UNITED STATES
SECURITIES EXCHANGE AND COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 15, 1998 (October 1, 1998)
ARTERIAL VASCULAR ENGINEERING, INC.
(Exact name of registrant as specified in its charter)
0-27802
(Commission File Number)
Delaware 94-3144218
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
3576 Unocal Place, Santa Rosa, California 95403
(Address of principal executive offices) (Zip Code)
(707) 525-0111
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 1, 1998, Arterial Vascular Engineering, Inc. (the "Company")
announced the closing of its previously announced agreement to acquire the
coronary catheter lab business (the "Business") of C. R. Bard, Inc. ("Bard"), as
well as rights to the supply by Bard of certain materials, for approximately
$550 million in cash, subject to adjustment. The transaction was structured as
an acquisition of the assets and certain liabilities of Bard related to the
Business and the acquisition of stock of certain subsidiaries (the
"Subsidiaries") of Bard engaged in the Business. Pursuant to the definitive
agreement, AVE did not acquire any cash or accounts receivable of the Business
in consideration for the $550 million purchase price. However, AVE did purchase
the trade accounts receivable of the Subsidiaries for 95% of the "net" book
value of the Subsidiaries' trade accounts receivable as of the closing Date
("net" meaning after deduction of the amount of the reserves for doubtful
accounts).
The acquisition was financed by term loans and revolving credit
facilities syndicated among various banks and financial institutions. AVE
expects to incur a significant one-time charge related to the acquisition,
largely in connection with the write-off of in-process research and development.
However, the Company is aware that the Securities and Exchange Commission is
reviewing the methodologies heretofore commonly used by companies in calculating
such one-time charges, and is likely to require a modified approach to
calculating such charges that may well require the Company to capitalize a
significantly higher amount of the acquisition costs.
ITEM 7. EXHIBITS.
1. Stock and Asset Purchase Agreement between C. R. Bard, Inc. and
Arterial Vascular Engineering, Inc., dated as of July 9, 1998.
2. Press Release, dated October 1, 1998, entitled "AVE Announces Closing
of Acquisition of Bard's Coronary Cath Lab Business."
2.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARTERIAL VASCULAR ENGINEERING, INC.
Dated: October 15, 1998 By: /s/ Lawrence J. Fassler
-----------------------------------
Lawrence J. Fassler
Vice President of Legal Affairs,
General Counsel, Secretary
3.
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INDEX TO EXHIBITS
1. Stock and Asset Purchase Agreement between C. R. Bard, Inc. and
Arterial Vascular Engineering, Inc., dated as of July 9, 1998.
2. Press Release, dated October 1, 1998, entitled "AVE Announces Closing
of Acquisition of Bard's Coronary Cath Lab Business."
4.
________________________________________________________________________________
STOCK AND ASSET PURCHASE AGREEMENT
between
C. R. Bard, Inc.
and
Arterial Vascular Engineering, Inc.
Dated as of July 9, 1998
________________________________________________________________________________
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF STOCK AND ASSETS............... 2
1.1 Stock; Assets; Liabilities................................ 2
(a) Stock Purchase...................................... 2
(b) Asset Purchase...................................... 3
(c) Excluded Assets..................................... 8
(d) Assumed Liabilities................................. 10
(e) Liabilities Not Assumed............................. 11
1.2 Assumption of Liabilities; Purchase Price................. 12
1.3 Adjustment to Purchase Price.............................. 13
(a) Preparation of Preliminary Closing Statement of
Assets and Liabilities.............................. 13
(b) Review of Preliminary Closing Statement of Assets
and Liabilities..................................... 13
(c) Disputes............................................ 14
(d) Final Statement of Assets and Liabilities........... 15
(e) Adjustments to the Purchase Price................... 15
ARTICLE II
CLOSING........................... 17
2.1 Time and Place............................................. 17
2.2 Deliveries by Seller....................................... 17
(a) Deliveries on the Closing Date...................... 17
(b) Delivery on or After the Closing Date............... 18
2.3 Deliveries by Buyer........................................ 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES.................... 19
3.1 Representations and Warranties of Seller................... 19
(a) Due Incorporation of the Subsidiaries............... 19
(b) Due Incorporation and Power......................... 20
(c) Authorization and Validity of Agreements............ 21
(d) Title............................................... 21
(e) Capitalization...................................... 22
(f) No Conflict......................................... 23
(g) Financial Statements; Financial Results............. 24
(h) Absence of Material Adverse Change.................. 25
(i) Taxes............................................... 25
(j) Title to Real and Personal Properties; Liens and
Encumbrances; Assets; No Other Interests............ 27
(k) Business Contracts.................................. 28
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(l) Legal Proceedings................................... 29
(m) Government Licenses, Permits and Related Approvals.. 30
(n) Conduct of Business in Compliance with
Regulatory Requirements............................. 30
(o) Labor Matters....................................... 31
(p) Intellectual Property............................... 32
(q) Employee Benefit Plans.............................. 35
(r) Brokers, Finders, etc. ............................. 40
(s) Environmental Matters............................... 40
(t) No Other Representations or Warranties.............. 43
(u) Affiliate Agreements................................ 43
(v) Insurance........................................... 43
(w) Audited Financial Statements........................ 44
(x) Milu and X-trode.................................... 44
3.2 Representations and Warranties of Buyer.................... 44
(a) Due Incorporation and Power......................... 44
(b) Authorization and Validity of Agreements............ 45
(c) No Conflict......................................... 45
(d) Brokers, Finders, etc. ............................. 46
(e) Legal Proceedings................................... 47
(f) Purchase for Investment............................. 47
(g) No Other Representations or Warranties.............. 47
3.3 Survival of Representations and Warranties................. 47
ARTICLE IV
COVENANTS.............................. 48
4.1 Access to Information Concerning Properties and Records.... 48
(a) Access.............................................. 48
(b) Subsequent Access................................... 48
(c) Retention of Records................................ 49
4.2 Conduct of the Business Prior to the Closing Date.......... 49
4.3 Intercompany Accounts, Debt................................ 53
(a) Intercompany Accounts............................... 53
(b) Settlement of Intercompany Debt..................... 53
4.4 Antitrust Laws............................................. 54
4.5 Cash Management............................................ 55
4.6 Further Actions............................................ 55
(a) Approvals, Filings and Defense of Proceedings....... 55
(b) Consents............................................ 57
(c) Mail................................................ 57
(d) Full Benefit of this Agreement...................... 58
(e) Non-assignable Agreements........................... 58
4.7 Covenant Not to Compete.................................... 59
4.8 Qualifying Shares.......................................... 61
4.9 Business Records........................................... 61
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4.10 Use of Names and Logos..................................... 62
4.11 Ancillary Agreements....................................... 63
4.12 Intentionally Omitted...................................... 63
4.13 Notification of Certain Matters............................ 63
4.14 Confidentiality............................................ 64
4.15 Best Efforts............................................... 65
4.16 Financial Statements....................................... 65
4.17 Intentionally Omitted...................................... 65
4.18 Liabilities Assumed by Seller.............................. 66
4.19 Estoppel Certificates...................................... 66
4.20 Release of Subsidiaries.................................... 66
4.21 Permits.................................................... 66
4.22 Non-Solicitation........................................... 67
4.23 Insurance Claims........................................... 67
4.24 Litigation Expenses........................................ 68
ARTICLE V
CONDITIONS PRECEDENT................. 68
5.1 Conditions Precedent to Obligations of Parties............. 68
(a) No Injunction....................................... 68
(b) Regulatory Authorizations........................... 69
(c) Ancillary Agreements................................ 70
5.2 Conditions Precedent to Obligation of Buyer................ 70
(a) Accuracy of Representations and Warranties.......... 70
(b) Performance of Agreement............................ 71
(c) Certificate......................................... 71
(d) Consents; Third-Party Rights; Filings; Notices...... 71
(e) Resignations........................................ 71
(f) Required Items...................................... 72
(g) Permits............................................. 72
(h) Financial Information............................... 72
5.3 Conditions Precedent to Obligation of Seller............... 72
(a) Accuracy of Representations and Warranties.......... 73
(b) Performance of Agreements........................... 73
(c) Certificate......................................... 73
(d) Required Items...................................... 74
(e) Permits............................................. 74
ARTICLE VI
PROVISIONS AS TO TAX MATTERS................. 74
6.1 Tax Indemnification........................................ 74
(a) Seller's Indemnification Obligation................. 74
(b) Buyer's Indemnification Obligation.................. 75
(c) Taxable Periods..................................... 76
(d) Tax Claims.......................................... 77
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(e) Tax Returns......................................... 79
(f) Access to Tax Data.................................. 83
(g) Limitations on Claims for Indemnity................. 83
(h) Indemnification Procedures.......................... 83
(i) Prohibition on Certain Transactions After
the Closing Date.................................... 84
(j) Certain Taxes Deemed Paid........................... 84
6.2 Tax Related Adjustments.................................... 84
(a) Indemnity Payments as Adjustment to Purchase Price... 84
(b) Adjustment to Indemnity Payment..................... 85
(c) Refunds and Credits Payable to Seller............... 85
(d) Carryback of any Tax Attribute...................... 86
6.3 Transfer Taxes............................................. 86
6.4 Allocation of Purchase Price............................... 87
6.5 Tax Matters Governed by Article VI......................... 88
ARTICLE VII
LABOR MATTERS, EMPLOYEE RELATIONS AND BENEFITS....... 88
7.1 Transferred Employees...................................... 88
7.2 Benefits for Transferred Employees......................... 89
7.3 Severance Policy and Other Agreements...................... 90
(a) Minimum Severance for Certain Transferred
Employees........................................... 90
(b) Severance/Employment Agreements of Transferred
Employees........................................... 90
7.4 1998 Bonus................................................. 90
7.5 Credit for Deductibles..................................... 91
7.6 Seller Plans............................................... 91
(a) Defined Contribution Plans.......................... 91
(b) Defined Benefit Plan................................ 93
(c) Other Plans......................................... 93
7.7 Employee Notification Requirements......................... 94
(a) Prohibit Actions Implicating WARN or Analogous
Laws................................................ 94
(b) WARN and Other Notifications........................ 94
(c) Terminations in Compliance with Foreign Laws........ 95
7.8 No Third Party Beneficiaries............................... 95
ARTICLE VIII
INDEMNIFICATION.............................. 95
8.1 Indemnification............................................ 95
(a) Buyer's Indemnification Obligations................. 95
(b) Seller's Indemnification Obligations................ 97
(c) Indemnified Liabilities............................. 99
(d) Environmental Matters............................... 99
8.2 Procedure..................................................100
8.3 Limitation on Indemnification..............................102
(a) Indemnification Threshold...........................102
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(b) Certain Special, Indirect, Incidental,
Consequential and Related Damages not
Indemnifiable.......................................102
(c) Indemnity Payments Reduced by Insurance Proceeds....102
(d) Limitation on Liability.............................103
8.4 Exclusive Remedy...........................................103
8.5 Time Period................................................104
ARTICLE IX
MISCELLANEOUS.............................104
9.1 Termination and Abandonment................................104
(a) General.............................................104
(b) Procedure Upon Termination..........................106
(c) Survival of Certain Provisions......................106
9.2 Fees and Expenses..........................................106
9.3 Notices....................................................107
9.4 Entire Agreement...........................................108
9.5 Binding Effect; Benefit....................................108
9.6 Assignability..............................................108
9.7 Amendment and Modification; Waiver.........................109
9.8 Public Announcements.......................................109
9.9 Specific Performance.......................................110
9.10 Bulk Sales Law.............................................110
9.11 Section Headings...........................................110
9.12 Counterparts...............................................110
9.13 Applicable Law.............................................110
9.14 Submission to Jurisdiction.................................110
9.15 Severability of Provisions.................................111
9.16 Certain Defined Terms......................................112
9.17 Schedules..................................................113
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INDEX OF DEFINITIONS
The following terms shall have the meanings ascribed to them
in the sections referred to opposite such term below:
Term Section
- ---- -------
"1060 Forms" 6.4
"1997 Statement of Operations" 5.2(h)
"Act" 6.1(b)
"affiliate" 9.16(i)
"Ancillary Agreements" 4.11
"Antitrust Division" 4.4
"Antitrust Improvements Act" 4.4
"Asset Patent Rights" 3.1(p)(i)
"Asset Trademark Rights" 3.1(p)(ii)
"Assets" 1.1(b)
"Assumed Liabilities" 1.1(d)
"Auditor" 1.3(c)
"Bard Connaught" 1.1(a)
"Bard Galway" 1.1(a)(iv)
"Bard International" 1.1(a)(ii)
"Bard Ireland" 1.1(a)(iii)
"Bard Japan" 1.1(a)(ii)
"Bard Shannon" 1.1(a)(iii)
"Bard U.S. Pension Plan" 7.2
"Benefit Plans" 3.1(q)(i)
"best efforts" 9.16(ii)
"Business" Recitals
"Business Contracts" 3.1(k)
"Business Intellectual Property" 3.1(p)
"Buyer" Recitals
"Buyer Indemnified Parties" 8.1(b)
"Buyer's Objection" 1.3(b)
"Buyer's Savings Plan" 7.6(a)
"Cash Balances" 4.5
"Closing" 2.1
"Closing Date" 2.1
"Code" 3.1(q)(iii)
"Competitive Activity" 4.7
"Competitive Product" 4.7
"Copyright Rights" 3.1(p)(iii)
"CorMedica" 1.1(a)(i)
"Coronary" 9.16(iii)
"Damages" 8.1(a)
"Designee" or "Designees" 9.6
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Term Section
- ---- -------
"Directives" 7.7(a)(ii)
"Disclosure of Invention" 9.16(ix)
"Employer" 3.1(q)(i)
"Environmental Claim" 3.1(s)(5)
"Environmental Laws" 3.1(s)(5)
"Environmental Permits" 3.1(s)(5)
"ERISA" 3.1(q)(i)
"Excluded Assets" 1.1(c)
"Expiration Date" 8.5
"Facilities" 1.1(b)(vii)
"Final Statement of Assets and Liabilities" 1.3(d)
"Financial Review" 5.2(h)
"FTC" 4.4
"GAAP" 3.1(w)
"Hazardous Materials" 3.1(s)(5)
"IMPRA Agreement" 4.11
"Indemnified Liabilities" 8.1(c)
"Initial Statement of Assets and Liabilities" 1.3(a)
"Intercompany Account" 4.3(a)
"IP Agreement" 4.11
"Irish Disability Plans" 3.1(q)(xi)
"Irish Pension Plans" 3.1(q)(xi)
"knowledge" 9.16(viii)
"Law" 3.1(n)(i)
"Lease" 4.11
"Legal Proceeding" 3.1(l)
"Liabilities" 9.16(iv)
"Liens" 3.1(d)
"Machinery" 1.1(b)(iv)
"Material Adverse Effect" 9.16(v)
"Material Contract" 3.1(k)
"Material Non-Business Permits" 4.21
"Material Permits" 3.1(m)
"Material Subsidiary Contracts" 3.1(k)
"Mergers Act" 4.4
"METE" 5.1(b)(iv)
"Milu" 1.1(a)(v)
"Net Book Value" 1.3(a)
"Net Intercompany Debt" 4.3(b)
"Net Subsidiaries Receivable Amount" 1.3(e)
"Noncompetitive Period" 4.7
"Non-United States Employees" 3.1(q)(i)(B)
"Patent Rights" 3.1(p)(i)
"Permits" 1.1(b)(vi)
"Permitted Exceptions" 3.1(j)
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Term Section
- ---- -------
"person" 9.16(vi)
"Post-Closing Straddle Period" 6.1(c)(ii)
"Pre-Closing Straddle Period" 6.1(c)(i)
"Preliminary Closing Statement of Assets and Liabilities 1.3(a)
"Proposed Settlement" 6.1(d)(iii)
"Purchase Price" 1.2(a)
"Real Property" 1.1(b)(vii)
"Remedial Actions" 8.1(d)(iii)
"Savings Total Transfer Amount" 7.6(a)
"Savings Transfer Date" 7.6(a)
"Scheduled Employees" 7.1
"Securities Act" 3.2(f)
"Seller" Recitals
"Seller Indemnified Parties" 8.1(a)
"Seller's Defined Benefit Plan" 7.6(b)
"Seller's Savings Plan" 7.6(a)(i)
"Seller Severance Plan" 7.3(a)
"Seller's Trademarks and Logos" 4.10
"Stock" 1.1(a)
"subsidiary" or "subsidiaries" 9.16(vii)
"Subsidiary" or "Subsidiaries" 1.1(a)
"Tax Claim" 6.1(d)(i)
"Tax Returns" 3.1(i)(i)
"Tax Statement" 6.1(e)(iii)
"Taxes" 3.1(i)(i)
"Taxing Authority" 6.1(c)
"Technology" 1.1(b)(xii)
"Third Party Claim" 8.2
"Trade Dress" 1.1(b)(xiii)
"Trademark Rights" 3.1(p)(ii)
"Transaction Agreements" 3.1(b)
"Transition Agreement" 4.11
"Transferred Employees" 7.1
"Transferred Service" 7.2
"VAT" 6.1(a)(ii)
"WARN" 3.1(o)(v)
"X-trode" 1.1(a)(vi)
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STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT, dated as of July 9, 1998, between
C. R. Bard, Inc., a corporation organized and existing under the laws of the
State of New Jersey ("Seller"), and Arterial Vascular Engineering, Inc., a
corporation organized and existing under the laws of the State of Delaware
("Buyer").
Seller and its subsidiaries (which, until the Closing Date, shall
include the Subsidiaries) are engaged in, among other things, the research,
development, manufacture, production, marketing, advertising, distribution,
licensing, use, offer for sale and sale, worldwide, of coronary catheter lab
products which include (i) PTCA balloon catheters; (ii) coronary stents,
excluding myocardial stents (as further described in Schedule 4.7(i)); (iii)
saphenous vein graft stents for coronary applications; (iv) PTCA guidewires; (v)
PTCA guide catheters; (vi) coronary diagnostic catheters; (vii) coronary
introducers; (viii) coronary diagnostic guidewires; (ix) femostop; (x) vessel
closure devices for coronary applications; (xi) right heart pressure monitoring
catheters; (xii) PTCA accessories; (xiii) coronary angiographic accessories;
(xiv) coronary OEM products; and (xv) related coronary components and
accessories (the "Business").
Seller desires to sell, and Buyer desires to purchase, the Business.
Seller and Buyer desire to enter into the other on-going and
transitional arrangements contemplated hereby.
Upon the terms and subject to the conditions set forth herein, the
parties hereto agree as follows:
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2
ARTICLE I
PURCHASE AND SALE OF STOCK AND ASSETS
1.1 Stock; Assets; Liabilities. (a) Stock Purchase. Upon the terms and
subject to the conditions of this Agreement, at the Closing: (i) Seller shall
sell to Buyer or one or more of its Designees, and Buyer shall or shall cause
one or more of its Designees to purchase, all of the capital stock owned by
Seller of CorMedica Corporation, a Delaware corporation ("CorMedica"), (ii)
Seller shall cause Bard International, Inc., a Delaware corporation ("Bard
International"), to sell to Buyer or one or more of its Designees, and Buyer
shall or shall cause one or more of its Designees to purchase, all of the
capital stock of Bard Japan Limited, a Japanese corporation ("Bard Japan"),
(iii) Seller shall cause Bard Shannon Ltd., an Irish corporation ("Bard
Shannon"), to sell to Buyer or one or more or its Designees, and Buyer shall or
shall cause one or more of its Designees to purchase, all of the issued share
capital owned by Bard Shannon in C. R. Bard Ireland Ltd., an Irish corporation
("Bard Ireland"), (iv) Seller shall cause Bard Shannon to sell to Buyer or one
or more of its Designees, and Buyer shall or shall cause one or more of its
Designees to purchase, all of the issued share capital owned by Bard Shannon in
Bard Galway Ltd., an Irish corporation ("Bard Galway"), (v) provided third party
consents required in connection with such sale are obtained, Seller shall cause
Bard Shannon to sell to Buyer or one or more of its Designees, and Buyer shall
or shall cause one or more of its Designees to purchase, all of the share
capital owned by Bard Shannon of Milu S.A., a Luxembourg corporation ("Milu"),
and (vi) provided third party consents required in connection with such sale are
obtained, Seller shall cause Bard Shannon to sell to Buyer or one or more of its
Designees, and Buyer shall or shall cause one or more of its Designees to
purchase, all of the quotas owned by Bard
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3
Shannon of X-trode S.r.l., an Italian corporation ("X-trode"). Bard Japan, Bard
Ireland, Bard Galway, Bard Connaught, an Irish corporation ("Bard Connaught"),
Milu (but only if third party consents required in connection with the sale of
the share capital of Milu owned by Bard Shannon are obtained) and X-trode (but
only if third party consents required in connection with the sale of the quotas
of X-trode owned by Bard Shannon are obtained) are hereinafter referred to
individually as a "Subsidiary" and collectively as the "Subsidiaries", and the
capital stock of CorMedica owned by Seller, the capital stock of Bard Japan, the
issued share capital of Bard Ireland and Bard Galway owned by Bard Shannon, the
issued share capital of Milu owned by Bard Shannon (but only if third party
consents required in connection with the sale of such share capital are
obtained) and the quotas of X-trode owned by Bard Shannon (but only if the
consents required in connection with the sale of such quotas are obtained) are
hereinafter referred to as the "Stock".
(b) Asset Purchase. Except as otherwise provided in Section 1.1(c),
upon the terms and subject to the conditions of this Agreement, at the Closing,
Seller shall, or shall cause its subsidiaries (other than the Subsidiaries) to,
sell, convey, assign, transfer and deliver to Buyer and/or its Designees, and
Buyer and/or its Designees shall purchase, acquire and accept from Seller or its
subsidiaries (other than the Subsidiaries), as appropriate, all of the Seller's
and its subsidiaries' (other than the Subsidiaries') right, title and interest
as of the Closing Date in and to all of the assets, properties, rights,
goodwill, privileges, claims and contracts of every kind and nature, real,
personal or mixed, tangible or intangible, absolute or contingent, as set forth
below, without duplication (such right, title and interest in such assets,
properties, rights, privileges, claims and contracts being sold, conveyed,
assigned, transferred and delivered to Buyer or its Designees being referred to
collectively as the "Assets"):
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4
(i) the assets reflected on the Final Statement of Assets and
Liabilities;
(ii) all packaging materials to the extent used or intended to
be used exclusively in connection with the Business, wherever located
on the Closing Date;
(iii) all records, data (whether in hard copy or computer
form), customer lists, vendor lists, service provider lists,
promotional literature and advertising materials used, or intended to
be used, primarily for the marketing of products of the Business,
catalogs, research material, technical information, blueprints,
technology, technical designs, drawings and specifications used, or
intended to be used, primarily in the Business on the Closing Date; it
being understood and agreed that following the Closing, copies of such
items used primarily but less than exclusively in the Business shall be
made available to Seller in accordance with the terms of Section 4.9
hereof and copies of similar items used in the Business but less than
primarily shall be made available to Buyer in accordance with the terms
of Section 4.9 hereof;
(iv) all equipment, fixtures, furniture, furnishings,
machinery, tools and other tangible personal property which are (A)
located at the Facilities or at the buildings, structures or other
improvements leased pursuant to leases identified or referred to in
Section 1.1(b)(v) on the Closing Date and, in either case, used
primarily in connection with the Business or (B) used exclusively in
the Business on the Closing Date (the "Machinery"), and all warranties
and guarantees, if any, express or implied, existing for the benefit of
Seller or its subsidiaries in connection with the Machinery, to the
extent transferable;
(v) to the extent applicable to the Business, all agreements,
contracts, maintenance and service agreements, purchase orders,
purchase commitments for raw
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5
materials, goods and other services, advertising and promotional
agreements, leases (including without limitation leases for real
property), licenses (including without limitation licenses for
intellectual property), shipping agreements and collective bargaining
agreements (including all warranties, representations and guaranties
therein), including but not limited to those set forth in Schedule
3.1(k) hereto (other than the Material Subsidiary Contracts);
(vi) all licenses, permits, consents, approvals, certificates,
authorizations, qualifications, orders or franchises, including,
without limitation, any of the foregoing issued under any Environmental
Law and any of the foregoing relating to any right in any particular
country to market the products of the Business, issued by any federal,
state, local or foreign governmental or regulatory authority or
organization which relate exclusively to the Real Estate, the
Facilities or the Business on the Closing Date, in each case, to the
extent transferrable (the "Permits");
(vii) subject to the Lease, the real property set forth in
Schedule 1.1(b)(vii) hereto (collectively, the "Real Property"),
including, without limitation, the buildings, structures and other
improvements situated thereon (the "Facilities"), and all easements,
privileges, rights-of-way, riparian and other water rights, lands
underlying any adjacent streets or roads and appurtenances pertaining
to or accruing to the benefit of such property, subject to the
Permitted Exceptions;
(viii) the other assets identified in Schedule 1.1(b)(viii),
except to the extent that any such assets have been disposed of not in
violation of the provisions of Section 4.2 since the date of this
Agreement;
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6
(ix) subject to the IP Agreement, all unexpired domestic and
foreign patents, patent applications and Disclosures of Inventions and
any improvements, continuations, continuations-in-part, divisionals,
extensions, reissues, patents of addition, reexaminations or
substitutions thereof, any subsequent filings in any country claiming
priority therefrom and any and all discoveries or inventions whether or
not embodied within the foregoing, and any right to use or exploit any
of the foregoing, in each case relating to the Business on the Closing
Date, including, but not limited to, the foregoing identified in
Schedule 1.1(b)(ix) hereto;
(x) subject to the IP Agreement and Section 4.10 hereof, (A)
all registered and unregistered unexpired domestic and foreign
trademarks, trademark registrations, trademark applications, trade
names, brand names, certification marks and service marks; and (B) all
state trademark registrations and applications therefor, including,
without limitation, any extension, modification or renewal of any such
registrations or applications and all common law rights in such
trademarks, and any right to use or exploit any of the foregoing, in
each case including, without limitation, any goodwill associated
therewith and relating to the Business on the Closing Date, including,
but not limited to, the foregoing identified in Schedule 1.1(b)(x)
hereto;
(xi) subject to the IP Agreement, all original works of
authorship, including but not limited to, all copyrights and
registrations or applications for registration of copyrights in any
jurisdiction, including, without limitation, any renewals or extensions
thereof, advertising materials, publications, technical papers and
computer software, and any right to use or exploit any of the
foregoing, in each case relating to the
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7
Business on the Closing Date, including but not limited to, the
foregoing identified in Schedule 1.1(b)(xi) hereto;
(xii) subject to the IP Agreement, all (A) patterns, plans,
designs, research data, trade secrets and other proprietary know-how,
formulae and manufacturing processes, commercially practiced processes
and inventions, in each case whether or not patentable in any
jurisdiction and (B) operating manuals, drawings, technology, manuals,
data, records, procedures and research and development records, and any
right to use or exploit any of the foregoing, in each case relating to
the Business on the Closing Date (the "Technology");
(xiii) subject to the IP Agreement, all distinctive features
of the packaging for the products of the Business on the Closing Date
and any right to use or exploit any of the foregoing (the "Trade
Dress");
(xiv) all claims and causes of action (known or unknown and
asserted or unasserted) against other persons to the extent arising out
of or relating to the Assets or the Business (other than claims or
causes of action to the extent arising out of or relating to (A) the
Excluded Assets or (B) Liabilities that are not Assumed Liabilities),
including, without limitation, the right to recover damages and losses
sustained by Seller or its subsidiaries prior to the Closing;
(xv) all computer systems, computer hardware, databases,
software programs, source codes and user manuals, which are (A) located
at the Facilities or at the buildings, structures or other improvements
leased pursuant to leases identified or referred to in Section
1.1(b)(v) on the Closing Date and, in either case, used primarily in
connection with the Business or (B) used exclusively in the Business on
the Closing
<PAGE>
8
Date; it being understood and agreed that following the Closing, copies
of such items (other than computer systems and computer hardware) used
less than exclusively in the Business shall be made available to Seller
in accordance with the terms of Section 4.9 hereof and copies of
similar items (other than computer systems and computer hardware) used
in the Business but, in the case of clause (A), less than primarily
and, in the case of clause (B), less than exclusively, shall be made
available to Buyer in accordance with the terms of Section 4.9 hereof;
(xvi) the goodwill and going concern value of the Business;
and
(xvii) with respect to any claims or causes of action against
other persons to the extent arising out of or relating to the Assets or
the Business, any damages, judgments, fees, costs or awards which
become payable to Seller or its subsidiaries between the date of this
Agreement and the Closing, subject to reversal or reduction by any
appellate or review process or proceeding (it being understood that any
such damages, judgments, fees, costs or awards shall not be reflected
as assets on the Final Statement of Assets and Liabilities).
(c) Excluded Assets. Notwithstanding any provision in this Agreement or
the Ancillary Agreements, it is expressly understood and agreed that all of the
Seller's and its Subsidiaries' (other than the Subsidiaries') right, title and
interest as of the Closing Date in and to the following assets, properties,
rights, goodwill, privileges, claims and contracts of every kind and nature,
real, personal and mixed, tangible or intangible, absolute or contingent (such
right, title and interest being referred to herein as the "Excluded Assets") are
specifically excepted from the Assets to be transferred to Buyer or its
Designees pursuant to Section 1.1(b):
<PAGE>
9
(i) the consideration delivered to, or to the order of, Seller
pursuant to this Agreement;
(ii) all cash and cash equivalents or similar types of
investments, such as certificates of deposit, Treasury bills and other
marketable securities, except as provided in Section 4.5;
(iii) any refund or credits (including, without limitation,
interest thereon or claims therefor) with respect to any Taxes for any
period prior to the Closing Date, including, without limitation, Taxes
assessed against any Real Property for any period prior to the Closing
Date;
(iv) all insurance policies of Seller and its subsidiaries
(other than the Subsidiaries) and all rights of Seller and its
subsidiaries (other than the Subsidiaries) of every nature and
description under or arising out of such insurance policies;
(v) except as provided in Section 1.1(b)(xvii) all receivables
(including without limitation, receivables relating to VAT, freight and
duty) of Seller and its subsidiaries (other than the Subsidiaries) of a
type that would be reflected on a balance sheet prepared in accordance
with GAAP;
(vi) all rights of Seller under this Agreement and the
agreements and instruments delivered by Buyer or its affiliates
pursuant to or in connection with this Agreement;
(vii) assets relating to the Benefit Plans; and
(viii) any intercompany receivables reflecting indebtedness
from Seller and its subsidiaries (other than the Subsidiaries), on the
one hand, to any Subsidiary, on the other hand (which will be governed
by Section 4.3 hereof).
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10
(d) Assumed Liabilities. Except as otherwise provided in Section
1.1(e), on the Closing Date, Buyer shall, or shall cause its Designees to,
assume only the Liabilities of Seller and its subsidiaries (other than the
Subsidiaries) as set forth below (the "Assumed Liabilities"):
(i) which are to be performed after the Closing Date (or, in
the case of contracts and agreements excluded from the Assets pursuant
to Section 4.6(e), which are to be performed after the date such
contract or agreement is deemed to be assigned pursuant to Section
4.6(e)) under the agreements, contracts, maintenance and service
agreements, purchase orders, purchase commitments for raw materials,
goods and other services, advertising and promotional agreements,
leases, licenses, shipping agreements and collective bargaining
agreements which are Assets pursuant to Section 1.1(b)(v) hereto to the
extent to which the foregoing are applicable to the Business;
(ii) reflected as liabilities in the liabilities column of the
Final Statement of Assets and Liabilities;
(iii) under the Permits transferred to Buyer to the extent
relating to periods after the Closing Date; and
(iv) in respect of Transferred Employees of Seller and its
subsidiaries (other than the Subsidiaries), any and all obligations
which (A) are not reflected on the Final Statement of Assets and
Liabilities, (B) relate to accrued vacation and sick time as of the
Closing Date and (C) when added to the aggregate amount of such
obligations of the Subsidiaries that are not reflected on the Final
Statement of Assets and Liabilities do not exceed $300,000 in the
aggregate.
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11
Buyer acknowledges that, except as otherwise provided herein and
subject to the provisions hereof, the Liabilities of the Subsidiaries existing
as of the Closing Date shall remain Liabilities of the Subsidiaries following
the Closing Date.
(e) Liabilities Not Assumed. Notwithstanding any provision in this
Agreement or the Ancillary Agreements, Buyer and its Designees shall not assume,
shall not take subject to and shall not be liable for (and the Assumed
Liabilities shall not include) the Liabilities as set forth below:
(i) except as provided in Section 1.1(d)(ii), any Liabilities
to the extent not incident to, or arising out of or incurred with
respect to, the Business;
(ii) except as provided in Section 1.1(d)(ii), any Liabilities
directly or indirectly arising out of or relating to the Excluded
Assets;
(iii) all Liabilities resulting from any Legal Proceedings
pending as of the Closing Date and any property damage, personal
injury, death, product recall or other similar Liability arising out of
products manufactured or distributed prior to the Closing Date (other
than such Liabilities to the extent arising out of or resulting from
the shipment, storage, handling or labelling (or any acts or omissions
in respect thereof) of such products by Buyer, any of its affiliates or
any of their direct or indirect distributors or agents after the
Closing Date);
(iv) any Liabilities arising out of or relating to any
Environmental Laws in respect of any condition existing on the Closing
Date that constitutes a violation of any Environmental Law or that
would require under Environmental Laws any investigation, cleanup,
remediation or removal actions with respect to the presence of
Hazardous Materials;
<PAGE>
12
(v) any Liability for which Seller or any of its subsidiaries
(other than the Subsidiaries) expressly has responsibility pursuant to
the terms of this Agreement or any of the Ancillary Agreements;
(vi) except as provided under Section 4.6(e) hereof,
Liabilities arising under any contract or agreement excluded from the
Assets pursuant to Section 4.6(e) hereof until such time as such
contract or agreement is deemed to be assigned to Buyer pursuant to
Section 4.6(e) hereof; or
(vii) except as provided under Sections 1.1(d)(i) and (ii),
any indebtedness for borrowed money (including, without limitation, as
evidenced by bonds, notes, indentures or similar instruments) or for
the deferred purchase price of property or services, or guarantees
therefor.
Seller acknowledges that Buyer and its Designees are not assuming any
Liabilities of any nature other than the Assumed Liabilities.
1.2 Assumption of Liabilities; Purchase Price. Subject to adjustment as
set forth in Section 1.3, upon the terms and conditions of this Agreement, on
the Closing Date, in consideration for the sale and transfer of the Assets and
the Stock, Buyer or its Designees, as applicable, shall assume and discharge or
perform when due the Assumed Liabilities and pay to, or to the order of, Seller
by wire transfer in immediately available funds in U.S. dollars an amount equal
to $550,000,000 (Five Hundred and Fifty Million Dollars) (the "Purchase Price")
in accordance with written instructions given by Seller to Buyer not less than
two business days prior to the Closing. The Purchase Price shall be allocated in
accordance with the terms of Section 6.4 hereof.
<PAGE>
13
1.3 Adjustment to Purchase Price.
(a) Preparation of Preliminary Closing Statement of Assets and
Liabilities. As soon as reasonably possible after the Closing Date (but not
later than 60 days thereafter), Seller shall prepare or cause to be prepared,
and deliver to Buyer at Seller's expense a special purpose statement of assets
and liabilities of the Business dated as of the Closing Date (the "Preliminary
Closing Statement of Assets and Liabilities") audited by Arthur Andersen LLP.
The Preliminary Closing Statement of Assets and Liabilities, after giving effect
to the transactions contemplated by this Agreement, shall be prepared on a basis
consistent with the special purpose statement of assets and liabilities of the
Business as of December 31, 1997 delivered by Seller to Buyer and attached as
Exhibit A hereto (the "Initial Statement of Assets and Liabilities"), subject to
the exceptions and such other matters as are set forth in Schedule 1.3(a)
hereto, and shall disclose net book value as determined without giving effect to
receivables ("Net Book Value") as of the Closing Date. Seller and its employees
and advisors shall have full access upon reasonable notice and during normal
business hours to the books, papers and records of Buyer and its subsidiaries
(including the Subsidiaries) relating to the Business as necessary or helpful
for the preparation of the Preliminary Closing Statement of Assets and
Liabilities.
(b) Review of Preliminary Closing Statement of Assets and Liabilities.
Buyer, upon receipt of the Preliminary Closing Statement of Assets and
Liabilities, shall (i) review the Preliminary Closing Statement of Assets and
Liabilities and (ii) to the extent Buyer may deem necessary, make reasonable
inquiry of Seller relating to the preparation of the Preliminary Closing
Statement of Assets and Liabilities. Buyer and its employees and advisors shall
have full access upon prior written notice and during normal business hours to
<PAGE>
14
the books, papers and records of Seller and its subsidiaries and, upon the
delivery by the Buyer of a customary release, the work papers of Seller's
auditors relating to the preparation of the Preliminary Closing Statement of
Assets and Liabilities in connection with such inquiry. The Preliminary Closing
Statement of Assets and Liabilities shall be binding and conclusive upon, and
deemed accepted by, Buyer unless Buyer shall have notified Seller in writing of
any objections thereto (the "Buyer's Objection") within 45 days after receipt of
the Preliminary Closing Statement of Assets and Liabilities.
(c) Disputes. In the event of a Buyer's Objection, Seller shall have 45
days to review and respond to the Buyer's Objection, and Seller and Buyer shall
attempt to resolve the differences underlying the Buyer's Objection within 45
days following completion of Seller's review of the Buyer's Objection. Disputes
between Buyer and Seller which cannot be resolved by them within such 45-day
period shall be referred no later than such 45th day for decision to a
nationally-recognized independent public accounting firm as Seller and Buyer
shall mutually agree upon (which firm shall not be the independent public
accountants for either Seller or Buyer) (the "Auditor") who shall act as
arbitrator and determine, based solely on presentations by Seller and Buyer and
on the basis of the standards set forth in Section 1.3(a) hereof and only with
respect to the remaining differences so submitted, whether and to what extent,
if any, the Preliminary Closing Statement of Assets and Liabilities requires
adjustment. The Auditor shall deliver its written determination, including,
without limitation, as to the adjustments, if any, to the Preliminary Closing
Statement of Assets and Liabilities and the calculations supporting any
adjustments, to Buyer and Seller no later than the 30th day after the remaining
differences underlying the Buyer's Objection are referred to the Auditor, or
such longer period of time as the Auditor determines is necessary. The
<PAGE>
15
Auditor's determination shall be conclusive and binding upon the parties. The
fees and disbursements of the Auditor shall be allocated between Buyer and
Seller in such a way that Seller shall be responsible for that portion of the
fees and expenses equal to such fees and expenses multiplied by a fraction the
numerator of which is the aggregate dollar value of disputed items submitted to
the Auditor that are resolved against Seller (as finally determined by the
Auditor) and the denominator of which is the total dollar value of the disputed
items so submitted, and Buyer shall be responsible for the remainder of such
fees and expenses. Buyer and Seller shall make readily available to the Auditor
all relevant information, books and records and any work papers relating to the
Preliminary Closing Statement of Assets and Liabilities and all other items
reasonably requested by the Auditor. In no event may the Auditor's resolution of
any difference be for an amount which is outside the range of Buyer's and
Seller's disagreement.
(d) Final Statement of Assets and Liabilities. The Preliminary Closing
Statement of Assets and Liabilities (after giving effect to any adjustment
pursuant to Section 1.3(c)) shall become final and binding upon the parties upon
the earliest of (i) the failure by Buyer to object thereto within the period
permitted under Section 1.3(b), (ii) the agreement between Buyer and Seller with
respect to the full resolution of the Buyer's Objection and (iii) the decision
by the Auditor with respect to any disputes under Section 1.3(c). The
Preliminary Closing Statement of Assets and Liabilities, as adjusted pursuant to
the agreement of the parties or decision of the Auditor, when final and binding
is referred to herein as the "Final Statement of Assets and Liabilities."
(e) Adjustments to the Purchase Price. As soon as practicable (but not
more than five business days) after the date on which the Final Statement of
Assets and
<PAGE>
16
Liabilities shall have been determined in accordance with this Section 1.3, (A)
Buyer shall pay to Seller in immediately available funds in U.S. dollars the
amount, if any, by which the sum of (i) Net Book Value (as determined without
giving effect to receivables) as at the Closing Date as reflected in the Final
Statement of Assets and Liabilities and (ii) the Net Subsidiary Receivables
Amount is greater than $51,775,194, which shall constitute an immediate upward
adjustment of the Purchase Price in such amount or (B) Seller shall pay to Buyer
in immediately available funds in U.S. dollars the amount, if any, by which
$51,775,194 is greater than the sum of the Net Subsidiary Receivables Amount and
Net Book Value (as determined without giving effect to receivables) as at the
Closing Date as reflected in the Final Statement of Assets and Liabilities,
which shall constitute an immediate downward adjustment of the Purchase Price in
such amount. "Net Subsidiary Receivables Amount" shall be equal to 95% of the
net book value ("net" meaning after deduction of the amount of the reserves for
doubtful accounts) of the trade accounts receivable of the Subsidiaries as
reflected on the Final Statement of Assets and Liabilities. If either party is
required to make a payment pursuant to this Section 1.3(e), such party shall
also be required to pay interest on the amount of such payment (for the period
commencing as of the Closing Date and ending on the date on which the payment is
made by such party) at a floating rate of interest equal to the ninety (90) day
commercial paper rate for high grade unsecured notes as published from time to
time in The Wall Street Journal, Eastern Edition. Notwithstanding the foregoing
provisions of this Section 1.3(e), no payment pursuant to this Section 1.3(e)
shall be made unless the payment would exceed $100,000, and if the payment would
exceed $100,000 then the full amount of the payment contemplated by this Section
1.3(e) shall be made.
<PAGE>
17
ARTICLE II
CLOSING
2.1 Time and Place. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 9.1 hereof, the closing with respect to the purchase and sale of the
Stock and the Assets (the "Closing") shall take place at the offices of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York, at 10:00 a.m. on
the last day of the month during which all of the conditions to the Closing set
forth in Article V hereof are satisfied or waived (other than the conditions to
be satisfied on the Closing Date, but subject to waiver or satisfaction of such
conditions) or on the next business day in The City of New York if such day is
not a business day in The City of New York) or such other place, time and date
as the parties may agree. The actual date of the Closing is herein referred to
as the "Closing Date". For all purposes, the Closing shall be deemed to have
occurred on, and the effective time of Closing shall be deemed to be, 11:59 p.m.
New York City time on the Closing Date.
2.2 Deliveries by Seller. (a) Deliveries on the Closing Date. On the
Closing Date and at the place specified in Section 2.1, upon the terms and
subject to the conditions of this Agreement, Seller shall, and shall cause its
subsidiaries, as applicable to, deliver to Buyer or its Designees, as
applicable:
(i) certificates representing the stock of CorMedica owned by
Seller, certificates representing the stock of Bard Japan, certificates
representing the shares of Bard Ireland and Bard Galway owned by Bard
Shannon, reasonable evidence that the shareholders' register of Milu
validly records the share transfer of all of the share capital of Milu
owned by Bard Shannon from Bard Shannon to Buyer or its Designees
<PAGE>
18
(but only if third party consents required in connection with the sale
of the share capital of Milu are obtained) and certificates
representing the quotas of X-trode owned by Bard Shannon (but only if
third party the consents required in connection with the sale of the
quotas of X-trode are obtained), in each case duly endorsed, or
accompanied by stock powers duly executed, with all necessary stock
transfer stamps attached thereto and cancelled or stock transfer forms
duly executed, as the case may be;
(ii) deeds duly executed and acknowledged in recordable form
sufficient to convey to Buyer or its Designees fee simple title
(subject to the Permitted Exceptions) in the Real Property and the
Facilities;
(iii) such deeds, bills of sale and other instruments of
transfer, conveyance and assignment, duly executed and in valid form,
as shall be sufficient to transfer the Stock, Assets and Assumed
Liabilities to Buyer and its Designees;
(iv) the certificates, consents and other documents referred
to herein as deliverable by Seller or its subsidiaries at the Closing,
including, without limitation, an affidavit of nonforeign status as
required by Section 1445(b)(2) of the Foreign Investment and Real
Property Tax Act, as amended;
(v) a receipt for the Purchase Price; and
(vi) such instruments as shall be necessary, in form
reasonably satisfactory to Buyer, duly executed and in valid form
effective to evidence the assumption by Seller or its Designees, as
applicable, of Liabilities pursuant to Section 4.18.
(b) Delivery on or After the Closing Date. On or as promptly as
practicable following the Closing Date, Seller shall, and shall cause its
subsidiaries to, take
<PAGE>
19
such action as shall be necessary to put Buyer and/or its Designees in the
possession or control of the Assets and shall deliver to Buyer copies of all
written agreements, arrangements, commitments, contracts, purchase orders,
leases, permits, business records and other documentation referenced in Section
1.1(b) hereof.
2.3 Deliveries by Buyer. On the Closing Date, upon the terms and
subject to the conditions of this Agreement, Buyer and its Designees shall
deliver to, or to the order of, Seller:
(i) the Purchase Price;
(ii) such instruments as shall be necessary, in form
reasonably satisfactory to Seller, duly executed and in valid form
effective to evidence the assumption by Buyer or its Designees, as
applicable, of the Assumed Liabilities; and
(iii) the certificates, consents and other documents referred
to herein as deliverable by Buyer at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
(a) Due Incorporation of the Subsidiaries. Each of the Subsidiaries is
a corporation duly incorporated, validly existing and in good standing to the
extent that the concepts of due incorporation, valid existence and good standing
exist in the relevant jurisdiction, under the laws of the jurisdiction of its
incorporation and is qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the nature of its business or
properties makes such qualification necessary. Each of the Subsidiaries has all
<PAGE>
20
requisite corporate power and authority to own its properties and assets and to
carry on its business as it is now being conducted. Complete and correct copies
of each of the Subsidiaries' respective constituent documents, each as amended
to date, have been made available to Buyer.
(b) Due Incorporation and Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey and has all requisite corporate power and authority to enter into
this Agreement and the Ancillary Agreements (and together with this Agreement,
the "Transaction Agreements") to which it is a party, perform its obligations
hereunder and thereunder and own, operate and lease its properties and assets
constituting the Business and to carry on the Business as it is now being
conducted. Complete and correct copies of Seller's Certificate of Incorporation
and By-laws, each as amended to date, have been made available to Buyer. Each of
Bard Shannon and Bard International and any subsidiary of Seller (other than the
Subsidiaries) that will be conveying Assets to Buyer pursuant to Section 1.1 or
assuming Liabilities pursuant to Section 4.18 is, or on the Closing Date will
be, a corporation duly incorporated, validly existing and in good standing to
the extent that the concepts of due incorporation, valid existence and good
standing exist in the relevant jurisdiction, under the laws of the jurisdiction
of its incorporation and has, or on the Closing Date will have, all requisite
corporate power and authority to consummate the applicable transactions
contemplated by the Transaction Agreements. Complete and correct copies of each
of Bard Shannon's and Bard International's respective constituent documents,
each as amended to date, have been, or will upon request be, made available to
Buyer.
<PAGE>
21
(c) Authorization and Validity of Agreements. The execution, delivery
and performance by Seller of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by its Board of
Directors. On or prior to the Closing Date, the execution, delivery and
performance by Seller and each subsidiary of Seller of the Ancillary Agreements
to which it is a party and the consummation by it of the applicable transactions
contemplated thereby will be duly authorized by its respective Board of
Directors, and no other corporate action on its part or on the part of its
stockholders will be necessary for the execution, delivery and performance by it
of the Transaction Agreements to which it is a party and the consummation by it
of the applicable transactions contemplated hereby and thereby. This Agreement
has been, and at the Closing each of the Ancillary Agreements will be, duly
executed and delivered by Seller and its subsidiaries, as applicable, and this
Agreement is, and at the Closing each of the Ancillary Agreements will be, a
legal, valid and binding obligation of Seller and its subsidiaries, as
applicable, enforceable against each of Seller and its subsidiaries, as the case
may be, in accordance with their respective terms, except as enforceability is
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
(d) Title. Upon consummation of the transactions contemplated hereby at
the Closing, Seller shall deliver or shall cause to be delivered to Buyer or a
Designee (or, in the case of qualifying stock required by law, to such persons
as Buyer may designate), as applicable, (i) the Stock and (ii) the Assets, in
the case of each of clauses (i) and (ii), free and clear of any liens, pledges,
claims, mortgages, title defects, charges, easements, security
<PAGE>
22
interests, restrictions, options or other legal or equitable encumbrances
("Liens") and without Buyer or a Designee incurring any material penalty or
other material adverse consequences, including, without limitation, any material
increase in rents, royalties or license or other fees imposed solely as a result
of, or arising solely from, the consummation of the transactions contemplated by
the Transaction Agreements, except as permitted or disclosed in or pursuant to
this Article III or in Schedule 3.1(d).
(e) Capitalization. Except as set forth in Schedule 3.1(e) hereto, all
of the outstanding shares of capital stock or other equity interests of each of
the Subsidiaries have been validly issued, have been fully paid, are
nonassessable (to the extent such concepts exist in the relevant jurisdiction)
and are owned by Seller and/or one or more of its subsidiaries (other than
shares held by nominees) free and clear of all Liens and preemptive rights
(other than restrictions on transfer generally arising under any applicable
securities laws). Schedule 3.1(e) sets forth for each of the Subsidiaries all of
the authorized capital stock or other equity interests, the number of shares of
outstanding capital stock or other equity interests, the record number of shares
of such outstanding capital stock or other equity interests owned by each owner
thereof and the name of each such record owner. Except as set forth in Schedule
3.1(e) hereto and except as contemplated by Section 1.1 of this Agreement, there
are no outstanding or authorized rights or agreements of any kind relating to
the sale, issuance, redemption, return or voting of any shares of capital stock
of, or other ownership interests in, any of the Subsidiaries, or evidencing the
right to purchase any shares of capital stock of, or other ownership interests
in, any of the Subsidiaries and no equity securities of any of the Subsidiaries
are reserved for issuance for any purpose. Except as set forth on Schedule
3.1(e), there are also no "phantom" stock rights, stock appreciation rights or
other similar
<PAGE>
23
rights relating to the capital stock of, or other ownership interests in, any of
the Subsidiaries. On the date of this Agreement, Seller owns 27,122 shares of
Class A Common Stock of CorMedica.
(f) No Conflict. Except as set forth in Schedule 3.1(f) hereto, the
execution, delivery and performance by Seller and its subsidiaries of the
Transaction Agreements to which they are a party and the consummation by Seller
and its subsidiaries of the transactions contemplated hereby and thereby does
not and will not (i) violate or result in the breach of any provision of
federal, state, local or foreign law, rule, regulation, order, injunction,
judgment or decree applicable to Seller or any of its subsidiaries or to which
their respective properties are subject; (ii) require any consent or approval
of, or filing with or notice to, any governmental or regulatory authority under
any provision of federal, state, local or foreign law, rule, regulation, order,
judgment or decree applicable to Seller or any of its subsidiaries; (iii)
violate any provision of the Certificate of Incorporation or By-laws or other
constituent documents of Seller or any of its subsidiaries; (iv) require any
consent, approval or notice under, conflict with, or result in the breach,
lapse, cancellation or termination of, or constitute a default under, or result
in the acceleration (whether after the filing of notice or the lapse of time or
both) of any right or obligation of, or the performance by, Seller or any of its
subsidiaries under, or result in a loss of any benefit to which Seller or any of
its subsidiaries is entitled or result in any penalty or adverse consequence
under, any Business Contract or any plan, permit, authorization or approval
which is an Asset or which is owned or used by a Subsidiary or under which a
Subsidiary has any right or obligation or (v) result in the creation or
imposition of any Lien on any of the Assets or the Stock or on any assets of the
Subsidiaries (except in the case of clauses (i), (ii), (iv) or (v), for such
violations,
<PAGE>
24
consents, approvals, filings, notices, conflicts, breaches, lapses,
cancellations, terminations, defaults, accelerations or losses, the absence of
which or the result of which, as the case may be, would not have a Material
Adverse Effect).
(g) Financial Statements; Financial Results. Seller heretofore has
delivered to Buyer the Initial Statement of Assets and Liabilities. Except as
set forth in Schedule 3.1(g) hereto, the Initial Statement of Assets and
Liabilities was prepared on a basis consistent with the audited consolidated
financial statements of Seller as of December 31, 1997 (which audited financial
statements were prepared in accordance with GAAP) and presents fairly in all
material respects the financial position of the Business as of the date thereof.
Except (A) as reflected in the Initial Statement of Assets and Liabilities, (B)
for Seller's or its subsidiaries', as the case may be, obligations under the
Business Contracts or under other contracts or agreements disclosed in the
Schedules hereto, to the extent that the existence of such obligations is
ascertainable solely by reference to such Business Contracts or such other
contracts or agreements, (C) for liabilities incurred in the ordinary course of
business subsequent to December 31, 1997 or in accordance with Section 4.2 and,
in each case, which will be reflected on the Final Statement of Assets and
Liabilities and (D) for liabilities of Seller not assumed by Buyer or its
Designees under this Agreement, neither the Business nor Seller (but only with
respect to the Business) nor any Subsidiary has any material Liabilities. The
Liability of Buyer and its Designees for the Assumed Liabilities to be assumed
pursuant to Section 1.1(d)(ii) and the Liabilities of the Subsidiaries reflected
in the Final Statement of Assets and Liabilities (to the extent required to be
reflected as liabilities on a balance sheet prepared in accordance with GAAP) in
the aggregate will not exceed the aggregate amount of
<PAGE>
25
the liabilities reflected in the liabilities column of the Final Statement of
Assets and Liabilities, except for up to $300,000 for accrued vacation and sick
time.
(h) Absence of Material Adverse Change. Except as disclosed in Schedule
3.1(h), since January 1, 1998, (i) the Business has been conducted in the
ordinary course of business consistent with past practice and (ii) there has not
been any material adverse change in (A) the business, financial condition or
results of operations of the Business, or (B) the Assets or any of the
Subsidiaries, except (I) as may be disclosed in this Agreement or in the
Schedules hereto, and (II) personnel changes resulting from the proposed change
of ownership (it being understood and agreed that Buyer assumes the risks
associated with such personnel changes).
(i) Taxes. (i) Except as set forth in Schedule 3.1(i), there
has been timely filed by or on behalf of each Subsidiary and with
respect to the Business all material returns, declarations, statements,
reports, schedules, forms and information returns and any amended tax
returns relating to any federal, state, provincial, local, municipal,
territorial and foreign income, profits, franchise, gross receipts,
municipal license, payroll, sales, employment, use, real and personal
property, real estate, excise, value added, estimated, stamp,
alternative or add-on minimum, environmental, withholding and any other
taxes, duties or assessments, together with all interest, penalties and
additions imposed with respect to such amounts (collectively, "Taxes")
required to have been filed (the "Tax Returns"), and all Taxes shown as
due on such Tax Returns, have been or will be paid in a timely fashion
or will be adequately provided for in the Final Statement of Assets and
Liabilities on a basis consistent with the audited
<PAGE>
26
consolidated financial statements of Seller as of December 31, 1997,
and all such Tax Returns are true, complete and correct in all material
respects.
(ii) Except as disclosed in Schedule 3.1(i), no audit or other
proceeding by any court, governmental or regulatory authority or
similar person is pending with respect to any Taxes due from or with
respect to any Subsidiary. No written assessment of Tax is proposed
against any Subsidiary, except to the extent that any such written
assessment is being contested in good faith.
(iii) There are no Liens for Taxes on any Asset or any asset
of any Subsidiary, other than with respect to Taxes not yet due and
payable or which are being contested in good faith.
(iv) Except as set forth in Schedule 3.1(i) hereto, none of
the Subsidiaries will be, as of the Closing Date, a party to or bound
by any tax indemnity, tax sharing or tax allocation agreement.
(v) The amount of the Subsidiaries' liability for unpaid Taxes
for all periods ending on or before the date of the Initial Statement
of Assets and Liabilities does not, in the aggregate, exceed the amount
of liability accruals reflected on the Initial Statement of Assets and
Liabilities, and the amount of the Subsidiaries' liability for unpaid
Taxes for all periods ending on or before the Closing Date shall not,
in the aggregate, exceed the amount of liability accruals for Taxes
reflected on the Final Statement of Assets and Liabilities.
(vi) The Seller and its subsidiaries have withheld and paid in
connection with the operation of the Business all material Taxes
required to be withheld and paid
<PAGE>
27
with respect to any employee, creditor, independent contractor or other
third party for all periods for which the applicable statute of
limitations has not expired.
(j) Title to Real and Personal Properties; Liens and Encumbrances;
Assets; No Other Interests. (i) Except as set forth in Schedule 3.1(j)(i), on
the Closing Date, (A) Seller or the applicable subsidiary of Seller (other than
the Subsidiaries) will own and have good and valid title to the assets of Seller
and its subsidiaries (other than the Subsidiaries) in which Seller's and its
subsidiaries' right, title and interest are being transferred pursuant to
Section 1.1 and which are reflected on the books and records of Seller and its
subsidiaries (other than the Subsidiaries) as being owned by Seller or a
subsidiary (other than the Subsidiaries) and (B) one of the Subsidiaries will
own and have good and valid title to the real and tangible personal properties
reflected on the Final Statement of Assets and Liabilities (other than real and
tangible personal properties that are identified in clause (A) above) and the
other assets reflected on the books and records of such Subsidiary as being
owned by such Subsidiary on the Closing Date, in the case of clauses (A) and
(B), free and clear of all Liens, except (v) statutory Liens arising or incurred
in the ordinary course of business with respect to which the underlying
obligations are not delinquent, (w) Liens for Taxes the amount or validity of
which are being contested in good faith or which are not yet delinquent, (x)
Liens securing liabilities that are reflected on the Initial Statement of Assets
and Liabilities and which will be reflected on the Final Statement of Assets and
Liabilities, (y) Liens which do not materially impair the continued use and
operation of such properties in the manner in which they have heretofore been
used by Seller and its subsidiaries and (z), with respect to Real Property or
real property owned by the
<PAGE>
28
Subsidiaries, immaterial survey exceptions and consents and customary exceptions
to title which do not materially impair the continued use and operation of such
real property in the manner in which it has heretofore been used by Seller and
its subsidiaries (the "Permitted Exceptions").
(ii) Except as set forth in Schedule 3.1(j)(ii), the Assets,
the rights and assets of the Subsidiaries immediately after the Closing
and the rights of Buyer under the Transaction Agreements, considered as
a whole, constitute all the properties, assets and rights necessary for
Buyer and its affiliates to conduct the Business in all material
respects as conducted on the date hereof (with such changes in the
conduct of the Business as are permitted by Section 4.2).
(iii) All material items of equipment and other tangible
assets which are Assets or are being leased to Seller or any of its
subsidiaries under leases which are Assets or which are owned by or
leased to a Subsidiary are adequate for the uses to which they are
being put and are adequate for the conduct of the Business in the
manner in which the Business is conducted on the date hereof (with such
changes in the conduct of the Business as are permitted by Section
4.2).
(k) Business Contracts. Schedule 3.1(k) hereto sets forth (i) each
Material Contract to which any of the Subsidiaries is a party or by which any of
them or their assets are bound or have any rights (the "Material Subsidiary
Contracts") and (ii) each Material Contract which constitutes an Asset (together
with the Material Subsidiary Contracts, the "Business Contracts"). For the
purpose of this Agreement "Material Contract" shall mean any agreement,
contract, maintenance and service agreement, purchase order, purchase commitment
for raw materials, goods and other services, advertising and promotional
<PAGE>
29
agreement, lease, sublease, license, sublicense, option (other than employee
stock options), shipping agreement, employment agreement or collective
bargaining agreement which by its terms (i) after the date hereof, requires or
may require any party thereto to pay an amount or provide consideration of any
nature (whether in a lump sum or in a series of installments) or provides for
financial commitments or, in any case, has an aggregate potential future
liability, in excess of $100,000 in amount or value, (ii) provides for a surety,
cosigner, endorser, guaranty or indemnity by any Subsidiary of any obligation or
liability in excess of $100,000, contingent or otherwise, or (iii) has a
remaining stated term in excess of one year and may not be terminated by any
party thereto upon less than three months' notice, other than maintenance and
service agreements and leases for personal property entered into in the ordinary
course of business. None of Seller or any of its subsidiaries is, or since
January 1, 1995 has been, in breach of or default in the performance of its
obligations under any Business Contract, and, to the knowledge of Seller, no
breach or default, alleged breach or default, or event which would (with the
passage of time, notice or both) constitute a breach or default thereunder by
Seller or any of its subsidiaries (or, to the knowledge of Seller, any other
party or obligor with respect thereto) has occurred, or as a result of its
performance will occur. To the knowledge of Seller, each Business Contract is in
full force and effect. Complete and correct copies of each Business Contract,
including, without limitation, all amendments and supplements thereto, have been
made available to Buyer.
(l) Legal Proceedings. Except as identified in Schedule 3.1(l) hereto,
there is no material civil, criminal or administrative claim, action,
proceeding, arbitration or governmental investigation (each, a "Legal
Proceeding") pending or, to the knowledge of Seller, threatened in any
jurisdiction, in each case, which (i) seeks to restrain or enjoin the
<PAGE>
30
consummation of the transactions contemplated by this Agreement or (ii) involves
the Business, any Subsidiary or any of the Assets. Schedule 3.1(l) hereto sets
forth each judgment, judicial decree, injunction, determination, award and order
entered by any domestic or foreign court or governmental authority or arbitrator
or arbitral body to which the Business, any of the Subsidiaries, the Stock or
any of the Assets is subject. None of any Subsidiary, the Seller (but only with
respect to the Business) or any of its subsidiaries other than the Subsidiaries
(but only with respect to the Business) is, or since January 1, 1995 has been,
in violation or non-compliance in any material respect with any such judgment,
judicial decree, injunction, determination, award or order.
(m) Government Licenses, Permits and Related Approvals. Schedule 3.1(m)
hereto lists each material license, permit, consent, certification, exemption,
approval, authorization, qualification, order and franchise issued by any
federal, state, local or foreign governmental or regulatory authority or
organization used by Seller and its subsidiaries to conduct the Business as
presently conducted (the "Material Permits"). Except as set forth in Schedule
3.1(m) and, to the knowledge of Seller, each item listed in Schedule 3.1(m) that
constitutes an Asset or is owned or used by a Subsidiary is valid and in full
force and effect, and neither Seller nor any of its subsidiaries has received
any notice from any governmental authority cancelling, rescinding, materially
modifying or refusing to renew any such item that constitutes an Asset or is
owned or used by a Subsidiary.
(n) Conduct of Business in Compliance with Regulatory Requirements. (i)
Seller and each of its subsidiaries (other than the Subsidiaries) is, and, at
all times since January 1, 1995 has been, in compliance with each law,
regulation, rule, ordinance, order, judgment, decree and code promulgated or
rendered by any federal, state, local or foreign
<PAGE>
31
governmental or regulatory authority or organization (each, a "Law") applicable
to the operation or conduct of, or ownership of the property relating to, the
Business except to the extent that failure to comply therewith would not have a
Material Adverse Effect. Each of the Subsidiaries is, and, at all times since
January 1, 1995, has been, in compliance with each Law applicable to such
Subsidiary except to the extent that failure to comply therewith would not have
a Material Adverse Effect. Except as set forth in Schedule 3.1(n), since January
1, 1995, neither Seller nor any of its subsidiaries (other than the
Subsidiaries), in each case with respect to the Business, nor any of the
Subsidiaries has been required by any governmental agency to make, nor has
voluntarily undertaken, any product recall nor has Seller or any of its
subsidiaries (other than the Subsidiaries) been restrained in the research,
development, manufacture, production, marketing, advertising, distribution,
licensing, use, offer for sale or sale of any products of the Business, nor has
any Subsidiary been restrained in the research, development, manufacture,
production, marketing, advertising, distribution, licensing, use, offer for sale
or sale of any products and, to the knowledge of Seller, there is no such action
or proceeding threatened by the U.S. Food and Drug Administration or any other
U.S. or foreign governmental body or multinational organization or union against
Seller or any of its subsidiaries (other than the Subsidiaries) relating to any
products of the Business or against any Subsidiary, other than regulatory
actions and proceedings affecting the medical device industry generally.
(o) Labor Matters. Except as set forth in Schedule 3.1(o) hereto: (i)
neither Seller nor any of its subsidiaries is a party or subject, and no
employment agreements or other agreements affecting Transferred Employees are
subject, and no Transferred Employees are subject to any collective bargaining
agreement or other collective contract or
<PAGE>
32
agreement with any labor organization or other representative of any of the
Transferred Employees, nor is any such collective contract or agreement
presently being negotiated nor is there any duty on the part of Seller or any of
its subsidiaries to bargain with any labor organization or representative for
any such collective contract or agreement; (ii) there is no unfair labor
practice charge or complaint pending or, to the knowledge of Seller, threatened
against or otherwise affecting any of the Subsidiaries or relating to any of the
Transferred Employees; (iii) there is no labor strike, slowdown, work stoppage,
lockout or other labor controversy in effect or, to the knowledge of Seller,
threatened against any of the Subsidiaries or relating to any of the Transferred
Employees; (iv) no action, suit, complaint, charge, arbitration, inquiry,
proceeding or investigation by or before any court, governmental agency,
administrative agency, commission, arbitrator or arbitral body brought by or on
behalf of any present or former employee or retiree of any of the Subsidiaries
or any Transferred Employee is pending or, to the knowledge of Seller,
threatened against Seller or any of the Subsidiaries; (v) Seller (with respect
to the Business) and the Subsidiaries are in compliance with their obligations
pursuant to the Worker Adjustment and Retraining Notification Act of 1988
("WARN"), and all other notification, bargaining and other similar obligations,
including, without limitation, those arising under or in relation to any
collective bargaining agreement, federal, state, local or foreign law or
otherwise; and (vi) to the knowledge of Seller, each employee of the Business
with access to information the unauthorized use or disclosure of which would
have a Material Adverse Effect is subject to a confidentiality agreement or
other obligation of confidentiality with respect to such information.
(p) Intellectual Property. (i) To the knowledge of Seller and except as
set forth in Schedule 3.1(p)(i): (A) Seller or one of its subsidiaries owns,
controls or
<PAGE>
33
licenses the material patent rights described in Schedule 1.1(b)(ix) (the "Asset
Patent Rights") and the material patent rights of the Subsidiaries described in
Schedule 3.1(p)(i) (together with the Asset Patent Rights, the "Patent Rights")
free and clear of all Liens; (B) no third party has alleged any claims
challenging the validity or ownership of the Patent Rights or Seller's or its
subsidiaries' right to use the Patent Rights; (C) the issued patents under such
Patent Rights are valid and subsisting and none of the claims of said patents is
now being infringed by others; and (D) no third party has notified Seller or any
of its subsidiaries that Seller or one of its subsidiaries (other than the
Subsidiaries) is infringing any U.S. or foreign patent owned by such third party
in the current operation of the Business or that any Subsidiary is infringing
any U.S. or foreign patent owned by such third party, and no claim is now
pending or threatened to such effect;
(ii) To Seller's knowledge and except as set forth in Schedule
3.1(p)(ii): (A) Seller or one of its subsidiaries owns the material
trademark rights described in Schedule 1.1(b)(x) (the "Asset Trademark
Rights") and the material trademark rights of the Subsidiaries
described in Schedule 3.1(p)(ii) (together with the Asset Trademark
Rights, the "Trademark Rights") free and clear of all Liens, (B) all
such Trademark Rights are valid and subsisting, free and clear of any
encumbrances or rights of third parties which would restrict Buyer's
exclusive right to use the Trademark Rights and (C) no claim by any
third party with regard to the use of any of the Trademark Rights is
pending or has been made or threatened and none of the Trademark Rights
is being infringed by others;
<PAGE>
34
(iii) To Seller's knowledge and except as disclosed in
Schedule 3.1(p)(iii) (A) Seller or one of its subsidiaries owns the
material copyrights described in Schedule 1.1(b)(xi) ("the Asset
Copyright Rights") and the material copyrights of the Subsidiaries
described in Schedule 3.1(p)(iii) (together with the Asset Copyright
Rights, the "Copyright Rights") free and clear of all Liens, (B) all
such Copyright Rights are valid and subsisting, free and clear of any
encumbrances on rights of third parties which would restrict Buyer's
exclusive rights to use the Copyright Rights, and (C) there are no
pending or threatened claims by or against Seller or its subsidiaries
with respect to Copyright Rights or the use thereof and no valid basis
exists for any such claim;
(iv) To Seller's knowledge, Seller and its subsidiaries have
taken all practicable measures and precautions to protect and maintain
the confidentiality and secrecy of all Business Intellectual Property
in a manner consistent with Seller's policy and practice except
Business Intellectual Property whose value would be unimpaired by
public disclosure and otherwise to maintain and protect the value of
all Business Intellectual Property;
(v) To Seller's knowledge, any Business Intellectual Property
held by assignment has been duly recorded with the governmental
authority from which the original registration issued or before which
the application for registration is pending, except where the failure
to be duly recorded would not have a Material Adverse Effect, and the
registered user provisions of all nations requiring such registration
with respect to the Business Intellectual Property have been complied
with; and
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35
(vi) Except as disclosed in Schedule 3.1(p)(vi), all rights of
Seller and its subsidiaries with respect to each item of the Business
Intellectual Property are transferable to Buyer as herein contemplated.
"Business Intellectual Property" means the Patent Rights, the Trademark
Rights, the Copyright Rights, the material Technology identified in Section
1.1(b)(xii), the material Trade Dress identified in Section 1.1(b)(xiii) and in
the case of the material Technology and material Trade Dress referred to above,
the similar material rights of the Subsidiaries.
(q) Employee Benefit Plans. (i) Schedule 3.1(q)(i) hereto contains a
true and complete list of each employee benefit plan (within the meaning of
Section 3(3), of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), whether oral or written, and each other plan, agreement, program,
policy, practice or arrangement, whether oral or written, providing employee
benefits or compensation (including, without limitation, any stock purchase,
stock option, fringe benefit, bonus or incentive, deferred compensation,
retirement, pension, annuity, death, assurance, insurance, employment,
collective bargaining, severance or change of control agreements, plans,
programs, policies or arrangements) under which any employee or former employee
of the Business (including, without limitation, employees who are not employed
in or paid from the United States ("Non-United States Employees")) has any
present or future right to benefits or compensation for which Buyer, any of the
Subsidiaries or any affiliates of Buyer will have liability after the Closing
Date; excluding, however, any plans, programs, policies and arrangements which
exist to
<PAGE>
36
provide benefits mandated by law. All such plans, agreements, programs, polices
and arrangements shall be collectively referred to as the "Benefit Plans."
(ii) With respect to each Benefit Plan, Seller has made
available to Buyer a current, accurate and complete copy and, to the
extent applicable, (A) any related trust agreement, annuity contract,
policy of insurance or other funding instrument; (B) any summary plan
description; (C) with respect to Benefit Plans providing pension
benefits from which assets will be transferred to a plan of Buyer, the
most recently filed Form 5500 and attached schedules, if any, and (D)
the most recently prepared actuarial report and financial statements,
if any. Seller has made available to Buyer a current, accurate and
complete copy of the Seller Severance Plan. Except as set forth in
Schedule 3.1(q)(ii), neither Seller nor any subsidiary has a commitment
to modify or terminate any Benefit Plan which provides benefits or
compensation to any Transferred Employees or to establish a new Benefit
Plan to provide benefits or compensation to any Transferred Employee,
except as required by applicable law.
(iii) Each Benefit Plan has been established and administered
in accordance with its terms and is in compliance with applicable Law,
including, without limitation, to the extent applicable, any foreign
Laws, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code").
(iv) Except as set forth in Schedule 3.1(q)(iv), (i) each
Benefit Plan and related trust intended to be tax qualified under the
Code have received a favorable determination from the United States
Internal Revenue Service or will be timely submitted for such
determinations and (ii) each Benefit Plan intended to qualify for
particular tax or other benefits under applicable foreign Law has
received all necessary
<PAGE>
37
determination of such qualification from the appropriate governmental
agency or authority. To Seller's knowledge, nothing has occurred since
any such determination that would be reasonably likely to adversely
affect such qualification.
(v) Except as set forth in Schedule 3.1(q)(v), during the last
5 years with respect to any Benefit Plan, (i) no "reportable event" (as
such term is used in section 4043 of ERISA) (other than those events
for which the 30 day notice has been waived pursuant to the
regulations) has occurred with respect thereto, (ii) no "accumulated
funding deficiency" (as such term is used in section 412 or 4971 of the
Code) has occurred, (iii) such Benefit Plan has not been terminated and
(iv) no "prohibited transaction" (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred from which a material
liability is outstanding or which could reasonably be expected to
result in material liability to Buyer, where any such reportable event,
deficiency, termination or prohibited transaction has resulted in a
material liability under ERISA.
(vi) Except as set forth in Schedule 3.1(q)(vi) hereto, no
actions, suits or claims (other than routine claims for benefits in the
ordinary course), whether under federal, state, local or foreign Laws
or otherwise, are pending or, to the knowledge of Seller, threatened
with respect to any Benefit Plan.
(vii) Except as set forth in Schedule 3.1(q)(vii), no Benefit
Plan exists which could, after the Closing Date, result in the payment
by Buyer to any employee of the Business of any money or other property
or rights or the acceleration or provision of any other rights or
benefits to any such employee as a result of the consummation of
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38
the transactions contemplated by this Agreement (regardless of whether
such payment is a "parachute payment" within the meaning of Section
280G of the Code).
(viii) Except as set forth in Schedule 3.1(q)(viii), no
Benefit Plan is a "multiemployer plan" (within the meaning of Section
3(37) of ERISA) and neither Seller nor any member of its "controlled
group" (such term to include any member of a controlled group of
organizations within the meaning of Section 414(b), (c), (m), or (o) of
the Code) has incurred any withdrawal liability that (i) remains
unsatisfied in a material amount or (ii) could reasonably be expected
to subject Seller or any member of its controlled group to material
controlled group liability under Section 4001(b) of ERISA.
(ix) Except as disclosed in Schedule 3.1(q)(ix) hereto, or as
otherwise required by Law or collective bargaining agreements, no
Employer has any Liabilities to current or former Non-United States
Employees arising from early retirement or pension arrangements
(including, without limitation, any direct pension promise, direct
insurance or through the setting up of a support fund or pension fund).
(x) Except as set forth in Schedule 3.1(q)(x): (i) neither
Seller nor any of its subsidiaries has incurred any liability for any
excise tax arising under Section 4971, 4972, 4980 or 4980B of the Code
which will result in a material Liability to Buyer, and no fact or
event exists which could reasonably be expected to give rise to any
such material Liability to Buyer; (ii) none of the assets of Seller or
any of its subsidiaries is the subject of any Lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code; and (iii)
neither Seller nor any of its subsidiaries has been
<PAGE>
39
required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code.
(xi) Except as disclosed in Schedule 3.1(q)(xi): (A) on the
basis of the actuarial methods and assumptions used for the last
actuarial valuation of the Benefit Plans relating to the provision of
pension and/or death benefits in Ireland (the "Irish Pension Plans"),
the assets of each Irish Pension Plan are and will at the Closing Date
be sufficient to fund the benefits in payment and those prospectively
or contingently payable in respect of pensionable service credited or
completed up to the Closing Date after making allowance on the basis
provided in the actuarial valuation for projected future increases in
salaries and increases to pensions in payment or deferment, except
where any such insufficiency would not reasonably be expected to have a
Material Adverse Effect; (B) the Irish Pension Plans and those Benefit
Plans relating to the provision of disability benefits in Ireland (the
"Irish Disability Plans") have at all times been duly administered in
compliance with all applicable Laws and requirements (including,
without limitation, Revenue and trust requirements), and do not contain
any provisions which could give rise to a claim under Article 119 of
the Treaty of Rome or Part VII of the Pensions Act, 1990 of Ireland,
except where any such failure to comply or inclusion of such
provisions, individually or in the aggregate, would not be reasonably
expected to have a Material Adverse Effect; and (C) all contributions
and expenses due under the Irish Pension Plans and Irish Disability
Plans with respect to the period up to the Closing Date have been paid,
except where the failure to pay could not be reasonably expected to
have a Material Adverse Effect.
<PAGE>
40
(r) Brokers, Finders, etc. With the exception of fees, commissions and
expenses which shall be Seller's sole responsibility, Seller has not employed,
nor is it subject to any valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who might be entitled to a fee or commission in connection with such
transactions.
(s) Environmental Matters. Except as would not reasonably be expected
to result in material liability under Environmental Laws or as set forth in
Schedule 3.1(s) hereto, with respect to Seller and its subsidiaries (other than
the Subsidiaries) in connection with the Business and with respect to the
Subsidiaries whether or not in connection with the Business:
(1) each of Seller and its subsidiaries hold, and are in
compliance with, and at all relevant times have held and have been in
compliance with all Environmental Permits and are otherwise and at all
relevant times have been in compliance with all Environmental Laws;
(2) neither Seller nor any of its subsidiaries has received
any Environmental Claim, and neither Seller nor any of its subsidiaries
is aware of any threatened Environmental Claim;
(3) neither Seller nor any of its subsidiaries has entered
into or has agreed to, or is subject to, any judgment, decree, order,
or legally binding agreement by or from any governmental authority
under any Environmental Laws, including without limitation those
relating to compliance with Environmental Laws or to investigation,
cleanup, remediation or removal of Hazardous Materials;
(4) (i) Hazardous Materials have not been generated, used,
treated, handled or stored on, or transported to or from, or released
at, any of the Facilities or Real
<PAGE>
41
Property or any leased property included in the Assets or any
facilities or real property owned or leased by any of the Subsidiaries
in violation of any Environmental Laws; (ii) Seller and its
subsidiaries have disposed of all wastes, including, without
limitation, those containing Hazardous Materials, in compliance with
all applicable Environmental Laws and Environmental Permits; and (iii)
no Real Property or leased property included in the Assets, and no
facilities or real property owned or leased by any of the Subsidiaries
and, to the knowledge of Seller, no property adjoining any Real
Property or any leased property included in the Assets or any
facilities or real property owned or leased by any of the Subsidiaries,
is listed or, to the knowledge of Seller, proposed for listing on the
National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or on any
analogous state list of sites requiring investigation or cleanup; and
(5) none of the Real Property or the Facilities or any leased
facilities included in the Assets or any facilities or real property
owned or leased by any of the Subsidiaries contains any friable ACMs,
PCBs or radon in condition or concentration that violates Environmental
Laws.
For purposes of this Section 3.1(s), the following terms shall have the
following meanings:
"Environmental Claim" means any written notice, claim, demand,
directive, action, suit, complaint, legal or administrative proceeding or other
written communication by or on behalf of any governmental authority or any other
person for damages, injunctive or equitable relief, personal injury (including,
without limitation, sickness, disease or death), remedial or removal action
costs, property damage, natural resource damages, nuisance,
<PAGE>
42
pollution, any adverse effect on the environment caused by any Hazardous
Material, or for fines, penalties or restrictions, or in connection with the
revocation, cancellation, recision, material modification or refusal to renew
(or threat to effect the same) of any Environmental Permits, or alleging
liability or potential liability arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials, or (ii) circumstances forming the basis of
any violation or alleged violation of any Environmental Laws or Environmental
Permits.
"Environmental Laws" means all applicable and legally binding foreign,
national, European Union, federal, state, provincial and local laws, statutes,
directives, rules, regulations, treaties, conventions, codes, ordinances,
orders, judgments and decrees relating to contamination, pollution or protection
of human health (as relating to the environment) or the environment in each case
as in effect as of the date of this Agreement or on or prior to the Closing
Date.
"Environmental Permits" means all permits, authorizations, licenses,
franchises, certificates, approvals, consents, registrations, variances, filings
and other governmental authorizations or notifications required or necessary
under Environmental Laws for Seller and its subsidiaries to conduct the Business
or to be held with respect to the Real Property, the Facilities, any leased
facilities included in the Assets or any facilities or real property owned or
leased by any of the Subsidiaries.
"Hazardous Materials" means all hazardous, dangerous or toxic
substances, wastes, materials or chemicals, petroleum (including, without
limitation, crude oil or any fraction thereof) and petroleum products,
radioactive materials, friable asbestos and friable
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asbestos-containing materials, polychlorinated biphenyls, pollutants,
contaminants and all other materials regulated pursuant to any Environmental
Laws.
(t) No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement, neither Seller nor
any other person makes any other express or implied representation or warranty
on behalf of Seller or its subsidiaries, including, without limitation, as to
the probable success or profitability of the ownership, use or operation of the
Business and the Assets by Buyer after the Closing.
(u) Affiliate Agreements. Except for the Ancillary Agreements and
except as set forth in Schedule 3.1(v), no agreement or contract between any of
the Subsidiaries and Seller (or any subsidiary or affiliate of Seller) will
continue in effect subsequent to Closing.
(v) Insurance. All material properties and risks of Seller and its
subsidiaries (other than the Subsidiaries) in respect of the Business and all
material properties and risks of the Subsidiaries are covered by valid and
currently effective insurance policies or binders of insurance or programs of
self-insurance in such types and amounts as are consistent with customary
practices and standards of companies engaged in businesses and operations
similar to the Business and, with respect to the Subsidiaries, businesses and
operations similar to the operations of the Subsidiaries, and in such amounts
and types as are adequate and reasonable in view of the loss experience of the
Business and the Subsidiaries, as applicable, the pending claims, threatened
claims known to Seller and occurrences known to Seller that could lead to claims
against the Business or the Subsidiaries. Seller or one or more of its
subsidiaries has paid all premiums due under such policies and is not in default
in any material respect with respect to its obligations under any such policies.
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(w) Audited Financial Statements. The audited financial statements
(including the related notes and supporting schedules, if any, thereto)
delivered to Buyer pursuant to Section 4.16 hereof will (i) present fairly in
all material respects the financial condition and results of operations and cash
flows of the Business at the dates and for the periods indicated, (ii) be
prepared in accordance with U.S. generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved, and
(iii) comply as to form in all material respects with the applicable
requirements of Regulation S-X of the Securities and Exchange Commission, except
to the extent consistent with any formal action taken or informal advice
rendered to Buyer by the Securities and Exchange Commission as contemplated by
Section 4.16.
(x) Milu and X-trode. Except as set forth in Schedule 3.1(x), as of the
Closing Date neither Milu nor X-trode will own or have rights in any material
assets, properties, rights, goodwill, privileges, claims or contracts of any
kind or nature which are used or useful in the Business.
3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
(a) Due Incorporation and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party and perform
its obligations hereunder and thereunder. Each Designee of Buyer is, or on the
Closing Date will be, a corporation duly incorporated, validly existing and in
good standing to the extent that the concepts of due incorporation, valid
existence and good standing exist in the relevant jurisdiction, under the laws
of the
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45
jurisdiction of its incorporation and has, or on the Closing Date will have, all
requisite corporate power and authority to consummate the applicable
transactions contemplated by the Transaction Agreements.
(b) Authorization and Validity of Agreements. The execution, delivery
and performance by Buyer of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by its Board of
Directors. On or prior to the Closing Date, the execution, delivery and
performance by Buyer and each subsidiary of Buyer of the Ancillary Agreements to
which it is a party and the consummation by it of the applicable transactions
contemplated thereby will be duly authorized by its respective Board of
Directors, and no other corporate action on its part or on the part of its
stockholders will be necessary for the execution, delivery and performance by it
of the Transaction Agreements to which it is a party and the consummation by it
of the applicable transactions contemplated hereby and thereby. This Agreement
has been, and at the Closing each of the Ancillary Agreements will be, duly
executed and delivered by Buyer and its subsidiaries, as applicable, and this
Agreement is, and at the Closing each of the Ancillary Agreements will be, a
legal, valid and binding obligation of Buyer and its subsidiaries, as
applicable, enforceable against each of Buyer and its subsidiaries, as the case
may be, in accordance with their respective terms, except as enforceability is
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
(c) No Conflict. The execution, delivery and performance by Buyer and
its subsidiaries of the Transaction Agreements to which they are a party and the
consummation
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46
by Buyer and its subsidiaries of the transactions contemplated hereby and
thereby does not and will not (i) violate or result in the breach of any
provision of federal, state, local or foreign law, rule, regulation, order,
injunction, judgment or decree applicable to Buyer or any of its subsidiaries or
to which their respective properties are subject; (ii) except for the antitrust
clearances under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (and the rules and regulations promulgated thereunder), any foreign
antitrust or competition regulations and the merger and competition regulations
of the European Community or similar supranational bodies, require any consent
or approval of, or filing with or notice to, any governmental or regulatory
authority under any provision of federal, state, local or foreign law, rule,
regulation, order, judgment or decree applicable to Buyer or any of its
subsidiaries; (iii) violate any provision of the Certificate of Incorporation or
By-laws or other constituent documents of Buyer or any of its subsidiaries; or
(iv) require any consent, approval or notice under, and will not conflict with,
or result in the breach by Buyer or any of its subsidiaries of, or constitute a
default by Buyer or any of its subsidiaries under, any indenture, mortgage, deed
of trust, lease, license, franchise, contract, agreement, concession or other
instrument to which Buyer or any of its subsidiaries is a party or by which any
of them, or their assets, are bound or encumbered (except in the case of clauses
(i), (ii) or (iv), for such violations, consents, approvals, filings, notices,
conflicts, breaches, lapses, cancellations, terminations, defaults,
accelerations or losses, the absence of which or the result of which, as the
case may be, would not have a material adverse effect on the ability of Buyer or
its affiliates to consummate any of the transactions contemplated hereby).
(d) Brokers, Finders, etc. Except for fees, commissions and expenses
which shall be Buyer's sole responsibility, Buyer has not employed, nor is it
subject to the valid
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47
claim of, any broker, finder, consultant or other intermediary in connection
with the transactions contemplated by this Agreement who might be entitled to a
fee or commission in connection with such transactions.
(e) Legal Proceedings. There is no material Legal Proceeding pending
against Buyer or any of its subsidiaries or, to the knowledge of Buyer,
otherwise pending or threatened in any jurisdiction which seeks to restrain or
enjoin the consummation of the transactions contemplated by this Agreement.
(f) Purchase for Investment. Buyer is aware that no shares of capital
stock or other securities being acquired pursuant to the transactions
contemplated hereby are registered under the Securities Act of 1933, as amended
(the "Securities Act"), or under any state or foreign securities laws. Neither
Buyer nor any of its Designees is an underwriter, as such term is defined under
the Securities Act, and Buyer and/or its Designees are purchasing such shares
solely for investment, with no present intention to distribute any such shares
to any person, and neither Buyer nor any of its Designees will sell or otherwise
dispose of such shares except in compliance with the registration requirements
or exemption provisions under the Securities Act and the rules and regulations
promulgated thereunder, or any other applicable securities laws.
(g) No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement, neither Buyer nor
any other person makes any other express or implied representation or warranty
on behalf of Buyer or its subsidiaries.
3.3 Survival of Representations and Warranties. Subject to Section 8.5,
the respective representations and warranties of Seller and Buyer contained in
this Article III, the certificate delivered by Seller pursuant to Section 5.2(c)
and the certificate delivered by Buyer
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48
pursuant to Section 5.3(c) at the Closing shall survive until the date that is
eighteen months after the Closing Date; provided, however, that the
representations and warranties set forth in Sections 3.1(e) and 3.1(s) shall
survive until the third anniversary of the Closing Date.
ARTICLE IV
COVENANTS
4.1 Access to Information Concerning Properties and Records. (a)
Access. During the period commencing on the date hereof and ending on the
Closing Date, and subject to applicable law, including, without limitation,
antitrust laws, Seller shall, and shall cause its subsidiaries to, afford to
Buyer, its counsel, accountants and other authorized representatives reasonable
access during normal business hours, upon reasonable notice and in such manner
as will not unreasonably interfere with the conduct of their respective
businesses, to the facilities, properties, books, records, the portions of Tax
Returns relating to the Business, documents, personnel and auditors of the
Business, and, upon request, arrange for Buyer to inspect any relevant land
register relating to real property forming part of the Assets or assets of a
Subsidiary in order that Buyer may have the opportunity to make such reasonable
investigations as it shall desire of the affairs of the Business. Seller shall,
and shall cause its subsidiaries and their respective officers, employees,
accountants and other agents to cooperate with any such investigation.
(b) Subsequent Access. Following the Closing, Seller shall provide
Buyer and its representatives, and Buyer shall provide Seller and its
representatives, reasonable access to personnel and records of Seller and Buyer,
as applicable, relating to the Business to the extent Buyer and Seller shall
reasonably request such access.
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49
(c) Retention of Records. Following the Closing, Buyer agrees to retain
or cause its subsidiaries (including the Subsidiaries) to retain the books,
records, documents, instruments, accounts, correspondence, writings, evidences
of title, Tax Returns (including, without limitation, returns related to VAT)
and other papers relating to the operation of the Business prior to the Closing
Date for seven years or for such longer period as may be required by any law or
court order applicable to Seller or any of its subsidiaries and disclosed to
Buyer and, in any event, to notify Seller prior to the destruction or other
disposition of any of such materials and, upon Seller's request, to turn over to
Seller any of such materials the proposed destruction of which was notified to
Seller.
4.2 Conduct of the Business Prior to the Closing Date. Seller agrees
that, except as provided in this Agreement, as consented to or approved in
writing by Buyer (which approval shall not be unreasonably withheld) or as set
forth in Schedule 4.2 hereto, during the period commencing on the date hereof
and ending at the Closing Date:
(i) the Business shall be conducted only in the ordinary
course of business consistent with past practice and Seller shall use
its best efforts to (a) preserve intact the Business and related
relationships with customers, suppliers and other parties with whom it
has business relationships and (b) keep available the services of
present employees (it being understood that Buyer assumes the risks
associated with personnel changes customarily attendant to a change of
ownership);
(ii) none of the Subsidiaries will amend its Certificate of
Incorporation or By-laws or other constituent documents;
(iii) none of the subsidiaries of Seller which is a
shareholder of any of the Subsidiaries will resolve to, and none of the
Subsidiaries will or will agree to, (A)
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issue, sell, pledge, transfer, repurchase or redeem any shares of
capital stock of any class or series, or any securities convertible
into or exchangeable for shares of capital stock or issue any options,
warrants or other rights to acquire any shares of capital stock or (B)
declare any dividend, make any distribution with respect to any class
or series of its capital stock or share capital, or repurchase or
otherwise acquire or grant, sell or pledge any shares of its capital
stock or other equity interest, in each case other than cash dividends
and distributions or as contemplated in Section 4.3 or 4.5;
(iv) Seller and its subsidiaries (other than the Subsidiaries)
in connection with the Business will not and none of the Subsidiaries
will (A) acquire, license, sub-license, dispose of, lease, sub-lease,
transfer or subject to a Lien any properties or assets, other than (1)
in the ordinary course of business, (2) properties or assets which in
the aggregate are not material to the Business, (3) transfers between
Subsidiaries, (4) dispositions or transfers of properties or assets
which (i) were owned by a Subsidiary on the date of the Initial
Statement of Assets and Liabilities, (ii) are not reflected on the
Initial Statement of Assets and Liabilities and (iii) do not relate to
the Business or (5) dispositions or transfers of properties or assets
acquired by a Subsidiary subsequent to the date of the Initial
Statement of Assets and Liabilities which are used less than primarily
in the Business; (B) waive any claims or rights, except (1) claims or
rights which in the aggregate are not material to the Business or (2)
for cancellation and waivers of intercompany indebtedness or claims not
assigned to or assumed by Buyer hereunder; (C) grant or approve any
increase in the compensation of Scheduled Employees (as hereinafter
defined) or Employees of the Subsidiaries (including, without
limitation, any increase in existing, or any creation of
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51
new, severance or termination pay obligations), or grant or approve any
bonus, in each case, except for increases in the ordinary course of
business and consistent with past practice or as a result of collective
bargaining or as required by any employment or other agreement, any
policy or any bonus, pension, profit-sharing or other plan or
commitment presently in effect; (D) enter into employment agreements
with any employee, except for any new hires or promotions in the
ordinary course of business and consistent with past practice; (E)
adopt or amend any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment or other plan,
agreement trust, fund or arrangement for the benefit of Scheduled
Employees (as hereinafter defined) or Employees of the Subsidiaries,
except as may be required to comply with applicable law or as may have
been contemplated by Seller and disclosed to Buyer in writing prior to
the date hereof; (F) make any capital expenditure, other than (1) in
the ordinary course of business or (2) pursuant to existing business
plans disclosed to Buyer prior to the date hereof; (G) terminate or
extend any Business Contract or enter into any contract that would be a
Material Contract; (H) fail to maintain insurance coverage at levels
consistent with presently existing levels; (I) incur or assume any
liabilities, obligations or indebtedness for borrowed money or
guarantee such liabilities, other than (1) in the ordinary course of
business and consistent with past practice and (2) liabilities,
obligations or indebtedness which shall not be Assumed Liabilities and
for which neither Buyer nor any Designee of Buyer nor any Subsidiary
shall otherwise be liable or responsible; provided that in no event
shall long-term indebtedness for borrowed money be incurred; (J) make
any Tax elections that have a continuing effect upon the Business
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52
after the Closing (other than "check the box" elections in connection
with the transactions contemplated by this Agreement); (K) enter into
any lease of real property, except renewals of existing leases in the
ordinary course of business (it being understood that Buyer shall have
the right to participate in the decision as to whether to renew any
such lease); (L) enter into any contract or agreement or engage in any
other type of transaction with Seller or any of its affiliates (other
than between Subsidiaries) other than in the ordinary course of
business and consistent with past practice or as contemplated by this
Agreement; (M) make any material change in inventory policies and
procedures, credit policies, or advertising policies and procedures in
respect of the Business, in each case other than in the ordinary course
of business; (N) do any other act which would cause any representation
or warranty of Seller in this Agreement to be or become untrue in any
material respect; (O) hire any employee whose base annual salary would
exceed $150,000; (P) revalue any of the Assets or any assets of any of
the Subsidiaries (including, without limitation, writing up or down the
value of inventory) except as required by GAAP; (Q) fail to use
commercially reasonable efforts to maintain capital expenditures for
the Business at levels materially equivalent to historical levels to
the extent requested by members of Buyer's or any of its subsidiaries'
management who will be directly responsible for managing the Business
or the relevant portion thereof; (R) take affirmative steps with
respect to claims or causes of action other than to satisfy legal
obligations or to preserve legal rights, unless otherwise instructed by
Buyer; (S) assert unasserted claims or causes of action; or (T) agree,
whether in writing or otherwise, to do any of the foregoing.
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53
(v) Seller shall not, and shall cause its subsidiaries to not,
(i) amend or modify any terms of, or waive any material rights under,
any Business Contracts other than in the ordinary course of business or
(ii) dispose of any Stock.
Nothing in this Agreement, including, without limitation, in this
Section 4.2, shall limit the ability of Seller and its subsidiaries (other than
the Subsidiaries) to transfer Assets to, in the case of Seller, any subsidiary
of Seller (including a Subsidiary) and, in the case of any subsidiary of Seller
(other than the Subsidiaries) to Seller or another subsidiary of Seller
(including a Subsidiary) in order to facilitate the transfer of the Assets, but
not the Excluded Assets, to Buyer at Closing.
4.3 Intercompany Accounts, Debt. (a) Intercompany Accounts. The
Subsidiaries on the one hand, and Seller (which, for purposes of this Section
4.3 shall include the subsidiaries of Seller other than the Subsidiaries), on
the other hand, maintain and will up to the Closing Date maintain certain
intercompany payables and intercompany receivables (the "Intercompany Account")
reflecting indebtedness between the Subsidiaries, on the one hand, to or from
Seller, on the other hand.
(b) Settlement of Intercompany Debt. If, as of the Closing Date, the
Net Intercompany Debt in the Intercompany Account consists of a net indebtedness
of the Business to Seller, Seller shall, prior to or simultaneously with the
Closing, contribute or cause to be contributed such Net Intercompany Debt in the
Intercompany Account to the Business, or, if not contributed will, prior to or
simultaneously with the Closing, cause such Net Intercompany Debt in the
Intercompany Account to be settled or to be eliminated in some other manner
which does not have a Material Adverse Effect (it being understood that the
actions contemplated by Section 4.5 shall be deemed not to have a Material
Adverse Effect).
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54
If, as of the Closing Date, the Net Intercompany Debt in the Intercompany
Account consists of a net indebtedness of Seller to the Business, Seller shall,
prior to or simultaneously with the Closing, cause the Business to cancel or
dividend such indebtedness to Seller, or, if not cancelled or dividended, will,
prior to the Closing, cause the same to be settled or to be eliminated in some
other manner which does not have a Material Adverse Effect (it being understood
that the actions contemplated by Section 4.5 shall be deemed not to have a
Material Adverse Effect). As used herein, the term "Net Intercompany Debt" shall
mean (i) all intercompany liabilities of the Business to Seller in the
Intercompany Account less (ii) the sum of all intercompany receivables due to
the Business from Seller in the Intercompany Account.
4.4 Antitrust Laws. Seller and Buyer agree to cooperate and use their
best efforts to make all filings which are or may become required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "Antitrust
Improvements Act"), in the United States and the Mergers and Takeovers (Control)
Act 1978-1996 in Ireland (the "Mergers Act"). Seller and Buyer will furnish each
other such necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of necessary filings or
submissions to any United States or foreign governmental agency or body of
competent jurisdiction. Seller and Buyer will supply each other copies of all
pre-Closing correspondence, filings or communications (or memoranda setting
forth the substance thereof) between such party or its subsidiaries or their
respective representatives, on the one hand, and the Federal Trade Commission
(the "FTC"), the Antitrust Division of the United States Department of Justice
(the "Antitrust Division"), the Department of Enterprise, Trade and Employment
in Ireland or any other United States or foreign governmental, international
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55
or supranational agency or body of competent jurisdiction or authority or
members of their respective staffs, on the other hand, with respect to the
Transaction Agreements and the transactions contemplated hereby other than any
of such information filed pursuant to Items 4(c) and 5 of the Hart-Scott-Rodino
Notification and Report Form or communications regarding the same or information
or documents of a similar confidential nature.
4.5 Cash Management. At the Closing, Seller shall endeavor to cause the
combined Cash Balances to be held at Closing by the Subsidiaries to be equal to
zero. It is understood and agreed that in achieving such Cash Balances,
notwithstanding anything to the contrary contained in this Agreement, Seller,
directly or indirectly through its subsidiaries, may cause the Cash Balances of
the Subsidiaries to be distributed to Seller or its other affiliates at or prior
to the Closing, whether or not in the ordinary course of business. Buyer and
Seller acknowledge and agree that in the event the combined Cash Balances held
by the Subsidiaries do not equal zero, the amount of the balance will be
reflected on the Final Statement of Assets and Liabilities for all purposes,
including, without limitation, for purposes of determining the adjustment to the
Purchase Price pursuant to Section 1.3(e) and for inclusion as an Asset. For
purposes of this Section 4.5, "Cash Balances" shall mean the sum of all (i) cash
and cash equivalents on deposit in any bank account, money market account,
certificate of deposit or comparable accounts in the name of any Subsidiary,
(ii) petty cash held by any Subsidiary and (iii) undeposited checks in the
possession of any Subsidiary, in each case at the close of business on the
Closing Date.
4.6 Further Actions. (a) Approvals, Filings and Defense of Proceedings.
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use its best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all
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56
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using its best efforts: (i) to obtain, in
addition to approvals contemplated by Section 4.4 hereof, any licenses, permits,
consents, approvals, authorizations, qualifications and orders of federal,
state, local and foreign governmental authorities as are required in connection
with the consummation of the transactions contemplated hereby and by the
Ancillary Agreements; (ii) to effect, in addition to the filings contemplated by
Section 4.4 hereof, all necessary registrations and filings including, without
limitation, required registrations and filings with foreign governmental
authorities; (iii) to defend any lawsuits or other Legal Proceedings, whether
judicial or administrative, whether brought derivatively or on behalf of third
parties (including, without limitation, governmental agencies or officials),
challenging this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby; and (iv) subject to appropriate
confidentiality protections, to furnish to each other such information and
assistance and to consult with respect to the terms of any registration, filing,
application or undertaking as reasonably may be requested in connection with the
foregoing. Notwithstanding anything to the contrary in this Section 4.6 or in
Section 4.4 or 4.15, no party shall have the obligation under this Section 4.6
or under Section 4.4 or 4.15 to (i) dispose or cause any of its subsidiaries to
dispose of any assets, (ii) license or cause any of its subsidiaries to license
any technology or intellectual property rights, (iii) make any changes to its
operations or proposed operations or to the operations or proposed operations of
any of its subsidiaries or (iv) make any commitment (to any governmental
authority or otherwise) regarding its future operations, or the future
operations of any of its subsidiaries, or the future operations of the Business
(even though the
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57
disposition of such assets, the granting of such licenses or the making of such
change or commitment might facilitate the obtaining of a required approval from
a governmental authority or might otherwise facilitate the consummation of the
transactions contemplated hereby).
(b) Consents. Seller shall use its best efforts to obtain prior to or
concurrently with (or, if not obtained prior to or concurrently, subsequent to)
the Closing all consents in forms reasonably satisfactory to Buyer, in each case
required by any material contracts, leases, licenses and other agreements to
which any Subsidiary is a party or which constitute Assets, and Buyer will
cooperate in order to obtain such consents.
(c) Mail. Each party hereto authorizes and empowers the other party
hereto on and after the Closing Date to receive and open all mail received by
such party relating to the Business or the Assets and to deal with the contents
of such communications in any proper manner. Buyer and its subsidiaries are
authorized to open mail received by them that relates to Excluded Assets or to
Seller's operations not relating to the Business. Seller shall promptly deliver
to Buyer any mail or other communication received by it after the Closing Date
pertaining to the Business or the Assets and any cash, checks or other
instruments of payment (with all necessary endorsements) to which Buyer or any
of its subsidiaries (including the Subsidiaries) or its Designees is entitled
and will use its best efforts to advise Buyer with respect to oral
communications pertaining to the Business. Buyer shall promptly deliver to
Seller any mail or other communication received by it after the Closing Date
pertaining to the Excluded Assets to be retained by Seller or otherwise
belonging to Seller and not relating to the Business, and any cash, checks or
other instruments of payment (with all necessary endorsements) required to be
remitted to Seller in respect thereof.
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(d) Full Benefit of this Agreement. Seller and Buyer shall do or
procure to be done all such further acts and things, and execute or procure the
execution of all such other documents, as such other party may from time to time
reasonably require, whether on or after Closing, for the purpose of giving to
such other party the full benefit of all the provisions of this Agreement. In
this regard but without limitation, after the Closing Date, Buyer shall take all
actions (or shall cause its subsidiaries (including the Subsidiaries) to take
all actions) reasonably requested by Seller to return to Seller (i) all
properties and assets identified in Section 1.1(c) that may be in the possession
of Buyer or its subsidiaries (including the Subsidiaries) and (ii) all
properties and assets of the Subsidiaries that were properties or assets of a
Subsidiary on the Closing Date but that are not reflected on the Final Statement
of Assets and Liabilities and which do not relate to the Business, except as
otherwise contemplated by the Ancillary Agreements.
(e) Non-assignable Agreements. Anything in this Agreement to the
contrary notwithstanding, nothing in this Agreement shall be construed as an
attempt to assign or transfer any contract or agreement that is by its terms or
at law non-assignable without the consent of the other party thereto and as to
which such consent shall not have been given. In order, however, that the full
value of every contract and agreement of the character described in the
immediately preceding sentence and all claims and demands relating to such
contracts and agreements may be realized, Seller or its subsidiaries, as
applicable, shall, to the extent reasonably possible and to the extent it would
not impose any material obligation on Seller or any of its subsidiaries (other
than the Subsidiaries), keep such contracts and agreements in effect and shall
give Buyer or its Designee the benefit of each such agreement to the same extent
as if it had been assigned, and Buyer or its Designee shall perform for the
benefit of
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the Seller or its subsidiaries, as applicable, the obligations under the
contract or agreement relating to the benefit obtained by Buyer or its Designee.
Upon the receipt by Buyer or Seller following the Closing Date of the consent of
the other party to any such contract or agreement that is by its terms or at law
non-assignable without such consent, such contract or agreement shall, without
any further action on the part of Buyer or Seller, be deemed to have been
assigned by Seller or its subsidiaries, as applicable, to Buyer or its Designee
and assumed by Buyer or its Designee as of the date of such consent.
4.7 Covenant Not to Compete. In order that Buyer and its subsidiaries
may have and enjoy the full benefit of the Business, Seller agrees that Seller
and its subsidiaries will not, without the written approval of Buyer, for the
period beginning on the Closing Date and ending on the fifth anniversary of the
Closing Date (the "Noncompetitive Period"): (i) engage, directly or indirectly,
in any activity involving the manufacture, production, marketing, advertising,
distribution or sale of any Competitive Product anywhere in the world (after
giving effect to the exceptions contained in the second succeeding sentence, the
"Competitive Activity"), (ii) directly or indirectly, (A) hold or invest in any
equity (or debt convertible into equity) of, (B) manage, operate or control, (C)
become a consultant with respect to any Competitive Activity for or (D) provide
material services for any Competitive Activity to, any Person that engages in
any Competitive Activity or (iii) license, sublicense or otherwise make
available to any person any technology or other intellectual property rights
that would facilitate such person's engaging in any Competitive Activity.
"Competitive Products" means (i) the products in any of the categories set forth
in the recitals hereto, (ii) catheter-based, wire-based, balloon-based or
stent-based products used in coronary applications and (iii) products that are
competitive with any products of the type referred to in
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the foregoing clause (i) or (ii). Notwithstanding the foregoing, nothing
contained herein shall limit the right of Seller or any subsidiary of Seller to
(i) hold and make passive investments in securities of any person that is
registered on a national securities exchange or admitted to trading privileges
thereon or actively traded in a generally recognized over-the-counter market;
provided, that Seller's and any such subsidiary's aggregate beneficial equity
interest therein shall not exceed 10% of the outstanding shares or interests in
such person; (ii) engage, directly or indirectly, in any Competitive Activity or
any activity otherwise prohibited by clause (ii) or clause (iii) of the second
preceding sentence with respect to the products identified in Schedule 4.7(i);
(iii) engage, directly or indirectly, in any Competitive Activity or any
activity otherwise prohibited by clause (ii) or clause (iii) of the second
preceding sentence with respect to Competitive Products for non-coronary
applications; (iv) engage in any transaction whereby, directly or indirectly, it
acquires (whether by merger, stock purchase, purchase of assets or otherwise)
any person or business, or any interest in any person or business, engaged,
directly or indirectly, in any Competitive Activity at the time of such
acquisition; provided, that within one year of any such transaction, Seller or
the applicable subsidiary or subsidiaries of Seller shall dispose of the portion
of the entity or division engaged in the Competitive Activity or cause such
portion of the entity or division to cease the Competitive Activity and,
provided, further, pending such disposition or cessation of the Competitive
Activity, Seller puts into place procedures reasonably designed to ensure the
autonomy and independence of the entity or division engaged in such Competitive
Activity; (v) engage, directly or indirectly, in any activity involving the
covering or coating of stents manufactured by third parties; provided, that
neither Seller nor any of its subsidiaries markets, advertises, distributes or
sells such covered or coated stents; or (vi) engage, directly or
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indirectly, in any activity that Seller or its subsidiaries are expressly
authorized to perform pursuant to the terms of the Ancillary Agreements. Except
as the parties shall otherwise agree, for a period of two years after the
Closing Date, Seller and its subsidiaries shall not, directly or indirectly,
hire or solicit to hire any Transferred Employee to leave (or cause or seek to
cause to leave) the employ of Buyer or any subsidiary or affiliate of Buyer;
provided, however, that the foregoing provision will not prevent Seller or any
of its subsidiaries from hiring any Transferred Employee who (a) has not been
employed by Buyer or its subsidiaries during the preceding six months, (b) whose
employment was terminated by Buyer or one of subsidiaries or (c) responds to a
general solicitation of employment not specifically directed towards employees
of Buyer or its subsidiaries. Buyer and Seller shall negotiate in good faith to
identify one employee from each of categories A, B and C on Schedule 4.7(ii) to
be hired by Seller or one of its subsidiaries. Any such hiring or any
discussions with such employees (after such employees have been jointly
identified by Buyer and Seller) in the context of such negotiations shall be
deemed not to violate the preceding sentence.
4.8 Qualifying Shares. Seller shall arrange for the sale, upon terms
and conditions satisfactory to Buyer, by the owner thereof to the Buyer or one
or more of its nominees at the Closing, of the qualifying shares of Bard Ireland
and Bard Galway owned by nominees of Seller.
4.9 Business Records. After the Closing Date, Buyer shall, or shall
cause its subsidiaries, as applicable, to, provide to Seller at any reasonable
time upon reasonable prior notice and from time to time, such access to and
copies of the Assets identified in Sections 1.1(b)(iii) and (xv) (other than
computer systems and computer hardware) which are not related exclusively to the
Business as Seller may from time to time reasonably request.
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Buyer shall also cause the Subsidiaries to provide access upon such terms to
Seller of similar items owned (other than computer systems and computer
hardware) by the Subsidiaries on the Closing Date to the extent not related
exclusively to the Business. Similarly, Seller shall, and shall cause its
subsidiaries, as applicable, to, provide access upon such terms to similar items
owned by Seller and its subsidiaries after the Closing Date which are used in
the Business on the Closing Date.
4.10 Use of Names and Logos. It is expressly agreed that neither Buyer
nor any Designee is purchasing or acquiring any right (except as specifically
contemplated in this Section 4.10), title or interest in any names, trade names,
trademarks, identifying logos or service marks employing the words "C. R. Bard,
Inc." or any part or variation thereof, including, without limitation, the name
"Bard", or any name, trade name, trademark or logo confusingly or misleadingly
similar thereto (collectively, the "Seller's Trademarks and Logos"). As promptly
as practicable, but in no event later than 180 days following the Closing Date,
Buyer shall, and shall cause each of its subsidiaries (including the
Subsidiaries) to, remove, strike over or otherwise obliterate all the Seller's
Trademarks and Logos from all materials constituting their properties and
assets, including, without limitation, any business cards, stationery, displays,
signs, promotional materials, manuals, forms and other materials, if such
materials are distributed or made available or proposed to be distributed or
made available to third parties; provided, that Buyer and each of its
subsidiaries (including the Subsidiaries) shall cease using invoices, stationery
and business cards containing the Seller's Trademarks and Logos no later than 60
days after the Closing Date (or such later time to the extent required by
applicable law). In addition, Buyer shall, as promptly as practical, but in no
event later than 60 days following the Closing Date, cause each Subsidiary to
change its
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name so as to omit any of the Seller's Trademarks and Logos therefrom. Buyer
agrees that none of it, its subsidiaries (including the Subsidiaries) or any of
their affiliates shall make any use of the Seller's Trademarks and Logos from
and after the expiration of 180 days after the Closing Date.
4.11 Ancillary Agreements. Buyer and Seller shall, or shall cause their
subsidiaries, as applicable, to, enter into (i) the Intellectual Property
License Agreement substantially in the form of Exhibit B hereto (the "IP
Agreement") and (ii) one or more agreements substantially on the terms and
conditions set forth in Exhibit C hereto (the "IMPRA Agreement"). Buyer and
Seller shall negotiate in good faith (i) one or more transition agreements
relating to the provision to Buyer and Seller and their respective subsidiaries
and successors of the transition services necessary to permit, in the case of
Buyer, the continued operation of the Business and, in the case of Seller, the
continued operation of its businesses other than the Business (the "Transition
Agreement") and (ii) a 99-year, triple-net lease providing for the lease by
Buyer or one of its subsidiaries to Seller or its Designee of Building 3 at the
Billerica, Massachusetts Facility (the "Lease") (it being understood that such
lease will provide for lease payments of $2.00 per year, have other terms and
conditions customary for leases of such type and contain terms designed to shift
to Seller or one of its Designees the economic burden of ownership of the
property subject to the Lease). The IP Agreement, the IMPRA Agreement, the
Transition Agreement and the Lease are referred to herein collectively as the
"Ancillary Agreements".
4.12 Intentionally Omitted.
4.13 Notification of Certain Matters. To the extent they have knowledge
thereof, Seller shall give prompt notice to Buyer, and Buyer shall give prompt
notice to
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Seller, of the occurrence, or non-occurrence, of any event the occurrence or
non-occurrence of which will cause (i) any representation or warranty of Seller
or Buyer, as the case may be, contained in this Agreement to be untrue or
incorrect in any respect that would result in the condition to Closing set forth
in Section 5.2(a) or 5.2(b), as the case may be, not being satisfied or (ii)
Seller or Buyer, as the case may be, to fail to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.13 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
4.14 Confidentiality. Prior to and subsequent to the Closing, except as
required by law, regulation, legal or judicial process or any stock exchange or
over-the-counter market on which Seller's stock is listed or admitted for
trading (it being understood that Seller shall give prompt prior notice to Buyer
of any such requirement), Seller shall keep confidential, and cause its
subsidiaries and instruct its and their officers, directors, employees and
advisors to keep confidential, all information relating to the Subsidiaries, the
Assets, the Business (except Seller need not keep confidential information with
respect to activities in which Seller is permitted to engage pursuant to Section
4.7) and the Buyer and its subsidiaries, except for information (i) that was, is
or becomes available to the public other than as a result of a breach of this
Section 4.14, (ii) with respect to Buyer and its subsidiaries that is or becomes
available to Seller on a nonconfidential basis from a source other than Buyer
and (iii) with respect to the Subsidiaries, Assets and the Business that becomes
available to Seller after the Closing Date on a nonconfidential basis from a
source other than Buyer or its subsidiaries, affiliates, representatives or
former employees. Notwithstanding the
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foregoing, Seller and its subsidiaries shall, subject to confidentiality
provisions consistent with those contained in the preceding sentence, be
entitled to make available to any acquiror of any business or assets of Seller
who would have an interest therein, any of the information that Seller or Buyer
has agreed to make available to the other pursuant to Section 4.9. The covenant
set forth in this Section 4.14 shall terminate two (2) years after the Closing
Date.
4.15 Best Efforts. Subject to the terms and conditions of this
Agreement, each party shall use its best efforts to cause the Closing to occur.
4.16 Financial Statements. Prior to the Closing, Seller shall provide
to Buyer (i) the audited combined statements of operations, combined statements
of cash flows and combined statements of parent company investment and advances
in the Business for the years ended December 31, 1995, 1996 and 1997, (ii) the
audited combined balance sheets of the Business as of December 31, 1996 and 1997
and (iii) the unaudited combined balance sheet as of June 30, 1998 and the
unaudited combined statements of operations and combined statements of cash
flows and combined statements of parent company investment and advances in the
Business for the six months ended June 30, 1997 and 1998 which are in accordance
with GAAP and conform to the requirements of Regulations S-X of the Securities
and Exchange Commission. Notwithstanding the foregoing provisions of this
Section 4.16, Seller may provide financial statements in such lesser scope
and/or detail as the Securities and Exchange Commission may, by formal action or
informal advice provided to Buyer, permit in connection with the filing by Buyer
of a Current Report on Form 8-K in connection with the transactions contemplated
by this Agreement. In this regard, Buyer agrees to use its best efforts to
obtain such formal action or informal advice prior to the Closing.
4.17 Intentionally Omitted.
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4.18 Liabilities Assumed by Seller. On the Closing Date, Seller shall,
or shall cause one or more of its Designees to, assume only the Liabilities of
the Subsidiaries which (i) do not relate to the Business, (ii) are not reflected
on the Final Statement of Assets and Liabilities and (iii) arise from, out of or
in connection with circumstances, acts or omissions prior to the Closing Date.
4.19 Estoppel Certificates. Sellers agrees to use best efforts to
obtain prior to the Closing landlord estoppel certificates with respect to
material facilities that are the subject of leases which constitute Assets and
with respect to material facilities that are leased by the Subsidiaries.
4.20 Release of Subsidiaries. From and after the Closing, the Seller,
for itself and its subsidiaries, hereby releases each Subsidiary from any claims
or demands that Seller or its subsidiaries may have against such Subsidiary to
the extent arising from, out of or in connection with any circumstances, acts or
omissions prior to the Closing, except for claims or demands that the Seller or
any of its subsidiaries may have pursuant to this Agreement or any of the
Ancillary Agreements.
4.21 Permits. As promptly as practicable but in any event within 30
days of the date of this Agreement, Seller shall provide to Buyer a schedule of
the Material Permits which are not Assets or which are not owned by a Subsidiary
or which will be terminated or revoked in connection with the transactions
contemplated by this Agreement. Buyer shall use its best efforts to obtain such
or comparable Material Permits prior to the Closing. To the extent Buyer is not
able to obtain such or comparable Material Permits prior to the Closing, Seller
and Buyer shall negotiate in good faith, prior to the Closing, such arrangements
as shall be reasonably satisfactory to Seller and Buyer to enable the continued
operation of the
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Business in substantial compliance with all Laws. Similarly, Buyer acknowledges
that certain of the Material Permits or similar items that are owned by one or
more Subsidiaries (and that will not be terminated or revoked in connection with
the transactions contemplated by this Agreement) may be material to the conduct
of one or more businesses of Seller other than the Business ("Material
Non-Business Permits"). Seller shall use its best efforts to obtain such or
comparable Material Non-Business Permits prior to the Closing. To the extent
Seller is not able to obtain such or comparable Material Non-Business Permits
prior to the Closing, Seller and Buyer shall negotiate in good faith such
arrangements as shall be reasonably satisfactory to Seller and Buyer to enable
the continued operation of such other business or businesses in compliance with
all Laws, except to the extent that the failure to comply therewith would not
have a material adverse effect on Seller or any of its subsidiaries or on any
such business or businesses.
4.22 Non-Solicitation. Seller agrees that neither it nor any of its
subsidiaries nor any of the officers, directors, employees or representatives of
Seller or any of Seller's subsidiaries shall solicit, encourage, engage in any
negotiations relating to, provide any information with respect to or enter into
any proposal, plan, agreement, understanding or arrangement contemplating, a
direct sale or other direct disposition of any material portion of the assets of
the Business or the Stock.
4.23 Insurance Claims. In the event Buyer Indemnified Parties or Seller
Indemnified Parties seek indemnification for Damages pursuant to Article VIII or
Article VI, the party seeking indemnification shall use its best efforts to
recover in respect of the applicable Damages under all applicable third-party
insurance policies held by such party. The party seeking indemnification shall
not, except with the consent of the indemnifying
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party (which consent shall not be unreasonably withheld), enter into any
settlement with any insurance provider with respect to any such claims. In the
event the party seeking indemnification receives insurance proceeds for claims
with respect to Damages for which the indemnifying party has previously
indemnified the indemnified party, the party securing indemnification will
promptly pay such proceeds to the indemnifying party up to the amount previously
paid by the indemnifying party as indemnification with respect to such Damages.
4.24 Litigation Expenses. Subject to Sections 4.2(iv)(R) and
4.2(iv)(S), Buyer agrees to reimburse Seller and its subsidiaries promptly upon
demand for all out-of-pocket fees, costs and expenses (including, without
limitation, legal fees and expenses) incurred by Seller or its subsidiaries, as
the case may be, between the date of this Agreement and the Closing Date in
connection with the prosecution of any claims or causes of action identified in
Section 1.1(b)(xiv).
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Obligations of Parties. The respective
obligations of Buyer and Seller to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, at or prior to the Closing Date,
of each of the following conditions:
(a) No Injunction. At the Closing Date, (i) there shall be no
injunction, restraining order, decision or decree of any nature of any United
States or foreign court or governmental agency or body of competent jurisdiction
that is in effect that makes illegal, restrains or prohibits in any respect the
consummation of the transactions contemplated hereby and (ii) there shall be no
continuing suit or proceeding instituted by any United States or
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foreign governmental authority or body of competent jurisdiction which seeks to
enjoin, restrain or prohibit the consummation of the transactions contemplated
hereby in whole or material part. Notwithstanding the foregoing, the condition
set forth in this Section 5.1(a) shall not be a condition to the obligations of
a party to consummate the transactions contemplated by this Agreement if the
consummation of the transactions contemplated by this Agreement, notwithstanding
that the condition set forth in this Section 5.1(a) has not been satisfied,
would not be reasonably likely to have a material adverse effect on such party
or any entity that would be a subsidiary of such party after the Closing.
(b) Regulatory Authorizations. All (i) consents, approvals,
authorizations and orders of federal, state, local and foreign governmental and
regulatory authorities of competent jurisdiction as are necessary in connection
with the lawful transfer of the Stock and Assets to Buyer or its Designees and
the execution and performance of the Transaction Agreements or which if not
obtained (x) would be reasonably likely to subject Buyer, Seller or any of their
respective subsidiaries, or any officer, director or agent of any such person to
civil or criminal liability, (y) would be reasonably likely to result in the
loss by Buyer of material benefits under the Transaction Agreements, or (z)
could render such transfer void or voidable shall have been obtained; (ii)
applicable waiting periods, including extensions thereof, specified under the
Antitrust Improvements Act with respect to the transactions contemplated by this
Agreement shall have lapsed or been terminated and any investigations relating
to the transactions contemplated hereby that may have been opened by either the
Department of Justice or the Federal Trade Commission by means of a request for
additional information or otherwise shall have terminated; and (iii)
confirmation shall have been received from the Minister for Enterprise Trade and
Employment of Ireland (the "METE")
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that (A) the METE has decided not to make an order under Section 9 of the
Mergers Act in relation to the sale and purchase of the shares in Bard Ireland,
Bard Galway and Bard Connaught; or (B) the METE has made a conditional order in
relation to such sale and purchase and Seller and Buyer are satisfied with any
conditions, requirements or terms subject to which such order is made; or (C)
the relevant period under Section 6 of the Mergers Act expired without the METE
having so made any order. Notwithstanding the foregoing, the condition set forth
in this Section 5.1(b) shall not be a condition to the obligations of a party to
consummate the transactions contemplated by this Agreement if the consummation
of the transactions contemplated by this Agreement, notwithstanding that the
condition set forth in this Section 5.1(b) has not been satisfied, would not be
reasonably likely to have a material adverse affect on such party or any entity
that would be a subsidiary of such party after the Closing.
(c) Ancillary Agreements. Buyer and Seller and/or their respective
subsidiaries, as applicable, shall have entered into the Ancillary Agreements.
5.2 Conditions Precedent to Obligation of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement is subject
to the satisfaction or waiver by Buyer at or prior to the Closing Date of each
of the following additional conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Seller contained herein shall be true and correct in all material
respects (with such materiality determined in the context of the Business taken
as a whole) as of the date hereof and at, and as of, the Closing Date, with the
same force and effect as though made at and as of the Closing Date, except for
changes expressly permitted or contemplated by this
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Agreement and except that, to the extent any representation or warranty is made
as of a specified date, it need be true only as of such date (it being
understood that, for purposes of determining the truth and correctness of
Seller's representations and warranties, all Material Adverse Effect and
materiality qualifiers (including those dollar thresholds and other materiality
qualifiers incorporated in the definition of Business Contracts) contained in
such representations and warranties shall be disregarded).
(b) Performance of Agreement. Seller and its subsidiaries shall have in
all material respects performed all obligations and agreements, and complied
with all covenants contained in this Agreement to be performed or complied with
by Seller and/or its subsidiaries prior to or at the Closing.
(c) Certificate. Buyer shall have received a certificate of Seller,
dated as of the Closing Date, executed on behalf of Seller by any Vice
President, to the effect that the conditions specified in paragraphs (a) and (b)
above have been fulfilled, and, for purposes of this Agreement, by the delivery
of such certificate, Seller shall be deemed to have made a representation and
warranty to Buyer as to the matters set forth in such certificate.
(d) Consents; Third-Party Rights; Filings; Notices. Buyer shall have
received evidence reasonably satisfactory to it that the consents, approvals,
filings and required notices set forth in Schedule 5.2(d) hereto have been
obtained, made or given (and are in full force and effect).
(e) Resignations. The directors of the Subsidiaries identified by Buyer
prior to the Closing Date and, in the case of Bard Japan, the statutory
auditors, shall have tendered their resignations effective as of the Closing, in
writing to the applicable Subsidiary or, shall have otherwise been removed as of
the Closing Date, other than, in the case of Milu
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for directors which Idus Holdings S.A. has the right to designate and, in the
case of X-trode, for the director and statutory auditor which Enzo Borghi and
Graziana Pasi, collectively, have the right to designate.
(f) Required Items. Seller shall have made or caused to be made
delivery to Buyer of the items required by Section 2.2(a).
(g) Permits. Buyer or its affiliates, as applicable, shall have
obtained all Material Permits or shall have entered into arrangements reasonably
satisfactory to Buyer to enable the continued operation of the Business
substantially in compliance with all Laws.
(h) Financial Information. The net sales of the Business as reflected
on or derived from the audited combined statement of operations of the Business
for the year ended December 31, 1997 delivered to Buyer pursuant to Section 4.16
(the "1997 Statement of Operations") shall not be less than $205,607 (which
represents 95% of the net sales of the Business as reflected on the Special
Purpose Coronary Cath Lab 1997 Financial Review attached as Exhibit D hereto
(the "Financial Review"); the gross profit of the Business as reflected on or
derived from the 1997 Statement of Operations shall not be less than $107,925
(which represents 95% of the gross profits of the Business as reflected on the
Financial Review)); and the total direct commercial expenses of the Business as
reflected on or derived from the 1997 Statement of Operations shall not be more
than $85,886 (which represents 105% of the total direct commercial expenses as
reflected on the Financial Review). Total direct commercial expenses shall be
derived from the 1997 Statement of Operations on the same bases set forth in the
Financial Review.
5.3 Conditions Precedent to Obligation of Seller. The obligation of
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction
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or waiver by Seller at or prior to the Closing Date of each of the following
additional conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Buyer contained herein shall be true and correct in all material
respects (with such materiality determined in the context of the ability of
Buyer and its subsidiaries to consummate the transactions contemplated by the
Transaction Agreements) as of the date hereof and at, and as of, the Closing
Date, with the same force and effect as though made at and as of the Closing
Date, except for changes expressly permitted or contemplated by this Agreement
and except that, to the extent any representation or warranty is made as of a
specified date, it need be true only as of such date (it being understood that,
for purses of determining the truth and correctness of Buyer's representations
and warranties, all Material Adverse Effect and materiality qualifiers contained
in such representations and warranties shall be disregarded).
(b) Performance of Agreements. Buyer and its subsidiaries shall have in
all material respects performed all obligations and agreements, and complied
with all covenants contained in this Agreement to be performed or complied with
by Buyer and/or its subsidiaries prior to or at the Closing, including, without
limitation, Buyer's obligations under Section 2.3.
(c) Certificate. Seller shall have received a certificate of Buyer,
dated as of the Closing Date, executed on behalf of Buyer by any Vice President,
to the effect that the conditions specified in paragraphs (a) and (b) above have
been fulfilled, and, for purposes of this Agreement, by the delivery of such
certificate Buyer shall be deemed to have made a representation or warranty to
Seller as to the matters set forth in such certificate.
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(d) Required Items. Buyer shall have made or caused to be made delivery
to Seller of the items required by Section 2.3.
(e) Permits. Seller or its affiliates, as applicable, shall have
obtained all Material Non-Business Permits or shall have entered into
arrangements reasonably satisfactory to Seller to enable the continued operation
of such business or businesses to which the Material Non-Business Permits relate
in substantial compliance with all Laws.
ARTICLE VI
PROVISIONS AS TO TAX MATTERS
6.1 Tax Indemnification. (a) Seller's Indemnification Obligation.
Except as provided in subparagraph (b) and Section 6.3, Seller shall indemnify
and hold harmless Buyer and its subsidiaries (including the Subsidiaries) from
and against any and all Taxes or other amounts payable (but not yet paid as of
the Closing Date) for or in respect of each of the following:
(i) any and all Taxes of the Subsidiaries (or any predecessor)
with respect to taxable periods actually ending on or before the
Closing Date (including, but not limited to, any and all income Taxes
attributable to the Pre-Closing Straddle Period pursuant to Section
6.1(c) hereof, and not previously paid, but only to the extent such
Taxes, in the aggregate, exceed the accrual established for Taxes on
the Final Statement of Assets and Liabilities;
(ii) any and all Taxes of any member other than any of the
Subsidiaries of an affiliated, consolidated, combined or unitary group
or equivalent group for VAT purposes of which any Subsidiary (or any
predecessor) is or was a member prior to
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the Closing Date, for which any such Subsidiary may be jointly or
severally liable by reason of its inclusion in such group prior to the
Closing Date pursuant to Treasury Regulation Section 1.1502-6(a) or any
analogous or similar state, local or foreign law or regulation; for the
purpose of this clause (ii) the term "VAT" means value added taxes or
similar sales or turnover tax of any relevant jurisdiction; and
(iii) any Taxes arising out of a breach of the representations
and warranties contained in Section 3.1(i) hereof; provided, that any
claim with respect thereto under this clause (iii) is made within the
period of survivability set forth in Section 3.3.
(b) Buyer's Indemnification Obligation. Except as provided in
subparagraph (a) and Section 6.3, Buyer shall be responsible for, and shall
indemnify Seller and its subsidiaries, and with respect to clause (v) of this
Section 6.1(b), in trust for each and every controlling director (as such term
is defined in Section 629 of the Taxes Consolidation Act, 1997 of the Republic
of Ireland (the "Act")), against (i) any and all Taxes of the Subsidiaries
allocable to the Pre-Closing Straddle Period or any other taxable period or
portion thereof ending on or before the Closing Date, but only to the extent
such Taxes, in the aggregate, do not exceed the accrual established for Taxes on
the Final Statement of Assets and Liabilities, (ii) any and all Taxes of a
Subsidiary or otherwise relating to the Business allocable to the Post-Closing
Straddle Period or any other taxable period or portion thereof beginning after
the Closing Date, (iii) any and all Taxes imposed on Seller or any of its
subsidiaries (including any Subsidiary) which would not have been imposed but
for actions, decisions or elections undertaken or made by Buyer or any of its
subsidiaries (including a Subsidiary) after the Closing without Seller's written
consent, (iv) any interest or penalties that are due solely to the failure of
Buyer to timely file or cause to be filed any Tax
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Return pursuant to subparagraph (e)(i) below or for which Buyer is responsible
for filing pursuant to subparagraph (e) below, (v) any Taxes arising under the
Act, with respect to a change in residence after the Closing Date of any one or
more of Bard Ireland, Bard Galway and Bard Connaught (which are under Irish tax
law, resident in Ireland at the Closing Date) from Ireland to another
jurisdiction and (vi) any incremental tax borne by Seller or any of its
subsidiaries as a result of any election by Buyer under Section 338(g) of the
Code with respect to any or all of the Stock. If Buyer makes a timely request of
Seller, then Seller shall provide Buyer with an analysis of any incremental tax
that would be caused by an election under Section 338(g) of the Code in a timely
manner prior to Buyer making such election.
(c) Taxable Periods. Seller and Buyer shall, to the extent permitted by
applicable law, elect with the relevant Taxing Authority to close the taxable
period of the Subsidiaries as of the end of the Closing Date. In any case where
applicable law does not permit any Subsidiary to close its taxable period as of
the end of the Closing Date, then, except as provided in subparagraph (b) above,
Taxes attributable to the taxable period of such Subsidiary beginning before and
ending after the Closing Date shall be allocated between (i) the period up to
the end of the Closing Date ("Pre-Closing Straddle Period") and (ii) the period
subsequent to the effective time of the Closing ("Post-Closing Straddle
Period"). Such allocation shall be made by means of a closing of the books and
records of each Subsidiary as of the effective time of the Closing; provided,
that any items that are not reasonably susceptible to such allocation (i.e.,
certain exemptions, allowances and deductions) shall be apportioned on the basis
of elapsed days. "Taxing Authority" shall mean any taxing or other authority in
any relevant jurisdiction competent to impose any liability for Taxes.
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(d) Tax Claims. (i) Promptly after receipt by Buyer or any of its
subsidiaries of written notice of the assertion or commencement of any claim,
audit, examination, or other proposed change or adjustment by any Taxing
Authority concerning any Taxes covered by Section 6.1(a) (each a "Tax Claim"),
Buyer shall notify Seller. Such notice shall contain factual information (to the
extent known by Buyer) describing the asserted Tax Claim in reasonable detail
and shall include copies of any notice or other document received from any
Taxing Authority in respect of any such asserted Tax Claim. The failure of Buyer
to give Seller prompt notice as provided herein shall not relieve Seller of any
of its obligations under Section 6.1 except to the extent such failure has a
material adverse effect on Seller's ability to defend the Tax Claim.
(ii) Seller shall have the sole right to represent any
Subsidiary's interests in any Tax audit or administrative or court or
other proceeding or dealing relating to any Taxes covered by Section
6.1(a) and to employ counsel of its choice. Seller shall promptly
notify Buyer if it decides not to control the defense or settlement of
any such Tax audit or administrative or court proceeding and Buyer
thereupon shall be permitted to defend and settle such Tax audit or
proceeding at Seller's reasonable expense. To the extent any negotiated
settlement would have a material Tax effect on a post Closing Date year
or portion thereof, Seller shall not agree to such settlement without
the consent of Buyer, which consent shall not be unreasonably withheld;
provided, however, that if Buyer shall refuse to consent to any such
settlement that Seller proposed to accept, then (A) the liability of
Seller with respect to the subject matter of such settlement shall be
limited to the amount that such liability would have
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been if such settlement had been accepted and (B) Buyer shall have the
right thereafter to control the defense and settlement of such Tax
audit or proceeding (it being understood that Buyer shall be
responsible for all expenses incurred thereafter in connection with the
contest of such Tax audit or proceeding except to the extent that the
final settlement imposes less liability on Seller than such Settlement
would have imposed).
(iii) With respect to any taxable period of any Subsidiary
beginning before and ending after the Closing Date, Buyer and Seller
shall jointly control the defense and settlement of any Tax audit or
administrative or court proceeding, and each party shall cooperate with
the other party at its own expense and there shall be no settlement or
closing or other agreement with respect thereto without the consent of
the other party, which consent will not be unreasonably withheld;
provided, however, that if either party shall refuse to consent to any
settlement, closing or other agreement that the other party proposed to
accept (a "Proposed Settlement"), then (A) the liability with respect
to the subject matter of the Proposed Settlement of the party who
proposed to accept the Proposed Settlement shall be limited to the
amount that such liability would have been if the Proposed Settlement
had been accepted and (B) the other party shall have the right
thereafter to control the defense and settlement of such Tax audit or
proceeding (it being understood that the other party shall be
responsible for all expenses incurred thereafter in connection with the
contest of such Tax audit or proceeding except to the extent that the
final settlement imposes less liability on the party who proposed to
accept the Proposed Settlement than the Proposed Settlement would have
imposed).
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(e) Tax Returns. (i) Buyer shall properly prepare or cause to be
properly prepared, and shall timely file or cause to be timely filed, all income
Tax Returns which include any Subsidiary or their respective assets or
operations for all taxable periods of the Subsidiaries ending on or before the
Closing Date and for which the due date for filing is after the Closing Date
(which income Tax Returns shall include the Subsidiaries and the reportable
items from the assets or operations of the Subsidiaries through and including
the Closing Date). Such income Tax Returns (insofar as they relate to any
Subsidiary) shall be prepared in a manner consistent with past practices, and
Buyer shall pay or cause to be paid all income Taxes shown as due on such Tax
Returns after application of all estimated tax payments previously made with
respect thereto. Such income Tax Returns (or the portions thereof that relate to
any Subsidiary) shall be provided to Seller for Seller's review and comment 30
days prior to filing, and Seller shall be entitled to suggest to Buyer any
reasonable changes to such income Tax Returns. Seller and Buyer agree to consult
and resolve in good faith any issue arising as a result of the review of such
income Tax Returns and mutually to consent to the filing as promptly as possible
of such income Tax Returns. In the event the parties are unable to resolve any
dispute within fifteen days following the delivery of such income Tax Returns,
the parties shall jointly request the Auditor to resolve any issue at least ten
days before the due date of any such income Tax Return, in order that such Tax
Return may be timely filed. In deciding the resolution of the dispute, the
Auditor shall be instructed to give deference to the position advocated by
Seller, provided such position is in accordance with applicable standards
relating to the practice of certified public accountants generally and is not
inconsistent
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with Seller's past practices. If the Auditor is unable to make a determination
with respect to any disputed issue within five business days prior to the due
date (including extensions) for the filing of the income Tax Return in question,
then such income Tax Return shall be filed in the form advocated by Seller prior
to such due date without such determination having been made. Notwithstanding
the filing of such Tax Return, the Auditor shall make a determination with
respect to any disputed issue, and an amended return shall be filed if necessary
to reflect the Auditor's determination. The fees and expenses of the Auditor
shall be allocated between Buyer and Seller proportionately in accordance with
the formula set forth in Section 1.3(c). Buyer shall, subsequent to the Closing
Date, provide written notice to Seller of the filing of any amended income Tax
Return or claim for refund with respect to any taxable period ending on or prior
to the Closing Date; and if any such filing could reasonably be expected to have
a material adverse effect on the condition of Seller, or its respective
subsidiaries, for any taxable period ending after the Closing Date, Buyer shall
not make such filing without the consent of Seller, which consent will not be
unreasonably withheld. Nothing in this Section 6.1(e)(i) shall excuse Seller
from its indemnification obligations pursuant to Section 6.1(a) hereof if the
amount of income Taxes as ultimately determined (on audit or otherwise), for the
periods covered by such Tax Returns exceeds the amount determined under this
Section 6.1(e)(i).
(ii) Subject to clause (iii) below, Buyer shall be responsible
for preparing and filing all other Tax Returns required to be filed
after the Closing Date by or on behalf of the Subsidiaries, or with
respect to their respective assets and operations.
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(iii) With respect to any income Tax Return required to be
filed by Buyer for a taxable period of any Subsidiary beginning before
the Closing Date and ending after the Closing Date, Buyer shall
deliver, at least 30 days prior to the due date for filing such Tax
Return (including extensions), to Seller a statement setting forth the
amount of Tax allocated to the Pre-Closing Straddle Period pursuant to
Section 6.1(c) (the "Tax Statement") and copies of such income Tax
Returns, and, without prejudice to the provisions of this Section 6.1,
Buyer shall cause the Subsidiaries to pay all income Taxes shown as due
on such income Tax Returns. Seller shall have the right to review such
income Tax Returns and the Tax Statement prior to the filing of such
income Tax Returns and to suggest to Buyer any reasonable changes to
such income Tax Returns. Seller and Buyer agree to consult and resolve
in good faith any issue arising as a result of the review of such
income Tax Returns and the Tax Statement and mutually to consent to the
filing as promptly as possible of such income Tax Returns. In the event
the parties are unable to resolve any dispute within fifteen days
following the delivery of such income Tax Returns and the Tax
Statement, the parties shall jointly request the Auditor to resolve any
issue in dispute as promptly as possible. If the Auditor is unable to
make a determination with respect to any disputed issue within five
business days prior to the due date (including extensions) for the
filing of the income Tax Return in question, then Buyer may file such
income Tax Return on the due date (including extensions) therefor
without such determination having been made and without Seller's
consent. Notwithstanding the filing of such income Tax Return, the
Auditor shall make a determination with respect to any disputed issue,
and the amount of income Taxes that are allocated to the Pre-Closing
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Straddle Period pursuant to Section 6.1(c) shall be as determined by
the Auditor. In addition, an amended return shall be filed if necessary
to reflect the Auditor's determination. The fees and expenses of the
Auditor shall be allocated between Buyer and Seller in accordance with
the formula set forth in Section 1.3(c). Nothing in this Section
6.1(e)(iii) shall excuse Seller from its indemnification obligations
pursuant to Section 6.1(a) hereof if the amount of income Taxes as
ultimately determined (on audit or otherwise), for the periods covered
by such income Tax Returns and which are allocable to the Pre-Closing
Straddle Period pursuant to Section 6.1(c), exceeds the amount
determined under this Section 6.1(e)(iii); provided, that Seller's
obligation to make any payments with respect to income Taxes governed
by this clause (iii) shall be solely governed by Section 6.1(a)(i).
(iv) The review and dispute resolution procedures described in
subparagraph (e)(iii) above shall also be followed with respect to any
Tax Return pertaining to other Taxes required to be prepared and filed
by Buyer after the Closing Date and which show other Taxes due relating
to the Pre-Closing Straddle Period or any other taxable period ending
on or before the Closing Date; provided, however, Seller's obligation
to make any payments with respect to such other Taxes shall be solely
governed by Section 6.1(a)(i).
(v) Seller and Buyer shall cooperate fully with each other and
make available to each other in a timely fashion such Tax data and
other information as may be reasonably required by Seller or Buyer for
the preparation and timely filing of any Tax Returns required to be
prepared and filed by Seller or Buyer hereunder, or in
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connection with the preparation or filing of any election, claim for
refund, consent or certification.
(vi) Seller hereby acknowledges that Buyer may, in its
discretion, make an election under Section 338(g) of the Code with
respect to any or all of the Stock.
(f) Access to Tax Data. Seller and Buyer shall provide to each other,
and Buyer shall cause each of the Subsidiaries to provide access to Seller at
any reasonable time upon reasonable prior written notice and from time to time,
at the business location at which the books and records are maintained, after
the Closing Date, to such Tax data of each of the Subsidiaries as Seller or
Buyer as the case may be, may from time to time reasonably request and will
furnish, and request the independent accountants and legal counsel of Seller,
Buyer or any Subsidiary to furnish to Seller or Buyer, as the case may be, such
additional Tax and other information and documents in the possession of such
persons as Seller or Buyer may from time to time reasonably request.
(g) Limitations on Claims for Indemnity. Any claim for indemnity
hereunder may be made at any time prior to 60 days after the expiration of the
applicable Tax statute of limitations with respect to the relevant taxable
period (including all periods of extension, whether automatic or permissive).
(h) Indemnification Procedures. Any party seeking indemnification under
Section 6.1 shall give the indemnifying party written notice of claim for
indemnification or payment, which notice shall include a calculation of the
amount of the requested indemnity or other payment and shall furnish to the
indemnifying party copies of or provide reasonable access to all books, records
and other information reasonably requested by such party to the extent necessary
to substantiate such claim and verify the amount thereof. If reasonably
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necessary in order to make or substantiate a claim (or to determine if a claim
should be made), the indemnifying party shall be permitted access to the
indemnified party's books, records and other information in connection
therewith. The indemnifying party shall deliver to the indemnified party, within
30 days after receiving both the foregoing notice and copies of or reasonable
access to all books, records and other information reasonably requested by it, a
detailed statement describing its objections (if any) thereto. The parties shall
use reasonable efforts to resolve any such objections, but if they do not obtain
a final resolution within 30 days (or any longer period mutually agreed to by
the parties) after the indemnified party has received the statement of
objections, the Auditor shall resolve any remaining objections. The fees and
expenses of the Auditor shall be allocated between Buyer and Seller
proportionately in accordance with the formula set forth in Section 1.3(c).
(i) Prohibition on Certain Transactions After the Closing Date. Buyer
agrees to cause each of the Subsidiaries to refrain from engaging in any
transaction following the Closing that is outside of the ordinary course of
business if such transaction would have an adverse effect on the United States
federal income Tax liability of the Seller's consolidated group or any other Tax
liability for which Seller is responsible pursuant to Section 6.1(a).
(j) Certain Taxes Deemed Paid. For all purposes of this Agreement, each
Subsidiary shall be considered to have paid prior to the Closing Date any Taxes
covered by Section 6.1(a) to the extent of any estimated Tax payments made by
such company or on behalf of such company prior to the Closing Date with respect
to such Taxes.
6.2 Tax Related Adjustments. (a) Indemnity Payments as Adjustment to
Purchase Price. Seller and Buyer agree that, to the extent permitted by law, any
indemnity payment made under this Agreement (including, without limitation,
under this Article VI or
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85
under Article VIII hereof) will be treated by the parties as an adjustment to
the Purchase Price. If, notwithstanding such treatment by the parties, any
indemnity payment made under this Agreement (including, without limitation,
under this Article VI or under Article VIII hereof) is determined to be taxable
to the indemnified party by any Taxing Authority, then the indemnifying party
shall indemnify the indemnified party for any Taxes payable by it by reason of
the receipt of such indemnity payment (including any payments under this Section
6.2), determined at an assumed marginal tax rate equal to the highest marginal
tax rate then in effect for corporate taxpayers in the relevant jurisdiction.
(b) Adjustment to Indemnity Payment. Notwithstanding anything to the
contrary in Article VIII hereof, any indemnity payment otherwise due and payable
under this Agreement (including, without limitation, under this Article VI or
under Article VIII hereof) shall be decreased (but not below zero) to the extent
of any net reduction in Taxes payable by the indemnified party or any of its
subsidiaries as a result of its receipt of any such indemnity payment or as a
result of or in connection with the loss giving rise to the claim for
indemnification, determined at an assumed marginal tax rate equal to the highest
marginal tax rate then in effect for corporate taxpayers in the relevant
jurisdiction.
(c) Refunds and Credits Payable to Seller. Except as provided in
Section 6.2(d), Buyer shall pay to Seller any refund or credit of any Taxes
covered by Section 6.1(a) (including, for this purpose, the amount by which any
Taxes included in the accrual established therefor on the Final Statement of
Assets and Liabilities are refunded or subsequently determined to not be
payable). In addition, Buyer shall pay to Seller the amount of any actual
reduction in Taxes realized by Buyer or any of its subsidiaries (including any
Subsidiary) with respect to any period (or portion thereof) beginning after the
Closing Date
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that relates to an audit adjustment or Taxes imposed on or with respect to
Seller or its subsidiaries (including any Subsidiary) with respect to any
taxable period (or portion thereof) ending on or prior to the Closing Date.
Buyer shall pay to Seller such refund or credit plus any interest received
thereon (reduced by any actual Tax increase or actual Tax detriment to Buyer or
any Subsidiary) or the amount of any such reduction in Taxes promptly upon
receipt thereof by the recipient thereof. Buyer shall, if Seller requests, cause
the relevant entity to file for and obtain any refunds or equivalent amounts to
which Seller is entitled under this Section 6.2(c); provided, however, that
Buyer must consent to any such refund claim, which consent may not be
unreasonably withheld, and that any such refund claim shall be at the sole
expense of Seller.
(d) Carryback of any Tax Attribute. In the event that any Subsidiary
realizes any Tax attribute after the Closing Date that must be carried back to a
taxable period ending on or prior to the Closing Date, such carryback shall be
made only with Seller's written consent; provided, that Seller shall consent to
such carryback, shall cooperate in the filing of any required returns or claims
for refund and shall pay Buyer any Tax refund received or the amount of
reduction in Taxes so obtained (net of any tax cost incurred) if Seller, in its
sole discretion, determines that permitting such carryback or filing such
returns or claims will not adversely affect Seller or its subsidiaries.
6.3 Transfer Taxes. Buyer and Seller shall share equally all transfer
taxes or fees, sales taxes, value added taxes, recordation or similar taxes or
fees, deed, stamp or other taxes, duties, recording charges, fees, or other
similar cost or expense of any kind required in connection with the effectuation
of the transactions and documentation contemplated by this Agreement (whether
such tax, duties or fee, cost or expense is imposed
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on Buyer, Seller or any subsidiary of Buyer or Seller). The parties shall
cooperate in the preparation and review (including, without limitation, the
resolution of any dispute in the same manner as provided for in Section 6.1(e)
of this Agreement) of all Tax Returns required to be filed in respect of any
Transfer Taxes to be paid pursuant to this Section 6.3.
6.4 Allocation of Purchase Price. The parties will allocate the
Purchase Price prior to Closing based upon a mutually satisfactory valuation
analysis to be jointly prepared by the parties prior to the Closing. The parties
acknowledge that, based upon the limited analysis performed prior to the date of
this Agreement, the parties have no reason to believe that the allocation of 50%
of the Purchase Price to the stock of Bard Galway, Bard Ireland and Bard
Connaught would be unreasonable. Notwithstanding the foregoing, the allocation
of the Purchase Price among assets sold by Seller or a U.S. subsidiary of
Seller, shall be prepared in accordance with the rules under Section 1060 of the
Code, and the Treasury Regulations promulgated thereunder); provided, however,
in the event of any adjustment to the Purchase Price pursuant to this Agreement
(i) Seller shall promptly prepare and furnish to Buyer an amendment to such
allocation, (ii) Buyer may promptly, but in no event later than 10 days after
receipt of such amendment, comment on the amendment and (iii) Seller shall
incorporate any comments of Buyer timely received by Seller into the amendment
which do not adversely affect Seller's liability for Taxes or Tax position in
any material respect. Seller and Buyer agree to act in accordance with the
computations and allocations resulting from the procedures set forth in this
Section 6.4 (including, without limitation, any modifications pursuant to the
proviso immediately preceding this sentence) in any relevant Tax Returns or
filings, including, without limitation, any forms or reports required to be
filed pursuant to Section 1060 of the Code, the Treasury Regulations
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promulgated thereunder or any provisions of local, state and foreign law ("1060
Forms"), and to cooperate in the preparation of any 1060 Forms and to file such
1060 Forms in the manner required by applicable law.
6.5 Tax Matters Governed by Article VI. It is the intention of the
parties that Buyer's rights against Seller and Seller's rights against Buyer
with respect to Taxes shall be governed by this Article VI and not Article VIII
except as specifically provided in Section 8.3.
ARTICLE VII
LABOR MATTERS, EMPLOYEE RELATIONS AND BENEFITS
7.1 Transferred Employees. On the Closing Date, Buyer will offer
employment to each of the employees of the Business listed in Schedule 7.1 who
is not an employee of a Subsidiary and remains an employee of the Business as of
the Closing Date (the "Scheduled Employees") at the same job in all material
respects, at the same location and at the same salary as such employee had prior
to the Closing Date, and such employees who accept such offer, together with the
employees of each Subsidiary as of the Closing Date, shall hereinafter be
referred to collectively as "Transferred Employees." With respect to any
Scheduled Employee who declines Buyer's offer of employment on the Closing Date,
Seller shall retain liability for any severance payments or severance benefits
to which such Scheduled Employee is entitled under Seller's employee benefit
plans, programs and practices, whether or not a Benefit Plan, so long as the
offer declined by such employee was for the same job in all material respects,
at the same location and for the same salary as such Employee had prior to the
Closing Date.
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7.2 Benefits for Transferred Employees. Except as hereinafter provided,
Buyer shall provide Transferred Employees with such compensation and employee
benefits as it provides to similarly situated employees and, except as may be
required by applicable law, shall have no obligation to maintain the
compensation and employee benefits, either as to amount or type, that were
provided to such Transferred Employees prior to the Closing Date. For purposes
of eligibility and vesting under employee pension and welfare benefit plans of
Buyer, Transferred Employees shall be credited with their service with the
Business and with any Subsidiary ("Transferred Service"). Transferred Service
shall also apply with respect to such other aspects of employment compensation
as vacation entitlement and seniority. Buyer shall pay or contribute as soon as
practicable (in light of, among other things, ERISA and tax matters) following
the Closing Date the sum of $1.5 million to be allocated directly to or on
behalf of those Transferred Employees who, as of the Closing, were participants
in the Employees' Retirement Plan of C.R. Bard, Inc. (the "Bard U.S. Pension
Plan"). Buyer and Seller shall negotiate in good faith an arrangement pursuant
to which such contribution will be allocated among such Transferred Employees.
From the Closing Date through the end of 1998, Buyer shall continue to provide
the same level of medical and other health plan coverage for Transferred
Employees in the United States at a cost for such employees that requires a
level of employee contributions no greater than that required for such coverage
immediately prior to the Closing Date. After the date hereof and prior to the
Closing Date, Seller shall give Buyer reasonable access to the Scheduled
Employees and employees of the Subsidiaries and Buyer shall use such access to
determine the persons to whom stock options of Buyer will be granted and the
size of such grants in order to make such grants, if any, as
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soon as practicable after the Closing Date. Buyer shall not be under any
obligation to make any such grants.
7.3 Severance Policy and Other Agreements. (a) Minimum Severance for
Certain Transferred Employees. Any Transferred Employee who, as of the Closing
Date, was covered by the C.R. Bard, Inc. Severance Plan (the "Seller Severance
Plan") and whose employment with Buyer is terminated by Buyer or any subsidiary
or affiliate of Buyer for other than cause (as such term is defined in the
Seller Severance Plan) during the one-year period following the Closing Date
shall be deemed to have a "Covered Termination" (as defined in the Seller
Severance Plan) and shall be entitled to receive a severance benefit from Buyer
no less than the amount to which such employee would be entitled under the terms
and conditions of the Seller Severance Plan as in effect on the date of this
Agreement in lieu of any other severance or similar benefit.
(b) Severance/Employment Agreements of Transferred Employees. Buyer
shall honor or cause to be honored all severance agreements and employment
agreements with individual Transferred Employees as in effect on the date of
this Agreement; provided, that Buyer shall not be obligated to honor or cause to
be honored any such agreement except to the extent such agreement was disclosed
in the Schedules or a copy thereof was provided or otherwise made available to
Buyer prior to the date hereof.
7.4 1998 Bonus. As soon as practicable (but in no event more than 30
days after) the Closing Date, Buyer will cause bonuses to be paid under any
applicable bonus plan of Seller or any of its subsidiaries, as in effect on the
date hereof, to the Transferred Employee participating thereunder in an amount
equal to the pro rata portion of the target bonus to which such employee would
have been entitled, based on the portion of the 1998
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fiscal year completed prior to the Closing Date, assuming the target bonus had
been achieved in respect of such fiscal year; provided, that Seller shall
reimburse Buyer any amount by which such bonuses, in the aggregate, exceed the
aggregate amount for such bonuses reflected as liabilities on the Final Closing
Statement of Assets and Liabilities.
7.5 Credit for Deductibles. Buyer will, or will cause the Subsidiaries
to, following the Closing Date, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to Transferred Employees under any welfare plan
that such employees may be eligible to participate in after the Closing Date and
(ii) provide each Transferred Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Closing Date.
7.6 Seller Plans. (a) Defined Contribution Plans. (i) As of the Closing
Date, Seller shall cause the active participation by Transferred Employees in
the Employees' Retirement Savings Plan of C. R. Bard, Inc. (the "Seller's
Savings Plan") to cease. Seller shall (A) as of the Closing Date cause the
trustees of the Seller's Savings Plan to identify, in accordance with the
applicable spinoff provisions set forth under Section 414(l) of the Code, the
assets of the Seller's Savings Plan representing the full account balances of
Transferred Employees for all periods of participation through the Closing Date
(including, as applicable, all employee contributions, employer contributions
and all earnings attributable thereto); and (B) as soon as practicable after the
Closing Date, make all required filings and submissions to appropriate
governmental authorities and all required amendments to the Seller's Savings
Plan and related trust agreements necessary to provide for the transfer of
assets described in this
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Section 7.6(a). The Seller's Savings Plan shall be amended to provide that (A)
there shall be no contributions thereto with respect to the Transferred
Employees for periods after the Closing Date and (B) all Transferred Employee
account balances shall be fully vested. Buyer shall (A) give Seller written
notice of the name of the trustee of the defined contribution plan designated by
Buyer to which the assets and liabilities for benefits of the Seller's Savings
Plan are to be transferred (the "Buyer's Savings Plan"), accompanied by a copy
of the most recent favorable IRS determination letter for such plan received by
Buyer, as promptly as possible after the Closing Date, but in any event prior to
the date on which such transfer is to occur and (B) as soon as practicable after
the Closing Date, make all required filings and submissions to appropriate
governmental authorities. As soon as practicable after the Savings Transfer
Date, Seller shall cause the trustees of the Seller's Savings Plan to transfer
to the trustee of the Buyer's Savings Plan the following amount (the "Savings
Total Transfer Amount"): (A) the full account balances (in cash and notes for
any loans to Transferred Employees) of all Transferred Employees, whose account
balances shall have been credited with appropriate earnings and contributions,
if any, attributable to the period ending at the close of business on the
Closing Date, plus (B) earnings on such account balances attributable to the
period from the Closing Date to the Savings Transfer Date reduced by (C) any
benefit or withdrawal payments in respect of Transferred Employees prior to the
Savings Transfer Date. Seller shall certify that all participant loans
transferred from Seller's Savings Plan are current as to payments of principal
and interest except as disclosed on a schedule delivered to Buyer at the time of
such transfer. The "Savings Transfer Date" shall be as soon as practicable after
the foregoing requirements have been met. In consideration of the transfer of
assets hereunder, Buyer shall, as of the Savings Transfer Date, cause the
Buyer's Savings
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Plan to assume the liabilities for benefits payable to plan participants and
beneficiaries in respect of participants for whom assets (including notes) are
transferred (it being understood that Buyer's Savings Plan shall not assume any
liability in respect of fiduciary duties under Seller's Savings Plan). With
respect to any Benefit Plan in any jurisdiction other than the United States
that is a defined contribution-type plan from which assets are to be transferred
to the Buyer, the principles established in this Section 7.6(a) shall be
followed, subject to applicable law.
(b) Defined Benefit Plan. As of the Closing Date, Transferred Employees
shall cease to accrue service credit or benefits under the Employees' Retirement
Plan of C. R. Bard, Inc. (the "Seller's Defined Benefit Plan"). Transferred
Employees' rights to benefits under the Seller's Defined Benefit Plan shall be
determined in accordance with the terms of such Defined Benefit Plan, and no
assets or liabilities will be transferred therefrom. Seller shall retain all
liabilities with respect to Seller's Defined Benefit Plan.
(c) Other Plans. Except as otherwise provided herein, from and after
the Closing Date, Buyer shall have no obligation to assume or to cause the
Subsidiaries to continue or assume any liabilities, including, without
limitation, any employee benefits or compensation liabilities, relating to the
Transferred Employees, including, but not limited to, liabilities under any
Benefit Plan, employment, severance or other similar contract, arrangement or
policy or any plan or arrangement providing for insurance coverage (including,
without limitation, any self-insured arrangements), workers' compensation,
short-term disability, long-term disability, supplemental unemployment benefits,
vacation benefits, retirement benefits, retiree welfare benefits, salary,
deferred compensation, profit-sharing, bonuses or other forms of incentive
compensation or post-retirement insurance, compensation
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or benefits (regardless of whether such benefits are provided pursuant to a
welfare plan). Without limiting the generality of the foregoing, Seller shall
retain (i) all liabilities in connection with the Seller's Defined Benefit Plan,
(ii) all liabilities under the Seller's Severance Plan except as specifically
set forth in Section 7.3(a) and (iii) all liabilities under the Seller's Savings
Plan, other than benefit liabilities with respect to participants who are
Transferred Employees (but only on and after the Savings Transfer Date).
7.7 Employee Notification Requirements. (a) Prohibit Actions
Implicating WARN or Analogous Laws. Prior to the Closing Date, Seller shall not,
without Buyer's consent, (i) effect any "plant closing" or "mass layoff", as
such terms are defined in WARN, or any partial closing to the extent a partial
closing would result in Liability under WARN or (ii) effect any dismissals or
"collective dismissals" or other analogous program of employment terminations to
the extent such actions would implicate foreign laws analogous to WARN,
(including, without limitation, any regulations, statutes, rules or orders
implementing such directives or acts (collectively, the "Directives")).
Similarly, neither Buyer nor any Subsidiary shall, without the consent of
Seller, (i) at any time prior to 90 days after the Closing Date, effectuate a
"plant closing", or "mass layoff" as such terms are defined in WARN or (ii)
effect any Directive.
(b) WARN and Other Notifications. Seller is not aware of any plans on
the part of the Buyer to carry out within 60 days of the Closing a plant closing
or mass layoff within the meaning of WARN with respect to the Business. The
Buyer is and shall be responsible for giving any notice to Transferred Employees
or governmental entities required under WARN or any analogous state, local or
foreign law in connection with or as result of the transactions contemplated by
this Agreement. Buyer agrees to cooperate with Seller to
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enable Seller to comply with any notification and consultation requirements
arising from the sale of the Business as may be required by labor laws and
agreements governing non-United States employees of the Seller and/or its
subsidiaries (including, without limitation, any notification to and
consultation obligations with the European Communications Network).
(c) Terminations in Compliance with Foreign Laws. Buyer agrees to take
such action as is necessary to insure that any employment terminations that may
be effected on or after the Closing in connection with the transactions
contemplated by this Agreement comply with the labor laws and agreements
covering Non-United States Employees, including without limitation, the
Directives.
7.8 No Third Party Beneficiaries. Nothing contained in this Article VII
shall confer upon any of the current or former employees of Seller, Buyer or any
of their subsidiaries, any rights or remedies of any kind whatsoever under or by
reason of this Agreement (including, without limitation, any right to employment
or continued employment for a specific period, or any right to a particular
benefit).
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. (a) Buyer's Indemnification Obligations. On and
after the Closing Date, Buyer hereby agrees to indemnify, defend and hold
harmless Seller and each of its directors, officers, employees, subsidiaries and
other affiliates (other than the Subsidiaries) and representatives
(collectively, the "Seller Indemnified Parties", which, for purposes of Section
8.3, shall be deemed to refer to Seller and its subsidiaries as indemnified
parties under Article VI hereof) from and against, and will pay to the Seller
Indemnified Parties the amount of, any and all claims, losses, damages, costs,
expenses, obligations,
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liabilities, charges, actions, suits, proceedings, deficiencies, interest,
penalties and fines (including, without limitation, costs of collection,
attorney's fees and other costs of defense, removal costs, remediation costs,
closure costs and expenses of investigation and ongoing monitoring) or
diminution in value, whether or not involving a third party claim (collectively,
"Damages") imposed on, sustained, incurred or suffered by or asserted against
them in respect of, but only in respect of:
(i) any breach of Buyer's representations and warranties in
this Agreement, including, without limitation, representations and
warranties of Buyer contained in any certificate delivered by Buyer at
the Closing pursuant to the terms of Section 5.3(c) hereof; provided,
that subject to Section 8.5 hereof, any indemnification claim under
this Section 8.1(a)(i) must be made within the period of survivability
set forth in Section 3.3;
(ii) Buyer's failure, or the failure of any subsidiary of
Buyer, to perform or otherwise fulfill any of its agreements,
covenants, obligations or undertakings hereunder or under any of the
Ancillary Agreements or under any document delivered by Buyer or any of
its Designees pursuant to the terms of Section 2.3;
(iii) the Assumed Liabilities;
(iv) any property damage, personal injury, death, product
recall, product return or other similar Liability arising out of
products that are manufactured or distributed by Buyer or any of its
subsidiaries or other affiliates subsequent to the Closing Date (other
than to the extent arising out of or resulting from the manufacture,
shipment, storage, handling or labelling (or any acts or omissions in
respect thereof) of such products by Seller or any of its affiliates or
any of their direct or indirect
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distributors or agents prior to the Closing Date), whether in respect
of any express or implied representation or warranty or otherwise; and
(v) statutory liability of Seller or any of its subsidiaries
arising from the termination or modification by Buyer or its
subsidiaries after the Closing of product distribution arrangements
under distribution contracts that are Assets or contracts of
Subsidiaries.
(b) Seller's Indemnification Obligations. On and after the Closing
Date, Seller hereby agrees to indemnify, defend and hold harmless Buyer and each
of its directors, officers, employees, subsidiaries and other affiliates
(including the Subsidiaries) and representatives (collectively, the "Buyer
Indemnified Parties", which, for purposes of Section 8.3, shall be deemed to
refer to Buyer and its subsidiaries (including the Subsidiaries) as indemnified
parties under Article VI hereof), from and against, and will pay to the Buyer
Indemnified Parties the amount of, any and all Damages imposed on, sustained,
incurred or suffered by or asserted against them in respect of, but only in
respect of:
(i) any breach of Seller's representations and warranties
(except for a breach of the representations and warranties contained in
Section 3.1(i), it being the intention of the parties that Buyer's
rights against Seller with respect to Taxes shall be governed by
Article VI and not this Article VIII except as specifically provided in
Section 8.3) in this Agreement (it being understood that, for purposes
of determining the truth and correctness of such representations and
warranties, all Material Adverse Effect and materiality qualifiers
(including the dollar thresholds and other materiality qualifiers
incorporated in the definition of Business Contract) contained in such
representations and warranties shall be disregarded), including,
without limitation,
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representations and warranties of Seller contained in any certificate
delivered by Seller at the Closing pursuant to the terms of Section
5.2(c) hereof (but disregarding any materiality qualification in any
such certificate); provided, that subject to Section 8.5, any
indemnification claim under this Section 8.1(b)(i) must be made within
the period of survivability set forth in Section 3.3;
(ii) Seller's failure, or the failure of any subsidiary of
Seller, to perform or otherwise fulfill any of its agreements,
covenants, obligations or undertakings hereunder or under any of the
Ancillary Agreements or under any document delivered by Seller or any
of its subsidiaries pursuant to the terms of Section 2.2;
(iii) all Liabilities of Seller and its subsidiaries (other
than the Subsidiaries) other than the Assumed Liabilities;
(iv) any property damage, personal injury, death, product
recall, product return or other similar Liability arising out of
products manufactured or distributed prior to the Closing Date (other
than to the extent arising out of or resulting from the shipment,
storage, handling or labelling (or any acts or omissions in respect
thereof) of such products by Buyer, any of its affiliates or any of
their direct or indirect distributors or agents after the Closing
Date), whether in respect of any express or implied representation or
warranty or otherwise; provided, that (without limiting any other
Damages that may be recovered under this Section 8.1(b)(iv)), the
Damages that can be recovered by Buyer from Seller under this Section
8.1(b)(iv) as a result of the return of such products of the Business
after the Closing for credit or replacement shall be limited to the
lesser of (a) replacement cost and (b) $225,000;
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(v) any Environmental Laws in respect of any condition
existing on the Closing Date that constitutes a violation of any
Environmental Law or that would require under Environmental Laws any
investigation, cleanup, remediation or removal actions with respect to
the presence of Hazardous Materials; and
(vi) the Liabilities assumed by Seller or its Designees
pursuant to Section 4.18.
(c) Indemnified Liabilities. All such Damages described in the
foregoing paragraphs (a) and (b) are collectively referred to as "Indemnified
Liabilities."
(d) Environmental Matters. With respect to any Indemnified Liabilities
arising under Section 8.1(b)(i) out of a breach of the representation set forth
in Section 3.1(s) hereof or Section 8.1(b)(v):
(i) Buyer shall, and shall cause any applicable Subsidiary to,
cooperate with any reasonable request by Seller to enable Seller to
perform its obligations under this Article VIII with respect to such
Indemnified Liabilities;
(ii) Buyer shall promptly after it has knowledge thereof
notify Seller of the existence of any Indemnified Liabilities, but
failure to so notify Seller promptly shall not relieve Seller of any of
its obligations hereunder in the absence of actual prejudice and then
only to the extent such actual prejudice is caused by such failure to
so notify Seller; and
(iii) notwithstanding any other provision of this Agreement to
the contrary, Damages relating to any environmental investigation,
monitoring or remediation (collectively, "Remedial Actions") that would
otherwise constitute Indemnified Liabilities shall be subject to
indemnification only to the extent that: (i) the Remedial
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Action is required by a governmental entity pursuant to Environmental
Laws and (ii) the Remedial Action is performed in a reasonably
cost-effective manner considering the totality of the circumstances.
8.2 Procedure. If any of the persons to be indemnified under this
Article VIII has suffered or incurred any Damages with respect to which
indemnification is to be sought hereunder, the indemnified party shall so notify
the party from whom indemnification is sought promptly in writing describing
such Damages, the amount or estimated amount thereof, if known or reasonably
capable of estimation, and the method of computation of such Damages. If a claim
or demand by a third party is made against an indemnified party or any action at
law or suit in equity is instituted against an indemnified party by a third
party (each claim, demand, action or suit by a third party, a "Third Party
Claim"), and if an indemnified party intends to seek indemnity with respect
thereto under this Article VIII, such indemnified party shall promptly notify
the indemnifying party in writing of such Third Party Claim setting forth such
Third Party Claim in reasonable detail and tender to the indemnifying party the
defense of such Third Party Claim. The failure of the indemnified party to give
the indemnifying party prompt notice, to provide notice in the form required or
tender the defense of a Third Party Claim as provided herein shall not relieve
the indemnifying party of any of its obligations under this Article VIII, except
to the extent that the indemnifying party is materially prejudiced by such
failure. For 30 days after receipt of such notice the indemnifying party shall
have the right but not the obligation to undertake the conduct and control,
through counsel of its own choosing and at its own expense, of the settlement or
defense of any Third Party Claim, and the indemnified party shall cooperate with
the indemnifying party in connection therewith; provided, that if the
indemnifying party elects to
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undertake the conduct and control of such settlement or defense, then the
indemnified party may participate in such settlement or defense through counsel
chosen by such indemnified party provided that the fees and expenses of such
counsel shall be borne by such indemnified party; provided, further, that
pending the indemnifying party's decision whether to exercise its right to
undertake the conduct and control of the settlement or defense of any Third
Party Claim, the indemnified party shall undertake, conduct and control the
settlement or defense thereof, through counsel of its own choosing. So long as
the indemnifying party is reasonably contesting any such claim in good faith,
the indemnified party shall not pay or settle any such Third Party Claim.
Notwithstanding the foregoing, the indemnified party shall have the right to pay
or settle any such Third Party Claim; provided, that in such event it shall
waive any right to indemnity therefor by the indemnifying party. If the
indemnifying party does not notify the indemnified party within 30 days after
the receipt of the indemnified party's notice of a claim of indemnity hereunder
in connection with a Third Party Claim that it elects to undertake the
settlement or defense thereof, the indemnified party shall have the right to
conduct and control the defense thereof and to contest, settle or compromise the
Third Party Claim but shall not thereby waive any right to indemnity therefor
pursuant to this Agreement. If the indemnifying party assumes the defense of a
Third Party Claim in accordance with this Section 8.2 and on the date 60 days
after the indemnifying party received notice of such Third Party Claim it
continues its defense thereof with respect to any or all claims made in such
Third Party Claim, then it will be deemed conclusively established for purposes
of this Agreement that all claims are within the scope of and are subject to the
indemnification provisions of this Article VIII, and the indemnifying party
shall not be permitted to contest the applicability of Article VIII to such
Third Party Claim or to contest
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the indemnifying party's obligation to provide indemnification with respect
thereto. The indemnifying party shall not, except with the consent of the
indemnified party, enter into any settlement or consent to entry of any judgment
unless: (i) such settlement or judgment includes as an unconditional term
thereof the giving by the person or persons asserting such claim to all
indemnified parties (i.e., Seller Indemnified Party or Buyer Indemnified Party,
as the case may be) an unconditional release from all liability with respect to
such claim and (ii) the relief provided in connection with such settlement or
judgment effected by the indemnifying party is satisfied entirely by the
indemnifying party.
8.3 Limitation on Indemnification. (a) Indemnification Threshold.
Seller shall be required to indemnify, defend and hold harmless the Buyer
Indemnified Parties under Section 6.1(a) and Section 8.1(b)(i) with respect to
Damages incurred by such indemnified party in accordance with Section 6.1(a) and
Section 8.1(b)(i) only to the extent that the aggregate amount of all such
Damages of the Buyer Indemnified Parties exceeds $7,500,000.
(b) Certain Special, Indirect, Incidental, Consequential and Related
Damages not Indemnifiable. In no event shall Seller or Buyer, as the case may
be, be liable to Buyer Indemnified Parties or Seller Indemnified Parties,
respectively, for special, indirect, incidental or consequential damages that
are not reasonably foreseeable.
(c) Indemnity Payments Reduced by Insurance Proceeds. Any indemnity
payment payable pursuant to this Agreement (including, without limitation, under
this Article VIII or under Article VI hereof) shall be decreased to the extent
of any insurance proceeds received by the Buyer Indemnified Party or the Seller
Indemnified Party, as the case may be, in respect of the Damages giving rise to
such indemnity payment.
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(d) Limitation on Liability. In no event shall the aggregate liability
of Seller and its subsidiaries under Section 6.1(a) and Article VIII exceed the
Purchase Price, as such price may be adjusted in accordance with the terms
hereof.
8.4 Exclusive Remedy. Each of Seller and Buyer acknowledges and agrees
that, from and after the Closing (except as provided in Section 9.9 hereof), its
sole and exclusive remedy with respect to any and all claims against the other
party relating to the subject matter of this Agreement (other than the Ancillary
Agreements) shall be pursuant to the indemnification provisions set forth in
this Article VIII (except for claims relating to Taxes, which shall be governed
by Article VI except as specifically provided in Section 8.3) or as otherwise
provided hereunder; provided, however, that there shall be no limitation on the
right to obtain injunctive or other equitable relief under appropriate
circumstances. In furtherance of the foregoing, each of Seller and Buyer hereby
waives, from and after the Closing, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action (other than
claims of, or causes of action arising from fraud) it may have against the other
party relating to the subject matter of this Agreement arising under or based
upon any federal, state or local statute, law, ordinance, rule or regulation or
otherwise including, without limitation, Environmental Laws. Buyer further
acknowledges and agrees that, other than the representations and warranties of
Seller specifically contained in this Agreement, the Ancillary Agreements and
the instruments and/or certificates delivered at Closing, there are no
representations or warranties of Seller or any other person affiliated with
Seller either expressed or implied with respect to the Business, the Assets or
the Assumed Liabilities.
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8.5 Time Period. If, at any time prior to the expiration date of the
representations and warranties pursuant to Section 3.3 (the "Expiration Date"),
any Seller Indemnified Party (acting in good faith) delivers to Buyer a written
notice asserting a claim for recovery under Section 8.1(a)(i) (and setting forth
in reasonable detail the basis for such Seller Indemnified Party's claim), then
the claim asserted in such notice shall survive the Expiration Date until such
time as such claim is fully and finally resolved. If, at any time prior to the
applicable Expiration Date, any Buyer Indemnified Party (acting in good faith)
delivers to Seller a written notice asserting a claim for recovery under Section
8.1(b)(i) (and setting forth in reasonable detail the basis for such Buyer
Indemnified Party's claim), then the claim asserted in such notice shall survive
the Expiration Date until such time as such claim is fully and finally resolved.
ARTICLE IX
MISCELLANEOUS
9.1 Termination and Abandonment.
(a) General. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(i) by mutual written consent of Buyer (for itself and as
agents for its Designees) and Seller (for itself and as agent for it
subsidiaries);
(ii) by Seller if any of the applicable conditions set forth
in Section 5.1 or 5.3 shall have become incapable of fulfillment, and
shall not have been waived by Seller;
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(iii) by Buyer if any of the applicable conditions set forth
in Section 5.1 or 5.2 shall have become incapable of fulfillment, and
shall not have been waived by Buyer;
(iv) by Buyer on or after the 181st day after the date hereof
if, through no failure of Buyer to satisfy any of its obligations under
this Agreement, the Closing shall not have occurred; provided, that if
the Closing shall not have occurred solely as a result of any condition
set forth in Section 5.1(b) or 5.2(d) not having been satisfied, Seller
may, upon notice to Buyer on or prior to such 181st day, extend the
date upon or after which Buyer may terminate this Agreement under this
Section 9.1(a)(iv) to the 271st day after the date hereof;
(v) by Seller on or after the 181st day after the date hereof
if, through no failure of Seller to satisfy any of its obligations
under this Agreement, the Closing shall not have occurred; provided,
that if the Closing shall not have occurred solely as a result of any
condition set forth in Section 5.1(b) not having been satisfied, Buyer
may, upon notice to Seller on or prior to such 181st day, extend the
date upon or after which Seller may terminate this Agreement under this
Section 9.1(a)(v) to the 271st day after the date hereof; or
(vi) by either party if there shall be in effect any federal,
state, local or foreign law or regulation that permanently enjoins,
restrains or prohibits the consummation of the Closing or if
consummation of the Closing would violate any non-appealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction; provided, that a party shall not be permitted
to terminate this Agreement under this Section 9.1(a)(vi) if the
consummation of the
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transactions contemplated by this Agreement, notwithstanding the
existence of such law, regulation, order, decree or judgment, would not
be reasonably likely to have a material adverse effect on such party or
on any entity that would be a subsidiary of such party after the
Closing.
(b) Procedure Upon Termination. In the event of the termination and
abandonment of this Agreement, written notice thereof shall promptly be given to
the other party hereto and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned without further action by any of the
parties hereto.
(c) Survival of Certain Provisions. In the event this Agreement is
terminated in accordance with Section 9.1(a), no party shall have any liability
hereunder to the other party hereto or their respective directors, officers,
employees, subsidiaries or other affiliates or representatives except for the
obligations of the parties with respect to (A) confidential information in
Section 4.14, (B) termination and its effects in this Section 9.1, (C) notices
in Section 9.3, (D) public disclosure in Section 9.8, (E) expenses in Section
9.2 and (F) governing law in Section 9.13; provided, that nothing herein will
relieve any party from liability for any breach of any representation, warranty
or covenant set forth in this Agreement prior to such termination. Except as
specifically provided otherwise in this Agreement, the provisions of this
Agreement shall survive the Closing.
9.2 Fees and Expenses. Whether or not the transactions contemplated
hereby are consummated, except as provided herein each of the parties hereto
shall pay its own fees and expenses incident to the negotiation, preparation and
execution of this Agreement, including, without limitation, attorneys',
accountants', brokers' and other advisors' fees.
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9.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or by overnight courier with delivery charges prepaid, or sent by telecopy, as
follows:
(a) if to Seller, to it at:
C. R. Bard, Inc.
730 Central Avenue
Murray Hill, New Jersey 07974
Attention: General Counsel
Telecopy No.: (908) 277-8025
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Philip T. Ruegger III, Esq.
Telecopy No.: (212) 455-2502
(b) if to Buyer, to it at:
Arterial Vascular Engineering, Inc.
3576 Unocal Place
Building B
Santa Rosa, CA 95403
Attn: General Counsel
Telecopy No.: (707) 541-3190
with a copy to:
Cooley Godward LLP
3000 Sand Hill Road
Bldg. 3, Suite 230
Menlo Park, California 94025
Attn: Craig E. Dauchy, Esq.
Telecopy No.: (650) 854-2691
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or to such other person or address as either party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery.
9.4 Entire Agreement. This Agreement and the Ancillary Agreements
(including the Exhibits and Schedules hereto) constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral and written (other than
the Confidentiality Agreement, dated February 15, 1998, between Seller and Buyer
and the Supplemental Confidentiality Agreement, dated February 26, 1998, between
Seller and Buyer).
9.5 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Except as expressly provided in Articles VI and VIII with
respect to indemnification, nothing in this Agreement, express or implied, is
intended to confer on any person, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.6 Assignability. This Agreement shall not be assigned by either of
the parties hereto without the prior written consent of the other party;
provided, however, that Buyer shall have the right to assign any or all of its
rights to acquire the Stock or the Assets and to delegate any or all of its
obligations to assume the Assumed Liabilities, and Seller shall have the right
to delegate any or all of its obligations to assume Liabilities pursuant to
Section 4.18, to one or more of its respective direct or indirect affiliates
(each a "Designee"); provided, further, however, that Buyer's lenders may
possess a security or similar financing interest in and to any or all of the
rights of Buyer under the Transaction Agreements; and
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provided, further, however, that Buyer and Seller each hereby guarantee to the
other the performance of their respective Designees.
9.7 Amendment and Modification; Waiver. Except as provided in Section
9.17 and subject to applicable law, this Agreement and any Exhibit attached
hereto may be amended, modified and supplemented by a written instrument
expressly identified as an amendment hereto authorized and executed on behalf of
Buyer and Seller at any time prior to the Closing Date with respect to any of
the terms contained herein. No waiver by any party of any of the provisions
hereof shall be effective unless explicitly set forth in writing and executed by
the party so waiving. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach. No failure on the part of either party hereto to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof. Except as set forth in Section 8.4 hereof, the remedies herein
are cumulative and not exclusive of any remedies provided by law.
9.8 Public Announcements. Unless otherwise required by law, prior to
the Closing Date, no news release or other public announcement pertaining to the
transactions contemplated by this Agreement will be made by or on behalf of
either party without the prior approval of the other party, which approval shall
not be unreasonably withheld. If in the judgment of either party such a news
release or public announcement is required by law, the party intending to make
such release or announcement shall provide prior notice to the other party of
the contents of such release or announcement and shall consult with the other
party with respect thereto.
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9.9 Specific Performance. Buyer and Seller each acknowledge that, in
view of the uniqueness of the transactions contemplated by this Agreement, the
other party might not have an adequate remedy at law for money damages if this
Agreement has not been performed in accordance with its terms. Each party
therefore agrees that the other party shall be entitled to such specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
9.10 Bulk Sales Law. Without limiting Seller's indemnification
obligations under Article VIII, the parties hereto each agree to waive
compliance by the other with the provisions of the Bulk Sales Law of any
jurisdiction.
9.11 Section Headings. The section headings contained in this Agreement
are inserted for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
9.13 Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts without regard to conflicts of laws principles
thereof.
9.14 Submission to Jurisdiction. The parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the United States of America located in Boston, Massachusetts for any actions,
suits or proceedings arising out of or relating to any Transaction Agreement or
the transactions contemplated hereby or thereby (and the parties agree not to
commence any action, suit or proceeding
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relating thereto except in such courts), and further agree that service of any
process, summons, notice or document by U.S. registered mail shall be effective
service of process for any action, suit or proceeding brought against the
parties in any such court. The parties hereby irrevocably and unconditionally
waive any objection to the laying of venue of any action, suit or proceeding
arising out of any Transaction Agreement or the transactions contemplated hereby
or thereby, in the courts of the United States of America located in Boston,
Massachusetts, and hereby further irrevocably and unconditionally waive and
agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
9.15 Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent and only for the duration of such
prohibition or enforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provisions in any
other jurisdiction. If any such provision shall be adjudged by any court or
authority of competent jurisdiction to be prohibited or unenforceable but would
be valid and enforceable if part of the wording thereof were to be deleted
and/or the period thereof were to be reduced and/or the area thereby were to be
reduced, such provision shall apply within the jurisdiction of such court or
authority with such modifications as are necessary to make it valid and
enforceable.
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9.16 Certain Defined Terms.
For purposes of this Agreement, the term:
(i) "affiliate" of a person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, the first mentioned
person;
(ii) "best efforts" shall not mean efforts which require the
performing party to commence any litigation (except as expressly set
forth) or to do any act that is unreasonable under the circumstances,
or to expend any funds other than reasonable out-of-pocket expenses
incurred in satisfying its obligations hereunder, including but not
limited to the fees, expenses and disbursements of its accountants,
actuaries, counsel and other professionals;
(iii) "coronary" shall be deemed to include, without
limitation, saphenous vein grafts and related products, activities and
applications;
(iv) "Liabilities" shall mean any and all debts, liabilities
and obligations of any nature, whether accrued or fixed, known or
unknown, absolute or contingent, matured or unmatured or determined or
determinable, and whether or not required to be disclosed on a balance
sheet prepared in accordance with GAAP;
(v) "Material Adverse Effect" shall mean an effect that is, or
would reasonably be likely to be, materially adverse to (a) the
business, results of operations or financial condition of the Business
taken as a whole or (b) the ability of a party hereto to consummate any
of the transactions contemplated hereby;
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(vi) "person" means an individual, corporation, partnership,
association, trust, incorporated organization, governmental authority,
other entity or group (as defined in Section 13(d)(3) of the Exchange
Act of 1934, as amended);
(vii) "subsidiary" or "subsidiaries" of Buyer, Seller or any
other person means any corporation, partnership, joint venture or other
legal entity of which Buyer, Seller or such other person, as the case
may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity
interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity;
(viii) "knowledge" with respect to Seller and its subsidiaries
shall mean the actual knowledge of Seller's executive officers or any
other employee of Seller or any of its subsidiaries who is, or is in a
position senior to, the head of a global technology center of the
Business, and the term "knowledge" with respect to Buyer shall mean the
actual knowledge of Buyer's executive officers; and
(ix) "Disclosure of Invention" means any written, oral or
visual idea, concept or invention of an employee or consultant of
Seller or its subsidiaries (including the Subsidiaries) in connection
with the Business on the Closing Date, whether or not such idea,
concept or invention has been formally submitted by the inventor(s) to
an attorney, agent or other representative of Seller or its
subsidiaries (including the Subsidiaries) for evaluation as to
patentability.
9.17 Schedules. Any fact or item which is clearly disclosed on any
schedule to this Agreement in such a way as to make its relevance to a
representation or
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representations made elsewhere in this Agreement or to the information called
for by another schedule or other schedules to this Agreement readily apparent
shall be deemed to be an exception to such representation or representations or
to be disclosed on such other schedule or schedules, as the case may be,
notwithstanding the omission of a reference or cross-reference thereto. Any fact
or item disclosed on any schedule hereto shall not by reason only of such
inclusion be deemed to be material and shall not be employed as a point of
reference in determining any standard of materiality under this Agreement. No
amendment or supplement to any schedule hereto shall be taken into account for
the purpose of determining whether the condition specified in Section 5.2(a) has
been satisfied or for any other purpose, and no such amendment or supplement
shall otherwise limit any of Buyer's rights or remedies under this Agreement;
provided, however, that if (i) Seller delivers to Buyer an amendment or
supplement to any schedule hereto prior to the Closing Date, (ii) Seller
simultaneously advises Buyer in writing that, as a result of the information set
forth in such amendment or supplement, the condition set forth in Section 5.2(a)
will not be satisfied and Buyer accordingly will not be obligated to consummate
the transactions contemplated by this Agreement and (iii) the Closing ultimately
takes place, then such amendment or supplement will be given effect for the sole
purpose of determining Seller's liability to Buyer under Section 8.1(b)(i).
[The remainder of this page has been intentionally left blank. The
following page is numbered S-1.]
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S-1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
C. R. Bard, Inc.
By: /s/ Timothy M. Ring
-------------------------------------
Name: Timothy M. Ring
Title: Group President
Arterial Vascular Engineering, Inc.
By: /s/ Lawrence J. Fassler
-------------------------------------
Name: Lawrence J. Fassler
Title: Vice President and General Counsel
[ARTERIAL VASCULAR ENGINEERING, INC. LOGO]
Contact: John Miller FOR IMMEDIATE RELEASE
Chief Financial Officer
Arterial Vascular Engineering, Inc.
(707) 525-0111
AVE ANNOUNCES CLOSING OF ACQUISITION
OF BARD'S CORONARY CATH LAB BUSINESS
Santa Rosa, CA--October 1, 1998--Arterial Vascular Engineering, Inc.
("AVE") (Nasdaq National Market: AVEI) today announced the closing of its
previously announced agreement to acquire the coronary catheter lab business of
C.R. Bard, Inc. ("Bard") (NYSE: BCR), as well as rights to the supply by Bard of
certain materials, for approximately $550 million in cash, subject to
adjustment.
The acquired coronary catheter lab business, which had reported
revenues of approximately $215 million in 1997, develops, manufactures and
markets worldwide a broad range of catheter-based technologies used in the
less-invasive treatment of cardiovascular disease. The assets acquired by AVE in
the acquisition include two state-of-the-art manufacturing facilities in
Billerica, Massachusetts and Galway, Ireland.
"The completion of AVE's acquisition of Bard's coronary catheter lab
business positions AVE to significantly expand its participation in the
interventional cardiology market," said Scott Solano, AVE's president and chief
executive officer. Mr. Solano continued, "We believe that the intellectual
property portfolio acquired in the acquisition, particularly the rights to
perfusion rapid exchange catheters, will strengthen AVE's leadership position in
the coronary stent market."
The acquisition was financed through a $600 million credit facility
arranged by Donaldson, Lufkin & Jenrette Securities Corporation.
Headquartered in Santa Rosa, California, Arterial Vascular Engineering,
Inc. is a leading provider of highly specialized stent and balloon angioplasty
systems for less invasive interventional treatment of cardiovascular disease.
AVE sells its stent and balloon angioplasty systems in more than 40 countries,
including its coronary stent systems in the United States.
-- MORE --
ARTERIAL VASCULAR ENGINEERING, INC.
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3576 UNOCAL PLACE Tel: (707) 525-0111
SANTA ROSA, CALIFORNIA 95403 Fax: (707) 525-0114
<PAGE>
ARTERIAL VASCULAR ENGINEERING
ADD ONE
Except for the historical information contained herein, this news
release contains forward-looking statements that involve risks and
uncertainties, including the ability of the company to successfully integrate
the operations of acquired businesses and the risks of business acquisitions
generally, variations in the level of sale and earnings, the ability to manage
growth effectively, the ability to successfully introduce and achieve market
acceptance for new products and continued demand for products generally, the
effects of competition and pricing pressure, the rapid and significant
technological change that characterizes the medical device industry and the
ability to continue to respond to such technological change, as well as the
other risks detailed from time to time in documents filed by AVE with the SEC,
including the report on Form 10-K for the year ended June 30, 1998.
###
ARTERIAL VASCULAR ENGINEERING, INC.
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3576 UNOCAL PLACE Tel: (707) 525-0111
SANTA ROSA, CALIFORNIA 95403 Fax: (707) 525-0114
