SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 28, 1995
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Rhone-Poulenc Rorer Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 1-5851 23-1699163
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
500 Arcola Road, Collegeville, PA 19426
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610)454-8000
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Under the terms of the Amendment to the Joint Venture
Agreement dated September 28, 1995 (the "Amendment"), Armour
Pharmaceutical Company ("Armour"), a subsidiary of Rhone-
Poulenc Rorer, Inc., and Behringwerke AG ("Behring"), a
subsidiary of Hoechst AG, have completed the creation of their
50/50 global joint venture dedicated to the plasma proteins
business.
Effective October 1, 1995, Armour and Behring will transfer
operational control of certain net assets of their respective
plasma operations to the management of the joint venture.
According to the Amendment, the joint venture partners are
entitled to receive the fourth quarter profits generated by
their respective contributed businesses; a 50/50 profit
sharing will be instituted effective January 1, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a)Combined Financial Statements of the Plasma Division
of Behringwerke AG and of selected foreign
subsidiaries of Hoechst AG.
It is impracticable to provide the required financial
statements at the time of filing this Form 8-K. The
required financial statements will be filed under
cover of Form 8-K/A as soon as practicable, but not
later than November 26, 1995.
(b)Pro Forma Financial Information (unaudited) to
reflect RPR's acquisition of a 50% interest in a
joint venture formed to combine the plasma protein
businesses of Rhone-Poulenc Rorer's Armour
Pharmaceutical Company and Hoechst AG's Behringwerke
subsidiaries.
It is impracticable to provide the required financial
information at the time of filing this Form 8-K. The
required financial information will be filed on Form
8-K/A as soon as practicable, but not later than
November 26, 1995.
(c)EXHIBITS.
Exhibit 2 - Amendment No. 1 to the Joint Venture
agreement between Armour Pharmaceutical Company and
Behringwerke AG.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
RHONE-POULENC RORER INC.
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(registrant)
Dated: October 11, 1995 By: /s/ Thomas F. Crawford
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Thomas F. Crawford
Vice President and
Corporate Controller
EXHIBIT 2
AMENDMENT NO. 1 TO JOINT VENTURE AGREEMENT
THIS AMENDMENT NO. 1 TO JOINT VENTURE AGREEMENT
(this "Amendment") is made and entered into this 28th day of
September, 1995 by and among ARMOUR PHARMACEUTICAL COMPANY, a
corporation organized under the laws of Delaware, U.S.A.
("Armour"), PLASMA ENTERPRISES, INC., a corporation organized
under the laws of Delaware, U.S.A. ("Plasma"), BEHRINGWERKE
AG, a company organized under the laws of Germany ("Behring"),
APC HOLDINGS INC., a corporation organized under the laws of
Delaware, U.S.A ("APC") and PLASMA INVESTMENTS U.K. LIMITED, a
corporation organized under the laws of the United Kingdom
("Plasma UK Ltd.").
RECITALS:
A. Armour, Plasma and Behring have entered into
that certain Joint Venture Agreement, dated as of February 22, 1995
(the "Joint Venture Agreement"), by and among Armour, Plasma
and Behring.
B. Armour, Plasma, Behring, APC and Plasma UK Limited
(the "Parties") desire, by means of this Amendment, to make
certain assignments in respect of, and certain amendments to,
the Joint Venture Agreement.
NOW, THEREFORE, for and in consideration of the foregoing,
the mutual covenants set forth below and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used and not defined
herein shall have the meanings ascribed to such terms in the
Joint Venture Agreement. The following terms are defined
herein:
Armour Permitted Push Down
Indebtedness Section 10
Behring Permitted Push Down
Indebtedness Section 10
Document Closing Section 13
Asset Transfer Date Section 13
Effective Date Section 13
Escrow Agreement Section 11
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Haemaccel License Agreement Section 5
Hoechst Section 5
Net Sales Section 15
North American Market Section 5
Operating Expenses Section 15
Operating Agreement Section 7
Operating Expense Cap Section 15
Operating Expense Ratio Section 15
Permitted Push Down Indebtedness Section 10
Transition Period Dividends Section 7
2. ASSIGNMENT BY ARMOUR. In accordance with Section
23.2 of the Joint Venture Agreement, each of the Parties
hereto hereby acknowledges that Armour has assigned all of its
right, title and interest in the Joint Venture Agreement to
APC and that APC has assumed all of the duties,
obligations and liabilities of Armour under the
Joint Venture Agreement and has agreed to be bound by the
provisions thereof, pursuant to that certain Assignment and
Assumption Agreement by and between Armour and APC dated as of
September 28, 1995.
3. ASSIGNMENT BY PLASMA. In accordance with Section
12.4 of the Joint Venture Agreement, each of the Parties
hereto hereby acknowledges that Plasma has assigned all of its
right, title and interest in the Joint Venture Agreement to
Plasma UK Ltd. and that Plasma UK Ltd. has assumed all of the
duties, obligations and liabilities of Plasma under the Joint
Venture Agreement and has agreed to be bound by the provisions
thereof, pursuant to that certain Assignment and Assumption
Agreement by and between Plasma and Plasma UK Ltd. dated as of
September 28, 1995.
4. DELAWARE CORPORATION. The Parties hereby agree to
amend the Preamble to the Joint Venture Agreement by replacing
the words "Pennsylvania, U.S.A." in the first sentence and
inserting "Delaware, U.S.A." in lieu thereof.
5. HAEMACCEL LICENSE. The Parties hereby agree to
amend Article I of the Joint Venture Agreement by adding a new
Section 1.6 to read as follows:
1.6 The right to develop, manufacture, sell
and distribute the product currently owned by
Behring known as "Haemaccel" and all Haemaccel
derivative products shall be licensed to the Joint
Venture pursuant to a license agreement (the
"Haemaccel License Agreement"), to be effective as
of the Effective Date, by and between Behring and
A1. Pursuant to the terms of the Haemaccel License
Agreement, the license granted to the Joint Venture
thereunder (i) shall be restricted to the United
States, Canada and Puerto Rico (the "North American
Market"), (ii) shall have a term of fifty years,
(iii) shall provide for an annual royalty payment to
be paid by A1 to Behring and (iv) shall grant to A1
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the right to sublicense to B1 such rights. Behring
may not grant any other license relating to
Haemaccel or any derivative product, except for one
only additional license to develop, manufacture,
sell and distribute Haemaccel and all Haemaccel
derivative products in the North American Market to
a direct or indirect wholly owned subsidiary of
Hoechst; PROVIDED, HOWEVER, that the profitability
and the value of the Joint Venture shall not be
harmed by the granting of such license; PROVIDED,
FURTHER that such licensee may not assign or
transfer any of the rights granted to it under such
license to a third party.
6. CENTEON L.L.C. AND BEHRING-INSTITUT GMBH. The
Parties hereby agree to amend Section 2.1 of the Joint Venture
Agreement (i) by inserting the words "Centeon L.L.C.,"
immediately before the words "a limited liability company" in
the first sentence thereof and (ii) by inserting the words
"Behring-Institut GmbH," immediately before the words "a GmbH
formed" in the first sentence thereof.
7. ASSET CONTRIBUTIONS AND TRANSITION PERIOD. The
Parties hereby agree to amend Section 2.2.1 of the Joint Venture
Agreement by deleting 2.2.1(i) thereof and inserting the following
in lieu thereof:
(i) As of the Asset Transfer Date (as defined in
Section 2.4), Armour shall contribute to A1 and Behring shall
contribute to B1 all of their respective tangible and intangible
assets of the Business in the following countries:
Germany Spain
United States United Kingdom
Austria France
Italy Brazil
(hereinafter defined as the "Category I Countries")
The contributions of the Business on the Asset Transfer
Date shall include all the stock or equity interest in
those subsidiaries listed in Exhibit IIA and Exhibit IIB.
No liabilities of the operations of any Category I
Country shall be transferred to the Joint Venture except
as provided by Section 2.2.4 hereof.
Notwithstanding any other provisions in this Section
2.2.4, (i) Behring's Business in Austria, Spain, Italy
and Brazil, and in its subsidiaries, Associated
Bioscience, Inc. and Seroplas GmbH shall be contributed
to A1 or B1, as the case may be, in accordance with the
provisions of Annex A hereto and (ii) Armour's Business
in Brazil, Germany, Spain and the United Kingdom and in
its subsidiary Laboratoire Armour shall be contributed to
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A1 or B1, as the case may be, in accordance with the
provisions of Annex B hereto.
The Parties hereby agree that as of the Asset
Transfer Date, the Joint Venture shall have day-to-day
operational control of such assets from the Category I
Countries which are contributed to A1 and B1 by Armour
and Behring respectively on the Asset Transfer Date,
generally in accordance with the principles of Articles V
and VI PROVIDED, HOWEVER, that during the period commencing
on the Asset Transfer Date and ending on December 31,
1995 (the "Transition Period"), (a) Armour shall enjoy
the benefits of income and economies of such assets
contributed to A1 by Armour and its Affiliates and (b)
Behring shall enjoy the benefits of income and economies
of such assets contributed to B1 by Behring and its
Affiliates. Notwithstanding the preceding sentence,
during the Transition Period the Executives (including in
their capacity as members of the Shareholders Committee
of B1) shall not take any action or make any decisions
which would violate Section 12.1 of this Agreement or
result in a restructuring charge; provided, however, that
if during the Transition Period, the Executives receive
consent from the Parties to make decisions (or are
otherwise permitted to make such decisions) which would
effect any of the following profit and loss items, the
costs of such items shall be shared by the Parties on an
equal basis:
(i) restructuring decisions giving rise
to involuntary termination benefits and other
exit costs as defined in EITF 94-3 under U.S.
GAAP;
(ii) actions directly related to the
launch of the Joint Venture, and direct costs
thereof; and
(iii) costs associated with sourcing changes
effected during the Transition Period.
The Parties hereby agree that prior to the Effective
Date, the cash compensation of each Executive, including
any housing allowance or living allowance paid to such
Executive, shall be borne by the former employer of such
Executive.
The Parties hereby agree that as of the Effective
Date, the corporate structure of the Joint Venture shall
be implemented by delivery of the shares of A1 and B1,
which shares shall be placed in escrow on the Asset
Transfer Date pursuant to the Escrow Agreement (as herein
after defined in Section 2.2.5). Any assets in Category
I Countries relating to the Business which are not
contributed by Armour (or its Affiliates) to A1 or by
Behring (or its Affiliates) to B1 on or before the
<PAGE>
Effective Date shall be operated for the benefit of the
Joint Venture as of the Effective Date.
Notwithstanding any other provision of this Agreement,
A1 may declare cash dividends or partnership distributions
to APC with respect to the earnings of A1 prior
to December 31, 1995. Notwithstanding any other
provision of this Agreement, B1 may declare cash
dividends or partnership distributions to Behring with
respect to the earnings of B1 prior to December 31, 1995.
Any such dividends are defined herein as the "Transition
Period Dividends" and may be paid before or after the
Effective Date.
8. B1 RESTRUCTURING. The Parties hereby agree to amend
Section 2.2.2 of the Joint Venture Agreement (i) by deleting
the words "Behring shall create B1, and" in the first sentence
thereof and (ii) by deleting the second paragraph of such
Section 2.2.2 and inserting the following in lieu thereof:
Prior to the Asset Transfer Date, Behring shall
cause B1 to increase its share capital to DM 49,991,000
effective prior to December 31, 1995, to be represented
by nonvoting preferred shares in the total nominal amount
of DM 49,990,000 (the "PB shares") and 2 common shares in
the nominal amount of DM 500 each (the "BB1" and the
"AB1" shares). Behring, as the holder of the BB1 share,
(a) shall have sole voting power during the Transition
Period and (b) shall be entitled to receive the
Transition Period Dividends described in Section
2.2.1(i). As of the effectiveness of the increase in
share capital, no other shares of B1 shall be outstanding.
Upon the Effective Date, the BB1 and the AB1
shares shall have equal voting rights and shall be
entitled to receive distributions in accordance with the
provisions of Article III. Upon the Effective Date, the
PB shares collectively shall have a cumulative right to
DM 8 million per year in dividends and shall have a DM 80
million liquidation preference over the BB1 and AB1 share
holders. (See Article III for a discussion of the
dividend distribution mechanism in excess of the
preference dividends.)
9. CREATION OF A1. The Parties hereby agree to amend
Section 2.2.3 of the Joint Venture Agreement (i) by deleting
the words "Armour and Plasma shall create A1, and" in the
first sentence of Section 2.2.3 and (ii) by deleting the
second and third paragraphs of such Section 2.2.3 and
inserting the following in lieu thereof:
A1 shall have share capital of US$ 30,000,000,
represented by nonvoting preferred shares in the total
nominal amount of US$ 29,999,400 (the "PA shares") and
60,000 common shares in the nominal amount of US$ 0.01
each consisting of the following number of and classes of
shares: 29,999 AA1 shares; 29,999 BA1 shares; 1 AAA1
share and 1 BBA1 share. APC, as the holder of the AA1
<PAGE>
shares, (a) shall have sole voting power during the
Transition Period and (b) shall be entitled to receive
the Transition Period Dividends described in Section
2.2.1(i). Upon the Effective Date, the AA1 shares, the
BA1 shares, the AAA1 share and the BBA1 share shall have
identical voting rights and shall be entitled to receive
distributions in accordance with the provisions of
Article III. Upon the Effective Date, the PA shares
collectively shall have a cumulative preferred right to $5
million per year in dividends (payable out of A1's
earnings not including any dividend from B1) plus a
dividend equal in amount to the total dividend paid by B1
in excess of DM 8 million with respect to both the PB and
BB1 shares owned by Behring (both dividends increased by
the gross-up described in Section 4.2 below). The PA
shares shall also have a $50 million liquidation
preference over the AA1, AAA1, BA1 and BBA1 shares. (See
Article III for a discussion of the dividend distribution
mechanism in excess of the preference dividends.)
In return for Armour's asset contribution to A1, APC
shall receive all of the above-mentioned shares of A1,
except the AAA1, BA1 and BBA1 voting shares. In return
for its asset contribution, subject to Section 2.2.6,
Plasma UK Ltd. shall receive the AAA1 share on the
Effective Date.
10. PUSH DOWN INDEBTEDNESS. The Parties hereby agree to
amend Section 2.2.4 of the Joint Venture Agreement by deleting
the first paragraph of Section 2.2.4 and inserting the following
in lieu thereof:
In addition to the contributions of Assets (which
will include inventory and accounts receivable, but a
Party may contribute cash in lieu of accounts
receivables) provided for under Sections 2.2.2 and 2.2.3
herein, as of the Asset Transfer Date, Behring will
transfer to B1 and Armour will transfer to A1, and each
of A1 and B1 shall assume, an equal amount of indebtedness
("Push Down Indebtedness") so that on the Effective
Date, the Equity Ratio (as hereinafter defined) shall be
approximately as specified in Section 9.1. Push Down
Indebtedness may include liabilities of the Parties
(other than Retained Liabilities, as defined in Section
13.1) such as taxes payable, unfunded pension liability
provisions for direct pension obligations and obligations
arising out of retiree medical and life insurance plans
under FASB 106, bank indebtedness or may be in the form
of a payable to such Party. Push Down Indebtedness shall
not include trade accounts payable. The amount of the
unfunded pension liability in the context of Push Down
Indebtedness should be calculated in the case of Armour
and its Transferred Subsidiaries (as hereinafter defined)
in the U.S.A. on a basis of an average between the
Accumulated Benefit Obligation and Projected Benefit
Obligation under FASB 87, for Behring and its Transferred
<PAGE>
Subsidiaries in Germany based on Section 6a ESt6 and for
the Parties in countries other than the U.S.A. or Germany
based on the Projected Benefit Obligation. On or prior
to the Asset Transfer Date, Behring shall transfer to B1
and Armour shall transfer to A1, and each of A1 and B1
shall assume, the trade accounts payable of the Business
of the countries included within the financial statements
comprising Schedule 8; except, that if the Business in
any such country is contributed after the Asset Transfer
Date pursuant to Annex A or Annex B hereof, the trade payable
shall be transferred on the date the Assets of the
Business in such country are contributed. In every case,
the trade payables shall be contributed to A1 or B1, as
the case may be, on the date the Assets of the Business
in such country are contributed to A1 or B1. No other
liabilities of the Business or the Parties (except as provided
in Section 10.1 or except if a Party otherwise provides
additional compensation to the Joint Venture for
other liabilities) shall be transferred to, or assumed
by, the Joint Venture; it being understood that under
generally accepted accounting principles in the United
States, the Joint Venture will reflect on its financial
statements an account in accordance with FASB 87 for both
pension assets and pension liabilities with respect to
employees transferred to the Joint Venture. As far as
applicable, the same principle applies with regard to
retirement benefit liabilities other than pensions (FASB
106). In addition, the Parties recognize that for
administrative reasons, the Joint Venture, after the Effective
Date, may make payment out of its funds for certain
liabilities accrued as of the Effective Date (for example,
accrued bonuses). In any such case, Behring or
Armour, as the case may be, shall reimburse the Joint
Venture for such payment within 30 days of written notice
from the Joint Venture, with appropriate supporting
documentation, confirming that such payment was made.
The Parties hereby agree that within 75 days of the
Effective Date, (i) A1 shall deliver to Behring an audited
combined opening balance sheet of A1 as of January
1, 1996, and (ii) B1 shall deliver to Armour an audited
combined opening balance sheet of B1 as of January 1,
1996 each prepared in accordance with the principles of
U.S. GAAP and each certified by an independent accounting
firm without a material qualification. Such financial
statements shall be accompanied by a certificate of an
Executive, which sets forth as of the Effective Date
(a) the calculation of the Equity Ratio for A1 and B1 on a
combined basis but excluding from the calculation of
shareholders' equity the amount of the Transition Period
Dividends, (b) the amount of Push Down Indebtedness
contributed by Behring to B1 and by Armour to A1, (c) the
total amount of Push Down Indebtedness which would cause
the Equity Ratio of A1 and B1 on a combined basis to be
25% (the "Permitted Push Down Indebtedness"), (d) the
Armour Permitted Push Down Indebtedness and (e) the
Behring Permitted Push Down Indebtedness.
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The Armour Permitted Push Down Indebtedness shall be
equal to 50% of the Permitted Push Down Indebtedness, reduced
by (x) the amount paid to Rhone-Poulenc Rorer S.A.
by A1 as consideration for the capital stock of
Laboratoire Armour and (y) $9 million in accordance with
the terms of Section 10.1 of this Agreement. The Behring
Permitted Push Down Indebtedness shall be equal to 50% of
the Permitted Push Down Indebtedness, (i) reduced by an
amount equal to the present value of the amount of the
purchase price to be paid to Behring in 1999 as consider
ation for the Vienna fractionation plant currently owned
by Behring, which plant is to be transferred to the Joint
Venture in 1999 pursuant to that certain lease agreement
by and between Behring and Centeon Pharma GmbH dated as
of the date hereof, and (ii) increased by an additional
$9 million of indebtedness which Behring is entitled to
contribute to the Joint Venture in accordance with the
terms of Section 10.1 of this Agreement. Subject to the
prior agreement of the Parties, Permitted Push Down
Indebtedness of Armour and Behring shall be increased or
decreased as necessary to adjust for any other transactions
under this Agreement.
Within 120 days of the Effective Date, the amount of
the Push Down Indebtedness (calculated as of January 1,
1996) contributed by Armour shall be adjusted if it is
not equal to the amount of the Armour Permitted Push Down
Indebtedness, and the amount of the Push Down Indebted
ness (calculated as of January 1, 1996) contributed by
Behring shall be adjusted if it is not equal to the
amount of the Behring Permitted Push Down Indebtedness.
If the Push Down Indebtedness of a Party is greater than
the Permitted Push Down Indebtedness for such Party, then
the Push Down Indebtedness of such Party shall be adjusted
by either (a) the cancellation of debt owed to
such Party by the Joint Venture in the amount of the
excess Push Down Indebtedness or (b) the payment of cash
by such Party to the Joint Venture in the amount of such
excess Push Down Indebtedness. If the Push Down Indebtedness
of Armour is less than the Permitted Push Down
Indebtedness for Armour, then Armour shall be entitled to
an increase in Push Down Indebtedness (upon terms to be
agreed upon by the Parties) in the amount by which Permit
ted Push Down Indebtedness for Armour exceeds Armour's
Push Down Indebtedness. If the Push Down Indebtedness of
Behring is less than the Permitted Push Down Indebtedness
for Behring, then Behring shall be entitled to an
adjustment (pursuant to a method to be agreed upon by the
Parties) in the amount by which Permitted Push Down
Indebtedness for Behring exceeds Behring's Push Down
Indebteness.
<PAGE>
11. ESCROW OF SHARES. The Parties hereby agree to amend
Article II of the Joint Venture Agreement by deleting Section
2.2.5 in its entirety and substituting in lieu thereof a new
Section 2.2.5 to read as follows:
2.2.5 On the Asset Transfer Date, in accordance
with the terms of the Share Transfer and
Escrow Agreement (the "Escrow Agreement"), dated as
of Asset Transfer Date, by and among APC, Behring,
Plasma UK Ltd., Centeon L.L.C. and Julie Chapin and
Frances Stanton, as Joint Escrow Agents, APC, Plasma
UK Ltd. and Behring shall engage in the following
transactions simultaneously:
(a) Behring shall cause to be delivered to the
Joint Escrow Agents the AB1 share in B1,
(b) APC shall cause to be delivered to the
Joint Escrow Agents the BA1 and BBA1 shares in
A1, and
(c) The Parties shall cause to be delivered to
the Joint Escrow Agents the AAA1 share in A1.
12. RELEASE OF ESCROW SHARES. The Parties hereby agree
to amend Article II of the Joint Venture Agreement by adding a
new Section 2.2.6 to read as follows:
2.2.6 On January 1, 1996, the Escrow Agent, in
accordance with the terms of the Escrow Agreement,
will deliver (i) the AB1 share in B1, representing
50% of the voting rights in B1, to A1, (ii) the BA1
and BBA1 shares in A1, representing an aggregate 50%
of the voting rights in A1, to Behring and (iii) the
AAA1 share in A1 to Plasma UK Ltd.
13. DOCUMENT CLOSING. The Parties hereby agree to amend
Article II by deleting Section 2.4 in its entirety and in
serting the following in lieu thereof:
The closing of the transfer of the assets as
set forth in Section 2.2.1 and the transfer of the
escrowed shares as set forth in Section 2.2.5 (the
"Document Closing") shall take place at the offices
of Skadden, Arps, Slate, Meagher & Flom in Washington,
D.C. on September 28, 1995, simultaneously
with the execution of this Amendment No. 1 to the
Joint Venture Agreement but shall not be effective
until October 1, 1995 (the "Asset Transfer Date").
At the Document Closing, each Party shall deliver in
form and substance reasonably satisfactory to counsel
for the other Parties all deeds, endorsements,
stock powers, assignments and other instruments of
transfer and conveyance as are necessary and
appropriate to effect the transaction contemplated
herein, such instruments to be duly executed as of
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the Asset Transfer Date. To the extent permitted by
German law, all documents delivered at the Document
Closing which are not initially in the English
language shall be accompanied by an agreed upon
English language translation and such translation
shall be the definitive version of the document as
between the Parties.
In accordance with the terms of Section 2.2.6 and
the Escrow Agreement, on January 1, 1996 (the "Effective
Date") the Joint Escrow Agents under the Escrow Agreement
shall deliver the shares of A1 and B1, respectively and
the profit sharing terms of the Joint Venture shall
commence.
14. PROFIT SPLIT. The Parties hereby agree to amend
Section 3.1 of the Joint Venture Agreement by inserting the
following into Section 3.1 thereof immediately to precede the
first sentence of Section 3.1:
The provisions of this Article III shall only
apply to the sharing of earnings and losses by the
Parties after December 31, 1995.
15. OPERATION EXPENSE CAP IN JAPAN. The Parties hereby
agree to amend Section 3.5 of the Joint Venture Agreement (i)
by adding the words "Subject to the provisions of Section
8.2," before the word "Armour" in the first line of subsection
(a) of such Section 3.5 and (ii) by adding subsections (f),
(g) and (h) to such Section 3.5 to read as follows:
(f) To the extent the Operating Expense
Ratio (as hereinafter defined) of B-Japan exceeds
the Operating Expense Cap (as hereinafter
defined) in 1996: (i) the amount by which
Behring's Profits are to be reduced under Section
3.5(b) shall be reduced further by an
amount equal to one-half of the amount by which
the Operating Expenses (as hereinafter defined)
of B-Japan exceed the maximum amount of Operating
Expenses permitted under the Operating Expense
Cap (the "B-Japan Operating Excess"); or
if Section 3.5(c) is applicable for 1996
(instead of Section 3.5(b)) and (ii) Armour's
Profits are to be increased under Section
3.5(c) by this amount.
(g) To the extent the Operating Expense
Ratio of A-Japan exceeds the Operating Expense
Cap in 1996, (i) the amount by which Armour's
Profits are to be reduced under Section 3.5(c)
shall be reduced further by an amount equal to
one-half of the amount by which the Operating
Expenses of A-Japan exceed the maximum amount
of Operating Expenses permitted under the
Operating Expense Cap (the "A-Japan Operating
<PAGE>
Excess"); or if Section 3.5(b) is applicable
(instead of Section 3.5(c)), (ii) Behring's
Profits are to be increased under Section
3.5(b) by this amount.
(h) Within 75 days of the last day of the
1996 fiscal year, (i) Armour shall deliver to
Behring an audited balance sheet and income
statement of A-Japan for the 1996 fiscal year
and (ii) Behring shall deliver to Armour an
audited balance sheet and income statement of B-
Japan for the 1996 fiscal year, each prepared
in accordance with U.S. GAAP and each certified
by an independent accounting firm, which
certification shall be without material qualification.
Such financial statements shall be accompanied
by a certificate of the chief financial
officer of each of A-Japan and B-Japan respectively,
which sets forth the calculation of the
Operating Expense Ratio (as defined below) for
such Japanese Affiliate for 1996 fiscal year.
For purposes of this Section 3.5, with
respect to A-Japan and B-Japan, Operating Expenses
shall mean the selling, general and administrative
expenses and the research and development expenses
(excluding research and development expenses associated
with the recombinant Factor XIII product ("rF
XIII")) as such expense items appear on the audited
income statement prepared in accordance with U.S.
GAAP for each of A-Japan and B-Japan for the 1996
fiscal year. The Operating Expense Ratio for each
of A-Japan and B-Japan shall be calculated as the
ratio of (x) Operating Expenses to (y) Net Sales for
such period. Net Sales means net sales calculated
on an accrual basis in accordance with U.S. GAAP.
The Operating Expense Cap for A-Japan shall be 27%
of Net Sales for 1996 and the Operating Expense Cap
for B-Japan shall be 34.3% of Net Sales for 1996.
16. ADJUSTMENTS TO ALLOCATION OF PROFITS. The Parties
hereby agree to amend Article III of the Joint Venture
Agreement by adding a new Section 3.7 to read as follows:
3.7 The distribution of Profits by the Joint
Venture set forth in this Article III shall be
subject to the following adjustments:
(a) Profits allocated and distributable to Behring by
the Joint Venture shall be (i) reduced in each fiscal year by
an amount equal to 50% of the aggregate amount of royalty
<PAGE>
payments (determined on an after tax basis) made by the Joint
Venture to Behring or any Affiliate of Behring in such year
pursuant to the terms of the Haemaccel License Agreement and (ii)
increased by an amount equal to 50% of the aggregate amount of
Profits (determined on an after tax basis) derived from the
Business in the United Kingdom by Armour, directly or
indirectly.
(b) Profits allocated and distributable to Armour by the
Joint Venture shall be (i) reduced in each fiscal year by an
amount equal to 50% of Profits (determined on an after tax
basis) derived from the Business in the United Kingdom by
Armour, directly or indirectly and (ii) increased by an amount
equal to 50% of the aggregate amount of royalty payments
(determined on an after tax basis) made by the Joint Venture to
Behring or any Affiliate of Behring in such year pursuant to
the terms of the Haemaccel License Agreement.
17. rF XIII. The Parties hereby agree to amend Article
VIII of the Joint Venture Agreement by adding a new Section
8.2 to read as follows:
(b) Behring and B-Japan shall not discontinue their
current research and development efforts related to rF XIII.
The research and development efforts shall be conducted under
the guidance of the Executives. B-Japan shall not discontinue
its current research and development efforts with respect to
rF XIII without the prior agreement of each of the Chief Executive
Officer of the Joint Venture and the Senior Vice
President of Operations and Research and Development of the
Joint Venture. In the event such approval is withheld by
either such Executive, B-Japan may discontinue its current
research and development efforts with respect to rF XIII if it
obtains the prior agreement of the Board of Directors.
(c) Behring and B-Japan shall be responsible for all
research and development costs related to rF XIII. Such
research and development costs shall not be included in the
calculation of Operating Expenses for purposes of Section
3.5(h).
(d) If rF XIII is determined to be commercially viable,
then Behring shall grant to the Joint Venture a worldwide
exclusive license to manufacture and distribute rF XIII and
its derivative products and in such event, the only payment
shall be a reimbursement by the Joint Venture by a process of
amortization, whereby the Joint Venture shall make payments to
Behring. The amount of the payments shall be equal to the
<PAGE>
amount necessary to amortize (over the remaining life of the
patent for rF XIII in Japan) the total amount of research and
development costs incurred by B-Japan after December 31, 1995,
related to the development of rF XIII, together with interest
at a rate to be negotiated between the Parties at the date the
first payment is due.
(e) Attached as Annex C hereto are term sheets with re
spect to the arrangements with A-Japan and B-Japan. Prior to
the Effective Date, A-Japan and B-Japan shall enter into
definitive distribution agreements with the Joint Venture.
18. EQUITY RATIO. The Parties hereby agree to amend
Section 9.1 of the Joint Venture Agreement by deleting "35%" in
the second sentence of such Section 9.1 and inserting "25%" in
lieu thereof.
19. CONTRIBUTION AMOUNT. The Parties hereby agree to
amend Section 10.1 of the Joint Venture Agreement (i) by deleting
the words "$18 million" in the second sentence of such Section
10.1 and inserting the words "$9 million" in lieu thereof
and (ii) by deleting the words "$36 million" in the third
sentence of such Section 10.1 and inserting the words "$18
million" in lieu thereof.
20. FINANCIAL DUE DILIGENCE. The Parties hereby agree
to amend Section 10.3 of the Joint Venture Agreement by
deleting the words "Effective Date" from the first sentence of
Section 10.3 and inserting the words "Asset Transfer Date" in
lieu thereof.
21. JURISDICTION OF ORGANIZATION. The Parties hereby
agree to amend Section 11.1 of the Joint Venture Agreement by
deleting the words "Commonwealth of Pennsylvania" in the
second sentence and by inserting "State of Delaware" in lieu
thereof.
22. REPRESENTATIONS AND WARRANTIES. The Parties hereby
agree to amend Article XI of the Joint Venture Agreement (i)
by deleting the words "Effective Date" in the first sentence
of Section 11.3(a) and inserting the words "Asset Transfer
Date" in lieu thereof, (ii) by deleting the words "the Joint
Venture" in the first sentence of Section 11.3(a) and
inserting the words "A1 or B1, as the case may be" in lieu
thereof, (iii) by deleting the words "Effective Date to the
Joint Venture" in the third sentence of Section 11.3(c) and
inserting the words "Asset Transfer Date to A1 and B1
respectively" in lieu thereof, (iv) by deleting the words "the
Joint Venture at the "Effective Date" in the second sentence
of Section 11.4 and inserting the words "A1 or B1 as the case
may be as of the Asset Transfer Date" in lieu thereof, (v) by
deleting the words "Effective Date" in the first sentence of
Section 11.10 and inserting the words "Asset Transfer Date" in
lieu thereof, (vi) by deleting the words "Effective Date" in
Section 11.17 and inserting the words "Asset Transfer Date" in
lieu thereof, (vii) by deleting the words "Effective Date" in
<PAGE>
subsection (b) and (d) of Section 11.19 and inserting the
words "Asset Transfer Date" in lieu thereof, and (viii) by
adding a new Section 11.23 to read as follows:
11.23 LIABILITIES OF A1 AND B1. As of the
Asset Transfer Date, each of Armour and Plasma represents
and warrants that there are no agreements, liabilites
or obligations of any nature (whether contingent
or otherwise) of A1, other than those created,
entered into, assumed or otherwise incurred
pursuant to the provisions of this Agreement and the
Related Agreements. Behring represents and warrants
that there are no agreements, liabilities or obligation
of any nature (whether contingent or otherwise)
of B1 other than those created, entered into,
assumed or otherwise incurred pursuant to the provisions
of this Agreement and the Related Agreements.
23. LICENSE AGREEMENTS. The Parties hereto agree to
amend Section 12.2 by deleting the words "Effective Date" in
the first and second sentences of Section 12.2 and inserting
the words "Asset Transfer Date" in lieu thereof.
24. SUCCESSOR TO PLASMA. The Parties hereby agree to
amend Section 12.4 of the Joint Venture Agreement by deleting
the words "Effective Date" in the first and second sentences
of Section 12.4 and inserting the words "Asset Transfer Date"
in lieu thereof.
25. COVENANTS. The Parties hereby agree to amend
Article XII of the Joint Venture Agreement by adding new Sections
12.5, and 12.6 to read as follows:
12.5 Each of the Parties hereby waives receipt
of the third party consents set forth on Annex D
hereto as a condition to such Party's obligations
under this Agreement and acknowledges that the
failure to receive any such consent, or all of them,
shall not constitute a defense to the failure by it
to perform any of its obligations under the
Agreement.
12.6 Each of APC and Behring agrees that during
the Transition Period, (i) it shall not grant any proxy
with respect to any interest in either A1 or B1, (ii) it
shall not transfer any interest in A1 or B1 owned by
either Armour or Behring, as the case may be, on the Asset
Transfer Date or (iii) it shall not amend the Limited
Liability Company Agreement of A1, the Transfer Agreement
between Behring and B1, the Bill of Sale and the
Undertaking between Armour and A1 and the Limited Liability
Company Agreement of B1 and (iv) it shall not take or
fail to take any action if to so act or fail to act would
be inconsistent with the purpose of this Agreement.
<PAGE>
26. TRANSFER OF INTERESTS. The Parties hereby agree to
amend Section 18.3 of the Joint Venture Agreement (i) by deleting
the words "Effective Date" in the first sentence of
Section 18.3 and inserting the words "Asset Transfer Date" in
lieu thereof and (ii) by adding a new sentence at the end of
such Section 18.3 to read as follows:
Armour shall cause APC to remain a Related Party of
Armour.
27. TERMINATION. The Parties hereby agree to amend Article
XIX of the Joint Venture Agreement (i) by deleting Section
19.2 in its entirety and inserting the words "[Intentionally
Omitted]" and (ii) by deleting the words "Effective Date" in
Section 19.3 and inserting the words "Asset Transfer Date" in
lieu thereof.
28. CONDITIONS OF CLOSING. The Parties hereby agree to
amend Section 22.1 of the Joint Venture Agreement by deleting
the words "Effective Date" in the first sentence of Section
22.1 and in subsections (a), (h), (i), (j) and (k) of Section
22.1 and inserting the words "Asset Transfer Date" in lieu
thereof. The Parties agree to further amend Section 22.1 of
the Joint Venture Agreement by adding subsections (p), (q) and
(r) to such Section 22.1 to read as follows:
29. EFFECTIVE DATE. The Parties hereby agree to amend
Section 23.1 of the Joint Venture Agreement by deleting the
Section in its entirety and substituting the following in lieu
thereof:
23.1 EFFECTIVE DATE. The Effective Date of
the Joint Venture shall be the stroke of midnight
between December 31, 1995 and January 1, 1996.
30. ASSIGNMENT. The Parties hereby agree to amend Section
23.2 of the Joint Venture Agreement by deleting the words
"Effective Date" in the second sentence of Section 23.2 and
inserting the words "Asset Transfer Date" in lieu thereof.
The parties agree that any reference to Armour or Plasma in
this or any related agreements shall include Armour and/or APC
or Plasma and/or Plasma UK Ltd. respectively so that the
assignment by Armour and Plasma does not operate to prejudice
Behring's rights under the Joint Venture Agreement or the
related agreements.
31. CONFLICT WITH OTHER AGREEMENTS. The Parties hereby
agree that to the extent there is any conflict between the
provisions of the Joint Venture Agreement (as amended hereby)
and the provisions of either the Limited Liability Company
Agreement for A1 or the Limited Liability Company Agreement
for B1, the provisions of the Joint Venture Agreement (as
amended hereby) shall prevail, except with respect to the
provisions of Sections 9 and 10.1 of the Limited Liability
Company Agreement for A1, which provisions would apply
notwithstanding any other provision in the Limited Liability
Agreement for A1 or the Joint Venture Agreement (as amended
hereby).
<PAGE>
32. CERTAIN TERMS. The terms "this agreement," "hereof,"
"herein" and other words of like import contained in the Joint
Venture Agreement shall be deemed to refer to the Joint
Venture Agreement as amended hereby.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed
this Amendment as of the date hereinabove set forth.
APC HOLDINGS INC.
/s/ Frances L. Stanton
-----------------------------------
By: Frances L. Stanton
Title: President
PLASMA INVESTMENTS U.K. LIMITED
/s/ Frances L. Stanton
------------------------------------
By: Frances L. Stanton
Title: Director
BEHRINGWERKE AG
/s/ Bernd Nevefreind
------------------------------------
By: Bernd Nevefreind
Title: Chief Executive
Officer
ARMOUR PHARMACEUTICAL COMPANY
/s/ Robert M. Infarinato
------------------------------------
By: Robert M. Infarinato
Title: Vice President
PLASMA ENTERPRISES, INC.
/s/ Robert M. Infarinato
--------------------------------------
By: Robert M. Infarinato
Title: Vice President
<PAGE>
Each of Centeon L.L.C. and Behring-Institut GmbH are
hereby entitled to all of the rights and benefits granted, and
assume all of the obligations delegated, to it under this
Agreement.
Agreed and accepted this 28th day of September,
1995.
/s/ Frances L.Stanton
------------------------------
CENTEON L.L.C.
By: Frances L. Stanton
Title: Authorized Agent
/s/ Joachim Thole
------------------------------
BEHRING-INSTITUT GMBH
By: Joachim Thole
Title: Attorney-in-fact
<PAGE>
Annexes to Amendment No. 1 to
Joint Venture Agreement
-----------------------
Annex A Plan of transfer for Behring Business in
Austria, Spain, Italy and Brazil, and in its
subsidiaries, Associated Bioscience, Inc. and
Seroplas GmbH
Annex B Plan of transfer for Armour's Business in
Brazil, Germany, Spain and the United Kingdom,
and in its subsidiary, Laboratoire Armour
Annex C Term sheets for arrangements with A-Japan
and B-Japan
Annex D Third party consents waived by Armour and
Behring as a condition to closing
The Company shall furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon its
request.
