EXHIBIT B
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (the "Agreement"), dated as of June
__, 2001, is between Xxxxx Partners III, L.P., a limited partnership organized
under the laws of the State of Delaware ("Xxxxx Partners"); Xxxxx Partners
International III, L.P., a limited partnership organized under the laws of the
State of Delaware ("Xxxxx International"); Xxxxx Employee Fund III, L.P.; a
limited partnership organized under the laws of the State of Delaware ("Xxxxx
Employees"); Ivy Orthopedic Partners, LLC, a limited liability company organized
under the laws of the State of Delaware ("Ivy"); and Medica Holding AG, a
corporation organized and existing under the laws of the Swiss Confederation
("Medica").
WHEREAS Medica commenced an action against, inter xxxx, Xxxxx Partners,
Xxxxx International and Xxxxx Employees (collectively the "Xxxxx Parties"), and
Ivy, in the Court of Chancery of the State of Delaware, New Castle County, on or
about May 1, 2001, entitled Medica Holding AG v. Xxxxxxx X. Xxxxxxxx, et al.,
Civil Action No. 18852 NC (the "Action"); and
WHEREAS, the parties hereto, on behalf of themselves and their respective
predecessors, successors, parents, subsidiaries, affiliates, divisions,
officers, employees, agents, shareholders, representatives and/or assigns,
desire to settle and terminate all of their disputes with each other that have
been raised or that could have been raised in or in connection with the Action;
and
WHEREAS, to resolve their disputes without the burden and expense of
further litigation, and without an admission of liability by any party hereto,
the parties have agreed upon a settlement in respect of any and all such claims;
NOW, THEREFORE, in consideration of the mutual promises,
releases and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the parties, the parties hereto enter into this Agreement, intending to be
legally bound, and it is hereby agreed by them as follows:
1. At the closing of this Settlement (the "Closing"), one or more of the Xxxxx
Parties and Ivy (in such proportion as the Xxxxx Parties and Ivy, in their sole
discretion, shall elect), shall purchase from Medica 780,362 shares of the
common stock of Encore Medical Corporation ("Encore"), at $1.875 per share, in
lawful money of the United States, for a total of $1,463,178.75 (the "Payment").
The Payment shall be made by wire transfer to the following account: Account No.
571609-01-2 at Credit Suisse, Xxxxxxxxxxxxx 0, XX-0000 Xxxxxxx, Xxxxxxxxxxx.
1. The Closing shall take place simultaneously with the closing of the
transaction contemplated by the Amended and Restated Series A Preferred Stock
Purchase Agreement, dated as of May 3, 2001, between and among, inter alia,
Encore, the Xxxxx Parties and Ivy (the "Preferred Stock Purchase Agreement").
The Xxxxx Parties and Ivy agree not to close the transaction described in the
Preferred Stock Purchase Agreement, or any substantially similar transaction,
unless this Settlement is closed simultaneously therewith.
2. It is a condition precedent to the purchase obligation of the Xxxxx
Parties and Ivy set forth in Section 1 above that (a) all conditions to closing
under the Preferred Stock Purchase Agreement shall have been satisfied or waived
in writing, and (b) that the closing of the transaction contemplated by the
Preferred Stock Purchase Agreement, or any substantially similar
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transaction, take place on or before July 30, 2001, or by such later date as
Encore and the Xxxxx Parties may agree upon pursuant to a signed writing
executed before July 30, 2001, time being of the essence with respect to this
paragraph 3(b).
3. At the Closing, Medica shall deliver to the Xxxxx Parties:
1. A certificate or certificates for the Shares registered in the name
of Medica or MVI AG (the "Certificates"); and
2. Stock transfer powers for the Shares, duly executed in blank, with
respect to each such certificate, in such number and amount as the Xxxxx
Parties and Ivy may direct (the "Stock Powers").
4. Medica warrants that, both as of the date of this Agreement and
immediately prior to the Closing, (a) it is the sole owner of the Shares,
including, without limitation, those Shares registered in the name of MVI AG;
(b) it has valid title to the Shares, (c) it is fully able to sell, transfer and
deliver the Shares, free and clear of any lien, security interest, claim or any
other encumbrance, and that the Shares are not subject to any lien, security
interest, claim or other encumbrance; (d) that no consent by, filing with,
notification to or waiver by any third party or governmental officer or agency
is required in order for Medica to deliver the Shares and Stock Powers to the
Xxxxx Parties; (e) the Shares are duly registered pursuant to the Securities Act
of 1933, as amended; (f) the Shares are not subject to any restriction or
limitation on transfer by Medica to the Xxxxx Parties and Ivy pursuant to any
federal, state or foreign securities law; and (g) the Certificates do not bear
any restrictive legend or language restricting transfer.
(a) Upon execution of this Agreement, Medica's attorneys shall execute and
deliver to the attorneys for the Xxxxx Parties and Ivy for filing with the Court
a
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stipulation of dismissal without prejudice as against the Xxxxx Parties and
Ivy of the Action, in the form annexed hereto as Exhibit A.
(b) At the Closing, Medica's attorneys shall execute and deliver to the
attorneys for the Xxxxx Parties and Ivy for filing with the Court a stipulation
of dismissal with prejudice as against the Xxxxx Parties and Ivy of the Action,
in the form annexed hereto as Exhibit B. Medica and its attorneys shall take any
other steps necessary to discontinue the Action, as against the Xxxxx Parties
and Ivy, with prejudice and without costs to any such party as against any
other.
(c) The Xxxxx Parties and Ivy agree not to oppose or to cause Encore to
oppose an application by Medica for attorneys' fees and expenses not to exceed
$300,000.
5. (a) Effective at the Closing, for the mutual promises and other
consideration set forth in this Agreement, and for other good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, Medica,
for itself and for its past and present officers, directors, employees, agents,
attorneys, representatives, parents, subsidiaries, partners, members,
affiliates, shareholders, successors and assigns (collectively, the "Medica
Releasors"), irrevocably and unconditionally releases and discharges each of the
Xxxxx Parties and Ivy, together with their past and present officers, directors,
employees, agents, attorneys, representatives, parents, subsidiaries,
affiliates, shareholders, successors and assigns, (collectively, the "Xxxxx
Releasees"), jointly and individually, from any and all claims, demands, rights,
liabilities, debts, liens, damages, punitive damages, costs, losses, expenses
and/or compensation, covenants, contracts, controversies, agreements, promises,
actions and causes of action, of every kind and nature whatsoever, at law or in
equity, under statute, rule, regulation, at
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common law or otherwise, known or unknown, suspected and unsuspected, disclosed
and undisclosed, which against the Xxxxx Releasees the Medica Releasors ever
had, now have or hereafter can, shall or may have for, upon, or by reason of any
act, omission, matter, cause or thing whatsoever, from the beginning of time to
the date of the Closing, but in every case only to the extent arising out of or
relating to (a) the matters and transactions described in the complaint and
amended complaint filed in the Action, or (b) the Preferred Stock Purchase
Agreement or the transactions contemplated thereby.
(b) Nothing in this paragraph 7 is intended to or constitutes a release or
waiver of any obligations that any party may have under this Agreement.
6. (a) Effective at the Closing, for the mutual promises and other
consideration set forth in this Agreement, and for other good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, the
Xxxxx Parties and Ivy, for themselves and for their past and present officers,
directors, employees, agents, attorneys, representatives, parents, subsidiaries,
partners, members, affiliates, shareholders, successors and assigns
(collectively, the "Xxxxx Releasors"), irrevocably and unconditionally release
and discharge Medica, together with its past and present officers, directors,
employees, agents, attorneys, representatives, parents, subsidiaries, partners,
members, affiliates, shareholders, successors and assigns (collectively, the
"Medica Releasees"), jointly and individually, from any and all claims, demands,
rights, liabilities, debts, liens, damages, punitive damages, costs, losses,
expenses and/or compensation, covenants, contracts, controversies, agreements,
promises, actions and causes of action, of every kind and nature whatsoever, at
law or in equity, under statute, rule, regulation, at common law or otherwise,
known or unknown, suspected and unsuspected,
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disclosed and undisclosed, which against the Medica Releasees the Xxxxx
Releasors ever had, now have or hereafter can, shall or may have for, upon, or
by reason of any act, omission, matter, cause or thing whatsoever, from the
beginning of time to the date of the Closing, but in every case only to the
extent arising out of or relating to (a) the matters and transactions described
in the complaint and amended complaint filed in the Action, or (b) the Preferred
Stock Purchase Agreement or the transactions contemplated thereby.
(b) Nothing in this paragraph 8 is intended to or constitutes a release or
waiver of any obligations that any party may have under this Agreement.
7. Simultaneously with the execution of this Agreement, Medica shall
deliver to Xxxxx Partners an irrevocable proxy coupled with an interest for all
of the Shares, in the form annexed hereto as Exhibit C, for all issues that may
come before the Stockholders' Meeting now scheduled to take place on June 12,
2001, or on such other date to which it may be continued or adjourned.
8. Medica represents and warrants: (a) that it has not filed any actions,
charges or claims, other than those that were or are now pending in the Action
with respect to the claims and other matters released pursuant to paragraph 7
hereof; (b) that it has made no transfer, assignment, conveyance, hypothecation
or other disposition to any other person or entity of any claims against or any
interest in claims against the parties released pursuant to the release in
paragraph 7 above; (c) that no other person or entity has an interest in any of
such claims so as to impede its ability to give his full and complete release of
all such claims; and (d) that it is duly authorized to execute the release set
forth in paragraph 7 above on behalf of each Releasor identified therein.
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9. The Xxxxx Parties and Ivy represent and warrant: (a) that they have not
filed any actions, charges or claims against Medica with respect to the claims
and other matters released pursuant to paragraph 8 hereof; (b) that they have
made no transfer, assignment, conveyance, hypothecation or other disposition to
any other person or entity of any claims against or any interest in claims
against the parties released pursuant to the release in Paragraph 8 above; and
(c) that no other person or entity has an interest in any of such claims so as
to impede its ability to give its full and complete release of all such claims;
and that they are duly authorized to execute the release set forth in paragraph
8 hereof on behalf of each Releasor identified therein.
10. This Agreement is without prejudice to any application to the Court by
Medica for an award of attorneys' fees and expenses from Encore in the Action.
11. The parties to this Agreement represent and warrant to each other: (a)
that they have read and understood its terms; (b) that they have been
represented by counsel with respect to this Agreement and all matters covered by
and relating to it; (c) that they have been fully advised by counsel with
respect to their rights and with respect to the execution of this Agreement; (d)
that each party has entered into this Agreement upon its own judgment, and not
in reliance upon the statements or representations of any other party hereto
except as set forth in this Agreement; (e) that all corporate, company or
partnership actions necessary to authorize the execution and delivery of this
Agreement have been taken; and (f) that this Agreement and the documents
executed pursuant thereto constitute their respective legal, valid and binding
obligations, enforceable in accordance with the terms thereof.
12. The parties acknowledge and agree that this Agreement is a compromise
and settlement, and that this Agreement and the documents executed and delivered
in connection
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therewith are not and shall not be deemed or construed to be an admission of
liability, or of the merit or lack of merit of any claim or defense asserted on
the part of any party hereto. The parties further acknowledge and agree that
this Agreement is being entered into for the purpose of avoiding the further
expense and the uncertainty of litigation, and this Agreement shall not be
offered into evidence in any action or proceeding between the parties for any
purpose whatsoever, except to enforce the terms thereof.
13. Within ten days after the Closing, each party to the Action shall
return all materials obtained in discovery, and all copies thereof, to the
attorneys for the producing party, including all documents, interrogatory
responses, and transcripts of depositions, or shall certify in writing that all
such materials have been destroyed. This paragraph 15 applies to all materials
obtained in discovery, and is not limited to materials designated as
confidential or highly confidential.
(a) This Agreement contains and sets forth the entire understanding between
the parties with respect to its subject matter, and there are no
representations, promises, warranties, covenants or undertakings other than
those expressly set forth herein. Each party hereto expressly disclaims having
entered into this Agreement by reason of any representation, promise, warranty,
covenant or undertaking other than those expressly set forth herein.
(b) This Agreement supersedes any and all previous agreements and
understandings between the parties hereto with respect to its subject matter.
All previous agreements between the parties (if any), whether oral or written,
are merged into this Agreement.
(c) This Agreement may not be altered, amended, modified or otherwise
changed in any respect whatsoever, except by a writing duly executed by the
parties or their authorized representatives. The parties acknowledge and agree
that they will make no claim
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at any time or place that this Agreement has been orally altered or modified in
any respect whatsoever.
(d) This Agreement is not effective until it has been fully executed and
delivered by all parties hereto.
14. The parties hereto will execute and deliver such other and further
documents, and take such other and further actions, as reasonably necessary to
carry out the purpose of this Agreement.
15. This Agreement, and all disputes arising out of or related to this
Agreement, shall in all respects be construed, interpreted, enforced and
governed by the laws of the State of Delaware, without giving effect to any
choice of law principles thereof.
16. The parties hereto consent to the exclusive personal jurisdiction of
the state and federal courts located in the State of Delaware in any action
arising out of or relating to this Agreement, or for the breach or alleged
breach thereof. In any such action, (a) the prevailing party shall be entitled
to recover, in addition to all other costs allowed by law, its reasonable
attorneys' fees and disbursements, and (b) the parties waive, to the fullest
extent permitted by law, their rights (if any) to trial by jury.
17. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of each of the parties hereto.
18. This Agreement, and all documents executed in connection herewith, may
be executed in one or more counterparts, each of which shall constitute a
duplicate of the original, and which together shall constitute one document.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.
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_________________________________ MEDICA HOLDING AG
_________________________________ By:
Date Name:
Title:
_________________________________ By:
Date Name:
Title:
_________________________________ XXXXX PARTNERS III, L.P.
_________________________________ By: Claudius, L.L.C., its General Partner
Date
By:
Name:
Title:
_________________________________ XXXXX PARTNERS INTERNATIONAL III, L.P.
_________________________________ By: Claudius, L.L.C., its General Partner
Date
By:
Name:
Title:
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_________________________________ XXXXX EMPLOYEE FUND III, L.P.
_________________________________ By: Wesson Enterprises, Inc., its General
Date Partner
By:
Name:
Title:
_________________________________ IVY ORTHOPEDIC PARTNERS, LLC
_________________________________ By: Name:
Date Title:
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