this Agreement, an aggregate of
210,651.69 Appreciation Units have been granted and are outstanding. Schedule 5.2.2 of the
Company Disclosure Schedule (as updated by Sellers prior to Closing in accordance the definitions
of the terms “Appreciation Rights Holders” and “Ex-Appreciation Rights Holders”) sets forth the
name of each Appreciation Rights Holder and Ex-Appreciation Rights Holder, as well as the
Appreciation Rights Plan(s) under which such Appreciation Rights Holder’s and Ex-Appreciation
Rights Holders Appreciation Rights were granted, the number of Appreciation Units held by each
Appreciation Rights Holder and the number of Appreciation Units held by each Ex-Appreciation Rights
Holder prior to entering into the Appreciation Rights Termination Agreement, the “Starting
Appreciation Unit Value” (as defined in the applicable Appreciation Rights Plan) for each grant of
Appreciation Units, and: (i) as of the date of this Agreement indicates: (a) the holders of
Appreciation Rights listed thereon with respect to whom it is contemplated will, prior to Closing,
enter into an Appreciation Rights Closure Agreement; and (b) the holders of Appreciation Rights
listed thereon with respect to whom it is contemplated
will, prior to Closing, enter into an Appreciation Rights Termination Agreement; and (ii) as
of Closing will indicate (after being updated by Sellers prior to Closing in accordance the
definitions of the terms “Appreciation Rights Holders” and “Ex-Appreciation Rights Holders”): (a)
the holders of Appreciation Rights listed thereon with respect to whom, prior to Closing, entered
into an Appreciation Rights Closure Agreement (i.e., the Appreciation Rights Holders); and (b) the
holders of Appreciation Rights listed thereon with respect to whom, prior to Closing, entered into
an Appreciation Rights Termination Agreement (i.e., the Ex-Appreciation Rights Holders). The
Company has delivered to the Buyer true, accurate and complete copies of each plan and agreement
pursuant to which any Appreciation Right has been granted, including any and all amendments
thereto. Neither the Company nor any of its Affiliates has ever maintained a plan or arrangement
entitled the “Theken Spine, LLC Appreciation Rights Plans for Employees, Distributors and Medical
Advisors dated January 1, 2006,” and each unit appreciation right or similar right or interest
purported to be issued under such a plan or arrangement was duly and validly issued pursuant to the
Theken Spine, LLC Appreciation Rights Plan for Employees and Distributors dated January 1, 2005.
36
Section 5.2.3 No Other Units or Appreciation Rights. Except for the class A Units and
class B Units referred to in Section 5.2.1 and as set forth on Schedule 5.2.1 of
the Company Disclosure Schedule, there are no outstanding options, warrants, convertible securities
or rights of any kind to purchase or otherwise acquire any Units or other equity or debt securities
of the Company. Except for the Appreciation Units referred to in Section 5.2.2 and as set
forth on Schedule 5.2.2 of the Company Disclosure Schedule, which have been issued in
compliance with all applicable state and federal securities Laws, there are no outstanding: (i)
appreciation rights in the Company, or (ii) rights of any kind to receive from the Company, or
otherwise be granted from the Company, any appreciation rights, profits, interests or other equity
linked rights, or any right, warrant or option to acquire any of the foregoing, or other right,
agreement, arrangement or commitment that gives any Person the right to receive any deferred
compensation, economic benefit or right similar to those granted under any of the Company’s
Appreciation Rights Plans. The Company does not have any outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or are convertible into or
exchangeable for securities having the right to vote) on any matter.
Section 5.2.4 No Other Agreements. Except as set forth on Schedule 5.2.4 of
the Company Disclosure Schedule and except as set forth in the Operating Agreement and Article
XII of this Agreement, there are no outstanding contractual obligations between the Company and
any of its security holders (i) restricting the transfer of; (ii) affecting the voting rights of;
(iii) requiring or allowing the repurchase, redemption or disposition of, or containing any right
of first refusal with respect to; (iv) requiring the registration or sale of; or (v) granting any
preemptive or antidilutive right with respect to, any Units or other equity interests in the
Company.
Section 5.3 Authority; No Violation. The Company has full power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which it is a party and to
perform its obligations hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements to
which the
Company is a party and the consummation of the transactions contemplated hereby and thereby
have been duly and validly approved, and no other proceedings on the part of the Company or any of
its Members or managers are necessary to approve this Agreement or the Ancillary Agreements to
which the Company is a party, or to authorize or consummate the transactions contemplated hereby
and thereby, in each case on behalf of the Company. This Agreement and the Ancillary Agreements to
which the Company is a party, have been duly and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery of this Agreement and the Ancillary
Agreements to which the Company is a party by each of the other parties hereto and thereto)
constitute or will constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as the enforceability thereof may be
subject to or limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws
relating to or affecting the rights of creditors generally and the availability of equitable relief
(whether in Proceedings at law or in equity).
Section 5.4 Consents and Approvals; No Conflicts. Except for certain rights set forth
in the Operating Agreement (which the Sellers have waived pursuant to Section 7.13 below),
and except for those consents, approvals and notices set forth on Schedule 5.4 of the
Company Disclosure Schedule as well as those required under the HSR Act, neither the execution and
delivery by the Company of this Agreement or the Ancillary Agreements to which the Company is a
party nor the consummation by the Company of any of the transactions contemplated hereby or
thereby, nor compliance by the Company with any of the terms or provisions hereof or thereof, will
(i) conflict with or violate any provision of the articles of organization or Operating Agreement
of the Company, or (ii) (A) violate, conflict with or require any notice, filing, consent, waiver
or approval under any material applicable Law or Judgment to which the Company or any of its
respective properties, Contracts or Company Assets are subject, or (B) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under, constitute a default (or
an event which, with or without notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation under, accelerate or
result in a right of acceleration of the performance required by, result in the creation of any
Encumbrance upon the Units or any Encumbrance, other than a Permitted Encumbrance, upon the
properties, Scheduled Contracts or assets of the Company under, or require any notice, approval,
waiver or consent under, any Contract.
37
Section 5.5 Financial Statements.
Section 5.5.1 The Company has delivered to the Buyer true, accurate and complete copies of (i)
the consolidated unaudited balance sheet of the Company as of September 30, 2007 (the
“Consolidated Interim Balance Sheet”), and the related consolidated statements of
operations and changes in members’ equity for the nine-month period then ended (the statements
referred to in this clause (i), including the Consolidated Interim Balance Sheet, the
“Consolidated Interim Financial Statements”); and (ii) the consolidated audited balance
sheet of the Company as of December 31, 2006 (the “Consolidated Audited Balance Sheet”) and
the related consolidated statements of operations and changes in members’ equity for the fiscal
year
ended December 31, 2006, as the same are accompanied by the opinion of SS&G Financial
Services, Inc. (the statements referred to in this clause (ii), including the Consolidated Audited
Balance Sheet, and the opinion of SS&G Financial Services, Inc., the “Consolidated Audited
Financial Statements”). The Consolidated Interim Financial Statements are attached hereto as
Schedule 5.5.1(a) of the Company Disclosure Schedule and the Consolidated Audited Financial
Statements are attached hereto as Schedule 5.5.1(b) of the Company Disclosure Schedule.
The Consolidated Interim Financial Statements include a consolidating balance sheet schedule which
sets forth the true, accurate and complete unconsolidated, unaudited balance sheet of the Company
as of September 30, 2007 (the “Interim Balance Sheet”), and a consolidating statement of
income schedule which sets forth the related unconsolidated statement of operations for the
nine-month period then ended (the statements referred to in this clause, including the Interim
Balance Sheet, the “Interim Financial Statements”). The Consolidated Audited Financial
Statements include a consolidating balance sheet schedule which sets forth the true, accurate and
complete unconsolidated, audited balance sheet of the Company as of December 31, 2006 (the
“Audited Balance Sheet”), and a consolidating statement of income schedule which sets forth
the related unconsolidated statement of operations for the fiscal year ended December 31, 2006, as
the same are accompanied by the opinion of SS&G Financial Services, Inc. (the statements referred
to in this clause, including the Audited Balance Sheet, and the opinion of SS&G Financial Services,
Inc., the “Audited Financial Statements”). The Interim Financial Statements are attached
hereto as Schedule 5.5.1(c) of the Company Disclosure Schedule and the Audited Financial
Statements are attached hereto as Schedule 5.5.1(d) of the Company Disclosure Schedule.
The Interim Financial Statements and Audited Financial Statements present fairly, in all material
respects in relation to the Consolidated Audited Financial Statements taken as a whole, the
financial position of the Company as of the dates thereof and the results of the Company’s
operations for the fiscal periods therein set forth. Each of the Audited Financial Statements and
the Interim Financial Statements has been prepared in accordance with the Company’s books and
records, and GAAP consistently applied throughout such fiscal periods, subject to normal year-end
adjustments, except (A) that the Interim Financial Statements may be subject to normal year-end
audit adjustments that will not be material, individually or in the aggregate, and (B) for the
items listed in Schedule 5.5.1(e) of the Company Disclosure Schedule.
38
Section 5.5.2 Attached hereto as Schedule 5.5.2 of the Company Disclosure Schedule are
true, accurate and complete copies of (i) the monthly unaudited balance sheet of the Company as of
the last day of each month from October 2007 through June 2008, inclusive, and (ii) the related
statement of operations of the Company for each such month then ended (the statements referred to
in clauses (i) and (ii), together with any additional financial statements delivered hereafter
pursuant to Section 7.11, collectively, the “Interim Monthly Financial
Statements”). Schedule 5.5.2 of the Company Disclosure Schedule shall be updated to
include any Interim Monthly Financial Statements delivered after the date hereof pursuant to
Section 7.11. The Interim Monthly Financial Statements present fairly, in all material
respects, the financial position of the Company as of the dates thereof and the results of the
Company’s operations for the fiscal periods therein set forth. Each of the Interim Monthly
Financial Statements has been prepared in accordance with the Company’s books and records, and GAAP
consistently applied throughout such fiscal periods, subject to normal year-end adjustments, except
(A) that the Interim Monthly Financial Statements may be subject to normal year-end
audit adjustments that will not be material, individually or in the aggregate, and (B) for the
items listed in Schedule 5.5.2 of the Company Disclosure Schedule.
Section 5.5.3 Schedule 5.5.3 of the Company Disclosure Schedule sets forth a true,
accurate and complete itemization of the accounts receivable (including aging) of the Company as of
a date not more than five (5) days prior to the date of this Agreement (the “Accounts
Receivable”). The Accounts Receivable represent bona fide claims against debtors for sales,
services performed or other charges arising on or before the respective dates of recording thereof.
All Accounts Receivable have been billed in accordance with the past practice and custom of the
Company consistently applied and are collectible in the ordinary course of business, except to the
extent of an amount not in excess of the reserve for doubtful accounts reflected on the Interim
Balance Sheet.
Section 5.5.4 The Company has not incurred any Liability or obligation (absolute, accrued,
contingent or otherwise) (other than contractual Liabilities and contractual obligations incurred
in the ordinary course) that is required under GAAP to be reflected or reserved against, which has
not been properly reflected or reserved against in the Audited Financial Statements and Interim
Financial Statements.
Section 5.5.5 There are no actual outstanding claims against the Company to return any
products by reason of alleged overshipments, defective products or otherwise that, individually or
in the aggregate, are material to the Company. Except as set forth on Schedule 5.5.5 of
the Company Disclosure Schedule, no outstanding purchase commitment of the Company presently is in
excess of the normal, ordinary and usual requirements of the Company Business or contains terms or
conditions that are materially more onerous than those usual and customary in the Company Business.
39
Section 5.5.6 The Company has made and kept (and given the Buyer access to) its true, accurate
and complete books and records and accounts, which, in reasonable detail, accurately and fairly
reflect the activities of the Company Business. The copies of the minute books of the Company
previously delivered to the Buyer in connection with the Buyer’s due diligence are true and
accurate, and accurately reflect all transactions in the Company’s equity securities through and
including the date hereof. At the Closing, the Buyer will have exclusive ownership and direct
control of the Company’s records, systems, controls, data and information.
Section 5.6 Inventory. Schedule 5.6 of the Company Disclosure Schedule sets
forth a complete and accurate list of addresses at which Inventory is located as of the date hereof
and except as set forth therein, and except as set forth on Schedule 5.6 of the Company
Disclosure Schedule, no Inventory is held as of the date hereof by any Person (including any
Affiliate of the Company) on consignment. All Inventory reflected on the Audited Financial
Statements and Interim Financial Statements and all other Inventory acquired by the Company was
acquired in the ordinary course of business and in a manner consistent with the Company’s ordinary
and usual inventory practices consistent with past custom and practice. Except for Excess or
Obsolete Inventory set forth on Schedule 5.6 of the Company Disclosure Schedule, all such
Inventory is in
good and saleable condition. As of the Closing Date, the Inventory held by the Company is
sufficient to enable the Company, following the Closing Date, to perform its ordinary usual
obligations consistent with past custom and practice. Adequate reserves in accordance with GAAP
have been established on the Audited Financial Statements and Interim Financial Statements with
respect to any (i) missing Inventory, or any (ii) Excess or Obsolete Inventory.
Section 5.7 Contracts.
Section 5.7.1 Schedule 5.7.1 of the Company Disclosure Schedule sets forth a complete
and accurate list or description, as of the date hereof, of all Contracts, except for “click
through” or “shrink-wrap” end user license agreements for commercial, off-the-shelf standard
software products entered into in the ordinary course of business: (i) pursuant to which the
Company is either obligated to pay or entitled to receive in excess of $20,000 and that is not
otherwise required to be disclosed pursuant to subsections (ii) through (xxviii) of this
Section 5.7.1; (ii) that are not terminable by the Company within ninety (90) days from the
date of this Agreement without penalty or further obligation on the part of the Company; (iii) that
involve payments based on profits or revenues of the Company; (iv) that are notes, mortgages,
indentures, letters of credit or other obligations or agreements or other instruments evidencing
Indebtedness (excluding trade payables incurred by the Company in the ordinary course of business
and consistent with past practice) of the Company; (v) that are collective bargaining agreements
with any labor unions or associations representing employees of the Company; (vi) that are for the
lease of personal property with an annual base rental obligation of more than $10,000 or a total
remaining rental obligation of more than $50,000; (vii) that are outsourcing, employment,
management, consulting, service, severance or change in control agreements or other agreements or
arrangements with any employee, Member, consultant or independent contractor of the Company (other
than offer letters and employee invention and Proprietary Rights assignment agreements and option
agreements, in each case, in the Company’s standard forms previously provided to the Buyer); (viii)
that are non-disclosure agreements or similar agreements pursuant to which the Company is a party
or which pertain to the Company Business; (ix) that include any noncompetition or nonsolicitation
covenant or any exclusive dealing or similar arrangement that limits the ability of the Company or
any of its Affiliates to compete (geographically or otherwise) in any line of business anywhere in
the world; (x) that include any noncompetition or nonsolicitation covenant or any exclusive dealing
or similar arrangement that limits the ability of other Persons to compete (geographically or
otherwise) in any line of business anywhere in the world;
40
(xi) that are Contracts with distributors
of the Company Products and/or Contracts with agents for the sale of the Company’s products; (xii)
that obligate the Company to make future payments, contingent or otherwise, arising out of or
relating to the acquisition or disposition of any business or securities of other Persons; (xiii)
that are with any supplier with respect to the Company Business other than Contracts entered into
with such suppliers in the ordinary course of business consistent with past practice and not in
excess of $10,000; (xiv) that are Contracts with manufacturers of the Company’s products other than
Contracts entered into with such manufacturers in the ordinary course of business consistent with
past practice and not in excess of $10,000; (xv) that are with any group purchasing organization,
hospital organization, hospital or surgeon;
(xvi) pursuant to which the Company has agreed to encumber, not assert, transfer or sell rights in or with respect to any
Proprietary Rights; (xvii) pursuant to which the Company is a party and which provides for the
development of any Technology or Proprietary Rights, independently or jointly; (xviii) that are
powers of attorney or agency agreements with respect to the Company Business; (xix) pursuant to
which the Company is a party and pursuant to which any Person is authorized or permitted to use any
Proprietary Rights; (xx) pursuant to which the Company is a party and pursuant to which the Company
acquired or is authorized to use any Intellectual Property Rights of any current or former employee
or other third party; (xxi) to license or authorize any third party to manufacture or reproduce any
products or Technology under Proprietary Rights; (xxii) obligating the Company to provide source
code to any third party for Proprietary Rights; (xxiii) granting a license to Proprietary Rights or
granting any distribution rights; (xxiv) granting an exclusive license to Proprietary Rights or
granting any exclusive distribution rights; (xxv) entered into by the Company with any Affiliate of
the Company; (xxvi) that are joint venture agreements or joint product development agreements
relating to the Company Business; (xxvii) obligating the Company to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any other Person;
(xxviii) entered into other than in the ordinary course;; or (xxix) that are material written
amendments, supplements or modifications in respect of any of the foregoing specified in
subsections (i) through (xxviii) of this Section 5.7.1 (collectively, the “Scheduled
Contracts”); provided, however, that Sellers shall not be obligated to schedule pursuant to the
foregoing clauses (vii) — (xi), any contracts with former employees, consultants or sales
representatives of the Company, that consist of employment at will agreements, consulting
agreements or manufacturer’s representative agreements entered into in the ordinary course of the
Company Business (which contracts, agreements or underlying relationship have been terminated or
expired prior to the date hereof).
Section 5.7.2 Schedule 5.7.2 of the Company Disclosure Schedule sets forth a complete
and accurate list of all material oral commitments that the Company has made to its customers with
respect to the products and services of the Company.
41
Section 5.7.3 As of the date hereof, each of the Contracts is a legal, valid and binding
obligation of the Company (assuming the due authorization, execution and delivery by the other
parties thereto), is in full force and effect and enforceable against the Company in accordance
with its terms, and is in full force and effect and enforceable against all parties thereto other
than the Company, except in each case as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors
generally and by the availability of equitable remedies (whether in Proceedings at law or in
equity). Except as set forth on Schedule 5.7.3.1 of the Company Disclosure Schedule, the
Company has not received notice of cancellation of or default under or intent to cancel or call a
default under any of the Contracts. Except as set forth on Schedule 5.7.3.2 of the Company
Disclosure Schedule, the Company has performed all obligations required to be performed by it to
date under the Contracts where nonperformance would result in a material breach of or default under
any such Contract, or result in the termination, cancellation or acceleration of, or cause the loss
or material modification of any right, or the imposition or material modification of any obligation
under any such Contract. Except as set forth on Schedule 5.7.3.3 of the Company Disclosure
Schedule, following the Closing, the Company will be permitted to exercise all of the Company’s
rights under the Contracts to the same extent the Company would have been able to
had the Transactions not occurred and without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payment which the Company would otherwise be
required to pay.
Section 5.7.4 Except as set forth on Schedule 5.7.4 of the Company Disclosure
Schedule, true, accurate and complete copies of each of the written Scheduled Contracts, together
with all material amendments, modifications or other changes thereto, have been provided to the
Buyer.
Section 5.8 Regulatory Matters.
Section 5.8.1 Except as set forth on Schedule 5.8.1 of the Company Disclosure
Schedule, all of the products sold by the Company are classified as Class I and Class II Medical
Devices (as defined in Title 21 of the Code of Federal Regulations (CFR), Parts 862-892). Except
as set forth on Schedule 5.8.1 of the Company Disclosure Schedule, the Company, and the
products sold by the Company, are in compliance in all material respects with all current and
otherwise applicable statutes, rules, regulations, standards, guides or orders administered or
issued by the FDA and all other Governmental Authorities (except for environmental agencies or
bodies) having regulatory authority over the products of the Company (except with respect to
environmental matters) and the Company.
Section 5.8.2 Except as set forth on Schedule 5.8.2 of the Company Disclosure
Schedule, in the previous sixty (60) month period, the Company has not received any of the
following communications, and to the Knowledge of the Company no facts exist which furnish any
reasonable basis for, any Notice of Inspectional Observation (Form FDA 483), Notice of Adverse
Findings, FDA Warning Letters, Section 305 notices, subpoena or other similar communication by any
Governmental Authority, and there have been no recalls, field notifications, safety alerts or
seizures required or threatened relating to the products manufactured, marketed or sold by the
Company.
42
Section 5.8.3 Except as set forth on part (a) of Schedule 5.8.3 of the Company
Disclosure Schedule, since its founding, the Company has neither filed any premarket approval
applications (“PMA”) nor received any premarket notification (“510(k)”) clearance
or concurrence letters from the FDA. Part (b) of Schedule 5.8.3 of the Company Disclosure
Schedule contains a complete list of all of the Company’s products not marketed under an approved
PMA or 510(k).
Section 5.8.4 Since its founding, the Company has not filed any investigational device
exemptions (“IDE”) and has not conducted any clinical investigations under an IDE.
Section 5.8.5 Except as set forth on Schedule 5.8.5 of the Company Disclosure
Schedule, to the Knowledge of the Company there are no facts which are reasonably likely to cause:
(i) the denial, withdrawal, recall or suspension of any product sold or intended to
be sold by the Company; (ii) a change in the marketing classification or labeling of any such
products; or (iii) a termination or suspension of marketing of any such products.
Section 5.8.6 Except as set forth on Schedule 5.8.6 of the Company Disclosure
Schedule, during the past five (5) years no products manufactured, marketed or sold by the Company
or in connection with the Company Business have been recalled or subject to a field notification
(whether voluntarily or otherwise) and no Proceedings have occurred (whether completed or pending)
seeking to recall, suspend or seize a product sold or proposed to be sold by the Company or in
connection with the Company Business.
Section 5.8.7 Except as set forth on Schedule 5.8.7 of the Company Disclosure
Schedule, in the past forty-eight (48) months, the Company has not received any FDA inspection
reports and the FDA has not inspected the Company’s facilities. The Company has furnished the
Buyer with access to the Company’s internal audit reports (as required by 21 C.F.R. Part 820,
Section 820.22) conducted by the Company in the past forty-eight (48) months. Schedule
5.8.7 of the Company Disclosure Schedule contains an accurate and complete list of all such
internal audit reports in the past twenty-four (24) months.
Section 5.8.8 Except as set forth on Schedule 5.8.8 of the Company Disclosure
Schedule, during the past five (5) years the Company has not filed any Medical Device Reports
(pursuant to 21 C.F.R. Part 804).
Section 5.8.9 The Company has made available to the Buyer all complaints maintained by the
Company (as required by 21 C.F.R. Part 820) and all product experience reports received or compiled
by the Company during the past five (5) years. Schedule 5.8.9 of the Company Disclosure
Schedule contains a complete list of all such complaints and product experience reports received or
compiled by the Company during the past five (5) years.
Section 5.8.10 The Company has made available to the Buyer copies of all labels for all of the
Company’s products in the Company’s possession. Except as set forth on Schedule 5.8.10 of
the Company Disclosure Schedule, all labels are in material compliance with all applicable FDA and
similar federal, state, local and foreign Laws.
43
Section 5.8.11 Except as set forth on Schedule 5.8.11 of the Company Disclosure
Schedule, the Company has not obtained any regulatory approvals from any foreign regulatory
agencies related to the products distributed and sold by the Company.
Section 5.9 Employment Matters.
Section 5.9.1 List of Plans. Schedule 5.9.1 of the Company Disclosure
Schedule sets forth a complete list of each “employee benefit plan” as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (whether or not
subject to ERISA) and any other plan, policy, program practice, agreement, understanding or
arrangement (whether written or oral) providing compensation or other benefits
to any current or former director, officer, employee or consultant (or to any dependent or
beneficiary thereof) of the Company or any ERISA Affiliate (as defined below), which are now, or
were within the past six (6) years, maintained, sponsored or contributed to by the Company or any
ERISA Affiliate, or under which the Company or any ERISA Affiliate has or may have any obligation
or Liability, whether actual or contingent, including, without limitation, all such incentive,
bonus, deferred compensation, vacation, holiday, cafeteria, medical, disability, stock purchase,
stock option, appreciation rights, phantom stock, restricted stock or other stock-based
compensation plans, policies, programs, practices or arrangements (each a “Company Benefit
Plan”). For purposes of this Agreement, “ERISA Affiliate” means any entity (whether or
not incorporated) other than the Company that, together with the Company, is required to be treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code.
Section 5.9.2 Deliveries. With respect to each Company Benefit Plan, the Company has
delivered to the Buyer complete copies and summary plan descriptions of (i) each Company Benefit
Plan (or, if not written, a written summary of its material terms), including without limitation
all plan documents, trust agreements, insurance contracts or other funding vehicles and all
amendments thereto, (ii) all summaries and summary plan descriptions, including any summary of
material modifications (iii) the most recent annual reports (Form 5500 series) filed with the IRS
with respect to such Company Benefit Plan, (iv) the most recent actuarial report or other financial
statement relating to such Company Benefit Plan, (v) the most recent determination or opinion
letter, if any, issued by the IRS with respect to any Company Benefit Plan and any pending request
for such a letter, (vi) the most recent nondiscrimination tests performed under the Code (including
the Section 401(k) and Section 401(m) tests) for each Company Benefit Plan, and (vii) all filings
made with any Governmental Authority, including but not limited to any filings under the Employee
Plans Compliance Resolution System or the Department of Labor Delinquent Filer Program.
Section 5.9.3 General Compliance. Except as set forth on Schedule 5.9.3 of
the Company Disclosure Schedule, each Company Benefit Plan has been administered in all material
respects in accordance with its terms and all applicable Laws, including ERISA, federal and state
securities laws and the Code, and all contributions required to be made under the terms of any of
the Company Benefit Plans as of the date of this Agreement have been timely made or, if not yet
due, have been properly reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Audited Financial Statements prior to the date of this Agreement
to the extent required to be so reflected or incorporated therein under applicable Law, GAAP or
otherwise. With respect to each Company Benefit Plan, all tax, annual reporting and other
governmental filings required by ERISA and the Code have been timely filed with the appropriate
Governmental Authority and all notices and disclosures have been timely provided to participants.
With respect to the Company Benefit Plans, no event has occurred, and to the Knowledge of the
Company there exists no condition or set of circumstances, in connection with which the Company
could be subject to any material Liability (other than for routine benefit liabilities) under the
terms of, or with respect to, such Company Benefit Plans, ERISA, the Code or any other applicable
Law.
44
Section 5.9.4 Tax Qualification of Plans. Except as set forth on Schedule
5.9.4 of the Company Disclosure Schedule, each Company Benefit Plan which is
intended to qualify under Section 401(a), Section 401(k) or Section 4975(e)(7) of the Code
either (i) has received a favorable determination letter from the IRS as to its qualified status,
(ii) may rely upon a favorable prototype opinion letter from the IRS, or (iii) the remedial
amendment period for such Company Benefit Plan has not yet expired, and each trust established in
connection with any Company Benefit Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code is so exempt, and to the Knowledge of the Company, no
fact or event has occurred and there exists no condition or set of circumstances, that could
adversely affect the qualified status of any such Company Benefit Plan or the exempt status of any
such trust.
Section 5.9.5 Prohibited Transactions, Legal Actions, Ability to Amend, and
Deductibility. There has been no prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code and other than a transaction that is exempt under a statutory or
administrative exemption) with respect to any Company Benefit Plan that could result in Liability
to the Company or any ERISA Affiliate. Neither the Company nor any other Person or entity has any
express or implied commitment, whether legally enforceable or not, to modify, change or terminate
any Company Benefit Plan, other than with respect to a modification, change or termination required
by ERISA or the Code. No suit, administrative proceeding, action or other litigation has been
brought, or to the Knowledge of the Company, is threatened, against or with respect to any such
Company Benefit Plan, including any audit or inquiry by the IRS or United States Department of
Labor. Neither the Company nor any ERISA Affiliate has any Liability under ERISA Section 502. All
contributions and payments to such Company Benefit Plan are deductible under Code Sections 162 or
404. No circumstances exist that could result in excise taxes being imposed upon the Company under
Chapter 43 of the Code.
Section 5.9.6 Title IV of ERISA. No Company Benefit Plan is a “multiemployer plan”
(as defined in Section 3(37) of ERISA) (“Multiemployer Plan”) or other pension plan subject
to Title IV or Part 3 of Title I of ERISA or Section 412 of the Code, and neither the Company nor
any ERISA Affiliate has sponsored, maintained, participated in, contributed to, or has been
required to participate in or contribute to a Multiemployer Plan or other pension plan subject to
Title IV or Part 3 of Title I of ERISA or Section 412 of the Code. None of the assets of Company
or any ERISA Affiliate is, or may reasonably be expected to become, the subject of any lien arising
under ERISA or Section 412(n) of the Code.
Section 5.9.7 Change in Control. Except as set forth on Schedule 5.9.7 of the
Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in any payment, acceleration or
creation of any rights of any Person to benefits under any Company Benefit Plan. No amount that
could be received (whether in cash, property, the vesting of property or otherwise) as a result of
or in connection with the consummation of the Transactions, by any employee, officer, director or
other service provider of the Company who is a “disqualified individual” (as such term is defined
in Treasury Regulation Section 1.280G-1) could be characterized as an “excess parachute payment”
(as defined in Section 280G(b)(1) of the Code).
45
Section 5.9.8 Retiree Health/COBRA. Except as required by applicable Law, no Company
Benefit Plan provides any of the following retiree or post-employment benefits to any person:
medical, disability or life insurance benefits. No Company
Benefit Plan is a voluntary employee benefit association under Section 501(a)(9) of the Code.
The Company and each ERISA Affiliate is in material compliance with (i) the requirements of the
applicable health care continuation and notice provisions of COBRA, and the regulations (including
proposed regulations) thereunder and any similar state law and (ii) the applicable requirements of
the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations
(including the proposed regulations) thereunder.
Section 5.9.9 Code Section 409A.
(a) Except as set forth on Schedule 5.9.9(a) of the Company Disclosure Schedule, no Company Benefit Plan or payment or benefit provided pursuant to any Company Benefit Plan between the Company and any “service provider” (within the meaning of Section 409A of the Code) will or may provide for the deferral of compensation subject to Section 409A of the Code, whether pursuant to the execution and delivery of this Agreement or the consummation of the Transactions (either alone or upon the occurrence of any additional or subsequent events) or otherwise. Each Company Benefit Plan, including but not limited to each Appreciation Rights Plan or Unit Appreciation Agreement, that is a nonqualified deferred compensation plan subject to Section 409A of the Code has been operated and administered in good faith compliance with Section 409A of the Code from the period beginning January 1, 2005 through the date hereof. The payments of the amounts described in Sections 2.2, 2.3(c), 2.4.4(c) and (e), 2.5.1(a), 2.5.2(a), and 2.5.4(a) to the Appreciation Rights Holders in the manner set forth in such Sections complies with Section 409A of the Code and, without limiting the generality of the foregoing, will constitute payments of “transaction-based compensation” in compliance with Treasury Regulation Section 1.409A-3(i)(5)(iv).
(b) The Appreciation Units awards disclosed on Schedule 5.9.9(b) of the Company Disclosure Schedule have been granted in compliance with applicable Law and have a “Starting Appreciation Unit Value” (as defined in the Theken Spine, LLC Appreciation Rights Plan for Employees and Distributors dated January 1, 2005) that is at least equal to the fair market value of a Unit as of the date that the Appreciation Unit was awarded (determined in accordance with applicable Law, including, without limitation, Section 409A of the Code).
Section 5.9.10 Withholding and Classification. The Company has withheld and paid all
amounts required by law or by agreement to be withheld from the wages, salaries, and other payments
to its employees, independent contractors and other service providers, and is not liable for any
arrears of wages or any taxes or any penalty for failure to withhold or pay such amounts. The
Company has properly classified all individuals providing services to the Company as employees or
non-employees for all relevant purposes.
Section 5.9.11 Foreign Plans. The Company does not maintain, sponsor, contribute to
or have any liability with respect to any employee benefit plan, program or arrangement that
provides benefits to non-resident aliens with no United States source income outside of the United
States or which is otherwise subject to the laws of any jurisdiction outside of the United States.
46
Section 5.9.12 Company Business Employees.
(a) Schedule 5.9.12(a) of the Company Disclosure Schedule sets forth a complete and
accurate list (giving name, job title, credited service, current annual compensation (including a
separate statement of base salary, bonus and benefits for each individual)) of each employee of the
Company. The Company has never been delinquent in payments to any employee, consultant or
independent contractor for any wages, salaries, commissions, bonuses or other direct compensation
for any services performed for it or amounts required to be reimbursed to such employee, except to
the extent of: (i) any delinquent payments arising from disputes with any such employees,
consultants or independent contractors set forth
on Schedule 5.9.12(a) of the Company Disclosure Schedule or (ii) non-material
delinquencies. Except as set forth on Schedule 5.9.12(a) of the Company Disclosure
Schedule, the Company is currently in compliance in all material respects with all applicable Laws
respecting labor, employment, immigration, fair employment practices, terms and conditions of
employment, workers’ compensation, occupational safety, plant closings, wages and hours and does
not have any material outstanding liability with respect to any prior non-compliance with such
Laws. The Company is not nor has it ever been liable for any nonpayment to any trust or other fund
or to any Governmental Authority, with respect to unemployment compensation benefits, social
security or other benefits or obligations for employees (other than routine payments to be made in
the ordinary course of business and consistent with past practice).
(b) Except as set forth on Schedule 5.9.12(b) of the Company Disclosure Schedule,
there are no pending claims against the Company under any workers’ compensation plan or policy or
for long-term disability. The Company is not bound by or subject to (and none of its assets or
properties are bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested in writing, or to
the Knowledge of the Company has sought, to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the Company pending or,
to the Knowledge of the Company, threatened. Except as set forth on Schedule 5.9.12(b) of
the Company Disclosure Schedule the Company has not, during the three-year period prior to the date
of this Agreement, received any demand letters, suits, drafts of suits, or administrative claims of
or from any of its employees. Except as set forth on Schedule 5.9.12(b) of the Company
Disclosure Schedule, there are no controversies pending, or, to the Knowledge of the Company,
threatened, between the Company and any of its employees, consultants or independent contractors,
which controversies have or could reasonably be expected to result in an action, suit, proceeding,
claim, arbitration or investigation before any Governmental Authority.
(c) To the Knowledge of the Company, none of the Company’s employees, consultants or
independent contractors are obligated under any Contract, or subject to any Judgment, decree or
order of any Governmental Authority, that would materially interfere with the use of their efforts
to promote the interests of the Company or that would conflict with the Company Business. To the
Knowledge of the Company and except as set forth on Schedule 5.9.12(c) of the Company
Disclosure Schedule: (i) each employee, consultant and independent contractor currently employed or
engaged by the Company (other than independent contractors who do not have access to any of the
Company’s confidential or proprietary information (e.g., construction workers)) has executed a
non-disclosure of confidential and/or proprietary information agreement with respect to the
confidential and/or proprietary information made available to such employee, consultant and
independent contractor of the Company; and (ii) no current or former employee, consultant or
independent contractor of the Company is in violation of any term or covenant of any Contract
relating to employment, invention disclosure, invention assignment, nondisclosure or
non-competition or any other Contract with any other party by virtue of such employee, consultant
or independent contractor being employed by, or performing services for, the Company or using trade
secrets or proprietary information of others without permission.
47
Section 5.9.13 Employee Claims. To the Knowledge of the Company and except as set
forth on Schedule 5.9.13 of the Company Disclosure Schedule, no employee or former employee
has any cause of action or other claim against the Company or any of its directors or officers
under federal or state employee discrimination or sexual harassment laws including claims under
Title VII of the Civil Rights Act of 1964.
Section 5.10 Tax Matters.
Section 5.10.1 Except as set forth on Schedule 5.10.1 of the Company Disclosure
Schedule, all Tax Returns required to be filed by or with respect to the Company have been timely
filed (taking into account any applicable extensions of time to file) with the appropriate
Governmental Authority, and all such Tax Returns are accurate and complete in all material
respects. Except as set forth on Schedule 5.10.1 of the Company Disclosure Schedule, the
Company is not currently the beneficiary of any extension of time to file any such Tax Return.
Complete and accurate copies of all Tax Returns of the Company for the last three (3) fiscal years
have been delivered or otherwise made available to the Buyer.
Section 5.10.2 Except as set forth on Schedule 5.10.2 of the Company Disclosure
Schedule: (i) the Company has timely paid all Taxes which are due and payable; and (ii) the
accruals and reserves with respect to Taxes (other than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set forth on the Interim Balance Sheet
are adequate to cover all Taxes of the Company accruing or payable with respect to Tax Periods (or
portions thereof) ending on or before the date of the Interim Balance Sheet. All Taxes of the
Company attributable to Tax Periods (or portions thereof) commencing after the date of the Interim
Balance Sheet have arisen in the ordinary course of business.
Section 5.10.3 Except as set forth on Schedule 5.10.3 of the Company Disclosure
Schedule: (i) to the Knowledge of the Company, the Company is in material compliance with, and
their records contain all information and documents necessary to comply with, all applicable
information reporting and withholding requirements under federal, state, local and foreign Tax
Laws; (ii) all Taxes required by Law to be withheld or collected by the Company has been duly
withheld or collected and, to the extent required, have been timely paid to the proper Governmental
Authority; and (iii) the Company has properly requested, received and retained all necessary
exemption certificates and other documentation supporting any claimed exemption or waiver of Taxes
on sales or other transactions as to which the Company otherwise would have been obligated to
collect or withhold Taxes.
Section 5.10.4 There are no Encumbrances for Taxes (other than Permitted Encumbrances) on any
of the assets of the Company. The Company has not elected nor is required to treat any of its
assets as tax-exempt bond financed property or tax-exempt use property within the meaning of
Section 168 of the Code or under any comparable provision of state, local or foreign Tax Law. None
of the assets of the Company is required to be treated for Tax purposes as being owned by any other
Person.
48
Section 5.10.5 Except as set forth on Schedule 5.10.5 of the Company Disclosure
Schedule: (i) no deficiencies for Taxes or other assessments relating to Taxes have been claimed,
proposed or assessed against the Company; (ii) there are no ongoing, pending, or to the Knowledge
of the Company threatened, audits, investigations, examinations or other administrative or judicial
Proceedings relating to the Liability for any Taxes of the Company, and there are no matters under
discussion between the Company and any Governmental Authority with respect to the Liability for any
Taxes of the Company; (iii) no power of attorney has been executed by or on behalf of the Company
with respect to any matters relating to Taxes that is currently in force; (iv) no extension or
waiver of a statute of limitations relating to Taxes is in effect with respect to the Company; and
(v) no claim has ever been made by any Governmental Authority against the Company in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be subject to taxation in
that jurisdiction.
Section 5.10.6 The Company has not requested or received any ruling from any Governmental
Authority, or signed any binding agreement with any Governmental Authority, which would impact the
amount of any Tax Liability of the Company for a Post-Closing Tax Period. The Company will not be
required to recognize for Tax purposes in a Post-Closing Tax Period any income or gain that
otherwise would have been required to be recognized under the accrual method of accounting in a
Pre-Closing Tax Period as a result of any change in the method of accounting of the Company (other
than any change in accounting method mandated by the Buyer) or otherwise deferring the recognition
of income or gain to a Post-Closing Tax Period as a result of the accounting method used in a
Pre-Closing Tax Period.
Section 5.10.7 Except as set forth on Schedule 5.10.7 of the Company Disclosure
Schedule: (i) the Company has never been a member of any affiliated group of corporations which has
filed a combined, consolidated or unitary income Tax Return for federal, state, local or foreign
Tax purposes; and (ii) the Company is not liable for the Taxes of any Person under Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or foreign Tax Law, as a
transferee or successor, by contract, or otherwise.
Section 5.10.8 Except as may otherwise be provided in the Operating Agreement, the Company is
not a party to any Tax sharing, indemnity, allocation or similar agreements. The Company has no
contractual obligations to indemnify any other Person with respect to Taxes.
Section 5.10.9 The Company has not entered into or participated in (i) any reportable
transaction within the meaning of Treasury Regulation Section 1.6011-4(b) or (ii) any confidential
corporate tax shelter within the meaning of Section 6111(d) of the Code and Treasury Regulation
Section 301.6111-2, as in effect prior to the enactment of the American Jobs Creation Act of 2004.
49
Section 5.10.10 Except as set forth on Schedule 5.10.10 of the Company Disclosure
Schedule, the Company is a partnership for income Tax purposes and has been since 2004. Prior to
2004, the Company filed its income Tax Returns as a sole proprietorship for income Tax purposes.
As a partnership for income Tax purposes it is not subject to any federal income Tax. The Company
files state income Tax withholding or
composite Tax Returns where it is required to file such Tax Returns and also currently files a
local income Tax Return with the city of Akron, Ohio.
Section 5.10.11 For purposes of Sections 897 and 1445 of the Code and the Treasury Regulations
thereunder, fifty percent or more of the value of the Company’s gross assets does not consist of
“U.S. real property interests” and ninety percent or more of the value of the Company’s gross
assets does not consist of “U.S. real property interests” plus cash or cash equivalents.
Section 5.11 Legal Proceedings; Permits.
Section 5.11.1 Except as set forth on Schedule 5.11.1 of the Company Disclosure
Schedule, there are no legal, administrative, arbitral or other proceedings (including disciplinary
proceedings), claims, suits, actions or governmental or regulatory investigations of any nature
(each, a “Proceeding”) pending, or, to the Knowledge of the Company, threatened, (i)
against the Company, any of its officers or directors (in their capacity as such), any of the
Company Assets or the Company Business or that challenge the validity or propriety of the
transactions contemplated hereunder; (ii) involving any of the Company’s products; (iii) against
the Company, any of its officers or directors (in their capacity as such), any of the Company
Assets or the Company Business that would reasonably be expected to, individually or in the
aggregate, materially affect the operation or conduct of the Company Business or the use of the
Company Assets in any jurisdiction where the Company conducts material business or, if determined
adversely, would reasonably be expected to result in Damages to the Company in excess of $10,000,
or (iv) challenging the Company’s right to use any products owned or licensed by any of the
Company’s vendors. Except as set forth on Schedule 5.11.1 of the Company Disclosure
Schedule, there is no Judgment imposed upon the Company or any of the Company Assets or the Company
Business pursuant to which the Company is currently obligated to make any payments to any third
party. Except as set forth on Schedule 5.11.1 of the Company Disclosure Schedule, the
Company is not currently obligated to make any payments to any third party in connection with any
threatened or actual Proceeding.
Section 5.11.2 Except as set forth on Schedule 5.11.2 of the Company Disclosure
Schedule, (i) to the Knowledge of the Company, no Member, officer or employee or any partner or
joint venture with the Company, has been permanently or temporarily enjoined or barred by any
Judgment of any Governmental Authority or private arbitration tribunal from engaging in or
continuing any conduct or practice in connection with the Company, (ii) there is not in existence
any Judgment of any Governmental Authority or private arbitration tribunal requiring the Company to
take any action of any kind which is not required generally of other entities in businesses similar
to the business currently conducted by the Company and to which the Company is subject or to which
the Company is bound, (iii) there is not in existence any Judgment of any Governmental Authority or
private arbitration tribunal constituting or relating to any Proceeding in which the Company is or
was a named party that imposes material financial obligations on the Company, and (iv) the Company
is not in default with respect to any Judgment of any Governmental Authority, and there are no
unsatisfied Judgments against the Company.
50
Section 5.11.3 Except as set forth on Schedule 5.11.3 of the Company Disclosure
Schedule, during the five (5) years preceding the date hereof, the Company has held, and at Closing
will hold, all material licenses, franchises, decrees, permits and authorizations required under
applicable Law (collectively, “Permits”) for the lawful ownership, operation and use of the
Company Assets and the conduct of the Company Business. The Company is not in default under any
applicable Law relating to the Company or any of the Company Assets or operations in any material
respect, and, except as set forth on Schedule 5.11.3 of the Company Disclosure Schedule,
there are no outstanding material violations of any of the above and the Company has not received
notice asserting any such violation. The Company has been and is in compliance with all Permits in
all material respects. Schedule 5.11.3 of the Company Disclosure Schedule sets forth a
true and complete list of all Permits currently held by the Company.
Section 5.11.4 Except as set forth on Schedule 5.11.4 of the Company Disclosure
Schedule, no Governmental Authority has provided notice to the Company of, and, to the Knowledge of
the Company, no Governmental Authority has otherwise initiated or threatened to commence, any
proceeding or investigation into the business or operations of the Company or any of its officers,
Members or employees in their capacity as such with the Company and, to the Knowledge of the
Company, no such Proceedings or investigations are contemplated. Except as set forth on
Schedule 5.11.4 of the Company Disclosure Schedule, there is no unresolved deficiency,
violation or exception claimed or asserted by any Governmental Authority with respect to any
examination of the Company of which the Company has notice.
Section 5.12
Health Care Matters. Without limiting the generality of
any other provision contained herein, the Company represents and warrants to Buyer as of the date
of this Agreement and as of the Closing Date as follows:
Section 5.12.1 Compliance with Health Care Laws. The Company, and any officer,
affiliate, agent or employee of the Company acting on behalf of the Company, is in compliance in
all material respects with all Health Care Laws applicable to Company.
Section 5.12.2 Filings. Except as set forth on Schedule 5.12.2 of the
Company Disclosure Schedule, all reports, documents, claims, notices or approvals required to be
filed, obtained, maintained or furnished under any Health Care Law to any Governmental Authority
by the Company, or by any officer, affiliate, agent or employee of the Company acting in his or
her capacity as an officer, affiliate, agent or employee of the Company, have been so filed,
obtained, maintained or furnished, and all such reports, documents, claims and notices were
complete and correct in all material respects on the date filed (or were corrected in or
supplemented by a subsequent filing).
51
Section 5.12.3 Material Statements. Neither the Company, nor any officer, affiliate,
agent or employee of the Company acting in his or her capacity as an officer, affiliate, agent or
employee of the Company, has in connection with any requirement under any Health Care Law: (i)
made an untrue statement of a material fact or fraudulent statement to any
Governmental Authority, (ii) failed to disclose a material fact required to be disclosed to
any Governmental Authority, or (iii) committed an act, made a statement, or failed to make a
statement that, at the time such disclosure was made, would reasonably be expected to constitute a
violation of any Health Care Law.
Section 5.12.4 Proceedings. There are no facts, circumstances or conditions that
would reasonably be expected to form the basis for any material investigation, suit, claim, audit,
action (legal or regulatory) or proceeding (legal or regulatory) by a Governmental Authority
against or affecting the Company relating to any of the Health Care Laws.
Section 5.12.5 Prohibited Transactions. Neither the Company, nor any officer,
affiliate, agent or employee of the Company acting on behalf of the Company, is a party to any
contract, lease agreement or other arrangement (including any consulting agreement) with any
Health Care Professional who is in a position to make or influence referrals to or otherwise
generate business to the Company, provide services, lease space, lease equipment or engage in any
other venture or activity with the Company, other than contracts, leases, agreements or other
arrangements which are in compliance with all applicable Health Care Laws. Neither the Company,
nor any officer, affiliate, agent or employee of the Company acting on behalf of the Company,
directly or indirectly: (1) offered or paid any remuneration, in cash or in kind, to, or made any
financial arrangements with, any past, present or potential Health Care Professional of the
Company in order to illegally obtain business or payments from such Health Care Professional in
violation of any Health Care Law; (2) gave or agreed to give, or is aware that there has been made
or that there is any illegal agreement to make, any illegal gift or gratuitous payment of any
kind, nature or description (whether in money, property or services) to any past, present or
potential Health Care Professional in violation of any Health Care Law; (3) made or agreed to
make, or is aware that there has been made or that there is any agreement to make, any
contribution, payment or gift of funds or property to, or for the private use of, any Health Care
Professional where either the contribution, payment or gift or the purpose of such contribution,
payment or gift is or was illegal under any applicable Health Care Law; or (4) made, or agreed to
make, or is aware that there has been made or that there is any agreement to make, any payment to
any Health Care Professional, or any officer, affiliate, agent or employee of the Company, with
the intention or understanding that any part of such payment would be used or was given for an
illegal purpose under any applicable Health Care Law.
Section 5.12.6 Fair Market Value. The compensation paid or to be paid by the Company
to any Health Care Professional who is employed by or contracted with the Company is fair market
value for the services and items actually provided by such Health Care Professional, not taking
into account the value or volume of referrals or other business generated by such Health Care
Professional for the Company. The Company has at all times maintained a written agreement with
each Health Care Professional receiving compensation from the Company.
52
Section 5.13 Environmental Matters. The Company (i) is and has been in compliance in all material respects with all applicable
Environmental Laws and is not subject to any material Liability under any Environmental Laws, and
(ii) holds all Environmental Permits necessary to conduct its current operations, which
Environmental Permits are valid, uncontested and in good standing. The Company has not retained or
assumed either contractually, or to the Knowledge of the Company by operation of law, any Liability
of any other Person under any Environmental Law. The Company has not received any notice, demand
letter, claim or request for information alleging that the Company may be in violation of, or
liable under, any Environmental Law. The Company has not entered into or agreed to any consent
decree or order, and is not subject to any Judgment, decree or judicial order, relating to
compliance with Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous Materials and no investigation,
litigation or other proceeding is pending, or, to the Knowledge of the Company, threatened, with
respect thereto. The Company is not an indemnitor in connection with any claim asserted by any
third-party indemnitee for any Liability under any Environmental Law or relating to any Hazardous
Materials, and to the Knowledge of the Company the Company is not an indemnitor in connection with
any claim threatened by any third-party indemnitee for any Liability under any Environmental Law or
relating to any Hazardous Materials. There have been no releases of Hazardous Materials at any
current or former real properties owned or leased by the Company in quantities that could trigger
the need for investigation and/or remediation pursuant to Environmental Laws. The Company has
delivered to, or made available for review by, the Buyer true and complete copies of all
environmental assessments or audit reports or other similar studies or analyses in the Company’s
possession, custody or control relating to the Company Business or any real property owned or
leased by the Company.
Section 5.14 Properties. The Company has good and marketable title to, or valid
leasehold interests in, all of its properties. Except as set forth on Schedule 5.14 of the
Company Disclosure Schedule, all such properties, other than properties in which the Company has a
leasehold interest, are free and clear of all Encumbrances, other than Permitted Encumbrances. The
Company has complied in all material respects with the terms of all leases to which it is a party
and under which it is in occupancy, and all such leases are in full force and effect. The Company
enjoys peaceful and undisturbed possession under all such leases. Except as set forth on
Schedule 5.14 of the Company Disclosure Schedule, the Company has no obligation to perform
any construction of material tenant improvements involving costs in excess of $20,000 under any
lease. Schedule 5.14 of the Company Disclosure Schedule sets forth a complete list, as of
the date of this Agreement, of all real property and interests in real property owned or leased by
the Company and a true and complete list of all personal property, equipment and fixtures (other
than items or categories of items having a book value of less than $10,000 individually) owned by
the Company, all of which personal property, equipment and fixtures are in ordinary operating
condition, normal wear and tear excepted.
Section 5.15 Insurance. Schedule 5.15 of the Company Disclosure Schedule
contains a true, accurate and complete list of all policies of fire, Liability, product liability,
workers’ compensation, health
and other forms of insurance presently in effect with respect to the Company Business (the
“Company Insurance Policies”), including the named insured(s) and all beneficiaries
thereunder, true and complete copies of which have been delivered to, or made available for review
by, the Buyer. All Company Insurance Policies are valid, outstanding and enforceable policies and
provide insurance coverage for the Company Assets and operation of the Company Business, of the
kinds, in the amounts and against the risks required to comply with applicable Law and/or any
contractual or other obligations. The Company has not been refused any insurance with respect to
any aspect of the operations of the Company Business.
53
All premiums due and payable under each such
policy have been paid and no notice of cancellation or termination has been received by the Company
or its Affiliates with respect to any such policy (except for any of the same which may have been
received due to a failure to timely pay an amount due all of which amounts have been paid by the
Company and such late payments have not had any adverse effect of any of such policies). The
Company has not (a) reserved against in the Interim Financial Statements, (b) received any notice
regarding, or (c) to the Knowledge of the Company, been threatened with, any actual or possible
refusal of any coverage or rejection of any material claims under any Company Insurance Policy.
The activities and operations of the Company have been conducted in a manner believed to conform in
all material respects to all applicable provisions of the Company Insurance Policies.
Section 5.16 Proprietary Rights.
Section 5.16.1 Except as set forth on Schedule 5.16.1 of the Company Disclosure
Schedule, the Company, owns, possesses or otherwise controls or has the right to use the
Intellectual Property Rights and Proprietary Rights necessary for the operation of the Company
Business as presently conducted. Except as set forth on Schedule 5.16.1 of the Company
Disclosure Schedule, to the Knowledge of the Company no Person who has licensed Proprietary Rights
to the Company has ownership rights or license rights to improvements made by the Company in such
Proprietary Rights except where possession of such ownership rights or license rights to
improvements by such Person would not have a Company Material Adverse Effect. Except as set forth
on Schedule 5.16.1 of the Company Disclosure Schedule, to the Knowledge of the Company each
item of the Proprietary Rights owned by the Company that is necessary for the operation of the
Company Business as presently conducted is valid and subsisting. In each case in which the Company
has acquired any Proprietary Rights from any Person, where such Proprietary Rights are necessary
for the operation of the Company Business as presently conducted, except as set forth on
Schedule 5.16.1 of the Company Disclosure Schedule, the Company has obtained a valid and
enforceable assignment, license or other grant sufficient to transfer to the Company such rights in
such Proprietary Rights as are necessary for the Company Business as presently conducted. Except
as set forth on Schedule 5.16.1 of the Company Disclosure Schedule, the Company has
recorded in the United States Patent & Trademark Office (the “PTO”) or the U.S. Copyright
Office, as applicable, any assignments of ownership to the Company or a subsidiary of a United
States Patent, a United States Trademark Registration, or a United States Copyright Registration,
as appropriate. The Company has not claimed “small entity status” with the United States Patent &
Trademark Office in connection
with any U.S. patent application filings or fee payments except where at the time such claim
was made the Company met the statutory requirements for such status.
Section 5.16.2 Except as set forth on Schedule 5.16.2 of the Company Disclosure
Schedule, there are no outstanding liens (statutory or otherwise), pledges, options, security
interests, claims, or rights of first refusal of any kind relating to the Proprietary Rights owned
by the Company, nor is the Company bound by or a party to any liens (statutory or otherwise),
pledges, options, security interests, claims, or rights of first refusal of any kind with respect
to the Intellectual Property Rights owned by the Company. Schedule 5.16.2 of the Company
Disclosure Schedule lists all material Contracts to which the Company is a party with respect to
any Technology or Proprietary Rights. Except as set forth on Schedule 5.16.2 of the
Company Disclosure Schedule, the Company is not in breach of, nor has it failed to perform under
any of, the foregoing Contracts and, to the Knowledge of the Company, no other party to any such
Contracts is in breach thereof or has failed to perform thereunder. Except as set forth on
Schedule 5.16.2 of the Company Disclosure Schedule, the Company does not have an explicit,
or to the Knowledge of the Company implied, legal obligation, absolute or contingent, to any Person
to sell, transfer or assign any of the Proprietary Rights owned by the Company. Except as set
forth on Schedule 5.16.2 of the Company Disclosure Schedule, the Company has not made any
assignment or granted any license, and is not under any obligation to grant any such license or
rights, to any Person, under any of the Proprietary Rights owned by the Company. Except as set
forth on Schedule 5.16.2 of the Company Disclosure Schedule, none of the Contracts listed
in Schedule 5.16.2 of the Company Disclosure Schedule grants, or sets forth or creates an
obligation to grant, any third party exclusive rights in, to or under any of the Proprietary
Rights, or grants, or sets forth or creates an obligation to grant, any third party the right to
sublicense any of the Proprietary Rights.
54
Section 5.16.3 Except as set forth on Schedule 5.16.3 of the Company Disclosure
Schedule, to the Knowledge of the Company there are no facts or circumstances that would render the
Proprietary Rights owned by the Company invalid or unenforceable. Except as set forth on
Schedule 5.16.3 of the Company Disclosure Schedule, to the Knowledge of the Company there
is and has been no unauthorized use, disclosure, infringement, or misappropriation, or notice of
invalidity or unenforceability, of any Proprietary Rights owned by the Company, by any third party,
including, for example, any employee or former employee of the Company. Except as set forth on
Schedule 5.16.3 of the Company Disclosure Schedule, with respect to the Proprietary Rights,
no notification has been received, and no claim has been asserted or suggested and to the Knowledge
of the Company no threat or inquiry has been made, regarding third party Intellectual Property
Rights, and no litigation, arbitration or other adversary proceeding is pending, or, to the
Knowledge of the Company, is threatened. None of the Proprietary Rights owned by the Company is
subject to any pending, or, to the Knowledge of the Company, threatened, outstanding order,
contract, stipulation, proceeding, or notification, including without limitation any pending
interference, opposition, cancellation, reissue, reexamination, or other challenge or adversarial
proceeding, restricting in any material manner the use, transfer, or licensing by the Company of
any Intellectual Property Rights, or which may materially affect the validity, use or
enforceability of any of the Proprietary Rights owned by the Company. Except as set forth on
Schedule 5.16.3 of the Company Disclosure Schedule, the Company has not obtained a legal
opinion analyzing or assessing the validity or scope of any
Proprietary Rights. Except as set forth on Schedule 5.16.3 of the Company Disclosure
Schedule, no freedom to operate, patent clearance, right to market or right to use studies or
analyses have been performed by or on behalf of the Company with respect to the Intellectual
Property Rights of third parties. The conduct of the Company Business as presently conducted does
not infringe or misappropriate any Intellectual Property Rights of any third party of any Person
anywhere in the world. Except as set forth on Schedule 5.16.3 of the Company Disclosure
Schedule, the Company has not within the past five (5) years received any communications alleging
that the Company has violated any of the Intellectual Property Rights of any other Person. Except
as set forth on Schedule 5.16.3 of the Company Disclosure Schedule, the Company has not
within the past five (5) years brought any action, suit or proceeding for infringement or
misappropriation of, or declaration regarding, any Proprietary Rights, breach of any agreement
relating to Intellectual Property Rights, or violation of any covenant not to compete.
55
Section 5.16.4 Except as set forth on Schedule 5.16.4 of the Company Disclosure
Schedule, all material Technology owned by the Company used in or necessary to the conduct of the
Company Business were written or created by either (i) an employee of the Company acting within the
scope of his employment who has assigned (or who is required to assign) all of his/her rights in
such Technology, including Intellectual Property Rights therein, to the Company or (ii) by
non-employees who have validly and irrevocably assigned all of their Intellectual Property Rights
therein to the Company. To the Knowledge of the Company no current or former employee, consultant
or independent contractor of the Company has developed any Technology or other copyrightable,
patentable or otherwise proprietary work for the Company that is subject to any agreement under
which such employee, consultant or independent contractor has assigned or otherwise granted, or is
obligated to assign or otherwise grant, to any third party any rights (including Intellectual
Property Rights) in or to such Technology or other copyrightable, patentable or otherwise
proprietary work.
Section 5.16.5 Schedule 5.16.5 of the Company Disclosure Schedule sets forth a
complete and accurate list of (i) all patents, trademark registrations or applications and
copyright registrations or applications for which the Company has made a filing or registered with
a Governmental Authority in the United States or a foreign country or which are material to the
operation of the Company Business held by, or under obligation of assignment to, the Company and
(ii) all applications therefor together with the name of the owner thereof. Each Proprietary Right
listed in Schedule 5.16.5 of the Company Disclosure Schedule (A) is in proper form and (B)
has been duly maintained, including the submission of all necessary filings in accordance with the
legal and administrative requirements of the appropriate jurisdictions, and the Patents described
in Schedule 5.16.5 of the Company Disclosure Schedule are subsisting. All necessary
registration, maintenance and renewal fees in connection with registered Proprietary Rights have
been paid and all necessary documents and certificates in connection with registered Proprietary
Rights have been filed with the relevant Patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such
registered Proprietary Rights. Except as set forth on Schedule 5.16.5 of the Company
Disclosure Schedule, there are no actions that must be taken by the Company within one hundred
twenty (120) days of the Closing Date, including the payment of any registration, maintenance or
renewal fees or the filing of any responses to PTO office actions, documents, applications or
certificates for the purposes of obtaining, maintaining,
perfecting or preserving or renewing any registered Proprietary Rights. Each owner listed in
Schedule 5.16.5 of the Company Disclosure Schedule is listed in the records of the
appropriate Governmental Authority as the sole owner of record. Except as set forth on
Schedule 5.16.5 of the Company Disclosure Schedule, the Company has, or will have as of the
Closing Date, obtained agreements from all necessary Persons to provide necessary and reasonable
assistance in perfecting the Company’s rights of ownership or exclusive license to any Patents.
Other than the Proprietary Rights listed in Schedule 5.16.5 of the Company Disclosure
Schedule, (x) no provisional applications, nonprovisional applications, substitutions, extensions,
reissues, reexaminations, renewals, divisions, continuations, continuations-in-part, parents or
other related applications have been filed or issued with respect to Technology used in and/or
necessary to the Company Business and owned by the Company, and as currently planned or
contemplated to be conducted by the Company, and (y) no counterpart applications of the Proprietary
Rights listed have been filed or issued in any country.
56
Section 5.16.6 Except as set forth on Schedule 5.16.6 of the Company Disclosure
Schedule: (i) to the Knowledge of the Company, no confidential information, trade secret, formula,
process, invention or design which is not publicly known or was not, as of the time of disclosure,
publicly known (“Confidential Information”), and which is currently necessary to the
conduct of the Company Business has been disclosed or authorized to be disclosed by the Company to
any Person, except in the ordinary course of business or pursuant to an obligation of
confidentiality binding upon said Person; (ii) the Company has taken all steps that are reasonably
required to protect the Company’s rights in Confidential Information of the Company or provided by
any other Person to the Company and to protect and preserve the confidentiality of all Confidential
Information included in the Proprietary Rights; (iii) in all material respects, the use, disclosure
or appropriation of Confidential Information owned by the Company by or to a third party has been
pursuant to the terms of a written agreement between the Company and such third party protecting
such Confidential Information from disclosure; and (iv) in all material respects, the use,
disclosure or appropriation of Confidential Information not owned by the Company has been pursuant
to the terms of a written agreement or other legal binding arrangement between the Company and the
owner of such Confidential Information, or is otherwise lawful.
Section 5.16.7 Except as set forth on Schedule 5.16.7 of the Company Disclosure
Schedule, all Proprietary Rights material to the operation of the Company Business as presently
conducted are fully transferable, alienable or licensable by the Company at the time of Closing
without material restriction and without material payment to any third party.
Section 5.16.8 Except as set forth on Schedule 5.16.8 of the Company Disclosure
Schedule, to the extent that the Company’s Technology has been developed or created by a third
party for the Company, the Company, has a written agreement with such third party with respect
thereto and the Company thereby either (i) has obtained ownership of, and is the exclusive owner
of, or (ii) has obtained a license (sufficient for the conduct of its business as currently
conducted) to all such third party’s Intellectual Property Rights in such Technology. To the
extent that any third-party Intellectual Property Rights are knowingly, intentionally or purposely
incorporated into, integrated or bundled with, or used by the Company in the development,
manufacture or compilation of any product under Proprietary Rights, or any of the
Proprietary Rights relates to any development by the Company that involves the derivation or
use of specifications or technical information derived from the products of third parties, the
Company, has a written agreement with such third party with respect thereto pursuant to which the
Company either has obtained complete, unencumbered and unrestricted ownership of, and is the
exclusive owner of, or has obtained licenses sufficient for the conduct of the Company Business.
Section 5.16.9 The Company is not and shall not be as a result of the execution or
effectiveness of this Agreement, or the performance of its obligations under this Agreement, in
material breach of any Contract to which Company is a party relating to any Proprietary Rights (the
“Intellectual Property Rights Agreements”) in a manner that would have a Company Material
Adverse Effect. The consummation of the transactions will neither result in the modification,
cancellation, termination, suspension of, or acceleration of any payments with respect to the
Intellectual Property Rights Agreements, nor give any party to any Intellectual Property Rights
Agreement the right to do any of the foregoing in a manner that would have a Company Material
Adverse Effect. Following the Closing, the Company will be permitted to exercise all of the rights
of Company under the Intellectual Property Rights Agreements to the same extent the Company would
have been able had the transactions not occurred and without the payment of any material additional
amounts or consideration other than ongoing fees, royalties or payments that Company would
otherwise be required to pay. Neither the execution or effectiveness of this Agreement nor the
performance of the obligations of Company under this Agreement will cause the forfeiture or
termination of, or give rise to a right of forfeiture or termination of any of the Proprietary
Rights, or impair the right of the Company to use, possess, sell or license any of the Proprietary
Rights in any manner that would have a Company Material Adverse Effect.
57
Section 5.16.10 Schedule 5.16.10 of the Company Disclosure Schedule lists all material
Contracts, between the Company and any other Person, other than ordinary course contracts with
customers, wherein or whereby the Company has agreed to, or assumed, any obligation or duty to
warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur any obligation
or Liability or provide a right of rescission with respect to the infringement or misappropriation
by the Company or such other Person of the Intellectual Property Rights of any Person other than
the Company.
Section 5.16.11 Except as set forth on Schedule 5.16.11 of the Company Disclosure
Schedule, there are no Contracts between the Company and any other Person with respect to Patents
or exclusive license to Patents that comprise the Proprietary Rights under which there is any known
dispute regarding the scope of such agreement, or performance under such agreement, including with
respect to any payments to be made or received by the Company thereunder.
Section 5.16.12 Except as set forth on Schedule 5.16.12 of the Company Disclosure
Schedule, the operation of the Company Business, including the design, development, use, import,
branding, advertising, promotion, marketing, manufacture and sale of the products, Technology or
services (including products, Technology or services currently under development) of the Company do
not and will not when conducted by the Company in substantially the same manner following the
Closing, infringe or misappropriate any Intellectual
Property Rights of any Person, violate any right of any Person (including any right to privacy
or publicity) or constitute unfair competition or trade practices under the laws of any
jurisdiction in a manner that would have a Company Material Adverse Effect, and except as set forth
on Schedule 5.16.12 of the Company Disclosure Schedule, the Company has not during the past
two (2) years received notice from any Person claiming that such operation or any act, product,
Technology or service (including products, Technology or services currently under development) of
the Company infringe or misappropriate any Intellectual Property Rights of any Person or
constitutes unfair competition or trade practices under the laws of any jurisdiction (nor does the
Company have any Knowledge of any basis therefor).
Section 5.16.13 Neither this Agreement nor the transactions contemplated by this Agreement,
including the assignment to the Buyer, by operation of law or otherwise, of any Contracts to which
the Company is a party, will result in the Company or the Buyer (i) granting to any third party any
right to or with respect to any Technology or Intellectual Property Rights owned by, or licensed
to, either of them, (ii) being bound by, or subject to, any non-compete or other restriction on the
operation or scope of their respective businesses which the Company is not already bound by or
subject to prior to Closing, or (iii) being obligated to pay any royalties or other amounts to any
third party in excess of those which the Company is already obligated to pay prior to the Closing.
58
Section 5.16.14 Except as set forth on Schedule 5.16.14 of the Company Disclosure
Schedule, and other than sales commissions paid to employees, consultants, sales agents or
independent contractors of the Company in the ordinary course of business, there are no royalties,
fees, honoraria or other payments payable by the Company to a Person by reason of the ownership,
development, use, license, sale or disposition of Proprietary Rights, other than salaries and
consulting fees.
Section 5.17 Absence of Certain Changes or Events. Since December 31, 2006, except as
contemplated by this Agreement or as otherwise disclosed on Schedules 5.17.1 through
5.17.17 of the Company Disclosure Schedule, the Company has conducted its business in the
ordinary course consistent with past practices and there has not been any:
Section 5.17.1 Company Material Adverse Effect or any event or development that could,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect;
Section 5.17.2 failure to operate the Company Business in the ordinary course so as to use all
commercially reasonable efforts to preserve the Company Business intact and to preserve the
continued services of the Company’s employees and the goodwill of suppliers, customers and others
having business relations with the Company;
Section 5.17.3 resignation or termination of any key employee or key independent contractor,
officer or manager, or any increase in the rate of compensation payable or to become payable to any
key employee, officer or manager of the Company (other than pursuant to general,
regularly-scheduled reviews or otherwise in the ordinary course of business),
including the making of any loan to, or the payment, grant or accrual of any bonus, incentive
compensation, service award or other similar benefit to, any such Person, or the addition to,
modification of, or contribution to any Company Benefit Plan;
Section 5.17.4 sale, assignment, license, transfer or Encumbrance of any of the Company
Assets, tangible or intangible, singly or in the aggregate, other than sales of products and
services in the ordinary course of business and consistent with past practice;
Section 5.17.5 incurrence of any Liability other than Liabilities incurred in the ordinary
course of business consistent with past practice;
Section 5.17.6 new Contracts (other than Contracts immaterial to the Company Business), or
extensions, modifications, terminations or renewals thereof which were entered into, modified or
terminated outside of the ordinary course of business or which were not consistent with past
practice;
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Section 5.17.7 change in accounting methods or practices by the Company or revaluation by the
Company of any of the Company Assets, including writing off or establishing reserves with respect
to Inventory, notes or Accounts Receivable (other than for which adequate reserves have been
previously established) except as a result of adjustments made to conform the Company’s accounting
methods or practices or valuation of any of the Company Assets with accounting standards as applied
by SS&G Financial Services, Inc. in the Audited Financial Statements;
Section 5.17.8 damage, destruction or loss (whether or not covered by insurance) materially
adversely affecting the Company Assets or the Company Business;
Section 5.17.9 declaration, setting aside or payment of any dividend or distribution by the
Company in respect of any Units of the Company or any redemption, purchase or other acquisition of
any equity securities of the Company;
Section 5.17.10 failure to pay any material obligation of the Company when due (except for
such obligations the Company is contesting in good faith or will pay off at Closing);
Section 5.17.11 except for any cancellation of Indebtedness which may occur in connection with
the Closing of this Agreement, cancellation of any Indebtedness (including cancellations made in
the ordinary course of business and consistent with past practice that exceed in the aggregate
$10,000) or waiver of any rights of substantial value to the Company;
Section 5.17.12 Indebtedness incurred by the Company or any commitment to borrow money entered
into by the Company (excluding trade payables incurred by the Company in the ordinary course of
business and consistent with past practice), any loans made or agreed to be made by the Company, or
guaranties by the Company for any Indebtedness;
Section 5.17.13 acquisition of any equity interest in any other Person;
Section 5.17.14 amendment to the articles of organization, Operating Agreement or similar
organizational documents of the Company;
Section 5.17.15 adoption, modification or termination of any Company Benefit Plan, except as
set forth on Schedule 5.17.15 of the Company Disclosure Schedule;
Section 5.17.16 material Tax election by the Company, change in the method of Tax accounting
of the Company or any compromise or settlement of any Tax Liability of the Company; or
Section 5.17.17 agreement by the Company directly or indirectly to do any of the foregoing.
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Section 5.18 Sufficiency of and Title to Assets.
Section 5.18.1 Except as set forth on Schedule 5.18.1 of the Company Disclosure
Schedule, the Company owns, and upon the consummation of the transactions contemplated herein, will
own, all right, title and interest in and to all of the properties, assets and rights of any kind,
whether tangible or intangible, real or personal or mixed, and wherever situated (including,
without limitation, the Contracts and Intellectual Property Rights that are presently owned by the
Company), used by the Company to conduct the Company Business (the “Company Assets”), free
and clear of any Encumbrances, other than Permitted Encumbrances and/or restrictions that result
from the Company’s Contracts. The Company Assets are sufficient for the conduct of the Company
Business at the time of Closing in substantially the same manner as conducted immediately prior to
Closing. All of the tangible personal property owned or leased by the Company is in good operating
condition and repair, subject only to ordinary wear and tear.
Section 5.18.2 Except for those licenses, consents and payments set forth on Schedule
5.18.2 of the Company Disclosure Schedule, no licenses or consents from, or payments to, any
Person are or will be necessary for the Buyer to use any of the Company Assets in substantially the
manner in which the Company and its Affiliates have used the Company Assets.
Section 5.18.3 A list of the Company’s tangible personal property is attached hereto as
Schedule 5.18.3 of the Company Disclosure Schedule.
Section 5.18.4 Schedule 5.18.4 of the Company Disclosure Schedule is a list of certain
assets of the Company that may be distributed to one or more Members of the Company prior to
Closing.
Section 5.19 Potential Conflicts of Interest. Except as otherwise set forth on Schedule 5.19 of the Company Disclosure Schedule,
neither the Company nor RRT, nor, to the Knowledge of the Company, any officer of the Company:
Section 5.19.1 owns, directly or indirectly, any interest in (excepting less than five percent
(5%) stock holdings for investment purposes in securities of publicly traded companies), or is an
officer, member, employee or consultant of, any Person that carries on business in competition with
the Company;
Section 5.19.2 has any claim against, or owes any amount to, the Company, except for claims
for salary, commissions, accrued vacation pay and accrued benefits under Company Benefit Plan; or
Section 5.19.3 has any cause of action or other claim whatsoever against, or owes any amount
to, the Company, except for any Liabilities reflected in the Audited Financial Statements and
claims in the ordinary and normal course of business, such as for accrued vacation pay and accrued
benefits under the Company Benefit Plans.
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Section 5.20 Transactions with Affiliates.
Section 5.20.1 Except as set forth on Schedule 5.20.1 of the Company Disclosure
Schedule, none of the Sellers, Appreciation Rights Holders or any of their respective Affiliates
(a) has borrowed money from or loaned money to the Company that is currently outstanding, (b) has
any ownership interest in any Company Asset, or (c) is a party to any Contract or is engaged in any
ongoing transaction with the Company (other than employment, independent contractor and/or
consulting relationships disclosed under Section 5.2.2, Section 5.7 or Section
5.9 hereof).
Section 5.20.2 Except as set forth on Schedule 5.20.2 of the Company Disclosure
Schedule, no Contract, understanding or arrangement in effect prior to or at the Closing between
the Company and any of the Sellers or their Affiliates will continue in effect subsequent to the
Closing Date (other than the Ancillary Agreements). Except as set forth on Schedule 5.20.2
of the Company Disclosure Schedule, after the Closing, none of the Sellers or Appreciation Rights
Holders will have any interest in any Company Asset. Except as set forth on Schedule
5.20.2 of the Company Disclosure Schedule, none of the Sellers or their Affiliates or
Appreciation Rights Holders provides any material services to the Company other than in his or her
capacity as an employee, independent contractor or consultant of the Company.
Section 5.21 Product Warranty. Except as set forth on Schedule 5.21 of the
Company Disclosure Schedule, no product of the Company Business manufactured, sold, leased or
delivered by the Company is subject to any oral or written guaranty, warranty or other indemnity to
its customers with respect to the quality or absence of defects of such product beyond the
Company’s applicable regular or standard or usual terms and conditions of sale or lease or as
otherwise provided by applicable
Law. Except as set forth on Schedule 5.21 of the Company Disclosure Schedule, the
Company has delivered or made available to the Buyer true and correct copies of each of the
Company’s customer Contracts. Except as set forth on Schedule 5.21 of the Company
Disclosure Schedule, there are no claims pending, or to the Knowledge of the Company anticipated or
threatened, against the Company with respect to the quality of, or existence of defects in, any
such products. The Company has made available to the Buyer information which is accurate and
complete in all material respects, regarding all returns of defective or expired products given or
promised to customers during said period, and such information in each case accurately describes as
best known to the Company the cause which resulted in the return, allowance or credit. Except as
set forth on Schedule 5.21 of the Company Disclosure Schedule, the Company has not during
the past five (5) years paid or been required to pay or received a request or demand for payment of
any Damages, including any direct, incidental or consequential damages, to any Person in connection
with any such product.
Section 5.22 Certifications; Product Safety.
Section 5.22.1 Except as set forth on Schedule 5.22.1 of the Company Disclosure
Schedule, all operations of the Company Business have achieved and maintained all required ISO
(International Organization for Standardization) and quality certifications and are compliant, in
all material respects, with the applicable FDA Quality System Regulations, and there is no pending,
or to the Knowledge of the Company, threatened, action to audit, repeal, fail to renew or challenge
with respect to any such certification. During the four (4) years preceding the date hereof and
except as set forth on Schedule 5.22.1 of the Company Disclosure Schedule, the Company has
not been required to file any notification or other report with or provide information to any
product safety agency, commission, board or other governmental entity of any jurisdiction
concerning actual or potential hazards with respect to any product purchased, distributed, sold or
leased, or with respect to services rendered, by the Company, to the extent such products or
services relate to the Company Business. Each product distributed, sold, or leased, or service
rendered, by the Company related to the Company Business complies in all material respects with all
product safety standards of each applicable product safety agency, commission, board or other
governmental entity having jurisdiction over the Company Business. The Company, or an agent of the
Company, manufactures each product of the Company Business in accordance with each device master
record (as such term is defined in the FDA Quality System Regulations) maintained by the Company,
or an agent of the Company, for each product of the Company Business.
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Section 5.22.2 Except as set forth on Schedule 5.22.2 of the Company Disclosure
Schedule, the Company has not received notice that requires, and to the Knowledge of the Company,
no development exists that would require, any product recalls or field corrective actions that
would or could reasonably be expected to result in a Company Material Adverse Effect.
Section 5.23 Product Liability Claims. Except as set forth on Schedule 5.23 of the Company Disclosure Schedule, no product
liability claims related to the Company Business or any of the Company’s products have been made
against the Company during the five (5) years preceding the date hereof.
Section 5.24 Export.
Section 5.24.1 In the three-year period prior to the date hereof, the Company and, to the
Knowledge of the Company, any distributor of the Company’s products have (i) complied with all
applicable laws or regulations related to the sale, marketing, promotion or export of goods
promulgated or enforced by the Office of Foreign Assets Control in the Unites States Department of
the Treasury, the United States Department of Commerce or any other department or agency of the
United States federal government, including, without limitation, the Arms Export Control Act, the
trading with the Enemy Act, the International Emergency Economic Powers Act, the Export
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, the Foreign Corrupt Practices Act, the Export
Administration Regulations, the International Traffic in Arms Regulations, the United States
Customers Regulations (the “Trade Laws”), and (ii) made reasonable efforts to ensure that
no products have been sold directly or indirectly to any entity where such sales are, or were at
any time during the previous two years, prohibited by these Trade Laws or other regulations.
Section 5.24.2 The Company has not received written notice that it has been or is the subject
of any investigation, complaint or claim of any violation of any Trade Law by any Governmental
Authority, and the Company has no reason to believe that the basis exists for any such
investigation, complaint or claim.
Section 5.25 Certain Relationships. Except as set forth on Schedule 5.25 of
the Company Disclosure Schedule, the Company has not received any written notice within the past
twenty-four (24) months that any Person who is a customer or distributor of, or supplier,
manufacturer or licensor to, or a party contracting with the Company with respect to the Company
Business, has taken any action, or threatened to take any action, which has had or would reasonably
be expected to have, a Company Material Adverse Effect.
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Section 5.26 Vote Required. No additional votes of any class or series of the
Company’s Units necessary to adopt or approve this Agreement, the Ancillary Agreements, and the
other transactions contemplated hereby are required.
Section 5.27 No Broker. Except for P&M Corporate Finance, LLC whose fees and expenses
shall constitute Company Expenses for purposes of this Agreement, no broker, finder or similar
intermediary has acted for or on behalf of the Sellers, the Company or any Affiliate of the
Company, or is entitled to any broker’s, finder’s or similar fee or other commission from the
Company or any of its Affiliates in connection with the Transactions.
Section 5.28 Full Disclosure. No representations or warranties by the Company in this
Agreement, any Ancillary Agreement, or any exhibit, certificate or schedule furnished to the Buyer
pursuant hereto or thereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary to make the statements or facts contained
herein or therein not misleading.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Company and Sellers as follows:
Section 6.1 Organization and Standing. The Buyer is a corporation, duly organized,
validly existing and in good standing under the Laws of the State of Delaware. The Buyer has all
requisite power and authority, and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to own, lease and operate all of its properties and assets
and to carry on its businesses substantially in the manner as they are currently being conducted.
In addition, the Buyer is duly licensed or qualified to do business as a foreign corporation in New
Jersey and Ohio. The Buyer shall deliver to the Member Representative prior to the Closing copies
of the Buyer’s articles of incorporation and the same are accurate, complete and correct copies of
such instruments as in effect on the date hereof. LifeSciences is a wholly-owned subsidiary of
Buyer and the sole direct subsidiary of Buyer. Buyer is not a subsidiary (direct or indirect) of
any other Person.
Section 6.2 Authority; No Violation.
Section 6.2.1 The Buyer has full power and authority to execute and deliver this Agreement and
the Ancillary Agreements to which the Buyer is a party and to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Ancillary Agreements to which the Buyer is a party and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary corporate action on
the part of the Buyer, and no other corporate action or proceedings on the part of the Buyer or any
of its stockholders or directors are necessary to approve this Agreement or the Ancillary
Agreements to which the Buyer is a party or authorize or consummate the transactions contemplated
hereby. This Agreement and the Ancillary Agreements to which the Buyer is a party have been duly
and validly executed and delivered by the Buyer and (assuming the due authorization, execution and
delivery of this Agreement and the Ancillary Agreements by the other parties hereto and thereto)
constitute or will constitute valid and binding obligations of the Buyer, enforceable against the
Buyer in accordance with their terms, except as the enforceability thereof may be subject to
or limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or
affecting the rights of creditors generally and the availability of equitable relief (whether in
Proceedings at law or in equity).
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Section 6.2.2 Neither the execution and delivery by the Buyer of this Agreement or the
Ancillary Agreements to which the Buyer is a party nor the consummation by the Buyer of the
transactions contemplated hereby or thereby, nor compliance by the Buyer with any of the terms or
provisions hereof or thereof, will (i) conflict with or violate any provision of the organizational
documents of the Buyer, or (ii) (A) violate, conflict with or require any notice, filing (except
for the filing under the HSR Act and federal and state securities laws filings), consent, waiver or
approval under any material applicable Law or Judgment or decree to which the Buyer, any of its
respective Affiliates or Subsidiaries or any of their respective properties, contracts or assets
are subject, or (B) violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with or without notice or lapse of
time, or both, would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate or result in a right of acceleration of the
performance required by, result in the creation of any Encumbrance upon the properties, contracts
or assets of the Buyer under, or require any notice, approval or consent under, any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement, contract or other instrument or
obligation to which the Buyer or any of its respective Affiliates or Subsidiaries is a party, or by
which the Buyer or any of its respective Affiliates or Subsidiaries, or any of their respective
properties or assets, may be bound or affected in any material respect, except, in the cases of
clauses (A) and (B) of this Section 6.2.2, for any conflict, breach, default, termination,
cancellation, acceleration, loss or violation which individually or in the aggregate would not
materially impair the Buyer’s ability to effect the Closing and carry out all of its obligations
hereunder including any and all obligations with respect to making the Earn-Out Payments.
Section 6.3 Consents and Approvals. Except for the filing required under the HSR Act
contemplated by Section 7.5.1, and any applicable filings required under the Exchange Act,
any applicable blue sky laws and the rules and regulations of the Exchange, no consents or
approvals of or filings or registrations with any Governmental Authority or any other Person are
necessary in connection with the execution and delivery by the Buyer of this Agreement and the
Ancillary Agreements to which the Buyer or its Affiliates or Subsidiaries is a party or the
consummation by the Buyer of the transactions contemplated hereby.
Section 6.4 No Broker. No broker, finder or similar intermediary has acted for or on
behalf of, or is entitled to any broker’s, finder’s or similar fee or other commission from, the
Buyer or any of its respective Affiliates or Subsidiaries in connection with this Agreement.
Section 6.5 Buyer’s Listing. Buyer is: (i) currently listed on the Exchange; (ii) is in full compliance with its listing
agreement; and (iii) is current in all of its filings required under the Exchange, the listing
agreement and the Exchange Act.
Section 6.6 Sufficiency of Funds. Buyer will have, when due, sufficient funds for the
payment of all amounts required to be paid by it pursuant to this Agreement, including, without
limitation, all amounts set forth under Article II hereof and for the performance of its
obligations with respect to the transactions contemplated by this Agreement.
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ARTICLE VII.
COVENANTS AND ADDITIONAL AGREEMENTS
COVENANTS AND ADDITIONAL AGREEMENTS
Section 7.1 Conduct of Business. From the date of this Agreement through the earlier
of the termination of this Agreement and the Closing, the Company shall carry on the operation of
the Company Business in the ordinary course and substantially in accordance with past practice and
shall use its reasonable best efforts not to take any action inconsistent with the provisions of
this Agreement or any of the Ancillary Agreements. Except as expressly set forth in this Agreement
or the Ancillary Agreements, the Company shall use its reasonable best efforts to maintain the
present character and quality of the Company Business, including its present operations, physical
facilities, working conditions and relationships with distributors, lessors, licensors, suppliers,
customers, consultants and employees. Without limiting the generality of the foregoing, unless
specifically consented to by the Buyer in advance in writing, or expressly set forth in this
Agreement, in the Ancillary Agreements or in any other written agreement with the Buyer, from the
date of this Agreement through the earlier of the termination of this Agreement and the Closing,
the Company shall not:
Section 7.1.1 except for trade payables incurred in the ordinary course of business consistent
with past practice, borrowings under the Line of Credit and as listed on Schedule 7.1.1 of
the Company Disclosure Schedule, incur any Indebtedness;
Section 7.1.2 assume, guarantee, endorse (other than endorsements for deposit or collection in
the ordinary course of business) or otherwise become responsible for obligations of any other
Person;
Section 7.1.3 issue or commit to issue any Units or any other securities or any securities
convertible into Units or any other securities, including, without limitation, any options to
acquire Units, or issue or commit to issue any Appreciation Rights;
Section 7.1.4 except as contemplated by Section 2.2, and the Appreciation Rights
Closure Agreements, amend, waive or modify any terms of any Appreciation Rights Plan or Unit
Appreciation Agreement, including by directly or indirectly increasing or reducing the “Starting
Appreciation Unit Value” (as defined in the applicable Appreciation Rights Plan) or the number of
Appreciation Rights granted under any Unit Appreciation Agreement or otherwise; provided, however,
that nothing herein shall prevent the Company from entering into any Appreciation Rights
Termination Agreements;
Section 7.1.5 except as allowed and contemplated under Article XII of this Agreement
with respect to voting agreements: (i) enter into any voting agreement with respect to any Units;
or (ii) declare, set aside, make, pay or incur any obligation to pay any dividend or distribution
on any Units payable in any form of property other than cash or cash equivalents (whether Units,
real or personal property or a combination thereof), it being understood and agreed by the Parties
that RRT and the other Sellers may at all times prior to Closing declare, set aside, make and pay
any dividend or distribution on any Units, or any bonus or other compensation including the
distributions contemplated on Schedule 7.1.5 of the Company Disclosure Schedule so long as
the same is made in available cash or cash equivalents of the Company and fully-paid prior to the
Closing with no obligations of the Company in respect thereof following the Closing;
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Section 7.1.6 reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire,
directly or indirectly, any Units, other equity interests or securities;
Section 7.1.7 make any change to the Company’s articles of organization or Operating
Agreement;
Section 7.1.8 mortgage, pledge or otherwise encumber any Company Assets, or sell, transfer,
license or otherwise dispose of any Company Assets, except for the sale or license of the Company’s
products and services to customers and in the ordinary course of business and consistent with the
Company’s past practice;
Section 7.1.9 cancel, release or assign any Indebtedness owed to it or any claims or rights
held by it in excess of $5,000, individually, or $25,000, in the aggregate;
Section 7.1.10 except as set forth on Schedule 7.1.10 of the Company Disclosure
Schedule, make any investment or commitment of a capital nature either by purchase of stock or
securities, contributions to capital, business or product line acquisitions, property transfer or
otherwise, or by the purchase of any property or assets of any other Person, except for such
investments, commitments, contributions, acquisitions or property transfers not in excess of
$10,000 in the aggregate;
Section 7.1.11 adopt a plan of partial or complete liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization (other than the
Transactions), or otherwise permit its corporate existence to lapse or be suspended or revoked;
Section 7.1.12 other than “click through” end user license agreements, or as set forth on
Schedule 7.1.12 of the Company Disclosure Schedule: (i) terminate, make any change in or
waive or exercise any material right or remedy under, or renew any Scheduled Contract, or (ii)
enter into any Contract, which if in existence as of the date of this Agreement would have
constituted a Scheduled Contract under Section 5.7.1, other than Contracts previously
approved by Buyer (such approval not be unreasonably withheld);
Section 7.1.13 except as set forth on Schedule 7.1.13 of the Company Disclosure
Schedule, (i) enter into or modify any employment Contract, (ii) change the status, title or
responsibilities, including without limitation, termination or promotion, of any officer of the
Company, or promote any employee (who is not an officer as of the date of this Agreement) to an
officer position, (iii) pay any compensation to or for any employee, officer or Member other than
in the ordinary course of business and pursuant to existing employment arrangements, (iv) pay or
agree to pay any bonus, incentive compensation, service award, severance, “stay bonus” or other
like benefit, other than pursuant to such benefits set forth on the Company Disclosure Schedule,
(v) enter into, modify or terminate any Company Benefit Plan other than as required by applicable
Law;
Section 7.1.14 make any change in any method of accounting or accounting practice other than
as required by GAAP, applicable Law or any Governmental Authority;
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Section 7.1.15 make or change any material election in respect of Taxes; adopt or change any
accounting method in respect of Taxes; enter into any Tax allocation agreement, Tax sharing
agreement, Tax indemnity agreement or closing agreement; settle or compromise any claim, notice,
audit report or assessment in respect of Taxes; or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes;
Section 7.1.16 except as allowed and contemplated under Sections 2.3 and
3.2.1(n), (o), (p) and (q) of this Agreement: (i) prepay any
long-term Indebtedness, or pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than in the ordinary course of the Company
Business, (ii) accelerate or delay the collection of notes or Accounts Receivable in advance of or
beyond their regular due dates or the dates on which the same would have been collected in the
ordinary course of the Company Business consistent with past practice, or (iii) delay or accelerate
the payment of any account payable in advance of its due date or the date such Liability would have
been paid in the ordinary course of the Company Business consistent with past practice;
Section 7.1.17 write up, write down or write off the book value of any Company Assets, except
for Excess or Obsolete Inventory, Accounts Receivable that are not collectible, or the depreciation
and amortization or impairment of assets, in each case in accordance with GAAP and consistent with
the Company’s past custom and practice;
Section 7.1.18 except as set forth on Schedule 7.1.18 of the Company Disclosure
Schedule, waive, release, assign, settle or compromise any material claims or settle any
Proceeding;
Section 7.1.19 do any other act that would cause any representation or warranty of the Company
in this Agreement to be or become untrue in any material respect or that is not in the ordinary
course of business consistent with past practice;
Section 7.1.20 transfer to any Person any Intellectual Property Rights or Proprietary Rights,
other than in the ordinary course of business consistent with past practice; or
Section 7.1.21 directly or indirectly take, agree to take or otherwise permit to occur any of
the actions described in Sections 7.1.1 through 7.1.20.
Section 7.2 Confidentiality and Announcements.
Section 7.2.1 During the period between the date hereof and the Closing Date or, if this
Agreement terminates without a Closing, for the five (5) year period after the date hereof, the
Parties shall hold, and shall cause their Affiliates and representatives to hold, confidential all
information of each other Party that is non-public, confidential or proprietary in nature in
accordance with the terms and conditions of the Confidentiality Agreement; provided however, that
with respect to any information of an Affiliate of RRT not a party to the Confidentiality
Agreement, Buyer shall keep the same confidential, subject to Section 7.8.3, and in the
same manner as it is required to keep and treat other confidential information delivered to it
pursuant to the Confidentiality Agreement; provided further, that the confidentiality period with
respect to confidential information of any such Affiliate shall run for a period of five (5) years
from the latter of the date hereof or the date that said confidential information is delivered to
Buyer.
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Section 7.2.2 Subject to Section 7.2.1, the Parties shall consult with each other as
to the form, substance and timing of any press release or other public disclosure related to this
Agreement or the Transactions contemplated hereby and, except as required by Law or the rules and
regulations of any Exchange, no such press release or other public disclosure shall be made without
the consent of the other Parties hereto, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing or any contrary term contained in the Confidentiality
Agreement, the Parties acknowledge that the Buyer is required to file this Agreement on SEC Form
8-K within four (4) Business Days after the date hereof, and shall prepare a filing that it deems
fit but will give all reasonable opportunity for the Member Representative to review and comment on
such disclosure prior to filing. In addition, if market rumors, press articles, wire agencies or
other sources indicate or mention the Transaction, the Buyer may be obliged to and may respond to
such comments in compliance with the requirements of any Exchange as it shall deem fit but will
give all reasonable opportunity for the Member Representative to review and comment on such
disclosure prior to the release of the same. The Parties shall cooperate in any such filing,
registration or notification and shall execute all documents reasonably required in connection
therewith.
Section 7.3 Access by the Buyer. Except as otherwise set forth herein and subject to
the terms of the Confidentiality Agreement, from the date of this Agreement through the Closing
Date, the Company shall, and shall cause each of its Members, Affiliates, managers, officers,
employees and representatives to, afford the Buyer and its representatives reasonable access upon
prior
notice and at all reasonable times to the Company Business for the purpose of inspecting the
same, and to the Company’s Members, Affiliates, officers, employees and representatives,
properties, books and records, Contracts and Company Assets, and shall furnish the Buyer and its
representatives, upon prior notice and in a timely manner, all financial, operating and other data
and information as the Buyer or its Affiliates, through their respective representatives, may
reasonably request.
Section 7.4 Notification of Certain Matters.
Section 7.4.1 RRT and the Company shall give prompt notice to the Buyer of any of the
following that occurs before the Closing: (i) the occurrence, or failure to occur, of any event
that causes any representation or warranty of any Seller or the Company contained in this Agreement
or in any Ancillary Agreement to which it is a party to be untrue or inaccurate in any material
respect (and similarly, each Seller hereby agrees to give prompt notice to RRT of any of the
following that occurs before the Closing: the occurrence, or failure to occur, of any event that
causes any representation or warranty of such Seller contained in this Agreement or in any
Ancillary Agreement to which he/it is a party to be untrue or inaccurate in any material respect);
and (ii) any failure of any Seller or the Company to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it hereunder (and
similarly, each Seller hereby agrees to give prompt notice to RRT of any of the following that
occurs before the Closing: any failure of such Seller to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by he/it hereunder);
provided, however, such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition; provided further, that notwithstanding
anything in this Agreement to the contrary, in no event shall any Seller (other than RRT) be in
breach of this Section 7.4.1 as a result of a breach of Section 7.4.1 by RRT unless
said breach by RRT is caused by, or is a result of, a breach of this Agreement or any Ancillary
Agreement by the particular Seller at issue. The Company shall promptly notify the Buyer of any
default, the threat or commencement of any Proceeding, or any development that occurs before the
Closing of which it is aware that results, or would reasonably be expected to result, in a Company
Material Adverse Effect.
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Section 7.4.2 The Buyer shall give prompt notice to the Member Representative on behalf of the
Company of any of the following that occurs before the Closing: (i) the occurrence, or failure to
occur, of any event that causes any representation or warranty of the Buyer contained in this
Agreement or in any Ancillary Agreement to which it is a party to be untrue or inaccurate in any
material respect and (ii) any failure of the Buyer to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition. The Buyer shall promptly notify the
Member Representative of any default, the threat or commencement of any Proceeding, or any
development that occurs before the Closing of which it is aware that results, or would reasonably
be expected to result, in a Buyer Material Adverse Effect.
Section 7.5 Consents and Approvals.
Section 7.5.1 Each of the Buyer, the Company and RRT shall use its best efforts to (i) take,
or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under any applicable Law, including any filing required by the HSR Act, or
otherwise to consummate and make effective the other Transactions contemplated hereby as promptly
as practicable, (ii) obtain from any Governmental Authority any consents, licenses, permits,
waivers, clearances, approvals, authorizations or orders required to be obtained or made by the
Company, or avoid any action or proceeding by any Governmental Authority, in connection with the
authorization, execution and delivery of this Agreement and the consummation of the other
Transactions contemplated hereby; and (iii) to obtain all consents, licenses, waivers, approvals or
authorizations set forth on Exhibit I, and ensure that such consents are in full force and
effect as of the Closing Date.
Section 7.5.2 Each of the Buyer and Company agrees to make, or cause to be made, the
applications or filings required to be made by the Buyer or the Company or any of their respective
Subsidiaries under any applicable Laws in connection with the authorization, execution and delivery
of this Agreement and the consummation of the other transactions contemplated hereby, and pay any
fees due in connection with such applications or filings, as promptly as is reasonably practicable.
Each of the Company, RRT and the Buyer shall, and shall cause their respective Affiliates to,
furnish to the other Parties all information necessary for any application or other filing to be
made in connection with the Transactions pursuant to this Section 7.5. For the avoidance
of doubt, the Buyer shall pay all filing fees required to be paid by the “acquiring person” under
the HSR Act.
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Section 7.5.3 Except as set forth in Section 7.5.5 of this Agreement, the Company and
the Member Representative shall (i) comply at the earliest practicable date with any request under
or with respect to the HSR Act and any other applicable Laws for additional information, documents
or other materials received by the Company from the United States Federal Trade Commission or
Department of Justice or any other Governmental Authority in connection with any applications or
filings to be made in connection with the Transactions pursuant to this Section 7.5 or the
other Transactions contemplated hereby, and (ii) coordinate and cooperate with the Buyer and give
due consideration to all reasonable additions, deletions or changes suggested by the Buyer in
connection with, making (A) any filing under or with respect to the HSR Act or any such other
applicable Laws, and (B) any filings, conferences or other submissions related to resolving any
investigation or other inquiry by any such Governmental Authority.
Section 7.5.4 Unless prohibited by a Governmental Authority or the Law, each of the Company,
the Member Representative and the Buyer shall promptly inform the other of any material
communication with, and any proposed understanding, undertaking or agreement with, any Governmental
Authority regarding any application or filing to be made in connection with the Transactions
pursuant to this Section 7.5. Prior to participating in any meeting with any Governmental
Authority in respect of any such filings, investigation or other inquiry, the Company shall give
the Buyer reasonable prior notice of such meeting and invite
representatives of the Buyer to participate in the meeting with the Governmental Authority
unless prohibited by such Governmental Authority or the Law. The Company shall coordinate and
cooperate as reasonable with the Buyer in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of the
Company in connection with all meetings, actions and Proceedings under or relating to any such
application or filing.
Section 7.5.5 If any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) by a Governmental Authority challenging the Transactions contemplated
hereby as violative of any applicable Law, the Company shall, and shall cause its Affiliates to,
reasonably cooperate with the Buyer and use its reasonable best efforts to contest and resist,
except insofar as the Company or the Buyer may otherwise agree, any such action or Proceeding,
including any action or Proceeding that seeks a temporary restraining order or preliminary
injunction that would prohibit, prevent or restrict consummation of the Transactions contemplated
hereby; provided, however, nothing in this Agreement shall require the Buyer, the Sellers, the
Member Representative or the Company, nor permit the Buyer, the Sellers, the Member Representative
or the Company, to enter into or consummate any understanding, undertaking or agreement that: (i)
would limit in any manner the Buyer’s ability to operate the Company Business following the Closing
in its absolute discretion, or require the sale, divestiture, or license of any of the assets,
properties or businesses of either the Buyer or the Company; or (ii) would reasonably be expected
to have a material and adverse impact on the anticipated amount of the Earn-Out Payments or
Purchase Price payable hereunder.
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Section 7.6 No Solicitation. From the date of this Agreement through the earlier of
the Closing or the termination of this Agreement, the Company and the Sellers will not (and will
use its reasonable best efforts to cause its Affiliates, employees, officers, directors, agents or
other Persons acting on its behalf not to) (i) solicit, initiate, entertain, encourage, discuss,
provide information with respect to, accept or consider any inquiries, offers or proposals from any
Person which constitute, or could reasonably be expected to lead to, (A) the sale of all or a
substantial part of any Company’s securities or assets, whether such transaction would take the
form of a sale of interests, merger, liquidation, dissolution, reorganization, recapitalization,
consolidation, sale of assets or otherwise (an “Acquisition Proposal”), or (B) the
incurrence or assumption of any Indebtedness (excluding trade payables incurred by the Company in
the ordinary course of business and consistent with past practice), issuance of any bonds or other
security, or any modification, amendment or refinancing of the Line of Credit (a “Financing
Proposal”), (ii) negotiate with any other Person or enter into any agreement, letter of intent,
or other document relating to or contemplating an Acquisition Proposal or Financing Proposal, (iii)
enter into any Contract with respect to any Acquisition Proposal, or (iv) sell, transfer or
otherwise dispose of, or enter into any Contract with respect to the sale, transfer or disposition
of, any interest in the Company Assets, Units or other equity interests of the Company. The
Company and the Sellers will not (and will each use reasonable best efforts to cause its
Affiliates, employees, officers, Members, agents or other Persons acting on its behalf not to)
provide any information concerning the Company to any other Person who the Company reasonably
believes will utilize such information to make or consider making an Acquisition Proposal or
Financing Proposal.
The Company and the Sellers will immediately notify the Buyer in writing upon receipt by the
Company or the Sellers (or any of their Affiliates, employees, officers, Members, agents or other
Persons acting on its behalf) of any Acquisition Proposal or offer, or any inquiry or other contact
with any Person with respect thereto, and shall, in any such notice to the Buyer, indicate the
identity of the Person making such proposal, offer, inquiry or contact and the terms and conditions
of such proposal, offer, inquiry or other contact (including a copy of any written or electronic
mail transmissions received in connection therewith).
Section 7.7 Takeover Statutes. If any Takeover Statute is or may become applicable to
the Transactions contemplated hereby, the Company and the Sellers shall grant such approvals and
take such actions as are reasonably necessary so that the Transactions contemplated hereby may be
consummated as promptly as practicable on the terms set forth in this Agreement and the Ancillary
Agreements and otherwise act to eliminate or minimize the effects of any Takeover Statute on the
transactions contemplated hereby.
Section 7.8 Further Assurances; Further Documents.
Section 7.8.1 As of the date of this Agreement, each of the Parties (as applicable to each of
them) shall use its reasonable best efforts, in the most expeditious manner practicable, (i) to
satisfy or cause to be satisfied all the conditions precedent that are set forth in
Article IX, (ii) to cause the other transactions contemplated hereby to be consummated, and
(iii) without limiting the generality of the foregoing, to obtain all consents and authorizations
of third parties and to make all filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to consummate the other transactions
contemplated hereby; provided, however, in no event shall the foregoing require any Seller to
expend any of its own funds, or expend any efforts greater than those expended by the Company or
any other Seller, in order to accomplish satisfaction of the foregoing conditions.
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Section 7.8.2 Each of the Parties shall, and shall cause its respective Affiliates to, at the
request of the other Party, execute and deliver to such other Party all such further instruments,
assignments, assurances and other documents as such other Party may reasonably request in
connection with the carrying out of this Agreement and the other transactions contemplated hereby.
Section 7.8.3 RRT agrees to afford the Buyer and its representatives reasonable access to the
properties, books and records of RRT’s Affiliates, and shall furnish the Buyer and its
representatives, upon prior written notice (including notice via electronic mail) and in a timely
manner, all financial, operating and other data and information as the Buyer or its Affiliates,
through their respective representatives, may reasonably request in connection with the preparation
of any reports to be filed with the SEC after the Closing Date; provided however, that except for
information required to be filed with the SEC, all other information which is not filed with the
SEC must be kept confidential in accordance with Section 7.2 of this Agreement.
Section 7.9 Employee Matters.
Section 7.9.1 For purposes of determining eligibility to participate and vesting where length
of service is relevant under any employee benefit plan of the Buyer or any of its Subsidiaries in
which employees of the Company who continue to be employed by the Buyer or any of its Subsidiaries,
as applicable (the “Continuing Employees”), are eligible to participate after the Closing
Date, to the extent permitted by the terms and conditions of such plans, the Buyer shall use
reasonable best efforts to cause the Continuing Employees to receive service credit for service
with the Company to the same extent such service was credited under similar employee benefit plans
of the Company; provided, however, that such service shall not be credited to the extent that it
would result in a duplication of benefits.
Section 7.9.2 Prior to the Closing, the Buyer may elect to provide written notice to the
Company instructing the Company to terminate its 401(k) Plan (the “401(k) Plan”). In the
event that the Buyer provides such written notice to the Company, the Company shall provide the
Buyer with evidence that the 401(k) Plan has been terminated (effective as of no later than the day
immediately preceding the Closing Date) pursuant to a valid corporate action. The form and
substance of such action shall be subject to the review and reasonable and timely approval of the
Buyer. The Company also shall take such other actions in order to terminate the 401(k) Plan as the
Buyer may reasonably request.
Section 7.9.3 No provision of this Section 7.9 shall create any third party
beneficiary or other rights in any Continuing Employee or former employee (including any
beneficiary or dependent thereof) in respect of continued employment (or resumed employment) with
the Buyer or any of its Subsidiaries (including the Company following the Closing) and no provision
of this Section 7.9 shall create any such rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any Company Benefit Plans or any
similar plan or arrangement which may be maintained by the Buyer, the Company or any of its
Subsidiaries for Continuing Employees.
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Section 7.10 Restrictive Covenants.
Section 7.10.1 For a period of five (5) years after the Closing (the “Restricted
Period”), each Seller set forth on Exhibit L covenants and agrees that neither it nor
any of its Affiliates, Subsidiaries, directors, managers, officers or employees (collectively, the
“Restricted Parties”) shall (i) engage, directly or indirectly, anywhere in the world where
the Company Business is currently conducted in any business that manufactures, produces or supplies
products or services of the kind manufactured, produced or supplied by the Company as of the
Closing (a “Competing Activity”) or, (ii) directly or indirectly, own an interest in,
manage, operate, join, control, lend money or render financial or other assistance or services to
or participate in or be connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any Person that competes with the Company in a Competing Activity (each a
“Competing Party”); provided, however, and notwithstanding anything herein to the contrary,
the
following shall not be deemed a Competing Activity or a breach of this Section 7.10:
(x) the research, design, development, mechanical testing, manufacture, marketing, sale and/or
distribution of devices, kits, instrumentation, techniques, methods, implants, and/or associated
components for (1) intervertebral distraction and the interposition or injection of
polymethylmethacrylate or another injectable biomaterial (excluding bone void fillers and
biomaterials designed to promote the formation of new bone) into the intervertebral space or (2)
joint distraction and the interposition or injection of polymethylmethacrylate or another
injectable biomaterial (excluding bone void fillers and biomaterials designed to promote the
formation of new bone) into such joints, solely for use in joints outside the spine; in each case,
including the apparatus for mixing and/or injecting polymethylmethacrylate or other injectable
biomaterial (excluding bone void fillers and biomaterials designed to promote the formation of new
bone) into such space or joints, respectively (the “Allowable Activities”); (y) the
rendition or provision of any services by RRT or any Affiliate of RRT (including, without
limitation, Theken Orthopaedic, Inc.) for, on behalf of, or related to the Allowable Activities; or
(z) the rendition or provision of any services by RRT or any Affiliate of RRT (including, without
limitation, Theken Orthopaedic, Inc.) on behalf of a Competing Party so long as such services are
rendered or provided other than for a Competing Activity of such Competing Party (e.g., the
rendition of orthopaedic testing services for the reconstruction division of ▇▇▇▇▇▇, Inc.).
Section 7.10.2 As a separate and independent covenant, and subject to the exceptions listed in
subsections (x)-(z) of Section 7.10.1 above, during the Restricted Period, none of the
Restricted Parties shall, in any way, directly or indirectly, for the purpose of conducting or
engaging in any Competing Activity, call upon, solicit, advise or otherwise do, or attempt to do,
business with any customers of the Company in connection with a Competing Activity or take away or
interfere or attempt to interfere with any custom, trade, business, supply relationship or
patronage of the Company.
Section 7.10.3 No Restricted Party will be in violation of this Section 7.10 solely by
reason of investing in stock, bonds or other securities of any Person or entity engaged in a
Competing Activity (but without otherwise participating in such Competing Activity), if: (i) such
stock, bonds or other securities are listed on any national securities exchange or have been
registered under Section 12(g) of the Exchange Act or any successor Law; and (ii) such investment
does not exceed, in the case of any class of the capital stock of any one issuer, five percent (5%)
of the issued and outstanding shares or such capital stock, or, in the case of bonds or other
securities, five percent (5%) of the aggregate principal amount thereof issued and outstanding.
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Section 7.10.4 As a separate and independent covenant, during the Restricted Period, none of
the Restricted Parties shall, in any way, directly or indirectly, (i) solicit, hire or interfere
with or attempt to solicit, hire or interfere with any officers, employees, representatives or
agents of the Company, or induce or attempt to induce any of them to leave the employ of the
Company or violate the terms of their contracts, or any employment arrangements, with the Company,
or (ii) employ or offer employment to any of the Company’s employees until after any such
individual has ceased to be employed by the Company (or any of its Affiliates) for a period of at
least twelve (12) consecutive months following the termination of such employment; provided
that the foregoing shall not prohibit a general public employment
advertisement not specifically identifying the Company or the Company Business, and
non-directed employment searches.
Section 7.10.5 The Restricted Period for any Seller shall be extended by the length of any
period during which such Seller is in breach of the terms of this Section 7.10.
Section 7.10.6 Sellers acknowledge that the covenants applicable to the Restricted Parties set
forth in this Section 7.10 are an essential element of this Agreement and that, but for the
agreement of and on behalf of the Restricted Parties to comply with these covenants, the Buyer
would not have entered into this Agreement. Each Seller acknowledges that this Section 7.10
constitutes an independent covenant that shall not be affected by performance or nonperformance
of any other provision of this Agreement by the Buyer. Each Seller has independently consulted
with its counsel and, after such consultation, agrees that the covenants set forth in this
Section 7.10 are reasonable and proper in scope and duration.
Section 7.11 Interim Monthly Financial Statements. For each month from June 2008
through the Closing Date, no later than thirty (30) days after the completion of such month, the
Company shall (and Sellers shall cause the Company to) deliver to the Buyer an unaudited balance
sheet of the Company as of the last day of such month, together with the related unaudited
statement of operations of the Company for such month. As used herein, and for purposes of, the
representation under Section 5.5.2 (including for purposes of the “bring down” of such
representation under Section 9.3.1), the term “Interim Monthly Financial Statements” shall
be deemed to include any financial statements delivered pursuant to this Section 7.11.
Section 7.12 Third-Party Indebtedness; Company Expenses. The Company agrees that
except for trade payables incurred in the ordinary course and consistent with past practice of the
Company Business, immediately prior to or at the Closing, there shall be none of the following
assuming that the same are paid off immediately prior to or at Closing (as contemplated by
Section 2.3): (i) Indebtedness or (ii) Company Expenses.
Section 7.13 Waiver of Operating Agreement Provisions. Each Seller hereby waives any
rights it might have under the Operating Agreement to block, prohibit or otherwise alter the sale
of the Units by the Members to the Buyer pursuant to the terms of this Agreement, including,
without limitation, any such rights under Sections 4.3, 4.4, 7.9 and 8 of the Operating Agreement.
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Section 7.14 Post-Closing Management of the Theken Companies by RRT.
Section 7.14.1 Buyer’s Actions. Buyer hereby covenants and agrees that, during the
Earn-Out Period, it will, and will cause its Affiliates and Subsidiaries to, act in good faith with
respect to its management, and the management of its Affiliates and Subsidiaries
(including, without limitation, the Theken Companies) as contemplated by this Agreement so as
not to take any actions that are intended to impede the ability of Sellers to earn the maximum
amount of Earn-Out Payments possible hereunder. Notwithstanding the foregoing, this Section
7.14.1 shall not prevent Buyer or any of its Affiliates or Subsidiaries (including the Company)
from taking any actions they reasonably determine in good faith are necessary or advisable for the
management of their businesses (so long as said actions are not intended to impede the ability of
Sellers to earn the maximum amount of Earn-Out Payments possible hereunder), certain of which
actions the parties acknowledge and agree may, directly or indirectly, adversely impact the amount
of the Earn-Out Payments.
Section 7.14.2 Management by RRT after Closing. After Closing and through the end of
the Earn-Out Period, for so long as he is employed by Buyer or one of its Affiliates, RRT shall
have authority to make all day-to-day ordinary course decisions with respect to the management of
the Theken Companies subject to the following:
(a) Budgets. RRT shall manage the Company, Therics and Theken Disc in accordance with the
nine quarterly budgets as set forth on Exhibit M attached hereto; provided, however, the
Parties acknowledge and agree that: (i) should the Closing occur in the middle of a quarter, the
first quarterly budget will be prorated to that portion of a calendar quarter remaining until the
commencement of the First Earn-Out Period, (ii) such budgets are subject to change based on the
actual revenue performance of the Theken Companies over the budgeted periods as contemplated in
Section 7.14.5, and (iii) the objective of the Parties is to maximize the revenues of the
Company and Therics during such periods subject to certain constraints, including that the Company,
Theken Disc and Therics will, on a combined pro forma basis, have earnings before interest, taxes
and intangible amortization (“EBITIA”) of: (A) at least Four Hundred Eighty-Four Thousand
Dollars ($484,000) for each month prior to the commencement of the Earn-Out Period, (B) at least
Eight Million Eight Hundred Thousand Dollars ($8,800,000) during the First Earn-Out Period, and (C)
during the Second Earn-Out Period, at least the sum of: (I) Eight Million Eight Hundred Thousand
Dollars ($8,800,000), plus (II) the product of 7.2% multiplied by the First Earn-Out
Amount, and capital expenditures shall be no more than One Million Nine Hundred Thousand Dollars
($1,900,000) in the First Earn-Out Period and no more than One Million Six Hundred Fifty Thousand
Dollars ($1,650,000) in the Second Earn-Out Period, provided, further, that, with respect to the
Theken Disc, (x) RRT shall manage the expenditures for engineering and related costs for the
development of the Theken Disc products, but not expenditures for regulatory and clinical affairs
activities related thereto (which shall be at the discretion and direction of the Buyer), and (y)
the Parties contemplate that Theken Disc is not expected to generate any Trade Sales of Theken Disc
products prior to the end of the Earn-Out Period; and
(b) Integra Policies and Procedures. RRT shall manage each of the Theken Companies in
accordance with the Buyer’s policies and procedures for “divisional” management and the directives
of the Buyer’s Executive Committee and Board of Directors.
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Section 7.14.3 Management by Buyer after Closing. After Closing and through the end
of the Earn-Out Period, in the event that RRT is no longer employed by Buyer or one of its
Affiliates, Buyer shall manage the Company, Therics and Theken Disc in
accordance with the nine quarterly budgets as set forth on Exhibit M attached hereto;
provided, however, the Parties acknowledge and agree that: (i) should the Closing occur in the
middle of a quarter, the first quarterly budget will be prorated to that portion of a calendar
quarter remaining until the commencement of the First Earn-Out Period, (ii) such budgets are
subject to change based on the actual revenue performance of the Theken Companies over the budgeted
periods as contemplated in Section 7.14.5, and (iii) the objective of the Parties is to
maximize the revenues of the Company and Therics during such periods subject to certain
constraints, including that the Company, Theken Disc and Therics will, on a combined pro forma
basis, have EBITIA of: (A) at least Four Hundred Eighty-Four Thousand Dollars ($484,000) for each
month prior to the commencement of the Earn-Out Period, (B) at least Eight Million Eight Hundred
Thousand Dollars ($8,800,000) during the First Earn-Out Period, and (C) during the Second Earn-Out
Period, at least the sum of: (I) Eight Million Eight Hundred Thousand Dollars ($8,800,000),
plus (II) the product of 7.2% multiplied by the First Earn-Out Amount, and capital
expenditures shall be no more than One Million Nine Hundred Thousand Dollars ($1,900,000) in the
First Earn-Out Period and no more than One Million Six Hundred Fifty Thousand Dollars ($1,650,000)
in the Second Earn-Out Period, provided, further, that, with respect to the Theken Disc, the
Parties contemplate that the Theken Disc is not expected to generate any Trade Sales of Theken Disc
products prior to the end of the Earn-Out Period.
Section 7.14.4 Management by Buyer Upon Termination of RRT Employment. In the event
that RRT’s employment is terminated by the Company without “Cause” or RRT resigns for “Good Reason”
(as such terms are defined in the RRT Employment Agreement) prior to the end of the Earn-Out
Period, then, for the period after such termination until the end of the Earn-Out Period:
(a) Replacement Manager. Buyer shall appoint one or more persons with qualifications and
compensation comparable to Buyer’s existing “divisional” Presidents (e.g., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) to replace RRT as manager of the Company, Therics and Theken Disc
during the Earn-Out Period and to manage such companies in accordance with the provisions of
Sections 7.14.1 and 7.14.3.
(b) Meeting Rights. RRT shall have the right to meet with the replacement manager described
in Section 7.14.4(a) once each month to discuss the management and performance of the
Company, Therics and Theken Disc.
(c) Access to Management of Buyer. RRT shall have the right to meet with at least one member
of Buyer’s Executive Committee on a quarterly basis to discuss the management and performance of
the Company, Therics and Theken Disc. All such meetings shall take place at Buyer’s corporate
headquarters in Plainsboro, New Jersey; provided that twice per year, at RRT’s request, such
meeting shall take place in Akron, Ohio.
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(d) Access to Information. RRT shall have the right to receive: (i) monthly reports detailing
revenue and EBITIA of each of the Company, Therics and Theken Disc as such reports are generated by
each Theken Company’s internal accounting system; (ii) qualitative monthly reports relating to the
Company, Therics and Theken Disc in the same scope and detail as qualitative monthly reports
prepared by ▇▇▇▇ ▇▇▇▇▇ prior to Closing; and (iii)
quarterly reports outlining in reasonable detail the product development activities conducted
during the quarter by the Company, Therics and Theken Disc.
(e) Access to Customers. RRT shall have the right to meet with a reasonable number of key
customers of the Company, Therics and Theken Disc on a periodic basis for the sole purpose of
assessing Buyer’s diligence in the pursuit of the Theken Companies’ business objectives set forth
above in Section 7.14.3; provided, however, that an employee of Buyer designated by any
member of Buyer’s Executive Committee shall be present at each such meeting.
Section 7.14.5 Expenditures Relative to Budgeted Revenue Targets. The Parties
acknowledge and agree that (a) if the actual revenue performance of the Theken Companies exceeds
the budgeted revenue targets set forth on Exhibit M, then RRT or Buyer, as applicable,
shall have the right but not the obligation to increase expenditures above the amounts budgeted
therefor, provided that the budgeted “EBITIA” for that period, as set forth on Exhibit M,
is achieved, and (b) if the actual revenue performance of the Theken Companies falls below the
budgeted revenue targets set forth on Exhibit M, then RRT or Buyer, as applicable, shall
reduce total expenditures below the budgeted amounts therefor in order to achieve at least the
“EBITIA” amount set forth in Section 7.14.2(a) (iii) for the applicable period
Section 7.14.6 Termination of Management Provisions Upon a Change of Control Event.
The Parties acknowledge and agree that the provisions of this Section 7.14 shall terminate
upon the occurrence of a Change of Control Event.
ARTICLE VIII.
TAX MATTERS
TAX MATTERS
Section 8.1 Preparation of Tax Returns. The Buyer shall prepare or cause to be
prepared (consistent with past practices of the Company, unless a contrary position is required by
applicable Tax Law) all Company Tax Returns (including amended Tax Returns), other than IRS Form
1065 and any other partnership income Tax Returns (collectively, the “Partnership Income Tax
Returns”), relating to Tax Periods beginning before the Closing Date that are required to be
filed after the Closing Date. The Member Representative shall be allowed reasonable time to review
and comment on each such Tax Return prepared by Buyer prior to filing and the filing of each such
Tax Return shall be subject to the Member Representative’s approval, which shall not be
unreasonably withheld, conditioned or delayed. The Buyer shall timely file all such Tax Returns
with the appropriate Governmental Authority and, subject to the Members’ indemnification
obligations under Article XI, shall pay all Taxes due with respect to such Tax Returns.
The Buyer shall be allowed reasonable time to review and comment on each Partnership Income Tax
Return relating to a jurisdiction which imposes any Tax on the income of a partnership or limited
liability company, and which is to be filed after Closing, prior to filing and the filing of each
such Partnership Income Tax Return shall be subject to the Buyer’s approval, which shall not be
unreasonably withheld, conditioned or delayed. The Buyer shall be solely responsible for preparing
and filing all Tax Returns relating to Tax Periods beginning after the Closing Date.
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Section 8.2 Transfer Taxes. All Transfer Taxes shall be paid by the Sellers. The
Member Representative and the Buyer shall cooperate in preparing and timely filing all Tax Returns
and other documentation relating to such Transfer Taxes as may be required by applicable Tax Law.
Section 8.3 Cooperation on Tax Matters. The Member Representative and the Buyer shall
reasonably cooperate, and shall cause their respective Affiliates, Members, officers, employees,
agents, auditors and other representatives to reasonably cooperate, in preparing and filing all Tax
Returns and, subject to Section 11.5, in resolving all disputes and audits relating to
Taxes. Such cooperation shall include maintaining and making available to each other all relevant
records relating to Taxes, and making employees available on a mutually convenient basis to provide
additional information or explanation of any material provided hereunder or to testify at any
Proceedings relating to Taxes.
ARTICLE IX.
CONDITIONS TO OBLIGATIONS
CONDITIONS TO OBLIGATIONS
Section 9.1 Conditions to Each Party’s Obligations to Effect the Closing. The
respective obligations of each Party hereto to consummate the transactions provided for hereby are
subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions:
Section 9.1.1 There shall not be any applicable Law or Judgment that enjoins or makes the
Transactions contemplated hereby illegal or otherwise prohibited.
Section 9.1.2 Any waiting period (and any extension thereof) under the HSR Act applicable to
the Transactions contemplated by this Agreement shall have expired or shall have been terminated.
Section 9.1.3 The closing of the transactions under each of the Theken Disc Purchase Agreement
and the Therics Purchase Agreement shall have occurred concurrently with the Closing of this
Agreement.
Section 9.2 Conditions to the Sellers’ Obligations to Effect the Closing. The
obligation of the Sellers to consummate the transactions provided for hereby are subject to the
satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which
may be waived by the Member Representative on behalf of the Sellers or any of them:
Section 9.2.1 Each of the representations and warranties of the Buyer contained herein shall
be true and correct in all material respects as of the Closing as though made on and as of the
Closing (except that (i) those representations and warranties that are qualified as to material,
materiality, Buyer Material Adverse Effect or similar expressions shall
be true and correct as of the Closing as though made on and as of the Closing and (ii) those
representations and warranties which address matters only as of a particular date need only be true
and correct in all material respects as of such date).
Section 9.2.2 The Buyer shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement and each Ancillary Agreement to which the Buyer
is a party that are to be performed or complied with by the Buyer on or prior to the Closing.
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Section 9.2.3 The Buyer shall have tendered for delivery the documents and other items to be
delivered pursuant to Section 3.2.2 each of which shall be in full force and effect.
Section 9.3 Conditions to the Obligations of the Buyer to Effect the Closing. The
obligation of the Buyer to consummate the Transactions provided for hereby are subject to the
satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which
may be waived by the Buyer:
Section 9.3.1 Each of the representations and warranties of the Sellers contained herein shall
be true and correct in all material respects as of the Closing as though made on and as of the
Closing (except that (i) those representations and warranties that are qualified as to material,
materiality, Company Material Adverse Effect or similar expressions shall be true and correct as of
the Closing as though made on and as of the Closing and (ii) those representations and warranties
which address matters only as of a particular date need only be true and correct in all material
respects as of such date).
Section 9.3.2 The Company and the Sellers shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement and each Ancillary Agreement
to which it is a party that are to be performed or complied with by them on or prior to the
Closing.
Section 9.3.3 The Company, the Member Representative and the Sellers shall have tendered for
delivery the documents and other items to be delivered by such Parties pursuant to Section
3.2.1, each of which shall be in full force and effect.
Section 9.3.4 All consents, licenses, waivers, approvals and authorizations set forth on
Exhibit I shall have been obtained, given or made and shall be in full force and effect.
Section 9.3.5 The Company shall have received: (i) all Permits and consents by Governmental
Authorities that are required to be obtained by it pursuant to the terms hereunder for the
consummation of the Transactions contemplated hereby; and (ii) any consents by third parties to
each of the agreements set forth on Schedule 5.4 of the Company Disclosure Schedule that
are required for the consummation of the Transactions contemplated hereby.
Section 9.3.6 Since the date of this Agreement, there shall not have occurred any Company
Material Adverse Effect.
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ARTICLE X.
TERMINATION
TERMINATION
Section 10.1 Termination. This Agreement may be terminated and the other Transactions
contemplated hereby may be abandoned at any time prior to the Closing:
Section 10.1.1 by mutual written consent of the Buyer and the Member Representative;
Section 10.1.2 by the Buyer or the Member Representative if: (i) any Governmental Authority
shall have issued a Judgment or taken any other final action restraining, enjoining or otherwise
prohibiting or making illegal the Closing and/or Transactions contemplated under this Agreement,
and such Judgment or other action is or shall have become nonappealable, (ii) by written notice by
the Member Representative to the Buyer, or the Buyer to the Member Representative, in the event the
Closing has not occurred on or prior to January 31, 2009 for any reason other than delay or
nonperformance of the Party seeking such termination, or (iii) if any of the conditions set forth
in the proviso contained in Section 7.5.5 of this Agreement shall have been triggered;
Section 10.1.3 by the Buyer if there shall have been (i) a breach by the Company or the
Sellers of any of their representations or warranties contained in this Agreement, or if any such
representation or warranty shall have become untrue, or (ii) a breach or nonperformance by the
Company (prior to the Closing) or the Sellers of any of its or their covenants or agreements
contained in this Agreement, such that, in the case of either (i) or (ii) above, the conditions set
forth in Sections 9.1 and 9.3 would not be satisfied, and such failure or breach is
not cured within ten (10) days following the Buyer’s having notified the Member Representative of
the Buyer’s intent to terminate this Agreement pursuant to this Section 10.1.3, provided
that the Buyer may not terminate the Agreement pursuant to this Section 10.1.3 if the Buyer
is in material breach of its obligations under this Agreement; and
Section 10.1.4 by the Member Representative if there shall have been (i) a material breach by
the Buyer of any of the Buyer’s representations or warranties contained in this Agreement, or if
any such representation or warranty shall have become untrue, or (ii) a material breach or
nonperformance by the Buyer of any of the Buyer’s covenants or agreements contained in this
Agreement, such that, in the case of either (i) or (ii) above, the conditions set forth in
Sections 9.1 and 9.2 would not be satisfied, and such failure or breach is not
cured within ten (10) days following the Member Representative’s having notified the Buyer of
Sellers’ intent to terminate this Agreement pursuant to this Section 10.1.4, provided that
the Member Representative may not terminate the Agreement pursuant to this Section 10.1.4
if the Company or the Sellers are in material breach of its or their obligations under this
Agreement.
Section 10.2 Effect of Termination. In the event of termination of this Agreement as provided in Section 10.1, this
Agreement shall forthwith become null and void and there shall be no liability or obligation on the
part of any Party except (a) as may otherwise be set forth in a mutual written consent entered into
pursuant to Section 10.1.1 of this Agreement, or as otherwise set forth in Section
7.2, this Section 10.2, Article XII and Article XIV, and (b) that
nothing herein shall relieve any Party from liability for any breach of this Agreement. No
termination shall affect any right or remedy which has accrued hereunder or under applicable Law
prior to or on account of such termination, and the provisions of this Agreement shall survive such
termination to the extent required so that each Party may enforce all rights and remedies available
to such party hereunder or under applicable Law in respect of such termination and so that any
Party responsible for any breach or nonperformance of its obligations hereunder prior to
termination shall remain liable for the consequences therefor.
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ARTICLE XI.
INDEMNIFICATION
INDEMNIFICATION
Section 11.1 Survival of Representations, Warranties and Covenants.
Section 11.1.1 The representations and warranties of the Parties contained herein shall
survive the Closing until the date that the Second Earn-Out Statement is required to be delivered
pursuant to the terms of Section 2.5.2(a); provided, however, that the representations and
warranties of the Parties referenced below (the “Extended Duration Representations”), shall
survive as follows:
(a) the representations and warranties set forth in Section 4.1 (Organization and
Standing), Section 4.2 (Power and Authority of Seller), Section 4.4 (Ownership of
Units), Section 5.1 (Organization and Standing), Section 5.2 (Capitalization),
Section 5.3 (Authority; No Violation), Section 5.26 (Vote Required), Section
5.27 (No Broker), Section 6.1 (Organization and Standing), Section 6.2
(Authority; No Violation) and Section 6.4 (No Broker) shall survive indefinitely;
(b) the representations and warranties set forth in Section 5.10 (Tax) and Section
5.13 (Environmental) shall survive until the expiration of the applicable statute of
limitations;
(c) the representations and warranties set forth in Section 5.16 (Proprietary Rights)
shall survive until the third anniversary of the Closing;
(d) the representations and warranties set forth in Section 5.12 (Health Care Matters)
shall survive until the fourth anniversary of the Closing; and
(e) in the case of fraud or intentional misrepresentation by any Party, the representations
and warranties of such Party (but only to the extent implicated in such fraud claim or intentional
misrepresentation claim) shall survive indefinitely.
Section 11.1.2 The covenants and agreements of the Sellers and the Buyer contained herein
shall survive in accordance with their terms.
Section 11.1.3 Any claims under this Agreement with respect to any breach or inaccuracy of any
representation and warranty, or any breach or non-performance of any covenant or agreement must be
asserted by written notice within the applicable survival period contemplated by this
Section 11.1, and if such a notice is given, the survival period for any representation,
warranty, covenant or agreement referenced in such notice, and any indemnification obligation with
respect thereto, shall continue until the claim is fully resolved and such indemnification
obligation, if any, is fully paid and performed. The right to indemnification or other remedy
based on the representations, warranties, covenants and agreements herein will not be affected or
limited by any investigation conducted with respect to, or any knowledge acquired by (or capable of
being acquired) at any time by (i) the Sellers, with respect to the representations, warranties,
covenants and agreements of the Buyer, or (ii) the Buyer, with respect to the representations,
warranties, covenants and agreements of the Sellers or, with respect to any periods through the
Closing, the Company, whether before or after the execution and delivery of this Agreement, with
respect to any actual or alleged breach or inaccuracy of any representation and warranty, or any
actual or alleged breach or non-performance of any covenant or agreement.
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Section 11.2 Indemnification.
Section 11.2.1 Several Indemnification by Each Seller. Subsequent to the Closing, and
subject to the applicable limitations described below in Section 11.4 and the provisions of
Section 11.6, each Seller, severally and not jointly, shall indemnify the Buyer and its
respective Affiliates (including, without limitation, the Company), and each of their respective
officers, directors, employees, stockholders, members, managers, partners, advisors, agents, heirs,
successors and assigns (each, a “Buyer Indemnified Party”) against, and hold each Buyer
Indemnified Party harmless from, any Damages incurred by such Buyer Indemnified Party that arise
out of or relate to, whether directly or indirectly, any breach or inaccuracy of any representation
or warranty made by such Seller under Article IV of this Agreement or in any agreement,
certificate or other instrument delivered by such Seller pursuant to this Agreement (without regard
to any qualification contained therein as to materiality).
Section 11.2.2 Joint and Several Indemnification by the Sellers. Subsequent to the
Closing, and subject to the applicable limitations described below in Section 11.4 and the
provisions of Section 11.6, and except with respect to Taxes and matters relating to Taxes
(which are addressed under Section 11.5), and except with respect to representations,
warranties, agreements, certificates or other instruments delivered by any Seller and that are
subject to the indemnification provisions of Section 11.2.1, the Sellers, jointly and
severally, shall indemnify each Buyer Indemnified Party against, and hold each Buyer Indemnified
Party harmless from, any Damages incurred by such Buyer Indemnified Party that arise out of or
relate to, whether directly or indirectly:
(a) any breach or inaccuracy of any representation or warranty made by the Company or any of
the Sellers contained in this Agreement or in any agreement, certificate or other instrument
delivered by the Company or any of the Sellers pursuant to this Agreement (without regard to any
qualification contained therein as to materiality), excluding representations and warranties made
under Article IV (which are addressed under Section 11.2.1) and Section
5.10 (which are addressed under Section 11.5);
(b) any breach or non-performance by the Company (prior to the Closing) or any Seller of any
of its or their covenants or agreements contained in this Agreement (excluding Article VIII
which is addressed under Section 11.5) or in any agreement, certificate or other instrument
delivered by the Company or any Seller pursuant to this Agreement;
(c) any claims made against any Buyer Indemnified Party by or on behalf of any Appreciation
Rights Holder, Ex-Appreciation Rights Holder or any former holder of Appreciation Rights of the
Company, except and solely to the extent such Damages relate to any breach or non-performance of
the Buyer’s payment obligations under Sections 2.3.2(c), 2.4.4(c), 2.4.4
(e), 2.5.1, 2.5.2, 2.5.4 or 11.6.2 hereunder;
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(d) any Proceeding or other matter disclosed, or required to be disclosed, on Schedule
5.11.1 or Schedule 5.11.2 of the Company Disclosure Schedule;
(e) any inaccuracy in the Allocation Schedule or the Closing Funds Flow Memo;
(f) any claims related to the matters disclosed on Schedule 5.9.3 of the Company
Disclosure Schedule; and
(g) any claims
related to the Appreciation Units awards disclosed on Schedule 5.9.9(b) of the Company
Disclosure Schedule.
Section 11.2.3 Indemnification by RRT Regarding Theken Disc and Therics. Subsequent
to the Closing, and subject to the applicable limitations described below in Section 11.4
and the provisions of Section 11.6, RRT shall indemnify each Buyer Indemnified Party
against, and hold each Buyer Indemnified Party harmless from, any Damages incurred by such Buyer
Indemnified Party that arise out of or relate to, whether directly or indirectly:
(a) any breach or inaccuracy of any representation or warranty made by Theken Disc or the
Theken Disc members, as sellers, under the Theken Disc Purchase Agreement or in any agreement,
certificate or other instrument delivered by Theken Disc or any of such selling members pursuant to
the Theken Disc Purchase Agreement (without regard to any qualification contained therein as to
materiality);
(b) any breach or non-performance by Theken Disc (prior to the Closing) or any of the Theken
Disc members, as sellers, of any of its or their covenants or agreements contained in the Theken
Disc Purchase Agreement or in any agreement, certificate or other instrument delivered by Theken
Disc or such selling members pursuant to the Theken Disc Purchase Agreement;
(c) any breach or inaccuracy of any representation or warranty made by Therics or the Therics
members, as sellers, under the Therics Purchase Agreement or in any agreement, certificate or other
instrument delivered by Therics or any of such selling members pursuant to the Therics Purchase
Agreement (without regard to any qualification contained therein as to materiality);
(d) any breach or non-performance by Therics (prior to the Closing) or any of the Therics
members, as sellers, of any of its or their covenants or agreements contained in the Therics
Purchase Agreement or in any agreement, certificate or other instrument delivered by Therics or
such selling members pursuant to the Therics Purchase Agreement;
(e) any inaccuracy in the “Allocation Schedule” or the “Closing Funds Flow Memo” (as such
terms are defined in the Theken Disc Purchase Agreement); and
(f) any inaccuracy in the “Allocation Schedule” or the “Closing Funds Flow Memo” (as such
terms are defined in the Therics Purchase Agreement).
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Section 11.2.4 Buyer’s Indemnification Obligations. Subsequent to the Closing and
subject to the applicable limitations described below in Section 11.4, the Buyer shall
indemnify Sellers and their respective Affiliates (but excluding the Company), and each of their
respective officers, directors, employees, stockholders, members, managers, partners, advisors,
agents, heirs, successors and assigns (each, a “Seller Indemnified Party”) against, and
hold each Seller Indemnified Party harmless from, any Damages incurred by such Seller Indemnified
Party that arise out of or relate to, whether directly or indirectly:
(a) any breach or inaccuracy of any representation or warranty made by the Buyer contained in
this Agreement (including under Article VI) or in any agreement, certificate or other
instrument delivered by Buyer pursuant to this Agreement (without regard to any qualification
contained therein as to materiality); and
(b) any breach or non-performance by the Buyer of any of its covenants or agreements contained
in this Agreement or in any agreement, certificate or other instrument delivered by the Buyer
pursuant to this Agreement.
Section 11.3 Indemnification Process.
Section 11.3.1 Except with respect to Taxes and matters relating to Taxes (which are covered
under Section 11.5), any claim by a Buyer Indemnified Party or a Seller Indemnified Party
(referred to herein as the “Indemnified Party”) asserted against any other Party to this
Agreement (referred to herein as the “Indemnifying Party”) shall be asserted, within the
relevant survival period provided for in Section 11.1 above, and resolved in accordance
with this Section 11.3. In the event that any Seller is an Indemnifying Party, all notices
and other communications shall be delivered to or made by the Member Representative on behalf of
such Seller(s); provided however, that notwithstanding anything herein to the
contrary, in the event that any Seller is an Indemnifying Party with respect to claims under
Section 11.2.1, then the Member Representative and the Seller Indemnifying Party may
instruct the Buyer Indemnified Party to deliver and accept notices or other communications to and
from the applicable Seller Indemnifying Party.
Section 11.3.2 Any Indemnified Party seeking indemnification hereunder shall, within the
relevant survival period provided for in Section 11.1 above, deliver, or cause to be
delivered, a written notice (each a “Claim Notice”) to the Indemnifying Party as follows:
(i) in the case of a claim for indemnification brought by a Buyer Indemnified Party pursuant to
Sections 11.2.1, 11.2.2, 11.2.3 and/or 11.5, the Buyer Indemnified
Party shall deliver a Claim Notice to the Member Representative; and (ii) in the case of a claim
for indemnification brought by any Seller Indemnified Party pursuant to Section 11.2.4, the
Member Representative shall deliver a Claim Notice to the Buyer (it being agreed that the Buyer
shall only be obligated to accept Claim Notices from the Member Representative). Each Claim Notice
shall describe in reasonable detail the facts giving rise to any claims for indemnification
hereunder and shall include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of this Agreement or any
agreement, certificate or instrument executed pursuant hereto or in connection herewith upon which
such claim is based; provided, however, that a Claim Notice in respect of any Proceeding, including
any action at law or suit in equity, brought by or against a third Person (a “Third-Party
Claim”) as to which indemnification will be sought shall be given promptly after the
Indemnified Party first becomes aware of the commencement of the Proceeding; provided, further,
that failure to deliver any such Claim Notice shall not affect such Indemnified Party’s right to
indemnification hereunder, except to the extent that the Indemnifying Party is materially
prejudiced as a result of such failure; provided, further, any Indemnified Party seeking
indemnification shall use good faith efforts to deliver any such Claim Notice within a reasonable
period after discovery of the same.
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Section 11.3.3 Within fifteen (15) days after delivery of a Claim Notice related to a Third
Party Claim, the Indemnifying Party shall have the right, but not the obligation, upon written
notice to the Indemnified Party acknowledging in writing its obligation to indemnify the
Indemnified Party hereunder against any Damages that may result from such Third Party Claim, to
investigate, contest, assume the defense of or settle any such Third Party Claim through counsel of
the Indemnifying Party’s choice (such counsel to be reasonably acceptable to the Indemnified
Party); provided that the Indemnifying Party may not assume control of the defense of a Third Party
Claim (w) involving alleged criminal liability against the Company, Buyer or any of their
Affiliates, directors, officers or employees, (x) in which equitable relief is sought against the
Indemnified Party (but only with respect to the part of any Third Party Claim seeking equitable
relief), (y) in which the maximum amount of the Third Party Claim, together with all other pending
claims (whether a Third Party Claim or otherwise), is less than the Deductible, or (z) in which the
maximum amount of the Third Party Claim is more than the Cap (it being agreed that this provision
(z) shall be applied on an aggregate, not claim-by-claim basis) (items (w) — (z) referred to
collectively as the “Non-Assumable Third Party Claims”); provided further that the
Indemnified Party may, at its option and at its own expense, participate in (but not control) the
investigation, contesting, defense or settlement of any such Third Party Claim through
representatives and counsel of its own choosing, cost and expense;
provided further, that the Indemnifying Party shall not settle any Third Party Claim unless
(i) such settlement is on exclusively monetary terms (other than standard provisions related to
confidentiality and similar matters) and includes a complete release of the Indemnified Party from
liability or (ii) the Indemnified Party shall have consented to the terms of such settlement, which
consent shall not be unreasonably withheld, conditioned or delayed. If requested by the
Indemnifying Party, the Indemnified Party will reasonably cooperate with the Indemnifying Party and
its counsel in contesting any Third Party Claim being defended by the Indemnifying Party or, if
appropriate and related to such Third Party Claim, in making, at the sole cost and expense of the
Indemnifying Party, any counterclaim against the claimant in such Third Party Claim, or any
cross-complaint against any Person. The Indemnifying Party’s indemnification obligations shall
include payment for the reasonable fees and expenses of counsel employed by the Indemnified Party:
(a) in connection with a Third Party Claim for any period during which the Indemnifying Party has
failed or refused (or is not permitted) to assume the defense thereof but only to the extent that
it is finally determined in accordance with Section 11.7 that the Indemnifying Party was
obligated to indemnify the Indemnified Party with respect to such Third Party Claim under this
Agreement, and (b) if the Indemnifying Party has assumed the defense thereof, if Indemnified Party
reasonably and in good faith concludes, upon the advice of counsel, that it and the Indemnifying
Party have a conflict of interest that would make it inappropriate for the same counsel to
represent both the Indemnified Party and the Indemnifying Party or different defenses available
with respect to such Third Party Claim. The Indemnifying Party shall be entitled to participate in
(but not to control) the defense of any Third Party Claim which it has not elected to assume the
defense of, or any Non-Assumable Third Party Claim, with its own counsel and at its own expense.
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Section 11.3.4 From and after the delivery of a Claim Notice under this Agreement, at the
reasonable request of the Indemnifying Party and subject to the appropriate confidential
undertakings, each Indemnified Party shall grant the Indemnifying Party and its representatives all
reasonable access to the books, records and properties of such Indemnified Party to the extent
reasonably related to the matters to which the Claim Notice relates. All such access shall be
granted during normal business hours and shall be granted under conditions which will not
unreasonably interfere with the business and operations of such Indemnified Party. The
Indemnifying Party will not, and shall require that its representatives do not, use (except in
connection with such Claim Notice) or disclose to any third Person other than the Indemnifying
Party’s representatives (except as may be required by applicable Law) any information obtained
pursuant to this Section 11.3 which is designated as confidential by an Indemnified Party.
Section 11.4 Limitation on Indemnity.
Section 11.4.1 Subject to the provisions of Section 11.4.2, with respect to any claims
for indemnification (i) by any Buyer Indemnified Party under Section 11.2.1, Section
11.2.2(a) or Section 11.2.3(a) or (c) (other than claims under Section
11.2.2(a) related to any of the Extended Duration Representations defined under Sections
11.1.1(a) or (b), or claims under Section 11.2.3(a) or (c) related to
any of the “Extended Duration Representations” defined under Section 11.1.1(a) or (b) of the Theken
Disc Purchase Agreement or Section 11.1.1(a) or
(b) of the Therics Purchase Agreement, respectively), or (ii) by any Seller Indemnified Party
under Section 11.2.4(a) (other than claims under Section 11.2.4(a) related to any
of the Extended Duration Representations defined under Section 11.1.1(a)), the Parties
agree that the following limitations shall apply:
(a) no such Indemnified Party shall be entitled to make any such claim unless and until the
aggregate amount of all Damages suffered by such Indemnified Party exceeds Four Hundred Thousand
Dollars ($400,000) (the “Threshold Amount”), whereupon, such Indemnified Party shall be
entitled to recover any Damages in excess of Two Hundred Thousand Dollars ($200,000) (the
“Deductible”); provided, however, that if an Indemnified Party’s claim for recovery of
Damages relates to the Company’s Intellectual Property Rights which are the subject matter of a
Delivered Opinion, the Deductible shall be increased by the amount of legal fees actually paid by
the Company to obtain the Delivered Opinions, which amount shall not exceed One Hundred Fifty
Thousand Dollars ($150,000) (i.e., a maximum Deductible of Three Hundred Fifty Thousand Dollars
($350,000));
(b) the aggregate cumulative liability of the Sellers with respect to any such claims brought
by any Buyer Indemnified Party shall not exceed the amount equal to thirty percent (30%) of the sum
of (i) the Purchase Price, plus (ii) the Theken Disc Adjusted Purchase Price, plus
(iii) the Therics Adjusted Purchase Price; provided, however, that notwithstanding anything in this
Agreement, the Theken Disc Purchase Agreement or the Therics Purchase Agreement to the contrary,
such amount shall not exceed an aggregate of Sixty Million Dollars ($60,000,000) (the amount
calculated in this Section 11.4.1(b), the “Cap”); provided, further, that the
aggregate cumulative liability of each Seller (other than RRT) under the Cap shall not exceed
thirty percent (30.00%) of the product of the Purchase Price multiplied by such
Seller’s “Percentage” as set forth on the
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Allocation
Schedule, attached as Exhibit A to
this Agreement hereto; provided, further, that the
aggregate cumulative liability of RRT under the Cap
shall not exceed the sum of (i) thirty percent (30.00%)
of the product of the Purchase Price multiplied by 90.85%
(i.e., RRT’s and the Appreciation Rights Holders aggregate “Percentage”
as set forth on the Allocation Schedule, attached as Exhibit A to this
Agreement hereto), plus (ii) Five Million Seven Hundred Twenty Thousand Three Hundred Sixteen
Dollars ($5,720,316); provided, further, that
the aggregate cumulative liability with respect to such indemnification claims pursuant to
Sections 11.2.3(a) (other than claims under Section 11.2.3(a) related to any of the
“Extended Duration Representations” defined under Section 11.1.1(a) or (b) of the Theken Disc
Purchase Agreement) shall not exceed Six Million Dollars ($6,000,000); provided, further, that the
aggregate cumulative liability with respect to such indemnification claims pursuant to Sections
11.2.3(c) (other than claims under Section 11.2.3(c) related to any of the “Extended
Duration Representations” defined under Section 11.1.1(a) or (b) of the Therics Purchase Agreement)
shall not exceed Two Million Four Hundred Thousand Dollars ($2,400,000); and
(c) the aggregate cumulative liability of the Buyer with respect to any such claims brought by
any Seller Indemnified Party shall not exceed an amount equal to the Cap.
Section 11.4.2 Notwithstanding anything in this Agreement to the contrary and for the
avoidance of doubt, the limitations under Section 11.4.1, including the Threshold Amount,
the Deductible and the Cap, shall not apply to (a) any payments (whether
Purchase Price, adjustments to the Purchase Price based upon the Final Working Capital Amount
or Earn-Out Payments (including any credits to Earn-Out Payments as a result of any Earn-Out
Acceleration Payments or otherwise)) owed by the Buyer to the Sellers pursuant to Article
II of this Agreement and Section 11.6.2, or (b) any other claims for indemnification by
any Indemnified Party not specifically limited pursuant to Section 11.4.1, or (c) any
claims for indemnification by any Indemnified Party that arise out of or relate to, whether
directly or indirectly, fraud or intentional misrepresentation by the Party against whom such
claims for indemnification are made (including any claims for indemnification related to any
Extended Duration Representations of such Party defined under Section 11.1.1(e)).
Section 11.4.3 Notwithstanding anything in this Agreement to the contrary and for the
avoidance of doubt, no Buyer Indemnified Party shall be entitled to indemnification hereunder for
any claims which such Buyer Indemnified Party has already been fully indemnified pursuant to the
terms of the Theken Disc Purchase Agreement or Therics Purchase Agreement.
Section 11.4.4 With respect to any claims for indemnification by any Buyer Indemnified Party
under Sections 11.2.2 or 11.5, the aggregate cumulative liability of each Seller
(other than RRT) under this Agreement shall not exceed the amount of Purchase Price actually
received by such Seller; provided, however, that the limitations under this Section 11.4.4
shall not apply to any claims for indemnification by any Buyer Indemnified Party under
Sections 11.2.2(b) or 11.5 against any Seller relating to any breach or
non-performance by such Seller of its covenants or agreements contained in this Agreement or in any
agreement, certificate or other instrument delivered by such Seller pursuant to this Agreement.
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Section 11.5 Tax Indemnification.
Section 11.5.1 Subsequent to the Closing, each Seller, jointly and severally, shall indemnify
the Buyer Indemnified Parties against, and hold each of the Buyer Indemnified Parties harmless
from: (i) all Liability for Taxes of the Company for all Pre-Closing Tax Periods, except to the
extent such Taxes are included as current liabilities in the determination of the Final Working
Capital Amount, (ii) any Damages incurred by such Buyer Indemnified Party that arise out of or
relate to, whether directly or indirectly, any breach by the Sellers, the Member Representative or
their Affiliates of any covenant contained in this Section 11.5 or Article VIII,
and (iii) any Damages incurred by such Buyer Indemnified Party that arise out of or relate to,
whether directly or indirectly, any breach of any representation or warranty contained in
Section 5.10 (without regard to any qualification contained therein as to materiality),
except to the extent that any such Damages are otherwise indemnified pursuant to the foregoing
clauses (i) or (ii) or are Taxes included as current liabilities in the determination of the Final
Working Capital Amount. For purposes of this Section 11.5, “Taxes” shall include the
amount of Taxes that would have been paid but for (A) income Tax deductions related to payments to
the Appreciation Rights Holders at Closing pursuant to the Appreciation Rights Closure Agreements
pursuant to Section 2.2 and (B) the application of any credit or net operating loss or
capital loss deduction attributable to Post-Closing Tax Periods.
Section 11.5.2 In the case of any Straddle Period: (i) real, personal and intangible property
Taxes or other Taxes levied on a per diem basis (collectively, “Per Diem Taxes”) of the
Company for a Pre-Closing Tax Period shall be equal to the amount of such Per Diem 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 the Pre-Closing Tax Period and the denominator of which
is the total number of days in the Straddle Period; and (ii) all other Taxes of the Company,
including income, sale, use and payroll Taxes, for any Pre-Closing Tax Period shall be computed as
if such Tax Period ended as of the end of the day on the Closing Date.
Section 11.5.3 The Sellers’ indemnification obligation for Taxes for a Pre-Closing Tax Period
shall initially be effected by the payment to the Buyer of the excess of (i) the amount of Taxes
due for such Pre-Closing Tax Period as evidenced by a Tax Return prepared in accordance with
Section 8.1 or other appropriate documentation relating to the resolution of a Tax Claim
over (ii) the amount of such Taxes paid by the Sellers at any time plus the amount of such
Taxes paid by the Company on or prior to the Closing Date, plus the amount of such Taxes
included as a current Liability in the determination of the Final Working Capital Amount. In the
case of any contested Tax, payment of the Tax to the appropriate Governmental Authority shall not
be considered to be due earlier than the date a final determination with respect to such Tax
Liability is made by the appropriate Governmental Authority or court.
Section 11.5.4 If a Governmental Authority shall make any claim relating to Taxes that, if
successful, might result in an indemnification payment and/or offset pursuant to this
Section 11.5 (a “Tax Claim”), the Buyer shall promptly and in any event no more
than fifteen (15) days following receipt of such Tax Claim, give written notice of such Tax Claim
to the Member Representative, together with copies of all notices and communications relating to
such Tax Claim; provided, however, the failure of the Buyer to give such notice shall only relieve
the Sellers from their indemnification obligations hereunder to the extent they are actually
prejudiced by such failure.
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Section 11.5.5 The Member Representative may elect to control all Proceedings at his own
expense and may make all decisions with respect to any Tax Claim relating to a Tax Period (or
portion thereof) ending on or prior to the Closing Date. Unless the Member Representative so
elects, the Buyer shall control all Proceedings and may make all decisions with respect to any Tax
Claim relating to a Tax Period (or portion thereof) ending on or prior to the Closing Date. The
controlling party shall not settle any such Tax Claim without the other party’s (the Buyer or the
Member Representative, as the case may be) consent, which shall not be unreasonably withheld,
conditioned or delayed.
Section 11.6 Set-Off Right Against Earn-Out Payments; Unresolved Claims.
Section 11.6.1 Subject to any applicable limitations set forth in Section 11.4, the
Buyer shall have the right to deduct from and offset against the First Earn-Out Amount and/or the
Second Earn-Out Amount, as the case may be, the amount of any Damages in respect of which it is
agreed by the Parties in writing, or otherwise finally determined pursuant to the terms of this
Agreement, that any Buyer Indemnified Party is entitled to indemnification
hereunder and for which such Buyer Indemnified Party has not already been indemnified (the
“Resolved Claim Amount”). For the avoidance of doubt, the Parties agree and acknowledge
that the Buyer’s right to deduct any Resolved Claim Amounts from, and offset any Resolved Claim
Amounts against, any Earn-Out Payment shall apply to the entirety of the applicable Earn-Out
Payment(s) and shall not be allocable to that portion of such Earn-Out Payment(s) payable to any
particular Seller(s) or Appreciation Rights Holder(s), regardless of the nature of the
indemnification claim that gave rise to such Resolved Claim Amount.
Section 11.6.2 Notwithstanding anything expressed or implied in this Article XI to the
contrary, in the event that a Buyer Indemnified Party has (i) delivered to the Member
Representative a Claim Notice pursuant to Section 11.3.2, or a notice in respect of any Tax
Claim pursuant to Section 11.5.4; and (ii) such indemnification claim has not been fully
and finally agreed to or resolved pursuant to this Agreement, including, as applicable, payment in
full of any amounts in respect thereof to the Buyer Indemnified Party (each, an “Unresolved
Claim”), then with respect to the aggregate amount of any Damages claimed by any Buyer
Indemnified Party under an Unresolved Claim (the “Unresolved Claim Amount”), the Parties
agree that, with respect to any Unresolved Claim Amount that exists as of the First Earn Earn-Out
Payment Date, the Buyer shall be entitled to holdback from the amount of the First Earn-Out Amount
otherwise payable hereunder the full amount such Unresolved Claim Amount (it being agreed that in
the event that the Unresolved Claim Amount is greater than the amount otherwise payable as the
First Earn-Out Payment, the Buyer shall be entitled to holdback (i) the entirety of the amount of
the First Earn-Out Amount otherwise payable hereunder and (ii) any excess Unresolved Claim Amounts
from the amount of the Second Earn-Out Amount otherwise payable hereunder); and, with respect to
any Unresolved Claim Amount that exists as of the Second Earn Earn-Out Payment Date, the Buyer
shall be entitled to holdback from the amount of the Second Earn-Out Amount otherwise payable
hereunder the full amount of such Unresolved Claim Amount. Upon final agreement by the Parties or
other final determination hereunder of any Unresolved Claim, (a) the Buyer shall be entitled to
retain for its own account, and deduct from and offset against the applicable Earn-Out Payment(s),
any amount of such Unresolved Claim that is finally agreed or determined to be payable to a Buyer
Indemnified Party, and/or (b) the Buyer shall, within five (5) Business Days of such final
agreement or determination, pay (i) any amount of such Unresolved Claim that is agreed or
determined to be payable, plus (ii) an amount equal to interest thereon at Adjusted LIBOR
for the period from the date of the holdback through the date of such payment (collectively, an
“Excess Holdback Payment”), in accordance with both the Allocation Schedule and Section
2.5.6, (x) to the Member Representative for the benefit of all Sellers, and (y) to the
Appreciation Rights Holders.
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Section 11.7 Remedies. The indemnification provisions in this Article XI
shall be the sole and exclusive remedies of the Parties with respect to any breach of the
respective representations, warranties, covenants and agreements pursuant to this Agreement or
otherwise arising out of this Agreement, regardless of the theory or cause of action pled, except
for the remedies of specific performance, injunction and other equitable relief; provided, however,
that no Party hereto shall be deemed to have waived any rights, claims, causes of action or
remedies if and to the extent gross negligence, fraud or intentional misrepresentation is proven on
the part of a Party by
another Party hereto and such rights, claims, causes of action or remedies may not be waived
under applicable Law; provided, further, that no Party shall be deemed to have waived its right to
enforce this Agreement via litigation in a court of law, or alternatively, any other dispute
resolution mechanism agreed upon by the Parties in writing (e.g., arbitration).
ARTICLE XII.
MEMBER REPRESENTATIVE.
MEMBER REPRESENTATIVE.
Section 12.1 Irrevocable Appointment of Representative. By the execution and delivery
of this Agreement, including counterparts hereof, each Seller hereby irrevocably constitutes and
appoints RRT, as the true and lawful agent and attorney-in-fact (referred to in this Agreement as
the “Member Representative”) of such Seller with full power of substitution to act in the
name, place and stead of such Seller with respect to the terms and provisions of this Agreement and
each Ancillary Agreement to which such Seller is a party, and to do or refrain from doing all such
further acts and things, and to execute all such documents, as the Member Representative shall deem
necessary or appropriate, in the Member Representative’s sole discretion, in connection with any of
the Transactions contemplated under this Agreement, including the power:
Section 12.1.1 to deliver the membership certificates and other instruments of conveyance
which are necessary or desirable to effect the sales of such Seller’s Units;
Section 12.1.2 to execute and deliver all Ancillary Agreements, certificates, and documents
which the Member Representative deems necessary or appropriate in connection with the consummation
of the transactions contemplated by the terms and provisions of this Agreement and the Ancillary
Agreements;
Section 12.1.3 to receive and receipt for all payments made by the Buyer to any of the Sellers
under this Agreement;
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Section 12.1.4 to employ and obtain the advice of legal counsel, accountants and other
professional advisors as the Member Representative, in such Person’s sole discretion, deems
necessary or advisable in the performance of such Person’s duties as Member Representative and to
rely on their advice and counsel;
Section 12.1.5 to incur expenses of sale, including Company Expenses, and any other fees and
expenses allocable or in any way relating to such transaction or any indemnification claim, whether
incurred prior or subsequent to Closing, to deduct from funds received on behalf of the Sellers
prior to their distribution to the Sellers any amount which the Member Representative deems
necessary for payment of or as a reserve against the Company Expenses, and to pay such fees and
expenses or to deposit the same in a bank account established for such purpose;
Section 12.1.6 to receive the Excess Working Capital Amount, if any, for the benefit of all
Sellers, and to distribute such Excess Working Capital Amount, if any, to Sellers in accordance
with both the Allocation Schedule and Section 2.5.6;
Section 12.1.7 to terminate, amend or waive any provision of this Agreement or any Ancillary
Agreement, provided that any such termination, amendment or waiver, if material to the rights and
obligations of the Sellers in the reasonable judgment of the Member Representative, shall be taken
in the same manner with respect to all Sellers unless otherwise agreed by each Seller who is
subject to any disparate treatment of a potentially adverse nature;
Section 12.1.8 to settle all disputes and claims that arise under this Agreement, the
Ancillary Agreements or any other agreement, certificate or instrument delivered in connection with
this Agreement;
Section 12.1.9 to serve as representative for the Sellers with respect to the Sellers’ rights
to receive payment of any portion of the Purchase Price (including any portions of the Earn-Out
Payments), and delivering on behalf of the Sellers any notice under this Agreement and the
Ancillary Agreements; and
Section 12.1.10 to do or refrain from doing any further act or deed on behalf of the Sellers
which the Member Representative deems necessary or appropriate in such Person’s sole discretion
relating to the subject matter of this Agreement as fully and completely as any of the Sellers
could do if personally present and acting.
Section 12.2 Authority of Representative; Reliance.
Section 12.2.1 The appointment of the Member Representative in this Article XII shall
be deemed coupled with an interest and shall be irrevocable, and the Buyer and any other Person may
conclusively and absolutely rely, without inquiry, upon any action of the Member Representative as
the act of each of the Sellers in all matters referred to in this Agreement. Each of Sellers
hereby ratifies and confirms all that the Member Representative shall do or cause to be done by
virtue of the Member Representative’s appointment as the Member Representative of such Seller. The
Member Representative shall act for Sellers on all of the matters set forth in this Agreement in
the manner the Member Representative believes to be in the best interest of the Sellers and
consistent with the Member Representative’s obligations under this Agreement, but the Member
Representative shall not be responsible to any Seller for any loss or damage any Seller may suffer
by reason of the performance by the Member Representative of the Member Representative’s duties
under this Agreement, including any loss or damage resulting from any error of judgment, mistake of
fact or Law, or any act done or omitted to be done in good faith, other than loss or damage arising
from willful violation of Law or gross negligence in the performance of the Member Representative’s
duties under this Agreement.
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Section 12.2.2 Each of the Sellers hereby expressly acknowledges and agrees that the Member
Representative is authorized to act on behalf of such Seller notwithstanding any dispute or
disagreement among the Sellers, and that the Buyer shall be entitled to rely on any and all action
taken by the Member Representative under this Agreement or the Ancillary Agreements without
liability to, or obligation to inquire of, any of the Sellers. The Buyer is hereby expressly
authorized to rely on the genuineness of the signature of the Member Representative on any
instrument, certificate or document. Upon receipt of any writing which reasonably appears to have
been signed by the Member Representative, the Buyer may act upon the same without any further duty
of inquiry as to the genuineness of the writing. The Sellers do hereby jointly and severally agree
to indemnify and hold the Member Representative harmless from and against any and all liability,
loss, cost, damage or expense (including fees and expenses of legal counsel) reasonably incurred or
suffered as a result of the performance of the Member Representative’s duties under this Agreement
except for actions by the Member Representative constituting gross negligence or willful
misconduct.
Section 12.3 Successor Representative. In the event that RRT dies or otherwise
becomes unable to serve as the Member Representative as contemplated hereunder, then the personal
representative of RRT’s person or estate shall automatically succeed as the successor Member
Representative (the “Successor Representative”). All provisions applicable to the Member
Representative, including, without limitation, the appointment and authority provisions hereof,
shall apply with equal force and effect to any Successor Representative.
ARTICLE XIII.
SELLER RELEASE
SELLER RELEASE
Section 13.1 Seller Release. Each Seller (a “Releasor”) for himself or itself
and its equity holders (to the extent permitted by applicable Law), officers, directors, employees,
agents, representatives and each of their respective Affiliates, successors and assigns
(collectively, the “Releasing Parties”) hereby unconditionally and forever remises,
releases, discharges and holds harmless, the Company and the Buyer and each and every director,
manager, officer, employee, agent, representative and Affiliate of the Company and the Buyer and
each of their successors and assigns (collectively, the “Released Parties”), of and from
any and all actions, Proceedings, claims, causes of action, suits, debts, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, controversies, contracts, leases, agreements,
promises, variances, trespasses, damages, judgments, executions, claims and demands, of any nature
whatsoever, and of every kind and description, ▇▇▇▇▇▇ and inchoate, at law or in equity whether
arising under the Operating Agreement, the Company’s articles of organization, or any provision of
Ohio Law, including but not limited to the Ohio LLC Act, which any Releasing Party now has or ever
might claim to have against any or all of the Released Parties, whether or not currently asserted
or known, arising from or relating to any event, dispute or occurrence which arose on or prior to
the date hereof, including, without limitation, any Releasing Party’s ownership of any Units of the
Company and/or the purchase thereof (collectively, the “Released Claims”).
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Section 13.2 Releasor Waiver. Each Releasor, on behalf of himself or itself and the
other Releasing Parties, and only as concerns the Released Claims, specifically waives the benefits
of any statutory or common law of any state, which in effect provides that a general release does
not extend to claims which the creditor does not know or suspect to exist in his favor. It is
expressly understood and agreed that the releases contained herein are intended to cover and do
cover all known facts and/or claims, as well as any further facts and/or claims within the scope of
such Released Claims not known or anticipated, but which may later develop or be discovered,
including all the effects and consequences thereof. Each Releasor, on behalf of himself or itself
and the other Releasing Parties, acknowledges that they may hereafter discover facts in addition
to, or different from, those which they now believe to be true with respect to the subject matter
of the Released Claims released herein, but agree that they have taken that possibility into
account in reaching this Agreement, and that the Released Claims given herein shall be and remain
in effect notwithstanding the discovery or existence of any such additional or different facts, as
to which the Releasing Parties expressly assume the risk. In connection with such waiver and
relinquishment of Released Claims, each Releasor, on behalf of himself or itself and the other
Releasing Parties, hereby acknowledges that they are aware that their attorneys may hereafter
discover claims or facts in addition to, or different from, those which they now know or believe to
exist with respect to the subject matter of the Released Claims, or any part of this Agreement, but
that it is nonetheless their intention to fully, finally and forever settle and release all
disputes and differences, known or unknown, suspected or unsuspected, as to the Released Claims.
Section 13.3 Releasor Covenants. Each Releasor covenants, and shall use reasonable
best efforts to cause the other Releasing Parties, never to institute any Released Claim whether at
law or in equity, against any or all of the Released Parties, in any court or administrative agency
or before any other public or private tribunal.
Section 13.4 Releasor Indemnification. Each Releasor severally agrees that if he or
it hereafter commences, joins in, or in any manner seeks relief through any action (including,
without limitation, any complaint, cross-claim, counterclaim, third-party complaint or interpleader
complaint in any jurisdiction or any action before an administrative or regulatory agency, whether
against a Party to this Agreement or any third party) arising out of, based upon, or relating to
any of the Released Claims released by him or it hereunder, or in any manner asserts against any
Released Party any of the Released Claims released hereunder, then such Releasor will indemnify and
hold harmless the Released Parties from any settlements, judgments, costs and expenses (including
attorneys’ fees and costs) incurred by such person or entity as a result of or in connection with
such action.
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Section 13.5 Excluded Claims. Notwithstanding anything to the contrary contained
herein, in no event shall this general release of Released Claims apply to any Released Claims that
(i) may arise from any breach by any of the Released Parties of this Agreement or the Ancillary
Agreements, or the
failure of the Released Parties to properly perform any obligation or duty arising on the part
of any of the Released Parties on or after the date hereof under this Agreement, or (ii) arise from
fraud, intentional misrepresentation or gross negligence of the Released Parties.
Section 13.6 Acknowledgment of Understanding by Releasor. Each Releasor acknowledges
that such Releasor (i) has received the advice of legal counsel in connection with this Article
XIII, (ii) has read and understands that this is a general release of Released Claims and (iii)
intends to be legally bound by the same.
ARTICLE XIV.
MISCELLANEOUS
MISCELLANEOUS
Section 14.1 Entire Agreement. This Agreement (including the Company Disclosure
Schedule, any other exhibits, schedules, certificates, lists and documents referred to herein, and
any documents executed by the Parties simultaneously herewith or pursuant thereto), the Ancillary
Agreements and the Confidentiality Agreement constitute the entire agreement of the Parties hereto,
except as provided herein, and supersedes all prior agreements and understandings, written and
oral, among the Parties with respect to the subject matter hereof.
Section 14.2 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as
broadly as is enforceable.
Section 14.3 Expenses. Except as expressly set forth in this Agreement, all fees,
costs and expenses incurred in connection with this Agreement or the other Transactions
contemplated hereby, shall be paid by the Party incurring such fees, costs and expenses.
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Section 14.4 Notices. Unless otherwise provided herein, all notices and other
communications hereunder shall be in writing and shall be deemed given if (i) delivered in person,
(ii) transmitted by telecopy (notice deemed given upon confirmation of receipt), (iii) mailed by
certified or registered mail (return receipt requested) (in which case such notice shall be deemed
given on the third (3rd) Business Day after such mailing, but only if deposited at a
U.S. Postal Service office in Ohio or New Jersey) or (iv) delivered by an express courier (with
written confirmation) (in which case such notice shall be deemed given on the next Business Day) to
the Parties at the following addresses (or at such other address for a Party as shall be specified
by like notice):
If to the Buyer (or the Company after the Closing):
Integra Life Sciences Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Senior Vice President and General Counsel
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Senior Vice President and General Counsel
With a copy (which shall not constitute notice) sent concurrently to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
If to any Seller or the Member Representative (or the Company before the Closing):
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
********
********
Facsimile: ********
********
********
Facsimile: ********
With a copy (which shall not constitute notice) sent concurrently to:
▇▇▇▇▇ & ▇▇▇▇▇ Co., L.P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Section 14.5 Binding Effect; Persons Benefiting; Assignment. This Agreement shall
inure to the benefit of and be binding upon the Parties hereto and their respective successors and
permitted assigns. No provision of this Agreement is intended or shall be construed to confer upon
any entity or Person other than the Parties hereto and their respective successors and permitted
assigns any right, remedy or claim under or by reason of this Agreement or any part hereof. This
Agreement may not be assigned by any of the Parties hereto; provided, however, that, the Buyer may
assign all or part of its rights under this Agreement and delegate all or part of its obligations
under this Agreement to (i) a wholly-owned Subsidiary of the Buyer, in which event all of the
rights and powers of the Buyer and remedies available to the Buyer under this Agreement shall
extend to and be enforceable by such Subsidiary and provided that Buyer provides the Member
Representative with written notice of such assignment within five (5) Business Days of the same, or
(ii) subject to Section 2.5.4 of this Agreement, any Person who acquires the Buyer, whether
by way of merger or the purchase of all of the Buyer’s outstanding capital stock or substantially
all of the Buyer’s assets. In the event of
any such assignment and delegation, the term “Buyer” as used in this Agreement shall be deemed
to refer to such Subsidiary or successor of the Buyer, as the case may be, where reference is made
with respect to actions to be taken with respect to the Transactions, and shall be deemed to
include both the Buyer and such Subsidiary or successor of the Buyer, as the case may be, where
appropriate. Notwithstanding anything herein to the contrary, irrespective of any assignment under
Section 14.5(i) above the original Buyer and assignor under Section 14.5(i) (i.e.,
Integra LifeSciences Holdings Corporation) shall remain primarily liable for the performance of all
of its obligations under this Agreement and the Ancillary Agreements, and as such, the Sellers may
seek to enforce this Agreement against Integra LifeSciences Holdings Corporation without first
having to seek enforcement against any assignee under Section 14.5(i) above, and
furthermore, nothing in this Section 14.5 shall be deemed a waiver of any claim which
Sellers might have against Integra LifeSciences Holdings Corporation.
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Section 14.6 Counterparts; Facsimile Signatures. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement, it being understood that all of the Parties
need not sign the same counterpart. This Agreement may be executed and delivered by facsimile or
email transmission of a file in “.pdf” or similar format and upon such delivery, each signature
shall be deemed to have the same effect as if the original signature had been delivered to the
other Party.
Section 14.7 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE ANCILLARY AGREEMENTS OR OTHER AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 14.7.
Section 14.8 Governing Law; Jurisdiction.
Section 14.8.1 Except as required by the mandatory provisions of the Ohio LLC Act, this
Agreement (including any claim or controversy arising out of or relating to this Agreement and the
Ancillary Agreements) shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to conflicts of laws
principles that would result in the application of the law of any other state.
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Section 14.8.2 Each of the Parties hereto hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of any Delaware State court, or, if no such
state court has proper jurisdiction, the Federal court of the United States of America, sitting in
Wilmington, Delaware, and any appellate court from any thereof, in any actions or Proceedings
arising out of or relating to this Agreement, the Ancillary Agreements and any Transactions
contemplated hereby or thereby or for recognition or enforcement of any Judgment relating thereto,
and each of the Parties hereby irrevocably and unconditionally (i) agrees not to commence any such
action or Proceeding except in such courts, (ii) agrees that any claim in respect of any such
action or Proceeding may be heard and determined in such Delaware State court or, if no such state
court has proper jurisdiction, the such Federal court, (iii) waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any action or Proceeding in the state or federal courts located in any such Delaware State
or Federal court, and (iv) waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or Proceeding in the state or federal courts
located in any such Delaware State or Federal court. Each of the Parties hereto agrees that a
final Judgment in any such action or Proceeding may be enforced in other jurisdictions by suit on
the Judgment or in any other manner provided by Law. Each Party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 14.4. Nothing
in this Agreement will affect the right of any Party to this Agreement to serve process in any
other manner permitted by Law.
Section 14.9 Specific Enforcement. The Parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any United States District
Court located in Delaware State or in any Delaware State court, in addition to any other remedy to
which any Party is entitled at law or in equity.
Section 14.10 Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the Parties only, and shall be given no substantive or interpretive effect
whatsoever.
Section 14.11 Waivers. The Member Representative or the Buyer may, by written notice
to the other Party hereto: (i) extend the time for the performance of any of the obligations or
other actions of the other Party under this Agreement; (ii) waive any inaccuracies in the
representations or warranties of the other Party contained in this Agreement or in any document
delivered pursuant to this Agreement; (iii) waive compliance with any of the conditions or
covenants of the other Party contained in this Agreement; or (iv) waive performance of any of the
obligations of the
other Party under this Agreement. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including without limitation any investigation by or on behalf of
any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance
with any representations, warranties, covenants or agreements contained in this Agreement. The
waiver by any Party hereto of a breach of any provision hereunder shall not operate or be construed
as a waiver of any prior or subsequent breach of the same or any other provision hereunder.
[Signature Pages Follow]
98
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the
date first above written.
| BUYER: | ||||||||
| INTEGRA LIFESCIENCES HOLDINGS CORPORATION | ||||||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III | |||||||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III | |||||||
| Title: | Executive Vice President, Finance and Administration, and Chief Financial Officer | |||||||
| THE COMPANY: | ||||||||
| THEKEN SPINE, LLC | ||||||||
| By: | Foxtrot-Papa Management Company, LLC | |||||||
| Its: | Manager | |||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Manager | ||||||||
| SELLERS: | ||||||
| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually | ||||||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||||
| /s/ ▇▇▇▇ ▇▇▇▇▇ | ||||||
| ▇▇▇▇ ▇▇▇▇▇ | ||||||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ | ||||||
| ▇▇▇▇▇▇▇ ▇▇▇▇ | ||||||
| /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||
| ▇▇▇▇▇ ▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Associates, Inc. Amended and Restated 401(k) Profit Sharing Plan | ||||||
| AFBS, INC. | ||||||
| By: | /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇ | |||||
| Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇ | ||||||
| Title: Vice President | ||||||
| Acknowledged and Agreed for the purposes of Section 12 hereof as of the date first set forth above: | ||||
| MEMBER REPRESENTATIVE: | ||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Member Representative | ||||
By: |
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
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