Exhibit 2.1
SHARE PURCHASE AGREEMENT
dated as of June 08, 2002
Among
KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft,
Wirtschaftsprufungsgesellschaft
- hereinafter referred to as "KPMG DTG" -
and
the other Sellers listed in Annex 1 hereto
- hereinafter referred to jointly as the "Minority Shareholders" -
and
KPMG Consulting, Inc.
- hereinafter referred to as the "Purchaser" -
relating to the sale and transfer of
Shares of KPMG Consulting AG
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS AND SCHEDULES .................................... 2
Section 1.01 Definitions. ................................................. 2
Section 1.02 Interpretation. .............................................. 9
Section 1.03 Schedules, Annexes and Appendices. ........................... 9
ARTICLE TWO SALE AND PURCHASE ............................................ 10
Section 2.01 Purchase and Sale ............................................ 10
Section 2.02 Purchase Price. .............................................. 10
Section 2.03 Purchase Price Adjustment. ................................... 12
Section 2.04 Exchange Shares. ............................................. 14
Section 2.05 Value Added Tax, Other Transfer Tax. ......................... 14
Section 2.06 Infonova. .................................................... 14
ARTICLE THREE CLOSING CONDITIONS ........................................... 15
Section 3.01 Cartel Approval .............................................. 15
Section 3.02 SEC Approval ................................................. 15
Section 3.03 No Injunctions; Objecting Shareholders. ...................... 15
Section 3.04 Waiver of Closing Conditions. ................................ 16
ARTICLE FOUR TERMINATION PRIOR TO CLOSING ................................. 16
Section 4.01 Termination prior to Closing ................................. 16
Section 4.02 Effect of Termination ........................................ 17
ARTICLE FIVE CONDUCT OF BUSINESS AFTER SIGNING;
PRE-CLOSING ACTIONS .......................................... 17
Section 5.01 Notification ................................................. 17
Section 5.02 Conduct of Business after Signing ............................ 17
Section 5.03 Non-Competition and Shared Services Agreements. .............. 20
Section 5.04 No Impairment; Antidilution. ................................. 21
Section 5.05 Required Approvals ........................................... 22
Section 5.06 Access to Information; Monthly Financials .................... 22
Section 5.07 Visits / Meetings with Clients and Consulting Employees. ..... 23
Section 5.08 Mutual Release of Guarantees. ................................ 23
Section 5.09 Purchaser Common Stock Options ............................... 24
Section 5.10 Cash Pooling Agreement; Inter-Company Balances ............... 24
ARTICLE SIX CLOSING ...................................................... 24
Section 6.01 Time and Place of Closing. ................................... 24
Section 6.02 Actions as of Closing: ....................................... 25
Section 6.03 Condition Precedent .......................................... 28
Section 6.04 Acknowledgement .............................................. 28
2
ARTICLE SEVEN SELLERS WARRANTIES ...................................... 30
Section 7.01 Corporate Matters ....................................... 30
Section 7.02 Non-contravention ....................................... 32
Section 7.03 Financial Statements. ................................... 32
Section 7.04 Conduct of Business; Absence of Certain Changes. ........ 33
Section 7.05 Insolvency .............................................. 33
Section 7.06 Intentionally left blank ................................ 33
Section 7.07 Real Property ........................................... 33
Section 7.08 Contracts ............................................... 33
Section 7.09 Intellectual Property. .................................. 35
Section 7.10 Taxes. .................................................. 35
Section 7.11 Employees. .............................................. 35
Section 7.12 Labor and Collective Bargaining Agreements .............. 36
Section 7.13 Benefit Plan. ........................................... 36
Section 7.14 Employment Disputes ..................................... 36
Section 7.15 Delivery of Information to the Workers' Council ......... 36
Section 7.16 Insurance Coverage. ..................................... 36
Section 7.17 Lawsuits ................................................ 36
Section 7.18 Finder's Fees. .......................................... 37
Section 7.19 Clients. ................................................ 37
Section 7.20 Compliance with Law. .................................... 37
Section 7.21 Bank Accounts ........................................... 37
Section 7.22 True and Correct Information. ........................... 38
Section 7.23 Known Facts ............................................. 38
ARTICLE EIGHT PURCHASER WARRANTIES .................................... 38
Section 8.01 Corporate Matters ....................................... 38
Section 8.02 Capitalization .......................................... 39
Section 8.03 Exchange Shares ......................................... 39
Section 8.04 SEC Filings ............................................. 40
Section 8.05 Consent ................................................. 40
Section 8.06 Non-contravention ....................................... 40
Section 8.07 Financial Statements. ................................... 41
Section 8.08 Absence of Certain Changes or Events. ................... 41
Section 8.09 Financial Advisers ...................................... 42
ARTICLE NINE SURVIVAL; LIABILITY ..................................... 42
Section 9.01 Survival. ............................................... 41
Section 9.02 Liability of the Sellers ................................ 41
ARTICLE TEN OTHER AGREEMENTS ........................................ 49
Section 10.01 Public Disclosure. ...................................... 48
Section 10.02 Nonsolicitation. ........................................ 48
Section 10.03 Purchase Price Allocation ............................... 49
Section 10.04 Access to Information After Closing ..................... 49
Section 10.05 Use of KPMG Name. ....................................... 49
3
ARTICLE ELEVEN MISCELLANEOUS ....................................... 51
Section 11.01 Seller's Representative. ............................ 50
Section 11.02 Notices ............................................. 51
Section 11.03 Governing Law ....................................... 52
Section 11.04 Arbitration. ........................................ 52
Section 11.05 Costs, Expenses ..................................... 52
Section 11.06 Headings. ........................................... 52
Section 11.07 Waiver; Amendment. .................................. 52
Section 11.08 Assignment; Substitution; Counterclaims. ............ 53
Section 11.09 Entire Agreement .................................... 53
Section 11.10 Severability ........................................ 53
Section 11.11 Confidentiality ..................................... 53
4
SCHEDULES AND APPENDICES
Annex 1 List of Minority Shareholders
Schedule 1.01 Data Room Index
Schedule 2.03(a) Net Financial Debt Balance Sheet Items
Schedule 2.03(b) Working Capital Balance Sheet Items
Schedule 2.06 Basic Terms of Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ regarding Infonova consideration
Schedule 5.02(f) Distributions and dividends declared prior to signing
Schedule 5.02(h) Changes or amendments to or introduction of new Benefit
Plans of the Group Companies
Schedule 5.03(a) Form of Non-Competition Agreement
Schedule 5.03(b) Shared Services Agreement
Schedule 5.09 List of Individuals to be granted New Partner Options and
amounts
Schedule 6.02(c) Form of Registration Rights Agreement
Schedule 7.01(c) Number of issued shares of the Company's capital stock,
number of Company Shares to be sold by each
Seller and related information
Schedule 7.01(e)-A Company's Subsidiaries (nominal capital, participation of
Company)
Schedule 7.01(e)-B List of Company's other participations
Schedule 7.01(f) Company Shares and Company's shares in Subsidiaries which
are not duly authorized, validly issued, fully paid up or in
which repayments have been made or which are subject to
further contribution
Schedule 7.01(i) Encumbrances or agreements regarding Encumbrances in respect
of the Company's shares in its Subsidiaries
Schedule 7.01(m) Company agreements ("Unternehmensvertrage")
Schedule 7.02 Exemptions to Non-Contravention Representation and Warranty
Schedule 7.03-A Company's Audited Consolidated Financial Statements
Schedule 7.03-B Company's Audited Consolidated Interim Financial Statements
Schedule 7.04-A Exemptions from the Conduct of Business Representation and
Warranty
Schedule 7.04-B List of Material Adverse Changes
Schedule 7.05 Exemptions from the Insolvency Representation and Warranty
Schedule 7.07 Description of Office Lease Agreements of the Company and
its Subsidiaries
Schedule 7.08-A (a) to (e): Lists of Material Contracts including Strategic
Alliance Contracts
Schedule 7.08-B Exemptions from the Representation and Warranty on Material
Contracts
Schedule 7.09-A List of the Company's intellectual property
Schedule 7.09-B Proceedings regarding the Company's Intellectual Property
Rights
Schedule 7.10-A Exemptions from Tax Representation and Warranty (Tax
returns)
Schedule 7.10-B Exemptions from Tax Representation and Warranty (Tax
payments)
Schedule 7.11-A List of Consulting Employees and associated details and
bonus for 2001 paid in 2002 for Partners
Schedule 7.11-B List of employees of the Subsidiaries
Schedule 7.11-C Agreements with Senior Managers and Partners containing
Change of Control Clauses
Schedule 7.11-D List of C, D and E Partners
Schedule 7.12-A List of internal labor agreements (Betriebsvereinbarungen)
Schedule 7.12-B List of collective bargaining agreements (Tarifvertrage)
Schedule 7.13 List of the Benefit Plans of the Company
Schedule 7.14 List of Employment Disputes
Schedule 7.16-A List of all insurance policies
Schedule 7.16-B List of group insurance policies
Schedule 7.17 List of Lawsuits
Schedule 7.19 List of 35 most significant clients of the Company and its
Subsidiaries
Schedule 7.21 List of the Company's and Infonova's Bank Accounts
Schedule 11.04 Arbitration Agreement
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT, dated as of June 8, 2002 (this
"Agreement"), is concluded among (i) KPMG Consulting, Inc., a corporation
organized and existing under the laws of the State of Delaware, USA, as
purchaser (the "Purchaser"), on the one hand, and each of (i) KPMG Deutsche
Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprufungsgesellschaft, a
stock corporation (Aktiengesellschaft) organized and existing under the laws of
the Federal Republic of Germany, with its registered office (Sitz) in Berlin and
Frankfurt am Main, Germany, registered with the Commercial Register of the Local
Court Berlin-Charlottenburg under HRB 1077 and with the Commercial Register of
the Local Court Frankfurt am Main under HRB 14345 ("KPMG DTG"), (ii) the persons
listed in Annex 1 hereto (each a "Minority Shareholder" and collectively the
"Minority Shareholders") (each of KPMG DTG and each of the Minority Shareholders
is also referred to hereinafter each as a "Seller" and collectively as the
"Sellers"). (The Purchaser and all the Sellers hereinafter each being referred
to as a "Party" and collectively, as the "Parties").
PREAMBLE:
WHEREAS, KPMG Consulting Aktiengesellschaft, with its
registered office (Sitz) in Frankfurt am Main, is registered with the Commercial
Register of the Local Court Frankfurt am Main under HRB 50613 (the "Company").
The nominal share capital (Grundkapital) of the Company amounts to EUR
8,400,000.00 (in words: Euro eight million four hundred thousand) and is divided
into 8,400,000 no-par value registered shares (Namensstuckaktien) (collectively
the "Company Shares" and individually a "Company Share"). The Company Shares are
represented by three global certificates ("Globalurkunden") which are currently
held by KPMG DTG (collectively the "Company Share Certificates"). The purpose of
the Company (Unternehmensgegenstand) is business consulting;
WHEREAS, the Sellers collectively are the owners of all of the
Company Shares. The exact shareholding of each of the Sellers in the nominal
share capital (Grundkapital) of the Company and the number of Company Shares
held by each of them are set forth opposite each such Sellers' name in Schedule
7.01 (c) to this Agreement;
WHEREAS, the Purchaser is a corporation established under the
laws of the State of Delaware, USA, with its headquarters at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇, with its common stock listed on the NASDAQ;
WHEREAS, the Company holds 51% of the shares in Infonova
Ges.m.b.H, a limited liability company (Gesellschaft mit beschrankter Haftung)
organized and existing under the laws of Austria, with its registered office
(Sitz) in Unterpremstatten, registered with the Commercial Register of the
Regional Court Graz (Firmenbuch des Landgerichts) under FN 44354 b ("Infonova").
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, who owns the remaining 49% of the shares in Infonova (the
"Infonova Shares"), has, in a separate share sale and purchase agreement, agreed
to sell and transfer the Infonova Shares to the Company. The Purchaser
acknowledges that it had been informed about such sale and transfer of the
Infonova Shares from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to the Company;
WHEREAS, the Company holds 61% of the shares in ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Ges.m.b.H, a limited liability company (Gesellschaft mit beschrankter
Haftung) organized and existing under the laws of Austria, with its registered
office (Sitz) in Graz, registered with the Commercial Register of the Regional
Court Graz (Firmenbuch des Landgerichts) ("MB GmbH"). MB GmbH is currently
dormant. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, who owns the remaining 39% of the shares in MB GmbH
(the "MB Shares" and collectively with the Infonova Shares, the "Infonova Group
Shares"), has in a separate share sale and purchase agreement, agreed to sell
and transfer the MB Shares to the Company. The Purchaser acknowledges that it
had been informed about such sale and transfer of the MB shares from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ to the Company;
WHEREAS, the Sellers desire to sell and transfer the Company
Shares owned by them; and the Purchaser desires to purchase and acquire all of
the Company Shares for the consideration and upon the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements contained herein, and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE ONE
DEFINITIONS AND SCHEDULES
Section 1.01 Definitions.
(a) In this Agreement, including its Schedules, Annexes and
Appendices, the following words and expressions shall have the meanings set
forth hereinafter:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly Controlling, Controlled by, or under
common Control with, such Person.
"Applicable Law" means, with respect to any Person or any
property or asset, all laws (including laws related to Taxes and
environmental law), statutes, ordinances, codes, rules, regulations,
decrees, orders, rulings, writs, injunctions or judgments of any
Governmental Authority (other than any Governmental Authorizations)
applicable to or binding on such Person (or its properties or assets)
or to such property or asset from time to time, however excluding any
and all contractual obligations, unless they have been concluded with
Governmental Authorities (offentlich-rechtliche Vertrage).
"Authority" means any taxing or other authority competent to
impose, administer or collect Tax or Taxes as defined in this
Agreement.
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"Benefit Plan" means any pension or retirement benefits,
bonus, incentive, profit sharing, stock purchase or stock option plan.
"Business Day" means any day (other than a Saturday or Sunday)
on which banks in Frankfurt am Main, Germany, are open for general
banking business.
"Closing Conditions" means the closing conditions set forth in
Article Three of this Agreement.
"Company Shares" means the 8,400,000 registered shares
(Namensstuckaktien) in the Company.
"Company Share Certificates" means the three global share
certificates (Globalurkunden) by which the Company Shares are
represented.
"Company's Audited Consolidated Financial Statements" means
the financial statements of the Company as of and for the year ended
December 31, 2001 which have been consolidated in accordance with
US-GAAP and audited by Ernst & Young AG Wirtschaftsprufungsgesellschaft
and which are attached as Schedule 7.03-A.
"Company's Audited Consolidated Interim Financial Statements"
means the financial statements of the Company as of and for the three
months to March 31, 2002 which have been consolidated in accordance
with US-GAAP and audited by Ernst & Young AG
Wirtschaftsprufungsgesellschaft and which are attached as Schedule
7.03-B.
"Condition Precedent" means the condition precedent
(aufschiebende Bedingung) set forth in Section 6.03.
"Consulting Business" means the business of providing
Consulting Services as defined in the Non-Competition Agreement.
"Consulting Employees" means those employees of the Company
who are professional consultants and are classified as "Manager",
"Senior Manager" or "Partner" under the applicable classification
system of the Company.
"Control" means ownership of 50% or more of the outstanding
share or other equity capital or voting power of any Person and the
terms "to Control", "Controlling" or "Controlled" have corresponding
meanings.
"Covenants" means the obligations to be complied with by the
Sellers (other than in Sections 2.01, 3.03, 5.03 (a) and 6.02 (e) and
the Purchaser (other than in Section 2.02), respectively, under this
Agreement.
"Data Room" means the information included in any of the
documents listed or generally reflected in the data room index which is
attached hereto as Schedule 1.01, provided however that in respect of
documents to which only a general reference is
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made, the Sellers shall have the burden of showing that the Purchaser
had access to the document in the data room prior to the date hereof.
"Domination and Profit and Loss Transfer Agreement" means the
domination and profit and loss transfer agreement ("Beherrschungs- und
Gewinnabfuhrungsvertrag") between KPMG DTG as the dominating entity and
the Company as the dominated company.
"Encumbrance" means any encumbrance, including any mortgage,
pledge, charge, lien, deposit or assignment or transfer by way of
security, ▇▇▇▇ of sale, option or right of pre-emption, entitlement to
beneficial ownership (including usufruct and similar entitlements), any
provisional or executional attachment and any interest or right held by
a third party.
"Euro Exchange Rate" means the official Euro Foreign Exchange
Reference Rate between central banks within and outside the European
System of Central Banks for the conversion of USD into EUR issued and
published on a daily basis by the European Central Bank.
"Financial Statements" means the Company's Audited
Consolidated Financial Statements and the Company's Audited
Consolidated Interim Financial Statements.
"Governmental Authority" means, with respect to any Person,
any public international, multinational or transnational organization
or any national, state, municipal or local governmental, judicial,
legislative, administrative or other authority, ministry, department,
agency, instrumentality, office, organization or stock exchange having
jurisdiction over such Person or its properties or assets.
"Governmental Authorization" means any license, certificate of
authority, permit, order, consent, approval, registration,
authorization, qualification or filing granted by or with any
Governmental Authority.
"Group Companies" means the Company and its Subsidiaries and
"Group Company" means any of them.
"Insolvency Proceedings" means any form of insolvency as set
forth under the German Insolvency Act (Insolvenzordnung) or comparable
laws in the jurisdiction of the respective company.
"Intellectual Property Rights" means all inventions,
registered designs, design rights, trademarks, service marks, internet
domain names, copyrights, patent rights, applications for any of the
foregoing, computer software programs, know-how, trade secrets and data
base rights and the goodwill attaching to any of them and applications
for any of them and any right or forms of protection of a similar
nature and having equivalent or similar effect to any of them.
"Issued Share Amount" means 8,400,000 Company Shares.
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"KCF" means KPMG Consulting France B.V.
"KCS" means KPMG Consulting Spain B.V.
"KPMG DTG" means KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft.
"Manager" means each Consulting Employee of the Company who is
classified as a "Manager" under the Company's classification system.
"Material Adverse Change" means with respect to a Person any
change, event or circumstance that has had or to such Persons'
Knowledge is reasonably likely to have, a material adverse effect on
the business, the financial condition or the results of operations or
the prospects of the Person and its Subsidiaries taken as a whole, in
each case, individually or in the aggregate and excluding adverse
changes arising out of (i) changes, events or circumstances affecting
the economy in general or the economies in which the Person and its
Subsidiaries operate and (ii) changes, events or circumstances
generally affecting the industries in which the Person and its
Subsidiaries operate. Any determination as to whether or not a Material
Adverse Change has occurred is to be determined solely with reference
to how such term as set forth in an acquisition agreement governed by
the laws of Delaware would be interpreted by U.S. courts. For purposes
of this Agreement, the Parties agree that prospects shall not be deemed
to include any forward-looking projections of the Company's anticipated
future financial results.
"Material Adverse Effect" means any effect on a Person or its
Subsidiaries that has had or is reasonably likely to have, a material
adverse effect on the business, the financial condition or the results
of operations or the prospects of such Person and its Subsidiaries
taken as a whole, excluding adverse changes arising out of (i) factors
affecting the economy in general or the economies in which such Person
and its Subsidiaries operate or (ii) factors generally affecting the
industries in which such Person and its Subsidiaries operate. Any
determination as to whether or not a Material Adverse Effect has
occurred is to be determined solely with reference to how such term as
set forth in an acquisition agreement governed by the laws of Delaware
would be interpreted by U.S. courts. However, the Parties agree that
the general duty to reduce damage, destruction or other casualty loss
under German law (allgemeine Schadensminderungspflicht) applies and
that such duty in particular includes that the Company and/or the
Purchaser have to rely on any existing insurance for any damage,
destruction or other casualty loss to the extent that it is covered by
a valid and enforceable claim against the respective insurance company
under such insurance. For purposes of this Agreement, the Parties agree
that prospects shall not be deemed to include any forward-looking
projections of the Company's anticipated future financial results.
"Non-Competition Agreement" means the agreement to be entered
into between KPMG DTG and the Company in the form as attached in
Schedule 5.03 (a).
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"Outstanding Share Amount" means 8,400,000 Company Shares.
"Partner" means each Consulting Employee of the Company who is
classified as a "Partner" under the Company's classification system.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or other entity or
organization, including any Governmental Authority.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative or investigative) commenced, brought, conducted or heard
by or before, any Governmental Authority or arbitrator.
"Properties" means the real properties owned or occupied by
the Company and its Subsidiaries, brief details of which are set out in
Schedule 7.07.
"Purchaser's Knowledge" or Person's Knowledge, if applicable,
means with respect to the Purchaser, the actual knowledge of its Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer or
General Counsel.
"Representations and Warranties" means the representations and
warranties given by the Sellers and the Purchaser in Article 7 and
Article 8 of this Agreement, respectively.
"Securities Act" means the United States Securities Act of
1933, as amended.
"Seller's Knowledge" or Person's Knowledge, if applicable,
means, with respect to each Seller, such Seller's actual knowledge.
Notwithstanding the foregoing, with respect to KPMG DTG, the actual
knowledge of each of the Partners and of the Company's management board
(Vorstand) shall be deemed to be the knowledge of KPMG DTG for purposes
of this Agreement.
"Senior Manager" means each Consulting Employee of the Company
who is classified as a "Senior Manager" under the Company's
classification system.
"Shared Services Agreement" means the agreement between the
Company and KPMG DTG dated December 22, 2000, in the version attached
in Schedule 5.03(b).
"Strategic Alliance Contract" means any KPMG Consulting
Material Contract listed in Schedule 7.08-A (e).
"Subsidiary" of a Person means (a) a corporation 50% or more
of the outstanding voting shares of which is owned, directly or
indirectly, by such Person or by one or more other Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof or (b)
any other Person (other than a corporation) in which such Person, or
one or more other Subsidiaries of such Person, or such Person and one
or more
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other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management, and
affairs thereof.
"Tax" and "Taxes" means any taxes and contributions levied by
any Authority, including income tax, value added tax, severance tax,
property tax, wealth tax, church tax, wage tax, social security
contributions (whether to be paid by the employer or assessed against
the employees ), trade tax and corporate income tax, customs and duties
(Zolle) as well as duties resulting from liability assessments in
connection with taxes (Haftungsschulden), withholding or similar taxes
or contributions, additions such as solidarity surcharge
(Solidaritatszuschlag), interest or penalties with respect thereto and
any interest in respect of such penalties or additions.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term: Section:
Agreement Introduction
Arbitration Agreement 11.04
Base Cash Price 2.02(b)(ii)(aa)
Base Purchase Price 2.02(a)
Base Purchase Price per Share 2.02(a)
Claim 2.01
Closing 6.01
Closing Condition 3.00
Closing Consideration Payment 2.02(b)(ii)
Closing Date 6.01
Closing Date Cash Amount 2.02(b)(ii)(aa)
Closing Date Payment 2.02(b)(i)
Common Stock Price as of Signing 2.04(a)
Company Preamble
Company Share Certificates Preamble
Company Shares Preamble
Condition Precedent 6.03
Contest 9.02(g)(xiv)
Cut Off Date 4.01(a)
Equity Consideration 2.02(b)(ii)(bb)
Escrow Agreement 6.02(d)(i)(bb)
Escrow Amount 6.02(d)(i)(bb)
Escrowed Exchange Shares 6.02(d)(ii)(cc)
Estimated Net Adjustment 2.03(d)
Exchange Act 8.04(b)
Exchange Shares 2.02(b)(ii)(bb)
Final Net Adjustment 2.03(d)
Final Purchase Price 2.03(d)
Financial Statements 7.03(a)
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Financing 2.02(b)(i)
Fixed Equity Consideration 2.02(b)(ii)(bb)
Floating Equity Consideration 2.02(b)(ii)(bb)
Forecast May 31 Net Working Capital 2.03(b)
Infonova Preamble
Infonova Group Shares Preamble
Infonova Shares Preamble
Initial Term 5.03(b)(i)
KCI Common Stock 2.02(b)(ii)(bb)
KPMG 3.02
KPMG Derivations 10.05(f)
KPMG DTG Introduction
KPMG US 3.02
March 31 NFD 2.03(a)
Material Contracts 7.08
May 31 Balance Sheet 2.03(a)
May 31 Net Working Capital 2.03(b)
May 31 NFD 2.03(a)
MB GmbH Preamble
MB Shares Preamble
Minority Shareholder Introduction
Monthly Financial Statements 5.06(b)
Negative Net Working Capital Adjustment 2.03(b)
Negative NFD Adjustment 2.03(a)
Net Adjustment 2.03(c)
Net Working Capital Adjustment 2.03(b)
New Partner Options 5.09
Non-Competition Agreement 5.03(a)
Non-Escrowed Exchange Shares 6.02(d)(ii)(bb)
Omnibus Account 6.02(d)(i)(aa)
Party Introduction
Positive Net Working Capital Adjustment 2.03(b)
Positive NFD Adjustment 2.03(a)
Purchaser Introduction
Purchasers' Closing Certificate 6.02(b)
Representation and Warranty 7.00
SEC Reports 8.04(a)
Securities Act 6.04(a)
Seller Introduction
Sellers Closing Certificate 6.02(a)
Specific Warranty 7.20
Tax Representation 9.02(g)
Transition Services Agreement 5.03(b)
Transitional Services 5.03(b)
TSA 5.03(b)
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US Person 6.04(b)
US-GAAP 7.03(a)
Section 1.02 Interpretation.
In this Agreement, except to the extent that the context otherwise requires:
(a) The terms defined herein include the plural as well as the
singular, and vice versa unless the context requires differently;
(b) words importing gender include all genders;
(c) all references to this Agreement mean this Share Purchase
Agreement, and all other Schedules, Annexes and Appendices hereto, and the
words "herein", "hereof", "hereto", "hereunder" and other words of similar
import refer to this Agreement and its Schedules, Annexes and Appendices as a
whole, and not to any particular Article, Section, Schedule, Annex, Appendix or
other subdivision;
(d) references made to "days", "months" and "years" refer to calendar
days, months and years, respectively;
(e) any time period provided for in this Agreement that expires on a
day that is not a Business Day shall expire on the next succeeding Business Day;
(f) whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation"; and
(g) any German term in this Agreement supersedes its English
translation.
Section 1.03 Schedules, Annexes and Appendices.
All Schedules, Annexes and Appendices to this Agreement form an
integral part of this agreement.
ARTICLE TWO
SALE AND PURCHASE
Section 2.01 Purchase and Sale. Upon the terms and subject to the
Closing Conditions set forth in this Agreement, each Seller hereby sells with
economic effect (wirtschaftliche Wirkung) as of January 1, 2002 and, at Closing,
shall assign and transfer to the Purchaser, and the Purchaser hereby purchases
from the Sellers and, at Closing, shall accept the assignment and transfer of,
the number of Company Shares set forth opposite the name of such Seller in the
table set out in Schedule 7.01 (c), such Company Shares in the aggregate
representing the entire issued share capital of the Company. The Purchaser shall
acquire the
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Company Shares together with all rights and obligations related thereto
(including the right to dividends accrued since January 1, 2002, for the current
and all previous financial years, as far as dividends for the previous financial
years were not actually distributed or profits of the Company were transferred
under the Domination and Profit and Loss Transfer Agreement to KPMG DTG as of
the date of this Agreement).
Furthermore, KPMG DTG herewith assigns to the Purchaser its claim against the
Company for reimbursement of the consideration payable by KPMG DTG to ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ for the transfer of the Infonova Group Shares to the Company
in the amount of USD 24,500,000 (the "Claim"), such assignment being subject to
the condition precedent that the entire Closing Date Payment or Closing
Consideration Payment, as the case may be, has been received by the Sellers as
set forth in Section 6.02 (d); the Purchaser herewith accepts such assignment.
The assignment set forth in the previous sentence has been taken into account
and is included in the calculation of the Purchase Price. For the avoidance of
doubt, the Parties confirm that the obligation of the Company to satisfy the
Claim shall not be taken into account in calculating the Net Adjustment as the
Claim results from the sale and purchase agreements relating to the Infonova
Group Shares which were entered into on June 7, 2002, i.e. only after the period
relevant for the May 31 Balance Sheet determining the Net Financial Debt of the
Company for purposes of the Net Adjustment.
Section 2.02 Purchase Price.
(a) Purchase Price; Purchase Price per Share. The aggregate
purchase price for all of the Company Shares agreed as of the date
hereof, is USD 670,164,500 (in words: United States Dollars six hundred
seventy million one hundred sixty four thousand five hundred) (the
"Base Purchase Price"). The base purchase price per Company Share is
USD 79.78 (in words: United States Dollars seventy-nine and seventy
eight cents) (the "Base Purchase Price per Share"). The Base Purchase
Price shall be adjusted at or after Closing, as the case may be, in
accordance with the purchase price adjustment mechanism set forth in
Section 2.03 of this Agreement.
(b) Closing Date Payment; Closing Consideration Payment.
(i) Cash Payment. At Closing, the Base Purchase Price as
adjusted by the Net Adjustment or the Estimated Net Adjustment,
as the case may be (the "Closing Date Payment"), shall be paid
completely in cash in immediately available funds in United
States Dollars, free of any bank charges in accordance with the
provisions set forth below. The Purchaser's obligation to pay the
entire Closing Date Payment in cash as provided for in this
paragraph (i) is, however, subject to the Purchaser having been
able to obtain sufficient financing through a combined funding
consisting of a debt and/or an equity offering on market terms
and conditions (the "Financing"). The Purchaser has, prior to the
execution of this Agreement, provided the Sellers' financial
advisors with a copy of a letter from its financial advisor with
respect to a potential Financing. The Purchaser shall use its
best efforts (alle Massnahmen ergreifen) to launch and close a
public equity offering to raise sufficient cash, alongside its
debt facilities, and
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in sufficient time to enable the Purchaser to satisfy the
entire Closing Date Payment in cash. If in the reasonable
opinion of the Purchaser (acting in good faith and after
consultation with the Sellers), the equity market environment
or the technology stock market environment has materially
deteriorated between the date of this Agreement and the
Closing such that the Purchaser has not been able to launch
and close a public equity offering on reasonable terms to
raise sufficient cash to enable the Purchaser, together with
the intended debt funding, to satisfy the entire Closing Date
Payment in cash, then it shall so notify the Sellers who may
elect to (aa) defer the closing for up to 30 days, while the
Purchaser continues its best efforts to attempt to obtain the
Financing; or (bb) to receive, instead of receiving the
entire Closing Date Payment in cash, the consideration set
forth in (ii) below. For the avoidance of doubt it is hereby
set forth that in such case, the Purchaser's obligation to
pay the consideration in the cash / shares ratio outlined in
(ii) is not conditional on receipt of any portion of the
Financing.
(ii) Cash / Share Payment. If the Purchaser is not able
to obtain the Financing before Closing, or if the Sellers
elect to cause the Purchaser to pay the consideration as set
forth in this paragraph (ii) as permitted in clause (i)
above, the Purchaser shall pay the consideration at Closing
in a cash / share ratio as follows (the "Closing
Consideration Payment"):
(aa) USD 280,000,000 (in words: United States
Dollars two hundred and eighty million) (the "Base Cash
Price") as adjusted by the Net Adjustment or the
Estimated Net Adjustment, as the case may be, shall be
payable in cash in immediately available funds in United
States Dollars, free of any bank charges (the "Closing
Date Cash Amount") in accordance with the provisions set
forth below.
(bb) USD 390,164,500 (in words: United States
Dollars three hundred ninety million one hundred sixty
four thousand five hundred) of the Closing Consideration
Payment (the "Equity Consideration") shall consist of
the "Fixed Equity Consideration" and the "Floating
Equity Consideration" and shall be payable in validly
issued, fully paid up and non-assessable shares of
common stock, par value of USD 0.01 per share, of the
Purchaser (the "KCI Common Stock") in accordance with
the provisions of Section 2.04. The aggregate number of
shares of KCI Common Stock to be issued, assigned,
transferred and delivered at Closing is hereinafter
referred to as the "Exchange Shares". The Exchange
Shares shall be of the same class and have the same
terms and rights as the currently outstanding shares of
KCI Common Stock, and shall not be subject to any
restriction on transfer other than those applicable
under the Securities Act to "restricted securities"
issued in an "offshore" placement in accordance with
Regulation S under the Securities Act.
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Section 2.03 Purchase Price Adjustment.
(a) Net Financial Debt Adjustment. The Sellers and the Purchaser
determined the Base Purchase Price and the Base Cash Price for the
Company Shares in part based on the Net Financial Debt of the Company as
of March 31, 2002 in the amount of EUR 17,021,000 (in words: Euro
seventeen million twenty one thousand) as set forth in the Company's
Audited Consolidated Interim Financial Statements (the "March 31 NFD").
Net Financial Debt for purposes of this Agreement means the financial
debt minus the cash and the cash equivalents of the Company and its
Subsidiaries (calculated on a consolidated basis, but only including
those balance sheet items expressly set forth in Schedule 2.03 (a)).
Should the Net Financial Debt of the Company as of May 31, 2002 (the "May
31 NFD") as set forth in the Company's audited interim balance sheet as
of May 31, 2002 (the "May 31 Balance Sheet") be an amount greater than
the March 31 NFD, the Base Purchase Price and therefore the Base Cash
Price, if applicable, shall be reduced by a positive amount equal to the
difference between the May 31 NFD and the March 31 NFD (a "Negative NFD
Adjustment"). Should the May 31 NFD be an amount lower than the March 31
NFD, the Base Purchase Price and therefore the Base Cash Price, if
applicable, shall be increased by a positive amount equal to the
difference between the May 31 NFD and the March 31 NFD (a "Positive NFD
Adjustment").
(b) Net Working Capital Adjustment. If the May 31 Balance Sheet
shows Net Working Capital (the "May 31 Net Working Capital") less than
EUR 12,500,000.00 (in words: Euro twelve million five hundred thousand)
(the "Forecast May 31 Net Working Capital"), the Base Purchase Price and
therefore the Base Cash Price, if applicable, shall be reduced by a
positive amount equal to the difference between the May 31 Net Working
Capital and the Forecast May 31 Net Working Capital (a "Negative Net
Working Capital Adjustment"). Should the May 31 Net Working Capital be
greater than the May 31 Forecast Net Working Capital, the Base Purchase
Price and therefore the Base Cash Price, if applicable, shall be
increased by a positive amount equal to the difference between the May 31
Net Working Capital and the Forecast May 31 Net Working Capital (a
"Positive Net Working Capital Adjustment"). For the purposes of this
Agreement, May 31 Net Working Capital shall mean - with each item
calculated on a consolidated basis - the sum of the balance sheet items
(line by line) indicated as Working Capital in Schedule 2.03 (b) hereto
as set forth on the May 31 Balance Sheet.
(c) Preparation of Interim Balance Sheet. The Sellers shall cause
the Company to prepare the May 31 Balance Sheet in accordance with the
practices, principles, policies, assumptions and estimates of the Company
used for purposes of preparing the Company's Audited Consolidated Interim
Financial Statements. The Sellers shall use their reasonable best efforts
to cause the May 31 Balance Sheet to be prepared within 60 days of the
date hereof. The Purchaser agrees not to interfere in the preparation of
the May 31 Balance Sheet.
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(d) Base Purchase Price Adjustment. The aggregate effect of
the positive or negative NFD Adjustment and the Positive or Negative
Net Working Capital Adjustment on the Base Purchase Price and therefore
the Base Cash Price, if applicable, is called for the purposes of this
Agreement the "Net Adjustment". The Net Adjustment shall initially be
calculated in EUR and then converted into USD on the basis of the Euro
Exchange Rate for May 31, 2002. The Sellers, if prior to the Closing,
and the Purchaser, if after the Closing, shall cause the Company to
prepare a provisional calculation of the Net Adjustment in accordance
with the above procedures. The mathematical calculation of the Net
Adjustment shall be reviewed and confirmed in writing by the Company's
auditor (i.e., Ernst & Young AG Wirtschaftsprufungsgesellschaft) and
shall, as confirmed, unless mechanical errors in computation can be
shown, be binding upon the Parties. The Parties agree to use their
reasonable best efforts to cause the Company's auditor to provide the
Parties with a written confirmation of the calculation of the Net
Adjustment as soon as possible. If the Net Adjustment has been
confirmed in writing by the Company's auditor prior to the Closing, the
Base Purchase Price and therefore the Base Cash Price, if applicable,
shall be adjusted by an amount in cash equal to the Net Adjustment. The
final purchase price calculated on the basis of the Base Purchase Price
or the Base Cash Price and the Equity Consideration, as the case may
be, and the Net Adjustment shall be referred to hereinafter as the
"Final Purchase Price". If the Net Adjustment has not been confirmed in
writing by the Company's auditor prior to the Closing, the Company's
good faith estimate of the Net Adjustment shall be delivered in writing
by the Company to the Purchaser with (i) supporting calculation and
(ii) a representation by the Company that the estimate is based on the
Company's good faith belief as to the elements to be included in the
calculation of the Net Adjustment (hereinafter called the "Estimated
Net Adjustment") at least five days prior to the Closing. The Sellers
and the Company shall prior to the Closing provide the Purchaser with
full access to the books and records used to calculate the Net
Adjustment and the Estimated Net Adjustment, as the case may be. If
only the Estimated Net Adjustment (rather than the Net Adjustment) was
available at Closing, the Closing Date Payment or the Closing Date Cash
Amount, as the case may be, shall be calculated on the basis of the
Base Purchase Price or the Base Cash Price, as the case may be, and the
Estimated Net Adjustment. A positive amount equal to the difference
between the Net Adjustment and the Estimated Net Adjustment (the "Final
Net Adjustment"), shall be paid by the Purchaser to the Sellers or the
Sellers to the Purchaser, as the case may be, within 5 Business Days
after the Net Adjustment has been confirmed in writing by the Company's
auditor. As to the payment of the Closing Date Payment or the Closing
Consideration Payment and the Final Net Adjustment, if any, any right
of set-off (Aufrechnungsrecht) or retention (Zuruckbehaltungsrecht)
shall be excluded.
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Section 2.04 Exchange Shares. The exact number of Exchange Shares to
be issued, assigned, transferred and delivered by the Purchaser under Section
2.02 (b) (ii) as of Closing shall be the sum of the Fixed Equity Consideration
and the Floating Equity Consideration:
(a) The Fixed Equity Consideration shall be the number of shares of
KCI Common Stock determined by dividing USD 195,082,250 (in words: United
States Dollars one hundred ninety five million eighty two thousand two
hundred and fifty) by USD 16.09 (in words: United States Dollars sixteen
and nine cents) and after performing such calculation rounding up to the
nearest whole number of shares of KCI Common Stock (the "Common Stock
Price as of Signing");
(b) The Floating Equity Consideration shall be that number of shares
in KCI Common Stock determined by dividing USD 195,082,250 (in words:
United States Dollars one hundred ninety five million eighty two thousand
two hundred and fifty) by the average market price in United States
Dollars of KCI Common Stock on the consolidated report of trading at the
close of official trading hours on the NASDAQ over the 10 trading day
period ending on the second trading day prior to the Closing Date (the
"Common Stock Price as of Closing") and after performing such calculation
rounding up to the nearest whole number of shares in KCI Common Stock.
(c) The Exchange Shares shall be transferred together with any and
all rights attached thereto. The Exchange Shares shall be delivered to
KPMG DTG acting on behalf of all Sellers. KPMG DTG and the Minority
Shareholders have agreed that the Closing Date Payment or the Closing
Consideration Payment as the case may be shall be allocated to the
individual Sellers in accordance with Schedule 7.01 (c) hereto.
Section 2.05 Value Added Tax, Other Transfer Tax. The Purchaser shall
pay all costs for the issuance and the transfer of the Exchange Shares and any
applicable Value Added Tax (VAT) as well as all stock transfer and stamp taxes
or any other transfer tax, if any, under any Applicable Law which might become
due in connection with the transfer of the Company Shares contemplated by this
Agreement. However, the Parties shall use their reasonable best efforts to
ensure, to the extent practicable, that the transactions contemplated by this
Agreement do not become subject to VAT or other transfer taxes under any
Applicable Law.
Section 2.06 Infonova. The Purchaser or the Company shall enter into
an agreement with ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ providing for the Purchaser's or
the Company's payment to them of additional consideration calculated on an
earn-out basis in respect of Infonova on terms no less favorable for ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ than the terms set forth in Schedule 2.06.
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ARTICLE THREE
CLOSING CONDITIONS
The Sellers and the Purchaser are obligated to consummate the sale and
purchase of the Company Shares as well as to make the Closing Date Payment or
Closing Consideration Payment, as the case may be, at Closing, subject only to
the satisfaction of the following conditions (each a "Closing Condition" and
jointly the "Closing Conditions"):
Section 3.01 Cartel Approval. All required approvals of the competent
cartel authorities shall have been granted or shall be deemed to be have been
granted (e.g., after expiry of the applicable time limit for taking a decision).
Section 3.02 SEC Approval. The Parties acknowledge that the
consummation of the transactions contemplated by this Agreement may raise issues
regarding the independence of KPMG (as defined below) under SEC regulations.
Therefore, unless this condition is waived by KPMG DTG, the Closing shall be
subject to the condition that the SEC confirms in a no-action letter customary
for transactions of this type that the execution, delivery and performance of
the transactions contemplated by this Agreement, including the ownership of the
Exchange Shares by the Sellers, the Non-Competition Agreement and the TSA, will
not endanger the independence of KPMG from the Purchaser within the meaning of
the applicable SEC regulations and, in particular, that KPMG will not have a
"mutuality of interest" or a "direct or material indirect business relationship"
with, or a "direct financial interest or material indirect financial interest"
in any of its audit clients that are also clients of or enter into business
relationships with or invest in the Purchaser or any of its affiliates, or in
which the Purchaser or any of its affiliates or any departing Company Partner or
employee invests. For the purposes of the foregoing, "KPMG" includes KPMG LLP or
any of its Subsidiaries ("KPMG US"), or any other firms not owned by KPMG US but
conducting audit activities outside the United States for SEC registrants under
the name KPMG or derivations thereof, including KPMG DTG, or otherwise as part
of the KPMG network of firms. The Parties will consult and co-operate with each
other with regard to communications with the SEC in relation to this Closing
Condition provided that KPMG DTG's counsel shall lead such process.
Section 3.03 No Injunctions; Objecting Shareholders. There shall not
exist any temporary restraining order, injunction or other order issued by any
court of competent jurisdiction prohibiting the consummation of the Closing.
Notwithstanding anything to the contrary contained herein, to the extent that
(a) one or more orders or injunctions exist prohibiting the transfer of less
than 5% in the aggregate of the Company Shares or (b) less than 5 % of the
Company Shares are not delivered at Closing for any other reasons, the Parties
shall nevertheless consummate the Closing and the Purchaser shall deliver at
Closing the entire portion of the total Closing Date Payment or the Closing
Consideration Payment, as the case may be, owed hereunder with respect to the
Company Shares delivered at Closing. The Purchaser shall have no rights or
indemnification claims against any of the Sellers arising from the fact that not
all of the Company Shares were delivered at Closing to the Purchaser under (a)
or (b) above; provided that the Sellers shall have used their reasonable best
efforts to ensure that all of the Company Shares are transferred to the
Purchaser at Closing. In the event of a squeeze-
-15-
out pursuant to Sec. 327a et seq. of the German Stock Corporation Act of the
objecting Minority Shareholders, the Sellers shall, within five Business Days of
the consummation of any squeeze out, pay to the Purchaser any amount by which
the consideration to be paid per Company Share in the squeeze-out procedure
exceeds the Final Purchase Price per Share for the Company Shares not delivered
at Closing, and the Purchaser shall, within such five Business Days, pay to KPMG
DTG on behalf of the Sellers any amount by which such consideration is less the
Final Purchase Price per Share for the Company Shares not delivered at Closing.
Section 3.04 Waiver of Closing Conditions. KPMG DTG may, at any time
between the date hereof and the Closing Date or on the Closing Date, waive,
either in whole or in part, the Closing Conditions set forth in Section 3.02.
The Sellers and the Purchaser jointly may, at any time between the date hereof
and the Closing Date or on the Closing Date, waive, either in whole or in part,
the Closing Condition set forth in Section 3.03. The Closing Condition set forth
in Section 3.01 may not be waived by the Sellers, nor by the Purchaser, nor by
both acting jointly.
ARTICLE FOUR
TERMINATION PRIOR TO CLOSING
Section 4.01 Termination prior to Closing. Prior to Closing, this
Agreement may be terminated (Rucktritt vom Vertrag) only for the following
reasons:
(a) Non-occurrence of Closing Conditions. This Agreement may be
terminated by KPMG DTG or the Purchaser by written notice to the other, if
the Closing Conditions set forth in this Agreement have not been satisfied
or, if permitted, waived on or before 180 days from the date hereof, or
such later date as KPMG DTG and the Purchaser may agree upon in writing
(the "Cut Off Date"). However, the Purchaser shall only be entitled to
terminate this Agreement after the Cut Off Date if the Purchaser has
complied with its obligations set forth under Section 5.05 (a) and (b)
(Required Approvals).
(b) Violation of Representation and Warranties and Obligations. Either
the Purchaser on the one hand or KPMG DTG (acting on behalf of all
Sellers) on the other hand may terminate this Agreement prior to Closing
in case of a breach of (i) the Representations and Warranties of the
Purchaser or the Sellers, as the case may be, or of (ii) the obligations
of the Purchaser or the Sellers, as the case may be, set forth in this
Agreement; provided, however, that such termination right shall only be
available, if (aa) the Purchaser or the Sellers, as the case may be, has
informed the other by written notice of such violation or breach; (bb)
such violation or breach has not been cured within 30 days of receipt of
such notice; and (cc) such violation or breach has had or is reasonably
likely to have ((alpha)) a Material Adverse Effect on the Company, in the
case of a violation or breach by the Sellers; or a Material Adverse Effect
on the Purchaser, in the case of a breach by the Purchaser or ((beta))
such violation or breach materially impairs
-16-
such Party's indemnification rights under this Agreement, or in the case
of the Sellers materially impairs the Sellers' rights under the
Registration Rights Agreement.
Section 4.02 Effect of Termination. In the event of the termination of
this Agreement in accordance with Section 4.01, this Agreement shall thereafter
become void and have no effect, and no Party hereto shall have any liability to
the other Party or Parties (other than for breach of this Agreement prior to
such termination), except that the provisions of this Section and of Section
10.01 and Sections 11.01, 11.02, 11.03, 11.04, 11.05, 11.06, 11.07, 11.08, 11.09
and 11.10 shall survive such termination. In the case of a termination under
Section 4.01 (b), the terminating Party shall be entitled to claim from the
other Party reimbursement of its costs and expenses reasonably incurred in
connection with the negotiation, preparation and execution of this Agreement.
ARTICLE FIVE
CONDUCT OF BUSINESS AFTER SIGNING; PRE-CLOSING ACTIONS
Section 5.01 Notification. At all times prior to Closing, each Party
shall promptly notify the other Parties when, in the case of the Sellers, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and in the case of the
Purchaser, Rand Blazer, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, become
aware of (a) the occurrence, or failure to occur, of any event that would be
likely to cause any of the Representations and Warranties given as of the
Closing Date by such Party contained in this Agreement to be untrue or
inaccurate in any material respect as of the Closing Date and (b) any material
failure to comply with or satisfy any of the obligations in this Agreement to be
complied with or satisfied by such Party under this Agreement. In case of a
breach of this notification obligation, the other Party continues to be obliged
to perform its own obligations, unless the breach has resulted in a Material
Adverse Effect on the other Party.
Section 5.02 Conduct of Business after Signing. Between the date
hereof and the Closing Date, except as otherwise expressly provided in this
Agreement or as the Purchaser shall otherwise consent to in writing in advance
thereto (which consent shall not be unreasonably withheld or delayed and which
shall be deemed given unless denied in writing within five Business Days from
notice by KPMG DTG or the Company to ▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇▇▇ at the
Purchaser, whereby the provisions relating to notices under Section 11.02 shall
apply accordingly, of the proposed transaction or action for which such consent
is sought), the Sellers shall, to the extent legally permissible:
(a) cause the Company and its Subsidiaries to conduct the business of
the Company and its Subsidiaries in all material respects in the ordinary
course of business consistent with past practice;
-17-
(b) not adopt shareholders' resolutions and cause the Company not
to adopt such resolutions for its Subsidiaries, other than those
necessary or desirable to effect the transactions and measures
contemplated by this Agreement;
(c) cause the Company and its Subsidiaries not to sell or
otherwise dispose of assets and properties in the excess of EUR 25,000.00
individually, other than the sale of products in the ordinary course of
business, or create Encumbrances on any portion of their respective
properties or assets;
(d) cause the Company and its Subsidiaries not to enter into any
new, or discontinue any existing, line of business within Consulting
Services as defined under the Non-Competition Agreement;
(e) cause the Company not to incur credit liabilities bearing
interest in excess of EUR 5,000,000.00 in the aggregate on a consolidated
basis;
(f) not cause the Company or any of the Group Companies which have
third party shareholders to declare, make or pay any dividend or
distribution (whether in cash, securities as other property) with respect
to the Company Shares or the shares owned by any third party of such
Group Company, except that it may set aside or pay any dividends or
distributions declared prior to the date hereof which are disclosed in
Schedule 5.02 (f);
(g) not cause the Company and its Subsidiaries to issue any shares
to any Person;
(h) other than under existing contracts or commitments or as
required by Applicable Law, cause the Company and its Subsidiaries not to
grant any material salary or wage increases of the Consulting Employees,
or, except as noted in Schedule 5.02 (h), change or amend any or
introduce new Benefit Plans of the Group Companies;
(i) except as otherwise described herein, cause the Group
Companies not to merge or consolidate with any other Person or acquire
any interest in any Person and not to resolve and implement any corporate
restructuring measures;
(j) not change the accounting methods, policies, practices,
procedures, classifications or judgements and estimations methodology of
the Company or its Subsidiaries, except where such changes are required
due to a concurrent change in Applicable Law or in generally accepted
accounting principles which takes effect after the date hereof;
(k) cause the Company and its Subsidiaries not to issue or sell
any notes, bonds or other securities (Anleihen, Schuldverschreibungen),
or any option, warrant or other right to acquire the same, of the Company
or any of its Subsidiaries;
-18-
(l) cause the Company and its Subsidiaries not to make any
individual capital expenditure or commitment for any individual capital
expenditure in excess of EUR 1,000,000.00;
(m) cause the Company and its Subsidiaries not to make any loan
to, guarantee any indebtedness of or otherwise incur any indebtedness on
behalf of any Person other than Group Companies and other than exceeding
EUR 25,000.00 individually or exceeding EUR 250,000.00 in the aggregate;
(n) cause the Company and its Subsidiaries not to enter into any
agreement, arrangement or transaction with any of its members of the
management board (Vorstandsmitglied), managing directors
(Geschaftsfuhrer), respectively, or shareholders (or with any relative,
beneficiary, spouse or affiliate of the foregoing) of the Company, other
than agreements, arrangements or transactions with the foregoing in their
capacity as employees of the Company and its Subsidiaries, respectively,
in the ordinary course of business consistent with past practice;
(o) cause the Company and its Subsidiaries not to make any
material change to the standard terms and conditions of employment or
service of any class of employees of the Company or its Subsidiaries
generally other than as required by Applicable Law or announce or
commence any redundancy program in respect of the employees of the
Company or its Subsidiaries;
(p) cause the Company and its Subsidiaries not to grant any
sublease to any third party;
(q) cause the Company and its Subsidiaries not to enter into any
new client engagement with proposed total fees in excess of EUR
10,000,000;
(r) cause the Company and its Subsidiaries not to enter into any
contract (other than as a result of the acceptance of any existing
proposal for a client engagement at the date of this Agreement) on terms
which are triggered on a change of control of the Company;
(s) cause the Company and its Subsidiaries to use their reasonable
best efforts not to permit any of their policies of insurance to lapse or
do anything which would make any such policy of insurance void or
voidable and shall notify its insurers of all circumstances required to
be so notified under the terms of such policies in a timely manner;
(t) cause the Company and its Subsidiaries not to do or omit to
do, or cause or allow to be done or omitted to be done, any act or thing
which would result (or be likely to result) in a breach of any of the
Representations and Warranties of the Sellers to the extent that such
Representations and Warranties are also given as of the Closing, or a
breach of any other obligation or undertaking contained in this
Agreement; or
-19-
(u) cause the Company and its Subsidiaries not to make any
commitments or agreements to do any of the foregoing.
With respect to the measures under (a), (c), (e), (m), (q), and
(u) above, any measures or transactions under the existing cash pooling
agreement between KPMG DTG and the Group Companies, shall be permitted.
Section 5.03 Non-Competition and Shared Services Agreements.
(a) Non-Competition Agreement. On or prior to the Closing, KPMG
DTG and the Company shall terminate the Division of Services Agreement
between them dated October 18 and 20, 2000 and shall enter into a
non-competition agreement in substantially the form attached hereto as
Schedule 5.03 (a) (the "Non-Competition Agreement"), with only such
changes, if any, as may be necessary to secure the SEC approval referred
to in Section 3.02 above or as may be mutually agreed by KPMG DTG and the
Purchaser. On or prior to the Closing, KPMG DTG shall use its reasonable
best efforts to cause KPMG Alpen-Treuhand GmbH and KPMG Austria GmbH to
enter into a substantially similar agreement with the Company and to
cause KPMG Holding, Zurich to enter into a substantially similar
agreement with the Company or to cause such parties to become parties to
the Non-Competition Agreement.
(b) Transition Services Agreement. On or prior to the Closing,
KPMG DTG and the Company shall negotiate in good faith and enter into and
replace the Shared Services Agreement with a Transition Services
Agreement pursuant to which KPMG DTG shall agree to provide to the
Company certain transitional services ("Transitional Services"),
including information technology, knowledge management, internal
accounting and human resources services and office facilities in
accordance with the terms and conditions specified in the Shared Services
Agreement as modified by the provisions set forth below or such
additional or different terms as may be required to secure the SEC
approval referred to in Section 3.02 above. On or prior to the Closing,
KPMG DTG shall use its reasonable best efforts to cause KPMG Fides,
Zurich to enter into a substantially similar agreement with the Company.
Such agreement (the "Transition Services Agreement" or "TSA") shall
include the following terms and conditions:
(i) Term. The TSA shall have an initial term (the "Initial
Term") of 12 months and shall continue in effect thereafter unless
terminated by either Party upon at least six months written
notice, provided however that the maximum term of the TSA shall be
3 years.
(ii) Remuneration. The services provided under the TSA shall
be provided at cost on the basis historically used by KPMG DTG to
allocate expenses to the Company. In the event the Company
terminates any Transitional Service prior to expiration of the
Initial Term, the Company shall pay KPMG DTG an amount equal to
the cost of providing such service for the balance of the Initial
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Term based upon the cost of the Company's use of the service in the 12
months preceding the Closing.
(iii) Migration and Termination Costs. Upon a delivery of notice
to terminate a Transitional Service, the parties shall co-operate in
developing a transition plan for the winding down of such Transitional
Service. The Company shall pay the allocated actual cost of any
employee of KPMG DTG providing any migration services, provided
however that KPMG DTG and the Company shall use their reasonable best
efforts to mitigate such costs.
(iv) In connection with the termination of any Transitional
Service, the Company shall pay its pro rata share of all expenses
actually incurred in connection with the termination by KPMG DTG of
third-party contracts in effect as of the date hereof which are for
the purpose of providing such service; provided however that KPMG DTG
and the Company shall use their reasonable best efforts to mitigate
such costs.
(v) Office Space. In cases where KPMG DTG and the Company
occupy common facilities, they shall have separate and distinct office
signage and their offices shall be clearly distinguishable from one
another. The Sellers shall pay the reasonable costs of any required
build out or modification of such common facilities as necessary to
separate each of the premises from which the Consulting Business
operates from the reminder of the premises of KPMG DTG and to make
those premises accessible only by the use of appropriate keys or other
secure access systems to be provided by the Company exclusively,
provided that the costs for the key and secure access systems shall
not be borne by the Sellers but by the Purchaser or the Company. The
Purchaser and the Sellers shall co-operate and consult with each other
with respect to the manner of such separation. In cases where KPMG DTG
subleases space to the Company for the Company's exclusive use, the
Company shall, in accordance with the terms of KPMG DTG's and the
Company's basic agreement on office use use its reasonable best
efforts to enter directly into a lease with the lessor as soon as
reasonably practicable. It is understood that the Company's obligation
under each existing lease or sublease with KPMG DTG shall continue in
full force and effect until the relevant expiration date unless
terminated prior to such date in accordance with its terms.
(vi) Confidentiality. KPMG DTG and the Company shall undertake
to use all commercially reasonable efforts to ensure that confidential
information of KPMG DTG regarding the business and affairs of KPMG DTG
is not communicated to the Company and confidential information of the
Company regarding the business and affairs of the Company is not
communicated to KPMG DTG.
Section 5.04 No Impairment; Antidilution. From the date hereof and
until the Closing, neither Party shall, and shall cause any of its Subsidiaries
and its and their respective
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partners and directors not to, effect any transaction involving the purchase of
any business or assets of any Person which could reasonably be expected to
impair the ability of the Purchaser to satisfy the Closing Conditions to its
obligations hereunder or otherwise delay the Closing. Prior to the Closing, the
Purchaser shall furthermore not enter into a re-capitalization or pay, declare
or set a record date with respect to any of its equity securities for any
dividend, distribution, spin-off, split-off, stock split or similar transaction.
Section 5.05 Required Approvals. With respect to the approvals
necessary for the execution of this Agreement the Parties agree as follows:
(a) The Parties shall co-operate and use their reasonable best
efforts to secure as promptly as practicable all requisite approvals
necessitated by this Agreement and to satisfy the Closing Conditions and
the Condition Precedent to the Parties' respective obligations hereunder.
Without prejudice to the foregoing, the Parties agree that all requests
and enquiries with regard to the Closing Conditions set out in Section
3.01 from any Governmental Authority shall be dealt with by them in
consultation with each other and that they shall promptly co-operate with
and provide all necessary information reasonably required by such
Governmental Authority upon being requested to do so by such Governmental
Authority or by the other Party.
(b) Except as set forth expressly below, with respect to the
Closing Conditions set forth in Section 3.01, the Purchaser shall comply
with any requirements of the competent competition or cartel authorities
in order to obtain the approval for the Closing of this Agreement. If
necessary in order to avoid a negative decision by any applicable
competition or cartel authority or a delay to the Closing beyond the
Cut-Off-Date, the Purchaser shall advise such authority of its
willingness to agree to and shall sell or otherwise dispose of, hold
separate or divest itself of any shares or participation or agree to any
other limitations regarding the right of the Purchaser or any of its
Subsidiaries to effectively control or operate its business, assets or
operations, provided however that the Purchaser shall not be required to
take such actions and/or agree to such limitations to the extent they
would have a Material Adverse Effect on the Company or on the Purchaser
(it being understood that if the Purchaser is required to dispose of,
hold separate or divest itself of any asset, the Material Adverse Effect
standard will be measured as if the Company were required to make such
disposal or divestiture).
Section 5.06 Access to Information; Monthly Financials. Between
the date hereof and the Closing Date, the Parties agree on the following
information rights and notification obligations:
(a) Access to Information. The Sellers shall cause the Company to
(i) provide to the Purchaser access at reasonable times upon reasonable
prior notice to its officers, employees, agents, properties, offices and
other facilities and to its books and records and (ii) furnish promptly
to the Purchaser such information concerning its business, properties,
contracts, assets, liabilities, personnel and other aspects as the
Purchaser or
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its representatives may reasonably request. The Purchaser shall appoint in
writing one representative through whom all such requests shall be made.
(b) Monthly Financials. Without prejudice to (a) above, the Sellers
shall deliver to the Purchaser, within 15 days after the end of each
calendar month, financial statements for each such calendar month for the
Company and its consolidated Subsidiaries, including a balance sheet dated
as of the end of such calendar month, prepared by the management of the
Company in good faith on a basis consistent with the monthly reports
routinely prepared by the management ("Monthly Financial Statements").
Section 5.07 Visits / Meetings with Clients and Consulting Employees.
(a) Visits of clients / Strategic Partners. Between the date hereof
and the Closing Date, KPMG DTG shall, in coordination with the Company and
the Purchaser, cause the Company's management to arrange for meetings
between representatives of the Purchaser, the Company and KPMG DTG with ten
major clients (identity to be mutually agreed), and three parties to major
Strategic Alliance Contracts (identity to be mutually agreed) in order to
encourage these clients to continue to work with the Company after Closing.
(b) Consulting Employees. Between the date hereof and the Closing,
KPMG DTG shall, in coordination with the Company and the Purchaser, arrange
for a meeting of the Consulting Employees where the Purchaser shall have
the opportunity to present its concept on the Company's further operation
to the Consulting Employees; KPMG DTG shall use its reasonable best efforts
to cause the Company's management to use its reasonable best efforts to
support the Purchaser in encouraging the Consulting Employees to continue
their employment relationship with the Company after Closing.
Section 5.08 Mutual Release of Guarantees.
(a) KPMG DTG and the Purchaser agree that the Purchaser hereby assumes
as of the Closing all obligations under any guarantees that KPMG DTG or any
of its Subsidiaries (other than the Group Companies) has given with respect
to liabilities and obligations of the Group Companies or any of them. The
Purchaser shall undertake its reasonable best efforts to achieve the
consent of the respective beneficiary under such guarantees to such
assumption. KPMG DTG shall co-operate. As long as and to the extent that
such consent by the respective beneficiary has not been granted, the
Purchaser and KPMG DTG shall treat each other internally as if such consent
had been granted. In particular, the Purchaser shall indemnify KPMG DTG and
its Subsidiaries (other than the Group Companies) against any and all
claims of the respective beneficiary under such guarantee.
(b) The previous paragraph 5.08 (a) shall also apply mutatis mutandis
for KPMG DTG's obligations to assume all obligations under any guarantees
granted by one of the Group Companies with respect to obligations or
liabilities of KPMG DTG or one of its Subsidiaries (other than the Group
Companies)
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Section 5.09 Purchaser Common Stock Options. The Purchaser agrees that
immediately following the Closing, it will, subject to the grantees entering
into the Purchaser's so called Managing Director Contract of Employment or such
other employment agreement as is applicable to the classification of such
grantee, grant options (the "New Partner Options") to purchase 833,000 shares of
KCI Common Stock at an exercise price equal to the closing price of the KCI
Common Stock on the Closing Date (or the next NASDAQ trading day if the Closing
Date is not a Nasdaq trading day) to the individuals and in the amounts set
forth on Schedule 5.09. The New Partner Options attributable to each individual
set forth on Schedule 5.09 will vest over a three-year period, with one third
vesting on the first anniversary of the Closing, one third vesting on the second
anniversary of the Closing and one third vesting on the third anniversary of the
Closing. Subject to the foregoing, the New Partner Options will be subject to
the terms of the KPMG Consulting, Inc. 2000 Long-Term Incentive Plan, Standard
Stock Option Agreement and Standard Notice of Grant. The Purchaser will maintain
the effectiveness of a Registration Statement on Form S-8 registering the KCI
Common Stock underlying the New Partner Options. The Sellers will indemnify the
Purchaser for damages arising from any successful claim by any of the
individuals listed on Schedule 5.09 against Purchaser or the Company alleging
that such individuals were entitled to Company Shares prior to the Closing and
therefore to a right to receive a portion of the Purchase Price hereunder.
Section 5.10 Cash Pooling Agreement; Inter-Company Balances. The
Sellers shall ensure that, as of the Closing Date, the cash pooling arrangement
between KPMG DTG on the one hand and the Group Companies on the other hand shall
be terminated and that any debt balances between KPMG DTG and its Subsidiaries
on the one hand and the Group Companies on the other hand shall be reduced to
zero.
ARTICLE SIX
CLOSING
Section 6.01 Time and Place of Closing. The transfer of the Company
Shares and the payment of the Closing Date Payment or the Closing Consideration
Payment, as the case may be, (the "Closing") hereunder shall take place at the
offices of KPMG DTG located at ▇▇▇▇▇▇▇▇▇▇(▇▇▇▇)▇ ▇▇ / ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
at the earliest of (i) June 30, 2002, if the Closing Conditions provided in
Article 3 have been satisfied or waived (if permitted) by such date, (ii) if the
Closing Conditions have not been satisfied or waived by June 30, 2002, the fifth
day after such Closing Conditions shall have been satisfied or waived (if
permitted), or (iii) such other date as may be agreed between the Purchaser and
the Sellers (the "Closing Date"). Subject to the provisions of Article 4
(Termination prior to Closing), failure to consummate the purchase and sale
provided in this Agreement on the date and at the place determined pursuant to
this Section will not result in the termination of this Agreement and will not
relieve any Party of any obligation under this Agreement. All rights under
Sections 323, 325 of the German Civil Code (BGB) shall remain unaffected.
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Section 6.02 Actions as of Closing. At the Closing, as part of a
simultaneous transaction (concurrent conditions; Erfullung Zug um Zug) the
following actions shall be taken:
(a) Sellers' Closing Certificate. The Sellers shall deliver to the
Purchaser a certificate in which they confirm (the "Sellers' Closing
Certificate") that:
(i) (aa) all those statements contained in Sections 7.01, 7.02
and 7.05 which are expressly given as of the Closing Date are true and
correct as of the Closing Date, and (bb) that the Sellers have
complied in all material respects with the obligations required to be
complied with by the Sellers prior to the Closing, except where, in
each case (aa) or (bb) would not reasonably be expected to have a
Material Adverse Effect;
(ii) neither the Company nor any of its Subsidiaries has been
made a party to any Proceeding (rechtshangiges Verfahren) or, to the
Seller's Knowledge, has been threatened in writing to be made a party
to any Proceeding, which has had or is reasonably likely to have a
negative impact on the Company and its Subsidiaries, taken as a whole,
in an amount in excess of EUR 20,000,000.00 (in words: Euro twenty
million). It being understood that any Proceedings initiated by the
Purchaser or one of its Affiliates shall not count for the purposes of
this provision and the respective Representation and Warranty.
(b) Purchaser's Closing Certificate. The Purchaser shall deliver a
certificate to the Sellers in which it confirms (the "Purchasers Closing
Certificate") that:
(i) the statements contained in Sections 8.01, 8.03, 8.04, 8.05,
8.06 and 8.09 are true and correct as of the Closing Date; and
(ii) the Purchaser has complied in all material respects with the
obligations required to be complied with by the Purchaser prior to the
Closing Date;
except where in such cases that would not reasonably be expected to
(i) materially impair the Sellers' rights hereunder or, (ii) have a
Material Adverse Effect.
(c) Registration Rights Agreement. The Purchaser shall deliver to KPMG
DTG the executed Registration Rights Agreement to be entered into between
the Purchaser and KPMG DTG in the form attached hereto as Schedule 6.02
(c).
(d) Payment of Purchase Price. The Purchaser shall deliver to the
Sellers the entire Purchase Price as follows:
(i) If the Purchaser has obtained the Financing in accordance
with Section 2.02 (b) (i) above, the Purchaser shall
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(aa) deliver to the Sellers, by wire transfer of immediately
available funds, free of any bank charges, to a bank account
designated by KPMG DTG to the Purchaser on behalf of all Sellers
with written notice given at least five Business Days prior to
the Closing Date (the "Omnibus Account"), an amount equal to 90%
of the Closing Date Payment set forth in Section 2.02 (b) (i);
(bb) the remaining 10% of the Closing Date Payment set forth
in Section 2.02 (b) (i) (the "Escrow Amount") shall be delivered
by wire transfer of immediately available funds, free of any bank
charges, to an Escrow Agent reasonably acceptable to the Parties.
The Escrow Amount shall solely serve to satisfy indemnification
claims of the Purchaser against the Sellers for a breach of the
Representations and Warranties and the Covenants set forth in
this Agreement. The rights and obligations of the Parties as well
as the rights and obligations of the Escrow Agent with respect to
the Escrow Amount shall be set forth in an Escrow Agreement (the
"Escrow Agreement"), which will be negotiated in good faith and
the Parties will use their reasonable best efforts to conclude
the Escrow Agreement as soon as practicable. If the Escrow
Agreement is not put in place when the Closing Conditions are
reasonably likely to be satisfied within the next ten days, then
an appropriate neutral expert shall be appointed by the Parties
and be requested to stipulate the then open issues on the Escrow
Agreement within three days of his appointment. If the Parties
cannot agree upon an appropriate neutral expert within three
business days, such expert shall be appointed, upon request of
one of the Parties, by the President of the Notary's Chamber in
Berlin. The expert shall be deemed to be commissioned by both
Parties and the Parties shall pay the experts costs in equal
shares. The escrow created by the Escrow Agreement shall subsist
for 18 months. Any release of the Escrow Amount shall only be
made in accordance with the Escrow Agreement. The provisions set
forth in the Escrow Agreement shall prevail over the provisions
of this Agreement. Notwithstanding the foregoing, the Sellers
shall be entitled at any time to replace the Escrow Amount partly
or in whole by a irrevocable, unconditional bank guarantee
unlimited in time of a bank reasonably satisfactory to the
Purchaser in a corresponding amount.
(ii) If the Purchaser has not obtained the Financing in
accordance with Section 2.02 (b) (i) above and therefore will pay the
Closing Consideration Payment as set forth in Section 2.02 (b) (ii),
the Purchaser shall
(aa) deliver to the Sellers, by wire transfer of immediately
available funds, free of any bank charges, to a bank account
designated by KPMG DTG to the Purchaser on behalf of all Sellers
with written notice given at least five Business Days prior to
the Closing Date (the
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"Omnibus Account"), an amount equal to the Closing Date Cash
Amount set forth in Section 2.02 (b) (ii) (aa);
(bb) issue, convey, assign, transfer and deliver all the
Exchange Shares to be delivered hereunder (the "Non Escrowed
Exchange Shares") other than those covered by (cc) below to KPMG
DTG (on behalf of all the Sellers). In the event that multiplying
the percentages of each of the Sellers set forth in Schedule 7.01
(c) by the total number of Exchange Shares so to be issued
produces a fraction, in lieu of delivering a fractional share,
the Purchaser will pay to KPMG DTG on behalf of each Seller
otherwise entitled to a fractional Exchange Share, an amount in
cash equal to such fraction multiplied by the Common Stock Price
as of Closing. With respect to such cash payment, the foregoing
sub-paragraph (aa) above shall apply analogously.
(cc) issue, convey, assign, transfer and deliver such
number of Exchange Shares (the "Escrowed Exchange Shares") to the
Escrow Agent as when valued at USD 16.09 per share would equal in
value 10 % of the Closing Date Payment (rounded up to the next
whole share) (calculated as if the Closing Date Payment rather
than the Closing Consideration Payment were being made). The
Escrowed Exchange Shares shall solely serve to satisfy
indemnification claims of the Purchaser against the Sellers for a
breach of the Representations and Warranties and the Covenants
set forth in this Agreement. The rights and obligations of the
Parties and the rights and obligations of the Escrow Agent with
respect to the Escrowed Exchange Shares shall also be set forth
in the Escrow Agreement described in Section 6.02 (d) (i) (bb).
Any release of the Escrowed Exchange Shares shall only be made in
accordance with the Escrow Agreement. The provisions set forth in
the Escrow Agreement shall prevail over the provisions of this
Agreement. With respect to the bank guarantee, Section 6.02 (d)
(i) (bb) shall apply accordingly.
(iii) Subject to any portion of the Closing Date Payment or the
Exchange Shares to be placed into Escrow under the provisions set
forth in Section 6.02 (d) (i) or (ii) above and in the Escrow
Agreement and subject to any internal escrow arrangements among the
Sellers, the Final Purchase Price or, in the case of section 6.02 (d)
(ii) above, the cash component thereof shall be distributed to all
Sellers entitled thereto (and to the Blaschitz Shareholders) less any
costs connected with this Agreement and the auction process leading
thereto, to the extent that they shall be borne by the Sellers and not
by the Purchaser or the Company.
(e) Transfer of Company Shares. The Sellers shall assign to the
Purchaser their Company Shares and KPMG DTG shall hand over to the
Purchaser the Company
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Share Certificates to the Purchaser in order to effect the transfer of the
Company Shares to the Purchaser;
(f) Resignation of Supervisory Board Members. The Sellers shall
deliver to the Purchaser written declarations showing the resignation of
all members of the supervisory board of the Company who are not Employee
Representatives and any members of the advisory board (Beirat) of any of
the Group Companies.
(g) Management Board Consent. The Sellers shall deliver evidence of
the consent of the Company's management board (Vorstand) to the transfer of
the Company's Shares under the Articles of Association.
(h) Other Actions. The Parties shall take all further actions and
measures required under Applicable Law and make all necessary declarations
and deliver all other documents to be delivered under this Agreement at or
prior to Closing that have not been previously delivered in order to effect
the Closing Date Payment or the Closing Consideration Payment, as the case
may be, the issuance, assignment, transfer and delivery of the Exchange
Shares and the assignment, transfer and delivery of the Company Shares and
the Claim.
Section 6.03 Condition Precedent. Notwithstanding the foregoing, the
transfer of the Company Shares as set forth above shall be subject to the
condition precedent (aufschiebende Bedingung) (the "Condition Precedent") that
the entire Purchase Price has been paid in the manner set forth in Section 6.02
(d) above (Payment of Purchase Price) by the time of the Closing. The Sellers
may, at their sole discretion and at any time prior, on, or after the Closing
waive the Condition Precedent by making a corresponding declaration in written
form vis-a-vis the Purchaser. However, in such case, the Purchase Price
outstanding at that time shall bear interest at a rate of 5% over the base
interest rate of the European Central Bank in terms of Section 247 para. 2
German Civil Code (BGB) (Basiszinssatz) for the period between the Closing Date
and the date on which the entire Purchase Price is paid in accordance with the
provisions set forth in Section 6.02 (d) (Payment of Purchase Price) above.
Sections 323 and 325 German Civil Code (BGB) shall apply with regard to delivery
of the Company Shares and the Payment of the Closing Date Payment or the Closing
Consideration Payment, as the case may be. The Sellers shall notify the
Purchaser in writing about the occurrence of the Condition Precedent without
delay.
Section 6.04 Acknowledgement. In the event that the Purchase Price
will be paid partly with Equity Consideration according to Section 2.02 (b) (ii)
above, each Seller will at Closing:
(a) understand that the Exchange Shares he/she/it is receiving
hereunder are "restricted securities" under the United States federal
securities laws as they are being acquired in a transaction not involving a
public offering and that under such laws and applicable regulations such
Exchange Shares may be resold without registration under
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the Securities Act of 1933, as amended (the "Securities Act"), only in
certain limited circumstances.
(b) certify that he/she/it is not a U.S. person and is not
acquiring the Exchange Shares for the account or benefit of any U.S.
person, provided that a maximum number of 10 such persons need not so
certify. For the purposes of this Section, "U.S. person" has the meaning
set forth in Regulation S of the Securities Act and includes, among
others, any natural person resident in the U.S. and any partnership or
corporation organized or incorporated under the laws of the U.S.
(c) agree to resell the Exchange Shares only in accordance with
the provisions of Regulation S of the Securities Act, pursuant to a
registration statement under the Securities Act, or pursuant to an
available exemption from registration requirements; and agree not to
engage in hedging transactions prohibited by the Securities Act with
regard to the Exchange Shares.
(d) acknowledge that each certificate for the Exchange Shares
shall be imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED (A) IN
ACCORDANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S.
SECURITIES ACT, OR (C) PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION AFTER PROVIDING A LEGAL OPINION FROM NATIONALLY
RECOGNIZED SECURITIES COUNSEL TO THE ISSUER TO THE EFFECT THAT
SUCH COUNSEL BELIEVES AN EXEMPTION TO REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH AN OFFER, SALE OR TRANSFER."
ARTICLE SEVEN
SELLERS WARRANTIES
The Parties agree that the Purchaser shall acquire the Company
Shares subject to only the Representations and Warranties of the Sellers set
forth in this Article 7, (each a "Representation and Warranty" and collectively
the "Representations and Warranties") with no other or further Representations
and Warranties being given. Except as set forth in the applicable Disclosure
Schedule attached to this Agreement, each Seller severally and not jointly with
any other Seller hereby warrants and represents to the Purchaser in the form of
an abstract guarantee ("Selbstandiges Garantieversprechen", Section 311 par. (1)
German Civil
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Code ("BGB")) that the following statements are true, provided, however, that
any provisions of this Agreement relating to the consequences of a breach of any
of the Representations or Warranties, including (without being limited thereto)
the provisions of Article 9 and the limitations set forth in Sections 9.02, form
an integral part of this abstract guarantee ("Inhalt des Schuldverhaltnisses" /
"Bestandteil der Garantieerklarung"), and this abstract guarantee is only given
subject to such provisions and limitations and does not form a
"Beschaffenheitsvereinbarung" within the meaning of the German Civil Code. The
Representations and Warranties are given solely as of the date hereof unless it
is expressly indicated in the respective Representation and Warranty that such
Representation and Warranty is also made as of the Closing Date:
Section 7.01 Corporate Matters. With respect to the organization of the
Sellers and the Company, the following statements are true as of the date hereof
and will be true as of the Closing Date, unless otherwise is expressly indicated
in the following paragraphs:
(a) KPMG DTG is a duly organized company, validly existing under
the laws of the Federal Republic of Germany, has the corporate power to
carry on its business as is now being conducted, and is duly qualified or
authorized to conduct business in the jurisdiction of its registered seat
(Sitz).
(b) Each of the Sellers has all legal power and authority
necessary to execute this Agreement and the documents referred to herein
and to perform fully its respective obligations thereunder.
(c) Schedule 7.01 (c) completely and accurately sets forth the
number of issued shares of the Company's capital stock, the names of the
holders thereof and the number and the nominal amount of shares held by
each holder and the percentage of all issued and outstanding shares in
the Company owned by such holder.
(d) The Company (i) is duly incorporated, organized and validly
existing under the laws of the Federal Republic of Germany, (ii) is duly
registered in the Commercial Register at the local court of
Frankfurt/Main under the registration number HRB 50613; (iii) has the
corporate power to carry on its business as is now being conducted, and
(iv) is duly qualified or authorized to conduct business in the
jurisdiction of its registered seat (Sitz).
(e) Schedule 7.01 (e)-A contains, except for shelf companies
(Vorratsgesellschaft; Mantelgesellschaft) and companies organized as a
civil partnership (Gesellschaft burgerlichen Rechts, unregistered Offene
Handelsgesellschaft or comparable organizations, in particular
Projektgesellschaften or Gelegenheitsgesellschaften) a complete and
accurate list of the Company's Subsidiaries as of the date hereof which
will still be, except for the changes expressly mentioned in Schedule
7.01 (e)-A, the qualifications expressly made herein or transactions
expressly provided for in this Agreement, true and correct as of the
Closing Date. The nominal capital of each of the Company's Subsidiaries
listed in Schedule 7.01 (e)-A and the nominal participation of the
Company in each Subsidiary listed in Schedule 7.01 (e)-A are truly and
completely re-
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flected in Schedule 7.01(e)-A. Each of the Company's Subsidiaries
listed in Schedule 7.01 (e)-A (i) is duly incorporated, organized and
validly existing in the jurisdiction in which it is organized; (ii) has
the corporate power to carry on its business as is now being conducted,
and (iii) is duly qualified or authorized to conduct business in the
jurisdiction of its registered seat. Except for the Company's
participations listed in Schedule 7.01(e)-B and subject to the
qualifications contained herein, there are no other corporations,
partnerships or other entities in which the Company or one of the
Company's Subsidiaries owns, of record or beneficially, any material
direct or indirect equity interest (except for Gesellschaften
burgerlichen Rechts, unregistered Offene Handelsgesellschaft or
comparable organisations, in particular Projektgesellschaften,
Gelegenheitsgesellschaften).
(f) The Company Shares and the Company's shares in each
Subsidiary have been, except as set forth in Schedule 7.01 (f) duly
authorized, are validly issued, fully paid up with no repayments being
made and are not subject to any obligation for further contributions
("Nachschusspflicht").
(g) There are no other certificates (Aktienurkunden) representing
the Issued Share Amount of the Company other than the Company Share
Certificates.
(h) Each Seller has full title to the Company Shares sold by it.
There are no Encumbrances of any kind whatsoever outstanding in respect
of the Company Shares, nor are there any agreements in existence to
create or grant the same. There are no agreements to create or issue
new shares or securities of the Company.
(i) There are no Encumbrances of any kind whatsoever outstanding
in respect of the Company's shares in its Subsidiaries, nor are there
any agreements in existence to create or grant the same, other than
those set forth in Schedule 7.01 (i). There are no agreements to create
or issue new shares or securities in any of the Company's Subsidiaries.
(j) All shareholders' consents or other consents required
pursuant to the Company's Articles of Association in order to complete
this Agreement have been obtained, unless otherwise stated in this
Agreement.
(k) All consents or approvals required to be obtained by the
Sellers pursuant to statute, regulation or otherwise which are
necessary for the completion of the transactions contemplated in this
Agreement have been obtained, unless otherwise stated in this
Agreement.
(l) The Articles of Association of the Company dated November 10,
2000 are valid and binding and no changes to such Articles of
Association have been effected between November 10, 2000 and the date
hereof and the Closing Date, respectively.
(m) Schedule 7.01 (m) contains a complete and true list of all
company agreements ("Unternehmensvertrage") within the meaning ▇▇▇▇.▇▇.
291 et seq. of the German Stock Corporation Act ("Aktiengesetz" -
"AktG"). The Domination and Profit and Loss
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Transfer Agreement will be validly terminated at or prior to the end of
the Closing Date and the Company will have accepted such termination
and KPMG DTG will have waived any claims under the Domination and
Profit and Loss Transfer Agreement for a transfer of profits of the
fiscal year 2002.
Section 7.02 Non-contravention. Except as set forth in Schedule
7.02, the execution, delivery and performance by each of the Sellers of this
Agreement does not and will not, as of the Closing Date, (a) violate any
provision of the articles of incorporation, by-laws or other organizational
documents of each of the Sellers (if not an individual), (b) assuming the
Closing Conditions according to Article 3 have been satisfied, violate or result
in a breach of or constitute a default under any Applicable Law or Governmental
Authorization with respect to any of the Sellers (if not an individual), or any
award, order, injunction or other restriction of any arbitrator or arbitrators
to which any of the Sellers (if not an individual) is subject, or (c) materially
conflict with or result in a material breach of or constitute a material default
under any agreement, instrument or undertaking (other than with respect to
change of control clauses in agreements between any of the Sellers and third
parties) to which any of the Sellers is a party or by which any of the Sellers
is bound.
Section 7.03 Financial Statements.
(a) The Sellers have provided Purchaser with complete copies
of the Company's Audited Consolidated Financial Statements and of the
Company's Audited Consolidated Interim Financial Statements which are
attached as Schedule 7.03 A and B, (hereinafter collectively the
"Financial Statements"). The Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America ("US-GAAP"), applied on a consistent basis with the
basis applied in preparing the Company's audited consolidated financial
statements for the preceding financial period. As of the date hereof,
the Financial Statements present fairly in all material respects the
consolidated financial condition and results of operations of the
Company and its consolidated Subsidiaries as of the dates thereof or
the periods covered thereby. In the event of any dispute as to the
accuracy of this Representation and Warranty, any arbitrator shall
apply US-GAAP on a basis consistent with the past practices, policies,
assumptions and estimates of the Company unless such consistent
practices, policies, assumptions and estimates are not permitted under
US-GAAP. As a further elaboration of the principle set forth above, the
Purchaser may not challenge the accuracy of this Representation and
Warranty alleging that the carrying value of the Company's interest in
KCF or KCS was lower than that set forth in any of the financial
statements or that the assumptions regarding projected benefit
obligations set forth therein are incorrect or should be modified in
any respect.
(b) To the actual knowledge of the board members of the
Company, neither the Company nor any of its Subsidiaries has received
written notification that the audited financial statements for KPMG
Consulting Spain S.L., Madrid, Spanien does not fairly present in all
material respects the financial situation and results of operations of
KPMG Consulting Spain S.L., Madrid, Spanien for the period ended on
December 31, 2001. To the actual knowledge of the board members of the
Company, neither the
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Company nor any of its Subsidiaries has received written notification that
the audited financial statements for the French branch of KCF do not
fairly present in all material respects the assets and liabilities as of
September 30, 2000 and the income and expenses for the period then ended.
(c) The management accounts of the Company for the month of April,
2002, contained in the Data Room have been prepared by the management of
the Company in good faith on a basis consistent with the monthly reports
routinely prepared by the Company's management.
Section 7.04 Conduct of Business; Absence of Certain Changes.
Between March 31, 2002 and the date hereof, and except as disclosed in Schedule
7.04-A, the business of the Company and its Subsidiaries has been conducted in
the ordinary course of business with the care of a prudent businessman
("Sorgfalt eines ordentlichen Kaufmanns") in all material aspects. Except as
disclosed in Schedule 7.04-B, between March 31, 2002 and the date of this
Agreement there has not been a Material Adverse Change and neither the Company
nor any of its non wholly owned direct or indirect Subsidiaries has declared,
made or paid any dividend, made distributions or transferred profits arising
from the financial year 2001.
Section 7.05 Insolvency. Neither the Company nor any of its
Subsidiaries is, and will not be as of the Closing Date, unless indicated
otherwise in Schedule 7.05, over-indebted or insolvent according to commercial
law or insolvency law, no application has been filed for Insolvency Proceedings
to be initiated against the assets of the Company or one of its Subsidiaries.
The Sellers have not resolved and will not resolve before the Closing Date to
liquidate the Company nor any of its Subsidiaries nor do they presently intend
to do so.
Section 7.06 Intentionally left blank
Section 7.07 Real Property. All office lease agreements of the
Company and its Subsidiaries are described in Schedule 7.07. Save as disclosed
in Schedule 7.07, the rental agreements relating to the real property described
therein are effective and enforceable and none of them has been materially
amended or terminated.
Section 7.08 Contracts. Schedule 7.08-A sets forth a complete and
true list of material contracts of the Company and Infonova (hereinafter
collectively referred to as the "Material Contracts"). Schedules 7.08-A (a) to
(e) contains the Material Contracts, which are all outstanding contracts,
agreements and obligations of the Company and Infonova which have not yet been
entirely performed and relate to one of the following items:
(a) with respect to the Company and Infonova all contracts and
agreements relating to the acquisition or the sale or other alienation of
fixed assets ("Gegenstande des Anlagevermogens"), including intangible
assets, fixed tangible assets (with the exception of real estate and
rights equivalent thereto) and financial assets, with a contract value in
excess of EUR 1,000,000.00 in each individual case or EUR 5,000,000.00
collectively;
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(b) with respect to the Company and Infonova all credit or loan
agreements executed by them as lender or borrower with the exception of
current accounts with banks (laufende Kontokorrentkredite) and customary
extensions of the due date of receivables or payables agreed to in the
ordinary course of business and with the exception of loans granted to
employees not exceeding EUR 10,000 in the individual case, as well as all
factoring arrangements and all guarantees issued by the Company and
Infonova for and on behalf of third parties obligations with a liability
incurred for the Company or Infonova exceeding EUR 250,000.00 in each
single case;
(c) with respect to the Company and Infonova all framework
agreements executed by the Company or binding on the Company, entered into
with major clients of the Company, including agreements under which the
services are not performed by the Company but by a "project company"
(Projektgesellschaft) in which the Company holds a majority participation
and a major client holds a minority participation; major clients of the
Company are those clients whose orders placed with the Company,
respectively, have created an annual turnover of EUR 5,000,000.00 or more
in the fiscal years 2000 and/or 2001; and, in the case of the Company,
whose agreements with the Company are reasonably likely to create an
annual turnover for the Company of EUR 5,000,000.00 or more in the fiscal
year 2002 (in each such case, the turnover has been calculated, or
respectively estimated on the basis of the management accounts of the
Company and not on the basis of US-GAAP);
(d) with respect to the Company and Infonova all contracts,
agreements or obligations which have been entered into or assumed outside
the ordinary course of business of the Company, to the extent that they
trigger annual payments of EUR 1,000,000.00 in each individual case or EUR
5,000,000.00 collectively;
(e) with respect to the Company all Strategic Alliance Contracts of
the Company with third parties.
Except as set forth in Schedule 7.08-A and B, each of the Material
Contracts set forth on Schedule 7.08-A is valid and binding on the parties
thereto and is in full force and effect; and the validity or enforceability of
none of the material terms of the Material Contracts has been expressly
contested. No Material Contract has been terminated and to the Sellers'
Knowledge, no written termination notice as to any Material Contract has been
received by the Company or Infonova. Neither the Company nor Infonova nor, to
the Seller's Knowledge, its respective contractual partner has materially
breached, or is in material default with respect to, any Material Contract.
Except as set forth in Schedule 7.08-B, this Agreement will not give any party
an expressly stipulated right to terminate or amend a Material Contract. Except
for (i) prime/subcontractor contracts between the Company or any of its
Subsidiaries, their customers and KPMG DTG and its Subsidiaries (other than the
Group Companies), (ii) prime/subcontractor contracts between KPMG DTG and any of
its Subsidiaries, their customers and any of the Group Companies, (iii)
contracts that will be replaced by the agreements to be entered into by the
Parties or terminated at the Closing, (iv) secondment or temporary or contingent
employment contracts, and (v) contracts providing for monthly payments of less
than EUR 10,000 per month in the aggregate, there is no contract between KPMG
DTG or
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any of its Affiliates (other than the Company and its Subsidiaries), directors,
officers, partners or employees on the one hand and the Company and its
Subsidiaries on the other hand.
Section 7.09 Intellectual Property. The Company owns free from
encumbrances or is licensed or otherwise possesses legally enforceable rights to
use all trademarks, service marks, copyrights, applications for any of the
foregoing that are described in Schedule 7.09-A. All rights pertaining to such
intellectual property are valid and in full force and effect and nothing has
been done or omitted to be done which would materially prejudice the validity or
enforceability of any such intellectual property of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries has granted any
exclusive rights pertaining to its Intellectual Property Rights that has, or
would reasonably be expected to have, a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is a named party to any Proceedings that
involve a claim of infringement by the Company of any Intellectual Property
Rights of third parties except for any such Proceedings that are disclosed in
Schedule 7.09-B and to the Sellers' Knowledge no method or process employed by
the Company or any of its Subsidiaries (or by any licensee under a license
granted by the Company or any of its Subsidiaries) infringes any Intellectual
Property Rights of any third party.
Section 7.10 Taxes. Except as set forth in Schedule 7.10-A,
all Tax returns that are required to be filed by the Company and its
Subsidiaries on or before the date of this Agreement (taking into account
applicable extensions) have been duly filed, with such exceptions as,
individually or in the aggregate, do not, and would not reasonably be expected
to, create a financial obligation in excess of EUR 100,000 on the Company.
Except as set forth in Schedule 7.10-B, all Taxes have been timely paid (taking
into account applicable extensions) or adequate accruals, reserves or current
liabilities have been recorded with respect thereto in accordance with generally
accepted accounting principles on the Company's Audited Consolidated Financial
Statements. A fiscal unity for corporation tax and trade tax for the year 2001
has been in place. The issue of shares to partners and employees has not
triggered or caused wage tax or social security contributions, nor are there any
Taxes associated with the employment of freelancers by the Group Companies other
than value added tax.
Section 7.11 Employees.
(a) A complete and accurate - +/- 5 % - list identifying the
Consulting Employees (Manager, Senior Manager, Partner) of the Company
as of May 01 2002 by name, age, length of service, grade classification
and fixed remuneration and, in the case of Partners - other than those
Partners who received their partnership status within 2002 - the actual
bonus paid for 2001 paid in 2002 is set forth in Schedule 7.11-A.
(b) A complete and accurate - +/- 5 % - list identifying
employees of the Subsidiaries with a fixed annual remuneration of EUR
96,000 or more as of May 01 2002 by age, length of service, grade
classification and fixed remuneration is set forth in Schedule 7.11-B.
(c) With the exception of the employees set forth in Schedule
7.11-C there are no agreements with Senior Managers and Partners which
provide an entitlement for
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premature termination with or without a severance payment or any
improvement to their remuneration benefits or terms and conditions of
employment with regard to the transactions contemplated under this
Agreement. There is no breach of contract unless more than 30 Senior
Managers and Partners not listed in Schedule 7.11-C successfully claim
for premature termination with or without a severance payment with
regard to the transactions contemplated under this Agreement and cause
additional expenses of more than 2,000,000.00 EUR in aggregate.
(d) None of the class C, D or E Partners of any Group Company
as listed in Schedule 7.11-D has given written notice terminating his
contract of employment or engagement nor are any of such Partners under
notice of dismissal.
Section 7.12 Labor and Collective Bargaining Agreements.
Except as set forth in Schedule 7.12-A, the Company is not bound to or party to
any internal labor agreements ("Betriebsvereinbarungen"). Except as set forth in
Schedule 7.12-B, the Company is not bound to or party to any collective
bargaining agreement ("Tarifvertrag").
Section 7.13 Benefit Plan. Schedule 7.13 sets forth a complete
and accurate list of the Benefit Plans of the Company. Since 31st March, 2002
the Company has not entered into any new benefit plans.
Section 7.14 Employment Disputes. Except as otherwise set
forth in Schedule 7.14, there are no Proceedings pending ("rechtshangig")
between the Company on the one hand and any of its Consulting Employees on the
other hand.
Section 7.15 Delivery of Information to the Workers' Council.
To the extent required by Applicable Law, each of the Company and its
Subsidiaries has informed and consulted its respective workers' council and
provided it with all the required information regarding the transactions
contemplated by this Agreement.
Section 7.16 Insurance Coverage. With the exception of
reinsurance contracts in connection with employee pension funds, Schedule 7.16-A
sets forth a complete and accurate list of all insurance policies relating to
the assets, business, operations, employees or directors of the Company. The
insurance policies referred to in Schedule 7.16-A are in full force and effect,
all premiums payable thereunder prior to the date hereof have been paid and the
Company has otherwise complied with the terms and conditions of such policies
and nothing has been done or omitted to be done which could make any such policy
of insurance void or voidable. There is no material claim outstanding under any
such policy in the amount exceeding EUR 1,000,000.00. Except as otherwise set
forth in Schedule 7.16-B, the insurance policies are not part of a group
insurance which will expire after the Closing of this Agreement.
Section 7.17 Lawsuits. Except as set forth in Schedule 7.17,
neither the Company nor any of its Subsidiaries is a party to any Proceeding
pending ("rechtshangig") involving in the case of the Subsidiaries a disputed
amount of EUR 250,000.00 or more. As of the Closing Date, there is no pending
(rechtshangig) Proceeding which has had or is reasonably likely to have a
negative impact on the Company and its Subsidiaries, taken as a whole, in
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an amount in excess of EUR 20,000,000.00 (in words: Euro twenty million). Since
31 March, 2002
(a) neither the Company nor any of its Subsidiaries has
settled any existing litigation or dispute in excess of EUR 100,000. To
the extent that the consequences of such settlement are included in any
financial statements that have been delivered prior to the date hereof,
the Purchaser shall not be entitled to any damages hereunder;
(b) no event has occurred which would entitle any third party
(with or without the giving of notice) to call for the repayment of
indebtedness of any Group Company prior to the normal maturity date.
Section 7.18 Finder's Fees. Neither the Company and/or its
Subsidiaries has or will have any obligation or pay any brokerage, finder's or
other fee or commission from the Company and/or its Subsidiaries in connection
with the execution of this Agreement or the transactions contemplated herein,
except for any broker, finder or investment banker who was or may have been
engaged by the Purchaser and except as to any such fee or commission which will
be reimbursed to the Group Companies.
Section 7.19 Clients. Schedule 7.19 contains a true and
complete list of the 35 most significant clients of the Company and its
Subsidiaries by revenue as calculated in accordance with the management accounts
(and not on the basis of US-GAAP) for the 12-month period ending March 31, 2002.
The Purchaser had the opportunity to discuss with the Company's risk management
department major complaints of the 35 clients listed in Schedule 7.19.
Section 7.20 Compliance with Law. The business of the Company
is being and since June 1, 2000 has been conducted in all material respects in
accordance with Applicable Law. All necessary permits, licenses and consents
("Erlaubnisse", "Genehmigungen") have been obtained by the Company and its
Subsidiaries to carry on each of their businesses in the places and in the
manner in which such businesses are currently conducted, and all such permits
are valid and subsisting and have been complied with in all material respects.
The Parties agree that the Representations and Warranties listed in the last
sentence of this Section 7.20 addressing a specific topic ("Specific Warranty")
shall prevail over the Representation and Warranty contained in this Section and
that where such Specific Warranty and the Representation and Warranty in this
section cover the same topic, only the Specific Warranty shall apply ("lex
specialis-Rule"). Furthermore, the Parties agree that, where a specific
Representation or Warranty has not been granted in this Agreement with regard to
any topic, such omission was made intentionally and that, therefore, the
Representation and Warranty in this section shall also not apply with regard to
any such topic ("alle Regelungslucken in Article 3 sind bewu(beta)te
Regelungslucken"). The Specific Warranties are those under Sec. 7.01, 703, 7.04,
7.07, 7.09 to 7.17 and 7.19.
Section 7.21 Bank Accounts. A complete and accurate list of
all the Company's and Infonova's bank accounts, including details of the credit
and debit balances on them are set out in Schedule 7.21 and since the date of
that list there has not been any payment
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out of any of the accounts except for payments in the ordinary course of the
Company's and Infonova's business.
Section 7.22 True and Correct Information. The Sellers have
not, intentionally or due to gross negligence, concealed any information which
they were obliged to disclose under applicable German laws
("Aufklarungspflichten im deutschen Recht").
Section 7.23 Known Facts. All Representations and Warranties
made under this Article 7 are given subject to and to the extent that matters
(a) are disclosed in any Schedules or Annexes to this Agreement and/or (b) are
fairly disclosed in the Data Room, provided that (b) shall not apply with
respect to the Representations and Warranties under Secs. 7.01 (c), 7.01 (e)-A
and B, 7.01 (f), 7.01 (i), 7.04-B, 7.05 and 7.07. The Schedules have been
prepared in good faith and do nor contain any untrue statement of a material
fact.
ARTICLE EIGHT
PURCHASER WARRANTIES
The Purchaser hereby warrants and represents to the Sellers in
the form of an abstract guarantee ("Selbstandiges Garantieversprechen", Section
311 par. (1) German Civil Code - BGB) (each a "Representation and Warranty" and
collectively the "Representations and Warranties") with respect to themselves
and their Subsidiaries that the following statements are true, provided,
however, that any provisions of this Agreement relating to the consequences of a
breach of any of the Representations or Warranties, including (without being
limited thereto) the provisions of Article 9 and the limitations set forth in
Section 9.03, form an integral part of this abstract guarantee ("Inhalt des
Schuldverhaltnisses" / "Bestandteil der Garantieerklarung"), and this abstract
guarantee is only given subject to such provisions and limitations and does not
form a "Beschaffenheitsvereinbarung" within the meaning of the German Civil
Code. The Representations and Warranties are given solely as of the date hereof
unless it is expressly indicated in the respective Representation and Warranty
that such Representation and Warranty is also made as of the Closing Date.
Section 8.01 Corporate Matters. With respect to the
organization of the Purchaser the following statements are true as of the date
hereof and as of the Closing Date:
(a) The Purchaser is a duly organized company, validly
existing and in good standing under the laws of the State of Delaware,
USA, has the requisite corporate power and authority to carry on its
business as is now being conducted, and is duly qualified or authorized
to conduct business in the jurisdictions in which it conducts business.
(b) The Purchaser has all the requisite corporate power and
authority necessary to execute and deliver this Agreement and to
perform fully its respective obligations hereunder. The execution and
delivery by the Purchaser of this Agreement and the Registration Rights
Agreement and the consummation by the Purchaser of the transactions
contemplated hereby and thereby have been duly and validly authorized
by all
-38-
necessary action on the part of the Purchaser (including the approval
by the Board of Directors of the transaction contemplated thereby).
This Agreement has been, and the Registration Rights Agreement will, at
Closing, have been, duly and validly executed and delivered by the
Purchaser and, assuming that this Agreement has been duly and validly
executed and delivered by the Sellers this Agreement constitutes, and
the Registration Rights Agreement will constitute a valid and binding
agreement of the Purchaser enforceable against the Purchaser in
accordance with its terms.
(c) The Purchaser is not insolvent nor over-indebted according
to commercial law or insolvency law. No application has been filed for
Insolvency Proceedings to be initiated against the assets of the
Purchaser.
(d) No consent of the shareholders of the Purchaser or other
corporate proceeding is required in connection with the execution,
delivery and performance of this Agreement.
(e) The Purchaser is not in violation of any of the provisions
of its Articles of Incorporation or By-laws, and its Articles of
Incorporation and By-laws most recently filed with the SEC prior to the
date hereof have not been amended, modified, or rescinded and remain in
full force and effect.
Section 8.02 Capitalization. As of the date of this Agreement,
the authorized capital stock of the Purchaser consists of 1 Billion shares of
KCI Common Stock. As of March 31, 2002, (i) 158,009,240 (excluding the shares of
KCI Common Stock under (ii) below) shares of KCI Common Stock were issued and
outstanding, all of which are duly authorized, validly issued, fully paid, and
non-assessable, (ii) 3,429,006 shares of KCI Common Stock were held in the
treasury of the Purchaser or owned by Subsidiaries of the Purchaser, and (iii)
31,561,403 options to acquire shares of KCI Common Stock have been granted and
are outstanding under the Purchaser's various stock option plans. Except as set
forth in this paragraph and the Stockholders' Rights Plan, effective as of
October 1, 2001, pursuant to a rights agreement between the Purchaser and
EquiServe Trust Company N.A., as rights agent as of the date hereof, there are
no subscriptions, options, warrants, or other rights, convertible securities,
agreements, arrangements, or commitments of any character relating to the issued
or unissued capital stock of the Purchaser to which the Purchaser or any of its
material Subsidiaries is a party, or by which any of their properties are bound
or affected, or obligating the Purchaser or any of its Subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in the Purchaser.
Since March 31, 2002 KCI has not issued any options nor issued shares other than
pursuant to existing options or option plans.
Section 8.03 Exchange Shares. The statements in this Section
are true as of the date hereof and will be true as of the Closing:
(a) The issue and delivery to the Sellers and the Escrow
Agent, respectively, of the Exchange Shares in connection with the
transactions contemplated hereby have been duly authorized by all
requisite corporate action of the Purchaser;
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(b) The Exchange Shares when issued and delivered to the
Sellers at Closing pursuant to this Agreement, and upon receipt by the
Purchaser of the Company Shares exchanged therefore, will be validly
issued and outstanding, fully paid, non-assessable and not subject to
any obligation for further contribution, and the holders of Exchange
Shares will receive good and marketable title to such Exchange Shares,
free and clear of all security interests, liens, claims, pledges,
agreements, limitations on voting rights, charges, pre-emptive rights
or other Encumbrances of any nature whatsoever, except such as may have
been created by the Sellers or restrictions applicable to "restricted
securities," issued by a U. S. corporation in an offshore transaction
pursuant to Regulation S under the Securities Act;
Section 8.04 SEC Filings. Except as noted in this Section, the
statements in this Section are true as of the date hereof and will be true as of
the Closing Date, except as otherwise provided expressly in one of the following
paragraphs:
(a) The Purchaser has filed all forms, including, without
limitation, all financial statements or schedules included therein,
reports and documents required to be filed by it with the SEC since
January 1, 2001 (collectively the "SEC Reports");
(b) the SEC Reports (i) were prepared in compliance in all
material respects with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
the case may be, and the rules and regulations promulgated thereunder,
and (ii) did not and will not contain, at the time they were or will be
filed, or, if amended, as of the date of such amendment, any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made,
not misleading;
(c) as of the date hereof, none of the Purchaser's
Subsidiaries is required to file any forms, reports or other documents
with the SEC;
(d) as of the date hereof, the Purchaser has not been advised
that the SEC is reviewing any of its SEC reports or any financial
statement contained therein;
Section 8.05 Consent. The statements in this Section are true
as of the date hereof and as of the Closing. No consents, approvals,
authorizations or other orders of, actions by, filings with or notifications to,
any Governmental Authority or third parties, other than anti trust authorities,
are required in connection with the execution, delivery and performance of this
Agreement by the Purchaser.
Section 8.06 Non-contravention. The Representations and
Warranties in this Section 8.06 are made as of the date hereof and as of the
Closing Date. The execution, delivery and performance by the Purchaser of this
Agreement does not and will not (a) violate any provision of the articles of
incorporation, by-laws or other organizational documents of the Purchaser, (b)
violate or result in a breach of or constitute a default under any Applicable
Law or Governmental Authorization with respect to the Purchaser, or any award,
order, injunction or other restriction of any arbitrator or arbitrators to which
the Purchaser is subject, or (c) ma-
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terially conflict with or result in a material breach of or constitute a
material default under any agreement, instrument or undertaking to which the
Purchaser is party or by which the Purchaser is bound.
Section 8.07 Financial Statements. The financial statements of
the Purchaser for the period ending June 30, 2001 were prepared in accordance
with United States GAAP applied on a consistent basis with the basis applied in
preparing the Purchaser`s audited consolidated financial statements for the
preceding financial period throughout the periods involved (except as may be
indicated in the notes thereto), and present fairly in all material respects the
consolidated financial position of the Purchaser and its consolidated
Subsidiaries as of June 30, 2001 and the consolidated results of their
operations and cash flows for the periods then ended.
Section 8.08 Absence of Certain Changes or Events. As of the
date hereof, except as disclosed in the SEC Reports filed with the SEC prior to
the date of this Agreement, since June 30, 2001, (i) there has been no Material
Adverse Change in relation to the Purchaser or (ii) the business of the
Purchaser and each of its Subsidiaries have been conducted in the ordinary
course, consistent with past practice.
Section 8.09 Financial Advisers. No investment banker, broker,
finder, or financial advisor is entitled to or will, as of Closing Date, be
entitled to, any brokerage, finder's, or other fee or commission from the
Sellers in connection with the execution of this Agreement, except for those
engaged by the Sellers.
ARTICLE NINE
SURVIVAL; LIABILITY
Section 9.01 Survival.
(a) Each Party's claims due to a breach of Representations and
Warranties and the Covenants to be complied with prior to the Closing
shall survive the Closing and remain in full force and effect until 18
months after the Closing Date, except for the Representations and
Warranties relating to Taxes under Sections 7.10, which shall remain in
force and effect until 6 (six) months after the final and binding tax
assessment of the respective Taxes. Section 202 para. 1 of the German
Civil Code (BGB n.F.) shall remain unaffected.
(b) If the Purchaser fails to notify the Sellers of such
liability claim under (a) within 6 weeks of the Purchaser actually
becoming aware of third party claims alleged or of damages due to a
breach as set forth under (a), then the Sellers shall not be liable in
respect of such damages to the extent that they would not have arisen
but for such failure, or the Sellers could have mitigated them upon
such notice.
Section 9.02 Liability of the Sellers. If any of the Seller's
Representations or Warranties contained in this Agreement is deemed to be
incorrect or if any of the Sellers'
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Covenants set forth in this Agreement is not complied with the Sellers shall
initially bring about the situation or an economically equivalent situation to
that which would have existed had the obligation not been breached. If this is
not possible or reasonable or if such situation is not brought about even after
the expiration of a reasonable grace period, the Sellers shall compensate the
Purchaser for all damages pursuant to the following provisions which would not
have been incurred had the breach of the obligation not occurred. In the case of
Representations or Warranties, this applies regardless of whether or not the
breach of them is due to the fault of the Sellers. The Sellers' liability is,
however, subject to the following limitations:
(a) The Purchaser shall have the right to claim
indemnification or damages only to the extent that the aggregate amount
of such claims is in excess of EUR 5,000,000.00, and the Sellers shall
be only liable for the amount in excess of EUR 5,000.000.00 (the
"Deductible"). The Sellers' maximum liability for any claims by the
Purchaser shall in any case be limited to 40% of the Base Purchase
Price (i.e. USD 268,065,800 - in words: United States Dollars two
hundred sixty eight million sixty five thousand eight hundred), unless
such limitation is prohibited by mandatory law.
(b) In the event that the Purchaser is entitled to demand
damages pursuant to this Agreement, the Sellers may, at their option,
satisfy the claim for damages (i) through cash payment; (ii) at any
time within the first year starting with the Closing Date through
return of a portion of the Exchange Shares accepted as part of the
Purchase Price under Section 2.02 of this Agreement, whereby the
precise number of shares to be returned shall be calculated by using a
value of USD 16.09 per Exchange Share or (iii) through any combination
of (i) and (ii).
(c) Each Seller - except for KPMG DTG who shall be jointly and
severally liable (gesamtschuldnerische Haftung) - shall only be liable
for a portion of the total damage equal to the proportion that the
Company Shares being sold by such Seller set forth in the table in
Schedule 7.01 (c) bears to the total number of Company Shares being
sold by all Sellers set forth in such table (teilschuldnerische
Haftung). In no event shall the Sellers, except where expressly set
forth in this Agreement, be jointly and severally liable
(gesamtschuldnerisch haften).
(d) The Sellers' liability is also excluded where and to the
extent that:
(i) the Company, its Subsidiaries or the Purchaser
does not incur damages from such breach of any obligation set
forth in this Agreement, or the inaccuracy of a Representation
and Warranty; or
(ii) the circumstances in violation of the
obligations set forth in this Agreement had already been
specifically taken into account in the Financial Statements or
the Net Adjustment; or
(iii) the damage arising from the incorrectness or
incompleteness of the Representation and Warranty is covered
by a valid and enforceable claim under insurance held by the
Company or its Subsidiaries which the Company
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or its Subsidiaries held at the Closing Date (net of any
adverse insurance consequences directly and actually incurred,
such as premium adjustments and other detriments); or
(iv) the damage incurred by the Purchaser or the
Company or its Subsidiaries arises from or is increased by any
change in generally accepted accounting principles applicable
to the Company or its Subsidiaries after 31 December 2001 or
from or by the passage of any legislation, or enactment of any
subordinate legislation after the date of signing of this
Agreement; or
(v) the damage incurred by the Purchaser or the
Company or its Subsidiaries arises from or is increased by an
increase in the rates, method of calculation or scope of
taxation after 31 December 2001; or
(vi) the damage incurred by the Purchaser or the
Company or its Subsidiaries is reduced by corresponding tax
advantages; or
(vii) after the Closing Date, the Company, its
Subsidiaries or the Purchaser did not do or did not refrain
from doing what a prudent businessman would have done or
refrained from doing in order to avert or prevent the damage
(Schadensminderungspflicht).
(e) With the exception of the Representations and Warranties
expressly set forth in this Agreement, the Sellers do not make any
representations or warranties of any nature to the Purchaser in respect
of the legal or commercial conditions of the Company or its
Subsidiaries or otherwise; in particular, the Sellers do not make any
representations or warranties as to the continuation of the current
financial or earnings situation of the Company or its Subsidiaries or
as to the reliability of the Company's or the Subsidiaries' budgets and
other planning. It is further agreed that any further claims of
whatever nature (under law or otherwise), with the exception of the
Representations and Warranties set forth in Article 7 of this
Agreement, are hereby excluded and waived unless any such exclusion or
waiver is precluded as a matter of mandatory law (sec. 276 para. 3 of
the German Civil Code - BGB). Unless otherwise expressly provided in
this Agreement, any rights of the Purchaser to rescission, damages
because of delay, non-performance - in particular with respect to
defects (▇▇▇▇▇▇, Fehler) and the rights under secs. 434, 435, 439, 442
and 443 of the German Civil Code (BGB n.F.), to compensation of
consequential damage (Folgeschaden), damages for misrepresentation
(Schadenersatz wegen Garantie), voidance of this Agreement because of
the lack of essential qualities (Anfechtung wegen des Fehlens einer
wesentlichen Eigenschaft), positive breach of contract (positive
Vertragsverletzung) or culpa in contrahendo (Verschulden bei
Vertragsanbahnung) pursuant to secs. 280, 311 of the German Civil Code
(BGB n.F.) and any rights or claims by any Party because of frustration
of contract (Wegfall der Geschaftsgrundlage) pursuant to sec. 313 of
the German Civil Code (BGB n.F.) as well as any other claims under
secs. 280, 276 of the German Civil Code (BGB n.F.) shall also be
excluded to the extent that such exclusion is permitted under mandatory
law. The Parties acknowledge that the Sellers have not granted any
guaran-
-▇▇-
▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇) within the meaning of sec. 444 of the
German Civil Code.
(f) The Purchaser's remedies in the event of any breach of the
obligations set forth in this Agreement, including the Representations
and Warranties or failure of representations and the Sellers'
liabilities as set forth in this Agreement are final and binding as of
the signing of this Agreement. In no event may the Purchaser rescind or
terminate this Agreement other than pursuant to Article 4, save (i) in
the event of any fraud ("arglistiger Tauschung") by any of the Sellers
or (ii) in the event that the Sellers are unable upon satisfaction of
the Closing Conditions to transfer valid title to at least 95% of the
Company Shares, free of any encumbrances or third party rights and this
defect has not been cured within 30 calendar days after notice to the
Sellers and such remedy has not been waived by the Purchaser.
(g) In case of a breach of the tax Representation and Warranty
given in Section 7.10, (the "Tax Representation") in addition to the
provisions foreseen in this Section 9.02 above, the following shall
apply:
(i) Indemnification. The Sellers agree to indemnify
the Purchaser, the Company and/or the Company's Subsidiaries
against any Tax liability caused by the breach of the Tax
Representation, which is payable to any Authority by the
Company and any of its Subsidiaries and which relate and are
attributable to the period until December 31, 2001 unless and,
except to the extent that such tax liabilities:
- are shown or provided for in the Audited
Consolidated Financial Statements as of December 31,
2001 Balance Sheet or are taken into account in the
Net Adjustment; or
- are subject of a valid and enforceable
claim for repayment or indemnification against a
third party (including Partners and other employees
of the Company and/or the Companies Subsidiaries); or
- are the result of a reorganization
contemplated or initiated by Purchaser.
(ii) Tax reduction and future tax benefits. Sellers
shall be entitled to compensation by the Purchaser for future
Tax benefits obtained by the Purchaser, the Company or its
Subsidiaries, if and to the extent that:
- Tax assessments regarding the Sellers, the
Company and the Group Companies for taxable
(assessment) periods ending on or before the December
31, 2001 are amended, especially by Tax audit, and
such amendments will cause future tax reductions
(Steuerminderungen), e.g. by the increase of
acquisition costs of assets reflected in the
respective balance sheet which the Purchaser, the
Company and/or the Com-
-44-
pany's Subsidiaries (or their successors) would not have obtained
otherwise; or;
- amendments pursuant to the preceding sub-paragraph
create Tax carry backs or carry forwards, which the Purchaser,
Company or the Group companies may use.
(iii) Tax Reductions. Tax reductions and/or benefits which the
Purchaser, Company and/or any of its affiliates achieve in accordance
with the aforesaid shall reduce the indemnity up to or, respectively,
give Sellers a claim against the Purchaser of an amount equal to their
net present value, based on (i) the assumption of immediate use of Tax
loss carry backs or loss carry forwards, (ii) the estimated Tax rate
applicable at such time to the respective company concerned, and (iii)
with the net present value being calculated using an interest rate of 5%
p.a. (30/360 days).
(viii) Indemnification Payments. Indemnification payments by the
Sellers due under this Section 9.02. (g) shall be made within 20 Business
Days following written notice by the Purchaser, provided that the payment
of such amounts to the Authority is due, and, further provided that the
Sellers shall not be required to make any payment earlier than 2 Business
Days before such Taxes are due to the Authority. In case of any Tax being
contested in accordance with Section 9.02. (g), payment of such Tax to
the authority will be considered due no earlier than on the date a final
(bestandskraftig) determination to such effect is made by either the
Authority or a court of proper jurisdiction, provided that the competent
Authority has granted relief from paying the assessed Tax until such Tax
becomes final and binding. If this is not the case, the Sellers shall
make a respective advance indemnification payment to the Purchaser, and
if the final amount to be indemnified for Taxes and to be paid by the
Sellers is lower than the advance indemnification payment by such
Sellers, then the difference shall be reimbursed by the Purchaser,
including all interest earned thereon, if any. If and to the extent that
compensation claims of the Sellers exceed indemnification claims of the
Purchaser, or cannot be off-set against indemnification claims of the
Purchaser for other reasons (e.g. timing), the Purchaser shall pay to the
Sellers the respective amounts within 20 Business Days after the
respective Tax assessment or Tax settlement notice (Abrechnungsbescheid)
from which such indemnification claims result has been issued.
(ix) Tax Refunds and Credit. The Purchaser shall promptly pay
to the Sellers any Tax refund and Tax credit (both including any interest
paid or credited with respect thereto) realized or received by the
Purchaser after January 01, 2002 (i) relating to the Company and its
Subsidiaries for taxable (assessment) periods or portions thereof ending
on or before December 31, 2001, or (ii) attributable to an amount paid by
the Sellers pursuant to Section 9.02. (g) the Purchaser shall procure the
filing for, and obtaining of, any Tax refund or Tax credit to which the
Sellers may be entitled under this Section 9.02. (g). The
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Purchaser shall procure that the Sellers are permitted to control the
enforcement of such Tax refund or Tax credit claim, and shall authorize,
or cause its affiliates or Subsidiaries to authorize, by appropriate
power-of-attorney such person(s) as the Sellers designate to represent
such entity with respect to such claim. A Tax refund is to be considered
realized for the purposes of this Agreement at the time that it is
received in cash or cash equivalent, and a Tax credit is deemed being
realized if reflected in a Tax assessment or Tax settlement notice
(Abrechnungsbescheid).
(x) Indemnification of the Sellers. The Purchaser shall be
responsible for and hold the Sellers harmless against any Taxes relating
to or attributable to the Company or its Subsidiaries or their assets or
their operations of their businesses attributable to all taxable periods
beginning on or after January 1, 2002.
(xi) Allocation of VAT. With a view to the fact that the tax
consolidations for VAT purposes between the Company and KPMG DTG will
terminate on Closing, the compensation for VAT purposes relating to the
Company and accruing for the period until Closing shall be calculated as
follows. The Company shall set up a balance showing all amounts of VAT
payable (geschuldete Umsatzsteuer) and of input VAT
(Vorsteuerabzugsbetrage) accruing for the period until Closing and
relating to its business. If the balance shows a surplus of input VAT,
the Sellers shall pay such balance to the Purchaser or, at the election
of the Purchaser, to the Company to the extent the Sellers have not yet
fulfilled such obligation vis-a-vis the Company until Closing. If the
balance shows a surplus of VAT payable, the Purchaser shall pay an amount
equal to such balance to the Sellers. The same applies to the extent the
balance is affected by amendments of a Tax audit or by any other
comparable event.
(xii) Proceedings. The Sellers agree to ensure the preparation
and filing of all Tax returns of Company and its Subsidiaries for any
taxable (assessment) period ending on or before December 31, 2001. The
Purchaser shall give to the Sellers full information and full access to
the books and records of the Company and its Subsidiaries for taxable
(assessment) periods until and including to theDecember 31, 2001, and
shall procure that the Company and its Subsidiaries file Tax returns for
taxable (assessment) periods including to December 31, 2001 in accordance
with instructions from, and the prior written consent of, the Sellers.
Tax returns for periods including to December 31, 2001 shall be prepared
on a basis consistent with those prepared for prior taxable (assessment)
periods. The Purchaser shall procure that the Sellers are provided with a
copy of such completed return at least 25 Business Days prior to the due
date for the filing of such return, and the Sellers shall have the right
to review such return and statement prior to the filing thereof. The
Purchaser undertakes to consult with the Sellers and to attempt in good
faith to resolve any issues arising as a result of the review of such
return and statement by the Sellers. The aforesaid shall also apply as
far as adjustments on transfer pricing or VAT, if
-46-
any, are concerned which may give rise to an indemnification by the
Sellers. The Purchaser further undertakes to immediately provide to the
Sellers all information relevant for the calculation of Tax reductions or
future Tax benefits, in any event within 15 Business Days after the
request of the Sellers, and grant to the Sellers access to the books and
records of the Company and its Subsidiaries reasonably required in order
to review and verify such Tax reductions or future Tax benefits.
(xiii) Notification. After the Closing Date, the Purchaser shall
promptly notify the Sellers upon learning of the commencement of any Tax
audit or administrative or judicial proceeding that, if determined
adversely to the Tax payer or after the lapse of time, would constitute a
basis for indemnification by the Sellers pursuant to this Section 9.02.
(g). Such notice shall be in writing and shall contain factual
information describing the asserted Tax liability in reasonable detail
and shall include copies of any notice or other document received from
any Tax authority in respect of any such asserted Tax liability. The
Purchaser shall further procure that the Company and its Subsidiaries
allow the Sellers to fully participate in such auditing process. If the
Sellers are not given prompt notice as required before, then the Sellers
shall not have any obligation to indemnify the Purchaser for any loss
arising out of such asserted Tax liability.
(xiv) Contest. The Sellers may elect to direct themselves or
through counsel of their own choice and at their expense, any audit,
claim for refund and administrative or judicial proceeding involving any
asserted liability with respect to which indemnity may be sought under
this Section 9.02. (g) (any such audit, claim for refund or proceeding
relating to an asserted Tax liability being referred to herein as
"Contest"). If the Sellers elect to direct a Contest, then the Sellers
shall within 25 Business Days of receipt of the Purchaser's notice of an
asserted Tax liability, notify the Purchaser of their intent to do so,
and the Purchaser shall co-operate and cause the Company and its
Subsidiaries or their respective successors to co-operate, at the
Sellers' expense in each phase of such Contest. If the Sellers do not
elect to direct such Contest or fail to notify the Purchaser of their
election as herein provided, the Purchaser, the Company or the respective
Subsidiary of the Company may pay, compromise or contest such asserted
Tax liability; provided that neither the Purchaser nor the Company or the
respective Group Companies may settle or compromise any asserted Tax
liability in spite of the objection of the Sellers. In any event, the
Sellers may participate, at their own expense, in any contest. If the
Sellers choose to direct the Contest, the Purchaser shall promptly
authorize, and shall cause the Company or the respective Group Company to
authorize, (by power-of-attorney and such other documentation as may be
necessary and appropriate) the designated representative of the Sellers
to represent the Purchaser and/or the Company or the respective
Subsidiary of the Company or their successor in the Contest insofar as
the Contest involves an asserted Tax liability for which the Sellers
would be liable under this Section 9.02. (g).
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(xv) The Purchaser hereby agrees to indemnify KPMG DTG against
claims of the Company for coverage of losses ("Verlustausgleich") under
Section 302 of the German Stock Corporation Act ("AktG") for possible
losses arising in the calendar year 2002, except for such losses against
which the Purchaser is indemnified under the indemnification provisions
of this Agreement. The Sellers hereby agree to indemnify the Purchaser
for any profits of the Company accrued since January 1, 2002, to the
extent such profits have been transferred to KPMG DTG under the
Domination and Profit and Loss Transfer Agreement.
Section 9.03 Liability of the Purchaser.
(a) Section 9.02 shall apply accordingly with respect to the
liability of the Purchaser under this Agreement, provided however, that
there will be no deductible and that the Purchasers' maximum liability,
except for its obligation to pay the Purchase Price pursuant to Section
2.02 above, for any claims by the Sellers arising out of the transactions
contemplated by this Agreement shall in any case be limited to 65 % of
the Base Purchase Price (USD 435,606,925 - in words: United States
Dollars four hundred thirty five million six hundred and six thousand
nine hundred and twenty five), unless such limitation is prohibited by
mandatory law.
ARTICLE 10
OTHER AGREEMENTS
Section 10.01 Public Disclosure. The initial press releases of
the Sellers and the Purchaser, shall be jointly agreed and the Purchaser's first
press release will be made at a time after the signing of this Agreement
selected by the Purchaser. Notwithstanding anything herein to the contrary, each
of the Parties to this Agreement hereby agrees with the other Party that, except
as may be required for a Party to comply with the requirements of any Applicable
Law or stock exchange regulation with respect to such Party, no press release or
similar public announcement or communication shall, whether prior or subsequent
to the Closing, be made or caused to be made concerning the execution or
performance of this Agreement, unless specifically approved in advance by the
other Party, provided that, after the Closing, (i) the Purchaser may freely
issue press releases or similar public announcements and communications with
respect to the business, affairs and prospects of the Company and its
Subsidiaries and (ii) the Purchaser may freely issue such communications with
respect to the effect of the transactions contemplated hereby on the business,
affairs and prospects of such Party (but not as to the performance by the other
Parties of their respective obligations hereunder). The Sellers may issue press
releases concerning the Closing of the transaction.
Section 10.02 Nonsolicitation. Until December 31, 2004, the
Purchaser, on the one hand, and KPMG DTG on the other hand, shall not and shall
not permit any of their Subsidiaries to, solicit, directly or indirectly (other
than through a general solicitation of employment not specifically directed to
any particular group of employees) the employment of or
-48-
employ any partner, manager or employee of KPMG DTG or any of its Subsidiaries,
in the case of the Purchaser, or of the Purchaser or any of its Subsidiaries, in
the case of KPMG DTG.
Section 10.03 Purchase Price Allocation. The Purchaser
acknowledges that the allocation of the Purchase Price amongst the Sellers shall
be made in accordance with Schedule 7.01 (c). The Sellers agree, that, with
regard to their potential liability under this agreement in case of breaches of
this Agreement, KPMG DTG shall hold an amount equal to 20% of the Purchase Price
received by it in accordance with Section 6.02 (d) on a fiduciary basis for all
of the Sellers for a time period of 19 months from the Closing Date and shall
release it to the individual Sellers in accordance with Schedule 7.01 (c)
thereafter, less any amounts which have been or may be used to satisfy indemnity
claims of the Purchaser as of the end of the 19 month period.
Section 10.04 Access to Information After Closing. To the
extent such information is reasonably requested to satisfy legal or stock
exchange obligations or to comply with disclosure obligations in connection with
third party claims, each Party hereto agrees to use its reasonable efforts to
provide any such information requested in writing by the other Party at the
requesting Party's cost, subject to execution of reasonably satisfactory
confidentiality agreements.
Section 10.05 Use of KPMG Name.
(a) The Purchaser and KPMG DTG agree that prior to the
earlier of December 31, 2004 and the date one year after the
announcement by the Purchaser of any new corporate name (the
"Restricted Period"):
(i) KPMG DTG shall not use or grant in the Territory the
right to use the name KPMG or the KPMG "four block" logo together
with the word "consulting" in its or any grantee's corporate
name, brand or letterhead unless such name also includes or
indicates a consulting service type or initials used as an
acronym for a service type. For purposes of example only, the use
of the following names would be restricted by the preceding
sentence: KPMG Consulting S.A., KPMG Atos Consulting A.G.;
(ii) KPMG DTG shall not use or grant the right to use the
name "KPMG Consulting AG" or any other trade name primarily used
by the Company or one of its Subsidiaries as of the date hereof;
and
(iii) KPMG DTG shall not oppose the use by the Company of the
name "KPMG Consulting AG" or "KPMG Consulting, Inc."
(b) The Purchaser agrees that KPMG DTG may use or grant in
the Territory the right to use the name "KPMG" or the KPMG "four block"
logo together with the word "consulting" with a name that includes or
indicates a consulting service type or initials used as an acronym for
another service type. For purposes of example only,
-49-
KPMG DTG would be permitted to use or grant rights to use the
following names: KPMG FAS Consulting AG, KPMG Tax Consulting AG.
(c) Notwithstanding anything other than (a) (i) or (ii)
above to the contrary set forth herein, KPMG DTG shall not be prohibited
from using any name currently used by KPMG DTG or any of its Subsidiaries
(other than the Company and its Subsidiaries).
(d) The Purchaser shall not use and shall not permit its
Subsidiaries to use in the Territory the name "KPMG" or the "four block"
KPMG logo without the word "consulting" immediately adjacent thereto.
(e) "Territory" means Germany, Austria and Switzerland.
(f) Notwithstanding anything to the contrary contained
herein, the Sellers make no representation or warranty with respect to
the use of the name or component "KPMG" or the KPMG "four block" logo or
any name or graphic depiction using either or both either alone or in
combination with any other name, component or graphic (collectively the
"KPMG Derivations").
(g) The Purchaser shall indemnify the Sellers from any
damage to the Sellers arising from the use of the KPMG Derivations by the
Purchaser, its Affiliates or any Group Company after the Closing. Except
as permitted by the Limited License Agreement entered into by the
Purchaser with KPMG International, the Purchaser shall cause the Group
Companies not to use any KPMG Derivation after the Closing.
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01 Seller's Representative.
(a) KPMG DTG is irrevocably designated, and hereby accepts
such designation, as the representative of the Sellers (Vertreter), and
each Seller acknowledges that KPMG DTG shall serve as the sole
representative of the Sellers with respect to the matters set forth in
this Agreement, including, without limitation, (a) to amend, cancel or
extend, or waive the terms of, this Agreement and any ancillary
agreement, (b) to act on behalf of the Sellers in connection with the
defense, pursuit or settlement of any determinations relating to any
claims for indemnification pursuant to Article 8, (c) to engage and
employ agents and representatives (including accountants, legal counsel
and other professionals) and to incur such other expenses as KPMG DTG
deems necessary or prudent in connection with the administration of the
foregoing; (d) to accept and receive notices to the Sellers pursuant to
this Agreement; and (e) to take all other actions and exercise all other
rights of the Sellers in connection with this Agreement.
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(b) All decisions and acts by KPMG DTG as the Sellers'
representative shall be binding upon each of the Sellers. In this
Agreement, all notices to be sent by the Sellers shall be deemed to be
given when delivered by KPMG DTG, and the Purchaser shall have no
obligation to rely upon any notice sent by any Seller other than KPMG
DTG.
(c) The Purchaser shall be entitled to rely, as being
binding upon each Seller, upon any document signed or sent by KPMG DTG,
and the Purchaser shall not be liable to any of the Sellers for any
action taken or omitted to be taken by it in such reliance. The Purchaser
shall not be liable to any of the Sellers for any action taken or omitted
to be taken by KPMG DTG in connection with the distribution of the
Purchase Price to each Seller.
Section 11.02 Notices. Whenever notice is required under the
provisions of this Agreement, such notice shall be in writing and sent to the
Parties at their respective addresses set forth below or to such other addresses
as the Parties may hereafter communicate to the others in writing:
To Seller[s]:
KPMG Deutsche Treuhand-Gesellschaft AG
Wirtschaftsprufungsgesellschaft
Prof. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ des Vorstands
▇▇▇▇▇▇▇▇▇. ▇▇-▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Telefax: +49 - (0)30 - 2068 1001
With copy to:
KPMG Deutsche Treuhand-Gesellschaft AG
Wirtschaftsprufungsgesellschaft
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Taubenstra(beta)e ▇▇-▇▇▇▇▇▇▇ Berlin
Telefax: +49 - (0)30 -2068 1100
To Purchaser:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
With copy to:
▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Notices may be given: (a) in person, (b) by telefax (c) by
private air courier, or (d) by first class registered mail, postage prepaid,
return receipt requested, addressed as set
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forth above. Notices shall be effective (i) if delivered in person, upon
delivery; (ii) if by telefax on the next business day, and a copy of the
transmission report shall be sufficient evidence of delivery; (iii) if by
courier or mail, upon receipt, duly evidenced.
Section 11.03 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the Federal Republic of
Germany, except (i) for Section 10.02 (Non-Solicitation) which shall be governed
by Delaware law, (ii) if expressly otherwise provided for in this agreement or
(iii) if applicable mandatory conflict of law provisions require the application
of laws of other jurisdictions.
Section 11.04 Arbitration. The Parties will, with regard to
potential disputes between the Parties out of or in connection with this
Agreement, enter simultaneously with the signing of this Agreement into an
arbitration agreement as reflected in Schedule 11.04 (the "Arbitration
Agreement").
Section 11.05 Costs, Expenses. Except as otherwise expressly
provided in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by the
Party that incurred such expenses. The Purchaser shall bear all costs and
expenses arising in connection with (i) the issuance, conveyance, assignment and
transfer of the Exchange Shares; and (ii) the proceedings to satisfy the Closing
Condition set forth in Section 3.01 (Cartel Approval) and the measures necessary
for compliance with the requirements of the competent cartel authorities,
provided, however, that each Party shall bear the costs of their own advisors.
The Parties acknowledge that the Company will be responsible (and will not
attempt to charge the Sellers for) all out-of-pocket expenses and internal costs
related to the preparation and execution of transactions contemplated hereby or
the auction process related to the sale of the Company Shares, provided however,
that only the Sellers shall bear the pre-closing costs for the Company's outside
legal or financial advisors, or another third party, if any. The Purchaser
shall, after Closing, ensure that the Company complies with the above provisions
and shall indemnify KPMG DTG against any claim made by the Company against KPMG
DTG for reimbursement of costs in violation of said provisions.
Section 11.06 Headings. The heading references herein and the
table of contents hereto (including the list of schedules and annexes to this
Agreement immediately following such table of contents) are for convenience
purposes only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
Section 11.07 Waiver; Amendment.
(a) Any provision of this Agreement may be waived if, and only
if, such waiver is in writing and signed by the Party against whom the
waiver is to be effective.
(b) No waiver or lack of exercise by one or more Parties of
any of their rights and privileges granted or arising hereunder shall
be deemed a waiver of any of these rights or privileges nor shall it
bar their exercise in the future.
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(c) There shall be no amendments to this Agreement without the
prior written agreement of all Parties hereto. No course of action
adopted by any of the Parties shall be deemed an amendment (whether
express or implied) to any of the provisions hereof.
Section 11.08 Assignment; Substitution; Counterclaims.
(a) The Purchaser may assign all its rights and obligations to
a wholly owned subsidiary provided that:
(i) the Purchaser remains fully liable with respect
to all obligations of the Purchaser under this Agreement;
(ii) any rights of the Sellers to set-off liabilities
against claims of the Purchaser shall not be affected; and
(iii) the assignment shall in no way operate so as to
increase or reduce the respective rights and obligation on the
part of the Purchaser or its assignee on the one hand and the
Sellers on the other hand.
(b) Except for the exemption set forth under (a) above, no
Party to this Agreement may assign any of its rights under this
Agreement without the prior written consent of the other Party hereto,
whereby such consent shall not be unreasonably withheld or delayed. Any
attempted assignment in violation hereof shall be null and void.
(c) The Purchaser shall not be entitled to exercise any rights
of set-off, withhold or reduction (Minderung) against the Purchase
Price, unless the counterclaim of the Purchaser is undisputed or a
competent tribunal has adopted a final and binding decision on such
counterclaim.
Section 11.09 Entire Agreement. This Agreement (including all
Schedules, Annexes and Appendices hereto) among the Parties dated the date
hereof and the Confidentiality Agreement dated October 31, 2001 between KPMG UK
Partnership, KPMG DTG, KPMG Holding N.V., NLC Holding B.V., KPMG Societe
Anonyme, KPMG REcursos S.A., KPMG Inc. and KLynveld Peat Marwick Goerdeler, AS
and the Purchaser contain the entire agreement between or among the Parties
hereto with respect to the subject matter hereof and thereof, except as
expressly provided herein, supersedes all prior agreements and understandings,
oral or written, with respect to such matter.
Section 11.10 Severability. If any provision of this Agreement
is held to be unenforceable for any reason, it shall be capable of being severed
and adjusted rather than voided, if possible, in order to achieve the intent of
the Parties to this Agreement to the extent possible. In any event, the
invalidity or unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of this Agreement,
including that provision, in any other competent jurisdiction.
Section 11.11 Confidentiality. The Purchaser undertakes to the
Sellers to keep the confidential information of any of the Sellers it has or
receives from any of them from time
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to time confidential and to use it solely for the purposes of the exercise of
its rights under this Agreement or any of the transaction documents or for the
purposes of performing its obligations under this Agreement. The Sellers
undertake to the Purchaser to keep the confidential information of the
Purchaser, the Company or the Subsidiaries they have or receive from time to
time confidential and to use it solely for the purposes of the exercise of their
rights under this Agreement or any of the transaction documents or for the
purposes of performing its obligations under this Agreement.
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IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to
be executed as of the date first written above.
KPMG Consulting, Inc. KPMG Deutsche Treuhand-Gesellschaft AG
(in its own name and as authorized
representative (Vertreter) for all the
other Sellers listed in Annex 1 hereof)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ Prof. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇. ▇▇▇▇▇ ▇▇▇▇
--------------------------------- --------------------------------------------------------------------------------
Name: Name:
Title: Title:
