Exhibit 10.1

EXECUTION VERSION

SECURITIES PURCHASE AGREEMENT,

dated as of December 13, 2018,

between

FILTRATION GROUP FGC LLC

and

CONMED CORPORATION

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     1  

1.1

  Definitions      1  

ARTICLE II PURCHASE AND SALE

     8  

2.1

  Purchase and Sale      8  

2.2

  Purchase Price      8  

2.3

  Closing      8  

2.4

  Closing Deliveries      9  

2.5

  Net Working Capital Adjustment      11  

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

     14  

3.1

  Existence and Power      14  

3.2

  Authorization      14  

3.3

  Enforceability      14  

3.4

  Governmental and Third Party Authorizations      14  

3.5

  Noncontravention      14  

3.6

  Capitalization; Subsidiaries      15  

3.7

  Financial Statements; Internal Controls      15  

3.8

  No Undisclosed Liabilities      16  

3.9

  Absence of Certain Changes      16  

3.10

  Material Contracts      17  

3.11

  Suits      18  

3.12

  Compliance with Laws; Permits; Regulatory Matters      18  

3.13

  Tangible Personal Property; Sufficiency of Assets      21  

3.14

  Intellectual Property and Data Security      21  

3.15

  Real Property      22  

3.16

  Benefit Matters      23  

3.17

  Labor Matters      25  

3.18

  Environmental Matters      25  

3.19

  Taxes      26  

3.20

  Brokers      26  

3.21

  Affiliate Transactions      26  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

     26  

4.1

  Existence and Power      27  

4.2

  Authorization      27  

4.3

  Enforceability      27  

4.4

  Governmental and Third Party Authorizations      27  

4.5

  Noncontravention      27  

4.6

  Brokers      27  

4.7

  Investment Representations      27  

4.8

  Financing      28  

4.9

  Solvency      29  

 

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TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE V COVENANTS OF SELLER

     30  

5.1

  Conduct of Business      30  

5.2

  No Additional Representations      32  

5.3

  Seller Release      32  

5.4

  Access to Books and Records      32  

5.5

  Non-Solicitation; Non-Competition      33  

ARTICLE VI COVENANTS OF BUYER

     33  

6.1

  Access to Books and Records      33  

6.2

  Indemnification; Directors and Officers Insurance      34  

6.3

  No Additional Representations      34  

6.4

  Communications Prior to Closing      35  

6.5

  RWI Policy      35  

6.6

  Buyer Release      35  

6.7

  Employee Compensation Matters      35  

ARTICLE VII COVENANTS OF BUYER AND SELLER

     35  

7.1

  Public Announcements      35  

7.2

  Antitrust Approvals      36  

7.3

  Efforts to Close      37  

7.4

  Tax Matters      37  

7.5

  Confidentiality      38  

7.6

  Financing and Financing Cooperation      39  

7.7

  Employee Matters      43  

ARTICLE VIII CONDITIONS TO CLOSING; TERMINATION

     44  

8.1

  Conditions to Obligation of Buyer      44  

8.2

  Conditions to Obligation of Seller      45  

8.3

  Frustration of Closing Conditions      45  

8.4

  Waiver of Conditions      45  

8.5

  Termination      45  

8.6

  Effect of Termination      46  

ARTICLE IX MISCELLANEOUS

     46  

9.1

  No Survival of Representations; Warranties and Pre-Closing Covenants; No
Liability      46  

9.2

  Investigation by Buyer      47  

9.3

  Notices      48  

9.4

  Amendments and Waivers      49  

9.5

  Expenses      49  

9.6

  Successors and Assigns      49  

9.7

  Governing Law      49  

 

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TABLE OF CONTENTS

(continued)

 

         Page  

9.8

  Consent to Jurisdiction; Service of Process; Waiver of Jury Trial      50  

9.9

  Counterparts      51  

9.10

  No Third Party Beneficiaries      51  

9.11

  Entire Agreement      51  

9.12

  Seller Disclosure Schedules      51  

9.13

  Captions      52  

9.14

  Remedies      52  

9.15

  Severability      53  

9.16

  Interpretation      53  

9.17

  Privilege; Conflicts of Interest      53  

9.18

  No Recourse Against Nonparty Affiliates      54  

9.19

  No Recourse Against Financing Parties      55  

EXHIBITS

 

Exhibit A    Form of Transition Services Agreement Exhibit B    Form of Supply
Agreement Exhibit C    Agreed Accounting Principles Exhibit D    Example Net
Working Capital Calculation

 

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Defined Terms    Sections

Accountants

   Section 2.5(e)

Acquired Companies

   Recitals

Acquired Company

   Recitals

Adjustment Escrow Account

   Section 2.4(d)

Adjustment Escrow Deposit

   Section 2.4(d)

Affiliate

   Section 1.1

Agreed Accounting Principles

   Section 1.1

Agreed Tax Treatment

   Section 7.4(d)

Agreement

   Preamble

Allocation

   Section 7.4(a)

Alternative Financing

   Section 7.6(d)

Ancillary Documents

   Section 1.1

Balance Sheet Date

   Section 3.7(a)

Benefit Plan

   Section 1.1

BF LLC

   Recitals

BF Securities

   Recitals

Books and Records

   Section 1.1

Business Day

   Section 1.1

Buyer

   Preamble

Buyer Closing Certificate

   Section 8.2(c)

Buyer Releasee

   Section 6.6

Cash

   Section 1.1

Cash Amount

   Section 2.2

Closing

   Section 2.3

Closing Date

   Sections 1.1, 2.3

Closing Schedule

   Section 2.2

Closing Statement

   Section 2.5(b)

Code

   Section 1.1

Confidentiality Agreement

   Section 1.1

Confidential Information

   Section 7.5

Contract

   Section 1.1

Covered Party

   Section 6.2(a)

Credit Agreement Lenders

   Section 2.4(a)(iv)

Current Assets

   Section 2.5(a)(i)

Current Liabilities

   Section 2.5(a)(ii)

D&O Insurance

   Section 6.2(b)

Debt Commitment Letter

   Section 4.8(a)

Definitive Debt Financing Agreements

   Section 7.6(a)

DOJ

   Section 3.12(a)

Employee

   Section 1.1

Employee Plan

   Section 1.1

Enterprise Value

   Section 2.2

Environmental Laws

   Section 1.1

Equity Securities

   Section 1.1

ERISA

   Section 1.1

 

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Defined Terms    Sections

ERISA Affiliate

   Section 1.1

Escrow Agent

   Section 2.4(d)

Escrow Agreement

   Section 2.4(d)

Example Net Working Capital Calculation

   Section 2.5(a)(iii)

Excluded Payroll Taxes

   Section 1.1

Existing Debt Agreements

   Section 2.4(a)(iv)

FDA

   Section 3.12(a)

FDCA

   Section 3.12(b)

FDCA Permits

   Section 3.12(e)

Filtration Group Party

   Section 1.1

Final Closing Statement

   Section 2.5(e)

Financial Statements

   Section 3.7(a)

Financing

   Section 1.1

Financing Conditions

   Section 4.8(e)

Financing Parties

   Section 1.1

Financing Providers

   Section 1.1

Financing Sources

   Section 1.1

Fraud

   Section 1.1

GAAP

   Section 1.1

Governmental Entity

   Section 1.1

HHS-OIG

   Section 3.12(a)

HSR Act

   Section 1.1

Income Taxes

   Section 1.1

Indebtedness

   Section 1.1

Intellectual Property

   Section 1.1

IRS

   Section 3.16(d)

Law

   Section 1.1

Leased Real Property

   Section 3.15(b)

Lenders

   Section 2.4(a)(iv)

Lien

   Section 1.1

Material Adverse Effect

   Section 1.1

Material Contract

   Section 1.1

Medical Device

   Section 3.12(b)

Most Recent Balance Sheet

   Section 3.7(a)

Net Working Capital

   Section 2.5(a)(iv)

Net Working Capital Lower Boundary

   Section 2.5(a)(v)

Net Working Capital Upper Boundary

   Section 2.5(a)(vi)

Nonparty Affiliates

   Section 9.18

Offering Documentation

   Section 7.6(f)(i)

Order

   Section 1.1

Organizational Documents

   Section 1.1

Other Antitrust Laws

   Section 7.2(a)

Paul Hastings

   Section 9.17(a)

Permit

   Section 1.1

Permitted Liens

   Section 1.1

 

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Defined Terms    Sections

Person

   Section 1.1

Personal Information

   Section 1.1

PHI

   Recitals

PHI Shares

   Recitals

Pre-Closing Covenants

   Section 9.1

Pre-Closing Tax Refunds

   Section 1.1

Pre-Closing Tax Period

   Section 1.1

Protest Notice

   Section 2.5(d)

Purchase Price

   Section 2.2

Real Estate Lenders

   Section 2.4(a)(iv)

Real Property

   Section 3.15(b)

Real Property Leases

   Section 3.10(a)(ii)

Registered Intellectual Property

   Section 3.14(a)

Regulatory Laws

   Section 3.12(b)

Releasees

   Section 6.6

Representatives

   Section 1.1

Restricted Persons

   Section 1.1

RWI Policy

   Section 1.1

Securities

   Recitals

Securities Act

   Section 1.1

Seller

   Preamble

Seller Closing Certificate

   Section 8.1(c)

Seller Disclosure Schedules

   Section 1.1

Seller’s Knowledge

   Section 1.1

Seller’s Recovery Costs

   Section 8.6(b)

Seller Releasee

   Section 1.1

Seller Welfare and Health Expenses

   Section 7.7

Social Security Act

   Section 3.12(i)

Straddle Period

   Section 1.1

Subsidiary or Subsidiaries

   Section 1.1

Supply Agreement

   Section 2.4(a)(x)

Suit

   Section 1.1

Tax or Taxes

   Section 1.1

Tax Returns

   Section 1.1

Termination Fee

   Section 8.6(b)

Trade Secrets

   Section 1.1

Transaction Expenses

   Section 1.1

Transition Services Agreement

   Section 2.4(a)(ix)

Transfer Taxes

   Section 1.1

Treasury Regulations

   Section 1.1

U.S. or United States

   Section 1.1

Welfare and Health Benefits

   Section 7.7

 

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SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of December 13,
2018, is by and between Filtration Group FGC LLC, a Delaware limited liability
company (“Seller”), and CONMED Corporation, a New York corporation (“Buyer”).

RECITALS

1.    Seller is the owner of all of the issued and outstanding common stock (the
“PHI Shares”) of Palmerton Holdings, Inc., a New York corporation (“PHI”), and
all of the issued and outstanding equity securities (the “BF Securities” and
together with the PHI Shares, the “Securities”) of Buffalo Filter LLC, a
Delaware limited liability company (“BF LLC”). PHI and BF LLC are collectively
referred to herein as the “Acquired Companies” and each individually as an
“Acquired Company”.

2.    Seller desires to sell, and Buyer desires to purchase, the Securities on
the terms and subject to the conditions set forth in this Agreement.

AGREEMENTS

In consideration of the foregoing premises and the respective representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1    Definitions. When used in this Agreement, the following terms shall have
the meanings assigned to them in this Section 1.1.

“Affiliate” means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such specified Person.

“Agreed Accounting Principles” means (a) the accounting methods, policies,
practices and procedures, with consistent classifications, judgments and
estimation methodology, that were used in preparing and on a consistent basis
with the Most Recent Balance Sheet including those set forth in Exhibit C hereto
and (b) GAAP, consistently applied. For the avoidance of doubt, in the event of
an inconsistency between the principles set forth in subsections (a) and (b)
above, the principles set forth in subsection (a) above will prevail over those
set forth in subsection (b).

“Ancillary Documents” means the Escrow Agreement and the other agreements,
instruments and documents delivered at the Closing pursuant to this Agreement.

“Benefit Plan” means any (a) Employee Plan and (b) any other benefit or
compensation plan, program, policy, practice, agreement, contract, arrangement
or other obligation, whether or not in writing and whether or not funded, in
each case, which is sponsored or maintained by, or

 

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required to be contributed to, or with respect to which any potential liability
is borne by any Acquired Company, including any employment, consulting,
retirement, severance, termination or change in control agreements, deferred
compensation, equity-based, incentive, bonus, supplemental retirement, profit
sharing, insurance, medical, welfare, fringe or other benefits or remuneration
of any kind.

“Books and Records” means books of account, general, financial and operating
records, invoices and other documents, records and files of the Acquired
Companies.

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks located in Chicago, Illinois or New York, New York are
authorized or required by Law to close.

“Cash” means, as of 11:59 p.m. Central time on the Closing Date, all cash and
cash equivalents of the Acquired Companies, as determined in accordance with the
Agreed Accounting Principles, excluding the effects of transactions on the
Closing Date after the Closing outside of the ordinary course of business.

“Closing Date” means the date on which the Closing occurs.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” means the Confidentiality Agreement, dated as of
September 12, 2018, by and between Seller and Buyer.

“Contract” means any agreement that constitutes a contract under applicable Law.

“Employee” means any employee of any Acquired Company (whether salaried or
hourly, and full-time or part-time), whether or not actively employed on the
date hereof, e.g., including employees on vacation and leave of absence,
including maternity, family, sick, military or disability leave.

“Employee Plan” means any “employee benefit plan,” as defined in Section 3(3) of
ERISA, that (a) is subject to Title I of ERISA and (b) is maintained,
administered or contributed to by any Acquired Company or covers any Employee.

“Environmental Laws” means any Law relating to the environment or to pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or materials.

“Equity Securities” means with respect to an entity, if such entity is a
corporation, shares of capital stock of such corporation and, if such entity is
a form of entity other than a corporation, ownership interests in such form of
entity, whether membership interests, partnership interests or otherwise, and
any securities convertible or exchangeable into or exercisable for such capital
stock or ownership interests.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

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“ERISA Affiliate” means any Person that, together with any Acquired Company, is
or was treated at any time as a single employer under Section 414 of the Code.

“Excluded Payroll Taxes” shall mean the employer’s share of any payroll Taxes
due under Section 3111(a) of the Code with respect to any payment under this
Agreement that constitutes a Transaction Expense to any Employee whose wages
from the Acquired Companies for the 2018 calendar year exceeded $132,900.

“Filtration Group Party” means Filtration Group Corporation and its Affiliates,
other than the Acquired Companies.

“Financing” means the debt financing described in the Debt Commitment Letter and
any offering of equity, equity-linked or debt securities by Buyer in lieu
thereof or in connection with the transactions contemplated by this Agreement.

“Financing Parties” means (i) any entities that have committed to provide or
otherwise entered into agreements in connection with the Financing (including
any Alternative Financing), including any Financing Source and including the
other financial institutions party to the Debt Commitment Letter or any related
fee letter and engagement letter and any joinder agreements, credit agreements,
indentures, notes, purchase agreements or other agreements related thereto
(including the Definitive Debt Financing Agreements) and any arrangers,
bookrunners, administrative agents, syndication agents, collateral agents,
underwriters, initial purchasers, placement agents and Affiliates of the
foregoing, together with (ii) any former, current or future direct or indirect
equityholders, controlling persons, members, managers, partners, attorneys,
advisors and Representatives of the foregoing and their successors, in each
case, in their capacity as such; provided, however, that Financing Parties shall
not include Buyer or any of its Affiliates or any former, current, or future
direct or indirect equity holders, controlling persons, members, managers,
partners, attorneys, advisors or Representatives (other than Financing Sources
or any related Financing Parties) of Buyer or any of its Affiliates or any
successor of any of the foregoing.

“Financing Providers” means any Person included in clause (i) of the definition
of “Financing Parties.”

“Financing Sources” means any financial institution named in the Debt Commitment
Letter or that will otherwise be providing debt Financing to Buyer.

“Fraud” means, as finally determined by a court of competent jurisdiction, a
willful and knowing common law fraud with the specific intent to deceive or
mislead (and not a constructive fraud, equitable fraud or promissory fraud or
negligent misrepresentation or omission, or any form of fraud based on
recklessness or negligence).

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” means any entity or body exercising executive,
legislative, judicial, regulatory or administrative functions of United States
federal, state or local government or foreign, international, multinational or
other government, including any department,

 

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commission, board, agency, bureau, official or other regulatory, administrative
or judicial authority thereof, in each case of competent jurisdiction.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Income Taxes” means Taxes imposed on or measured by net income.

“Indebtedness” means any of the following, without duplication: (a) any
obligations of the Acquired Companies for borrowed money; (b) any obligations of
any Acquired Company evidenced by bonds, debentures, notes or other similar
instruments; (c) any obligations of any Acquired Company as lessee under leases
that are required under GAAP to be treated as capital leases or to pay the
deferred and unpaid purchase price of any business, line of business, property
or equipment (including obligations related to earn-out arrangements) other than
to the extent such obligations are taken into account in the calculation of Net
Working Capital; (d) all net cash payment obligations of the Acquired Companies
under swaps, options, derivatives and other hedging Contracts that would be
payable upon the termination thereof (calculated assuming termination on the
date of determination); (e) any accrued and unpaid interest, premiums, fees,
charges, reimbursements and other expenses owed by any Acquired Company with
respect to the foregoing, including, but not limited to, prepayment penalties;
(f) any obligations from any Acquired Company to Seller or any of its Affiliates
(excluding each Acquired Company) other than to the extent such obligations are
taken into account in the calculation of Net Working Capital; (g) any guaranty
by any Acquired Company of any of the foregoing types of Indebtedness of any
Person other than such Acquired Company; (h) all Indebtedness of any other
Person secured by a Lien on any property or asset of any Acquired Company other
than a Permitted Lien that is not released at Closing pursuant to
Section 2.4(a)(iv); and (i) any standalone liability of the Acquired Companies
for unpaid Income Taxes with respect to a Pre-Closing Tax Period. Indebtedness
shall not include (i) undrawn letters of credit, surety bonds and similar
instruments, except to the extent such instruments relate to obligations of an
entity other than an Acquired Company, (ii) any obligations from one Acquired
Company to another Acquired Company or (iii) any obligations incurred by or on
behalf of Buyer or any of its Affiliates in connection with the transactions
contemplated by this Agreement.

“Intellectual Property” means, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, letters patent and pending applications
for patents of the United States and all countries foreign thereto and all
reissues, reexaminations, divisions, continuations, continuations-in-part and
extensions thereof; (b) all trademarks, service marks, trade names, and Internet
domain names, all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith; (c) all published and
unpublished works of authorship (including databases and software), and all
applications, registrations and renewals in connection therewith; (d) all mask
works and all applications, registrations, and renewals in connection therewith;
(e) all trade secrets and confidential business information (including
confidential ideas, research and development, know how, methods, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals)
(collectively “Trade

 

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Secrets”); and (f) all copies and tangible embodiments of the foregoing (in
whatever form or medium).

“Law” means any statute, law, ordinance, common law, rule or regulation of any
Governmental Entity.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, hypothecation or any other similar encumbrance in
respect of such property or asset. For the avoidance of doubt, “Lien” shall
exclude any restrictions on transfer under securities Laws and any terms and
conditions of any Organizational Document of any Acquired Company.

“Material Adverse Effect” means any effect that is or would reasonably be
expected to be materially adverse to the business, financial condition, assets
or operations of the Acquired Companies, taken as a whole; provided that none of
the following shall be taken into account in determining whether there is a
Material Adverse Effect: any adverse change, event or development arising from
or relating to: (a) general business, industry or economic conditions,
(b) local, regional, national or international political or social conditions,
including the engagement (whether new or continuing) by the United States in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack, any natural or
man-made disaster or acts of God, (c) changes in financial, banking, or
securities markets (including any disruption thereof and any decline in the
price of any security or any market index), (d) any failure of any Acquired
Company to meet any projections or forecasts (provided, that this clause
(d) shall not prevent a determination that any effect, change, event,
circumstance, fact or development underlying such failure to meet projections or
forecasts has resulted in a Material Adverse Effect (provided, further, that any
such effect, change, event, circumstance, fact or development is not otherwise
excluded from determining whether there is a Material Adverse Effect)), (e)
changes in GAAP, (f) changes in Laws, (g) the taking of any action required by
this Agreement (except for any obligation to operate in the ordinary course of
business), (h) the announcement or pendency of the transactions contemplated by
this Agreement, including any termination of, reduction in or similar negative
impact on relationships, contractual or otherwise, with any customers,
suppliers, employees or contractors of the Acquired Companies due to the
announcement or pendency of the transactions contemplated by this Agreement or
the identity of the parties to this Agreement and their respective Affiliates,
(i) any actions or omissions by Buyer or any of its Affiliates or (j) any matter
to the extent expressly set forth in the Seller Disclosure Schedules; provided,
that with respect to clauses (a), (b), (c), (e) and (f) of this definition, such
changes, events or developments shall be taken into account in determining
whether a Material Adverse Effect has occurred or would reasonably be expected
to occur to the extent they disproportionately affect the Acquired Companies,
taken as a whole, relative to other companies of similar size operating in the
geographic markets in which the Acquired Companies operate or their products or
services are contracted for, distributed or sold.

“Material Contract” means any of the Contracts listed or required to be listed
on Schedules 3.10(a) and 3.14(b).

 

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“Order” means any award, injunction, judgment, decree, order, ruling, subpoena
or verdict or other decision issued, promulgated or entered by any Governmental
Entity of competent jurisdiction.

“Organizational Documents” means, with respect to any entity, the certificate of
incorporation, articles of incorporation, bylaws, articles of organization,
certificate of formation, partnership agreement, limited liability company
agreement, formation agreement, joint venture agreement and other similar
organizational documents of such entity (in each case, as amended through the
date of this Agreement).

“Permit” means any authorization, approval, consent, certificate, license,
permit, registration or franchise of or from any Governmental Entity.

“Permitted Liens” means (a) Liens for Taxes that are not yet due and payable or
that may hereafter be paid without penalty or that are being contested in good
faith by appropriate proceedings if adequate reserves have been established in
accordance with GAAP, (b) statutory Liens of landlords and workers’, carriers’,
materialmen’s, suppliers’ and mechanics’ or other like Liens incurred in the
ordinary course of business (i) with respect to liabilities that are not yet due
and payable or, if due, are not delinquent or (ii) that are being contested in
good faith by appropriate proceedings if adequate reserves (based on good faith
estimates of management) have been set aside for the payment thereof, (c) Liens,
easements, covenants, conditions restrictions, encroachments and other similar
matters of record with respect to Real Property which do not materially detract
from the value of the Real Property subject thereto or materially interfere with
the present use of the Real Property they affect, (d) Liens that will be
released prior to or as of the Closing, (e) zoning, building and other land use
laws imposed by any Governmental Entity having jurisdiction over such parcel
that are not violated by existing structures or the ordinary conduct of the
business of the Acquired Companies, (f) Liens identified on issued title
policies, title surveys or other documents or writings recorded in the public
records, (g) Liens created by or through Buyer, (h) Liens in respect of any
obligations as lessee under capitalized leases, and (i) Liens set forth on
Schedule 1.1.

“Person” means an individual, a corporation, a partnership, a limited liability
company, a joint venture, a trust, an unincorporated association, a Governmental
Entity, or any other entity or body.

“Personal Information” means any information with respect to which there is a
reasonable basis to believe such information could reasonably be used to
identify any individual or that is otherwise protected under applicable Laws
concerning data privacy, cybersecurity or data security.

“Pre-Closing Tax Period” means any taxable year or period that ends on or before
the Closing Date and, with respect to any taxable year or period beginning on or
before and ending after the Closing Date, the portion of such taxable year
ending on and including the Closing Date, which portion shall be determined
(i) in the case of any Taxes other than Taxes based upon or related to income,
receipts, payroll or sales, be deemed to be the amount of such Tax for such
entire Straddle Period multiplied by a fraction the numerator of which is the
number of days in

 

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such Straddle Period ending on the end of the Closing Date and the denominator
of which is the number of days in such entire Straddle Period and (ii) in the
case of all other Taxes by assuming the taxable year or period ended as of the
close of the Closing Date.

“Representatives” of any Person shall mean the directors, officers, employees,
consultants, financial advisors, counsel, accountants and other representatives
and agents of such Person.

“Restricted Persons” means Filtration Group Corporation and its Subsidiaries;
provided, however, that, for the sake of clarity, “Restricted Persons” shall not
include any Filtration Group Party or any other Person other than Filtration
Group Corporation and its Subsidiaries.

“RWI Policy” means the representations and warranties insurance policy to be
obtained by Buyer in connection with the transactions contemplated by this
Agreement.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Seller Disclosure Schedules” means the disclosure schedules delivered by Seller
concurrently with the execution and delivery of this Agreement.

“Seller’s Knowledge” or any similar phrase means the actual knowledge of
Samantha Bonano, Nicole Kane, Joseph Lynch and Gregory Pepe after due inquiry.

“Severance Obligations” means any obligation of any Acquired Company to pay the
Severance Amount (as defined in each executive’s Change of Control Agreement
described below) under any of the (i) Change of Control Agreement, dated as of
November 5, 2018, by and between BF LLC and Samantha Bonano; (ii) Change of
Control Agreement, dated as of November 15, 2018, by and between BF LLC and
Nicole Kane; (iii) Change of Control Agreement, dated as of October 30, 2018, by
and between BF LLC and Greg Pepe; and (iv) Change of Control Agreement, dated as
of October 28, 2018, by and between BF LLC and Joseph Lynch.

“Subsidiary” or “Subsidiaries” means, with respect to any Person, any
corporation, partnership, limited liability company, joint venture or other
legal entity of any kind of which such Person (either alone or through or
together with one or more of its other Subsidiaries) owns, directly or
indirectly, more than 50% of the capital stock or other equity interests the
holders of which are (a) generally entitled to vote for the election of the
board of directors or other governing body of such legal entity or (b) generally
entitled to share in the profits or capital of such legal entity.

“Suit” means any, suit, litigation, arbitration or other dispute resolution
proceeding by or before any Governmental Entity.

“Tax” or “Taxes” means all U.S. federal, state, provincial, local and foreign
income, profits, franchise, gross receipts, environmental, customs duty,
tariffs, capital stock, severance, stamp, payroll, sales, employment,
unemployment, disability, use, personal and real property, withholding, excise,
production, transfer, alternative minimum, value added, occupancy and other
taxes.

 

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“Tax Returns” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

“Transaction Expenses” means (i) all of the out-of-pocket fees and expenses
payable to third parties (including all fees, expenses, disbursements and other
similar amounts payable to attorneys, financial advisors, brokers or
accountants) incurred by Seller or any Acquired Company prior to the Closing
solely to effect the negotiation, documentation and consummation of the
transactions contemplated by this Agreement which are unpaid as of the Closing,
and (ii) any transaction bonuses, change of control bonuses, excise tax gross-up
payments or retention bonuses that, in each case, become payable by Seller, any
Acquired Company or any of their Affiliates to any current or former Employees,
officers, directors, contractors or other service providers of any Acquired
Company solely as a result of the consummation of the transactions contemplated
by this Agreement (in each case payable before, at or after the Closing), which
are unpaid as of the Closing; provided, however, that Transaction Expenses shall
not include any Severance Obligations or any Excluded Payroll Taxes.

“Transfer Taxes” means sales, use, transfer, real property transfer, recording,
documentary, stamp, registration and stock transfer Taxes and any similar Taxes.

“Treasury Regulations” means United States Treasury regulations promulgated
under the Code.

“U.S.” or “United States” means the United States of America.

ARTICLE II

PURCHASE AND SALE

2.1    Purchase and Sale. At the Closing, on the terms and subject to the
conditions set forth in this Agreement, Seller shall sell, transfer, assign,
convey and deliver to Buyer, and Buyer shall purchase from Seller, all right,
title and interest in and to the Securities free and clear of all Liens.

2.2    Purchase Price. The aggregate consideration to be paid by Buyer to Seller
for the Securities (the “Purchase Price”) shall be (a) $365,000,000 (the
“Enterprise Value”), plus (b) the Cash Amount set forth on the Final Closing
Statement, minus (c) the aggregate amount of the Indebtedness set forth on the
Closing Schedule, minus (d) the aggregate amount of the Transaction Expenses set
forth on the Closing Schedule. At least two (2) Business Days prior to the
Closing, Seller shall deliver to Buyer a schedule (the “Closing Schedule”)
setting forth (A) each item of Indebtedness outstanding as of immediately prior
to the Closing, including the amount and payee thereof, (B) each outstanding
Transaction Expense including the amount and payee thereof and (C) Seller’s good
faith estimate of Cash (the “Estimated Cash Amount”).

2.3    Closing. Unless this Agreement shall have been terminated in accordance
with Section 8.5, Buyer and Seller shall consummate the transactions
contemplated by this Agreement by electronic mail and overnight courier service,
or by physical exchange of documentation at the

 

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offices of Paul Hastings LLP, 71 South Wacker Drive, 45th Floor, Chicago,
Illinois 60606 (in either case, the “Closing”), as promptly as practicable but
in no event later than three (3) Business Days after the date on which all
conditions set forth in Article VIII (except those conditions that are to be
satisfied or waived at Closing) have been satisfied or waived by the party
entitled to the benefit of the same, at 9:00 a.m., Central time, or at such
other place, date and time as the parties shall mutually agree in writing (the
date on which the Closing occurs, the “Closing Date”); provided, however, that
in no event shall the Closing Date occur prior to February 1, 2019 without the
prior written consent of Buyer.

2.4    Closing Deliveries.

(a)    Deliveries by Seller at the Closing. At the Closing, Seller shall deliver
to Buyer the following:

(i)    certificates evidencing the Securities, if any, duly endorsed in blank or
accompanied by stock powers duly executed in blank;

(ii)    certificates of good standing with respect to the Acquired Companies
issued by the responsible Governmental Entity of the jurisdictions of their
respective formation (to the extent any such certificate is routinely issued by
any such jurisdiction), dated as of a date not more than three (3) Business Days
prior to the Closing Date;

(iii)    a duly executed “certificate of non-foreign status,” in a form
reasonably acceptable to Buyer, that complies with the requirements of Treasury
Regulations Section 1.1445-2(b); provided, however, that Buyer’s sole right if
such Seller fails to provide such certificate shall be to make an appropriate
withholding under Section 1445 of the Code;

(iv)    customary letters reflecting the agreement of the appropriate parties to
terminate the obligations of the Acquired Companies under, and release the Liens
arising under, the (A) Credit and Guaranty Agreement dated as of March 29, 2018
by and among Filtration Group Corporation, PHI, certain other subsidiaries of
Filtration Group Corporation, various lenders, Goldman Sachs Bank USA, JPMorgan
Chase Bank, N.A., BMO Capital Markets Corp., HSBC Bank USA, National Association
and ING Capital LLC (the “Credit Agreement Lenders”), as amended, (B) the
Amended and Restated Loan Agreement, dated as of March 27, 2014, by and between
PHI and The PrivateBank and Trust Company, as amended by that certain
Modification Agreement, dated as of March 27, 2018, by and among the Acquired
Companies and CIBC Bank USA (the “Real Estate Lenders” and, together with the
Credit Agreement Lenders, the “Lenders”), and (C) the agreements entered into in
connection therewith, including (1) the Pledge and Security Agreement dated as
of March 29, 2018 by and among Filtration Group Corporation, PHI, each of the
other grantors party thereto, and Goldman Sachs Bank USA, (2) the Mortgage Loan
Note, dated as of March 27, 2014, by and between PHI and The PrivateBank and
Trust Company, (3) the Continuing Unconditional Guaranty, dated as of March 27,
2014, by and between BF LLC and The PrivateBank and Trust Company, (4) the
Assignment of Mortgage executed by Bank of America, N.A. on March 27, 2014,
(5) the Assignment of Assignment of Leases and Rents executed by Bank of
America, N.A. on March 27, 2014 and (6) the Building Loan Mortgage, Assignment
of Rents, Security Agreement and Fixture Filing, dated as of

 

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September 17, 2010, given by Palmerton Holdings, Inc. and Town of Lancaster
Industrial Development Agency to Bank of America, N.A. (the Contracts listed in
this Section 2.4(a)(iv), the “Existing Debt Agreements”);

(v)    the written resignation of each director of PHI, in each case to be
effective as of the Closing;

(vi)    a copy of the resolution of Seller’s manager, certified by an
appropriate officer of Seller as having been duly and validly adopted and being
in full force and effect as of the Closing Date, authorizing the execution and
delivery of this Agreement and performance by Seller of the transactions
contemplated hereby;

(vii)    the Escrow Agreement, duly executed by Seller;

(viii)    the Seller Closing Certificate;

(ix)    a transition services agreement in the form of Exhibit A hereto (the
“Transition Services Agreement”), duly executed by Seller; and

(x)    a filter supply agreement in the form of Exhibit B hereto (the “Supply
Agreement”), duly executed by Seller.

(b)    Deliveries by Buyer at the Closing. At the Closing, Buyer shall deliver
to Seller the following:

(i)    an amount equal to (A) the Enterprise Value, plus (B) the Estimated Cash
Amount set forth on the Closing Schedule, minus (C) the aggregate amount of the
Indebtedness outstanding as of immediately prior to the Closing as set forth on
the Closing Schedule, minus (D) the aggregate amount of the Transaction Expenses
as set forth on the Closing Schedule, minus (E) the amount of the Adjustment
Escrow Deposit;

(ii)    a copy of the resolution of Buyer’s governing body, certified by an
appropriate officer of Buyer as having been duly and validly adopted and being
in full force and effect as of the Closing Date, authorizing the execution and
delivery of this Agreement and performance by Buyer of the transactions
contemplated hereby;

(iii)    the Escrow Agreement, duly executed by Buyer;

(iv)    the Buyer Closing Certificate;

(v)    the Transition Services Agreement, duly executed by Buyer; and

(vi)    the Supply Agreement, duly executed by Buyer.

(c)    Payment of Indebtedness and Transaction Expenses. At the Closing, Buyer
shall, on behalf of Seller and the Acquired Companies, pay (i) the Indebtedness
reflected in the Closing Schedule to the lenders named therein in accordance
with the instructions set forth therein

 

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and (ii) the Transaction Expenses reflected in the Closing Schedule to the
obligees thereof in accordance with the instructions set forth therein.

(d)    Adjustment Escrow Deposit. At the Closing, Buyer shall deposit, or cause
to be deposited, with Wilmington Trust, N.A. (the “Escrow Agent”) an amount
equal to $500,000 (the “Adjustment Escrow Deposit”), to be held in escrow in an
account (the “Adjustment Escrow Account”) and disbursed by the Escrow Agent in
accordance with the terms and provisions of an Escrow Agreement in a form
reasonably acceptable to Seller (the “Escrow Agreement”).

2.5    Net Working Capital Adjustment.

(a)    Definitions.

(i)    “Current Assets” means any and all current assets that should be
reflected on the balance sheet of the Acquired Companies in those general ledger
accounts (and only those general ledger accounts) included in the Example Net
Working Capital Calculation, prepared in accordance with the Agreed Accounting
Principles. For the avoidance of doubt, Current Assets shall exclude any assets
with respect to Cash and Income Taxes.

(ii)    “Current Liabilities” means any and all current liabilities that should
be reflected on the balance sheet of the Acquired Companies in those general
ledger accounts (and only those general ledger accounts) included in the Example
Net Working Capital Calculation, prepared in accordance with the Agreed
Accounting Principles. For the avoidance of doubt, Current Liabilities shall
exclude any liabilities with respect to Cash, Indebtedness, Transaction
Expenses, Income Taxes, the D&O Insurance, the Severance Obligations and
Excluded Payroll Taxes.

(iii)    “Example Net Working Capital Calculation” means the calculation set
forth on Exhibit D.

(iv)    “Net Working Capital” means the difference between the book value of the
Current Assets and the book value of the Current Liabilities, in each case, as
of 11:59 p.m. Central time on the Closing Date. Notwithstanding anything to the
contrary herein, for purposes of determining Net Working Capital, (A) no assets
or liabilities shall reflect any changes in such assets or liabilities as a
result of purchase accounting adjustments or other changes arising from or
resulting as a consequence (including Tax consequences) of the transactions
contemplated hereby; (B) the determination shall be based solely on facts and
circumstances as they exist prior to the Closing and shall exclude the effect of
any fact, event, change, circumstance, act or decision occurring on or after the
Closing; (C) those general ledger accounts (and only those general ledger
accounts) included in the Example Net Working Capital Calculation shall be
included; and (D) no reserve shall be created and no reserve reflected in the
Example Net Working Capital Calculation, if any, shall be increased, decreased
or eliminated except in each case by reason of payment, settlement or as
required by the Agreed Accounting Principles.

(v)    “Net Working Capital Lower Boundary” means $5,250,000.

(vi)    “Net Working Capital Upper Boundary” means $5,750,000.

 

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(b)    Closing Statement. As soon as practicable, but not later than thirty
(30) days following the Closing Date, Buyer shall prepare in good faith and
deliver to Seller a statement (the “Closing Statement”) setting forth a
calculation of Net Working Capital and Cash and each of the components thereof
and reasonably detailed supporting documents for the calculation of Net Working
Capital and Cash.

(c)    Reasonable Access. Upon receipt of the Closing Statement, Seller and its
Representatives shall be given reasonable on-site access to or copies of (as
Seller shall reasonably request), for the purpose of verifying the Closing
Statement: (i) all of the Books and Records, work papers, trial balances and
other materials relating to the Closing Statement and (ii) Buyer’s and the
Acquired Companies’ personnel and accountants.

(d)    Protest Notice. Within thirty (30) days following delivery of the Closing
Statement, Seller may deliver written notice (the “Protest Notice”) to Buyer of
any disagreement that Seller may have as to the Closing Statement setting forth
in reasonable detail the amount(s) in dispute; provided, however, that such
thirty (30) day period shall toll during any time that Buyer fails to comply in
all material respects with Section 2.5(c). If Seller fails to deliver a Protest
Notice on or before the date which is thirty (30) days following delivery of the
Closing Statement (or applicable later date if such period is tolled), the Net
Working Capital and Cash as set forth on the Closing Statement shall be final,
binding and non-appealable.

(e)    Resolution of Protest. If a Protest Notice is timely delivered in
accordance with Section 2.5(d), Seller and Buyer shall promptly endeavor in good
faith to resolve any disagreement as to the Closing Statement. If Buyer and
Seller are unable to resolve in writing any disagreement as to the Closing
Statement within thirty (30) days following Buyer’s receipt of the Protest
Notice, then the amounts in dispute will be promptly referred to the New York
office of Ernst & Young LLP (the “Accountants”) for final arbitration, which
arbitration shall be completed within thirty (30) days after the matter is
submitted to the Accountants, and which arbitration shall be final, binding and
non-appealable. The Accountants shall act as an arbitrator to determine, based
solely on presentations and submissions by Buyer and Seller (which presentations
and submissions shall be made to the Accountants no later than fifteen (15) days
after the engagement of the Accountants), and not by independent review, only
those amounts still in dispute, in each case, in accordance with the definitions
of Net Working Capital and Cash set forth herein. Buyer and Seller agree to
execute, if requested by the Accountants, a reasonable engagement letter and to
reasonably cooperate with the Accountants during the term of the engagement. The
fees and expenses of the Accountants shall be allocated between Buyer and Seller
(as determined by the Accountants) so that Seller’s share of such fees and
expenses shall be equal to the product of (i) the aggregate amount of such fees
and expenses, and (ii) a fraction, the numerator of which is the amount in
dispute that is ultimately unsuccessfully disputed by Seller (as determined by
the Accountant) and the denominator of which is the total amount in dispute
submitted to arbitration. The balance of such fees and expenses shall be paid by
Buyer. The parties agree that the purpose of the adjustment contemplated by this
Section 2.5 with respect to Net Working Capital is to measure the amount of
changes in Net Working Capital using the Agreed Accounting Principles, and such
adjustment is not intended to permit the introduction of different judgments,
accounting methods, policies, principles, practices, procedures, classifications
or estimation methodologies for the purposes of determining Net Working Capital.
The term “Final Closing Statement,” as used in this Agreement, shall mean the
Closing Statement

 

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if deemed final in accordance with Section 2.5(d) or the definitive Closing
Statement agreed to in writing by Seller and Buyer or resulting from the
determinations made by the Accountants in accordance with this Section 2.5(e).
The term “Cash Amount” shall mean the amount of Cash set forth on the Final
Closing Statement.

(f)    Payment. Within five (5) days of the determination of the Final Closing
Statement:

(i)    if (A) the Net Working Capital set forth on the Final Closing Statement
is less than the Net Working Capital Lower Boundary or (B) the Cash set forth on
the Final Closing Statement is less than the Estimated Cash Amount, then in each
case such difference (and only such difference) shall be deducted from the
Adjustment Escrow Account and paid to Buyer within five (5) days of the
determination of the Final Closing Statement, by wire transfer of immediately
available funds to an account designated by Buyer;

(ii)    if (A) the Net Working Capital set forth on the Final Closing Statement
is greater than the Net Working Capital Upper Boundary or (B) the Cash set forth
on the Final Closing Statement is greater than the Estimated Cash Amount, then
in each case Buyer shall pay to Seller such difference (and only such
difference) within five (5) days of the determination of the Final Closing
Statement by wire transfer of immediately available funds to an account
designated by Seller; or

(iii)    if (A) the Net Working Capital set forth on the Final Closing Statement
is less than or equal to the Net Working Capital Upper Boundary and greater than
or equal to the Net Working Capital Lower Boundary and (B) the Cash set forth on
the Final Closing Statement is equal to the Estimated Cash Amount, then neither
Buyer nor Seller shall have any payment obligation pursuant to this Section 2.5
and the Adjustment Escrow Deposit shall be released to Seller in accordance with
Section 2.5(g)(ii).

(g)    Adjustment Escrow. Within five (5) days of the determination of the Final
Closing Statement, Buyer and Seller shall deliver a joint written instruction to
the Escrow Agent instructing it to disburse all of the funds in the Adjustment
Escrow Account as follows: (i) to Buyer, the amount (if any) payable to Buyer
pursuant to Section 2.5(f)(i) and (ii) to Seller the remaining Adjustment Escrow
Deposit by wire transfer of immediately available funds to accounts designated
by Seller.

(h)    Exclusive Remedy. Notwithstanding anything to the contrary contained in
this Agreement, except in the case of Fraud, (i) the process set forth in this
Section 2.5 shall be the sole and exclusive remedy of the parties hereto for any
disputes related to items required to be included or reflected in the
calculation of Net Working Capital and Cash and (ii) Buyer’s right to receive
payment pursuant to Section 2.5(f)(i) shall be Buyer’s sole remedy in the event
that the Net Working Capital as set forth on the Final Closing Statement is less
than the Net Working Capital Lower Boundary and/or the Cash as set forth on the
Final Closing Statement is less than the Estimated Cash Amount, even if the
amount of such difference is greater than the amount of the Adjustment Escrow
Deposit.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the Seller Disclosure Schedules, Seller hereby represents
and warrants to Buyer as follows:

3.1    Existence and Power.

(a)    Seller is a limited liability company duly formed, validly existing and
in good standing under the Laws of the State of Delaware.

(b)    Each Acquired Company is an entity duly formed, validly existing and in
good standing under the Laws of its jurisdiction of incorporation or formation
(as applicable), has all requisite power and authority required to own and lease
its property and to carry on its business as presently conducted, and is duly
qualified to transact business as a foreign entity and is in good standing as a
foreign entity authorized to transact business in each jurisdiction in which the
nature of the business conducted by it requires such qualification, except where
the failure to be so qualified or in good standing as a foreign entity would not
reasonably be expected to have a Material Adverse Effect.

3.2    Authorization. The execution, delivery, and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby (a) are
within Seller’s limited liability company powers and (b) have been duly
authorized by all necessary limited liability company action on the part of
Seller.

3.3    Enforceability. This Agreement has been duly executed and delivered by
Seller and constitutes a valid and legally binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other Laws affecting creditors’ rights generally and except insofar as the
availability of equitable remedies may be limited by applicable Law.

3.4    Governmental and Third Party Authorizations. Except as set forth on
Schedule 3.4, and except for (a) applicable requirements under “blue sky” laws
of various states and (b) assuming all filings required under the HSR Act are
made and any waiting periods thereunder have expired or been terminated, no
consent, approval or authorization of, declaration to or filing or registration
with, any Governmental Entity or any party to a Material Contract is required to
be made or obtained by Seller in connection with the execution, delivery and
performance by Seller of this Agreement or the consummation by Seller of the
transactions contemplated hereby, except in each case for such consents or
approvals (x) the failure of which to obtain would not reasonably be expected to
have a Material Adverse Effect or (y) that would arise solely as a result of any
acts or omissions by, or any facts pertaining to, Buyer.

3.5    Noncontravention. Except as set forth on Schedule 3.5 and except for
(a) applicable requirements under “blue sky” laws of various states and
(b) assuming all filings required under the HSR Act are made and any waiting
periods thereunder have expired or been terminated, the execution, delivery and
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transactions contemplated hereby, will not (i) violate the Organizational
Documents of Seller or any Acquired Company, (ii) violate any Law applicable to
Seller or any Acquired Company, (iii) constitute or result in a breach or
default by an Acquired Company under any Material Contract, or (iv) result in
the creation or imposition of any Lien (other than Permitted Liens) on any asset
of any Acquired Company, except in the case of clauses (iii) and (iv) for such
violations, defaults or impositions that would (x) not reasonably be expected to
have a Material Adverse Effect or (y) arise solely as a result of any acts or
omissions by, or any facts pertaining to, Buyer.

3.6    Capitalization; Subsidiaries.

(a)    Schedule 3.6(a) sets forth the entire authorized Equity Securities of
each Acquired Company and a complete and correct list as of the date hereof of
the issued and outstanding Equity Securities of each Acquired Company, including
the name of the record owner thereof and the number of Equity Securities held
thereby. All of the outstanding Equity Securities of each Acquired Company have
been duly authorized and validly issued and, if applicable, are fully paid and
non-assessable.

(b)    Except as set forth on Schedule 3.6(b), (i) there are no Contracts
(including any options, warrants or similar agreements) obligating any Acquired
Company to issue or sell any Equity Securities, (ii) there are no Contracts
obligating any Acquired Company with respect to any stock appreciation, phantom
stock or similar arrangements, (iii) neither Acquired Company has entered into
any stock plan, no Equity Securities have been reserved for issuance and no
equity awards (including any restricted shares) with respect to the Acquired
Companies have been granted, (iv) neither Acquired Company has outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or which are convertible or exchangeable into or exercisable for
Equity Securities having the right to vote) on any matter with respect to which
holders of Equity Securities have the right to vote.

(c)    No Acquired Company has any Subsidiaries.

(d)    Except as set forth on Schedule 3.6(d), no Acquired Company is party to
any stockholder agreement or other similar agreement with respect to the voting
or transfer of any of its Equity Securities.

(e)    Except as set forth on Schedule 3.6(e), Seller is the record owner of,
and has good and valid title to, the Securities, free and clear of all Liens.

3.7    Financial Statements; Internal Controls.

(a)    Schedule 3.7(a) contains true and complete copies of (i) the unaudited
combined balance sheets of the Acquired Companies as of December 31, 2017 and as
of September 30, 2018 (the “Most Recent Balance Sheet” and such date, the
“Balance Sheet Date”) and (ii) the related statements of income and cash flows
for the twelve-month period and nine-month period then ended, respectively
(collectively, the “Financial Statements”).

(b)    Each of the Financial Statements presents fairly, in all material
respects, the financial position of the Acquired Companies at the dates thereof
and the results of operations of the

 

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Acquired Companies for the periods then ended, as applicable, in accordance with
GAAP, consistently applied during the applicable period, except (i) as may be
stated in the notes thereto, (ii) that the unaudited Financial Statements at and
for the nine month period ended on the Balance Sheet Date are subject to
year-end adjustments, (iii) that the unaudited Financial Statements lack the
footnote disclosure otherwise required by GAAP and (iv) as set forth on Schedule
3.7(b).

(c)    Each of the Acquired Companies maintains a system of internal accounting
controls sufficient to provide reasonable assurances that books and records are
maintained and transactions and dispositions of assets are recorded, in each
case as reasonably necessary to prepare financial statements that present
fairly, in all material respects, the financial position of the Acquired
Companies at the dates thereof except as noted in Section 3.7(b).

(d)    Except as set forth on Schedule 3.7(d), other than any Indebtedness
outstanding under the Existing Debt Agreements, no Acquired Company is liable in
respect of any Indebtedness.

3.8    No Undisclosed Liabilities. Except for obligations and liabilities
(a) reflected or reserved against in the Most Recent Balance Sheet or
(b) incurred in the ordinary course of business since the Balance Sheet Date,
there are no obligations or liabilities of the Acquired Companies, whether or
not accrued or contingent and whether or not required to be disclosed, except as
would not reasonably be expected to have a Material Adverse Effect or prevent,
materially delay or materially impair the ability of Seller to consummate the
transactions contemplated by this Agreement.

3.9    Absence of Certain Changes. As of the date hereof, except as disclosed in
Schedule 3.9, since the Balance Sheet Date:

(a)    the Acquired Companies have conducted their business only in the ordinary
course of business consistent with past practice;

(b)    there has not been any one or more changes, events, or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have a Material Adverse Effect;

(c)    no Acquired Company has sold, leased, transferred, pledged or assigned
any of its material assets;

(d)    no Acquired Company has cancelled, compromised, waived, or released any
material right or claim outside of the ordinary course of business consistent
with past practice;

(e)    no Acquired Company has granted any material license or sublicense of any
rights under or with respect to any Intellectual Property other than in the
ordinary course of business consistent with past practice;

(f)    no Acquired Company has made or authorized any change in any
Organizational Document of any of Acquired Company;

 

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(g)    no Acquired Company has issued, sold, or otherwise disposed of any of its
Equity Securities, or granted any options, warrants, or other rights to purchase
or obtain (including upon conversion, exchange, or exercise) any of its Equity
Securities;

(h)    no Acquired Company has experienced any material damage, destruction, or
loss (whether or not covered by insurance) to any of its property;

(i)    no Acquired Company has (i) made any material increase in the base
compensation of any of its directors, officers or Employees, except in the
ordinary course of business consistent with past practice, or (ii) adopted any
material Benefit Plan or modified any material Benefit Plan in any material
respect, in each case, except as may be required by any Law or Contract;

(j)    no Acquired Company has made any material Tax election outside of the
ordinary course of business consistent with past practice;

(k)    no Acquired Company has changed its accounting policies or procedures,
except as required by changes in Law or GAAP; and

(l)    no Acquired Company has legally obligated itself to do any of the
foregoing.

3.10    Material Contracts.

(a)    Schedule 3.10(a) contains a list as of the date hereof of each Contract
pursuant to which any Acquired Company has any executory rights or obligations
that:

(i)    (A) resulted or is expected to result in an aggregate payment of $250,000
or more to or from an Acquired Company in the twelve (12) months ended
December 31, 2017 or ending December 31, 2018 and (B) cannot be terminated by
such Acquired Company without penalty with less than one hundred eighty-one
(181) days’ notice;

(ii)    is an agreement pursuant to which any Acquired Company leases,
subleases, occupies or otherwise uses any real property (the “Real Property
Leases”);

(iii)    creates a partnership or joint venture;

(iv)    is an agreement with any officer, director or Employee of any Acquired
Company, other than (A) any employment letter that sets forth the terms of an at
will employment arrangement or (B) a Benefit Plan;

(v)    restricts any Acquired Company from engaging, or competing with any
Person, in any line of business in any geographic area;

(vi)    is with Seller or an Affiliate of Seller or any Acquired Company (other
than another Acquired Company);

 

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(vii)    relates to the acquisition or disposition of any business (whether by
merger, sale of capital stock, sale of assets or otherwise), and which was
consummated during the three (3) years preceding the date hereof;

(viii)    relates to Indebtedness including any swap, option, derivative or
other hedging arrangement;

(ix)    is a collective bargaining agreement (or similar labor contract)
covering any Employee;

(x)    is an agreement with the Acquired Companies’ top ten (10) suppliers or
top ten (10) customers for the fiscal year ending December 31, 2018;

(xi)    provides for indemnification by an Acquired Company, except for
Organizational Documents of any Acquired Company and non-material Contracts
entered into in the ordinary course of business; or

(xii)    is an agreement relating to the settlement of any Suit.

(b)    Except as disclosed in Schedule 3.10(b), as of the date hereof, each
Material Contract is valid, binding and in full force and effect. Except as set
forth in Schedule 3.10(b), none of the Acquired Companies is in breach in any
material respect, or in receipt as of the date hereof of any written notice of
any breach in any material respect, of any Material Contract. Except as set
forth in Schedule 3.10(b), to Seller’s Knowledge, as of the date hereof, no
counterparty to any Material Contract is in breach in any material respect of
such Material Contract.

(c)    Seller has made available to Buyer a true and correct copy of each
written Material Contract as of the date hereof.

3.11    Suits. Except as set forth on Schedule 3.11, as of the date hereof,
there are no material Suits pending or, to Seller’s Knowledge, threatened
against any Acquired Company. Except as disclosed on Schedule 3.11, as of the
date hereof, there are no material Orders in effect with respect to any Acquired
Company.

3.12    Compliance with Laws; Permits; Regulatory Matters.

(a)    None of the Acquired Companies is in violation in any material respect of
any Law to which it is subject. Each of the Acquired Companies holds all Permits
necessary for the ownership of its assets and the operation of its business,
each of such Permits is valid and in full force and effect, and none of the
Acquired Companies is in violation of any such Permit in any material respect.
Except as set forth on Schedule 3.12(a), BF LLC has not received during the
preceding three (3) years written notice from any Governmental Entity (including
the Federal Food and Drug Administration (“FDA”), Department of Health and Human
Services, Office of Inspector General (the “HHS-OIG”) and the United States
Department of Justice (the “DOJ”)) of any violation or alleged violation by it
of any Law to which it is subject or any Permit necessary for the ownership of
its assets or the operation of its business which remains unresolved. No

 

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enforcement action, investigation or review by any Governmental Entity
(including the FDA, HHS-OIG and DOJ) is pending or, to Seller’s Knowledge,
threatened.

(b)    As to each product that is developed, manufactured, tested, distributed
or marketed by BF LLC and that is subject to the Federal Food, Drug, and
Cosmetic Act (the “FDCA”), or similar Laws (including Council Directive
93/42/EEC, and all related amendments, concerning medical devices and its
implementing rules and guidance documents) in any foreign jurisdiction (the FDCA
and such similar Laws, collectively, the “Regulatory Laws” and any such product,
a “Medical Device”), each such Medical Device has been, during the preceding
three (3) years, and is being developed, manufactured, tested, distributed or
marketed in compliance with all applicable requirements under the Regulatory
Laws, including those relating to investigational use, premarket clearance or
marketing approval to market a Medical Device, good manufacturing practices,
labeling, advertising, record keeping, filing of reports and security, and in
compliance with the Advanced Medical Technology Association Code of Ethics on
Interactions with Healthcare Professionals, except failures in compliance that,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect.

(c)    BF LLC is in compliance with the written procedures, record-keeping and
the FDA reporting requirements for Medical Device Reporting.

(d)    During the preceding three (3) years, BF LLC has not received, with
respect to the business of BF LLC, any (x) written notice of inspectional
observations on an Form FDA 483, or equivalent reports by inspectors or
officials from any other Governmental Entity of any situation requiring
attention or correction or of conditions or circumstances that are objectionable
under or otherwise contrary to applicable Regulatory Laws, or (y) warning
letters, or other written notices from the FDA or any other Governmental Entity
indicating a failure to comply with applicable Regulatory Laws. BF LLC’s
facilities and records relating to the Medical Devices were last inspected by
the FDA on January 12, 2015.

(e)    Schedule 3.12(e) sets forth a list of all registrations, clearances and
approvals issued under the FDCA (collectively, the “FDCA Permits”) and held
exclusively by BF LLC. Such listed FDCA Permits constitute the only FDCA Permits
required for BF LLC to conduct its business in the United States as presently
conducted. Each such FDCA Permit is in full force and effect, and no suspension,
revocation, cancellation or withdrawal of any such FDCA Permit has been
threatened in writing.

(f)    During the preceding three (3) years, no Medical Device has been
recalled, withdrawn, suspended, seized or discontinued (other than for
commercial or other business reasons) by BF LLC in the United States or outside
the United States (whether voluntarily or involuntarily). To Seller’s Knowledge,
during the preceding three (3) years , (A) there has been no Suit against BF LLC
(whether completed or pending) in the United States or outside of the United
States seeking the recall, withdrawal, suspension, seizure or discontinuance of
any Medical Device, which would reasonably be expected to have a Material
Adverse Effect, and (B) BF LLC has not received any written notice that the FDA
or any other Governmental Entity has commenced, or threatened to initiate, any
action to (x) withdraw its approval or request the recall of any Medical Device
or (y) enjoin production of any Medical Device.

 

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(g)    As to each Medical Device for which a premarket approval application,
premarket notification, investigational device exemption or similar state or
foreign regulatory application has, during the preceding three (3) years, been
approved, BF LLC is in compliance with 21 U.S.C. § 360, § 360e and § 360j and 21
C.F.R. Parts 807, 812 and 814, respectively, and all applicable Regulatory Laws
and all terms and conditions of such licenses or applications, except for any
such failure or failures to be in compliance which would not reasonably be
expected to have a Material Adverse Effect. In addition, BF LLC is in compliance
with all applicable registration and listing requirements set forth in 21 U.S.C.
§ 360 and 21 C.F.R. Part 807, medical device reporting requirements set forth in
21 C.F.R. Part 803 and all applicable Regulatory Laws, except for any such
failure or failures to be in compliance which would not reasonably be expected
to have a Material Adverse Effect.

(h)    No article of any Medical Device manufactured for or distributed by BF
LLC during the preceding three (3) years, is (A) adulterated within the meaning
of 21 U.S.C. § 351 (or other similar Regulatory Laws), (B) misbranded within the
meaning of 21 U.S.C. § 352 (or other similar Regulatory Laws) or (C) a product
that is in violation of 21 U.S.C. § 360 or § 360e (or other similar Regulatory
Laws), except for any such failure or failures to be in compliance with the
foregoing that would not reasonably be expected to have a Material Adverse
Effect.

(i)    Neither BF LLC nor, to Seller’s Knowledge, any officer, Employee or agent
of BF LLC has, during the preceding three (3) years, been convicted of any crime
or engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a)
or any applicable Regulatory Law or authorized by Section 306 of the FDCA (21
U.S.C. § 335a(b)) or any applicable Regulatory Law. Neither BF LLC nor, to
Seller’s Knowledge, any officer, Employee or agent of BF LLC has, during the
preceding three (3) years, been convicted of any crime or engaged in any conduct
for which such Person or entity could be excluded from participating in the
federal health care programs under Section 1128 or Section 1877 of the Social
Security Act of 1935 (the “Social Security Act”) or any similar Law. Neither BF
LLC nor, to Seller’s Knowledge, any officer, Employee or agent of BF LLC,
(A) has during the preceding three (3) years , engaged in any conduct that would
reasonably be expected to subject such Person or entity to a civil money penalty
or criminal penalty under Sections 1128A or 1128B of the Social Security Act or
any similar Law; (B) is being excluded, debarred or suspended from or otherwise
ineligible to participate in a “Federal Health Care Program” as defined in 42
U.S.C. 1320a-7b(f) or any other governmental payment, procurement or
non-procurement program; or (C) is included on the HHS-OIG List of Excluded
Individuals/Entities, the General Services Administration’s List of Parties
Excluded from Federal Programs, or the FDA Debarment List.

(j)    No vigilance reports or medical device reports with respect to the
Medical Devices have during the preceding three (3) years, been reported by BF
LLC to any Governmental Authority and, to Seller’s Knowledge, no vigilance
report or medical device report is under investigation by any Governmental
Entity with respect to any Medical Device. BF LLC is in compliance in all
material respects with all certifications currently held by BF LLC governing
quality systems and manufacturing processes.

(k)    Without limiting this Section 3.12, BF LLC and its operations are and
have during the preceding three (3) years, been conducted in compliance in all
material respects with all

 

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applicable Laws enforced by the United States Department of Health and Human
Services and its constituent agencies, including the Centers for Medicare &
Medicaid Services and the Office of Inspector General, and all applicable Laws
enforced by the DOJ, including, in each case with respect to all applicable
similar local, state, federal, regional, and foreign Laws, the following: all
applicable fraud and abuse and transparency laws such as those included in the
Social Security Act (e.g., the Anti-Kickback Statute; the Physician Payment
Sunshine Act), the federal False Claims Act, the federal False Statements Act,
the federal Program Fraud Civil Penalties Act, the Civil Monetary Penalties
statute, the physician self-referral provisions of the Stark Law, and the
implementing regulations of each such Law.

(l)    Neither BF LLC nor, to Seller’s Knowledge, any of its Representatives
has, during the preceding three (3) years, offered, paid or accepted any
remuneration or other thing of value that is prohibited by applicable Law,
including under the United States Foreign Corrupt Practices Act of 1977. Neither
BF LLC nor, to Seller’s Knowledge, any of its Representatives has, during the
preceding three (3) years, made or agreed to make any contribution, gift, bribe,
rebate, payoff, influence payment, kickback or similar payment to any Person in
violation of any Law (A) to obtain favorable treatment in securing business,
(B) to pay for favorable treatment for business secured, (C) to obtain special
concessions or pay for special concessions already obtained, or (D) in
connection with the approval or regulatory status of the Medical Devices or the
facilities in which the Medical Devices are manufactured, packaged or stored, or
from which Medical Devices are initially distributed.

3.13    Tangible Personal Property; Sufficiency of Assets.

(a)    Each Acquired Company has good and marketable title to or, in the case of
leased property other than the Real Property, has valid leasehold interests in,
all tangible personal property (including all fixtures, leasehold improvements,
equipment, office, operating and other supplies and furniture) material to its
business as presently conducted, free and clear of all Liens other than
Permitted Liens.

(b)    Except as provided pursuant to the Transition Services Agreement, the
assets of the Acquired Companies constitute all the assets, properties and
rights of Seller and its Affiliates necessary to conduct the business of the
Acquired Companies in all material respects as conducted as of the date of this
Agreement.

3.14    Intellectual Property and Data Security.

(a)    Schedule 3.14(a) contains a list as of the date hereof (specifying the
owner thereof and the registration or application number if applicable) of all
patented or registered Intellectual Property owned by any Acquired Company and
material to the operation of its business, and all applications therefor
(collectively, “Registered Intellectual Property”). Except as otherwise set
forth on Schedule 3.14(a), none of the Registered Intellectual Property has been
cancelled, abandoned or adjudicated invalid or unenforceable, and all renewals
and maintenance fees in respect of the Registered Intellectual Property which
were due prior to the date hereof have been duly paid. To Seller’s Knowledge,
all Registered Intellectual Property is valid and enforceable.

 

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(b)    Schedule 3.14(b) contains a list as of the date hereof of all Contracts
pursuant to which Intellectual Property is (i) licensed or otherwise provided to
any Acquired Company (excluding generally commercially available, off the shelf
software programs licensed pursuant to shrink-wrap or “click to accept”
agreements), or (ii) licensed or otherwise provided by any Acquired Company to
any third party (excluding non-exclusive licenses granted to customers and
contractors of the Acquired Companies in the ordinary course of business).

(c)    All of the Intellectual Property owned by, and material to the business
of, any of the Acquired Companies is exclusively owned by the Acquired
Companies. Except as set forth on Schedule 3.14(c), each employee and contractor
who has developed any issued patents (or, with respect to applicable
jurisdictions, registered patents) and, to Seller’s Knowledge, each employee and
contractor who has developed any patent applications, in each case, for or on
behalf of any of the Acquired Companies, has irrevocably and presently assigned
all such patents and patent applications, as applicable, to one or more of the
Acquired Companies.

(d)    The Acquired Companies own, or have a valid license or other valid right
to use, all material Intellectual Property used in or necessary to their
businesses as currently conducted. Except as set forth on Schedule 3.14(d), to
Seller’s Knowledge, (i) within the three (3) years preceding the date hereof,
none of the Acquired Companies has infringed, misappropriated or otherwise
violated in any material respect the Intellectual Property of any other Person,
and none of Seller or any of its Affiliates has received any written claim or
offer to license suggesting otherwise, and (ii) as of the date hereof, no other
Person is infringing, misappropriating or otherwise violating in any material
respect the Intellectual Property owned by or licensed exclusively to any
Acquired Company.

(e)    At all times during the three (3) years preceding the date hereof,
(i) each of the Acquired Companies has established, implemented, and in all
material respects complied with, written policies and all applicable Laws
regarding data security, cybersecurity, and privacy, including with respect to
the collection, use, retention, disclosure, transfer, storage, security or
disposal of Trade Secrets and any Personal Information; and (ii) to Seller’s
Knowledge, except as has not resulted in, and would not reasonably be expected
to result in, material liability or an obligation to notify any Governmental
Entity, there has been no unauthorized access to or misuse of any Trade Secrets
or Personal Information owned, collected or held for use by, or any of the
information technology systems used by, any of the Acquired Companies.

3.15    Real Property.

(a)    Schedule 3.15(a) contains a list of each parcel of real property owned by
PHI (the “Owned Real Property”). BF LLC does not have any ownership interest in
any real property. Except as set forth on Schedule 3.15(a), (x) PHI has good and
marketable indefeasible fee simple title to the Owned Real Property, free and
clear of any Liens, except for Permitted Liens and (y) there are no outstanding
options, rights of first offer or rights of first refusal to purchase the Owned
Real Property.

(b)    Schedule 3.15(b) contains a list of each parcel of real property leased
under the Real Property Leases (the “Leased Real Property” and together with the
Owned Real Property,

 

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the “Real Property”). Each Acquired Company has a valid leasehold interest in
all of its Leased Real Property.

(c)    The Real Property constitutes all of the real property occupied or
operated by any Acquired Company. No portion of the Owned Real Property is
subject to any pending or, to Seller’s Knowledge, threatened condemnation or
other similar proceeding by any Governmental Entity. To Seller’s Knowledge, no
portion of the Leased Real Property is subject to any pending or threatened
condemnation or other similar proceeding by any Governmental Entity. Except as
disclosed in Schedule 3.15(c), there are no Contracts to which any Acquired
Company is a party granting to any third party the right of use or occupancy of
any portion of the parcels of the Real Property.

3.16    Benefit Matters.

(a)    Benefit Plans Generally. Schedule 3.16(a) attached hereto contains a true
and complete list as of the date hereof of all Benefit Plans, but excluding
normal payroll practices such as the continuation of regular wage payments on
account of vacation, holiday, jury duty or other like absence.

(b)    Multiemployer Plans. None of the Acquired Companies or any ERISA
Affiliate is a participant in any “multiemployer plan” (within the meaning of
Section 3(37) of ERISA), a “multiple employer plan” (within the meaning of
Section 413 of the Code) or a “multiple employer welfare arrangement” (within
the meaning of Section 3(40) of ERISA).

(c)    Pension Plans. None of the Acquired Companies or any ERISA Affiliate has
any unsatisfied liability with respect to any pension plan (as defined in
Section 3(2) of ERISA) that is subject to Title IV of ERISA, Section 302 of
ERISA, or Section 412 of the Code, and no Acquired Company has any risk of
incurring any actual liability under Title IV of ERISA, Section 302 of ERISA or
Section 412 of the Code, including as a result of the Acquired Company being an
ERISA Affiliate of Seller and Seller’s ERISA Affiliates prior to the Closing.

(d)    Qualified Plans. With respect to each Employee Plan intended to qualify
under Section 401(a) of the Code, such Employee Plan has received a
determination letter or opinion letter from the Internal Revenue Service (the
“IRS”) stating that the form of such plan is so qualified, or a request for such
determination or opinion is currently pending with the IRS, such request was
timely filed, and, to Seller’s Knowledge, nothing has occurred that would
reasonably be expected to cause any Acquired Company to incur any liability as a
result of the qualification of such plan being adversely effected.

(e)    Compliance. Except as set forth on Schedule 3.16(e), each Benefit Plan
has been established, operated and administered in compliance in all material
respects with all applicable Laws, including ERISA and the Code, as applicable
and there are no pending or, to Seller’s Knowledge, threatened claims (other
than routine claims for benefits) or proceedings by a Governmental Entity or
other Person by, on behalf of or against any Benefit Plan or any trust related
thereto which could reasonably be expected to result in any material liability
to any of the Acquired Companies.

 

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(f)    Contributions. Except as set forth on Schedule 3.16(f), to Seller’s
Knowledge, an Acquired Company has made or properly accrued all payments and
contributions to all Benefit Plans on a timely basis as required by the terms of
each such Benefit Plan (and any insurance contract funding such plan), GAAP and
any applicable Law.

(g)    Prohibited Transactions. Except as set forth on Schedule 3.16(g), (i)
except as would not be material, no nonexempt “prohibited transactions” as such
term is defined in Section 406 of ERISA or Section 4975 of the Code have
occurred with respect to any Benefit Plan, and (ii) none of the Acquired
Companies has material Tax liability under Section 4975 of the Code. Except as
required by applicable Law, and except as would not be material, no Benefit
Plan, nor any trust which serves as a funding medium for any such Benefit Plan
is, to Seller’s Knowledge, currently under examination by the IRS, the United
States Department of Labor, the Pension Benefit Guaranty Corporation or any
court, other than applications for determinations pending with the IRS.

(h)    Documentation. The Acquired Companies have made available to Buyer
correct and complete copies of the following documents: (i) to the extent
applicable, all material plan documents, amendments and trust agreements
relating to each Benefit Plan, including any insurance contracts under which
benefits are provided, as currently in effect; (ii) to the extent applicable,
the most recent annual and periodic accountings of plan assets; (iii) to the
extent applicable, the most recent Internal Revenue Service notification,
opinion or determination letter relating to any Benefit Plan that is a pension
plan (as defined in Section 3(2) of ERISA) which is intended to be qualified
under Section 401(a) of the Code, (iv) to the extent such reports were required,
all annual reports filed on Form 5500 or 5500C/R, as applicable, for the most
recent plan year for which such form is currently required; and (v) the current
summary plan description, if any is required by ERISA to be prepared and
distributed to participants, for each Employee Plan.

(i)    Post-Retirement Benefits. Except as set forth on Schedule 3.16(i), no
Benefit Plan provides post-retirement medical benefits, post-retirement death
benefits or other post-retirement welfare benefits, except to the extent of the
continuation coverage rules as provided under Sections 601 through 608 of ERISA
or any other similar applicable Law.

(j)    Change in Control and Tax Gross-Ups.

(i)    Except as set forth on Schedule 3.16(j), neither the execution and
delivery of this Agreement, any approval of this Agreement nor the consummation
of the transactions contemplated by this Agreement could, either alone or in
combination with another event, (1) entitle any current or former employee,
director, officer or natural person independent contractor of any of the
Acquired Companies to severance pay or any material increase in severance pay,
(2) accelerate the time of payment or vesting, or materially increase the amount
of compensation due to any such employee, director, officer or natural person
independent contractor, (3) directly or indirectly cause an Acquired Company to
transfer or set aside any assets to fund any material benefits under any Benefit
Plan, (4) otherwise give rise to any material liability under any Benefit Plan,
or (5) limit or restrict the right to merge, materially amend, terminate or
transfer the assets of any Benefit Plan on or following the Closing Date.

 

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(ii)    Neither the execution and delivery of this Agreement, any approval of
this Agreement nor the consummation of the transactions contemplated by this
Agreement could, either alone or in combination with another event, result in
the payment of any amount that could, individually or in combination with any
other such payment, constitute an “excess parachute payment” as defined in
Section 280G(b)(1) of the Code.

(iii)    None of the Acquired Companies has any obligation to provide, and no
Benefit Plan or other agreement provides any individual with the right to, a
gross up, indemnification, reimbursement or other payment for any excise or
additional taxes, interest or penalties incurred pursuant to Section 409A or
Section 4999 of the Code or due to the failure of any payment to be deductible
under of Section 280G of the Code.

3.17    Labor Matters.

(a)    As of the date hereof, none of the Acquired Companies is a party to any
collective bargaining agreement or other agreement with a labor union or like
organization, and to the Seller’s Knowledge, there are no activities or
proceedings by any individual or group of individuals, including representatives
of any labor organizations or labor unions, to organize any employees of the
Acquired Companies.

(b)    As of the date hereof, there is no strike, lockout, slowdown, work
stoppage, unfair labor practice or other labor dispute, or arbitration or
grievance pending or, to the Seller’s Knowledge, threatened. Each of the
Acquired Companies is in compliance in all material respects with all applicable
Laws respecting labor, sexual harassment, employment and employment practices,
terms and conditions of employment, wages and hours, and occupational safety and
health.

3.18    Environmental Matters.

(a)    Except as set forth on Schedule 3.18(a), (i) each Acquired Company is,
and for the past three (3) years has been, in material compliance with all
applicable Environmental Laws, (ii) no Acquired Company has received in the
three (3) years preceding the date hereof any written notice or claim with
respect to its business or Real Property from any Governmental Entity or other
third party alleging that such Acquired Company is liable under, or not in
material compliance with, any Environmental Law which remains unresolved and
(iii) to Seller’s Knowledge, there has been no “release” of a “hazardous
substance,” as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq., by any
Acquired Company in excess of a reportable quantity on the Real Property
occupied by an Acquired Company which release remains unresolved.

(b)    Notwithstanding any other provision of this Agreement to the contrary,
the representations and warranties set forth above in this Section 3.18 shall
constitute the sole and exclusive representations and warranties made by Seller
with respect to environmental matters, and no other representation or warranty
contained in any other section of this Agreement, shall be deemed to be made
with respect to environmental matters.

 

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3.19    Taxes.

(a)    All material Tax Returns required to be filed by each Acquired Company
have been filed with the appropriate taxing authorities, and all such Tax
Returns are true, complete and correct in all material respects. Each Acquired
Company has paid all Taxes shown as due and payable by it on such Tax Returns.

(b)    Each Acquired Company has withheld and paid over all material Taxes
required to have been withheld and paid over in connection with amounts paid or
owing to any employee, independent contractor, or other third party to the
extent due and payable.

(c)    As of the date hereof, there is no lien for Taxes upon any of the assets
of the Acquired Companies nor, to the Seller’s Knowledge, is any taxing
authority in the process of imposing any lien for Taxes on any of the assets of
the Acquired Companies, other than liens for Taxes that are not yet due and
payable or for Taxes the validity or amount of which is being contested by
Seller or one of its Affiliates in good faith by appropriate action.

(d)    As of the date hereof, no issues that have been raised in writing with
any Acquired Company by the relevant taxing authority in connection with any
examination of the Tax Returns referred to in paragraph (a) hereof that are
currently pending, and all deficiencies asserted or assessments made, if any, as
a result of such examinations have been paid in full, unless the validity or
amount thereof is being contested by Seller or one of its Affiliates in good
faith by appropriate action.

(e)    No election has been filed under Treasury Regulations Section 301.7701-3
to treat BF LLC as a corporation for income tax purposes.

(f)    Notwithstanding any other provision of this Agreement to the contrary,
the representations and warranties set forth above in this Section 3.19 shall
constitute the sole and exclusive representations and warranties made by Seller
with respect to Taxes, and no other representation or warranty contained in any
other section of this Agreement shall be deemed to be made with respect to
Taxes.

3.20    Brokers. Except for Goldman Sachs & Co. LLC, no investment banker,
broker, finder or other intermediary has been retained by or is authorized to
act on behalf of Seller or any Acquired Company who is entitled to any fee or
commission from any Acquired Company in connection with the transactions
contemplated by this Agreement.

3.21    Affiliate Transactions. Except as set forth in Schedule 3.21, (i) no
Filtration Group Party is a party to any Contract with any Acquired Company and
(ii) no Filtration Group Party has engaged in any transaction with any Acquired
Company in the 12 months preceding the date hereof.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as follows:

 

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4.1    Existence and Power. Buyer is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of New York.

4.2    Authorization. The execution, delivery, and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby (a) are
within Buyer’s corporate powers and (b) have been duly authorized by all
necessary corporate action on the part of Buyer.

4.3    Enforceability. This Agreement has been duly executed and delivered by
Buyer and constitutes a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other Laws affecting creditors’ rights generally and except insofar as the
availability of equitable remedies may be limited by applicable Law.

4.4    Governmental and Third Party Authorizations. Except as set forth on
Schedule 4.4, and except for (a) applicable requirements under “blue sky” laws
of various states and (b) assuming all filings required under the HSR Act are
made and any waiting periods thereunder have expired or been terminated, no
consent, approval or authorization of, declaration to or filing or registration
with, any Governmental Entity or any other party to a Contract to which Buyer is
a party is required to be made or obtained by Buyer in connection with the
execution, delivery and performance by Buyer of this Agreement or the
consummation by Buyer of the transactions contemplated hereby, except in each
case for such consents or approvals the failure of which to obtain would not
materially adversely affect or materially delay the ability of Buyer to
consummate the transactions contemplated by this Agreement.

4.5    Noncontravention. Except as set forth on Schedule 4.5 and except for
(a) applicable requirements under “blue sky” laws of various states and
(b) assuming all filings required under the HSR Act are made and any waiting
periods thereunder have expired or been terminated, the execution, delivery and
performance by Buyer of this Agreement, and the consummation of the transactions
contemplated hereby, will not (i) violate the Organizational Documents of Buyer,
(ii) violate any Law applicable to Buyer, or (iii) constitute or result in a
breach or a default by Buyer under any Contract to which Buyer is a party,
except for such violations, defaults or impositions that would not materially
adversely affect or materially delay the ability of Buyer to consummate the
transactions contemplated by this Agreement.

4.6    Brokers. Except for Barclays Capital Inc., no investment banker, broker,
finder or other intermediary has been retained by or is authorized to act on
behalf of Buyer who is entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.

4.7    Investment Representations. Buyer is acquiring the Securities for its own
account and not with a view to distribution with the meaning of Section 2(a)(11)
of the Securities Act. Buyer acknowledges that it is relying solely on its own
investigation and analysis in entering into the transactions contemplated
hereby. Buyer is knowledgeable about the industries in which the Acquired
Companies operate and is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement and is able to bear the substantial
economic risk of such investment for an indefinite period of time. Buyer has
been afforded full access to the Books and

 

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Records, facilities and personnel of the Acquired Companies for purposes of
conducting a due diligence investigation and has conducted a due diligence
investigation of the Acquired Companies.

4.8    Financing.

(a)    Buyer has delivered to Seller a true and correct copy of an executed debt
commitment letter (together with all exhibits, schedules and annexes thereto,
the “Debt Commitment Letter”), dated as of the date of this Agreement, entered
into by and between Buyer and JPMorgan Chase Bank, N.A., pursuant to which, as
of the date of this Agreement, upon the terms and subject to (and only to) the
Financing Conditions set forth therein, the Financing Sources party thereto have
agreed to provide the amounts and perform the services set forth therein.

(b)    As of the date of this Agreement, the Debt Commitment Letter has not been
amended or modified in any manner, and the commitments contained therein have
not been terminated, reduced, withdrawn or rescinded in any respect by Buyer or,
to the knowledge of Buyer, any other party thereto, and no such termination,
reduction, withdrawal or rescission is contemplated by Buyer or, to the
knowledge of Buyer, any other party thereto, other than in accordance with the
express terms thereof.

(c)    Other than the fee letters relating to the Debt Commitment Letter, there
are no side letters, understandings or other agreements or arrangements relating
to the Debt Commitment Letter or any portion of the debt financing contemplated
thereby to which Buyer or any of its Affiliates is a party that could adversely
affect the availability or conditions of the debt financing contemplated by the
Debt Commitment Letter.

(d)    Buyer or an Affiliate thereof on its behalf has fully paid any and all
commitment or other fees and amounts required by the Debt Commitment Letter (or
any fee letters, engagement letters, and syndication letters with respect the
Financing and any interest rate, currency or other cost caps or other
derivatives relating to the Financing) to be paid on or prior to the date of
this Agreement.

(e)    The Debt Commitment Letter has been duly executed by Buyer and, to the
knowledge of Buyer, the other parties thereto. As of the date of this Agreement,
the Debt Commitment Letter is in full force and effect and constitutes the
valid, binding and enforceable obligation of Buyer and, to the knowledge of
Buyer, the other parties thereto, enforceable against Buyer and, to the
knowledge of Buyer, the other parties thereto, in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other Laws affecting creditors’ rights generally
and except insofar as the availability of equitable remedies may be limited by
applicable Law. There are no conditions precedent related to the funding of the
full amount of the debt financing contemplated by the Debt Commitment Letter,
other than the conditions precedent expressly set forth in the Debt Commitment
Letter (such conditions precedent, the “Financing Conditions”).

(f)    As of the date of this Agreement, assuming the accuracy of the
representations and warranties of Seller contained in Article III that are
material to the interests of the Financing

 

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Sources and the satisfaction of the conditions set forth in Article VIII (except
those conditions that are to be satisfied or waived at Closing, but subject to
the satisfaction or waiver of such conditions at the Closing), Buyer has no
reason to believe that (i) any of the Financing Conditions will not be satisfied
on or prior to the Closing Date or (ii) the relevant portions of the debt
financing contemplated by the Debt Commitment Letter will not be available to
Buyer on the Closing Date.

(g)    As of the date of this Agreement, no event has occurred that, with or
without notice, lapse of time or both, would constitute a default or breach
under the Debt Commitment Letter on the part of Buyer or, to the knowledge of
Buyer, any other party thereto, under the terms and conditions of the Debt
Commitment Letter.

(h)    Assuming the accuracy of the representations and warranties of Seller
contained in Article III that are material to the interests of the Financing
Sources and the satisfaction of the conditions set forth in Article VIII (except
those conditions that are to be satisfied or waived at Closing, but subject to
the satisfaction or waiver of such conditions at the Closing), the aggregate
proceeds of the Financing (after netting out applicable fees, expenses, original
issue discount and similar premiums and charges and after giving effect to the
maximum amount of flex (including original issue discount flex) provided under
the Debt Commitment Letter), when added together with other available cash of
Buyer and the Acquired Companies as of the Closing Date, will be sufficient to
enable Buyer to pay the aggregate Purchase Price, the amounts required to be
paid under Section 2.4(c) hereof when due and payable hereunder, and any other
amounts required under the Debt Commitment Letter to be paid in connection with
the initial funding of the debt financing contemplated by the Debt Commitment
Letter.

(i)    Notwithstanding this Section 4.8 or any other provision of this
Agreement, in no event shall the receipt by or the availability of any funds or
financing to Buyer or any of its Affiliates or any other financing be a
condition to Buyer’s obligation to consummate the transactions contemplated by
this Agreement.

4.9    Solvency. Upon the consummation of the transactions contemplated hereby,
assuming the accuracy of the representations and warranties of Seller contained
in Article III and the satisfaction of the conditions set forth in Article VIII
(except those conditions that are to be satisfied or waived at Closing, but
subject to the satisfaction or waiver of such conditions at the Closing), (a)
Buyer, each of its Subsidiaries and each of the Acquired Companies, taken as a
whole, will not be insolvent as defined in Section 101 of Title 11 of the United
States Code, (b) Buyer, each of its Subsidiaries and each of the Acquired
Companies, taken as a whole, will not be left with insufficient capital with
which to engage in its business in the ordinary course of business consistent
with past practice, (c) Buyer, each of its Subsidiaries and each of the Acquired
Companies, taken as a whole, will not have incurred debts beyond their ability
to pay such debts as they mature and (d) the capital of Buyer, each of its
Subsidiaries and each of the Acquired Companies, taken as a whole, will not be
impaired, except, with respect to the Acquired Companies, for insolvency,
insufficiency of capital, incurrence of debt or impairment of capital to the
extent resulting from acts and omissions by Seller prior to consummation of the
transactions contemplated by this Agreement. No transfer of property is being
made and no obligation is being incurred in connection with the transactions
contemplated by this Agreement with the intent to

 

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hinder, delay or defraud either present or future creditors of Buyer or its
Subsidiaries (including, following the Closing, each Acquired Company).

ARTICLE V

COVENANTS OF SELLER

5.1    Conduct of Business. Except as set forth on Schedule 5.1, as contemplated
by this Agreement or as Buyer may otherwise consent to in writing (which consent
shall not be unreasonably withheld, conditioned or delayed), from the date
hereof through the Closing, Seller shall (i) not sell, pledge, otherwise
encumber or dispose of the Securities, (ii) not take any action which would
reasonably be expected to prevent, materially delay or materially impair the
ability of Seller to consummate the transactions contemplated by this Agreement
and (iii) cause each Acquired Company to:

(a)    conduct its business in the ordinary course of business consistent with
past practice in all material respects;

(b)    use commercially reasonable efforts to maintain and preserve intact its
business organization, to maintain its relations with Governmental Entities,
lenders, suppliers, landlords, other Persons with which it has material business
relationships, and to keep available the services of its Employees;

(c)    not sell, lease, transfer, create a Lien on, cancel, abandon, assign or
otherwise dispose of any of its material assets outside of the ordinary course
of business consistent with past practice;

(d)    not acquire any material assets, Persons or businesses, other than in the
ordinary course of business consistent with past practice or consistent with
Contracts existing as of the date hereof;

(e)    not enter into any Contract that would have been a Material Contract had
it been entered into prior to the execution of this Agreement, other than
Contracts that would not have been required to be scheduled as a Material
Contract pursuant to any subsection of Section 3.10 other than
Section 3.10(a)(i) or Section 3.10(a)(x).

(f)    not cancel, compromise, waive, settle or release any material right or
claim, other than in the ordinary course of business consistent with past
practice in all material respects;

(g)    not grant any material license, sublicense of any rights under or other
right with respect to any Intellectual Property, other than non-exclusive rights
granted in the ordinary course of business consistent with past practice;

(h)    not incur or guaranty any Indebtedness;

(i)    not make or authorize any change in any of its Organizational Document;

 

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(j)    not make any loans, advances, guarantees to or capital contributions or
investments in any other Person (including Seller or any of its Affiliates)
other than advances to Employees for business travel or similar expenses made in
the ordinary course of business;

(k)    not merge or consolidate either Acquired Company with any other Person,
or restructure or reorganize the Equity Securities of either Acquired Company or
completely or partially liquidate either Acquired Company;

(l)    not issue, sell, or otherwise dispose of any of its Equity Securities, or
grant any options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its Equity Securities;

(m)    not (i) make any increase in the compensation, severance or termination
pay of any of its directors, officers and Employees, except for increases in
base salary or annual wage rate in the ordinary course of business consistent
with past practice that do not exceed 4% in the aggregate, (ii) become a party
to, establish, adopt or commence participation in any Benefit Plan or amend or,
in any material respect, modify any Benefit Plan (except as may be required by
the terms of such Benefit Plan or applicable Law), including any arrangement
that would have been a Benefit Plan had it been entered into prior to this
Agreement except for modifications or renewals to health and welfare plans in
the ordinary course of business consistent with past practice that do not
materially increase any costs to any Acquired Company, (iii) take any action to
accelerate the vesting or lapsing of restrictions or payment, or fund or in any
other way secure the payment, of compensation or benefits under any Benefit
Plan, (iv) change any actuarial or other assumptions used to calculate funding
obligations with respect to any Benefit Plan that is required by applicable Law
to be funded or change the manner in which contributions to such plans are made
or the basis on which such contributions are determined, except in each case as
may be required by GAAP, (v) forgive any loans or issue any loans (other than
routine travel advances issued in the ordinary course of business) to any
Employee; (vi) hire any Employee other than (1) to fill a position created by
the termination of employment of a non-executive Employee, with terms of
employment no more favorable than those applicable to the former Employee or
(2) as set forth on Schedule 5.1(m), or (vii) terminate the employment of any
Employee that is an officer, other than for cause; in each case, except as may
be required by applicable Law or the terms of any Benefit Plan in effect as of
the date hereof;

(n)    not make any material Tax election if the effect of such election would
be to increase the Tax liability of any of the Acquired Companies in taxable
periods beginning after the Closing Date;

(o)    not make any changes with respect to its accounting policies or
procedures outside of the ordinary course of business consistent with past
practice, except as required by changes in Law or GAAP;

(p)    not amend, modify, terminate or fail to renew in the ordinary course any
Material Contract (other than upon any expiration of the term of any Material
Contract) other than in the ordinary course of business consistent with past
practice;

 

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(q)    not declare, set aside or pay any non-cash dividend or other distribution
(whether in stock, property or any combination thereof) in respect of any Equity
Securities;

(r)    not engage in any promotional sales or discount activities or other
practice, in each case, in a manner outside the ordinary course of business and
contrary to generally accepted industry practices, with the effect of
accelerating the pre-Closing period sales or accelerating collection of
pre-Closing period receivables or postponing payments to the post-Closing
period; and

(s)    not legally obligate itself to do any of the actions described in the
foregoing clauses (b) through (r).

5.2    No Additional Representations. Notwithstanding anything to the contrary
contained herein, Seller acknowledges and agrees that, except for the specific
representations and warranties expressly made by Buyer in Article IV of this
Agreement, Buyer has not made, and is neither making nor will make, and Seller,
the Acquired Companies, their respective Affiliates and their respective
Representatives have not relied, are not relying and will not rely on, any
representation or warranty, express or implied, at law or in equity, with
respect to (a) Buyer, (b) Buyer’s businesses, assets, liabilities, operations,
prospects, or condition (financial or otherwise), (c) the transactions
contemplated hereby, (d) the accuracy or completeness of any information
regarding any of the foregoing, or (e) any other matter whatsoever.

5.3    Seller Release. Effective as of the Closing, Seller, on behalf of itself
and its Affiliates, successors and assigns, hereby unconditionally and
irrevocably waives, releases and forever discharges any and all such
liabilities, rights, claims, causes of action, obligations and losses of any
type that it or any of its Affiliates has had, now has or might now have against
the Acquired Companies, and each of their respective officers, directors,
employees, successors and assigns, in each case in their capacity as such (each,
a “Seller Releasee”), in each case, in respect of, relating to or arising in
connection with Seller’s ownership of the Acquired Companies prior to the
Closing; provided, however, that for the avoidance of doubt, this release shall
not apply to any payables or receivables to the extent taken into account in the
calculation of Net Working Capital. Seller expressly waives, releases and
discharges any claims or rights of Seller with respect to exculpation or
indemnification under the Organizational Documents of the Acquired Companies;
provided, however, that such release shall not apply to any rights to
exculpation or indemnification held by current or former directors or officers
of the Acquired Companies acting in their capacity as such. This general release
shall be given full force and effect according to each of its express terms and
provisions, including those relating to unknown and unsuspected claims
(notwithstanding any statute that expressly limits the effectiveness of a
general release of unknown or unsuspected).

5.4    Access to Books and Records. Subject to applicable Law, Seller shall,
throughout the period prior to the Closing, cause the Acquired Companies to
(a) afford Buyer and its Representatives with reasonable access, upon prior
reasonable written request, during regular business hours, to (i) the Employees
of the Acquired Companies and (ii) the Books and Records, and (b) furnish at
Buyer’s expense, reasonably promptly to Buyer copies of all such Books and
Records, and such additional data or information which may already exist, in the
form that such data or information exists, in each case that Buyer may
reasonably request; provided, that the

 

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foregoing shall not require the Acquired Companies to permit any inspection, or
to disclose any information, that in the reasonable judgment of the Acquired
Companies (x) would result in the disclosure of any Trade Secrets of third
parties, the waiver of any attorney-client privilege or other legal privilege or
the violation of any of the Acquired Companies’ obligations with respect to the
confidentiality of third parties (if the Acquired Companies have used reasonable
best efforts to obtain the consent of such party to such inspection or
disclosure) or (y) could reasonably be expected to violate applicable antitrust
Laws. All such information shall be governed by the terms of the terms of the
Confidentiality Agreement.

5.5    Non-Solicitation; Non-Competition.

(a)    Non-Solicitation. For a period of two (2) years after the Closing Date,
Seller will not, and will cause the other Restricted Persons not to, directly or
indirectly, solicit for employment, employ or engage as a contractor any
Employee; provided, however, that the Restricted Persons shall not be restricted
from soliciting, employing or engaging as a contractor any person who (i) has
not been an Employee for at least 180 days prior to such solicitation or hiring,
(ii) whose employment was terminated by Buyer or an Acquired Company after the
Closing, or (iii) responds to general solicitations of employment not
specifically directed toward Employees (including by a recruiter or search
firm).

(b)    Non-Competition. For a period of three (3) years after the Closing Date,
Seller and its Affiliates (including the Filtration Group Parties) will not,
directly or indirectly, design, engineer, manufacture, distribute or sell any
products whose function is surgical smoke evacuation anywhere in the world;
provided, however, that nothing in this Section 5.5(b) shall prohibit Seller or
its Affiliates (including the Filtration Group Parties) from owning, directly or
indirectly, up to 2.0% of the outstanding securities of any Person that are
traded on national securities exchange or stock market.

ARTICLE VI

COVENANTS OF BUYER

6.1    Access to Books and Records. Buyer shall maintain until the sixth (6th)
anniversary of the Closing Date all Books and Records relating to any Acquired
Company or any asset or liability of any Acquired Company prior to the Closing
in the manner such Books and Records are maintained immediately prior to the
Closing Date. Subject to applicable Law, after the Closing, Buyer shall provide
Seller and its Representatives with reasonable access, upon prior reasonable
written request, during regular business hours, to (a) the officers and
employees of the Acquired Companies and (b) the Books and Records, but, in each
case, only in the form that such data or information exists and to the extent
relating to the assets, liabilities or business of any Acquired Company prior to
the Closing, and Seller and its Representatives shall have the right to make
copies of such Books and Records at its sole cost; provided, that Buyer and the
Acquired Companies may withhold access, documents or information that in the
reasonable judgment of Buyer (x) would result in the disclosure of any Trade
Secrets of third parties, the waiver of any attorney-client privilege or other
legal privilege or the violation of any of the Acquired Companies’ obligations
with respect to the confidentiality of third parties (if the Acquired Companies
have used reasonable best efforts to obtain the consent of such party to such
inspection or disclosure)

 

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or (y) would reasonably be expected to violate applicable antitrust Laws. All
such information shall be kept confidential in accordance with Section 7.6.

6.2    Indemnification; Directors and Officers Insurance.

(a)    For a period of not less than six (6) years from and after the Closing
Date, Buyer shall cause the Organizational Documents of each Acquired Company to
contain provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of current or former directors and
officers of any Acquired Company (each, a “Covered Party”) than are set forth in
their respective Organizational Documents as of the date hereof. Any
indemnification agreements with Covered Parties in existence on the date of this
Agreement shall remain effective, without any further action, and shall survive
the Closing and continue in full force and effect in accordance with their
terms.

(b)    On or prior to the Closing Date, Seller and the Acquired Companies shall
obtain a non-cancelable run-off insurance policy for directors’ and officers’
liability, for a period of six (6) years after the Closing Date to provide
insurance coverage for events, acts or omissions occurring on or prior to the
Closing Date, including in connection with this Agreement and the transactions
contemplated hereby, for all persons who were directors, managers or officers of
Seller or any Acquired Company, as applicable, on or prior to the Closing Date
(the “D&O Insurance”). Buyer shall be solely responsible for paying the costs
and expenses (including the premium) of obtaining the D&O Insurance up to a
maximum amount of $75,000, and Buyer and Seller shall share equally in any such
costs and expenses in excess of $75,000. Buyer shall cause any Acquired Company,
as applicable, to maintain the D&O Insurance in full force and effect, and
continue to honor the obligations thereunder.

(c)    In the event Buyer or any Acquired Company (i) consolidates with or
merges into any other Person and shall not be the continuing entity after such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision shall be made so that such continuing entity or transferee of such
assets, as the case may be, shall assume the obligations set forth in this
Section 6.2.

6.3    No Additional Representations. Notwithstanding anything to the contrary
contained herein, Buyer acknowledges and agrees that, except for the specific
representations and warranties expressly made by Seller in Article III of this
Agreement (as qualified by the Seller Disclosure Schedules), none of Seller, the
Acquired Companies or any Nonparty Affiliate has made, is making or will make,
and Buyer, its Affiliates and their Representatives have not relied, are not
relying and will not rely on, any representation or warranty, express or
implied, at law or in equity, with respect to (a) any of the Acquired Companies,
(b) their respective businesses, assets, liabilities, operations, prospects, or
condition (financial or otherwise), (c) the transactions contemplated hereby,
(d) the accuracy or completeness of any information regarding any of the
foregoing, including any confidential information memorandum, management
presentation, projections, budgets or any other information, document or
material made available to Buyer, its Affiliates or any of their Representatives
in “data rooms” and online “data sites,” management presentations or any in any
other form, or (e) any other matter whatsoever.

 

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6.4    Communications Prior to Closing. Prior to the Closing, Buyer and Buyer’s
Representatives may only contact and communicate with the employees, lenders,
customers, service providers and suppliers of any Acquired Company in connection
with the transactions contemplated hereby after prior consultation with and
written (including by email) approval of Seller.

6.5    RWI Policy. At or prior to the Closing, Buyer shall deliver to Seller
evidence of the purchase by Buyer of a RWI Policy, effective as of the Closing,
together with evidence of the payment of the premium for such RWI Policy. The
form of RWI Policy will include a provision whereby the insurer expressly
waives, and agrees not to pursue, directly or indirectly, any subrogation rights
against Seller with respect to any claim made by any insured thereunder, except
in the case of Fraud and Seller shall be an express third party beneficiary of
such provision under the RWI Policy and such provision shall not be amended or
waived without Seller’s prior written consent.

6.6    Buyer Release. Effective as of the Closing, Buyer, on behalf of the
Acquired Companies and their respective successors and assigns, hereby
unconditionally and irrevocably waives, releases and forever discharges any and
all such liabilities, rights, claims, causes of action, obligations and losses
of any type that the Acquired Companies has had, now has or might now have
against Seller and any of its Affiliates and each of their respective officers,
directors, employees, successors and assigns, in each case in their capacity as
such (each, a “Buyer Releasee” and, together with the Seller Releasees, the
“Releasees”) in respect of, relating to or arising in connection with the
Seller’s ownership of the Acquired Companies prior to the Closing; provided,
however, that for the avoidance of doubt this release shall not apply to any
payables or receivables to the extent taken into account in the calculation of
Net Working Capital. This general release shall be given full force and effect
according to each of its express terms and provisions, including those relating
to unknown and unsuspected claims (notwithstanding any statute that expressly
limits the effectiveness of a general release of unknown or unsuspected).

6.7    Employee Compensation Matters. Buyer shall provide to Employees of the
Acquired Companies that continue in employment with Buyer or its Affiliates
(including the Acquired Companies) after the Closing employee benefits that are
similar to those benefits that are provided to similarly situated employees of
the Buyer or its Affiliates, until the first (1st) anniversary of the Closing
Date.

ARTICLE VII

COVENANTS OF BUYER AND SELLER

7.1    Public Announcements. Each of Buyer and Seller agrees that neither it nor
any of its Affiliates will, without the written approval of the other party
hereto, issue any press release or otherwise make any public statement with
respect to this Agreement or the transactions contemplated by this Agreement,
except as may be required by applicable Law or by the rules of any national
securities exchange or stock market, in which case the party hereto required to
make the release or announcement shall allow the other party hereto reasonable
time to comment on such release or announcement in advance of such issuance;
provided that each of the parties hereto may make internal announcements to
their respective employees regarding the transactions

 

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contemplated by this Agreement; provided, further, that nothing herein shall
prohibit or prevent Seller or any of its Affiliates from disclosing any
information of a nature that would typically be provided by companies to their
investors or prospective investors.

7.2    Antitrust Approvals.

(a)    Seller and Buyer shall, as promptly as practicable and before the
expiration of any relevant legal deadline, but in no event later than four
(4) Business Days following the execution and delivery of this Agreement, file,
or cause to be filed, with (i) the United States Federal Trade Commission and
the DOJ the notification and report form required pursuant to the HSR Act for
the transactions contemplated by this Agreement, and provide as promptly as
practicable any supplemental information requested in connection therewith,
which forms shall specifically request early termination of the waiting period
prescribed by the HSR Act and (ii) any other Governmental Entity, any other
filings, reports, information and documentation required for the transactions
contemplated hereby pursuant to any Laws relating to antitrust and competition
applicable to any Acquired Company, if any (“Other Antitrust Laws”). Each of the
parties hereto shall furnish, or cause to be furnished, to each other’s counsel
such necessary information and reasonable assistance as the other may request in
connection with its preparation of any filing or submission that is necessary
under the HSR Act and any Other Antitrust Laws. Buyer shall be responsible for
all filing fees payable in connection with such filings.

(b)    Seller and Buyer shall use their respective reasonable best efforts to
promptly obtain any clearance required under the HSR Act and any Other Antitrust
Laws for the consummation of the transactions contemplated by this Agreement and
shall keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, any Governmental Entity
and shall comply promptly with any such inquiry or request. Buyer agrees to
promptly take any and all steps necessary to avoid or eliminate each and every
impediment under any applicable Law that may be asserted by any Governmental
Entity or any other party so as to enable the parties to expeditiously close the
transactions contemplated by this Agreement, including (i) proposing,
negotiating, committing to and effecting, by consent decree, hold separate
order, or otherwise, the sale, divestiture or disposition of any of its assets,
properties or businesses or of the assets, properties or businesses to be
acquired by it pursuant to this Agreement as are required to be divested, and
(ii) otherwise taking or committing to take actions that after the Closing Date
would limit Buyer’s or its Affiliates’ freedom of action with respect to, or its
or their ability to retain, one or more of the businesses, product lines or
assets of any Acquired Company, in each case, as may be required in order to
avoid the entry of, or to effect the dissolution of, any preliminary or
permanent injunction, in any Suit under the HSR Act or any Other Antitrust Laws,
which would otherwise have the effect of preventing or materially delaying the
Closing; provided, however, that notwithstanding anything to the contrary
contained in this Agreement, neither this Section 7.2 nor the “reasonable best
efforts” standard shall require, or be construed to require, Buyer to take any
action with respect to any assets, properties, businesses or product lines of
Buyer, its Subsidiaries or the Acquired Companies that, individually or taken
together with any other actions, would reasonably be expected to have a material
adverse effect on the business, financial condition, assets or operations of
Buyer (together with its Subsidiaries) or the Acquired Companies; and provided,
further, that for purposes of determining whether an adverse effect would be
material for the purposes hereof, in the case of each of Buyer (together with
its Subsidiaries) or the Acquired

 

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Companies, the adverse effect shall be measured against a company of the size
and scale of the Acquired Companies (taken as a whole). Buyer and its Affiliates
shall be obligated to promptly contest, administratively or in court, any
ruling, order or other action of any Governmental Entity or any other Person
respecting the transactions contemplated by this Agreement.

(c)    Subject to applicable Laws relating to the exchange of information, Buyer
shall have the right to direct all matters (including the timing thereof) with
any Governmental Entity consistent with its obligations under this Section 7.2;
provided, that each of the parties hereto agrees to instruct their respective
counsel to cooperate with the other and use their respective efforts to
facilitate and expedite the identification and resolution of any issues arising
under the HSR Act and any Other Antitrust Laws at the earliest practicable
dates. Such efforts and cooperation include counsel’s undertaking (i) to
promptly inform the other party’s counsel of any oral communication with, and
provide copies of written communications with, any Governmental Entity regarding
any such filings or applications or any such transaction, and (ii) to confer
with each other regarding appropriate contacts with and response to personnel of
such Governmental Entity. No party hereto shall independently participate in any
substantive meeting or discussion with any Governmental Entity in respect of any
such filings, applications, investigation or other inquiry without giving the
other party hereto prior notice of the meeting and, to the extent permitted by
the relevant Governmental Entity, the opportunity to attend and participate
(which, at the request of any of the parties hereto, shall be limited to outside
antitrust counsel only).

(d)    Prior to the Closing, Buyer shall not, and shall cause its Affiliates not
to, acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets or equity interests of, or by any
other manner, any Person or portion thereof, or otherwise acquire or agree to
acquire any assets, if the entering into of a definitive agreement relating to
or the consummation of such acquisition, merger or consolidation would
reasonably be expected to (i) impose any material delay in the obtaining of, or
significantly increase the risk of not obtaining, any clearance required under
the HSR Act and any Other Antitrust Laws for the consummation of the
transactions contemplated by this Agreement or the expiration or termination of
any applicable waiting period, (ii) significantly increase the risk of any
Governmental Entity entering an order prohibiting the consummation of the
transactions contemplated by this Agreement, or (iii) materially delay the
consummation of the transactions contemplated by this Agreement.

7.3    Efforts to Close. Subject to the terms of this Agreement (including the
proviso in Section 7.2(b)), each of Buyer and Seller shall use their respective
reasonable best efforts to promptly cause the conditions to Closing to be
satisfied and for the Closing to occur. The “reasonable best efforts” of Seller
shall not require Seller or any of its Affiliates to provide financing to Buyer
for the consummation of the transactions contemplated hereby.

7.4    Tax Matters.

(a)    Agreed Tax Treatment. Buyer shall be a “C corporation” for purposes of
the Code. Buyer shall cause the Company and each other Acquired Company eligible
to do so to (i) join Buyer’s “consolidated group” (within the meaning of
Treasury Regulation Section 1.1502-1(h)) effective as of the beginning of the
date following the Closing Date and (ii) to the extent permitted by applicable
Law, treat the Closing Date as the last date of a Tax period of such Acquired

 

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Companies (the “Agreed Tax Treatment”). Each party hereto shall file all Tax
Returns consistently with the Agreed Tax Treatment and shall not take any
position inconsistent therewith. Buyer and Seller agree that any Tax deduction
for any of the Transaction Expenses or amounts that would have been Transaction
Expenses but for the fact that they were paid prior to the Closing, the payment
of Indebtedness, or any amounts included as Current Liabilities (each as finally
determined pursuant to this Agreement) shall be allocated to a Pre-Closing Tax
Period of the Seller and its Affiliates (such Tax Deduction not to exceed, in
the case of PHI, PHI’s taxable income for the Pre-Closing Tax Period ending on
the Closing Date). Neither Buyer nor any of its Affiliates shall have any right
to any Tax Refunds received by Seller or any of its Affiliates with respect to
the Acquired Companies for any Pre-Closing Tax Period.

(b)    Buyer shall not, and shall not permit any of its Affiliates (including,
after the Closing for the avoidance of doubt, the Acquired Companies) to,
(i) file, re-file, supplement, or amend any Tax Return of any Acquired Company
for any Pre-Closing Tax Period, (ii) voluntarily approach any taxing authority
regarding any Taxes or Tax Returns of any Acquired Company that were originally
due on or before the Closing Date, (iii) make an election under Section 338 of
the Code (or any comparable applicable provision of state, local or foreign Tax
law) with respect to the transactions contemplated by this Agreement, (iv) make
any Tax election with respect to the Acquired Companies effective on or before
the Closing Date, (v) take any action relating to Taxes or that could create a
Tax liability on the Closing Date (other than as expressly contemplated by this
Agreement) that is outside the ordinary course of business, or (vi) carryback
any net operating losses to a Tax period (or portion thereof) ending on or
before the Closing Date.

(c)    Buyer shall pay all Transfer Taxes arising out of or in connection with
the transactions contemplated by this Agreement, and shall file all necessary
documentation and Tax Returns with respect to such Transfer Taxes.

(d)    Allocation of Purchase Price. No later than 60 days following the
determination of Net Working Capital as finally determined pursuant to
Section 2.5, Seller shall prepare and provide to Buyer an allocation of the
Purchase Price (along with other items of consideration for United States
federal Income Tax purposes) among the PHI Shares and the assets of BF LLC in
accordance with Section 1060 of the Code (as finally determined, and subject to
any further amendment, in each case pursuant to this Section 7.4(d), the
“Allocation”). The Allocation shall be final and binding on Buyer. In case of
any adjustment to the Purchase Price (or any other item of consideration for
United States federal Income Tax purposes), requiring an amendment to the
Allocation, Seller shall amend the Allocation and provide such amended
allocation to Buyer (which shall become the Allocation). The parties hereto
agree not to take any position, in connection with any Tax Return, audit or
similar proceeding related to Taxes, that is inconsistent with the Allocation.

7.5    Confidentiality. Seller will not, and will cause its Affiliates not to,
directly or indirectly, without the prior written consent of Buyer, disclose or
use any confidential or proprietary information of the Acquired Companies
(“Confidential Information”); provided, however, that “Confidential Information”
will not include any information that (a) is generally available to, or known
by, the public (other than as a result of disclosure in violation hereof),
(b) is independently developed by Seller or its Affiliates after the Closing
without use or reference to

 

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Confidential Information, or (c) is later lawfully obtained by Seller or its
Affiliates without any duty of confidentiality. If Seller or any of its
Affiliates is compelled to disclose any Confidential Information by judicial or
administrative process or by other requirements of Law, Seller shall promptly
notify Buyer in writing, to the extent legally permissible, of its intention to
make such disclosure and provide a list of the Confidential Information that
Seller or its Affiliates intend to disclose prior to making such disclosure.
Prior to the disclosure of any such Confidential Information, Seller agrees to
cooperate with Buyer so that Buyer may seek, at its sole cost and expense, an
appropriate protective order or other remedy. In the event that such a
protective order or other remedy is not obtained prior to such time as
disclosure or production is required, Seller (a) may disclose or produce only
that portion of such Confidential Information to any Governmental Entity as its
legal counsel reasonably believes is required by applicable Law to be disclosed
or produced and (b) will use its reasonable best efforts to obtain, at Buyer’s
sole cost and expense, an order or other reasonable assurance that confidential
treatment will be accorded to such Confidential Information. Notwithstanding
anything to the contrary set forth in this Agreement, Seller and its Affiliates
shall be permitted to (i) use Confidential Information required in connection
with their Tax or accounting purposes and to enforce their respective rights
under this Agreement or the Ancillary Documents and (ii) disclose Confidential
Information to their respective and prospective investors, provided that such
Confidential Information is (x) limited solely to pre-Closing financial
information of the Acquired Companies that is of a nature consistent with
Sellers’ and its Affiliates’ past communications with their respective investors
and prospective investors and (y) not inconsistent with any information that
Buyer has filed with or furnished to the Securities and Exchange Commission or
has otherwise publicly disclosed.

7.6    Financing and Financing Cooperation.

(a)    Buyer shall use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary,
advisable or proper to obtain the Financing as promptly as practicable and in a
timely fashion (and in any event, on or prior to the Closing Date) (to the
extent such Financing is required to pay the aggregate Purchase Price, the
amounts required to be paid under Section 2.4(c) hereof when due and payable
hereunder), and any other amounts required under the Debt Commitment Letter to
be paid in connection with the initial funding of the debt financing
contemplated by the Debt Commitment Letter, including using reasonable best
efforts to: (i) maintain in effect and enforce in all material respects the Debt
Commitment Letter (including the applicable commitments thereunder) and any
Definitive Debt Financing Agreements (until the termination thereof in
accordance with their respective terms) and comply in all material respects with
its obligations thereunder; (ii) negotiate and enter into definitive debt
financing agreements on the terms contemplated by the Debt Commitment Letter
(the “Definitive Debt Financing Agreements”); and (iii) satisfy on a timely
basis all conditions to the funding of the Financing (including the Financing
Conditions) set forth in the Debt Commitment Letter and the Definitive Debt
Financing Agreements. Buyer shall keep Seller reasonably informed of the status
of its efforts to arrange the Financing and shall give Seller reasonably prompt
notice upon obtaining knowledge of any fact, change, event or circumstance that
is reasonably likely to have, individually or in the aggregate, a material
adverse effect on the availability of the debt financing contemplated by the
Debt Commitment Letter.

 

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(b)    Subject to Section 7.6(c), prior to the Closing, Buyer shall not agree to
or permit any termination (other than in accordance with its terms), amendment,
replacement, supplement or other modification of, or waive any of its material
rights under, the Debt Commitment Letter without Seller’s prior written consent
if such amendment, replacement, supplement, modification or waiver would
reasonably be expected (A) reduce the aggregate amount of the debt financing
contemplated by the Debt Commitment Letter; (B) impose new or additional
conditions or otherwise expand, amend or modify any of the conditions to the
receipt of the debt financing contemplated by the Debt Commitment Letter, in
each case, in a manner that would reasonably be expected to materially delay or
prevent the Closing; or (C) adversely impact the ability of Buyer to enforce its
rights against the other parties to the Debt Commitment Letter; provided, that
the Debt Commitment Letter may be amended, replaced, supplemented or otherwise
modified to add lenders, lead arrangers, bookrunners, syndication agents or
similar entities that had not executed the Debt Commitment Letter as of the date
of this Agreement and in connection therewith, amend the economics and other
arrangements with respect to the appointment of such existing and additional
lenders, lead arrangers, bookrunners, syndication agents or similar entities.
Upon any such amendment, replacement, supplement or modification, the terms
“Debt Commitment Letter” and “Definitive Debt Financing Agreement” shall mean
the Debt Commitment Letter or applicable Definitive Debt Financing Agreement, as
applicable, as so amended, replaced, supplemented or modified. Buyer shall
promptly deliver to Seller copies of any such amendment, replacement, supplement
or other modification of the Debt Commitment Letter.

(c)    Buyer (including through its Subsidiaries) shall have the right to
substitute the proceeds of consummated debt or equity financings or asset sales
for all or any portion of the debt financing contemplated by the Debt Commitment
Letter by reducing commitments under the Debt Commitment Letter; provided that
the conditions to the use of such proceeds are not less favorable, taken as a
whole, to Buyer than the Financing Conditions as in effect on the date hereof.

(d)    If all or any portion of the debt financing contemplated by the Debt
Commitment Letter becomes unavailable, or the Debt Commitment Letter shall be
withdrawn, repudiated, terminated or rescinded for any reason, then Buyer shall
use its reasonable best efforts to arrange and obtain and to negotiate and enter
into definitive agreements with respect to, as promptly as practicable, but, in
no event, later than the date Buyer is required to consummate the transactions
hereunder, from the same and/or alternative financing sources, alternative
financing on terms not materially less favorable and conditions not less
favorable, taken as a whole, to Buyer than the terms or conditions set forth in
the Debt Commitment Letter in an amount sufficient, when added together with the
available cash of Buyer and the Acquired Companies as of the Closing Date, to
enable Buyer to consummate the transactions contemplated by this Agreement, pay
the aggregate Purchase Price and the amounts required to be paid under
Section 2.4(c) hereof when due and payable hereunder, and any other amounts
required under the Debt Commitment Letter to be paid in connection with the
initial funding of the debt financing contemplated by the Debt Commitment
Letter. In the event any alternative financing is obtained in accordance with
this Section 7.6(d) (“Alternative Financing”), references in this Agreement to
the Financing shall also be deemed to refer to such Alternative Financing, and
if one or more commitment letters or definitive financing agreements are entered
into or proposed to be entered into in connection with such Alternative
Financing, references in this Agreement to the Debt Commitment Letter and the
Definitive Debt Financing Agreements shall also be deemed to refer to such
commitment letters and definitive

 

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financing agreements relating to such Alternative Financing, and all obligations
of Buyer pursuant to this Section 7.6 shall be applicable thereto to the same
extent as Buyer’s obligations with respect to the debt financing contemplated by
the Debt Commitment Letter.

(e)    From the date hereof to the earlier of the Closing Date and the date this
Agreement is terminated in accordance with Section 8.5, Seller shall use its
reasonable best efforts, shall cause the Acquired Companies to use their
respective reasonable best efforts, and shall use its reasonable best efforts to
cause its and their respective Representatives to use their reasonable best
efforts, at the sole cost and expense of the Buyer, to provide such reasonable
and customary cooperation and information as may be reasonably requested by
Buyer in connection with the arrangement, syndication and consummation of the
Financing and satisfying the conditions to, and complying with any obligations
of Buyer in connection with the preparation and completion of, the Financing.

(f)    Without limiting the generality of the foregoing Section 7.6(e), such
assistance shall include:

(i)    furnishing to Buyer and the Financing Providers, to the extent reasonably
requested by Buyer, due diligence materials and any other financial and other
pertinent information relating to the Acquired Companies and their businesses
(but only in the form that such information exists at such time) to be used in
the preparation of registration statements, prospectuses, offering and
information documents (collectively, “Offering Documentation”), syndication
documents and materials, lender and investor presentations and rating agency
presentations regarding the business, operations, financial projections and
prospects of Buyer and its Subsidiaries customary for the Financing and, to the
extent available (but only in the form that such information exists at such
time), information of the type reasonably determined by Buyer to be required by
Regulation S-X and Regulation S-K under the Securities Act for registered
offerings of debt or equity securities in connection with the Financing;

(ii)    assisting Buyer and the Financing Providers in the timely preparation of
Offering Documentation, syndication documents and materials, lender and investor
presentations and rating agency presentations to be used in connection with the
Financing (including in connection with the syndication of credit facilities
and/or offerings of securities in registered offerings under the Securities Act
or in reliance on Rule 144A under the Securities Act or in private placements);

(iii)    providing to Buyer (x) unaudited combined balance sheets of the
Acquired Companies and related statements of income and cash flows as of the end
of and for each fiscal quarter ending after the date hereof and at least 30 days
before the Closing Date (other than the fourth fiscal quarter of any fiscal
year), and (y) unaudited combined balance sheets of the Acquired Companies and
related statements of income and cash flows as of the end of and for each fiscal
year ending after the date hereof and at least 45 days before the Closing Date,
in each case prepared in accordance with GAAP (except (i) as may be stated in
the notes thereto, (ii) that any such quarterly financial statements may be
subject to year-end adjustments, (iii) that such statements may lack the
footnote disclosure otherwise required by GAAP and (iv) as set forth on Schedule
3.7(b)), as well as, using reasonable best efforts to provide, other information
as is

 

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necessary to receive from the independent auditors of the Acquired Companies’
financial information customary “comfort” (including “negative assurance
comfort”) with respect to the financial information to be included in any
Offering Documentation (whether in a registered offering under the Securities
Act or in reliance on Rule 144A under the Securities Act or in private
placements), and using reasonable best efforts to assist in obtaining any such
letters and any consents with respect to the combined financial statements of
the Acquired Companies from the independent auditors of the Acquired Companies’
financial information;

(iv)    using reasonable best efforts to cause the independent auditors of the
Acquired Companies’ financial information to provide assistance and cooperation
to Buyer and the Financing Providers in connection with any Financing;

(v)    cooperating with the customary marketing efforts for any portion of the
Financing, including by participating (including by way of using reasonable best
efforts to cause management with appropriate seniority and expertise to
participate), at the request of Buyer, in a reasonable number of diligence
sessions and meetings with the Financing Providers and rating agencies
(including one-on-one meetings or conference calls with potential Financing
Providers), presentations, road shows, drafting sessions, and other syndication
activities, in each case, reasonably necessary for any Financing;

(vi)    facilitating the execution and delivery at the Closing of definitive and
ancillary documents required in connection with or reasonably related to the
Financing;

(vii)    obtaining termination letters, guarantee releases, Lien or other
security interest terminations and instruments of discharge to be delivered at
Closing to allow for the discharge and termination in full on the Closing Date
of any obligations of the Acquired Companies in respect of the Indebtedness
under the Existing Debt Agreements, and the release of any related Liens;

(viii)    providing customary authorization letters to the Financing Parties
authorizing the distribution of information to prospective lenders;

(ix)    using reasonable best efforts to assist Buyer in obtaining any corporate
credit and family ratings from any ratings agencies in respect of the relevant
borrower, issuer or parent borrower under the Financing and public ratings for
the Financing;

(x)    using reasonable best efforts to provide all documentation and other
information about the Acquired Companies as is reasonably requested by Buyer or
any Financing Provider at least ten Business Days prior to the Closing Date
which is in connection with the Financing and relates to, and is reasonably
required by, applicable “know your customer” and anti-money laundering rules and
regulations, including the USA PATRIOT Act; and

(xi)    executing and delivering any pledge and security documents, and other
financing documents on behalf of the Acquired Companies, in each case as may be
reasonably requested by Buyer, facilitating the granting and perfection of
security interests in collateral (including releasing any Liens on property or
assets securing existing Indebtedness,

 

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conditional on the Closing) and taking such corporate actions as may be
reasonably requested by Buyer to permit the consummation of the Financing as
promptly as practicable.

(g)    Notwithstanding the foregoing, none of Seller or the Acquired Companies
shall be required to (i) take any action that would subject it to actual or
potential liability or conflict with or violate this Agreement or an Acquired
Company’s organizational documents (to the extent such conflict or violation
cannot be resolved by such entity using its reasonable best efforts to do so) or
any applicable Laws or result in the contravention of, or that would reasonably
be expected to result in a violation or breach of, or a default under, any
Existing Debt Agreement or Material Contract to which an Acquired Company is a
party as in effect on the date hereof, (ii) bear any cost, fee or expense or to
pay any commitment or other similar fee or make any other payment (other than
reasonable out-of-pocket costs) or incur any other liability or obligation or
provide or agree to provide any indemnity in connection with the Financing or
any of the foregoing prior to the Closing, (iii) undertake any action that would
unreasonably and materially interfere with the business or operations of Seller
or the Acquired Companies, (iv) provide or prepare, and Buyer shall be solely
responsible for, the preparation of pro forma financial information, including
pro forma costs savings, synergies, capitalization or other pro forma
adjustments desired to be incorporated into any pro forma financing information,
(v) provide any financial or other information other than in the form that such
information exists at such time, (vi) provide access to or disclose any
information to Buyer or its Representatives to the extent such disclosure would
jeopardize the attorney-client privilege, attorney work product protections or
similar protections, or (vii) take any action that would change any fiscal
period.

(h)    Notwithstanding anything to the contrary herein, any breach by Seller or
the Acquired Companies of their obligations under this Section 7.6 shall not,
whether alone or together with any other breach of this Section 7.6, constitute
a failure to satisfy the condition precedent set forth in Section 8.1(b) unless
(i) such breach has not been cured by Seller or any Acquired Company or their
respective Representatives within five (5) Business Days after Buyer’s delivery
to Seller of a written notice specifying in reasonable detail the facts and
circumstances constituting such breach (it being understood that Buyer shall
reasonably cooperate with the Seller to facilitate the Seller’s cure of any such
alleged breach) and (ii) such breach is a willful and material breach and
directly results in the Financing not being available to Buyer.

(i)    None of Seller or the Acquired Companies or their respective
Representatives shall be required to execute or enter into or perform any
certificate or agreement with respect to the Financing that is not contingent
upon the Closing or that would be effective prior to the Closing and no
directors of PHI shall be required to execute or enter into or perform any
agreement with respect to the Financing.

7.7    Employee Matters. Seller shall be solely responsible for (a) claims for
the following benefits: medical, prescription drugs, dental, vision, life
insurance, short-term disability, long-term disability and healthcare flexible
spending accounts (“Welfare and Health Benefits”) and for workers’ compensation,
in each case that are incurred by or with respect to any employee of any
Acquired Company before the Closing Date, and (b) claims relating to COBRA
coverage attributable to “qualifying events” with respect to such employee and
his or her beneficiaries and dependents that occur before the Closing Date (any
such claims described under clauses (a) and

 

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(b), “Seller Welfare and Health Expenses”). Buyer and its Affiliates shall be
solely responsible for (i) claims for Welfare and Health Benefits and for
workers’ compensation, in each case that are incurred by or with respect to any
employee of any Acquired Company that continues employment with Buyer or its
Affiliates (including any Acquired Company) on or after the Closing Date, and
(ii) claims relating to COBRA coverage attributable to “qualifying events” with
respect to any such employee and his or her beneficiaries and dependents that
occur on or after the Closing Date. For purposes of the foregoing, a claim shall
be considered incurred when the services are rendered or the supplies are
provided, and not when the condition arose. A life insurance, disability or
workers’ compensation claim shall be considered incurred when the death, injury
or event giving rise to the claim occurs.

ARTICLE VIII

CONDITIONS TO CLOSING; TERMINATION

8.1    Conditions to Obligation of Buyer. The obligation of Buyer to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
(or waiver by Buyer) of the following conditions:

(a)    Each of the representations and warranties of Seller set forth in
(i) Section 3.1 (Existence and Power), Section 3.2 (Authorization), Section 3.3
(Enforceability), and Section 3.6(a) and (e) (Capitalization; Subsidiaries)
shall be true and correct at and as of the Closing Date (other than such
representations and warranties that refer specifically to an earlier date, which
representations and warranties shall have been true and correct as of such
earlier date), (ii) Sections 3.6(b), (c), (d) and (f) (Capitalization;
Subsidiaries), Section 3.8 (No Undisclosed Liabilities) and Section 3.20
(Brokers) shall be true and correct in all material respects at and as of the
Closing Date (other than such representations and warranties that refer
specifically to an earlier date, which representations and warranties shall have
been true and correct as of such earlier date), and (iii) Article III (other
than those sections set forth in the foregoing clauses (i) and (ii) of this
Section 8.1(a)) shall be true and correct (without giving effect to any
limitation as to “materiality” or “Material Adverse Effect” set forth therein)
at and as of the Closing Date (other than such representations and warranties
that refer specifically to an earlier date, which representations and warranties
shall have been true and correct as of such earlier date), except where the
failure of any such representation or warranty to be so true and correct has not
had or is not reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.

(b)    Seller shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Seller at or prior to the Closing Date.

(c)    Buyer shall have received a certificate dated the Closing Date signed by
Seller to the effect that the conditions set forth in Sections 8.1(a) and 8.1(b)
have been satisfied (the “Seller Closing Certificate”).

(d)    All applicable waiting periods under the HSR Act and Other Antitrust Laws
shall have expired or been terminated.

 

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(e)    No Order enjoining or prohibiting any of the parties hereto from
consummating the transactions contemplated hereby shall be in effect.

(f)    Since the date of this Agreement, no event, change or development shall
have occurred and remains in effect that, individually or taken together with
any other events, changes or developments that have occurred since the date of
this Agreement and remain in effect, have had or are reasonably expected to have
a Material Adverse Effect.

8.2    Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by Seller) of the following conditions:

(a)    Each of the representations and warranties of Buyer set forth in Article
IV shall be true and correct at and as of the Closing Date (other than such
representations and warranties that refer specifically to an earlier date, which
representations and warranties shall have been true and correct as of such
earlier date), except where the failure of any such representation or warranty
to be so true and correct has not had a material adverse effect on the ability
of Buyer to consummate the transactions contemplated by this Agreement.

(b)    Buyer shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Buyer at or prior to the Closing Date.

(c)    Seller shall have received a certificate dated the Closing Date signed by
Buyer to the effect that the conditions set forth in Sections 8.2(a) and 8.2(b)
have been satisfied (the “Buyer Closing Certificate”).

(d)    All applicable waiting periods under the HSR Act and Other Antitrust Laws
shall have expired or been terminated.

(e)    No Order enjoining or prohibiting any of the parties hereto from
consummating the transactions contemplated hereby shall be in effect.

8.3    Frustration of Closing Conditions. Neither Seller nor Buyer may rely on
or assert the failure of any condition set forth in this Article VIII if such
failure results from or was caused by such party’s failure to comply with any
provision of this Agreement.

8.4    Waiver of Conditions. All conditions set forth in this Article VIII will
be deemed to have been satisfied or waived from and after the Closing.

8.5    Termination. This Agreement may be terminated, and the transactions
contemplated herein may be abandoned, prior to the Closing solely:

(a)    by the mutual written consent of Seller and Buyer;

(b)    by either Seller or Buyer, if (i) an Order enjoining or prohibiting any
of the parties hereto from consummating the transactions contemplated hereby is
in effect and such Order

 

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has become final and non-appealable and (ii) the terminating party has not
materially breached any provision of this Agreement;

(c)    by Buyer, if (i) a breach or failure to perform any representation,
warranty, covenant or agreement on the part of Seller set forth in this
Agreement shall have occurred which is not cured within thirty (30) days after
Buyer provides Seller written notice thereof, specifying such breach or failure
in reasonable detail and referencing its rights under this Section 8.5(c) in the
event such breach or failure is not cured, and renders impossible the
satisfaction of one or more of the conditions set forth in Section 8.1 and
(ii) Buyer has not materially breached any provision of this Agreement;

(d)    by Seller, if (i) a breach or failure to perform any representation,
warranty, covenant or agreement on the part of Buyer set forth in this Agreement
shall have occurred which is not cured within thirty (30) days after Seller
provides Buyer written notice thereof, specifying such breach or failure in
reasonable detail and referencing its rights under this Section 8.5(d) in the
event such breach or failure is not cured, and renders impossible the
satisfaction of one or more of the conditions set forth in Section 8.2 and
(ii) Seller has not materially breached any provision of this Agreement; or

(e)    by Buyer or Seller if (i) the Closing shall not have occurred on or
before March 12, 2019, and (ii) the terminating party has not materially
breached any provision of this Agreement.

8.6    Effect of Termination.

(a)    The valid termination of this Agreement in accordance with Section 8.5
shall terminate all rights and obligations of the parties hereunder and none of
the parties shall have any liability to the other party hereunder, except that
(a) Section 7.1, this Section 8.6 and Article IX shall survive any such
termination, and (b) nothing herein shall relieve any party from liability for
any willful breach of any covenant or agreement in this Agreement prior to such
termination. A failure of Buyer to consummate the transactions contemplated by
this Agreement because of a failure to have sufficient available funds will be
deemed to be a willful breach. In the event of termination of this Agreement,
and regardless of the reason for the termination, the Confidentiality Agreement
shall continue in full force and effect in accordance with its terms and any
such termination shall not amend, modify, release, waive or otherwise limit any
rights or obligations under the Confidentiality Agreement.

ARTICLE IX

MISCELLANEOUS

9.1    No Survival of Representations; Warranties and Pre-Closing Covenants; No
Liability. None of the (a) representations and warranties or (b) covenants or
agreements which require performance at or prior to the Closing (“Pre-Closing
Covenants”), in each case contained in this Agreement, any Ancillary Document or
in any certificate or schedule delivered pursuant

 

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hereto or thereto, shall survive the Closing. In furtherance, not limitation, of
the foregoing, the parties hereto, intending to contractually shorten any
otherwise applicable statute of limitations, hereby agree that: (a) the
representations and warranties herein are intended solely to facilitate
disclosure and to give effect to the Closing conditions set forth in Article
VIII, (b) the Pre-Closing Covenants are intended solely to serve as Closing
conditions set forth in Article VIII and (c) from and after the Closing, no
Person will have any entitlement, remedy or recourse, whether in contract, tort
or otherwise, with respect to this Agreement, any Ancillary Document or any
certificate or schedule delivered pursuant hereto or thereto, or the
transactions contemplated hereby or thereby, it being agreed that all such
remedies, entitlements and recourse are expressly waived and released to the
fullest extent permitted by Law, except for any Suit seeking to specifically
enforce, or to recover any damages with respect to the breach of, any covenant
or agreement solely to the extent such covenant or agreement is to be performed
or complied with after the Closing. Nothing contained in this Agreement shall
limit the common law liability of (a) Seller in the event Seller committed Fraud
by making any representation or warranty set forth in Article III or (b) Buyer
in the event Buyer committed Fraud by making any representation or warranty set
forth in Article IV.

9.2    Investigation by Buyer.

(a)    In connection with the decision to execute this Agreement and to
consummate the transactions contemplated hereby, Buyer has inspected and
conducted such reasonable independent review, investigation and analysis
(financial and otherwise) of the Acquired Companies and their respective
businesses as desired by Buyer. The execution of this Agreement and consummation
of the transactions contemplated hereby by Buyer are not done in reliance upon
any representation or warranty by, or information from, Seller or the Acquired
Companies or any of their respective Affiliates, Employees or Representatives,
whether oral or written, express or implied (including any implied warranty of
merchantability or of fitness for a particular purpose), except for the
representations and warranties specifically and expressly set forth in Article
III (as qualified or modified by the Seller Disclosure Schedules). Such
consummation of the transactions contemplated hereby is instead done entirely on
the basis of Buyer’s own investigation, analysis, judgment and assessment of the
present and potential value and earning power of the Acquired Companies and
their respective businesses, as well as those representations and warranties by
Seller specifically and expressly set forth in Article III (as qualified or
modified by the Seller Disclosure Schedules).

(b)    Buyer acknowledges and agrees that, except for the representations and
warranties expressly contained Article III, none of Seller, the Acquired
Companies or any of their respective directors, officers, employees, Affiliates,
controlling persons, agents, advisors or Representatives, has made, is making or
shall be deemed to have made any representation or warranty, either express or
implied, in connection with the transactions contemplated hereby, including as
to the accuracy and/or completeness of any of the information (including,
without limitation, any estimates, projections, forecasts or other
forward-looking information) provided or otherwise made available to Buyer or
any of its directors, officers, employees, Affiliates, controlling persons,
agents, advisors or Representatives (including, without limitation, in any
management presentations, information or offering memorandum, supplemental
information or other materials or information with respect to any of the above).
With respect to any such estimate, projection or forecast delivered by or on
behalf of any of the Acquired Companies to Buyer, Buyer acknowledges

 

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that (i) there are uncertainties inherent in attempting to make such estimates,
projections and forecasts, (ii) Buyer is aware that actual results may differ
materially and (iii) Buyer shall not have any claim against Seller or any of its
Nonparty Affiliates with respect to any such estimate, projection or forecast.
Buyer acknowledges that neither Seller nor the Acquired Companies (nor any
Person acting on their behalf) has made any representations or warranties to
Buyer regarding the probable success or profitability of the Acquired Companies
or their respective businesses.

9.3    Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given: (a) on the date established by the sender as having been
delivered personally, (b) on the date delivered by a private courier as
established by the sender by evidence obtained from the courier, (c) on the date
sent by electronic mail, with confirmation of receipt, if sent prior to 5:00
p.m. Central time, or if sent later, then on the next Business Day, or (d) on
the fifth (5th) Business Day after the date mailed, by certified or registered
mail, return receipt requested, postage prepaid. Such communications, to be
valid, must be addressed as follows:

If to Buyer, to:

CONMED Corporation

525 French Road

Utica, New York 13502

Attn: Peter K. Shagory, EVP – Strategy and Corporate Development

Email: PeterShagory@conmed.com

With required copies (which shall not constitute notice) to:

CONMED Corporation

525 French Road

Utica, New York 13502

Attn: Daniel S. Jonas, Esq., General Counsel

Email: DanielJonas@conmed.com

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attn: Melissa Sawyer

Email: sawyerm@sullcrom.com

If to Seller, to:

c/o Filtration Group Equity LLC

500 West Madison, Suite 3890

Chicago, Illinois 60661

Attn: Larry W. Gies

Email: lgies@madison.net

 

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With a required copy (which shall not constitute notice) to:

Paul Hastings LLP

71 South Wacker Drive, 45th Floor

Chicago, Illinois 60606

Attn: Brian F. Richards

Email: brianrichards@paulhastings.com

or to such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain).

9.4    Amendments and Waivers. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and is signed, in
the case of an amendment, by each party to this Agreement, or in the case of a
waiver, by the party against whom the waiver is to be effective. Notwithstanding
anything to the contrary herein, this Section 9.4 and Sections 9.7, 9.8(b),
9.8(c), 9.10 and 9.19 (and any other provision of this Agreement to the extent
that an amendment or waiver of such provision would modify in any material
respect the substance of any of the foregoing provisions) may not be amended or
waived in a manner that would be adverse to a Financing Party without the prior
written consent of the relevant Financing Source. No failure or delay by any
party hereto in exercising any right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.

9.5    Expenses. Except as otherwise provided in this Agreement, each party
shall bear its own costs and expenses in connection with the negotiation,
documentation and consummation of the transactions contemplated by this
Agreement, including all legal, accounting, financial advisory, consulting and
all other fees and expenses of third parties, whether or not the transactions
contemplated by this Agreement are consummated.

9.6    Successors and Assigns. This Agreement may not be assigned by either
party hereto without the prior written consent of the other party hereto, except
that Buyer may assign any and all of its rights or obligations under this
Agreement (x) to one or more of its wholly-owned Subsidiaries (provided, that,
any such assignment shall not be undertaken prior to the Closing if not
permitted by the Debt Commitment Letter) or (y) to any of Buyer’s Financing
Providers as collateral; provided, however, that no such assignment shall
relieve Buyer of any of its obligations hereunder. Any purported assignment in
violation of this Section 9.6 shall be null and void. Subject to the foregoing,
all of the terms and provisions of this Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns.

9.7    Governing Law. This Agreement, the Ancillary Documents, any Schedules
hereto and the other documents, instruments and agreements specifically referred
to herein or therein or delivered pursuant hereto or thereto, and all claims or
causes of action (whether in contract or tort) that may be based upon, arise out
of or relate hereto or thereto, or the negotiation, execution or performance of
hereof or thereof (including any claim or cause of action based upon, arising
out of or related to any representation or warranty made in or in connection
with this Agreement or as

 

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an inducement to enter into this Agreement), shall be governed by the internal
Laws of the State of Delaware, without giving effect to any choice of Law or
conflict of Laws rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of Delaware; provided, however, that the
adjudication of any action, suit, proceeding or claim of any kind or nature,
whether at law or equity, in contract, in tort or otherwise, against any
Financing Party in connection with this Agreement, the Financing or the
transactions contemplated by the Financing shall be governed by and in
accordance with the Laws of the State of New York, without giving effect to any
choice of Law or conflict of Laws rules or provisions (whether of the State of
New York or any other jurisdiction) that would cause the application of the Laws
of any jurisdiction other than the State of New York.

9.8    Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.

(a)    Any suit, action or other proceeding arising out of or relating to this
Agreement or any transaction contemplated hereby shall be brought exclusively in
the Delaware Court of Chancery in New Castle County, or in the event (but only
in the event) that such court does not have subject matter jurisdiction over
such action, the United States District Court for the District of Delaware, and
each of the parties hereto hereby irrevocably submits to the exclusive
jurisdiction of such courts for the purpose of any such suit, action or other
proceeding. A final judgment in any such suit, action or other proceeding may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Each party irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in such courts, and hereby
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each party further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party’s respective address set forth herein shall be effective service of
process for any such action, suit or proceeding.

(b)    Notwithstanding the foregoing provisions of this Section 9.8, any action,
suit, proceeding or claim of any kind or nature, whether at law or equity, in
contract, in tort or otherwise, against any Financing Party in connection with
this Agreement, the Financing or the transactions contemplated by the Financing
shall be brought exclusively in any New York state or federal court located in
the Borough of Manhattan. Each party hereby irrevocably submits with regard to
any such action, suit, proceeding or claim for itself and in respect of its
property, generally and unconditionally, to the personal jurisdiction of the
aforesaid courts and agrees that it will not bring any such action, suit,
proceeding or claim relating to this Agreement, the Financing or the
transactions contemplated by the Financing in any court other than the aforesaid
courts.

(c)    EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY (INCLUDING THE FINANCING OR TRANSACTIONS CONTEMPLATED BY THE
FINANCING) OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF. EACH PARTY HEREBY ACKNOWLEDGES AND

 

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CERTIFIES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF ANY ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) IT MAKES THIS WAIVER
VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 9.8.

9.9    Counterparts. This Agreement may be executed in counterparts, and any
party hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. This Agreement shall
become effective when each party hereto shall have received a counterpart hereof
signed by the other party hereto. The parties hereto agree that the delivery of
this Agreement, the Ancillary Documents and any other agreements and documents
executed and delivered concurrently with the execution and delivery of this
Agreement or executed and delivered at the Closing, may be effected by means of
an exchange of facsimile signatures or other electronic delivery.

9.10    No Third Party Beneficiaries. Other than Sections 5.3, 6.2 (from and
after the Closing), 6.6, 9.17 and 9.18, and with respect thereto, Sections 9.6
through 9.10 and Sections 9.13 through 9.16, which are intended to benefit and
may also be enforced by the Releasees, Covered Parties, Paul Hastings and the
Nonparty Affiliates, as applicable, no provision of this Agreement is intended
to confer upon any Person other than the parties hereto any rights or remedies
hereunder; provided, however, that each party specifically acknowledges and
agrees that the provisions of Sections 9.4, 9.7, 9.8(b) and 9.8(c), this
Section 9.10 and Section 9.19 are intended to benefit and may be enforced by any
Financing Party (to the extent contemplated thereby).

9.11    Entire Agreement. This Agreement, the Ancillary Documents and any
Schedules hereto and the other documents, instruments and agreements
specifically referred to herein or therein or delivered pursuant hereto or
thereto set forth the entire understanding of the parties hereto and thereto
with respect to the transactions contemplated by this Agreement. All Schedules,
including any Seller Disclosure Schedule, referred to herein are intended to be
and hereby are specifically made a part of this Agreement and incorporated by
reference herein. Any and all previous agreements and understandings between or
among the parties regarding the subject matter of this Agreement, the Ancillary
Documents and any Schedules hereto, whether written or oral, are superseded by
this Agreement, except for the Confidentiality Agreement which shall continue in
full force and effect in accordance with its terms.

9.12    Seller Disclosure Schedules. Except as otherwise provided in the Seller
Disclosure Schedules, all capitalized terms used therein shall have the meanings
assigned to them in this Agreement. Matters reflected in the Seller Disclosure
Schedules are not necessarily limited to matters required by this Agreement to
be disclosed. No disclosure made in the Seller Disclosure Schedules shall
constitute an admission or determination that any fact or matter so disclosed is
material, has had or could reasonably be expected to have a Material Adverse
Effect, meets a dollar or other threshold set forth in this Agreement or would
otherwise be required to be disclosed, and

 

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no Person shall use the fact of the setting of a threshold or the inclusion of
such facts or matters in any dispute or controversy as to whether any
obligation, amount, fact or matter is or is not material, is or is not in excess
of a dollar or other threshold or would otherwise be required to be disclosed,
for purposes of this Agreement. Information disclosed in any Seller Disclosure
Schedule will qualify any representation, warranty, covenant or agreement in
this Agreement to the extent that the relevance or applicability of the
information disclosed to any such representation, warranty, covenant or
agreement is reasonably apparent on its face, notwithstanding the absence of a
reference or cross-reference to such representation, warranty, covenant or
agreement on any such Seller Disclosure Schedule or the absence of a reference
or cross-reference to such Seller Disclosure Schedule in such representation,
warranty, covenant or agreement. No disclosure in the Seller Disclosure
Schedules relating to any possible breach or violation of any agreement or Law
shall be construed as an admission or indication that any such breach or
violation exists or has actually occurred.

9.13    Captions. All captions contained in this Agreement are for convenience
of reference only, do not form a part of this Agreement and shall not affect in
any way the meaning or interpretation of this Agreement.

9.14    Remedies.

(a)     The parties hereto hereby acknowledge and agree that the failure of
either party hereto to perform its agreements and covenants hereunder will cause
irreparable injury to the other party hereto, for which damages, even if
available, will not be an adequate remedy. Accordingly, the parties hereto
hereby acknowledge and agree that in the event of any breach or threatened
breach by any party hereto of any of its covenants or obligations set forth in
this Agreement, in addition to any other available remedies (including damages)
the non-breaching party may have at law or in equity, the non-breaching party
hereto shall be entitled to an injunction or injunctions to prevent or restrain
such breaches or threatened breaches of this Agreement by such party hereto, and
to specifically enforce the terms and provisions of this Agreement to prevent
such breaches or threatened breaches of, or to enforce compliance with, the
covenants, agreements and obligations of such other party hereto under this
Agreement (including the obligation to consummate the Closing). Each of the
parties hereto hereby agrees not to raise any objections to the availability of
the equitable remedy of specific performance to prevent breaches or threatened
breaches of, or to enforce compliance with, the covenants, agreements and
obligations of such parties under this Agreement. Each of the parties hereto
hereby waives (i) any defenses in any action for specific performance that a
remedy at law would be adequate and (ii) any requirement under any Law to post a
bond or other security as a prerequisite to seeking or obtaining equitable
relief.

(b)    In determining damages for any failure by Buyer to close if its
conditions to Closing are satisfied or for any failure to comply with its
covenants in Section 7.2 or 7.3 that result in the transactions contemplated by
this Agreement not being consummated, Buyer agrees that Seller’s damages shall
include damages based upon any decrease in value of the Securities, lost premium
or lost benefit of the bargain to Seller (in each case taking into account all
relevant matters, including the total amount payable to Seller under this
Agreement and the time value of money); provided, however, that in no event
shall Seller’s damages calculated pursuant to this Section 9.14(b) be determined
to exceed the Purchase Price.

 

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9.15    Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

9.16    Interpretation. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement, and any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted
against any party by virtue of the authorship of this Agreement shall not apply
to the construction and interpretation hereof. For the purposes of this
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires: (a) the meaning assigned to each term defined herein shall
be equally applicable to both the singular and the plural forms of such term and
vice versa, and words denoting either gender shall include both genders as the
context requires; (b) where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning; (c) the terms
“hereof,” “herein,” “hereunder,” “hereby” and “herewith” and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement; (d) when a
reference is made in this Agreement to an Article, Section, paragraph, Exhibit
or Schedule, such reference is to an Article, Section, paragraph, Exhibit or
Schedule to this Agreement unless otherwise specified; (e) the word “include,”
“includes,” and “including” when used in this Agreement shall be deemed to be
followed by the words “but not limited to,” unless otherwise specified; and
(f) all accounting terms used and not defined herein have the respective
meanings given to them under GAAP.

9.17    Privilege; Conflicts of Interest.

(a)    Buyer: (i) acknowledges that Paul Hastings LLP (“Paul Hastings”) has
represented the Acquired Companies and Seller in connection with the
transactions provided for herein and that, effective upon the Closing, the
Acquired Companies shall, without the necessity of further documentation of
transfer, be deemed to have irrevocably assigned and transferred to Seller
immediately prior to the Closing all of the Acquired Companies’ right to, title
to and interest in all communications with, and work product of, Paul Hastings
as they relate to this Agreement, the Ancillary Documents, the transactions
contemplated hereby and thereby, and the preparation and negotiation hereof and
thereof, together with all written or other materials consisting of, containing,
summarizing or embodying such communications and work product, and (ii) agree
that the intent and effect of this provision is to grant Seller control over the
exercise of the attorney-client privilege held by any Acquired Company in
respect of this Agreement, the Ancillary Documents and the transactions
contemplated hereby and thereby, and the preparation and negotiation hereof and
thereof, together with all written or other materials consisting of, containing,
summarizing or embodying such communications and work product, and (iii) agree
that after the Closing, the Acquired Companies will not (and Buyer will cause
the Acquired Companies not to) knowingly waive the attorney-client privilege
belonging to any Acquired Company, if any, relating to any matter relating to
this Agreement, the Ancillary Documents and the transactions contemplated
hereunder and thereunder, and the preparation and negotiation hereof and thereof
occurring before the Closing or disclose the content of communications or work
product related to such privilege to

 

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any Person with the intention of or knowingly waiving the attorney-client
privilege to which the communications or work product is subject, without the
express written consent of Seller.

(b)    Buyer and Seller further intend that Seller shall have the right, should
it so choose, to have the benefit of representation by Paul Hastings in
connection with post-Closing matters concerning this Agreement, any Ancillary
Document and the transactions contemplated hereunder and thereunder.
Accordingly, each of Buyer and Seller agree that this Agreement will
(i) constitute consultation with respect to the potential conflict of interest
that Paul Hastings may have as a result of its representation of the Acquired
Companies both historically and in connection with this Agreement, the Ancillary
Documents and the transactions contemplated hereunder and thereunder,
(ii) confirm that each party understands the risks associated with potential
conflicts of interest and that the parties have alternatives to waiving the
potential conflict (including refusing to waive the potential conflict or
declining to engage in the matter giving rise to the potential conflict), and
(iii) that the parties still wish to consent to Paul Hastings’s representation,
if requested, of Seller in connection with matters relating to this Agreement,
the Ancillary Documents and/or the transactions contemplated hereunder and/or
thereunder, and waive any conflicts of interest which do or may exist as a
result of such representations, including in connection with any litigation or
adversarial proceeding arising among the parties, or any of them, regarding this
Agreement, the Ancillary Documents and the transactions contemplated hereunder
and thereunder.

9.18    No Recourse Against Nonparty Affiliates. Notwithstanding anything to the
contrary contained herein, except in the case of Fraud in the making of any of
the representations or warranties set forth in Article III or Article IV,
(a) all claims, obligations, liabilities, or causes of action (whether in
contract or in tort, in law or in equity, or granted by statute) available to
Buyer or any of its Affiliates or any of its or their Representatives or any
other Person through or on behalf of Buyer that may be based upon, in respect
of, arise under, out or by reason of, be connected with, or relate in any manner
to this Agreement, or the negotiation, execution, or performance of this
Agreement (including any representation or warranty made in, in connection with,
or as an inducement to, this Agreement), may be made only against (and are those
solely of) Seller; (b) no Person other than Seller, including any Affiliate or
any director, officer, employee, incorporator, member, partner, manager,
stockholder, agent, attorney, or representative of, or any financial advisor or
lender to, Seller or any of its Affiliates, or any director, officer, employee,
incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney,
or representative of, or any financial advisor or lender to, any of the
foregoing (“Nonparty Affiliates”), shall have any liability (whether in contract
or in tort, in law or in equity, or granted by statute) for any claims, causes
of action, obligations, or liabilities arising under, out of, in connection
with, or related in any manner to this Agreement or the transactions
contemplated hereby or based on, in respect of, or by reason of this Agreement
or its negotiation, execution, performance, or breach or the transactions
contemplated hereby; (c) to the maximum extent permitted by law, Buyer, on
behalf of itself and its Affiliates (including, after the Closing, the Acquired
Companies), hereby waives and releases all such liabilities, claims, causes of
action, and obligations against any such Nonparty Affiliates; and (d) without
limiting the foregoing, to the maximum extent permitted by law, Buyer, on behalf
of itself and its Affiliates (including, after the Closing, the Acquired
Companies), (i) hereby waives and releases any and all rights, claims, demands,
or causes of action that may otherwise be available at law or in equity, or
granted by statute, to avoid or disregard the entity form of Seller or otherwise
impose liability of Seller on any Nonparty Affiliate, whether granted

 

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by statute or based on theories of equity, agency, control, instrumentality,
alter ego, domination, sham, single business enterprise, piercing the veil,
unfairness, undercapitalization, or otherwise, and (ii) disclaims any reliance
upon any Nonparty Affiliates with respect to the performance of this Agreement
or any representation or warranty made in, in connection with, or as an
inducement to enter into, this Agreement.

9.19    No Recourse Against Financing Parties. Notwithstanding anything that may
be expressed or implied in this Agreement or any document, agreement, or
instrument delivered contemporaneously herewith, in no event shall any Financing
Party have any liability or obligation to, or be subject to any action, suit,
proceeding or claim from, Seller, the Acquired Companies or any Nonparty
Affiliate in connection with this Agreement or the transactions contemplated
hereby, including any Financing, whether at law or equity, in contract, in tort
or otherwise, and none of the Seller, the Acquired Companies and the Nonparty
Affiliates will have any rights or claims against any Financing Party (solely in
its capacity as a Financing Party) under this Agreement or any other agreement
contemplated by, or entered into in connection with the transactions
contemplated by, this Agreement, including any commitments by the Financing
Sources in respect of financing the transactions contemplated by this Agreement.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

 

SELLER: FILTRATION GROUP FGC LLC By:  

/s/ Aaron Van Getson

Name:  

Aaron Van Getson

Title:  

Vice President

 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

--------------------------------------------------------------------------------

BUYER: CONMED CORPORATION By:  

/s/ Curt R. Hartman

Name:  

Curt R. Hartman

Title:  

President and Chief Executive Officer

 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]