<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 8-K
--------------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
December 31, 1998 000-27078
- ------------------------------------------------ -------------------------
Date of Report (Date of earliest event reported) (Commission File Number)
HENRY SCHEIN, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3136595
- -------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
135 Duryea Road, Melville, NY 11747
----------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(516) 843-5500
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
On December 31, 1998, Henry Schein, Inc. (the "Company") acquired General
Injectables and Vaccines, Inc. through its purchase of all of the outstanding
securities of GIV Holdings, Inc. ("GIV"), formerly known as Biological &
Popular Culture, Inc., for $65 million plus potentially significant contingent
consideration based on future increases in the gross profits of the Company's
combined human vaccine and injectables business. The acquisition will be
accounted for as a purchase transaction.
With estimated 1998 revenues of $118 million, GIV is a leading
independent direct marketer of vaccines and other injectables to office-based
practitioners in the United States. Founded in 1983, it is based in Bastian,
Virginia, and employs over 180 people. GIV's distribution facility in Bastian
serves its 32,000 customers throughout the United States. GIV offers more than
4,000 products.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) To be filed by amendment to this Form 8-K not later than March 16, 1999.
(b) Not applicable.
(c) Exhibits:
2.1 Stock Purchase Agreement by and among Henry Schein, Inc., New River
Management Company, L.L.C., Chiron Corporation and Biological &
Popular Culture, Inc., dated as of December 8, 1998.
2.2 Amendment No. 1 to the Stock Purchase Agreement by and among Henry
Schein, Inc., New River Management Company, L.L.C., Chiron
Corporation and Biological & Popular Culture, Inc., dated as of
December 30, 1998.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Henry
Schein, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HENRY SCHEIN, INC.
By: /s/ Michael Ettinger
-------------------------------------
Name: Michael Ettinger
Title: Vice President and Associate
General Counsel
Date: January 15, 1999
3
<PAGE>
EXHIBIT INDEX
Exhibit No. DOCUMENT DESCRIPTION
2.1 Stock Purchase Agreement by and among Henry Schein, Inc., New
River Management Company, L.L.C., Chiron Corporation and
Biological & Popular Culture, Inc., dated as of December 8,
1998.
2.2 Amendment No. 1 to the Stock Purchase Agreement by and among
Henry Schein, Inc., New River Management Company, L.L.C.,
Chiron Corporation and Biological & Popular Culture, Inc.,
dated as of December 30, 1998.
<PAGE>
STOCK PURCHASE AGREEMENT
BY AND AMONG
HENRY SCHEIN, INC.,
NEW RIVER MANAGEMENT COMPANY, L.L.C.,
CHIRON CORPORATION
AND
BIOLOGICAL & POPULAR CULTURE, INC.
Dated as of December 8, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................................2
Section 1.01. Accounts..............................................2
Section 1.02. Acquired Entity.......................................2
Section 1.03. Acquisition...........................................2
Section 1.04. Affiliates............................................2
Section 1.05. After-Tax Basis.......................................2
Section 1.06. Agreement.............................................3
Section 1.07. Assets................................................3
Section 1.08. Baseline Contingent Compensation Period...............3
Section 1.09. Baseline Gross Profits Additions......................3
Section 1.10. Baseline Gross Profits Deductions.....................3
Section 1.11. Baseline Percentage Gross Profits.....................4
Section 1.12. Baseline Percentage Gross Profits of the Company......4
Section 1.13. Baseline Percentage Gross Profits of the Purchaser....4
Section 1.14. Business..............................................4
Section 1.15. Cap Amount............................................4
Section 1.16. Chiron Debt...........................................4
Section 1.17. Closing...............................................5
Section 1.18. Closing Date..........................................5
Section 1.19. Code..................................................5
Section 1.20. Common Stock..........................................5
Section 1.21. Company...............................................5
Section 1.22. Confidentiality Agreement.............................5
Section 1.23. Contingent Compensation Period........................5
Section 1.24. Contingent Consideration..............................5
Section 1.25. Continuing Subsidiary.................................6
Section 1.26. Contracts.............................................6
Section 1.27. Cost of Goods Sold....................................6
Section 1.28. Current Year Gross Profits of the Purchaser...........6
Section 1.29. Disposed Entity.......................................6
Section 1.30. Disposition...........................................6
Section 1.31. DOL...................................................6
Section 1.32. Environmental Laws....................................6
Section 1.33. ERISA.................................................7
Section 1.34. ERISA Affiliate.......................................7
Section 1.35. Exchange Act..........................................7
-i-
<PAGE>
Section 1.36. Excluded Subsidiary...................................7
Section 1.37. GAAP..................................................7
Section 1.38. Governmental Entity...................................7
Section 1.39. Gross Profits.........................................7
Section 1.40. Gross Profits Percentage..............................7
Section 1.41. Hazardous Substances..................................7
Section 1.42. Historical Financial Statements.......................8
Section 1.43. HSR Act...............................................8
Section 1.44. Indemnitee and Indemnitor.............................8
Section 1.45. Initial Baseline Gross Profits........................8
Section 1.46. Initial Consideration.................................8
Section 1.47. Intellectual Property.................................8
Section 1.48. Inventory.............................................9
Section 1.49. IRS...................................................9
Section 1.50. Knowledge of the Sellers..............................9
Section 1.51. Law...................................................9
Section 1.52. Liens.................................................9
Section 1.53. Losses................................................9
Section 1.54. Material Adverse Effect...............................9
Section 1.55. Medical Reimbursement Plan...........................10
Section 1.56. New Biopop Notes.....................................10
Section 1.57. New Products Earn-Out................................10
Section 1.58. Opinion of Purchaser's Counsel.......................10
Section 1.59. Opinion of Sellers' Counsel..........................10
Section 1.60. PBGC.................................................10
Section 1.61. Permits..............................................10
Section 1.62. Permitted Liens......................................11
Section 1.63. Plan.................................................11
Section 1.64. Preferred Stock......................................11
Section 1.65. Pro Forma Closing Balance Sheet......................11
Section 1.66. Pro Forma Income Statements..........................12
Section 1.67. Purchase Price.......................................12
Section 1.68. Purchaser Claimant...................................12
Section 1.69. Purchaser Covered Person.............................12
Section 1.70. Real Property........................................12
Section 1.71. Release..............................................12
Section 1.72. Required Consents....................................12
Section 1.73. Restructuring........................................13
Section 1.74. Revenues.............................................13
Section 1.75. SEC..................................................13
Section 1.76. SKU..................................................13
Section 1.77. Securities Act.......................................13
-ii-
<PAGE>
Section 1.78. Seller Claimant......................................13
Section 1.79. Seller Covered Person................................13
Section 1.80. Seller Proportionate Interest........................13
Section 1.81. Subsidiaries.........................................14
Section 1.82. Taxes................................................14
Section 1.83. Tax Returns..........................................14
Section 1.84. Threshold Gross Profits..............................14
ARTICLE II PURCHASE AND SALE................................................15
Section 2.01. Commitment to Sell...................................15
Section 2.02. Commitment to Purchase...............................15
Section 2.03. Payment of Chiron Debt...............................15
Section 2.04. Payment of New Biopop Notes..........................16
Section 2.05. Deliveries at Closing................................16
Section 2.06. Contingent Consideration.............................16
Section 2.07. New Products Earn-Out................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS...................19
Section 3.01. Enforceability.......................................20
Section 3.02. Consents and Approvals; No Violation or
Conflict by Sellers................................20
Section 3.03. Title to the Common Stock............................22
Section 3.04. Capitalization.......................................22
Section 3.05. Organization; Conduct of Business....................22
Section 3.06. Continuing Subsidiaries..............................23
Section 3.07. No Adverse Change....................................23
Section 3.08. No Litigation........................................24
Section 3.09. Title to and Sufficiency of Assets...................24
Section 3.10. Inventory............................................25
Section 3.11. Books and Records....................................25
Section 3.12. Contracts............................................25
Section 3.13. Accounts Receivable..................................26
Section 3.14. Intellectual Property................................26
Section 3.15. Historical Financial Statements......................27
Section 3.16. Pro Forma Closing Balance Sheet; No Liabilities......27
Section 3.17. Pro Forma Income Statements..........................28
Section 3.18. Insurance............................................28
Section 3.19. Employee Benefit Plans...............................28
Section 3.20. Compliance with Applicable Law.......................30
Section 3.21. Transactions With Affiliates.........................32
Section 3.22. Fees and Expenses of Brokers and Others..............32
Section 3.23. Tax Matters..........................................32
Section 3.24. Environmental Matters................................34
Section 3.25. Orders and Commitments...............................34
-iii-
<PAGE>
Section 3.26. Labor Matters........................................35
Section 3.27. Bank Accounts; Powers of Attorney....................35
Section 3.28. Customers and Suppliers..............................35
Section 3.29. Real and Personal Property...........................36
Section 3.30. Year 2000............................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..................37
Section 4.01. Organization.........................................37
Section 4.02. Authority; Enforceability............................37
Section 4.03. Consents and Approvals; No Violation
or Conflict by the Purchaser........................38
Section 4.04. Fees and Expenses of Brokers and Others..............38
Section 4.05. Investment Representation............................38
Section 4.06. Obligation to Fund...................................38
Section 4.07. Year 2000............................................39
ARTICLE V COVENANTS.........................................................39
Section 5.01. Conduct of Business of the Company; Continued
Ownership of Common Stock..........................39
Section 5.02. No Solicitation......................................41
Section 5.03. Access to Information................................41
Section 5.04. Best Efforts.........................................42
Section 5.05. Public Announcements.................................42
Section 5.06. Confidentiality Agreement............................43
Section 5.07. Supplemental Disclosure..............................43
Section 5.08. Covenants of the Sellers and the Purchaser...........43
Section 5.09. New River Dissolution................................44
Section 5.10. National Bank of Canada Credit Facility..............45
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING..................................45
Section 6.01. Conditions to Each Party's Obligations...............45
Section 6.02. Conditions Precedent to Obligations of the Purchaser.46
Section 6.03. Conditions Precedent to Obligations of the Sellers...47
ARTICLE VII TERMINATION; AMENDMENT; WAIVER..................................47
Section 7.01. Termination..........................................47
Section 7.02. Effect of Termination................................48
Section 7.03. Amendment............................................49
Section 7.04. Extension; Waiver....................................49
ARTICLE VIII ADDITIONAL COVENANTS...........................................49
Section 8.01. Cooperation With Respect to Tax and SEC Matters......49
Section 8.02. Records..............................................51
-iv-
<PAGE>
Section 8.03. Further Assistance...................................51
Section 8.04. Employee Matters; Employee Benefit Plans.............52
Section 8.05. Directors' and Officers' Insurance...................52
Section 8.06. Cooperation..........................................52
Section 8.07. Certain Contracts....................................53
ARTICLE IX INDEMNIFICATION..................................................53
Section 9.01. Survival of Representations and Warranties...........53
Section 9.02. Indemnification......................................53
Section 9.03. Limitations on Indemnification.......................55
Section 9.04. Indemnification Procedures...........................56
ARTICLE X RESTRICTIVE COVENANTS.............................................57
Section 10.01. Non-Competition.....................................57
Section 10.02. Non-Solicitation of Employees.......................58
Section 10.03. Non-Solicitation or Interference with
Customers and Suppliers............................58
Section 10.04. Acknowledgments.....................................58
Section 10.05. Confidentiality.....................................58
ARTICLE XI MISCELLANEOUS....................................................59
Section 11.01. Entire Agreement; Assignment........................59
Section 11.02. Notices.............................................60
Section 11.03. Governing Law.......................................61
Section 11.04. Descriptive Headings................................61
Section 11.05. Parties in Interest.................................61
Section 11.06. Counterparts........................................61
Section 11.07. Fees and Expenses...................................61
Section 11.08. Severability........................................62
Section 11.09. No Reliance.........................................62
Section 11.10. Termination of Certain Agreements; Consents.........62
-v-
<PAGE>
EXHIBIT INDEX
Exhibit 6.02(c) Forms of Software License Agreement and Time and
Materials Agreement
-vi-
<PAGE>
SCHEDULE INDEX
Schedule 1.07 Assets
Schedule 1.27 Cost of Goods Sold Determination
Schedule 1.56 New Biopop Notes
Schedule 1.61 Permits
Schedule 1.62 Permitted Liens
Schedule 1.65 Pro Forma Closing Balance Sheet
Schedule 1.66 Pro Forma Income Statements
Schedule 1.70 Real Property
Schedule 1.73 Restructuring
Schedule 3.02 Required Consents
Schedule 3.03 Title to the Common Stock
Schedule 3.05 Organization
Schedule 3.06 Continuing and Excluded Subsidiaries
Schedule 3.07 No Adverse Change
Schedule 3.08 No Litigation
Schedule 3.09 Title to and Sufficiency of Assets
Schedule 3.12 Contracts
Schedule 3.13 Accounts
Schedule 3.14 Intellectual Property
Schedule 3.15 Change in Accounting Policies
Schedule 3.18 Insurance
Schedule 3.19 Employee Benefit Plans
Schedule 3.20 Compliance with Law
Schedule 3.21 Transactions with Affiliates
Schedule 3.23 Tax Matters
Schedule 3.24 Environmental Matters
Schedule 3.25 Orders, Commitments and Returns
Schedule 3.26 Labor Matters
Schedule 3.27 Bank Accounts; Powers of Attorney
Schedule 3.28 Customers and Suppliers
Schedule 5.01 Conduct of Business of the Company; Continued
Ownership of Common Stock
Schedule 10.01 Business of the Purchaser
Schedule 10.03 Non-Solicitation
Schedule 11.10 Termination of Certain Agreements
-vii-
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, made as of the 8th day of December, 1998, by
and among HENRY SCHEIN, INC. ("Schein"), a Delaware corporation (the
"Purchaser"), and NEW RIVER MANAGEMENT COMPANY, L.L.C., a Virginia limited
liability company ("New River"), CHIRON CORPORATION, a Delaware corporation,
("Chiron" and, together with New River, the "Sellers"), and BIOLOGICAL & POPULAR
CULTURE, INC., a Delaware corporation ("Biopop"), recites and provides as
follows:
RECITALS
WHEREAS, the Sellers own all of the issued and outstanding capital stock of
Biopop, and Biopop owns, directly or indirectly through GIV (as defined below),
all of the issued and outstanding capital stock of General Injectables &
Vaccines, Inc., a Virginia corporation ("GIV"), Radford Therapeutics, Inc., a
Delaware corporation ("Radford"), Rahn Laboratories, Inc., a Virginia
corporation ("Rahn"), InSource, Inc., a Virginia corporation ("InSource"),
Resolve Medical Corporation, a Virginia corporation ("RMC"), Rahn Laboratories
America, a Virginia general partnership ("RLA"), Lotus Biochemical de Mexico,
S.A. de C.V., a Mexican corporation ("Lotus Mexico"), National BioStudios, Inc.,
a Tennessee corporation ("NBS"), and certain other Affiliates (as defined
below); and
WHEREAS, New River owns all of the issued and outstanding shares of Common
Stock (as defined below), and Chiron owns all of the issued and outstanding
shares of Preferred Stock (as defined below); and
WHEREAS, Chiron intends to convert its Preferred Stock into Common Stock
representing 30% of the issued and outstanding shares of Common Stock
immediately prior to and contingent upon the Closing (as defined below); and
WHEREAS, the Sellers intend to rename Biopop "GIV Holdings, Inc." (as
renamed, the "Company") and to restructure (the "Restructuring") Biopop and its
Subsidiaries (as defined below) to transfer all of the shares of certain
Subsidiaries and certain assets to New River or a newly formed company ("New
Biopop") or their Affiliates (as defined below), such that as a result, the
Company will own at Closing (as defined below), directly or indirectly, all of
the issued and outstanding capital stock of GIV, Radford, Rahn, InSource, RMC,
RLA, Lotus Mexico and NBS; and
WHEREAS, the Restructuring will occur immediately prior to and contingent
upon the Closing, but for purposes of this Agreement, all references herein to
the Company shall be deemed to refer to the Company as it will exist immediately
after the Restructuring; and
-1-
<PAGE>
WHEREAS, the Purchaser desires to purchase from the Sellers, and the
Sellers desire to sell to the Purchaser, all of the issued and outstanding
capital stock of the Company (after giving effect to the Restructuring), all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, it hereby is agreed that:
ARTICLE I
DEFINITIONS
For purposes of this Agreement and the Schedules attached hereto, the
following terms have the meaning specified or referred to in this Article I, and
the terms defined in the Recitals and Schedule 1.73 attached hereto shall have
the respective meanings specified therein.
Section 1.01. Accounts.
"Accounts" shall mean all accounts receivable, notes receivable and
associated rights owned by the Company or any Continuing Subsidiary.
Section 1.02. Acquired Entity.
"Acquired Entity" shall mean the entity acquired or from whom the acquired
business was acquired in an Acquisition.
Section 1.03. Acquisition.
"Acquisition" shall mean any transaction (other than the transaction
contemplated by this Agreement) by which the Purchaser or any of its Affiliates
acquires any entity or business from which it will immediately, or at any time
during the Contingent Compensation Period, derive Revenues.
Section 1.04. Affiliates.
"Affiliates" shall mean with respect to any person or entity, any other
person or entity that, directly or indirectly, controls, is controlled by, or is
under common control with such first person or entity. For the purpose of this
definition, "control" shall mean, as to any person or entity, the possession,
directly or indirectly, of the power to elect or appoint a majority of directors
(or other persons acting in similar capacities) of such person or entity or
otherwise to direct or cause the direction of the management and policies of
such person or entity, whether through the ownership of voting securities, by
contract or otherwise.
Section 1.05. After-Tax Basis.
"After-Tax Basis" shall mean, with respect to any payment otherwise to be
received or accrued by any person or entity, the amount of such payment (i)
reduced by the amount of any
-2-
<PAGE>
reduction in, credit against, or refund of taxes (as measured by reference to
net income) realized plus the present value (based on a discount rate of 5.0%
per annum) of the amount of any such reduction, credit, or refund reasonably
expected to be realized by such person, entity, or any Affiliate as a result of
the facts and circumstances giving rise to the payment otherwise to be received
or accrued, and (ii) supplemented by a further payment or payments (which will
be payable either simultaneously with the initial payment or, in the event that
taxes (as measured by reference to net income) resulting from the receipt or
accrual of such initial payment are not payable in the year of receipt or
accrual, at the time or times such taxes become payable) so that the sum of all
such initial and supplemental payments, after deduction of all taxes (as
measured by reference to net income) imposed by any taxing authority (after
taking into account any credits or deductions or other tax benefits arising
therefrom to the extent such are currently used) resulting from the receipt or
accrual of such payments (whether or not such taxes (as measured by reference to
net income) are payable in the year of receipt or accrual) will be equal to the
initial payment to be so received or accrued (reduced as provided in clause
(i)).
Section 1.06. Agreement.
"Agreement" shall mean this Stock Purchase Agreement, together with the
Schedules and Exhibits attached hereto, as the same may be amended from time to
time in accordance with the terms hereof.
Section 1.07. Assets.
"Assets" shall mean all of the tangible (real, personal and mixed) and
intangible assets of the Company and the Continuing Subsidiaries, excluding any
assets set forth on Schedule 1.07.
Section 1.08. Baseline Contingent Compensation Period.
"Baseline Contingent Compensation Period" shall mean the fiscal years of
the Purchaser 1998 through 2002, inclusive.
Section 1.09. Baseline Gross Profits Additions.
"Baseline Gross Profits Additions" shall mean, with respect to each
Acquisition, an amount equal to (a) for the year in which such Acquisition is
made and only for such year, the Gross Profits of the Acquired Entity for the
same period of the preceding fiscal year of the Purchaser as the period for
which the Gross Profits of the Acquired Entity are included in the Current Year
Gross Profits of the Purchaser for the fiscal year in which such Acquisition
occurred, and (b) for the year following the year in which such Acquisition is
made and for all subsequent years in the Contingent Consideration Period, the
Gross Profits of the Acquired Entity for the full fiscal year of the Purchaser
immediately preceding the fiscal year of the Purchaser in which the Acquisition
occurred.
Section 1.10. Baseline Gross Profits Deductions.
"Baseline Gross Profits Deductions" shall mean, with respect to each
Disposition, an amount equal to (a) for the year in which such Disposition is
made and only for such year, the difference between (i) the Gross Profits of the
Disposed Entity for the first full year that the
-3-
<PAGE>
Gross Profits of such Disposed Entity were included in Baseline Percentage Gross
Profits during the Baseline Contingent Consideration Period (the "First Baseline
Percentage Year"), and (ii) the Gross Profits of the Disposed Entity for the
same period of such First Baseline Percentage Year as is equal to the period of
the year in which such Disposition occurs beginning on the first day of the
fiscal year and ending on the closing date of such Disposition, and (b) for the
year following the year in which such Disposition is made and for all subsequent
years in the Contingent Consideration Period and with respect to each such
Disposition, the Gross Profits of the Disposed Entity for the full First
Baseline Percentage Year.
Section 1.11. Baseline Percentage Gross Profits.
"Baseline Percentage Gross Profits" shall mean, for any fiscal year, the
Initial Baseline Gross Profits (a) increased by the aggregate Baseline Gross
Profits Additions for such fiscal year, and (b) decreased by the aggregate
Baseline Gross Profits Deductions for such fiscal year.
Section 1.12. Baseline Percentage Gross Profits of the Company.
"Baseline Percentage Gross Profits of the Company" shall mean the Gross
Profits of the Company and its Continuing Subsidiaries for the fiscal year 1998,
being the period from December 29, 1997 through and including January 3, 1999.
Section 1.13. Baseline Percentage Gross Profits of the Purchaser.
"Baseline Percentage Gross Profits of the Purchaser" shall mean the Gross
Profits of the Purchaser and its Affiliates for the fiscal year 1998, being the
period from December 28, 1997 through and including December 26, 1998.
Section 1.14. Business.
"Business" shall mean the entire business as conducted by the Company and
the Continuing Subsidiaries as of the date hereof and as of the Closing Date,
including the business of warehousing, marketing, selling and distributing
vaccines, biologicals, pharmaceuticals, medical supplies and other health care
products and related services and all activities associated therewith or
ancillary thereto, including, without limitation, third party distribution,
CapVax, Zurich Information Systems and other logistical and value added
services.
Section 1.15. Cap Amount.
"Cap Amount" shall have the meaning assigned to such term in Section 9.03.
Section 1.16. Chiron Debt.
"Chiron Debt" shall mean the outstanding principal balance of each of (i)
the $11 Million Subordinated Promissory Note issued to Chiron by the Company,
dated September 11, 1996, together with interest accrued thereon through the
Closing Date and (ii) the $5 Million prepaid item identified in the Prepayment
Agreement by and among Chiron, Biopop, GIV and Resolve, dated September 11,
1996.
-4-
<PAGE>
Section 1.17. Closing.
"Closing" shall mean the conference held at 10:00 a.m., local time, on the
Closing Date, at the offices of Hunton & Williams, 951 East Byrd Street,
Richmond, Virginia 23219.
Section 1.18. Closing Date.
"Closing Date" shall mean the earliest practicable date after the
satisfaction of the conditions precedent to Closing set forth in Article VI
hereof or such other date as the parties may hereafter agree in writing.
Section 1.19. Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or (as
appropriate in the context used) any predecessor thereto, and the Treasury
Regulations thereunder.
Section 1.20. Common Stock.
"Common Stock" shall mean all of the issued and outstanding shares of
common stock, $.001 par value, of the Company, consisting of 285,648.27 shares
owned of record and beneficially by New River as of the Closing and 122,420.68
shares to be issued by the Company and owned of record and beneficially by
Chiron as of the Closing (giving effect to the conversion of the Preferred Stock
into Common Stock prior to the Closing).
Section 1.21. Company.
"Company" shall mean Biological & Popular Culture, Inc., a Delaware
corporation, as it will exist immediately after the Restructuring.
Section 1.22. Confidentiality Agreement.
"Confidentiality Agreement" shall mean the confidentiality agreement, dated
as of May 29, 1998, between the Purchaser and Bear, Stearns & Co. Inc., for
itself and on behalf of Biopop.
Section 1.23. Contingent Compensation Period.
"Contingent Compensation Period" shall mean the fiscal years of the
Purchaser 1999 through 2003, inclusive.
Section 1.24. Contingent Consideration.
"Contingent Consideration" shall have the meaning assigned to such term in
Section 2.06; provided, that in no event shall the Contingent Consideration be
less than zero.
Section 1.25. Continuing Subsidiary.
"Continuing Subsidiary" shall mean any Subsidiary of the Company other than
an Excluded Subsidiary.
Section 1.26. Contracts.
"Contracts" shall mean all contracts, agreements, leases, licenses and
commitments, written or oral, to which the Company or any Continuing Subsidiary
is a party or by which the Company, any Continuing Subsidiary or any of their
respective properties are bound, including, without limitation, as a result of
the dissolution or liquidation of an Excluded Subsidiary.
-5-
<PAGE>
Section 1.27. Cost of Goods Sold.
"Cost of Goods Sold" shall mean the cost of an item of inventory being sold
determined in accordance with Schedule 1.27 attached hereto.
Section 1.28. Current Year Gross Profits of the Purchaser.
"Current Year Gross Profits of the Purchaser" shall mean, for any fiscal
year of the Purchaser in the Contingent Compensation Period, the actual Gross
Profits of the Purchaser and its Affiliates for such fiscal year as determined
herein.
Section 1.29. Disposed Entity.
"Disposed Entity" shall mean an entity or business disposed of in a
Disposition.
Section 1.30. Disposition.
"Disposition" shall mean any transaction by which the Purchaser or any of
its Affiliates disposes of, by any means, any entity or business from which it
derived Revenues during the Baseline Contingent Compensation Period.
Section 1.31. DOL.
"DOL" shall mean the United States Department of Labor.
Section 1.32. Environmental Laws.
"Environmental Laws" shall mean the current common law and all current
federal, state, local and foreign laws, regulations, rules, ordinances,
directives and codes in effect as of the date hereof and as of the Closing Date
relating to pollution or protection of human health, safety or the environment,
including without limitation, laws and regulations relating to natural resource
damages, Releases or threatened Releases of Hazardous Substances into the
environment (including, without limitation, biota, ambient air, surface water,
groundwater, sediments, land surface or subsurface strata) or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances and all laws and regulations with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Substances.
Section 1.33. ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
Section 1.34. ERISA Affiliate.
"ERISA Affiliate" shall mean any entity that would be deemed a "single
employer" with Biopop, the Company or any Continuing Subsidiary or Excluded
Subsidiary under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA.
Section 1.35. Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
-6-
<PAGE>
Section 1.36. Excluded Subsidiary.
"Excluded Subsidiary" shall mean any Subsidiary of the Company immediately
prior to the Restructuring that is not a Subsidiary of the Company immediately
following the Restructuring.
Section 1.37. GAAP.
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States of America at the time of the preparation of the subject
financial statement.
Section 1.38. Governmental Entity.
"Governmental Entity" shall have the meaning assigned to such term in
Section 3.20.
Section 1.39. Gross Profits.
"Gross Profits" shall mean for any period the Revenues of an entity less
the associated Cost of Goods Sold.
Section 1.40. Gross Profits Percentage.
"Gross Profits Percentage" shall mean, for any fiscal year, the percentage
that is derived by dividing the Baseline Percentage Gross Profits of the Company
by the Baseline Percentage Gross Profits as determined for such year.
Section 1.41. Hazardous Substances.
"Hazardous Substances" shall mean any petroleum, petroleum products,
petroleum- derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead- based paint, radon, urea formaldehyde, asbestos
or any materials containing asbestos, pesticides and any chemicals, materials or
substances regulated under any Environmental Law, or defined as or included in
the definition of "hazardous substances," "extremely hazardous substances,"
"hazardous materials," "hazardous wastes," "hazardous constituents," "toxic
substances," "pollutants," "contaminants," or any similar denomination intended
to classify or regulate such chemicals, materials or substances by reason of
their toxicity, carcinogenicity, ignitability, corrosivity or reactivity or
other characteristics under any Environmental Law.
Section 1.42. Historical Financial Statements.
"Historical Financial Statements" shall mean, collectively, the historical
audited consolidated income statements, consolidated statements of cash flows
and consolidated balance sheets of Biopop and its Subsidiaries or the
predecessor company and its Subsidiaries (which do not give effect to the
Restructuring or any plans for the Restructuring), as of December 31, 1995,
December 29, 1996 and December 28, 1997, and for the periods then ending (the
"Year-End Historical Financial Statements") and the historical unaudited
consolidated income statements, consolidated statements of cash flows and
consolidated balance sheets of Biopop and its Subsidiaries (which do not give
effect to the Restructuring or any plans for the Restructuring) as of September
27, 1998 and for the periods then ended (the "Interim Historical Financial
Statements").
-7-
<PAGE>
Section 1.43. HSR Act.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
Section 1.44. Indemnitee and Indemnitor.
"Indemnitee" and "Indemnitor" shall have the meanings assigned to such
terms in Section 9.04.
Section 1.45. Initial Baseline Gross Profits.
"Initial Baseline Gross Profits" shall mean the sum of the Baseline
Percentage Gross Profits of the Company and the Baseline Percentage Gross
Profits of the Purchaser, without adjustment for any Acquisition or Disposition.
Section 1.46. Initial Consideration.
"Initial Consideration" for the Common Stock shall equal $65.0 million.
Section 1.47. Intellectual Property.
"Intellectual Property" shall mean (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto and all patents, patent applications and patent disclosures, together
with all reissuances, continuations, continuations-in- part, revisions,
extensions and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and all applications,
registrations and renewals in connection therewith, (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith, (d) all trade secrets and confidential business information
(including ideas, research and development, know-how, 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), (e) all computer
software (including data and related documentation), (f) all other proprietary
rights, (g) all rights as a licensee or authorized user of the intellectual
property of any third party and (h) all copies and tangible embodiments thereof
(in whatever form or medium) used or held for use in the Business.
Section 1.48. Inventory.
"Inventory" shall mean all inventories of goods and supplies owned by the
Company.
Section 1.49. IRS.
"IRS" shall mean the Internal Revenue Service.
Section 1.50. Knowledge of the Sellers.
"Knowledge of the Sellers" shall mean, with respect to a particular fact or
other matter, as of the date hereof, the actual knowledge of New River or any of
the following members of the senior management of the Company: Randal J. Kirk;
George S. Zorich; James W. Short; Marcus E. Smith; Dixon D. Low; and Doit L.
Koppler, II.
-8-
<PAGE>
Section 1.51. Law.
"Law" shall mean any federal, state, local or other law or governmental
requirement of any kind, domestic or foreign, and the rules, regulations and
orders promulgated thereunder.
Section 1.52. Liens.
"Liens" shall mean any encumbrance, mortgage, charge, claim, restriction,
pledge, security interest or imposition of any kind or nature.
Section 1.53. Losses.
"Losses" shall have the meaning assigned to such term in Section 9.02.
Section 1.54. Material Adverse Effect.
"Material Adverse Effect" shall mean any fact, event, change, circumstance
or effect relating to or affecting the Company or any Continuing Subsidiary
adversely that, individually or in the aggregate, has had or is reasonably
likely to have an impact of $250,000 or greater on the financial condition,
results of operations, business, assets or liabilities of the Company and the
Continuing Subsidiaries, taken as a whole, or the ability of the Company or any
Continuing Subsidiary or Excluded Subsidiary to consummate the transactions
contemplated by the Restructuring or this Agreement.
Section 1.55. Medical Reimbursement Plan.
"Medical Reimbursement Plan" shall have the meaning assigned to such term
in Section 3.20.
Section 1.56. New Biopop Notes.
"New Biopop Notes" shall mean the short-term, interest free, notes issued
by New Biopop or any of its Affiliates to the Company in connection with the
Restructuring in the amounts set forth on Schedule 1.56 attached hereto.
Section 1.57. New Products Earn-Out.
"New Products Earn-Out" shall mean $5,387,740 if payment is made on or
prior to March 1, 2000, or such amount plus interest calculated at the rate of
6.66% per annum from March 1, 2000 until payment is made if payment is not made
on or prior to such date.
Section 1.58. Opinion of Purchaser's Counsel.
"Opinion of Purchaser's Counsel" shall mean the opinion of Proskauer Rose
LLP, counsel to Buyer, and, with respect to matters covered by Virginia law,
local counsel to the Purchaser reasonably satisfactory to the Sellers, in each
case in form and substance reasonably satisfactory to the Sellers.
Section 1.59. Opinion of Sellers' Counsel.
"Opinion of Sellers' Counsel" shall mean the opinion of Hunton & Williams,
special counsel to New River and Biopop, and the opinion of counsel to Chiron,
each in form and substance reasonably satisfactory to the Purchaser.
-9-
<PAGE>
Section 1.60. PBGC.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
Section 1.61. Permits.
"Permits" shall mean all permits, licenses and governmental authorizations,
registrations and approvals used or required as of the date hereof in the
conduct of the Business, including, without limitation, those Permits listed on
Schedule 1.61 attached hereto.
Section 1.62. Permitted Liens.
"Permitted Liens" shall mean (i) liens for Taxes not yet due and payable,
(ii) covenants, conditions and restrictions of record, (iii) title defects that
do not materially interfere with the existing use of the assets of the Company
and do not materially and adversely affect the marketability or value thereof
and (iv) those Liens and other matters affecting any of the Assets that are
specifically listed on Schedule 1.62 attached hereto.
Section 1.63. Plan.
"Plan" shall mean (i) each "employee benefit plan" (as defined in Section
3(3) of ERISA, contributed to, maintained or sponsored by or on behalf of
Biopop, the Company, a Continuing Subsidiary or Excluded Subsidiary or any ERISA
Affiliate within the past six years, for the benefit of any present or former
employee (or any dependent or beneficiary thereof), independent contractor,
officer or director of the Company or a Continuing Subsidiary or any ERISA
Affiliate within the past six years or with respect to which the Company or a
Continuing Subsidiary has any liability or potential liability and (ii) each
other retirement, savings, thrift, deferred compensation, severance, stock
ownership, stock purchase, stock option, performance, bonus, incentive, travel,
hospitalization, medical, disability, life or other insurance, payroll practice,
executive compensation, holiday, vacation, fringe benefit, post-retirement,
change-in-control, retention or any other benefit policy, trust, understanding
or arrangement of any kind, whether oral or written, insured or self insured,
contributed to, maintained or sponsored by Biopop, the Company, a Continuing
Subsidiary or Excluded Subsidiary or any ERISA Affiliate for the benefit of any
present, retired or former employee (or any dependent or beneficiary thereof),
independent contractor, officer or director of the Company or a Continuing
Subsidiary or with respect to which the Company or a Continuing Subsidiary has
any liability or potential liability. The preceding sentence to the contrary
notwithstanding, the term "Plan" does not include any payroll practices on
account of sick leave, vacation, holiday, shift differential or jury duty.
Section 1.64. Preferred Stock.
"Preferred Stock" shall mean all of the issued and outstanding Series A
Preferred Stock, $.01 par value per share, of the Company, consisting of 13,800
shares owned of record and beneficially by Chiron, which shares will be
converted into Common Stock immediately prior to and contingent upon the
Closing.
-10-
<PAGE>
Section 1.65. Pro Forma Closing Balance Sheet.
"Pro Forma Closing Balance Sheet" shall mean the pro forma unaudited
consolidated balance sheet of the Company and the Continuing Subsidiaries, as
adjusted for the Restructuring, in accordance with the notes thereto, prepared
on the assumption that the Closing Date was September 27, 1998, which balance
sheet is attached hereto as Schedule 1.65.
Section 1.66. Pro Forma Income Statements.
"Pro Forma Income Statements" shall mean, collectively, the pro forma
unaudited consolidated income statements of the Company and the Continuing
Subsidiaries for the years ended December 29, 1996 and December 28, 1997 as
adjusted in accordance with the notes thereto (the "Year-End Pro Forma Income
Statements"), and the pro forma unaudited consolidated income statement of the
Company and the Continuing Subsidiaries as adjusted in accordance with the notes
thereto for the period from December 29, 1997 to September 27, 1998 (the
"Interim Pro Forma Income Statements"), all of which are attached hereto as
Schedule 1.66.
Section 1.67. Purchase Price.
"Purchase Price" will consist of the Initial Consideration and the
Contingent Consideration.
Section 1.68. Purchaser Claimant.
"Purchaser Claimant" shall have the meaning assigned to such term in
Section 9.02.
Section 1.69. Purchaser Covered Person.
"Purchaser Covered Person" shall have the meaning assigned to such term in
Section 10.05(b).
Section 1.70. Real Property.
"Real Property" shall mean the real property owned or leased by the Company
and the Continuing Subsidiaries, together with the improvements located thereon,
including all appurtenant rights, claims and interests, all of such real
property being listed on Schedule 1.70 attached hereto.
Section 1.71. Release.
"Release" shall mean any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge or dispersal into the
environment (including, without limitation, ambient air, surface water,
groundwater, sediments and surface or subsurface strata).
Section 1.72. Required Consents.
"Required Consents" shall mean those consents, approvals and waivers
related to certain notes, bonds, mortgages, indentures, licenses, contracts,
agreements, leases or other instruments or obligations, written or oral, to
which one or more of the Sellers, the Company or the Continuing Subsidiaries is
a party, or to which one or more of their respective properties is subject, that
are required in connection with the consummation of the transactions
contemplated herein (including, without limitation, the Restructuring).
-11-
<PAGE>
Section 1.73. Restructuring.
"Restructuring" shall mean the taking of the actions set forth on Schedule
1.73 attached hereto to restructure the Company in accordance with the terms set
forth therein.
Section 1.74. Revenues.
"Revenues" shall mean net sales and related other income (which is net of
associated direct expenses, including payment of administrative fees to
non-Affiliate Group Purchasing Organizations, but not including selling, general
and administrative or any other overhead expenses) in connection with the sale
or promotion of human vaccines and other human injectables, in the United States
and its territories and possessions, excluding dental anesthetics,
Erythropoietin, USP, Calcitriol Injection, USP and any injectable saccharides of
iron, determined in accordance with GAAP and consistent with the Historical
Financial Statements for the year ended December 28, 1997, plus, to the extent
not included in the associated Cost of Goods Sold, any and all rebates,
cooperative advertising allowances, promotional fees, commissions and vendor
fees and incentives, paid or due to be paid from any vendor of products from
which Revenues may otherwise be derived. Revenues shall not include any income
from the currently outstanding accounts receivable for Medeva Pharmaceuticals,
Inc., King Pharmaceuticals, Inc. or Lotus (US) or from contract manufacturing of
human vaccines or other injectables by the Purchaser or any of its Affiliates,
to the extent of a normal manufacturing profit thereon in the case of any sales
among the Purchaser and its Affiliates.
Section 1.75. SEC.
"SEC" shall mean the Securities and Exchange Commission.
Section 1.76. SKU.
"SKU" shall mean stock keeping units.
Section 1.77. Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.78. Seller Claimant.
"Seller Claimant" shall have the meaning assigned to such term in Section
9.02.
Section 1.79. Seller Covered Person.
"Seller Covered Person" shall have the meaning assigned to such term in
Section 10.05(a).
Section 1.80. Seller Proportionate Interest.
"Seller Proportionate Interest" shall mean as to Chiron 30% and as to New
River 70%.
-12-
<PAGE>
Section 1.81. Subsidiaries.
"Subsidiaries" shall mean each entity with respect to which another entity
(a) owns or otherwise controls, directly or indirectly, through one or more
subsidiaries, partnerships, joint ventures or other business associations,
shares or other ownership interests representing 50% or more of the votes
eligible to be cast in the election of directors of each such entity or (b) owns
a majority of the outstanding beneficial interests or a majority of the capital
or profits.
Section 1.82. Taxes.
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, all income, gross receipts, excise,
real or personal property, sales, withholding, social security, occupation, use,
service, service use, license, net worth, payroll, franchise, transfer, gains,
recording, ad valorem, profits, employment, estimated severance, stamp, gift,
value added or other taxes, fees and charges imposed by any taxing authority
(whether domestic or foreign including, without limitation, any state, county,
local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments.
Section 1.83. Tax Returns.
"Tax Return" shall mean any report, return, document, declaration or other
document (including any attachment thereto) required to be filed with any taxing
authority or jurisdiction (foreign or domestic) with respect to Taxes,
including, without limitation, information returns, any documents with respect
to or accompanying payments of estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
Section 1.84. Threshold Gross Profits.
"Threshold Gross Profits" shall mean, for purposes of determining the
Contingent Consideration payable in any year during the Contingent Compensation
Period, the greater of (i) the Baseline Percentage Gross Profits (as
re-calculated annually as provided in Section 1.11) for such fiscal year and
(ii) the highest amount of any of the Current Year Gross Profits of the
Purchaser for all preceding years in the Contingent Consideration Period (as
re-calculated annually as hereinafter provided in this Section), as each such
preceding year's amount of Current Year Gross Profits of the Purchaser may be
(but only for purposes of this Section) (x) increased by, to the extent not
already included in the Current Year Gross Profits of the Purchaser for such
preceding year, the Gross Profits of each Acquired Entity (that did not
subsequently become a Disposed Entity) for the same respective periods of the
fiscal year of the Purchaser immediately preceding the year in which the
Acquisition occurred as the Gross Profits of such Acquired Entity are included
in the Current Year Gross Profits of the Purchaser for the year for which the
-13-
<PAGE>
calculation of Contingent Consideration is being made, and (y) decreased by the
amount of Gross Profits of each Disposed Entity included in the Current Year
Gross Profits of the Purchaser for the same respective periods in the fiscal
year of the Purchaser immediately preceding the year in which the Disposition
occurred as the Gross Profits of such Disposed Entity are not included in the
Current Year Gross Profits of the Purchaser for the year for which the
calculation of Contingent Consideration is being made. Notwithstanding any other
provision herein, nothing in this Section shall operate to cause an inclusion of
any Gross Profits of an Acquired Entity more than once in any single year.
ARTICLE II
PURCHASE AND SALE
Section 2.01. Commitment to Sell.
Each of the Sellers hereby, severally and not jointly, agrees that at the
Closing, and upon all of the terms and subject to all of the conditions of this
Agreement, it shall sell, transfer, assign, convey and deliver to the Purchaser,
by assignment, stock power or other appropriate instrument, free and clear of
all liens, claims, pledges or encumbrances, all of the Common Stock owned by
such Seller.
Section 2.02. Commitment to Purchase.
The Purchaser hereby agrees that at the Closing, and upon all of the terms
and subject to all of the conditions of this Agreement, it shall purchase from
the Sellers all of the Common Stock, and in full and final payment therefor the
Purchaser shall deliver the Purchase Price to each of New River and Chiron in
their respective Seller Proportionate Interest (a) by wire transfer of
immediately available funds of the Initial Consideration, in accordance with the
written disbursement instructions to be provided by each Seller to the Purchaser
no less than two business days prior to Closing, and (b) by subsequent payment
of the Contingent Consideration pursuant to Section 2.06; provided, that upon
payment of the Initial Consideration the Purchaser shall have title to the
Common Stock. All payments and deliveries at Closing shall be made into escrow
to an escrow agent on or prior to the Closing and disbursed on the Closing Date
in accordance with this Article II pursuant to an escrow agreement in a form
reasonably acceptable to the parties hereto.
Section 2.03. Payment of Chiron Debt.
The Purchaser hereby agrees that at the Closing, and upon all of the terms
and subject to all of the conditions of this Agreement, it shall loan
$12,217,535.47 (plus such additional interest as may accrue under the promissory
note included in the Chiron Debt after December 15, 1998 pursuant to the terms
thereof) to the Company, to be applied at the Closing to the payment in full of
all outstanding Chiron Debt by wire transfer of immediately available funds, in
accordance with the disbursement instructions described in Section 2.02, which
payment shall be in addition to the Purchase Price pursuant to Section 2.02.
Upon payment of the amount set forth above to Chiron and assuming the Closing is
-14-
<PAGE>
consummated, the Chiron Debt shall be satisfied in full, and the Company, the
Continuing Subsidiaries and the Excluded Subsidiaries shall not have any further
liabilities to Chiron with respect to the Chiron Debt or any other debt for
borrowed money or advances.
Section 2.04. Payment of New Biopop Notes.
Upon payment of the Initial Consideration, New River shall cause an amount
necessary to satisfy in full the outstanding balances of the New Biopop Notes to
be paid to the Company at the Closing.
Section 2.05. Deliveries at Closing.
(a) By Sellers to the Purchaser. At the Closing, the Sellers shall deliver
to the Purchaser the following items, each (where applicable) properly executed
and dated as of the Closing Date and in form and substance reasonably
satisfactory to the Purchaser: (i) the Opinion of Sellers' Counsel; (ii)
executed resignations of those officers and directors of the Company and each of
the Continuing Subsidiaries who have been designated by the Purchaser; (iii) a
certificate of the Secretary of the Company; (iv) certificates satisfying the
requirements of Section 1445(b)(2) of the Code, as to the non-foreign status of
each of the Sellers; (v) certificates representing the Common Stock, together
with duly executed stock powers therefor to convey the Common Stock to the
Purchaser; and (vi) the other documents and instruments required pursuant to
Section 6.02 and not previously delivered.
(b) By the Purchaser to Sellers. At the Closing, the Purchaser shall
deliver to the Sellers the following items, each (where applicable) properly
executed and dated as of the Closing Date and in form and substance reasonably
satisfactory to the Sellers: (i) the Initial Consideration in accordance with
Section 2.02; (ii) the Opinion of Purchaser's Counsel; (iii) a certificate of
the Secretary of the Purchaser and (iv) the other documents and instruments
required pursuant to Section 6.03 and not previously delivered.
(c) By the Purchaser to Chiron. At the Closing, the Purchaser shall deliver
to the Company the proceeds of a loan that will be used for payment of the
Chiron Debt, in accordance with Section 2.03, and the Company shall deliver such
payment to Chiron.
(d) By New Biopop to the Company. At the Closing, New Biopop shall deliver
to the Company the payment for the New Biopop Notes, in accordance with Section
2.04.
Section 2.06. Contingent Consideration.
(a) Basis of Determination. In addition to the Initial Consideration
payable pursuant to Section 2.05(b)(i), as additional consideration for the
Common Stock and as an adjustment to the Purchase Price, the Purchaser shall pay
to each of New River and Chiron in their respective Seller Proportionate
Interest the following additional amounts:
(i) the Gross Profits Percentage (as re-determined for fiscal year 1999)
multiplied by the product of (x) 110% and (y) the amount by which the Current
Year Gross Profits of the Purchaser for fiscal year 1999 exceed the Threshold
Gross Profits for fiscal year 1998; provided that the amount payable pursuant to
this clause (i) will not exceed $20.0 million;
-15-
<PAGE>
(ii) the Gross Profits Percentage (as re-determined for fiscal year 2000)
multiplied by the product of (x) 110% and (y) the amount by which the Current
Year Gross Profits of the Purchaser for fiscal year 2000 exceed the Threshold
Gross Profits for fiscal year 1999; provided that the amount payable pursuant to
this clause (ii) will not exceed $20.0 million;
(iii) the Gross Profits Percentage (as re-determined for fiscal year 2001)
multiplied by the product of (x) 110% and (y) the amount by which the Current
Year Gross Profits of the Purchaser for fiscal year 2001 exceed the Threshold
Gross Profits for fiscal year 2000; provided that the amount payable pursuant to
this clause (iii) will not exceed $20.0 million;
(iv) the Gross Profits Percentage (as re-determined for fiscal year 2002)
multiplied by the product of (x) 110% and (y) the amount by which the Current
Year Gross Profits of the Purchaser for fiscal year 2002 exceed the Threshold
Gross Profits for fiscal year 2001; provided that the amount payable pursuant to
this clause (iv) will not exceed $20.0 million; and
(v) the Gross Profits Percentage (as re-determined for fiscal year 2003)
multiplied by the product of (x) 110% and (y) the amount by which the Current
Year Gross Profits of the Purchaser for fiscal year 2003 exceed the Threshold
Gross Profits for fiscal year 2002; provided that the amount payable pursuant to
this clause (v) will not exceed $20.0 million;
provided, however, that the aggregate Contingent Consideration paid pursuant to
clauses (i), (ii), (iii), (iv) and (v) of this Section 2.06(a) shall not exceed
$75.0 million.
(b) Method of Determination. On or before March 15 of each of 2000, 2001
and 2002, 2003 and 2004, the Purchaser shall prepare and deliver to the Sellers
a statement (showing in reasonable detail the calculations) of the Gross Profits
Percentage, the Threshold Gross Profits and the Current Year Gross Profits of
the Purchaser for the immediately preceding fiscal year and the amount of the
Contingent Consideration payable in respect of such year, together with a
certificate from the Purchaser's chief financial officer and a confirmation from
BDO Seidman LLP or another nationally recognized independent accounting firm to
the effect that such statements have been prepared and such amount computed in
accordance with this Agreement including this Section 2.06 and Schedule 1.27.
The Purchaser will make the work papers used in preparing the statements
available to the Sellers and Arthur Andersen LLP or any other single firm of
Sellers' choice at reasonable times and upon reasonable notice at any time from
the date of delivery of such statements through the resolution of any objections
with respect thereto. If either Seller shall have any objection to either of
such statements, New River, as the Sellers' representative for this purpose (the
"Sellers' Representative"), shall deliver to the Purchaser a written notice
describing in detail its objection within 30 days after receiving such
-16-
<PAGE>
statements. If New River does not deliver such notice to the Purchaser within
such 30-day period, the Purchaser's statement (showing in reasonable detail the
calculations) of the Gross Profits Percentage, the Threshold Gross Profits and
the Current Year Gross Profits of the Purchaser and the amount of Contingent
Compensation then payable shall be final and binding. The Purchaser and the
Sellers' Representative shall use their reasonable best efforts to resolve any
such objections. If a final resolution of such objections is not achieved within
15 days after the Purchaser has received a notice of objections, the Purchaser
and the Sellers' Representative will jointly select a nationally recognized
independent accounting firm mutually acceptable to them to resolve any remaining
objections. If the Purchaser and the Sellers' Representative are unable to agree
on the choice of an accounting firm within seven days after the end of such 15-
day period, they shall select a nationally recognized independent accounting
firm by lot (after excluding BDO Seidman LLP, Arthur Andersen LLP, and KPMG Peat
Marwick LLP or any other such other single firm as the Sellers' Representative
may have chosen). The accounting firm so selected shall, upon a review of the
statements and work papers presented by the Purchaser and New River's objections
thereto, resolve in accordance with this Section 2.06 and Schedule 1.27 any such
objections that have not been resolved by the Purchaser and the Sellers'
Representative and shall communicate its resolution thereof to the Purchaser and
the Sellers' Representative in writing as promptly as practicable after such
firm's selection and in any event within 45 days of its selection. If any such
unresolved objections are submitted to an accounting firm for resolution as
provided above, the Purchaser shall pay 50% of the fees and expenses of such
firm and the Sellers shall pay the other 50% thereof.
(c) Time and Method of Payment. Upon delivery of the statements prepared by
the Purchaser, the Purchaser shall pay the amount of Contingent Consideration
calculated therein to each of New River and Chiron pro rata in accordance with
their respective Seller Proportionate Interest. All payments required by this
Section 2.06 shall be made by wire transfer of immediately available funds as
instructed in writing by New River and Chiron, as applicable, with respect to
their allocated portions of such payment. If either Seller objects to such
statement, then five days after resolution of the objections pursuant to Section
2.06(b) hereof (i) if the amounts determined to be due to the Sellers are in
excess of the amounts paid to the Sellers upon delivery of the statements by the
Purchaser, then the Purchaser shall pay the amounts of such excess to each of
New River and Chiron pro rata in accordance with their respective Seller
Proportionate Interest, or (ii) if the amounts determined to be due to the
Sellers are less than the amounts paid to the Sellers upon delivery of the
statements by the Purchaser, the Sellers shall pay, in accordance with their
respective Seller Proportionate Interest, the amounts of such difference to the
Purchaser; provided, that in no event shall either Seller be required to pay
more to the Purchaser than the amount initially received by such Seller,
respectively, from the Purchaser in connection with the disputed statements. Any
amounts owed by either the Sellers or the Purchaser with respect to the previous
sentence shall bear interest at the rate of 6.66% per annum from the date of the
initial payment by the Purchaser to the Sellers upon the delivery of the
statements until the date that is two days after the day that any such
obligations are determined pursuant to Section 2.06(b) hereof (which shall be
the date when payment of any such obligations is due). Any amounts owed pursuant
to Sections 2.06 and 2.07 and not paid when due shall bear interest at a rate
per annum equal to the prime rate of The Chase Manhattan Bank as then from time
to time in effect plus 2% until paid.
-17-
<PAGE>
(d) ______ Covenants. The Purchaser covenants that it will not restructure
its business or take any action after the Closing such that the intended result
would be to reduce the Contingent Consideration or the amount of the New Product
Earn-Out paid to the Sellers; provided, however, that the foregoing shall not be
deemed to prohibit the Purchaser from effecting a Disposition. If after the
Closing Date, (i) the Purchaser sells or otherwise disposes of all or
substantially all of its business relating to the warehousing, marketing,
selling and distributing of vaccines, biologicals, pharmaceuticals, medical
supplies and other health care products and related services and all activities
associated therewith or ancillary thereto (except for a transaction set forth in
clause (ii) below), then the Purchaser shall pay to each of New River and Chiron
pro rata in accordance with their respective Seller Proportionate Interest $75.0
million less the aggregate Contingent Consideration previously paid to the
Sellers through the date of such sale or disposition, or (ii) the Purchaser is
sold or sells substantially all of its business or assets to a third party
(including by means of a merger, consolidation or other reorganization), then
such third party shall be obligated to assume the obligations of the Purchaser
pursuant to Sections 2.06 and 2.07, and such transaction shall be treated as if
the Purchaser has acquired such third party for purposes of Section 1.09 and all
Sections related thereto.
Section 2.07. New Products Earn-Out.
If Revenues of the Purchaser from sales of products identified by SKUs,
which SKUs were not included in the product offerings of the Company or the
Continuing Subsidiaries or the Purchaser or its Affiliates as of June 30, 1998,
exceed either (i) $10,000,000 during fiscal year 2000 or (ii) $15,000,000 during
the fiscal years 2000 and 2001 combined, the Purchaser shall pay to each of New
River and Chiron pro rata in accordance with their respective Seller
Proportionate Interest the New Products Earn-Out within 30 days following the
end of the month during which such Revenues will have exceeded in the aggregate
such amount set forth in either clause (i) or clause (ii) above. Upon reasonable
notice, New River, as the representative of the Sellers, shall have the right to
audit the Revenues of the Purchaser as they relate to the New Products Earn-Out
but not more frequently than once in any fiscal year.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
New River represents and warrants to the Purchaser as to the matters set
forth below other than the representations and warranties set forth in Sections
3.01(b), 3.02(b), 3.03(b) and 3.08(b), Chiron represents and warrants to the
Purchaser solely as to the matters set forth below in Sections 3.01(b), 3.02(b),
3.03(b) and 3.08(b) and makes no other representations or warranties to the
Purchaser, and neither New River nor Chiron makes any representation or warranty
as to any matter for which the other party is making a representation or
warranty:
-18-
<PAGE>
Section 3.01. Enforceability.
(a) New River has full limited liability company power, legal right and
capacity to execute and deliver this Agreement and all of the documents and
instruments required hereby from New River, and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and all
of the other agreements or documents required hereby or in connection with the
Restructuring from New River, the Company, the Continuing Subsidiaries or the
Excluded Subsidiaries and the performance by New River, the Company, the
Continuing Subsidiaries and the Excluded Subsidiaries of their respective
obligations hereunder and thereunder (as applicable) have been duly authorized
by all board of directors, stockholder, member, partner or other similar action
on the part of New River, the Company, the Continuing Subsidiaries and the
Excluded Subsidiaries and no further corporate, limited liability company,
partnership or other similar action is required on the part of New River, the
Company, the Continuing Subsidiaries or the Excluded Subsidiaries to consummate
the transactions contemplated hereby or in connection with the Restructuring.
This Agreement has been, and all of the other documents and instruments required
hereby or in connection with the Restructuring to which New River, the Company,
the Continuing Subsidiaries or the Excluded Subsidiaries are parties will be,
duly and validly executed and delivered by each such party. This Agreement is,
and the other documents and instruments required hereby will be, when executed
and delivered by the parties thereto, the valid and binding obligations of New
River, the Company, the Continuing Subsidiaries and the Excluded Subsidiaries,
as the case may be, that are parties thereto, enforceable against them in
accordance with their respective terms.
(b) Chiron has full corporate power, legal right and capacity to execute
and deliver this Agreement and all of the documents and instruments required
hereby from Chiron, and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the performance by Chiron of its
obligations hereunder have been duly authorized by all corporate or similar
action on the part of Chiron other than the approval of this Agreement by the
Board of Directors of Chiron and no further corporate or other similar action is
required on the part of Chiron to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Chiron, subject to approval of the Chiron Board of Directors. Subject to the
approval of the Board of Directors of Chiron, this Agreement is the valid and
binding obligation of Chiron, enforceable against it in accordance with its
terms.
Section 3.02. Consents and Approvals; No Violation or Conflict by Sellers.
(a) Except for any applicable filing requirements under the HSR Act, no
notice to, filing or registration with, and no permit, authorization, consent or
approval of, any governmental, regulatory or self-regulatory agency is necessary
or is required to be made or obtained by New River, Randal J. Kirk, Novartis A.
G., the Company, the Continuing Subsidiaries or the Excluded Subsidiaries in
connection with the execution and delivery of this Agreement or the other
agreements or documents required in connection with the Restructuring or for the
consummation by New River, the Company, the Continuing Subsidiaries and the
Excluded Subsidiaries of the transactions contemplated hereby or in connection
-19-
<PAGE>
with the Restructuring. The execution, delivery and performance of this
Agreement and the other agreements or documents required in connection with the
Restructuring by New River, the Company, the Continuing Subsidiaries and the
Excluded Subsidiaries (as applicable) and the consummation of the transactions
contemplated hereby or in connection with the Restructuring do not and will not
(a) conflict with or violate any Law, judgment, order, writ, injunction or
decree binding on New River, Randal J. Kirk, Novartis A. G., the Company, the
Continuing Subsidiaries or the Excluded Subsidiaries or any of their respective
properties or assets, (b) assuming that the Required Consents listed on Schedule
3.02 have been obtained, conflict with or result in a material violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
material default (or give rise to any Lien or any right of termination,
cancellation, modification or acceleration) or change of control under, any of
the terms, conditions or provisions of any material note, bond, mortgage,
indenture, license, or any other material agreement to which New River, the
Company, the Continuing Subsidiaries or the Excluded Subsidiaries is a party or
by which New River, the Company, the Continuing Subsidiaries or the Excluded
Subsidiaries or any of their respective properties or assets may be bound,
including, without limitation, the Contracts listed on Schedule 3.12, or (c)
conflict with or violate any of the provisions of the certificate of
incorporation, bylaws or other organizational documents of New River. New River
shall have no obligation to obtain, or to cause the Company, the Continuing
Subsidiaries or the Excluded Subsidiaries to obtain, any Required Consents prior
to or after the Closing, but will cooperate with the Purchaser in obtaining any
such Required Consents listed on Schedule 3.02. Neither the Restructuring nor
the consummation of the transactions contemplated hereby will cause New River to
become insolvent or unable to pay or discharge its obligations as they become
due or constitute a fraudulent conveyance or other violation of the rights of
its creditors under applicable Law or leave it with inadequate capital to
conduct its business and affairs.
(b) Except for any applicable filing requirements under the HSR Act, no
notice to, filing or registration with, and no permit, authorization, consent or
approval of, any governmental, regulatory or self-regulatory agency is necessary
or is required to be made or obtained by Chiron in connection with the execution
and delivery of this Agreement or the other agreements or documents required in
connection the consummation by Chiron of the transactions contemplated hereby.
Subject to receipt of the approval of the Chiron Board of Directors, the
execution, delivery and performance of this Agreement and the other agreements
or documents required in connection therewith and the consummation of the
transactions contemplated hereby do not and will not (a) conflict with or
violate any Law, judgment, order, writ, injunction or decree binding on Chiron
or any of its properties or assets, (b) conflict with or result in a material
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a material default (or give rise to any Lien or any right of
termination, cancellation, modification or acceleration) or change of control
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, license, or any other material agreement to which Chiron is
a party or by which Chiron or any of its properties or assets may be bound or
(c) conflict with or violate any of the provisions of the certificate of
incorporation, bylaws or other organizational documents of Chiron.
-20-
<PAGE>
Section 3.03. Title to the Common Stock.
(a) New River owns of record and beneficially good, valid and marketable
title to the Common Stock owned by New River as set forth in Section 1.20, free
and clear of any and all Liens, except as set forth on Schedule 3.03. Upon
delivery of the Common Stock owned by New River to the Purchaser at the Closing
and upon the Purchaser's payment of the Initial Consideration therefor, good and
valid title to the Common Stock owned by New River, free and clear of all
mortgages, liens, encumbrances, charges, claims, restrictions, pledges, security
interests or impositions, will pass to the Purchaser.
(b) Chiron (as a result of the conversion of all of the outstanding shares
of Preferred Stock) immediately prior to the Closing will own, of record and
beneficially (and as of the date of this Agreement Chiron owns good and
marketible title to the Preferred Stock owned by it) good, valid and marketable
title to the Common Stock owned by Chiron as set forth in Section 1.20, free and
clear of any and all Liens, except as set forth on Schedule 3.03. Upon delivery
of the Common Stock owned by Chiron to the Purchaser at the Closing and upon the
Purchaser's payment of the Initial Consideration therefor, good and valid title
to the Common Stock owned by Chiron, free and clear of all mortgages, liens,
encumbrances, charges, claims, restrictions, pledges, security interests or
impositions, will pass to the Purchaser.
Section 3.04. Capitalization.
The authorized equity capitalization of the Company consists of: 5,000,000
shares of common stock, $.001 par value per share, and 1,000,000 shares of
preferred stock, $.01 par value per share. The Common Stock and the Preferred
Stock represent all of the issued and outstanding capital stock of the Company,
have been duly and validly issued and are fully paid and non-assessable. All of
the Common Stock and Preferred Stock was offered and sold in compliance with all
applicable federal and state securities laws and regulations. There are no
outstanding or authorized options, warrants, purchase rights, conversion rights
(except such rights of the Preferred Stock), exchange rights, or other contracts
or commitments to subscribe for or purchase any capital stock of the Company or
securities convertible into or exchangeable for, or which otherwise confer on
the holder any right to acquire, any capital stock of the Company, nor is the
Company obligated or committed to issue any such option, warrant or other right.
There are no outstanding stock appreciation, phantom stock, profit participation
or similar rights with respect to the capital stock of the Company, nor is the
Company obligated or committed to issue any such rights.
Section 3.05. Organization; Conduct of Business.
Each of the Company and the Continuing Subsidiaries is a corporation or
partnership, as the case may be, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, and each has all requisite corporate or partnership power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Each of the Company and the Continuing
Subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
-21-
<PAGE>
necessary, except where the failure to be so qualified or licensed could
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Schedule 3.05 attached hereto is a true and complete list of all
such jurisdictions for each of the Company and the Continuing Subsidiaries. The
Sellers have delivered to the Purchaser true and complete copies of the
certificate of incorporation, bylaws or other organizational documents of the
Company and each Continuing Subsidiary. The Business is conducted only by the
Company and the Continuing Subsidiaries.
Section 3.06. Continuing Subsidiaries.
The Continuing Subsidiaries listed on Schedule 3.06 constitute all of the
Subsidiaries of the Company excluding the Excluded Subsidiaries listed on
Schedule 3.06. All of the issued and outstanding shares of capital stock or
other equity interests of each Continuing Subsidiary have been duly authorized
and are validly issued, fully paid and nonassessable. All of the issued and
outstanding shares of capital stock of each Continuing Subsidiary are owned of
record and beneficially by the Company or another Continuing Subsidiary, as set
forth on Schedule 3.06 , free and clear of any and all restrictions on transfer
(other than restrictions under federal and state securities laws), taxes, Liens,
options, warrants, purchase rights, contracts, commitments, equities, claims and
demands, except as set forth on Schedule 3.06. Except as set forth on Schedule
3.06, there are no outstanding or authorized options, warrants, purchase rights,
conversion rights, exchange rights, subscription rights or other contracts or
commitments that could require the Company to sell, transfer or otherwise
dispose of any capital stock of any of the Continuing Subsidiaries or that could
require any Continuing Subsidiary to issue, sell or otherwise cause to become
outstanding any of its own capital stock, and each of such rights and
commitments will terminate on or before the Closing. There are no outstanding
stock appreciation, phantom stock, profit participation or similar rights with
respect to any Continuing Subsidiary, nor is any Continuing Subsidiary obligated
or committed to issue any such rights. There are no voting trusts, proxies or
other agreements or understandings with respect to the voting of any capital
stock of any Continuing Subsidiary. Except for the shares of the Continuing
Subsidiaries and the Excluded Subsidiaries, Biopop does not own any debt or
equity investment in any person other than as provided on Schedule 3.06.
Section 3.07. No Adverse Change.
Except as set forth in Schedule 3.07, since December 28, 1997, there has
not been: (a) any Material Adverse Effect; (b) any loss, damage or condemnation
of any of the properties of the Company or any Continuing Subsidiary that, but
for insurance or contractual indemnification or other similar rights, would
have, individually or in the aggregate, a Material Adverse Effect; (c) any
increase, other than in the ordinary course of business, in the rates of pay of
any of the employees of the Company or any Continuing Subsidiary; (d) any
material labor dispute or disturbance relating to the Company or any Continuing
Subsidiary or the Business; (e) any borrowings or guarantees in excess of
$50,000 in the aggregate by the Company or any Continuing Subsidiary other than
in the ordinary course of business consistent with past practice; (f) any Lien
made on any of the properties or Assets of the Company in excess of $50,000 in
the aggregate, except for Permitted Liens; or (g) any sale, transfer or other
disposition of Assets other than in the ordinary course of business consistent
with past practice or as contemplated by this Agreement or the Restructuring.
-22-
<PAGE>
Section 3.08. No Litigation.
(a) Except as listed in Schedule 3.08 attached hereto, there is no
litigation, arbitration proceeding, governmental investigation, citation or
action of any kind pending or, to the Knowledge of the Sellers, proposed or
threatened (a) against either New River, Biopop or any Continuing Subsidiary,
(b) relating to the Business or the Restructuring or the assets, properties or
products of the Company or any Continuing Subsidiary or (c) that seeks
restraint, prohibition, damages or other relief in connection with this
Agreement, the Restructuring or the consummation of the transactions
contemplated hereby or thereby.
(b) Except as listed in Schedule 3.08 attached hereto, there is no
litigation, arbitration proceeding, governmental investigation, citation or
action of any kind pending or, to the actual knowledge of Magnus Lundberg or
Philip K. Moody (Chiron's designees to the Biopop Board of Directors), proposed
or threatened against Chiron (to the extent relating to the Business, Biopop,
any Continuing Subsidiary or the Preferred Stock).
Section 3.09. Title to and Sufficiency of Assets.
The Company and the Continuing Subsidiaries own good and marketable title
to the Assets (or, with respect to Assets held pursuant to leases or licenses,
valid and current leasehold interests in or licenses to the Assets), free and
clear of any and all Liens, except Permitted Liens. Except as set forth on
Schedule 3.09, the Assets include all tangible and intangible assets, contracts
and rights necessary or required for, or used in, the operation of the Business
as currently conducted or reflected on the Pro Forma Closing Balance Sheet
(excluding Assets acquired or sold or otherwise disposed of in the ordinary
course of the Business after September 27, 1998). Except as set forth on
Schedule 3.09, there are no Assets or Real Property used in the operation of the
Business and owned by any person other than the Company or a Continuing
Subsidiary that will not be leased or licensed to the Company, the Continuing
Subsidiaries or the Purchaser under valid, current leases or license
arrangements. Except as set forth on Schedule 3.09, the Assets are in good
repair and operating condition (subject to normal wear and tear) and, to the
Knowledge of the Sellers, there are no facts or conditions affecting the Assets
or Real Property which could, individually or in the aggregate, interfere in any
material respect with the use, occupancy or operation thereof as currently used,
occupied or operated, or their adequacy for such use.
Section 3.10. Inventory.
Except to the extent of the reserves therefor reflected on the books and
records of the Company and the Continuing Subsidiaries: (i) all inventory of the
Company and the Continuing Subsidiaries is of merchantable quality and is usable
and salable by the Company and the Continuing Subsidiaries and in accordance
with historical sales practices in the ordinary course of the Business; and (ii)
such inventory does not include any items which are obsolete, damaged,
excessive, below standard quality or slow moving (i.e., items that are for
-23-
<PAGE>
discontinued or expected to be discontinued product lines, or items in
respect of which reserves should have been taken in accordance with GAAP).
Section 3.11. Books and Records.
The books and records of the Company and the Continuing Subsidiaries are
complete and correct in all material respects and the Company has made available
to the Purchaser for examination the originals or true and correct copies of all
documents material to the Business as conducted prior to the Closing and all
other documents which the Purchaser has reasonably requested in connection with
the transactions contemplated by this Agreement.
Section 3.12. Contracts.
Schedule 3.12 attached hereto is a true and complete list of all of the
Contracts that constitute: (a) a lease of any interest in any real property; (b)
a lease of any personal property with aggregate annual rental payments in excess
of $50,000; (c) an agreement to purchase or sell a capital asset for a price in
excess of $50,000; (d) an agreement relating to the borrowing or lending of
money in excess of $50,000; (e) a guaranty, contribution agreement or other
agreement that includes any indemnification, contribution or support obligation
(contingent or otherwise) in excess of $50,000; (f) an agreement limiting in any
respect the Company's or any Continuing Subsidiary's ability to compete in any
line of business or with any person or to conduct the Business; (g) any other
agreement involving (contingent or otherwise) an amount over its term in excess
of $50,000 (other than purchase orders for inventory in the ordinary course of
the Business); and (h) any other material licenses (including, without
limitation, any material software license), co-development, marketing,
distribution or joint venture agreement which agreement has an aggregate cost or
value of $50,000 or more to the Company and its Continuing Subsidiaries. The
Company has delivered to the Purchaser true and complete copies, or, in the case
of oral agreements, accurate summaries of the terms thereof, of each Contract
listed on Schedule 3.12. Except for the Contracts listed on Schedule 3.12, there
is no material oral or written note, bond, mortgage, indenture, license,
contract, lease, agreement or other instrument or obligation to which the
Company or any of the Continuing Subsidiaries is a party or by which any of
their respective properties are bound or that otherwise relates to the Business.
All of the Contracts listed on Schedule 3.12 are valid and in full force and
effect, and consummation of the transactions contemplated by this Agreement
(including, without limitation, the Restructuring) will not cause such Contracts
to cease to be in full force and effect. Except as described on Schedule 3.12,
each of the Company and the Continuing Subsidiaries has performed and, to the
Knowledge of the Sellers, every other party has performed, each material term,
covenant and condition of each Contract listed on Schedule 3.12 that is to be
performed by any of them at or before the date hereof and is not in material
default under any such Contract. Except as described on Schedule 3.12, no event
has occurred that would, with the passage of time or compliance with any
applicable notice requirements, constitute a breach or default in any material
respect by the Company or any Continuing Subsidiary or, to the Knowledge of the
Sellers, any other party under any material Contract, and, to the Knowledge of
the Sellers, no party to any material Contract intends to cancel, terminate or
exercise any option under any such Contract.
-24-
<PAGE>
Section 3.13. Accounts Receivable.
Schedule 3.13 contains a complete and accurate summary aging of all of the
accounts receivable of the Company and the Continuing Subsidiaries set forth on
the books and records of the Company and the Continuing Subsidiaries as of
September 27, 1998, and a complete and accurate aging of all such accounts
receivable, on a line item basis, with respect to the 50 largest accounts,
without providing the identity of such accounts. Except as set forth on Schedule
3.13, all of the accounts receivable of the Company and the Continuing
Subsidiaries: (i) represent sales actually made in the ordinary course of the
Business for goods or services delivered or rendered to unaffiliated customers
in bona fide arm's length transactions, (ii) constitute valid claims, (iii) to
the Knowledge of the Sellers, are collectible in full within the longer of 90
days of the date they were created or the payment terms given with respect to
such account at the aggregate recorded amounts thereof net of the reserve
therefor without right of recourse, defense, deduction, return of goods,
counterclaim or offset, and (iv) have not been extended or rolled over in order
to make them current.
Section 3.14. Intellectual Property.
(a) ______ Except as set forth on Schedule 3.14, the Company and the
Continuing Subsidiaries are (or, in the case of the Continuing Subsidiaries,
will be following the Restructuring) the sole and exclusive owners of, or have a
valid license to use, all the Intellectual Property, free and clear of all
Liens, except Permitted Liens and the Intellectual Property constitutes all of
the Intellectual Property necessary for the conduct of the Business. Schedule
3.14 contains a complete and accurate list of all patents, patent applications,
proprietary software, copyright registrations, trademarks, trade names, service
marks and registrations for and applications for registration of the foregoing
included in the Intellectual Property.
(b) ______ All grants, registrations and applications included in the
Intellectual Property (i) are valid, subsisting, in proper form and enforceable,
and have been duly maintained, including the submission of all necessary filings
and fees in accordance with the legal and administrative requirements of the
appropriate jurisdictions and (ii) have not lapsed, expired or been abandoned,
and no grant, registration or license therefor is the subject of any legal or
governmental proceeding before any registration authority in any jurisdiction.
(c) ______ Neither the Company nor New River have any notice that any third
party is engaging in conduct which conflicts with or infringes in any way any
Intellectual Property. The conduct of the Business (including, without
limitation, the use of the Intellectual Property) as currently conducted does
not conflict with or infringe (and the conduct of business by Biopop and its
Subsidiaries prior to the Closing has not and will not conflict with or
infringe) in any way any proprietary right of any third party in a way that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect, and, except as set forth on Schedule 3.14, there is no
claim, suit, action or proceeding pending or, to the Knowledge of the Sellers,
threatened against Biopop, any Subsidiary of Biopop, or either Seller (i)
alleging any such conflict or infringement with any third party's proprietary
rights, or (ii) challenging the ownership, use, validity or enforceability of
the Intellectual Property.
-25-
<PAGE>
Section 3.15. Historical Financial Statements.
The Year-End Historical Financial Statements (including any related notes
and schedules) have been prepared in accordance with GAAP, consistently applied
throughout the periods indicated, except as disclosed in the notes thereto, and
fairly present in all material respects the consolidated financial position of
Biopop and its Subsidiaries or the predecessor company to Biopop and its
Subsidiaries as of the dates thereof and the results of operations and cash
flows of Biopop and its Subsidiaries or the predecessor company to Biopop and
its Subsidiaries for the periods then ended. The Interim Historical Financial
Statements (including any related notes and schedules) were prepared in
accordance with GAAP applied on a consistent basis, subject to normal year-end
closing adjustments in accordance with past practice and the lack of full
footnote presentations and fairly present in all material respects the
consolidated financial position of Biopop and its Subsidiaries or the
predecessor company to Biopop and its Subsidiaries as of the date thereof and
the results of operations and cash flows of Biopop and its Subsidiaries or the
predecessor company to Biopop and its Subsidiaries for the period then ended,
subject to such closing adjustments as described in this sentence. Except as
disclosed in the notes to the Historical Financial Statements or Schedule 3.15,
there has been no change in any of the significant accounting (including tax
accounting) policies, practices or procedures of the Company and the
Subsidiaries since January 1, 1995.
Section 3.16. Pro Forma Closing Balance Sheet; No Liabilities.
The Pro Forma Closing Balance Sheet was derived from the consolidated
balance sheet contained in the Historical Financial Statements. To the Knowledge
of the Sellers, no adjustments (other than the adjustments described in the
notes to the Pro Forma Closing Balance Sheet) are necessary to convert the
consolidated balance sheet contained in the Historical Financial Statements to a
balance sheet that would fairly represent the consolidated balance sheet of the
Company and the Continuing Subsidiaries, assuming that the Closing Date was
September 27, 1998. Except for any liability or obligation arising under
Contracts disclosed on Schedule 3.12 or any Contracts not required to be
disclosed thereon (no liability or obligation of which arises out of any
material breach or material default under such Contracts), none of the Company
or any of the Continuing Subsidiaries had at September 27, 1998, or has incurred
since that date, any liabilities or obligations (whether known or unknown,
absolute or contingent, accrued or unaccrued, asserted or unasserted, or
otherwise due or to become due) of any nature other than liabilities,
obligations or contingencies (i) which were accrued or reserved against on the
Pro Forma Closing Balance Sheet, (ii) which were incurred after September 27,
1998 in the ordinary course of business consistent with past practices, or (iii)
that would not have, individually or in the aggregate, a Material Adverse
Effect. The Sellers make no representations as to the compliance of the Pro
Forma Closing Balance Sheet with GAAP.
Section 3.17. Pro Forma Income Statements.
The Pro Forma Income Statements were derived from the consolidated income
statements contained in the Historical Financial Statements. To the Knowledge of
the Sellers, no adjustments (other than the adjustments described in the notes
to the Pro Forma Income Statements) are necessary to convert the Historical
-26-
<PAGE>
Income Statements to income statements that would fairly represent the
consolidated income statements of the Company and the Continuing Subsidiaries
taking into consideration all assumptions as described in Schedule 1.66. The
expenses eliminated in the pro forma adjustments presented in the Pro Forma
Income Statements do not represent expenses that the Purchaser would be required
to incur, in whole or in part, in order to operate the Business after the
Closing Date in substantially the same manner as the Business was operated prior
to the Closing Date. The Sellers make no representation as to the compliance of
the Pro Forma Income Statements with GAAP.
Section 3.18. Insurance.
All properties and operations of the Company and the Continuing
Subsidiaries (including, without limitation, the Business) are insured for their
respective benefits, in amounts as set forth on Schedule 3.18. Such operations
are conducted under valid and enforceable policies issued by insurers of
recognized responsibility. All such policies are set forth on Schedule 3.18
attached hereto including on such schedule the type of coverage, the persons
insured, the insurer, the current premiums, the expiration date and the amount
of coverage for each such policy.
Section 3.19. Employee Benefit Plans.
(a) ______ Attached hereto as Schedule 3.19 is a true and complete list of
each Plan. Schedule 3.19 identifies (i) each Plan that is a "pension plan" (as
defined in Section 3(2) of ERISA) (the "Pension Plans"), and denotes those
Pension Plans intended to be qualified under Section 401(a) of the Code (the
"Qualified Plans") and (ii) each Plan that is a "welfare plan" (as defined in
Section 3(1) of ERISA) (the "Welfare Plans"). True and correct copies of each
Plan and related documents including, but not limited to, the most recent
determination letter received from the IRS, the most recent application for
determination letter submitted to the IRS, summary plan descriptions, and the
three most recent annual reports have been delivered to the Purchaser. The
Special Performance Unit has been terminated and none of Biopop, the Company,
any Continuing Subsidiary or Excluded Subsidiary has any further liability with
respect thereto.
(b) ______ To the Knowledge of the Sellers, each Qualified Plan complies in
all material respects with applicable Law as of the date hereof, and the IRS has
issued favorable determination letters to the effect that the form of Qualified
Plans (or predecessor plans) satisfy the requirements of Section 401(a) and
related Sections of the Code. To the Knowledge of the Sellers, there are no and
there are not expected to be any facts or circumstances that could reasonably be
expected to jeopardize or adversely affect the qualification under Section
401(a) of the Code of any Qualified Plan.
(c) ______ As of the Closing Date, full payment will be made to each Plan
of all contributions that are required under the terms thereof or any collective
bargaining agreement or other agreement or by Law (including, without
limitation, all contributions, insurance premiums or intercompany charges) and
under ERISA or the Code to be made on or prior to the Closing Date or provided
for by Biopop as applicable by full accruals on its financial statements with
regard to amounts that have been fixed but are not required to be paid as of the
Closing Date
-27-
<PAGE>
(d) ______ Each Plan has been at all times administered in accordance with
its terms. In addition, each Plan complies in all material respects, and has
been at all times administered in all material respects in accordance with, any
applicable provisions of ERISA and the Code and the rulings and regulations
promulgated thereunder (including the continuation coverage requirements of
group health plans under Code Section 4980B(f) and Section 602 of ERISA), and
all other applicable Laws. No suit, claim, arbitration or complaints to or by
any person or governmental authority have been filed or, to the Knowledge of the
Sellers, are contemplated or threatened, against any Plan, any trustee or
fiduciaries thereof, Biopop, the Company, any Continuing Subsidiary or any
Excluded Subsidiary, any ERISA Affiliate, any director, officer, or employee
thereof, or any of the assets of any trust of any Plan.
(e) ______ None of Biopop, the Company, any Continuing Subsidiary or any
Excluded Subsidiary or any ERISA Affiliate has received a notice of, or
incurred, any withdrawal liability with respect to any "multiemployer plan" (as
defined in Section 3(37) and 4001(a)(3) of ERISA). None of Biopop, the Company,
any Continuing Subsidiary, any Excluded Subsidiary or any ERISA Affiliate has
ever contributed to, contributes to, has ever been required to contribute to, or
otherwise participated in or participates in or in any way directly or
indirectly has any liability with respect to any "multiemployer plan" (as
defined in Section 3(37) and 4001(a)(3) of ERISA).
(f) ______ None of Biopop, the Company, any Continuing Subsidiary, any
Excluded Subsidiary or any ERISA Affiliate has ever contributed to, contributes
to, has ever been required to contribute to, or otherwise participated in or
participates in or in any way directly or indirectly has any liability with
respect to any "defined benefit plan" (as defined in Section 414 of the Code and
Section 3(35) of ERISA), any plan subject to Section 412 of the Code, Section
302 of ERISA or Title IV of ERISA.
(g) ______ None of Biopop, the Company, any Continuing Subsidiary, any
Excluded Subsidiary or any ERISA Affiliate has incurred any material liability
with respect to any Welfare Plan or for "welfare benefits" (as defined in
Section 419 of the Code) including, without limitation, any liability for tax
under Section 5000 of the Code that is not fully reflected in the Financial
Statements.
(h) ______ No "prohibited transaction," within the meaning of Section 4975
of the Code and Section 406 of ERISA, has occurred or is expected to occur with
respect to any Plan (and the consummation of the transaction contemplated by
this Agreement will not constitute or directly or indirectly result in such a
prohibited transaction).
(i) ______ Biopop, the Company, each Continuing Subsidiary, each Excluded
Subsidiary, each ERISA Affiliate, each Plan, and each "plan sponsor" (within the
meaning of Section 3(16) of ERISA) of each "welfare benefit plan" (within the
meaning of Section 3(1) of ERISA) has complied in all material respects with the
requirements of Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA.
(j) ______ With respect to each Plan that is funded mostly or partially
through an insurance policy, none of Biopop, the Company, any Continuing
Subsidiary or any ERISA
-28-
<PAGE>
Affiliate has any liability in the nature of retroactive rate adjustment, loss
sharing arrangement or other actual or contingent liability arising wholly or
partially out of events occurring on or before the Closing.
(k) ______ The consummation of the transactions contemplated by this
Agreement will not give rise to any liability, including, without limitation,
liability for severance pay, unemployment compensation, termination pay or
withdrawal liability, or accelerate the time of payment or vesting (other than a
partial termination and vesting of affected employee's accounts in the General
Injectables & Vaccines, Inc. 401(k) Plan) or increase the amount of compensation
or benefits due to any employee, director, shareholder or beneficiary of the
Company or a Continuing Subsidiary (whether current, former, or retired) or
their beneficiaries solely by reason of such transactions. No amounts payable
under any Plan or otherwise payable by the Company or any Continuing Subsidiary
as a result of this Agreement or the Restructuring will fail to be deductible
for federal income tax purposes by virtue of Section 280G or 162(m) of the Code.
None of Biopop, the Company, any Continuing Subsidiary or any ERISA Affiliate
maintains, contributes to, or in any way provides for any benefits of any kind
whatsoever (other than under Section 4980B of the Code, the Federal Social
Security Act, or a plan qualified under Section 401(a) of the Code) to any
current or future retiree or terminee. None of Biopop, the Company, any
Continuing Subsidiary, any ERISA Affiliate, or any officer or employee thereof,
has made any promises or commitments, whether legally binding or not, to create
any additional plan, agreement, or arrangement, or to modify or change any
existing Plan. No event, condition or circumstance exists that could result in
an increase of the benefits provided under any Plan or the expense of
maintaining any Plan from the level of benefits or expense incurred for the most
recent fiscal year ended before the Closing. None of Biopop, the Company, any
Continuing Subsidiary or any ERISA Affiliate has any unfunded liabilities
pursuant to any Plan that is not intended to be qualified under Section 401(a)
of the Code. No event, condition, or circumstance exists that would prevent the
amendment or termination of any Plan.
Section 3.20. Compliance with Applicable Law.
Except as set forth in Schedule 3.20:
(a) ______ (i) The Company (which, for purposes of this Section 3.20, is
defined to include Biopop and the Continuing Subsidiaries) holds, and is in
compliance in all material respects with the terms of all of the Permits, (ii)
no fact exists or event has occurred, and no action or proceeding is pending or,
to the Knowledge of the Sellers, threatened, that has a reasonable possibility
of resulting in a revocation, non-renewal, termination, suspension or other
impairment of any Permits, (iii) the Business is not being conducted (and has
not been conducted) in violation of any applicable Law, and (iv) no
investigation or review by any federal, state, local or foreign legislature,
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority (a "Governmental Entity") with
respect to the Company, any Continuing Subsidiary or the Business is pending or,
to the Knowledge of the Sellers, threatened and (b) no Governmental Entity has
indicated to the Company or either Seller an intention to conduct such
investigation or review.
-29-
<PAGE>
(b) ______ Neither the Company, New River, nor any of their respective
officers, directors or employees, has had or may reasonably be expected to have:
(i) criminal culpability with respect to, or has been or may reasonably be
expected to be excluded from participation in, the Medicare, Medicaid or CHAMPUS
programs or any other health care program or excluded from receiving payment
from any third-party payor (each such program and payor, a "Medical
Reimbursement Program") for its or his corporate or individual actions or
failure to act, or (ii) individual culpability for matters under investigation
by the Office of the Inspector General of the United States Department of Health
and Human Services or other Governmental Entity relating to or in connection
with any Medical Reimbursement Program or any Law relating to healthcare.
(c) ______ Neither the Company, New River, nor any of their respective
officers, directors or employees has ever been charged with or, to the Knowledge
of the Sellers, investigated for committing any violation of any state or
federal statute or regulation involving fraudulent and abusive practices
relating to its or his participation in any Medical Reimbursement Program,
including but not limited to fraudulent billing practices. The Company has
properly and legally billed all intermediaries and third party payors for
services rendered under any Medical Reimbursement Program and has maintained its
records to reflect such billing practices. Other than in the ordinary course of
business, no funds are now or will be withheld by any Medicare intermediary or
third party payor. Neither the Company, New River or their respective
Affiliates, any of their respective officers, directors or employees has engaged
in any of the following: (i) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration (x)
in return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by any Medical Reimbursement Program, or (y) in return
for purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or ordering of any good, facility, service, or item for
which payment may be made in whole or in part by any Medical Reimbursement
Program; or (ii) billing a patient in violation of any federal or state Law that
prohibits referrals for certain services by physicians or providers that have a
financial interest in the entity receiving referrals.
Section 3.21. Transactions With Affiliates.
Except as set forth on Schedule 3.21, neither Biopop, any Continuing
Subsidiary nor any Excluded Subsidiary has, in the ordinary course of business
or otherwise, purchased, leased or otherwise acquired within two years prior to
the date hereof any property or assets or obtained any services from, or sold,
leased or otherwise disposed of any property or assets or provided any services
to (except for transactions involving less than $100,000 in the aggregate) any
officer, employee or Affiliate of the Company, any Continuing Subsidiary or any
Excluded Subsidiary (excluding transfers between any of the Company, any
Continuing Subsidiary or any Excluded Subsidiary) other than compensation paid
as salary or bonus.
-30-
<PAGE>
Section 3.22. Fees and Expenses of Brokers and Others.
Other than Bear, Stearns & Co., Inc. (whose fees and expenses shall be paid
by the Company as provided for in the letter agreement between the Company and
Bear, Stearns & Co. Inc. dated January 23, 1998 as amended by the letter dated
December 3, 1998, copies of which have been provided to the Purchaser), neither
of the Sellers nor Biopop nor any of their respective Affiliates has employed,
nor is subject to the valid claim of, any broker, finder, investment banker,
consultant, financial advisor or other intermediary in connection with the
transactions contemplated by this Agreement or who might be entitled to a fee or
commission in connection with this Agreement or the transactions contemplated
hereby.
Section 3.23. Tax Matters.
Except as set forth in Schedule 3.23 attached hereto:
(a) ______ Biopop has filed or caused to be filed all Tax Returns required
to have been filed by or for it or any Subsidiary; none of those Tax Returns has
been the subject of an audit or examination by any tax authority nor, to the
Knowledge of the Sellers, has been noticed for such audit or examination.
Neither Biopop, any Subsidiary, nor either Seller has received written notice
from a taxing authority in a jurisdiction where Biopop does not file Tax Returns
that Biopop, any Subsidiary, or the Business is or may be subject to taxation by
that jurisdiction. All of those Tax Returns are true, correct and complete in
all material respects.
(b) ______ Biopop has paid or made adequate provision for all Taxes that
have become due pursuant to those Tax Returns or pursuant to any assessment or
adjustment made with respect thereto. All deficiencies assessed as a result of
any audit or examination of any of those Tax Returns by federal, state, local or
foreign tax authorities have been paid or reserved on the financial statements
of Biopop in accordance with GAAP consistently applied. There are no ongoing
proposed tax assessments, suits, actions, claims, investigations or inquiries by
any tax authority with respect to the Company or any Subsidiary.
(c) ______ Neither Biopop or any Subsidiary has granted (and is not subject
to) any waiver of the period of limitations for the assessment of Taxes for any
currently open taxable period, and no unpaid Tax deficiency has been asserted
against or with respect to the Company or any Subsidiary by a taxing authority.
(d) ______ All amounts required to be collected or withheld by Biopop and
each of its Subsidiaries with respect to Taxes have been duly collected or
withheld and any such amounts that are required to be remitted on or prior to
the Closing Date to any taxing authority have been duly remitted.
(e) ______ There are no tax rulings, requests for rulings, closing
agreements or changes of accounting method relating to Biopop or any of its
Subsidiaries that could materially affect its liability for Taxes for any period
after the Closing Date and none of Biopop or any of its Subsidiaries will be
required to include in a taxable period ending after the Closing Date taxable
income attributable to a prior taxable period that was not recognized in that
prior taxable period as a result of the installment method of accounting, the
completed contract method of accounting, the long-term contract method of
-31-
<PAGE>
accounting, the cash method of accounting or Section 481 of the Code or
comparable provisions of state or local or foreign Tax Law.
(f) ______ As of December 28, 1997, no excess loss account (within the
meaning of Treasury Regulations section 1.1502-19) exists with respect to any
Subsidiary of Biopop, and, to the Knowledge of the Sellers, neither the Company
nor any of its Subsidiaries has any material deferred gain or loss (i) arising
from deferred intercompany transactions (within the meaning of Treasury
Regulations section 1.1502-13), or (ii) with respect to the stock or obligations
of any other member of the Company's affiliated group (as described in Treasury
Regulations section 1.1502-14).
(g) ______ Neither the Company nor any of its Subsidiaries has filed a
consent under section 341(f) of the Code or any comparable provision of a state
revenue statute.
(h) ______ Any amount or other entitlement that could be received (whether
in cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer or director
of the Company or any of its Subsidiaries who is a "disqualified individual" (as
such term is defined in proposed Treasury Regulations section 1.280G-1) would
not be characterized as an "excess parachute payment" or a "parachute payment"
(as such terms are defined in section 280G(b)(1) of the Code).
(i) ______ The Company has filed a consolidated Return for federal income
Tax purposes on behalf of itself and other members of the affiliated group
(within the meaning of section 1504 of the Code) of which it is the parent
corporation since at least the date on which it was incorporated.
(j) ______ There are no Tax sharing agreements to which the Company or any
of its Subsidiaries is a party.
Section 3.24. Environmental Matters.
Except as set forth on Schedule 3.24, (i) the Company and the Continuing
Subsidiaries are in material compliance with all applicable Environmental Laws;
(ii) the Company and the Continuing Subsidiaries have all Permits required by
the Environmental Laws necessary for the operation of the businesses of the
Company and the use of the Assets, taken as a whole, as currently being
conducted, and is in compliance with all such Permits; (iii) there has been no
Release or threatened Release of Hazardous Substances at or shipment of
Hazardous Substances from the Real Property or from current or previously owned
or operated real property that would result in liability under the Environmental
Laws or that required or with the passage of time is likely to require reporting
to any governmental regulatory agency or entity; (iv) no Hazardous Substances or
underground or above-ground storage tank is contained in or located at, in, on
or under any Real Property owned by the Company or the Continuing Subsidiaries,
except for such Hazardous Substances as are used, stored or maintained in the
ordinary course of the Business and in full compliance with applicable
Environmental Laws; (v) neither the Company nor any of the Continuing
Subsidiaries has received notice of any actual or threatened civil, criminal or
administrative suit, claim, action, proceeding or investigation related to the
-32-
<PAGE>
Company, the Business or the Real Property or any currently or previously
owned or operated real property arising under any Environmental Laws; (vi) none
of the Real Property, nor any currently or previously owned or operated real
property, is listed or proposed for listing on the National Priorities List
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., or any similar inventory of sites
requiring investigation, monitoring or remediation that is maintained by any
state or locality; (vii) neither the Company nor any Continuing Subsidiary will
by virtue of the Restructuring contractually or otherwise assume or succeed to,
and, to the Knowledge of the Sellers, neither the Company nor any Continuing
Subsidiary has otherwise contractually or otherwise assumed or succeeded to, any
environmental liabilities of any predecessors or any other person or entity;
(viii) none of the items set forth on Schedule 3.24 are reasonably to be
expected to have, individually or in the aggregate, a Material Adverse Effect;
and (ix) the Company and the Sellers have provided to Purchaser all
environmental reports, assessments, audits, studies, investigation, data,
environmental permits and other material written environmental information
respectively in their custody, possession or control concerning the Real
Property or any currently or previously owned or operated real property, the
Assets and the Business. This Section 3.24 shall be the only representation and
warranty by the Sellers with respect to environmental matters.
Section 3.25. Orders and Commitments.
Except as set forth in Schedule 3.25 attached hereto, all accepted and
unfulfilled orders for the sale of products and the performance of services
entered into by the Company or any Continuing Subsidiary and all outstanding
contracts or commitments for the purchase of supplies, materials and services
used or to be used in the Business were made in bona fide transactions in the
ordinary course of the Business consistent with past practice.
Section 3.26. Labor Matters.
Neither Biopop, any Continuing Subsidiary nor any Excluded Subsidiary is a
party to, or bound by, any collective bargaining agreement, contract or other
understanding with a labor union or labor organization. There has not occurred
or, to the Knowledge of the Sellers, been threatened any strike, slowdown,
picketing, work stoppage, concerted refusal to work overtime or other similar
labor activity with respect to any employees employed by Biopop, any Continuing
Subsidiary or any Excluded Subsidiary. Except as set forth on Schedule 3.26, as
of the date hereof, there is no suit, claim, action, charge, proceeding or
investigation pending or, to the Knowledge of the Sellers, threatened between
Biopop, any Continuing Subsidiary or Excluded Subsidiary and any of their
respective employees, and, to the Knowledge of the Sellers, as of the date
hereof, there are no organizational efforts presently being made involving any
of the employees of Biopop, any Continuing Subsidiary or Excluded Subsidiary.
Except as set forth on Schedule 3.26, Biopop, the Continuing Subsidiaries and
the Excluded Subsidiaries have complied in all material respects with all Laws
relating to the employment of employees, including without limitation, all such
laws relating to labor relations, equal employment, fair employment practices,
entitlements, prohibited discrimination, worker health and safety or other
similar employment practices or acts, wages, hours, collective bargaining, and
the payment of social security and similar Taxes, and, as of the date hereof, no
person has, to the Knowledge of the Sellers, asserted that Biopop, any
-33-
<PAGE>
Continuing Subsidiary or Excluded Subsidiary is liable in any material
amount for failure to comply with any of the foregoing.
Section 3.27. Bank Accounts; Powers of Attorney.
Schedule 3.27 sets forth (i) the name of each bank in which the Company or
any Continuing Subsidiary has an account or safe deposit box and the names of
all persons authorized to draw thereon or to have access thereto, and (ii) the
names of all persons, if any, holding powers of attorney from the Company or any
Continuing Subsidiary and a summary statement of the terms thereof.
Section 3.28. Customers and Suppliers.
(a) ______ Schedule 3.28(a) hereto sets forth a list of the Company's and
the Continuing Subsidiaries' 50 largest customers without providing the identity
of such customers in order of dollar volumes of sales for each of its last two
fiscal years and for the period from the end of the last fiscal year through
September 27, 1998, showing the approximate total sales in dollars by the
Company and each Continuing Subsidiary to each such customer during each such
period.
(b) ______ Schedule 3.28(b) hereto sets forth a list of the 25 largest
suppliers of the Company and the Continuing Subsidiaries in order of dollar
volume of purchases for each of the last two fiscal years and for the period
from the end of the last fiscal year through September 27, 1998, showing the
approximate total purchases in dollars by the Company and each Continuing
Subsidiary from each such supplier during each such period.
(c) ______ Except as set forth on Schedule 3.28(c): (i) neither the Company
nor any Continuing Subsidiary is engaged in any disputes with customers or
suppliers except for minor returns, bill adjustments and similar disputes in the
ordinary course of the Business not exceeding $2,500 with respect to any single
return, bill adjustment or similar dispute or $50,000 in the aggregate, and (ii)
there has not been any adverse change, and there are no facts known to the
Company or the Sellers which may reasonably be expected to indicate that any
material adverse change may occur, in the business relationship of the Company
or any of its Continuing Subsidiaries with any customer or supplier named on
Schedule 3.28(a) or Schedule 3.28(b). To the Knowledge of the Sellers, none of
the customers or suppliers named on Schedule 3.28(a) or Schedule 3.28(b) is
considering termination, non-renewal or any adverse modification of its
arrangements with the Company or any of its Continuing Subsidiaries, and the
consummation of the transactions contemplated by this Agreement will not, to the
Knowledge of the Sellers, have any material adverse effect on the Company's
relationship with any of such suppliers or customers. To the Knowledge of the
Sellers, no customer has a present intent to return products to the Company or
any Continuing Subsidiary, (i) the value of which would be material to the
Company and its Continuing Subsidiaries, and (ii) that the Company or its
Continuing Subsidiaries, as the case may be, would not be entitled to return to
the supplier or manufacturer in exchange for substantially the original invoice
cost to the Company or the Continuing Subsidiary, as the case may be.
-34-
<PAGE>
(d) ______ Schedule 3.28(d) hereto sets forth a complete and accurate
summary aging of all accounts payable of the Company and its Continuing
Subsidiaries as of September 27, 1998.
Section 3.29. Real and Personal Property.
Schedule 1.70 contains a complete and correct list of all Real Property
(including buildings and structures) that will be owned or leased by the Company
or any Continuing Subsidiary as of the Closing Date and all interests therein
(including a brief description of the property, the record title holder, the
location and the improvements thereon). All such Real Property and the equipment
therein, and the operations and maintenance thereof, comply in all material
respects with all applicable agreements and restrictive covenants and conform in
all material respects to all applicable Laws, including those relating to health
and safety, land use and zoning. No condemnation or other providing is pending
or, to the Knowledge of Sellers, threatened that would materially adversely
affect the use of any such property by the Company or any Continuing Subsidiary.
The Company has delivered a complete and correct list and brief description of
all equipment, machinery, computers, furniture, leasehold improvements, vehicles
and other personal property (other than Inventory) owned by the Company or any
of the Continuing Subsidiaries showing the net book value of such assets in
accordance with the Company's capitalization practices and all interests therein
as of September 27, 1998. The Company's and the Continuing Subsidiaries'
buildings and other structures, equipment and other physical assets (whether
leased or owned) are in good operating condition and repair, subject to ordinary
wear and tear.
Section 3.30. Year 2000.
Any reprogramming required to permit the Company and the Continuing
Subsidiaries to conduct their respective businesses without Material Adverse
Effect to the Company and the Continuing Subsidiaries taken as a whole, through
the proper functioning, in and following the Year 2000, of (i) the Company's and
the Continuing Subsidiaries' internal core computer systems and (ii) equipment
containing embedded microchips (including systems and equipment supplied by
third parties or with which the Company's or the Continuing Subsidiaries'
internal core computer systems interface) and the testing of all such systems
and equipment, as so reprogrammed were planned to have been completed by July 1,
1999 if the transactions contemplated by this Agreement were not consummated.
Assuming that the reprogramming in the preceding sentence as may be necessary is
completed by the Purchaser pursuant to the Company's and the Continuing
Subsidiaries' current plan prior to July 1, 1999, the internal core computer and
management information systems of the Company and the Continuing Subsidiaries
are expected to be sufficient to permit the Company and the Continuing
Subsidiaries to conduct their respective businesses without Material Adverse
Effect to the Company and the Continuing Subsidiaries, taken as a whole. To the
Knowledge of the Sellers, the cost to the Company and the Continuing
Subsidiaries of such reprogramming and testing to the Company and the Continuing
Subsidiaries (excluding the failure of systems or equipment supplied by third
parties) is not expected to result in a Material Adverse Effect to the Company
and the Continuing Subsidiaries taken as a whole. Other than the provisions
herein, the Sellers make no representations or warranties with respect to
-35-
<PAGE>
Biopop's or its Subsidiaries' internal or external core computer systems as
they relate to Year 2000 readiness, any other computer products or systems owned
or used by Biopop or its Subsidiaries, any date-dependent functions or any Year
2000 matters.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
Section 4.01. Organization.
The Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
Section 4.02. Authority; Enforceability.
The execution, delivery and performance of this Agreement and of all of the
documents and instruments required hereby from the Purchaser are within the
corporate power of the Purchaser. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of the Purchaser, and no other corporate
proceedings on the part of the Purchaser are necessary to authorize this
Agreement or to consummate the transactions contemplated herein. This Agreement
has been, and the other documents and instruments required hereby to which the
Purchaser is a party will be, duly and validly executed and delivered by the
Purchaser. This Agreement is, and the other documents and instruments required
hereby will be, when executed and delivered by the parties hereto, the valid and
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms.
Section 4.03. Consents and Approvals; No Violation or Conflict by the
Purchaser.
Except for any applicable filing requirements under the HSR Act and the
Exchange Act, no notice to, filing or registration with, and no permit,
authorization, consent or approval of, any governmental, regulatory or
self-regulatory agency is necessary or is required to be made or obtained by the
Purchaser in connection with the execution and delivery of this Agreement by the
Purchaser or for the consummation by the Purchaser of the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Purchaser and the consummation of the transactions contemplated hereby do
not and will not (a) conflict with or result in any breach of any provision of
the charter or bylaws of the Purchaser, (b) conflict with or violate any Law,
judgment, order, writ, injunction or decree binding on the Purchaser or any of
its properties or assets or (c) conflict with or violate any contract or
agreement to which the Purchaser is a party or by which it is bound, the breach
of which could reasonably be expected to have a material adverse effect on the
Purchaser's ability to perform its obligations hereunder.
-36-
<PAGE>
Section 4.04. Fees and Expenses of Brokers and Others.
Other than William Blair & Company, L.L.C. (whose fees shall be paid by the
Purchaser), the Purchaser has not employed, and is not subject to the valid
claim of, any broker, finder, investment banker, consultant, financial advisor
or other intermediary in connection with the transactions contemplated by this
Agreement who might be entitled to a fee or commission in connection with this
Agreement or the transaction contemplated hereby.
Section 4.05. Investment Representation.
The Purchaser hereby represents that it is acquiring the Common Stock for
its own account, for investment, and not with a view to the distribution or
resale thereof. With respect to any disposition of the Common Stock in the
future, the Purchaser represents and acknowledges that it understands that the
Common Stock has not been registered under the Securities Act or any applicable
state securities laws and that, consequently, they must be held indefinitely
unless subsequently registered under the Securities Act and such state
Securities laws for sale or disposition or unless a sale or disposition may be
made without registration under the Securities Act and such state securities
laws.
Section 4.06. Obligation to Fund.
The Purchaser has (or will have on the Closing Date) on hand cash or other
short-term investments in an amount sufficient (i) to pay in U.S. dollars the
Initial Consideration and (ii) to make in U.S. dollars the loan contemplated in
Section 2.03. The Purchaser will be able to pay the Contingent Consideration at
the time or times that such amounts become due and payable.
Section 4.07. Year 2000.
Any reprogramming required to permit the Purchaser and its Subsidiaries to
conduct their respective businesses without material adverse effect to the
Purchaser and its Subsidiaries taken as a whole, through the proper functioning,
in and following the Year 2000, of (i) the Purchaser's and its Subsidiaries'
internal core computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by third parties or with which the
Purchaser's or its Subsidiaries' internal core computer systems interface) and
the testing of all such systems and equipment, as so reprogrammed are planned to
be completed by September 28, 1999. Assuming that the reprogramming in the
preceding sentence as may be necessary is completed by the Purchaser prior to
September 28, 1999, the internal core computer and management information
systems of the Purchaser and its Subsidiaries are expected to be sufficient to
permit the Purchaser and its Subsidiaries to conduct their respective businesses
without material adverse effect to the Purchaser and its Subsidiaries, taken as
a whole. To the actual knowledge of the senior management of the Purchaser, the
cost to the Purchaser and its Subsidiaries of such reprogramming and testing to
the Purchaser and its Subsidiaries (excluding the failure of systems or
equipment supplied by third parties) is not expected to result in a material
adverse effect to the Purchaser and its Subsidiaries taken as a whole. Other
than the provisions herein, the Purchaser makes no representations or warranties
with respect to the Purchaser's or its Subsidiaries' internal or external core
computer systems as they relate to Year 2000 readiness, any other computer
products or systems owned or used by the Purchaser or its Subsidiaries, any
date-dependent functions or any Year 2000 matters.
-37-
<PAGE>
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business of the Company; Continued Ownership of
Common Stock.
(a) ______ Except as set forth on Schedule 5.01, during the period from the
date of this Agreement to the Closing, New River and, to the extent within its
control, Chiron shall cause the Company and the Continuing Subsidiaries and the
Excluded Subsidiaries to conduct their respective operations according to their
ordinary and usual course of the Business (provided, that the Company shall be
permitted to give effect to the Restructuring in accordance with Schedule 1.73)
and consistent with past practice, and New River and, to the extent within its
control, Chiron shall cause the Company and the Continuing Subsidiaries and
Excluded Subsidiaries to use their reasonable best efforts to preserve intact
their business organizations, to keep available the services of their officers
and employees and to maintain the goodwill of the Business and existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers and others having material business relationships with them. Without
limiting the generality of the foregoing, and except as otherwise set forth in
Schedule 5.01 or Schedule 1.73, prior to the Closing, New River and, to the
extent within its control, Chiron shall ensure that neither the Company nor any
Continuing Subsidiary will, without the prior written consent of the Purchaser:
(i) amend its charter or bylaws, in the case of a corporation, or its
partnership agreement, in the case of a partnership;
(ii) authorize for issuance or issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other debt or equity
securities or partnership interests;
(iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock or
partnership interests, or redeem, repurchase or otherwise acquire any of its
securities or any securities of its subsidiaries;
(iv) participate in any merger, consolidation or share exchange or other
business combination;
(v) ______ (A) incur or assume any debt other than in the ordinary course
of business and not in excess (in the aggregate) of $100,000 not currently
outstanding (except for trade payables in the ordinary course of business and
borrowings against existing bank lines of credit consistent with past practice),
(B) assume, guarantee, endorse or otherwise become liable or responsible for the
obligations of any person or otherwise incur any other contingent liability, (C)
make any loans, advances or capital contributions to, or investments in, any
other person, (D) enter into any contract or agreement other than in the
-38-
<PAGE>
ordinary course of business or in connection with the transactions
contemplated by this Agreement or (E) authorize any single capital expenditure
which is in excess of $25,000 or capital expenditures which are, in the
aggregate, in excess of $50,000 for the Company and the Continuing Subsidiaries,
taken as a whole, other than capital expenditures as to which the Company or any
Continuing Subsidiary is contractually committed as of the date hereof and which
is identified on Schedule 5.01;
(vi) adopt or amend (except as may be required by Law) any Plan, or (except
for normal increases in the ordinary course of the Business that are consistent
with past practices) increase in any manner the compensation or fringe benefits
of any director, officer or employee or pay any benefit not required by any
existing plan and arrangement (including, without limitation, the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(vii) acquire, sell, lease or dispose of any material assets outside the
ordinary course of business;
(viii) take any action other than in the ordinary course of business and in
a manner consistent with past practice with respect to accounting policies or
procedures;
(ix) make any tax election or settle or compromise any material tax
liability;
(x) ______ pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the balance sheets included in the
Financial Statements or incurred in the ordinary course of business since the
respective dates thereof; or
(xi) agree in writing or otherwise to take any of the foregoing actions.
(b) ______ Each Seller agrees that (i) (except for the conversion of the
outstanding shares of Preferred Stock) it will not sell, transfer, pledge,
hypothecate, divide, assign or otherwise alienate any shares of Common Stock or
Preferred Stock prior to the Closing and (ii) it shall take, or cause such
Affiliates as it controls to take, all such action within its control as may be
necessary or appropriate to effect the Restructuring in accordance with Schedule
1.73.
Section 5.02. No Solicitation.
Except as expressly contemplated by this Agreement and the Restructuring,
the Sellers and the Company shall not, after the date hereof, directly or
indirectly, through any Affiliate officer, director, employee, agent or
otherwise, solicit, initiate or encourage submission of proposals or offers from
any person relating to any acquisition or purchase of all or (other than in the
ordinary course of business) a substantial portion of the assets of, or any
equity interest in, or any business combination involving the Company or any
Continuing Subsidiary or any other Assets used in the Business, participate in
any negotiations regarding, or furnish to any other person any information with
-39-
<PAGE>
respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. Each Seller shall promptly advise the
Purchaser if any such proposal or offer, or any inquiry or contact from any
person with respect to any of the foregoing, is made to it.
Section 5.03. Access to Information.
Between the date of this Agreement and the Closing, the Purchaser and its
authorized representatives will be given reasonable access to: (i) New River,
together with the Company's legal advisors and accountants; and (ii) the books
and records of the Company, the Continuing Subsidiaries, the Excluded
Subsidiaries and the Business, provided that the parties contemplate that such
books and records will be made available in a manner intended to preserve the
confidentiality of the transactions contemplated herein prior to Closing;
provided further, however, that nothing in the foregoing proviso shall be deemed
to limit the Purchaser's and its representatives reasonable access thereto or to
restrict any disclosure that the Purchaser may be obligated to make under the
applicable Law. The Company and New River shall also provide representatives of
the Purchaser with reasonable access upon request to other personnel of the
Company and to the Company's premises and Real Property, including reasonable
access for environmental due diligence purposes; provided, however, that any
such access shall be conducted in a mutually satisfactory manner that is
intended to preserve the confidentiality of the transactions contemplated herein
prior to Closing; provided further, however, that nothing in the foregoing
proviso shall be deemed to limit the Purchaser's and its representatives
reasonable access thereto or to restrict any disclosure that the Purchaser may
be obligated to make under the applicable Law. Notwithstanding the foregoing,
New River and the Company shall have no obligation to provide the Purchaser with
the identity of any of the Company's customers or accounts. All such information
shall be kept confidential in accordance with the Confidentiality Agreement.
Without limiting the generality of the foregoing, but subject to the foregoing
qualifications, New River and the Company shall cooperate with the Purchaser and
its consultants in conducting a Year 2000 readiness review of the Company and
its Continuing Subsidiaries and a review of compliance by the Company and the
Continuing Subsidiaries with the matters set forth in Item 4 of Schedule 3.08.
Section 5.04. Best Efforts.
Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Law (including, without limitation, the HSR Act),
necessary to consummate and make effective the transactions contemplated by this
Agreement in accordance with the terms and conditions provided for herein. New
River and, to the extent within its control, Chiron also agree to use their
reasonable best efforts prior to the Closing to cause the Company and the
Continuing Subsidiaries to file termination statements for financing statements
for which the underlying obligations have been satisfied; provided, however,
that the failure to file such termination statements shall not in any way impact
the obligations of the Purchaser to consummate the transactions contemplated
hereby.
-40-
<PAGE>
Section 5.05. Public Announcements.
The Purchaser, Chiron and New River shall consult with each other before
the issuance of any press release or the making of any other public statement
with respect to this Agreement or any of the transactions contemplated herein.
None of the Purchaser, Chiron or New River shall issue any such press release or
make any such public statement, or permit any of their respective Affiliates to
issue any such press release or make any such public statement, prior to such
consultation or as to which the Purchaser, Chiron or New River reasonably
object, except as may be required by Law or by obligations pursuant to any
listing agreement with any national securities exchange or inter-dealer
quotation system. The Purchaser shall not contact in any manner or have any
discussions with any of the Company's or its Subsidiaries' suppliers, customers
or employees relating to this Agreement or the transactions contemplated hereby
without the prior written consent of the Company.
Section 5.06. Confidentiality Agreement.
Notwithstanding the execution of this Agreement, the Confidentiality
Agreement shall remain in full force and effect unless the Closing occurs, in
which event it shall terminate immediately thereafter.
Section 5.07. Supplemental Disclosure.
New River or Chiron, as applicable, shall give prompt notice to the
Purchaser, and the Purchaser shall give prompt notice to the Sellers, of (i) the
occurrence, or non-occurrence, of any event known, to the Knowledge of the
Sellers, the actual knowledge of Magnus Lundberg or Philip K. Moody or the
actual knowledge of the senior management of the Purchaser, respectively, the
occurrence or non-occurrence of which would be likely to cause (x) any
representation or warranty of such person contained in this Agreement to be
untrue or inaccurate or (y) any covenant, condition or agreement contained in
this Agreement not to be complied with or satisfied by such person and (ii) any
failure of either of the Sellers, the Company or the Purchaser, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder of which either of the Sellers or the
Purchaser, as the case may be, has actual knowledge; provided, however, that the
delivery of any notice pursuant to this Section 5.07 shall not have any effect
for the purpose of determining the satisfaction of the conditions set forth in
Article VII of this Agreement or otherwise limit or affect the remedies
available hereunder or under applicable Law to any party.
Section 5.08. Covenants of the Sellers and the Purchaser.
(a) ______ During the period from the date of this Agreement and continuing
until the Closing Date, New River (i) agrees as to itself and the Company and
its Subsidiaries that New River, the Company and its Subsidiaries shall not take
any action that would or can reasonably be expected to result in any of the
conditions to the obligations of the Purchaser set forth in Article VI not being
satisfied or that would materially impair the ability of New River to consummate
the transactions contemplated herein in accordance with the terms hereof or that
would materially delay such consummation, and (ii) shall promptly provide the
Purchaser (or its counsel) copies of all filings made by it or
-41-
<PAGE>
Randal J. Kirk with any Government Entity in connection with this Agreement
and the transactions contemplated hereby.
(b) ______ During the period from the date of this Agreement and continuing
until the Closing Date, the Purchaser (i) agrees as to itself and its
Subsidiaries that the Purchaser and its Subsidiaries shall not take any action
that would or can reasonably be expected to result in any of the conditions to
the obligations of the Sellers set forth in Article VI not being satisfied or
that would materially impair the ability of the Purchaser to consummate the
transactions contemplated herein in accordance with the terms hereof or that
would materially delay such consummation, and (ii) shall promptly provide the
Sellers (or their counsel) copies of all filings made by it with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(c) During the period from the date of this Agreement and continuing until
the Closing Date, Chiron (i) agrees as to itself and its Subsidiaries that
Chiron shall not take any action that would or can reasonably be expected to
result in any of the conditions to the obligations of the Purchaser set forth in
Article VI not being satisfied or that would materially impair the ability of
Chiron to consummate the transactions contemplated herein in accordance with the
terms hereof or that would materially delay such consummation, and (ii) shall
promptly provide the Purchaser (or its counsel) copies of all filings available
to the public made by it with any Government Entity in connection with this
Agreement and the transactions contemplated hereby.
Section 5.09. New River Dissolution.
(a) ______ New River covenants and agrees that, until the later of the
final determination and payment of the Contingent Consideration, if any, due and
payable in respect of fiscal year 2003 of the Purchaser, or the final resolution
of any and all claims for indemnification under Section 9.02(a) for which notice
properly has been given under Section 9.04(a)(i) prior to that date and the
payment of all amounts (if any) that may be payable by it in respect thereof, it
will not:
(i) take any action to dissolve, liquidate or wind up its affairs;
(ii) apply for, or consent to, the appointment of a receiver, trustee or
liquidator of it or its property;
(iii) admit in writing its inability to pay its debts as they mature;
(iv) make a general assignment for the benefit of its creditors; or
(v) ______ fail to have any court order approving a petition filed against
it under the federal bankruptcy laws to be vacated or set aside or otherwise
terminated within sixty days.
(b) ______ Randal J. Kirk covenants and agrees that, until the later of the
final determination and payment of the Contingent Consideration, if any, due and
payable in respect of fiscal year 2003 of the Purchaser, or the final resolution
of any and all claims for indemnification under Section 9.02(a) for which notice
-42-
<PAGE>
properly has been given under Section 9.04(a)(i) prior to that date and the
payment of all amounts (if any) that may be payable by him in respect thereof,
he will not:
(i) take or omit to take any action that would cause New River to breach
Section 5.08;
(ii) take or omit to take any action that would, as to himself and his own
financial condition and not New River, breach any of the covenants contained in
clauses (ii) through (v), inclusive, of Section 5.08(a); or
(iii) shelter his assets with the intent of substantially impairing his
ability to satisfy his obligations under this Agreement.
Section 5.10. National Bank of Canada Credit Facility.
Simultaneously with the Closing, the Purchaser covenants and agrees to
terminate and pay in full by wire transfer of immediately available funds all
amounts outstanding, if any, pursuant to the Loan and Security Agreement, dated
March 31, 1998, by and among National Bank of Canada, Biopop, Biological Asia,
Radford, GIV, Landmark, Biofix, Biopop Bermuda, Biopop Exports, BCC, InSource,
RMC, RLA, Rahn, NBS and Lotus Mexico.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
Section 6.01. Conditions to Each Party's Obligations.
The respective obligations of each party to consummate the purchase and
sale of the Common Stock as contemplated herein shall be subject to the
satisfaction or waiver at or prior to the Closing of the following conditions:
(a) ______ HSR Approval. Any waiting period applicable to the consummation
of the transactions contemplated hereby under the HSR Act shall have expired or
been terminated, and no action shall have been instituted by the U.S. Department
of Justice or Federal Trade Commission challenging or seeking to enjoin the
consummation of this transaction, which action shall have not been withdrawn or
terminated.
(b) ______ No Order. No Governmental Entity (including a federal or state
court) of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and which enjoins, materially restricts, restrains or prohibits the
transactions contemplated hereby or in the Restructuring, including the purchase
of the Common Stock, or has the effect of making the purchase of the Common
Stock illegal; provided, however, that the party or parties asserting this
condition shall have used their reasonable best efforts (as required under
Section 5.04) to cause any such decree, judgment, injunction or other order to
be vacated or lifted.
-43-
<PAGE>
(c) ______ Approvals. All authorizations, consents, waivers, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity the failure of which to obtain, make or
occur would individually, or in the aggregate have a material adverse effect at
or after the Closing Date on the Purchaser and its Affiliates (including,
without limitation, the Company and the Continuing Subsidiaries), taken as a
whole, shall have been obtained or filed or have occurred.
Section 6.02. Conditions Precedent to Obligations of the Purchaser.
The obligation of the Purchaser to consummate the purchase of the Common
Stock as contemplated herein is subject to the satisfaction or waiver at or
prior to the Closing of the following conditions precedent:
(a) ______ the representations and warranties of the Sellers contained in
Article III shall be true and correct in all material respects when made and at
and as of the Closing with the same force and effect as if those representations
and warranties had been made at and as of such time;
(b) ______ the Sellers and the Company, as the case may be, shall, in all
material respects, have performed all obligations and complied with all
covenants to be performed or complied with by them on or before the Closing;
(c) ______ a software license agreement and time and materials agreement
each among PBX/EX, GIV, InSource, Rahn, Radford and the Company in the forms
attached as Exhibit 6.02(c) shall have been executed and delivered to the
Purchaser;
(d) ______ the Company shall have entered into agreements with George S.
Zorich, James W. Short and Doit L. Koppler, II in form and substance as shall be
mutually agreed pursuant to which each such person agrees not to accept
employment with Chiron for a period of two years after the Closing Date;
(e) ______ the Purchaser shall have received a certificate executed by each
Seller, in form satisfactory to counsel for the Purchaser, certifying
fulfillment by such Seller of the matters referred to in paragraphs (a) through
(b) of this Section 6.02;
(f) ______ Chiron shall have received all requisite approval of its Board
of Directors for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and such approval shall not
have been rescinded;
(g) ______ all proceedings, corporate or other, to be taken by the Sellers,
the Company and the Subsidiaries of the Company in connection with the
transactions contemplated by this Agreement (including, without limitation, the
Restructuring), and all documents incident thereto, shall be reasonably
satisfactory in form and substance to the Purchaser and the Purchaser's counsel,
and the Sellers and the Company shall have made available to the Purchaser for
examination the originals or true and correct copies of all documents that the
Purchaser may reasonably request in connection with the transactions
contemplated by this Agreement; and
(h) ______ the Purchaser shall have received the Opinion of Sellers'
Counsel.
-44-
<PAGE>
Section 6.03. Conditions Precedent to Obligations of the Sellers.
The obligation of each of the Sellers to consummate the sale of the Common
Stock as contemplated herein is subject to the satisfaction or waiver at or
prior to the Closing of the following conditions precedent:
(a) ______ the representations and warranties of the Purchaser contained in
Article IV shall be true and correct in all material respects when made and at
and as of the Closing with the same force and effect as if those representations
and warranties had been made at and as of such time;
(b) ______ the Purchaser shall, in all material respects, have performed
all obligations and complied with all covenants to be performed or complied with
by it on or before the Closing;
(c) ______ the Sellers shall have received a certificate of the Chairman,
President or any Vice President of the Purchaser, in form satisfactory to
counsel for the Sellers, certifying fulfillment of the matters referred to in
paragraphs (a) and (b) of this Section 6.03;
(d) ______ Chiron shall have received the approval of its Board of
Directors of this Agreement and the consummation of the transactions
contemplated hereby;
(e) ______ all proceedings, corporate or other, to be taken by the
Purchaser in connection with the transactions contemplated by this Agreement,
and all documents incident thereto, shall be reasonably satisfactory in form and
substance to the Sellers and the Sellers' counsel, and the Purchaser shall have
made available to the Sellers for examination the originals or true and correct
copies of all documents that the Sellers may reasonably request in connection
with the transactions contemplated by this Agreement; and
(f) ______ the Sellers shall have received the Opinion of Purchaser's
Counsel.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.01. Termination.
This Agreement may be terminated and the transactions contemplated herein
may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Purchaser and the Sellers;
(b) ______ by the Purchaser by written notice to the Sellers at any time
following the Purchaser becoming aware that either Seller has breached any
representation, warranty or covenant of either Seller contained in this
Agreement in any material respect, if the Purchaser has notified the Sellers in
writing of the breach and the breach, if curable, has continued without cure for
a period of 30 days after the notice of breach;
-45-
<PAGE>
(c) ______ by either of the Sellers by written notice to the Purchaser at
any time following either of the Sellers becoming aware that the Purchaser has
breached any representation, warranty or covenant of Purchaser contained in this
Agreement in any material respect, if either of the Sellers have notified the
Purchaser in writing of the breach and the breach, if curable, has continued
without cure for a period of 30 days after the notice of breach;
(d) ______ by either of the Sellers or the Purchaser, if the Closing shall
not have occurred on or before the later of (i) December 31, 1998 or (ii) five
days after the satisfaction of the conditions set forth in Section 6.01,
provided, however, that this Agreement shall automatically terminate on February
15, 1999 if the Closing shall not have occurred prior to such date.
(e) ______ by the Purchaser or either of the Sellers, if any court of
competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated
herein and such order, decree, ruling or other action shall have become final
and nonappealable; provided, however, that the party or parties seeking to
terminate this Agreement on this basis shall have used its or their reasonable
best efforts, as required under Sections 5.04 and 5.08.
(f) ______ by Chiron, if its Board of Directors has not approved this
Agreement and the consummation of the transactions contemplated hereby, on or
before December 18, 1998, or by either the Purchaser or New River, if it has not
received written confirmation from Chiron of the foregoing approval on or before
December 18, 1998.
Section 7.02. Effect of Termination.
(a) ______ If this Agreement is terminated pursuant to Section 7.01 hereof,
this Agreement shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers, shareholders or
members to the other party, its directors, officers, shareholders or members
except as provided in Section 7.02(b) and except that the obligations in
Sections 10.05 and 11.07 will survive.
(b) ______ In the event that this Agreement is terminated by the Purchaser
pursuant to Section 7.01(b) and the Sellers would not have been entitled to
terminate this Agreement pursuant to Section 7.01(c), then the Sellers shall pay
to the Purchaser, as liquidated damages and not as a penalty, the amount of $7.0
million, which amount shall be paid only by the breaching Seller or if both
Sellers have breached then in accordance with their respective Seller
Proportionate Interest. In the event that this Agreement is terminated by the
Sellers pursuant to Section 7.01(c) and the Purchaser would not have been
entitled to terminate this Agreement pursuant to Section 7.01(b), then the
Purchaser shall pay to each of Chiron and New River in accordance with their
respective Seller Proportionate Interest, as liquidated damages and not as a
penalty, the amount of $7.0 million. The right to receive liquidated damages
pursuant to this Section 7.02(b) shall be the exclusive remedy for the Purchaser
and the Sellers with respect to the termination of this Agreement prior to the
Closing.
-46-
<PAGE>
Section 7.03. Amendment.
This Agreement may be amended by the parties hereto at any time by an
instrument in writing duly authorized and signed on behalf of each of the
parties hereto.
Section 7.04. Extension; Waiver.
At any time prior to the Closing, the parties may (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of any party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party and only to the extent expressly provided for therein.
ARTICLE VIII
ADDITIONAL COVENANTS
Section 8.01. Cooperation With Respect to Tax and SEC Matters.
(a) ______ The Sellers agree to cooperate with the Purchaser, and the
Purchaser agrees to cooperate with the Sellers, to the extent necessary in
connection with the filing, pursuant to any provision of the Code or regulations
thereunder, of any information return or other document relating to the
Purchaser's acquisition of the Company and any of the other transactions
contemplated by Article II of this Agreement. In addition, New River and, to the
extent within its control, Chiron agree to cooperate with the Purchaser and the
Company in preparing any historical and pro-forma financial statements required
to be filed by the Purchaser with the SEC under the Exchange Act with respect to
the transactions contemplated herein.
(b) ______ The Sellers and the Purchaser agree that, if but only if New
River so chooses, an election under Section 338(h)(10) of the Code will be made
with respect to the Company's sale of the stock of any or all of Landmark
Scientific, Inc., Bioclinical Concepts, Inc., Biofix, Inc., and Biopop Export
Corporation to BCCX, Inc. in the Restructuring. The Company (as seller, common
parent of the target corporation(s) or selling affiliate) shall execute four
originals of IRS Form 8023 (or any successor form) at or before the Closing and
deliver such executed Forms 8023 (or applicable successor forms) to New River.
New River shall retain custody of such forms (including all required schedules
or attachments thereto) and, if New River chooses to have one or more Section
338(h)(10) elections made as permitted by this paragraph, shall have BCCX, Inc.
execute the appropriate form(s) and shall file such form(s) with the appropriate
office(s) of the IRS. Promptly after such filing, New River shall cause a
photocopy of all filed Forms 8023 (including all schedules or attachments) to be
delivered to the Purchaser as agent for the Company. The parties intend for any
such election to be effective, if possible, for state (as well as federal)
income tax purposes, and they shall cause the Company and BCCX, Inc. to execute
and file any documents that may be required under any applicable state Law for
-47-
<PAGE>
state Law for any such election (or any corresponding election under state Law)
to be effective for state income tax purposes. New River shall determine the
deemed sales prices of the assets of any corporation for which a Section
338(h)(10) election is made pursuant to this paragraph and shall notify the
Purchaser, as agent for the Company, in writing of the prices so determined when
providing a copy of any Form 8023 (or successor form) filed pursuant to this
paragraph. New River and the Purchaser shall cooperate, and shall cause BCCX,
Inc. and the Company to cooperate, to provide such information as may be
necessary to complete the foregoing form(s) and any required schedules or
attachments thereto.
(c) ______ The Company, and not the Sellers, shall be responsible for
preparing and filing all Tax Returns for the Company and for its Subsidiaries
for periods ending on or before the Closing Date but filed after the Closing.
Such Tax Returns shall characterize the transactions comprising the
Restructuring in accordance with the description of such transactions in
Schedule 1.73, to the extent such Tax Returns report transactions comprising the
Restructuring, and shall be based on the same Tax accounting methods and (except
as provided in Section 8.01(b)) elections as used for the Tax period immediately
preceding the period of such return, except as otherwise required by Law or
agreed upon by Sellers and the Purchaser. With respect to any such Tax Return
for any Tax measured by net income, the Purchaser shall cause the Company to
provide a draft of such Tax Return to the Sellers at least 45 days before the
due date (taking into account any valid extensions) of the time for filing such
Tax Return, and the Sellers shall be entitled to review and comment on each such
Tax Return before it is filed; provided, however, that any such comments must be
given in writing to the Purchaser at least 15 days prior to the due date. If New
River, as agent for the Sellers, objects to any information reflected in, or the
omission of any information from, any such Tax Return, the Sellers and the
Purchaser shall negotiate in good faith to resolve any such objection. If they
are unable to resolve all such objections by the tenth day before the due date
(taking into account any valid extensions) for filing any such Tax Return, they
shall promptly select a nationally recognized independent accounting firm
mutually acceptable to them to resolve any remaining objections (or, if they are
unable to agree on the choice of such an accounting firm, they shall select a
nationally recognized independent accounting firm by lot as provided in Section
2.06(b) hereof), provided, that no resolution may be inconsistent with the
second sentence of this Section 8.01(c). If resolution of any such objection
does not occur by the due date (taking into account any valid extensions) for
filing the Tax Return that is the subject of such objection, the Purchaser shall
cause the Company to file the Tax Return timely but shall thereafter cause the
Company to file an amended Tax Return reflecting the resolution of any such
objection to the extent necessary to reflect such resolution. Except as provided
in the preceding sentence or as required by Law, after the Closing neither the
Company nor any Continuing Subsidiary shall (and the Purchaser shall not permit
either the Company or any Continuing Subsidiary to) file or permit to be filed
any amended Tax Return of Biopop or its Subsidiaries by or on behalf of the
Company or any Subsidiary with respect to any Tax Period ending on or before the
Closing Date without the prior written consent of the Sellers, which consent
will not be unreasonably withheld. Notwithstanding any contrary provision of
this Agreement (including, without limitation, Section 9.02), the Sellers shall
have no liability under this Agreement with respect to Taxes or other Losses to
-48-
<PAGE>
the extent that such Taxes or Losses directly result from any action or
omission by the Purchaser, the Company, or any Continuing Subsidiary in
contravention of this paragraph.
(d) ______ For the purposes of this Section 8.01, the term "Company"
includes Biopop prior to the Restructuring.
Section 8.02. Records.
On or before the Closing Date, the Sellers will deliver to the Company all
books, papers and records of the Company, and deliver or destroy all extracts,
summaries, reports and analyses prepared therefrom, that are in the possession
of the Sellers or any of their respective Affiliates and all copies of any
Intellectual Property identified on Schedule 3.14, excluding copies of the
Intellectual Property that is to be owned by New River, New Biopop or any of
their respective Affiliates as of and after the Closing; provided, that, Chiron
and Magnus Lundberg and Philip K. Moody shall be permitted to retain all
information (i) received in connection with Chiron's initial investment in
Biopop (including Chiron's extracts, summaries, reports and analyses prepared
therefrom) or (ii) received in their capacity as directors of Biopop,
respectively. At the Closing, pursuant to the termination of the Source Code and
Schema Escrow Agreement, dated as of September 11, 1996, among the Depositors
(as defined therein), Chiron and Data Securities International, Inc., as escrow
agent, the Depositors and Chiron shall instruct the escrow agent to deliver all
of the materials constituting the Deposit (as defined therein) to PBX/EX. The
Purchaser shall cause the Company to preserve and keep, free of charge, all
original books, papers and records of the Company that are in the possession of
the Company at the Closing in accordance with the Purchaser's corporate document
retention policy. The Purchaser agrees to permit the Sellers and their
attorneys, accountants, agents and designees access to such books, papers and
records from and after the Closing Date for all reasonable purposes. Any such
examination shall be at the expense of the Sellers, shall be performed at the
place where such books, papers and records are regularly maintained and shall
not interfere unreasonably with the Purchaser's or the Company's normal business
activities.
Section 8.03. Further Assistance.
In case at any time after the Closing Date any further action is necessary
or desirable to carry out the purposes of this Agreement, each of the parties to
this Agreement will take, without additional consideration, such further action
(including the execution and delivery of such further instruments and documents)
as any other party reasonably may request. The Sellers acknowledge and agree
that from and after the Closing Date, and subject to Section 8.02 hereof, the
Purchaser will be entitled to possession of all documents, books, records
(including tax records), agreements and financial data of any sort relating to
the Company or any Continuing Subsidiary.
Section 8.04. Employee Matters; Employee Benefit Plans.
(a) ______ The Purchaser and New River and, to the extent within its
control, Chiron shall not take any action on or before the Closing Date that
would require compliance by either the Purchaser or the Sellers under the Worker
Adjustment, Retraining and Notification Act of 1988 (WARN), including the
-49-
<PAGE>
giving of any notice thereunder, or under any applicable state laws
requiring the giving of notice of terminations, lay-offs, site closings or other
comparable events.
(b) ______ Immediately prior to, and subject to, the Closing, New River
and, to the extent within its control, Chiron shall cause a "spin-off" of the
assets and liabilities of the General Injectables & Vaccines, Inc. 401(k) Plan
(the "GIV 401(k) Plan") resulting in the division of the GIV 401(k) Plan into
two separate, component plans and trusts, in accordance with applicable Law
(including, without limitation, Section 414(l) of the Code), covering,
respectively (i) the employees of the Company and the Continuing Subsidiaries
("Transferred Employees") (the "Current Plan") and (ii) all Biopop employees
(whether current, former or retired) other than Transferred Employees (the "New
Plan"). The Company shall draft and deliver to the Purchaser for the Purchaser's
approval, no later than 15 days prior to the Closing Date, the appropriate
documents and use their best efforts to take all actions necessary to effectuate
the intent of this Section 8.04. Prior to the Closing Date, New River shall
cause the New Plan to be adopted by New Biopop or any entity that would be
deemed a "single employer" with New Biopop under Section 414(b), (c), (m) or (o)
of the Code (other than the Company or any Continuing Subsidiary).
Section 8.05. Directors' and Officers' Insurance.
(a) ______ Immediately following the Closing the Purchaser shall (i) cause
the policies of directors' and officers' liability insurance maintained by the
Company as of the date hereof to be terminated and (ii) purchase "tail coverage"
policies continuing for a period of not less than five years from the Closing
Date and of at least the same amounts containing terms that are no less
advantageous to the insured parties with respect to claims arising from facts or
events that occurred on or prior to the Closing Date and in no event shall the
coverage for the transactions contemplated hereby be excluded; provided that in
no event shall the Purchaser be obligated to expend in order to procure "tail
coverage" insurance pursuant to this paragraph any amount per annum in excess of
$75,000, but in any event the Purchaser shall purchase as much coverage as
possible for such maximum amount.
(b) ______ Each director and officer shall have rights as a third party
beneficiary under this Section 8.05 as separate contractual rights for his or
her benefit and such right shall be enforceable by such director or officer, his
or her heirs and personal representatives and shall be binding on the Purchaser
and its successors and assigns.
Section 8.06. Cooperation.
Following the Closing, the Purchaser and the Sellers agree to cooperate and
to take, without additional consideration, all steps necessary to complete any
actions required to be taken in connection with the Restructuring that have not
been completed as of the Closing that the other party may reasonably request,
including the execution and delivery of any consents, agreements or other
documents, provided, however, that (i) any such action taken by the Purchaser,
the Company, Chiron or any Subsidiary of the Purchaser or the Company shall be
taken at the expense of New River and (ii) nothing in this Section 8.06 shall be
deemed to limit or affect any rights to indemnification under Section 9.02(a).
-50-
<PAGE>
Section 8.07. Certain Contracts.
If any contract or other agreement listed on Schedule 1.07 relates to both
the Business and the business of any Excluded Subsidiary or any Affiliate of any
Excluded Subsidiary, New River shall use its reasonable best efforts to cause
the third party or parties to such agreement to enter into a separate agreement
with the appropriate Excluded Subsidiary or Affiliate with respect to the
business of any Excluded Subsidiary or any Affiliate of any Excluded Subsidiary
and to cause the existing contract or agreement to remain in effect with respect
to the Business in all material respects on substantially the same terms and
conditions as currently exist.
ARTICLE IX
INDEMNIFICATION
Section 9.01. Survival of Representations and Warranties.
All representations and warranties contained in Articles III and IV of this
Agreement shall survive the Closing and shall remain in full force and effect
until two years after the Closing Date; provided, however, that the
representations and warranties contained in (i) Section 3.24 shall remain in
full force and effect until five years after the Closing Date, (ii) Sections
3.19 and 3.23 shall remain in full force and effect until 120 days after the
expiration of the applicable statute of limitations, and (iii) Sections 3.01,
3.03, 3.04 and 3.05 shall remain in full force and effect and shall not
terminate.
Section 9.02. Indemnification.
(a) ______ Subject to Section 9.03, from and after the Closing, New River
shall indemnify and save the Purchaser, its respective Subsidiaries (including,
without limitation, the Company and the Continuing Subsidiaries) and respective
Affiliates, directors, officers, employees, agents, counsel and representatives
and all of their successors and assigns (collectively, the "Purchaser Claimants"
and, individually, a "Purchaser Claimant") harmless from, and defend each of
them from and against, any and all demands, claims, actions, liabilities,
losses, costs, damages or expenses whatsoever, including reasonable attorneys'
fees (collectively, "Losses"), imposed upon or incurred by the Purchaser
Claimants constituting, resulting from, arising out of or relating to (i) any
breach of any representation or warranty of New River contained in this
Agreement; (ii) any breach of any covenant or obligation of New River contained
in this Agreement; (iii) the Restructuring (except to the extent reflected on or
reserved against in the Pro Forma Closing Balance Sheet, net of any asset
derived by the Company or the Continuing Subsidiaries from the Restructuring to
the extent not reflected on the Pro Forma Closing Balance Sheet), including,
without limitation, any liability for Taxes arising out of or relating to the
Restructuring (including any Taxes resulting from any 338(h)(10) election made
pursuant to Section 8.01(b) hereof), or any failure to consummate the
Restructuring on the terms set forth on Schedule 1.73; (iv) any liabilities or
obligations (A) of New River, the Excluded Subsidiaries or their respective
Affiliates (excluding the Company and the Continuing
-51-
<PAGE>
Subsidiaries), (B) arising out of or related to any former Subsidiary of Biopop
dissolved or liquidated prior to the Closing Date or (C) arising out of or
related to the operations of RMC (other than for purposes of this Section
9.02(a)(iv)(C) any operations arising out of or relating to the matters set
forth in Item 2 under the Miscellaneous category on Schedule 3.12), NBS or Lotus
Mexico prior to the Closing Date to extent that such liabilities or obligations
are not reflected on or reserved against in the Pro Forma Closing Balance Sheet;
(v) the non-payment, in whole or in part, when due, of any receivable from any
Excluded Subsidiary, Lotus (US), PBX/EX, Lotus Bermuda, Lotus Technologies or
New River, including the current portion, shown on the consolidated balance
sheet included in the Pro Forma Closing Balance Sheet or for which an adjustment
was made in the Pro Forma Closing Balance Sheet; (vi) any contract or agreement
listed on Schedule 1.07, or any contract or agreement not listed thereon to
which NBS or Lotus Mexico is a party or by which their respective assets or
properties are bound as of the Closing; (vii) any amounts paid by the Company or
the Continuing Subsidiaries in excess of $50,000 arising out of the matters set
forth in Item 4 of Schedule 3.08, or matters involving the same obligations with
respect to the operation of Biopop and its Subsidiaries prior to the Closing;
(viii) any Taxes of Biopop or its Subsidiaries relating to any period through
and including the Closing Date to the extent not reflected on or reserved
against on the Pro Forma Closing Balance Sheet or incurred in the ordinary
course of business after September 27, 1998 through the Closing Date; provided,
however, that amounts constituting interest relating to Taxes included as a
liability elsewhere on the Pro Forma Closing Balance Sheet shall be deemed to be
Taxes reflected on or reserved against on the Pro Forma Closing Balance Sheet
for purposes of this clause (viii); or (ix) any guaranty by the Company or any
of the Continuing Subsidiaries of, or any Lien granted by the Company or any
Continuing Subsidiary with respect to, any obligation or liability of G.I.V.
Benevolent Fund, Inc., or any obligation or liability of the Company or any
Continuing Subsidiary arising out of or relating to G.I.V. Benevolent Fund,
Inc., including without limitation, any obligation or liability arising out of
or relating to the consummation of the transactions contemplated hereby or the
Restructuring.
(b) ______ Subject to Section 9.03, from and after the Closing, the
Purchaser shall indemnify and save the Sellers and their respective Affiliates,
beneficiaries, heirs, executors, successors and assigns (collectively, the
"Seller Claimants" and, individually, a "Seller Claimant") harmless from and
defend each of them from and against any and all Losses imposed upon or incurred
by the Seller Claimants, constituting, resulting from or arising out of (i) any
breach of any representation or warranty of Purchaser contained in this
Agreement or (ii) any breach of any covenant or obligation of Purchaser
contained in this Agreement.
(c) ______ Subject to Section 9.03, from and after the Closing, Chiron
shall indemnify and save the Purchaser Claimants harmless from, and defend each
of them from and against, any and all Losses imposed upon or incurred by the
Purchaser Claimants, constituting, resulting from or arising out of (i) any
breach of any representation or warranty of Chiron contained in Sections
3.01(b), 3.02(b), 3.03(b) and 3.08(b); (ii) any breach of any covenant or
obligation of Chiron contained in this Agreement; or (iii) the allegations of
Genesis BioPharmaceuticals, Inc. relating to distribution rights for vaccines
developed or manufactured by Chiron or any of the underlying facts and
-52-
<PAGE>
circumstances including, without limitation, all Losses that may accrue
under the existing litigation pending in the United States District Court in New
Jersey, which shall be the exclusive remedy for any claims brought by the
Purchaser against Chiron or any of its Affiliates relating to the subject matter
set forth in this Agreement whether brought pursuant to the indemnification
provisions of this Article IX or otherwise, except that this limitation shall
not apply in the case of intentional fraud on the part of Chiron.
Section 9.03. Limitations on Indemnification.
(a) ______ The Purchaser Claimants will not be entitled to such
indemnification under Section 9.02(a) unless and until the aggregate amount of
all Losses incurred by the Purchaser Claimants exceeds $250,000 (the "Threshold
Amount"), in which event the Purchaser Claimants will be entitled to
indemnification for all Losses so incurred in excess of the Threshold Amount.
The maximum aggregate amount of indemnification that New River shall be
obligated to pay under Section 9.02(a) shall be equal to the sum of $7,000,000
and 10% of the aggregate Contingent Consideration that has been paid or that is
later paid under Section 2.06 (the "Cap Amount"); provided, however, that the
Threshold Amount and the Cap Amount shall not apply to Losses arising with
respect to any misrepresentation or breach of any representation or warranty
made in Section 3.01(a), 3.03(a), 3.04, 3.05, 3.19 or 3.24 or for which a
Purchaser Claimant is entitled to indemnification under clauses (iii) through
(ix) of Section 9.02(a), but in no event shall the aggregate amount of
indemnification payments made under Section 9.02(a) exceed New River's Seller
Proportionate Interest of the Purchase Price.
(b) ______ The Seller Claimants will not be entitled to seek
indemnification under Section 9.02(b) unless and until the aggregate amount of
all Losses incurred by the Seller Claimants exceeds the Threshold Amount, in
which event the Seller Claimants will be entitled to indemnification for all
Losses so incurred in excess of the Threshold Amount. The maximum aggregate
amount of indemnification that Purchaser shall be obligated to pay under Section
9.02(b) shall be equal to the Cap Amount.
(c) ______ The maximum aggregate amount of indemnification that Chiron
shall be obligated to pay under Section 9.02(c) shall be equal to Chiron's
Seller Proportionate Interest of the Cap Amount; provided, however, that
Chiron's Seller Proportionate Interest of the Cap Amount shall not apply to
Losses arising with respect to any misrepresentation or breach of any
representation or warranty made in Section 3.01(b) or 3.03(b) or for which a
Purchaser Claimant is entitled to indemnification under clause (iii) of Section
9.02(c), but in no event shall the aggregate amount of indemnification payments
made under Section 9.02(c) exceed Chiron's Seller Proportionate Interest of the
Purchase Price, provided that Chiron actually receives such amount.
(d) ______ The amount of any indemnification payable under this Article IX
(i) shall be payable on an After-Tax Basis and (ii) shall be deemed to be an
adjustment of the Purchase Price. The party seeking indemnification shall use
reasonable efforts to minimize the obligations of the indemnifying parties
hereunder by seeking reimbursement from insurance carriers under applicable
insurance policies covering any such liability, provided that the party seeking
-53-
<PAGE>
indemnification does not incur any cost (not reimbursed by the indemnifying
parties) in seeking such reimbursement. To the extent that the party seeking
indemnification receives any payment in reimbursement from an insurer relating
to a claim, the indemnifying parties shall receive a credit therefor.
(e) ______ Losses for which any Purchaser Claimant is entitled to
indemnification under clause (i) of Section 9.02(a) as that relates to the
breach of a representation, warranty or covenant with a Material Adverse Effect
qualifier shall be recoverable (subject to the other provisions of this Section
9.03) in full and not just to the extent in excess of the $250,000 Material
Adverse Effect qualifier.
(f) ______ The indemnification provisions set forth in this Article IX
shall be the exclusive remedy for any claims brought by any of the parties
hereto relating to the subject matter set forth in this Agreement whether
brought pursuant to the indemnification provisions of this Article IX or
otherwise, except that this limitation shall not apply in the case of
intentional fraud.
(g) ______ The indemnification obligations under Section 9.02 shall survive
indefinitely except that the indemnification under clauses 9.02(a)(i) and
9.02(b)(i) shall terminate when the survival of the applicable representation or
warranty expires under Section 9.01; provided, however, that any valid claims
for indemnification for which an Indemnitee shall have notified the Indemnitor
(as such terms are defined in Section 9.04(a)) prior to such expiration shall
survive indefinitely and the expiration of such representation or warranty shall
not impact an Indemnitee's ability to seek indemnification under any other
applicable clause of Section 9.02(a) or Section 9.02(b), as the case may be.
Section 9.04. Indemnification Procedures.
(a) ______ The rights and obligations of each party asserting a claim for
indemnification pursuant to Section 9.02 (each, an "Indemnitee") from a party or
parties obligated to provide such indemnification (collectively, the
"Indemnitor") shall be governed by the following rules:
(i) ______ The Indemnitee shall give prompt written notice to the
Indemnitor of any state of facts which the Indemnitee determines will give rise
to a claim by it against the Indemnitor based on the indemnity agreement
contained herein, stating the nature and basis of said claims and the amount
thereof, to the extent known. No failure to give such notice, however, shall
affect the indemnification obligations of the Indemnitor hereunder, except to
the extent such failure materially prejudices the Indemnitor's ability
successfully to defend the matter giving rise to the indemnification claim.
(ii) In the event any action, suit or proceeding is brought by or before
any Governmental Entity or arbitrator against an Indemnitee with respect to
which the Indemnitor may have liability hereunder, then, upon the written
acknowledgment by the Indemnitor that it is undertaking and will prosecute the
defense of the claim and confirming that the claim is one with respect to which
the Indemnitor is obligated to indemnify, the action, suit or proceeding
-54-
<PAGE>
(including all proceedings on appeal or for review) may be defended by the
Indemnitor. However, in the event the Indemnitor shall fail promptly to assume
the defense of any action, suit or proceeding, the Indemnitee may assume the
defense and dispose of the action, suit or proceeding. The Indemnitees shall
have the right to employ its own counsel in any action, suit or proceeding, but
the fees and expenses of such counsel shall be at the Indemnitee's own expense
unless (A) the employment of such counsel and the payment of such fees and
expenses both shall have been specifically authorized by the Indemnitor in
connection with the defense of such action, suit or proceeding, (B) the
Indemnitee shall have reasonably concluded, upon the advice of counsel, and
specifically notified the Indemnitor that there may be specific defenses
available to it which are different from or additional to those available to the
Indemnitor, or (C) the Indemnitee shall have assumed the defense because the
Indemnitor failed to assume the defense of such action, suit or proceeding as
provided above.
(iii) The Indemnitee shall be kept informed by the Indemnitor of such
action, suit or proceeding at all stages thereof, whether or not it is
represented by counsel. The Indemnitor shall make available to the Indemnitee
and its attorneys and accountants all books and records of the Indemnitor
relating to such proceedings or litigation as necessary to ensure the proper and
adequate defense of such action, suit or proceeding, and the parties hereto
agree to render to each other such assistance as they may reasonably require of
each other in order to ensure the proper and adequate defense of any such
action, suit or proceeding.
(b) ______ The Indemnitor shall make no settlement of any claims which the
Indemnitor has undertaken to defend without the Indemnitee's consent (which
consent shall not be unreasonably withheld), unless the Indemnitor fully
indemnifies the Indemnitee for all Losses, there is no finding or admission of
violation of Laws by, or effect on any other claims that may be made against,
the Indemnitee, and the relief granted in connection therewith requires no
action on the part of and has no effect on the Indemnitee or the operation of
the business of the Indemnitee or any of its subsidiaries.
ARTICLE X
RESTRICTIVE COVENANTS
Section 10.01. Non-Competition.
None of Randal J. Kirk, New River or any of New River's Affiliates shall,
for a period of five years after the Closing Date, directly or indirectly, as an
owner, equity holder (other than as an equity holder of less than 5% of the
issued and outstanding shares of a publicly traded company), director, officer,
employee, agent, consultant or otherwise, engage, anywhere in the United States,
in any business, activity or enterprise which competes with the Business or any
other business of the Purchaser and its Subsidiaries as of the date hereof and
described on Schedule 10.01.
-55-
<PAGE>
Section 10.02. Non-Solicitation of Employees.
None of Randal J. Kirk, New River nor any of their respective Affiliates
shall, for a period of five years after the Closing Date, for itself or on
behalf of any other individual or entity, solicit directly for employment any
person who is a then current employee of the Company or any Continuing
Subsidiary, or induce or attempt to induce any such employee to leave his or her
employment with the Company or any Continuing Subsidiary.
Section 10.03. Non-Solicitation or Interference with Customers and
Suppliers.
Except as provided in Schedule 10.03, neither New River nor any of its
Affiliates shall, for a period of five years after the Closing Date, directly or
indirectly, for itself or on behalf of any other individual or entity, solicit,
divert, take away or attempt to take away any customers or suppliers of the
Company or any Continuing Subsidiary as of the Closing Date or the business or
patronage of any such customers or suppliers of the Company or any Continuing
Subsidiary as of the Closing Date or in any way interfere with, disrupt or
attempt to disrupt any relationships existing as of the Closing Date between the
Company or any Continuing Subsidiary and any of their respective customers or
suppliers or other individuals or entities with whom they deal.
Section 10.04. Acknowledgments.
The Sellers and Randal J. Kirk acknowledge that, in view of the nature of
the Purchaser's business and the business objectives of the Purchaser in
acquiring the Company, and the consideration paid to the Sellers for the Common
Stock, the restrictions and covenants contained or referenced in this Article X
are reasonably necessary to protect the legitimate business interests of the
Purchaser and that any violation of such restrictions will result in irreparable
injury to the Company or any Continuing Subsidiary for which damages will not be
an adequate remedy. The Sellers and Randal J. Kirk therefore acknowledge that,
if any such restrictions or covenants are violated, Schein shall be entitled to
preliminary and injunctive relief against the violating party as well to an
equitable accounting of earnings, profits and other benefits arising from such
violation.
Section 10.05. Confidentiality.
(a) None of Randal J. Kirk, Chiron, New River nor any of its Affiliates
shall ever use or divulge any trade secrets, customer or supplier lists, pricing
information, marketing arrangements or strategies, business plans, internal
performance statistics, training manuals or any other information concerning the
Company or any of the Continuing Subsidiaries that is competitively sensitive,
proprietary or confidential, except on behalf of the Company, the Purchaser or
any of its Subsidiaries; provided, however, that the confidentiality covenants
contained in this Section 10.05(a) shall not apply to the following: (i)
information that is already in the public domain or generally available to
persons or entities in the same or similar industries as the Company or any of
the Continuing Subsidiaries at the time of its disclosure to New River, Chiron
or any of their respective Affiliates (each, for the purposes of this Section
10.05(a), a "Seller Covered Person"); (ii) information that, after its
disclosure to a Seller Covered Person, becomes part of the public domain or
generally available to companies in the same or similar
-56-
<PAGE>
industries as the Company or any of the Continuing Subsidiaries by publication
or otherwise other than through a Seller Covered Person's act; (iii) information
that a Seller Covered Person received from a third party who, to the actual
knowledge of such Seller Covered Person, was not legally or contractually
prohibited from disclosing such information; or (iv) information that a Seller
Covered Person is legally compelled to disclose, but only as to the disclosure
that is so compelled.
(b) None of the Purchaser nor any of its Affiliates (including, without
limitation, the Company and its Affiliates on and after the Closing Date) shall
ever use or divulge any trade secrets, customer or supplier lists, pricing
information, marketing arrangements or strategies, business plans, internal
performance statistics, training manuals, or any other information concerning
New River, the Excluded Subsidiaries, Chiron or any of their respective
Affiliates that is competitively sensitive, proprietary or confidential, except
on behalf of New River, the Excluded Subsidiaries, Chiron or any of their
respective Affiliates; provided, however, that the confidentiality covenants
contained in this Section 10.05(b) shall not apply to the following: (i)
information that is already in the public domain or generally available to
persons or entities in the same or similar industries as New River, the Excluded
Subsidiaries, Chiron or any of their respective Affiliates at the time of its
disclosure to the Purchaser or any of its Affiliates (each, for the purposes of
this Section 10.05(b), a "Purchaser Covered Person"); (ii) information that,
after its disclosure to a Purchaser Covered Person, becomes part of the public
domain or generally available to companies in the same or similar industries as
New River, the Excluded Subsidiaries, Chiron or any of their respective
Affiliates by publication or otherwise other than through a Purchaser Covered
Person's act; (iii) information that a Purchaser Covered Person received from a
third party who, to the actual knowledge of such Purchaser Covered Person, was
not legally or contractually prohibited from disclosing such information; or
(iv) information that a Purchaser Covered Person is legally compelled to
disclose, but only as to the disclosure that is so compelled.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Entire Agreement; Assignment.
This Agreement, the Exhibits and Schedules hereto and the agreements and
instruments referenced herein or therein collectively (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof,
and (b) shall not be assigned by operation of law or otherwise; provided, that
the Purchaser may assign its rights and obligations to any direct or indirect
wholly owned subsidiary of the Purchaser, but no such assignment shall relieve
the Purchaser of its obligations hereunder if such assignee does not perform
such obligations.
-57-
<PAGE>
Section 11.02. Notices.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by cable, telecopy, telegram or
telex, reliable overnight courier or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:
If to the Purchaser: Henry Schein, Inc.
135 Duryea Road
Melville, New York 11747
Attention: Mark E. Mlotek, Esquire
Telecopy No.: (516) 843-5532
Telephone No.: (516) 843-5906
With a copy to: Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Robert A. Cantone, Esquire
Telecopy No.: (212) 969-2900
Telephone No.: (212) 969-3000
If to Sellers: New River Management Company, L.L.C.
7335 Lee Highway
Radford, Virginia 24141
Attention: Marcus E. Smith, Esquire
Telecopy No.: (540) 633-3410
Telephone No.: (540) 633-3510
and
Chiron Corporation
4560 Horton Street
Emeryville, California 94608
Attention: General Counsel
Telecopy No.: (510) 654-5360
Telephone No.: (510) 923-2905
With a copies to: Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attention: C. Porter Vaughan, III, Esquire
Telecopy No.: (804) 788-8218
Telephone No.: (804) 788-8200
-58-
<PAGE>
Morrison & Foerster LLP
19900 MacArthur Boulevard
Irvine, California 92612
Attention: Robert M. Mattson, Jr.
Telecopy No.: (949) 251-0900
Telephone No.: (949) 251-7500
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 11.03. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia without regard to its conflicts of laws
principles or rules.
Section 11.04. Descriptive Headings.
The descriptive headings herein are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
Section 11.05. Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement, except
as set forth in Section 8.05.
Section 11.06. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
Section 11.07. Fees and Expenses.
Except as otherwise provided in this Agreement, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
transactions contemplated herein are consummated; provided, however, New River
shall pay any transaction fees and year-end bonuses of the Company and the
Continuing Subsidiaries in connection with this Agreement and the consummation
of the transactions contemplated hereby and the Restructuring to the extent such
fees exceed $2,000,000 in the aggregate.
Section 11.08. Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effectuate the original intent of the parties
-59-
<PAGE>
as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible. To the
extent that any of the restrictive covenants contained in Article X of this
Agreement are determined by a court in any jurisdiction to be unenforceable, as
to any Seller or Affiliate, as to duration, scope of activities restricted or
geographic area, such covenant shall automatically be deemed amended to the
extent necessary to make such covenant enforceable; provided, however, that
nothing in the foregoing shall be deemed to affect the enforceability of any
other covenant in Article X as written or the enforceability of the covenant
deemed to be amended in any other jurisdiction as written.
Section 11.09. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement; the Purchaser and the
Sellers assume no liability to any third party because of any reliance on the
representations, warranties and agreements of the Purchaser and the Sellers
contained in this Agreement.
Section 11.10. Termination of Certain Agreements; Consents.
(a) ______ Chiron and New River agree that, effective upon consummation of
the Closing on the Closing Date, all of the agreements set forth on Schedule
11.10 attached hereto shall be terminated and of no further force and effect.
Upon such termination, Chiron and its Affiliates and New River and its
Affiliates agree to release the other party from any and all claims that they
may have with respect to any such terminated agreements (except as otherwise
agreed by Chiron and New River). Upon such termination, Chiron and the Company
and the Continuing Subsidiaries agree to release the other party from any and
all claims that they may have with respect to any such terminated agreements,
except for any obligations arising under the indemnification provisions under
the distribution and marketing agreements set forth on Schedule 11.10. The
termination of such agreements shall be of no force and effect if the Closing
does not take place.
(b) ______ The execution and delivery of this Agreement by Chiron and New
River shall evidence the consent of each of Chiron and New River to the
consummation of the transactions contemplated hereby.
-60-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement
to be duly executed as of the day and year first above written.
THE PURCHASER:
HENRY SCHEIN, INC.
By:
--------------------------------
Mark Mlotek
Vice President & General Counsel
SELLERS:
NEW RIVER MANAGEMENT COMPANY, L.L.C.
By:--------------------------------
Randal J. Kirk
Manager
CHIRON CORPORATION
By:--------------------------------
William G. Green
Senior Vice President, General Counsel
& Secretary
THE COMPANY:
BIOLOGICAL & POPULAR CULTURE, INC.
By:
------------------------------
Randal J. Kirk
Chief Executive Officer
-61-
<PAGE>
-62-
<PAGE>
Randal J. Kirk ("Kirk"), as the owner of a majority of the
membership interests of New River Management Company L.L.C., is
executing and delivering this Stock Purchase Agreement as of the day
and year first written above solely: (i) to evidence his absolute,
continuing and irrevocable guarantee (notwithstanding, without
limitation, his death or disability or the bankruptcy, insolvency or
reorganization of New River) of the performance by New River of its
obligations under Article IX of this Stock Purchase Agreement to the
extent that, with respect to any matter for which any Purchaser
Claimant has asserted a claim for indemnification hereunder, such
obligation has been acknowledged in writing by New River or New River's
obligation with respect thereto has been determined by a final,
nonappealable judgment of a court of competent jurisdiction, and Kirk
hereby waives all rights to subrogation, reimbursement, indemnity or
contribution from any Purchaser Claimant, and (ii) to be subject to
Sections 5.09(b), and 10.01 through 10.05 hereof. Kirk's obligations
hereunder shall be binding upon Kirk and his administrators, executors,
heirs and beneficiaries, and may not be assigned by Kirk.
-----------------------------------
Randal J. Kirk
-63-
<PAGE>
-64-
<PAGE>
SOFTWARE USE LICENSE AGREEMENT
This Software Use License Agreement (the "Agreement") is entered into by
and between PBX/EX, Inc., a Delaware corporation with its principal place of
business at 7335 Lee Highway, Radford, Virginia 24141 ("PBX/EX") and GIV
Holdings, Inc., a Delaware corporation, General Injectables & Vaccines, Inc., a
Virginia corporation, InSource, Inc., a Virginia corporation, and Rahn
Laboratories, Inc., a Virginia corporation, with their principal place of
business at Highways 21 and 52, Bastian, Virginia 24314 (individually and
collectively, "Customer").
I. DEFINITIONS.
1.1 "Competitive Business" shall mean the business of distribution (i.e.,
the purchase and resale for profit) of healthcare products to office-based
physicians.
1.2 "Program" shall mean the call sequencing system computer software
described in Schedule A in object code form owned or distributed by PBX/EX for
which Customer is granted a use license pursuant to this Agreement; the media;
the user guides and manuals for use of the software ("Documentation").
1.3 "Order Form" shall mean the document by which Customer may order
Program licenses, which must be agreed to by the parties. Any Order Form shall
reference the Effective Date of this Agreement.
1.4 "Price List" shall mean PBX/EX's applicable standard commercial fee
schedule that is in effect when a Program license or any other product or
service is ordered by Customer.
1.5 "Designated System" shall mean the computer hardware and operating
system currently resident in Bastian, Virginia, as of the date hereof.
1.6 "Site" shall mean a single location and shall be either the
above-identified Customer address in Bastian, Virginia or such other single
location as Customer shall identify by written notice to PBX/EX.
1.7 "Commencement Date" shall mean the date on which the Programs are
delivered by PBX/EX to Customer, or if no delivery is necessary, the Effective
Date set forth on the relevant Order Form.
1.8 "Subsequent Release" shall mean a subsequent release of the Program.
<PAGE>
1.9 "Seat" unless otherwise specified on the Order Form, shall mean the
physical location or terminal at which Programs are available for use by an
individual authorized by Customer to use such Programs, regardless of whether
such individual is actively using the Programs at any given time.
1.10 "Limited Production Program" shall be a Program which does not appear
on the Price List or which is designated as Limited Production by PBX/EX.
1.11 "Cap" shall mean the limitation on the total cumulative amount for
which PBX/EX may be liable to Customer under and in connection with this
Agreement and the Time and Materials Agreement, including any applicable
provisions of this Agreement and the Time and Materials Agreement. On the date
of execution of this Agreement and the Time and Materials Agreement, the Cap
shall be $50,000. Thereafter, the Cap may be increased by the amounts of fees
that Customer may pay to PBX/EX for additional software licenses or for services
under the Time and Materials Agreement, up to $150,000. In no event shall the
Cap amount exceed $150,000.
II. PROGRAM LICENSE.
2.1 Rights Granted.
A. Subject to the terms and conditions of this Agreement for the
initial term and any renewal term thereof, and in consideration of Customer's
payment in full of the applicable license fees as provided in Section 5.1 below,
PBX/EX grants to Customer a nonexclusive use license to use the Programs
specified under this Agreement, as follows:
i. to use the Programs solely for Customer's own internal data
processing operations on the Designated System at the Site or on a backup system
at the Site if the Designated System is inoperative, up to any applicable
maximum number of designated Seats or other such limitation (if any) as
specified in this Agreement. Customer is only authorized to use the Programs in
conjunction with Customer's marketing, sales, and customer service functions as
a specialty wholesaler or distributor of vaccines, biologics, pharmaceuticals,
and other healthcare products typically utilized in physician offices. Customer
may not relicense the Programs or use the Programs for third-party training,
commercial time-sharing, third-party services, rental or services bureau use.
Customer's use license shall be limited to the number of Seats specified in
Schedule B hereto. Different employees of Customer may use the Programs at a
specific Seat, but not concurrently;
ii. to use the Documentation provided with the Programs in
support of Customer's authorized use of the Programs; and
iii. to make and retain a single copy the Programs for archival
or backup purposes and to make a copy of the Program, and to use the Program, in
a test environment at the Site, provided that Customer notifies PBX/EX of the
hardware and operating system on which such Program will be used; provided,
however, that no other
Page 2
<PAGE>
copies shall be made without PBX/EX's prior written consent. All titles,
trademarks, and copyright and restricted rights notices shall be reproduced in
such archival or backup copy. All archival and backup copies of the Programs are
subject to the terms of this Agreement.
Customer shall not copy or use the Programs (including the Documentation) except
as otherwise expressly specified in this Agreement or an Order Form. Customer
shall have the right to allow Customer's third party agents ("Agents") to use
the Programs for Customer's internal use purposes so long as Customer ensures
that Agents use the Programs in accordance with the terms of this Agreement.
B. Customer agrees not to cause or permit the reverse engineering,
disassembly, or decompilation of the Programs.
C. PBX/EX shall retain all title, copyright and other proprietary
rights in the Programs. Customer does not acquire any rights, express or
implied, in the Programs, other than those specified in this Agreement.
Customer's sole rights are use rights as set forth in the Agreement. PBX/EX may
license any of the Programs to any manufacturers, including manufacturers of
injectables, vaccines, medical supplies, and surgical supplies, but PBX/EX's
licenses to any such manufacturers shall not allow the manufacturers to use the
Programs in connection with the distribution of injectables, vaccines, medical
supplies, or surgical supplies to office-based physicians (other than pursuant
to the Engagement Letter dated March 13, 1998, by and between Block Drug
Company, Inc. and Biological & Popular Culture, Inc. ("Biopop"); the Time and
Materials Agreement dated March 13, 1998, by and between Block Drug Company,
Inc. and Biopop; and the Demonstration Agreement dated March 13, 1998, by and
among Block Drug Company, Inc., General Injectables & Vaccines, Inc. and
Biopop).
D. In the event that PBX/EX plans or proposes to license the Programs
to persons to enhance their distribution of products to dental practices or
veterinary practices, PBX/EX, subject to the confidentiality provisions of this
Agreement, will so advise Customer. Upon receipt of such notice, Customer shall
have the right to obtain from PBX/EX a license to the Programs at issue
comparable to the proposed license for use in the dental market or the
veterinary market as applicable. In the event that Customer does obtain from
PBX/EX a license to the Programs at issue for the dental market or the
veterinary market, Customer's license from PBX/EX for the Programs at issue in
the dental market or the veterinary market, as applicable, shall be exclusive
for the remaining term of this Agreement.
E. To use a Program specified on an Order Form ("Ordered Program"),
Customer may need to use an ancillary third party program embedded in or
delivered with the Ordered Program. Customer is responsible for obtaining any
licenses or permissions that it may need to use such ancillary third party
programs.
F. As an accommodation to Customer, PBX/EX may notify Customer of
pre-production releases of Programs (which may be labeled "Alpha" or "Beta").
PBX/EX may supply Customer with such pre-production releases pursuant to an
Order Form or other written agreement between the parties. These products are
not suitable for production use.
Page 3
<PAGE>
G. Provided that Customer gives PBX/EX prior written notice, Customer
may move the Programs and the Designated System from the Site to a different
physical location ("New Site"), and may use the Programs on the Designated
System at the New Site. Under no circumstances shall Customer use the Programs
or establish a Designated System at more than one physical location or site at
any one time.
2.2 Acceptance of Program.
Customer shall be deemed to have accepted each Program subject to the terms
and conditions of this Agreement both as of the Effective Date of this Agreement
and as of the date that any Program is installed on the Designated System.
2.3 Transfer and Assignment.
A. Customer may transfer a Program license within its organization
upon prior written notice to PBX/EX, provided that the Program must remain at
the Site.
B. Customer may assign this Agreement in connection with a sale of all
or substantially all of its assets or a corporate reorganization or a spinoff,
provided that the Program must remain at the Site. Customer may not assign this
Agreement to a third party (i.e., a legal entity separate from Customer) without
the prior written consent of PBX/EX.
C. PBX/EX and its affiliates shall not themselves use nor license to
any third party nor otherwise permit the use by any third party of any of the
Programs specified under this Agreement in connection with any Competitive
Business prior to the expiration or termination of this Agreement in accordance
with Article III hereof.
2.4 Verification.
At PBX/EX's written request, not more frequently than twice annually,
Customer shall furnish PBX/EX with a signed certification (a) verifying that the
Programs are being used pursuant to the provisions of this Agreement, including
any Seat restrictions and other limitations; and (b) listing the locations,
types and serial numbers of the Designated Systems on which the Programs are
run.
PBX/EX may, at its expense, audit Customer's use of the Programs. Any such
audit shall be conducted during regular business hours at Customer's facilities
and shall not unreasonably interfere with Customer's business activities. If an
audit reveals that Customer has underpaid fees to PBX/EX, Customer shall be
invoiced for such underpaid fees based on the Price List in effect at the time
the audit is completed; if the underpaid fees exceed 5% of the license fees
paid, then Customer shall also pay PBX/EX's reasonable costs of conducting the
audit. Audits shall be conducted no more than once annually.
Page 4
<PAGE>
2.5 Injunctive Relief.
In the event that PBX/EX breaches Sections 2.1C, 2.1D or 2.3C, monetary
damages shall be insufficient and Customer shall be entitled injunctive relief
and damages resulting from such material breach, but any such damages shall be
subject to the Cap amount at the time of the alleged material breach.
III. TERM AND TERMINATION.
3.1 Term.
If not otherwise specified on the Order Form, each Program license
granted under this Agreement shall remain in effect for a period of five (5)
years from the Commencement Date, unless the license or this agreement is
terminated as provided in Section 3.2 or 3.3 below. By written modification to
this Agreement acceptable to PBX/EX, Customer may purchase renewals and
extensions of the term of this Agreement.
3.2 Termination by Customer.
Customer may terminate any Program license at any time upon written
notice to PBX/EX; however, termination shall not relieve Customer's obligations
specified in Section 3.4 and termination shall not result in the refund or
proration of any license fee, or of any other amount paid or owed to PBX/EX.
3.3 Termination by PBX/EX.
PBX/EX may terminate this Agreement or any license upon written notice
if Customer breaches this Agreement and fails to correct the breach within 30
days following written notice specifying the breach.
3.4 Effect of Termination.
Termination of this Agreement or any license hereunder shall not limit
either party from pursuing other remedies available to it, including injunctive
relief, nor shall such termination relieve Customer's obligation to pay all fees
that have accrued or are otherwise owed by Customer under this Agreement, any
Order Form, or other similar ordering document under this Agreement. The
parties' rights and obligations under Sections 2.1.B, 2.1.C, 2.1.D, and 2.3.B,
and Articles III, IV, V, VI and VII shall survive termination of this Agreement.
3.5 Handling of Programs Upon Termination.
If a license granted under this Agreement expires or otherwise
terminates, Customer shall (a) cease using the applicable Programs, and (b)
certify to PBX/EX within one month after expiration or termination that Customer
has destroyed or has returned to PBX/EX the Programs and all copies. This
requirement applies to copies in all forms, partial and complete, in all types
of media and computer memory, and whether or not modified or merged into other
materials.
Page 5
<PAGE>
Before returning Programs to PBX/EX, Customer shall acquire a Return Material
Authorization ("RMA") number from PBX/EX. PBX/EX shall have the right, but not
the obligation, to audit Customer's systems and systems sites to determine and
verify the return and/or destruction of the Programs in accordance with the
terms of this Section 3.5.
IV. INDEMNITY, WARRANTIES, REMEDIES.
4.1 Infringement Indemnity.
PBX/EX will defend and indemnify Customer from and against all damages
and costs (including reasonable attorney's fees and costs) arising out of a
claim that the Programs, as used by Customer in accordance with this Agreement,
infringe a U.S. copyright or patent or trade secret or other intellectual
property right of any other party, provided that (a) Customer notifies PBX/EX in
writing within 30 days of the claim; (b) PBX/EX has sole control of the defense
and all related settlement negotiations, provided that Customer may be
represented by its own counsel at Customer's cost; and (c) Customer provides
PBX/EX with the assistance, information and authority reasonably necessary to
perform PBX/EX's obligations under this Section. Reasonable out-of-pocket
expenses incurred by Customer in providing such assistance will be reimbursed by
PBX/EX. PBX/EX shall have no liability for any claim of infringement based on
use of a superseded or altered release of Programs if the infringement would
have been avoided by the use of a current unaltered release of the Programs
which PBX/EX provides to Customer. This intellectual property infringement
indemnification is subject to the Cap.
In the event the Programs are held or are believed by PBX/EX to
infringe, PBX/EX shall have the option, at its expense, to (a) modify the
Programs to be noninfringing provided that the modified Programs do not result
in a significant loss of functionality from the original Programs; (b) obtain
for Customer a license to continue using the Programs; or (c) terminate the
license for the infringing Programs and pay Customer up to $50,000, prorated
over a five year term from the Commencement Date. This Section 4.1 states
PBX/EX's entire liability and Customer's exclusive remedy or infringement.
4.2 Warranties and Disclaimers
A. Warranty.
PBX/EX warrants for a period of one year from the Commencement Date that
each unmodified Program for which Customer has a fully paid license will perform
the functions described in the Documentation. PBX/EX further warrants that each
unmodified Program for which Customer has a fully paid license will accurately
perform the functions described in the Documentation before, during, and after
January 1, 2000, including any and all date-dependent functions, including for
all leap years, provided that Customer uses such Program properly and in
accordance with its Documentation, and provided that Customer does not use such
Program in connection with any third party materials, systems or hardware other
than the third party materials, systems or hardware with which the Programs are
currently used at the Site.
B. No Time Bomb Warranty.
Page 6
<PAGE>
PBX/EX warrants that it did not insert or include (or cause any third party
to insert or include) into the Program or any of its components (i) any
"viruses", "deactivation", "destruct" or other "time bomb" features designed to
interfere with Customer's quiet enjoyment and use of the Program or to disable
the program including automatically with the passage of time or (ii) any
features permitting unauthorized direct or remote access to the Program or any
of its components.
C. Interface With Order Entry Application.
An Oracle-based order entry application is being developed at the site
which is expected to interface with the Program (the "Order Entry Application"),
but development of the Order Entry Application is not completed and will not be
completed by the execution date of this Agreement. Provided that development of
the Order Entry Application is completed in accordance with the plan developed
by PBX/EX or its affiliates and in accordance with specifications to be provided
by PBX/EX, the Order Entry Application will interface with the Program in
accordance with the applicable Documentation.
D. Disclaimers.
THE WARRANTIES ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.
PBX/EX DOES NOT WARRANT THAT THE PROGRAMS WILL MEET CUSTOMER'S
REQUIREMENTS, THAT THE PROGRAMS WILL OPERATE IN THE COMBINATIONS THAT CUSTOMER
MAY SELECT FOR USE, THAT THE OPERATION OF THE PROGRAMS WILL BE UNINTERRUPTED OR
ERROR-FREE, OR THAT ALL PROGRAM ERRORS WILL BE CORRECTED. ANY LIMITED PRODUCTION
PROGRAMS OR PRE-PRODUCTION RELEASES OF PROGRAMS ARE DISTRIBUTED ON AN "AS-IS"
BASIS.
BY ACCEPTING THIS AGREEMENT, CUSTOMER ACKNOWLEDGES THAT THE USE LICENSE
REPRESENTED BY THIS AGREEMENT IS ONLY GRANTED BY PBX/EX TO CUSTOMER FOR SUCH
PROGRAMS AS PBX/EX MAY EXCLUSIVELY OWN IN ITS OWN RIGHT. USE OF PBX/EX'S
PROGRAMS ENCOMPASSED BY THIS AGREEMENT REQUIRE THIRD-PARTY SOFTWARE AND HARDWARE
FOR PROPER OPERATION. IT IS CUSTOMER'S SOLE RESPONSIBILITY TO OBTAIN AND
MAINTAIN THE RIGHTS TO USE ALL SUCH THIRD PARTY SOFTWARE AND HARDWARE DURING THE
TERM OF THIS AGREEMENT AND ANY EXTENSION OR RENEWAL HEREOF.
E. Limitation of Liability.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF PROFITS, REVENUE, DATA
OR USE, INCURRED BY EITHER PARTY OR ANY
Page 7
<PAGE>
THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT, EVEN IF THE OTHER PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. PBX/EX's LIABILITY FOR
DAMAGES HEREUNDER SHALL BE SUBJECT TO THE CAP.
The provisions of this Agreement allocate the risks between PBX/EX and
Customer. PBX/EX's pricing reflects this allocation of risk and the limitation
of liability specified herein.
4.3. Exclusive Remedies.
For any breach of the warranties contained in Section 4.2, Customer's
exclusive remedy, and PBX/EX's entire liability, shall be the correction of
Program errors that cause breach of the warranty, or if PBX/EX is unable to make
the Program operate as warranted, Customer shall be entitled to recover up to
the Cap, prorated over a five-year term from the Commencement Date.
V. PAYMENT PROVISIONS.
5.1 Invoicing and Payment.
The license fees for the Programs are set forth on Schedule B hereto and
for any Subsequent Releases shall be as stated on any applicable Order Forms.
The license fees offered to Customer for any Subsequent Release shall be no
higher than the license fees that PBX/EX charges or shall charge to similarly
situated customers for the same Subsequent Release at the time. Invoices for
payment of license fees shall be payable 30 days from the Commencement Date. Any
other applicable fees shall be payable 30 days from the invoice date, and shall
be deemed overdue if they remain unpaid thereafter. Any amounts payable by
Customer hereunder which remain unpaid after the due date shall be subject to a
late charge equal to 1.0% per month from the due date until such amount is paid.
Customer agrees to pay all applicable media and shipping charges. Customer shall
have a purchase order, or alternative document acceptable to PBX/EX, on or
before the Effective Date of this applicable Order Form.
5.2 Taxes.
The fees listed in this Agreement do not include taxes; if PBX/EX is
required to pay sales, use, property, value-added or other taxes based on the
licenses granted in this Agreement or on Customer's use of Programs, then such
taxes shall be billed to and paid by Customer. This Section shall not apply to
taxes based on PBX/EX's income.
VI. ESCROW
Promptly after execution of this Agreement, the parties shall enter into a
source code escrow agreement, which shall contain provisions substantially
similar to the following:
A. Provided that Customer is current in all applicable license fees
and is otherwise in compliance with the terms and provisions of the Agreement,
PBX/EX shall maintain in escrow a copy of the source code and process flows,
data flows and database structures ("source code") for the applicable licensed
Programs.
Page 8
<PAGE>
B. Provided that Customer has obtained and is current in all
applicable payments for maintenance and support services under the Time and
Materials Agreement, Customer shall be entitled to request release of the
applicable escrowed source code in the event that one or more of the following
events occurs: (i) PBX/EX permanently discontinues or dissolves its business or
permanently ceases its operations; or (ii) PBX/EX fails to provide maintenance
or support services as set forth in the Time and Materials Agreement or in a
Work Order or Change Order entered into pursuant to the Time and Materials
Agreement, and does not cure its failure to provide such maintenance or support
services within 30 days after notice thereof by Customer.
C. In the event of an occurrence of the type requiring release of the
applicable escrowed source code, Customer shall send, by national overnight
courier service, to both PBX/EX and the escrow agent, a signed declaration that
an event of default has occurred such that the escrowed source code should be
released to it, and reciting the basis for the cited event of default. PBX/EX
shall have 15 days from the date of receipt of the declaration to notify the
escrow agent that the cited event of default has not occurred or is disputed. In
the event of a dispute, the parties shall attempt to resolve the dispute
promptly through negotiation or, if the dispute cannot be resolved in such
manner, through an alternative dispute resolution process agreed to by the
parties. The escrow agent shall not release the escrowed source code unless any
dispute is resolved and the resolution is an agreement or determination that the
escrowed source code should be released.
D. Notwithstanding anything in this Agreement either expressly or by
implication to the contrary, in the event that the Program has, due to a failure
of the Program to satisfy the warranty in Section 4.2 (and Customer is in
compliance with its obligations under Section 1.1 of the Time and Materials
Agreement) and not due to the fault of Customer or a third party, completely
crashed or malfunctioned to the extent that Customer is materially impaired in
the conduct of its business (" Emergency Situation"), and PBX/EX has failed to
satisfy its obligations under Section 1.1 of the Time and Materials Agreement
relating to an Emergency Situation (and Customer is in compliance with its
obligations under Section 1.1 of the Time and Materials Agreement), then
Customer may send, by normal overnight carrier service to both PBX/EX and the
Escrow Agent, a signed declaration that an event of default has occurred with
respect to an Emergency Situation, in which case the Escrow Agent shall release
the applicable escrowed source code unless, within 48 hours of PBX/EX's receipt
of the default declaration, PBX/EX sends a signed declaration contesting the
default notice. If PBX/EX contests the default notice, the parties shall
promptly submit their dispute to arbitration before the American Arbitration
Association at a mutually agreeable site within the Western District of
Virginia, it being agreed that the parties shall share equally the cost of the
arbitrators' fees and provided that the arbitration should be completed within
ten business days after submission and, if the arbitrator rules that an
Emergency Situation did exist and that PBX/EX breached its obligations under
Section 1.1 of the Time and Materials Agreement relating to an Emergency
Situation, then the Escrow Agent shall immediately deliver the source code to
Customer and PBX/EX shall be liable to Customer for any and all damages suffered
by Customer because of its inability to operate the Program during the 10 day
period, subject to the limits of liability in Section 4.2D.
Page 9
<PAGE>
E. Customer's use of any released escrowed source code shall be
subject to the terms and conditions of this Agreement, and such released
escrowed source code is and shall remain PBX/EX Confidential Information. Before
Customer may allow its employees any access to any released escrowed source
code, Customer shall ensure that such employees have reviewed this Agreement and
will abide by all confidentiality obligations and other obligations herein, and
Customer shall indemnify PBX/EX against any damage or injury resulting from its
failure or its employees' failure to abide by such obligations.
VII. GENERAL TERMS.
7.1 Confidentiality.
By virtue of this Agreement, the parties may have access to
information that is confidential to one another ("Confidential Information").
Confidential Information of PBX/EX shall include the Programs, the
Documentation, the source code, the training materials, the terms and pricing
under this Agreement, all information about PBX/EX's business that is disclosed
to Customer, and all information clearly identified as confidential.
Confidential Information of Customer shall include the data stored on the
Program (including customer, product and price information and lists), all
information about Customer's business that is disclosed to PBX/EX, and all
information clearly identified as confidential. Each party hereby acknowledges
the other party's exclusive ownership of that party's Confidential Information.
A party's Confidential Information shall not include information that:
(a) is or becomes a part of the public domain through no act or omission of the
other party; (b) was in the other party's lawful possession prior to the
disclosure and had not been obtained by the other party either directly or
indirectly from the disclosing party; (c) is lawfully disclosed to the other
party by a third party without restriction on disclosure; or (d) is
independently developed by the other party. Customer shall not disclose the
results of any benchmark tests of the Programs to which it may be allowed access
to any third party without PBX/EX's prior written approval.
The parties agree, unless required by law, not to make each other's
Confidential Information available in any form to any third party or to use each
other's Confidential Information for any purpose other than the implementation
of this Agreement. Each party agrees to take all reasonable steps to ensure that
Confidential Information is not disclosed or distributed by its employees or
agents in violation of the terms of this Agreement. Customer agrees to cause all
of its employees, consultants and representatives who have access to any
Confidential Information of PBX/EX to agree to be bound by the terms of this
Section 7.1.
7.2 Governing Law.
This Agreement and all matters arising out of, or relating to, this
Agreement, shall be governed by the laws of the Commonwealth of Virginia, and
shall be deemed to be executed in Pulaski County, Virginia.
Page 10
<PAGE>
7.3 Jurisdiction.
Any legal action or proceeding relating to this Agreement shall be
instituted and maintained in a state or federal court in the Western District of
Virginia. PBX/EX and Customer agree to submit to the jurisdiction of, and agree
that venue is proper in, these courts in any such legal action or proceeding.
7.4 Notice.
All notices, including notices of address change, required to be sent
hereunder shall be in writing and shall be deemed to have been given if sent by
fax copy as directed below and followed by hard copy, dispatched on the same day
(a) by a nationally reputable overnight delivery service, prepaid and addressed
as set forth below, or (b) by certified mail, return receipt requested, postage
prepaid, and addressed as follows:
If to PBX/EX:
PBX/EX, Inc.
7335 Lee Highway
Radford, VA 24141
Attention: Lee Talbot
Fax No.: (540) 633-3416
With a copy to:
PBX/EX, Inc.
7335 Lee Highway
Radford, VA 24141
Attention: Legal Department
Fax No.: (540) 633-3410
If to Customer:
GIV Holdings, Inc.
7335 Lee Highway
Radford, Virginia 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
General Injectables & Vaccines, Inc.
7335 Lee Highway
Radford, Virginia 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
Page 11
<PAGE>
InSource, Inc.
7335 Lee Highway
Radford, Virginia 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
Rahn Laboratories, Inc.
7335 Lee Highway
Radford, Virginia 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
Any party may change its address for notices by giving the other party notice of
such change in the manner provided above. To expedite order processing, Customer
agrees that PBX/EX may treat documents faxed by Customer to PBX/EX as original
documents; nevertheless, either party may require the other to exchange original
signed documents.
7.5 Severability.
In the event any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions of this Agreement will remain in full
force.
7.6 Waiver.
The waiver by either party of any default or breach of this Agreement shall
not constitute a waiver of any other or subsequent default or breach. Except for
actions for nonpayment or breach of PBX/EX's proprietary rights in the Programs,
no action, regardless of form, arising out of this Agreement may be brought by
either party more than one year after the cause of action has accrued.
7.7 Export Administration.
Customer agrees to comply fully with all relevant export laws and
regulations of the United States ("Export Laws") to assure that neither the
Programs nor any direct product thereof are (a) exported, directly or
indirectly, in violation of Export Laws; or (b) are intended to be used for any
purposes prohibited by the Export Laws, including, without limitation, nuclear,
chemical, or biological weapons proliferation.
7.8 Relationships Between the Parties.
PBX/EX is an independent contractor; nothing in this Agreement shall be
construed to create a partnership, joint venture or agency relationship between
the parties.
Page 12
<PAGE>
7.9 Entire Agreement.
This Agreement constitutes the complete agreement between the parties and
supersedes all prior or contemporaneous agreements or representations written or
oral, concerning the subject matter of this Agreement. This Agreement may not be
modified or amended except in a writing signed by a duly authorized
representative of each party; no other act, document, usage or custom shall be
deemed to amend or modify this Agreement.
It is expressly agreed the terms of this Agreement and any Order Form shall
supersede the terms in any Customer purchase order or other ordering document.
This Agreement shall also supersede the terms of any shrink-wrap or
break-the-seal license agreement included in any package for PBX/EX-furnished
software, except terms contained in such license agreement that grant specific
use rights for the Programs.
Page 13
<PAGE>
The Effective Date of this Agreement shall be December 31, 1998.
GIV HOLDINGS, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
GENERAL INJECTABLES & VACCINES, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
INSOURCE, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
RAHN LABORATORIES, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
Page 14
<PAGE>
PBX/EX, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
Page 15
<PAGE>
SCHEDULE A
LICENSED PROGRAM
The licensed Program consists of the following proprietary software systems
or modules at the Site:
1. Call Sequencing System - Computer Telephony software system for
multi-tasking call center platforms.
2. Data Warehouse - Established data warehouse tool set comprised of
Contact Manager, Financial, and Messaging data marts and associated
Management tools.
3. Review Queue - Duplicate prevention, identification, and correction
tool for Contact Manager and navigation tool.
4. Intranet Decision System - Database-driven dynamic web page
application presentation and navigation tool.
5. Intranet Maintenance Cartridge - Operational command and configuration
tool for Intranet Decision System.
6. Paperless Forms Cartridge - Various administrative request forms via
the web.
7. Telephone Operations Cartridge - Telephony operations reporting.
8. Teleservices Management Cartridge - Call center command and control
application.
Page 16
<PAGE>
SCHEDULE B
LICENSE FEES
License Fee
US $1.00 per callcenter Seat
(minimum and maximum 100 Seat configuration)
Page 17
<PAGE>
TIME AND MATERIALS AGREEMENT
Customer Names: GIV Holdings, Inc.
General Injectables & Vaccines, Inc.
InSource, Inc.
Rahn Laboratories, Inc.
Customer Address: Highways 21 and 52
Bastian, Virginia 24314
This Time and Materials Agreement (this "Agreement") is entered into by and
among GIV Holdings, Inc., General Injectables & Vaccines, Inc., InSource, Inc.
and Rahn Laboratories, Inc., with business addresses at Highways 21 and 52 in
Bastian, Virginia 24314 (each individually and collectively, "Customer") and
PBX/EX, Inc., a Delaware corporation with offices at 7335 Lee Highway, Radford,
Virginia 24141 ("PBX/EX").
1. SERVICES.
1.1 PBX/EX Obligations.
PBX/EX agrees to provide to Customer such consulting services, system
integration services, and support and maintenance services for the Program and
any Subsequent Releases licensed pursuant to the Software Use License Agreement
made between the parties of even date herewith ("Services") provided that
Customer requests such Services in written requests ("Work Requests") to PBX/EX
pursuant to the terms of this Agreement, and provided that such Work Requests
are agreed to by PBX/EX and set forth in a work order executed by both parties
(a "Work Order"). Each Work Request shall specify the scope of requested
Services and Customer's specifications.
In the event that a "Program" or "Subsequent Release," as those terms
are defined in the Software Use License Agreement, has, due to a failure of the
Program or Subsequent Release to satisfy the warranty in Section 4.2 of the
Software Use License Agreement and not due to the fault of Customer or a third
party, completely crashed or malfunctioned to the extent that Customer is
materially impaired in the conduct of its business ("Emergency Situation"),
PBX/EX shall initiate the provision of support and maintenance services, on-site
if necessary (provided, that Customer, upon receipt of a reasonably detailed
invoice from PBX/EX, promptly shall reimburse PBX/EX for its reasonable expenses
arising out of or relating to its provision of such on-site services (the
"Expenses")), within 24 hours of Customer's notice to PBX/EX of an Emergency
Situation and request for emergency support and maintenance, provided that
Customer has in place a device or mechanism to allow PBX/EX remote access to the
Program or Subsequent Release. PBX/EX shall use its best efforts to diagnose,
and, if the crash or malfunction is due to a failure of the Program or
Subsequent Release to satisfy the warranty in Section 4.2 of the Software Use
License Agreement and not due to the fault of Customer or a
<PAGE>
a third party, to repair, as quickly as possible, the Program or Subsequent
Release so that it performs according to its Documentation. If the crash or
malfunction is due to a failure of the Program or Subsequent Release to satisfy
the warranty in Section 4.2 of the Software Use License Agreement and not due to
the fault of the Customer or a third party, and Customer believes that PBX/EX
has failed to repair the Program or Subsequent Release so that it performs
according to its documentation within five days after notice of the Emergency
Situation, then Customer may initiate the process for release of the applicable
escrowed source code pursuant to Section VI D of the Software Use License
Agreement.
Customer shall pay to PBX/EX in advance on the date of this Agreement
and on each anniversary of such date, an amount equal to the then current per
day rate of a Practice Director multiplied by ten days (the "Yearly Fee"), which
amount (i) shall be applied against the actual cost (excluding Expenses) of the
provision of support and maintenance services in Emergency Situations during the
period covered by such Yearly Fee and (ii) shall be non-refundable. To the
extent that the costs (excluding Expenses) of the provision of such services
exceeds the Yearly Fee, such costs shall be paid in accordance with the terms of
this Agreement.
1.2 Customer's Obligations.
Customer agrees to provide assistance, cooperation, information,
equipment, data, a suitable work environment for any work conducted on-site, and
resources reasonably necessary to enable PBX/EX to provide Services. Customer
acknowledges that PBX/EX's ability to provide Services as set forth in the Work
Requests, Work Orders and herein may be affected if Customer does not provide
sufficient assistance as set forth above.
1.3 Project Management.
(a) Project Manager. Each party shall designate on each Work Order a
project manager who shall work together with the other party's project
manager to facilitate efficient delivery of Services.
(b) Change Orders. Any change in the scope of Services specified in a
Work Order must be mutually agreed upon by the parties in a written change
order (a "Change Order"). Without limiting the foregoing, PBX/EX's written
consent must be obtained if any change in Customer requirements, software,
or hardware could affect PBX/EX's cost estimates. Change Orders signed by
Customer and PBX/EX shall be used to document all changes.
2. RATES AND PAYMENTS
2.1 Rates.
Services referenced in Section 1.1 above shall be provided at the
following rates until the next scheduled rate change on December 31, 1999:
2
<PAGE>
Consulting Level Rate
---------------- ----
Staff Consultant $1,400/Day
Senior Consultant $1,525/Day
Principal Consultant $1,820/Day
Managing Principal $2,075/Day
Practice Director $2,520/Day
Thereafter, Services shall be provided at PBX/EX's revised rates. PBX/EX's
current rates and revised rates offered to Customer shall be no higher than the
rates that PBX/EX charges or shall charge to similarly situated customers for
similar services at the time.
2.2 Budgeting.
The Services referenced in Section 1.1 above are provided on a time
and materials (T&M") basis. Based upon preliminary estimates at the time of each
Work Order or Change Order, PBX/EX shall estimate the anticipated time and
materials required to provide the requested Services. In the event that the fees
and expenses due PBX/EX reach this estimate, PBX/EX shall cease providing
Services until it has received prior written approval by Customer's authorized
representative to continue Services. Any estimate related to the Services
performed pursuant to this Agreement is intended to be only an estimate for
Customer's budgeting and PBX/EX's resource scheduling purposes. Provided that
Customer provides PBX/EX with an appropriate Work Request and the parties agree
to a Work Order or Change Order, PBX/EX will continue to provide Services to
Customer on a T&M basis after any estimated amount has been reached pursuant to
a Change Order or other modification to the scope of Services or this Agreement.
2.3 Invoicing.
All fees and expenses will be invoiced monthly and will be payable
within 30 days of the date of invoice. Actual, reasonable travel and
out-of-pocket expenses, and applicable taxes and other charges, if any, are not
included in rates set forth above and will be invoiced separately and paid by
Customer. Interest shall be added to any such amount at the rate of one percent
(1%) per month from the date such amount should have been delivered until the
date of actual payment to PBX/EX.
3. ADDITIONAL TERMS
3.1 Rights to Developments.
Upon receipt of Customer's payment in full of all fees and expenses
under this Agreement, PBX/EX hereby agrees to grant Customer a non-exclusive,
non-transferable, royalty-free license to use items and materials developed by
PBX/EX for Customer under this Time and Materials Agreement; such items and
materials shall be referred to as "Contract Property."
3
<PAGE>
PBX/EX shall own and retain all copyrights, patent rights, and other
intellectual property rights to the Contract Property.
Nothing in this Agreement shall preclude PBX/EX from developing,
acquiring, using, marketing or selling any software, documentation, or other
products performing the same or similar functions as the Contract Property.
3.2 No Solicitation.
For a period of one year following the rendering of any Services
under this Agreement, Customer agrees that it shall not solicit or hire any
employee of PBX/EX without PBX/EX's prior written consent, nor shall PBX/EX
solicit or hire any employee of Customer without Customer's prior written
consent..
4. TERMINATION.
4.1 Term.
Subject to the terms of any Work Orders or Change Orders, this
Agreement shall remain in effect for a period of five years from the date hereof
unless terminated pursuant to Section 4.2 hereof.
4.2 Termination by PBX/EX.
PBX/EX may terminate this Agreement upon written notice if Customer
breaches this Agreement and fails to correct the breach within 30 days following
written notice specifying the breach.
4.3 Effect of Termination.
Termination of this Agreement shall not limit either party from
pursuing other remedies available to it, including injunctive relief, nor shall
such termination relieve Customer's obligation to pay all fees that have accrued
or are otherwise owed by Customer under this Agreement, any Order Form, or other
similar ordering document under this Agreement. The parties' rights and
obligations under Sections 4, 5, 6 and 7 shall survive termination of this
Agreement.
4
<PAGE>
4.4 Handling of Contract Property Upon Termination.
If this Agreement expires or otherwise terminates, Customer shall (a)
cease using the applicable Contract Property, and (b) certify to PBX/EX within
one month after expiration or termination that Customer has destroyed or has
returned to PBX/EX the Contract Property and all copies. This requirement
applies to copies in all forms, partial and complete, in all types of media and
computer memory, and whether or not modified or merged into other materials.
Before returning Contract Property to PBX/EX, Customer shall acquire a Return
Material Authorization ("RMA") number from PBX/EX. PBX/EX shall have the right,
but not the obligation, to audit Customer's systems and systems sites to
determine and verify the return and/or destruction of the Contract Property in
accordance with the terms of this Section 4.4.
5. WARRANTIES AND DISCLAIMERS.
5.1 Services Warranty.
PBX/EX warrants that its Services will be performed consistent with
generally accepted industry standards. This warranty shall be valid for 90 days
from the date of performance of any Services.
5.2 Disclaimers.
THE WARRANTY ABOVE IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.
PBX/EX DOES NOT WARRANT THAT THE SERVICES WILL MEET CUSTOMER'S
REQUIREMENTS, THAT THE CONTRACT PROPERTY WILL OPERATE IN THE COMBINATIONS THAT
CUSTOMER MAY SELECT FOR USE, THAT THE OPERATION OF THE CONTRACT PROPERTY WILL BE
UNINTERRUPTED OR ERROR-FREE, OR THAT ALL CONTRACT PROPERTY ERRORS WILL BE
CORRECTED. ANY COMPUTER-BASED TRAINING IS DISTRIBUTED ON AN "AS-IS" BASIS.
IT IS CUSTOMER'S SOLE RESPONSIBILITY TO OBTAIN AND MAINTAIN THE
RIGHTS TO USE ANY NECESSARY OR APPROPRIATE THIRD PARTY SOFTWARE AND HARDWARE
DURING THE TERM OF THIS AGREEMENT AND ANY EXTENSION OR RENEWAL HEREOF.
5.3 Limitation of Liability.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF PROFITS,
REVENUE, DATA OR USE, INCURRED BY EITHER PARTY OR ANY THIRD PARTY, WHETHER IN AN
ACTION IN CONTRACT OR TORT, EVEN IF THE
5
<PAGE>
OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. PBX/EX's
LIABILITY FOR DAMAGES HEREUNDER SHALL BE SUBJECT TO THE "CAP," AS DEFINED IN
SECTION 1.11 OF THE SOFTWARE USE LICENSE AGREEMENT.
The provisions of this Agreement allocate the risks between PBX/EX
and Customer. PBX/EX's pricing reflects this allocation of risk and the
limitation of liability specified herein.
5.4 Exclusive Remedies.
Anything in this Agreement notwithstanding, for any breach of the
warranty contained in Section 5.1, Customer's exclusive remedy, and PBX/EX's
entire liability, shall be the reperformance of the Services, or if PBX/EX is
unable to perform the Services as warranted, Customer shall be entitled to
recover the fees paid to PBX/EX for the unsatisfactory Services.
6. TAXES.
The fees listed in this Agreement do not include taxes; if PBX/EX is
required to pay sales, use, property, value-added or other taxes based on the
Services provided in this Agreement, then such taxes shall be billed to and paid
by Customer. This Section shall not apply to taxes based on PBX/EX's income.
7. GENERAL TERMS.
7.1 Confidentiality.
By virtue of this Agreement, the parties may have access to
information that is confidential to one another ("Confidential Information").
Confidential Information of PBX/EX shall include the Programs, the
Documentation, the source code, the training materials, the Services, the
Contract Property, the terms and pricing under this Agreement, all information
about PBX/EX's business that is disclosed to Customer, and all information
clearly identified as confidential. Confidential Information of Customer shall
include the data stored on the Program or Subsequent Release (including
customer, product and price information and lists), all information about
Customer's business that is disclosed to PBX/EX, and all information clearly
identified as confidential. Each party hereby acknowledges the other party's
exclusive ownership of that party's Confidential Information. A party's
Confidential Information shall not include information that: (a) is or becomes a
part of the public domain through no act or omission of the other party; (b) was
in the other party's lawful possession prior to the disclosure and had not been
obtained by the other party either directly or indirectly from the disclosing
party; (c) is lawfully disclosed to the other party by a third party without
restriction on disclosure; or (d) is independently developed by the other party.
The parties agree, unless required by law, not to make each other's
Confidential Information available in any form to any third party or to use each
other's Confidential
6
<PAGE>
Information for any purpose other than the implementation of this Agreement.
Each party agrees to take all reasonable steps to ensure that Confidential
Information is not disclosed or distributed by its employees or agents in
violation of the terms of this Agreement.
7.2 Governing Law.
This Agreement and all matters arising out of, or relating to, this
Agreement, shall be governed by the laws of the Commonwealth of Virginia, and
this Agreement shall be deemed to be executed in Pulaski County, Virginia.
7.3 Jurisdiction.
Any legal action or proceeding relating to this Agreement shall be
instituted and maintained in a state or federal court in the Western District of
Virginia. PBX/EX and Customer agree to submit to the jurisdiction of, and agree
that venue is proper in, these courts in any such legal action or proceeding.
7.4 Notice.
All notices, including notices of address change, required to be sent
hereunder shall be in writing and shall be deemed to have been given if sent by
fax copy as directed below and followed by hard copy, dispatched on the same day
(a) by a nationally reputable overnight delivery service, prepaid and addressed
as set forth below, or (b) by certified mail, return receipt requested, postage
prepaid, and addressed as follows:
If to PBX/EX:
PBX/EX, Inc.
7335 Lee Highway
Radford, VA 24141
Attention: Lee Talbot
Fax No.: (540) 633-3416
With a copy to:
PBX/EX, Inc.
7335 Lee Highway
Radford, VA 24141
Attention: Legal Department
Fax No.: (540) 633-3410
7
<PAGE>
If to Customer:
GIV Holdings, Inc.
7335 Lee Highway
Radford, VA 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
General Injectables & Vaccines, Inc..
7335 Lee Highway
Radford, VA 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
InSource, Inc.
7335 Lee Highway
Radford, VA 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
Rahn Laboratories, Inc.
7335 Lee Highway
Radford, VA 24141
Attention: Marcus E. Smith
Fax No.: (540) 633-3410
Any party may change its address for notices by giving the other
party notice of such change in the manner provided above. To expedite order
processing, Customer agrees that PBX/EX may treat documents faxed by Customer to
PBX/EX as original documents; nevertheless, either party may require the other
to exchange original signed documents.
7.5 Severability.
In the event any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions of this Agreement will remain in full
force.
7.6 Waiver.
The waiver by either party of any default or breach of this Agreement
shall not constitute a waiver of any other or subsequent default or breach.
Except for actions for nonpayment, no action, regardless of form, arising out of
this Agreement may be brought by either party more than one year after the cause
of action has accrued.
7.8 Relationships Between the Parties; Assignment.
8
<PAGE>
PBX/EX is an independent contractor; nothing in this Agreement shall
be construed to create a partnership, joint venture or agency relationship
between the parties. Customer may not assign this Agreement to a third party
(i.e., a legal entity separate from Customer) without the prior written consent
of PBX/EX.
7.9 Entire Agreement.
This Agreement constitutes the complete agreement between the parties
and supersedes all prior or contemporaneous agreements or representations
written or oral, concerning the subject matter of this Agreement. This Agreement
may not be modified or amended except in a writing signed by a duly authorized
representative of each party; no other act, document, usage or custom shall be
deemed to amend or modify this Agreement.
It is expressly agreed the terms of this Agreement and any Work Order
or Change Order shall supersede the terms in any Customer purchase order or
other ordering document.
9
<PAGE>
The Effective Date of this Agreement shall be December 31, 1998.
GIV HOLDINGS, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
GENERAL INJECTABLES & VACCINES, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
INSOURCE, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
RAHN LABORATORIES, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
10
<PAGE>
PBX/EX, INC.
By: _________________________________
Marcus E. Smith
Senior Vice President, General Counsel
& Secretary
11
<PAGE>
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
The parties to this Amendment No. 1 (this "Amendment"), dated as of
December 30, 1998, are Henry Schein, Inc., a Delaware corporation, New River
Management Company, L.L.C., a Virginia limited liability company, Chiron
Corporation, a Delaware corporation, and Biological & Popular Culture, Inc., a
Delaware corporation.
WHEREAS, the parties hereto entered into a Stock Purchase Agreement,
together with the schedules related thereto (the "Agreement"), dated as of
December 8, 1998;
WHEREAS, the parties wish to amend the Agreement in the manner set
forth herein.
Accordingly, the parties agree as follows:
ARTICLE I
AMENDMENTS TO AGREEMENT AND SCHEDULES
1.1. Schedule 1.07: Assets.
Schedule 1.07 shall be amended to add the items set forth on
Schedule A attached hereto.
1.2. Article I.
Article I shall be amended by the addition of a new Section 1.85, as
set forth below:
"Section 1.85. GIV Benevolent Fund Real Property.
'GIV Benevolent Fund Real Property' shall mean the real property
owned or leased by the G.I.V. Benevolent Fund, Inc., together with any
improvements located thereon, including all appurtenant rights, claims and
interests."
1.3. Schedule 1.61: Permits.
Schedule 1.61 shall be amended to add the items set forth on
Schedule B attached hereto.
<PAGE>
1.4. Schedule 1.62: Permitted Liens.
Schedule 1.62 shall be amended to add the items set forth on
Schedule C attached hereto.
1.5. Schedule 1.70.
Schedule 1.70 shall be amended to add the item set forth on Schedule
D attached hereto.
1.6. Schedule 1.73: Restructuring.
Schedule 1.73 and Exhibit A attached thereto shall be amended and
restated as set forth on Schedule E attached hereto. Original Exhibits B, C, D,
E and F to Schedule 1.73 shall remain unchanged.
1.7. Section 2.07: New Products Earn-Out.
Section 2.07 shall be amended by inserting the words "and its
Affiliates" immediately after the phrase "Revenues of the Purchaser" in each
place that such phrase appears in Section 2.07.
1.8. Schedule 3.05: Organization.
Schedule 3.05 shall be amended and restated as set forth on Schedule
F attached hereto.
1.9. Schedule 3.06: Continuing and Excluded Subsidiaries.
Schedule 3.06 shall be amended and restated as set forth on Schedule
G attached hereto.
1.10. Schedule 3.07: No Adverse Change.
Schedule 3.07 shall be amended and restated as set forth on Schedule
H attached hereto.
1.11. Schedule 3.08: No Litigation.
Schedule 3.08 shall be amended to add the items set forth on
Schedule I attached hereto.
1.12. Schedule 3.12: Contracts.
Schedule 3.12 shall be amended to add the items set forth on
Schedule J attached hereto.
<PAGE>
1.13. Section 3.19 and Schedule 3.19: Employee Benefit Plans.
Section 3.19(k) shall be amended to add the phrase "Except as set
forth in Schedule 3.19," at the beginning of the first sentence thereof and
Schedule 3.19 shall be amended to add the item set forth on Schedule K attached
hereto.
1.14. Section 3.24.
Section 3.24 shall be amended in its entirety as set forth on
Schedule L attached hereto.
1.15. New Section 3.31.
Article III shall be amended by the addition of a new Section 3.31
as set forth below:
"Section 3.31. Fen-Phen Claims.
At all times since November 19, 1989 that the Company or the Continuing
Subsidiaries have engaged in any business with respect to fenfluramine or
phentermine, including without limitation the repackaging and distribution
thereof, all properties and operations of the Company and the Continuing
Subsidiaries have been insured pursuant to general liability insurance policies
with coverage amounts of not less than (A) $1,000,000 from November 19, 1989
through November 19, 1990, (B) $5,000,000 from November 19, 1990 through
November 19, 1991, (C) $10,000,000 from November 19, 1991 through November 19,
1992, and (D) $20,000,000 since November 19, 1992, which have not and do not
exclude coverage for claims relating to fenfluramine or phentermine. Neither the
Sellers, the Company, the Continuing Subsidiaries nor their directors or
officers have taken any action which would make unavailable to he Company or any
Continuing Subsidiaries (i) insurance coverage with respect to claims relating
to fenfluramine or phentermine, or (ii) indemnification rights which the Company
or the Continuing Subsidiaries could otherwise assert against manufacturers or
suppliers of fenfluramine or phentermine with respect to claims relating to
fenfluramine or phentermine."
1.16. Section 5.07: Supplemental Disclosure.
Section 5.07 shall be amended by deleting the term "Article VII" and
replacing it with the term "Article VI":
1.17. Section 5.09: New River Dissolution.
Section 5.09 shall be amended by deleting the term "5.08" in each
place that it appears and replacing it with the term "5.09."
1.18. Exhibit 6.02(d): Software Use License Agreement.
Exhibit 6.02(d) shall be amended by deleting the term "6.02(d)" and
replacing it with the term "6.02(c)."
<PAGE>
1.19. Section 9.02: Indemnification.
Section 9.02(a) shall be amended by deleting the word "or"
immediately preceding the term "(ix)", and inserting immediately following the
word "Restructuring" at the end of the paragraph the following:
"; or (x) the matters set forth in Item 8 of Schedule 3.08 or any of
the facts and circumstances underlying such matters."
1.20. Section 9.03: Limitations on Indemnification.
Section 9.03(a) shall be amended by deleting the term "(ix)" and
replacing it with the term "(x)".
ARTICLE II
MISCELLANEOUS
2.1. No Other Amendments.
Other than as expressly set forth herein, the Agreement remains
unaltered and in full force and effect.
2.2. Counterparts.
This Amendment may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same amendment.
2.3. Governing Law.
This Amendment shall be governed by and construed in accordance with
the laws of the Commonwealth of Virginia without regard to its conflicts of laws
principles or rules.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed as of December 30, 1998.
HENRY SCHEIN, INC.
By:______________________________
Michael Ettinger
Vice President
NEW RIVER MANAGEMENT COMPANY, L.L.C.
By:______________________________
Randal J. Kirk
Manager
CHIRON CORPORATION
By:______________________________
William G. Green
Senior Vice President,
General Counsel & Secretary
BIOLOGICAL & POPULAR CULTURE, INC.
By:______________________________
Randal J. Kirk
Chief Executive Officer
<PAGE>
The undersigned agrees to the foregoing and agrees and acknowledges that
the execution of this amendment neither amends nor modifies in any manner the
terms and provisions set forth on the signature page to the Agreement executed
by the undersigned, which terms and provisions will remain in full force and
effect in accordance with their terms and with respect to the Agreement.
_________________________
Randal J. Kirk
<PAGE>
Schedule A
----------
SCHEDULE 1.07
ASSETS
Personal Property Leases
- ------------------------
71. Two-Tier Lease between GIV and United Telephone-Southeast, Contract Number
2056-93.
72. Two-Tier Lease between GIV and United Telephone-Southeast, Contract Number
1532057.
73. Two-Tier Lease between Lotus Biochemical Corporation (now RMC) and United
Telephone-Southeast, Contract Number 1532058.
<PAGE>
Schedule B
----------
SCHEDULE 1.61
PERMITS
GIV
- ---
22. Commonwealth of Virginia, Department of Health Professions, Board of
Pharmacy -- Wholesale Distributor Licenses (2) expiring December 31, 1999.
23. State of Illinois, Department of Professional Regulation -- Controlled
Substance and Wholesale Drug Distributor Licenses expiring December 31,
2000.
24. New Mexico State Board of Pharmacy -- Wholesaler License expiring December
31, 1999.
25. State of Maryland, Department of Health and Mental Hygiene, Maryland Board
of Pharmacy -- Distributor Permit expiring December 31, 1999.
26. Arkansas State Board of Pharmacy -- Wholesale Drug Distributor's License
for 1999.
27. South Dakota Board of Pharmacy -- Wholesale Drug Distributor License
expiring December 31, 1999.
Insource
- --------
29. Commonwealth of Virginia, Department of Health Professions, Board of
Pharmacy -- Wholesale Distributor Licenses (2) expiring December 31, 1999.
30. Louisiana State Board of Wholesale Drug Distributors -- Manufacturer
Distributor or Wholesale Distributor of Legend Drugs License expiring
December 31, 1999.
31. State of Illinois, Department of Professional Regulation -- Controlled
Substance and Wholesale Drug Distributor Licenses expiring December 31,
2000.
32. Iowa Board of Pharmacy Examiners -- Wholesale Drug License expiring
December 31, 1999.
33. North Carolina Department of Agriculture, Food and Drug Protection Division
-- Prescription Drug Wholesaler Registration expiring December 31, 1999.
Radford
- -------
2. Commonwealth of Virginia, Department of Health Professions, Board of
Pharmacy -- Wholesale Distributor License expiring December 31, 1999.
RLA (d/b/a Packall International, Inc.)
- ---------------------------------------
1. Commonwealth of Virginia, Department of Health Professions, Board of
Pharmacy -- Restricted Manufacturing Permit expiring December 31, 1999.
<PAGE>
Schedule C
----------
SCHEDULE 1.62
PERMITTED LIENS
The First National Bank of Bluefield
Operative Document: $2,000,000 Note dated September 2, 1993, payable to First
National Bank of Bluefield by GIV.
Evidence of Encumbrance: Credit Line Deed of Trust dated September 2, 1993, by
and among GIV and RLA (grantors), Franklin P. Slavin, Jr. and Charles C.
Lacy (trustees), and First National Bank of Bluefield (beneficiary).
Collateral: Two parcels of real property located at (i) Route 21-52 in Bastian,
Virginia 24314, and (ii) Route 101 in Bland County, Virginia 24315.
Louise D. Hall
Operative Documents: $55,000 Note dated February 11, 1983, payable to Louise D.
Hall by Randal J. Kirk; General Warranty Deed dated January 24, 1992, by
and between Randal J. Kirk and Donna P. Kirk (grantors) and GIV (grantee)
recorded in the Clerk's Office of the Circuit Court of Bland County,
Virginia in deed book 107, page 213; $38,459.25 Note dated January 24,
1992, payable to Randal J. Kirk by GIV.
Evidence of Encumbrance: Credit Line Deed of Trust dated February 11, 1983, by
and among Randal J. Kirk and Donna P. Kirk (grantors), A. Willard Lester
(trustee), and Louise D. Hall (beneficiary).
Collateral: Lot and Kirk Building located in Bland County, Virginia.
<PAGE>
Schedule D
----------
SCHEDULE 1.70
REAL PROPERTY
Lease Agreement, dated June 22, 1998, by and between G.I.V. Benevolent
Fund, Inc. and GIV with respect to the lease of real property and warehouse
located at The Lord's Storehouse, 385 Calhoun Street, Wytheville, Virginia
<PAGE>
Schedule E
----------
SCHEDULE 1.73
RESTRUCTURING
Exhibit A attached hereto contains a list of abbreviations used in this Schedule
1.73 and the associated exhibits. Exhibits B and C are forms of purchase
agreements to be used to transfer assets and stock from the Company to LLC or
its Subsidiaries or Affiliates. Capitalized terms used in this Schedule 1.73 and
not otherwise defined have the meanings assigned in the Stock Purchase Agreement
to which this Schedule 1.73 is attached.
The Restructuring will be accomplished through the following steps:
1. Martin, Zurich, and Biopop Media had been previously liquidated into Biopop
prior to and independent of this transaction pursuant to the respective
Certificates of Dissolution by Directors and Vote of Stockholders,
Certificate of Dissolution, and Certificate of Withdrawal, copies of which
have been delivered to the Purchaser.
2. RHB and RME had been previously liquidated into RMC prior to and
independent of this transaction pursuant to the respective Articles of
Termination of Corporate Existence and Articles of Dissolution, copies of
which have been delivered to the Purchaser.
3. GIV has purchased the assets held under certain capital and operating
leases, which leases are collectively listed on Exhibit D attached hereto
and the purchase of which is reflected in the Pro Forma Closing Balance
Sheet.
4. LLC has organized a new corporation, BCCX.
5. PBX/EX will change its name to BPCX.
6. LLC will form a new corporation to be named New PBX/EX.
7. Immediately prior to step 8 and as a condition precedent thereto, GIV will
declare and pay a dividend to Biopop in the form of the demand note held by
GIV and payable by the G.I.V. Benevolent Fund, Inc. The loss arising out of
the dividend of the indebtedness (but not any increase in basis of a
Subsidiary as a result of the later contribution of the indebtedness to the
capital of such Subsidiary) shall not be taken into account in determining
the amounts of "liability for Taxes arising out of relating to the
Restructuring" within the meaning of Section 9.02(a)(iii).
8. Immediately prior to step 9 and as a condition thereto, Biopop will
contribute the note it received in the form of a dividend in step 7 to the
capital of Landmark. No additional shares of Landmark will be issued.
<PAGE>
9. Immediately prior to step 10 and as a condition precedent thereto, Biopop
will change its name to GIV Holdings.
10. Immediately prior to step 11 and as a condition precedent thereto, GIV
Holdings will contribute any open account intercompany receivable from
Biopop (Asia), Biopop (Bermuda), BCC, Biofix, and Biopop Export that is
greater in amount than the amounts to repaid as shown in step 20 to the
capital of the respective companies.
11. Immediately prior to step 12 and as a condition precedent thereto, LLC will
purchase the stock of Biopop (Asia) and Biopop (Bermuda) from GIV Holdings,
in exchange for short-term notes payable in the amounts of $20,200 and
$272,500, respectively, and in the form attached hereto as Exhibit E.
12. Immediately prior to step 13 and as a condition precedent thereto, BCCX
will purchase the stock of Landmark, BCC, Biofix, and Biopop Export from
GIV Holdings, in exchange for short-term notes payable in the amounts of
$2,230,000, $500,000, $41,300 and $2,500 respectively, and in the form
attached hereto as Exhibit E. BCCX and GIV Holdings may, at BCCX's
election, join in making elections under Section 338(h)(10) of the Code
with respect to one or more of such stock transfers in accordance with
Section 8.01(a) of the Agreement.
13. Immediately prior to step 14 and as a condition precedent thereto, NEW
PBX/EX, BCCX, BPCX, and Lotus (US) (but as to Lotus (US), only with respect
to the assignment of certain agreements that inadvertently may not have
been transferred from RMC to Lotus (US) on September 11, 1996 and were
included in the valuation of such transaction at September 11, 1996) will
purchase the assets of GIV valued at $991,481 and RMC valued at $614,941,
which assets are included on Schedule 1.07 attached to the Agreement
(including the note at the end thereof)(generally being fixed assets,
software, and other intellectual property), in exchange for short-term
notes payable totaling $1,606,422 in the form attached hereto as Exhibit E.
The amount payable by each of NEW PBX/EX, BCCX, and BPCX will be determined
prior to Closing.
14. Immediately prior to step 15 and as a condition precedent thereto, LLC will
assume a lease dated November 1, 1995, by and between Weston Management
Company and Tennessee Laboratory Acquisition Corp. (now NBS) for real
property located in Memphis, Tennessee that is currently an obligation of
NBS.
15. Immediately prior to step 16 and as a condition precedent thereto, Chiron
will convert its preferred stock, plus accrued and unpaid dividends, into
30 percent of the issued and outstanding shares of GIV Holdings common
stock in accordance with the Certificate of Designation of Biopop's (now
GIV Holdings') Series A Preferred Stock.
16. Purchaser will acquire 100 percent of the common stock of GIV Holdings from
LLC and Chiron in exchange for cash and other consideration as provided in
Article II of the Stock Purchase Agreement.
<PAGE>
17. Simultaneously with the consummation of the purchase of the Common Stock at
the Closing, an aggregate of $12,217,535.47, plus additional accrued
interest at the rate of $1,639.99 per diem during the period from and
including December 16, 1998 and including the Closing Date (provided that
if the Closing Date occurs later than December 31, 1998, the per diem
interest rate would change for the period subsequent to that date as
provided for in the Subordinated Promissory Note), will be paid to Chiron
in full payment and discharge of the Subordinated Promissory Note, dated
September 11, 1996, made by Biopop, GIV, Insource, RLA, Rahn, RMC, RME, and
GIV Real Estate Development Corporation to Chiron and any and all amounts
due under the Prepayment Agreement, dated September 11, 1996 (collectively,
the "Chiron Debt"). The payment of the Chiron Debt will be funded by the
loan in the amount of $12,217,535.47, plus the additional accrued interest
at the above per diem rate, by Purchaser to GIV or GIV Holdings pursuant to
the promissory note in the form attached hereto as Exhibit F. Chiron, LLC,
Kirk, and any other parties thereto shall cause each of the agreements
listed on Schedule 11.10 to the Agreement to be terminated in accordance
with Section 11.10 of the Agreement, and Chiron and the other parties to
such termination agreements will take all of the actions to be taken at the
Closing thereunder.
18. Simultaneous with the Closing, Biopop (Bermuda) and GIV will execute and
deliver the Termination of License Agreement instruments in form and
substance reasonably satisfactory to the Purchaser, and Biopop (Bermuda)
and GIV will take all of the actions to be taken at the Closing thereunder.
19. Immediately following step 18, LLC will transfer cash to each of NEW
PBX/EX, BCCX, BPCX, Biopop (Asia), Biopop (Bermuda), and Lotus (US) to
allow each of them to meet its obligations as described in step 20. Further
transfers are made from BCCX to Landmark, BCC, Biofix, and Biopop Export to
allow each of them to meet it obligations as described in step 20.
20. Immediately following step 19, LLC, NEW PBX/EX, BPCX and BCCX will repay
the short-term notes issued in steps 11, 12, and 13. In addition, the
following entities will repay the outstanding open balances on intercompany
accounts to GIV Holdings and/or the Continuing Subsidiaries as listed
below:
Payable From Payable To Amount
------------ ---------- ------
Lotus (US) GIV Holdings $149,900
Lotus (US) GIV 14,307
Lotus (US) RMC 106,598
LLC GIV Holdings 1,301
Biopop (Bermuda) GIV Holdings 495,015
Landmark GIV Holdings (1)
Biofix GIV Holdings 32,353
BCC GIV Holdings 362,547
Biopop Export GIV Holdings 3,067
Biopop (Asia) GIV Holdings 59,811
<PAGE>
(1) This amount shall equal the sum of any outstanding open balances on
intercompany accounts payable to GIV Holdings and/or the Continuing
Subsidiaries by Landmark on the business day immediately prior to the
Closing Date.
It is specifically understood that the amounts to be repaid at Closing do
not include the $1.9 million note dated September 11, 1996, payable to
Resolve Medical Marketing, Inc. (now RMC) by Lotus (US) and the $4.7
million note dated December 28, 1993, payable to GIV by RSR Acquisition
Corp. (now King Pharmaceuticals, Inc.).
<PAGE>
Exhibit A
Alphabetic Listing of Company and Other Abbreviations and Names
Abbreviation Company or Other Name
BCC BioClinical Concepts, Inc.
BCCX BCCX, Inc.
BPCX BPCX, Inc.*, formerly PBX/EX, as defined below.
Biofix Biofix, Inc.
Biopop Biological & Popular Culture, Inc.
Biopop (Asia) Biological & Popular Asia Pte Ltd.
Biopop (Bermuda) Biological & Popular (Bermuda) Ltd.
Biopop Export Biopop Export Corporation
Chiron Chiron Corporation
GIV General Injectables & Vaccines, Inc.
GIV Holdings GIV Holdings, Inc.*
Insource Insource, Inc.
Kirk Randal J. Kirk
Landmark Landmark Scientific, Inc.
LLC New River Management Company, L.L.C.
Lotus (Bermuda) Lotus Biochemical (Bermuda) Ltd.
Lotus Export Lotus Export Corporation
Lotus Tech Lotus Technologies (Bermuda) Ltd.
Lotus (Mexico) Lotus Biochemical de Mexico, S.A. de C.V.
Lotus (US) Lotus Biochemical Corporation
NBS National BioStudios, Inc.
New PBX/EX PBX/EX, Inc.
PBX/EX PBX/EX, Inc., formerly Chelation Sciences, Inc.
(Name change was effective June 19, 1998.)
Radford Radford Therapeutics, Inc.
RLA Rahn Laboratories America
Rahn Rahn Laboratories, Inc.
RMC Resolve Medical Corporation
Zurich Zurich Information Systems, Inc.
* Indicates a future name of an existing corporation. It is assumed that such
names will be available upon filing for such changes.
<PAGE>
Schedule F
----------
SCHEDULE 3.05
ORGANIZATION
State of States in
Incorporation Which Qualified
{Biopop}* DE VA
GIV VA NC, TN
Insource VA NC
NBS TN VA
RMC VA
Rahn VA
Radford DE VA
RLA (VA partnership)
Lotus Mexico (Mexico)
*The Company will be renamed prior to Closing. The name "Biological & Popular
Culture, Inc." will be retained by one of the Sellers. Purchaser will acquire
the renamed Company entity.
<PAGE>
Schedule G
----------
SCHEDULE 3.06
CONTINUING AND EXCLUDED SUBSIDIARIES
Continuing Subsidiaries
- -----------------------
GIV
Insource
NBS
RMC
Rahn
Radford
RLA
Lotus Mexico
Excluded Subsidiaries
Landmark Scientific, Inc.
BioClinical Concepts, Inc.
Biofix, Inc.
Biopop Export Corporation
Biological & Popular Asia Pte Ltd.
Biological & Popular (Bermuda) Ltd.
<PAGE>
Schedule H
----------
SCHEDULE 3.07
NO ADVERSE CHANGE
(b) GIV and Insource paid $283,754 in connection with vaccine losses due to
shutdown of a refrigeration unit, which amount was expensed and reflected
in the Pro Forma Closing Balance Sheet and Pro Forma Income Statements and
which is the subject of the matter set forth in item 6 on Schedule 3.08.
-------------
<PAGE>
Schedule I
----------
SCHEDULE 3.08
LITIGATION
7. Request that Insource defend and indemnify DRX Pharmaceutical Consultants,
Inc., a defendant in Sullivan v. Enrich International, Inc., et al. filed
in the San Francisco City and County Superior Court (No. 993535) and
transferred to the Los Angeles County Superior Court (JCCP No.
4032)(Complaint for personal injuries that allegedly resulted from
ingestion of the diet drug phentermine). Defendant's insurance carrier
alleges that Insource distributed phentermine to defendant and seeks to
have Insource defend and indemnify defendant in this diet drug litigation.
8. New River received four letters, dated December 2, 1998, December 15, 1998,
December 23, 1998 and December 30, 1998, respectively, from Woods, Rogers &
Hazlegrove PLC on behalf of certain members of New River indicating that
such members may take legal action with respect to certain internal
governance issues of New River. Such letters accurately describe the
subject matter of the dispute with respect to such issues.
<PAGE>
Schedule J
SCHEDULE 3.12
CONTRACTS
Real Property Leases
- --------------------
2. Lease Agreement dated June 22, 1998, by and between G.I.V. Benevolent Fund,
Inc. and GIV.
Loans (Borrowing or Lending) in Excess of $50,000
- -------------------------------------------------
5. $1,000,000 Note dated June 30, 1995, payable to GIV by G.I.V. Benevolent
Fund, Inc.
Guaranty and Indemnification Agreements
- ---------------------------------------
5. Deed of Trust Note executed July 29, 1993, by and among First Virginia Bank
-- Southwest, G.I.V. Benevolent Fund, Inc. and GIV.
6. Guaranty Agreement dated June 8, 1998, by and between First Virginia Bank
-- Southwest and GIV.
Other Agreements Involving Amounts in Excess of $50,000
- -------------------------------------------------------
Customer Contracts
- ------------------
80. Agreement dated December 1, 1998, by and between PharmaCare Dynamic
Management Corporation and Insource.
81. Agreement dated January 1, 1999 and effective December 1, 1998, by and
between Keystone Pharmacy Purchasing Alliance, Inc. and Insource.
82. Agreement dated December 18, 1998, by and between Lee Medical
International, Inc. and Insource.
83. Amendment No. 1 to Bid Agreement dated January 1, 1998, by and between the
State of Tennesee and GIV.
Vendor Contracts
- ----------------
52. Price Agreement Volume Purchase, effective September 1, 1998, by and
between Graham-Field, Inc. and GIV.
53. Contract Pricing Agreement, term commencing December 15, 1997, by and
between Quidel Corporation and GIV.
54. Medical Distributor Price Guide -- Tidi Brand, effective June 8, 1998, by
and between Banta Healthcare Products and GIV.
Supply and Service Contracts
- ----------------------------
Item 5 shall be deleted and replaced with the following:
<PAGE>
5. National Account Agreement dated June 15, 1998, by and between Federal
Express and GIV.
<PAGE>
Schedule K
----------
SCHEDULE 3.19
EMPLOYEE BENEFIT PLANS
Only the following applies to the exception in the first sentence of Section
3.19(k):
Payments Triggered by Restructuring
- -----------------------------------
If the Closing occurs on or before December 31, 1998, certain payment
obligations by GIV to Doit L. Koppler, II, George S. Zorich and James W. Short
will be triggered under executive employment agreements, each dated February 25,
1998.
<PAGE>
Schedule L
----------
Section 3.24. Environmental Matters.
----------------------
Except as set forth on Schedule 3.24, (i) the Company, the Continuing
Subsidiaries and G.I.V. Benevolent Fund, Inc., are in material compliance with
all applicable Environmental Laws; (ii) the Company, the Continuing Subsidiaries
and G.I.V. Benevolent Fund, Inc., have all Permits required by the Environmental
Laws necessary for the operation of the businesses of the Company and G.I.V.
Benevolent Fund, Inc., and the use of the Asset and the GIV Benevolent Fund Real
Property, taken as a whole, as currently being conducted, and is in compliance
with all such Permits; (iii) there has been no Release or threatened Release of
Hazardous Substances at or shipment of Hazardous Substances from the Real
Property or the GIV Benevolent Fund Real Property or from current or previously
owned or operated real property that would result in liability under the
Environmental Laws or that required or with the passage of time is likely to
require reporting to any governmental regulatory agency or entity; (iv) no
Hazardous Substances or underground or above-ground storage tank is contained in
or located at, in, on or under any Real Property owned by the Company or the
Continuing Subsidiaries or the GIV Benevolent Fund Real Property, except for
such Hazardous Substances as are used, stored or maintained in the ordinary
course of the Business and in full compliance with applicable Environmental
Laws; (v) neither the Company, any of the Continuing Subsidiaries nor G.I.V.
Benevolent Fund, Inc. has received notice of any actual or threatened civil,
criminal or administrative suit, claim, action, proceeding or investigation
related to the Company, the Business, the Real Property or the GIV Benevolent
Fund Real Property or any currently or previously owned or operated real
property arising under any Environmental Laws; (vi) none of the Real Property,
the GIV Benevolent Fund Real Property, nor any currently or previously owned or
operated real property, is listed or proposed for listing on the National
Priorities List pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., or
any similar inventory of sites requiring investigation, monitoring or
remediation that is maintained by any state or locality; (vii) neither the
Company, any Continuing Subsidiary nor G.I.V. Benevolent Fund, Inc., will by
virtue of the Restructuring contractually or otherwise assume or succeed to,
and, to the Knowledge of the Sellers, neither the Company, any Continuing
Subsidiary nor G.I.V. Benevolent Fund, Inc., has otherwise contractually or
otherwise assumed or succeeded to, any environmental liabilities of any
predecessors or any other person or entity; (viii) none of the items set forth
on Schedule 3.24 are reasonably to be expected to have, individually or in the
aggregate, a Material Adverse Effect; and (ix) the Company and the Sellers have
provided to Purchaser all environmental reports, assessments, audits, studies,
investigation, data, environmental permits and other material written
environmental information respectively in their custody, possession or control
concerning the Real Property, the GIV Benevolent Fund Real Property or any
currently or previously owned or operated real property, the Assets and the
Business. This Section 3.24 shall be the only representation and warranty by the
Sellers with respect to environmental matters.
