EXHIBIT 2.1
[FRESHFIELDS BRUCKHAUS ▇▇▇▇▇▇▇▇ LOGO]
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SALE AND PURCHASE AGREEMENT
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regarding the
sale and purchase of the
Demedis Dental Business
Execution Version Demedis SPA - 23 December 2003
2
by and between
1. all shareholders of demedis GmbH:
1.1 Sirona Dental Systems S.a.r.l., ▇▇ ▇▇▇▇ ▇'▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇
- "SELLER 1" -
1.2 Oxanis AG, ▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
- "SELLER 2" -
1.3 ▇▇▇▇▇ ▇▇▇▇, with address at ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
- "SELLER 3" -
1.4 ▇▇▇▇ ▇▇▇▇▇▇, with address at ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇-▇▇▇▇ ▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
- "SELLER 4" -
1.5 Wolfgang Ni(beta)ing, with address at ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
- "SELLER 5" -
- on the one side -
2. Blitz HH 02-650 GmbH, with business address at Am ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
- "SHARE PURCHASER"
3. ▇▇▇▇▇ ▇▇▇▇▇▇ Europe, Inc., with business address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
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- "LOAN PURCHASER" -
4. ▇▇▇▇▇ ▇▇▇▇▇▇, Inc, with business address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇
- "▇▇▇▇▇ ▇▇▇▇▇▇" -
- on the other side -
- Seller 1 through Seller 5 are collectively referred to as "SELLERS" and
individually as "SELLER", Loan Purchaser and Share Purchaser are collectively
referred to as "PURCHASERS" and individually as "PURCHASER", Loan Purchaser,
Share Purchaser, Sellers and ▇▇▇▇▇ ▇▇▇▇▇▇ are individually referred to as a
"PARTY" and collectively as "PARTIES" -
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TABLE OF CONTENTS
CLAUSE PAGE
PREAMBLE............................................................................................ 5
Section 1 Corporate Structure ............................................................. 6
Section 2 Financial Debt / Debt Guarantees ................................................ 10
Section 3 Sale and Purchase of Shares and Shareholder Loans ............................... 13
Section 4 Purchase Price .................................................................. 14
Section 5 Economic Transfer Date / Signing Date / Closing Date / Closing .................. 16
Section 6 Sellers' Guarantees ............................................................. 24
Section 7 Purchaser's Guarantees .......................................................... 37
Section 8 Remedies ........................................................................ 37
Section 9 Expiration of Claims / Limitation of Claims ..................................... 44
Section 10 Sellers' Covenant .............................................................. 46
Section 11 Indemnity ...................................................................... 47
Section 12 Restriction of Announcement / Stay Bonus / Cooperation / Confidentiality /
Non-competition and Non-solicitation ...................................................... 47
Section 13 Notices / Exercise of Rights ................................................... 49
Section 14 Miscellaneous .................................................................. 51
Section 15 Exhibits / Disclosure Schedules / Definitions .................................. 55
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PREAMBLE
(A) Sellers are the sole shareholders of demedis GmbH, a limited liability
company organised under German law, registered in the Commercial Register
maintained at the Lower Court of Offenbach am Main under registration
number HRB 34827, having its legal domicile in Langen/Hessen, Germany
("DEMEDIS"), which, largely through its direct and indirect subsidiaries
("DEMEDIS GROUP") and to a small extent by direct sales, is engaged in the
trading and distribution of dental products in Germany, Austria, Belgium,
Luxembourg and The Netherlands ("DEMEDIS DENTAL BUSINESS").
A corporate chart of the Demedis Group is attached as Exhibit A.
(B) Sellers are interested to sell and transfer their shares in Demedis and
Seller 1 is interested to sell and transfer one of its shareholder loans
granted to Demedis to Purchasers and Purchasers are interested to acquire
such shares and loan from Sellers upon the terms and conditions of this
sale and purchase agreement ("AGREEMENT").
(C) In addition to acquiring the Demedis Dental Business, Purchasers will
enter into a sale and purchase agreement ("EDH AGREEMENT") to acquire (i)
all shares in Euro Dental Holding GmbH, a limited liability company
organised under German law, registered in the Commercial Register
maintained at the Lower Court of Offenbach/Hessen under registration
number HRB 34839 and having its legal domicile in Langen/Hessen, ("EDH"),
which through its direct and indirect subsidiaries ("EDH GROUP") is also
engaged in the trading and distribution of dental products and the
ultimate owners of which are partly identical to the ultimate owners of
the Demedis Group, as well as (ii) 1% of the shares in Krugg S.p.A., an
Italian company registered in the Commercial Register of Milan under
registration number 13088630150 (the remaining 99% of the shares are held
by EDH).
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NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1
CORPORATE STRUCTURE
1.1 DEMEDIS SHARES. Sellers are the sole shareholder of Demedis and hold the
following shares in the following nominal amounts in Demedis ("DEMEDIS
SHARES"):
SHAREHOLDER NOMINAL AMOUNT OF SHARES IN EURO
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Sirona Dental Systems S.a.r.l. 475,000
13,050
Oxanis AG 7,500
▇▇▇▇▇ ▇▇▇▇ 2,950
▇▇▇▇ ▇▇▇▇▇▇ 1,000
Wolfgang Ni(beta)ing 500
1.2 DIRECT SUBSIDIARIES. Demedis holds shares in the following companies:
1.2.1 five shares in the nominal amounts of EUR 25,000, EUR 113,000, EUR
2,000,000, EUR 2,046,000 and EUR 3,600,000 (which together represent
100 % of the total registered share capital in the nominal amount of
EUR 7,784,000) in demedis dental depot GmbH ("DDD SHARES"), a
limited liability company organised under German law, registered in
the Commercial Register maintained at the Lower Court of
Offenbach/Hessen under registration number HRB 35008 and having its
legal domicile in Langen/Hessen, Germany ("DDD");
1.2.2 one share in the nominal amount of ATS 30,000,000 (which represents
100 % of the total registered share capital) in Austrodent
Handelsgesellschaft m.b.H. ("AUSTRODENT SHARE"), a limited liability
company organised under Austrian law, registered in the Commercial
Register maintained in Vienna under registration number FN 45564g
and having its legal domicile in Vienna, Austria ("AUSTRODENT");
1.2.3 600 shares in the nominal amounts of NLG 1000 each (which together
represent 100 % of the total registered share capital in the amount
of NLG 600,000) in Sirona Dental Systems B.V. ("SDS SHARES"), a
limited liability company organised under Dutch law, registered in
the Commercial
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Register maintained in Tiel under registration number NR 30070331
and having its legal domicile in Tiel, The Netherlands ("SDS").
(DDD, Austrodent and SDS are hereinafter collectively referred to as
the "DIRECT SUBSIDIARIES" and each of them as "DIRECT SUBSIDIARY";
the DDD Shares, the Austrodent Share and the SDS Shares are
hereinafter collectively referred to as the "DIRECT SHARES".)
1.3 INDIRECT SUBSIDIARIES. The Direct Subsidiaries and their respective direct
or indirect subsidiaries hold shares and partnership interests in the
following companies and partnerships:
1.3.1 DDD holds shares and partnership interests in the following
companies and partnerships:
(i) one share in the nominal amount of DM 50,000 (which represents
100 % of the total registered share capital) in VBR
Vertriebsburo Rotierende Instrumente Gesellschaft mit
beschrankter Haftung, a limited liability company organised
under German law, registered in the Commercial Register
maintained at the Lower Court of Berlin Charlottenburg under
registration number HRB 45271 and having its legal domicile in
Berlin, Germany ("VBR");
(ii) one share in the nominal amount of EUR 8,400 (which represents
33.3 % of the total registered share capital in the nominal
amount of EUR 25,200) in DES Dental Events Gesellschaft fur
professionelles Veranstaltungsmanagement GmbH, a limited
liability company organised under German law, registered in
the Commercial Register maintained at the Lower Court of
Cologne under registration number HRB 31892 and having its
legal domicile in Cologne, Germany ("DES GMBH");
(iii) one share in the nominal amount of EUR 3,000 (which represents
4.545 % of the total capital in the nominal amount of EUR
66,000) in Arbeitsgemeinschaft der Bayerischen Dentaldepots, a
civil law partnership (Gesellschaft burgerlichen Rechts)
organised under German law and having its legal domicile in
Munich, Germany ("ARGE");
(iv) four shares in the nominal amounts of DM 17,894.46, DM
17,894.46, DM 17,649.99 and DM 17,894.42 (which together
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represent 29.889 % of the total capital in the nominal amount
of DM 238,659.17) in Arbeitsgemeinschaft der Dental-Depots in
Baden-Wurttemberg und Rheinland-Pfalz im BVD, a civil law
partnership organised under German law and having its legal
domicile in Stuttgart, Germany ("DENTALDEPOT").
(DES GmbH, Arge, Dentaldepot are collectively referred to as "DENTAL
ASSOCIATIONS").
1.3.2 Austrodent holds shares in the following companies:
(i) one share in the nominal amount of ATS 500,000 (which
represents 100 % of the total registered share capital) in
▇▇▇▇▇▇ Zahnwarenhandelsgesellschaft m.b.H., a limited
liability company organised under Austrian law, registered in
the Commercial Register maintained in Vienna under
registration number FN 74236x and having its legal domicile in
Vienna, Austria ("▇▇▇▇▇▇ GmbH");
(ii) one share in the nominal amount of ATS 500,000 (which
represents 100 % of the total registered share capital) in
Golth Dentalwarenhandelsgesellschaft m.b.H., a limited
liability company organised under Austrian law, registered in
the Commercial Register maintained in Vienna under
registration number FN 89735k and having its legal domicile in
Vienna, Austria ("GOLTH GmbH").
1.3.3 SDS holds 100 shares with a nominal value of NLG 1,000 each (which
together represent 100 % of the total registered share capital in
the amount of NLG 100,000) in NDO Leeflang Beeher B.V., a limited
liability company organised under Dutch law, registered in the
Commercial Register maintained in Almere under registration number
39053828 and having its legal domicile in Almere, The Netherlands
("NDO BV").
1.3.4 NDO BV holds 454 shares with a nominal value of EUR 100 each (which
together represent 100 % of the total registered share capital in
the amount of EUR 45,400) in B.V. Nederlandse Dental Onderneming
▇.▇. ▇▇▇▇▇▇▇▇, a limited liability company organised under Dutch
law, registered in the Commercial Register maintained in Almere
under registration number 39052908 and having its legal domicile in
Almere, The Netherlands ("NDO LEEFLANG").
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1.3.5 NDO Leeflang holds shares in the following companies:
(i) 236 shares with a nominal value of EUR 100 each (which
together represent 100 % of the total registered share capital
in the amount of EUR 23,600) in Double Precision B.V., a
limited liability company organised under Dutch law,
registered in the Commercial Register maintained in Almere
under registration number 39055454 and having its legal
domicile in Almere, The Netherlands ("DOUBLE BV");
(ii) 7,550 shares without a nominal value but each with a
fractional value of EUR 24.7893 (which together represent 100
% of the total registered share capital of EUR 187,159.16) in
Demedis Dental N.V., a limited liability company organised
under Belgian law, registered in the Commercial Register
maintained at Antwerpen under registration number 322.094 and
having its legal domicile in Zwijndrecht, Belgium ("DEMEDIS
NV").
(VBR, ▇▇▇▇▇▇ GmbH, Golth GmbH, NDO BV, NDO Leeflang, Double BV and Demedis
NV are hereinafter collectively referred to as "INDIRECT SUBSIDIARIES";
Demedis, the Direct Subsidiaries and Indirect Subsidiaries, but excluding
the Dental Associations, are collectively referred to as "COMPANIES" and
individually as "COMPANY"; the Dental Associations and the Companies are
collectively referred to as "GROUP COMPANIES" and individually as "GROUP
COMPANY"; the shares and partnership interests directly or indirectly held
by the Direct Subsidiaries and the Indirect Subsidiaries in the Indirect
Subsidiaries are hereinafter collectively referred to as "INDIRECT
SHARES"; the Demedis Shares, the Direct Shares and the Indirect Shares are
collectively referred to as "SHARES").
1.4 OTHER PARTICIPATIONS. NDO Leeflang also holds interests in the so-called
"STICHTING BONUS FONDS NDO LEEFLANG", a Dutch entity that legally does not
have any shareholders and merely serves the purpose of administrating
bonus certificates granted by NDO Leeflang to customers as well as the
making to and receiving payments from customers in connection with such
bonus certificates.
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SECTION 2
FINANCIAL DEBT / DEBT GUARANTEES
2.1 SHAREHOLDER LOAN. Seller 1 has granted to Demedis the following
shareholder loans:
2.1.1 one shareholder loan bearing interest to be accrued at a variable
interest rate of 7% p.a. during the financial year ending on 30
September 2003 and 8% p.a. during the financial year ending on 30
September 2004 which, as of the Economic Transfer Date, (as defined
in Section 5.1.1) provided for a total amount (including both
principal and accrued interest) of EUR 70,838,037.89 (in words: Euro
seventy million eight hundred thirty eight thousand thirty seven and
eighty nine Cents) ("SHAREHOLDER LOAN").
(The loan agreement on the basis of which the Shareholder Loan has
been granted is hereinafter referred to as "SHAREHOLDER LOAN
AGREEMENT".)
2.1.2 one shareholder loan bearing interest at a (variable) interest rate
of 8% p.a. which as of the Economic Transfer Date provided for a
total amount (including both principal and accrued interest) of EUR
2,968,213.15 (in words: Euro two million nine hundred sixty eight
thousand two hundred thirteen and fifteen Cents) ("REPAID
SHAREHOLDER LOAN").
2.2 BANK DEBT.
2.2.1 SDS SENIOR FACILITY. Under a certain senior facility dated 5
September 2001 (as amended) ("SDS SENIOR FACILITY AGREEMENT") SDS,
NDO BV and NDO Leeflang have been granted a senior loan facility at
varying interest rates ("SDS SENIOR FACILITY") by Deutsche Bank AG
("SDS SENIOR LENDER"). In order to secure the claims of the SDS
Senior Lender under the SDS Senior Facility Agreement, certain
security has been granted to the SDS Senior Lender. As of the
Economic Transfer Date the principal plus accrued and unpaid
interest outstanding under the SDS Senior Facility amounted to EUR
7,035,620 (in words: Euro seven million thirty five thousand six
hundred twenty) ("SDS SENIOR FACILITY AMOUNT").
2.2.2 DDD WORKING CAPITAL FACILITY. Under a working capital facility
agreement dated 27 February 2002 (as amended) ("DDD WORKING CAPITAL
FACILITY AGREEMENT I") DDD has been granted a working capital
facility at varying interest rates ("DDD WORKING CAPITAL FACILITY")
by Bayrische Hypo- und Vereinsbank AG ("DDD LENDER"). In order to
secure the claims of the DDD Lender under the DDD Working Capital
Facility Agreement, certain security
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has been granted to the DDD Lender. As of the Economic Transfer Date
the principal plus accrued and unpaid interest outstanding under the
Working Capital Facility amounted to EUR 3,000,000 (in words: Euro
three million) ("DDD WORKING CAPITAL FACILITY AMOUNT").
2.2.3 AUSTRODENT WORKING CAPITAL FACILITY. Under a working capital
facility agreement dated 24 November 2000 (as amended) ("AUSTRODENT
WORKING CAPITAL FACILITY AGREEMENT I") Austrodent has been granted a
working capital facility at varying interest rates ("AUSTRODENT
WORKING CAPITAL FACILITY") by Allgemeine Sparkasse Oberosterreich
Bankaktiengesellschaft ("AUSTRODENT LENDER"). In order to secure the
claims of the Austrodent Lender under the Austrodent Working Capital
Facility Agreement, certain security has been granted to the
Austrodent Lender. As of the Economic Transfer Date the principal
plus accrued and unpaid interest outstanding under the Austrodent
Working Capital Facility amounted to EUR 657,420.71 (in words: Euro
six hundred fifty seven thousand four hundred twenty and seventy one
Cents ("AUSTRODENT WORKING CAPITAL FACILITY AMOUNT").
(The SDS Senior Facility, the DDD Working Capital Facility and the
Austrodent Working Capital Facility are hereinafter collectively
referred to as "BANK DEBT".)
2.3 REPAYMENT OF BANK DEBT AND REPAID SHAREHOLDER LOAN. The Parties agree that
the Bank Debt and the Repaid Shareholder Loan shall be repaid by Share
Purchaser as set out below.
Except as modified by Section 2.4, on the Closing Date (as defined in
Section 5.1.3) Share Purchaser shall:
2.3.1 pay the outstanding principal plus accrued and unpaid interest as
well as any prepayment and all other charges in respect of the SDS
Senior Facility as of the Closing Date ("SDS SENIOR FACILITY
REPAYMENT AMOUNT") in discharge of all payment obligations under the
SDS Senior Facility as set forth in Section 5.4.3;
2.3.2 pay the outstanding principal plus accrued and unpaid interest as
well as any prepayment and all other charges in respect of the DDD
Working Capital Facility as of the Closing Date ("DDD WORKING
CAPITAL REPAYMENT AMOUNT") in discharge of all payment obligations
under the DDD Working Capital Facility as set forth in Section
5.4.4;
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2.3.3 pay the outstanding principal plus accrued and unpaid interest as
well as any prepayment and all other charges in respect of the
Austrodent Working Capital Facility as of the Closing Date
("AUSTRODENT WORKING CAPITAL REPAYMENT AMOUNT") in discharge of all
payment obligations under the Austrodent Working Capital Facility as
set forth in Section 5.4.5;
2.3.4 pay the outstanding principal plus accrued and unpaid interest of
the Repaid Shareholder Loan as of the Closing Date ("REPAID
SHAREHOLDER LOAN REPAYMENT AMOUNT") in discharge of all payment
obligations under the Repaid Shareholder Loan as set forth in
Section 5.4.5a.
Without undue delay following the satisfaction of all Closing Conditions
(as defined in Section 5.2), but in any event not later than three (3)
Business Days thereafter, Sellers shall notify Share Purchaser in writing
of the SDS Senior Facility Repayment Amount, the DDD Working Capital
Repayment Amount, the Austrodent Working Capital Repayment Amount and the
Repaid Shareholder Loan Repayment Amount.
2.4 ASSUMPTION OF BANK DEBT. Instead of repaying the entire Bank Debt on the
Closing Date, Share Purchaser or Sellers in respect of the Austrodent
Working Capital Facility may also request from the respective other Party
in writing that Bank Debt which does not need to be repaid on the Closing
Date due to the exercise of a change-of-control right or other agreement
between the relevant lenders and borrowers stays within the Demedis Group
("DEBT ASSUMPTION REQUEST", such part of the Bank Debt that will not be
repaid "ASSUMED BANK DEBT"). The Debt Assumption Request can only be
issued before the relevant Companies have agreed with the relevant lenders
to repay the relevant Bank Debt on the Closing Date or are required to
repay the Bank Debt on the Closing Date for any other reason and in no
event later than five (5) Business Days (as defined in Section 14.6) prior
to the Closing Date. A Debt Assumption Request issued by Share Purchaser
shall include a confirmation by the relevant lender(s) of the Assumed Bank
Debt that it/they agree that the Assumed Bank Debt stays within the
relevant Company. In case a valid Debt Assumption Request has been issued,
Share Purchaser will not be required to repay the Assumed Bank Debt as set
forth in the relevant Sections 5.4.3 to 5.4.5 on the Closing Date and
Sellers will not need to deliver the relevant release and discharge of
debt or other confirmations in relation to the Assumed Bank Debt as set
forth in the relevant Sections 5.4.9 to 5.4.11.
2.5 SELLER 1 DEBT GUARANTEE. Seller 1 has issued a guarantee to HVB Banque
Luxembourg S.A. to secure liabilities of DDD resulting from the DDD
Working Capital Facility as well as the guarantees listed in Exhibit 2.5
(all those guarantees collectively "SELLER 1 DEBT GUARANTEES").
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2.6 RELEASE OF GUARANTEES. Purchasers shall procure that, at the Closing Date,
Seller 1 is fully and irrevocably released from all its obligations and
liabilities under the Seller 1 Debt Guarantees on behalf or for the
benefit of the Demedis Group or any Group Company or any customers or
suppliers of the Demedis Group or any Group Company (hereinafter
collectively referred to as "RELEASED GUARANTEES") by Purchasers
substituting its own collateral for the Seller 1 Debt Guarantees or
otherwise. If and to the extent that the beneficiaries of the Released
Guarantees are not prepared to release Seller 1, Purchasers shall fully
indemnify and hold Seller 1 harmless from any claims under or in
connection with the relevant Released Guarantees and shall provide Seller
1 on the Closing Date with an irrevocable and unconditional back-up
guarantee (Ruckburgschaft) in favour of Seller 1, payable on first written
demand in the form attached as Exhibit 2.6, such guarantee to be issued by
a German savings institution (Sparkasse) or a Standard & Poor's AA (or
equivalent rating agency) or better rated German or U.S. bank.
SECTION 3
SALE AND PURCHASE OF SHARES AND SHAREHOLDER LOANS
3.1 OBJECT OF SALE AND PURCHASE. Subject to the terms and conditions of this
Agreement,
3.1.1 Sellers hereby sell the Demedis Shares to Share Purchaser and Share
Purchaser purchases from Sellers the Demedis Shares; and
3.1.2 Seller 1 hereby sells the Shareholder Loan to Loan Purchaser and
Loan Purchaser hereby purchases the Shareholder Loan from Seller 1.
(The Demedis Shares and the Shareholder Loan are hereinafter collectively
referred to as the "SOLD ASSETS")
3.2 RIGHTS AND OBLIGATIONS ATTACHED TO THE SOLD ASSETS. The Sold Assets are
sold to Purchasers with all rights and obligations attached thereto as
from the Economic Transfer Date including the right to receive the
interest accrued on the Shareholder Loan and the right to receive all
dividends in respect of the Demedis Shares relating to periods as from the
Economic Transfer Date.
3.3 CONSENT REQUIREMENTS. All consents required under the articles of
association of Demedis to effect the sale and transfer of the Demedis
Shares have been, or shall have been duly obtained prior to, or on the
Closing Date. The consent of Demedis for the transfer of the Shareholder
Loan is attached hereto as Exhibit 3.3.
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SECTION 4
PURCHASE PRICE
4.1 PURCHASE PRICE. The aggregate purchase price for the Sold Assets (the
"PURCHASE PRICE") is EUR 44,341,099 (in words: Euro forty four million
three hundred forty one thousand ninety nine). The Purchase Price shall be
fixed and not be subject to any adjustments unless otherwise set forth in
this Agreement.
4.2 PAYMENT AMOUNT / HOLDBACK ESCROW AMOUNT. The Purchase Price shall consist
of a portion of EUR 34,341,099.00 (in words: Euro thirty four million
three hundred forty one thousand ninety nine) ("PAYMENT AMOUNT") and EUR
10,000,000 (in words: Euro ten million) ("HOLDBACK ESCROW AMOUNT").
4.3 PURCHASE PRICE INTEREST. The Purchase Price shall bear interest at a rate
of six per cent (6%) p.a. as from and including the Economic Transfer Date
until and including the Closing Date ("PURCHASE PRICE INTEREST"),
provided, however, that in case of a Down Payment in accordance with
Section 4.3a, the amount subject to interest pursuant to this Section
shall be, as from the Down Payment Date, reduced to the Purchase Price
minus the Down Payment.
4.3a DOWN PAYMENT. Purchaser shall make a down payment in the amount of EUR
25,000,000 (in words: Euro twenty five million) to the Escrow Account (as
defined in the Escrow Agreement) on January 20, 2004 ("DOWN PAYMENT") if
the Closing has not yet occurred by this date ("DOWN PAYMENT DATE").
4.4 PURCHASE PRICE AND PURCHASE PRICE INTEREST ALLOCATION. The Parties agree
that the Purchase Price and the Purchase Price Interest shall be allocated
to the Demedis Shares and the Shareholder Loan as set out in Exhibit 4.4.
4.5 PAYMENT OF PAYMENT AMOUNT / PURCHASE PRICE INTEREST. On the Closing Date,
Purchasers shall pay the Payment Amount (minus the Down Payment if already
paid in accordance with Section 4.3a) and the Purchase Price Interest into
the Sellers' Account (as defined in Section 4.7) pursuant to Section
5.4.1.
4.6 PAYMENT OF HOLDBACK ESCROW AMOUNT. On the Closing Date, Purchasers shall
pay the Holdback Escrow Amount to the escrow agent under the Escrow
Agreement (as defined in Section 4.10) ("ESCROW AGENT") in accordance with
Section 5.4.2.
4.7 SELLERS' ACCOUNT. Except for the Holdback Escrow Amount and the Down
Payment all payments owed by Purchasers to Sellers under this Agreement,
including the Purchase
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Price and the Purchase Price Interest, shall be paid by Purchasers in
immediately available funds free of any charges, taxes or other deductions
by wire transfer to Sellers' bank account, the details of which will be
notified in writing by the Sellers to Purchasers at the latest five (5)
Business Days prior to the Closing Date ("SELLERS' ACCOUNT").
4.8 DEFAULT INTEREST. If Purchasers fail to pay the Purchase Price or the
Purchase Price Interest on the Closing Date, with value (Wertstellung)
prior to 5:00 p.m. Central European Time or to make any other payment when
due under this Agreement, interest at the rate of 600 basis points above
EURIBOR as from and including the relevant due date until, and including,
the date of payment shall become due and payable on the relevant due date,
without prejudice to any other rights and remedies of Sellers arising from
such failure.
4.9 NO RETENTION OR SET-OFF. Purchasers shall not be entitled to exercise a
right of set-off (Aufrechnung) or retention (Zuruckbehaltungsrecht) with
respect to its obligations to pay the Purchase Price and Purchase Price
Interest or to make any other payments under this Agreement, unless
Purchasers' claim on which Purchasers have based their right of set-off or
retention has been acknowledged by Sellers in writing or has been
determined by a final and non-appealable court judgement or arbitral
award, as the case may be.
4.10 RELEASE OF HOLDBACK ESCROW AMOUNT. The Holdback Escrow Amount shall be
released to Sellers and/or Purchasers, as the case may be, in accordance
with the escrow agreement to be entered into prior to 20 January 2004 or
the Closing (whichever occurs earlier) and substantially in the form as
set forth in Exhibit 4.10 ("ESCROW AGREEMENT").
4.11 FUTURE CAPITAL SUPPLY AND FINANCING. Purchasers are aware that the Demedis
Group, besides its bank credit lines, depends on capital supply and
financing by its shareholders which is presently provided by the
Shareholder Loans. With effect as of the Closing Date, Sellers have no
continuing responsibility to provide capital or financing to the Demedis
Group; rather, the capital supply and financing of the Demedis Group will
be assumed, as of the Closing Date, by Purchasers.
4.12 PAYMENT GUARANTEE. At any time prior to the Closing Date, Purchasers will,
upon written request of Sellers, deliver an unconditional and irrevocable
guarantee payable on first written demand for the obligations of
Purchasers to pay the Purchase Price and the Purchase Price Interest (less
the Down Payment if already paid in accordance with Section 4.3a) under,
or in connection with, this Agreement issued by a German saving
institution (Sparkasse) or a Standard & Poor's AA or better rated German
or US bank
16
of international standing ("PAYMENT GUARANTEE"). Sellers' will bear the
costs of the guarantee fee (Avalprovision) for the Payment Guarantee,
provided, however, that the costs need to be agreed by Sellers before
delivery of the Payment Guarantee and provided further that Purchasers
will have no obligation to deliver the Payment Guarantee if Sellers cannot
agree on the relevant costs.
SECTION 5
ECONOMIC TRANSFER DATE / SIGNING DATE / CLOSING DATE / REFERENCE DATE / CLOSING
5.1 DEFINITIONS. Economic Transfer Date, Signing Date, Closing Date and
Reference Date shall have the following meanings in this Agreement:
5.1.1 "ECONOMIC TRANSFER DATE" shall be 30 September 2003, 24:00 o'clock;
5.1.2 "SIGNING DATE" shall be the day on which this Agreement has been
duly executed before a notary public;
5.1.3 "CLOSING DATE" shall be the day defined in Section 5.4;
5.1.4 "REFERENCE DATE " shall be 23 December 2003.
5.2 CLOSING CONDITIONS. The transactions contemplated under this Agreement
(the "TRANSACTION") shall be completed (erfullt) pursuant to Section 5.4
below only if
5.2.1 (a) the Federal Cartel Office (Bundeskartellamt) has notified
Sellers or Purchasers that the Transaction does not fulfil the
prohibition prerequisites of Sec. 36 (1) of the Act Against
Restraints of Competition (Gesetz gegen Wettbewerbsbeschrankungen,
GWB) or (b) the one month period pursuant to Sec. 40 (1) sentence 1
GWB has expired, unless the Federal Cartel Office has stated to
enter into an examination of the Transaction in accordance with Sec.
40 (1) sentence 1 GWB or (c) the Federal Cartel Office has cleared
the Transaction pursuant to Sec. 40 (2) sentence 1 GWB or (d) the
examination period set forth in Sec. 40 (2) sentences 2 and 3 GWB
has expired, unless the Federal Cartel Office has issued a decision
to prohibit the Transaction;
5.2.2 the pledge over the Demedis Shares granted to the holders of a High
Yield Bond issued by Seller 1 has been released.
5.2.3 the Appellate Court of Vienna as Cartel Court (Oberlandesgericht
Wien als Kartellgericht) (i) has decided to issue a confirmation
according to
17
Section 42b (1) or (5) of the Austrian Cartel Act (Kartellgesetz),
or (ii) has decided that the transaction is not subject to
pre-merger notification, or (iii) has decided pursuant to Section
42b (2) fig 3 or (3) of the Austrian Cartel Act that the merger is
not prohibited. (The condition precedents listed in Section 5.2 are
hereinafter referred to as "CLOSING CONDITIONS".)
The Parties shall make all reasonable endeavours and render to each other
all reasonably necessary support and cooperation to ensure that the
Closing Conditions are fulfilled as soon as possible after the Signing
Date. The Parties shall inform each other in writing without undue delay
as soon as any or all of the Closing Conditions have been fulfilled.
5.3 MERGER CONTROL AND OTHER GOVERNMENTAL FILINGS.
5.3.1 Purchasers shall ensure that any filings to be made pursuant to
Section 5.2 with the German Federal Cartel Office and the Austrian
cartel court will be made within five (5) Business Days after the
Signing Date unless the applicable laws and regulations require an
earlier filing, and in such case the filing shall be made at the
earlier date. Although each Party remains responsible for preparing
and making its own required filings, Sellers and Purchasers shall
fully cooperate with one another in preparing and making the
relevant filings and in furnishing all information required in
connection therewith. Purchasers shall fully involve Sellers in any
proceedings with the relevant merger control authorities, in
particular Purchasers shall (i) not take any actions in respect of
the relevant merger control filings or contact the merger control
authorities without Sellers' prior consultation, (ii) provide
Sellers with all reasonable information on the filing(s), allow
Sellers, at their request, to attend all meetings or other contacts
with the merger control authorities without getting actively
involved in such contacts and meetings, (iii) promptly notify
Sellers about any contacts planned or made, actions planned or taken
or information received in respect of any relevant merger control
filings or contacts with any merger control authorities and (iv)
provide Sellers with all relevant documents related thereto.
5.3.2 Purchasers shall undertake or cause to be undertaken all reasonable
steps necessary to remove any impediments, restrictions, or
conditions that may affect the timely satisfaction of the Closing
Condition set forth in Section 5.2.1, however, Purchasers shall not
be obliged to dispose of any of their assets or any of one of their
Affiliates.
18
5.4 CLOSING ACTIONS. The consummation of the Transaction ("CLOSING") shall
take place six (6) Business Days after the Closing Conditions have been
fulfilled at the offices of Freshfields Bruckhaus ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, starting at 9.00 a.m., or at such
place, day and time as agreed between the Parties ("CLOSING DATE"). On the
Closing Date the Parties shall take, or cause to be taken, the following
actions ("CLOSING ACTIONS") which shall be taken in the order set forth
below and which shall be deemed to have been taken simultaneously (Zug um
Zug):
5.4.1 Purchasers shall pay the Payment Amount and the Purchase Price
Interest (minus the Down Payment if already paid in accordance with
Section 4.3a) in immediately available funds free of any charges,
taxes or other deductions by wire transfer to Sellers' Account;
5.4.2 Purchasers shall pay the Holdback Escrow Amount in immediately
available funds free of any charges, taxes or other deductions by
wire transfer to the Escrow Agent's account as set forth in the
Escrow Agreement ("ESCROW ACCOUNT");
5.4.2a Sellers and Purchasers shall instruct the Escrow Agent in writing
to (i) release the Down Payment and (ii) pay the amount of the Down
Payment in immediately available funds free of any charges, taxes or
other deductions by wire transfer to Sellers' Account;
5.4.3 Share Purchaser shall pay the SDS Senior Facility Repayment Amount
in immediately available funds free of any charges, taxes or other
deductions by wire transfer to the SDS Senior Lenders. The payment
shall be made to a bank account to be notified in writing by Sellers
to Share Purchaser at the latest 5 (five) Business Days prior to the
Closing Date ("SDS SENIOR LENDERS' ACCOUNT");
5.4.4 Share Purchaser shall pay the DDD Working Capital Repayment Amount
in immediately available funds free of any charges, taxes or other
deductions by wire transfer to the DDD Lender. The payment shall be
made to a bank account to be notified in writing by Sellers to Share
Purchaser at the latest 5 (five) Business Days prior to the Closing
Date ("DDD LENDER'S ACCOUNT");
5.4.5 Share Purchaser shall pay the Austrodent Working Capital Repayment
Amount in immediately available funds free of any charges, taxes or
other deductions by wire transfer to the Austrodent Lender. The
payment shall be made to a bank account to be notified in writing by
Sellers to Share Purchaser
19
at the latest 5 (five) Business Days prior to the Closing Date
("AUSTRODENT LENDER'S ACCOUNT");
5.4.5a Share Purchaser shall pay the Repaid Shareholder Loan Amount in
immediately available funds free of any charges, taxes or other
deductions by wire transfer to Seller 1. The payment shall be made
to Sellers' Account;
5.4.6 with respect to the Guarantees, Purchasers shall deliver to Seller
1 release letters from the holders of the Seller 1 Debt Guarantees
in the form attached in Exhibit 5.4.6 and, in respect of Seller 1
Debt Guarantees where no release has been granted, provide Seller 1
with back-up guarantees in the form attached hereto as Exhibit 2.6;
5.4.7 Share Purchaser and Sellers shall execute a notarial deed in
respect of the assignment of the Demedis Shares before a German
notary in the form attached hereto as Exhibit 5.4.7;
5.4.8 Loan Purchaser and Seller 1 shall execute an agreement providing
for the transfer of the Shareholder Loan by way of the assumption
of all rights and obligations arising under and in connection with
the Shareholder Loan Agreements by Loan Purchaser with full
discharging effect for Seller 1 (Vertragsubernahme mit
schuldbefreiender Wirkung) in the form attached hereto as Exhibit
5.4.8;
5.4.9 Sellers shall deliver to Share Purchaser a letter of the SDS Senior
Lender (i) confirming that all payment obligations under the SDS
Senior Facility Agreement have been fully discharged and (ii)
releasing all security rights granted to the SDS Senior Lender in
connection with the SDS Senior Facility;
5.4.10 Sellers shall deliver to Share Purchaser a letter of the DDD Lender
(i) confirming that all payment obligations under the DDD Working
Capital Facility have been fully discharged and (ii) releasing all
security rights granted to the DDD Lender in connection with the
DDD Working Capital Facility;
5.4.11 Sellers shall deliver to Share Purchaser a letter of the Austrodent
Lender (i) confirming that all payment obligations under the
Austrodent Working Capital Facility have been fully discharged and
(ii) releasing all security rights granted to the Austrodent Lender
in connection with the Austrodent Working Capital Facility;
20
5.4.12 Sellers shall deliver to Purchasers a certificate confirming that,
to Sellers' Knowledge, (i) the guarantees given in Section 6 were
and/or are true and correct in all "material" respects as of the
date applicable to such guarantees (ignoring, however, for the
purpose of confirming that these guarantees were and are true in
all "material" respects that certain guarantees are already
qualified by materiality, Material Adverse Effect or similar words,
i.e., the materiality standard shall not be taken into account
twice in respect of one and the same guarantee) or, (ii), list in
the form of subject headings (schlagwortartig) whether and to which
extent these guarantees were not or are not true and correct as of
the relevant date ("GUARANTEE CONFIRMATION"). For the avoidance of
doubt, the Guarantee Confirmation shall not create or increase any
liability of Sellers or confer any withdrawal right to the Parties
not otherwise existing under this Agreement; and
5.4.13 Sellers shall deliver a letter substantially in the form attached
hereto as Exhibit 5.4.13 confirming that following the completion
of Closing Actions in Sections 5.4.1 to 5.4.12 they have no more
claims in connection with this Transaction against any of the
Companies other than those (i) expressly set forth in this
Agreement or (ii) related to any employment matters.
5.5 WITHDRAWAL RIGHTS. The Parties may withdraw from this Agreement as
follows:
5.5.1 Sellers may withdraw from this Agreement if
(i) the Closing Conditions have not been satisfied at the latest
10 (ten) months after the Reference Date;
(ii) if any of the Purchasers have not fully performed their
obligations under Section 5.4 at the latest within 10 (ten)
Business Days following the Closing Date.
5.5.2 prior to the Closing Date, Purchasers may withdraw from this
Agreement
(i) if a MAC (as defined in Section 5.5.3) has occurred and the
withdrawal is expressly based on the MAC ("MAC WITHDRAWAL");
(ii) for any other reason ("NON-MAC WITHDRAWAL").
5.5.3 "MAC" shall mean if between the Reference Date and the beginning of
the Closing set forth in Section 5.4 or the end of the 90th day
following the Reference Date (whichever occurs earlier) an act,
event or occurrence or a series of
21
acts, events or occurrences has occurred that has a material adverse
effect on the business, operations, assets, liabilities or financial
condition of the Demedis Group, taken as a whole, that either result
or are reasonably likely to result in a reduction of the (a) Net
Equity (as defined below) of more than EUR 20,000,000 (in words:
Euro twenty million), or, (b) Sustainable Annual Operating Profit
(as defined below) of more than EUR 6,000,000 (in words: Euro six
million), in each case of the Demedis Group on a consolidated basis,
and in case of the Sustainable Annual Operating Profit in comparison
to the fiscal year of the Demedis Group ending on 30 September 2003
(i.e, EUR 6,064,083.84 (in words: Euro six million sixty four
thousand eighty three and eighty four cents)), provided that;
(i) adverse effects from the development or changes of the general
economic, financial, regulatory, legal or political conditions
(including the relevant market in which the Demedis Group is
active and the financing market);
(ii) adverse effects to the extent related to, or caused by, the
acquisition of the Demedis Group by Purchasers, including the
identity of Purchasers and its shareholders;
(iii) adverse effects to the extent they are covered by insurance or
valid claims against third parties to the extent such claims
would be recorded as a receivable on the asset side of a
balance sheet in accordance with German generally accepted
accounting principles on a balance sheet end date
(Bilanzstichtag) and
(iv) effects resulting from changes in (i) accounting principles or
standards, or (ii) good will;
(v) sales force attrition, i.e., any reduction in the number of
sales representatives and the financial implications resulting
therefrom;
shall be disregarded (if and to the extent applicable) for purposes
of determining whether or not a material adverse effect within the
meaning of this clause has occurred.
("NET EQUITY" shall be determined in accordance with German general
accepted accounting principles (German Commercial Code - HGB)
applied on a basis consistent with the audited Financial Statements
2003 and is defined as the equity position of the Demedis Group as
set out in the audited Financial
22
Statements 2003. According to this definition, Net Equity shall
consist of the following items: equity (Eigenkapital) as per Section
266 subsec. 3, no. A I, A II, A III, A IV and A V HGB; badwill as
per Section 301 subsec. 3 HGB; minority interests as per Section 307
subsec. 1 HGB, foreign exchange differences as per Section 244 and
Section 298 subsec. 1 HGB. To the extent that Net Equity as defined
above is negative, Section 268 subsec. 3 HGB applies.)
("SUSTAINABLE ANNUAL OPERATING PROFIT" shall mean earnings before
interest, taxes and good will effects as prepared by the management
of the Demedis Group and reflected in the Financial Statements 2003
and adjusted for the following items in order to arrive at
"sustainable" earnings:
(a) effects from changes in accounting principles, policies
and procedures since the Economic Transfer Date;
(b) effects from changes in the principles applied in
establishing accounting estimates since the Economic
Transfer Date;
(c) effects from changes in the group of consolidated
companies or other non-organic growth (acquisitions /
disposals) since the Economic Transfer Date;
(d) effects on the Demedis Group to the extent related to,
or caused by, the acquisition of the Demedis Group by
Purchasers, including the identity of Purchasers and its
shareholders;
(e) extraordinary income / expenses as defined by the German
Commercial Code;
(f) other one-off, non-recurring income / expense items;
(g) restructuring and restructuring related expenses;
(h) non-periodic income / expense items unless of a
recurring nature.)
5.6 NOTICE OF WITHDRAWAL. A withdrawal (Rucktritt) pursuant to Section 5.5 is
only valid if the other party and the Escrow Agent have received a notice
of withdrawal (Rucktrittserklarung) in writing ("WITHDRAWAL NOTICE"). In
the event that the Closing Condition has not been satisfied within twelve
(12) months after the Signing Date and neither Party has withdrawn from
this Agreement, this Agreement shall be deemed void.
23
5.7 CONSEQUENCES OF WITHDRAWAL. In case of a withdrawal under Section 5.5 the
following rules shall apply:
5.7.1 In case of a
(i) MAC Withdrawal by Purchasers, the Parties shall instruct the
Escrow Agent to (a) release the Down Payment and (b) pay the
Down Payment to Purchasers within 5 (five) Business Days
following the Withdrawal Notice to an account to be notified
by Purchasers to Sellers in writing together with the
Withdrawal Notice. The provisions of Sections 5.5 to 5.7 and
Sections 12.4, 12.5, 13, 14.1, 14.2, 14.3, 14.7 and 14.10
shall survive a withdrawal pursuant to Section 5.5 to 5.7.
(ii) Non MAC Withdrawal by Purchasers or a withdrawal by Sellers
based on Section 5.5.1 or an automatic termination of this
Agreement pursuant to Section 5.5.6 2nd sentence the Parties
shall instruct the Escrow Agent to (a) release the Down
Payment and (b) pay the Down Payment to Sellers by wire
transfer to an account to be notified by Sellers and Sellers
shall be irrevocably entitled to retain the Down Payment as a
compensation for the significant efforts, costs and expenses
incurred in connection with the sales process, the significant
risk of the Demedis Dental Business being seriously adversely
affected in case a closing has not occurred by this date as
well as the additional efforts, costs and expenses to be
incurred in connection with a new sales process to be
initiated with a view to disposing of the Demedis Dental
Business. Purchasers are fully aware that in case of a Non MAC
Withdrawal Sellers will retain the Down Payment, have received
legal advise in this respect and acknowledge that the Down
Payment will be an amount for an adequate compensation for all
such efforts, risks, costs and expenses involved in case of
such withdrawal. The provisions of Sections 5.5 to 5.7 and
Sections 12.4, 12.5, 13, 14.1, 14.2, 14.3, 14.7 and 14.10
shall survive a withdrawal pursuant to Section 5.5 to 5.7.
5.7.2 Save as provided for in Section 5.7.1, if a Party withdraws from
this Agreement in accordance with Section 5.5, such withdrawal shall
be without any liability of either Party (or any shareholder,
director, officer, employee, agent, consultant, adviser or
representative of such Party) to the other Party.
5.8 NO FURTHER CONDITIONS / WITHDRAWAL RIGHTS. The Parties agree that except
for the Closing Conditions (as defined in Section 5.2) and the withdrawal
rights set forth in Section 5.5 the obligations of the Parties to
consummate the Transaction shall not be
24
subject to any other conditions, requirements or withdrawal rights and
none of the Parties may withdraw from, rescind or terminate this Agreement
or refuse to fulfil any of its obligations thereunder, except as expressly
provided for in this Agreement.
5.9 NON-SATISFACTION OF CLOSING CONDITION 5.2.2. If the Closing Condition set
forth in Section 5.2.2 is not fulfilled earlier than the Closing Condition
5.2.1 or not fulfilled within a period of four (4) months after the
Signing Date (whichever occurs earlier) each Party has the right to
request that, instead of selling and transferring the Sold Assets ("SHARE
DEAL"), Purchasers will, and Sellers will procure that Demedis will, enter
into an agreement between Purchasers and Demedis pursuant to which Demedis
will sell and transfer all of its assets, liabilities and contractual
relationship ("ASSET DEAL") in a way that the Asset Deal is commercially
and legally (to the extent technically possible) identical to the Share
Deal, which agreement shall then replace this Agreement.
SECTION 6
SELLERS' GUARANTEES
6.1 SELLERS' GUARANTEES. Sellers hereby guarantee, except as set forth in the
disclosure letter attached hereto as Exhibit 6.1 and subject to any
limitations contained in this Agreement, including the remedies set out in
Section 8 and the limitations set out in Section 9, in particular the Time
Limitations, the De Minimis Amount, the Basket and the Liability Cap (each
as defined in Section 9) by way of an independent guarantee
(selbststandige Garantie) pursuant to Section 311 (1) German Civil Code
(Burgerliches Gesetzbuch) that the statements set forth hereinafter are
correct as of the Signing Date and will be correct at the Closing Date,
unless expressly specified otherwise herein; provided, however, that
(i) in respect of Section 6.1.1 the guarantee shall be given by
each Seller only with respect to itself;
(ii) in respect of Section 6.1.2, 2nd sentence the guarantee shall
be given by each Seller only with respect to the share sold by
such Seller;
(iii) in respect of Section 6.1.7 the guarantee shall only be given
by Seller 1;
(iv) guarantees made as of a specific date shall be correct only as
of such date;
25
(v) guarantees which are subject to Sellers' Knowledge (as defined
below) shall only be correct as of the Signing Date;
(vi) the term "SELLERS' KNOWLEDGE" shall mean the actual knowledge
(positive Kenntnis) as of the Signing Date of ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Reidegeld, ▇▇▇▇ ▇▇▇▇▇▇, Gotz ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ van
den Brink, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Ganaus ("SELLERS'
KNOWLEDGE INDIVIDUALS") and in respect of the guarantees in
Sections 6.1.8, 6.1.11, 6.1.13, 6.1.21 and 6.1.22 the term
Sellers' Knowledge shall mean the actual knowledge as of the
Signing Date of the Sellers' Knowledge Individuals and the
knowledge they could have obtained after due inquiry with the
relevant key employees of the Companies responsible for the
relevant aspects covered by the guarantees in Sections 6.1.8,
6.1.11, 6.1.13, 6.1.21 and 6.1.22;
(vii) the term "MATERIAL ADVERSE EFFECT" shall mean any state of
facts, events, changes or effects having a material adverse
effect on the assets, liabilities, financial condition or
business operations of the Demedis Group as a whole.
6.1.1 ENFORCEABILITY / CORPORATE IDENTITY. This Agreement constitutes a
valid and binding obligation of Sellers, enforceable under German
law against each of the Sellers in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganisation, moratorium, or other similar laws
relating to or affecting the rights of creditors generally and
except that the remedy of specific performance and injunctive relief
and other forms of equitable relief may be subject to equitable
defences and to the discretion of the court before which any
proceeding may be brought. Each of the Sellers have the corporate
authority to execute this Agreement and to perform its obligations
under this Agreement.
6.1.2 EXISTENCE OF COMPANIES / OWNERSHIP OF SHARES. Each of the Companies
is duly incorporated and validly existing under the laws of its
jurisdiction. Except as listed in Schedule 6.1.2,
(i) the Shares are held by Sellers and the Companies as set out in
Section 1;
(ii) the Shares are free and clear of any liens, encumbrances or
other third party rights, except for the pledges granted to
the lenders under the Bank Debt;
26
(iii) there are no pre-emptive rights, rights of first refusal,
options, voting agreements or other rights of third parties
(granted in favour of or agreed between any of the Companies)
to acquire any of the Shares;
(iv) the Shares are fully paid up, have not been repaid and are
non-assessable (nicht nachschusspflichtig);
(v) there are no silent partnerships or other rights to
participate in any of the Companies' revenues or profits; and
in each case except for rights given under statutory law, or
the articles of association or by-laws.
6.1.3 COMPANY INFORMATION. Schedule 6.1.3 contains a complete list of the
articles of association and by-laws (or their equivalent formation
documents in the relevant jurisdiction) of the Companies valid as of
the Signing Date. Copies of such documents have been made available
to Purchasers prior to the execution of this Agreement. The
description of the group structure set forth in Section 1 of this
Agreement hereof is correct, and the Companies do not hold any legal
or beneficial interest in any other businesses.
6.1.4 SUPERVISORY AND ADVISORY BOARDS. Schedule 6.1.4 contains a complete
list of all supervisory and advisory boards of all Companies
including the names of the relevant members.
6.1.5 INSOLVENCY PROCEEDINGS. No insolvency proceedings against the
Companies are pending (i.e., a court has formally commenced
insolvency proceedings (Insolvenzverfahren eroffnet) in accordance
with the German Insolvency Code (Insolvenzordung) or the
corresponding procedure under applicable law or have been applied
for by the Companies, or, to Sellers' Knowledge, have been applied
for by any third party. Purchasers are aware of the present net
equity position of the Companies and in particular of Demedis and
DDD and the existing subordination agreements signed by the relevant
Sellers in respect of the Shareholder Loan in order to avoid
insolvency risks (for the absence of which Sellers do, however, not
assume any responsibility).
6.1.6 AFFILIATES / ENTERPRISE AGREEMENTS. Except as disclosed in Schedule
6.1.6 and Section 1, the Companies have no affiliated companies
within the meaning of Section 15 German Stock Corporation Act
("AFFILIATES") nor do they hold any participation or
sub-participation in any other company and there exist no
27
enterprise agreements within the meaning of Sections 291 and 292
German Stock Corporation Act (Aktiengesetz).
6.1.7 SHAREHOLDER LOANS. The Shareholder Loan Agreement has been validly
entered into and can be freely sold and transferred by Seller 1
without the consent of any third party being required, except only
for the consent of Demedis as borrower which has already been
granted pursuant to the consent declaration attached hereto as
Exhibit 3.3. Sellers do not assume any guarantee that the
Shareholder Loan is enforceable or collectable and Purchasers are in
particular aware of the subordination agreement signed by Seller 1
in respect of the Shareholder Loan and of the fact that if might
legally be treated as deemed equity irrespective of such
subordination (eigenkapitalersetzende Gesellschafterdarlehen).
6.1.8 MATERIAL INTELLECTUAL PROPERTY RIGHTS. The Companies own, or
lawfully use, all such patents, trade marks, copyrights, software,
domain names, which are material to carrying on the Demedis Dental
Business taken as a whole (herein after collectively referred to as
"INTELLECTUAL PROPERTY RIGHTS"). Schedule 6.1.8 (a) contains a true
and complete list of the Intellectual Property Rights (except for
off the shelf standard software) of which the Companies are the
legal owners indicating (i) the nature and the registered owner of
the Intellectual Property Rights and (ii) if applicable, the
jurisdiction in which such Intellectual Property Rights have been
registered. Except as disclosed in Schedule 6.1.8 (a), the Companies
are entitled to dispose freely of the Intellectual Property Rights,
which are owned by the Companies. No other than the Intellectual
Property Rights are necessary for the Demedis Dental Business to
conduct its business as currently conducted. Except as listed in
Schedule 6.1.8 (b), the Intellectual Property Rights are not subject
to any pending or threatened proceedings for opposition or
cancellation which may adversely affect the operation of the Demedis
Dental Business taken as a whole nor, to Seller's Knowledge, being
infringed by any third party. All fees necessary to maintain the
Intellectual Property Rights have been paid, except for non-payments
which will not have and can not reasonably be expected to have a
Material Adverse Effect. To Seller's Knowledge, the Companies do not
infringe any material intellectual property rights owned by a third
party.
The Companies either own and hold valid leases and/or licenses to
all material computer hardware, software and other information
technology ("IT"), which is currently used by the Companies to
conduct their business as currently conducted. All material leases
or licenses in respect of such IT are effective. Except as disclosed
in Schedule 6.1.8 (c), since the Economic Transfer Date,
28
there were no material interruptions, material data losses or
material similar incidents attributable to the IT owned or used by
the Companies, and which, in addition, had or are likely to have a
Material Adverse Effect on the Demedis Dental Business. To Sellers'
Knowledge, the IT has the capacity and performance necessary to
conduct the business operations of the Companies as conducted on
the Signing Date.
6.1.9 INSURANCE. As of the Signing Date, the Companies, maintain for
their own benefit the insurance policies which are listed in
Schedule 6.1.9 (i), and except as set forth in Schedule 6.1.9 (ii),
all due premiums under such insurance policies have been paid.
Except as disclosed in Schedule 6.1.9 (ii), there are no material
claims pending under any of the insurance policies and, to Seller's
Knowledge, no facts exist which could give rise to any such claims.
6.1.10 MATERIAL ASSETS. Except as disclosed in Schedule 6.1.10, the
Companies own, or hold lawful possession of, all fixed assets
(Anlagevermogen) material to the Demedis Dental Business and
capitalized in the Financial Statements 2003, except for such
assets which were sold, abandoned or otherwise disposed of since
the Economic Transfer Date in the ordinary course of business
("MATERIAL ASSETS"). Except as disclosed in Schedule 6.1.10, the
Material Assets are not encumbered with any liens, pledges or other
encumbrances in favour of third parties, except for:
(i) rights of retention of title (Eigentumsvorbehalte), liens or
pledges in favour of suppliers, mechanics, landlords and
carriers granted in the ordinary course of business; and
(ii) security rights granted to banks and other lenders in respect
of the Bank Debt which will be released on the Closing Date;
(iii) encumbrances (Belastungen) other than rights under (i) and
(ii) above which individually or in the aggregate do not
exceed EUR 150,000 (in words: Euro one hundred fifty
thousand).
6.1.11 MATERIAL AGREEMENTS. Schedule 6.1.11 contains a correct list, as of
the Signing Date, of all of the following written agreements to
which any of the Companies is a party and which have not yet been
completely fulfilled (hereinafter collectively referred to as the
"MATERIAL AGREEMENTS"):
29
(i) agreements providing for a consideration in excess of EUR
250,000 (in words: Euro two hundred fifty thousand) and
relating to the acquisition or sale of (a) interests in other
companies or (b) real estate;
(ii) rental and lease agreements relating to real estate which,
individually, provide for annual net payments of EUR 65,000
(in words: Euro sixty five thousand) or more;
(iii) loan agreements (other than between the Companies), bonds,
notes or any other instruments of debt made or issued, as the
case may be, by any of the Companies (other than made or
issued for the benefit of another Company and other than the
Bank Debt);
(iv) guarantees, suretyships, comfort letters
(Patronatserklarungen) and similar instruments issued by any
of the Companies for any debt of any third party, i.e., other
than for any of the Companies for an amount of EUR 100,000
(in words: Euro one hundred thousand) or more in each
individual case;
(v) employment agreements providing for a fixed annual salary of
EUR 75,000 (in words: Euro seventy five thousand) or more;
(vi) any hedging agreements or derivatives contracts made by any
of the Companies;
(vii) distribution or agency agreements (other than between the
Companies or with any company of the Demedis Group) with an
annual net sales volume (as per the last completed financial
year ending on 30 September 2003) of EUR 1,000,000 (in words:
Euro one million) or more;
(viii) agreements for joint-ventures, strategic alliances, joint
development of products or other forms of co-operations;
(ix) agreements to sell, or otherwise dispose of any fixed assets
owned by a Company with a fair market or replacement value in
excess of EUR 200,000 (in words: Euro two hundred thousand);
(x) license agreements with any Company as licensee or licensor,
which resulted during the last fiscal year, or are likely to
result during the current fiscal year in annual royalties in
excess of EUR 100,000 (in words: Euro one hundred thousand);
30
(xi) agreements with the top 10 suppliers of DDD, Austrodent and
SDS BV based on the volume of purchase orders in the last
fiscal year ending on 30 September 2003;
(xii) except as disclosed in any other Schedule to this Section 6
material agreements outside the ordinary course of business;
(xiii) agreements expressly imposing restrictions on a Company to
compete with any third party, to acquire any products or
services from a third party, to sell any products or to
perform any services for any third party or to develop any
technology, if and to the extent that such restrictions will
prevent the Company from conducting its business operations
or pursuing its business development activities; it being
understood that all distribution, agency or similar
agreements containing restrictions on territories shall be
disregarded provided that such restrictions are in line with
the ordinary standards for distribution, agency or similar
agreements in the dental distribution business in general.
To Sellers' Knowledge and except as disclosed in Schedule 6.1.11,
each of the Material Agreements is in effect. To Sellers' Knowledge
and except as disclosed in Schedule 6.1.11, no party to any of the
Material Agreements has indicated in writing that it will terminate
the agreement as a result of the Transaction and none of the
Material Agreements contains a change-of-control clause entitling
the contracting party to terminate the agreement as a result of the
Transaction.
6.1.12 PERMITS. Except as disclosed in Schedule 6.1.12, the Companies are
in possession of all governmental approvals, licenses and permits
necessary to operate the Demedis Dental Business and which are
material to the Demedis Dental Business taken as a whole. The
Permits are in full force and effect. Except as disclosed in
Schedule 6.1.12, none of the Permits has been challenged by any
third party and, to Seller's Knowledge, there are no circumstances,
which would justify such challenge, and no proceedings regarding a
revocation or withdrawal of any Permit has been initiated or
threatened, and, to Seller's Knowledge, there are no circumstances,
which would justify such revocation or withdrawal.
6.1.13 LITIGATION. Except as disclosed in Schedule 6.1.13, the Companies
are not party to any court or administrative proceedings, including
arbitration proceedings,
31
either as plaintiff or defendant, having a litigation value
(Streitwert) exceeding EUR 50,000 (in words: Euro fifty thousand)
in the individual case.
6.1.14 SHOP AGREEMENTS. Schedule 6.1.14 contains a list of all material
shop agreements (i.e. agreements which are entered into between a
Company and a representative body of employees of a Company, unless
such agreements repeat mandatory statutory law only) existing as of
the Signing Date and providing for any of the following:
(i) benefit or incentive plans relating to a change of control in
a Company;
(ii) limitations to terminate employment agreements, including
agreements providing for severance payments; or
(iii) obligations of a Company to make specific investments or to
guarantee the employment of a certain number of employees.
6.1.15. LABOR STRIKES AND VIOLATION OF LAWS. Except as disclosed in
Schedule 6.1.15, none of the Companies is experiencing:
(i) any strike, slowdown, or work stoppage by or lockout of its
employees; or
(ii) any lawsuit relating to the alleged violation of any law or
order applicable in Germany and Italy and relating to
discrimination, civil rights, workers' safety or working
conditions,
which would have a Material Adverse Effect.
6.1.16 TAX MATTERS. Except as disclosed in Schedule 6.1.16
(i) all taxes owed or to be payable by any Company under
applicable laws and relating to periods ending on or before
the Economic Transfer Date have been paid or have been accrued
for in the year-end accounts of the relevant Company
(Einzelabschluss) as at the Economic Transfer Date. For
purposes of this Agreement "TAXES" means any taxes and public
dues, including but not limited to income tax, value-added
tax, trade tax, wage tax, withholding tax, sales tax, property
or transfer tax under mandatory law, or customs duties (Zolle)
or social security contributions, together with any interest,
penalty or addition to taxes (Steuerliche
32
Nebenleistungen) imposed by any governmental authority
responsible for the imposition of such taxes;
(ii) as of the Signing Date, the Companies are subject only to
general tax audits (Allgemeine Betriebsprufungen) and to
special tax audits as far as the type of tax requires them
(Besondere Betriebsprufungen - especially VAT and wage taxes
but not subject to any disputes regarding Taxes);
(iii) all tax returns required to be filed by the Companies on or
before the Signing Date have been filed and are true and
correct in all material respects;
(iv) there has been no notice or any written claim, action, suit,
proceeding or investigation now pending against or with
respect to any Company in respect of any Taxes;
(v) no tax authority in a jurisdiction where a Company is not
paying Taxes has made a claim or written assertion that a
Company is or may be subject to Taxes by such jurisdiction,
otherwise than by deduction of Taxes at source.
Purchasers, to the degree legally permissible, further agree
that they shall not (and Purchasers shall ensure that none of
the Companies shall) make, change, modify or withdraw any tax
filings for the tax periods until and including 30 September
2003 (or agree to any of the foregoing) without the prior
written consent of Sellers which shall not unreasonably be
withheld, unless required by law or to make a factually
correct filing.
6.1.17 FINANCIAL STATEMENTS 2002 AND 2003. Except as disclosed in Schedule
6.1.17, the audited consolidated year end accounts
(Konzernabschluss) of Demedis as at 30 September 2002 and the
audited consolidated year end accounts of Demedis as at 30
September 2003, in each case consisting of the balance sheet, the
profit and loss statement and the notes (Anhang) thereto
("FINANCIAL STATEMENTS 2002 and FINANCIAL STATEMENTS 2003",
respectively) have in all material respects been prepared in
accordance with German generally accepted accounting principles
applying to Demedis consistent with past practice and present a
true and fair view of the assets and liabilities (Vermogenslage),
financial position (Finanzlage) and earning positions (Ertragslage)
in accordance with Section 297 (2) of the German Commercial Code
(HGB) of the
33
Demedis Group taken as a whole, as of the relevant balance sheet
date or the relevant period, as the case may be, provided, however,
that Sellers shall not be liable for any deviations of the book
values of the participations held by Demedis GmbH, any goodwill and
shareholder loans as reflected in the Financial Statements 2002 and
Financial Statements 2003 from any valuation in respect of these
items that could be inferred from the Purchase Price paid under
this Agreement. Sellers shall further not be liable for any
deviation of the book value of any real estate as reflected in the
Financial Statements 2002 and Financial Statements 2003 from any
valuation that could be inferred from a sale of such real estate
after the Economic Transfer Date. .
6.1.18 NO MATERIAL ADVERSE CHANGES / CONDUCT OF BUSINESS. Except as
disclosed in Schedule 6.1.18, and apart from changes resulting
from, or relating to, general political developments or
developments of the economy in general or in the relevant
marketplace, to Sellers' Knowledge during the period from Economic
Transfer Date until the Signing Date no event has occurred or
action been taken which would qualify as a breach of the covenants
set forth in Section 10 had such covenants already been in place
for the period of time between the Economic Transfer Date and the
Signing Date.
6.1.19 DEALINGS WITH SIRONA GROUP. Except as disclosed in Schedule 6.1.19
the supply relationships between Sirona Beteiligungs- und
Verwaltungsgesellschaft mbH or any of its Affiliates as supplier
and any of the Companies as distributor are at arm's length terms.
6.1.20 PRODUCT LIABILITY. Except as disclosed in Schedule 6.1.20, no
product liability claims (Produkthaftungsanspruche) in connection
with any products sold by the Companies prior to the Economic
Transfer Date are pending (anhangig) against any of the Companies.
The products of the Companies sold prior to the Economic Transfer
Date do not have any defects, which could give rise to any such
product liability claims.
6.1.21 ENVIRONMENTAL LIABILITIES. To Sellers' Knowledge, except as
disclosed in Schedule 6.1.21 and further except where the
inaccuracy of the statement would not have a Material Adverse
Effect
(i) the Companies are in compliance with all laws relating to
pollution and the protection of the environment and material
for the operations of the Demedis Group, taken as a whole
(collectively "ENVIRONMENTAL LAWS");
34
(ii) as of the Signing Date, no Company has received in writing
any notice or communication stating or alleging that it is in
violation of any Environmental Laws;
(iii) between January 2000 and the Signing Date, no Company has
received by the competent environmental authorities a written
notice or communication to conduct any kind of investigation
audit, survey or similar examination of environmental
conditions;
provided, however, that Purchasers shall not have any claims under
this Section 6.1.21 if after the Signing Date the Purchasers, or
after the Closing Date Purchasers or any of the Companies,
(a) conduct any kind of investigation, audit, survey or similar
examination of the soil, ground water or other environmental
conditions of the premises of any Company, apart from the
review of pertinent documentation and the conduct of
interviews and the mere visual inspection of the surface of
the soil without any kind of drilling or opening of the soil
("ENVIRONMENTAL EXAMINATION"), without being required to do
so under a court judgement or administrative order unless
there is a valid business reason other than merely or
predominantly to trigger a liability of Sellers under this
Section 6.1.21;
(b) solicit, trigger or otherwise actively cause, directly or
indirectly, any Environmental Examination by any governmental
authorities or any other party unless there is a valid
business reason other than merely or predominantly to trigger
a liability of Sellers under this Section 6.1.21.
For the avoidance of doubt, Sellers shall not be liable for any
contamination if and to the extent it did not exist as of the
Closing Date, in particular if and to the extent a contamination
requiring clean-up results from
(v) any non-compliance of Purchasers or the Companies with
Environmental Laws after the Closing Date;
(w) negligent omissions to take actions required to be taken by
the Purchasers or the Companies under applicable laws and
relating to environmental matters after the Closing Date;
(x) any negligent act or omission of any employee or any other
representative of, or service provider to, the Companies
after the Closing Date.
35
The other general limitations to Sellers' liability under or in
connection with this Agreement shall remain unaffected.
6.1.22 COMPLIANCE WITH LAWS. To Sellers' Knowledge, except as disclosed in
Schedule 6.1.22, each Company is in all material respects in
compliance with the laws and regulations of any jurisdiction
applicable to the Companies' and all orders, decrees or rulings of,
or restrictions imposed by, any judicial, governmental or
regulatory body (collectively "LAWS AND ORDERS") in all relevant
jurisdictions. To Sellers' Knowledge, no material non-compliance
with the Laws and Orders has been alleged in writing to the
Companies and, to Sellers' Knowledge, there are no circumstances,
which would justify such allegations. To Sellers' Knowledge, none
of the Companies is subject to any material administrative or
material criminal investigations and no such material
investigations have been threatened in writing to the Companies,
and to Seller's Knowledge, no circumstances exist, which would
justify the initiation of such a material investigation. Sellers,
SDS, NDO BV and NDO Leeflang have informed or will inform until the
Closing Date the relevant work counsils about the Transaction,
irrespective of the relevant form of information.
6.1.23 EMPLOYEES. Schedule 6.1.23 (i) includes for each Company a correct
and complete list of its employees (Arbeitnehmer) on an anonymous
basis with various information related to such employees. Except as
disclosed in Schedule 6.1.23 (ii), none of the Companies have
increased any of their directors' or employees' remuneration or
benefit entitlements after the Economic Transfer Date other than in
accordance with (i) the terms of the relevant employment and
service agreements in force as of the Economic Transfer Date, (ii)
applicable shop or collective bargaining agreements, (iii) past
practise or (iv) as part of the Stay Bonus Arrangements. None of
the Sellers' Knowledge Individuals has given written notice of
termination and, to Seller's Knowledge, no circumstances exist that
any of these employees is giving notice of termination (provided
that for the purpose of defining Sellers' Knowledge in this
particular case, the knowledge of the Sellers' Knowledge
Individuals shall be disregarded in respect of themselves).
Schedule 6.1.23 (iii) includes for each Company a correct and
complete list of certain pension obligations.
6.1.24 REAL ESTATE. Except for the real estate listed in Schedule 6.1.24
(i) the Companies do not own any real estate. The real estate used
by the Companies is listed in Schedule 6.1.24 (ii).
36
6.2 CONSENTS. Purchasers acknowledge that certain consents may be required in
connection with contracts of the Group Companies containing
change-of-control provisions and that such consents have not been
obtained. While Sellers shall take reasonable efforts to assist Purchasers
in obtaining such consents, Purchasers agree that Sellers shall not have
any liability arising from the failure to obtain such consents and that no
guarantee, covenant or other obligation of Sellers shall be breached and
no condition shall be deemed not to have been satisfied as a result (i) of
the failure to obtain such consent, (ii) the termination of any such
contract or (iii) any lawsuit commenced or threatened arising from the
failure to obtain such consent or the termination of such contract.
6.3 NO OTHER GUARANTEES. Purchasers agree to purchase and accept the Sold
Assets and the Demedis Dental Business in their condition they are in on
the Closing Date based upon its own inspection, examination and
determination with respect thereto as to all matters and without reliance
upon any express or implied guarantees, representations or warranties of
any nature made by or on behalf of or imputed to Sellers, except only for
the guarantees expressly set forth in this Agreement. Sellers do therefore
not give or assume any guarantees other than those set forth in this
Agreement and none of the Sellers' Guarantees shall be construed as a
guarantee or representation with respect to the quality of the purchase
object within the meaning of Sections 276 Subsec. 1, 443 German Civil Code
(Garantie fur die Beschaffenheit der Sache). Without limiting the
generality of the foregoing, Purchasers acknowledge that Sellers make no
guarantees, representations or warranties with respect to:
(i) any projections, estimates or budgets delivered or made available to
Purchasers of future revenues, future results of operations (or any
component thereof), future cash flows or future financial conditions
(or any component thereof) or the future business and operations of
the Demedis Dental Business or the Demedis Group;
(ii) any other information or documents made available to Purchasers or
their counsel, accountants or other advisers with respect to the
Demedis Dental Business or the Demedis Group, except as expressly
set forth in Section 6 of this Agreement;
(iii) the enforceability and collectibility of the Shareholder Loan (i.e.,
the ability and obligation of Demedis to repay the Shareholder Loan)
provided, however, that to Sellers' Knowledge none of the information nor
documents made available to Purchasers or their counsel, accountants or
other advisers with respect
37
to the Demedis Dental Business or the Demedis Group is untrue inaccurate
in any material respect.
SECTION 7
PURCHASER'S GUARANTEES
Purchasers guarantee to Sellers as of the Signing Date and Closing Date:
7.1 ENFORCEABILITY / NO CONFLICT. This Agreement constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchasers in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally
and except that the remedy of specific performance and injunction relief
and other forms of equitable relief may be subject to equitable defences
and to the discretion of the court before which any proceeding may be
brought. Purchasers have the power and authority to execute this Agreement
and to perform its obligations under this Agreement, and the Transaction
have been duly authorised and approved by all necessary corporate action
of Purchasers.
7.2 LITIGATION. There is no action, suit, investigation or proceeding pending
against, or to the knowledge of Purchasers, as of the Signing Date,
threatened against or affecting Purchaser before any court or arbitrator
or governmental body, agency or official body which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
Transaction.
7.3 FINANCIAL CAPABILITY. Purchasers have sufficient immediately available
funds or binding and unconditional and irrevocable financing commitments
to make all payments required to be made under or in connection with this
Agreement.
7.4 FINDERS' FEES. Purchasers have no obligation or liability to pay any fees
or commissions to any broker, finder or agent with respect to the
Transaction for which Sellers could become wholly or partly liable.
SECTION 8
REMEDIES
8.1 LIMITATION OF REMEDIES. In the event of a breach or non-fulfilment of any
guarantee, covenant or other obligation of Sellers contained in this
Agreement, Sellers shall put the relevant Purchaser, or at the option of
the relevant Purchaser, the respective Company
38
into the same position it would have been in if Sellers' Guarantees,
covenants or other obligation contained in this Agreement had been
fulfilled or had not been breached (Naturalrestitution), or, at the option
of Sellers, pay damages for non-performance (▇▇▇▇▇▇▇ Schadenersatz). For
purposes of determining the liability of Sellers, only the actual losses
incurred by the respective Company or Purchasers shall be taken into
account and not any potential or actual reduction (Minderung) in the value
of the Companies or the relevant Purchaser. Sellers shall in no event be
liable for any indirect damages (mittelbare Schaden), consequential
damages (Folgeschaden), indirect losses caused by business interruption
(Betriebsunterbrechungschaden) or lost profits (entgangener Gewinn),
damages incidental to any breach or non-fulfilment of the independent
guarantees (Schaden anlasslich einer Verletzung einer selbstandigen
Garantie) or any internal costs (i.e., non-out of pocket expenses)
incurred by the Companies or the relevant Purchaser, it being understood
that in case of a third party claim constituting a liability that triggers
a Purchaser Claim such liability will be considered as a direct damage
within the meaning of this Agreement even if it includes consequential
damages, losses and lost profits. If and to the extent damages are paid to
any of the Companies, such payments shall be effected as contributions
(Einlagen) made by Purchasers into the respective Company.
8.2 PURCHASER CLAIM PROCEDURE. In the event of any breach or non-fulfilment of
Sellers' Guarantees, covenants or other obligation contained in this
Agreement or in case of any other claim of a Purchaser against Sellers'
under or in connection with this Agreement ("PURCHASER CLAIM"), Purchaser
will give Sellers written notice of such breach or non-fulfilment, without
undue delay (ohne schuldhaftes Zogern) after its discovery but within
twenty five (25) Business Days thereafter stating in such notice in
reasonable detail the nature thereof and the amount involved, to the
extent that such amount has been determined at the time when such notice
is given. Without prejudice to the validity of the Purchaser Claim or
alleged claim in question, Purchaser shall allow, and cause the Companies
to allow, Sellers and their accountants and professional advisers to
investigate the matter or circumstance alleged to give rise to such
Purchaser Claim. Purchaser shall give and cause the Companies to give such
information and assistance, including, during normal business hours and
upon prior written notice, access to Purchaser's and the Companies'
premises and personnel, including the right to examine and copy or
photograph any assets, accounts, documents and records, as Sellers or
their accountants or professional advisers may request, provided it is
done in such a way so as to minimize business disruption.
8.3 LIMITATION OF SELLERS' LIABILITY. Sellers shall not be liable for, and
Purchasers shall not be entitled to bring any Purchaser Claim, if and to
the extent that:
39
8.3.1 the matter to which the Purchaser Claim relates has been taken into
account in the Financial Statements 2003 by way of a provision
(Ruckstellung), or depreciation (Abschreibung), or exceptional
depreciation (au(beta)erplanma(beta)ige Abschreibung), or
depreciation to reflect lower market values (Abschreibung auf den
niedrigeren beizulegenden ▇▇▇▇) or otherwise;
8.3.2 the amount of the Purchaser Claim is actually recovered from a third
party (including any agreement by virtue of which any shares in the
Companies have (directly or indirectly) been acquired) or under an
insurance policy in force on the Signing Date, provided, however,
that if the relevant Purchaser could recover the amount of the
Purchaser Claim from a third party or an insurance policy in force
on the Signing Date, the relevant Purchaser shall use all reasonable
efforts to recover the amount of the Purchaser Claim from the
relevant third party or the relevant insurer, as the case may be, as
soon as possible and in case of such recovery reimburse Sellers for
any payments already made in respect of the Purchaser Claim up to
the amount recovered. At the request of Sellers, Purchasers shall
assign the relevant claim to Sellers and deliver to Sellers all
relevant documents related to such Purchaser Claim subject to
applicable law. In the case that Purchasers could not recover such
amount within a period of eighteen (18) months as from the Closing
Date, Purchasers are entitled to assign the relevant claim to
Sellers who are obliged to accept such assignment, unless they
release Purchaser from its obligation to further pursue the
possibility of recovery;
8.3.3 the payment or settlement of any item giving rise to a Purchaser
Claim results in a tax benefit realized by the Companies or
Purchasers, i.e. when the payment or settlement leads to a tax
deductible expense within the fiscal year of the relevant Company in
which such payment or settlement is made and this tax deductible
expense does not only increase a tax loss carry forward;
8.3.4 the Purchaser Claim results from a failure of Purchaser or the
Companies to mitigate damages pursuant to Section 254 German Civil
Code;
8.3.5 the matter to which the Purchaser Claim relates was actually known
by the persons listed on Exhibit 8.3.5 (i) as of the Closing Date,
taking into account that Purchaser and in particular these persons,
prior to entering into this Agreement, had the opportunity to
thoroughly review the condition of the Demedis Group and the Demedis
Dental Business under commercial, technical, organisational,
financial, environmental and legal aspects and, in this connection,
to hold discussions with managing directors and other senior
employees of the Companies, and to inspect any relevant real estate;
without limiting
40
the generality of the foregoing. Purchaser shall be deemed to have
knowledge of all matters disclosed in (i) the Information
Memorandum; (ii) the Vendor Due Diligence Report of
PricewaterhouseCoopers, (iii) the PricewaterhouseCoopers Tax Status,
each as disclosed to Purchaser; (iv) any documents listed in the
specific data room index attached hereto as Exhibit 8.3.5 (ii) to
the extent that a reasonable purchaser would have logically
concluded that a Purchaser Claim exists from such disclosure and (v)
the written answers to any information requests of Purchaser
attached hereto as Exhibit 8.3.5 (iii);
8.3.6 the Purchaser Claim results from or is increased by the passing of,
or any change in any law, statute, ordinance, rule, regulation,
common law rule or administrative practice of any government,
governmental department, agency or regulatory body including
(without prejudice to the generality of the foregoing) any increase
in the rates of any taxes or any imposition of any taxes or any
withdrawal or relief from any taxes, not actually in effect at the
Closing Date;
8.3.7 Sellers were prejudiced by the Purchasers' failure to observe the
procedures set forth in Sections 8.2 and 8.4;
8.3.8 in respect of a Purchaser Claim under Section 6.1.16 (without
prejudice to the generality of Section 8.3.3), if and to the extent
(i) the breach of the relevant Sellers' Guarantees results only in
a loss or reduction of tax loss carry-forwards;
(ii) Purchasers impair any obligation of the Companies or Sellers
regarding the preparation of any tax returns of any of the
Companies for assessment periods (Veranlagungszeitraume) up to
and including the Economic Transfer Date ("TAX RETURNS");
(iii) Tax Returns already prepared by Sellers or any of the
Companies prior to the Closing Date should not be filed
accordingly by Purchasers or any of the Companies, provided
that such Tax Returns have been applied in accordance with
applicable laws and accounting practices; or
(iv) any of the Tax Returns which have already been filed should be
changed, modified or withdrawn by Purchaser and/or Companies
without prior written consent of Sellers which shall not be
unreasonably withheld;
41
8.3.9 either Purchasers or the Companies have caused or partially caused
(verursacht oder mitverursacht) such Purchaser Claim after the
Closing Date or by Purchaser after the Signing Date, e.g., by way of
any kind of (corporate) restructurings, or by the way the repayment
of Bank Debt and the Repaid Shareholder Loan will be booked on the
level of the relevant Companies provided however that Purchasers
shall be authorized to initiate tax audits with respect to any
Companies.
When calculating the amount of the liability of Sellers under this
Agreement all advantages in connection with the relevant matter shall be
taken into account (Vorteilsausgleich) and Sellers shall not be liable
under this Agreement in any respect of any Purchaser Claim for any losses
suffered by Purchasers or the Companies to the extent of any corresponding
savings by or benefit to Purchasers, any Affiliate of Purchasers or any
Company arising therefrom.
8.4 THIRD PARTY CLAIM PROCEDURE. If the Companies or Purchasers are sued or
threatened to be sued by a third party, including any governmental
agencies, or if the Companies or Purchasers are subjected to any audit or
examination by any tax authority ("THIRD PARTY CLAIM"), which may give
rise to a Purchaser Claim, Purchasers shall give Sellers immediately
(unverzuglich) written notice of such Third Party Claim. Purchasers shall
ensure that Sellers shall be provided with all material, information and
assistance relevant in relation to the Third Party Claim, be given
reasonable opportunity to comment or discuss with Purchasers any measures
which Purchasers proposes to take or to omit in connection with a Third
Party Claim. In particular, Sellers shall be given the opportunity to
comment on, participate in, and review any reports, all relevant tax and
social security audits or other measures and receive without undue delay
copies of all relevant orders e.g. (Bescheide) of any authority, in each
case subject to applicable law. No admission of liability shall be made by
or on behalf of Purchasers or the Companies and the Third Party Claim
shall not be compromised, disposed of or settled without the prior written
consent of Sellers, which shall not be unreasonably withheld. Further,
however, subject to prior consultation with Purchasers and subject to
Purchasers' prior written consent, which shall not be unreasonably
withheld, Sellers shall be entitled at their own discretion to take such
action (or cause Purchasers or the Companies to take such action) as it
deems necessary to avoid, dispute, deny, defend, resist, appeal,
compromise or contest such Third Party Claim (including making counter
claims or other claims against third parties) in the name of and on behalf
of Purchasers or the Companies concerned and Purchasers will give and
cause the Companies to give (subject to them being paid all reasonable
out-of-pocket costs and expenses), all such information and assistance, as
described above, including during normal business hours and upon prior
written notice access to premises and personnel and including the right to
examine and copy or photograph any assets,
42
accounts, documents and records for the purpose of avoiding, disputing,
denying, defending, resisting, appealing, compromising or contesting any
such claim or liability as Sellers or their professional advisers may
reasonably request provided it is done in such a way so as to minimize
business disruption. Sellers agree to use all such information
confidentially only for such purpose and to treat them confidentially. To
the extent that Sellers are in breach of a Sellers' Guarantee or covenant,
all costs and expenses reasonably incurred by Sellers in defending such
Third Party Claim shall be borne by Sellers.
8.5 APPORTIONMENT OF LIABILITY / NO JOINT LIABILITY. Any liability for a
breach of the guarantees given under Section 6.1.1, 6.1.2, 2nd Sentence,
and 6.1.7 shall accrue only to the Seller that has given the respective
guarantee. Each Seller shall only be liable for such remaining portion of
the total liability pro rata to the amount of the relevant percentage of
its shareholding in Demedis. In no case shall any liability of Sellers
under or in connection with this Agreement be a joint liability of Sellers
(Gesamtschuld), i.e., no Seller shall be held liable for a liability of
any other Seller but Sellers shall be liable for any liabilities of
Sellers under or in connection with this Agreement only as single debtors
(Teilschuldner).
8.6 NO DOUBLE RECOVERY. For the avoidance of doubt, no Party shall be entitled
to recover one and the same damage or loss more than once under or in
connection with this Agreement.
8.7 SOLE REMEDY. Any claims of Purchasers under or in connection with this
Agreement shall be limited to claims against Sellers that can be satisfied
by the Escrow Amount. Purchasers shall in no event be entitled to make any
direct claims against any Sellers which will not be covered by the
Holdback Escrow Amount. Any liability of Sellers and recourse by
Purchasers shall at all times be solely limited to the Holdback Escrow
Amount kept by the Escrow Agent in accordance with the Holdback Escrow
Agreement and not be directed to any of the Sellers.
8.8 MODIFIED REMEDIES FOR TITLE GUARANTEE. In the case of a breach of Section
6.1.2 (i) or (ii) in respect of the Demedis Shares the following specific
amendments to Sellers' liability under this Agreement will apply:
8.8.1 Share Purchaser shall be entitled to claims for specific performance
(Erfullung) and consequential damages (Folgeschaden);
8.8.2 the Liability Cap will not apply, but the aggregate liability of
each individual Seller will be limited to the pro rata portion of
the Purchase Price attributable to the Demedis Shares of each
individual Seller;
43
8.8.3 the Time Limitation will be extended to a period ending five (5)
years as from the Closing Date;
8.8.4 in the case that the guarantees in Section 6.1.2 (i) or (ii) have
been breached in respect of the Demedis Shares due to a mere
technical or formal problem (e.g., if a notarial deed contains a
technical or formal mistake rendering the transfer of title invalid)
all Sellers will use their best efforts to cooperate with each other
and with Share Purchaser in order to remedy such defect/problem, in
particular to ensure that the split of shares and ownership
structure set forth in Section 1.1 will be put in place. This clause
shall, however, not increase the overall liability of Sellers for a
breach of Sections 6.1.2 (i) and (ii) in respect of the Demedis
Shares and the as set forth in Section 8.8.2;
8.8.5 Share Purchaser shall first raise Purchaser Claims against the
Holdback Escrow Amount before pursuing any Purchaser Claims against
any Sellers directly.
it being understood that no further rights, other than those expressly set
forth in this Section 8.8, in particular no further rights of withdrawal,
will be conferred on Share Purchaser.
8.9 TREATMENT OF HOLDBACK ESCROW AMOUNT. In view of Sellers' separate
liability (teilschuldnerische Haftung) as set forth in Section 8.5, the
sole remedy principles set forth in Section 8.7 as well as the modified
remedies for title guarantees set forth in Section 8.8 and for the
avoidance of doubt, the Parties agree that the Holdback Escrow Amount will
not be available to Purchasers as a whole but only in the liability
portions set forth in Section 8.5, i.e., the Holdback Escrow Amount of EUR
10,000,000 (in words: Euro ten million) will only be paid into one single
account for practicality reasons, but not for reasons of joint liability,
so that for purposes of any Purchaser Claim the Holdback Escrow Amount
will be separated into 5 different and separate portions reflecting the
pro-rata amount of the Purchase Price attributable to Sellers ("PRO-RATA
ESCROW AMOUNT"), so that in no event whatsoever, one Seller would ever be
jointly liable for any liability of another Seller or for more than the
portion of his part of the liability set forth in Section 8.5. However, if
the Pro-rata Escrow Amount is already used up by Purchaser Claims based on
a breach of Section 6.1.2 (i) or (ii) in respect of the Demedis Shares or
other Purchaser Claims, the liability of the relevant Seller will not be
limited to the Pro-rata Escrow Amount, but be increased by the amount of
the Pro-rata Escrow Amount which has already been used to satisfy
Purchaser Claims based on a breach of Section 6.1.2 (i) or (ii) in respect
of the Demedis Shares.
44
Example: If the portion of the Holdback Escrow Amount attributable to
Seller 4 was EUR 50,000 and the relevant share sold by Seller 4 under this
Agreement is affected by a title defect triggering a liability of EUR
100,000, Purchaser can only claim EUR 50,000 against the Holdback Escrow
Amount and the remaining EUR 50,000 from Seller 4 directly but only up to
the portion of the Purchase Price attributable to Seller 4. However, if
thereafter another general guarantee set forth in Section 6 is breached
triggering a liability of EUR 1,000,000, Purchaser will only be able to
claim against the Escrow Account the amount recoverable from all Sellers
other than Seller 4, as the relevant portion of the Holdback Escrow Amount
attributable to Seller 4 has already been used up, so that the remaining
liability for all other shareholders will be limited to the amount of EUR
1,000,000 less a percentage equal to the percentage of the Holdback Escrow
Amount attributable to Seller 4. The remaining amount up to EUR 50,000
can, however, be claimed directly from the relevant Seller 4.
SECTION 9
EXPIRATION OF CLAIMS / LIMITATION OF CLAIMS
9.1 TIME LIMITATIONS. All claims of Purchasers arising under or in connection
with this Agreement shall be time-barred on 30 April 2005 except for
claims of Purchasers pursuant to Section 8.8 or for claims of Purchasers
arising as a result of wilful, fraudulent or intentional breaches of
Sellers' obligations under this Agreement which shall be time barred in
accordance with the statutory rules in Sections 195, 199 German Civil Code
("TIME LIMITATIONS").
9.2 EXCLUSION OF STATUTORY LIMITATION RULES. To the extent legally permissible
Sections 203 and 209 German Civil Code shall not apply. Any limitation
period pursuant to this Agreement shall be interrupted only in the event
that a statement of claims is filed with the arbitral tribunal or
competent court, as the case may be, within the relevant Time Limitations.
9.3 DE MINIMIS AND BASKET. Sellers shall only be liable under or in connection
with this Agreement if and to the extent that: (i) the amount recoverable
under this Agreement with respect to the individual claim made exceeds EUR
100,000 (in words: Euro one hundred thousand) ("DE MINIMIS AMOUNT")
provided, however, that claims which are based on factually coherent
matters (auf demselben Lebenssachverhalt beruhend) can be aggregated and
(ii) the aggregate amount recoverable under this Agreement with regard to
all claims made (excluding claims which do not exceed the De Minimis
Amount in the individual case) exceeds EUR 1,250,000 (in words: Euro one
million
45
two hundred fifty thousand) ("BASKET") i.e., only if both the De Minimis
Amount and the Basket are exceeded, Sellers shall be liable under this
Agreement in the full amount, subject to the other provisions of this
Section 9. The Parties agree that the terms Material Adverse Effect,
material or any similar materiality qualifier in any of the guarantees in
Section 6 will be disregarded for purposes of determining of whether or
not the De Minimis Amount and the Basket are exceeded or reached, as the
case may be.
9.4 LIABILITY CAP. Subject to Section 8.8.2, the aggregate liability of
Sellers for any possible claims under and in connection with this
Agreement shall not exceed EUR 10,000,000 (in words: Euro ten million)
("LIABILITY CAP"), which will be covered by the Holdback Escrow Amount and
cannot be directly claimed from any of the Sellers.
9.5 EXCLUSION OF STATUTORY RIGHTS. The Parties agree that the remedies which
Purchasers, or any of the Companies, may have against Sellers for breach
of obligations set forth in this Agreement are solely governed by this
Agreement, and the remedies provided for in this Agreement shall be the
exclusive remedies available to Purchasers or the Companies. Apart from
the rights of Purchasers under Section 5 above (i) any right of Purchasers
to withdraw (zurucktreten) from this Agreement or to require the winding
up of the Transaction (e.g. by way of gro(beta)er Schadensersatz or
Schadenersatz statt der Leistung), (ii) any claims for breach of
pre-contractual obligations (culpa in contrahendo, including claims
arising under Sections 241 Subsec. 2, 311 Subsec. 2 (3) German Civil Code)
or ancillary obligations (positive Forderungsverletzung, including to
claims arising under Sections 280, 282 German Civil Code), (iii)
frustration of contract pursuant to Section 313 German Civil Code (Storung
der Geschaftsgrundlage), (iv) all remedies of Purchaser for defects of the
Sold Assets under Sections 437 through 441 German Civil Code and (v) any
and all other statutory rights and remedies, if any, are hereby expressly
excluded and waived by Purchasers, except for claims for wilful deceit
(arglistige Tauschung) and other intentional breach of contract
(vorsatzliche Vertragsverletzungen). The Parties agree that Sellers'
Guarantees are only designed for the specific remedies of Purchasers set
forth in Section 6 above and the restrictions contained in this Section 9
and that Sellers' Guarantees shall not serve to provide Purchasers with
any other claims than those set forth in this Agreement. The Parties
further agree that under no circumstances shall Sellers' Guarantees be
construed as representations of Sellers with respect to the quality of the
purchase object within the meaning of Sections 276 Subsec. 1, 443 German
Civil Code (Garantie fur die Beschaffenheit der Sache) and therefore,
Purchaser explicitly waives the application of Section 444 German Civil
Code.
46
SECTION 10
SELLERS' COVENANT
SELLERS' COVENANT. Except as set forth in Exhibit 10, during the period between
the Signing Date and the Closing Date and to the extent legally permissible,
10.1 Sellers shall use all reasonable efforts to ensure that the Companies
shall (i) preserve their material customer relationships, (ii) preserve
the Material Assets in good working condition, reasonable wear and tear
excepted.
10.2 Sellers shall undertake and procure that the Companies shall, (i) keep the
existing insurance for the Demedis Dental Business in place, (ii) maintain
accounting procedures consistent with past practice and (iii) maintain
inventory holding levels substantially consistent with past practice.
10.3 Sellers shall undertake and procure that the Companies shall conduct the
Demedis Dental Business in the ordinary course of business and not, except
in the ordinary course of business and consistent with past practice, (i)
adopt any material change in the articles of association of the Companies,
(ii) make any dividend payments or other distributions of such kind to
Sellers or Affiliates of Sellers, (iii) allot, issue, redeem or repurchase
any shares of the Companies, (iv) merge or consolidate with any other
person (other than the Companies), (v) make any material capital
expenditure (i.e. exceeding an amount of EUR 2,000,000) (in words: Euro
two million) (unless reflected in the business plan of the Demedis Group
which has been disclosed to Purchasers), (vi) enter into any agreements
exceeding a contract value of EUR 500,000 (in words: Euro five hundred
thousand) or with onerous terms, (vi) cancel or waive any claims or rights
of a value exceeding in the individual case EUR 500,000 (in words: Euro
five hundred thousand), (vii) enter into any agreement or arrangement with
Sellers or an Affiliate with Sellers not at arm's length terms, (viii)
commence any litigation with a dispute value (Streitwert) in excess of EUR
250,000 (in words: Euro two hundred fifty thousand), (ix) shorten or
lengthen the customary payment cycles for any receivables or payables (x)
acquire or dispose of any material business or (xi) agree in writing to do
any of the foregoing, provided however, that Sellers and any of the
Companies may enter into bonus agreements with any of the Companies'
employees and/or any of their managing directors in an aggregate maximum
amount of EUR 1,268,000.00 (in words: Euro one million two hundred sixty
eight thousand), which amounts shall be borne by the Companies and are
already reflected in the Purchase Price ("STAY BONUS ARRANGEMENTS").
47
SECTION 11
INDEMNITY
Sellers will indemnify Purchasers for all materialized liabilities arising from
the currently still contingent liabilities in respect of the lease transactions
between the Companies and Gefa Gesellschaft fur Absatzfinanzierung GmbH as well
as the Dutch VAT issue both as set forth in Exhibit 11 provided, however, that
all limitations to Sellers' liability in this Agreement, in particular those set
forth in Sections 8 and 9 will also apply to this indemnity, apart from the
limitations provided for in Section 9.3, provided, however, that any amounts
received by Purchasers under this Section 11 shall be disregarded for purposes
of filling the Basket for any other Purchaser Claims.
SECTION 12
RESTRICTION OF ANNOUNCEMENT / STAY BONUS / COOPERATION / CONFIDENTIALITY /
NON-COMPETITION AND NON-SOLICITATION / PARENT LIABILITY / JOINT LIABILITY / USE
OF IP RIGHTS
12.1 RESTRICTIONS OF ANNOUNCEMENTS. Each of the Parties undertakes that prior
to the Closing Date it will not make an announcement in connection with
this Agreement unless required by applicable mandatory law or stock
exchange regulations or the other Party hereto has given its consent to
such announcement in writing, including the form of such announcement,
which consents may not be unreasonably withheld and may be subject to
conditions. If and to the extent any announcement or disclosure of
information regarding the subject matter of this Agreement is to be made
under applicable mandatory laws, in particular any applicable stock
exchange regulations, the Party being concerned shall not disclose any
such information without prior consultation with the other Party.
12.2 STAY BONUS. Purchasers acknowledge the Stay Bonus Arrangements (as defined
in Section 10.3) made or to be made to certain of the managing directors
and/or employees of the Demedis Group. If and to the extent that the Stay
Bonus Arrangements should not have been validly made by any of the
Companies, Purchasers agree to provide for such payments to be effected in
its own name as if such promises had been validly made by Purchaser itself
under full discharge of the original debtors.
12.3 COOPERATION. Upon and after the Closing Date, Sellers and Purchaser shall
each use their reasonable best efforts to execute and deliver or procure
to be done, executed and delivered all such further acts, deeds,
documents, instruments of conveyance, assignment and transfer and things
as may be reasonably necessary to implement the terms of this Agreement.
48
12.4 CONFIDENTIALITY. The Parties agree to keep strictly confidential any
information obtained by them in connection with the negotiation and
conclusion of this Agreement with respect to the respective other party
and its Affiliates unless otherwise agreed in writing between the Parties
or required by applicable law.
12.5 CONFIDENTIALITY WAIVER. Each Party authorises every other Party (and each
employee, representative or other agent of every other Party) to disclose
to any and all persons, without limitation of any kind, the U.S. federal
income tax treatment and tax structure of the Transaction and all
materials of any kind (including opinions or other tax analyses) that are
provided to such party related to such tax treatment and tax structure.
12.6 NON-COMPETITION / NON-SOLICITATION ▇▇. ▇▇▇▇ Mauser and ▇▇. ▇▇▇▇▇▇ Fark of
Permira Beteiligungsberatung GmbH have entered into the non-competition
and non-solicitation agreement with Purchaser attached hereto as Exhibit
12.6 ("NON-COMPETITION/NON-SOLICITATION AGREEMENT"). The Parties expressly
agree that none of Sellers shall be subject to any kind of non-competition
obligation or non-solicitation obligation with respect to any employees /
managing directors of any of the Companies.
Sellers will reimburse all reasonable costs incurred by Gotz Mauser and
▇▇▇▇▇▇ Fark under or in connection with the Non-competition /
Non-solicitation Agreement, including in particular any reasonable
lawyer's fees for defending any claims raised by Purchaser against Gotz
Mauser and ▇▇▇▇▇▇ Fark, to the extent such claims are not validly based on
wilful misconduct on the part of Gotz Mauser and ▇▇▇▇▇▇ Fark. This
obligation shall constitute an agreement for the benefit of third parties
(echte Vereinbarung zugunsten Dritter) within the meaning of Section 328
of the German Civil Code. No obligations shall attach to Purchasers in
respect of ▇▇. ▇▇▇▇▇▇ and Mr. Fark.
12.7 PARENT LIABILITY. ▇▇▇▇▇ ▇▇▇▇▇▇ will be jointly liable for any and all
obligations of Purchaser under or in connection with this Agreement, even
in case of a transfer of rights and obligations pursuant to Section 14.4
12.8 JOINT PURCHASERS' LIABILITY. All Purchasers will be jointly liable for any
and all obligations of any Purchaser under or in connection with this
Agreement, even in case of a transfer of rights and obligations pursuant
to Section 14.4.
12.9 USE OF MARKS / DOMAINS / NAMES. Purchasers are aware that Demedis is part
of a larger group with Sirona Beteiligungs- und Verwaltungsgesellschaft
mbH ("SBV") and its Affiliates ("SIRONA GROUP") as sister company which is
engaged in the production, trading and distribution of dental products.
After the Closing Date, Purchasers shall ensure that neither Purchasers or
any of their Affiliates nor any of the Group
49
Companies use (as part of its corporate or trade name, internet domains or
otherwise) the name "Sirona" or the abbreviation "SDS", any name likely to
be confused therewith or any name to which a company of the Sirona Group
("SIRONA GROUP COMPANY") has any right which permits such Sirona Group
Company to preclude the use of such name by third parties. Furthermore,
except as provided below, Purchasers shall ensure that neither Purchasers
nor any of their Affiliates nor any of the Group Companies shall use any
brochure, sales literature, letterhead, web page, packaging or promotional
or other materials or sell any publications or other products which
contain or carry the name "Sirona" or the abbreviation "SDS" or any other
▇▇▇▇ or names which suggest that a Company is or was part of the Sirona
Group unless permitted by relevant agreements between the Sirona Group and
the Group Companies. Purchasers acknowledge and agree that between the
Signing Date and the Closing Date, Sellers and the Group Companies will
take all actions which are necessary or appropriate to delete the name
"Sirona" or "SDS" from their corporate name (Firma) of any of the Group
Companies which contains the name "Sirona" or the abbreviation "SDS" and
to change the corporate name of any of such Group Companies. Without undue
delay after the Closing Date, at the latest within one month after the
Closing Date, Purchasers shall take, or cause to be taken, all outstanding
actions and issue, or cause to be issued, all declarations which are
necessary or appropriate to change the corporate name of any of the Group
Companies which contains the name "Sirona" or the abbreviation "SDS" to a
corporate name which does not contain the name "Sirona" or the
abbreviation "SDS" or any name likely to be confused therewith.
SECTION 13
NOTICES / EXERCISE OF RIGHTS
13.1. NOTICES. All notices and other communications hereunder shall be made in
writing and shall be delivered or sent by registered mail or courier to
the addresses below or to such other addresses which may be specified by
any Party to the other Parties in the future in writing:
If to Sellers:
Freshfields Bruckhaus ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
with a copy to
50
▇▇▇▇▇▇▇▇ Chance
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇-▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
If to Purchaser:
▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
Attn.: General Counsel
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
13.2 EXERCISE OF RIGHTS. Any statements, declarations and notices of Sellers
under or in connection with this Agreement as well as the Escrow Agreement
may be validly made or given only by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, with the address as
set forth in Section 13.1 on behalf of all Sellers and Sellers hereby
authorize Seller 1 to act in their name and on their behalf in making such
statements, declarations and giving such notices. The same shall apply to
the exercise of any rights by Sellers under or in connection with this
Agreement.
13.3 SETTLEMENT OF PURCHASER CLAIMS. Sellers hereby appoint ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
with the address as set forth in Section 13.1 ("APPOINTEE") to act in
their name and on their behalf to negotiate, accept, compromise, admit to
settle any Purchaser Claims arising out of or in connection with this
Agreement, provided that this Section shall only apply (a) to Purchaser
Claims other than in respect of a breach of Sections 6.1.2 (i) and (ii),
unless the relevant defect on which the Purchaser Claims is based extends
to all Sellers, and (b) to Purchaser Claims in respect of which the Time
Limitations have not yet expired, it being understood that in respect of
Purchaser Claims based on a breach of Sections 6.1.2 (i) and (ii) and
extending to all Sellers (as set forth in Section 13.3
51
(a)), the Time Limitations of Section 9.1 (and not the extended time
limitation set forth in Section 8.8.3) will apply for purposes of this
Section 13.3 (b). Any termination of such appointment is valid only if (a)
made in writing and (b) if at the same time a new appointee is notified to
the Purchaser. Sellers will pay to the Appointee all reasonable fees for
Appointee's services and expenses incurred by Appointee. This obligation
shall constitute an agreement for the benefit of third parties (echte
Vereinbarung zugunsten Dritter) within the meaning of Section 328 of the
German Civil Code. Any liability of the Appointee shall be limited to
gross negligence (▇▇▇▇▇ Fahrlassigkeit) and wilful misconduct (Vorsatz)
only.
SECTION 14
MISCELLANEOUS
14.1 FEES / COSTS / EXPENSES. All expenses, costs, fees and charges in
connection with the Transactions including legal services, shall be borne
by the Party commissioning the respective costs, fees and charges, in
particular, the Companies shall not bear any costs for lawyers,
accountants, investment bankers and other advisors advising Sellers' in
relation to the Transaction to the extent not already paid before the
Economic Transfer Date. All notarial fees incurred with the notarisation
of this Agreement and the agreements to be executed to implement the
Transactions as well as all official fees charged by the cartel
authorities in connection with the merger clearances required under this
Agreement shall be borne by Purchaser. Purchaser shall also be responsible
for the payment of any sales, transfer or stamp taxes, or other similar
charges, payable by reason of the Transaction.
14.2 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this Agreement
constitute an integral part of this Agreement and any reference to this
Agreement includes this Agreement and its Exhibits as a whole. The
disclosure of, or reference to, any matter in this Agreement (including
any Exhibit and Schedule thereto) shall be deemed to be a disclosure.
14.3 ENTIRE AGREEMENT. This Agreement (including all Exhibits and Schedules
hereto) comprises the entire agreement between the Parties concerning the
subject matter hereof and supersedes and replaces all oral and written
declarations of intention made by the Parties in connection with the
contractual negotiations except for the Confidentiality Agreement dated 11
September 2003. Changes or amendments to this Agreement (including this
Section 14.3) must be made in writing by the Parties or in any other
legally required form, if so required.
14.4 NO ASSIGNMENT. No Party shall be entitled to assign any rights,
obligations or claims under this Agreement without the prior written
consent of the other Party provided
52
that Purchasers may assign all rights and obligations under this Agreement
to an Affiliate of Purchasers without the express consent of the Sellers
which is hereby granted, provided however that Purchasers will in any
event remain jointly liable for all obligations of the relevant assignee
under and in connection with this Agreement.
14.5 INTEREST DAYS. Interest payable under any provision of this Agreement
shall be calculated on the basis of actual days elapsed divided by 365.
14.6 BUSINESS DAYS. "BUSINESS DAYS" shall be the days on which banks are open
for business in Frankfurt am Main, Germany.
14.7 NO THIRD PARTY RIGHTS. This Agreement shall not grant any rights to, and
is not intended to operate for, the benefit of third parties unless
otherwise explicitly provided for herein.
14.8 HEADINGS. The headings in this Agreement are inserted for convenience only
and shall not affect the interpretation of this Agreement; where a German
term has been inserted in quotation marks and/or italics it alone (and not
the English term to which it relates) shall be authoritative for the
purpose of the interpretation of the relevant English term in this
Agreement.
14.9 SET-OFF / RETENTION. No Party, except as provided otherwise herein, shall
be entitled (i) to set-off (aufrechnen) any rights and claims it may have
against any rights or claims the other Party may have under this Agreement
or (ii) to refuse to perform any obligation it may have under this
Agreement on the grounds that it has a right of retention
(Zuruckbehaltungsrecht) unless the rights or claims of the relevant Party
claiming a right of set-off (Aufrechnung) or retention (Zuruckbehaltung)
have been acknowledged (anerkannt) in writing by the relevant other
Party/Parties or have been confirmed by final decision of a competent
court (Gericht) or arbitration court (Schiedsgericht).
14.10 GOVERNING LAW / ARBITRATION. This Agreement shall be governed by, and be
construed in accordance with, the laws of the Federal Republic of Germany,
excluding the principles of conflicts of laws and the UN Convention on the
Sale of Goods. All disputes arising under or in connection with this
Agreement or its validity shall be finally settled in accordance with the
arbitration rules set forth in Section 15.
14.11 SEVERABILITY. In the event that one or more provisions of this Agreement
shall, or shall be deemed to, be invalid or unenforceable, the validity
and enforceability of the other provisions of this Agreement shall not be
effected thereby. In such case, the Parties hereto agree to recognise and
give effect to such valid and enforceable provision
53
or provisions which correspond as closely as possible to the commercial
intent of the Parties. The same shall apply in the event that the
Agreement contains any loopholes (Vertragslucken).
14.12 EURO. Any reference to EUR shall mean Euro, the currency of the European
Union. For the purpose of any disclosure thresholds in the representations
and warranties, such reference shall include the equivalent in any foreign
currency at the exchange rate officially determined in Frankfurt am Main,
Germany, on the Signing Date.
14.13 INTERPRETATIONS. Words such as "hereof" or "hereunder" refer (unless
otherwise required by the context) to this Agreement as a whole and not to
a specific provision of this Agreement. The term "including" shall mean
"including, without limitation" and the term "in particular" shall mean
"in particular, without limitation".
SECTION 15
ARBITRATION PROCEEDINGS
15.1 COMPETENCE OF THE ARBITRAL TRIBUNAL. All disputes arising out of or in
connection with the Share Purchase Agreement or its validity shall be
finally settled in accordance with the Arbitration Rules of the German
Institution for Arbitration e.V. ("DIS RULES") without recourse to the
ordinary courts of law. Where this Section 15 deviates from the DIS Rules,
this Section 15 shall prevail; where this Section 15 is silent, the DIS
Rules apply.
15.2 PLACE AND LANGUAGE OF THE ARBITRATION. The place of arbitration is
Zurich/Switzerland. The language of the arbitration proceedings is
English. However, no party shall be obliged to submit translations of
documents drafted in the German language.
15.3 APPLICABLE LAW. The arbitral tribunal ("ARBITRAL TRIBUNAL") shall apply
the substantive law as provided in this Agreement.
15.4 COMPOSITION OF THE ARBITRAL TRIBUNAL. The Arbitral Tribunal shall consist
of three arbitrators:
15.4.1 if there are only two parties to the arbitration proceedings, each
party shall nominate one arbitrator. The two arbitrators nominate a
chairman of the Arbitral Tribunal;
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15.4.2 several claimants shall nominate one arbitrator jointly; several
respondents shall nominate one arbitrator jointly;
15.4.3 if the arbitration proceedings are not brought by all Sellers or
Purchasers against all Purchasers or Sellers, respectively, the
claimant(s) shall notify all other Parties of the submission of the
statement of claim by registered mail including a copy of such
statement of claim and request that those of them who wish to join
the arbitration proceedings declare such joining and whether they
wish to join on the claimants' or respondents' side, by registered
mail to the parties to the arbitration proceedings (with a copy to
the DIS and with advance fax to all recipients) within two weeks of
receipt. Claimant(s) and respondent(s) will not nominate
arbitrators before the elapse of the above two week period, at the
earliest three weeks from the dispatching of the last of such
notifications by the claimant(s). Parties who declare their joining
to the arbitration proceedings prior to the expiration of this
deadline have to nominate an arbitrator jointly with the party or
parties on whose side they join.
15.5 SUBSEQUENT JOINING. Parties who have not joined the arbitration
proceedings within the deadline provided under Section 15.4.3 do not take
part in the arbitration proceedings. However, they remain entitled to join
the arbitration proceedings on the side of either claimant(s) or
respondent(s). In case of a subsequent joining, they have to accept the
composition of the Arbitral Tribunal and the state of the proceedings at
the time of their joining.
15.6 REIMBURSEMENT OF ATTORNEYS' FEES. Several claimants and respondents as
well as Parties joining the arbitration proceedings on either side shall
appoint the same attorney to act for them in the proceedings. If several
claimants or respondents cannot agree on joint representation by the same
attorney, they shall - if they prevail in the arbitration - only be
jointly entitled to reimbursement of attorneys' fees in the amount of fees
they would have incurred in case of joint representation. A joining Party
who appoints a different attorney shall not be entitled to reimbursement
of attorneys' fees. This does not apply in case the attorney acting for
the party on whose side the joining Party intends to join the arbitration
proceedings is prevented from acting for such joining Party due to a
conflict of interest as defined by mandatory German bar rules. In such
case, the joining Contract Party will be entitled to full reimbursement of
its attorneys' fees.
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15.7 PROCEDURAL ACTS OF JOINING PARTY. A Party joining the arbitration
proceedings may bring factual submissions in support of or in defence
against a claim and other procedural acts insofar as such declarations or
acts do not contradict declarations or acts of the party or parties on
whose side such Party joined.
15.8 BINDING EFFECT OF AWARD. The Arbitral Tribunal's findings of facts and
law, that do not exclusively concern the relationship between one or
several claimants on the one hand and one or several respondents on the
other hand, but also establish a basis for claims in relation between
other Parties, become binding on all Parties properly notified of the
initiation of the arbitration proceedings regardless of their joining the
arbitration proceedings. In subsequent disputes with other Parties, a
Party who knew of the initiation of the arbitration proceedings is
precluded from relying on the submission that the arbitration proceedings
were decided erroneously or that one of the parties to the arbitration
proceedings misconducted the proceedings. No Party shall be precluded from
relying on grounds to vacate an award in accordance with Sec. 1059 of the
German Code of Civil Procedure (ZPO).
15.9 LIMITATION PERIOD. The Parties agree that the initiation of in arbitration
proceedings expiration of the Limitation Period interrupts the running of
the Limitation Periods in relation to the relevant Purchaser Claim and
also all other Parties regardless of whether such other Parties are
parties to or join the arbitration proceedings. If Parties not
participating in the arbitration proceedings but on whom the award will
have a binding effect pursuant to Section 15.8, the limitation period is
interrupted (gehemmt) from the initiation of the arbitration proceedings
until four (4) months after receipt of the award by registered mail. The
same applies if the arbitration proceedings are terminated by order of the
arbitral tribunal or by the DIS Secretariat in accordance with Sec. 39 of
the DIS Rules.
SECTION 16
EXHIBITS / DISCLOSURE SCHEDULES / DEFINITIONS
16.1 EXHIBITS / DISCLOSURE SCHEDULES
Exhibit A Corporate Chart
Exhibit 2.5 Seller 1 Debt Guarantees
Exhibit 2.6 Back-up Guarantee for Released Guarantees
Exhibit 3.3 Consent for Transfer of Shareholder Loans
Exhibit 4.4 Purchase Price Allocation
Exhibit 4.10 Escrow Agreement
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Exhibit 5.4.6 Seller 1 Debt Guarantees Release Letters
Exhibit 5.4.7 Assignment of Demedis Shares
Exhibit 5.4.8 Transfer of Shareholder Loans
Exhibit 5.4.13 Completion of Closing Actions
Exhibit 6.1 Disclosure Letter
Schedule 6.1.2 Ownership of Shares
Schedule 6.1.3 Articles of Association and By-laws
Schedule 6.1.4 Supervisory and Advisory Boards
Schedule 6.1.6 Affiliates/Enterprise Agreements
Schedule 6.1.8 Intellectual Property Rights
Schedule 6.1.9 Insurances
Schedule 6.1.10 Material Assets
Schedule 6.1.11 Material Agreements
Schedule 6.1.12 Governmental Approvals, Licences and Permits
Schedule 6.1.13 Litigation
Schedule 6.1.14 Shop Agreements
Schedule 6.1.15 Labor Strikes and Violation of Laws
Schedule 6.1.16 Tax Matters
Schedule 6.1.17 Financial Statements 2002 and 2003
Schedule 6.1.18 Material Adverse Changes
Schedule 6.1.19 Dealings with Sirona Group
Schedule 6.1.20 Product Liability
Schedule 6.1.21 Environmental Liabilities
Schedule 6.1.22 Compliance with Laws
Schedule 6.1.23 Employees
Schedule 6.1.24 Real Estate
Exhibit 8.3.5 (i) Purchaser's Knowledge
Exhibit 8.3.5 (ii) Data Room Index
Exhibit 8.3.5 (iii) Written answers to Information Requests
Exhibit 10 Exceptions to Sellers' Covenant
Exhibit 11 Sellers' Indemnity
Exhibit 12.6 Non-competition / Non-solicitation Agreement
Exhibit 14.10 Arbitration Agreement
16.2 DEFINITIONS
The capitalized terms used in this agreement are defined in the following
Sections and clauses:
Agreement Preamble B
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Affiliates Section 6.1.6
Appointee Section 13.3
Arbitral Tribunal Section 15.3
Arge Section 1.3.1 (iii)
Asset Deal Section 5.9
Assumed Bank Debt Section 2.4
Austrodent Section 1.2.2
Austrodent Lender Section 2.2.3
Austrodent Lender's Account Section 5.4.5
Austrodent Share Section 1.2.2
Austrodent Working Capital Facility Section 2.2.3
Austrodent Working Capital Facility
Agreement I Section 2.2.3
Austrodent Working Capital Facility Amount Section 2.2.3
Austrodent Working Capital Repayment Amount Section 2.2.3
Bank Debt Section 2.2.3
Basket Section 9.3
Business Days Section 14.6
Closing Section 5.4
Closing Actions Section 5.4
Closing Condition Section 5.2
Closing Date Section 5.1.3
Companies Section 1.3
Company Section 1.3
DDD Section 1.2.1
DDD Lender Section 2.2.2
DDD Lender's Account Section 5.4.4
DDD Shares Section 1.2.1
DDD Working Capital Facility Section 2.2.2
DDD Working Capital Facility Agreement I Section 2.2.2
DDD Working Capital Facility Amount Section 2.2.2
DDD Working Capital Repayment Amount Section 2.3.2
De Minimis Amount Section 9.3
Debt Assumption Request Section 2.4
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Demedis Preamble C
Demedis Group Preamble C
Demedis Dental Business Preamble A
Demedis Group Preamble A
Demedis NV Section 1.3.5 (ii)
Demedis Shares Section 1
De Minimis Amount Section 9.3
Dental Associations Section 1.3.1
Dentaldepot Section 1.3.1 (iv)
DES GmbH Section 1.3.1 (ii)
Direct Shares Section 1.2.3
Direct Subsidiaries Section 1.2.3
Direct Subsidiary Section 1.2.3
DIS Rules Section 15.1
Double BV Section 1.3.5 (i)
Down Payment Section 4.3 a
Down Payment Date Section 4.3 a
Economic Transfer Date Section 5.1.1
EDH Preamble C
EDH Agreement Preamble C
EDH Group Preamble C
Environmental Examination Section 6.1.21 (a)
Environmental Laws Section 6.1.21 (i)
Escrow Account Section 5.4.2
Escrow Agent Section 4.6
Escrow Agreement Section 4.10
Financial Statements 2002 and Financial
Statements 2003 Section 6.1.17
Golth GmbH Section 1.3.2 (ii)
Group Companies Section 1.3
Group Company Section 1.3
Guarantee Confirmation Section 5.4.12
▇▇▇▇▇ ▇▇▇▇▇▇ Preamble
Holdback Escrow Amount Section 4.2
Indirect Shares Section 1.3
Indirect Subsidiaries Section 1.3
Intellectual Property Rights Section 6.1.8
IT Section 6.1.8
Laws and Orders Section 6.1.22
Liability Cap Section 9.4
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Loan Purchaser Preamble
MAC Section 5.5.3
MAC Withdrawal Section 5.5.2 (i)
Material Adverse Effect Section 6.1 (vii)
Material Agreements Section 6.1.11
Material Assets Section 6.1.10
Material Permits Section 6.1.12
▇▇▇▇▇▇ GmbH Section 1.3.2 (i)
NDO BV Section 1.3.3
NDO Leeflang Section 1.3.4
Net Equity Section 5.5.3
Non-competition/Non-solicitation Agreement Section 12.6
Non-Mac Withdrawal Section 5.5.2 (ii)
Parties Preamble
Party Preamble
Payment Amount Section 4.2
Payment Guarantee Section 4.12
Pro Rata Escrow Amount Section 8.9
Purchase Price Section 4.1
Purchase Price Interest Section 4.3
Purchaser Preamble
Purchasers Preamble
Purchaser Claim Section 8.2
Reference Date Section 5.1.4
Released Guarantees Section 2.6
Repaid Shareholder Loan Section 2.1.2
Repaid Shareholder Loan Repayment Amount Section 2.3.4
SBV Section 12.9
SDS Section 1.2.3
SDS Senior Facility Section 2.2.1
SDS Senior Facility Agreement Section 2.2.1
SDS Senior Facility Amount Section 2.2.1
SDS Senior Facility Repayment Amount Section 2.3.1
SDS Senior Lender Section 2.2.1
SDS Senior Lenders' Account Section 5.4.3
SDS Shares Section 1.2.3
Seller Preamble 3.
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Seller 1 Debt Guarantees Section 2.5
Sellers Preamble 3.
Sellers' Account Section 4.7
Sellers' Knowledge Section 6.1 (vi)
Sellers' Knowledge Individuals Section 6.1. (vi)
Share Deal Section 5.9
Share Purchaser Preamble
Shareholder Loan Agreement Section 2.1
Shareholder Loan Section 2.1.1
Shares Section 1.3
Signing Date Section 5.1.2
Sirona Group Section 12.9
Sirona Group Company Section 12.9
Sold Assets Section 3.1
Stay Bonus Arrangements Section 10.3
Stichting Bonus Fonds NDO Leeflang Section 1.4
Sustainable Annual Operating Profits Section 5.5.3
Taxes Section 6.1.16 (i)
Third Party Claim Section 8.4
Tax Returns Section 8.3.8 (ii)
Time Limitations Section 9.1
Transaction Section 5.2
VBR Section 1.3.1 (i)
Withdrawal Notice Section 5.6