EXECUTION COPY
COORDINATION AND ADJUSTMENT AGREEMENT
COORDINATION AND ADJUSTMENT AGREEMENT (this "Agreement") dated as of
September 24, 1996 by and among O Acquisition, Inc., a Delaware corporation
("Buyer") and each of the parties set forth on the signature pages hereto under
the heading "Sellers", together with any additional parties executing a
counterpart to this Agreement pursuant to Section 3.9 (each a "Seller" and
collectively, the "Sellers").
R E C I T A L S
A. Buyer, certain of its Affiliates and the Sellers have entered into,
or will enter into, the individual asset and share purchase agreements described
on Exhibit A hereto (collectively, the "Sale Agreements"), pursuant to which
each of the respective Sellers has agreed to sell, and Buyer has agreed to
purchase, various assets and capital shares owned by each such Seller
(collectively, the "Purchased Assets"), all on the terms and conditions set
forth in such Sale Agreements.
B. In exchange for the Purchased Assets and subject to adjustment
pursuant to this Agreement, Buyer and certain of its Affiliates have agreed to
pay Sellers the Purchase Price provided for in each of the individual Sale
Agreements, and to assume certain of the liabilities and obligations of the
Sellers (collectively, the "Assumed Liabilities"), all on the terms and
conditions set forth in the Sale Agreements.
C. Buyer desires to enter into this Agreement with Sellers so that the
Purchase Price paid pursuant to each of the individual Sale Agreements may be
adjusted as at the closing of the transactions contemplated by the Sale
Agreements (the date upon which the transactions contemplated by all of the Sale
Agreements has been consummated is referred to herein as the "Closing Date"),
with such adjustments to be effected on a combined basis reflecting all of the
Purchased Assets and all of the Assumed Liabilities in order to more efficiently
and expeditiously carry out such adjustments in a fair and equitable manner.
D. In order to avoid unintended conflicts and inconsistencies among the
individual Sale Agreements, Buyer and Seller also desire to provide herein for
the uniform handling and treatment among themselves of certain matters including
cooperation among all of them in defending against certain Litigation and in
administering any indemnity claims made by one against another.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and in exchange for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Sellers agree as follows:
ARTICLE I. - NET WORTH ADJUSTMENT
1.1. Preparation of Closing Date Balance Sheet. No later than
forty-five (45) days subsequent to the Closing Date, Sellers shall deliver to
Buyer a Closing Date balance sheet audited by KPMG Peat Marwick, Sellers'
independent public accountants, in accordance with United States generally
accepted accounting principles, which reflects only the Purchased Assets and the
Assumed Liabilities as of the opening of business on the Closing Date as
purchased and sold pursuant to each of the Sale Agreements. The Closing Date
balance sheet will be based on a roll forward from the Year End Balance Sheet of
Sellers and shall be prepared on a basis consistent with the Year End Balance
Sheet. Buyer shall cooperate with Sellers and their representatives in the
preparation of the Closing Date balance sheet, and shall furnish such
information as may be reasonably requested in connection therewith. Within
fifteen (15) business days after delivery of the Closing Date balance sheet,
Buyer shall notify Sellers in writing whether or not Buyer disputes any part of
such Closing Date balance sheet. If no notification is received by Sellers
within such fifteen (15) business day period, Buyer shall be deemed to have
accepted such Closing Date balance sheet. If Buyer does dispute any aspect of
the Closing Date balance sheet, Buyer's dispute notice shall include reasonable
detail regarding the nature and reasons for such dispute, and the parties shall
thereafter negotiate in good faith to reach a mutually acceptable resolution as
soon as reasonably possible. If Buyer and Sellers are unable to resolve such
dispute within fifteen (15) business days after receipt by Sellers of Buyer's
written dispute notice, then the determination of the Closing Date balance sheet
shall be promptly submitted to a third party accounting firm of international
standing, which shall resolve any disputes regarding the Closing Date balance
sheet. The terms of appointment and engagement of such third party accounting
firm shall be as agreed upon between the Sellers and Buyer. The determination of
such third party accounting firm regarding the Closing Date balance sheet shall
be final and binding on Buyer and Sellers, and the expenses of such third party
accounting firm in making such determination shall be borne equally by Buyer, on
the one hand, and Sellers, on the other hand. The Closing Date balance sheet as
finally agreed to by the parties or as determined by such third party accounting
firm pursuant to this section is referred to as the "Closing Date Balance
Sheet."
1.2. Calculation/Payment of Adjustment. (a) The aggregate of the
Purchase Price to be paid by Buyer and its affiliates to the Sellers under all
of the Sale Agreements is equal to US$155 million, as adjusted as provided
herein. The allocation of such amount among the various Sellers is as set forth
on Exhibit B hereto. If the Worldwide Net Worth as reflected on the Closing Date
Balance Sheet is greater than the Worldwide Net Worth reflected on the Year End
Balance Sheet, then the amount of such excess shall be paid by Buyer to Sellers
as additional Purchase Price for the Purchased Assets. If the Worldwide Net
Worth as reflected on the Closing Date Balance Sheet is less than the Worldwide
Net Worth reflected on the Year End Balance Sheet, then the amount of such
shortfall shall be paid by Sellers to Buyer, as a reduction in the Purchase
Price already paid. For purposes of this Agreement, "Worldwide Net Worth" shall
mean the difference between the aggregate dollar value of the Purchased Assets,
less the Assumed Liabilities as set forth on the Closing Date Balance Sheet.
(b) All payments to be made pursuant to this section shall be made no
later than the fifth (5th) day after the Closing Date Balance Sheet has been
finalized, and shall be made in U.S. Dollars by wire transfer of immediately
available funds, in such amounts and to such accounts as the receiving party
shall designate to the paying party, together with interest accruing after the
Closing Date up to and including the date of payment at the prevailing prime
rate reported from time to time in the WALL STREET JOURNAL.
1.3. Adjustment of Purchase Price Allocation. The amount of any
adjustment to the Purchase Price payable pursuant to Section 1.2 hereof and due
to an increase or decrease in value of one of the categories of Purchased Assets
or Assumed Liabilities as to which the Purchase Price, as provided in any Sale
Agreements, has been allocated (other than intangible assets) shall be allocated
to or deducted from each such category of Purchased Assets or Assumed
Liabilities in an amount equal to the actual increase or decrease occurring with
respect to that particular category of Purchased Asset or Assumed Liability. Any
difference between the total amount of the adjustment to the Purchase Price and
the amount of such adjustment due to changes in value of the tangible Purchased
Assets or Assumed Liabilities as to which the Purchase Price has been otherwise
allocated, shall be allocated to or deducted from intangible assets. Any such
adjustments to the Purchase Price shall be allocated among the Sale Agreements
covering Sellers' Canadian and French operations in amounts equal to the actual
change in value of any of the Purchased Assets or Assumed Liabilities actually
covered by the particular Sale Agreement covering Sellers' Canadian and French
operations, with the balance allocated to the operations covered by the U.S.
Agreement, as defined below.
ARTICLE II. - SALES AGREEMENT INCONSISTENCIES
2.1. Inconsistencies Among Sales Agreements. The parties recognize and
acknowledge that due to, among other things, variations among local laws and
customs in the jurisdictions in which the Sale Agreements are to apply and
pursuant to which the assignment, transfer and assumption of the Purchased
Assets and Assumed Liabilities are to be effected, there may be inconsistencies
or conflicts among the terms and conditions of the Sale Agreements
(collectively, "Inconsistencies"). Notwithstanding any such Inconsistencies, the
parties acknowledge that the Sale Agreements are intended to provide for an
integrated purchase and sale among the parties hereto of the worldwide Business
described therein and the parties intend that the Sale Agreements, and the
construction, interpretation and enforcement thereof, be uniform and consistent
(except as the Sale Agreements may otherwise expressly provide or as the context
may otherwise require). Accordingly, in order to provide for and assure
consistency among the Sale Agreements, the parties hereby agree that the terms,
provisions, conditions, agreements, covenants, representations and warranties of
the parties contained in the Sale Agreements shall, in the case of any
Inconsistency, be governed, construed, interpreted and enforced solely in
accordance with the Asset Purchase Agreement by and among Buyer, Telectronics
Pacing Systems, Inc. and TPLC, Inc. concerning the purchase and sale of the U.S.
Operations as therein defined (the "U.S. Agreement"), which U.S. Agreement
shall, to such extent, supersede all of the other Sale Agreements; provided,
however, that any such Inconsistency which has arisen on account of any
requirement of law of the jurisdiction in which one of the Sale Agreements is
intended to apply (a "Legally Required Inconsistency") shall not be superseded
to the extent that such Legally Required Inconsistency is necessary for the
lawful consummation of the transactions contemplated by such of the Sale
Agreements. Without limiting the generality of the foregoing, the parties
further agree as follows:
(a) No representation or warranty contained in any Sale Agreement shall
be the basis for any claim, action, cause of action, termination, or rescission
right or other relief by any party against another party unless and to the
extent any such claim, action, cause of action, termination or rescission right
or other relief would be available to such party pursuant to the representations
or warranties of the other parties contained within the U.S. Agreement (as if
the same were applicable to the Business covered by the other Sale Agreements).
(b) The provisions for indemnification contained within Article X of
the U.S. Agreement (including without limitation, those concerning the
definition and extent of Buyer Claims or Seller Claims; those concerning the
time period during which any Buyer Claims or Seller Claims may be brought; the
Buyer Threshold and the Liability Cap applicable to any Buyer Claims; the
procedure for indemnification and the method of the bringing of Buyer Claims or
Seller Claims; Sellers' indemnity obligations with respect to the Litigation;
Buyer's and Sellers' indemnity obligations with respect to the FDA Consent
Decree; and the treatment of any indemnity payments as an adjustment to the
Purchase Price paid for the Purchased Assets) shall be applicable to, and be
considered limitations on, all Claims which may be brought under any of the Sale
Agreements for indemnification or otherwise and, except as provided in the Sale
Agreements, shall be the sole and exclusive remedy (in contract, tort or
otherwise) relating to any and all disputes, legal actions, suits or proceedings
arising out of or related to the Sale Agreements. The overall Liability Cap
applicable to all of the Sale Agreements shall be the sum of the Purchase Prices
paid under each of the Sale Agreements, as adjusted pursuant to this Agreement,
and the Buyer Threshold defined in the U.S. Agreement shall be applicable to all
Buyer Claims which may be brought under any of the Sale Agreements.
(c) The provisions concerning the financial statements, financial
position and financial results of operation relating to the Business contained
in Sections 4.5 and 4.6 of the U.S. Agreement, those concerning litigation
cooperation prior to closing contained in Section 6.5 of the U.S. Agreement and
those concerning the disposition of certain information contained in Section 7.7
of the U.S. Agreement shall be applicable to all of the Sale Agreements and to
the transactions and Business covered by the other Sale Agreements as fully as
if set forth therein in their entirety and shall supersede any similar provision
in any of the other Sale Agreements in case of any Inconsistency.
(d) Attached hereto are various schedules (the "Disclosure Schedules")
which describe certain matters concerning Sellers' worldwide Business. Such
Disclosure Schedules are hereby incorporated in each of the Sale Agreements as
if fully set forth therein in their entirety, and the matters described therein
shall be deemed to supplement and modify the representations, warranties,
covenants and agreement contained in the Sale Agreements to the extent so set
forth in such Disclosure Schedules.
(e) Except as provided in Section 7.4 of the U.S. Agreement, on a
world-wide basis, all Taxes (as defined in the U.S. Agreement), recording fees,
personal property, title application fees, patent and trademark assignment
registration fees, and such other transfer taxes and fees arising by virtue of
the transfer of the Purchased Assets and the Business from Sellers and their
Affiliates to Buyer or its Affiliates pursuant to the Sale Agreements (other
than Taxes based upon the net income or capital gain of Sellers or their
Affiliates arising out of the transactions contemplated thereby) shall be paid
by Buyer, provided that the parties shall cooperate with one another in all
lawful and reasonable arrangements to minimize such Taxes and fees, and further
provided that Sellers or their Affiliates shall reimburse Buyer within 30 days
for one-half of the sales taxes, use taxes or similar transfer taxes imposed on
the transfer of the Purchased Assets to Buyer. Buyer and Seller agree that they
will prepare and agree before Closing a schedule identifying categories of
assets located within each State and Territory of Australia and the agreed sale
value of each such category within each such State and Territory of Australia.
(f) Solely for purposes of the Sale Agreements and the transactions
contemplated thereby, each of the parties hereby agrees that any and all
disputes, legal actions, suits, or proceedings arising out of or relating to the
Sale Agreements or the transactions contemplated thereby, whether legal or
equitable in nature, or arising out of contract, tort or otherwise, may be
brought solely in a state or federal court located in the County of New Castle,
State of Delaware. By their signature to this Agreement, the parties, regardless
of their residence, each irrevocably submits to the jurisdiction of the courts
located in the County of New Castle, State of Delaware, in any dispute, legal
action, suit or proceeding arising out of or relating to the Sale Agreements or
the transactions contemplated thereby. Each of the parties acknowledges that it
has freely agreed to so submit to jurisdiction and venue, and that without such
agreement the courts located in the County of New Castle, State of Delaware
might not otherwise have jurisdiction over each of such parties.
(g) Solely for purposes of the Sale Agreements and the transactions
contemplated thereby, each of the parties hereby irrevocably appoints The
Corporation Trust Company, whose address is 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx, 00000, as their designated agent for service of process in the State
of Delaware upon whom may be served any notice, process or pleading in any
dispute, legal action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, and each further consents
that service of process on such designated agent shall have the same effect as
if they had lawfully been served personally with process in the State of
Delaware; provided, that such appointment may be terminated after that date
which is 6 years from the Closing Date.
(h) Solely for purposes of the Sale Agreements and the transactions
contemplated thereby, each of the parties hereby irrevocably waives all claims
of immunity from jurisdiction or attachment, and waives all claims of immunity
from jurisdiction, attachment and execution to which it might otherwise be
entitled in any legal action or proceeding brought in any state or federal court
located in the County of New Castle, State of Delaware, and further irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to any dispute, legal action, suit or proceeding arising out
of or relating to the Sale Agreements or the transactions contemplated thereby
being brought in any federal or state court located in the County of New Castle,
State of Delaware, and hereby further irrevocably waives any claim that any such
dispute, legal action, suit, or proceeding brought in any such court has been
brought in an inconvenient forum.
ARTICLE III. - MISCELLANEOUS
3.1. Notices. Any notice, request, instruction or other document to be
given hereunder shall be in writing and delivered personally or sent by United
States registered or certified mail, postage prepaid, or by facsimile, according
to the instructions set forth below. Such notices shall be deemed given: at the
time delivered by hand, if personally delivered; at the time received if sent by
United States registered or certified mail; at the time when receipt is
confirmed by the receiving facsimile machine if sent by facsimile.
If to Buyer, to:
St. Jude Medical, Inc.
Xxx Xxxxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
If to any Seller, to:
Pacific Dunlop Limited
Xxxxx 00, 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 0000
Attention: Managing Director
Telecopy Number: 011-613-9270-7330
With a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Messrs. Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
3.2. Successors and Assigns. The rights of Buyer and Sellers pursuant
to this Agreement shall not be assignable by such party prior to the Closing
Date without the prior written consent of the other parties, except that Buyer
may assign its rights hereunder to one or more of its Affiliates prior to the
Closing Date, PROVIDED THAT Buyer shall not be released from any of its
obligations hereunder by reason of such assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their successors
and assigns.
3.3. Entire Agreement; Amendments. This Agreement and the Sale
Agreements contain the entire understanding of the parties hereto with regard to
the subject matter contained herein, and supersede all prior written or oral
agreements, understandings or letters of intent between or among any of the
parties hereto, with respect to the subject matter hereof. This Agreement shall
not be amended, modified or supplemented except by a written instrument signed
by an authorized representative of each of the parties hereto. In the event of a
dispute or inconsistency between any of the Sale Agreements and this Agreement,
the terms of this Agreement shall prevail. Capitalized terms used herein not
otherwise defined herein shall have the same meanings herein as ascribed to such
terms in the U.S. Agreement.
3.4. Interpretation. Section headings are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
3.5. Waivers. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, pursuant to a written action by
the party or parties entitled to the benefit thereof. The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
3.6. Partial Invalidity. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
3.7. Execution in Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by each of the
parties hereto and delivered to each Seller and Buyer.
3.8. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without giving
effect to any choice of laws provisions which may direct the application of the
laws of another jurisdiction.
3.9. Additional Parties. Certain of the Sale Agreements will be
executed subsequent to the date of this Agreement. The parties agree that upon
execution of such Sale Agreements, this Agreement shall be amended to add the
parties to such Sale Agreements as parties hereto and to reference the
additional Sale Agreements on Exhibit A hereto, with such amendments to be
effected and evidenced by the delivery to each party hereto of a revised Exhibit
A together with a counterpart signature page to this Agreement, executed by such
new parties and reflecting such parties as "Sellers" for purposes of this
Agreement.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year set forth on the first page hereto.
BUYER: SELLERS:
O Acquisition, Inc Telectronics Pacing Systems, Inc.
By: /s/ X.X. Xxxxxx By: /s/ Xxxxx Xxxxxx
----------------------------- --------------------------------
Title: Vice President - Finance and Title: President
Chief Financial Officer --------------------------------
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TPLC, Inc.
By: /s/ Xxxxx Xxxxxx
--------------------------------
Title: President
--------------------------------
Telectronics Pty. Ltd.
By: /s/ Xxxxx Xxxxxx
--------------------------------
Title: Attorney-in-Fact
--------------------------------
Medical Telectronics Pty. Ltd.
By: /s/ Xxxxx Xxxxxx
--------------------------------
Title: Attorney-in-Fact
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