SECURITIES AND EXCHANGE COMMISSIONS
Washington, DC 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):
December 29, 1997
BAUSCH & LOMB INCORPORATED
(Exact name of registrant as specified in its
charter)
New York 1-4105 16-0345235
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
One Bausch & Lomb Place, Rochester NY
14604-2701
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(716) 338-6000
Inapplicable
(Former name or former address, if changed since last
report).
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
a. Acquisition of Chiron Vision Corporation
On December 29, 1997, Bausch & Lomb Incorporated (the
"Company") acquired, for $300 million in cash, all of the
issued and outstanding shares of Chiron Vision Corporation
("Chiron Vision"), pursuant to an October 21, 1997
agreement between the Company and Chiron Corporation, the
sole shareholder of Chiron Vision.
Chiron Vision's business is the research, development and
manufacture of innovative products that improve results in
cataract and refractive surgery, and the treatment of
progressive eye diseases.
Included in the assets acquired by the Company (indirectly
through the acquisition of the shares of Chiron Vision) are
the following products and operations:
Chiron Vision's product portfolio includes microkeratones
and blades for LASIK refractive surgery; an advanced excimer
laser with a built-in LASIK workstation for refractive
surgery; equipment and viscoelastics for cataract surgery;
PMMA and foldable intraocular lenses (IOLs); and the
Vitrasert Implant, the first drug delivery system to provide
local, sustained therapy for the treatment of
cytomegalovirus (CMV) in people with AIDS. Based in
Claremont, California, Chiron Vision maintains owned and
leased manufacturing and sales facilities on five
continents. Receivables and other contract rights of Chiron
Vision are included in the assets obtained indirectly
through this acquisition of capital stock.
b. Acquisition of Storz Instrument Company
On December 31, 1997, the Company, in a combined purchase of
stock and assets, acquired, for $380 million in cash, Storz
Instrument Company, Storz Ophthalmics, Inc. And Cyanamid
Chirurgie S.A.S. (collectively the "Storz Entities")
pursuant to an October 21, 1997 agreement by and among the
Company, American Cyanamid Company ("Cyanamid") and
American Home Products Corporation ("AHP").
Storz manufactures and distributes high quality ophthalmic
surgical instruments, surgical and diagnostic equipment,
intraocular lens implants and ophthalmic pharmaceuticals.
The assets were acquired from AHP and Cyanamid directly and
indirectly through the acquisition of the shares of Storz
Instrument Company, Storz Ophthalmics, Inc. and Cyanamid
Chirurgie S.A.S., as well as certain other assets. The
assets acquired include the following products and
operations:
Storz surgical and diagnostic equipment products include
technologically-advanced surgical systems that provide
irrigation/aspiration and phacoemulsification capabilities
utilized in ophthalmic surgery. Intraocular lens implant
products include over 80 models in multi-piece, single-piece
and small-incision design. Pharmaceutical products include
Ocuvite, a vitamin and mineral supplement, as well as a
number of in-office diagnostic and OTC products marketed to
eye care professionals. The Storz assets also include a
comprehensive surgical instrument product line offering a
broad range of hand-held microsurgical instruments. Based
in St. Louis, Missouri, Storz maintains manufacturing and
sales facilities in several countries. Receivables and
other contract rights associated with the Storz business are
also included in the assets acquired.
The funds used to consummate both of these acquisitions came
from the issuance by the Company of short-term obligations
under the Company's commercial paper program.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a)(4) Financial statements of the businesses acquired are
not included with this report, and will be filed on or
before March 13, 1998.
(c) See Exhibit Index for a listing of exhibits.
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.
BAUSCH & LOMB INCORPORATED
/s/ Stephen C. McCluski
Stephen C. McCluski
Senior Vice President - Finance
Dated: January 13, 1998
EXHIBIT INDEX
Exhibit No. Description
2(a) Stock Purchase Agreement by and between Bausch
& Lomb Incorporated and Chiron Corporation
dated as of October 21, 1997
2(b) Purchase Agreement by and among American
Cyanamid Company, American Home Products
Corporation and Bausch & Lomb Incorporated
dated as of October 21, 1997
STOCK PURCHASE AGREEMENT
by and between
BAUSCH & LOMB INCORPORATED
and
CHIRON CORPORATION
Dated as of October 21, 1997
EXHIBITS
Exhibit A
Reserved
Exhibit B
Opinion of William G. Green, Esq., Counsel
for Chiron
Exhibit C
Non-competition Agreement
Exhibit D
Opinion of Purchaser's Counsel
Exhibit E
List of Special Charges
SCHEDULES
Schedule
1.5.1
Audited Balance Sheet
Schedule
2.2
Noncontravention
Schedule
2.3
Governmental Consents or Approvals
Schedule
2.4.1
Subsidiaries of the Company
Schedule
2.5
Directors and Officers of the Company
Schedule
2.6.2
Capital Stock of the Company
Schedule
2.8
Undisclosed Liabilities
Schedule
2.9
Certain Developments of the Company
Schedule
2.10
Real Properties of the Company
Schedule
2.11.1
Contracts
Schedule
2.11.2
Certain Contracts
Schedule
2.11.3
Contract Approvals
Schedule
2.12
Litigation
Schedule
2.13.1
Intellectual Property
Schedule
2.13.2
Certain Intellectual Property Matters
Schedule
2.14
Permits
Schedule
2.15.1
Employee Benefit Plans and Agreements
Schedule
2.15.2
Benefit Arrangements
Schedule
2.16
Certain Interests
Schedule
2.17
Intercompany Transactions
Schedule
2.21
Insurance Policies and Bonds
Schedule
2.23
Certain FDA Matters
Schedule
3.2
Noncontravention
Schedule
3.3
Governmental Consents or Approvals
Schedule
4.2.1
Commitments and Capital Expenditures
Schedule
6.2.1
Tax Sharing Agreements
Schedule
6.2.2
Tax and Other Returns and Reports
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of October 21,
1997, is made by and between Bausch & Lomb Incorporated, a
New York corporation (the "Purchaser"), and Chiron
Corporation, a Delaware corporation ("Chiron").
RECITALS
A. Chiron owns 1,000 shares of Common Stock, $.01 par
value (the "Stock"), of Chiron Vision Corporation, a
Delaware corporation (the "Company"), constituting all of
the issued and outstanding capital stock of the Company.
B. The Purchaser desires to purchase the Stock, and
Chiron desires to sell the Stock to the Purchaser, on the
terms and conditions herein set forth.
NOW THEREFORE, in consideration of the premises and of
the respective representations, warranties, covenants and
conditions contained herein, the parties hereto agree as
follows:
ARTICLE I
Purchase and Sale
1.1 Purchase and Sale. Upon the terms and subject to
the conditions of this Agreement (this and other capitalized
terms, to the extent not defined in any other Article, shall
have the meanings assigned to such terms in Article X),
Chiron shall sell to the Purchaser, and the Purchaser shall
purchase from Chiron, the Stock at the Closing (as defined
in Section 1.4) and Chiron shall deliver at the Closing the
certificates evidencing the Stock, properly endorsed, or
accompanied by a duly executed stock power duly endorsed, in
blank.
1.2 Purchase Price. In consideration for the Stock
and as payment in full therefor, the Purchaser shall pay to
Chiron $300,000,000 (the "Purchase Price"), subject to
such adjustments as may be made pursuant to Section 1.5.
1.3 Payment of Purchase Price. If the obligations of
the parties to proceed with the Closing set forth in Article
VII are satisfied or waived in writing by all parties, at
the Closing, the Purchaser shall pay Chiron the Purchase
Price by wire transfer of immediately available funds to a
bank account designated by Chiron. Within two business days
of delivery to the Purchaser of the Closing Date Balance
Sheet, the Purchaser shall pay to Chiron, or Chiron shall
pay to the Purchaser, as the case may be, by wire transfer
of immediately available funds, the adjustment to the
Purchase Price, if any, determined in accordance with
Section 1.5.
1.4 Closing. The closing (the "Closing") of the
purchase and sale of the Stock shall take place at the
offices of the Purchaser's counsel in Newport Beach,
California as soon as possible after the satisfaction or
waiver of the conditions set forth in Article VII, or at
such other time and place as the parties shall mutually
agree; provided that in no event shall the Purchaser be
required to close prior to November 1, 1997. The date on
which the Closing actually occurs is herein referred to as
the "Closing Date."
1.5 Adjustments to Purchase Price.
1.5.1 Adjustment. The Purchase Price shall be
adjusted as follows:
(a) If the amount of Net Assets reflected on
the Closing Date Balance Sheet (as defined in Section
1.5.2(a)) (the "Closing Date Net Assets") is more
than $82,702,000 (being the amount of Net Assets
reflected on the Audited Balance Sheet, which is
attached as Schedule 1.5.1 and herein called the
"Audited Balance Sheet Date Net Assets"), there will
be an upward adjustment of the Purchase Price equal to
fifty percent of the difference between the Closing
Date Net Assets and the Audited Balance Sheet Net
Assets.
(b) If the Closing Date Net Assets are less
than the Audited Balance Sheet Date Net Assets, there
will be a downward adjustment of the Purchase Price
equal to fifty percent of the difference between the
Closing Date Net Assets and the Audited Balance Sheet
Net Assets.
(c) In the event Net Operating Losses of
Chiron Adatomed reported as of December 31, 1997 are
less than $1,000,000, there will be a downward
adjustment of the Purchase Price equal to forty percent
of the difference between $1,000,000 and such Net
Operating Losses.
(d) If any upward or downward adjustment is
required, the increase or decrease to the Purchase
price, as the case may be, shall be referred to herein
as the "Upward Purchase Price Adjustment" or
"Downward Purchase Price Adjustment", respectively.
1.5.2 Balance Sheet.
(a) Chiron shall, at its own cost and
expense, prepare and deliver to the Purchaser within 60
days after the Closing Date, a consolidated balance
sheet for the Company and its Subsidiaries (as defined
in Section 2.4.4) as of the Closing Date (the "Closing
Date Balance Sheet") which shall include, in addition
to the other information set forth therein, the Closing
Date Net Assets. The Closing Date Balance Sheet shall
be prepared in accordance with the Agreed Procedure,
and shall be accompanied by an audit opinion thereon of
KPMG Peat Marwick LLP ("KPMG") to the effect that the
Closing Date Balance Sheet, and the assets and
liabilities reflected thereon, were prepared and
determined in accordance with the Agreed Procedure.
The Closing Date Balance Sheet shall be accompanied by
a supplementary schedule setting forth the calculation
of the adjustment to the Purchase Price contemplated by
Section 1.5.1. During the sixty-day period following
the Closing, the Purchaser will cause the Company to
provide to Chiron and its accountants reasonable access
during normal business hours to such books and records
of the Company as may be necessary to enable Chiron to
prepare the Closing Date Balance Sheet. Chiron shall
make available to the Purchaser all work papers, books
and records used by it in the preparation and audit of
the Closing Date Balance Sheet, and shall provide
copies of the same. The Purchaser and such accountants
or auditors of its choice (the cost and expense of
which shall be borne by the Purchaser) shall be
entitled to jointly conduct with Chiron and KPMG, or
otherwise participate in or monitor, a physical count
of the inventories on hand as of the Closing Date (or
such other date as the Purchaser and Chiron shall
mutually agree) and such other procedures acceptable to
the Purchaser with respect to any inventory on
consignment.
(b) The Purchaser shall have 30 business
days after its receipt of the Closing Date Balance
Sheet and related supplementary schedules to review
them (the "Review Period"). On or prior to the
expiration of the Review Period, the Purchaser shall
notify Chiron in writing if it does not agree with
Chiron's calculation of any adjustment to the Purchase
Price (the "Disagreement Notice"), which notice shall
include a brief description of the basis of its
disagreement, including its calculation of any
adjustment to the Purchase Price. If Chiron does not
receive the Disagreement Notice on or prior to the
expiration of the Review Period, the Purchaser shall be
deemed to have approved the Closing Date Balance Sheet
and Chiron's calculation of any adjustment to the
Purchase Price applicable thereto.
(c) If Chiron receives the Disagreement
Notice, Chiron and the Purchaser shall, in good faith,
attempt to resolve the disagreement within 20 business
days after Chiron's receipt of the Disagreement Notice.
If they cannot resolve the disagreement within such
time period, then (i) Chiron or the Purchaser, as
applicable, shall promptly pay any net amount owed to
the other party that is not in disagreement (i.e., net
of any offsetting liability), and (ii) the parties
promptly shall refer such disagreement for resolution
to Arthur Andersen LLP, or if Arthur Andersen LLP is
unable to serve or declines to act, or if at the time
of such referral Arthur Andersen LLP is not independent
of each of the Purchaser and Chiron, such other firm of
independent accountants of recognized national standing
as mutually selected by the Purchaser and Chiron (such
firm being referred to herein as the "Deciding
Accountant"). The determination of the Deciding
Accountant as to the calculation and amount of any
adjustment to the Purchase Price shall be rendered
within 30 calendar days after such disagreement is
referred to the Deciding Accountant, and shall be
binding upon the parties hereto.
(d) Each of the Purchaser and Chiron shall
furnish to the Deciding Accountant, at its own cost and
expense, such documents and information as the Deciding
Accountant may request, and each party may also furnish
to the Deciding Accountant such other information and
documents as it deems relevant, in all cases with
copies (where it would not be unreasonably costly or
burdensome to provide copies) or notification (with
reasonable rights of access) being given to the other
party. The fees and expenses payable to the Deciding
Accountant shall be borne one-half by the Purchaser and
one-half by Chiron.
(e) The Closing Date Balance Sheet as agreed
to by the parties or as determined by the Deciding
Accountant, and the Closing Date Net Assets reflected
thereon, shall be binding on the parties and thereafter
be the "Closing Date Balance Sheet" and the "Closing
Date Net Assets", respectively, for all purposes of
this Agreement. The later of the date on which the
parties agree upon the Closing Date Balance Sheet and
the calculation of any adjustment to the Purchase Price
or the date on which the Deciding Accountant renders
its decision with respect thereto shall be called the
"Final Settlement Date".
(f) Within 10 business days after the Final
Settlement Date, (i) if the Purchase Price paid at the
Closing is to be increased, the Purchaser shall pay to
Chiron the Upward Purchase Price Adjustment to the
extent not previously paid via wire transfer to an
account of Chiron identified in writing by Chiron, and
(ii) if the Purchase Price paid at the Closing is to be
decreased, Chiron shall pay to the Purchaser the
Downward Purchase Price Adjustment to the extent not
previously paid via wire transfer to an account of the
Purchaser identified in writing by the Purchaser.
(g) Any adjustments to the Purchase Price
required by application of this Section 1.5 shall be
allocated among the Net Assets in the same manner as
the allocation of Purchase Price required by Section
6.9.
ARTICLE II
Representations and Warranties of Chiron
Chiron represents and warrants to the Purchaser that:
2.1 Organization and Authority of Chiron. Chiron is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Chiron
has full power and authority to execute, deliver and perform
this Agreement and such other documents as are contemplated
hereunder to be executed and delivered at or prior to the
Closing. The execution, delivery and performance of this
Agreement by Chiron and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Chiron, the
Company and the Subsidiaries. This Agreement constitutes a
valid and, assuming due execution by the Purchaser, and the
expiration or termination of the applicable waiting period
under the HSR Act (as defined in Section 2.3), binding
obligation of Chiron, enforceable against Chiron in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally, and to general
equitable principles.
2.2 Noncontravention. Except as set forth in Schedule
2.2, the execution, delivery and performance of this
Agreement by Chiron and the consummation of the transactions
contemplated hereby will not violate or conflict with, or
constitute a breach or default (whether upon lapse of time
and/or the occurrence of any act or event or otherwise)
under (a) the Certificate of Incorporation or bylaws of
Chiron, the Company or any of the Subsidiaries (as defined
in Section 2.4.4), or (b) any law, regulation, order,
judgment, or decree applicable to any such Person, or (c)
any material indenture, mortgage or other instrument to
which Chiron is a party or by which it or any of its
properties is bound.
2.3 No Governmental Consent or Approval Required. No
authorization, consent, Permit, approval or other order of,
declaration to, or registration, qualification, designation
or filing with, any governmental agency or body is required
for or in connection with the execution, delivery and
performance of this Agreement by Chiron and the consummation
of the transactions contemplated hereby by Chiron, the
Company and the Subsidiaries, other than (a) the filing of
notification under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act") and the expiration or
early termination of the waiting period thereunder, as well
as certain filings under the foreign competition laws
(together with the HSR Act, the "Competition Laws"), and
(b) the matters identified in Schedule 2.3 as requiring that
certain actions be taken by or with respect to any
governmental agency or body and (c) any consents from any
Person (other than any governmental entity or body) the
failure to obtain which does not prohibit the transfer of
the Stock or the consummation of any of the transactions
contemplated hereby or create a Lien on the Stock.
2.4 Subsidiaries.
2.4.1 Capitalization, Qualification and. The
Company has no subsidiaries and no investments, directly or
indirectly, in any corporation or business organization
other than the subsidiaries and certain other investments
listed on Schedule 2.4.1. Schedule 2.4.1 correctly sets
forth the capitalization of each Subsidiary (as defined in
Section 2.4.4), the ownership of the Company or one of its
Subsidiaries therein, the jurisdictions in which the Company
and its Subsidiaries are organized and each jurisdiction in
which the Company and any of its Subsidiaries is required
(except where the failure to so qualify would not have an
adverse effect on the business, assets, financial condition
or results of operations of the Company or its Subsidiaries)
to be qualified or licensed to do business as a foreign
Person.
2.4.2 Chiron Adatomed. The Company currently
conducts certain business through an affiliate, Chiron
Adatomed Pharmazeutische und medizintechnicshe Gesellschaft
mbH ("Chiron Adatomed"). At the date of this Agreement,
all of the outstanding capital stock of Chiron Adatomed is
owned by Chiron. Chiron will transfer all such outstanding
capital stock to the Company prior to the Closing.
2.4.3 Chiron Canada. The Company currently
owns all of the outstanding capital stock of Chiron Vision
Canada Inc. ("Chiron Canada"), a Canadian corporation.
Prior to the Closing, all of the capital stock of Chiron
Canada will be transferred to Chiron. Chiron Canada is not
actively engaged in the business of the Company and its
Subsidiaries.
2.4.4 Definitions. As used in this Agreement,
the term "Subsidiaries" means the subsidiaries of the
Company listed on Schedule 2.4.1 and includes Chiron
Adatomed.
2.5 Organization and Authority of the Company and
Subsidiaries. Except as set forth on Schedule 2.5, the
Company and each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate power
and authority to carry on its business as presently
conducted and to consummate the transactions contemplated
hereby. Except as set forth on Schedule 2.5, the Company
and each Subsidiary is qualified to do business as a foreign
corporation in good standing in each jurisdiction where
failure to so qualify would have an adverse effect on the
business, assets, financial condition or results of
operations of the Company or any Subsidiary. Schedule 2.5
correctly lists the current directors and executive officers
of the Company and the Subsidiaries. True, correct and
complete copies of the respective charter documents of the
Company and the Subsidiaries as in effect on the date hereof
have been provided to the Purchaser.
2.6 Capitalization.
2.6.1 The Company. The entire authorized
capital stock of the Company consists of 1,000 shares of
Common Stock, $.01 par value, of which 1,000 shares are
issued and outstanding. All of the Stock has been duly
authorized and validly issued and is outstanding, fully paid
and nonassessable. There are no outstanding warrants,
options, subscription, conversion, preemptive or other
rights entitling any person or entity to purchase or
otherwise acquire any capital stock of the Company. Chiron
owns all of the Stock beneficially and of record and has
good and valid title to all of the Stock, free and clear of
all Liens and, subject to applicable securities laws and
competition laws, free of any restriction on its right to
transfer or exercise any voting or other right with respect
thereto. At the Closing, the Purchaser will acquire good
and valid title to the Stock, free and clear of any Liens of
any nature whatsoever.
2.6.2 The Subsidiaries. Except as disclosed
in Schedule 2.6.2, the Company owns all of the capital stock
of each Subsidiary beneficially and of record and has good
and valid title to all of the capital stock of each
Subsidiary, free and clear of all Liens and, subject to
applicable securities laws and competition laws, free of any
restriction on its right to transfer or exercise any voting
or other right with respect thereto and all of such shares
of capital stock have been duly authorized and, to the
extent applicable in the jurisdiction in which such
Subsidiary was organized, are validly issued and
outstanding, fully paid and non-assessable and, at the
Closing, upon the consummation of the transactions
contemplated hereby, the Company will continue to have good
and valid title to all such shares of capital stock, free
and clear of any Liens of any nature whatsoever. Except as
disclosed on Schedule 2.6.2, there are no outstanding
warrants, options, subscription, conversion, preemptive or
other rights entitling any Person to purchase or otherwise
acquire any capital stock of the Company or any Subsidiary.
Any capital stock or other securities or equity interests of
the Company or any Subsidiary which were issued and
reacquired by the Company or any of such Subsidiaries were
so reacquired (and, if reissued, so reissued) in compliance
with all applicable laws, and neither the Company nor any
Subsidiary has any outstanding obligation or liability with
respect thereto.
2.7 Financial Statements. Chiron has delivered to the
Purchaser (a) the consolidated balance sheets of the Company
and Subsidiaries as of December 31, 1996 (the "Audited
Balance Sheet") and the consolidated statements of
operations and cash flows for the year ended December 31,
1996, accompanied by the audit report thereon of KPMG (the
"Audited Financial Statements"), (b) the unaudited
consolidated balance sheet of the Company and Subsidiaries
as of March 31, 1997 (the "Q-1 Balance Sheet") and the
unaudited consolidated statements of operations for the
three months then ended (together with the Audited Financial
Statements, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP,
consistently applied, and fairly and accurately present the
financial position of the Company and the Subsidiaries as of
the respective dates thereof and the results of operations
and changes in financial position and, in the case of the
Audited Financial Statements, cash flow of the Company and
Subsidiaries for the respective periods covered thereby. At
the date of such balance sheets, neither the Company nor the
Subsidiaries had any liability (actual, contingent, accrued
or otherwise) that, in accordance with GAAP applied on a
consistent basis, should have been shown or reflected
therein but was not. Since December 31, 1995, there has been
no change in any of the significant accounting policies,
practices or procedures of the Company or any Subsidiary.
2.8 Undisclosed Liabilities. The Company and its
Subsidiaries have no liabilities (whether accrued, absolute,
contingent or otherwise, and whether due or to become due,
probable of assertion or not), except for (a) matters
identified in Schedule 2.8, (b) liabilities fully reflected
and expressly reserved for in the Audited Balance Sheet, (c)
liabilities of a type not required to be reflected in the
Company's or its Subsidiaries' balance sheet in accordance
with GAAP, and (d) liabilities incurred in the ordinary
course of business since December 31, 1996.
2.9 Absence of Certain Developments. Since December
31, 1996, except as disclosed in the Financial Statements or
in Schedule 2.9, there has not been (a) any declaration,
setting aside or payment of any dividend or other
distribution with respect to the capital stock of the
Company, (b) any loss, destruction or damage to any property
of the Company or its Subsidiaries, whether or not insured,
which had or could reasonably be expected to have an adverse
effect on the business, assets, financial condition, or
results of operations of the Company and any Subsidiary, or
(c) any agreement, condition, action or omission which would
be prescribed by (or requires notice or consent under)
clause (b), (c), (d) or (g) of Section 4.2 had it existed,
occurred, or arisen after the date of this Agreement.
2.10 Title to Properties.
2.10.1 Personal Property. Except as disclosed
in the Audited Financial Statements, the Company and
Subsidiaries have good and marketable title to, or have a
valid leasehold interest in, all of the personal properties
and assets held, occupied or used in their respective
businesses or otherwise purportedly owned or leased by the
Company or any Subsidiary, free and clear of all Liens other
than (a) the lien of current taxes not yet due and payable,
and (b) Permitted Liens. All such personal properties and
assets which are material tangible properties are adequate
for the respective businesses of the Company and its
Subsidiaries as presently conducted.
2.10.2 Real Property. Schedule 2.10 discloses
and lists all real properties currently owned, used or
leased by the Company or the Subsidiaries or in which the
Company or a Subsidiary has an ownership or leasehold
interest (collectively, the "Real Property") and if owned
identifies the record title holder of all of the Real
Property. Either the Company or a Subsidiary has good and
marketable fee simple title to (or a leasehold interest in,
as the case may be) all Real Property shown as owned (or
leased, if applicable) by it on Schedule 2.10, free and
clear of all Liens other than Permitted Liens. Neither the
Company nor any Subsidiary has received any written notice
of assessments for public improvements or condemnation
against any Real Property.
2.11 Contracts. Attached as Schedule 2.11.1 is a true
and complete list of all debt instruments, contracts,
leases, license agreements, employment and labor agreements,
and other agreements, commitments and understandings of any
kind, whether or not in writing, to which the Company or any
Subsidiary is a party or to which the Company, any
Subsidiary or any of their respective properties is subject
or by which any thereof is bound which is either (a)
important to the continued conduct of the business of the
Company and any Subsidiary as presently conducted or (b)
which pursuant to its terms imposes payment obligations on
either party in excess of $1 million annually or $3 million
in the aggregate (excluding all purchase orders, sales in
the ordinary course of business and distributorship
contracts that are not material to the business) ("Material
Contracts"). Except as disclosed in Schedule 2.11.2, each
Material Contract is in full force and effect; and no breach
or default, breach or default alleged in writing, or event
which would (with the passage of time, notice or both)
constitute a breach or default thereunder by the Company or
such Subsidiary, as the case may be, in each case in any
material respect, or, to the knowledge of Chiron, the
Company and each Subsidiary, any other party or obligor with
respect thereto exists and is continuing. The execution,
delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will
not result in a breach of or default under any Material
Contract, will not (and will not give any Person a right to)
terminate or modify any rights of, or accelerate or augment
any obligation of, the Company or any Subsidiary, and do not
require any consent, approval, waiver or other action by any
party to any such Material Contract, other than the consents
and approvals identified in Schedule 2.11.3 (the "Contract
Approvals").
2.12 Litigation. To the knowledge of Chiron, the
Company and each Subsidiary except as disclosed in Schedule
2.12, there is no written claim, filed complaint,
arbitration, action, suit, proceeding or investigation
pending or threatened, against, affecting or reasonably
expected to affect the Company or any Subsidiary, including
any claim for indemnification from the Company or a
Subsidiary which could reasonably be expected to be asserted
by any director, officer, employee, agent or representative
of the Company or any Subsidiary (a) which if resolved
adversely to the Company or any Subsidiary, as the case may
be, would result in liability to the Company or any
Subsidiary, or (b) seeking to prevent or challenging in any
other manner the consummation of the transactions
contemplated hereby. Neither the Company nor any Subsidiary
is a party to, or subject to the provisions of, or, to the
knowledge of Chiron, the Company and each Subsidiary, is
threatened with, any order, writ, injunction, judgment or
decree of any court or governmental agency or
instrumentality which could reasonably be expected to
prevent the consummation of the transactions contemplated
hereby. There is no organized labor strike, dispute,
slowdown or stoppage, or collective bargaining or unfair
labor practice claim pending, or to the knowledge of Chiron,
the Company and each Subsidiary threatened, against or
affecting the Company or any Subsidiary, nor are there, to
the knowledge of Chiron, the Company or any Subsidiary, any
union organizing efforts.
2.13 Intellectual Property.
2.13.1 Patents, Trademarks. Attached as
Schedule 2.13.1 is a list of all registered trademarks,
trademark applications, trade names, service marks, patents
and patent applications owned by the Company or any
Subsidiaries. Schedule 2.13.1 includes as to each item
listed thereon a registration or application number (as
applicable). Except as disclosed in Schedule 2.13.1, the
Company or a Subsidiary, as the case may be, has the sole
and exclusive rights to such registered trademarks,
trademark applications, trade names, service marks, patents
and patent applications and, to the knowledge of Chiron, the
Company and each Subsidiary, no other party has asserted
orally or in writing to the Company or any Subsidiary any
claim with respect to or challenged the Company's or
Subsidiary's rights with respect to such registered
trademarks, trademark applications, trade names, service
marks, patents and patent applications and such registered
trademarks, trademark applications, trade names, service
marks, patents and patent applications are free and clear of
any Liens other than Permitted Liens. Except as disclosed
in Schedule 2.13.1, to the knowledge of Chiron, the Company
and each Subsidiary, the Company or the Subsidiaries have
ownership of or license to all of the registered trademarks,
trademark applications, trade names, service marks, patents
and patent applications used in connection with the business
of the Company and the Subsidiaries, the absence of which
would have a material adverse effect on the Company and any
Subsidiary as presently conducted.
2.13.2 No Infringement. Except as disclosed in
Schedule 2.13.2, since January 1, 1993, the Company has not
received any written (or, to the knowledge of Chiron, the
Company or any of its Subsidiaries, oral) communications
alleging that the Company or any of its Subsidiaries has
infringed, violated or misappropriated any of the registered
trademarks, trademark applications, trade names, services
marks, patents, patent applications, copyrights or trade
secrets of any other Person. Except as disclosed on
Schedule 2.13.2, there are no third party patents which
could reasonably be expected to provide such third party
with a colorable claim against the Company or any Subsidiary
for infringement thereof based on acts of Chiron, the
Company or any Subsidiary occurring prior to the Closing
Date.
2.14 Compliance with Law; Governmental Permits. Except
as set forth in Schedule 2.14, to the knowledge of Chiron,
the Company and each Subsidiary (including, without
limitation, the Vice President of Regulatory Affairs for the
Company), the Company and each Subsidiary is in compliance
with all laws, regulations, orders, judgments and decrees of
any court or governmental authority which are applicable to
its business, including without limitation the Federal Food,
Drug and Cosmetic Act (the "FDC Act") and the regulations
promulgated thereunder, except in the case of the FDC ACT
and the regulations promulgated thereunder, noncompliance
with which could not reasonably be expected to result in any
enforcement action by any government entity or body or the
issuance of a warning letter by the U.S. Food and Drug
Administration (the "FDA"). Except as disclosed in
Schedule 2.14, to the knowledge of Chiron, the Company and
each Subsidiary, each Permit held by the Company and its
Subsidiaries is in full force and effect and will be upon
consummation of the transactions contemplated by this
Agreement. To the knowledge of Chiron, no suspension,
cancellation or termination of any of such Permits is
threatened or imminent.
2.15 Employee Benefits.
2.15.1 Plans and Material Documents.
(a) Schedule 2.15.1 lists all employee
benefit plans and severance plans generally applicable
to the U.S. employees of the Company or any of its
Subsidiaries, including, without limitation, (i) any
"employee welfare benefit plan" or "employee pension
benefit plan" (within the meaning of Sections 3(1) or
3(2) of ERISA) (the "Benefit Plans"), (ii) any profit
sharing, deferred compensation, bonus, stock option,
stock purchase, pension, retention, consulting,
retirement, severance, welfare or incentive plan, (iii)
any plan providing for fringe benefits or perquisites
to employees, officers, directors or agents, or (iv)
any employment agreement not terminable on 30 days (or
less) written notice and providing for an annual salary
in excess of $150,000. The plans described in this
Section 2.15.1 may be referred to herein as the
"Benefit Arrangements". Except as disclosed in
Schedule 2.15.1, none of the Benefit Arrangements or
any Benefit Plan or any employee pension benefit plan
(within the meaning of Section 3(2) of ERISA)
maintained or contributed to by any ERISA Affiliate is
(A) a plan subject to Title IV of ERISA or (B) a
"multiemployer plan" (within the meaning of Section
3(37) of ERISA). In addition, neither the Company nor
any of its ERISA Affiliates contributes to or had an
obligation to contribute to any multiemployer plan
during the five year period preceding the date of this
Agreement. Chiron has provided to the Purchaser true
and complete copies of all written documents and
summary plan descriptions of the Benefit Arrangements
made available to employees of the Company or any
Subsidiary. Chiron has provided to the Purchaser true
and complete copies of the Form 5500 filed in the most
recent plan year with respect to any Benefit Plan,
including all schedules thereto and financial
statements with attached opinions of independent
accountants.
(b) Except as disclosed on Schedule 2.15.1
or as required by Section 4980B of the Code, neither
the Company nor any Subsidiary has made any promises or
commitments to provide, and is under no obligation or
liability to provide, (i) medical benefits (including
through insurance) generally applicable to U.S.
retirees or former U.S. employees or their dependents
or (ii) life insurance or other death benefits
(including through insurance) generally applicable to
retired U.S. employees or their dependents.
2.15.2 Compliance with Applicable Law.
(a) Each Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has received
a favorable determination letter from the Internal
Revenue Service that such Benefit Plan is qualified
under Section 401(a) of the Code (as amended by the Tax
Reform Act of 1986 and subsequent legislation prior to
1994) and that the trust under such Benefit Plan is
exempt from tax under Section 501(a) of the Code. To
the knowledge of Chiron, no event has occurred that is
likely to give rise to disqualification or loss of tax-
exempt status of any such Benefit Plan under Sections
401(a) or 501(a) of the Code. No "prohibited
transaction" (within the meaning of Section 4975 of
the Code or Sections 406 and 408 of ERISA) has occurred
with respect to any of such Benefit Plans that,
assuming the taxable period of such transaction expired
as of the date hereof, could subject the Company or any
of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of
ERISA. Chiron has delivered to the Purchaser the most
recent determination letter received from the Internal
Revenue Service with respect to each such Benefit Plan.
(b) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each
Benefit Plan.
(c) All Benefit Plans are in substantial
compliance in form and in operation with the relevant
provisions of ERISA and the Code, the regulations and
published authorities thereunder, and all other laws
applicable with respect to all such Benefit Plans. The
Company and its Subsidiaries have performed their
obligations under all Benefit Arrangements in all
material respects. There is no action (other than
routine claims for benefits) pending or to the
knowledge of Chiron and the Company threatened against
any Benefit Arrangement or arising out of any Benefit
Arrangement.
(d) Except as disclosed in Schedule 2.15.2
(which shall identify the entity obligated to make any
payments due or which may become due), the execution
and performance of this Agreement will not (i)
constitute a stated triggering event under any Benefit
Arrangement that will result in any payment (whether of
severance pay or otherwise) becoming due from Chiron,
the Company or any Subsidiaries to any present or
former officer, employee, director or consultant (or
dependents of any thereof) of the Company or any of its
Subsidiaries, or (ii) accelerate the time of, or upon
any act or event, or the lapse of time or both, result
in any payment or vesting, or increase the amount, of
compensation due to any employee, officer, director or
consultant of the Company or any Subsidiaries under any
Benefit Arrangements.
(e) To the knowledge of Chiron and the
Company, except as set forth on Schedule 2.15.2, all
Benefit Plans and Benefit Arrangements maintained for
foreign employees are in compliance in all material
respects in form and in operation with all laws
applicable to such Benefit Arrangements.
2.16 Certain Interests. Except as set forth in
Schedule 2.16, no officer or director of Chiron, the Company
or any Subsidiary is indebted or otherwise obligated to the
Company or any Subsidiary; and neither the Company nor any
Subsidiary is indebted or otherwise obligated to any such
officer or director, except for amounts due under normal
arrangements applicable to all employees generally as to
salary or reimbursement of ordinary business expenses.
2.17 Intercompany Transactions. Except as described in
Schedule 2.17, none of the goods and services provided by
Chiron or any Affiliate of Chiron (other than the Company
and the Subsidiaries) to the Company or any of its
Subsidiaries described in Schedule 2.17 is required or
necessary for the ongoing operation of the Company or any of
its Subsidiaries. Except as described in Schedule 2.17,
neither the Company nor any Subsidiary has any liabilities
or obligations to Chiron or any other Affiliate of Chiron
(other than the Company and the Subsidiaries) and none of
Chiron or such Affiliates has any obligations to the Company
or any Subsidiary. Except as described in Schedule 2.17,
consummation of the transactions contemplated by this
Agreement will not (either alone, or upon the occurrence of
any act or event, or with the lapse of time, or both) result
in any payment arising or becoming due from the Company or
any Subsidiary or the successor or assign of any thereof to
Chiron or any Affiliate of Chiron.
2.18 No Brokers or Finders. No agent, broker, finder,
or investment or commercial banker (other than Morgan
Stanley, Dean Witter & Co., as to whose fees and expenses
Chiron shall have full responsibility and neither the
Company nor any Subsidiary nor the Purchaser shall have any
responsibility) or other Person or firm engaged by or acting
on behalf of Chiron, Company or any Subsidiary or any of
their respective Affiliates in connection with the
negotiation, execution or performance of this Agreement or
the transactions contemplated by this Agreement, is or will
be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement or such
transaction.
2.19 Inventories. As of the Closing Date, the
inventory as set forth on the Closing Date Balance Sheet is
acquired and maintained in accordance with the regular
business practices of the Company and the Subsidiaries,
consists of new, unused and reconditioned items of a quality
and quantity usable or saleable in the ordinary course of
business, and is valued at reasonable amounts in accordance
with GAAP and consistent with GAAP and consistent with the
normal valuation policy of the Company. As of the Closing
Date, none of such inventory is obsolete, unusable, damaged
or unsalable in the ordinary course of business, except for
such items of inventory which have been written down to
realizable market value, or for which adequate reserves have
been provided, in the Closing Date Balance Sheet.
2.20 Receivables. As of the Closing Date, the accounts
receivable set forth on the Closing Date Balance Sheet
represent bona fide claims of the Company or the
Subsidiaries against customers for sales, services performed
or other charges arising on or before the date thereof. As
of the Closing Date, said accounts receivable are subject to
no defenses, counterclaims or rights of setoff, except to
the extent of the appropriate reserves for bad debts on
accounts receivable as set forth on the Closing Date Balance
Sheet.
2.21 Insurance. Attached as Schedule 2.21 is a list of
(a) all insurance policies and bonds provided by third
parties currently maintained by or on behalf of the Company
and its Subsidiaries or which were maintained by or on
behalf of the Company and its Subsidiaries during the past
two years and (b) any third party indemnities relating to
the Company or its Subsidiaries under which Chiron, the
Company or any Subsidiary is receiving currently any
payments. Neither the Company nor any Subsidiary is in
default under any such policy or bond, nor is Chiron or
Centaur in default under any such policy or bond, where such
default would provide any insurer with a defense to its
obligation to provide coverage or otherwise be likely to
interfere with such coverage. Except as disclosed on
Schedule 2.21, to the knowledge of Chiron, the Company and
the Subsidiaries, Chiron, Centaur, the Company or the
Subsidiaries, as the case may be, have timely filed claims
with, and given notice to, the applicable insurers with
respect to all written claims for which the Company and its
Subsidiaries or Chiron or Centaur (where the Company or its
Subsidiaries would be indirect beneficiaries under such
policies maintained by Chiron or Centaur consistent with
past practice) may reasonably be expected to have coverage.
Except as disclosed on Schedule 2.12, claims have been filed
with insurers with respect to each matter identified on
Schedule 2.12 and such claims are covered by the applicable
insurance policies of such insurers, subject to the
applicable deductible or self-insured retention amounts
under the policies of such insurers (excluding Centaur).
Except as disclosed on Schedule 2.21, the execution,
delivery and performance of this Agreement will not
constitute a breach or default of any such policies, bonds
or third party indemnities which would result in a
termination of existing coverage for any claims for which
notice was properly given prior to Closing, or in the case
of third party indemnities, loss of the right to receive
coverage following the Closing.
2.22 Chiron Canada. As of the Closing Date, Chiron
Canada has no assets related to or connected with the
business of the Company or any Subsidiary as presently
conducted.
2.23 Certain FDA Matters. Except as disclosed in
Schedule 2.23, there have been no product recalls or market
withdrawals by the Company or any Subsidiary since December
31, 1995.
2.24 Completeness. To the knowledge of Chiron, the
Company or any Subsidiary, the Schedules to Article II
attached hereto do not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading.
ARTICLE III
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to Chiron
that:
3.1 Organization and Authority. The Purchaser is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New York. The
Purchaser has full power and authority to execute, deliver
and perform this Agreement. The execution, delivery and
performance of this Agreement by the Purchaser and the
consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on
the part of the Purchaser. This Agreement constitutes a
valid and, assuming due execution by Chiron, and the
expiration or termination of the applicable waiting period
under the HSR Act, binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting
creditors' rights generally and to general equitable
principles.
3.2 Noncontravention. The execution, delivery and
performance of this Agreement by the Purchaser and the
consummation of the transactions contemplated hereby will
not violate or conflict with, or constitute a breach or
default (whether upon lapse of time and/or the occurrence of
any act or event or otherwise) under (a) the certificate of
incorporation or bylaws of the Purchaser, (b) any law,
regulation, order, judgment, or decree applicable to the
Purchaser or (c) any contract, indenture, mortgage or other
instrument to which the Purchaser is a party that is
material to the financial condition or results of operations
of the Purchaser; subject (as to clauses (b) and (c)
respectively) to the matters disclosed on Schedule 3.2.
3.3 No Governmental Consent or Approval Required. No
authorization, consent, approval or other order of,
declaration to, or registration, qualification, designation
or filing with, any governmental entity or body or any other
Person is required for or in connection with the execution,
delivery and performance of this Agreement by the Purchaser
and the consummation of the transactions contemplated
hereby, other than (a) the filing of notification under the
HSR Act and the expiration or early termination of the
waiting period thereunder as well as certain filings under
Competition Laws and (b) the matters identified in Schedule
3.3 as requiring that certain actions to be taken by or with
respect to any governmental entity or body or any other
Person.
3.4 Purchase for Investment. The Purchaser is
purchasing the Stock for investment for its own account and
not with a view to, or for sale in connection with, the
distribution thereof.
ARTICLE IV
Covenants of Chiron
4.1 Cooperation and Access. From and after the date
hereof, Chiron shall cause the Company and each Subsidiary
to afford promptly to employees of the Purchaser with
responsibility for a particular subject area or subject
matter, to the Purchaser's management personnel and to its
authorized representatives (which term shall include its
independent accountants and counsel) at all reasonable times
with reasonable prior notice full and unrestricted access to
the premises, facilities, properties, books, records,
lawsuit pleadings, work papers and personnel of the Company
and each Subsidiary, to furnish to the Purchaser copies of
such books, records, working papers and such other
additional financial, tax, legal, and operating data and
information as the Purchaser may reasonably request and to
permit the Purchaser and its authorized representatives to
discuss the business and operations of the Company and its
Subsidiaries with the officers, employees with
responsibility for a particular subject area or subject
matter, accountants and counsel of the Company and its
Subsidiaries in order to assist the Purchaser in its
evaluation of the business; provided, however, that the
Purchaser shall not interfere with the normal operation of
the business of the Company and its Subsidiaries and Chiron
shall have the right to participate in all discussions with
the accountants and counsel of the Company and its
Subsidiaries. To the extent Chiron incurs more than $50,000
in the aggregate of fees and expenses to its outside
accountants and counsel who participate in such discussions
with the Purchaser or its representatives, the Purchaser
will reimburse Chiron for the amount of such fees and
expenses that exceed $50,000, against receipt of invoices of
such accountants and counsel.
4.2 Conduct of Business.
4.2.1 Pre-Closing Negative Covenants. From
the date hereof until the Closing, without the prior written
consent of the Purchaser, which shall not be unreasonably
withheld, Chiron will not permit the Company or any
Subsidiary to:
(a) enter into, amend in any material
respect or terminate any Material Contract except in
the ordinary course of business consistent with past
practice;
(b) issue or transfer any capital stock of
the Company or any Subsidiary or any security
convertible into or exchangeable for any such capital
stock or any right to acquire any such capital stock,
except as expressly provided in Section 2.4;
(c) merge or consolidate with any entity
except as provided in Section 2.4 or acquire any stock
or other ownership interests in any entity or the
assets of any business substantially as an entirety,
except as disclosed in Schedule 4.2.1;
(d) make any change in its certificate of
incorporation or bylaws (or equivalent governing
instruments);
(e) sell, lease, pledge, encumber or
otherwise dispose of or transfer any of its assets or
property, except in the ordinary course of business
consistent with past practice;
(f) incur any third party indebtedness other
than ordinary course trade debt consistent with past
practice or, except as set forth on Schedule 4.2.1,
enter into any commitment or make any capital
expenditures or investments of more than $200,000 alone
or $1,000,000 in the aggregate other than as set forth
in the 1997 capital budget of the Company or as
required by existing contractual obligations;
(g) liquidate, dissolve or otherwise
reorganize or seek protection from creditors, except as
disclosed in Schedule 4.2.1;
(h) except in the ordinary course of
business, settle any claim, dispute or litigation in
consideration for anything other than payment of
monies;
(i) conduct their respective business other
than in the ordinary course, consistent with past
practice;
(j) terminate or fail to renew any insurance
coverage;
(k) grant any general or uniform increase in
the pay or benefits of employees, or any increase in
the pay, bonus or benefits of any individual employee
earning $50,000 or more in annual salary (including
bonus) other than in the ordinary course of business as
disclosed in Schedule 4.2.1 or as otherwise disclosed
on Schedule 4.2.1;
(l) enter into any employment contract that
is not terminable at will and without payment (other
than the payment of customary severance in accordance
with the Company's policies); or
(m) agree or commit itself to do any of the
foregoing.
4.2.2 Pre-Closing Affirmative. Prior to the
Closing, Chiron shall, and shall cause the Company and each
Subsidiary to, use commercially reasonable efforts to
preserve intact its business and the goodwill of its
customers, suppliers, employees, and others having business
relations with it.
4.3 Government Approvals. Chiron will, and will cause
the Company and the Subsidiaries, to prepare and file, at
the earliest practicable date, all applications and other
notices required in connection with, and will use its
commercially reasonable effort to obtain promptly , all
consents, approvals or other actions by any governmental
agency or authority required to be obtained by Chiron, the
Company or any Subsidiary in connection with the performance
of this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, promptly
prepare and file notification in accordance with the HSR Act
and other Competition Laws. Chiron will notify the
Purchaser of all requests, terms or conditions made or
sought to be imposed on the Company or any Subsidiary in
connection with obtaining such approvals and will discuss
with the Purchaser the acceptability of such requests, and
Chiron and the Purchaser will mutually agree on the response
to such requests.
4.4 Consents. Chiron will cause the Company and its
Subsidiaries to use commercially reasonable efforts to
obtain, at the earliest practicable date, the Contract
Approvals.
4.5 Material Developments, Reports, Etc.
4.5.1 Events or Occurrences. Chiron shall
promptly notify the Purchaser of any event which, to the
knowledge of Chiron, the Company or any of the Subsidiaries,
has had or might reasonably be expected to have a material
adverse effect on the assets, properties, condition
(financial or otherwise), results of operations or the
business of the Company or any of its Subsidiaries taken as
a whole.
4.5.2 Reports. Chiron shall deliver to the
Purchaser promptly after they become available the
operating and financial reports to the extent customarily
prepared (including projections and budgets) of the Company
and its Subsidiaries that are prepared for management of the
Company or Chiron and monthly and quarterly unaudited
balance sheets, statements of operation for the Company and
its consolidated Subsidiaries.
4.6 Intercompany Accounts. Prior to the Closing,
Chiron shall (a) cause to be eliminated any and all loans,
advances and other extensions of credit made between the
Company or any Subsidiary on the one hand, and Chiron and
any of its Affiliates (other than the Company or any
Subsidiary), and (b) cause to be transferred to it all cash
and cash equivalents of the Company and the Subsidiaries.
4.7 Claremont Property. On or before the Closing, the
Claremont Property will be transferred to Chiron by
quitclaim deed with no representations and warranties by the
Company. Following the Closing and until the third
anniversary date of the Closing, the Purchaser and the
Company shall have the right to occupy and use the currently
occupied portion of the Claremont Property exclusively and
on a rent-free basis, whether or not the Claremont Property
is sold to a third party.
4.8 Assignment of Leases. On or before the Closing,
at Chiron's option, the Huntington Lease and the Milton
Keynes Lease, together with all obligations of the Company
thereunder as lessee, will be assigned to Chiron pursuant to
the terms of an assignment and assumption agreement
reasonably acceptable as to form by the Purchaser or Chiron
will indemnify the Purchaser from such obligations.
4.9 No Solicitation. Chiron agrees that it will not,
nor will it permit the Company or its Subsidiaries to, nor
will it authorize any stockholder, officer, director,
employee of, or any investment banker, attorney or other
advisor or representative of, Chiron, the Company or its
Subsidiaries to, solicit or initiate or encourage the
submission of any proposal to acquire the Company or its
business; provided that nothing herein shall preclude
Chiron, the Company or its Subsidiaries from continuing
discussions and exchange of information with potential
purchasers who have indicated an interest prior to the date
hereof.
4.10 Payroll and Other Services. Following the
Closing, Chiron shall provide the Purchaser, for the benefit
of the Company, with such employee payroll, other employee-
related processing services, human resource and computer
services and laser servicing in Canada as were provided to
the Company prior to the Closing, but only as are reasonably
required by the Purchaser during the period that the
Purchaser is diligently pursuing the transition of the
employees of the Company over to its own services up to a
maximum of six months. Such services shall be provided at a
rate equal to Chiron's fully burdened cost plus 10%. At or
prior to the Closing, (a) Chiron and the Company will enter
into a co-promotion agreement in form and substance
reasonably satisfactory to the Purchaser to promote
Vitrasert through Chiron's Therapeutics Group for a period
of three years on reasonable terms and conditions, and (b)
Chiron shall cause Chiron B.V. to enter into an agreement in
form and substance reasonably satisfactory to the Purchaser
with the Company on reasonable terms and conditions under
which Chiron B.V. will, for a period of two years, provide
Vitrasert testing services ("Vitrasert Testing") to the
Company. The Purchaser shall agree to indemnify, defend and
hold harmless Chiron and its Affiliates from and against any
and all Losses arising out of or attributable to the
provision of all services provided under Section 4.10, other
than the co-promotion of Vitrasert. Chiron shall agree to
indemnify, defend and hold harmless the Purchaser, the
Company and their Affiliates from and against any and all
Losses arising out of or attributable to the negligence of
Chiron B.V. in connection with Vitrasert Testing.
4.11 Employee Provisions. Prior to the Closing, Chiron
shall exercise commercially reasonable efforts to enter into
an employment agreement with William Link on terms
acceptable to the Purchaser.
4.12 Use of Chiron Name. Following the Closing, the
Company and its Subsidiaries shall have the right to
continue to use the tradename of Chiron, any derivation
thereof or the Centaur design ("Chiron Name") which is
affixed to products, labeling, packaging materials or
promotional materials as of the Closing Date until the later
of (a) depletion of existing inventories, or (b) the date on
which any requisite regulatory approvals are obtained in
connection with the removal of the Chiron Name from the
foregoing; provided that such use shall in no event continue
longer than two years following the Closing. The Purchaser
will use its commercially reasonable efforts to secure any
such requisite regulatory approvals as promptly as
practicable following the Closing Date. Prior to the
Closing, the parties will enter into a trademark license
agreement in a form reasonably acceptable to Chiron and the
Purchaser governing such use of the Chiron name after the
Closing.
4.13 Insurance Coverage. Prior to the Closing, Chiron
shall take such action as may be required to ensure that any
insurance coverage for any claims that have been filed with
the applicable insurers prior to the Closing relating to the
Company and its Subsidiaries will continue with respect to
such claims following the Closing, and Chiron agrees to pay
to the Company insurance proceeds (net of any out-of-pocket
unreimbursed costs or expenses of Chiron incurred in defense
of such claim) resulting from such coverage promptly after
receipt thereof. From and after the date hereof, Chiron
shall diligently pursue insurance coverage for any claims
filed with Centaur and/or third party insurers prior to the
Closing relating to the Company and its Subsidiaries.
Following the Closing, Chiron shall be responsible for the
control of all claims filed with Centaur and the Company
shall be responsible for the control of all claims filed
with third party insurers, subject to the control exercised
by any insurers in accordance with the applicable insurance
policies. Following the Closing, Chiron shall transfer,
immediately, to the Company, all proceeds (net of
unreimbursed defense costs incurred by Chiron) to which it
is entitled to receive from Centaur and/or third party
insurers, as the case may be, as a result of such claims.
4.14 Human Resource Data Base. At the Purchaser's
request, following the Closing, Chiron shall provide the
Purchaser and the Company with reports containing the
information in Chiron's Human Resource Information System
relating to the domestic employees of the Company.
4.15 Alternative Deal Structures. From and after the
date hereof, the Purchaser and Chiron shall exercise
commercially reasonable efforts to evaluate, identify and
agree upon alternative means of structuring the transactions
contemplated hereby ("Alternative Deal Structures"),
including without limitation, asset transfers between
Subsidiaries of the Company and Affiliates of the Purchaser
for the purpose of providing to the Purchaser tax benefits
following Closing having a present value equal to no less
than $2 million (including the benefits to the Purchaser of
any Net Operating Losses of Chiron Adatomed at the Closing
plus any adjustment to the Purchase Price made pursuant to
Section 1.5.1(c)); provided that such structures impose no
additional cost on Chiron, the Company or the Subsidiaries.
4.16 Retention Bonus Payments. Chiron shall promptly
pay when due all payments to employees of the Company and
its Subsidiaries under the Chiron Retention Plan, Chiron
Transaction Team Program and the Executive Amendment to the
Company's Global Severance Program described in Schedule
4.16; provided that in the case of the Executive Amendment
to the Company's Global Severance Program, Chiron's
responsibility shall be limited to the amount by which the
payments required under such Executive Amendment exceed the
amounts that would have been required had the Company's
Global Severance Program not been so amended.
4.17 Confidentiality. Chiron, the Company and its
Subsidiaries, at all times prior to the Closing and after
any termination of this Agreement, will hold all
confidential information provided to Chiron by or on behalf
of the Purchaser in confidence and will not disclose such
information prior to Closing other than to directors,
officers, employees, and agents of Chiron who need to know
such information for the purposes of the transactions
contemplated by this Agreement. Upon any termination of
this Agreement, Chiron will promptly return to the Purchaser
such information provided to Chiron, including any copies of
such information; provided that Chiron may retain one copy
in its Law Department. Chiron acknowledges that the
Purchaser would be irreparably harmed by a breach of this
Section 4.17 and that there would be no adequate remedy at
law or in damages to compensate the Purchaser for any such
breach and agrees that, in addition to any other remedy, the
Purchaser shall be entitled to one or more injunctions
requiring specific performance by Chiron, the Company or its
Subsidiaries of this Section 4.17, and Chiron, the Company
and its Subsidiaries consent to the entry thereof.
4.18 Product Liability Claims. From and after the date
hereof, Chiron shall use commercially reasonable efforts to
pursue any claims for indemnification under agreements
identified on Schedule 4.18 arising out of any product
liability claims against the Company or any Subsidiary filed
prior to the Closing, and Chiron agrees to pay to the
Company all indemnification proceeds (net of any out-of-
pocket costs or expenses incurred by it in pursuing such
claims) resulting from such indemnification claims promptly
after receipt thereof; provided that notwithstanding the
foregoing, Chiron shall have no obligation to continue to
pursue such indemnification in the event it reasonably
determines that such pursuit would require it to institute
legal proceedings or is not likely to result in recovery;
further provided, however, that at the time of any such
determination, upon the Purchaser's request and at the
Purchaser's expense, Chiron shall pursue such third party
indemnification on the Purchaser's behalf.
ARTICLE V
Covenants of the Purchaser
5.1 Government Approvals. The Purchaser will prepare
and file, at the earliest practicable date, all applications
and other notices required in connection with, and will use
its commercially reasonable efforts to obtain promptly, all
consents, approvals or other actions by any governmental
agency or authority required to be obtained by the Purchaser
in connection with the performance of this Agreement and the
consummation of the transactions contemplated hereby,
including, without limitation, promptly prepare and file
notification in accordance with the HSR Act and other
Competition Laws. The Purchaser will notify Chiron of all
requests, terms or conditions made or sought to be imposed
on the Purchaser in connection with obtaining such approvals
and will discuss with Chiron the acceptability of such
requests, and the Purchaser and Chiron will mutually agree
on the response to such requests.
5.2 Confidentiality. The Purchaser, at all times
prior to the Closing and after any termination of this
Agreement, will hold all confidential information provided
to the Purchaser by or on behalf of Chiron, the Company or
any Subsidiary in confidence and will not disclose such
information prior to Closing other than to directors,
officers, employees and agents of the Purchaser who need to
know such information for the purposes of the transaction
contemplated by this Agreement. Upon any termination of
this Agreement, the Purchaser will promptly return to Chiron
all such information provided to the Purchaser, including
any copies of such information, provided that the Purchaser
may retain one copy in its Law Department. The Purchaser
acknowledges that Chiron would be irreparably harmed by a
breach of this Section 5.2 and that there would be no
adequate remedy at law or in damages to compensate Chiron
for any such breach and agrees that, in addition to any
other remedy, Chiron shall be entitled to one or more
injunctions requiring specific performance by the Purchaser
of this Section 5.2, and the Purchaser consents to the entry
thereof.
5.3 Employee Benefits. From and after the Closing
Date, the Purchaser shall provide the employees of the
Company and its Subsidiaries with employee benefit plans,
programs, policies or arrangements which are no less
favorable in the aggregate than the benefit plans, programs,
policies and arrangements provided by Chiron, the Company
and its Subsidiaries to employees of the Company and its
Subsidiaries prior to the Closing. In addition, the
Purchaser shall provide to employees of the Company and its
Subsidiaries benefit plans, programs, policies or
arrangements that in the aggregate will be approximately
comparable to the benefit plans, programs, policies or
arrangements provided by the Purchaser to its other
employees with similar levels of responsibility; provided
that new or additional benefits may in no event be provided
later than one year following the Closing and nothing shall
require the Purchaser to provide any particular benefit
plan, program, policy or arrangement not currently provided
by the Purchaser to its employees. To the extent any such
benefit plans, programs, policies or arrangements are not
currently provided by the Purchaser to its employees, the
Purchaser will provide replacement benefits that in the
aggregate are approximately comparable. Each such employee
benefit plan, program, policy or arrangement shall give full
credit for each participant's period of service with the
Company and its Subsidiaries prior to the Closing Date for
purposes of determining eligibility, vesting and the amount
of benefits (including subsidies relating to such benefits),
other than for the defined benefit plans. Each employee
welfare benefit plan provided by the Purchaser to the
employees of the Company and its Subsidiaries shall give
full credit for deductibles satisfied under the Company's
and its Subsidiaries' Benefit Plans with respect to the
current plan year toward any deductibles for the remainder
of the plan year during which the Closing occurs, and shall
waive any pre-existing condition limitation for any employee
covered under a Company or Subsidiary Benefit Plan (which is
a group health plan) immediately prior to the Closing Date.
Nothing contained in this Section 5.3 will create any third
party beneficiary rights in any employee or former employee
of the Company or any Subsidiaries in respect of continued
employment or any other matters including, but not limited
to, any rights in any benefit plan, program, policy or
arrangement provided by the Purchaser.
5.4 Warn Ac. The Purchaser shall comply with The
Worker Adjustment Retraining Notification Act (the "Warn
Act") and shall indemnify Chiron against liability
thereunder.
ARTICLE VI
Tax Matters
6.1 Definitions. For purposes of this Agreement,
"Taxes" shall mean all federal, state, local and foreign
income, property, sales and use, excise, withholding,
franchise, real and personal property, transfer, gross
receipt, capital stock, production, business and occupation,
disability, employment, payroll, severance and other taxes,
tariffs or government charges of any nature whatsoever, and
shall include any penalties or interest relating thereto,
and any Loss in connection with the determination,
settlement or litigation of any Tax liability; and "Net
Operating Losses" or "NOLs" shall mean the deduction
allowed as a carryforward for losses incurred in a prior
taxable period.
6.2 Tax Sharing Agreements; Tax and Other Returns and
Reports.
6.2.1 Tax Sharing Agreements. Chiron
represents and warrants to the Purchaser that, except as set
forth in Schedule 6.2.1, neither the Company nor any
Subsidiary is a party to any agreement, contract or
understanding relating to any sharing by the Company or any
Subsidiary of any Tax liability of any person or entity.
6.2.2 Tax and Other Returns and Reports.
Chiron represents and warrants to the Purchaser that, except
as set forth in Schedule 6.2.2, the Company and each
Subsidiary have timely filed or will file (or, where
permitted or required, its respective direct or indirect
parents have timely filed or will file) all required Tax
Returns and have paid all Taxes due for all periods ending
on or before the Closing Date. Except as disclosed in
Schedule 6.2.2, adequate provision has been made in the
books and records of the Company and each Subsidiary, and in
the Financial Statements referred to in Section 2.7 above or
in any other financial statements delivered or to be
delivered to the Purchaser, for all Taxes whether or not due
and payable and whether or not disputed. Neither the
Company nor any Subsidiary has elected to be treated as a
consenting corporation under Section 341(f) of the Code.
Schedule 6.2.2 lists the date or dates through which the IRS
and any other governmental entity or body have examined the
United States federal income tax returns and any other Tax
Returns of the Company and its Subsidiaries. All required
Tax Returns, including amendments to date, have been
prepared in good faith without negligence or willful
misrepresentation and are complete and accurate in all
material respects. Except as set forth in the Schedule
6.2.2, no governmental entity or body has, during the past
three years, examined or is in the process of examining any
Tax Returns of the Company or any Subsidiary. Except as set
forth on Schedule 6.2.2, no governmental entity or body has
proposed (tentatively or definitively), asserted or assessed
or, to the knowledge of Chiron, threatened to propose or
assert, any deficiency, assessment or claim for Taxes and
there would be no basis for any such deficiency assessment
or claim. Chiron has provided to the Purchaser all Tax
Returns filed for the Company on a separate basis (and
related work papers, audit papers or other relevant
documents for Tax Returns) and excerpts from consolidated
and combined returns relating to tax items of the Company,
included therein for the prior three years and for all prior
periods that are still open under the statute of limitations
which have been requested by the Purchaser or its duly
authorized representatives.
6.3 Pre-Closing Tax Indemnity. Chiron shall
indemnify, defend and hold harmless the Purchaser and its
Affiliates (including the Company and each Subsidiary) and
their respective directors, officers, employees and agents
from any Taxes imposed on the Company or any of its
Subsidiaries with respect to any taxable period, or portion
thereof, ending on or prior to the Closing Date (including
without limitation any such Taxes from, or Taxes related to
other transactions which are payable because of,
transactions or elections contemplated by this Agreement),
except to the extent of the aggregate amount of Taxes
reflected on the Closing Date Balance Sheet. Chiron shall
further indemnify, defend and hold harmless the Purchaser
and its Affiliates (including without limitation the Company
and each Subsidiary) and their respective directors,
officers, employees and agents against (a) Taxes for any
period whatsoever of any member of a consolidated or
combined tax group of which Chiron or any of its Affiliates
is, or was at any time, a member, for which the Company
and/or any Subsidiary is liable as a result of its inclusion
in such group, (b) any claim or demand for reimbursement or
indemnification resulting from any transfer by Chiron prior
to the Closing of any Tax benefits or credits to any other
Person, and (c) any Tax liabilities arising out of the
transfer of the Stock pursuant to this Agreement or the
transfer of the stock of Chiron Adatomed as contemplated
hereby. This Section 6.3 shall not apply to any increase in
tax resulting from any reassessment of real or personal
property taxes as a result of the transfer of stock of the
Company to the Purchaser, or with respect to any increase in
tax resulting from changes in the valuation of any asset or
liability of the Company due to the election contemplated
under Section 6.9.
6.4 De Minimis Taxes. Chiron shall not be liable
under Section 6.3 for any amount assessed for any particular
Tax or Tax period of less than $5,000.
6.5 Tax Periods. With respect to any Taxes for any
taxable period that includes but does not end as of the
Closing Date, the amount of Taxes subject to indemnification
hereunder shall be calculated as if such taxable period
ended as of the close of business on the Closing Date,
except that property Taxes calculated on an annual basis
shall be prorated based on the number of days in the annual
period elapsed through the Closing Date compared to the
number of days in the annual period elapsing after the
Closing Date.
6.6 Offset for Future Reductions. To the extent an
increase in Tax for any period which gives rise to a
liability of Chiron under Section 6.3 is the result of an
adjustment which will result in a corresponding decrease in
Tax for a subsequent period, Chiron shall be liable for the
full amount of such increase for such period and the
Purchaser shall pay Chiron the amount of such corresponding
decrease in Tax for such subsequent period (if any) when
such corresponding decrease in Tax is actually realized by
the Company in such subsequent period. Chiron promptly
shall indemnify and reimburse the Purchaser for any Loss if
such decrease in Tax, as claimed on a Tax Return or any
other document, is subsequently successfully contested by
the applicable taxing authority.
6.7 Net Operating Losses. The indemnity in Section
6.3 shall not apply to, and Chiron shall not be liable for,
any increase in Tax resulting from any adjustment to any Net
Operating Loss of the Company or its Subsidiaries available
to offset income of the Company or the Purchaser in a Tax
period beginning on or after the Closing Date.
Additionally, Chiron makes no representation with respect to
the ability of the Company or its Subsidiaries to use after
the Closing Date any Net Operating Loss available
immediately prior to the Closing Date, and Chiron shall not
have any indemnity obligation hereunder to the extent that
the Company, its Subsidiaries or the Purchaser are unable to
use after the Closing Date NOLs available immediately prior
to the Closing Date.
6.8 Tax Proceedings.
6.8.1. Right to Control Proceedings. Chiron
shall have the responsibility for, and the right to control,
at Chiron's expense, the audit (and disposition thereof) of
any Tax Return relating to periods ending on or prior to the
Closing Date and to participate in the disposition of the
audit of any Tax Return relating to the periods ending after
the Closing Date if such audit or disposition thereof could
give rise to a claim for indemnification hereunder (any such
audit or disposition, a "Tax Proceeding").
6.8.2. Notice; Reports. Chiron's right to
control a Tax Proceeding shall commence upon the receipt by
the Purchaser or any of its Affiliates (including, after the
Closing Date, the Company and its Subsidiaries) of a
proposed adjustment to Tax for the period under audit or
examination communicated in writing. The Purchaser shall
promptly notify Chiron in writing upon their learning of the
pendency of a Tax Proceeding and shall fully cooperate with
Chiron in the conduct of such Tax Proceeding. The Purchaser
shall provide to Chiron, once per year, a list of any Tax
audits, examinations or other proceeding that is or could
result in a Tax Proceeding in progress, the nature of the
Tax and Tax period involved and the status of the
proceeding, including the amount of the proposed adjustment,
if known. The failure on the part of the Purchaser to
promptly notify Chiron of the pendency of a Tax Proceeding
or the failure of the Purchaser to provide the information
set forth in the immediately preceding sentence shall not in
any way discharge Chiron's indemnity obligations hereunder,
except that the Purchaser shall be liable for any increase
in penalties, interest, other assessments or fees and
expenses which are due to any delay in promptly notifying
Chiron of the pendency of any Tax Proceeding and shall be
responsible for any indemnity obligations to the extent that
Chiron is materially prejudiced as a result of such delay.
Without the prior written consent of Chiron (which consent
shall not be unreasonable withheld), neither the Purchaser
nor any of its Affiliates shall settle or compromise any
claim for Taxes that might result in Chiron's being required
to make an indemnity payment pursuant to Section 6.3. The
Purchaser shall, and shall cause Company and Subsidiaries
to, cooperate with Chiron including providing reasonable
access to records, returns and supporting information, in
connection with any Tax Proceeding or matter as to which the
Purchaser may seek indemnity or other relief for Chiron
under this Article 6. The Purchaser promptly shall pay
Chiron any refunds, rebates or other recoveries received by
the Company or a Subsidiary on account of Taxes paid before
the Closing. The Purchaser shall have the right directly or
through its designated representatives, to review in advance
and comment upon all submissions made in the course of
audits or appeals thereof to any governmental entity or body
relating to periods ending or treated by this Agreement as
ending on or prior to the Closing Date and to approve the
disposition of any audit adjustment with respect to such
periods if such disposition will or might reasonably be
expected to result in an increase in Taxes, of $50,000 or
more, of the Purchaser, the Company and/or any Subsidiary
for any period beginning at or after the Closing or as to
which the Company and/or any Subsidiary is jointly or
severally liable as a result of its inclusion in such group
prior to the Closing Date. Chiron will not, and will not
permit any of its Affiliates to, without the consent of the
Purchaser (which consent shall not be unreasonably
withheld), make any elections with respect to Taxes that are
inconsistent with prior elections reflected in prior Tax
Returns or the Audited Financial Statements. Chiron will
not amend, or permit any of its Affiliates to amend, any Tax
Return for any period prior to or including the Closing Date
in a manner that would have an adverse effect on the
Company, any Subsidiary or the Purchaser or its Affiliates,
or subject them to any liability for Taxes, except for
amended returns necessary to correct any accounting or
computational error discovered subsequent to the Closing
Date or to make adjustments with respect to any item the
treatment of which is clear under applicable tax laws,
regulations or rulings. Chiron shall provide to the
Purchaser a copy of any amended return prepared thirty days
prior to the filing of such return.
6.9 Section 338(h)(10) Election. The Purchaser and
Chiron agree to join in the making of an election pursuant
to Section 338(h)(10) of the Internal Revenue Code of 1986,
as amended, for federal income tax purposes, but not for
California state tax purposes. The Purchaser shall prepare
an allocation schedule (the "Allocation Schedule")
allocating the Purchase Price and the liabilities of the
Company and its Subsidiaries among the assets of the Company
and its Subsidiaries in accordance with Section 1060 of the
Code and the regulations issued thereunder, and shall submit
such Allocation Schedule to Chiron for its review and
signature not later than 30 days prior to the filing date.
Chiron hereby agrees that so long as the Allocation Schedule
has been prepared in accordance with Section 1060 of the
Code and the regulations issued thereunder, it will file all
tax returns and reports in a manner consistent with the
Allocation Schedule and will not take any position for
purposes of any Taxes respecting the allocation of the
Purchase Price and the liabilities of the Company and its
Subsidiaries which is inconsistent with the Allocation
Schedule.
6.10 Survival, Etc. Notwithstanding anything to the
contrary contained in this Agreement, the representations
and warranties and the indemnification obligations set forth
in this Article VI shall survive the Closing and shall
remain in effect until the expiration of the applicable
statute of limitations. Any matter as to which a claim has
been asserted by notice to the other party that is pending
or unresolved at the end of any applicable limitation period
shall continue to be covered by this Article VI
notwithstanding any applicable statute of limitations (which
the parties hereby waive) until such matter is finally
terminated or otherwise resolved by the parties or by a
court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid. This Article VI
shall not be deemed to preclude or otherwise limit in any
way the exercise of any other rights or pursuit of other
remedies for the breach of this Agreement or with respect to
any misrepresentation. Chiron agrees to notify the
Purchaser of any liabilities, claims or misrepresentations,
breaches or other matters covered by this Article VI upon
discovery or receipt of notice thereof (other than from the
Purchaser), whether before or after the Closing.
ARTICLE VII
Conditions to Closing
7.1 General Conditions. Unless waived in writing by
all parties, the obligations of the parties to proceed with
the Closing are subject to the satisfaction of the
conditions that no law, rule, regulation, decree,
injunction, judgment, order, ruling or writ shall have been
enacted, entered, issued, promulgated or enforced by any
governmental entity or body, nor shall any action, petition,
investigation, suit or other proceeding have been instituted
and remain pending or, to the knowledge of Chiron or the
Purchaser, have been threatened and remain so by any
governmental entity or body at what would otherwise be the
Closing Date, which prohibits the transactions contemplated
by this Agreement.
7.2 Conditions to the Obligations of the Purchaser.
The obligations of the Purchaser to proceed with the Closing
are subject to the satisfaction at or prior to the Closing
of all of the conditions set forth in Section 7.1 and this
Section 7.2, any one or more of which conditions set forth
in this Section 7.2 may be waived, in whole or in part, by
the Purchaser:
7.2.1 Accuracy of Representations. The
representations and warranties of Chiron in this Agreement
shall be true and correct at and as of the date of the
Closing as if made at and as of the Closing, except where
the failure of the representations and warranties to be true
and correct would not reasonably be expected to have a
material adverse affect on the assets, properties, condition
(financial or otherwise), results of operations, or the
business of the Company and its Subsidiaries taken as a
whole, and the Purchaser shall have received (i) a
certificate, dated the Closing Date, of the Chief Financial
Officer or the Chief Executive Officer of Chiron to that
effect, (ii) a certificate, dated the Closing Date of the
Vice President of Regulatory Affairs to that effect with
sole and specific reference to Section 2.14 as it relates to
Regulatory Laws and (iii) certificates, dated the Closing
Date, of such officers or other employees of the Company
with responsibility for the particular subject areas or
subject matters covered in Article II to that effect with
respect to such particular subject areas or subject matters.
7.2.2 Performance of Covenants. Chiron shall
have performed and complied in all material respects with
all covenants and agreements contained in this Agreement
that are required to be performed or complied with by it at
or prior to the Closing, and the Purchaser shall have
received a certificate, dated the Closing Date, of the Chief
Financial Officer or the Chief Executive Officer of Chiron
to that effect.
7.2.3 HSR Act. The filing of the required
notification under the HSR Act and other Competition Laws
required to be filed prior to the Closing and the approval,
if applicable, or expiration or early termination of the
applicable waiting period, if any, without there being any
continuing objection thereto.
7.2.4 Stock Certificate. Chiron shall have
delivered to the Purchaser a certificate for the Stock, duly
endorsed (or accompanied by stock powers duly endorsed) in
blank.
7.2.5 Opinion of Chiron Counsel. The
Purchaser shall have received from William G. Green, Esq.,
Senior Vice President and General Counsel of Chiron, a legal
opinion in substantially the form attached as Exhibit B.
7.2.6 Consents. Chiron shall have obtained
and provided to the Purchaser all required authorizations,
approvals, consent and Permits listed on Schedule 2.3 and
shall have made all registrations and filings listed on
Schedule 2.3 and the Purchaser shall have obtained all
authorizations, approvals, consents and Permits listed on
Schedule 3.3 without any materially adverse conditions or
terms thereto, each in form and substance reasonably
satisfactory to the Purchaser.
7.2.7 Reserved.
7.2.8 Chiron Adatomed. Chiron shall have
transferred all of the capital stock of Chiron Adatomed to
the Company.
7.2.9 Chiron Canada. On or prior to the
Closing Date, the Company shall have transferred all of the
capital stock of Chiron Canada to Chiron in a transaction
the form and substance of which are reasonably satisfactory
to the Purchaser, and all of the assets and liabilities of
Chiron Canada (other than the Net Operating Losses) will be
transferred to the Company.
7.2.10 Registration of Directors. The
directors of the Company and its Subsidiaries shall have
submitted their resignations in writing to the Company and
the Subsidiaries, as applicable. Such resignations shall be
effective as of the Closing.
7.2.11 Non-Competition Agreements. Chiron
shall have executed and delivered and shall have caused its
Affiliates to execute and deliver a non-competition
agreement substantially in the form attached as Exhibit C
hereto.
7.2.12 Intercompany Transactions. Chiron shall
have delivered to the Purchaser evidence in form and
substance satisfactory to the Purchaser showing the
elimination of all of the intercompany indebtedness between
the Company and its Subsidiaries on the one hand and Chiron
and its other Affiliates on the other listed on Schedule
2.17 and the Company shall have transferred all of its cash
and cash equivalents to Chiron as of the Closing.
7.2.13 Material Adverse Change. There shall
not have been any material adverse change in or to the
assets, properties, condition (financial or otherwise),
results of operations, or the business of the Company and
its Subsidiaries taken as a whole between the date hereof
and the Closing Date, nor shall any events have occurred
between the date hereof and the Closing Date which would
reasonably be expected to result in such a material adverse
change.
7.2.14 Reserved.
7.2.15 Chiron Vision France, S.A. The
statutory net equity (as defined by applicable French or
English law) of Chiron Vision France, S.A. ("CV France")
and Chiron Vision (UK) shall have been increased to an
amount which satisfies the minimum statutory net equity
requirements under such law.
7.2.16 Cash Management. Any agreements or
arrangements providing Chiron with the right to remove cash
from bank accounts of the Company, after the Closing shall
have been terminated, and the Chief Financial Officer or the
Chief Executive Officer of Chiron shall have delivered to
the Purchaser a certificate to that effect.
7.3 Conditions to the Obligations of Chiron. The
obligations of Chiron to proceed with the Closing are
subject to the satisfaction at or prior to the Closing of
all of the conditions set forth in Section 7.1 and this
Section 7.3, any one or more of which conditions set forth
in this Section 7.3 may be waived, in whole or in part, by
Chiron.
7.3.1 Accuracy of Representations. The
representations and warranties of the Purchaser in this
Agreement shall be true and correct in all material respects
at and as of the date of the Closing as if made at and as of
the Closing, and Chiron shall have received a certificate,
dated the Closing Date, of the Chief Financial Officer of
the Purchaser to that effect.
7.3.2 Performance of Covenants. The Purchaser
shall have performed and complied in all material respects
with all covenants and agreements contained in this
Agreement that are required to be performed or complied with
by it at or prior to the Closing, and Chiron shall have
received a certificate, dated the Closing Date, of the Chief
Financial Officer of the Purchaser to that effect.
7.3.3 HSR Act. The filing of the required
notice under the HSR Act and other Competition Laws required
to be filed prior to the Closing and the approval, if
applicable, or expiration or early termination of the
applicable waiting period, if any, without there being any
continuing objection thereto.
7.3.4 Payment. The Purchaser shall have
delivered to Chiron by wire transfer to such bank account as
Chiron shall specify in writing cash in immediately
available funds in the amount of the Purchase Price, subject
to the provisions of Section 1.4.
7.3.5 Opinion of Purchaser Counsel. Chiron
shall have received from Robert B. Stiles, Senior Vice
President and General Counsel of the Purchaser, a legal
opinion in substantially the form attached as Exhibit D.
7.3.6 Claremont Lease. Chiron and the
Purchaser shall have entered into an agreement providing for
the occupancy by the Purchaser of the Claremont Property as
provided in Section 4.7, payment by the Purchaser of all
maintenance and operating expenses and indemnification for
any Losses incurred by Chiron as a result of any acts or
omissions by the Company or its Subsidiaries in connection
with their occupancy of the Claremont property following the
Closing.
ARTICLE VIII
Termination
8.1 Grounds for Termination. This Agreement may be
terminated at any time prior to Closing:
8.1.1. Mutual Agreement. by the mutual written
agreement of Chiron and the Purchaser;
8.1.2 Expiration. by Chiron or by the
Purchaser if the Closing shall not have occurred on or
before February 28, 1998, or such other date upon which
Chiron and the Purchaser may agree in writing; provided,
however, that February 28, 1998 shall be extended until the
end of any cure period which commences prior thereto under
either Section 8.1.7 or Section 8.1.9;
8.1.3 Contravention of Law. by Chiron or by
the Purchaser if consummation of the transactions
contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body
having competent jurisdiction;
8.1.4 Fiduciary Obligation. by Chiron if the
Chiron Board of Directors shall have determined reasonably
and in good faith, upon the advice of outside Delaware
counsel, that such termination is required by its fiduciary
duties to Chiron stockholders under applicable laws, by
reason of an alternative, bona-fide offer having been made
for the acquisition of the Company and its Subsidiaries or
of all or substantially all of their businesses;
8.1.5 Purchaser's Breach. by Chiron (a) if
the Purchaser shall refuse or fail after notice to perform
any material covenant or agreement required to be performed
by it under this Agreement or (b) if any representation or
warranty of the Purchaser contained in this Agreement shall
prove to have been inaccurate or misleading in any material
respect at the time when made;
8.1.6 Reserved.
8.1.7 Chiron's Breach. by the Purchaser (a)
if Chiron shall refuse or fail after notice to perform any
material covenant or agreement required to be performed by
it under this Agreement and such failure is not reasonably
capable of being cured or, if capable of being cured, is not
cured by Chiron by the earlier of thirty days after the
receipt of notice thereof, or (b) if Chiron breaches any
material covenant under Section 4.2, and such breach would
reasonably be expected to have a material adverse effect on
the assets, properties, condition (financial or otherwise),
results of operations, or the business of the Company and
its Subsidiaries taken as a whole, and such breach is not
reasonably capable of being cured or, if capable of being
cured, is not cured by Chiron within 30 days after receipt
of notice thereof.
8.1.8 Failure of a Chiron Condition. by
Chiron at any time after the date hereof if any event occurs
or condition exists which would render impossible the
satisfaction of one or more conditions to the obligations of
Chiron to consummate the transactions contemplated by this
Agreement as set forth in Section 7.1 or Section 7.3 and
such event or condition is not reasonably capable of being
cured or, if capable of being cured, is not cured by the
Purchaser within 30 days after the receipt of notice of such
event or condition; and
8.1.9 Failure of a Purchaser Condition. by
the Purchaser at any time after the date hereof if the
satisfaction of one or more conditions to the obligations of
the Purchaser to consummate the transactions contemplated by
this Agreement as set forth in Section 7.2.1 or Section
7.2.13 has become impossible, and is not reasonably capable
of being cured or, if capable of being cured, is not cured
by Chiron within 30 days after receipt of such notice of
such fact.
8.2 Notice. Any party desiring to terminate this
Agreement pursuant to this Section shall give written notice
of termination to the other party.
8.3 Effect of Termination. Subject to the provisions
of Section 8.4, if this Agreement is terminated pursuant to
Section 8.1, such termination shall be without liability of
any party (or any shareholder, director, officer, employee
or agent of any party) to any other party to this Agreement.
The provisions of this Section 8.3 and Section 5.2 shall
survive any termination hereof.
8.4 Termination Fees.
8.4.1. Payments by the Purchaser. In the event
that the transactions contemplated by this Agreement are not
consummated by the Purchaser, the Purchaser shall pay to
Chiron the sum of $15 million in cash as a termination fee,
unless the reason the transactions have not been consummated
is based on any of the following: (i) a termination of this
Agreement by Chiron under Section 8.1.3 or 8.1.4 or because
of a failure of the condition set forth in Section 7.3.3 or
(ii) a termination by the Purchaser either under Section
8.1.7 or 8.1.9, or because of a failure of the condition set
forth in Section 7.2.3.
8.4.2 Payment by Chiron. If this Agreement is
terminated by Chiron pursuant to Section 8.1.4, Chiron shall
immediately pay to the Purchaser the sum of $15 million in
cash as a termination fee.
ARTICLE IX
Representations and Warranties; Indemnities; Survival
9.1 Chiron General Indemnity. Chiron shall indemnify
and hold harmless the Purchaser and its Affiliates and their
respective directors, officers, employees and agents against
any and all Losses arising out of or attributable to the
following matters:
9.1.1 Representations, Warranties and
Covenants.
(a) The breach or inaccuracy of any
representation or warranty of Chiron contained in this
Agreement, (b) any matter (other than third party
claims) included on an Amended Schedule arising after
the date of this Agreement but before the Closing that
would have constituted a breach or inaccuracy of any
representation or warranty of Chiron had it occurred
prior to the date of this Agreement and not been
disclosed and (c) the breach or failure to perform any
covenant or agreement to be performed by Chiron or any
of its Affiliates under this Agreement other than under
Section 4.2 and Section 4.5. Chiron, however, shall
not be liable for any indemnity amounts in respect of
Losses under this Section 9.1.1 unless (i) the amount
of such Losses (less payments received from insurance
and third party indemnification, subject to the
provisions of Section 9.4) relating to any claim made
by a third party against the Company or any Subsidiary
for infringement of a patent to the extent arising out
of or attributable to any act or omission that occurred
prior to the Closing (other than claims identified on
Schedule 2.13) exceeds $2.5 million individually, or
(ii) in any other case, the amount of such Losses
exceeds $1 million individually and in both cases
exceeds $5 million in the aggregate, in which event
Chiron shall indemnify and hold harmless the Purchaser
and its Affiliates and their respective directors,
officers, employees and agents for all Losses related
to an individual claim that exceeds $2.5 million or $1
million, as the case may be, including the first $1
dollar of such claims. The indemnity obligations of
Chiron under this Section 9.1.1 shall expire upon the
conclusion of the second year-end audit following the
Closing, but in no event later than the conclusion of
the audit of the Company's financial statements for the
period ending December 31, 1998.
9.1.2 Third Party Claims.
(a) Any claim asserted against the Company
or any of its Subsidiaries by a third party after the
Closing to the extent arising out of or attributable to
any act or omission that occurred prior to the date of
this Agreement, except to the extent reserved against
in, or reflected as a liability on, the Audited Balance
Sheet or the Schedules, (b) any third party claim
arising out of or attributable to the matters disclosed
on Schedule 9.1.2(b), (c) any product liability claims
against the Company or its Subsidiaries disclosed on
Schedule 9.1.2(c) to the extent the Company and its
Subsidiaries do not receive insurance proceeds or third
party indemnification, and (d) any third party claim to
the extent arising out of or attributable to any act or
omission that occurred after the date of this Agreement
but before the Closing and is disclosed to the
Purchaser on an Amended Schedule other than matters
expressly permitted or consented to by the Purchaser
under Section 4.2 and Section 4.5. Chiron, however,
shall not be liable for any indemnity amounts in
respect of Losses under this Section 9.1.2 unless the
amount of such Losses, less payments received from
insurance and third party indemnification, subject to
Section 9.4, received by the Purchaser after pursuing
the same in accordance with Section 9.4 exceeds $5
million in aggregate and (i) $50,000 with respect to
any single claim under subparagraph (a) and (ii)
$100,000 with respect to any single claim under
subparagraph (d), in which events Chiron shall
indemnify and hold harmless the Purchaser and its
Affiliates and their respective directors, officers,
employees and agents for 50% of all such Losses in
excess of the applicable threshold. Losses indemnified
under this Section 9.1.2 shall (i) include costs and
expenses of defense of such third party claims as well
as amounts paid to such third party claimants (whether
by way of final court order or out-of-court settlement)
and (ii) shall exclude any other Losses arising out of
or attributable to such third party claims, including
without limitation, costs and expenses incurred to
effect any change to the assets, properties, condition
or business of the Company and its Subsidiaries. The
indemnity obligations of Chiron under this Section
9.1.2 shall expire upon the date two years after the
Closing.
9.1.3 Environmental Claims. Any Losses of the
Company or any Subsidiary arising out of the violation of
any Environmental Law which violation occurred prior to the
Closing. Chiron shall indemnify and hold harmless the
Purchaser and its Affiliates and their respective directors,
officers, employees and agents for all such Losses (after
insurance and third party indemnification, subject to the
provisions of Section 9.4). The indemnity obligations of
Chiron under this Section shall expire upon the date five
years after the Closing.
9.1.4 Tax Losses. Losses related to Tax
matters are expressly excluded from Section 9.1 and Article
IX (except with respect to indemnification procedures, which
shall be governed by Section 9.3) and instead shall be
governed by the provisions of Article VI.
9.1.5 Liability Limits. The obligations of
Chiron to indemnify the Purchaser under Section 9.1 for
Losses incurred as a result of any claims asserted against
the Company or against the Purchaser arising out of any
violations of any Environmental Laws, Regulatory Law or
alleged or actual infringement by the Company or any
Subsidiary of any patent of any other Person shall be
limited to an aggregate maximum of $100 million. The
obligations of Chiron to indemnify the Purchaser under any
other clause or provision in Section 9.1 for Losses incurred
by the Company or by the Purchaser shall be limited to an
aggregate maximum of $50 million. The obligations of Chiron
to indemnify the Purchaser under Section 9.1 and under the
provisions of Article VI with respect to any tax matter or
as a result of fraud on the part of Chiron shall not be
limited as to amount.
9.1.6 Miscellaneous. Notwithstanding anything
to the contrary contained herein, neither party hereto (the
"Indemnitor") shall be responsible for indemnifying the
other party or its Affiliates or any of their respective
directors, officers, employees or agents (collectively, the
"Indemnitee") for any consequential damages incurred by
the Indemnitee, including loss of profits of the Indemnitee,
resulting from any event giving rise to the Indemnitee's
indemnity claim. This Article IX shall constitute exclusive
remedy for any and all claims arising out of the
transactions contemplated hereby. This Section 9.1.6 shall
survive any termination of this Agreement.
9.2 Purchaser General. The Purchaser shall indemnify
and hold harmless Chiron and its Affiliates and their
respective directors, officers, employees and agents against
any and all Losses to the extent arising out of or
attributable to (a) the inaccuracy of any representation and
warranty of the Purchaser contained in this Agreement and
(b) the breach or failure to perform any covenant or
agreement to be performed by the Purchaser under this
Agreement.
9.3 Indemnification Procedures. Any person seeking
indemnity pursuant to Section 9.1 or Section 9.2 (the
"Indemnified Party") shall use its reasonable efforts to
notify the indemnifying party in writing promptly upon
becoming aware of any claim, suit, proceeding or liability
to which such indemnification may apply; provided however
that any failure to provide such notice shall not constitute
a waiver of the indemnifying party's indemnity obligations
hereunder except to the extent the indemnifying party is
actually prejudiced in defense of a third party's claim
against the Indemnified Party. The indemnifying party shall
have the right, within ten business days of receipt of
notice thereof, to assume and control the defense and
settlement of, a third party's claim, suit or proceeding
against the Indemnified Party (a "Third Party Claim") at
the indemnifying party's sole cost and expense and with
counsel reasonably satisfactory to the Indemnified Party;
provided, however, that the indemnifying party will not have
the right to assume the defense of any Third Party Claim
that seeks criminal penalties. If the indemnifying party's
right to assume the defense is exercised, the indemnifying
party shall be deemed to have waived all rights to contest
its liability to the Indemnified Party in respect of such
Third Party Claim. The Indemnifying Party will not settle
or compromise any Third Party Claim that it elects to defend
without the prior written consent of the Indemnified Party,
which consent will not be unreasonably withheld. If the
right to assume and control the defense is exercised, the
Indemnified Party shall have the right to participate in,
but not control, such defense at its own expense and the
indemnifying party's indemnity obligations shall be deemed
not to include attorneys' fees and litigation expenses
incurred in such participation by the Indemnified Party
after the assumption of the defense by the indemnifying
party. If the indemnifying party does not assume the
defense of the Third Party Claim, the Indemnified Party may
defend and settle the Claim for the account and cost of the
indemnifying party; provided, that the Indemnified Party
will not settle the Third Party Claim without the prior
written consent of indemnifying party, which consent will
not be unreasonably withheld. The indemnifying party will
promptly pay, or reimburse the Indemnified Party for payment
of, costs and expenses (including fees and expenses of
counsel) incurred in the defense thereof. The Indemnified
Party shall cooperate with the indemnifying party and,
subject to obtaining proper assurances of confidentiality
and privilege, will make available to the indemnifying party
all pertinent information under the control of the
Indemnified Party.
9.4 Pursuit of Insurance and Third Party
Indemnification. The Purchaser shall consult with Chiron
regarding the pursuit of insurance and third party
indemnification and, subject to the following sentence, the
Purchaser will diligently pursue insurance and third party
indemnification for a period of one year. Notwithstanding
the foregoing, the Purchaser shall have no obligation to
continue to diligently pursue insurance or third party
indemnification in the event it reasonably determines that
such pursuit would require it to institute legal proceedings
or is not likely to result in any recovery; provided that at
the time of any such determination, the Purchaser shall
either assign to Chiron the right to pursue such insurance
or third party indemnification or, upon Chiron's request and
at Chiron's expense, pursue such insurance or third party
indemnification on Chiron's behalf.
9.5 Survival. Any matter as to which a claim has been
asserted by notice to the other party that is pending or
unresolved at the end of any applicable limitation period or
on any applicable expiration date of such other party's
indemnity obligations hereunder shall continue to be covered
by this Article IX notwithstanding any applicable expiration
of any party's indemnity obligations set forth in this
Article IX until such matter is finally terminated or
otherwise resolved by the parties or by a court of competent
jurisdiction and any amounts payable hereunder are finally
determined and paid.
ARTICLE X
Certain Definitions
10.1 Certain Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless
the context otherwise requires:
"Affiliate" means a Person that directly, or
indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, a
specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control
with"), as applied to any Person, means (a) the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person,
whether through the ownership of voting securities or by
contract or otherwise, or (b) the ownership of more than 25%
of the voting securities of that Person. Notwithstanding
anything to the contrary contained herein, "Affiliate"
shall not include, in the case of Chiron, Novartis AG or any
Affiliate of Novartis (other than Chiron and its
subsidiaries).
"Agreed Procedure" shall mean, when used with
reference to the Closing Date Balance Sheet, that such
Balance Sheet will be prepared from the books and records of
the Company in accordance with GAAP in a manner consistent
with past practices, except that the standard of materiality
applicable shall be that which would be appropriate for the
Company as an independent entity without regard to its
consolidation with Chiron.
"Agreement" means this Agreement by and among Chiron
and the Purchaser, as amended or supplemented together with
all Exhibits and Schedules attached or incorporated by
reference.
"Centaur" shall mean Chiron's wholly-owned captive
insurance subsidiary.
"Claremont Property" shall mean the real property and
improvements thereon owned by the Company and located in
Claremont, California.
"Code" shall mean the United States Internal Revenue
Code of 1986, as amended.
"Environmental Laws" shall mean all laws relating to
the protection of the environment including all requirements
pertaining to reporting, licensing, permitting, controlling,
investigating, or remediating emissions, discharges,
releases, or threatened releases of Hazardous Substances,
chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater
or land, or relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Substances, chemical substances,
pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any company that, as of
the relevant measuring date under ERISA, is a member of a
controlled group of corporations or under common control
with the Company or any Subsidiary within the meaning of
Section 414(b) and (c) of the Code.
"GAAP" shall mean generally accepted accounting
principles in the United States as in effect from time to
time.
"Hazardous Substances" shall mean substances that are
defined or listed in, or otherwise classified pursuant to,
any applicable laws as "hazardous substances," "hazardous
materials," "hazardous wastes" or "toxic substances," or
any other formulation intended to define, list or classify
substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, radioactivity,
carcinogenicity, reproductive toxicity or "EP toxicity,"
and petroleum and drilling fluids, produced waters and other
wastes associated with the exploration, development, or
production of crude oil, natural gas or geothermal energy.
"Huntington Lease" shall mean the lease dated
September 12, 1991 between Acorn Development, Inc. and
Intraoptics, Inc.
"Knowledge" shall mean, with respect to any Person,
the actual knowledge of any officer of such Person, the law
department of such Person or any other employee of such
Person with responsibility for the particular subject area
or subject matter.
"Lien" shall mean any mortgage, pledge, security
interest, lien, charge, encumbrance, equity, claim, option,
tenancy, right or restriction on transfer of any nature
whatsoever.
"Loss" shall mean any loss, damage, liability, cost,
deficiency, assessment and expense including, without
limitation, any interest, fine, court cost and reasonable
investigation cost, penalty and attorneys' and expert
witnesses' fees, disbursements and expenses, but shall not
include any component of damages for lost profits of, or
consequential damages suffered by, Chiron, the Purchaser,
the Company, its Subsidiaries or any of their respective
Affiliates or any of their respective directors, officers,
employees and agents.
"Lyon Reserve" shall mean an amount reflected on the
Audited Balance Sheet and the Closing Date Balance Sheet as
a reserve for rental obligations in excess of market value
under the lease dated January 2, 1990 between Domilyon
Corporation and Domilens Laboratories, as amended by a First
Amendment dated May 10, 1994.
"Milton Keynes Lease" shall mean the lease dated May
25, 1990 between Milton Keynes Development Corporation and
Intraoptics (UK) Limited.
"Net Assets" shall mean, when used with reference to
the Audited Balance Sheet and the Closing Date Balance Sheet
(prepared in accordance with the Agreed Procedure in the
case of the Closing Date Balance Sheet), as the case may be,
total assets of the Company adjusted for purposes of
calculating the Upward Purchase Price Adjustment or Downward
Purchase Price Adjustment, as the case may be, by excluding
(a) cash, (b) the net value (gross value minus depreciation)
of the Claremont Property, (c) intangible assets, net of
accumulated amortization, consisting of purchased
technology, patents, licenses, goodwill, tradenames,
customer lists and start up costs (except for consideration
provided to Luis Ruiz and Sergio Lenchig capitalized in
accordance with GAAP), (d) any deferred tax assets for which
the Company will not obtain a future benefit as a result of
the Section 338(h)(10) election, and (e) with respect to the
Closing Date Balance Sheet only, any amounts paid prior to
or as of the Closing Date to Johann F. (Hans) Hellenkamp
which are capitalized on the Closing Date Balance Sheet in
accordance with GAAP other than amounts creditable against
royalties accruing following the Closing (not to exceed
$250,000), less (i) current liabilities other than current
portion of long-term liabilities except the portion of such
liabilities relating to capital leases), (ii) long-term
capital leases, (iii) that portion of the Lyon Reserve which
corresponds to periods following September 30, 1998, and
(iv) with respect to the Closing Date Balance Sheet only two
times the value of (A) the note payable to CEMPE with a
maturity date of October 31, 1999, (B) that portion of the
Lyon Reserve that corresponds to periods prior to September
30, 1998, (C) other long-term liabilities including taxes,
but excluding any deferred tax liabilities which the Company
will not be obligated to pay as a result of the Section
338(h)(10) election, (D) obligations relating to the Milton
Keynes Lease and the Huntington Lease (unless such leases
shall have been assigned to Chiron with any requisite
consents, and Chiron shall have assumed such obligations
effective as of the Closing Date), and (E) the current
portion of long-term liabilities except the portion of such
liabilities relating to capital leases.
"Permit" shall mean any license, permit, franchise,
certificate of authority, or order, or any waiver of the
foregoing, required to be issued by any Governmental Entity.
"Permitted Liens" shall mean the following types of
Liens: (a) statutory Liens of landlords, statutory Liens of
banks and rights of set-off, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen,
and other Liens imposed by law, in each case incurred in the
ordinary course of business (i) for amounts not yet overdue
or (ii) for amounts that are overdue and that (in the case
of such amounts overdue for a period in excess of 30 days)
are being contested in good faith by appropriate
proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have
been made for any such contested amounts; (b) easements,
rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do
not and will not interfere in any material respect with the
ordinary conduct of the business of Company or any of its
Subsidiaries; (c) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
and (d) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or
regulate the use of any real property and (e) Liens that do
not either adversely affect the value of the real property
subject to such Lien or prohibit or interfere with the
operations of that real property or the business of the
Company or the Subsidiaries.
"Person" shall mean an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization, a governmental entity or any other entity.
"Products" shall mean products, technology and
services, manufactured, sold, licensed, or otherwise
exploited by the Company or any Subsidiary in connection
with their business prior to the Closing.
"Regulatory Law" shall mean the FDC Act or any
similar or analogous legislation in any foreign jurisdiction
and the regulations of the FDA or any similar or analogous
foreign governmental entity or body.
"Schedule" means a disclosure schedule delivered by
Chiron to the Purchaser prior to the date of this Agreement
and "Amended Schedule" means an amendment to a Schedule,
delivered by Chiron to the Purchaser prior to the Closing,
that includes disclosure of events occurring or facts
arising after the date of this Agreement.
"Tax Return" means a report, return or other
information required to be supplied to a governmental entity
or body with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of
entities that includes the Company or any Subsidiary.
ARTICLE XI
Miscellaneous
11.1 Amendments. This Agreement may not be amended or
modified except by express written consent of the parties
hereto in an agreement or instrument of comparable
significance to this Agreement.
11.2 Assignment. Neither party may assign this
Agreement or its rights or obligations hereunder, whether by
operation of law or otherwise, to any third party without
the prior written consent of the other party.
11.3 Notices. All notices or communications hereunder
shall be sent by overnight mail by courier of nationally
recognized standing addressed as follows (or such other
address as such party may designate in writing):
To Chiron:
Chiron Corporation
4560 Horton Street
Emeryville, California 94608-2916
Attention: Chief Executive Officer
Telefax: (510) 655-6281
With a copy to:
Chiron Corporation
4560 Horton Street
Emeryville, California 94608-2916
Attention: General Counsel
Telefax: (510) 654-5360
To the Purchaser:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: Chief Executive Officer
Telefax: (716) 338-6805
With a copy to:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: General Counsel
Telefax: (716) 338-8706
Any notice hereunder shall be effective upon receipt by the
intended recipient.
11.4 Severability. If any provision of this Agreement
shall be held to be invalid or otherwise unenforceable under
applicable law, such provision shall be deemed severed and
all other provisions shall nevertheless continue in full
force and effect; provided that the parties shall negotiate
in good faith to resolve any inequities created by such
partial unenforceability.
11.5 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one and
the same instrument.
11.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California.
11.7 Interpretation. When a reference is made in this
Agreement to an Article, Section, Exhibit or Schedule, such
reference is to an Article or Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" and
"including" are used in this Agreement, they are deemed to
be followed by the words "without limitation." For all
purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (a) the
terms defined include the plural as well as the singular,
(b) all accounting terms not otherwise defined herein have
the meanings assigned under GAAP, and (c) the words
"herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision.
11.8 Entire Agreement. This Agreement, together with
any agreement executed and delivered by the parties
concurrently herewith and the Schedules and Exhibits
attached hereto, constitutes the entire agreement between
the Purchaser and Chiron with respect to the subject matter
hereof. There are no representations, warranties, covenants
or undertakings with respect to the subject matter hereof
other than those expressly set forth herein. This Agreement
supersedes all prior agreements between the parties with
respect to the Stock purchased hereunder and the subject
matter hereof.
11.9 Publicity. The parties jointly will prepare a
news release or other announcement regarding this Agreement
and, subject to their respective legal obligations
(including requirements of the New York Stock Exchange and
other similar regulatory bodies), thereafter will consult
with each other regarding the text of any press release or
other public statement (including any filings with any
federal or state governmental or regulatory agency) relating
to the transaction contemplated by this Agreement prior to
any release or filing thereof.
11.10 Efforts; Further Assurances. Each party will
use its commercially reasonable efforts to cause all
conditions to its obligations hereunder to be timely
satisfied and to perform and fulfill all obligations on its
part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement
shall be effected substantially in accordance with its terms
as soon as feasible. The parties shall cooperate with each
other in such actions and in securing requisite approvals,
consents and authorizations. Each party shall execute and
deliver both before and after the Closing such further
certificates, agreements and other documents and take such
other actions as the other party may reasonably request as
may be necessary or appropriate to consummate or implement
the transactions contemplated hereby or to evidence such
events or matters. Each party agrees to cause its
subsidiaries to comply with any obligations hereunder
relating to such subsidiaries and to cause its subsidiaries
to take any other action which may be necessary or
reasonably requested by the other party in order to
consummate the transactions contemplated by this Agreement.
11.11 Expenses. Subject to Article VI and Article
IX, Chiron and the Purchaser shall each pay their own
expenses incident to the negotiation, preparation and
performance of this Agreement and the transactions
contemplated hereby, including but not limited to the fees,
expenses and disbursements of their respective investment
bankers, accountants and counsel. Any such expenses of
Company and the Subsidiaries shall be paid by Chiron on or
prior to the Closing.
IN WITNESS WHEREOF, this Agreement has been executed
and delivered as of the date first above written, by the
duly authorized representatives of the parties hereto.
BAUSCH & LOMB INCORPORATED
By:___________________________
William M. Carpenter
President and Chief
Executive Officer
By:___________________________
Stephen C. McCluski
Senior Vice President,
Finance
CHIRON CORPORATION
By:___________________________
Edward E. Penhoet, Ph.D.
President and Chief
Executive Officer
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT dated as of October 21, 1997
(this "Agreement") by and among AMERICAN CYANAMID COMPANY, a
Maine corporation ("Cyanamid"), AMERICAN HOME PRODUCTS
CORPORATION, a Delaware corporation ("AHP" and, together with
Cyanamid, "Sellers"), and BAUSCH & LOMB INCORPORATED, a New
York corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Sellers desire to sell to Buyer, and Buyer
desires to acquire from Sellers, the Business (as defined
herein), which the parties agree will be effected by the purchase
and sale of the Shares (as defined herein) and the Assets (as
defined herein), all on the terms and subject to the conditions
set forth herein;
WHEREAS, Cyanamid owns and has the legal right and
authority to sell, transfer, assign and deliver the Storz Shares
(as defined herein) of STORZ INSTRUMENT COMPANY, a Missouri
corporation ("Storz"), and the Ophthalmics Shares (as defined
herein) of STORZ OPHTHALMICS, INC., a Delaware corporation
("Ophthalmics"), which Shares constitute all of the issued and
outstanding shares of capital stock of Storz and Ophthalmics,
respectively;
WHEREAS, AHP indirectly owns and has the legal right
and authority to cause its subsidiaries to sell, transfer, assign
and deliver the Chirurgie Shares (as defined herein) of Cyanamid
Chirurgie S.A.S., a company organized under the laws of France
("Chirurgie"), which Shares constitute all of the issued and
outstanding shares of capital stock of Chirurgie;
WHEREAS, the Assets are owned by Sellers or their
Affiliates and Sellers desire to sell to Buyer, and desire that
such Affiliates sell to Buyer, and Buyer desires to purchase from
Sellers and such Affiliates, the Assets, and in connection with
such purchase and sale, Buyer is willing to assume certain
liabilities of Sellers and such Affiliates and to employ the
employees of Sellers and such Affiliates related to the Business,
all on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the foregoing
premises and the representations, warranties, covenants and
agreements herein contained, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, unless otherwise
clearly indicated by the context, the terms defined below shall
have the indicated meanings:
ARTICLE 1.1 "Accountant" shall have the meaning
set forth in Section 3.5.3.
ARTICLE 1.2 "Affiliate" shall mean, with respect
to any Person, any Person which directly or indirectly through
stock ownership or through other arrangements either controls, or
is controlled by or is under common control with, such Person,
provided, however, for purposes of this Agreement the term
"Affiliate" shall not include subsidiaries or other entities in
which a Person owns a majority of the ordinary voting power to
elect the majority of the board of directors or other governing
board but is restricted from electing such majority by contract
or otherwise, until such time as such restrictions are no longer
in effect.
ARTICLE 1.3 "Agreement" shall mean this Agreement
and any supplements, amendments, Exhibits and Schedules hereto.
ARTICLE 1.4 "Aggrieved Party" shall have the
meaning set forth in Section 11.2.1.
ARTICLE 1.5 "Allocation Schedule" shall have the
meaning set forth in Section 7.7.5(c).
ARTICLE 1.6 "Applicable Laws" shall mean all laws,
statutes, regulations, constitutional provisions, ordinances,
interpretations, decrees, injunctions, judgments, orders,
rulings, assessments or writs of any Governmental Authority
having jurisdiction over the Companies, the Assets, and, with
respect to the Business, the Sellers or the International
Affiliates in effect at or prior to Closing.
ARTICLE 1.7 "Applicable Permits" shall mean any
waiver, exemption, variance, permit, authorization, license or
similar approval, required to be obtained or maintained under
Applicable Laws in connection with the Companies or the Assets.
ARTICLE 1.8 "Appraisal" shall have the meaning set
forth in Section 7.7.5(b).
"Appraiser" shall have the meaning set forth in Section
7.7.5(b).
ARTICLE 1.9 "Assets" shall mean, collectively, the
Cyanamid Storz Assets, the Wyeth Storz Assets, and the
International Assets.
ARTICLE 1.10 "Assumed Contracts" shall mean the
Cyanamid Storz Assumed Contracts, the International Assumed
Contracts and the Wyeth-Storz Assumed Contracts.
ARTICLE 1.11 "Assumed Liabilities" shall mean (i)
the liabilities and obligations of Sellers and/or the
International Affiliates arising from and after the Closing Date
under the Assumed Contracts, (ii) any and all liabilities of any
of the Sellers or the International Affiliates which arise or may
arise from the transfer of the Assumed Contracts to Buyer or from
any termination of such Assumed Contracts either by operation of
law as a result of the transactions contemplated herein or
through the action of Buyer, and (iii) all liabilities of Sellers
or the International Affiliates to Cyanamid Storz Employees and
International Employees which are assumed by Buyer or any
Affiliate of Buyer pursuant to the provisions of Article 9, and
(iv) product liability claims against Sellers and the
International Affiliates relating to occurrences of injuries
after Closing caused by a product of the Business. For purposes
of clarity it is understood that Assumed Liabilities shall relate
only to the purchase and sale of the Assets and that, by
operation of law, Buyer is assuming all of the liabilities of the
Companies, subject to the indemnity provisions set forth herein.
ARTICLE 1.12 "Base Net Asset Value" shall have the
meaning set forth in Section 3.6.1.
ARTICLE 1.13 "Books and Records" shall mean the
books and records (including data and information in electronic
media) of (i) Sellers to the extent related primarily to the
Cyanamid Storz Business and the Wyeth Storz Business, (ii) the
International Affiliates to the extent related primarily to the
International Business, and (iii) the Companies, including the
minute books, stock books and other corporate records having to
do with corporate organization and capitalization of the
Companies and all books of account and income tax records of the
Companies.
ARTICLE 1.14 "Bundled Contracts" shall mean those
contracts or other similar agreements set forth in Section 1.15
of the Disclosure Schedule pursuant to which Sellers are,
immediately prior to the Closing Date, selling products included
in the Cyanamid Storz Assets and the Wyeth Storz Assets along
with other products of Sellers to third party buyers.
ARTICLE 1.15 "Business" shall refer to the business
of the Companies together with the Cyanamid Storz Business, the
Wyeth Storz Business and the International Business, excluding
the Excluded Assets and the Excluded Liabilities.
ARTICLE 1.16 "Business Field" shall mean all
products manufactured, sold or distributed as part of the
Business, including ophthalmic products, surgical equipment,
implants, pharmaceuticals and hand-held surgical instruments, but
excluding the Excluded Assets and the Excluded Liabilities.
ARTICLE 1.17 "Chiron Purchase Agreement" shall mean
the agreement entered into between Buyer and Chiron Corporation
under which all the issued and outstanding capital stock of CVC
shall be transferred to Buyer.
ARTICLE 1.18 "Chiron Transaction" shall mean the
sale of all the issued and outstanding capital stock of CVC to
Buyer and the transactions related thereto pursuant to the terms
of the Chiron Purchase Agreement.
ARTICLE 1.19 "Chirurgie Employees" shall mean (i)
all individuals who, on the Closing Date, are actively employed
by Chirurgie; and (ii) all individuals who are on short-term
disability leave, authorized leave of absence granted prior to
the Closing Date in accordance with the terms of Chirurgie's
leave policy as in effect on the date of this Agreement or
military service or layoff with recall rights from Chirurgie as
of the Closing Date.
ARTICLE 1.20 "Chirurgie Shares" shall mean all the
issued and outstanding shares of capital stock of Chirurgie.
ARTICLE 1.21 "Cidofovir Co-Promotion Agreement"
shall mean that certain co-marketing agreement between Buyer and
Sellers, or their respective Affiliates, with respect to the
marketing of Cidofovir and related products to the pediatrician,
internal medicine physician and family physician market, based on
the principal terms set forth in Exhibit A.
ARTICLE 1.22 "Closing" shall have the meaning set
forth in Section 3.1.
ARTICLE 1.23 "Closing Date" shall have the meaning
set forth in Section 3.1.
ARTICLE 1.24 "Closing Net Asset Value" shall have
the meaning set forth in Section 3.5.1.
ARTICLE 1.25 "Closing Statement" shall have the
meaning set forth in Section 3.5.1.
ARTICLE 1.26 "Code" shall mean the Internal Revenue
Code of 1986, as amended.
ARTICLE 1.27 "Companies" collectively, and
"Company" individually, shall mean Ophthalmics, Storz, Storz
GmbH and/or Chirurgie, as the case may be.
ARTICLE 1.28 "Competitive Business" shall have the
meaning set forth in Section 7.8.2.
ARTICLE 1.29 "Competition Laws" shall mean all
Applicable Laws that are designed or intended to prohibit,
restrict or regulate actions or conduct which may have the effect
of monopolizing or restraining trade or otherwise may lessen
competition.
ARTICLE 1.30 "Contracts" shall mean (i) all leases,
subleases, rental agreements, insurance policies, sales orders,
licenses, agreements, employee plans, purchase orders,
instruments of indebtedness, guarantees and any and all other
contracts or binding arrangements to which one or more of the
Companies is a party, and (ii) the Assumed Contracts, but shall
not include any contracts or other binding arrangements related
exclusively to the Excluded Assets.
ARTICLE 1.31 "Costs" shall have the meanings set
forth in Section 11.1.
ARTICLE 1.32 "CVC" shall mean Chiron Vision
Corporation, a Delaware corporation.
ARTICLE 1.33 "Cyanamid Storz Assets" shall mean
collectively (i) those fixed assets (including machinery,
apparatus, furniture and other equipment) located at Pearl River,
N.Y., listed in Section 1.34 of the Disclosure Schedule; (ii)
Intellectual Property listed in Section 1.34 of the Disclosure
Schedule, (iii) the rights of Cyanamid under the Cyanamid Storz
Assumed Contracts, (iv) all materials, supplies, owned motor
vehicles, and other equipment exclusively used in connection with
the Cyanamid Storz Business, (v) all inventory of finished
products (and related promotional and sales materials) held for
sale or used primarily in connection with the Cyanamid Storz
Business as of the date hereof, together with any additions
thereto and subject to any reductions therefrom received or
incurred in operating the Cyanamid Storz Business in the ordinary
course after the date hereof through the Closing Date, (vi) all
prepaid expenses as of the date hereof, together with any
additions thereto and subject to any reductions therefrom made or
accrued by Cyanamid in operating the Cyanamid Storz Business in
the ordinary course and in compliance with Article 6 after the
date hereof through the Closing Date, (vii) sales data, customer
lists, information relating to customers, suppliers' names,
mailing lists, and, if any, advertising matter and all rights
thereto to the extent exclusively relating to the Cyanamid Storz
Business, and (viii) all transferable Applicable Permits
exclusively related to the Cyanamid Storz Business.
ARTICLE 1.34 "Cyanamid Storz Assumed Contracts"
shall mean the Contracts listed in Section 1.35 of the Disclosure
Schedule.
ARTICLE 1.35 "Cyanamid Storz Business" shall mean
the activities conducted in the United States by Cyanamid and
outside the United States by the International Affiliates
relating primarily to the ophthalmic pharmaceutical products of
the Companies listed in Section 1.36 of the Disclosure Schedule,
excluding the Excluded Assets and Excluded Liabilities.
ARTICLE 1.36 "Cyanamid Storz Employees" shall mean
(i) those employees of Cyanamid whose employment responsibilities
relate primarily to the Cyanamid Storz Business, including those
employees who are on short-term disability leave, authorized
leave of absence granted prior to the Closing Date in accordance
with the terms of Cyanamid's leave policy as in effect as of the
date of this Agreement or military service or lay-off with recall
rights from Cyanamid as of the Closing Date. Each Cyanamid Storz
Employee on the date hereof is listed in Section 1.37 of the
Disclosure Schedule.
ARTICLE 1.37 "Diamox, Neptazane, and Phospholine
Iodide Co-Promotion Agreement" shall mean that certain co-
promotion agreement between Buyer and Sellers, or their
respective Affiliates, with respect to Sellers' Diamox, Neptazane
and Phospholine Iodide products, based on the principal terms set
forth in Exhibit B hereto.
ARTICLE 1.38 "Disclosure Schedule" shall mean that
certain schedule identified as such, dated the date of this
Agreement and delivered by Sellers to Buyer pursuant to this
Agreement, as the same may be supplemented and updated from time
to time pursuant to this Agreement.
ARTICLE 1.39 "Employees" shall mean the Storz
Employees, the Cyanamid Storz Employees, the International
Employees, the Chirurgie Employees and the Storz GmbH Employees.
ARTICLE 1.40 "Encumbrances" shall mean all claims,
security interests, liens, pledges, charges, escrows, options,
proxies, rights of first refusal, preemptive rights, mortgages,
hypothecations, prior assignments, title retention agreements,
indentures, security agreements, leases, easements, encumbrances,
or restrictions (whether on voting, sale, transfer, disposition
or otherwise), whether imposed by agreement, law, equity or
otherwise, except for any restrictions on transfer arising under
any Applicable Law.
ARTICLE 1.41 "Environmental Laws" shall mean all
Applicable Laws relating to the protection of human health,
safety and the environment including the Comprehensive
Environmental Response Compensation and Liability Act, as amended
(42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Federal Solid Waste
Disposal Act, as amended by the Resource Conservation and
Recovery Act and the Hazardous and Solid Waste Amendments
thereto, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act and any similar or analogous
statutes, or regulations of any Governmental Authority, as each
of the foregoing exists on the date hereof.
ARTICLE 1.42 "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended, and the
related regulations and published interpretations
ARTICLE 1.43 "ERISA Affiliate" shall mean (i) any
corporation which is a member of a group of corporations of which
any Seller, any International Affiliate or a Company is a member
and which is a controlled group of corporations within the
meaning of Section 414(b) of the Code; (ii) any trade or business
(whether or not incorporated) which is a member of a group of
trades or businesses under common control within the meaning of
Section 414(c) of the Code of which any Seller, any International
Affiliate or a Company is a member; and (iii) a member of an
affiliated service group within the meaning of Section 414(m) or
Section 414(o) of the Code of which any Seller, any corporation
described in clause (i) above or any trade or business described
in clause (ii) above would be treated as a single employer under
Section 414 of the Code.
ARTICLE 1.44 "Excluded Assets" shall mean the
following assets of Sellers, the Companies and/or the
International Affiliates (all of which are expressly excluded
from the purchase and sale of the Business contemplated hereby):
(i) cash, except to the extent provided in Section 3.5.1; (ii)
Pharmaceutical Receivables; (iii) goodwill for financial
reporting purposes; (iv) International Receivables; (v) notes
receivable, including any reserves, in the approximate aggregate
principal and interest amount as of August 31, 1997 of $2,622,537
due to Storz from Global Instruments, Inc. and Sparta Medical,
Inc.; (vi) rights under the Asset Purchase Agreement between
Storz and Otologics LLC dated July 16, 1996, relating to patents
and related intellectual property for a middle ear hearing
device; (vii) any and all rights and assets, including but not
limited to intellectual property rights and time release
technology, relating to the products Diamox(R) and Neptazane(R),
worldwide in any formulations (solid or parenteral), and Sellers
generic formulations thereof; (viii) all assets relating to any
of Sellers' joint venture interests relating to the Business;
(ix) Aureomycin trademark worldwide; (x) all rights under the
Agreement dated July 28, 1995 between A.H. Robins Company,
Incorporated and Senju Pharmaceutical Co., Ltd, relating to
bromfenac as an ophthalmic specialty; (xi) all work-in-progress
and other non-finished inventory of pharmaceutical products for
which finished inventory is included in the Business; (xii) all
rights under the March 11, 1992 AREDS CRADA for application
outside of ophthalmology; (xiii) Tax Assets; (xiv) intercompany
assets; (xv) all manufacturing equipment used in the Business
located at Rouses Point as listed in Section 1.45 of Disclosure
Schedule; and (xvi) all rights to the use of the "Wave Bottle",
including without limitation the related intellectual property
rights listed in Section 1.45 of the Disclosure Schedule. For
purposes of clarity, any Excluded Assets contained in any of the
Companies shall be distributed to Sellers pursuant to Section
6.2, and the defined term "Excluded Assets" as used herein
shall refer to assets of the Sellers, Companies and/or
International Affiliates.
ARTICLE 1.45 "Excluded Liabilities" shall mean the
following liabilities of Sellers or the International Affiliates
(but not the Companies), whether absolute, contingent, accrued,
known or unknown, which are not specifically assumed by Buyer or
an Affiliate of Buyer pursuant to this Agreement (all of which
are expressly excluded from the purchase and sale of the Business
contemplated hereby), including, without limitation: (i)
International Payables and Pharmaceutical Payables; (ii) Tax
Liabilities with respect to International Affiliates and the
Sellers; (iii) intercompany liabilities; (iv) except as otherwise
specifically assumed pursuant to the terms of this Agreement,
including but not limited to Article 9, and, the Assumed
Liabilities, any liabilities or obligations incurred, arising
from or out of, in connection with or as a result of claims made
by or against Sellers or the International Affiliates (but not
the Companies) whether before or after the Closing Date that
arise out of events prior to the Closing Date; (v) any
liabilities or obligations to the Cyanamid Storz Employees or the
International Employees not specifically assumed pursuant to
Article 9; and (vi) product liability claims against the Sellers,
the International Affiliates or Buyer relating to occurrences of
injuries caused by the products of the Business prior to Closing.
For purposes of clarity it is understood that Excluded
Liabilities shall relate only to the purchase and sale of the
Assets and that, by operation of law, Buyer is assuming all of
the liabilities of the Companies, subject to the indemnity
provisions set forth herein.
ARTICLE 1.46 "FDA" shall have the meaning set forth
in Section 4.15.
ARTICLE 1.47 "Final Net Asset Value" shall have the
meaning set forth in Section 3.5.3.
ARTICLE 1.48 "Financial Statements" shall have the
meaning set forth in Section 4.5.1.
ARTICLE 1.49 "GAAP" shall mean United States
generally accepted accounting principles.
ARTICLE 1.50 "Governmental Authority" shall mean
any government or any department, commission, board, bureau,
agency, court, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or
local, domestic or foreign, where a Company is now operating or
has operated or where any of the Assets are located.
ARTICLE 1.51 "HSR Act" shall have the meaning set
forth in Section 7.5.
ARTICLE 1.52 "Hazardous Substance" shall mean
substances that are defined or listed in or otherwise classified
pursuant to any applicable Environmental Laws as "hazardous
substances", "hazardous materials", "hazardous waste" or
"toxic substances" and shall specifically include petroleum,
including crude oil or any fraction thereof, and natural gas in
its various forms.
ARTICLE 1.53 "Indemnifying Party" shall have the
meaning set forth in Section 11.2.1.
ARTICLE 1.54 "Intellectual Property" shall mean all
(i) Patents, (ii) Know-how, (iii) Trademarks and (iv) copyrights,
copyright registrations and applications for registration,
inventions, designs, industrial and utility models (including
registrations and applications for registration thereof), trade
secrets and all other intellectual property rights whether
registered or not, in each case which are licensed to or owned by
any of the Companies and, in the case of Sellers or International
Affiliates, are exclusively used in connection with the Business.
ARTICLE 1.55 "International Affiliates" shall mean
those Affiliates of Sellers listed on Section 1.56 of the
Disclosure Schedule.
ARTICLE 1.56 "International Assets" shall mean
collectively (i) Intellectual Property listed in Section 1.57 of
the Disclosure Schedule, (ii) the rights of the International
Affiliates under the International Assumed Contracts, (iii) all
machinery, apparatus, furniture, materials, supplies, owned motor
vehicles and other equipment exclusively used in connection with
the International Business, (v) all inventory of finished
products (and related promotional and sales materials) held for
sale in connection with the International Business as of the date
hereof, together with any additions thereto and subject to any
reductions therefrom received or incurred in operating the
International Business in the ordinary course after the date
hereof through the Closing Date, (vi) all prepaid expenses as of
the date hereof, together with any additions thereto and subject
to any reductions therefrom made or accrued by the International
Affiliates in operating the International Business, in each case
in the ordinary course and in compliance with Article 6 after the
date hereof through the Closing Date, (vii) sales data, customer
lists, information relating to customers, suppliers' names,
mailing lists, and, if any, advertising matter and all rights
thereto primarily relating to the International Business, (viii)
all transferable Applicable Permits, and (ix) the benefits
associated with and rights to any overfunded benefit plans with
respect to Storz GmbH Employees and Chirurgie Employees with
respect to whom liabilities under such plans are being assumed
pursuant to Article 9.
ARTICLE 1.57 "International Assumed Contracts"
shall mean the Contracts listed in Section 1.58 of the Disclosure
Schedule.
ARTICLE 1.58 "International Business" shall mean
the business conducted by the International Affiliates relating
to the manufacture, sale or distribution outside of the United
States of products manufactured and/or distributed by the
Companies and the products distributed in connection with the
Cyanamid Storz Business and Wyeth Storz Business outside the
United States.
ARTICLE 1.59 "International Employees" shall mean
those employees of the International Affiliates whose employment
responsibilities relate primarily to the International Business.
Each International Employee as of the date hereof, is listed in
Section 1.60 of the Disclosure Schedule.
ARTICLE 1.60 "International Inventory" shall mean
those items referred to in clause (v) of Section 1.57.
ARTICLE 1.61 "International Payables" shall mean
accounts payable and accruals of the International Affiliates
relating to the Business.
ARTICLE 1.62 "International Plans" shall mean the
plans and arrangements referenced in the first sentence of
Section 9.2.1.
ARTICLE 1.63 "International Premises" shall mean
the premises described on Section 1.64 of the Disclosure
Schedule.
ARTICLE 1.64 "International Receivables" shall mean
accounts receivable of the International Affiliates relating to
the Business.
ARTICLE 1.65 "Know-how" shall mean all product
specifications, processes, product designs, plans, ideas,
concepts, manufacturing, engineering and other manuals and
drawings, technical information, data, research records, all
promotional literature, customer and supplier lists and similar
data and information, and all other confidential or proprietary
technical and business information which is either (i) owned by
the Companies or (ii) owned by Sellers or the International
Affiliates and used exclusively in connection with the Business.
ARTICLE 1.66 "Leased Real Property" shall mean all
real property leased by the Companies, including any buildings,
structures, fixtures and improvements thereon or appurtenances
thereto.
ARTICLE 1.67 "License Agreement" shall mean that
certain license agreement between Buyer and Sellers,
substantially in the form of Exhibit C hereto.
ARTICLE 1.68 "Material Adverse Change" shall mean a
change that has had a Material Adverse Effect.
ARTICLE 1.69 "Material Adverse Effect" shall mean
any effect which would reasonably be expected to have a material
adverse effect on the assets, business, operations or financial
condition of the Business.
ARTICLE 1.70 "Minimum Loss" shall have the meaning
set forth in Section 11.3.
ARTICLE 1.71 "Multiemployer Plan" means each U.S.
Employee Plan that is a multiemployer plan, as defined in Section
3(37) of ERISA.
ARTICLE 1.72 "Net Assets" shall mean the Assets and
the total assets of the Companies (excluding the Excluded
Assets), minus the sum of the Assumed Liabilities and the total
liabilities of the Companies (excluding the Excluded
Liabilities).
ARTICLE 1.73 "Net Receivables" shall mean the net
amount of the International Receivables and International
Payables and Pharmaceutical Receivables and Pharmaceutical
Payables.
ARTICLE 1.74 "Net Sales" equals gross sales less
returns, cash discounts, temporary price reductions, chargebacks,
rebates and price adjustments.
ARTICLE 1.75 "Operating Profit" shall mean the
amount calculated from the line items set forth on the Statements
of Operating Profit included in the Financial Statements as
follows: Net Sales less the sum of the following: Cost of Goods
Sold; Marketing; Selling; Storage, Packaging & Shipping;
Administrative; Research & Development; and General Expense; and
excluding the following: amortization of goodwill and incentive
compensation costs.
ARTICLE 1.76 "Ophthalmics" shall have the meaning
set forth in the second WHEREAS clause of this Agreement.
ARTICLE 1.77 "Ophthalmic Shares" shall have the
meaning set forth in Section 4.2.
ARTICLE 1.78 "Owned Real Property" shall mean all
real property owned by the Companies set forth in Section 4.8.1
of the Disclosure Schedule hereto, including any buildings,
structures and improvements thereon or appurtenances thereto.
ARTICLE 1.79 "Patents" shall mean all patents and
patent applications (including, without limitation, all reissues,
divisions, continuations, continuations-in-part, renewals and
extensions of the foregoing) which are either (i) owned by the
Companies or (ii) owned by Sellers or the International
Affiliates and used exclusively in connection with the Business.
ARTICLE 1.80 "Pension Plan" means an "employee
pension benefit plan" (as such term is defined in Section 3(2)
of ERISA) that is intended to qualify under Section 401(a) of the
Code and is maintained by any of the Companies or any ERISA
Affiliate, or to which any of the Companies or any ERISA
Affiliate is required to contribute, or with respect to which any
of the Companies or any ERISA Affiliate is or will be required to
pay any amount.
ARTICLE 1.81 "Permitted Encumbrances" shall have
the meaning set forth in Section 4.9.1.
ARTICLE 1.82 "Person" shall mean an individual, a
corporation, a partnership, an association, a trust or other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
ARTICLE 1.83 "Pharmaceutical Payables" shall mean
accounts payable and accruals of Sellers and the Companies
arising from the manufacture and/or sale of ophthalmic
pharmaceutical products included in the Business.
ARTICLE 1.84 "Pharmaceutical Receivables" shall
mean accounts receivable of Sellers and the Companies arising
from sales of ophthalmic pharmaceutical products included in the
Business.
ARTICLE 1.85 "Product Development Agreement" means
an agreement between Sellers and Buyer, or their respective
Affiliates, relating to product development efforts for different
formulations of Ocuvite, based on the principal terms set forth
in Exhibit D.
ARTICLE 1.86 "Purchase Price" shall have the
meaning set forth in Section 2.1.
ARTICLE 1.87 "Real Property" shall mean the Owned
Real Property and the Leased Real Property.
ARTICLE 1.88 "Release" shall mean any release,
spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal or leaching of Hazardous Substances into the
environment.
ARTICLE 1.89 "Research and Discovery Agreement"
shall mean an agreement relating to ophthalmic research and
discovery to be entered into, substantially on the terms set
forth in Exhibit E hereto.
ARTICLE 1.90 "Section 338(h)(10) Elections" shall
have the meaning set forth in Section 7.7.5.
ARTICLE 1.91 "Section 338 Taxes" shall mean any
Taxes that would not have been imposed but for the Section
338(h)(10) Elections or any elections under state, local or other
Tax law that are required to be made or deemed to have been made
as a result of any Section 338(h)(10) Elections.
ARTICLE 1.92 "Securities Act" shall mean the
Securities Act of 1933, as amended, and the regulations
thereunder.
ARTICLE 1.93 "Shares" shall mean the Chirurgie
Shares, Ophthalmics Shares, Storz Shares and Storz GmbH Shares.
ARTICLE 1.94 "Storz" shall have the meaning set
forth in the second WHEREAS clause of this Agreement.
ARTICLE 1.95 "Storz Employees" shall mean (i) all
individuals who, on the Closing Date, are actively employed by
any of the Companies; and (ii) all individuals who are on
short-term disability leave, authorized leave of absence granted
prior to the Closing Date in accordance with the terms of the
Companies' leave policies as in effect as of the date of this
Agreement or military service or lay-off with recall rights from
any of the Companies as of the Closing Date.
ARTICLE 1.96 "Storz GmbH" shall mean Storz
International GmbH, a wholly-owned subsidiary of Storz.
ARTICLE 1.97 "Storz GmbH Employees" shall mean (i)
all individuals who, on the Closing Date, are actively employed
by Storz GmbH; and (ii) all individuals who are on short-term
disability leave, authorized leave of absence in accordance with
the terms of Storz GmbH's policy as in effect as of the date of
this Agreement or military service or lay-off with recall rights
from Storz GmbH as of the Closing Date.
ARTICLE 1.98 "Storz GmbH Plans" shall mean the
plans and arrangements referenced in Section 9.2.1.
ARTICLE 1.99 "Storz GmbH Shares" shall mean all the
issued and outstanding shares of capital stock of Storz GmbH.
ARTICLE 1.100 "Storz Shares" shall have the meaning
set forth in Section 4.2.
ARTICLE 1.101 "Straddle Period" shall mean any
taxable period beginning before and ending after the Closing
Date.
ARTICLE 1.102 "Supply Agreement" shall mean the
supply agreements under which certain products in finished
packaged form related to the Cyanamid Storz Business and the
Wyeth Storz Business shall be provided by Sellers or their
Affiliates to Buyer, and/or its Affiliates, substantially in the
form of Exhibit F attached hereto.
ARTICLE 1.103 "Tax Affiliate" of a Person shall mean
any Affiliate of said Person which was included, or includable,
in a Tax Return in which such Person was included as a member.
ARTICLE 1.104 "Tax Assets" shall mean all assets
comprising receivables or deferred assets or prepayments for
Taxes, except Value Added Tax ("VAT") receivables, of the
Companies for taxable periods (or portions thereof) ending on or
before the Closing Date.
ARTICLE 1.105 "Tax Liabilities" shall mean all
liabilities for Taxes imposed on the Companies or otherwise with
respect to the Business or the Assets, in each case for the
taxable periods, or portions thereof, ending on or before the
Closing Date.
ARTICLE 1.106 "Tax Returns" shall mean all reports,
returns, schedules and any other documents required to be filed
with respect to Taxes and all claims for refunds of Taxes.
ARTICLE 1.107 "Tax Sharing Arrangement" shall mean
any written or unwritten agreement or arrangement for the
allocation or payment of Tax Liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax
Return which Tax Return includes any of the Companies.
ARTICLE 1.108 "Taxes" (and with correlative
meanings, "Tax" and "Taxable") shall mean all taxes of any
kind imposed by a federal, state, local or foreign Governmental
Authority, and any payments made to another party pursuant to a
Tax Sharing Arrangement, indemnity or other similar arrangement,
including but not limited to those on, or measured by or referred
to as income, gross receipts, financial operation, sales, use, ad
valorem, value added, franchise, profits, license, withholding,
payroll (including all contributions or premiums pursuant to
industry or governmental social security laws or pursuant to
other tax laws and regulations), employment, excise, severance,
stamp, occupation, premium, property, transfer or windfall
profits taxes, customs, duties or similar fees, assessments or
charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by
such Governmental Authority with respect to such amounts.
ARTICLE 1.109 "Trademarks" shall mean (i)
trademarks, service marks, trade names, trade dress, labels,
logos and all other names and slogans associated with any
products or services, or embodying associated goodwill, whether
or not registered, and any applications or registrations therefor
owned by the Companies and, in the case of Sellers or the
International Affiliates, are exclusively used in connection with
the Business.
ARTICLE 1.110 "Transition Services Agreement" shall
mean the transition services agreement to be entered into between
Sellers or their Affiliates and Buyer based on the principal
terms set forth in Exhibit G.
ARTICLE 1.111 "U.S. Benefit Arrangements" shall mean
the arrangements referenced in the Section 9.1.4.
ARTICLE 1.112 "U.S. Employee Plan" means any plan
referenced in Section 9.1.1.
ARTICLE 1.113 "Wyeth Storz Assets" shall mean (i)
Intellectual Property listed in Section 1.114 of the Disclosure
Schedule, (ii) the rights of AHP under the Wyeth Storz Assumed
Contracts, (iii) all inventory of finished products (including
the finished goods inventories of the AHP ophthalmic
pharmaceutical products described in Section 1.114 of the
Disclosure Schedule) and other tangible personal property (and
related promotional and sales materials) held for sale or used
primarily in connection with the Wyeth Storz Business as of the
date hereof, together with any additions thereto and subject to
any reductions therefrom received or incurred in operating the
Wyeth Storz Business in the ordinary course after the date hereof
through the Closing Date, (iv) all prepaid expenses as of the
date hereof, together with any additions thereto and subject to
any reductions therefrom made or accrued by AHP in operating the
Wyeth Storz Business in the ordinary course and in compliance
with Article 6 after the date hereof through the Closing Date,
(v) sales data, customer lists, information relating to
customers, suppliers' names, mailing lists, and, if any,
advertising matter and all rights thereto relating to the Wyeth
Storz Business, (vi) all transferable Applicable Permits.
ARTICLE 1.114 "Wyeth-Storz Assumed Contracts" shall
mean the Contracts listed in Section 1.115 of the Disclosure
Schedule.
ARTICLE 1.115 "Wyeth Storz Business" shall mean the
business conducted in the United States by AHP and outside the
United States by the International Affiliates related primarily
to the manufacture, sale and distribution of the products
included in the Wyeth Storz Assets.
ARTICLE 1.116 Additional defined terms:
Term Section
Andersen 3.5.1
European Employees 9.5.3(a)
Notice of Disagreement 3.5.2
Section 3.5.1 Documents 3.5.1
Third Party Claim 11.2.1
Transfer Provisions 9.5.3(b)
Additional definitions are set forth in Article 9.
ARTICLE 2
THE ACQUISITION
ARTICLE 2.1 Purchase and Sale. Upon the terms and
subject to the conditions of this Agreement, (i) Sellers shall
(and shall cause the International Affiliates to) sell, assign,
transfer and deliver to Buyer the Shares and the Assets, and (ii)
Buyer and/or Affiliates of Buyer shall purchase and accept the
Shares and the Assets from Sellers and the International
Affiliates, subject to the Assumed Liabilities, for an aggregate
purchase price of THREE HUNDRED EIGHTY MILLION DOLLARS
($380,000,000), payable at Closing, subject to adjustment as
provided in Section 3.6 (the price as so adjusted, together with
the Assumed Liabilities, is herein called the "Purchase
Price").
ARTICLE 2.2 Assumption of Liabilities. Pursuant to
assumption agreements to be executed and delivered in accordance
with Section 3.2(j), Buyer and/or Affiliates of Buyer will assume
at the Closing and subsequently, in due course, pay, honor and
discharge all of the Assumed Liabilities.
ARTICLE 3
CLOSING; PURCHASE PRICE ADJUSTMENT
ARTICLE 3.1 The Closing. Unless this Agreement
shall have been terminated, on the terms and subject to the
conditions of this Agreement, the closing of the sale and
purchase of the Shares and the Assets and the consummation of the
other transactions contemplated hereby (the "Closing") shall
take place at the New York City offices of Buyer's counsel,
O'Melveny & Meyers on the later of December 15, 1997 or the next
succeeding business day on which the last to be fulfilled or
waived of the conditions set forth in Article 8 shall be
fulfilled or waived in accordance with this Agreement or at such
other time, date or place as the parties may mutually agree upon
in writing (the "Closing Date"). At the Closing, the parties
to this Agreement will exchange funds, certificates and other
documents specified in this Agreement. For purposes of this
Agreement the Closing will be treated as if it occurred at 11:59
P.M. on the Closing Date.
ARTICLE 3.2 Deliveries by Buyer. At the Closing,
Buyer shall deliver, or cause to be delivered, to Sellers the
following:
(a) the amount of the Purchase Price specified in
Section 2.1 to be paid at Closing, payable by wire transfer of
immediately available funds on the Closing Date to an account
specified in writing by Sellers, such notice to be delivered no
less than two business days prior to the Closing Date.
(b) the certificate by an officer of Buyer required to
be delivered pursuant to Section 8.2.3;
(c) a certificate, signed by an authorized officer of
Buyer, certifying as to (i) the due organization and good
standing of Buyer, (ii)the corporate resolutions of Buyer
authorizing the transactions contemplated by this Agreement, and
(iii) the incumbency of officers of Buyer executing this
Agreement and the other agreements, instruments or certificates
delivered at or prior to the Closing;
(d) the Transition Services Agreements, duly executed
by Buyer and/or any Affiliates of Buyer;
(e) the Supply Agreements, duly executed by Buyer
and/or any Affiliates of Buyer;
(f) the Research and Discovery Agreement, duly
executed by Buyer and/or an Affiliate of Buyer;
(g) the Diamox, Neptazane and Phospholine Iodide Co-
Promotion Agreement duly executed by Buyer and/or any Affiliates
of Buyer;
(h) the Cidofovir Co-Marketing Agreement, duly
executed by Buyer and/or an Affiliate of Buyer;
(i) the License Agreement, duly executed by Buyer
and/or an Affiliate of Buyer;
(j) the Product Development Agreement, duly executed
by Buyer and/or an Affiliate of Buyer;
(k) such instruments of assumption and other
certificates, instruments or documents, in form and substance
reasonably acceptable to Sellers, as may be necessary to effect
Buyer's assumption under Applicable Laws of the Assumed
Liabilities; and
(l) such other instruments and documents, in form and
substance reasonably acceptable to Sellers, as may be necessary
to effect the Closing.
ARTICLE 3.3 Deliveries by Sellers. At the Closing,
Sellers shall deliver, or cause to be delivered by the
International Affiliates, to Buyer and any Affiliates designated
by Buyer the following:
(a) certificate(s) representing the Shares duly
endorsed for transfer to Buyer or accompanied by stock powers
duly executed in blank;
(b) the certificate by officers of Sellers required to
be delivered pursuant to Section 8.3.3;
(c) a certificate, signed by an authorized officer of
each of Sellers, certifying as to (i) the due organization and
good standing of each Seller, (ii) the corporate resolutions of
each Seller authorizing the transactions contemplated by this
Agreement, and (iii) the incumbency of officers of each Seller
executing this Agreement and the other agreements, instruments or
certificates delivered at or prior to the Closing;
(d) the stock books, stock ledgers, minute books and
corporate seals of the Companies;
(e) the Transition Services Agreements, duly executed
by Cyanamid, AHP or their Affiliates;
(f) the Supply Agreements, duly executed by Cyanamid,
AHP or their Affiliates;
(g) the Research and Discovery Agreement, duly
executed by a Seller or an Affiliate of Sellers.
(h) the Diamox, Neptazane and Phospholine Iodide Co-
Promotion Agreement, duly executed by a Seller and/or an
Affiliates of Sellers;
(i) the Cidofovir Co-Marketing Agreement, duly
executed by a Seller and/or an Affiliate of Sellers;
(j) the License Agreement, duly executed by a Seller
and/or an Affiliate of Sellers;
(k) the Product Development Agreement duly executed by
a Seller and/or an Affiliate of Sellers;
(l) bills of sale and any other appropriate
instruments of sale and conveyance, in form and substance
reasonably acceptable to Buyer, transferring to Buyer or its
Affiliates under Applicable Laws all tangible personal property
included in the Assets, including Books and Records;
(m) bills of sale and any other appropriate
instruments of sale and conveyance, in form and substance
reasonably acceptable to Buyer, transferring to Buyer or its
Affiliates under Applicable Laws all Intellectual Property
included within the Assets (Buyer, at its own expense, shall
prepare any and all individual assignment documents required in
the respective countries and shall record them in the national
patent and trademark and other government offices, as
applicable);
(n) assignments or, where necessary, subleases, in
form and substance reasonably acceptable to Buyer, assigning or
subleasing to Buyer or its Affiliates under Applicable Laws all
Assumed Contracts and transferable Applicable Permits;
(o) such instruments of cancellation and other
appropriate documents, in form and substance reasonably
acceptable to Buyer, cancelling all loans or other obligations
for borrowed money owed by any of the Companies to Sellers or any
of their Affiliates, duly executed by Sellers or such Affiliates,
as the case may be;
(p) such other instruments and documents, in form and
substance reasonably acceptable to Buyer and Sellers, as may be
necessary to effect the Closing; and
(q) letters of resignation executed by the directors
of each of the Companies and such letters executed by officers of
the Companies as shall be requested by Buyer.
ARTICLE 3.4 Further Assurances.
ARTICLE 3.4.1 From time to time, at Buyer's or
Sellers' request and in accordance with Section 7.3, whether at
or after the Closing Date, Buyer or Sellers, as the case may be,
shall, and shall cause their respective Affiliates to, execute
and deliver such further instruments of conveyance, transfer and
assignment, cooperate and assist in providing information for
making and completing regulatory filings, and take such other
actions as Buyer or Sellers, as the case may be, may reasonably
require of the other party to more effectively assign, convey and
transfer to such party the Shares and the Assets, and to assume
the Assumed Liabilities, as contemplated by this Agreement. In
addition, Buyer shall or shall cause its Affiliates to, upon
Sellers' request, to execute and deliver appropriate instruments
of conveyance, transfer and assignment to assign, convey and
transfer to Sellers' designated Affiliate all right, title and
interest to the Excluded Assets and any security documentation
and agreements relating thereto.
ARTICLE 3.4.2 To the extent that the assignment of any
Assumed Contract or other Asset to Buyer hereunder shall require
the consent of the other party thereto, this Agreement shall not
constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof. Sellers will use
their diligent efforts to obtain the consent of the other parties
to such Assumed Contracts for the assignment thereof to Buyer,
provided, however, that Sellers shall not be obligated to make
any payment or take any other detrimental action to obtain any
such consent. If any such consent is not obtained, Sellers
shall, and shall cause their Affiliates to, cooperate with Buyer
in any arrangement reasonably requested by Buyer to provide for
Buyer the benefits under any such Contract, including the
enforcement at the cost of and for the benefit of Buyer of any
and all rights thereunder of Sellers or their respective
Affiliates against the other party thereto.
ARTICLE 3.4.3 If any Applicable Permit is
nontransferable, following the date hereof Sellers shall, and
shall cause their Affiliates to, reasonably cooperate with Buyer
and its Affiliates in connection with Buyer's and its Affiliates'
efforts to obtain any such Applicable Permit in its or their own
names. If Buyer and its Affiliates are unsuccessful in obtaining
any such Applicable Permit at or prior to the Closing, the
Sellers or the International Affiliates will provide, at Buyer's
cost, interim services for Buyer's account for such period as may
reasonably be necessary to allow Buyer and its Affiliates to
secure such Applicable Permit in its or their own names to the
extent practicable and upon reasonable terms and conditions. In
the event any Applicable Permit (including product registrations)
is not obtained by the Closing Date, Sellers shall, and shall
cause their Affiliates to, cooperate with Buyer in any
arrangement reasonably requested by Buyer to provide for Buyer
the benefits under any such Applicable Permit (including product
registrations) under the terms of the Transaction Services
Agreement.
ARTICLE 3.4.4 Any returns of consigned inventory
received by Sellers or the International Affiliates shall be
promptly forwarded to Buyer. To the extent International
Affiliates receive payments specifically designated as payment
for purchases made from Buyer or its Affiliates after the
Closing, the International Affiliates will promptly forward such
payments to Buyer.
ARTICLE 3.5 Closing Statement.
ARTICLE 3.5.1 As promptly as practicable, but no later
than 90 days after the Closing Date, Sellers, at their own
expense, will cause to be prepared in accordance with GAAP,
applied on a basis which is consistent with the preparation of
the Financial Statements, and shall deliver to Buyer a combined
adjusted statement, together with notes thereto, of the Net
Assets (which shall include any cash remaining in any of the
Companies on the Closing Date) as of the close of business on the
Closing Date (the "Closing Statement"), including a schedule
based on such Closing Statement setting forth Sellers'
calculation of the value of the Net Assets as of the Closing Date
(the "Closing Net Asset Value") which statement will indicate,
but not include, the Net Receivables as of the Closing Date;
provided, however, that for purposes of calculating the Closing
Net Asset Value, such calculation shall include reserves
calculated in a manner consistent with the manner used in
calculating such reserves in the Statement of Net Assets as of
December 31, 1996 included in the Financial Statements. The
Closing Statement shall include line items and notes
substantially consistent with those of the audited statements of
Net Assets included in the Financial Statements except for the
exclusion of the Net Receivables. Buyer, at its own expense,
shall cause the Companies and Buyer's Affiliates and their
respective employees to assist Sellers in the preparation of the
Closing Statement and shall provide Sellers and their independent
auditors, Arthur Andersen LLP ("Andersen"), access at all
reasonable times to the personnel, properties, books and records
of the Companies for such purpose. The Closing Statement shall
be accompanied by an audit report from Andersen stating that in
its opinion the Closing Statement presents fairly, in all
material respects, the Net Assets and the Net Receivables as of
the Closing Date in conformity with GAAP and pursuant to the
terms of this Agreement, applied on a basis which is consistent
with the preparation of the Financial Statements. The Closing
Statement and the accompanying audit report are collectively
referred to as the "Section 3.5.1 Documents".
ARTICLE 3.5.2 If Buyer disagrees with Sellers'
calculation of Closing Net Asset Value contained in the Section
3.5.1 Documents, Buyer may, within 30 days after delivery of the
Section 3.5.1 Documents, deliver a notice to Sellers disagreeing
with such calculation and setting forth Buyer's calculation of
such amount ("Notice of Disagreement"). Any such Notice of
Disagreement shall specify those items or amounts as to which
Buyer disagrees, and Buyer shall be deemed to have agreed with
all other items and amounts contained in the Section 3.5.1
Documents.
ARTICLE 3.5.3 If a Notice of Disagreement shall be
duly and timely delivered pursuant to Section 3.5.2, the parties
shall, during the 30 days following such delivery, use their
diligent efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the amount of
Closing Net Asset Value, which amount shall not be more than the
amount thereof shown in the Section 3.5.1 Documents nor less than
the amount thereof shown in the Notice of Disagreement. If,
during such period, the parties are unable to reach agreement,
they shall promptly thereafter cause a mutually acceptable firm
of nationally recognized independent public accountants (the
"Accountant") promptly to review this Agreement, the
appropriate books and records relating to the Business and the
Assets and the disputed items or amounts for the purpose of
calculating Closing Net Asset Value. In making such calculation,
the Accountant shall consider only those items or amounts in the
Closing Statement or Sellers' calculation of Closing Net Asset
Value as to which Buyer has disagreed. The Accountant shall
deliver to Sellers and Buyer, as promptly as practicable, a
report setting forth such calculation. Such report shall be
final and binding upon the parties hereto. The cost of such
review and report shall be borne (i) by the party whose
calculation or calculations, taken together, were furthest from
that of the Accountant, or (ii) otherwise equally by Sellers and
Buyer. "Final Net Asset Value" means (A) Closing Net Asset
Value as shown in Sellers' calculation delivered pursuant to
Section 3.5.1 if no Notice of Disagreement with respect thereto
is duly and timely delivered, (B) the amount agreed upon by the
parties pursuant to this Section 3.5.3, or (C) in the absence of
such agreement, the amount as shown in the Accountant's
calculation delivered pursuant to this Section 3.5.3; provided
that Final Net Asset Value shall not in any event be more than
Sellers' calculation delivered pursuant to Section 3.5.1 nor less
than Buyer's calculation pursuant to Section 3.5.2.
ARTICLE 3.6 Adjustment of Purchase Price.
ARTICLE 3.6.1 If the amount of $73,192,000 ("Base Net
Asset Value") exceeds the Final Net Asset Value, Sellers shall
pay to Buyer, as an adjustment to the Purchase Price, in the
manner and with interest as provided in Section 3.6.2, the amount
of such excess. If Final Net Asset Value exceeds Base Net Asset
Value, Buyer shall pay to Sellers, in the manner and with
interest as provided in Section 3.6.2, the amount of such excess.
Any such payment pursuant to this Section 3.6.1 shall be made
(i) within 30 days after Sellers' delivery of the Section 3.5.1
Documents if no Notice of Disagreement with respect to Closing
Net Asset Value is duly and timely delivered pursuant to Section
3.5.2 or (ii) if a Notice of Disagreement with respect to Closing
Net Asset Value is duly and timely delivered pursuant to Section
3.5.2, then within 10 days after the earlier of (A) agreement
between the parties pursuant to Section 3.5.3 with respect to
Closing Net Asset Value or (B) delivery of the Accountant's
calculation of Final Net Asset Value pursuant to Section 3.5.3.
ARTICLE 3.6.2 Any payment made pursuant to this
Section 3.6 shall be made by wire transfer or by delivery to the
payee of the required amount in immediately available funds to
such account as the payee shall have designated for such purpose
at least two days prior to the date of the required payment (or,
if not so designated, by certified or official bank check payable
in immediately available funds to the order of the payee in such
amount). The amount to be paid under this Section shall bear
interest from and including the date immediately preceding the
Closing Date to the date of payment at a rate per annum equal to
the rate publicly announced by Chase Manhattan Bank (or its
successor) in New York, New York as its prime rate in effect on
the Closing Date. Interest shall be calculated daily on the
basis of a year of 365 days and the actual number of days for
which interest is due.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF SELLERS
Sellers hereby jointly and severally represent and
warrant to Buyer as follows:
ARTICLE 4.1 Organization, Good Standing, Power, Etc.
ARTICLE 4.1.1 Each of the Companies is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Each of the
Companies has the requisite corporate power and authority to own,
operate or lease the properties that it purports to own, operate
or lease and to carry on its business as it is now being
conducted and is duly licensed or qualified as a foreign
corporation in each domestic or foreign jurisdiction in which the
nature of the business conducted by it or the character or
location of the properties owned or leased by it makes such
licensing or qualification necessary, except where the failure to
be so licensed or qualified would not reasonably be expected to
result in a Cost in excess of $200,000. Copies of (i) the
certificate of incorporation and by-laws (or similar charter
documents) of each of the Companies including all amendments
thereto, (ii) the minute books of each of the Companies and (iii)
the stock transfer books of each of the Companies, heretofore
delivered, furnished or made available to Buyer or its
representatives by Sellers, are true and complete as of the date
hereof (except in the case of the minute books, which are true
and complete in all material respects). The certificate of
incorporation and by-laws (or similar charter documents) of each
of the Companies is in full force and effect, and none of the
Companies is in violation or breach of any of the provisions of
its certificate of incorporation or by-laws (or similar charter
documents) in any material respect.
ARTICLE 4.1.2 Each of Sellers is a corporation duly
organized, validly existing and in good standing under the laws
of the state of its incorporation. Each of Sellers has the
requisite corporate power and authority to execute and deliver
this Agreement, and Sellers and the International Affiliates have
all requisite corporate power and authority to execute and
deliver the other agreements contemplated hereby and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement by Sellers, the
execution and delivery by Sellers or the International Affiliates
of the other agreements contemplated hereby, and the consummation
by Sellers and the International Affiliates of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Sellers and the
International Affiliates and no other or further corporate
proceedings will be necessary for the execution and delivery of
such agreements by Sellers and the International Affiliates, the
performance by Sellers and the International Affiliates of their
obligations hereunder and thereunder and the consummation by
Sellers and the International Affiliates of the transactions
contemplated hereby and thereby. This Agreement has been duly
executed and delivered by each of Sellers and constitutes a
legal, valid and binding obligation of each of Sellers
enforceable against Sellers in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating to
or affecting the enforcement of creditors' rights and general
principles of equity.
ARTICLE 4.2 Capitalization of the Companies. As of the
date of this Agreement, the authorized capital stock of (i) Storz
consists of 20,000 shares of Common Stock, $100 par value per
share (the "Storz Shares"), all of which Storz Shares are
validly issued and outstanding, fully paid and non-assessable
(ii) Ophthalmics consists of 1,000 shares of Common Stock, $1.00
par value per share, only of which 10 shares (the "Ophthalmics
Shares") are validly issued and outstanding, fully paid and non-
assessable, and (iii) Chirurgie consists of 8,000 shares of
Ordinary Stock, 100ff par value per share, all of which Chirurgie
Shares are validly issued and outstanding, fully paid and non-
assessable.
ARTICLE 4.2.1 There are no options, warrants or other
rights, agreements, arrangements or commitments of any character
obligating any of the Companies to issue or sell any shares of
capital stock of or other equity interests in any of the
Companies, or any securities or obligations convertible into or
exchangeable for any shares of capital stock of any of the
Companies or other equity interests in any of the Companies
obligating any of the Companies to grant, extend or enter into
any such right, agreement, arrangement or commitment.
ARTICLE 4.2.2 There are no outstanding contractual
obligations of any of the Companies to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of, or
other ownership interests in, any of the Companies, or to make
any investment (in the form of a loan, capital contribution or
otherwise) in any other entity.
ARTICLE 4.2.3 Cyanamid is the record and beneficial
owner of the Storz Shares and the Ophthalmic Shares, and has
good, valid and marketable title to all of the respective Shares
free and clear of any Encumbrances and any preemptive or
subscription rights of any Person. There are no restrictions
with respect to the transferability of the Shares except as
provided by Applicable Law.
ARTICLE 4.3 Subsidiaries. Storz is the record and
beneficial owner of all the Storz GmbH Shares, free and clear of
any Encumbrances and any preemptive or subscription rights of any
Person. Other than with respect to the matters set forth in
Section 4.3 of the Disclosure Schedule, and other than with
respect to Storz GmbH (it being understood that all such
interests shall be transferred out of the Companies prior to
Closing), none of the Companies own any interest in any
corporation and neither Company is a participant or owns an
interest in any partnership or any joint venture with any third
party. Wyeth Nutrition (1 Share) and Wyeth-Lederle (7,999
Shares) are collectively the record and beneficial owner, and AHP
is the indirect beneficial owner, of all the Chirurgie Shares,
free and clear of any Encumbrances and any preemptive or
subscription rights of any Person.
ARTICLE 4.3.1 There are no options, warrants or other
rights, agreements, arrangements or commitments of any character
obligating either Chirurgie or Storz GmbH to issue or sell any
shares of capital stock of or other equity interests in either
Chirurgie or Storz GmbH, or any securities or obligations
convertible into or exchangeable for any shares of capital stock
of either Chirurgie or Storz GmbH or other equity interests in
either Chirurgie or Storz GmbH obligating Chirurgie or Storz GmbH
to grant, extend or enter into any such right, agreement,
arrangement or commitment.
ARTICLE 4.3.2 There are no outstanding contractual
obligations of either Chirurgie or Storz GmbH to repurchase,
redeem or otherwise acquire any outstanding shares of capital
stock of, or other ownership interests in, either Chirurgie or
Storz GmbH, or to make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
ARTICLE 4.4 Effect of Agreement. The execution,
delivery and performance by Sellers of this Agreement and the
execution, delivery and performance by Sellers and the
International Affiliates of the other agreements contemplated
hereby and the consummation by Sellers and the International
Affiliates of the transactions contemplated hereby and thereby
will not require any notice to, filing with, or the consent,
approval or authorization of, any person or Governmental
Authority, except as contemplated in Section 7.5 hereof or as set
forth in Section 4.4 of the Disclosure Schedule, other than where
the failure to obtain such consent, approval or authorization, or
to give or make any such notice or filing, would not reasonably
be expected to have a Cost in excess of $200,000. Except as
contemplated in Section 7.5 hereof or as set forth in Section 4.4
of the Disclosure Schedule, neither the execution and delivery of
this Agreement or of the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or
thereby will (i) violate or result in a breach or result in the
acceleration or termination of, or the creation in any third
party of the right to accelerate, terminate, modify or cancel,
any Contract material to the Business, (ii) conflict with,
violate or result in a breach of any provision of the
incorporation documents or by-laws of either of Sellers or any of
the Companies, or any similar corporate documents of the
International Affiliates in any material respect, or (iii)
conflict with or violate any Applicable Laws or court orders in
any material respect.
ARTICLE 4.5 Financial Statements and Net Asset Value.
ARTICLE 4.5.1 Sellers will deliver the financial
statement set forth in clause (i) below as soon as it becomes
available but in no event later than November 15, 1997 and
Sellers have delivered to Buyer or its representatives the
financial statements set forth in clause (ii) below (the
"Financial Statements"): (i) an audited combined adjusted
statement of Operating Profit for the year ended December 31,
1996 which includes the results derived from the Business for
such period and a combined adjusted statement of Net Assets as of
December 31, 1996 (including notes thereto) indicating (but not
including) the Net Receivables as of such date, which combined
adjusted statement contains a report from Andersen reporting
thereon; and (ii) an unaudited combined adjusted statement of
Operating Profit for the six months ended June 30, 1997, which
includes the results derived from the Business for such period
and a combined adjusted statement of Net Assets as of June 30,
1997 including the Net Receivables as of such date, each prepared
consistently with the December 31, 1996 Financial Statements
(except for the inclusion, rather than indication of the Net
Receivables in the Statement of Net Assets as of June 30, 1997),
copies of all of which are and will be when delivered attached
hereto as Section 4.5.1(a) of the Disclosure Schedule.
ARTICLE 4.5.2 When delivered, the Financial Statements
will (i) have been prepared from the books and records of
Sellers, the Companies and the International Affiliates, (ii)
except as set forth in Section 4.5.2 of the Disclosure Schedule
and in the Financial Statements (including the notes thereto),
have been prepared in accordance with GAAP and contain sufficient
supporting disclosures as required to make the information
presented not misleading, and accurately reflect, in all material
respects, the Operating Profit for the 1996 year and the six
months ended June 30, 1997, respectively, and the Net Assets and
Net Receivables as of December 31, 1996 and June 30, 1997,
respectively.
ARTICLE 4.6 Absence of Certain Changes or Events.
Except (i) to the extent arising out of or relating to the
transactions contemplated by this Agreement (ii) for Contracts
entered into since June 30, 1997 that are included in the
Contracts listed on Schedule 4.10(i) of the Disclosure Schedule,
and (iii) for matters listed on Section 4.6 of the Disclosure
Schedule, since June 30, 1997 (A) the Business has been operated
in the ordinary course in a manner consistent with past practice,
(B) there has not been any Material Adverse Change, (C) to the
knowledge of Sellers, no change has occurred which would
reasonably be expected to result in a Material Adverse Change,
(D) there has not been any agreement, condition, action or
omission which would be proscribed by (or require consent under)
6.1.4 had it existed, occurred or arisen after the date of this
Agreement, (E) there has not been any strike or other labor
dispute, and (F) there has not been any casualty, loss, damage or
destruction (whether or not covered by insurance) of any of the
Assets or assets of the Companies which would reasonably be
expected to have a Material Adverse Effect.
ARTICLE 4.7 Taxes.
ARTICLE 4.7.1 Except as disclosed on Section 4.7 of
the Disclosure Schedule, (i) the Companies have filed on or
before the date hereof (or will timely file) all Tax Returns
required to be filed for tax years or periods ending on or before
the Closing Date; (ii) except where failure to pay would not have
a Material Adverse Effect, all such Tax Returns are (or will be)
complete and accurate and disclose (or will disclose) all Taxes
required to be paid by the Companies for the periods covered
thereby and all Taxes shown to be due on such Tax Returns have
been (or will be) timely paid; (iii) except where failure to pay
would not have a Material Adverse Effect, all Taxes (whether or
not shown on any Tax Return) owed by the Companies and required
to be paid with respect to tax years or periods ending on or
before the Closing Date have been (or will be) timely paid or are
being presently contested in good faith; (iv) none of the
Companies or any of their Tax Affiliates have waived or been
requested to waive any statute of limitations in respect of
Taxes; (v) the income Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (vi) there is no action, suit,
investigation, audit, claim or assessment pending or proposed or
threatened with respect to Taxes of the Companies; (vii) all
deficiencies asserted or assessments made as a result of any
examination of the Tax Returns referred to in clause (i) have
been paid in full; (viii) all Tax Sharing Arrangements and Tax
indemnity arrangements will terminate on or prior to the Closing
Date and the Companies will have no liability thereunder on or
after the Closing Date; (ix) there are no liens for Taxes upon
any of the assets of the Companies or the Assets except liens
relating to current Taxes not yet due; (x) no intercompany
obligation (as described in Prop. Treas. Reg. Section 1.1502-13(g)) of
the Companies or any Tax Affiliate will remain outstanding
following the Closing; and (xi) the Companies have no corporate
acquisition indebtedness, as described in Section 279(b) of the
Code.
ARTICLE 4.7.2 No transaction contemplated by this
Agreement is subject to withholding under Section 1445 of the
Code.
ARTICLE 4.7.3 As a result of the transactions
contemplated by this Agreement, neither the Companies nor Buyer
will be obligated to make a payment to an individual that would
be an "excess parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the
Code.
ARTICLE 4.7.4 None of the Companies is, or will be as
of the Closing, a "consenting corporation" within the meaning
of Section 341(f) of the Code.
ARTICLE 4.8 Real Property.
ARTICLE 4.8.1 Owned Real Property. Section 4.8 of the
Disclosure Schedule sets forth a list of all Owned Real Property.
Except as set forth on Section 4.8.1 of the Disclosure Schedule
and except for Permitted Encumbrances, (i) the Companies have
good, valid and marketable fee simple title to each parcel of
Owned Real Property and (ii) none of the Owned Real Property is
subject to any lease.
ARTICLE 4.8.2 Leased Real Property. Section 4.8.2 of
the Disclosure Schedule sets forth a list of all Leased Real
Property. The Companies have a valid and binding leasehold
interest in all Leased Real Property and an International
Affiliate has a valid leasehold interest in each parcel included
in the International Premises and each of such leases is in full
force and effect in accordance with its terms and there exists no
material breach or default thereunder on the part of any of the
Companies or their Affiliates or, to the knowledge of Sellers,
any other party thereto.
ARTICLE 4.9 Good Title To and Condition of Assets;
Conduct of Business.
ARTICLE 4.9.1 The Companies have good title to, or a
valid and binding leasehold interest in, the assets of the
Companies and AHP, Cyanamid and the International Affiliates,
respectively, have good title to, or a valid and binding
leasehold interest in, the Wyeth Storz Assets, the Cyanamid Storz
Assets and the International Assets, respectively (other than
Real Property and Intellectual Property which are addressed in
Section 4.8 and 4.11, respectively), in each case free and clear
of all Encumbrances, except (i) as set forth in Section 4.9.1 of
the Disclosure Schedule, (ii) any Encumbrances disclosed in the
Financial Statements, (iii) liens for Taxes, assessments and
other governmental charges not yet due and payable, (iv)
immaterial mechanics', workmen's, repairmen's, warehousemen's,
carriers' or other like liens arising or incurred in the ordinary
course of business, and equipment leases with third parties
entered into in the ordinary course of business, (v) with respect
to Real Property, (A) easements, quasi-easements, licenses,
covenants, rights-of-way, and other similar restrictions,
including without limitation any other agreements, conditions or
restrictions, in each case, which are a matter of public record,
(B) any conditions that are shown by a current survey (which has
been made available for Buyer's review prior to the date hereof)
or physical inspection and (C) zoning, building and other similar
restrictions pursuant to Applicable Laws and (vi) other
Encumbrances which, individually or in the aggregate, are not
material and would not be required to be disclosed or reflected
on a consolidated balance sheet of the Companies and, with
respect to the Assets, Sellers and International Affiliates,
prepared in accordance with GAAP (all items included in (i)
through (vi) are referred to collectively herein as the
"Permitted Encumbrances").
ARTICLE 4.9.2 The physical assets of the Companies and
the Assets taken as a whole are in good and serviceable condition
(subject to normal wear and tear and immaterial impairments of
value and damage) and are generally suitable for the uses for
which they are intended. Except as set forth in Section 4.9.2 of
the Disclosure Schedule, and except for the Excluded Assets, the
Assets, together with all assets owned by the Companies (other
than Intellectual Property which is addressed in Section 4.11),
constitute all of the assets necessary to conduct the Business
consistent with past practice.
ARTICLE 4.10 Contracts. Section 4.10(i) of the
Disclosure Schedule sets forth a list, as of the date hereof, of
each Contract other than (i) purchase orders in the usual and
ordinary course of business and (ii) any Contract involving the
payment of less than $300,000 or terminable by any of the
Companies or by the respective Seller or International Affiliate
without material penalty upon not more than 60 days' notice.
Except as set forth in Section 4.10(ii) of the Disclosure
Schedule, each Contract listed in Section 4.10(i) of the
Disclosure Schedule or Section 4.11.1 of the Disclosure Schedule
is a valid and binding agreement and is in full force and
effect. Except as otherwise provided in Section 4.10(iii) of the
Disclosure Schedule, neither Sellers, the International
Affiliates nor the Companies are in default, and to Sellers'
knowledge there is no default by the other party, under any
Contract listed in Section 4.10(i) of the Disclosure Schedule
which default has not been cured or waived, except for such
defaults as would not reasonably be expected to have a Cost in
excess of $200,000. Except as described on Section 4.10(iv) of
the Disclosure Schedule, to the knowledge of Sellers, there is no
event or circumstance which, with the passage of time or the
giving of notice or both, would constitute a material default or
breach by any of the Companies, Sellers or International
Affiliates that is a party thereto under any of the Contracts
listed on Section 4.10(i) of the Disclosure Schedule or would
give rise to any right of termination or acceleration thereunder
except for such default, breach, termination or acceleration as
would not reasonably be expected to have a Cost in excess of
$200,000. To the knowledge of Sellers, there is no assertion by
any third party of any claim of material default or breach under
any of the Contracts except for such claim as would not
reasonably be expected to have a Cost in excess of $200,000.
ARTICLE 4.11 Intellectual Property Rights.
ARTICLE 4.11.1 Section 4.11.1 of the Disclosure
Schedule sets forth a listing of (i) all Patents, registered
Trademarks and applications therefor, registered copyrights and
applications for copyright registration, industrial and utility
model registrations and applications therefor, and design
registrations and applications therefor, included in the
Intellectual Property, (ii) all Contracts under which any of the
Companies or any of their Affiliates is licensed or otherwise
uses or is permitted to use Intellectual Property which is
material to the Business, (iii) all Contracts under which any of
the Companies or any of their Affiliates licenses or otherwise
permits any party to use Intellectual Property; provided, however
that except as set forth in Section 7.9, the right to use
"American Home" or "Cyanamid" or anything imitative thereof
or anything confusingly similar thereto are prohibited and such
assets are expressly excluded from the purchase and sale
hereunder. Except as set forth in Section 4.11.1, of the
Disclosure Schedule or as provided in the preceding clause or for
the terms contemplated or set forth in the Supply Agreements, the
Intellectual Property consists of all such rights required to
conduct the Business consistent with past practice.
ARTICLE 4.11.2 To the knowledge of Sellers, except as
set forth in Section 4.11.2 of the Disclosure Schedule, (i) no
person has claimed that the conduct of the Business as currently
conducted infringes on or otherwise violates the intellectual
property rights of any other Person, (ii) no Person is
challenging or infringing or otherwise violating the Intellectual
Property, (iii) there are no agreements, written or oral, consent
decrees or settlement arrangements that would limit or restrict
Buyer's or its Affiliates' use of the Intellectual Property in
the operation of the Business except, in each case, for
challenges, infringements or violations that would be not
reasonably expected to have a Material Adverse Effect, and (iv)
to the knowledge of Sellers, none of Sellers, the International
Affiliates nor the Companies have engaged in any conduct with
respect to the Business that would reasonably be expected to
provide any third party with a valid claim of infringement of
Intellectual Property against the Companies or, with respect to
the Assets, Sellers or the International Affiliates.
ARTICLE 4.11.3 Except as disclosed on Section 4.11.3 of
the Disclosure Schedule, the Companies, Sellers or their
Affiliates either (i) own the entire right, title and interest in
and to the Intellectual Property free and clear of any
Encumbrances; or (ii) have the royalty-free right to use the
same.
ARTICLE 4.11.4 Except as disclosed on Section 4.11.4 of
the Disclosure Schedule, the Companies, Sellers and their
Affiliates are not in breach of any material provision of any
material agreement, commitment, contractual understanding,
license, sublicense, assignment or indemnification which relates
to any of the Intellectual Property used in the Business and they
have not taken any action which would have a Material Adverse
Effect on their rights in any of the Intellectual Property used
in the Business.
ARTICLE 4.12 Litigation and Claims.
ARTICLE 4.12.1 Except as set forth in Section 4.12.1 of
the Disclosure Schedule, and except for matters under
Environmental Laws or relating to the Environmental Condition of
the Real Property (as to which no representation or warranty is
being made except as set forth in Section 4.14) there is no
civil, criminal or administrative action, suit, hearing,
proceeding or investigation pending or, to the knowledge of
Sellers, threatened against any of the Companies or, to the
extent involving the Assets, Sellers or the International
Affiliates, other than those that individually or in the
aggregate would not reasonably be expected to have a Cost in
excess of $200,000.
ARTICLE 4.12.2 Except as set forth in Section 4.12.2 of
the Disclosure Schedule, and except for matters under
Environmental Laws or relating to the Environmental Condition of
the Real Property (as to which no representation or warranty is
being made except as set forth in Section 4.14), none of the
Companies nor, to the extent involving the Assets, Sellers or the
International Affiliates are subject to any order, writ,
judgment, award, injunction or decree of any court or
Governmental Authority or any arbitrator or arbitrators other
than those that would not reasonably be expected to have a Cost
in excess of $200,000.
ARTICLE 4.13 Compliance with Law; Applicable
Permits. Except as set forth in Section 4.12 of the Disclosure
Schedule or Section 4.13 of the Disclosure Schedule, and except
for matters relating to Taxes which are addressed in Section 4.7,
and except for matters under Environmental Laws or relating to
the Environmental Condition of the Real Property and the
International Premises (as to which no representation or warranty
is made except as set forth in Section 4.14), the Business is
being conducted in compliance with all Applicable Laws, except
where the failure so to comply would not reasonably be expected
to have a Cost in excess of $200,000. The Companies (and Sellers
and the International Affiliates to the extent relating to the
Assets) have all Applicable Permits necessary to own, operate or
lease their respective properties and to conduct the Business as
currently conducted, other than those the absence of which would
not reasonably be expected to have a Material Adverse Effect.
There are no proceedings pending or, to the knowledge of Sellers,
the International Affiliates, or the Companies threatened which
may result in the revocation, cancellation or suspension of any
such Applicable Permits, except those the absence of which would
not reasonably be expected to have a Material Adverse Effect.
ARTICLE 4.14 Environmental Matters. Except as
disclosed on Section 4.14 of the Disclosure Schedule:
ARTICLE 4.14.1 Each of the Companies has obtained those
environmental permits, licenses or approvals necessary for its
operation, or as required by law, other than those the absence of
which would not be reasonably expected to have a Material Adverse
Effect, which permits are in full force and effect and is in
compliance with such permits and other requirements of applicable
Environmental Laws except where the failure to so comply would
not be reasonably expected to have a Cost in excess of $200,000
and Sellers have no knowledge of any such failures to comply
which have occurred in the past;
ARTICLE 4.14.2 none of the Companies has received any
written notice of or is otherwise aware of any claims by any
Governmental Authority alleging a violation of any Environmental
Laws which have not been complied with except where the failure
to so comply would not be reasonably expected to have a Cost in
excess of $200,000 and, to Sellers' knowledge, no such actions
are threatened;
ARTICLE 4.14.3 to the knowledge of Sellers, the Real
Property does not contain any underground storage tanks, surface
impoundments containing any Hazardous Substance, PCB-containing
materials or any exposed, friable asbestos-containing materials
the presence of which would reasonably be expected to have a Cost
in excess of $200,000;
ARTICLE 4.14.4 none of the Companies has received any
written notice, claim, or request for information relating to any
third party waste disposal site or former property, alleging that
either of them is or may be liable to any person or Governmental
Authority as a result of a Release or threatened Release by any
of the Companies, or generated by any of the Companies; and
ARTICLE 4.14.5 to the knowledge of Sellers, there has
been no Release at or on any Real Property that would reasonably
be expected to result in a Cost in excess of $200,000;
ARTICLE 4.14.6 Section 4.14.6 of the Disclosure
Schedule is an accurate description of Sellers' recent
environmental assessment program as it relates to the Business.
ARTICLE 4.15 FDA Matters. Except as set forth on
Section 4.15 of the Disclosure Schedule, there are no products
being sold in connection with the Business which at the date
hereof would require any approval of the United States Food and
Drug Administration (the "FDA") or any other Governmental
Authority, for the purpose for which they are being sold for
which such approval has not been obtained. All products now
being commercially distributed in connection with the Business in
any jurisdiction meet the applicable legal requirements of such
jurisdiction in all material respects and all requisite
governmental approvals have been duly obtained and are in full
force and effect. There is no action or proceeding by the FDA or
any other governmental body (including, but not limited to,
recalls, warning letters or inspection observation reports)
pending or, to the knowledge of Sellers, threatened that relate
to safety or efficacy of any of its products sold in connection
with the Business.
ARTICLE 4.16 Labor Matters. Except as disclosed in
Section 4.16 of the Disclosure Schedule, none of the Companies is
a party to any collective bargaining agreement and there are no
unfair labor practice proceedings affecting any of the Employees
or any labor or other collective bargaining unit representing any
Employee that would reasonably be expected to have a Cost in
excess of $200,000.
ARTICLE 4.17 Insurance. Section 4.17 of the
Disclosure Schedule sets forth a list of all insurance policies
and bonds provided by third parties currently maintained by or on
behalf of the Companies, or relating exclusively to the
International Business, Wyeth Storz Business and Cyanamid Storz
Business.
ARTICLE 4.18 Broker's Fees. Except for the retention
of Bear Stearns & Co. Inc., the fees and expenses of which will
be paid by Sellers pursuant to Section 7.2, none of the Companies
nor Sellers have employed any broker, finder or investment banker
or incurred any liability for any brokerage, finder's or other
fee or commission in connection with the transactions
contemplated by this Agreement.
ARTICLE 4.19 Undisclosed Liabilities. Except for (i)
matters identified in Section 4.19 of the Disclosure Schedule,
(ii) liabilities reflected or reserved for in the Financial
Statements, (iii) liabilities of a type not required to be
reflected in the Financial Statements in accordance with GAAP,
and (iv) liabilities incurred in the ordinary course of business
consistent in nature and amount with the comparable period of the
preceding fiscal year, since June 30, 1997, no liabilities have
arisen with respect to the Business (whether accrued, absolute,
contingent or otherwise).
ARTICLE 4.20 Certain Interests. Except as set forth
in Section 4.20 of the Disclosure Schedule, no officer or
director of Sellers or the Companies, is indebted or otherwise
obligated to the Companies; and the Companies are not indebted or
otherwise obligated to any such Person, except for amounts due
under normal arrangements applicable to all employees generally
as to salary or reimbursement of ordinary business expenses not
unusual in amount or significance.
ARTICLE 4.21 Intercompany Transactions. Except as
described in Section 4.21 of the Disclosure Schedule, none of the
goods and services provided by Sellers or any Affiliates of
Sellers to the Companies is required or necessary for the ongoing
operation of the Companies or the conduct of the Business.
Except as described in Section 4.21 of the Disclosure Schedule,
consummation of the transactions contemplated by this Agreement
will not (either alone, or upon the occurrence of any act or
event, or with the lapse of time, or both) result in any payment
arising or becoming due from the Companies to Sellers or any
Affiliates of Sellers.
ARTICLE 4.22 Receivables. Except as disclosed in
Section 4.6 of the Disclosure Schedule, all receivables of the
Companies represent sales actually made in the ordinary course of
business.
ARTICLE 4.23 Disclosure; No Other Representations or
Warranties. Except for the representations and warranties of
Sellers set forth in this Agreement, neither Sellers nor any
other Person makes any other express or implied representation or
warranty on behalf of Sellers, or otherwise in respect of the
Business. Disclosure in a particular Section of the Disclosure
Schedule shall be deemed to be a disclosure in all other Sections
thereof.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
ARTICLE 5.1 Corporate Organization. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of New York. Buyer has the requisite corporate
power and authority to own, operate or lease the properties that
it purports to own, operate or lease and to carry on its business
as it is now being conducted and is duly licensed or qualified as
a foreign corporation in each domestic or foreign jurisdiction in
which the nature of the business conducted by it or the character
or location of the properties owned or leased by it makes such
licensing or qualification necessary, except where the failure to
be so licensed or qualified would not reasonably be expected to
have a material adverse effect on the business, operations or
financial condition of Buyer and its subsidiaries, taken as a
whole.
ARTICLE 5.2 Authority Relative to this Agreement.
Buyer has the requisite corporate power and authority to execute
and deliver this Agreement and the other agreements contemplated
hereby and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by Buyer of this Agreement
and the other agreements contemplated hereby and the consummation
by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the
part of Buyer and no other corporate proceeding is necessary for
the execution and delivery of this Agreement or such other
agreements by Buyer, the performance by Buyer of its obligations
hereunder or thereunder and the consummation by Buyer of the
transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by Buyer and constitutes a
legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, moratorium, reorganization or
other laws of general applicability relating to or affecting the
enforcement of creditor's rights and general principles of
equity.
ARTICLE 5.3 Broker's Fees. Except for the retention of
Chase Securities Inc., the fees and expenses of which will be
paid by Buyer pursuant to Section 7.2, none of Buyer or any of
its Affiliates has employed any broker, finder or investment
banker or incurred any liability for any brokerage, finder's or
other fee or commission in connection with the transactions
contemplated by this Agreement.
ARTICLE 5.4 Consents and Approvals; No Violations.
Except as contemplated by Section 7.5 hereof, no material filing
with, and no material permit, authorization, consent or approval
of, any public body or authority is necessary for the
consummation by Buyer of the transactions contemplated by this
Agreement or the other agreements which Buyer will execute
pursuant to the terms of this Agreement. Buyer's execution and
delivery of this Agreement and Buyer's or its Affiliates'
execution, delivery and performance of such other agreements and
Buyer's consummation of the transactions contemplated hereby and
thereby will not (i) conflict with or result in a breach of any
of the provisions of the Certificate of Incorporation or by-laws
of Buyer, or (ii) subject to the making of the filings and the
obtaining of the governmental and other consents referred to
herein, contravene in any material respect any law, rule or
regulation of any state, the United States or any foreign country
or any order, writ, judgment, injunction, decree, determination
or award currently in effect that is binding upon Buyer or any of
its subsidiaries or any of their respective properties.
ARTICLE 5.5 Financial Capability. Buyer has the
financial capacity to purchase the Shares and the Assets and to
perform its obligations under the Contracts and Assumed
Liabilities on the terms and subject to the conditions
contemplated by this Agreement.
ARTICLE 5.6 Securities Act. Buyer is acquiring the
Shares solely for the purpose of investment and not with a view
to, or for sale in connection with, any distribution thereof in
violation of the Securities Act. Buyer acknowledges the Shares
are not registered under the Securities Act or any applicable
state securities law, and that such Shares may not be transferred
or sold except pursuant to the registration provisions of such
Securities Act or pursuant to an applicable exemption therefrom
and pursuant to state securities laws and regulations as
applicable.
ARTICLE 5.7 Due Diligence. In connection with the
transactions contemplated herein and in the agreements to be
executed in connection therewith, Buyer has performed a
comprehensive due diligence investigation of the Business.
ARTICLE 5.8 Chiron Purchase Agreement. The Chiron
Purchase Agreement has been duly executed and delivered by the
parties thereto, constitutes a valid and binding agreement and
contains no conditions to the consummation of the transactions
contemplated therein other than those previously delivered to
Sellers.
ARTICLE 5.9 No Other Representations or Warranties.
Except for the representations and warranties of Buyer expressly
set forth in this Agreement, neither Buyer nor any other Person
makes any other express or implied representation or warranty on
behalf of Buyer.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
ARTICLE 6.1 Conduct of Business Pending the Closing.
Except as disclosed in Section 6.1 of the Disclosure Schedule,
Sellers and Buyer agree that, prior to the Closing, unless Buyer
shall otherwise consent in writing (which consent Buyer shall not
unreasonably withhold) or as otherwise expressly contemplated by
this Agreement, the following provisions shall apply:
ARTICLE 6.1.1 The Business shall be conducted only in
the ordinary course of business and consistent with past
practices.
ARTICLE 6.1.2 Sellers shall not, and shall cause the
Companies not to do any of the following: (i) authorize for
issuance, issue, sell, pledge, deliver, or agree or commit to
issue, sell, pledge or deliver (whether through the issuance or
grant of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any capital stock of the Companies or
securities or rights convertible into or exchangeable for, shares
of capital stock or securities convertible into or exchangeable
for such shares; (ii) amend or propose to amend their Certificate
of Incorporation (or other similar charter documents) or by-laws;
(iii) split, combine or reclassify any shares of their capital
stock; (iv) redeem, purchase or otherwise acquire or offer to
redeem, purchase or otherwise acquire any capital stock; or (v)
authorize or propose any of the foregoing or enter into any
contract, agreement, commitment or arrangement to do any of the
foregoing; provided, however, that Sellers shall continue to have
the right to withdraw cash from the Companies, either in the form
of a dividend or in the form of a cash advance, and,
correspondingly, to provide cash to the Companies, either in the
form of a contribution to capital or an intercompany loan, in a
manner consistent with their past practice and the cash
management programs which they have in place, generally, for
their Affiliates. Buyer acknowledges that all cash will be
dividended out of the Companies prior to the Closing and, to the
extent possible, the Excluded Assets and Excluded Liabilities
relating to the Companies will be assigned or dividended out of
the Companies prior to the Closing as contemplated by Section
7.13.
ARTICLE 6.1.3 Sellers shall cause the Companies and,
to the extent related to the Business, the International
Affiliates, not to (i) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof or make any
investment either by purchase of stock or securities,
contributions to capital, property transfer or purchase of any
amount of property or assets of any other individual or entity;
(ii) acquire any assets other than pursuant to the current
capital expenditure budget of the Companies and other than
purchases in the ordinary course of business; (iii) dispose of
any assets other than in the ordinary course of business; (iv)
incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee, endorse or otherwise as an
accommodation or become responsible for, the obligations of any
other Person, make any loans or advances or enter into any other
transaction, except the occurrence of intercompany loans or the
making of intercompany advances in the ordinary course of
business consistent with past practice and except for advances to
Employees for expenses in the ordinary course of business and
consistent with past practice; (v) authorize, recommend or
propose any change in its capitalization; or (vi) authorize or
propose any of the foregoing or enter into or modify any
contract, agreement, or commitment or arrangement with respect to
any of the foregoing.
ARTICLE 6.1.4 Except as otherwise contemplated by this
Agreement, Sellers shall not adopt or amend any U.S. Employee
Plan, U.S. Benefit Arrangement or International Plan, each as
hereinafter defined, or increase or pay any benefit not required
by any existing U.S. Employee Plan, U.S. Benefit Arrangement or
International Plan (as defined in Section 9.2), or increase any
salaries or wages, other than in the ordinary course of business
or as may be required by a Governmental Authority.
ARTICLE 6.1.5 Sellers shall cause the Companies and
the International Affiliates not to waive, release, grant or
transfer any Intellectual Property or modify or change in any
material respect any existing material license, distribution
agreement, lease, or other document, in each case, other than in
the ordinary course of business.
ARTICLE 6.1.6 Sellers shall not, and shall cause the
International Affiliates and the Companies not to, (i) terminate
or fail to renew any existing insurance coverage, (ii) terminate,
amend or fail to renew or preserve any material Applicable
Permits, (iii) agree to or make any commitment to take any action
that is or would be prohibited by this Section 6.1.6.
ARTICLE 6.2 Permitted Actions. Notwithstanding any
other provisions herein to the contrary, as contemplated by
Section 7.13, prior to the Closing, Sellers shall be permitted to
cause each of the Companies to transfer by way of dividend or
otherwise to Cyanamid or AHP or any of their Affiliates, as the
case may be, any Excluded Assets, including but not limited to
cash or cash equivalents held by such Company from time to time
up to and including the Closing Date. Except to the extent
otherwise agreed between Sellers and Buyer, Sellers shall, with
respect to the Companies, or otherwise with respect to the
Business, extinguish all intercompany receivables and other
intercompany assets, and intercompany payables and other
intercompany liabilities (including without limitation all
intercompany Tax and equity accounts), and shall repay
obligations for borrowed money of the Companies. For purposes of
this Section 6.2, intercompany receivables, intercompany assets,
intercompany payables and intercompany liabilities shall mean
receivables, assets, payables and liabilities between any of the
Companies, or otherwise with respect to the Business, and any of
their Affiliates.
ARTICLE 6.3 Preservation of Business Prior to the
Closing. During the period beginning on the date hereof and
ending on the Closing Date, (i) Sellers will use their
commercially reasonable efforts to preserve the Business and to
preserve the goodwill of customers, suppliers and others having
business relations with Sellers, the International Affiliates and
the Companies and (ii) Sellers and Buyer will consult with each
other concerning, and Sellers will cooperate with Buyer's efforts
to keep available the Employees.
ARTICLE 6.4 Bank Accounts. Upon or prior to Closing,
Sellers shall terminate any agreements or arrangements providing
Sellers with the right to remove cash from the Companies' bank
accounts after the Closing.
ARTICLE 6.5 Change of Name. Prior to Closing, Sellers
shall be permitted to change the corporate name of Chirurgie to
delete any reference to "Cyanamid".
ARTICLE 7
ADDITIONAL AGREEMENTS
ARTICLE 7.1 No Transfer of Shares. Sellers agree that
from the date of this Agreement through the earlier of the
Closing Date or the termination of this Agreement, they shall not
transfer, sell, hypothecate or otherwise assign any interest in
the Shares or, except in the ordinary course of business and
consistent with past practice, the Assets.
ARTICLE 7.2 Expenses. Except as otherwise provided in
Section 3.5.3, all expenses, including the fees of any attorneys,
accountants, investment bankers or others engaged by Sellers or
Buyer, incurred in connection with this Agreement and the
transactions contemplated hereby, shall be paid by the party
incurring such expenses whether or not the transactions
contemplated by this Agreement are consummated, provided, that in
the event such transactions are consummated, any such fees
incurred by the Companies shall be paid by Sellers.
ARTICLE 7.3 Additional Agreements. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees (i) to use all reasonable efforts to do, or cause to be
done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and to cooperate with
each other in connection with the foregoing, (ii) to defend all
lawsuits or other legal proceedings challenging this Agreement or
the consummation of the transactions contemplated hereby, (iii)
to use all reasonable efforts to lift or rescind any injunction
or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions
contemplated hereby, (iv) to use all reasonable efforts to effect
all necessary registrations and filings and submissions of
information required or requested by Governmental Authorities
with respect to the transactions contemplated hereby and (v) in
the case of Sellers and the International Affiliates, to convey
to Buyer and its Affiliates any purchase orders and inquiries
relating to the International Business received after the
Closing.
ARTICLE 7.4 Access to Information. Prior to the
Closing, Sellers shall, and shall cause the Companies and the
International Affiliates to, afford the officers, employees and
agents of Buyer reasonable access to the facilities, records (not
including confidential personnel records prohibited by Applicable
Laws) and Employees relating to the Business during normal
business hours and in a manner that will not unreasonably disrupt
the operation of the Business. In connection therewith, the
parties will comply with the terms of the Confidentiality
Agreement dated July 27, 1995 between Buyer and Bear Stearns &
Co. Inc., as agent of AHP, as amended, which agreement shall
survive the termination of this Agreement; provided, however,
that to the extent any provision thereof is inconsistent or
conflicts with any provision of this Agreement, the provision of
this Agreement shall govern.
ARTICLE 7.5 Filings and Authorizations. Buyer and the
ultimate parent entities of the Companies will, as promptly as
practicable, file or supply, or cause to be filed or supplied,
all notifications and information required to be filed or
supplied pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and the related regulations and published
interpretations (the "HSR Act") and, if necessary, any other
Competition Laws, in connection with the transactions
contemplated by this Agreement. As promptly as practicable, (i)
Sellers and Buyer will make, or cause to be made, all such other
filings and submissions under laws, rules and regulations
applicable to them, or to their subsidiaries and Affiliates, as
may be required for them to consummate the transactions
contemplated hereby in accordance with the terms of this
Agreement, and (ii) Buyer will exercise commercially reasonable
efforts to obtain, or cause to be obtained, all authorizations,
approvals, consents and waivers from all Governmental Authorities
necessary to be obtained by Buyer, its subsidiaries or
Affiliates, in order for them so to consummate such transactions.
Notwithstanding anything in this Agreement to the contrary,
including, without limitation, clause (ii) above, Buyer covenants
that it will, or cause its Affiliates to, take all actions
necessary, including any divestiture or hold separate agreements,
to obtain all regulatory clearances, authorizations, waivers,
consents and approvals from Governmental Authorities with respect
to Competition Laws, provided that nothing herein shall be
construed to require Buyer or its Affiliates to dispose of or
hold separate business or product lines which generated annual
gross sales for the year ended December 31, 1996 in excess of 10
percent (10%) of the Purchase Price. Subject to the foregoing,
each party hereto shall (x) use its reasonable efforts to prevent
the entry into a judicial or administrative proceeding brought
under any antitrust law by any Governmental Authority with
jurisdiction over enforcement of any applicable Competition Law
or any other party of any preliminary injunction or other order
that would make consummation of the purchase of the Shares and
the Assets in accordance with the terms of this Agreement
unlawful or would prevent or delay it (including defending any
litigation that could result in the entry of such injunction or
order); and (y) take promptly, in the event that such an
injunction or order has been issued in such a proceeding, all
steps reasonably necessary to prosecute an appeal of such
injunction or order; provided, however, that neither Sellers nor
Buyer shall be required to undertake more than one such appeal.
ARTICLE 7.6 Information for Other Filings. The parties
represent to each other that the information provided and to be
provided by Buyer and Sellers, respectively, for use in any
document to be filed with any Governmental Authority in
connection with the transactions contemplated hereby shall, at
the respective times such documents are filed with the
Governmental Authority and on the Closing Date, be true and
correct in all material respects and shall not omit to state any
material fact required to be stated therein or necessary in order
to make such information not false or misleading, and Sellers and
Buyer each agree to so correct any such information provided by
it for use in such documents that shall have become false or
misleading.
ARTICLE 7.7 Tax Matters.
ARTICLE 7.7.1 Liability for Taxes.
(a) Sellers shall be liable for, and shall
indemnify Buyer against, all (i) Taxes imposed on any of Sellers'
Tax Affiliates (other than the Companies) for any taxable year or
period excluding any Taxes included in Section 7.7.l(e), (ii)
Taxes imposed on the Companies or for which the Companies may
otherwise be liable for any taxable year or period that ends on
(and including) or before the Closing Date and, with respect to
any Straddle Period, the portion of such Straddle Period ending
on and including the Closing Date (including, without limitation,
any obligation to contribute to the payment of a Tax determined
on a consolidated, combined or unitary basis with respect to the
Companies and any of Sellers' Tax Affiliates), (iii) Section 338
Taxes, and (iv) all income or franchise Taxes caused by or
incurred in connection with all transactions contemplated by this
Agreement.
(b) Buyer shall be liable for, and shall
indemnify Sellers against, Taxes imposed on the Companies or
Buyer for any taxable year or period that begins after the
Closing Date and with respect to any Straddle Period, the portion
of such Straddle Period beginning after the Closing Date
(including, without limitation, any obligation to contribute to
the payment of a Tax determined on a consolidated, combined or
unitary basis with respect to Buyer and its Tax Affiliates).
(c) For purposes of paragraphs (a) and (b) of
Section 7.7.1, whenever it is necessary to determine the
liability for Taxes of the Companies a Straddle Period, the
determination of the Taxes of the Companies for the portion of
the Straddle Period ending on, and the portion of the Straddle
Period beginning after, the Closing Date shall be determined by
assuming that the Straddle Period consisted of two taxable years
or periods, one which ended on the Closing Date and the other
which began at the beginning of the day following the Closing
Date, and items of the Companies for the Straddle Period shall be
allocated between such two taxable years or periods on a
"closing of the books basis" by assuming that the books of the
Companies were closed at the close of business on the Closing
Date, provided, however, that (i) exemptions, allowances or
deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned between such two
taxable years or periods on a daily basis, (ii) extraordinary
items described in Treas. Reg. Section 1.1502-76(b)(2)(ii)(C) shall be
allocated to the day that they are taken into account and any
item relating to any Section 338 Taxes shall be allocated to the
Closing Date.
(d) For purposes of paragraphs (a) and (b) of
Section 7.7.1, where, under applicable law, a taxable year or
period ends as a result of the purchase of the Shares pursuant to
this Agreement, items of income, gain, deduction, loss or credit
shall be allocated between such taxable year or period and the
following taxable year or period in a manner consistent with the
rules in Treas. Reg. Section 1.1502-76(b).
(e) Buyer, on the one hand, and Sellers, on the
other hand, shall share equally any real property transfer or
gains Tax, sales Tax, use Tax, stamp Tax, stock transfer Tax, or
other similar Tax imposed on the transactions contemplated by
this Agreement, provided that any value added Tax shall be the
obligation of Buyer to the extent Buyer is entitled to claim
credit for such value added Tax. This paragraph shall not apply
to franchise, income or other Taxes based on income.
(f) Within 60 days after the date of this
Agreement, Sellers will deliver or cause to be delivered to Buyer
true and complete copies, to the extent available, of: (i) all
income Tax Returns of the Companies for periods subsequent to
December 31, 1993, and any other open Tax years (or, with respect
to consolidated, combined or unitary returns, the portion thereof
relating to the Companies); (ii) any other Tax Returns for
periods subsequent to December 31, 1993, and any other open Tax
years, reasonably requested by Buyer, as may be relevant to the
Companies or the assets or operations thereof; and (iii) any
workpapers or other supporting data reasonably requested by Buyer
relating to "income Taxes payable" reflected in the books and
records of the Companies as of December 31, 1995, relating to Tax
Returns made available pursuant to clause (i) or (ii) or relating
to Tax Returns referred to in (i) or (ii) not yet filed.
ARTICLE 7.7.2 Tax Returns. Sellers shall file or
cause to be filed when due all Tax Returns that are required to
be filed by or with respect to the Companies for taxable years or
periods ending on or before the Closing Date and Sellers shall
remit (or cause to be remitted) to the appropriate Governmental
Authority any Taxes due in respect of such Tax Returns, and Buyer
shall file or cause to be filed when due all Tax Returns that are
required to be filed by or with respect to the Companies for
taxable years or periods ending after the Closing Date and Buyer
shall remit (or cause to be remitted) to the appropriate
Governmental Authority any Taxes due in respect of such Tax
Returns. Sellers or Buyer shall reimburse the other party the
Taxes for which Sellers or Buyer is liable pursuant to Section
7.7.1 but which are payable with any Tax Return to be filed by
the other party pursuant to the previous sentence upon written
request of the party entitled to reimbursement setting forth in
detail the computation of the amount owed by Sellers or Buyer, as
the case may be, but in no event less than 15 days prior to the
due date for the filing of such Tax Return. All Tax Returns
which Sellers are required to file or cause to be filed in
accordance with this Section 7.7.2 shall be prepared and filed in
a manner consistent with past practice in preparing and filing
similar Tax Returns and Sellers shall not thereafter amend any
Tax Return to take positions inconsistent with such past
practice.
ARTICLE 7.7.3 Contest Provisions. Buyer shall notify
Sellers in writing upon receipt by Buyer, any of its Tax
Affiliates, or any of the Companies of notice of any pending or
threatened federal, state, local or foreign Tax audits or
assessments which may materially affect the Tax Liabilities of
the Company for which Sellers would be required to indemnify
Buyer pursuant to Section 7.7.1. Sellers shall have the sole
right to represent the Companies' interests in any Tax audit or
administrative or court proceeding relating to taxable periods
ending on or before the Closing Date, and to employ counsel of
its choice at its expense. Provided however that if any
adjustment or settlement would materially affect the step up
value of the assets deemed purchased under the Section 338(h)(10)
election, or if such adjustment or settlement otherwise would
materially increase the Tax liability of the Companies for any
period after the Closing Date. Buyer shall be entitled to
participate in discussions with the Taxing Authority and Sellers
shall not agree to such an adjustment or settlement without the
consent of Buyer, which shall not be unreasonably withheld.
ARTICLE 7.7.4 Buyer and Sellers agree to cooperate and
share all required information on a timely basis in order to
timely file all Tax Returns and for the preparation of any audit,
and for the prosecution or defense of any claim, suit or
proceeding relating to any proposed adjustment. Buyer and
Sellers agree to retain or cause to be retained all books and
records pertinent to the Companies until the applicable period
for assessment under applicable law (giving effect to any and all
extensions or waivers) has expired, and to abide by or cause the
abidance with all record retention agreements entered into with
any Governmental Authority. After the Closing, Buyer will give
Sellers reasonable notice prior to discarding or destroying any
such books and records relating to Tax matters and, if Sellers so
request, Buyer will allow Sellers (at Sellers' expense) to take
possession of such books and records. Buyer and Sellers shall
cooperate with each other in the conduct of any audit or other
proceedings involving the Companies for any Tax purpose and each
shall execute and deliver such powers of attorney and other
documents as are necessary and appropriate to carry out the
intent of this Section.
ARTICLE 7.7.5 Election Under Section 338(h)(10).
(a) At the request of Buyer, Sellers and Buyer
shall make a joint election for all or some of the Companies
under Section 338(h)(10) of the Code and/or under any applicable
similar provisions of state law with respect to the purchase of
the Shares (collectively, the "Section 338(h)(10) Elections").
Buyer shall be responsible for, and control the preparation of,
all federal, state and local forms needed to make the Section
338(h)(10) Elections requested by Buyer and shall be responsible
for any defects in such election. Sellers represent that the
Section 338(h)(10) Elections are available for the Companies. If
the Section 338(h)(10) Elections are made, Sellers and Buyer
shall, within 10 days after receipt of the Allocation Schedule,
exchange completed and executed copies of Internal Revenue
Service Form 8023-A, required schedules thereto, and any similar
state forms. If any changes are required in these forms as a
result of information which is first available after these forms
are prepared or otherwise, the parties will promptly agree on
such changes, and Sellers shall take such steps as are reasonably
requested by Buyer to effectuate or cure any defect in the
Section 338(h)(10) Elections.
(b) Sellers and Buyer shall cause an
independent appraiser selected by Buyer (the "Appraiser") to
conduct and to deliver to Buyer and Sellers, within 90 days
following the determination of the Final Net Asset Value, an
appraisal (the "Appraisal") of the fair market value as of the
Closing Date of the assets acquired pursuant to this Agreement
(including the assets of the Companies). The cost of the
Appraisal shall be paid by Buyer. Buyer shall deliver a copy of
the Appraisal to Seller.
(c) Within 60 days following receipt of the
Appraisal, Buyer shall deliver to Sellers a schedule (the
"Allocation Schedule") allocating the Modified Adjusted Deemed
Sales Price, as defined in Treas. Reg. Section 1.338(h)(10)-1(f), for
the Companies among the assets of the Companies. The Allocation
Schedule shall be reasonable and shall be prepared in accordance
with Sections 338(h)(10) and 1060 of the Code and the regulations
thereunder and in accordance with the Appraisal. Sellers agree
that promptly upon receiving the Allocation Schedule, assuming
that the Allocation Schedule satisfies the requirements set forth
in the preceding sentence, Sellers shall sign the Allocation
Schedule and return an executed copy thereof to Buyer. Buyer and
Sellers each agree to file all federal, state, local and foreign
Tax Returns in accordance with the Allocation Schedule and not to
take or cause to be taken, any action that would be inconsistent
with or prejudice any Section 338(h)(10) Elections.
ARTICLE 7.7.6 Adjustment to Purchase Price. Any
payment by Buyer or Sellers under Section 7.7 will be deemed for
tax purposes an adjustment to the Purchase Price.
ARTICLE 7.7.7 Survival of Obligations.
Notwithstanding anything to the contrary in this Agreement, and
notwithstanding Section 12.3 of this Agreement, the obligations
of the parties set forth in Section 7.7 shall be unconditional
and absolute and shall remain in effect until the expiration of
the applicable statute of limitations.
ARTICLE 7.8 Covenant Not to Compete.
ARTICLE 7.8.1 Sellers, for and on behalf of themselves
and each of their respective Affiliates, agree that for a period
of three years after the Closing Date, they shall not own,
manage, operate, control or otherwise engage in any Competitive
Business (as hereinafter defined); provided, however, that
nothing herein contained shall be construed to prevent Sellers or
any of their Affiliates from acquiring or merging with any
business, Person or entity 80% or more of whose consolidated
revenues for the most recently completed fiscal year prior to
such acquisition were derived from businesses other than a
Competitive Business.
ARTICLE 7.8.2 "Competitive Business" shall mean a
business in the Business Field, provided, however, Buyer
acknowledges that each of clauses (i), (ii), (iii) and (iv)
hereunder shall not constitute a Competitive Business: (i) the
conduct of the business (which includes business derived from
current research and development) of Sellers and their Affiliates
as currently conducted (including the operations related to the
Excluded Assets), (ii) the conduct of Sellers' joint venture
partners who are not Affiliates, (iii) the manufacture,
distribution and/or sale by Sellers or any of their Affiliates of
vitamins, and/or nutraceuticals not primarily indicated (by
labelling or packaging) for ophthmalic indications, but which may
have opthmalic benefits, and Sellers may indicate that such
product has ophthalmic benefits in addition to other benefits,
provided, however, that Sellers and their Affiliates shall not
during the three year period following the Closing Date directly
promote or detail such products to eye care professionals.
ARTICLE 7.8.3 In order to protect Buyer against any
efforts by Sellers to cause Employees to terminate their
employment, Sellers agree that for a period of one year following
the Closing Date, Sellers will not directly or indirectly induce
any Employees to leave their employment (and in the case of
Cyanamid Storz Employees, hiring such Employees shall be
prohibited for such term); provided however, the foregoing shall
not apply to (i) Employees who first approach Sellers or their
Affiliates for employment (except in the case of Cyanamid Storz
Employees for whom hiring is prohibited hereunder for the term
set forth in this Section 7.8.3) or (ii) solicitations or hiring
(except in the case of Cyanamid Storz Employees for whom hiring
is prohibited hereunder for the term set forth in this Section
7.8.3) as part of a general employee solicitation not targeted at
Employees (e.g. newspaper advertisements, etc.) or (iii) any
Employee at any time that such Employee is no longer employed by
Buyer or its Affiliates.
ARTICLE 7.8.4 Sellers recognize and agree that a
material breach by Sellers of any of the covenants set forth in
this Section 7.8 would cause irreparable harm to Buyer, that
Buyer's remedies at Law in the event of such breach would be
inadequate, and that, accordingly, in the event of such breach a
restraining order or injunction or both may be issued against
Sellers, in addition to any other rights and remedies which are
available to Buyer. If this Section 7.8 is more restrictive than
permitted by Applicable Law, this Section 7.8 shall be limited to
the extent required to permit enforcement under any such
Applicable Law.
ARTICLE 7.8.5 For income tax purposes only, Buyer and
Sellers agree that a portion of the Purchase price shall be
allocated to the covenants in this Section 7.8.
ARTICLE 7.9 Use of Certain Names. As soon as possible,
but in no event later than 18 months after the Closing, Buyer
shall cause the Companies to revise product literature and
labeling (including stickering), change packaging and stationery,
and otherwise discontinue use of the names "American Cyanamid",
"Cyanamid", "American Home Products," "Lederle," "Cy"
"Wyeth" and variations thereof (collectively, the "Names").
In no event shall Buyer or the Companies use any Names after the
Closing in any manner or for any purpose different from the use
of such Names by the Companies during the period preceding the
Closing. With respect to product inventory manufactured by the
Companies prior to the Closing, Buyer and the Companies may
continue to sell such inventory, notwithstanding that it bears
one or more of the Names, for a reasonable time after the Closing
not to exceed eighteen months (or such time thereafter as Buyer
may request if Sellers furnish their written consent, which shall
not be unreasonably withheld).
ARTICLE 7.10 Ancillary Agreements. At the Closing,
AHP or its Affiliates and Buyer will enter into the Supply
Agreement(s), Research and Discovery Agreement, Diamox, Neptazane
and Phospholine Iodide Co-Promotion Agreement, License Agreement,
Cidofovir Co-Promotion Agreement, Product Development Agreement
and Transition Services Agreements.
ARTICLE 7.11 Termination of Sale Discussions.
Sellers shall promptly terminate any and all pending discussions
with prospective buyers of the Business. During the period
between the date hereof and the Closing, unless this Agreement is
terminated by either party in accordance with the provisions
hereof, neither Sellers, the International Affiliates nor the
Companies nor any of their respective officers or agents will,
directly or indirectly, solicit any offers, bids or indications
of interest, or initiate negotiations with any person, with
respect to the Business or the Shares, nor shall Sellers, the
International Affiliates or the Companies furnish, or authorize
any agent or representative to furnish, any confidential
information concerning the Companies or the Business to any third
party.
ARTICLE 7.12 Delivery of International Assets. As
soon as reasonably practicable after the Closing, but in no event
later than 180 days, Buyer shall arrange to have the
International Assets removed from the premises (other than the
International Premises) of the International Affiliates holding
such International Inventory, at Buyer's sole cost. Sellers
shall cause the International Affiliates to co-operate in
arranging such removal. Prior to such removal by Sellers,
Sellers shall cause the International Affiliates to exercise
ordinary care in connection with their possession of the
International Assets.
ARTICLE 7.13 Excluded Assets and Liabilities. Buyer
acknowledges and agrees that, to the extent assignable, Excluded
Assets and Excluded Liabilities relating to the Companies will be
transferred, conveyed or assigned, by dividend or otherwise to
the extent practicable or otherwise as set forth in Section
3.5.1, out of the Companies prior to the Closing.
ARTICLE 7.14 Access to Records After Effective Time.
ARTICLE 7.14.1 For a period of six years after the
Closing, Sellers and their representatives shall have reasonable
access to all of the books and records of the Companies with
respect to periods prior to the Closing Date to the extent that
such access may reasonably be required by Sellers in connection
with matters relating to or affected by the operations of the
Companies prior to the Closing Date. The Companies shall afford
such access upon receipt of reasonable advance notice and during
normal business hours, Sellers shall be solely responsible for
any costs or expenses incurred by them pursuant to this Section
7.14.1. If Buyer or the Companies shall desire to dispose of any
of such books and records prior to the expiration of such
six-year period, the Companies shall, prior to such disposition,
give Sellers a reasonable opportunity, at Sellers' expense, to
segregate and remove such books and records as Sellers may elect.
ARTICLE 7.14.2 For a period of six years after the
Closing Date, Buyer, the Companies and their respective
representatives shall have reasonable access to all of the books
and records relating to the Companies or the Business which
Sellers or any of their Affiliates may retain after the Closing
Date. Such access shall be afforded by Sellers and their
Affiliates upon receipt of reasonable advance notice and during
normal business hours. Buyer or the Companies, as the case may
be, shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section 7.14.2. If Sellers or
any of their Affiliates shall desire to dispose of any of such
books and records prior to the expiration of such six-year
period, Sellers shall, prior to such disposition, give Buyer and
the Companies a reasonable opportunity, at Buyer's or the
Companies' expense, to segregate and remove such books and
records as Buyer or the respective Companies may elect.
ARTICLE 7.15 Disclosure Supplement. Prior to
Closing, Sellers shall deliver to Buyer supplements to the
Disclosure Schedule, and without limitation on Buyer's right
under Section 8.3.3 to receive an unqualified certificate
regarding the continuing accuracy and performance of the
representations, warranties and covenants of Sellers made on the
date hereof, to the extent supplemental disclosures relate to
developments between the date hereof and Closing or termination,
and to the extent such subsequent disclosures would constitute
breaches of representations and warranties contained herein as of
the date hereof, any indemnity obligations of Sellers under
Article 11 relating to such breaches shall be limited to and
shall not exceed $1 million in the aggregate. To the extent such
supplemental disclosures would reasonably be expected to result
in Costs in excess of $1 million, the parties agree to discuss
such matters in good faith.
ARTICLE 7.16 Foreign Distribution Agreements. Prior
to the Closing, Sellers shall cause the Companies and/or the
International Affiliates to enter into agreements with
distributors in Japan, Spain and Portugal on terms and conditions
reasonably acceptable to Buyer (it being agreed that the
principal terms contained in Exhibit H are acceptable to Buyer).
ARTICLE 7.17 1997 Bonus. Bonuses to be paid to
Employees for performance in 1997, if any, shall be paid by
Sellers, provided however, that payment of bonuses is in the sole
discretion of Sellers.
ARTICLE 7.18 Bundled Contracts. To the extent
permitted by Applicable Law, Buyer covenants and agrees that
after the Closing it will continue to honor Sellers' commitments
made in each such bundled contract with respect to supplying the
relevant products, including the sale price, for the respective
commitment terms set forth in Section 1.15 of the Disclosure
Schedule. As soon as practicable after the Closing Date, Sellers
and Buyer will, at the request of Buyer, request each third party
to the Bundled Contracts to relieve Sellers of their obligation
to provide such products under each such Bundled Contract.
ARTICLE 7.19 AREDS Arrangements. Without the consent
of Buyer, Sellers shall not terminate the Cooperative Research
and Development Agreement dated March 11, 1993 with the National
Eye Institute of the National Institute of Health prior to the
expiration of its term. In connection therewith, Buyer shall
bear the cost of the supply of Ocuvite to the NIH under such
agreement. Sellers agree to share data relating to Ocuvite in
the Business Field with Buyer. The parties agree to share
equally the stipend fees to be paid to the NIH pursuant to the
letter agreement dated October 14, 1996.
ARTICLE 7.20 AHP Guaranty Removal. Buyer agrees to
use diligent efforts in cooperation with Sellers to substitute
the guaranty of Buyer for AHP's guaranty under the supply
agreement dated September 1, 1996 between Storz and Dow Corning
Corporation relating to the supply of silicone.
ARTICLE 7.21 Gilead Consent. The parties shall each
use this diligent efforts to obtain the consent to the assignment
of the license agreement dated August 1, 1994 between Gilead
Sciences, Inc. and Cyanamid, and to institute Buyer as the
obligor, rather than Cyanamid.
ARTICLE 8
CONDITIONS
ARTICLE 8.1 Conditions to Obligation of each Party
to Effect the Transactions Contemplated by this Agreement. The
obligation of each party to effect the transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
ARTICLE 8.1.1 all governmental and other consents and
approvals, if any, necessary to permit the consummation of the
transactions contemplated by this Agreement shall have been
obtained and any waiting period (and any extension thereof)
applicable to the consummation of this Agreement under the HSR
Act or under other Competition Laws shall have expired or been
terminated; and
ARTICLE 8.1.2 no preliminary or permanent injunction
or other order, decree or ruling issued by a court of competent
jurisdiction or by a Governmental Authority nor any Applicable
Law shall be in effect that would restrain or otherwise prevent
the consummation of the transactions contemplated by this
Agreement.
ARTICLE 8.2 Conditions to the Obligation of Sellers.
The obligation of Sellers to effect the transactions
contemplated by this Agreement is subject to the fulfillment at
or prior to the Closing Date of the following conditions, except
to the extent waived in writing by Sellers:
ARTICLE 8.2.1 Buyer shall have performed in all
material respects each obligation and agreement and complied in
all material respects with each covenant to be performed and
complied with by it hereunder at or prior to the Closing Date.
ARTICLE 8.2.2 the representations and warranties of
Buyer in this Agreement shall be true and correct in all material
respects as of the Closing Date with the same force and effect as
though made at such time, except for changes contemplated by this
Agreement.
ARTICLE 8.2.3 Buyer shall have furnished to Sellers a
certificate, dated as of the Closing Date, signed by a duly
authorized officer of Buyer to the effect that all conditions set
forth in Sections 8.2.1 and 8.2.2 have been satisfied.
ARTICLE 8.3 Conditions to the Obligation of Buyer.
The obligation of Buyer to effect the transactions contemplated
by this Agreement is subject to the fulfillment at or prior to
the Closing Date of the following conditions, except to the
extent waived in writing by Buyer:
ARTICLE 8.3.1 Sellers and the International Affiliates
shall have performed in all material respects each obligation and
agreement and complied in all material respects with each
covenant to be performed and complied with by them hereunder at
or prior to the Closing.
ARTICLE 8.3.2 the representations and warranties of
Sellers in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same force and
effect as though made at such time, except for changes
contemplated by this Agreement.
ARTICLE 8.3.3 Sellers shall have furnished to Buyer a
certificate, dated as of the Closing Date, signed by a duly
authorized officer of each of Sellers to the effect that all
conditions set forth in Sections 8.3.1 and 8.3.2 have been
satisfied.
ARTICLE 8.3.4 Buyer shall have, simultaneously with
the Closing hereunder, effected a closing of the Chiron
Transaction under the Chiron Purchase Agreement.
ARTICLE 9
AGREEMENTS WITH RESPECT TO EMPLOYEES
AND EMPLOYEE BENEFITS
ARTICLE 9.1 U.S. Employee Plans. Sellers hereby
represent and warrant to Buyer that:
ARTICLE 9.1.1 Section 9.1.1 of the Disclosure Schedule
lists each "employee benefit plan," as such term is defined in
Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is maintained by the Companies or to which any of the
Companies contributes to or has an obligation to contribute, and
(iii) covers Storz Employees (hereinafter referred to
collectively as the "U.S. Employee Plans"). With respect to
each U.S. Employee Plan, Sellers will make available to Buyer a
true and complete copy of the applicable plan document or summary
plan description and the most recently filed IRS Form 5500.
ARTICLE 9.1.2 Except as disclosed in Section 9.1.2 of
the Disclosure Schedule, none of the Companies nor any of the
Companies' ERISA Affiliates has incurred any liability under
Title IV of ERISA arising in connection with the termination of
any Pension Plan which is subject to Title IV of ERISA that could
become, after the Closing Date, an obligation of Buyer or any of
its Affiliates. No Pension Plan has incurred any "accumulated
funding deficiency" (within the meaning of Section 412 of the
Code), whether or not waived, and neither the Companies' nor any
ERISA Affiliate has failed to make a required installment or any
other payment required under Section 412 of the Code before the
applicable due date. As of the most recent valuation date for
each of the Pension Plans which cover Storz Employees, the amount
of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), is zero.
ARTICLE 9.1.3 Each U.S. Employee Plan that is a
Pension Plan, and each Pension Plan that covers Cyanamid Storz
Employees, has received a determination letter from the Internal
Revenue Service and to the knowledge of Sellers nothing has
occurred since the issuance of each such letter which could
reasonably affect its qualification.
ARTICLE 9.1.4 Section 9.1.4 of the Disclosure Schedule
includes a list of each management, employment, consulting, or
other contract providing for the retention of services involving
the payment of $100,000 or more and which is not otherwise
disclosed in Section 4.10 of the Disclosure Schedule, and each
plan or arrangement providing for fringe benefits as defined in
Code Section 132, vacation benefits, supplemental nonqualified benefits,
severance benefits, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post retirement
insurance (including retiree life and medical benefits),
compensation or benefits which (i) is not a Pension Plan, (ii) is
entered into, maintained or contributed to, as the case may be,
by any of the Companies, and (iii) covers Storz Employees, and
dependents or beneficiaries thereof. Such contracts, plans and
arrangements as are described above, copies or descriptions of
all of which will be made available to Buyer, are hereinafter
referred to collectively as the "U.S. Benefit Arrangements."
ARTICLE 9.1.5 There is no pending or threatened claim
in respect of any of the U.S. Employee Plans or U.S. Benefit
Arrangements other than routine claims for benefits. Each of the
U.S. Employee Plans (i) has been administered in accordance with
its terms in all material respects, and (ii) complies in form,
and has been administered in accordance with the requirements of
ERISA and, where applicable, the Code, in all material respects.
Except as disclosed in Section 9.1.5 of the Disclosure Schedule,
no investigation, audit or dispute relating to any U.S. Employee
Plan is pending before any court or governmental agency.
ARTICLE 9.1.6 None of the Companies nor any other
"disqualified person" (within the meaning of Section 4975 of
the Code) or "party in interest" (within the meaning of Section
3(14) of ERISA) has taken any action with respect to any of the
U.S. Employee Plans or U.S. Benefit Arrangements which could
subject any such plan (or its related trust) or any of the
Companies or any officer, director or employee of any of the
foregoing to any penalty or tax under Section 502(i) of ERISA or
Section 4975 of the Code. None of the U.S. Employee Plans or
U.S. Benefit Arrangements is liable for any tax imposed under
Section 511 of the Code.
ARTICLE 9.1.7 Except as disclosed in Section 9.1.7 of
the Disclosure Schedule, none of the Companies has been required,
or has any obligation, to contribute to a multiemployer plan, as
defined in Section 3(37) of ERISA, or has or expects to have any
withdrawal liability assessed against it with respect to any such
multiemployer plan.
ARTICLE 9.1.8 Except as disclosed in Section 9.1.8 of
the Disclosure Schedule or as may be triggered by Buyer's failure
to fulfill any of its obligations to Employees under Section 9.3
and 9.4, none of the Companies have by reason of the transaction
contemplated hereby, any obligation to make any payment to any
Storz Employee or Cyanamid Storz Employee pursuant to any plan or
existing contract or arrangement.
ARTICLE 9.1.9 There are no contractual obligations to
pay severance benefits to Storz Employees or to Cyanamid Storz
Employees other than the obligations described in Section
9.3.2(b) and the schedules thereto.
ARTICLE 9.2 International Plans. Sellers hereby
represent and warrant to Buyer that:
ARTICLE 9.2.1 Section 9.2.1 of the Disclosure Schedule
lists each material employee benefit plan, program, policy or
practice maintained or contributed to by any International
Affiliate, Chirurgie or Storz GmbH for International Employees,
Chirurgie Employees or Storz GmbH Employees (other than
Governmental Authority mandated plans or funds maintained or
contributed to by the International Affiliates, Chirurgie or
Storz GmbH pursuant to Applicable Laws), including, without
limitation, vacation, severance, disability, medical, dental,
hospitalization, life insurance and incentive bonus, savings and
retirement plans ("International Plans", "Chirurgie Plans"
and "Storz GmbH Plans", respectively). Summary descriptions of
each International Plan, Chirurgie Plan and Storz GmbH Plan which
is subject to Section 9.6.2 will be made available to Buyer by
Sellers.
ARTICLE 9.2.2 To the knowledge of Sellers, all
International Plans, Chirurgie Plans and Storz GmbH Plans are in
compliance with, and have been administered in compliance with
Applicable Laws, in all material respects and contributions
required to be made to each such plan under the terms of the plan
or any contract or labor or collective bargaining agreement or
Applicable Law have been made or reserved.
ARTICLE 9.3 Buyer's Obligations to Employees.
ARTICLE 9.3.1 Buyer shall be obligated to continue the
employment of the Employees or offer employment to Employees on
the following basis:
(a) Buyer's acquisition of the Shares shall not
result in the termination of employment of the Storz Employees,
Storz GmbH Employees or Chirurgie Employees. Buyer acknowledges
that following the purchase and sale hereunder, the Surgical
Instrument Workers Union will continue to be the collective
bargaining representative of all union represented Storz
Employees located at the St. Louis/Kirkwood facilities in the
U.S., agrees to recognize the collective bargaining, work council
or labor agreements applicable to the Storz GmbH Employees as in
effect on the Closing Date, and agrees to assume the terms and
conditions of any such collective bargaining, work council or
labor agreements to which the Companies are subject on the
Closing Date and are disclosed in the Disclosure Schedule.
Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to restrict the ability of the Companies to terminate the
employment of any of the Employees after the Closing Date.
(b) With respect to Cyanamid Storz Employees and
the International Employees except as set forth in subsection (c)
below, Buyer shall offer or cause an Affiliate of Buyer to offer
to hire or transfer each Cyanamid Storz Employee and
International Employee as of the Closing Date, at the same or
greater rate of cash compensation than that enjoyed by such
Employee immediately prior to the Closing Date; and
(c) Buyer agrees to offer employment to all
union, work council or labor represented International Employees
and agrees to recognize the collective bargaining or labor
representative of said employees and agrees to assume the terms
and conditions of any collective bargaining agreement as in
effect on the Closing Date.
ARTICLE 9.3.2 Buyer shall make the following payments
or provide the following notification to Employees whom it
terminates after the Closing Date:
(a) After the Closing Date, the Companies or
Buyer, as the case may be, will have sole responsibility for any
obligations or liabilities to Storz Employees and Cyanamid Storz
Employees at all locations under the Worker Adjustment and
Retraining Notification Act or similar Applicable Laws of any
jurisdiction relating to any plant closing or mass layoff or as
otherwise required by any such Applicable Law. Sellers in their
capacities as agents for the Buyer agree to provide or cause the
Companies to provide, prior to the Closing Date, such notices
under the Worker Adjustment and Retraining Notification Act or
similar Applicable Laws as requested by Buyer concerning
employment terminations which will occur after the Closing Date;
provided, however, that the notices shall be placed on the
Buyer's letterhead, shall be prepared by the Buyer, the Buyer
shall determine which Employees and which locations receive the
notice and the Buyer shall be responsible for any defects in the
notice or its delivery;
(b) Buyer shall make or cause the Companies to
make a separation payment to each Storz Employee and Cyanamid
Storz Employee whose employment is terminated by Buyer or the
Companies because of a reduction in the work force or job
elimination at anytime before 24 months after the Closing Date.
The separation payment shall be the higher of (i) the amount set
forth in this Section 9.3.2(b)(i), or (ii) the amount a similarly
situated employee of Buyer would receive as a separation payment.
For exempt and non-exempt employees, the payment will be
calculated on the basis of two weeks of base pay for each full
year of service to the Companies, Sellers, or their Affiliates,
with a minimum payment of twelve weeks and a maximum payment of
fifty-two weeks; provided, however, that for individuals who earn
more than $75,000 annually, the minimum severance shall be six
months. For those employees listed in Section 9.3.2(b)(i)(A) of
the Disclosure Schedule, the severance shall be calculated on the
basis of the formula set forth in that Section of the Disclosure
Schedule. Field Sales employees as listed on Section
9.3.2(b)(i)(B) of the Disclosure Schedule shall have any
severance due calculated on the basis of their compensation as
set forth in that Section of the Disclosure Schedule. Buyer
shall or shall cause the Companies to make separation payments if
a Storz Employee or Cyanamid Storz Employee resigns from
employment with the Company within 24 months after the Closing
Date because (w) there is a reduction in his or her salary (other
than for cause); (x) there is a materially adverse reduction in
the nature and extent of his or her job responsibilities; (y)
there is a material reduction in employee benefits; or (z) a
condition of continued employment is a relocation of principal
work place of greater than 25 miles (collectively "Constructive
Termination"). Buyer shall also provide outplacement services
as follows: (a) non-exempt employees, up to $1,000; (b) exempt
employees earning up to $80,000, up to $5,000; (c) exempt
employees earning more than $80,000, up to 12% of base salary to
a maximum of $15,000. Buyer shall also extend coverage under its
employee benefit plans to Employees who receive severance under
the provisions of this Section 9.3.2(b) in accordance with the
provisions set forth in Section 9.3.2(b) of the Disclosure
Schedule.
(c) Buyer shall, or shall cause the Companies or
an Affiliate of Buyer as the case may be, to make a severance
payment to each International Employee and Storz GmbH Employee
whose employment is terminated by Buyer or its Affiliates because
of reduction in work force or job elimination at any time before
24 months after the Closing Date, or whose employment is
terminated or deemed to be terminated by operation of law as a
result of the transactions contemplated herein, in an amount
equal to the severance benefit due in accordance with the
applicable International Plan or Storz GmbH Plan relating to
severance as set forth in Section 9.3.2(c) of the Disclosure
Schedule plus any greater or additional severance benefit due in
accordance with Applicable Laws. In addition, Buyer shall, or
shall cause an Affiliate to make a severance payment if an
Chirurgie Employee, International Employee or Storz GmbH Employee
resigns because of a Constructive Termination event. Buyer shall
promptly reimburse Sellers for any payments in the nature of
severance required to be made by an International Affiliate to an
International Employee as a result of the transactions
contemplated herein. To the extent permitted by Applicable Law,
Buyer may require, or may cause the Companies to require, as a
condition of any payments or benefit under this Section 9.3.2(c),
that the Employee release all claims against Buyer, the Companies
and their Affiliates.
ARTICLE 9.4 Treatment of Sellers' U.S. Employee Plans
and U.S. Benefit Arrangements.
ARTICLE 9.4.1 The Companies and Buyer shall retain or
assume, as the case may be, (i) all Storz Employees' benefits,
compensation, bonus, incentive, severance, and vacation
liabilities and all other similar liabilities, whether arising
under Applicable Laws of the United States, U.S. Employee Plans
or U.S. Benefit Arrangements, or otherwise associated with any
Storz Employee, regardless of whether the liabilities relate to
events which occurred on or prior to the Closing Date or to
actions taken by Sellers or one of Sellers' Affiliates, or by
Buyer or one of its Affiliates, or to consequences which are
deemed to have occurred by operation of law as a result of the
transactions contemplated herein, (ii) all liabilities under all
union and labor contracts to the extent related to Storz
Employees (Employees covered by collective bargaining agreements
shall be provided with such benefits as shall be required under
the terms of any applicable collective bargaining agreement), and
(iii) all benefit and similar liabilities to inactive and former
employees of the Companies, including individuals who are or have
been on long-term disability leave or who have terminated
employment, who retired or died through the Closing Date. Buyer
agrees to maintain such plans and benefits set forth in Section
9.4.1(i) for a period of one year measured from the Closing Date.
Nothing in this Agreement shall prohibit Buyer from causing such
plans or benefits set forth in Section 9.4.1(i) to be amended or
terminated following such one-year period, and nothing in this
Agreement shall prohibit Buyer from negotiating changes to the
union and labor contracts following the Closing Date. At the
expiration of the one-year period following the Closing Date,
Buyer shall provide the Storz Employees with Plans and benefits
no less favorable than those offered to similarly situated
employees of Buyer.
ARTICLE 9.4.2 With respect to Cyanamid Storz
Employees, Buyer shall, for a period of one year from the Closing
Date, provide or cause an Affiliate of Buyer to provide each such
Employee with either (i) substantially equivalent benefits,
programs and policies to those benefits, programs and policies
provided to similarly situated employees of Buyer or its
Affiliates or (ii) benefits, programs and policies substantially
equivalent to those benefits, programs and policies provided by
Sellers to such employees as of the date hereof; provided,
however, that in the event such employee has received stock
option grants from Sellers in the past, and similarly situated
employees of Buyer would not receive stock options under Buyer's
Stock Option Plan, Buyer may provide for replacement benefits
having comparable value to such employee's stock option benefit.
At the expiration of the one-year period following the Closing
Date, if Buyer or its Affiliates provided benefits to the
Cyanamid Storz Employees in accordance with Section 9.4.2(i),
Buyer shall, or shall cause an Affiliate of Buyer, to provide
future benefits, programs and policies to such employees which
are no less favorable than those offered to similarly situated
employees of Buyer.
ARTICLE 9.4.3 Buyer maintains retirement plans and
savings plans for its employees (respectively, "Buyer's U.S.
Retirement Plans" and "Buyer's U.S. Savings Plans"). Buyer
shall recognize Cyanamid Storz Employees' service with Sellers or
their Affiliates for purposes of determining retirement and
savings plan eligibility to participate, vesting of benefits,
service requirements for disability, subsidized early retirement
and pre-retirement death benefits under any Buyer's U.S.
Retirement Plans and Buyers U.S. Savings Plans in which such
Employees participate, but not for benefit accrual purposes under
Buyer's U.S. Retirement Plans. Sellers maintain a qualified
defined benefit pension plan, the American Home Products
Corporation Retirement Plan - United States ("Sellers' U.S.
Retirement Plan"). Sellers agree to amend Sellers' U.S.
Retirement Plan to provide that with respect to benefits accrued
by Cyanamid Storz Employees under Sellers' U.S. Retirement Plan
through the Closing Date, the Employees' period of service with
Buyer shall be taken into account for purposes of determining
eligibility for subsidized early retirement benefits and vesting
under Sellers' U.S. Retirement Plan. Sellers maintain a
qualified savings plan, the American Home Products Corporation
Savings Plan ("Sellers' U.S. Savings Plan"). Sellers agree to
amend Sellers' U.S. Savings Plan to provide that Cyanamid Storz
Employees are fully vested in their account balances as of the
Closing Date.
ARTICLE 9.4.4 With respect to the Cyanamid Storz
Employees, Sellers shall retain liability under any group life,
accident, worker's compensation, medical, hospitalization,
prescription drug, dental or disability plan, whether or not
insured, for any claims incurred through the Closing Date, and
Buyer shall assume all liability for claims arising after the
Closing Date under its group life, accident, worker's
compensation, medical, hospitalization, prescription drug, dental
or disability plan. For purposes of this Section 9.4.4 claims
shall be deemed to have arisen:
(a) With respect to all death or dismemberment
claims, on the actual date of death or dismemberment;
(b) With respect to disability or salary
continuance claims, on the day the claimant became disabled or
otherwise entitled to salary continuation;
(c) With respect to all hospital, medical, drug
or dental claims, on the date the service or supply was purchased
or received by the claimant; and
(d) With respect to worker's compensation claims
which are single accident specific, on the-date of the
occurrence, and with respect to all other worker's compensation
claims, on the date the award is made.
ARTICLE 9.4.5 Buyer and its Affiliates maintain
medical, hospitalization, dental, prescription drug, death, life
insurance, accidental death and dismemberment, short-term
disability and long-term disability benefit plans for its
employees covered by this Section 9.4.5 ("Buyer's U.S. Welfare
Plans"). Immediately after the Closing Date, all Cyanamid Storz
Employees shall participate in those Buyer's U.S. Welfare Plans
applicable to each such Employee's business unit in accordance
with the terms of such plans, and employment with Sellers or
their Affiliates will be taken into account for purposes of
determining eligibility to participate and benefits under Buyer's
U.S. Welfare Plans; provided, however, that
(a) Cyanamid Storz Employees shall participate
under the applicable Buyer's U.S. Welfare Plans immediately after
the Closing Date without any waiting periods, without evidence of
insurability, and without application of any pre-existing
physical or mental condition limitations except to the extent
applicable under similar plans maintained by Sellers; and
(b) Buyer shall count claims arising through the
Closing Date for purposes of satisfying deductibles, out-of
pocket maximums, and all other similar limitations.
ARTICLE 9.4.6 Sellers maintain a program of medical
and life insurance benefits for certain retired employees
("Sellers' U.S. Retiree Welfare Plans"). Any Cyanamid Storz
Employee who has met the eligibility requirements for benefits
under Sellers' U.S. Retiree Medical Plan through the Closing Date
will be entitled to benefits in accordance with the terms of
Sellers' U.S. Retiree Medical Plan as in effect from time to time
upon termination of employment with Buyer and loss of coverage as
an active employee under Buyer's group health plan. Buyer shall
recognize service with Sellers for purposes of its retiree
medical plan for those Cyanamid Storz Employees who are not
eligible for the Sellers' U.S. Retiree Welfare Plans as of the
Closing Date.
ARTICLE 9.4.7 Buyer shall be responsible for any
legally mandated continuation of health care coverage for all
Cyanamid Storz Employees and/or their covered dependents who have
a loss of health care coverage due to a qualifying event (as
defined in Section 4980B of the Code) that occurs after the
Closing Date.
ARTICLE 9.5 International Employees of the European
Union ("EU").
ARTICLE 9.5.1 Notwithstanding Section 9.3.1(b),
Sellers and Buyer accept and agree that the transfer of
employment of the International Employees in the EU countries
(hereinafter referred to as "European Employees") will be
effected and governed by the Transfer Provisions and accordingly
the contract of employment of each European Employee shall be
assumed by Buyer or its Affiliate with effect from the Closing
Date which shall be the "time of transfer" under the Transfer
Provisions.
ARTICLE 9.5.2 Buyer shall ensure that its Affiliates
(where necessary) comply with their respective obligations under
the Transfer Provisions and upon request provide Seller or the
relevant Sellers' Affiliate with such information as will enable
either Seller or its Affiliate, as the case may be, to carry out
its duties under the Transfer Provisions concerning measures to
effectuate the transfer of the European Employees to Buyer.
ARTICLE 9.5.3 The following terms as used herein shall
have the following meanings:
(a) "European Employees" means all those
Employees of Sellers and their Affiliates employed in the
Business within the EU; and
(b) "Transfer Provisions" means any legislation
implementing the provisions of directive 77/187/EEC commonly
called the Acquired Rights Directive or Transfer of Undertakings
Directive.
ARTICLE 9.6 Treatment of Sellers' International Plans.
ARTICLE 9.6.1 Storz GmbH Plans and Chirurgie Plans,
as listed in Section 9.6.1 of the Disclosure Schedule, shall be
retained or assumed by the Companies and Buyer and unless
otherwise required by Applicable Law, the Companies and Buyer
agree to maintain such plans for a period of one year from the
Closing Date, At the expiration of the one-year period following
the Closing Date, Buyer shall provide the Storz GmbH Employees
and the Chirurgie Employees with plans and benefits no less
favorable than those provided to similarly situated employees of
the Buyer. The Companies and Buyer shall retain or assume, as
the case may be, all benefits and similar liabilities to inactive
or former employees of Storz GmbH or a predecessor company, and
Chirurgie or a predecessor company, including any individuals who
are or have been on long-term disability leave or who have
terminated their employment, retired or died on or before the
Closing Date. With respect to the Storz GmbH defined benefit
plan, all assets and liabilities shall remain attributable to the
plan and shall be retained by Storz GmbH. However, in the event
that the book reserve established for the Storz GmbH defined
benefit plan is less than the liabilities determined as of the
most recent valuation date prior to the Closing Date plus a pro-
rated accrual of liabilities for the period between such
valuation date and the Closing Date, Sellers shall pay to Buyer
such deficiency, as an adjustment to the Purchase Price, in the
manner and with interest as provided in Section 3.6.2. In the
event that the book reserve established for the Storz GmbH
defined benefit plan exceeds the liabilities determined as of the
most recent valuation date, Buyer shall pay Sellers an amount
equal to such excess in the manner and with interest as provided
in Section 3.6.2. For this purpose, the book reserve and the
liabilities shall be based on reasonable actuarial assumptions
and generally accepted valuation methods as determined by
Sellers' actuary subject to review and reasonable approval of
Buyer's actuary (not to be unreasonably withheld). In the event
of a dispute, the provisions of Section 9.6.2 with respect to the
appointment of an independent third party shall apply. Sellers
shall provide Buyer with an accounting under this Section 9.6.1
within sixty (60) days after the Closing Date. Any adjustment
required hereunder shall be made within thirty (30) days after
the accounting is issued by Sellers, unless the Buyer objects to
the calculation in which case the adjustment shall be made within
thirty (30) days after the independent actuary renders an opinion
pursuant to Section 9.6.2.
ARTICLE 9.6.2 Except as expressly set forth in Section
9.6.1, this Section 9.6.2, or as required by Applicable Law, no
assets of any International Plan shall be transferred to Buyer or
any of its Affiliates or to any plan of Buyer or any of its
Affiliates. With respect to any International Plans as to which
the Companies are the plan sponsor and which cover solely
International Employees, Buyer shall assume, or cause its
Affiliates to assume, the assets and liabilities of such plans
with respect to the International Employees. Buyer shall also
assume, or cause its Affiliates to assume, the assets and
liabilities of any defined contribution or individual account
plan maintained by Sellers or the Companies for the benefit of
the International Employees and Seller shall cause any such plan
to be amended to provide that the International Employees'
account balances thereunder are fully vested as of the Closing
Date. With respect to any defined benefit plan which is required
under Applicable Law to transfer assets and liabilities to Buyer,
the assets and liabilities to be transferred shall be based on
reasonable actuarial assumptions and generally accepted valuation
methods as determined by Sellers' actuary subject to the review
of Buyer's actuary. In the event the actuaries are unable to
agree on the valuation of the assets and liabilities, the parties
shall appoint an independent third party actuary to act as an
expert. If the parties can not agree on an independent third
party actuary, one shall be appointed by the Institute of
Actuaries in London. The parties shall share the cost arising
from the appointment of such independent third party. Sellers
shall take whatever action is reasonably required to ensure that
such plans and arrangements and all related plan assets or
reserves are maintained by, and subject to the control of, the
Companies on or prior to the Closing Date.
ARTICLE 9.6.3 Buyer shall recognize each International
Employee's service with Sellers and Sellers' Affiliates for
purposes of determining retirement and savings plan eligibility
for participation, vesting of benefits, and service requirements
for disability, subsidized early retirement and pre-retirement
death benefits under the appropriate international retirement and
savings plans of Buyer and its Affiliates, but not benefit
accrual purposes under the appropriate international retirement
plan of Buyer and its Affiliates. With respect to International
Plans which provide group life, accident, medical
hospitalization, prescription drug, dental or disability
benefits, and with respect to International Plans or arrangements
providing benefits in the nature of worker's compensation,
liabilities for claims through and after the Closing Date shall
be allocated between Buyer and Sellers in the manner set forth in
Section 9.6.4. International Employees' participation in the
appropriate international welfare plans of Buyer and its
Affiliates, where available, shall be on the basis as set forth
in Section 9.6.5.
ARTICLE 9.6.4 With respect to all International
Employees, excluding Storz GmbH Employees, Sellers shall retain
liability under any group life, accident, worker's compensation,
medical, hospitalization, prescription drug, dental or disability
plan, whether or not insured, for any claims incurred through the
Closing Date and Buyer shall retain or assume, as the case may
be, all liability for claims arising after the Closing Date under
any group life, accident, worker's compensation, medical,
hospitalization, prescription drug, dental or disability plan.
For purposes of this Section 9.6.4, claims shall be deemed to
have arisen:
(a) with respect to all death or dismemberment
claims, on the actual date of death or dismemberment;
(b) with respect to disability or salary
continuance claims, on the day the claimant became disabled or
otherwise entitled to salary continuation;
(c) with respect to all hospital, medical, drug
or dental claims, on the date the service or supply was purchased
or received by the claimant; and
(d) with respect to worker's compensation claims
which are single accident specific, on the date of the
occurrence, and with respect to all other worker's compensation
claims, on the date the award is made.
ARTICLE 9.6.5 Buyer and its Affiliates maintain
medical, hospitalization, dental, prescription drug, death, life
insurance, accidental death and dismemberment, short-term
disability and long-term disability benefit plans ("Buyer's
International Welfare Plans") for its non-U.S., employees.
Immediately after the Closing Date, all International Employees,
other than the Chirurgie Employees and the Storz GmbH Employees
covered by Section 9.6.1, shall participate in the appropriate
Buyer's International Welfare Plans applicable to such Employee's
business unit with Buyer and its Affiliates in accordance with
the terms of such plans, and employment with any of the Companies
and its Affiliates shall be taken into account for purposes of
determining eligibility for participation and benefits under the
applicable Buyer's International Welfare Plans; provided,
however, that (i) International Employees shall participate under
Buyer's International Welfare Plans immediately after the Closing
Date without any waiting periods, without any evidence of
insurability, and without application of any pre-existing
physical or mental condition limitations, except to the extent
applicable under Sellers' International Plans, and (ii) Buyer
shall count claims arising through the Closing Date for purposes
of satisfying deductibles, out-of-pocket maximums, and other
similar limitations.
ARTICLE 9.7 No Third Party Beneficiaries. No provision
of this Agreement shall create any third party beneficiary or
other rights in any Employee (including any beneficiary or
dependent thereof) or any persons in respect of continued
employment with any of the Companies, with Sellers, or with any
of their Affiliates and no provision of this Agreement shall
create any such rights in any such persons in respect of any
benefits that may be provided, directly or indirectly, under any
U.S. Employee Plan or U.S. Benefit Arrangement, any International
Plan or any plan or arrangement which may be established by Buyer
or any of its Affiliates. No provision of this Agreement shall
constitute a limitation on the right of Buyer, any of the
Companies or any Affiliates of Buyer to terminate any Employee at
will.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
ARTICLE 10.1 Termination. This Agreement may be
terminated at any time prior to the Closing Date:
ARTICLE 10.1.1 by mutual consent of Buyer and Sellers;
ARTICLE 10.1.2 by Buyer or Sellers if the Closing
shall not have occurred on or prior to February 28, 1997,
provided, however, that the right to terminate under this Section
10.1.2 shall not relieve any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in the failure of the Closing to occur on or before such
date of any liability of such party to the other party hereunder
for such failure;
ARTICLE 10.1.3 subject to Section 7.5, by Buyer or
Sellers if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action, in
each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become
final and nonappealable;
ARTICLE 10.1.4 by Sellers upon written notice to Buyer
if any event occurs which would render impossible the
satisfaction and capability of curing of one or more conditions
to the obligation of Sellers to consummate the transactions
contemplated by this Agreement as set forth in Section 8.2.1 or
8.2.2; or
ARTICLE 10.1.5 by Buyer upon written notice to Sellers
if any event occurs which would render impossible the
satisfaction and capability of curing of one or more conditions
to the obligation of Buyer to consummate the transactions
contemplated by this Agreement as set forth in Section 8.3.1 or
8.3.2.
The date on which this Agreement is terminated pursuant
to any of the foregoing subsections of this Section 10.1 is
herein referred to as the "Termination Date."
ARTICLE 10.2 Effect of Termination. Upon the
termination of this Agreement pursuant to Section 10.1, all
further obligations of the parties under this Agreement shall
terminate without further liability of any party to the others,
except that the obligations under Sections 7.2 and 7.4 shall
survive any such termination, and except that nothing herein
shall relieve any party from liability for breach of any
provision of, or for any misrepresentation under this Agreement,
or be deemed to constitute a waiver of any available remedy for
any such breach or misrepresentation.
ARTICLE 11
INDEMNIFICATION
ARTICLE 11.1 Indemnification.
ARTICLE 11.1.1 From and after Closing, except with
respect to any claim related to Taxes for which Section 7.7 of
this Agreement shall provide the sole and exclusive basis of
indemnity to Buyer, and subject to Section 11.3, Sellers shall
indemnify, defend and hold harmless Buyer, the Companies and
their respective Affiliates, officers, directors, employees and
controlling Persons from any liability, damage, deficiency, loss,
judgments, assessments, cost or expense, including reasonable
attorneys' fees and costs of investigating and defending against
lawsuits, complaints, actions or other pending or threatened
litigation (collectively, "Costs") (Costs shall not include any
Cost which has been reflected in the adjustment to the Purchase
Price pursuant to Section 3.6 hereof), arising from or
attributable to:
(a) the breach of any representation or warranty
made by Sellers in this Agreement;
(b) any failure of Sellers duly to perform or
observe any covenant or agreement to be performed or observed by
Sellers pursuant to this Agreement;
(c) the Excluded Liabilities and Excluded Assets;
(d) any failure by Sellers or the International
Affiliates to comply with any applicable bulk sales, fraudulent
conveyance or other Law for the protection of creditors;
(e) product liability claims against the
Companies relating to occurrences of injuries prior to Closing
caused by a product of the Business;
(f) any obligation to indemnify Dow Corning for
liabilities relating to pre-closing purchases and sales arising
out of the Supply Agreement dated September 1, 1996 between
Cyanamid and Dow Corning;
(g) any obligation to indemnify Sparta
Maxillofacial Products, Inc. ("Sparta") arising out of the
Asset Purchase Agreement dated January 20, 1994 between Sparta
and Storz, except due to the breach of any covenant or agreement
by Storz or its Affiliates after Closing;
(h) any obligation to indemnify Global Surgical
Corp. ("Global") arising out of the Asset Purchase Agreement
dated January 31, 1994 between Global, Storz and Surgical
Mechanical Research, Inc., except due to the breach of any
covenant or agreement by Storz or its Affiliates after Closing;
and
(i) any liability arising out of or attributable
to the Companies' sale of breast implants on behalf of Dow
Corning to the extent Dow Corning fails to indemnify Storz for
any liability relating to the sale of breast implants prior to
Closing; and
(j) any liability relating to a claim asserted by
Tree Court Associates, L.P. ("Landlord") by letter dated
January 31, 1994, for alleged failure to maintain in good
condition and order the premises subject to a lease dated
December 31, 1985 between Storz and Landlord (which premises are
currently subject to a sublease with Global Surgical Corp.); and
(k) any liabilities relating to cochlear ear
implants implanted in patients by Storz or its Affiliates prior
to Closing pursuant to an FDA approved IDE relating to (i)
maintenance or service of such implants to patients, (ii)
removal/replacement of such implants in patients, and (iii)
product liability claims relating to such implants in all such
cases only to the extent such liability exceeds the reserve
established for such item on the Closing Statement.
(l) 50% of any Assumed Liabilities which arise or
may arise from the transfer of the International Assumed
Contracts to Buyer or any from any termination of such
International Assumed Contracts, in each case by operation of
Applicable Law as a result of the transactions contemplated
herein (but not by action of Buyer), to the extent such
liabilities exceed $500,000.
ARTICLE 11.1.2 Except with respect to any claim
related to Taxes for which Section 7.7 of this Agreement shall be
the sole and exclusive basis of indemnity to Sellers, Buyer shall
indemnify and hold harmless Sellers, their officers, directors,
employees and Affiliates from Costs arising from or attributable
to:
(a) the breach of any representation or warranty
made by Buyer in this Agreement;
(b) any failure of Buyer duly to perform or
observe any covenant or agreement to be performed or observed by
Buyer pursuant to this Agreement;
(c) the Assumed Liabilities;
(d) AHP's guaranty of Storz's indemnification
obligation under the agreement with Dow Corning Corporation,
referred to in Section 7.20 for all periods following the
Closing; and
(e) Cyanamid's continuing obligation as assignor
of the agreement with Gilead Sciences referred to in Section
7.21.
(f) except for the matters for which Sellers
would be obligated to indemnify Buyer against under this
Agreement, all post-Closing liabilities of the Companies and all
post-Closing liabilities arising out of, or relating primarily
to, the Business.
ARTICLE 11.1.3 Sellers and Buyer shall indemnify the
other for all Taxes for the periods and in the manner described
in Section 7.7.
ARTICLE 11.2 Procedures.
ARTICLE 11.2.1 Promptly after the receipt by any
Person entitled to indemnity hereunder of notice under this
paragraph 11.2, of any third party claim, suit, action or
proceeding (a "Third Party Claim"), such Person (the
"Aggrieved Party") will, if a claim for indemnification with
respect thereto is to be made against any party obligated to
provide indemnification pursuant to Article 11 (the
"Indemnifying Party"), give such Indemnifying Party written
notice of such Third Party Claim and shall permit the
Indemnifying Party to assume the defense of any such Third Party
Claim, and, upon such assumption, shall cooperate fully with the
Indemnifying Party in the conduct of such defense; provided,
however, that any failure to provide such notice shall not
constitute a waiver of the Indemnifying Party's indemnity
obligations hereunder except to the extent the Indemnifying Party
is actually prejudiced in defense of a Third Party Claim against
the Aggrieved Party. The Indemnifying Party shall have the
right, within 12 business days of receipt of notice thereof, to
assume and control the defense and settlement of such Third Party
Claim at the Indemnifying Party's sole cost and expense [and with
counsel reasonably satisfactory to the Aggrieved Party];
provided, however, that the Indemnifying Party will not have the
right to assume the defense of any Third Party Claim that seeks
criminal penalties. If the Indemnifying Party assumes the
defense of any such Third Party Claim, the Aggrieved Party may
participate in, but not control, at its expense, the defense of
such Third Party Claim. The Indemnifying Party shall not, in the
defense of such Third Party Claim, consent to entry of any
judgment, except with the written consent of the Aggrieved Party,
or enter into any settlement, except with the written consent of
the Aggrieved Party, which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the
Aggrieved Party of a release from all liability in respect of
such Third Party Claim. All awards and costs payable by a third
party to the Aggrieved Party or the Indemnifying Party shall
belong to the Indemnifying Party.
ARTICLE 11.2.2 If the Indemnifying Party shall not
assume the defense of any such Third Party Claim, the Aggrieved
Party may defend and settle such Third Party Claim in such manner
as it may deem appropriate and, unless the Indemnifying Party
shall deposit with the Aggrieved Party a sum equivalent to the
total amount demanded (subject to the applicable limitation set
forth in Section 11.3) in such Third Party Claim less the Minimum
Loss to the extent not incurred already by the Aggrieved Party,
or shall deliver to the Aggrieved Party a surety bond in form and
substance reasonably satisfactory to the Aggrieved Party in such
amount, the Aggrieved Party may settle such Third Party Claim on
such terms as it may deem appropriate, and the Indemnifying Party
shall promptly reimburse the Aggrieved Party for the amount of
all expenses, legal or otherwise, incurred by the Aggrieved Party
in connection with the defense against or settlement of such
Third Party Claim minus the Minimum Loss to the extent not
incurred already by the Aggrieved Party. If no settlement of
such Third Party Claim is made, the Indemnifying Party shall
promptly reimburse the Aggrieved Party for the amount of any
judgment rendered with respect to such Third Party Claim and of
all expenses, legal or otherwise, incurred by the Aggrieved Party
in the defense against such Third Party Claim.
ARTICLE 11.2.3 If there shall be any conflicts between
the provisions of this Section 11.2 and Section 7.7.3 (relating
to Tax contests), the provisions of Section 7.7.3 shall control
with respect to Tax contests.
ARTICLE 11.3 Limitations. An Aggrieved Party shall
not be entitled to recover any Costs under Section 11.1(a),
11.1(b), 11.1(d) until the aggregate amount of the Costs suffered
by the Aggrieved Party thereunder shall exceed $5 million (the
"Minimum Loss"), at which time the indemnification provided
under Section 11.1 shall apply to all Costs in excess of the
Minimum Loss, and the maximum liability under Section 11.1 for an
Indemnifying Party shall not exceed in the aggregate $100
million. Notwithstanding anything to the contrary contained
herein, a party shall not be entitled to indemnification under
this Article 11 with respect to any matter to the extent a
purchase price adjustment has been made with respect thereto
pursuant to Section 3.6.
ARTICLE 11.4 Indemnification as Sole Remedy. The
indemnification provided in this Article 11 and Article 7,
subject to the limitations set forth herein, shall be the
exclusive post-Closing remedy for damages available to any
Aggrieved Party.
ARTICLE 11.5 Survival. Notwithstanding the
provisions of Section 12.3, any matter as to which a claim has
been asserted by notice to the other party that is pending or
unresolved at the end of any applicable limitation period or on
any applicable expiration date of such party's indemnity
obligations hereunder shall continue to be covered by this
Article 11 notwithstanding any applicable expiration of any
party's indemnity obligations set forth in this Article 11 until
such matter is finally terminated or otherwise resolved by the
parties or by a court of competent jurisdiction and any amounts
payable hereunder are finally determined and paid.
ARTICLE 12
GENERAL PROVISIONS
ARTICLE 12.1 Public Statements. Prior to the
Closing, or afterward, so long as this Agreement is in effect,
none of the parties hereto shall issue or cause the publication
of any press release or other announcement with respect to this
Agreement or the transactions contemplated hereby without
consulting with and obtaining the consent of the other party;
provided, however, that such consent shall not be required where
such release or announcement is required by applicable law.
ARTICLE 12.2 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
to have been duly given if delivered personally, mailed by
reputable overnight courier or certified mail (return receipt
requested) or sent by telecopier (confirmed thereafter by such
certified mail) to the parties at the following addresses or at
such other addresses as shall be specified by the parties by like
notice:
ARTICLE 12.2.1 if to Sellers:
c/o American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Attention: Chief Financial Officer
Telecopier Number: (201) 660-7156
with a copy to:
American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Attention: Senior Vice President and
General Counsel
Telecopier Number: (201) 660-6030
ARTICLE 12.2.2 if to Buyer:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: Chief Executive Officer
Telecopier Number: (716) 338-6805
with a copy to:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: General Counsel
Telecopier Number: (716) 338-8706
Notice so given shall (in the case of notice so given by mail) be
deemed to be given and received on the third calendar day after
mailing or the next business day if sent by a reputable overnight
courier and (in the case of notice so given by telecopier or
personal delivery) on the date of actual transmission or (as the
case may be) personal delivery.
ARTICLE 12.3 Survival of Representations and
Warranties. The respective representations and warranties of the
parties hereto shall survive the Closing and shall remain in full
force and effect, provided, however, that (i) the representations
and warranties in Sections 4.7 shall survive until the applicable
statute of limitations has run, (ii) the representations and
warranties in Section 4.14 shall survive until the third
anniversary of the Closing Date, and (iii) all other
representations and warranties shall expire on March 31, 1999.
ARTICLE 12.4 Amendment. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto.
ARTICLE 12.5 Waiver. At any time prior to the
Closing, any term, provision or condition of this Agreement may
be waived in writing (or the time for performance of any of the
obligations or other acts of the parties hereto may be extended)
by the party that is entitled to the benefits thereof.
ARTICLE 12.6 Parties In Interest. Except as
contemplated hereunder, this Agreement may not be assigned by a
party without the prior written consent of the other parties
hereto. This Agreement shall not run to the benefit of or be
enforceable by any person other than a party to this Agreement
and, subject to the first sentence of this Section, its
successors and assigns.
ARTICLE 12.7 Interpretation. When a reference is
made in this Agreement to an Article, Section, Exhibit or
Disclosure Schedule, such reference is to an Article or Section
of, or an Exhibit or Disclosure Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise
requires, (i) the terms defined include the plural as well as the
singular, (ii) the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision.
ARTICLE 12.8 Sellers' Knowledge. When "to the
knowledge of Sellers" or similar phrase is used herein it shall
refer to the actual knowledge of Sellers and to the individuals
employed by Affiliates of Sellers contained in Section 12.8 of
the Disclosure Schedule.
ARTICLE 12.9 Miscellaneous. This Agreement
(including the Disclosure Schedule, the Exhibits and the
agreement identified in Section 7.4) constitutes the entire
agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof; is not intended
to confer upon any other person any rights or remedies hereunder;
and shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of
New York without giving effect to the principles of conflicts of
laws thereunder. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
If any provisions of this Agreement shall be held to be illegal,
invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire
Agreement. Such provision shall be deemed to be modified to the
extent necessary to render it legal, valid and enforceable, and
if no such modification shall render it legal, valid and
enforceable, then this Agreement shall be construed as if not
containing the provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced
accordingly.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
AMERICAN HOME PRODUCTS CORPORATION
By:
Name:
Title:
AMERICAN CYANAMID COMPANY
By:
Name:
Title:
BAUSCH & LOMB INCORPORATED
By:
Name:
Title:
PURCHASE AGREEMENT
by and among
AMERICAN CYANAMID COMPANY
AMERICAN HOME PRODUCTS CORPORATION
and
BAUSCH & LOMB INCORPORATED
