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EXHIBIT I
AGREEMENT AMONG BIDDERS
This Agreement Among Bidders (the "Agreement") dated as of October 2, 1997
concerns the respective obligations and relationship of those identified below
as participants in certain transactions relating to Kinetic Concepts, Inc.
SECTION 1. Definitions. The following terms shall have the following meanings
for the purposes of this Agreement:
1.01. "Affiliate" means with respect to any Person, any other Person that
directly, or indirectly, through one or more intermediaries or by agreement,
controls, is controlled by or is under common control with such Person.
1.02. "Bidder Commitments" means $229,490,838.50, representing the amounts
(whether in cash or contribution of securities of KCI) Fremont and RCBA have
committed to contribute to fund the KCI Transactions. The Fremont Bidder
Commitment and the RCBA Bidder Commitment are separately defined below.
1.03. "Closing Time" means the time of funding the Bidder Commitments.
1.04. "Fremont" means Fremont Partners, L.P.
1.05. "Fremont Bidder Commitment" means $138,197,020.50, adjusted as
necessary and appropriate pursuant to Section 3.04(a).
1.06. "Fremont/KCI Group" means any Affiliate of Fremont or any investor
who invests in any such Affiliate within six months of the Closing Time.
1.07. "KCI" means Kinetic Concepts, Inc.
1.08. "KCI Percentages" means the ratio of each party's Bidder Commitment
in relation to their combined commitments, adjusted as necessary and appropriate
pursuant to Section 3.04(a).
1.09. "KCI Transactions" means those series of transactions contemplated
by the Transaction Agreement dated the date hereof among Fremont, RCBA and KCI.
1.10. "Person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, pension fund, governmental
authority or other entity.
1.11. "RCBA" means Xxxxxxx X. Xxxx & Associates, L.P.
1.12. "RCBA Bidder Commitment" means $91,293,818.00, adjusted as
necessary and appropriate pursuant to Section 3.04(a).
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1.13. "RCBA/KCI Group" means RCBA Purchaser I, L.P., a Delaware limited
partnership (or any successor thereto), RCBA, Xxxxxxx X. Xxxx & Associates,
Inc., The Southern California Carpenters Pension Fund, The United Brotherhood of
Carpenters and Joiners Pension Fund, Insurance Company Supported Organizations
Pension Plan, Xxxxxxx Capital Partners, L.P., Xxxxxxx Capital Partners II, L.P.,
BK Capital Partners IV, L.P., Prism Partners I. L.P., The Common Fund, and any
Affiliate of RCBA or any investor who invests in any such Affiliate or any
entity listed herein within six months of the Closing Time.
1.14. Terms and Usage Generally. The definitions in this Section 1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections and
Schedules shall be deemed to be references to Sections of and Schedules to, this
Agreement unless the context shall otherwise require. All Schedules attached
hereto shall be deemed incorporated herein as if set forth in full herein. The
words "include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
References to a Person are also to its permitted successors and permitted
assigns.
SECTION 2. The KCI Transactions.
2.01. Fremont and RCBA agree to cooperate with one another to accomplish
in accordance with the timetable reflected therein the KCI Transactions.
2.02 Fremont and RCBA agree to make all decisions regarding their pursuit
and execution of the KCI Transactions jointly, by consensus among them, without
regard to percentage of interest or other factors.
2.03 Until the Closing Time:
a. All reasonably necessary books of account and other financial
records of expenses paid and incurred by Fremont and RCBA in pursuit of
the KCI Transactions from the inception of their joint activities shall be
created and maintained by each of them for themselves and their respective
groups.
b. The originals of all other documents germane to the KCI
Transactions shall be maintained by Fremont, and copies shall be provided
regularly to RCBA as it may reasonably request.
c. Fremont shall provide the foregoing services at its cost, and to
the extent Fremont is not reimbursed by KCI, RCBA shall reimburse Fremont
for its pro rata portion of such costs at such periodic intervals as
Fremont reasonably may request.
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d. Each of Fremont and RCBA otherwise shall be responsible for their
own costs, and will be reimbursed by KCI at or reasonably soon after the
Closing Time for their costs and for pro rata shares of such joint out of
pocket costs incurred and paid that have been associated with their joint
pursuit of the KCI Transactions. Their prorata shares shall be the
relationship between their KCI Percentages.
2.04. In the event the parties hereto fail to complete the KCI
Transactions because their bid is topped, they will divide between themselves in
accordance with their respective KCI Percentages, the sum of (a) all
consideration received on any KCI options held by them and their respective KCI
Groups; and (b) all breakup fees and expenses paid to them by KCI. However, in
consideration for the parties' respective rights and obligations under the KCI
Transactions (including without limitation Fremont's guaranty), the RCBA/KCI
Group's portion shall be reduced, and the Fremont/KCI Group's portion shall be
increased, by an amount equal to 5.4% of the aggregate over bid amount (adjusted
as necessary and appropriate pursuant to Section 3.04(a)), wherein the aggregate
over bid amount is calculated as the product of (i) the amount that the price
per share of the topping bid exceeds $19.25, and (ii) KCI's total shares
outstanding.
SECTION 3. Funding.
3.01 Until the Closing Time, each of Fremont and RCBA will contribute the
amounts required to fulfill their respective shares of the Bidders Commitments
and such other incidental funds for expenses as are reasonably required to
pursue the KCI Transactions in proportion to their respective commitments. To
the extent that either such party advances more than its proportionate share
during any month, the other party shall within five business days of the close
of that month true-up accounts, including interest at the rate paid by the party
which has a favorable balance, so that each party has borne all of its
proportionate share, but no more.
3.02 Each of Fremont and RCBA is responsible for raising or contributing
through the Fremont/KCI Group and the RCBA/KCI Group, respectively, the amounts
of equity required to consummate the KCI Transactions, as of the date of this
Agreement.
3.03 [Intentionally Omitted]
3.04. To the extent either of Fremont/KCI Group or RCBA/KCI Group defaults
by failing timely to provide all of its respective share of the equity
commitments set forth above:
a. If the default involves less than $15 million, the non-defaulting party
may elect to provide that share, in which event it will, in consideration
thereof, acquire that additional interest in KCI and be entitled to 125%
of the transaction fees on that additional interest that would have been
received by the defaulting party had it not defaulted; provided that the
defaulting party will have the right to cure any such default prior to the
closing of the tender contemplated as part of the KCI Transactions in
which event it can recoup from the non-defaulting party its additional
interest in KCI but not the transaction fees
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pertaining thereto. In the event of a default of an amount greater than
$15 million, there is no understanding; the parties will attempt to
resolve all issues at that time.
b. Notwithstanding the foregoing rights of the non-defaulting party, it
shall in all events be entitled to be held harmless and be fully
indemnified by the defaulting party from any liability to any and all
third parties, and any reasonable related expenses resulting from such
default.
SECTION 4. Liabilities and Indemnification.
4.01. It being understood as between Fremont and RCBA that they or their
affiliates may be assuming joint and several liability to KCI for some or all of
the KCI Transactions, Fremont and RCBA hereby agree that to the extent one of
them or their Affiliates breaches the Transaction Agreement, the breaching party
will indemnify and hold harmless the party not responsible for the breach from
any such liability and reasonably related expenses resulting from the assertion
of liability.
4.02. Except as set forth above and as otherwise expressly assumed in
writing by Fremont, the Fremont/KCI Group, RCBA or the RCBA/KCI Group:
a. none of them shall be liable to any third parties for any
actions, commitments or debts of any other; and
b. each of them shall take all reasonable steps to negate and
preclude exposing any of the other of them to any liability to any third
party.
4.03. To the extent any of Fremont, the Fremont/KCI Group, RCBA or the
RCBA/KCI Group is presented with a demand or made party to an adjudication by a
third party asserting their potential liability for the actions, commitments or
debts of the other respecting KCI, they shall notify that other party in writing
promptly, and upon the receipt of such notice the notified party will assume the
responsibility for the defense, resolution and/or satisfaction of the claim and
in all respects indemnify the party whose is faced with such a claim to the full
extent of that party's costs and ultimate liabilities, if any.
SECTION 5. Miscellaneous.
5.01. Notices. Except as otherwise expressly provided in this Agreement,
all notices, requests and other communications to any party hereunder shall be
in writing (including a facsimile or similar writing) and shall be given to such
party at the address or facsimile number specified for such party on Schedule
5.01 hereto or as such party shall hereafter specify for the purpose by notice
to the other parties. Each such notice, request or other communication shall be
effective (i) if given by facsimile, at the time such facsimile is transmitted
and the appropriate confirmation is received (or, if such time is not during a
Business Day, at the beginning of the next such Business Day), (ii) if given by
mail, three Business Days (or, if to an address outside
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the United States, seven calendar days) after such communication is deposited in
the mails with first-class postage prepaid, addressed as aforesaid, or (iii) if
given by any other means, when delivered at the address specified pursuant to
this Section 5.01.
5.02. No Third Party Beneficiaries. This Agreement is not intended to
confer any rights or remedies hereunder upon, and shall not be enforceable by,
any Person other than the parties hereto.
5.03. Waiver. No failure by any party to insist upon the strict
performance of any covenant, agreement, term or condition of this Agreement or
to exercise any right or remedy consequent upon a breach of such or any other
covenant, agreement, term or condition shall operate as a waiver of such or any
other covenant, agreement, term or condition of this Agreement. Any Person by
notice given in accordance with Section 5.01 may, but shall not be under any
obligation to, waive any of its rights or conditions to its obligations
hereunder, or any duty, obligation or covenant of any other Person. No waiver
shall affect or alter the remainder of this Agreement but each and every
covenant, agreement, term and condition hereof shall continue in full force and
effect with respect to any other then existing or subsequent breach. The rights
and remedies provided by this Agreement are cumulative and the exercise of any
one right or remedy by any party shall not preclude or waive its right to
exercise any or all other rights or remedies.
5.04. Dispute Resolution. Subject to the aforesaid provisions of this
Agreement providing for remedies, any controversy, claim or dispute arising out
of or relating to this Agreement or any breach hereof, including any dispute
concerning the scope of this Section 5.04, shall be resolved exclusively in a
California court of law, acting in a proceeding conducted without a jury, each
party hereto expressly waiving its right to trial by jury.
5.05. Integration. This Agreement constitutes the entire agreement among
the parties hereto and thereto pertaining to the subject matter hereof and
thereof and supersede all prior Agreements and understandings of the parties in
connection herewith and therewith, and no covenant, representation or condition
not expressed in this Agreement, the confidentiality Agreements between Fremont,
RCBA and KCI or any other such agreement shall affect, or be effective to
interpret, change or restrict, the express provisions of this Agreement.
5.06. Headings. The titles of the Sections of this Agreement are for
convenience only and shall not be interpreted to limit or amplify the provisions
of this Agreement.
5.07. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument, which may be
sufficiently evidenced by one counterpart.
5.08. Severability. Each provision of this Agreement shall be considered
separable and if for any reason any provision or provisions hereof are
determined to be invalid and contrary to
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any existing or future law, such invalidity shall not impair the operation of or
affect those portions of this Agreement which are valid.
5.09. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
conflicts of law principles thereof.
5.10. Non-Assignability. All of the rights and obligations of the parties
to this Agreement are intended to be exercisable and fulfilled by the parties
themselves, as presently constituted. None of those rights or obligations may be
assigned, assumed or transferred without the written informed consent of the
counterparty.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
as of the day and year first above written.
Fremont Partners, L.P. Xxxxxxx X. Xxxx & Associates, L.P.
By FP Advisers, L.L.C., By Xxxxxxx X. Xxxx & Associates,
its General Partner Inc., its General Partner
By /s/ X.X. Xxxxxxxx By /s/ Xxxxxx X. Xxxxxx
___________________________ ___________________________
Name: X.X. Xxxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Member Title: Managing Director and
General Counsel
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