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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 6, 1996
DIAMETRICS MEDICAL, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 0-21982 41-1663185
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(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification No.)
2658 Patton Road, Roseville, Minnesota 55113
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612)639-8035
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Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index Appears on Page 5
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Item 2. Acquisition or Disposition of Assets.
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On November 6, 1996, pursuant to an Agreement for the sale of the
whole of the issued share capital of Biomedical Sensors Limited
(the "Agreement") between Diametrics Medical, Inc. ("Diametrics")
and Howmedica, Inc. ("Howmedica"), a subsidiary of Pfizer Inc.
("Pfizer"), Diametrics Medical, Inc. ("Diametrics") acquired
Biomedical Sensors Limited, a private limited company
incorporated in England and Wales ("BSL"), together with certain
related assets of two other subsidiaries of Pfizer. The Agreement
was negotiated at arms' length. As a result of the acquisition,
which will be accounted for as a purchase, Diametrics acquired
all of the outstanding capital stock of BSL and BSL became a
wholly-owned subsidiary of Diametrics; certain of the assets were
acquired by BSL and others by Diametrics. In connection with the
acquisition, Diametrics paid $1.5 million in cash and $7.3
million by the issuance to Howmedica of a Senior Secured Fixed
Rate Loan Note due November 4, 2002 and bearing interest at the
rate of 8.75% per year. Certain post-closing adjustments may be
made to these amounts following a review of cash on hand and
certain accrued liabilities and accounts payable; any additional
amounts due resulting from these adjustments will be paid in
cash. The cash used in the transaction came from cash and
investments on hand.
A copy of the Agreement is attached hereto as Exhibit No. 2.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Business Acquired
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The required financial statements of BSL are not included in
this Current Report on Form 8-K. These financial statements
will be provided in an amendment to this Current Report on
Form 8-K as soon as practicable, but not later than January
16, 1997.
(b) Pro Forma Financial Information
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The required pro forma financial information relative to the
acquisition of BSL is not included in this Current Report on
Form 8-K. The pro forma financial information will be
provided in an amendment to this Current Report on Form 8-K
as soon as practicable, but not later than January 16, 1997.
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(c) Exhibits
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Exhibit No. Description
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2.1 Agreement for the sale of the whole of the
issued share capital of Biomedical Sensors
Limited between the Company and Howmedica,
Inc. dated November 6, 1996.
2.2 Senior Secured Fixed Rate Loan Note due
November 4, 2002, in the original principal
amount of $7,300,000 from the Company to
Howmedica, Inc.
2.3 Transitional Services Agreement, dated as of
November 6, 1996, by and among Howmedica
Inc., Howmedica GmbH, the Company and
Biomedical Sensors Ltd.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 21, 1996 DIAMETRICS MEDICAL, INC.
/s/ Laurence L. Betterley
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Laurence L. Betterley
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit
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Number Item Page
- ------ ---- ----
2.1 Agreement for the sale of the whole of the issued share capital
of Biomedical Sensors Limited between the Company and Howmedica,
Inc. dated November 6, 1996......................................
2.2 Senior Secured Fixed Rate Loan Note due November 4, 2002, in the
original principal amount of $7,300,000 from the Company to
Howmedica, Inc...................................................
2.3 Transitional Services Agreement, dated as of November 6, 1996, by
and among Howmedica Inc., Howmedica GmbH, the Company and
Biomedical Sensors Ltd...........................................
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EXHIBIT 2.1
DATED 6 NOVEMBER 1996
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HOWMEDICA, INC
- and -
DIAMETRICS MEDICAL, INC.
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AGREEMENT
for the sale of the whole of the issued share capital of
BIOMEDICAL SENSORS LIMITED
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CONTENTS
Clause No Description
- --------- -----------
1. Interpretation
2. Sale of Shares and Consideration
3. Adjustment to the Consideration
4. Completion
5. Warranties
6. Confidential Information
7. Pension Provisions and Employees
8. Product Liability Indemnities
9. Whole Agreement and Purchaser's Remedies
10. Access to Books and Records etc.
11. General Provisions
FIRST SCHEDULE (Particulars of the Company)
SECOND SCHEDULE(Particulars of Contract Shares and allocation of the
Consideration)
THIRD SCHEDULE(Details of the Properties)
FOURTH SCHEDULE(The Warranties)
FIFTH SCHEDULE(Taxation Covenant)
ANNEXURE 1 (Form of Loan Note)
ANNEXURE 2 (details of patents and patent Applications)
ANNEXURE 3 (details of Trade Marks)
ANNEXURE 4 (details of the Specified Individuals and their respective rates of
pay etc)
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THIS AGREEMENT is made on the 6th day of November 1996
BETWEEN:
(1) HOWMEDICA, INC incorporated in the State of Delaware, USA with its
principal office at 235 East 42nd Street, New York, NY 10017 (hereinafter
called the "VENDOR");
(2) DIAMETRICS MEDICAL, INC. incorporated in the State of Minnesota with its
principal office at 2658 Patton Road, St. Paul, Minnesota 56118, (the
"PURCHASER").
WHEREAS:
(A) BIOMEDICAL SENSORS LIMITED (the "COMPANY") ( further details of which are
set out and contained in the First Schedule hereto) is a private limited
company incorporated in England and Wales with number 1676781 and, as at
the date hereof, has an authorized share capital of (Pounds)29,829,089
divided into 22,829,089 Ordinary shares of (Pounds)1 each all of which
(inclusive of those mentioned in Recital (B) below) have been issued fully
paid, or credited as fully paid, and 7,000,000 9% non-cumulative redeemable
preference shares of (Pounds)1 each all of which have been issued fully
paid.
(B) The Company issued to the Vendor, on 10 July 1996, a zero coupon loan note
in respect of a principal amount of (Pounds)29,215,000 which indebtedness
has been satisfied and extinguished by the allotment and issue to Vendor of
20,479,089 Ordinary Shares of (Pounds)1 each of the Company all of which
shares were issued credited as fully paid.
(C) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Contract Shares (as hereinafter defined) upon the terms and subject to the
conditions hereinafter appearing.
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement and the Recitals and Schedules hereto unless the context
requires otherwise:
"ACCOUNTING DATE" means 30th November 1995;
"ACCOUNTS" means the audited balance sheet of the Company as at the
Accounting Date and the audited profit and loss account of the Company for
the financial year of the
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Company ended on the Accounting Date and the directors' report and other
documents annexed thereto;
"THE ACCOUNTANTS" means the Purchaser's Accountants and the Vendor's
Accountants;
"AFFILIATES" means any subsidiaries from time to time of the Purchaser;
"BUSINESS DAY" means a day which is not a Saturday or Sunday or a bank or
other public holiday in New York;
"CASH CONSIDERATION" means that amount of the Consideration to be paid in
cash at Completion pursuant to Clause 2;
"COMPANIES ACT" means the Companies Act 1985;
"COMPANY'S AUDITORS" means KPMG of Arlington Business Park, Theale,
Reading, RG7 4SD;
"COMPANY LOAN NOTE" means the zero coupon loan note issued by the Company
on 10 July 1996 and which is referred to in Recital (B) hereinbefore
appearing;
"COMPLETION" means completion of the obligations of the parties hereunder
in accordance with the provisions of Clause 4;
"COMPLETION DATE" means the date on which Completion is to take place
pursuant to Clause 4.1;
"CONSIDERATION" means the consideration for the purchase of the Contract
Shares as specified in Clause 2.2;
"CONTRACT SHARES" means all of the issued shares of the Company as at
Completion, comprising those issued shares referred to in Recital (A)
hereinbefore appearing;
"DESCRIPTIVE MEMORANDUM" means the information memorandum prepared by
Pfizer Inc. relating to the Company a copy of which is annexed to the
Disclosure Letter;
"DIRECTORS" means the directors of the Company at the date hereof
immediately prior to Completion, being the persons named as such in the
First Schedule;
"DISCLOSED MATTERS" means any fact, matter, event or circumstance which is
disclosed in this Agreement or the Disclosure Letter (or treated by the
Disclosure Letter as being disclosed) and any information ascertainable
from the documents and information concerning the Company which were
available for inspection (and, without limitation
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thereto the Purchaser acknowledges that the documents listed in Annexure 5
to the Disclosure Letter were available for inspection) by the Purchaser
(irrespective of whether or not the Purchaser, any Related Party or any of
their respective advisers in fact inspected the same) ;
"DISCLOSURE LETTER" means the letter of even date herewith written by the
Vendor to the Purchaser qualifying the Warranties;
"LOAN NOTE" means the senior secured interest bearing loan note to be
issued by the Purchaser pursuant to Clause 2.4, such note to be in the form
of the draft set out in Annexure 1 hereto;
"MANAGEMENT ACCOUNTS" means the unaudited management accounts of the
Company prepared by the directors of the Company for internal purposes in
respect of certain periods between 1 December 1995 and 27 September 1996,
copies of which are annexed to the Disclosure Letter;
"NYSE" means the New York Stock Exchange;
"PFIZER GROUP" means Pfizer Inc and any of its subsidiaries from time to
time;
"PROPERTIES" means the land and buildings specified in the Third Schedule;
"UK PROPERTIES" means all properties specified in Part I of the Third
Schedule;
"US PROPERTIES" means all properties specified in Part II of the Third
Schedule;
"PURCHASER'S ACCOUNTANTS" means KPMG, St. Paul, Minnesota, USA;
"PURCHASER'S LAWYERS" means Dorsey & Whitney L.L.P. of Pillsbury Center
South, 220 South Sixth Street, Minneapolis, Minnesota 55402, USA;
"RELATED PARTY" means any subsidiary undertaking and parent undertaking of
the Purchaser and any subsidiary undertaking of such parent undertaking and
any person who immediately following Completion will become interested
(within the same meaning as in section 208 of the Companies Act) in the
Contract Shares;
"SHARES CHARGE" means a charge in the agreed terms, over the shares in the
Company as security for the Purchaser's obligations under the Loan Note;
"SPECIFIED ASSET VALUE" means the sum of cash and trade debtors less
----
trade creditors and accrued compensation and related items and other
accrued liabilities calculated in accordance with the provisions of Clause
3.2;
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"SPECIFIED ASSET VALUE CALCULATION" means the calculation prepared in
accordance with Clause 3.2 in connection with the ascertainment of the
Specified Asset Value as at the Completion Date;
"SPECIFIED INDIVIDUALS" means those persons listed in Annexure 4 and
references to a Specified Individual shall mean any one of those Specified
Individuals;
"TAXES ACT 1988" means the Income and Corporation Taxes Act l988;
"TCGA 1992" means the Taxation of Chargeable Gains Act 1992;
"VENDOR'S ACCOUNTANTS" means KPMG, New York, USA;
"VENDOR'S UK SOLICITORS" MEANS THEODORE GODDARD OF 150 ALDERSGATE STREET,
LONDON EC1A 4EJ;
"WARRANTIES" means the warranties specified in the Fourth Schedule;
reference to a document as "IN THE AGREED TERMS" means that document in a
form agreed and a copy of which has been initialed for the purposes of
identification by or on behalf of the parties hereto;
the expression "SO FAR AS THE VENDOR IS AWARE" means the actual knowledge
of the Vendor after inquiry of the Directors (other than Mr. T. Audley) by
the Vendor;
references to any statutory provision include any re-enactment or statutory
modification or extension thereof in force at the date hereof and also
include any orders, regulations, instruments or other subordinate
legislation made prior to the date hereof under the statutory provision
referred to;
the masculine gender includes the feminine and neuter and the singular
number includes the plural and vice versa;
references to Clauses, sub-Clauses, Schedules and Annexures are references
to clauses and sub-clauses of, and schedules and annexures to, this
Agreement;
words and phrases the definitions of which are contained or referred to in
Part XXVI of the Companies Act shall be construed as having the meanings
thereby attributed to them;
"PERSON" includes any individual, company, corporation, firm, partnership,
joint venture, association, government department or agency, local
authority, organisation or trust (in
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each case whether or not having separate legal personality) and references
to any of the same shall include a reference to the others.
1.2 The Schedules and Annexures hereto form part of and are incorporated in
this Agreement and the term "this Agreement" means this Agreement together
with the Schedules and Annexures hereto.
1.3 The index, headings and sub-headings are included in this Agreement for
ease of reference only and shall not affect the interpretation of this
Agreement.
2. SALE OF SHARES AND CONSIDERATION
2.1 Subject to the terms and conditions of this Agreement the Vendor shall sell
and the Purchaser shall purchase the Contract Shares.
2.2 The Contract Shares shall be sold free from all liens, charges, equities
and encumbrances and together with all rights attached or attaching thereto
(including, in respect of the Contract Shares, the right to all dividends
or distributions declared, made or paid thereon after the date hereof) for
a total consideration of US$8,800,000, subject to adjustment in accordance
with Clause 3.
2.3 Notwithstanding the provisions of Clause 2.5 the Purchaser shall not be
obliged to complete the purchase of any of the Contract Shares unless the
purchase of all the Contract Shares is completed simultaneously.
2.4 The Consideration shall be paid as to US$1,500,000 in cash and satisfied as
to US$7,300,000 by the issue by the Purchaser of the Loan Note in the
principal sum of US$7,300,000, the respective amounts to be allocated to
the different Contract Shares being specified in columns (2) and (3) of the
Second Schedule save that any additional Consideration payable pursuant to
Clause 3 shall be paid as provided therein.
2.5 All monies payable under this Clause 2 shall be paid in full on the due
date for payment thereof without any deduction, set-off or counterclaim
whatsoever whether under or arising from any other provision of this
Agreement or otherwise and the Purchaser expressly waives any right to set-
off against or to deduct from any monies otherwise due for payment by it
hereunder any claim which it may have against the Vendor.
2.6. Notwithstanding the foregoing provisions of this Clause 2 the parties have
agreed to allocate (i) US$1,561,438 of the Consideration to the purchase by
the Purchaser of certain United States assets from members of the Pfizer
Group relating to the business of the Company and (ii) US$1,146,917 of the
Consideration to the purchase by the Company of certain German assets from
members of the Pfizer Group relating to the business of the Company and the
parties agree that if and insofar as any filings are required to be made in
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the United States in relation to the purchase by the Purchaser of certain
assets they shall co-operate so as to reflect, in such filings such amounts
allocated as aforesaid.
3. ADJUSTMENT TO THE CONSIDERATION
3.1 The Vendor and the Purchaser shall procure that there shall be ascertained
by the Company the amount of cash (both in hand and at bank) in the Company
as at the close of business on the Completion Date and, insofar as the same
shall reasonably be practicable, there shall be prepared on the Completion
Date:
(i) a list of all trade debtors and all trade creditors as at the close
of business on the Completion Date (including details of the amounts
owed in each case)
(ii) a list of all accrued compensation and related items and other
accrued liabilities (as such items and liabilities were calculated
for the purpose of the Management Accounts) as at the close of
business on the Completion Date
(a copy of each such list being then delivered to the Vendor and the
Purchaser at Completion) and the Purchaser shall ensure that as soon as
practicable following Completion, and in any event not later than 30 days
after the Completion Date, such lists and details shall be further reviewed
and checked, and modified if necessary, and that a draft of the Specified
Asset Value Calculation ("draft Specified Asset Value Calculation") shall
be prepared by the Purchaser in accordance with Clause 3.2 and delivered to
the Vendor together with such lists as aforesaid (with any changes to such
lists from those delivered on the Completion Date being identified and
explained).
3.2 The draft Specified Asset Value Calculation shall be prepared:
(a) stating the cash (in hand and at bank), trade debtors, trade creditors
and accrued compensation and related items and other accrued
liabilities (as such items and liabilities were calculated for the
purpose of the Management Accounts) of the Company as at the close of
business on the Completion Date; and
(b) using the same accounting principles, policies, bases and practices as
were used in the preparation of the Accounts subject to the following
adjustments:
(i) amounts owed to or by other companies in the Pfizer Group, if
any, shall be ignored and excluded; and
(ii) the amount of US$350,000 is to be debited against trade debtors
as an allowance for uncollectable trade debts (and no other
adjustment is to be made for uncollectable trade debts)
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(iii) there shall be treated as an accrued liability the amount of
US$336,000 with respect to exchanging patient data modules
(iv) there shall be treated as an accrued liability an amount
equivalent to the cost of repairing or replacing customer
returns at the Company as at the Completion Date (such amount
presently estimated to be in the region of US$115,000)
(c) so as to show the Specified Asset Value, which shall be first
expressed in pounds sterling (other than the amounts of US$350,000 and
US$336,000 referred to in sub-paragraphs (b)(ii) and (iii) above) and
then converted into US Dollars at the average exchange rate (as
reflected in Bloomberg spot quotations ) for the 30 calendar days
immediately preceding the Completion Date.
3.3 As soon as practicable after delivery of the draft Specified Asset Value
Calculation to the Vendor, the Vendor and the Purchaser shall each use
their reasonable endeavours to agree the Specified Asset Value. If the
Vendor agrees with the Specified Asset Value it shall so confirm to the
Purchaser in writing. If agreement is not reached as to the Specified Asset
Value within 20 days following such delivery, the parties shall procure
that the draft Specified Asset Value Calculation is delivered to the
Accountants within 3 Business Days of the expiry of such period.
3.4 As soon as practicable and, in any event, within 40 days after delivery of
the draft Specified Asset Value Calculation to the Accountants in
accordance with Clause 3.3 ("the Review Period"), the Accountants shall
review the draft Specified Asset Value Calculation and endeavour to agree
what adjustments (if any) need to be made to it in order for it to comply
with Clause 3.2.
3.5 If:
(a) the Accountants agree that no adjustments need to be made to the draft
Specified Asset Value Calculation; or
(b) the Accountants agree on the adjustments to be made to the draft
Specified Asset Value Calculation in order for it to comply as
aforesaid,
they shall:
(i) (in the circumstances mentioned in (b) above) jointly incorporate
into, and reflect any such adjustments in, the draft Specified Asset
Value Calculation;
(ii) jointly report to the Vendor and the Purchaser that they have
carried out such work as they consider necessary under this Clause
3.5 and that in their opinion the Specified Asset Value Calculation
annexed to their report has been drawn up
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in accordance with the provisions of Clause 3.2 and comply with
those provisions; and
(iii) specify in such report the amount of the Specified Asset Value,
and the amount (if any) by which the Consideration should be
increased or reduced under this Clause 3.
and the Specified Asset Value Calculation annexed to such report and the
Specified Asset Value specified in such report shall be the Specified Asset
Value Calculation and the Specified Asset Value respectively for all
purposes of this Agreement and shall in the absence of manifest error be
final and binding on the Vendor and the Purchaser, and the date of such
report shall for all purposes of this Agreement be the date of agreement of
the Specified Asset Value
3.6 If the Accountants are unable to agree within the Review Period on:
(a) whether adjustments need to be made to the draft Specified Asset
Value Calculation; or
(b) the amount of the Specified Asset Value,
the Accountants shall forthwith jointly notify the Vendor and the Purchaser
in writing of the matter or matters in dispute between the Accountants and
the Vendor and the Purchaser shall thereupon forthwith endeavour in good
faith to resolve and agree such matter or matters by negotiation
3.7 If the Vendor and the Purchaser have not resolved any such matter in
dispute as is referred to in Clause 3.6 within 45 days after notification
by the Accountants, then such matter or matters shall thereupon be referred
to such firm of independent chartered accountants as the Vendor and the
Purchaser may agree within 14 days of a request by either of them to the
other or, failing such agreement within such time, as the president for the
time being of the Institute of Chartered Accountants in England and Wales
may nominate on the application of the Vendor or the Purchaser
("INDEPENDENT ACCOUNTANTS") for determination on the following basis:
(a) the Independent Accountants shall be instructed to notify the Vendor
and the Purchaser of their determination of any such matter as soon as
possible;
(b) the Vendor and the Purchaser shall be entitled to make written
submissions to the Independent Accountants and to have sight of and to
comment on any submissions made by the other but subject thereto the
Independent Accountants shall have power to determine the procedure to
be followed in relation to their determination;
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(c) in making such submissions the Vendor and the Purchaser shall, where
appropriate, state their respective best estimates of monetary amounts
of the matters referred for determination;
(d) in making their determination the Independent Accountants shall act as
experts and not as arbitrators, their decision as to any matter
referred to them for determination shall in the absence of manifest
error be final and binding in all respects on the Vendors and the
Purchaser (but shall be without prejudice to the Purchaser's right to
claim under the Warranties or otherwise in respect of any matter); and
(e) the fees and expenses of the Independent Accountants shall be borne
and paid as to one half by the Vendor and as to the other half by the
Purchaser.
3.8 Following any agreement between the Vendor and the Purchaser or any
determination by the Independent Accountants in accordance with Clause 3.7,
the Accountants shall:
(a) jointly incorporate into and reflect in the draft Specified Asset
Value Calculation, the matters agreed between the Vendor and the
Purchaser and/or determined by the Independent Accountants, together
with any adjustments which may have been agreed between the
Accountants in accordance with Clause 3.7; and
(b) report on such adjusted accounts in the terms set out in Clauses
3.5(b)(ii) and 3.5(b)(iii)
and the Specified Asset Value Calculation as annexed to such report and the
Specified Asset Value stated in such report shall be the Specified Asset
Value Calculation and the Specified Asset Value respectively for all
purposes of this Agreement and shall, in the absence of manifest error, be
final and binding on the Vendor and the Purchaser, and the date of such
report shall for all purposes of this Agreement be the date of
determination of the Specified Asset Value.
3.9 Following Completion and until the Specified Asset Value shall have been
agreed or determined the Purchaser and the Vendor shall:
(a) give or procure that the Accountants and the Independent Accountants
are given unrestricted access at all reasonable times to all books and
records of the Company which are in the possession or under the
control of the Vendor or the Purchaser (as the case may be); and
(b) generally provide the Accountants and the Independent Accountants with
such other information and assistance as they may reasonably require
(including access
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to and assistance at reasonable times from personnel employed by the
Vendor or the Purchaser, as the case may be) in relation to the
review, agreement or determination of the Specified Asset Value
Calculation and the Specified Asset Value.
3.10 The Vendor and the Purchaser shall use their respective reasonable
endeavours to procure that the Accountants comply with the requirements
placed upon them under this Clause 3 (including, without limitation, the
provisions relating to timing).
3.11 The fees and expenses of the Vendor's Accountants and of the Purchaser's
Accountants in respect of the matters to be dealt with by them under this
Clause 3 shall be for the account of the Vendor and the Purchaser
respectively.
3.12 If the Specified Asset Value is less than zero the Consideration shall be
reduced by an amount equal to the shortfall and the Vendor shall, within
14 days following the agreement or determination of the Specified Asset
Value pay such sum to the Purchaser. If the Specified Asset Value is more
than US$0 the Purchaser shall pay to the Vendor an amount by way of
additional Consideration equal to the excess, such additional
Consideration to be paid within 14 days following the agreement or
determination of the Specified Asset Value.
4. COMPLETION
4.1 Completion shall take place at the offices of Pfizer Inc in New York City,
New York, USA at 10.00 a.m. on 5 November 1996 or on such other date as
the Vendor and the Purchaser may agree in writing.
4.2 Save as the parties shall otherwise agree on Completion the Vendor shall
deliver to the Purchaser (or procure that the same are delivered to the
Purchaser's lawyers or solicitors in the United Kingdom):
4.2.1 transfers in favour of the Purchaser or as it shall direct of all
of the Contract Shares duly executed by the registered holders
thereof together with the certificates therefor;
4.2.2 the certificates of incorporation (original and on any re-
registration or change of name), the statutory books and the common
seals and any securities seals of the Company;
4.2.3 evidence of the extinguishment of any further liability of the
Company under the Company Loan Note;
4.2.4 the lists contemplated by paragraphs (i) and (ii) of Clause 3.1;
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4.2.5 evidence of the transfer into the Purchaser of the leases and/or
tenancies of the US Properties, and of transfer into the Company
and/or the Purchaser of the equipment and inventory used in the
business of the Company as specified in two Bills of Sale in the
agreed terms of even date;
4.2.6 evidence that there shall have been transferred and assigned to
the Company, by assignments in the agreed terms, certain
intellectual property rights as specified in such assignments;
4.2.7 evidence that agreements in the agreed terms shall have been
entered into between certain members the Pfizer Group and the
Company with respect to certain matters concerning intellectual
property rights (as more particularly set out in such agreements);
4.2.8 evidence that an agreement in the agreed terms shall have been
entered into concerning the provision of certain services to the
Company with respect to its business in Germany
4.3 Save as the parties shall otherwise agree on Completion the Vendor shall
procure:
4.3.1 the appointment as directors of the Company and as Secretary of
the Company of such person or persons as the Purchaser shall have
nominated and procure the resignation(s) of Tony Audley as
director of the Company and of Dr. Robert Thomas as the secretary
of the Company each delivering to the Purchaser a deed of
resignation in the agreed terms acknowledging that the person so
resigning has no claim for compensation for loss of office or
wrongful dismissal or unfair dismissal or redundancy payment or
any other claim against the Company;
4.3.2 the revocation (if required by the Purchaser) by the board of
directors of the Company of all authorities relating to bank
accounts and the giving by such board of authority to such persons
as the Purchaser may nominate to operate the same accounts or such
other accounts with the same or such other bank or banks as the
Purchaser may require.
4.4 Save as the parties shall otherwise agree on Completion the Purchaser
shall:
4.4.1 pay the Cash Consideration to the Vendor's account at Chase
Manhattan Bank NA in New York City, ABA No. 021000021 bank account
number 0361034655 in the name of the Vendor, by way of a wire
transfer so that Vendor will receive value in respect of the Cash
Consideration with effect from and including the Completion Date;
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4.4.2 issue to the Vendor the Loan Note;
4.4.3 execute and deliver to the Vendor the Shares Charge
4.4.4 deliver to the Vendor duly executed stock transfer forms and
share certificates in respect of the shares the subject of the
Shares Charge
4.5 On and following Completion the Purchaser undertakes to the Vendor that it
shall use its reasonable endeavours to procure the release of each relevant
company in the Pfizer Group from (i) the guarantee and/or suretyship given
in the lease dated 16 April 1992 relating to the property at Isaac Lord
Building, Short Street, High Wycombe (details of which appear in the
Disclosure Letter) and (ii) any liability under or in respect of the lease
of 293 Great Valley Parkway referred to in Part II of the Third Schedule,
and pending such release the Purchaser undertakes to the Vendor that it
shall indemnify and keep indemnified each relevant company in the Pfizer
Group in respect of such guarantee, suretyship, and liability and from and
against all losses, costs, liabilities, expenses, claims and demands
arising out of or in connection with the same.
4.6 This Agreement shall notwithstanding Completion remain in full force and
effect in regard to any of the provisions remaining to be performed or
carried into effect.
5. WARRANTIES
5.1 The Vendor hereby warrants to the Purchaser in the terms of the Fourth
Schedule and acknowledges that the Purchaser is entering into this
Agreement in reliance on each of the Warranties.
5.2 The Warranties are given subject to the Disclosed Matters.
5.3 In the absence of fraud on the part of the Vendor, the aggregate amount of
the liability of Vendor under this Agreement shall not exceed the amount of
the Cash Consideration plus the principal sum payable under the Loan Note
provided that the Vendor may, at its sole discretion, elect by notice in
writing to the Purchaser to satisfy all or any part of such liability by a
reduction in an equivalent amount of the principal sum payable under the
Loan Note (and in such event such reduction shall be given effect to and
the Vendor shall have no further liability to the Purchaser in respect of
that part of the aforementioned liability elected so to be satisfied).
5.4 No liability shall attach to Vendor under this Agreement unless the
aggregate amount of such liability shall exceed US$100,000 in which event
the liability of Vendor shall not be limited by this Clause 5.4 (but
without prejudice to the other provisions of this Clause 5).
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5.5 No liability shall attach to Vendor under this Agreement in respect of any
claim where the amount of such liability in respect of that claim is less
than US$5,000.
5.6 Purchaser acknowledges and agrees that:
5.6.1 it is a company experienced and knowledgeable in the medical
devices industry and in products of the sort produced and sold by
the Company , and is familiar with the issues, problems and
concerns faced by companies (such as the Company) operating in such
industry;
5.6.2 the Vendor and the Company have, prior to the date hereof, given
the Purchaser unrestricted access to all books, records, premises
and employees of the Company, and has also permitted the Purchaser
to speak and meet with such customers of and suppliers to the
Company as the Purchaser may have requested, for the purpose of the
Purchaser undertaking such due diligence as it thinks fit in
relation to the Company, its business and affairs;
5.6.3 it has carried out such inspections, reviews, and interviews as
it deems sufficient and is satisfied with the quality, quantity,
and completeness of information and assistance provided
5.7 The Vendor acknowledges that the Company has been selling the products
described in the Disclosure Letter since about 1992 under trade agreements
containing various warranties and representations to its customers,
examples of which have been provided to the Purchaser by the Vendor (and
are annexed to the Disclosure Letter) and the Vendor believes those
representations to be true. Nonetheless, the Vendor and Purchaser
acknowledge that they have seriously negotiated the many terms and
conditions of this Agreement and have thereby carefully allocated various
risks, costs and other matters between them and attempted to reduce any
uncertainty and to simplify resolution of any disputes which might arise
with respect to this Agreement. Notwithstanding the foregoing and FOR THE
AVOIDANCE OF DOUBT no representation or warranty is or has been given by
the Vendor (and this Agreement and the warranties shall be so construed
accordingly) to the Purchaser:
5.7.1 that the technology applicable to or used in the design,
manufacture, testing or labeling of blood gas sensors (or any other
products of the Company) is fit for the purpose for which such
products have been designed, or is otherwise appropriate or
represents the state of the art for making a blood gas sensor that
will perform in foreseeable settings with a degree of safety,
efficacy, or reliability satisfactory to user-practitioners,
patients or regulators; and/or
5.7.2 (although the Company believes that the products of the Company
are safe, effective, and represent the state of art for such
products and that its inspection,
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quality control, testing and record keeping procedures are
complete, adequate and accurate) that the products of the
Company, and/or their design and manufacture, and/or the
inspection, quality control, testing (both in vitro and in
vivo), clinical trials, or clinical uses of such products, are
or ever will be or can ever be made sufficiently free from
imperfections as to permit confidence in the performance of
such products, or that the records or record keeping with
respect to any and all of the foregoing is, or has been,
complete, adequate or accurate.
5.8 No claim shall be capable of being made against Vendor under this
Agreement unless written notice thereof (specifying full details of
the breach or other event to which such claim shall relate and the
Purchaser's bona fide estimate of the amount thereof) shall have been
given to Vendor promptly after a claim has arisen and in any event:
5.8.1 in the case of claims under those Warranties set out in
paragraphs 3,4 and 7 to 29 (inclusive) and paragraphs 47, 48
and/or 49 of the Fourth Schedule not later than the date which
is 12 months after the date of Completion;
5.8.2 in the case of claims under those Warranties set out in
paragraphs 1, 2 and/or 5 of the Fourth Schedule not later than
the date which is 18 months after the date of Completion;
5.8.3 in the case of claims under those Warranties set out in
paragraphs 30 to 45 (inclusive) of the Fourth Schedule not
later than the date which is 7 years after the date of
Completion
Any such claim which may be made shall (if it has not been previously
satisfied, settled or withdrawn) be deemed to be withdrawn at the
expiration of one year from the date of giving notice of such claim in
accordance with Clause 5.8 (or, in the case of notified claims falling
within Clause 5.20, one year from the date that the contingent
liability in question becomes an actual liability) unless legal
proceedings in respect thereof have been commenced by the issuing and
service of such proceedings against Vendor and the subject matter of
any such claim which shall be so deemed withdrawn shall not be capable
of being the subject of a further claim.
5.9 Payment of any claim under this Agreement shall pro tanto satisfy and
discharge any other claim under this Agreement which is capable of
being made in respect of the same subject matter.
5.10 No liability shall attach to Vendor in respect of a claim under this
Agreement to the extent that:
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5.10.1 such claim arises or is increased as a consequence of a change in
the law or a change or withdrawal of any previously published
practice or concession of any tax authority after the date
hereof;
5.10.2 such claim arises or is increased as the result of any provision
or reserve made in respect thereof in the Accounts or the
Management Accounts being insufficient by reason of any increase
in rates of taxation made after the date hereof or arises or is
increased as the result of the retrospective imposition of
taxation as a consequence of a change in the law after the date
hereof;
5.10.3 such claim or the events giving rise to such claim arise or such
claim is increased as a result of an act, omission or transaction
by or at the request of or with the approval of the Purchaser or
the Company or its directors, officers or employees effected
after Completion otherwise than in the ordinary course of
business as presently carried on by the Company or as required by
operation of law or any agreement of the Company which is in
existence prior to Completion;
5.10.4 such claim or the event giving rise to such claim would not have
arisen if the policies of insurance effected by the Company (or
equivalent policies) as at the Completion Date had been
maintained in force after Completion;
5.10.5 the liability giving rise to such claim has been taken into
account in the Management Accounts;
5.10.6 a provision or reserve (identified as such) in respect thereof is
made in the Management Accounts or to the extent that the subject
matter of the claim was taken into account in computing the
amount of any such provision or reserve;
5.10.7 such claim results from or is increased or extended by the change
of the accounting reference date of the Company on Completion or
any subsequent change thereafter or by any change in the
accounting policies of the Company after Completion.
5.11 The Vendor shall have no liability to the Purchaser under the Warranties
(or any of them) by reason of the bad trade debts of the Company, the
amount accrued for patient data module expenses and/or the amount accrued
for customer returns for repairs exceeding the amount provided therefor in
the Accounts or in the Management Accounts, or exceeding the amount allowed
therefor pursuant to Clause 3.2.
5.12 In assessing any liability of the Vendor under this Agreement there shall
be taken into account:
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5.12.1 any benefit (excluding taxation benefit) accruing to the
Purchaser or the Company as a direct consequence of the relevant
breach; and
5.12.2 the amount of any reserve or provision for liability within the
Accounts which has not been fully utilised at the date of claim
in respect of the relevant breach but to the extent so taken into
account shall not thereafter be available as a provision.
5.13 The effect of the application of Clauses 5.9 to 5.12 shall first be taken
into account for the purpose of determining the amount of liability for the
purposes of Clauses 5.4 and 5.5.
5.14 The Purchaser shall not be entitled to recover any sum in respect of any
claim for breach of any of the Warranties or otherwise obtain reimbursement
or restitution more than once in respect of any one breach of the
Warranties.
5.15 In the event that the Purchaser or the Company is entitled to recover from
a third party (whether by payment, discount, credit, relief or otherwise
howsoever) any sum in relation to any loss, liability or damage which is
the subject of a claim under this Agreement or which may give rise to a
claim under this Agreement, the Purchaser shall (or shall procure that the
Company shall):
5.15.1 notify the Vendor as soon as reasonably practicable and provide
such information and assistance as the Vendor may require
relating to such entitlement and the action taken or proposed to
be taken by the Purchaser or the Company in respect of it;
5.15.2 take (at the expense of the Vendor ) such reasonable steps or
proceedings as the Vendor may require and shall act in accordance
with any such requirements of the Vendor subject to the Purchaser
being indemnified by Vendor against all reasonable costs and
expenses incurred in connection therewith and shall keep the
Vendor promptly informed of the progress of any such steps,
proceedings or actions.
5.16 In the event of the Vendor having paid to the Purchaser an amount in
respect of a claim under this Agreement and subsequent to the date of
making such payment the Purchaser or the Company recovers from a third
party (whether by payment, discount, credit, relief or otherwise howsoever)
a sum which is referable to that payment then the Purchaser shall forthwith
repay or procure the repayment by the Company to the Vendor of so much of
the amount paid by the third party as does not exceed the sum paid by the
Vendor to the Purchaser less the reasonable costs of the Purchaser or the
Company in recovering such sum.
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5.17 In the event that the Purchaser or the Company shall be in receipt of any
claim by another person which might constitute or give rise to a claim
under this Agreement, the Purchaser shall as soon as reasonably practicable
notify the Vendor giving full details as far as practicable and shall not
settle or compromise any such claim or make any admission of liability
without the prior written consent of the Vendor such consent not to be
unreasonably withheld. The Vendor shall be entitled to require the
Purchaser to take or to procure that the Company takes (at the expense of
the Vendor) such reasonable steps or proceedings as Vendor may consider
necessary in order to mitigate any claim under this Agreement. The
Purchaser shall and/or shall procure that the Company shall act in
accordance with any such requirements of the Vendor subject to the
Purchaser being indemnified by the Vendor against all reasonable costs and
expenses incurred in connection therewith and shall keep the Vendor
promptly informed of the progress of such acts.
5.18 Where a breach of this Agreement shall be in respect of a matter where the
Company shall be insured against any loss or damage arising therefrom, the
Purchaser shall procure that the Company shall make and diligently pursue a
claim against its insurers for compensation for such loss or damage
suffered and any claim against the Vendor shall be limited (in addition to
all other limitations on the liability of the Vendor elsewhere referred to
herein) to the amount by which the amount of the loss or damage suffered by
the Purchaser as a result of such breach shall exceed the compensation paid
by the said insurers to the Company or the Purchaser.
5.19 In relation to any claim under this Agreement or any fact, matter, event or
circumstance which may give rise to a claim the Purchaser shall allow (and
shall procure that the Company shall allow) the Vendor, their advisers and
their agents to investigate any such claim, fact, matter, event or
circumstance and whether and to what extent any amount is payable in
respect thereof and shall make available (and shall procure that the
Company makes available) and shall use its best endeavours to procure that
the auditors (both present and then current) of the Company make available
to the Vendor, their advisers and their agents, all such property,
information and assistance (including access to properties and any of their
books, correspondence, audit papers or other documents or records and the
right to copy the same and making available employees and directors to give
assistance) as may reasonably be required by the Vendor.
5.20 If any claim under this Agreement shall arise by reason of some liability
of the Company which, at the time the claim is notified to the Vendor, is
contingent only, the Vendor shall not be under any obligation to make any
payment to the Purchaser in respect of such claim until such time as the
contingent liability shall become an actual liability.
5.21 Nothing in this Agreement shall be deemed to relieve the Purchaser from any
common law duty to mitigate any loss or damage incurred by it.
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5.22 Any amount paid by the Vendor to the Purchaser in respect of any breach of
this Agreement shall be treated as a reduction in the Consideration.
5.22 The Purchaser warrants to the Vendor that:
5.23.1 it has not relied on any representation, warranty, covenant or
undertaking of the Vendor or any other persons save for any
representation, warranty, covenant or undertaking expressly set
out in this Agreement. The Purchaser acknowledges that no
representation, warranty, covenant or undertaking (whether
express or implied, statutory or otherwise) made or alleged to
have been made by or on behalf of the Vendor in connection with
or arising out of the sale of the Contract Shares and which is
not expressly set out in this Agreement shall give rise to any
liability on the part of the maker or makers thereof or any other
person or persons who might otherwise be liable in respect of the
making thereof;
5.23.2 the Purchaser is duly incorporated and validly existing under the
laws of the State of Minnesota;
5.23.3 the Purchaser has power to enter into this Agreement and to
perform the obligations expressed to be assumed by it and has
taken all necessary corporate action to authorise the execution,
delivery and performance of this Agreement;
5.23.4 this Agreement has been duly executed by the Purchaser;
5.23.5 the execution, delivery and performance of the terms of this
Agreement by the Purchaser will not violate any provision of:
(a) any law or regulation or any order or decree of any
authority, agency or court binding on the Purchaser;
(b) the Articles of Incorporation or By-laws of the Purchaser;
(c) any loan stock, bond, debenture or other deed, mortgage,
contract or other undertaking or instrument to which the
Purchaser is a party;
5.23.6 in acquiring the Contract Shares the Purchaser is acting as
principal and not as agent or broker for any other person.
5.24 The Vendor undertakes that, in the event of any claim being made against
the Vendor whether under the Warranties or otherwise in connection with the
sale of the Shares to the Purchaser, the Vendor will not make any claim
against the Company, or against any employee of the Company (other than, in
respect of claims in excess of US$10,000, the
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Directors), on which or on whom the Vendor may have relied before agreeing
to any term of this Agreement or authorising any statement in the
Disclosure Letter.
5.25 Each of the Warranties will be construed as a separate Warranty and will
not be limited or restricted by reference to, or inference from, the terms
of any other Warranty.
5.26 For the purposes of references in this Clause 5 to the amount expressed in
US Dollars where claims or liability in respect of claims (as the case may
be) is ascertained in pounds sterling or in any currency other than US
Dollars then such amount shall be translated into US Dollars at an exchange
rate equivalent to the average exchange rate during the 30 day period
immediately prior to the date upon which such claim is first made or, where
claims are contingent and fall within Clause 5.20, the date upon which such
contingent liability becomes an actual liability.
6. CONFIDENTIAL INFORMATION
6.1 The Purchaser hereby undertakes to the Vendor that if Completion does not
take place it will not and will procure that no Related Party will without
the prior written consent of the Vendor at any time divulge or communicate
to any person any confidential information concerning the business,
accounts, finance or contractual arrangements or other dealings,
transactions or affairs of the Company which may be within or may come to
its knowledge and it shall use its reasonable endeavours to prevent the
publication or disclosure of any such confidential information concerning
such matters and it shall forthwith return or procure the return of all
documents and copies thereof relating to such arrangements or affairs
unless such information or such documents are generally available to the
public or they were obtained otherwise than from Vendor or its advisers or
agents.
6.2 Vendor hereby undertakes to the Purchaser and its Affiliates that it will
not at any time after Completion divulge or communicate to any person other
than to its professional or financial advisers or to officers or employees
of the Vendor or of other companies in the Pfizer Group or to the extent
required by any applicable law or by the rules or regulations of the NYSE
or any other recognised investment exchange (as defined by section 207 of
the Financial Services Act 1986) or by any other regulatory body , or by
the Internal Revenue Service or any other tax authority or equivalent body
in any jurisdiction, any confidential information concerning the business,
accounts, finance or contractual arrangements or other dealings,
transactions or affairs of the Company.
7. PENSION PROVISIONS AND EMPLOYEES
7.1 The Company is the principal employer under the Biomedical Sensors Limited
Staff Benefits Plan (the "Plan") which is an exempt approved scheme within
the meaning of Section 592(1) of the Taxes Act 1988. It is an insured
arrangement with London & Manchester Insurance Company Limited and is
contracted-out of the State earnings
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related pension scheme. The Plan provides pension and other benefits for
and in respect of certain employees of the Company related to their final
salaries at retirement.
7.2 The Purchaser agrees to offer employment as of the Completion Date to each
of the Specified Individuals at a rate of pay at least equal to the rate of
pay for each such Specified Individual in effect on the Business Day
immediately preceding the Completion Date, such rate being set out in
Annexure 4. Annexure 4 sets forth the name of each of each Specified
Individual, his current rate of pay, position, date of hire and summary
details of severance benefits. For the purposes of its obligations under
this Clause 7.2 the Purchaser shall be entitled to rely on the accuracy of
Annexure 4. The Purchaser shall have no obligation whatsoever with regard
to any employees of the Vendor or of any company in the Pfizer Group in the
United States and Germany, including but not limited to retired employees,
who are not or shall have ceased to be employees in the United States and
Germany as of the Business Day immediately preceding the Completion Date,
or to employees in the United States and Germany who do not accept the
offer of employment given by the Purchaser in accordance with this Clause
7.2 and who do not work for the Purchaser for at least one day. The
Purchaser shall be solely responsible for all salaries or wages accruing on
or after the Completion Date with respect to the employees in the United
States and Germany whom the Purchaser is obliged to offer employment as
aforesaid. The Purchaser may, at its discretion, change the conditions of
employment after the Completion Date except for the pay comparability
requirements and severance pay obligations described in Annexure 4 which
shall remain unchanged for a period of six (6) months from the Completion
Date. Notwithstanding anything to the contrary herein, after such six (6)
month period, the Purchaser shall provide pay and severance plans, programs
and policies which are no less favourable than those provided to other
similarly situated employees of the Purchaser.
7.3 The Purchaser agrees to procure that the pay comparability requirements and
severance pay obligations enjoyed by employees of the Company at the
Completion Date shall remain unchanged for a period of six (6) months from
the Completion Date. After such six (6) month period, the Purchaser shall
procure that such employees shall continue to enjoy pay and severance
plans, programs and policies which are no less favourable than those
provided to other similarly situated employees of the Purchaser.
7.4 Except as expressly provided herein, nothing contained herein, expressed or
implied, is intended to confer upon any employee of the Vendor or of any
company in the Pfizer Group any right to continued employment with the
Purchaser or any Affiliate of the Purchaser for any period by reason of
this Agreement. In addition, the provisions of this Agreement, in
particular Clause 7.2, are for the sole benefit of the parties to this
Agreement and are not for the benefit of any third party.
7.5 Vendor undertakes that, save with the consent of the Purchaser and/or the
Company, during the period of 2 years following completion it will not
knowingly, and whether
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directly or indirectly, (i) solicit the services of any employees of the
Company or (ii) approach any such employees with a view to engaging their
services whether as employees or otherwise.
8. PRODUCT LIABILITY INDEMNITIES
8.1 The Vendor shall indemnify and keep indemnified the Purchaser and the
Company from and against all proceedings and claims against, and
liabilities of, the Company arising after Completion in respect of any
personal injury occurring prior to Completion arising out of the use of any
products manufactured or supplied by the Company prior to Completion
PROVIDED THAT notice of any claim by the Purchaser or by the Company under
this Clause 8.1 shall have been given, in accordance with Clause 8.2,
within three (3) years following the date of Completion. For the avoidance
of doubt the Vendor shall have and bear no liability of whatsoever nature
in respect of (i) any personal injury occurring on or after Completion
except to the extent directly attributable to any action or failure to act
on the part of the Company prior to Completion, (ii) any personal injury
arising or resulting from any products, or the use of any products,
manufactured or supplied by the Company on or after Completion or (iii) any
such proceedings, claims and liabilities which shall not have been notified
to the Vendor within the period of three (3) years as aforesaid.
8.2 The Purchaser shall notify (or procure the Company to notify) the Vendor of
any proceedings, claims and liabilities which could, or might, be the
subject of a claim under Clause 8.1 (such proceedings, claims and
liabilities being hereinafter referred to as "Relevant Claims") as soon as
such Relevant Claims are commenced, threatened, made, instituted or arise.
Such notification shall include full details of any such Relevant Claims
and shall be accompanied by any relevant documentation received by the
Purchaser and/or the Company in respect thereof.
8.3 The Purchaser agrees and undertakes that the Vendor shall have the right to
undertake, in the Company's name, the conduct of any negotiations or
defence in relation to any Relevant Claims, whether or not legal
proceedings are instituted, and to compromise or settle any Relevant Claims
on any basis that it thinks fit, subject to the Vendor agreeing as follows:
8.3.1 that it will undertake such negotiations and/or defence with
appropriate skill and attention and shall use its best endeavours
to adhere to all procedural matters and requirements required for
the proper conduct of any litigation;
8.3.2 that it will keep both the Purchaser and the Company informed of
the progress of such negotiations and defence and consult with
both the Purchaser and the Company in relation thereto;
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8.3.3 that it will indemnify the Company against all legal costs and
expenses incurred by the Vendor in respect of the conduct of such
negotiations and defence, all amounts agreed to be paid pursuant
to any compromise or settlement of any Relevant Claims and all
damages, costs and expenses in relation to any Relevant Claims in
the event of a finding of liability against the Company.
8.4 Until such time as the Vendor shall elect, under Clause 8.3, to undertake
the conduct of any negotiations or defence in relation to any Relevant
Claims, the Purchaser agrees and undertakes to procure that the Company
will itself, to the extent that the Company shall reasonably be in a
position so to do, vigorously challenge and defend any Relevant Claims,
whether or not legal proceedings are instituted and that:
8.4.1 the Company will undertake any negotiations and/or defence with
appropriate skill and attention and shall use its reasonable
endeavours to adhere to all reasonable procedural matters and
requirements required for the proper conduct of any litigation;
8.4.2 the Company will in the selection of legal counsel to represent
it in such negotiations and/or defence consult the Vendor and
accede to its reasonable request;
8.4.3 the Company and the Purchaser will each keep the Vendor informed
of the progress of such negotiations and/or defence and will
consult closely with the Vendor at all stages thereof and will
take no significant decisions in relation thereto without first
giving the Vendor reasonable opportunity to comment on the same
the Vendor will indemnify the Company against all legal costs and expenses
incurred by the Company in respect of the conduct of any negotiations
and/or defence in relation to any Relevant Claims and, subject to
compliance by the Purchaser and the Company with the foregoing and with
Clause 8.7, all amounts agreed to be paid pursuant to any compromise or
settlement of any Relevant Claims and all damages, costs and expenses in
relation to any Relevant Claims in the event of a finding of liability
against the Company.
8.5 The Purchaser agrees to allow, and to procure that the Company will allow
the Vendor and its legal and other professional advisers, upon the giving
of reasonable notice, to all of the Company's records which may in the
opinion of the Vendor be relevant to any Relevant Claims, to all of the
Company's records which may be relevant to any product which is the subject
of any Relevant Claims and to such of the Company's employees as the Vendor
shall consider desirable or necessary in connection with assessing any
Relevant Claims and/or the undertaking of any negotiations and/or defence
in respect of any Relevant Claims.
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8.6 The Purchaser shall itself bear, or procure that the Company bears, any
costs incurred by either the Purchaser or the Company in complying with
their obligations under Clause 8.5.
8.7 The Purchaser agrees and undertakes that neither the Purchaser nor the
Company shall act in any manner or do anything, which might compromise or
prejudice any negotiations or defence in respect of any Relevant Claims
without, in any case, the Vendor giving its approval thereto, save that if
the Vendor shall not within a reasonable time elect to undertake the
conduct of any negotiations or defence in respect of any Relevant Claims
then the Vendor shall not unreasonably withhold the giving of such approval
as aforesaid. In the event of any breach of this Clause 8.7 the Vendor
shall cease to have any liability under Clause 8.1.
8.8 The Purchaser shall indemnify and keep indemnified, and shall procure that
the Company shall indemnify and keep indemnified, on a joint and several
basis, the Vendor for itself and also on behalf of each member of the
Pfizer Group from and against all proceedings, claims and liabilities in
respect of any personal injury occurring after Completion and whether
arising out of the use of any products manufactured or supplied by the
Company prior to or after Completion which shall not expressly be the
subject of the indemnity given by the Vendor in Clause 8.1.
9. WHOLE AGREEMENT AND PURCHASER'S REMEDIES
9.1 This Agreement (together with any documents referred to herein) constitutes
the whole agreement between the parties hereto.
9.2 The Purchaser (for itself and as agent and trustee for and on behalf of
each Related Party and their respective directors, officers, employees,
agents and advisers) irrevocably and unconditionally waives any right it
may have to claim damages and/or to rescind this Agreement in respect of
any false or misleading statement (other than a statement made
fraudulently) made to it or a Related Party or any of their respective
directors, officers, employees, agents and advisers and upon which it
relied in entering into this Agreement but which is not expressly set out
in this Agreement.
9.3 The Purchaser (for itself and as agent and trustee for and on behalf of
each Related Party and their respective directors, officers, employees,
agents and advisers) agrees that no representation, warranty, covenant or
undertaking is or was given in or in relation to the Descriptive Memorandum
or, unless and to the extent that any of the Warranties expressly applies
to the same, any information, expression of opinion or future intention,
forecast, speculation, assessment, projection, illustration, estimate,
budget or advice contained or referred to in the Descriptive Memorandum or
in any documentation made available to, or inspected by, the Purchaser or
its advisers in connection with the due diligence undertaken by it in
relation to the Company.
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9.4 No breach of this Agreement shall in any event give rise to a right on the
part of the Purchaser to rescind or terminate this Agreement. The sole
remedy of the Purchaser in respect of any breach of this Agreement shall be
in damages and shall be subject to the limitations contained in this
Agreement.
9.5 The Purchaser acknowledges and agrees that the express terms of this
Agreement are in lieu of all warranties, conditions, terms, undertakings
and obligations implied by statute, common law or otherwise, all of which
are hereby excluded to the fullest extent permitted by law.
9.6 The Vendor hereby confirms and undertakes to the Purchaser that it will not
(and will procure that each of its Affiliates will not) at any time after
the Completion Date in any circumstances bring any action claim or demand
against the Company in respect of the Company Loan Note (or any
indebtedness of the Company represented by the Company Loan Note)
10 ACCESS TO BOOKS AND RECORDS ETC
10.1 The Purchaser acknowledges:
(i) that, pursuant to an Agreement dated 30 June 1988, as amended by a
so-called First Amendment and a so-called Second Amendment, (the
`Original Purchase Agreement') made between the then shareholders
(the "Sellers") of Biomedical Sensors (Holdings) Limited (`BSHL')
(which was at that time, and so remained until 23 October 1996, the
immediate parent company of the Company) and Howmedica International
Inc (`HII') (which is the subsidiary of the Vendor) HII purchased
the entire issued share capital of BSHL;
(ii) that it has been provided with a copy of the Original Purchase
Agreement;
(iii) that pursuant to Section 2.6 (i) of the Original Purchase Agreement
HII undertook certain obligations concerning the keeping by the
Company of certain books and records, the provision of certain
information to the Sellers and permitting certain access to and
examination of such books and records;
(iv) that HII's obligations under such Section 2.6(i) aforesaid are not
yet discharged; and
(v) that if HII were unable to discharge its obligation sunder Section
2.6(i) aforesaid it might be in breach thereof and incur liability
and/or be subject to other legal remedies available to Sellers
24
<PAGE>
10.2 The Purchaser undertakes and represents to the Vendor , for itself, and on
behalf also of HII, (i) that the Purchaser will procure that the Company
shall preserve for at least 30 months following the date hereof the books
and records of the Company respecting sales of the MPC (as defined in the
Original Purchase Agreement) and all other information falling within
Section 2.6(i) aforesaid, including any amounts due to the Sellers (ii)
that the Purchaser will procure that the Company will not destroy any such
books and records without first notifying HII and the Vendor of such
intention and giving the Vendor and HII reasonable opportunity themselves
to take possession of such books and records or otherwise to take copies
thereof (iii) that the Purchaser will procure that the Company will permit
the Vendor, HII and/or the Sellers and/or any other persons contemplated
to have access by Section 2.6(i) aforesaid (or any of them) access to all
such records and books as will enable HII fully to discharge its
obligations under the Original Purchase Agreement and, in particular,
Section 2.6(i) thereof and (iv) that if, within the period of 30 months
following the date hereof the Company, or the business or undertaking
thereof, shall be sold or transferred to any other person the Purchaser
will procure that the purchaser or transferee enters into and delivers to
the Vendor and HII a similar undertaking to this one in favour of the
Vendor and HII.
10.3 The Purchaser agrees that at any time, upon reasonable notice thereof
being given to the Purchaser and at the cost of the Vendor, the Vendor may
take and retain such copies of the Company's records as it may require in
order to be able to comply with its obligations under Section 2.6(i)
aforesaid. The Purchaser also acknowledges that the Vendor and/or HII has
retained copies of certain of such books and records for such purpose and
agrees that the Vendor and/or HII may retain these notwithstanding
Completion taking place.
10.4 The Purchaser acknowledges that the Company has itself given to the Vendor
and to HII acknowledgments, undertakings and representations in terms
substantially similar (mutatis mutandis) to these set out in Clauses 10.1,
10.2 and 10.3 above.
10.5 Purchaser agrees forthwith to give directly to HII acknowledgments,
undertakings and representation in terms substantially similar to these
set out in Clause 10.1, 10.2 and 10.3
11. GENERAL PROVISIONS
11.1 COSTS
Each of the parties hereto shall pay its own costs of and incidental to
the negotiation, preparation and completion of this Agreement.
11.2 ANNOUNCEMENTS
No announcement or circular in connection with the subject matter of this
Agreement shall be made by or on behalf of the Vendor without the prior
approval of the Purchaser
25
<PAGE>
or by the Purchaser without the prior approval the Vendor save that in the
event that the Purchaser is required by any applicable law or by the
regulations of any stock exchange or other securities market on which any
shares in or other securities of the Purchaser are listed to make any
announcement or issue any circular the Purchaser may do so after first
consulting the Vendor as to the contents thereof.
11.3 TIME OF THE ESSENCE
Time shall be of the essence as regards any date or period mentioned in
any Clause of this Agreement save only to the extent that any date or
period may be altered by mutual agreement between the Vendor and the
Purchaser whereupon time shall be of the essence as regards such date or
period as so altered.
11.4 VARIATION
No modification, variation or amendment of this Agreement shall be
effective unless such modification, variation or amendment is in writing
and has been signed by or on behalf of both the parties hereto.
11.5 NO ASSIGNMENT
The Purchaser shall not be entitled to assign the benefit of this
Agreement (or any part of it) to any other person and the Vendor shall not
be entitled to assign its obligations under this Agreement (or any part of
it) to any other person. The Purchaser confirms to Vendor that it is not
acquiring the Contract Shares with a view to disposing of any of the
Contract Shares or any of the assets of the Company other than in the
ordinary course of business.
11.6 FURTHER ASSURANCE
At any time after Completion each of the parties shall, at the request and
cost of the other, execute such further documents and do such acts and
things as may reasonably be necessary for the purpose of giving effect to
the provisions of this Agreement.
11.7 INVALIDITY
If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable (in whole or in part) such provision or part shall to that
extent be deemed not to form part of this Agreement but the remainder of
this Agreement shall continue in full force and effect.
11.8 COUNTERPARTS
26
<PAGE>
This Agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts
shall together constitute one and the same agreement.
11.9 GOOD FAITH
In the implementation of this Agreement the parties undertake to observe
the utmost good faith in their dealings with each other.
11.10 ACTIONS REQUIRED OF THIRD PARTIES
Each of the parties agrees to use its reasonable endeavours to ensure, so
far as it is reasonably practicable so to do, that any actions required
of any member of the same group of companies as either such party in
order to give effect to the transaction contemplated by this Agreement
are duly undertaken.
11.11 GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by English law and the parties hereto
hereby submit to the jurisdiction of the English Courts.
11.12 NOTICES
Any notice required or authorised to be given hereunder and any process
to be served in relation to or arising out of this Agreement ("NOTICE")
shall be in writing and may be served personally or delivered to the
address of the relevant party or parties as specified below, or to such
other address as any one of the parties may from time to time notify to
the other parties hereto for this purpose by Notice, or sent by
registered mail (return receipt requested), certified mail or by a
courier (with a receipt being obtained) addressed to the address of the
relevant party or parties as specified below or to such other address as
any one of the parties may from time to time notify to the other parties
hereto for this purpose by Notice:
11.12.1 if to the Vendor:
Address: 235 East 42nd Street New York, NY 10071
Attention: Robert C. Ross
11.12.2 if to the Purchaser:
Address: 2658 Patton Road
St. Paul
Minnesota 56118
Attention: Chief Financial Officer
27
<PAGE>
11.13 SERVICE OF NOTICES
Any Notice served personally shall be deemed to have been given upon such
service and any Notice delivered to the address specified in Clause 11.12
shall be deemed to have been given when delivered. PROVIDED ALWAYS that
if a Notice which is served personally or delivered is given on a day
that is not a Business Day the relevant Notice shall be deemed to be
given on the Business Day next following that day and PROVIDED FURTHER
that if a Notice which is served personally or delivered is given after
5.30 p.m. on a Business Day the relevant Notice shall be deemed to be
given at 9.30 a.m. on the Business Day next following such Business Day.
AS WITNESS the hands of the parties hereto or their duly authorised
representatives the day and year first before written.
28
<PAGE>
FIRST SCHEDULE
(PARTICULARS OF THE COMPANY AS AT THE DATE HEREOF, PRIOR TO COMPLETION)
Date of incorporation: 9th November 1982
Place of Incorporation: England and Wales
Registered Number: 1676781
Registered Office: 5 Manor Court Yard, High Wycombe, Buckinghamshire
HP13 5RE
Share capital (authorised): (Pounds)29,829,089 divided into 22,829,089
Ordinary shares of (Pounds)1 each in the capital
of the Company and 7,000,000 9% non-cumulative
redeemable preference shares of (Pounds)1 each in
the capital of the Company.
Share capital (issued): 22,829,089 Ordinary shares issued fully paid or
credited as fully paid and 7,000,000 9% non-
cumulative redeemable preference shares issued
fully paid.
Shareholders
- ------------
H Inc. 22,479,089 Ordinary shares of (Pounds)1 each in
the capital of the Company
7,000,000 9% non-cumulative redeemable preference
shares of (Pounds)1 each in the capital of the
Company
Directors: Tony George Robert Audley
Roy Johnson
Peter Albrighton
Secretary: Dr Robert Thomas
Accounting Reference Date: 30th November
Auditors: KPMG
Subsisting Mortgages, debentures and other registered charges: There exists a
charge over the George Street Premises in favour of Nuffield College in respect
of monies due or to become due under a licence for alterations dated 21.12.83.
29
<PAGE>
SECOND SCHEDULE
(PARTICULARS OF CONTRACT SHARES AND ALLOCATION OF THE CONSIDERATION)
<TABLE>
<CAPTION>
(1) (2) (3)
CONTRACT AMOUNT OF AMOUNT OF
SHARES CONSIDERATION CONSIDERATION
TO BE PAID IN TO BE SATISFIED BY
CASH (US$) FOR THE THE ISSUE OF THE
CONTRACT SHARES LOAN NOTE (US$
SPECIFIED IN COLUMN (1) PRINCIPAL AMOUNT)
<S> <C> <C>
22,829,089 $1,150,000 $5,575,000
Ordinary Shares
of (Pounds)1 each
7,000,000 $350,000 $1,725,000
9% non-cumulative
redeemable
preference shares
of (Pounds)1 each
------------ -------------
US$1,500,000 US$7,300, 000
============ =============
</TABLE>
30
<PAGE>
THIRD SCHEDULE
(DETAILS OF THE PROPERTIES)
PART I
(UK PROPERTIES)
1. GEORGE STREET, HIGH WYCOMBE, BUCKS
Under lease dated 1st December 1980 between:
(1) Warden and Fellows of Nurfield College in the University of Oxford
(2) JM Jones & Sons (Holdings) Limited
Term: 25 years from 29.09.80
Current Rent: (Pounds)105,000 p.a.
2. SHORT STREET, HIGH WYCOMBE, BUCKS
Lease dated 16.04.92 between:
(1) AJ and SC Packford
(2) The Company
(3) Pfizer Inc (surety)
Term: 4 years from and including 16.04.92 Extended by a Deed of Variation
dated 15.04.96 (to which Pfizer Inc is not a party) to 5 years from and
including 16.04.92
Current Rent: (Pounds)41,000 p.a. (As adjusted by deed of variation)
3. 4 MANOR COURT YARD, HIGH WYCOMBE, BUCKS
Lease of 4 Manor Court. Yard (formerly Unit 1D) dated 16.01.90 between:
(1) Bluevale Limited
(2) The Company
Term: 25 years to 15.01.2015 (break clause at Jan 1998)
Current Rent: (Pounds)27,500
31
<PAGE>
Title No: 4 Manor Court: BM 147113
4. 5 MANOR COURT YARD, HIGH WYCOMBE, BUCKS
Lease of 5 Manor Court. Yard (formerly Unit 1E) dated 16.01.90 between:
(1) Bluevale Limited
(2) The Company
Term: 25 years to 15.01.2015 (break clause at Jan 1998)
Current Rent: (Pounds)27,500
Title No: 5 Manor Court : BM 147114
PART II
(US PROPERTIES)
1. 293 Great Valley Parkway Great Valley Corporate Center, Malvern PA 19355
between:
(1) Morehall Associates Limited Partnership
(2) Biomedical Sensors, a division of Shiley Inc.
Agreement for lease of premises dated 11.11.91
Term: to 31 October 1997
Current Rent: US$25,650
2. Paoli Technology Enterprise Center Lease dated 24.07.87 between:
(1) PTEC Associates, Inc.
(2) Biomedical Sensors Inc
Term: Annual (renewable July)
Current Rent: US$27,000
Total annual costs: US$35,000
32
<PAGE>
FOURTH SCHEDULE
THE WARRANTIES
In accordance with Clause 5 of the Agreement the Vendor gives each of the
following warranties, representations and undertakings subject to the matters
stated in the Disclosure Letter and Clause 5 but otherwise subject to no
qualification whatever.
ACCOUNTS AND RECORDS
1.1 As at the Accounting Date the balance sheet contained in the Accounts gave
a true and fair view of the state of affairs of the Company at the
Accounting Date.
1.2 As at the Accounting Date the profit and loss account contained in the
Accounts gave a true and fair view of the profit of the Company during the
financial period to which it related.
2 Copies of the Management Accounts have been supplied to the Purchaser and,
so far as the Vendor is aware, the information in such Accounts is fair and
not misleading.
3 The information contained in Schedule 1 and the details of the Contract
Shares contained in Schedule 2 are true and accurate in all respects.
4.1 So far as the Vendor is aware compliance has been made with all legal
requirements in connection with the formation of the Company and all issues
and grants of shares, debentures, notes, mortgages or other securities of
the Company.
4.2 So far as the Vendor is aware the statutory books (including all registers
and minute books) of the Company have been properly kept and contain an
accurate record of the matters which should be dealt with in those books
and no notice or allegation that any of them is materially incorrect or
should be rectified in any material way has been received.
POSITION SINCE THE ACCOUNTING DATE
5. Since the Accounting Date there has not been:
33
<PAGE>
5.1 any commitment made involving any single item of material capital
expenditure by the Company in excess of (Pounds)30,000, nor
commitments made by the Company in aggregate involving capital
expenditure in excess of (Pounds)300,000;
5.2 any acquisition by the Company of any asset otherwise than in the
ordinary course of business;
5.3 any acquisition by the Company of any other business or body corporate
or any part thereof or any share or shares therein;
5.4 except in the ordinary course of business any disposal of any of the
assets of the Company;
5.5 save with respect to the issue of shares in connection with the
matters mentioned in Recital (B) , any issue of share or loan capital
by the Company, any increase in the authorised share capital of the
Company, any purchase or redemption by the Company of any shares in
the Company or any reduction of the capital of the Company;
5.6 except for any dividends provided for in the Accounts, any
distribution by the Company (whether of capital or income) or dividend
or bonus declared or paid on any part of its share capital.
5.7 any loan made by the Company which remains outstanding which has
become due and payable in whole or in part to the Company;
5.8 any trade and business of the Company which has been carried on other
than in the ordinary and normal course;
5.9 any change to Company's accounting reference date.
CAPITAL
6.1 The Company has not allotted or issued any share capital currently in
existence other than the shares shown in Schedules 1 and 2 as being issued.
6.2 No Contract has been entered into which requires or may require the Company
to allot or issue any share or loan capital and the Company has not
allotted or issued any securities which are convertible into share or loan
capital.
THE PROPERTIES
34
<PAGE>
7.1 The Third Schedule specifies all the land and buildings owned, used or
occupied by the Company whether freehold or leasehold or of any other
tenure and whether situated in England and Wales or elsewhere.
7.2 The Company is not now nor will at Completion be under any obligation to
purchase, lease, sublease, use or otherwise occupy or to acquire any
rights of any nature whatsoever in respect of any other land or buildings
wheresoever situated.
7.3 The Properties are now and will at Completion be of the respective tenures
specified in that Schedule
7.4 All deeds and other documents necessary to prove or show title to each of
the Properties are in the possession of or held to the order of the
Company
8.1 The UK Properties are free from all mortgages, charges, liens, debentures
(whether fixed or floating), options, covenants, agreements, claims and
overriding interests (as defined in section 70 of the Land Registration
Act 1925) or any other encumbrance affecting the Company's title to the
Properties.
8.2 The US Properties are free from all mortgages, liens and other
encumbrances affecting the Company's title to the US Properties.
8.3 As far as the Vendor is aware there are no subsisting disputes or
outstanding notices or, in the case of leasehold property, rights for the
lessor thereof to break the term.
9. All rents and service charges have been paid to date and during the
Company's ownership of the relevant Property so far as the Vendor is aware
no notice of any alleged material breach of any of the terms of any lease
or tenancy agreement under which any of the Properties is held has been
received by the Company.
10.1 All leases, tenancies, licences and agreements to which any of the
Properties are subject are either summarised in the particulars thereof
set out in the Third Schedule hereto or are referred to or annexed to the
Disclosure Letter.
10.2 There are no rent reviews in the course of being determined or, save as
disclosed in the leases, tenancy agreements, licence agreements or other
agreements supplied to the Purchaser by the Vendor, exercisable by the
lessor from a date prior to the Completion Date.
OTHER ASSETS
11. The Company is the owner of all fixed and loose plant, equipment, raw
materials and vehicles and every other asset reflected in the accounts and
used in connection with its
35
<PAGE>
business (hereinafter together referred to as "plant and equipment"). So
far as the Vendor is aware the plant and equipment is free from any credit
sale, conditional sale or hire purchase agreement or agreement reserving
title to any other person or for payment on hiring or deferred terms
except for:
11.1 any hire or lease agreement in the ordinary course of business;
11.2 reservation of title provisions in respect of goods and materials
acquired by the Company in the ordinary course of business; and
11.3 liens arising in the ordinary course of business by operation of
law.
LOANS, CHARGES AND GUARANTEES
12.1 The Company has not now outstanding and has not agreed (conditionally or
unconditionally) to create any loan capital (whether secured or unsecured)
or any mortgage, debenture, charge, lien or other encumbrance over any of
its assets or undertaking whether present or future.
12.2 So far as the Vendor is aware the Company had no outstanding indebtedness
as of 27 September 1996 which is not reflected in the Management Accounts
as at 27 September 1996.
13.1 No guarantee or indemnity has been given or granted by the Company in
respect of the discharge of the liabilities or the performance of any of
the obligations (whether present or future) of any other person or any
suretyship in respect thereof.
13.2 The Company does not have the benefit of any guarantee or indemnity given
by any third party save as disclosed in the Disclosure Letter.
14. The Company is not in material default under the terms of any borrowing
made by it.
15. There are no loans made by or to the Company to or by any of its directors
or members.
16. The Company has not applied for or received any grant, subsidy, payment or
allowance from any government, authority, body or agency (whether supra-
national, national, regional or local) which may at any time be or become
repaid or repayable.
INSOLVENCY
36
<PAGE>
17.1 No order has been made and no resolution has been passed for the winding-
up of the Company and no meeting has been convened and so far as the
Vendor is aware no petition has been presented for the purpose of winding-
up the Company.
17.2 No administration order has been made and so far as the Vendor is aware no
petition for such an order has been presented in respect of the Company.
17.3 No receiver (which expression shall include an administrative receiver)
has been appointed in respect of the Company or all or any of its assets.
17.4 The Company is not insolvent or unable to pay its debts within the meaning
of section 123 of the Insolvency Act 1986.
17.5 No voluntary arrangement has been approved under Part I Insolvency Act
1986 and no compromise or arrangement has been sanctioned under section
425 of the Act in respect of the Company.
17.6 No distress, execution or other process which remains undischarged has
been levied on the assets of the Company, the Company has not stopped the
payment of its debts or received a written demand pursuant to Section
123(1)(a) Insolvency Act 1986 and it is not unable to pay its debts within
the meaning of Section 123 Insolvency Act 1986 nor could it be deemed to
be unable to pay its debts within the meaning of Section 123 Insolvency
Act 1986.
17.7 The Vendor is not aware that the Company has received notice of a
disqualification order made pursuant to the provisions of the Company
Directors Disqualification Act 1986 against any current officer or
employee of the Company.
CONDUCT OF BUSINESS, CONTRACTS, ETC.
18.1 The Company is not a party to any agreement a copy of which has not been
supplied to the Purchaser or details of which have not been given in the
Disclosure Letter:
18.1.1 which is of a long term nature or involves obligations of a
material nature or magnitude; nor
18.1.2 which is outside the ordinary course of business of the Company.
19.1 So far as the Vendor is aware, with respect to each medical device
currently manufactured or marketed by the Company, excepting medical
devices currently manufactured or marketed by the Company in Japan,
application has been made by or on behalf of the Company for or there has
been obtained by or on behalf of the Company all applicable
37
<PAGE>
licenses, registrations, approvals, clearances, and authorisations
required by local, state, or federal agencies, foreign or domestic,
regulating the safety, effectiveness, manufacturing or market clearance of
such medical device which are necessary for such medical device to be
manufactured or marketed in the jurisdiction or jurisdictions in which it
is currently manufactured or marketed.
19.2 With respect to each medical device currently manufactured or marketed by
the Company in Japan, the Company has, where necessary for such medical
device to be manufactured or marketed, a `Shonin' Product Approval/Licence
(but no warranty is given as to whether the Company has any import
licences which may be necessary for such medical device to be manufactured
or marketed in Japan).
19.3 So far as the Vendor is aware, all material written data and information
submitted by the Company to all such authorities are truthful and accurate
in all material respects and no material facts have been omitted from such
submissions
20. There are no agreements in force which (whether conditionally or
unconditionally) require or confer the right to require the allotment or
issue of any share capital of the Company now or at any time in the future
and no person is entitled to any option in respect of any of the Contract
Shares.
DIRECTORS AND EMPLOYEES
21. So far as the Vendor is aware there is no subsisting contract of service
between the Company and any director or employee of the Company which
cannot be terminated without breach of contract by giving prior notice of
three months or less under which emoluments are at a rate in excess of
(Pounds)30,000 per annum.
22. There has not since the Accounting Date been any material alteration in
the terms of employment or any material increase in any fees or emoluments
paid or payable to any director or employee of the Company.
23. There is no share option or share incentive scheme of any nature
whatsoever in operation by or in relation to the Company for any of its
directors or employees.
24. So far as the Vendor is aware no employee of the Company as at the date
hereof has been engaged by the Company since the Accounting Date other
than in the ordinary course of business and/or so far as the Vendor is
aware no person employed by the Company at or since the Accounting Date
has, since the Accounting Date, ceased or given or received notice to
cease, to be so employed.
25. So far as the Vendor is aware the Company is not involved, and has not
during the 12 months prior to the date of this Agreement been involved, in
any strike, lock-out,
38
<PAGE>
industrial or trade dispute or any negotiations with any trade union or
body of employees.
PENSIONS
26.1 Full particulars of all plans, schemes, or arrangements in relation to
death, disability or retirement for or in respect of the employees of the
Company have been disclosed.
26.2 Full particulars of the basis on which the Company makes, or is liable to
contributions to any of the plans, schemes or arrangements referred to in
paragraph 26.1 hereof have been disclosed in writing to the Purchaser.
27. All contributions which are payable by the Company in respect of any of
the plans, schemes or arrangements referred to in paragraph 26.1 hereof
and all contributions due from the employees of the Company as members of
such plans, schemes or arrangements have been duly made at the date
hereof.
28. With the exception of the pension scheme details of which appear in the
Disclosure Letter there are no:
28.1 agreements or arrangements for the provision of any relevant
benefits (as defined in Section 612(1) of the Taxes Act 1988) or
similar benefit (including any pension, annuity, lump sum, gratuity
or other like benefit) to be given on retirement, or in anticipation
of retirement or after retirement in connection with past service,
or to be given on or in anticipation of or in connection with any
change in the nature of the service of the person in question or on
death or disability; or
28.2 informal or ex-gratia pension arrangements, customs or practices
(whether or not legally enforceable or schemes involving the Company
for the provision of such benefits;
for any employee, former employee, director or former director, officer or
former officer of the company or for any dependents of any such person and
no proposals for such arrangements have been announced by the Company.
LITIGATION
29.1 As at the date hereof the Company is not involved in any material
litigation, arbitration, prosecution or other legal proceedings nor has it
been threatened in writing therewith.
29.2 The Vendor is not aware of any unsatisfied judgment or unfulfilled order
outstanding against the Company or that the Company is a party to any
outstanding undertaking or
39
<PAGE>
assurance given to a court, tribunal or any other person in connection
with the determination or settlement of any claim or proceedings.
TAXES AND DUTIES ETC.
Tax Residence
-------------
30.1 The Company is resident in the United Kingdom for the purposes of United
Kingdom taxation and has not been resident for taxation purposes in any
other country under the laws of that country.
30.2 The Company has not at any time, prior to the Transfer Date, been subject
to Taxation in any jurisdiction outside the United Kingdom or, prior to
the Transfer Date, had a branch outside the United Kingdom or any
permanent establishment (as that expression is defined in the respective
double taxation relief orders current at the date hereof) outside the
United Kingdom.
30.3 The Company is not assessable and has not at any time been assessable to
tax under Section 78 Taxes Management Act 1970.
Accounts and Returns
--------------------
31.1 Full provision was made in the Accounts for taxation assessed on or
measured by reference to all profits earned up to the Accounting Date and
other taxation liabilities for which the Company was at the Accounting
Date liable to be assessed and so far as the Vendor is aware, having also
made enquiry of the Company's Auditors, all liabilities (including
contingent and deferred liabilities) of the Company for tax as at the
Accounting Date are fully provided for in the Accounts.
31.2 The Company has properly and punctually effected all requisite
registrations, made all relevant returns, kept all relevant records, given
all relevant notices and made all relevant payments for the purposes of
taxation and there are not, nor, so far as the Vendor is aware are there
likely to be, any disputes whatsoever with the Inland Revenue or other
taxation authorities, the Companies Registry, the Department of Trade,
Customs and Excise authorities, H.M. Treasury, The Bank of England or any
other governmental (whether national or local) department or body whether
in the United Kingdom or elsewhere.
Penalties and Interest
----------------------
31.3 The Company has not within the period of six years ending on the date
hereof paid or become liable to pay any penalty or interest charged by
virtue of the provisions of the Taxes Management Act 1970 or otherwise.
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<PAGE>
Investigation
-------------
31.4 The Company has not within the period of six years ending on the date
hereof been subject to an investigation, audit or visit (other than of a
routine nature) involving HM Customs and Excise, the Inland Revenue or
any other relant tax. authority.
PAYE and Employees
------------------
32.1. The Company has properly operated the Pay As You Earn and National
Insurance systems deducting tax as required by law and all sums in
respect thereof have been paid to the Inland Revenue (in so far as such
taxation ought to have been paid).
32.2. So far as the Vendor is aware, having also made enquiry of the Company's
Auditors, prior to the date hereof the Company has not made any payment
to or provided any benefit for any officer or employee or ex-officer or
ex-employee of the Company which is not allowable as a deduction in
calculating the profits of the Company for taxation purposes and the
Company is under no obligation to make any such payments or provide any
such benefit.
Deductions
----------
33. All payments by the Company to any person prior to the date hereof which
ought to have been made under deduction of tax have been so made and the
Company has accounted to the Inland Revenue for the tax so deducted to
the extent it ought to have done so.
Value Added Tax
---------------
34.1 The Company is a registered and taxable person for the purposes of value
added tax and, so far as the Vendor is aware, has complied in all
material respects with the requirements relating to VAT.
34.2 The Company is not and has not been a member of a VAT group for United
Kingdom tax purposes.
34.3 No claim has been made at the date hereof by the Company for bad debt
relief under section 36 of the Value Added Tax Act 1994.
34.4 The Company has not elected to waive exemption from value added tax under
the provisions of paragraph 2 of Schedule 10 to the Value Added Tax Act
1994 in respect of any interest in land or buildings held by the Company.
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<PAGE>
34.5 The Company has not within the period of 6 years preceding the date
hereof purchased or otherwise acquired any capital items which may be
subject to adjustment of input tax under Part XI of the Value Added Tax
Regulations 1995.
34.6 So far as the Vendor is aware the Company has not within the two years
ending on the date hereof been served with any penalty liability notice
or any surcharge liability notice or been issued with any written warning
for the purposes of value added tax.
34.7 The Company has not been required by the Commissioners of Customs &
Excise to give security.
34.8 The Company is not, and has agreed to become, an agent, manager or factor
for the purposes of Section 47 of the Value Added Tax Act 1994 of any
person who is not resident in the United Kingdom.
34.9 All supplies of goods and services made by the Company are taxable
supplies for the purposes of the Value Added Tax Act 1994 and so far as
Vendor is aware the Company has not been and will not be denied credit
for any input tax by reason of the operation of Section 26 of the Value
Added Tax Act 1994 or otherwise
Capital Allowances
------------------
35. If a pool of capital assets of the Company were disposed of at the date
hereof, or a disposal is made of any asset not in a pool at the date
hereof, for a consideration equal to the book value of that pool of
assets or (as the case may be) that asset in or adopted for the purpose
of the Accounts no balancing charge under the Capital Allowances Act 1990
would arise.
Chargeable Gains
----------------
36.1 If each of the capital assets of the Company were disposed of at the date
hereof for a consideration equal to the book value of that asset in or
adopted for the purpose of the Accounts no liability to corporation tax
on a chargeable gain would arise.
36.2 The Company has not at any time:
36.2.1 acquired any asset from any company which at the time of the
acquisition was a member of the same group of companies as
defined in Section 170 TCGA 1992;
36.2.2 been a party to any such reconstruction as is described in
Section 343 of the Taxes Act 1988;
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36.2.3 been the subject or otherwise involved in any arrangements as are
referred to in Section 240(11) or 410 of the Taxes Act 1988;
36.2.4 been and so far as the Vendor's are aware there are no
circumstances by virtue of which the Company could be, assessed
or charged to corporation tax by virtue of the provisions of
Section 178(9), 179(11), 190 or 191 TCGA and is not entitled to
recover or liable to have recovered from it any sums paid
pursuant to any of those Section; or
36.2.5 ceased to be a member of a group of companies in such
circumstances that a profit or grain was deemed to accrue to the
Company by virtue of Section 178 or 179 TCGA 1992 and neither the
execution of this Agreement nor Completion will result in any
profit or gain being deemed to accrue to the Company for any
taxation purpose whether pursuant to Section 178 or 179 TCGA 1992
or otherwise.
Group Relief and Advance Corporation Tax
----------------------------------------
37. The Disclosure Letter contains:
37.1 full and complete particulars of all arrangements and agreements
relating to group relief (as defined in section 402 of the Taxes
Act 1988) to which the Company is or has been a party in the
three years ending on the date hereof and:
37.1.1 all claims made by the Company for group relief whether
or not made in the said three year period were, when
made, valid and have been or will be allowed by way of
relief from corporation tax;
37.1.2 the Company has not at any time made and is not liable to
make any payment under any such arrangement or agreement;
37.1.3 the Company has received all payments due to it under any
such arrangement or agreement for surrender of group
relief made by it;
37.2 and complete particulars of all arrangements and agreements to
which the Company is or has been a party under section 240 of the
Taxes Act 1988 (set-off of surplus advance corporation tax) in
the three years ending on the date hereof and:
37.2.1 the Company has not paid and is not liable to pay any
advance corporation tax which is or may become incapable
of set off against the Company's liability to corporation
tax; and
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37.2.2 the Company has received all payments due to it under any
such arrangement or agreement for all surrenders of
advance corporation tax made by it.
Distributions
-------------
38. No distribution within the meaning of Part VI of the Taxes Act 1988 has
been made by the Company since 30th June 1988 except dividends shown in
its audited accounts nor is the Company bound to make any such
distribution.
39. The Company has not issued any bonus share capital since 30th June 1988.
40. Except as reflected in the Accounts there is no liability (including a
contingent liability) of the Company which arises under section 189 TCGA
(capital distribution of chargeable gains: recovery of tax from
shareholder).
Foreign Companies and Overseas Trade etc
----------------------------------------
41. No claim has been made by the Company under section 13 of the TCGA
(foreign assets: delayed remittances) or section 279 TCGA 1992 (foreign
assets: delayed remittance) or section 584 (unremittable overseas income)
of the Taxes Act 1988.
Close Companies
---------------
42. The Company is not nor has in the last 6 years been a close company as
defined in section 414 Taxes Act 1988.
Inheritance Tax
---------------
43.1 There is not outstanding any Inland Revenue charge under section 237 of
the Inheritance Tax Act 1984 over any assets of or shares in the Company.
43.2 No person has by virtue of section 212 of the Inheritance Tax Act 1984
(powers to raise tax) any power of sale, mortgage or charge in relation
to any shares, securities or assets of the Company.
Stamp Duty
----------
44.1 All documents in the possession or under the control of the Company to
which the Company is a party and which attract stamp duty have been
properly stamped, no claim for exemption from or reduction of stamp duty
is outstanding and no exemption already granted can be withdrawn,
canceled or deemed not allowed and so far as the Vendor is aware there is
no outstanding liability to or in respect of stamp duty reserve tax.
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Anti-Avoidance
--------------
44.2 Other than transactions carried into effect in accordance within the
terms of a relevant application and corresponding valid and effective
consent or clearance obtained on the basis of full and accurate
disclosure to the Inland Revenue, the Company has not at any time since
the Company became a member of the Pfizer Group nor, so far as the Vendor
is aware, prior to that date, been a party to any transaction to which,
and circumstances have not arisen as a result of which, any of the
following provisions have been or could reasonably be applied:
44.2.1 section 139(5) TCGA 1992 (Company reconstruction or
amalgamation: transfer of assets);
44.2.2 sections 135 and 136 TCGA 1992 (exchange of securities and
reconstruction or amalgamation involving issue of securities);
44.2.3 sections 213 to 218 Taxes Act 1988 and section 192 TCGA 1992
(demergers);
44.2.4 sections 56 (transactions in deposits etc), 399 (dealings in
commodity futures etc), 410 (arrangements for transfer of
company), 395 (leasing contracts), 116 (arrangements for
transferring relief) and section 118 (restrictions on relief) of
the Taxes Act; and
44.2.5 sections 703, 729, 730, 747, 765, 768, 768A, 770, and 776 to 787
(inclusive) Taxes Act 1988.
Post Accounting Date
--------------------
45. So far as the Vendor is aware since the Accounting Date:
45.1 no event has occurred outside the ordinary course of business of
the Company which has given rise or will or may give rise to a
liability to Taxation on the Company in respect of deemed (as
opposed to actual) income, profit or gains; and
45.2 the Company has not entered into any transaction outside the
ordinary course of business of the Company which has given rise or
may give rise to a liability to Taxation on a chargeable gain.
INSURANCE
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46. Particulars of the Company's insurances have been disclosed to the
Purchaser.
INTELLECTUAL PROPERTY ETC.
47. The Company owns the intellectual property listed in Annexures 2 and 3.
48. All intellectual property used by the Company in connection with its
business is registered in the name of the Company as proprietor if such
intellectual property is capable of registration and no licences,
registered user or other rights in respect thereof have been granted to
any third party.
49. So far as the Vendor is aware the Company has not received any notice
that any person is infringing any of the Company's patents.
MISCELLANEOUS
50. The Vendor has full power to enter into and perform this Agreement and
this Agreement constitutes obligations binding on the Vendor in
accordance with its terms.
51. So far as the Vendor is aware the execution of this Agreement and the
observance and performance of its provisions will not and will not be
likely to:-
51.1 result in a material breach of any Contract, law, regulation,
order, judgment, injunction, undertaking, decree or other like
imposition to or by which the Company and/or the Vendor is party or
are bound, or entitle any person to terminate or avoid any Contract
to which the Company and/or the Vendor is party, or have any
material effect on any such Contract;
51.2 result in any present or future indebtedness of the Company
becoming due and payable, or capable of being declared due and
payable, prior to its stated maturity date or in any financial
facility of the Company being withdrawn.
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FIFTH SCHEDULE
TAXATION COVENANT
PART I - INTERPRETATION
1. Interpretation
In this SCHEDULE:
1.1 save as herein otherwise provided words and expressions defined in Clause 1
of this Agreement shall bear the same meanings in this Schedule and any
provisions in the Agreement concerning matters of interpretation or
construction shall apply equally to this Schedule; the following
expressions have the following meanings unless inconsistent with the
context:-
EXPRESSION MEANING
"ACT" Advance corporation tax
"the Auditors" The auditors for the time being of the Company
"the Balance Sheet" The audited balance sheet of the Company as at the
Accounting Date
"CAA" Capital Allowances Act 1990
"Claim" Any notice, demand, assessment, letter or other
document issued, or action taken, by or on behalf of
any Taxation Authority and the submission of any
Taxation form, return or computation from which, in
either case, it appears to the Purchaser that the
Company is or may be subject to a Liability to
Taxation or other liability in respect of which the
Vendor is or may be liable under paragraph 2 of this
Schedule
"Dispute" Any dispute, appeal, negotiations or other
proceedings in connection with a Claim
"Event" Any event, fact or circumstance whatsoever including
but not limited to:
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(a) any transaction, action or omission (whether
or not the Company is party to it);
(b) the earning, receipt or accrual for any
Taxation purpose of any income, profits or
gains;
(c) the incurring for any Taxation purpose of
any loss or expenditure;
(d) the declaration, payment or making of any
dividend or other distribution;
(e) the sale and purchase of the Contract Shares
pursuant to this Agreement; and
(f) Completion
"FA" Finance Act
"Group Relief" The meaning given to that expression by section
402 ICTA
"ICTA" Income and Corporation Taxes Act 1988
"IHTA" Inheritance Tax Act 1984
"Liability to Taxation" Any liability of the Company to make an actual
payment of Taxation (whether or not the Company
is primarily so liable and whether or not the
Company has any right of recovery against any
other person) and the Company shall be treated
for the purposes of the Covenant in Part II of
this Schedule as having a liability to make an
actual payment of Taxation in circumstances
where the Company would have had such a
liability but for the utilisation of any Relief
which arises after Completion.
"Relief" (a) any relief, allowance, exemption, set-off,
deduction or credit available from, against
or in relation to Taxation or in the
computation for any Taxation purpose of
income, profits or gains; and
(b) any right to a repayment of Taxation
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"Saving" The reduction or elimination of any liability of
the Company to make an actual payment of
corporation tax in respect of which the Vendor
would not have been liable under paragraph 2 of
this Schedule by the use of any Relief arising
wholly as a result of a Liability to Taxation in
respect of which the Vendor has made a payment
under such paragraph 2
"Taxation" (a) any tax duty, impost or levy, past or
present, of the United Kingdom or elsewhere,
whether governmental, state, provincial,
local governmental or municipal, including
but not limited to income tax (including
income tax required to be deducted or
withheld from or accounted for in respect of
any payment under section 203 ICTA or
otherwise), corporation tax, ACT, capital
gains tax, inheritance tax, VAT, customs and
other import or export duties, rates, stamp
duty, stamp duty reserve tax, national
insurance and social security contributions;
and
(b) any fine, penalty, surcharge, interest or
other imposition relating to any tax, duty,
impost or levy mentioned in paragraph (a) of
this definition or to any account, record,
form, return or computation required to be
kept, preserved, maintained or submitted to
any person for the purposes of any such tax,
duty, impost or levy
"Taxation Statute" Any authority, whether of the United Kingdom or
elsewhere, competent to impose, assessor collect
Taxation, including but not limited to the Board
of Inland Revenue, the Commissioners of Customs
and Excise and the Department of Social Security
"Taxation Statute" Any statute (and all regulations and other
documents having the force of law under such
statute) published, enacted, issued or coming into
force on or before the date of this Agreement
relating to Taxation
"TCGA" Taxation of Chargeable Gains Act 1992
"TMA" Taxes Management Act 1970
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<PAGE>
"VAT" Value added tax
"VATA" Value Added Tax Act 1994
1.2 references to Events include Events which are deemed to have occurred for
any Taxation purpose and references to income, profits or gains earned,
received or accrued for any Taxation purpose include income, profits or
gains which are deemed to have been earned, received or accrued for any
Taxation purpose;
1.3 references to the loss of a Relief include the disallowance of a Relief and
the failure to obtain a Relief (whether as a result of the surrender of the
Relief to another company or otherwise);
1.4 any stamp duty which is charged on any document, or in the case of a
document which is outside the United Kingdom any stamp duty which would be
charged on the document if it were brought into the United Kingdom, which
is necessary to establish the title of the Company to any asset or in the
enforcement or production of which the Company is interested, and any
interest, fine or penalty relating to such stamp duty, will be deemed to be
a liability of the Company to make an actual payment of Taxation; and
1.5 references to any statute or statutory provisions will, unless the context
otherwise requires, be construed as including references to any earlier
statute or the corresponding provisions of any earlier statute, whether
repealed or not, directly or indirectly amended, consolidate, extended or
replaced by such statute or provisions, and to any subsequent statute or
the corresponding provisions of any subsequent statute directly or
indirectly amending, consolidating, extending, replacing or re-enacting the
same, and will include any orders, regulations, instruments or other
subordinate legislation made under the relevant statute or statutory
provisions.
PART II - TAX COVENANT
2. Covenant
2.1 Subject to the provisions of this Part II of this Schedule the Vendor
covenants with the Purchaser to pay to the Purchaser an amount equal to:-
2.2 any liability to Taxation which has arisen or arises as a result of any
Event which occurred on or before Completion, whether or not such Liability
to Taxation has been discharged on or before Completion; and
2.3 any Liability to Taxation which arises under section 767A ICTA, section 132
FA 1988 or section 179, 189, 190 or 191 TCGA as a result of the combined
effect of two or more Events, the first of which occurred on or before
Completion; and
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<PAGE>
2.4 any Liability to Taxation which arises as a result of any Event which
occurs after Completion pursuant to a legally binding obligation (whether
or not conditional) entered into by the Company on or before Completion
otherwise than in the ordinary course of business of the Company; and
2.5 any liability of the Company to make a payment in respect of Taxation which
has arisen or arises as a result of or in connection with any Event which
occurred on or before Completion, whether or not such liability has been
discharged on or before Completion, including but not limited to:-
2.5.1 any liability of the Company to make a payment in respect of
Taxation under any indemnity, covenant, guarantee or charge entered
into by the Company on or before Completion; and
2.5.2 any liability of the Company to make a payment in respect of
Taxation under any agreement or arrangement relating to the
surrender of Group Relief, ACT or any other Relief or to any VAT
Group, in either case entered into by the Company on or before
Completion; and
2.6 any costs, fees or expenses reasonably and properly incurred by the Company
or the Purchaser in connection with:-
2.6.1 any liability to taxation or other liability in respect of which
the Vendors are liable under any of paragraphs 2.1 to 2.4; or
2.6.2 taking or defending any action (including but not limited to
legal proceedings) under this Part II of this Schedule
3. Exclusions
3.1 The Vendor will not be liable under paragraph 2 of this Schedule in respect
of a Liability to Taxation or other liability of the Company to the extent
to which:-
3.1.1 such Liability to Taxation or other liability was discharged on or
before the Accounting Date and the discharge of such Liability to
Taxation or other liability was recognised in the Balance Sheet or
the Management Accounts; or
3.1.2 provision or reserve was made or reflected in the Balance Sheet or
the Management Accounts for such Liability to Taxation or other
liability; or
3.1.3 such Liability to Taxation or other liability would not have arisen
but for any Event which occurred in the ordinary course of business
of the Company after the Accounting Date and on or before
Completion; or
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<PAGE>
3.1.4 payment has already been made in respect of such Liability to
Taxation or other liability under this Part II of this Schedule
or under the Warranties; or
3.1.5 such Liability to Taxation or other liability would not have
arisen but for a change in legislation (including but not
limited to an increase in rates of Taxation) or in the published
practice or concession of any Taxation Authority first enacted
or announced after Completion; or
3.1.6 such Liability to Taxation or other liability would not have
arisen but for a voluntary act, transaction or omission of the
Company after Completion:-
3.1.6.1 otherwise than pursuant to a legally binding
obligation entered into by the Company on or before
Completion or imposed on the Company by any
legislation whether coming into force before, on or
after Completion; and
3.1.6.2 which the Purchaser was aware or ought reasonably to
have been aware would give rise to the Liability to
Taxation or other liability in question; and
3.1.6.3 otherwise than in the ordinary course of business of
the Company
3.1.7 to the extent that such Tax Liability arises by virtue of any disclaimer
or disallowance of industrial building or other capital allowances or
other transaction by the Company after Completion which has the effect
of increasing the Tax Liability of the Company in respect of any period
ending on or before the Accounting Date;
3.1.8 to the extent that the Tax Liability arises or is increased in
consequence of any failure by the Purchaser to comply with, or failure
to procure the compliance of the Company with, any of their respective
obligations under this Schedule;
3.1.9 to the extent that such Tax Liability results from or is increased or
extended by the change of the accounting reference date of the Company
after Completion or by any change in the accounting policies of the
Company after Completion or the payment of any unusual or abnormal
dividend;
3.1.10 to the extent that such liability has been reflected or taken into
account in calculations for the purposes of Clause 3 of this Agreement
dealing with adjustment to the consideration.
3.2 For the purposes of paragraph 3.1.3 of this Schedule none of the
following will be regarded as an Event occurring in the ordinary course
of business of the Company:-
3.2.1 any distribution (within the meaning of Part VI (with section
418 ICTA) or deemed distribution;
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<PAGE>
3.2.2 any Event which gives rise to a Liability to Taxation in respect
of deemed (as opposed to actual) income, profits or gains;
3.2.3 the Company ceasing, or being deemed to cease, to be a member of
any group of companies or associated with any other company for
any Taxation purpose;
3.2.4 any Event which gives rise to a Liability to Taxation under Part
VIII TMA;
3.2.5 any Event which gives rise to a Liability to Taxation under Part
XVII ICTA;
3.2.6 any Event which gives rise to a Liability to Taxation primarily
chargeable against or attributable wholly or partly to or
recoverable wholly or partly from any other person;
3.2.7 any scheme, arrangement or transaction designed partly or wholly
or containing steps or stages designed partly or wholly for the
purpose of avoiding or reducing or deferring a Liability to
Taxation;
3.2.8 the creation, cancellation or reorganisation of any share or
loan capital of the Company;
3.2.9 the failure by the Company to deduct or account for any
Taxation; or
3.2.10 any Event which gives rise to any fine, penalty, surcharge,
interest or other imposition relating to any Taxation.
4. Deductions from payments
4.1 Except as required by law all payments by the Vendor under this Part II
of this Schedule will be made free and clear of all deductions and
withholdings (whether in respect of Taxation or otherwise).
4.2 If any deduction or withholding is required by law to be made from any
payment by the Vendor under this Part II of this Schedule or if
(ignoring any available Relief) the Purchaser is subject to Taxation in
respect of any payment by the Vendor under this Part II of this
Schedule, the Vendor covenants with the Purchaser to pay to the
Purchaser such additional amount as is necessary to ensure that the net
amount received and retained by the Purchaser (after taking account of
such deduction or withholding or Taxation) is equal to the amount which
it would have received and retained had the payment in question not been
subject to the deduction or withholding or Taxation.
. Due date for payment
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5.1 The due date for the making of a payment by the Vendor under this Part
II of this Schedule will be the later of:
5.1.1 the date falling five Business Days after the Purchaser has
served notice on the Vendor demanding such payment; or
5.1.2 in any case involving a liability of the Company or the
Purchaser to make an actual payment (whether or not a payment of
Taxation), the later of the date mentioned in paragraph 5.1.1
above and the date falling five clear Business Days before the
last date upon which the payment is required to be made to the
person entitled to the payment (after taking into account any
postponement of the due date for payment of any Taxation which
is obtained).
6. Claims procedure
6.1 The Purchaser will as soon as reasonably practicable give notice of any
Claim to the Vendor, provided that the giving of such notice will not be
a condition precedent to the liability of the Vendor under paragraph 2
of this Schedule.
6.2 Provided that the Vendor indemnifies and secures the Company, the
Purchaser and all other members of the same group of companies as the
Purchaser to the reasonable satisfaction of the Purchaser against all
losses, costs, damages and expenses (including interest on overdue
Taxation) which may be incurred thereby, the Purchaser will procure that
the Company, at the Vendor's cost and expense, takes such action and
gives such information and assistance in connection with its Taxation
affairs as the Vendor may reasonably and promptly request to dispute,
appeal against, settle or compromise any Claim, including but not
limited to:
6.2.1 applying to postpone (so far as legally possible) the payment of
any Taxation; and
6.2.2 (except in the case of a Claim where any Taxation Authority
alleges dishonest or fraudulent conduct on the part of the
Vendor or the Company or any person acting on their or its
behalf) allowing the Vendor to undertake, at its own cost and
expense, the conduct of the Dispute.
6.3 The Vendor will not without the prior written consent (such consent not
to be unreasonably withheld or delayed) of the Purchaser in relation to
any Dispute conducted by it or at its request, take the following
actions:
6.3.1 the settlement or compromise of the relevant Claim;
6.3.2 transmission to any Taxation Authority of any written or oral
communication pertaining to the subject matter of the Dispute;
and
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<PAGE>
6.3.3 the agreement of any matter which is likely to affect the amount
of the relevant Claim or any future Liability to Taxation.
6.4 The Purchaser may withhold its consent to the taking of any action
mentioned in paragraph 6.3 which it reasonably considers to be
materially prejudicial to the business or Taxation affairs of the
Company, the Purchaser or any other member of the same group of
companies as the Purchaser or on any other reasonable ground.
6.5 The Vendor will promptly and fully inform the Purchaser of all matters
relating to any Dispute conducted by or at the request of the Vendor and
will provide the Purchaser with copies of all correspondence and other
documents relating thereto.
6.6 Without prejudice to the liability of the Vendor under this Part II of
this Schedule:
6.6.1 the Purchaser will be entitled to appoint its own solicitors and
other professional advisers in relation to any Dispute conducted
by or at the request of the Vendor, in addition to those
appointed by the Vendor;
6.6.2 the Purchaser will not be obliges to procure that the Company
appeals against any assessment to or demand for Taxation unless
within ten Business Days of the Purchaser giving notice thereof
to the Vendor in accordance with paragraph 6.1 the Vendor have
given notice to the Purchaser to do so;
6.6.3 the Purchaser will not be obliged to prevent the Company from
making a payment of Taxation at the time necessary to avoid
incurring any fine, penalty, surcharge, interest or other
imposition in respect of any unpaid Taxation.
7. Limitations
7.1 The Vendor will not be liable under paragraph 2 of this Schedule in
respect of a Liability to Taxation or other liability of the Company
unless within seven years after the date of this Agreement the Purchaser
has given notice to the Vendor of any Claim whatsoever relating to such
Liability to Taxation or other liability, or of any Event which may give
rise to such a Claim.
7.2 The aggregate amount of the liability of the Vendor under this Schedule
shall not exceed the amount of the Cash Consideration plus such amount
to the principal sum payable under the Loan Note as shall from time to
time (prior to any claim under this Schedule or any other claim under
this Agreement having been agreed or determined) have been paid to the
Vendor.
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7.3 No liability shall attach to the Vendor under this Schedule unless the
aggregate amount of such liability shall exceed US$100,000 in which
event the liability of the Vendor shall not be limited by this paragraph
7.3 (but without prejudice to other provisions of this deed).
7.4 No liability shall attach to the Vendor under this Schedule in respect
of any claim where the amount of such liability in respect of the claim
is less than US$5,000.
7.5 No liability shall attach to the Vendor under paragraph 2 of this
Schedule to the extent that the Purchaser has not provided full and
accurate information in respect of any possible Claim against the Vendor
within 12 months of becoming aware of such Claim and if the Purchaser or
the Company shall receive an assessment in respect of which there is a
time limit prescribed by law within which to appeal and the Purchaser or
the Company does not give notice of such assessment to the Vendor within
10 Business Days of receipt of such assessment then the Vendor's
liability under paragraph 2 of this Schedule shall be reduced to t he
extent that the Vendor's ability to resist the assessment under the
provisions of paragraph 6 above is prejudiced by such failure and the
Liability to Taxation in question could have been avoided as a result of
action taken at the request of the Vendor under paragraph 6 had notice
been given within the said 10 day period.
8. Savings
8.1 If (at the Vendor's request and expense) the Auditors determine that the
Company has obtained a Saving, the Purchaser will as soon as reasonably
practicable thereafter repay to the Vendor the lesser of:
8.1.1 the amount of the Saving (as determined by the Auditors); and
8.1.2 the amount paid by the Vendor under paragraph 2 of this Schedule
in respect of the Liability to Taxation which gave rise to the
Saving less any part of that amount previously repaid to the
Vendor under any provision of this Agreement or otherwise.
8.2 The Company will be entitled to use in priority to any Relief which
gives rise to a Saving any other Relief available to it (including by
way of surrender by another company to it) to reduce or eliminate any
liability to make an actual payment of corporation tax.
8.3 The Company will not obtain a Saving until the last date upon which it
would have been obliged to make the actual payment of corporation tax
which has been reduced or eliminated in order to avoid incurring
interest thereon.
8.4 In determining whether the Company has obtained a Saving, the Auditors
will act as experts and not as arbitrators and their determination will
(in the absence of manifest error) be conclusive and binding on the
parties.
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9. Recovery from other persons
9.1 If the Company recovers from any other person (including any Taxation
Authority but excluding the Purchaser, any other member of the same
group of companies as the Purchaser and any officer or employee of any
such company) any amount which is referable to a Liability to Taxation
or other liability of the Company in respect of which the Vendor has
made a payment under paragraph 2, the Purchaser will repay to the Vendor
the lesser of:
9.1.1 the amount so recovered (less any losses, costs, damages and
expenses incurred by the Company, the Purchaser or any other
member of the same group of companies as the Purchaser as a
result of the recovery of that amount); and
9.1.2 the amount paid by the Vendor under paragraph 2 in respect of
the Liability to Taxation or other liability in question less
any part of such amount previously repaid to the Vendor under
any provision of this Agreement or otherwise.
9.2 If the Purchaser becomes aware that the Company is entitled to recover
any amount mentioned in paragraph 9.1 the Purchaser will as soon as
reasonably practicable give notice of that fact to the Vendor and
provided that the Vendor indemnifies and secure the Company, the
Purchaser and all other members of the same group of companies as the
Purchaser to the reasonable satisfaction of the Purchaser against all
losses, costs, damages and expenses which may be incurred thereby, the
Purchaser will procure that the Company, at the Vendor's cost and
expense, takes such action as the Vendor may reasonably and promptly
request to effect such recovery.
9.3 The action which the Vendor may request the Company to take under
paragraph 9.2 does not include:
9.3.1 any action which the Purchaser considers to be materially
prejudicial to the business or Taxation affairs of the Company,
the Purchaser or any other member of the same group of companies
as the Purchaser or to which the Purchaser object on any other
reasonable ground; or
9.3.2 allowing the Vendor to undertake the conduct of any action
necessary to effect recovery of the amount in question.
10. Mitigation
10.1 If it appears that a Claim may arise under this Part II of this Schedule
and that by taking certain action that Claim may be avoided then the
Purchaser shall at the Vendor's request procure that the Company:
57
<PAGE>
10.1.1 uses such Reliefs (other than Reliefs arising in the Company by
reference to an accounting period commencing or expenditure
incurred after Completion) available to them such Reliefs to be
used in priority to Reliefs arising after Completion;
10.1.2 take all action, make all elections, save in respect of matters
after the date of this Agreement, so as to reduce or eliminate
the Vendor's liability under this Agreement;
10.1.3 at the Vendor's request and expense deliver to the Vendor a
certificate from the Company's auditors for the time being
confirming that all such Reliefs have been so used and elections
made.
11. Assignment
The Purchaser shall not be entitled to assign the benefit of the
Taxation Covenant contained in this Schedule or any part of it to any
other person.
12. NOTICES
The provisions of Clause 10.10 and 10.11 of this Agreement shall apply
as to the provision of Notices under this Schedule.
58
<PAGE>
SIGNED by________________________________)
for and on behalf of )
HOWMEDICA, INC )
in the presence of:______________________)
SIGNED by________________________________)
for and on behalf of )
DIAMETRICS MEDICAL, INC. )
in the presence of:______________________)
59
<PAGE>
In accordance with Item 601(b)(2) of Regulation S-K, certain schedules to this
agreement, which do not contain information that is material to an investment
decision and that is not otherwise disclosed in the agreement, have not been
included with Exhibit 2.1 as filed. The following is a list of the contents of
all omitted schedules:
1. Annexure 1: form of Senior Secured Fixed Rate Loan Note due November 4,
2002, filed as Exhibit 2.2 to the Company's Current Report on Form 8-K
dated November 6, 1996.
2. Annexure 2: contains information regarding the patents held by BSL.
3. Annexure 3: contains information regarding trademarks held by BSL.
4. Annexure 4: contains information regarding the compensation of certain U.S.
and German employees of Pfizer affiliates.
The Company hereby agrees to furnish supplementally a copy of any omitted
schedule to the Commission upon request.
60
<PAGE>
EXHIBIT 2.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 , AS AMENDED (THE "ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED ("TRANSFERRED") WITHIN THE UNITED
STATES OF AMERICA ITS TERRITORIES OR POSSESSIONS, ANY STATE OF THE UNITED STATES
OF AMERICA OR THE DISTRICT OF COLUMBIA OR TO ANY "U.S. PERSON", AS SUCH TERM IS
DEFINED IN RULE 902(O) PROMULGATED UNDER THE ACT, UNLESS THEY ARE REGISTERED
UNDER THE ACT OR ANY EXEMPTION FROM REGISTRATION IS AVAILABLE.
DIAMETRICS MEDICAL, INC.
SENIOR SECURED FIXED RATE LOAN NOTE
DUE NOVEMBER 4, 2002
Principal Amount: $7,300,000
Interest Rate 8.75% p.a.
Date of Issue: 6 November, 1996
FOR VALUE RECEIVED, the undersigned, DIAMETRICS MEDICAL, INC. a corporation
incorporated in the State of Minnesota with its principal office at 2658 Patton
Road, St. Paul, Minnesota 56118 (herein called the "Company"), promises to pay
to HOWMEDICA, INC. a company incorporated under the laws of Delaware, with an
office at 235 East 42nd Street, New York, NY 10017, or its registered assigns
(the "Holder") the amount of SEVEN MILLION THREE HUNDRED THOUSAND DOLLARS
($7,300,000) or such lesser amount as may be owing hereunder on or before the
Final Payment Date together with interest thereon from the Issue Date at the
rate and on the dates specified in Article 3, in accordance with the terms
hereof.
Capitalized terms used herein without definition shall have the meanings given
such terms in Article 9 hereof.
The following is a statement of the rights of the Holder and the terms and
conditions to which this Note is subject, and to which the Holder, by the
acceptance hereof, agrees:
Article 1 Security
--------
Section 1.01 Nature of Security The obligations of the Company under this Note
------------------
are secured pursuant to the provisions of the Security Documents.
Section 1.02 Release of Security Provided that no Default or Event of Default
-------------------
shall then exist and subject as hereinafter provided the Company
may at any time during any calendar year (commencing with 1997)
require by notice given to the Holder that all or any of the
Shares that are the subject of the Security Documents shall cease
to form security for the obligations of the Company under this
Note and be released from the Security Documents PROVIDED THAT:
(i) only one such notice may be given in any calendar year;
(ii) the Book Value of the Shares must, within four months preceding
the date upon which any such notice is given, have exceeded the
unpaid
<PAGE>
Principal Amount as at the date such notice is given;
(iii) such notice shall include a copy of audited financial statements
of the Company evidencing the Book Value referred to in (ii)
above;
(iv) the maximum number of Shares which may cease to form security as
aforesaid and be released as aforesaid shall be such number of
Shares (and if there is more than one class of Share, of each
class of Shares) as is proportionate (relative to the number of
Shares then forming such security) to the amount by which the
Book Value of the Shares shall exceed the then unpaid Principal
Amount; and
(v) in the event that the Book Value of the Shares forming the
security for the obligations of the Company under this Note shall
at any time be less than the unpaid Principal Amount, the Company
shall upon request by the Holder cause such number of Shares (if
any) not then forming part of such security as is equivalent in
value to the deficit to form part of such security and to become
subject to the Security Documents.
Article 2. The Principal Amount
--------------------
Section 2.01 Payment of the Principal Amount The Principal Amount, to the
-------------------------------
extent not previously paid under the terms of this Note, shall be
due and payable in full on the Final Payment Date.
Section 2.02 Early Payment of Principal Amount The Company may at any time
---------------------------------
prior to the Final Payment Date pay all or any part of the
Principal Amount, subject to the Company giving to the Holder not
less than 3 days, and not more than 30 days, prior notice
thereof. In the event of such notice being given it may not be
revoked or withdrawn save with the consent in writing of the
Holder and the Company shall, subject to such revocation or
withdrawal, be obliged to make payment on the date specified in
such notice of the amount of the Principal Amount specified
therein to be paid.
Section 2.03 Acceleration of Payment of Principal Amount In the event that
-------------------------------------------
between the Issue Date and the second anniversary of the Issue
Date the Company should issue any securities which are listed or
traded on any Securities Exchange, and the aggregate Net Proceeds
of Issue in respect of all such issues should exceed
US$40,000,000 the Company shall be obliged, within 30 days
following the date upon which the securities which first cause
such excess are first listed or able to be traded, to pay to the
Holder the whole of the outstanding Principal Amount.
If the Principal Amount shall not have become payable as
aforesaid then, in the event that at any time from and including
the second anniversary of the Issue Date until 4 November, 2002,
the Company should issue any securities which are listed or
traded on any Securities Exchange the Company shall be obliged,
within 30 days following the date upon which such securities are
first listed or able to be traded, to pay a proportion of the
outstanding Principal Amount in accordance with the following
table such that, according to the amount of Cumulative Net
Proceeds which would, inclusive of the Net Proceeds of Issue
arising from the aforementioned issue of securities, have been
obtained by the Company there shall be due and payable such
amount of the Principal Amount as shall be equivalent to the
excess of the amount as
2
<PAGE>
shown in column (2) of the following table over the actual amount
of Principal Amount which shall have then been repaid :
<TABLE>
<CAPTION>
--------------------------------------------------------------
(1) (2)
CUMULATIVE NET PROCEEDS AMOUNT ($)
---------------------------------------------------------------
<S> <C>
More than $5,000,000 but 1,000,000
less than $ 10,000,000
---------------------------------------------------------------
Between $10,000,000 and $19,999,999 2,500,000
(inclusive)
---------------------------------------------------------------
Between $20,000,000 and $39,999,999 4,500,000
(inclusive)
---------------------------------------------------------------
More than $40,000,000 or greater 7,300,000
---------------------------------------------------------------
</TABLE>
Article 3 Interest and Default Interest
-----------------------------
Section 3.01 Interest Interest shall be payable at the rate of 8.75 per cent
--------
per annum by the Company on the outstanding Principal Amount from
time to time. Such interest shall accrue, on a daily basis, from
the Issue Date and will be payable, at the Interest Rate, on 31
December 1997 (in respect of the period from the Issue Date until
and including 31 December 1997) and thereafter quarterly in
arrears on 31 March, 30 June, 30 September and 31 December of
each year, or if any such date is not a Business Day, then on the
next Business Day. If the Principal Amount (or any part thereof)
shall become due and payable interest up to and including the
relevant Payment Date shall also be due and payable on such
Payment Date.
Section 3.02 Default Interest If any sum due and payable by the Company is
----------------
not paid on its due date for payment under this Note, interest
shall accrue at the Interest Rate plus 2 per cent. per annum on
the unpaid sum until the date on which the full amount of the
unpaid sum is paid to the Holder.
Section 3.03 Calculation Period Interest in respect of a period of less than
------------------
one year shall be calculated on the basis of the actual number of
days elapsed and a 365 day year.
Article 4. Payments
--------
Section 4.01 Place and Method of Payment All payments made by the Company in
---------------------------
respect of Principal Amount shall be made to the Holder, upon
presentation and endorsement (in the case of part payment of
Principal Amount) or, in the case of payment of the whole of the
outstanding Principal Amount, surrender of this Note by the
Holder to the Company, in same day funds to such account of the
Holder as shall be notified by the Holder to the Company. All
payments made by the Company in respect of Interest and Default
Interest will be paid to the Holder as shown in the Register on
the last Business Day preceding the date fixed for payment of any
Interest or Default Interest. Payments of Interest and Default
Interest will be made by US dollar cheque drawn on a bank in New
York City and mailed to the Holder (or the first named of joint
Holders) at his address appearing in the Register. Upon
application by the Holder to the Company not less than 5 Business
Days before the due date for payment of any Interest or Default
Interest, such payment may be made by transfer to a US dollar
account maintained by the payee with a bank in New York City.
3
<PAGE>
Section 4.02 Currency of Payments All payments made by the Company in respect
--------------------
hereof, whether for the Principal Amount, Interest, Default
Interest or otherwise shall be made in US Dollars.
Section 4.03 Payment without Deduction etc Each payment under this Note shall
-----------------------------
be made free and clear of and without any deduction for or on
account of any set-off or counterclaim.
Section 4.04 Principal Amount Paid in Part Upon surrender of this Note when
-----------------------------
the Principal Amount is paid in part the Company shall either
execute and deliver to the Holder a new Note in substitution for
this Note reflecting the reduced outstanding Principal Amount or
otherwise endorse this Note recording the fact of such payment
and redeliver the Note to the Holder.
Article 5. Change of Control etc
---------------------
Section 5.01 In the event of:
---------------
(a) the Company consolidating or merging into any other Person
except that (i) any subsidiary of the Company may merge or
consolidate with the Company (provided that the Company
shall be the continuing or surviving corporation) and (ii)
the Company may consolidate or merge with any other Person
provided only that (A) the Company shall be the continuing
or surviving corporation or (B) the continuing or surviving
Person shall be a corporation organized under the laws of a
State of the United States which shall have a credit rating
no less favourable than the Company at the time of such
merger or consolidation, shall expressly assume in writing
all of the obligations of the Company under this Note and
the Security Documents, shall have total net worth of less
than US$100 million and immediately after such merger or
consolidation there shall exist no Default or Event of
Default;
(b) there occurring any Change of Control unless, following such
Change of Control, the continuing or surviving Person shall
be a corporation organized under the laws of a State of the
United States which shall have a credit rating no less
favourable than the Company at the time of such Change of
Control and having a total net worth of less than US$100
million; or
(c) the Company transferring or leasing its assets substantially
as an entirety to any Person,
the Principal Amount shall immediately become due and payable.
Article 6. Covenants
---------
Section 6.01 Payments The Company covenants and agrees for the benefit of the
--------
Holder that it shall duly and punctually pay or cause to be paid
the Principal Amount, Interest and any Default Interest in
accordance with the terms of this Note. In addition, following a
default the Company shall pay, upon demand therefor, all of the
costs and expenses of the Holder incurred in collecting any
amounts payable under this Note.
Section 6.02 Corporate Existence Subject to Article 5, the Company shall do
-------------------
or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, in accordance with
its organizational documents (as the same may be
4
<PAGE>
amended from time to time) and its rights (charter and
statutory), licenses and franchises; provided, however, that the
-------- -------
Company shall not be required to preserve any such right, license
or franchise if its Board shall determine that the preservation
thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in
any material respect to the Holder.
Section 6.03 Certificate as to Default The Company shall deliver an Officer's
-------------------------
Certificate to the Holder within 5 Business Days after any
executive officer of the Company comes to actually know of the
occurrence of any Default or Event of Default and such
certificate shall specify the nature of such Default or Event of
Default and the status thereof.
Article 7. Events of Default and Remedies "Event of Default", wherever used
------------------------------
herein with respect to this Note, means any one of the following
events (whatever the reason for such event and whether it shall
be voluntary or involuntary or be effected by operation of law,
pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
(a) failure to pay the Principal Amount of this Note due on any
Payment Date whether by acceleration or otherwise; or
(b) default is made in the payment of any Interest on any due
date for payment thereof; or
(c) failure by the Company to perform or comply in any material
respect with the covenants contained in Section 6.01 of this
Note and such default or breach continues for a period of 30
days after written notice thereof has been given to the
Company by the Holder; or
(d) default shall be made by the Company in the performance or
observance of any obligation, covenant, condition or
provision binding on it under the Security Documents and,
except where such default is not capable of remedy (in which
case no such Notice or continuation as is hereinafter
mentioned shall be required), such default continues for 7
days after written notice thereof has been given by the
Holder to the Company requiring the same to be remedied; or
(e) failure by the Company to perform or comply in any material
respect with any covenant in this Note (other than a
covenant contained in Section 6.01 of this Note) and such
default or breach continues for a period of 60 days after
written notice thereof has been given to the Company by the
Holder; or
(f) (i) any present or future indebtedness of the Company for or
in respect of moneys borrowed or raised in excess of $25,000
becomes (or becomes capable of being declared) due and
payable prior to its stated maturity otherwise than at the
option of the Company; or (ii) any such indebtedness is not
paid when due or, as the case may be, within any applicable
grace period; or (iii) the Company fails to pay when due or
expressed to be due any amount payable or expressed to be
payable by it under any present or future guarantee for any
moneys borrowed or raised in excess of $25,000; or (iv) any
mortgage, charge, pledge, lien or other encumbrance, present
or future, created or assumed by the Company becomes
enforceable and the holder thereof takes any steps to
enforce it; or
5
<PAGE>
(g) the Company (i) is, or is deemed for the purposes of any law
to be, unable to pay its debts as they fall due or to be
insolvent, or admits inability to pay its debts as they fall
due; or (ii) suspends making payments on all or any class of
its debts or announces an intention to do so, or a
moratorium is declared in respect of any of its
indebtedness; or (iii) by reason of financial difficulties,
begins negotiations with all or any class of its creditors
with a view to the readjustment or rescheduling of any of
its indebtedness; or
(h) (i) any step (including petition, proposal or convening a
meeting) is taken with a view to a composition, assignment
or arrangement with all or any class of the creditors of the
Company; or (ii) a meeting of the Company is convened for
the purpose of considering any resolution for (or to
petition for) its winding-up or its administration or any
such resolution is passed; or (iii) any person presents a
petition for the winding-up of the Company or the grant of
an administration order (unless such petition is frivolous,
vexatious or an abuse of process and (in any such case) is
discharged within 60 days); or (iv) any order for the
winding-up or administration of the Company is made; or (v)
any other step (including petition, proposal or convening a
meeting) is taken with a view to the rehabilitation,
administration, custodianship, liquidation, winding-up or
dissolution of the Company or any other insolvency
proceedings involving the Company; or
(i) (i) any liquidator, trustee in bankruptcy, judicial
custodian, compulsory manager, receiver, administrative
receiver, administrator the like is appointed in respect of
the Company or any part of its assets; or (ii) the directors
of the Company request the appointment of a liquidator,
trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or
the like; or (iii) any other steps are taken to enforce any
security interest over any part of the assets of the Company
unless in the case of any Lien of any nature whatsoever, the
amount secured by it is less than 5% of Consolidated
Tangible Net Worth; or
(j) any attachment sequestration, distress or execution affects
any asset of the Company and is not lifted or discharged
within 14 days or, if both the aggregate amount of the
relevant claim and the aggregate market value of all assets
subject to the relevant process are less than 5% of
Consolidated Tangible Net Worth, 30 days.
Section 7.02 Acceleration of Payment Date and Annulment
------------------------------------------
(a) If an Event of Default occurs and is continuing, the Holder
may by a notice in writing to the Company, declare the
Principal Amount, to be due and payable immediately, and
upon any such declaration such Principal Amount shall become
immediately due and payable.
(b) At any time after a declaration of acceleration with respect
to this Note has been made and before a judgment or decree
for payment of the money due has been obtained by the Holder
as hereinafter in this Article provided, the Holder, by
written notice to the Company, may rescind and annul such
declaration and its consequences. No such rescission shall
affect any subsequent Default or impair any right consequent
thereon.
6
<PAGE>
Section 7.03 Application of Money Collected Any money collected by the Holder
------------------------------
pursuant to this Article shall be applied in the following order:
FIRST: To the payment of all of the costs and expenses of the
Holder in collecting such amounts as provided herein;
SECOND: To the payment of the amounts then due and unpaid in
respect of Interest and Default Interest; and
THIRD: To the payment of the amounts then due and unpaid in
respect of the Principal Amount.
Section 7.04 Rights and Remedies Cumulative No right or remedy herein
------------------------------
conferred upon or reserved to the Holder is intended to be
exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 7.05 Delay or Omission Not Waiver No delay or omission of the Holder
----------------------------
to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the
Holder may be exercised from time to time, and as often as may be
deemed expedient, by the Holder.
Article 8
- ---------
Registration
- ------------
The Company will keep a register of the Holder of the Note from time to time and
including particulars of the Note. Any transfers or assignments of the Note
will be recorded by the Company in the Register.
Article 9
- ---------
Definitions
- -----------
Section 9.01 Certain Defined Terms As used herein, the following terms, unless
---------------------
the context otherwise requires, have the following meanings:
"Auditors" means the auditors from time to time of the Company.
--------
"Board" means the Board of Directors of the Company or any committee of such
-----
Board of the Company duly authorized to act for such Board.
"Book Value" means total stockholders equity as shown by audited financial
----------
statements of BSL.
"BSL" means Biomedical Sensors Limited, an English company.
---
"Business Day" means any day other than a Saturday, Sunday or legal holiday in
------------
New York, USA.
7
<PAGE>
"Change of Control" means any Person, whether alone or together with any
-----------------
affiliates of such person, acquires in excess of 50 per cent of the outstanding
voting securities of the Company.
"Company" has the meaning given such term in the preamble hereof and includes an
-------
corporation which shall succeed to or assume the obligations of the Company
under this Note.
"Consolidated Tangible Net Worth" means the total common shareholders equity as
-------------------------------
shown on the latest audited consolidated balance sheet of the Group from time to
time filed with the Securities Exchange Commission.
"Cumulative Net Proceeds" means the aggregate Net Proceeds of Issue obtained by
-----------------------
the Company from all issues of equity securities which are listed or traded on
any Securities Exchange by the Company at any time on or after the first
anniversary of the Issue Date;
"Default" means any event, act or condition the occurrence of which is, or after
-------
notice or the passage of time or both would be, an Event of Default.
"Default Interest" means interest in accordance with Section 3.02.
----------------
"Director's Certificate" means a certificate signed by any Director of the
----------------------
Company.
"Dollars" means the lawful currency of the USA.
-------
"Event of Default" has the meaning specified in Article 7.
-------- -------
"Final Payment Date" means the 4th day of November 2002.
------------------
"Group" means the Company and its Subsidiaries from time to time.
-----
"Holder" has the meaning given such term in the preamble hereof.
------
"Indebtedness" means any indebtedness for money borrowed now or hereafter
------------
existing (other than indebtedness in respect of which the creditor has no right
of recourse to the Company, the Company or any Subsidiary of the Company in
relation in the debtor's financial obligations or liabilities in connection with
such indebtedness).
"Interest Rate" means the rate of 8.75 per cent per annum.
-------------
"Issue Date" means the date upon which this Note was originally issued.
----------
"Lien" means any pledge, mortgage, hypothecation, security interest, lien or
----
encumbrance.
"Payment Date" means the Final Payment Date and/or, if earlier, any date fixed
------------
for payment of all or any part of the Principal Amount pursuant to Article 2.
"Net Proceeds of Issue" means the total proceeds of any issue of equity
---------------------
securities by the Company which are listed or traded on any Securities Exchange.
"Note" means this loan note and any replacement therefor.
----
8
<PAGE>
"Person" means an individual, corporation, business trust, association, company,
------
partnership joint venture, trust unincorporated organization or other entity, or
a government or any agency or political subdivision thereof.
"Principal Amount means the principal amount of this Note set forth on the face
----------------
hereof, as reduced from time to time by any payment of part pursuant to Section
2.02 thereof.
"Register" means the Register in respect of the Note maintained by the Company
--------
pursuant to Article 8.
"Securities Exchange" means the New York Stock Exchange, the American Stock
-------------------
Exchange, NASDAQ and/or any other organized market for the trading of, or
dealing in, securities whether in the United States or elsewhere.
"Security Documents" means the Deed of Change of even date herewith executed by
------------------
the Company in favour of the Holder together with any other security documents
or instruments from time to time executed by the Company in connection with its
obligations under this Note.
"Senior Indebtedness" means any Indebtedness owed by the Company to any Person,
-------------------
other than any indebtedness evidenced by this Note.
"Shares" means the ordinary, redeemable preference, and other shares of BSL.
------
"Subsidiary" means any entity whose results are generally required under the
----------
laws of the United States to be consolidated into the Group accounts of the
Company.
Section 9.02 Form and Interpretation. Words of the masculine gender are to be
-----------------------
construed to include correlative words of the feminine and neuter
genders. Words in the singular number include words of the plural
number and words in the plural number include words of the
singular number. Accounting terms used, but not otherwise
defined, herein will have their respective meanings given to them
under, and are to be construed in accordance with generally
accepted accounting principles in the United States.
Article 10 Miscellaneous
-------------
Section 10.01 Waiver Amendment Any provision of this Note may be amended,
----------------
waived or modified upon the written consent of the Company and
the Holder.
Section 10.02 Assignment The rights and obligations of the Company and the
----------
Holder shall be binding upon and benefit their respect
successors, assigns, heirs, administrators and transferees.
Section 10.03 Transfer Subject as hereafter mentioned this Note may be
--------
transferred or assigned without any restriction thereon. This
Note may only be transferred or assigned in whole and not in
part. The transfer or assignment must not be in favour of more
than four transferees as joint holders. No transfer of the Note
may be made if in the reasonable opinion of the directors of the
Company the proposed transferee is engaged in the business of
commercializing products for critical care blood analysis in
humans. The transfer or assignment documentation must be
delivered for registration to the principal office for the time
being of the Company together with the Note. The Company shall be
entitled to retain the transfer or assignment documentation.
9
<PAGE>
The Company shall not be obliged to register any transfer during
the 14 days immediately preceding any interest payment date. No
transfer or assignment shall be effective unless and until the
transfer or assignment is registered in the Register. The Company
shall be obliged to register any transfer or assignment subject
to the foregoing.
Section 10.04 Severability Wherever possible each provision of this Note shall
------------
be interpreted in such manner as to be effect and valid under
applicable law. If, however, any provision of this Note shall be
prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note, unless the
ineffectiveness of such provision materially and adversely alters
the benefits accruing to the Holder or the Company.
Section 10.05 Notice Any notices:
------
(a) must be in writing and may be given (i) in the case of the
Company, at its registered office listed herein, or (ii) in
the case of the Holder. at its registered office or to such
other address as may have been notified in writing to the
Company:
(b) will be effectively served:
(i) on the day of receipt where any hand-delivered letter
or any telex message is received on a Business Day
before or during normal working hours;
(ii) on the following Business Day where any hand-
delivered letter or any telex or telophase message is
received either on a Business Day or after normal
working hours or on any other day; or
(iii) in each case, at such earlier time as the Company and
the Holder may agree.
Section 10.06 Article and Section Titles The article and section titles
--------------------------
contained in this Note are and shall be without substantive
meaning or content of any kind whatsoever.
Section 10.07 Governing Law This Note is governed by and is to be construed in
-------------
accordance with the laws of New York, excluding the body of law
relating to conflict of laws.
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be issued this 6th day
of November, 1996.
DIAMETRICS MEDICAL, INC.
By_____________________________
Laurence L. Betterley
Title Chief Financial Officer
11
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EXHIBIT 2.3
TRANSITIONAL SERVICES AGREEMENT
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AGREEMENT, made as of the 6th day of November, 1996, among HOWMEDICA INC.,
a Delaware corporation, ("Vendor"), HOWMEDICA GmbH, a German corporation,
("Howmedica Germany") DIAMETRICS MEDICAL, INC., a Minnesota corporation,
("Purchaser") and BIOMEDICAL SENSORS LTD, an English corporation ("BSL").
W I T N E S S E T H
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WHEREAS, Vendor and Purchaser have entered into a Sale and Purchase
Agreement of even date herewith, (the "Sale Agreement"), providing for the sale
by the Vendor to Purchaser of all of the stock of BSL, as more fully set forth
in the Sale Agreement (the "Sale"); and
WHEREAS, the parties wish to enter into an agreement setting forth the
terms pursuant to which Howmedica Germany, which is an Affiliate of Vendor, will
render, or cause its Affiliates to render, certain services and provide, or
cause its Affiliates to provide, certain facilities to Purchaser or BSL on an
interim basis after the Completion Date (as defined in the Sale Agreement) with
respect to Purchaser's operation of BSL and the Business carried out by BSL.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the signatories covenant and agreement as follows:
ARTICLE 1 - DESCRIPTION OF SERVICES
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1.01 The intent of this Article 1 is to enable Purchaser or BSL, as the
case may be, to receive certain services and to obtain the use of certain
facilities from Howmedica Germany on an interim basis in order to permit
Purchaser and BSL the opportunity to obtain alternate sources of supply of such
services within a reasonable time after the date hereof.
1.02 The services to be supplied and the facilities to be provided to
Purchaser and BSL shall be the services and facilities identified in Exhibit A
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and Exhibit B hereto.
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ARTICLE 2 - PERIOD OF SERVICES; TERM
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2.01 The parties agree that all services covered by this Agreement shall
terminate on 30 November, 1996, except that the Purchaser shall have the option
to extend the services for two additional consecutive 30 day periods. Notice of
any such 30 day extension shall be given to the Vendor in writing at least 14
days prior to the date on which this Agreement would otherwise terminate. The
provisions of this Agreement shall continue to govern the provision of such
services during any extension period for any such service.
2.02 Purchaser and BSL agree to proceed as promptly as reasonably possible
after the date hereof to obtain alternate sources of supply for services to be
initially provided hereunder. As soon as Purchaser or BSL shall obtain an
alternate source of supply of any of the services to be provided hereunder, they
shall promptly notify Howmedica Germany and Vendor and such parties may
thereupon terminate the provision of such service.
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ARTICLE 3 - COMPENSATION
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3.01 Purchaser shall pay to Howmedica Germany a fee (in local currency)
for each service which shall be provided to Purchaser and BSL hereunder shall be
as follows: (1) shared services as defined in Exhibit A will be charged in
accordance with Howmedica Germany's 1996 budgeted charges for such service (in
local currency); (2) Direct Services as defined in Exhibit B shall be charged at
actual cost (in local currency).
3.02 In the event that within sixty (60) days after (i) receipt of any
invoice for the services hereunder or (ii) receipt of a verification certificate
provided pursuant to Article 9, whichever is later, Purchaser shall notify
Vendor in writing that it does not accept such invoiced Fee and the parties
cannot resolve the matter in a mutually satisfactory manner, then the matter
shall be submitted within thirty (30) days from the date of such notice to
independent public accountants, mutually acceptable to, and at the joint expense
of, the parties. The decision of such independent public accountants with
respect to such matter shall be binding upon the parties.
ARTICLE 4 - PAYMENT TERMS
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4.01 Vendor shall invoice Purchaser for services performed hereunder on a
monthly basis. Payments shall be due net thirty (30) days from date of invoice
and shall provide a statement of the budgeted charges for each such service for
Howmedica Germany for 1996 . Separate invoices shall be rendered for each of
the respective services rendered pursuant to this Agreement.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES; CLAIMS
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5.01 The Service Fees will be prepared in a manner consistent with the
1996 budgeted charges for Howmedica Germany.
5.02 Vendor and Howmedica Germany will perform the services to be
performed by them hereunder in a competent, businesslike manner and shall charge
the Service Fee in accordance with Howmedica Germany's 1996 budgeted charges for
the services. The receipt by Purchaser or BSL of such services shall be an
unqualified acceptance of, and a waiver by Purchaser and BSL of its right to
make any claim (other than one based on gross negligence or fraud) with respect
to such services unless Purchaser gives Vendor written notice of claim within
thirty (30) days after performance by Howmedica Germany, of the service which is
the subject of claim.
5.03 THERE ARE NO EXPRESS OR IMPLIED WARRANTIES BY EITHER PARTY AND NO
WARRANTY SHALL BE IMPLIED UNDER THIS AGREEMENT OR AT LAW INCLUDING, WITHOUT
LIMITATION, WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE as to the services to be performed hereunder.
ARTICLE 6 - REIMBURSEMENT OF OUT-OF-POCKET EXPENSES; COOPERATION
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6.01 Purchaser shall reimburse Vendor and Howmedica Germany, within thirty
(30) days of receipt of invoices, for all reasonable out-of-pocket expenses
incurred on behalf of Purchaser or BSL hereunder.
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6.02 The parties agree to cooperate from and after the Closing Date with
respect to the providing of information and documentation to each other which is
necessary for the provision of transition services hereunder.
ARTICLE 7 - ASSIGNMENT
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7.01 Neither party shall assign this Agreement, or any part hereof,
without the prior written consent of the other party except that Purchaser may,
at is election assign its rights under this Agreement in whole or in one or more
parts to any one or more Affiliates of the Purchaser and any assignment in
violation of this provision shall be void. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and permitted assigns.
ARTICLE 8 - INDEMNIFICATION
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8.01 The parties recognize that, for a period of time following the date
hereof, personnel of Purchaser or BSL may be on the premises of Howmedica GmbH
for various business purposes. Purchaser ("the identifying party") agrees that
it will protect, indemnify and save Howmedica Germany and Vendor (the
"indemnified parties") harmless from and against all liabilities, actions,
damages, claims, demands, judgments, losses, expenses, suits or actions and
attorneys fees, and will defend such parties in any suit for injuries to or
death of any person or persons, or loss of or damage to the property of any
person or persons whomsoever (including without limitation the agents and
employees of the indemnified parties) arising out of the actions of the
indemnifying party's obligations hereunder. The indemnified parties shall give
the indemnifying party prompt notice of any claim, action or suit asserted
against it and the indemnifying party shall have the sole right to defend such
action or suit. In the case of joint or concurring negligence of the parties
giving rise to a loss or claim against either or both, each shall have full
rights of contribution against the other.
ARTICLE 9 - VERIFICATION OF INVOICES
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9.01 If following receipt of any invoice hereunder Purchaser shall notify
Vendor that it questions or disputes all or any part of such invoice, Vendor
shall provide to Purchaser, within thirty (30) days of such request a
certificate, signed by the appropriate department head, explaining the matter or
matters in question in reasonable detail to permit Purchaser to verify the
accuracy of any charges invoiced to it hereunder.
ARTICLE 10 - FORCE MAJEURE
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10.01 No party hereunder shall be liable to another for its failure to
perform hereunder caused by contingencies beyond its control including, but not
limited to, acts of God, fire, flood, wars, sabotage, strike, government actions
and any other similar occurrence beyond the non-performing party's control.
ARTICLE 11 - INDEPENDENT CONTRACTOR
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11.01 The parties shall each be an independent contractor in the
performance of its obligations hereunder.
ARTICLE 12 - NOTICES
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12.01 All notices or communications required hereunder shall be deemed
given when actually delivered, or if sent by registered mail, postage prepaid,
return receipt
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requested, on the date of receipt, and addresses to the other party at the
address set forth below.
If to Vendor:
Howmedica, Inc.
235 East 42nd Street
New York, New York 10017
Attention: Mr. Charles F. Raeburn
Telecopy No.: (212) 573-1895
With a copy to:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attention: Office of the General Counsel
Telecopy No.: (212) 573-1445
If to Purchaser:
Biomedical Sensors Limited
5 Manor Courtyard
Hughenden Avenue
High Wycombe, Bucks HP13 5RE
England
With a copy to:
Diametrics Medical, Inc.
2658 Patton Road
St. Paul, Minnesota 56118
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice which is
addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail.
ARTICLE 13 - GOVERNING LAW
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13.01 Governing Law. This Agreement shall be construed in accordance with
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and governed by the laws of the State of New York applicable to agreements made
and to be performed in such jurisdiction. Should any dispute arise in
connection with this Agreement, the matter in dispute shall be referred to three
arbitrators, one to be appointed by each of the parties hereto and the third by
the two so chosen. Their decision or that of any two of them shall be final and
binding upon all parties. The proceedings (including the appointment of the
arbitrators) shall be conducted in accordance with and under the Conciliation
and Arbitration Rules of the International Chamber of Commerce, shall be
conducted in English in New York, New York, and shall be governed by the laws of
the State of New York applicable to agreements made and to be performed in such
jurisdiction. With respect to any suit, action or proceeding relating to the
enforcement of such decision
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("Proceedings"), each party irrevocably: (I) submits to the non-exclusive
jurisdiction of the United States District Court located in the Borough of
Manhattan in New York City, and (ii) waives any objection which it may have at
any time to the laying of venue of any Proceedings brought in any such court,
waives any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such Proceedings,
that such court does not have jurisdiction over such party. Each party not
resident in the State of New York irrevocably appoints each of its Affiliates
resident in the State of New York to receive, for it and on its behalf, service
of process in any Proceedings. If for any reason such Affiliates are unable to
act as its agent for service of process, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 14.08. Nothing in this Agreement will
affect the right of any party to serve process in any other manner permitted by
law.
ARTICLE 14 - STANDARD PURCHASE ORDER FORMS
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14.01 To the degree that either or both of the parties hereto find it
convenient to employ their standard forms of purchase order or acknowledgment of
order in administering the terms of this Agreement, it or they may do so, but
none of the terms and conditions printed or otherwise appearing on such form
shall be applicable except to the extent that it specifies information required
to be furnished by either party hereunder.
ARTICLE 15 - HEADINGS
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15.01 The headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
ARTICLE 16 - MODIFICATIONS
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16.01 This Agreement contains the entire understanding and agreement
between the parties hereto as to the services being performed hereunder. It may
not be amended or modified except by a written instrument executed by the
parties hereto.
ARTICLE 17 - DEFINED TERMS
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17.01 Capitalized terms used herein which are not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
ARTICLE 18 - CUMULATIVE EFFECT
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18.01 The rights and obligations of the parties under this Agreement shall
be cumulative to and not exclusive of the rights and obligations of the parties
contained in the Purchase Agreement.
ARTICLE 19 - INTERPRETATION
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19.01 All references in this Agreement to "Purchaser" or "Vendor" or a
"party" shall be deemed to include such party's Affiliates unless the context
requires otherwise. All references in this Agreement to "services to be
supplied" or similar language shall be deemed to include "facilities to be
provided" unless the context requires otherwise. To the extent that this
Agreement purports to impose any obligation on the Affiliates of a party, such
party shall cause its Affiliates to fulfill such obligation.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
HOWMEDICA, INC.
By:_________________________
HOWMEDICA GmbH
By:_________________________
DIAMETRICS MEDICAL, INC.
By:_________________________
BIOMEDICAL SENSORS, LTD
By:_________________________
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EXHIBIT A
Shared Services
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Warehousing
Distribution/Customer Service
Invoicing
Payroll
General Accounting
Administrative Support
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EXHIBIT B
Direct Services
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Compensation & Benefits
Direct Marketing Expenses
Travel & Expenses
Auto Expenses
Other Direct Expenses
