EX-10.12 SHAREHOLDER AGREEMENT 5/17/07

Shareholder Agreement

You are currently viewing:

This Shareholder Agreement involves

Inverness Medical Innovations Inc | INVERNESS MEDICAL SWITZERLAND GMBH, PROCTER & GAMBLE INTERNATIONAL OPERATIONS, SA | Procter Gamble Company

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: EX-10.12 SHAREHOLDER AGREEMENT 5/17/07
Governing Law: New York Date: 8/9/2007
Industry: Biotechnology and Drugs Law Firm: Covington Burling;Goodwin Procter Sector: Healthcare

EX-10.12 SHAREHOLDER AGREEMENT 5/17/07, Parties: inverness medical innovations inc , inverness medical switzerland gmbh procter & gamble international operations sa , procter gamble company

EXHIBIT 10.12

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH THE SYMBOL “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934.

SHAREHOLDER AGREEMENT

dated as of May 17, 2007

among

INVERNESS MEDICAL SWITZERLAND GMBH,

PROCTER & GAMBLE INTERNATIONAL OPERATIONS, SA

and

SPD SWISS PRECISION DIAGNOSTICS GMBH

Table of Contents


	Page
Article 1 General Provisions		2

Section 1.1 Term		2

Article 2 Shareholders		2

Section 2.1 Shareholders		3
Section 2.2 Rights and Powers of Shareholders; No Management		3
Section 2.3 Transactions with Affiliates		3
Section 2.4 Shareholder Voting Rights		3
Section 2.5 Shareholders’ Meetings		3
Section 2.6 Telephonic Meetings		3
Section 2.7 Notice of Meetings		4
Section 2.8 Unanimous Shareholder Consent		4
Section 2.9 Written Consent		5
Section 2.10 General Voting Obligation		5

Article 3 Board of Managers		5

Section 3.1 Board of Managers		5
Section 3.2 Managers		6
Section 3.3 Chairperson		6
Section 3.4 Meetings of Board		6
Section 3.5 Notice of Meetings		6
Section 3.6 Quorum		7
Section 3.7 Agendas; Vote Required at Meetings		7
Section 3.8 Special Meetings		9
Section 3.9 Action Without a Meeting		9
Section 3.10 Compensation		9
Section 3.11 Observation Rights		9

Article 4 Officers		9

Section 4.1 Officers		9
Section 4.2 Management in Accordance with Budget		10
Section 4.3 Management Team		10
Section 4.4 Duties and Authority of Officers		10
Section 4.5 Initial Chief Executive Officer and Chief Financial Officer		11

Article 5 Capital Contributions		11

Section 5.1 Capital Contributions		11
Section 5.2 Additional Capital Contributions		11
Section 5.3 No Interest on Capital		12
Section 5.4 Return of Capital		12
Section 5.5 No Liability of Shareholders		12


	Page
Section 5.6 Shareholders’ Capital Accounts		12
Section 5.7 Allocation of Profit or Loss		13
Section 5.8 Banking; Investments		16
Section 5.9 Distributions		16
Section 5.10 Advance in Excess of Capital Contribution		16

Article 6 Accounting, Tax and Reporting Matters		16

Section 6.1 Books; Fiscal Year		16
Section 6.2 Reports		16
Section 6.3 Company Information		17
Section 6.4 Records; Internal Controls		17
Section 6.5 Consents of Independent Auditors		18
Section 6.6 Tax Returns		18
Section 6.7 Tax Characterization		18
Section 6.8 Tax Matters Partner		19
Section 6.9 Tax Elections		19
Section 6.10 Withholding		19

Article 7 Transfers; Admission; Liquidation		20

Section 7.1 Transfers		20
Section 7.2 Effect of Transfers		23
Section 7.4 PGIO’s Option		23

Article 8 Indemnification		23

Section 8.1 [Reserved]		23
Section 8.2 Indemnification		23

Article 9 Dissolution; Liquidation		25

Section 9.1 Dissolution		25
Section 9.2 Distribution Upon Dissolution		25
Section 9.3 Time For Liquidation		26
Section 9.4 Liquidation And Deletion of Entry in Commercial Register		26

Article 10 [Reserved]		26

Article 11 Finances		26

Section 11.1 Business Plan and Budget		26
Section 11.2 Reserves		27
Section 11.3 Additional Capital		27

Article 12 New Business		28

Section 12.1 Potential Expansion of Field		28
Section 12.2 New Business		28
Section 12.3 Purchase; Development by Shareholder		30
Section 12.5 Intellectual Property License Back		32

Article 13 Non-Compete; Confidentiality		33

Section 13.1 Non-Compete		33

iii


	Page
Section 13.2 Confidentiality		34
Section 13.3 Non-Solicitation		35

Article 14 Material Breach; Bankruptcy; Withdrawal		35

Section 14.1 Material Breach		35
Section 14.2 Bankruptcy		36
Section 14.3 Effect of Material Breach or Bankruptcy		36

Article 15 Disputes Among Shareholders		37

Section 15.1 Management Mediation		37
Section 15.2 Arbitration		38
Section 15.3 Costs		38

Article 16 Miscellaneous		39

Section 16.1 Notices		39
Section 16.2 Definitions		40
Section 16.3 Descriptive Headings; Certain Interpretations		49
Section 16.4 Assignment		50
Section 16.5 Entire Agreement		50
Section 16.6 No Third-Party Beneficiaries		50
Section 16.7 Counterparts		50
Section 16.8 Governing Law		50
Section 16.9 Severability		51
Section 16.10 Amendments; Waiver		51
Section 16.11 Further Assurances		51
Section 16.12 Amendment to CO		51
Section 16.13 Relationship		51
Section 16.14 Equitable Remedies		52
Section 16.15 Fees and Expenses		52
Section 16.16 Ancillary Restraints		52

Schedules:

Schedule I: Shareholders; Shares; Capital Contributions
Schedule II: Initial Business Plan
Schedule III: Restricted Third Parties
Schedule 12.2(a): Timing of Presentation and Implementation Parameters
Schedule 13.1(a)(2): Non-Compete Exception — P&G existing business
Schedule 13.1(a)(3): Non-Compete Exception — IMS Existing Business
Schedule 16.16 ***


***		Represents text omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

Index


Accounting Period			38
Acquiring Shareholder			29
Adjusted Capital Account Deficit			39
Affiliate			39
Agreement			1
Allocated Value			21
Arbitration Request			36
Articles of Incorporation			39
Bankrupt Shareholder			34
Beneficial Owner			39
Board of Managers			5
Breaching Shareholder			34
Business Day			39
Business Plan and Budget			7
Capital Account			11
Capital Contribution			39
Cardiology Field			40
Carve Out Business			32
Chairperson			5
Change of Control			40
CO			41
Code			41
Company			1
Company Minimum Gain			41
Company to IMA License Agreement			41
Company to P&G License Agreement			41
Consumer Channel			41
Consumer Diagnostics Business			1
Contracting Party			3
Debt			41
Depreciation			41
Determination Date			21
Developing Shareholder			29
Diabetes Field			41
Distributable Cash			41
Excluded Fields			42
Fair Market Value			42
Field			42
Financial Investor			42
Fiscal Year			42
GAAP			42
Governmental Entity			42
Gross Asset Value			42
IMA			1
IMA License Agreement			5
IMS			1
IMS Contribution Agreement			1
IMS’s Valuation			29
Indemnified Party			22
Initial Business Plan and Budget			25
Initial Period			43
Initial Term			2
Intellectual Property			43
Intellectual Property Rights			44
Interim Third Party Business			27
Kunz			1
Lanter			1
Law			44
Legal Proceeding			44
Lien			44
Liquidation Agent			24
Majority of Managers			6
Manager			5
Material Adverse Effect			44
Material Breach			44
Net Losses			44
Net Profits			44
New Business			26
Non-Breaching Indemnitee			34
Non-Breaching Shareholder			35
Nonrecourse Deductions			45
Nonrecourse Liability			45
Non-Selling Shareholder			21
Non-Transferring Shareholder			19
Option Agreement			45
Ordinary Course Capex Reserve			25
P&G License Agreement			5
Participation Notice			19
Percentage Interest			45
Person			45
PGIO			1
PGIO Contribution Agreement			1
PGIO’s Valuation			29
Purchase Agreement			1
Purchased CD Business			1
Regulatory Allocations			14
Renewal Term			2
Representative			45
Required Working Capital Balance			25
Restricted Third Party			19


Sale Event			45
Sale Notice			21
Schedule			45
Securities Act			17
Securities Filings			15
Selling Shareholder			20
Share			46
Share Capital			46
Share Capital Percentage			46
Share Transfer Agreement			1
Shareholder In-License Agreement			20
Shareholder In-License Agreements			46
Shareholder New Business			26
Shareholder New Business Proposal			27
Shareholder Nonrecourse Debt			46
Shareholder Nonrecourse Debt Minimum Gain			46
Shareholder Nonrecourse Deductions			46
Shareholders			1
Strategic Investor			46
Subsidiary			46
Tag-Along Election			20
Tax Matters Partner			17
Tax Year			46
Term			2
Third Party			46
Third Party New Business			26
Transaction Agreements			46
Transfer			47
Transferring Shareholder			19
Treasury Regulations			47
US JV			47
US JV LLC Agreement			47
Waiver			48

SHAREHOLDER AGREEMENT, dated as of May 17, 2007 (this “ Agreement ”), among Inverness Medical Switzerland GmbH, a Swiss company (“ IMS ”), Procter & Gamble International Operations, SA, a Swiss corporation (“ PGIO ” and together with IMS, the “ Shareholders ”) and SPD Swiss Precision Diagnostics GmbH, a Swiss company (the “ Company ”).

Introduction

The Company was formed on December 19, 2006, by Dominique Kunz (“ Kunz ”) and Marco Lanter (“ Lanter ”), each a resident of Switzerland, on behalf of IMS. In connection with the formation of the Company, each of Kunz and Lanter, on behalf of IMS, contributed CHF 10,000 to the Company and as consideration for such contribution received one quota (one Share of the Company, representing, immediately following such contribution, 50% of the outstanding Shares of the Company).

Effective December 21, 2006, Kunz and IMS entered into a share transfer agreement, pursuant to which Kunz sold to IMS and IMS purchased from Kunz, one Share of the Company for a purchase price of CHF 10,000. Following the consummation of such sale and purchase, each of Lanter, on behalf of IMS, and IMS owned one quota (one Share of the Company, representing 50% of the outstanding Shares of the Company).

On or prior to the date hereof, Lanter, on behalf of IMS, and PGIO entered into a Share Transfer Agreement (the “ Share Transfer Agreement ”), pursuant to which Lanter sold and PGIO purchased the Share of the Company owned by Lanter, on behalf of IMS, for a purchase price of CHF 10,000. Immediately following such sale and purchase, each of IMS and PGIO owned 50% of the Company’s outstanding Shares.

Inverness Medical Innovations, Inc, a Delaware corporation (“ IMA ”), and certain of its Subsidiaries (including IMS) are in the business of human diagnostics and/or monitoring including developing, manufacturing, marketing, selling and distributing human diagnostics and monitoring products for sale and distribution through over-the-counter channels, including retail outlets and emerging channels located in such retail outlets (the “ Consumer Diagnostics Business ”).

On or prior to the date hereof, PGIO and IMS entered into an Amended and Restated Asset Purchase Agreement (the “ Purchase Agreement ”) pursuant to which PGIO has agreed to purchase for cash consideration from IMS and certain of its Affiliates certain assets of the Consumer Diagnostics Business (the “ Purchased CD Business ”) on terms and conditions set forth therein. On or prior to the date hereof, PGIO, IMS and the Company entered into a PGIO Contribution Agreement (the “ PGIO Contribution Agreement ”) pursuant to which PGIO has agreed to contribute to the Company the Purchased CD Business and cash in the amounts of CHF 990,000 and $11,269,050. In consideration for PGIO’s contribution of CHF 990,000, PGIO’s share capital in the Company will be increased to CHF 1,000,000.

On or prior to the date hereof, IMS, PGIO and the Company entered into an Amended and Restated Contribution Agreement (the “ IMS Contribution Agreement ”), pursuant

to which IMS has agreed (a) subject to the exceptions set forth in the IMS Contribution Agreement, to contribute to the Company certain assets of the Consumer Diagnostics Business described in the IMS Contribution Agreement, and the Company will assume certain liabilities of the Consumer Diagnostics Business, as set forth in the IMS Contribution Agreement; (b) to contribute to the Company cash in the amounts of CHF 990,000 and $11,269,050; and (c) to contribute a promissory note in favor of the Company in an original principal amount of $22,326,000. In consideration for IMS’s contribution of CHF 990,000, IMS’s share capital in the Company will be increased to CHF 1,000,000. Immediately after the Closing (as defined in the IMS Contribution Agreement), IMS and PGIO shall each own 50% interest in the Company.

The Shareholders desire to enter into this Agreement for the purpose of regulating certain aspects of the Shareholders’ relationships with regard to the Company and each other.

Certain capitalized terms have the meanings assigned to them in Section 16.2 or as otherwise provided in this Agreement.

For good and valuable consideration, the parties, intending legally to be bound, hereby agree as follows:

ARTICLE 1

General Provisions

Section 1.1 Term . This Agreement shall enter into effect as of the date hereof, and continue for an initial period of 25 years (the “ Initial Term ”), or until the earlier dissolution of the Company as provided by its Articles of Incorporation and by Law. The Initial Term shall automatically be renewed for successive terms of 10 years (each such term being a “ Renewal Term ”) unless either Shareholder gives written notice not to renew the Initial Term or any Renewal Term three years prior to the expiration of the Initial Term or any Renewal Term. The Initial Term and any Renewal Term shall be referred to herein as a “ Term .”

ARTICLE 2

Shareholders

Section 2.1 Shareholders . Each of the Persons listed on Schedule I hereof is a Shareholder of the Company. The rights and liabilities of the Shareholders shall be as provided in the CO, except as is otherwise expressly provided herein. Whenever the Shares and Capital Contributions of Shareholders are changed in accordance with this Agreement, Schedule I shall be amended to record any such changes. However, the failure to amend Schedule I shall not impair the effectiveness of any change in Shares effected in accordance with this Agreement.

Section 2.2 Rights and Powers of Shareholders; No Management . The Shareholders shall not have any right or power to act for or bind the Company in any way, except for the rights and powers of the Shareholders specifically set forth in this Agreement, the inalienable rights and powers of Shareholders set forth in Article 810 of the CO and, to the extent not inconsistent with this Agreement, any other rights and powers provided to the Shareholders in the CO.

Section 2.3 Transactions with Affiliates . Each Shareholder acknowledges and agrees that the conduct of the Company’s business may involve business dealings and undertakings with Shareholders and their respective Affiliates. With respect to any transaction between the Company on the one hand and a Shareholder or its Affiliate (a “ Contracting Party ”) on the other hand, all negotiations on behalf of the Company with respect to such transactions will be conducted by a Manager representing a Shareholder who is not a Contracting Party (or by an officer of the Company approved by such Shareholder to conduct such negotiations or take such actions).

Section 2.4 Shareholder Voting Rights . No Shareholder has any voting or consenting right except with respect to those matters specifically reserved for a Shareholder vote or consent which are set forth in this Agreement or as required by the CO. Whenever the vote or consent of Shareholders is permitted or required under this Agreement, such vote or consent may be given in person at a meeting, by a duly authorized representative, in writing, by facsimile or by comparable electronic transmission (to be followed by original signatures, if necessary or desired). Unless otherwise expressly provided in this Agreement or by the CO, Shareholders who have an interest (economic or otherwise) in the outcome of any particular matter upon which the Shareholders vote or consent, may vote or consent upon any such matter and their vote or consent, as the case may be, shall be counted in the determination of whether the particular matter is approved by the Shareholders. The Shareholders shall be entitled to vote or consent in a manner consistent with their own interests when such interests are not, or may not be, consistent with the interests of the Company or the Shareholders as a whole.

Section 2.5 Shareholders’ Meetings . A Shareholders’ meeting may be called by the Board of Managers or any Shareholder for any matter that is appropriate for consideration at such meeting. Each meeting of Shareholders shall be conducted by such Persons as the Shareholders may designate.

Section 2.6 Telephonic Meetings . Shareholders’ meetings may be held through the use of conference telephone or similar communications equipment so long as all Persons participating in such Shareholders’ meetings can hear one another at the time of such Shareholders’ meeting. Participation in a Shareholders’ meeting via conference telephone or similar communications equipment in accordance with the preceding sentence constitutes presence in person at the Shareholders’ meeting. Following such telephonic or similar meeting, the Shareholders will confirm the resolutions in writing in a circular resolution.

Section 2.7 Notice of Meetings . Written notice of each Shareholders’ meeting shall state the place, date and time of such Shareholders’ meeting, and the agenda of the business to be transacted. Notice shall be given in the manner prescribed in Section 16.1 not fewer than 10 days nor more than 20 days before the date thereof.

Section 2.8 Unanimous Shareholder Consent . No action may be taken by the Company (whether by the Board of Managers, or otherwise) in connection with any of the following matters without the unanimous consent of the Shareholders:

(a) acts in contravention of this Agreement;

(b) any transaction that would result in a Sale Event, subject to the Option Agreement;

(c) the issuance or sale of any additional Shares, including any options, warrants or other rights to purchase Shares or any other securities convertible into Shares;

(d) the issuance or incurrence of Debt by the Company in excess of $ ^* * * or the equivalent amount in Euros;

(e) the making of any election under the Code or the Treasury Regulations and Internal Revenue Service guidance issued thereunder;

(f) the admission of any additional Shareholders to the Company (other than in connection with Transfers of Shares in accordance with Section 7.1);

(g) the reorganization of the Company, including conversion of the Company into another form of entity;

(h) voluntary bankruptcy of the Company;

(i) any transaction to liquidate or dissolve the Company; provided , however , that the Shareholders agree to adopt a resolution or take such other actions as may be necessary for the dissolution of the Company prior to the expiration of the Term such that the Company will be dissolved upon expiration of the Term;

(j) any transaction between the Company and any Shareholder or Affiliate of any Shareholder (other than transactions pursuant to the terms and conditions of any Transaction Agreement or any agreement between the Company and a Shareholder or an Affiliate of a Shareholder that has been approved in accordance with this Section 2.8, excluding (for the avoidance of doubt) any amendment, modification, consent, waiver or acquiescence with respect to such agreement);

(k) the entry by the Company or any Subsidiary of the Company into a new line of business or a New Business in accordance with Article 12;

(l) the appointment or dismissal of the Chief Executive Officer and the Chief Financial Officer and any other senior officers required to be appointed by the Shareholders pursuant to Article 810 para. 2 CO, but subject to Section 4.1;

(m) any contribution of property to the Company by a Shareholder to the extent that such contribution will increase such Shareholder’s Share ownership;


^* * *		REPRESENTS TEXT OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(n) any sublicensing by the Company of Intellectual Property Rights licensed or sublicensed to the Company pursuant to (i) the License Agreement by and among IMA, IMS and the Company, dated as of the date hereof (the “ IMA License Agreement ”), (ii) the License Agreement by and between The Procter & Gamble Company and the Company, dated as of the date hereof (the “ P&G License Agreement ”) and (iii) the Sublicense Agreement by and between US JV and the Company, dated as of the date hereof;

(o) any increase of the quota (share) capital; or

(p) the entering into any commitment to do any of the things set forth in (a) — (o) above in this Section 2.8 unless expressly conditioned upon the approval required under this Section 2.8.

Section 2.9 Written Consent . Any action required or permitted to be taken at any Shareholders’ meeting may be taken without a meeting if all Shareholders consent thereto in writing. Any such written consents shall be filed with the minutes of the proceedings.

Section 2.10 General Voting Obligation . Each Shareholder agrees to take all actions legally required pursuant to the CO, including voting its Shares and, if necessary, convening, attending and voting at a Shareholders’ meeting, in order to fulfill the obligations, and to permit each Shareholder to exercise its rights, under this Agreement.

ARTICLE 3

Board of Managers

Section 3.1 Board of Managers . Except as otherwise provided in this Agreement, the day to day business and affairs of the Company shall be managed under the direction of a Board of Managers (the “ Board of Managers ” and each member thereof, a “ Manager ”) appointed by the Shareholders as provided in Section 3.2 below. Except where the Shareholders’ approval is expressly required by this Agreement or the CO, the Board of Managers shall have authority, power and discretion to make decisions with respect to the Company’s business.

Section 3.2 Managers . The Board of Managers of the Company shall consist of six Managers, of which three Managers shall be designated by IMS and three Managers shall be designated by PGIO. The Shareholders shall take all action, including the voting of their Shares, (a) to elect the Managers designated by IMS and PGIO respectively in accordance with the foregoing, (b) to remove, with or without cause, a Manager at the request of the Shareholder that designated such Manager and (c) to fill the resulting vacancy in accordance with the following sentence. Upon the death, incapacity, resignation or removal of a Manager or other vacancy on the Board of Managers, the Shareholder that designated the Manager the departure of which created such vacancy, shall have the right to nominate for election a replacement Manager, and the Shareholders shall so elect such replacement Manager. Each Manager shall have one vote on all matters to be decided by the Board of Managers.

Section 3.3 Chairperson . One Manager shall be appointed to act as chairperson (the “ Chairperson ”) of the Board of Managers. Appointment of the Chairperson shall be made by the Managers appointed by one Shareholder the first year of the term and by the

Managers appointed by the other Shareholder the following year of the term, such Chairperson appointment to alternate from year to year thereafter from the Managers appointed by each Shareholder, respectively. In the absence or unavailability of the Chairperson, any two Managers may take the actions designated herein to be taken by the Chairperson; provided that the two Managers are not appointed by the same Shareholder.

Section 3.4 Meetings of Board . The Board of Managers shall hold regular meetings no less frequently than once every fiscal quarter and the Chairperson shall establish meeting times, dates and places and adopt rules or procedures consistent with the terms of this Agreement. Unless otherwise approved by the Chairperson, each meeting of the Board of Managers will be held at the Company’s principal place of business; provided that provision shall be made for telephone participation in each meeting, and participation in a meeting of the Board of Managers via conference telephone or similar communications equipment constitutes presence in person at such meeting so long as all Persons participating in such meeting can hear one another at the time of such meeting. The Board of Managers shall cause written minutes of all actions taken by it to be signed by the Chairman and the Secretary and to be distributed to all Managers promptly after the related meeting.

Section 3.5 Notice of Meetings . Written notice of each meeting of the Board of Managers shall state the place, date and time of such meeting, and the general nature of the business to be transacted (if not otherwise set forth in the agenda delivered pursuant to Section 3.7). Notice shall be given in the manner prescribed in Section 16.1 not fewer than two days before the date thereof. Receipt of notice of a particular meeting may be waived, in writing, by any Manager either before or at such meeting, and shall be deemed to have been waived by any Manager who participates in such meeting, without protesting prior to the conclusion of such meeting the lack of notice of such meeting; provided that such Manager has been given an adequate opportunity at the meeting to protest such lack of notice (except where a Manager participates in the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business on the ground that the meeting has not been convened properly under this Agreement).

Section 3.6 Quorum . At all meetings of the Board of Managers, the presence of a majority of the Managers of the Board of Managers shall be necessary to constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board of Managers, the Managers present thereat may, in accordance with Section 3.5, adjourn and reschedule the meeting to a date no earlier than five days thereafter.

Section 3.7 Agendas; Vote Required at Meetings . (a) The Chairperson shall prepare or direct the preparation of the agenda for, and preside over, meetings of the Board of Managers. The Chairperson shall deliver such agenda to each Manager at least two Business Days prior to the giving of notice of a regular or special meeting of the Board of Managers, and each Manager may add items to such agenda. The Board of Managers shall act by affirmative vote of a majority of the Managers, which majority shall include at least one Manager appointed by PGIO and one Manager appointed by IMS (such majority, a “ Majority of Managers ”). The authorization of any contract or transaction between the Company and one or more of the Managers, or between the Company and any other Person in which one or more of the Managers, are directors or officers, or have a financial interests, shall require the affirmative votes of a

majority of the disinterested Managers. In the event of a vacancy on the Board of Managers for any reason, unless otherwise approved by the Shareholders, no action shall be taken by the Board of Managers until the vacancy is filled by the applicable Shareholder as long as filled within 30 days of notice given to a Shareholder by the other Shareholder.

(b) Without limiting the generality of Section 3.1, the Company may not (without an affirmative vote of a Majority of Managers):

(i) adopt or approve a business plan and budget for the Company (the “ Business Plan and Budget ”) or any material modifications thereof;

(ii) launch any new product other than the products that are the Base Products under the Finished Product Purchase Agreement, dated as of the date hereof, between the Company, IMS and certain of its Subsidiaries;

(iii) issue or incur Debt up to the amount subject to Shareholders’ approval in accordance with Section 2.8(d);

(iv) enter into any agreement or incur any expenditure not provided for in the Business Plan and Budget involving amounts in excess of $ ^* * * , or the equivalent amount in Euros, individually, or more than $* * *, or the equivalent amount in Euros, in the aggregate during any Fiscal Year;

(v) file any material income or similar tax returns and reports;

(vi) sublicense or license any of the Company’s Intellectual Property Rights, subject to the Shareholder approval requirement set forth in Section 2.8(n);

(vii) enter into any material agreement of the Company (including any material amendment or modification thereof);

(viii) take any enforcement or waiver actions regarding any material agreement between the Company and a Shareholder or an Affiliate of a Shareholder (including (x) any determination of a breach or potential breach thereunder, or (y) any determination relating to a waiver or acquiescence with respect to such agreement);

(ix) appoint or dismiss (or alter the compensation of) any senior officers of the Company, other than appointment or dismissal (or alteration of the compensation) of the Chief Executive Officer, the Chief Financial Officer, and any other senior officers required, pursuant to art. 810 para. 2, to be appointed or dismissed by the Shareholders (who shall be appointed or dismissed pursuant to Section 2.8(l));


^* * *		REPRESENTS TEXT OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(x) retain or otherwise appoint, or dismiss, the Company’s accountant and any primary legal advisor or financial advisor to the Company;

(xi) commence or settle any litigation or arbitration to which the Company is, or is to be, a party involving amounts in question in excess of $ ^* * * or the equivalent amount in Euros or enter into any agreement or court filing that * * *;

(xii) market, or permit any distributor, commissionaire or sales agent to market, the Company’s products under a third party’s label brand except for private label brands in the ordinary course of business; or

(xiii) commit to do any of the things set forth in (i)-(xii) above in this Section 3.7(b) unless expressly conditioned upon the approval required under this Section 3.7(b).

Section 3.8 Special Meetings . Special meetings of the Board of Managers may be called (a) by the Chairperson or (b) by any two other Managers at any time and from time to time. Notice of each special meeting shall be given to each Manager on the Board of Managers by telephone, telecopy or similar method (in each case, notice shall be given at least 48 hours before the time of the meeting) or sent by first-class mail (in which case notice shall be given at least five days before the meeting), unless a longer notice period is established by the Board of Managers. Each such notice shall state (x) the time, date, place (which shall be at the principal office of the Company unless otherwise agreed to by all Managers) or other means of conducting such meeting and (y) the purpose of the meeting to be so held.

Section 3.9 Action Without a Meeting . Any action required or permitted to be taken at any meeting of the Board of Managers may be taken without a meeting if all Managers consent thereto in writing. Any such written consents shall be filed with the minutes of the proceedings.

Section 3.10 Compensation . The Managers shall not be entitled to compensation for services rendered to the Company in their capacity as Managers.

Section 3.11 Observation Rights . Each Shareholder for so long as it shall be a Shareholder may from time to time designate no more than three (3) persons (or such greater number as the Board of Managers may determine) to attend all meetings of the Board of Managers in a nonvoting observer capacity; provided, however , that such observer agrees in writing to hold in confidence and trust all confidential and proprietary information provided or discussed at any such meeting so attended; and provided, further, that the Company reserves the right to withhold any information and to exclude such observer from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel.


^* * *		REPRESENTS TEXT OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ARTICLE 4

Officers

Section 4.1 Officers . The Shareholders hereby create the offices of a Chief Executive Officer, a Chief Financial Officer and a secretary. The Shareholders shall have the power to create the offices of such other senior officers as are required by art. 810 para. 2 CO to be appointed or dismissed by the Shareholders, with such powers as the Shareholders deem appropriate as shall be determined by the Shareholders consistent with the terms of this Agreement. Subject to art. 810 para. 2 CO, the Board of Managers shall have the power to create such other officer positions with such powers as it deems appropriate as shall be determined by the Board of Managers consistent with the terms of this Agreement, including one or more Vice Presidents and one or more Assistant Secretaries. The officers of the Company shall have the power and authority to conduct the day-to-day operations of the Company in accordance with this Agreement. The Shareholders shall determine the signing authority of such officers.

Section 4.2 Management in Accordance with Budget . The officers of the Company shall conduct the business and operations of the Company in accordance with, and subject to the limitations set forth in, any Business Plan and Budget in force from time to time.

Section 4.3 Management Team . It is the intent of the Shareholders that each Shareholder’s contributions to the Company’s management team will reflect the core capabilities of such Shareholder, and that the Company’s management team will have balanced representation of each Shareholder. Accordingly, it is the Shareholders’ expectation that, unless the Shareholders agree otherwise, (a) individuals to serve as leaders of core efforts on marketing, sales, logistics, finance and supply chain management of the Company will be drawn principally from PGIO; provided , that any employee decisions made by PGIO with respect to the leaders of the core efforts in sales and marketing will not derogate or otherwise impair the Company’s access to the institutional knowledge of the CD Business (as defined in the IMS Contribution Agreement) provided by IMS and its personnel, including any employee transferred to, or providing services for, the Company, and (b) individuals to serve as leader of core efforts on research and development, human resources, new business development and legal will be drawn principally from IMS.

Section 4.4 Duties and Authority of Officers .

(a) Chief Executive Officer . The Chief Executive Officer shall supervise the daily operations of the business of the Company, and shall report to the Board of Managers. Subject to the provisions of this Agreement and to the direction of the Board of Managers, he or she shall perform all duties which are commonly incident to the office of chief executive officer of a corporation organized under Swiss Law or which are delegated to him or her by the Board of Managers. To the fullest extent permitted by Law, he or she shall have power to sign all contracts and other instruments of the Company which are authorized, to take actions and incur expenditures provided for in the Business Plan and Budget and shall have general supervision and direction of all of the other officers, employees and agents of the Company.

(b) Vice President . Each Vice President shall have such powers and duties as may be delegated to him or her by the Board of Managers.

(c) Chief Financial Officer . The Chief Financial Officer shall have responsibility for establishing in accordance with the Business Plan and Budget the Required Working Capital Balance and the Ordinary Course Capex Reserve, subject to the supervision of the Board of Managers, and maintaining the financial records and accounting controls of the Company. He or she shall render from time to time an account of all such transactions and of the financial condition of the Company to the Board of Managers. The Chief Financial Officer shall also perform such other duties as set forth in this Agreement and as the Board of Managers or the Chief Executive Officer may from time to time prescribe.

(d) Secretary . The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the Shareholders and the Board of Managers. He or she shall have charge of the corporate books and shall perform such other duties as the Board of Managers or the Chief Executive Officer may from time to time prescribe.

(e) Delegation of Authority . Subject to any limitations set forth in this Agreement or the CO, the Chief Executive Officer may from time to time delegate his or her powers and duties to the other officers of the Company.

Section 4.5 Initial Chief Executive Officer and Chief Financial Officer .

(a) Hilde Eylenbosch will be Chief Executive Officer of the Company for the Initial Period; provided that IMS shall have the right to remove Hilde Eylenbosch and nominate a successor (who shall be a qualified individual) as Chief Executive Officer of the Company any time during the Initial Period, subject to the approval of the Shareholders in accordance with Section 2.8 of this Agreement.

(b) Riccardo Guitart will be Chief Financial Officer of the Company for the Initial Period; provided that PGIO shall have the right to remove Riccardo Guitart and nominate a successor (who shall be a qualified individual) as Chief Financial Officer of the Company any time during the Initial Period, subject to the approval of the Shareholders in accordance with Section 2.8 of this Agreement.

(c) After the Initial Period, the Chief Executive Officer and the Chief Financial Officer of the Company shall be appointed by the Shareholders and in accordance with Section 2.8(l) of this Agreement.

ARTICLE 5

Capital Contributions

Section 5.1 Capital Contributions . On or prior to the date hereof, each of IMS and PGIO shall have made capital contributions to the Company of CHF 1,000,000 in cash, and shall have made, or caused certain of their respective Affiliates to have made, such other contributions to the Company as are described in the IMS Contribution Agreement and the PGIO Contribution Agreement, respectively. IMS and PGIO each have acquired one Share with the par value and representing the amount of capital contributions specified opposite their respective names on Schedule I .

Section 5.2 Additional Capital Contributions . Except as expressly provided in this Agreement or as required under any applicable Law, no Shareholder shall be required or permitted to make additional capital contributions or lend any funds to, or expend any funds on behalf of, the Company without the written consent of all of the Shareholders; provided that each Shareholder shall be required to make such additional capital contributions pursuant to Section 11.3. An additional capital contribution required under this Agreement by either Shareholder may be made in the form of a loan to the Company on terms agreed upon by the Shareholders. Except with the unanimous approval of the Shareholders, no Shareholder shall be entitled to make any additional capital contribution in property other than cash. In no event may any such property be encumbered with any Liens, unless the Shareholders have otherwise unanimously approved.

Section 5.3 No Interest on Capital . No interest shall accrue or be paid on Shareholders’ Shares ( Stammeinlage ) or Capital Contributions ( Leistung auf Stammeinlage ).

Section 5.4 Return of Capital . Except as expressly provided in this Agreement, (x) no Shareholder shall be entitled to withdraw all or any part of such Shareholder’s Capital Contribution from the Company prior to the Company’s dissolution and liquidation, (y) when such withdrawal is permitted, no Shareholder will be entitled to demand a distribution of property other than cash, and (z) no Shareholder shall have priority over any other Shareholder as to the return of capital contributions or as to profits, losses or other items of income, gain or deduction. This Section 5.4 shall not apply to the repayment of loans (as distinguished from capital contributions) which a Shareholder has made to the Company.

Section 5.5 No Liability of Shareholders . All capital, whenever contributed, shall be subject in all respects to the risks of the business and subordinate in right of payment to the claims of present or future creditors of the Company and of any successor firm in accordance with this Agreement. However, no Shareholder shall have any personal liability for any obligations of the Company or of any other Shareholder, except as required by applicable Law.

Section 5.6 Shareholders’ Capital Accounts . A separate capital account (a “ Capital Account ”) shall be established and maintained for each Shareholder in accordance with Treasury Regulations Section 1.704-1(b), as of any particular date. Each Shareholder’s initial Capital Account (as determined immediately after giving effect to the contributions described in Section 5.1 hereof) is set forth on Schedule I , which initial Capital Accounts apply the principles of Treasury Regulation Section 1.704-1(b)(2)(iv)(d) and thereafter such Capital Account shall be adjusted as follows:

(a) The Capital Account of each Shareholder shall be increased by:

(i) the amount of any Net Profits (and any items of income or gain), allocated on or after the date hereof to such Shareholder;

(ii) the amount, if any, of any Company liabilities assumed by such Shareholder or taken subject to or in connection with the distribution of property to such Shareholder by the Company on or after the date hereof;

(iii) the amount of any cash contributed by the Shareholder to the Company on or after the date hereof (other than contributions required pursuant to the IMS Contribution Agreement or the PGIO Contribution Agreement);

(iv) the Gross Asset Value of property contributed to the Company by such Shareholder on or after the date hereof (other than contributions required pursuant to the IMS Contribution Agreement or the PGIO Contribution Agreement); and

(v) any other item required by Treasury Regulation Section 1.704-1(b)(2)(iv) to be credited for proper maintenance of capital accounts.

(b) The Capital Account of each Shareholder shall be decreased by:

(i) the amount of cash distributed to such Shareholder by the Company on or after the date hereof;

(ii) the amount of any Net Losses (and any items of deduction or loss) allocated to such Shareholder on or after the date hereof;

(iii) the Gross Asset Value of any property distributed to such Shareholder by the Company on or after the date hereof;

(iv) the amount of any liabilities of such Shareholder assumed by the Company or taken subject to or in connection with the contribution of property by such Shareholder to the Company on or after the date hereof (other than liabilities assumed or taken subject to or in connection with as described in the IMS Contribution Agreement or the PGIO Contribution Agreement); and

(v) any other item required by Treasury Regulation Section 1.704-1(b)(2)(iv) to be debited for proper maintenance of capital accounts.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations under Section 704(b) of the Code and, to the extent not inconsistent with the provisions of this Agreement, shall be interpreted and applied in a manner consistent with such Treasury Regulations. The Board of Managers may make such modifications to the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with Treasury Regulation Section 1.704(b)(2)(iv), or otherwise for purposes of determining the appropriate allocations of Company items for tax purposes.

Section 5.7 Allocation of Profit or Loss . (a) Except as otherwise provided in this Agreement, the Net Profits and Net Losses of the Company (and items thereof) for each Accounting Period shall be allocated in accordance with the Shareholders’ respective Percentage Interests.

(b) If a Shareholder Transfers all or any portion of its Share during any Fiscal Year, Net Profits and Net Losses attributable to such transferred Share for such Fiscal Year shall be apportioned between the transferor and the transferee or computed as to such Shareholders on

the basis of an interim closing of the books and records of the Company; provided in all events that any apportionment described above shall be permissible under the Code and applicable regulations thereunder.

(d) When the Gross Asset Value of a Company asset differs from its basis for federal or other income tax purposes, solely for purposes of the relevant tax and not for purposes of computing Capital Account balances, income, gain, loss, deduction and credit with respect to such asset shall be allocated among the Shareholders under the traditional method described in Treasury Regulation Section 1.704-3(b).

(e) All matters concerning the allocation of Net Profits and Net Losses (and items of income, gain, loss and deduction) among the Shareholders, tax elections (except as may otherwise be required by the income tax laws) and accounting procedures not expressly and specifically provided by the terms of this Agreement, shall be determined by the Board of Managers, and on a basis that is in conformity with the requirements imposed under Code Section 704 and the Treasury Regulations thereunder as equitably applied among the Shareholders.

(f) Except for interest payable pursuant to Shareholder loans permitted to be made hereunder, no interest shall be paid by the Company on capital contributions, balances in Shareholder’s Capital Accounts or any other funds contributed to the Company or distributed or distributable by the Company under this Agreement.

(g) (i) Except as otherwise provided in Section 1.704-2(f) of the Treasury Regulations, notwithstanding any other provision of this Section 5.7, if there is a net decrease in Company Minimum Gain during any taxable period, each Shareholder shall be specially allocated, before any allocations of Net Profits or Net Losses for such period, items of Company income and gain for such period (and, if necessary, subsequent periods) in an amount equal to such Shareholder’s share of the net decrease in Company Minimum Gain, determined in accordance with Section 1.704-2(g) of the Treasury Regulations. Allocations pursuant to the preceding sentence shall be made in proportion to the respective amounts required to be allocated to each Shareholder pursuant thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section 5.7(g)(i) is intended to comply with the minimum gain chargeback requirement in Section 1.704-2(f) of the Treasury Regulations and shall be interpreted consistently therewith.

(ii) Except as otherwise provided in Section 1.704-2(f) of the Treasury Regulations, notwithstanding any other provision of this Section 5.7, if there is a net decrease in Shareholder Nonrecourse Debt Minimum Gain attributable to a Shareholder Nonrecourse Debt during any taxable period, each Shareholder who has a share of the Shareholder Nonrecourse Debt Minimum Gain attributable to such Shareholder Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations, shall be specially allocated items of Company income and gain for such period (and, if necessary, subsequent periods) in an amount equal to such Shareholder’s

share of the net decrease in Shareholder Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. Allocations pursuant to the preceding sentence shall be made in proportion to the respective amounts required to be allocated to each Shareholder pursuant thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. This Section 5.7(g)(ii) is intended to comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted consistently therewith.

(h) Notwithstanding the allocations provided for in Section 5.7(a), (b), (c), (d) or (e), no allocation of an item of loss or deduction shall be made to a Shareholder to the extent such allocation would cause or increase an Adjusted Capital Account Deficit for such Shareholder as of the end of the taxable period to which such allocation relates and such losses or deductions shall be allocated to other Shareholders in accordance with the positive balances in such Shareholders’ capital accounts so as to allocate the maximum permissible losses or deductions to each Shareholder under Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations. In the event any Shareholder unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, items of Company income and gain shall be specially allocated to such Shareholder in an amount and manner sufficient to eliminate, to the extent required by Treasury Regulations, the Adjusted Capital Account Deficit of the Shareholder as quickly as possible; provided that an allocation under this sentence shall be made only if and to the extent that the Shareholder would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 5.7 have been tentatively made as if this sentence were in this Agreement.

(i) (i) Nonrecourse Deductions for any taxable period shall be specially allocated to the Shareholders in proportion to their respective Percentage Interests.

(ii) Any Shareholder Nonrecourse Deductions for any taxable period shall be specially allocated to the Shareholder who bears the economic risk of loss with respect to the Shareholder Nonrecourse Debt to which such Shareholder Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i)(1) of the Treasury Regulations.

(j) The allocations set forth in Sections 5.7(g), (h), (i) and (k) (the “ Regulatory Allocations ”) are intended to comply with certain requirements of Section 1.704-1(b) of the Treasury Regulations. The Regulatory Allocations shall be taken into account in allocating other Net Profits and Net Losses and items of income, gain, loss and deduction so that, to the extent possible, the net amount of such other allocations and the Regulatory Allocations to each Shareholder shall be equal to the net amount that would have been allocated to such Shareholder if the Regulatory Allocations had not been made.

(k) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining capital accounts, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or

loss shall be allocated to the Shareholders in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(m).

Section 5.8 Banking; Investments . All funds of the Company shall be deposited in such bank account or accounts, or invested, and withdrawals from any such bank account shall be made upon such signature or signatures, as shall be established and designated by the Chief Financial Officer with the approval of the Board of Managers.

Section 5.9 Distributions .

(a) Except as otherwise required by Law or as provided in this Agreement, no Shareholder shall have any right to withdraw any portion of its Capital Contribution without the consent of all the other Shareholders, and subject to applicable Law.

(b) Unless otherwise agreed by the Shareholders, and subject to applicable Law, promptly after the statement contemplated by Section 6.2 has been prepared after the end of each Fiscal Year, the Company shall distribute all Distributable Cash, if any, to the Shareholders in proportion to their respective Shares. Distributions upon the dissolution of the Company shall be made in accordance with Section 9.2 hereof.

Section 5.10 Advance in Excess of Capital Contribution . Except as expressly provided in this Agreement or with unanimous approval of the Shareholders, if any Shareholder advances any funds to the Company in excess of the amount of any capital contributions such Shareholder is required to make, the excess amount of such advance shall neither increase such Shareholder’s Capital Contribution nor entitle it to any increase in its share of the distributions of the Company. Instead, such amount shall be a Shareholder loan, repayable by the Company. Any such amount shall be payable and collectible only out of the Company’s assets.

ARTICLE 6

Accounting, Tax and Reporting Matters

Section 6.1 Books; Fiscal Year . The Company shall maintain complete and accurate books of account of the Company’s affairs at the Company’s principal place of business. Such books shall be kept in accordance with GAAP. The Company’s accounting period for tax purposes shall be the Tax Year. The Company’s accounting year for all other purposes shall be the Fiscal Year.

Section 6.2 Reports . (a) The Company shall deliver for each fiscal month unaudited financial statements for the Company which shall have been prepared in accordance with GAAP, subject to the absence of footnotes. Such monthly reports shall be delivered by the Company within seven Business Days after the conclusion of each fiscal month.

(b) The Company shall prepare and distribute to each Shareholder quarterly unaudited financial statements, which shall be prepared in accordance with GAAP and shall be in sufficient detail to permit each of PGIO and IMS to prepare and timely file its respective financial statements and quarterly filings under applicable federal, state, local and foreign securities Laws (“ Securities Filings ”), including its Quarterly Report on Form 10-Q, and shall include or be accompanied by such other financial information as each of PGIO and IMS may

reasonably request. Such quarterly statements shall be made available to each Shareholder no later than 30 days after the end of each quarter.

(c) Within 45 days of the end of each Fiscal Year (or such earlier date as necessary to permit each of PGIO and IMS to make its Securities Filings, including its Annual Report on Form 10-K), the Company shall deliver audited financial statements prepared in accordance with GAAP together with the notes thereto and the report thereon of the Company’s independent auditors, which auditors shall be registered with the Public Company Accounting Oversight Board. Such audited financial statements shall be prepared in a manner (including containing the requisite information and detail therein) that permits filing of such financial statements under, and in compliance with, Rule 3-09 of Regulation S-X.

(d) To the extent reasonably requested by either Shareholder, the Company shall prepare and deliver to each Shareholder, within a reasonable time period, those financial statements required by Sections 6.2(b) and 6.2(c) on a combined consolidated basis with the financial statements of the US JV which combined consolidated financial statements shall be prepared in accordance with GAAP.

Section 6.3 Company Information . Upon reasonable request, the Company shall supply to any Shareholder information regarding the Company, its sales, receipts, payments, all accounting information and records as well as all activities of the Company. In the event the Company provides reports or similar information regarding the Company, including its business operations, strategies, plans, assets, activities or prospects, to one Shareholder, its Affiliates or its Representatives (other than reports and other deliverables contemplated under any operating or services agreements, such as transition services, long-term services, product, distribution and commissionaire agreements, entered into on the date hereof or following the date hereof in compliance with Section 2.8(j) hereof by the Company and/or any Subsidiary of the Company and a Shareholder and/or any Affiliates of such Shareholder), the Company shall provide, or cause to be provided, such information to all other Shareholders. Except to the extent prohibited by, and subject to compliance with, applicable Swiss Law, each Shareholder and its Representatives shall have reasonable access during normal business hours to discuss the operations and business of the Company with employees or agents of the Company, and to inspect, audit or make copies of all books, records and other information relative to the operations and business of the Company at their own expense; provided , however , that each Shareholder shall, and shall cause its Affiliates and Representatives to, preserve the confidentiality of such information in accordance with Section 13.2 hereof.

Section 6.4 Records; Internal Controls . (a) The Company shall keep or cause to be kept appropriate books and records in accordance with the CO with respect to the Company’s business, which books and records shall at all times be kept at the principal office of the Company. Without limiting the foregoing, the Company shall keep at its principal office the following:

(i) a current list of the full name and the last known street address of each Shareholder;

(ii) a copy of the deed of incorporation and a copy of the current Articles of Incorporation and this Agreement and all amendments thereto;

(iii) copies of the Company’s federal, state and local income tax returns and reports, if any, for the three most recent Tax Years or such longer period as reasonably requested by a Shareholder;

(iv) copies of the Company’s financial statements, for the ten most recent Fiscal Years; and

(v) such other documents with respect to the Company’s business as may reasonably be required from time to time by the Board of Managers.

(b) The Company shall engage an experienced third party to establish and maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions are taken with respect to any differences.

(c) The Company shall take such actions, and shall use its reasonable best efforts to cause its independent auditors to take such actions, as may be reasonably requested by a Shareholder or such Shareholder’s independent auditors in connection with fulfilling such Shareholder’s responsibilities and obligations under Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the regulations promulgated thereunder.

Section 6.5 Consents of Independent Auditors . The Company shall use its reasonable best efforts to cause its independent auditors to prepare consents and such other documents as may be necessary for each Shareholder to fulfill any requirements to include or incorporate by reference the Company’s financial statements, and the report of the Company’s independent auditors thereon, in any filing made under the Securities Act of 1933, as amended (the “ Securities Act ”), the Securities Exchange Act of 1934, as amended, and any other federal, state, local and foreign securities Laws.

Section 6.6 Tax Returns . Except to the extent prohibited by, and subject to compliance with, applicable Swiss Law, the Shareholders shall provide each other with copies of all correspondence or summaries or other communication with any taxing authority regarding any aspect of items of Company income, gain, loss or deduction and no Shareholder shall enter into settlement negotiations with respect to the tax treatment of any Company item of income, gain, loss or deduction without first giving reasonable advance notice of such intended action to the other Shareholders.

Section 6.7 Tax Characterization . The Shareholders agree to take all actions required for the Company to elect to be treated as a partnership for United States federal income tax purposes and for purposes of applicable state and local tax law.

Section 6.8 Tax Matters Partner . Pursuant to Section 6231(a)(7)(A) of the Code, PGIO shall be the “ Tax Matters Partner ” of the Company for all purposes of the Code and any corresponding state or local statute. Each Shareholder consents to such designation and agrees to take such further action as may be required, by regulation or otherwise, or as may be requested by any Shareholder, to effectuate such designation. Except to the extent prohibited by, and subject to compliance with, applicable Swiss Law, the Tax Matters Partner shall cooperate with the other Shareholders and shall promptly provide the other Shareholders with copies of notices or other materials from, and inform the other Shareholders of discussions engaged in with, any taxing authority and shall provide the other Shareholders with notice of all scheduled administrative proceedings, including meetings with agents, technical advice conferences and appellate hearings, as soon as possible after receiving notice of the scheduling of such proceedings. The Tax Matters Partner will schedule such proceedings only after consulting the other Shareholders with a view to accommodating the reasonable convenience of both the Tax Matters Partner and the other Shareholders. The Tax Matters Partner shall be responsible for preparing all tax returns of the Company; provided that prior to filing any material income or similar tax return or report (x) a draft of such return or report shall be provided to each Shareholder a reasonable period of time prior to the due date therefor, and (y) the Board of Managers shall approve the filing thereof; provided further , that the Tax Matters Partner shall be permitted to file any such tax return that has been submitted to the Board of Managers for approval a reasonable period of time prior to the due date therefor, but that on the due date therefor, has not then been approved by the Board of Managers. The Tax Matters Partner shall not agree to (i) extend the period of limitations for assessments; (ii) file a petition or complaint in any court; (iii) file a request for an administrative adjustment of partnership items after any return has been filed or (iv) enter into any settlement agreement with respect to Company items of income, gain, loss or deduction except at the direction of the Board of Managers. The Tax Matters Partner may request extensions to file any tax return or statement without the written consent of, but shall so inform, the other Shareholders. The provisions of this Agreement regarding the Company’s tax returns shall survive the termination of the Company and the transfer of any Shareholder’s interest in the Company and shall remain in effect for the period of time necessary to resolve any and all matters regarding the taxation of the Company and items of Company income, gain, loss and deduction, notwithstanding the expiration of all applicable statutes of limitations (including extensions thereof).

Section 6.9 Tax Elections . The Shareholders shall determine whether to make any available tax election.

Section 6.10 Withholding . Each Shareholder hereby authorizes the Company to withhold from or pay on behalf of or with respect to such Shareholder any amount of federal, state, local or foreign taxes that the Board of Managers determines that the Company is required to withhold or pay with respect to any amount distributable or allocable to such Shareholder pursuant to this Agreement, including any taxes required to be withheld by the Company pursuant to applicable tax Laws. Any amount paid on behalf of or with respect to a Shareholder shall be treated as having been distributed to such Shareholder with subsequent distributions under this Agreement to take into account such deemed distribution treatment.

ARTICLE 7

Transfers; Admission; Liquidation

Section 7.1 Transfers .

(a) No Shareholder may Transfer all or any portion of its Share other than (i) pursuant to the terms of Sections 7.1(b), (c), or (d) hereof, or (ii) upon the unanimous written consent of the Shareholders. Any attempted Transfer of Shares, other than in accordance with this Article 7, shall be null and void and the purported transferee shall have no rights as a Shareholder or assignee hereunder. In the event a Shareholder desires to Transfer its Share in accordance with the first sentence of this Section 7.1(a), the other Shareholder agrees to take all actions legally required pursuant to the CO to effect such Transfer, including to approve at a Shareholders’ meeting (i) the Transfer of the Share and (ii) the pertinent amendment of the Articles of Incorporation.

(b) A Shareholder may Transfer all or part of its Share to a wholly-owned, direct or indirect, Subsidiary of such Shareholder; provided, however, that in no event shall such Transfer relieve any Shareholder of its obligations under this Agreement. It shall be a condition to such Transfer that the transferee shall have assumed by written agreement all of the obligations of such Shareholder under this Agreement. In the event a Shareholder desires to Transfer its Share in accordance with the foregoing, the other Shareholder agrees to take all actions legally required pursuant to the CO to effect such Transfer, including to approve at a Shareholders’ meeting (i) the Transfer of the Share and (ii) the pertinent amendment of the Articles of Incorporation.

(c) A Shareholder (the “ Transferring Shareholder ”) may Transfer all (but not part) of its Share to any third party, other than a Person set forth on Schedule III hereto (each, a “ Restricted Third Party ”); provided that (i) all (but not part) of the interest in the US JV owned by such Transferring Shareholder (if any) and such Transferring Shareholder’s Affiliates are simultaneously transferred to the same third party transferee or such transferee’s Affiliates, (ii) such third party agr

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates