<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1994
or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-87
EASTMAN KODAK COMPANY
(Exact name of registrant as specified in its charter)
NEW JERSEY 16-0417150
(State of incorporation) (IRS Employer
Identification No.)
343 STATE STREET, ROCHESTER, NEW YORK 14650
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 716-724-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of Shares Outstanding at
Class September 30, 1994
Common Stock, $2.50 par value 339,685,483
<PAGE>
<PAGE> 2
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS
<CAPTION>
(in millions) Third Quarter Three Quarters
1994 1993 1994 1993
<S> <C> <C> <C> <C>
REVENUES
Sales $3,529 $3,160 $9,709 $ 9,181
Earnings from equity interests and other
revenues 2 27 70 156
------ ------ ------ -------
TOTAL REVENUES 3,531 3,187 9,779 9,337
------ ------ ------ -------
COSTS
Cost of goods sold 1,967 1,625 5,219 4,688
Marketing and administrative expenses 972 829 2,644 2,499
Research and development costs 221 231 655 648
Interest expense 28 41 113 145
Restructuring costs - 495 - 495
Other charges 25 41 133 122
------ ------ ------ -------
TOTAL COSTS 3,213 3,262 8,764 8,597
------ ------ ------ -------
Earnings (loss) from continuing operations
before income taxes 318 (75) 1,015 740
Provision (benefit) for income taxes from
continuing operations 125 (1) 382 316
------ ------ ------ -------
Earnings (loss) from continuing operations
before extraordinary item and cumulative
effect of changes in accounting principle 193 (74) 633 424
Earnings (loss) from discontinued operations
before cumulative effect of changes in
accounting principle - 7 (81) 41
------ ------ ------ -------
Earnings (loss) before extraordinary item and
cumulative effect of changes
in accounting principle 193 (67) 552 465
Extraordinary item - (1) (13) (13)
------ ------ ------ -------
Earnings (loss) before cumulative effect of
changes in accounting principle 193 (68) 539 452
------ ------ ------ -------
Cumulative effect of changes in accounting
principle from continuing operations - - - (1,649)
Cumulative effect of changes in accounting
principle from discontinued operations - - - (519)
------ ------ ------ -------
Total cumulative effect of changes in
accounting principle - - - (2,168)
------ ------ ------ -------
NET EARNINGS (LOSS) $ 193 $ (68) $ 539 $(1,716)
====== ====== ====== =======
- - -----------------------------------------------------------------------------
See Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE> 3
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS (Continued)
<CAPTION>
Third Quarter Three Quarters
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Primary earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes in
accounting principle $ .57 $ (.23) $ 1.89 $ 1.29
Primary earnings (loss) per share from
discontinued operations before cumulative
effect of changes in accounting principle - .02 (.24) .13
------ ------ ------ ------
Primary earnings (loss) per share before
extraordinary item and cumulative effect of
changes in accounting principle .57 (.21) 1.65 1.42
Extraordinary item - - (.04) (.04)
------ ------ ------ ------
Primary earnings (loss) per share before
cumulative effect of changes in
accounting principle .57 (.21) 1.61 1.38
------ ------ ------ ------
Cumulative effect of changes in accounting
principle from continuing operations - - - (5.04)
Cumulative effect of changes in accounting
principle from discontinued operations - - - (1.58)
------ ------ ------ ------
Total cumulative effect of changes in
accounting principle - - - (6.62)
------ ------ ------ ------
Primary earnings (loss) per share $ .57 $ (.21) $ 1.61 $(5.24)
====== ====== ====== ======
Fully diluted earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes in
accounting principle $ .56 $ (.17) $ 1.86 $ 1.29
Fully diluted earnings (loss) per share from
discontinued operations before cumulative
effect of changes in accounting principle - .02 (.24) .12
------ ------ ------ ------
Fully diluted earnings (loss) per share before
extraordinary item and cumulative effect of
changes in accounting principle .56 (.15) 1.62 1.41
Extraordinary item - - (.04) (.03)
------ ------ ------ ------
Fully diluted earnings (loss) per share before
cumulative effect of changes in
accounting principle .56 (.15) 1.58 1.38
------ ------ ------ ------
Cumulative effect of changes in accounting
principle from continuing operations - - - (5.04)
Cumulative effect of changes in accounting
principle from discontinued operations - - - (1.58)
------ ------ ------ ------
Total cumulative effect of changes in
accounting principle - - - (6.62)
------ ------ ------ ------
Fully diluted earnings (loss) per share $ .56 $ (.15) $ 1.58 $(5.24)
====== ====== ====== ======
- - -----------------------------------------------------------------------------
See Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE> 4
<TABLE>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<CAPTION>
Third Quarter Three Quarters
(in millions) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
RETAINED EARNINGS
Retained earnings at beginning of period $4,552 $5,746 $4,469 $7,721
Net earnings (loss) 193 (68) 539 (1,716)
Cash dividends declared (136) (165) (401) (492)
Other changes (3) - (1) -
------ ------ ------ ------
RETAINED EARNINGS at end of period $4,606 $5,513 $4,606 $5,513
====== ====== ====== ======
- - --------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION:
Operations of subsidiary companies outside
the U.S. included in Consolidated Statement
of Earnings:
Sales $2,070 $1,869 $5,741 $5,434
Earnings from operations 143 57 436 295
- - ----------------------------------------------------------------------------------
See Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<CAPTION>
Sept. 30, Dec. 31,
(in millions) 1994 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 585 $ 1,635
Marketable securities 142 331
Receivables (net of allowances of $108 and $92) 3,148 2,817
Inventories 1,765 1,532
Deferred income tax charges 457 339
Other 392 203
------- -------
Total current assets 6,489 6,857
------- -------
PROPERTIES
Land, buildings and equipment at cost 12,429 11,601
Less: Accumulated depreciation 7,003 6,574
------- -------
Net properties 5,426 5,027
------- -------
OTHER ASSETS
Unamortized goodwill (net of accumulated
amortization of $210 and $179) 673 272
Long-term receivables and other
noncurrent assets 782 912
Deferred income tax charges 352 393
Net assets of discontinued operations 5,361 5,349
------- -------
TOTAL ASSETS $19,083 $18,810
======= =======
- - --------------------------------------------------------------------------
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Payables $ 3,025 $ 2,877
Short-term borrowings 2,460 611
Taxes-income and other 415 384
Dividends payable 136 165
Deferred income tax credits 46 16
------- -------
Total current liabilities 6,082 4,053
OTHER LIABILITIES AND DEFERRED CREDITS
Long-term borrowings 4,667 6,727
Postemployment liabilities 3,603 3,491
Other long-term liabilities 621 1,183
Deferred income tax credits 50 -
------- -------
Total liabilities 15,023 15,454
------- -------
SHAREOWNERS' EQUITY
Common stock at par* 966 948
Additional capital paid in or
transferred from retained earnings 510 213
Retained earnings 4,606 4,469
Accumulated translation adjustment (66) (235)
------- -------
6,016 5,395
Less: Treasury stock shares at cost* 1,956 2,039
------- -------
Total shareowners' equity 4,060 3,356
------- -------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $19,083 $18,810
======= =======
* Common stock: $2.50 par value, 950 million shares authorized, 386 million
shares issued as of September 30, 1994. Treasury stock at cost consists of
approximately 49 million shares on December 31, 1993 and approximately 47
million shares on September 30, 1994.
- - -------------------------------------------------------------------------
See Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE> 6
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Three Quarters
(in millions) 1994 1993
<S> <C> <C>
Cash flows from operating activities:
Earnings from continuing operations before
extraordinary item and cumulative effect of
changes in accounting principle $ 633 $ 424
Adjustments to reconcile above earnings to net cash
provided by operating activities:
Depreciation and amortization 613 639
Benefit for deferred taxes (8) (38)
Loss on sale and retirement of properties 38 102
Increase in receivables (128) (57)
Increase in inventories (131) (115)
Increase in liabilities excluding borrowings 77 322
Other items, net (244) (53)
------ ------
Total adjustments 217 800
------ ------
Net cash provided by operating activities 850 1,224
------ ------
Cash flows from investing activities:
Additions to properties (814) (612)
Proceeds from sale of investments - 43
Proceeds from sale of properties 41 5
Marketable securities - sales 242 1
Marketable securities - purchases (27) -
Payment for purchase of Qualex, net of
cash acquired (48) -
------ ------
Net cash used in investing activities (606) (563)
------ ------
Cash flows from financing activities:
Net increase in commercial paper borrowings
of 90 days or less 1,385 (255)
Proceeds from other borrowings 2 544
Repayment of other borrowings (1,483) (536)
Unwinding of derivatives (814) -
Dividends to shareowners (429) (492)
Exercise of employee stock options 29 166
------ ------
Net cash used in financing activities (1,310) (573)
------ ------
Effect of exchange rate changes on cash 16 (2)
------ ------
Net increase (decrease) in cash and cash equivalents (1,050) 86
Cash and cash equivalents, beginning of year 1,635 361
------ ------
Cash and cash equivalents, end of period $ 585 $ 447
====== ======
- - --------------------------------------------------------------------------
See Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The financial statements have been prepared by the Company in accordance with
the accounting policies stated in the 1993 Annual Report, except as noted
below, and should be read in conjunction with the Notes to Financial
Statements appearing therein. In the opinion of the Company, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation have been included in the financial statements. The statements
are based in part on approximations and have not been audited by independent
accountants. The annual statements will be audited by Price Waterhouse.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The recorded amounts of other investments as of September 30, 1994 shown in
the following table include $37 million of equity investments in a number of
entities for which it is not practicable to estimate fair values, since
quoted market prices do not exist for any of these investments.
The fair values of long-term borrowings were estimated based on quoted market
prices or by obtaining quotes from brokers.
The Company is a party to various interest rate option and swap agreements
and foreign currency contracts which are included in other instruments below.
The fair values of other instruments were estimated by obtaining quotes from
brokers, where practicable, or by estimating the amounts the Company would
receive or pay to terminate the instruments at the reporting date.
The recorded amounts of certain financial instruments, such as cash and
marketable securities and short-term borrowings, approximate their fair
values and are excluded from the amounts below. The recorded amounts and
estimated fair values of the Company's long-term borrowings and other
financial instruments as of September 30, 1994 were as follows:
(in millions) Recorded Amount Fair Value
Other investments $ 43 $ 45
Long-term borrowings (4,667) (4,842)
Other instruments (63) (206)
EARNINGS PER COMMON SHARE
Fully diluted earnings per share is computed by dividing net earnings
adjusted for after-tax interest expense associated with convertible
securities by the average number of common shares outstanding, common stock
equivalents related to dilutive stock options, and common shares issuable
upon conversion of such convertible securities. Fully diluted earnings per
share relating to the cumulative effect of changes in accounting principle
were anti-dilutive. The number of common shares used to compute earnings per
share amounts was as follows:
- - --------------------------------------------------------------------------
Third Quarter Three Quarters
(in millions) 1994 1993 1994 1993
- - --------------------------------------------------------------------------
Primary 339.4 328.7 334.3 327.7
Fully Diluted 345.2 359.2 340.2 358.2
- - --------------------------------------------------------------------------
CASH FLOW INFORMATION
Certain debt issues have been converted to equity in non-cash transactions
which are not reflected in the Consolidated Statement of Cash Flows.
<PAGE>
<PAGE> 8
DISCONTINUED OPERATIONS
On May 3, 1994, the Company announced its intent to divest the following
non-imaging health businesses: the pharmaceutical and consumer health
businesses of Sterling Winthrop Inc., the household products and
do-it-yourself products businesses of L&F Products and the Clinical Diagnostics
Division. These businesses comprise the Health segment, which is reported as
a discontinued operation with results for prior periods restated. On June
23, 1994, the Company announced Sanofi agreed to acquire the pharmaceutical
business of Sterling Winthrop Inc. for $1.675 billion in cash and its
interest in the "Over the Counter" alliance with Sterling Winthrop Inc.
Sanofi's interest in the "Over the Counter" alliance will be transferred to
Sterling Winthrop Inc. On October 1, 1994, the Company completed this sale.
On August 29, 1994, the Company announced SmithKline Beecham plc agreed to
acquire the consumer health business of Sterling Winthrop Inc. for $2.925
billion in cash. On November 2, 1994, the Company completed this sale. On
September 6, 1994, the Company announced Johnson & Johnson agreed to acquire the
Clinical Diagnostics Division for $1.008 billion in cash. On September 26,
1994, the Company announced Reckitt & Coleman plc agreed to acquire the
worldwide household products business of L&F Products for $1.55 billion in
cash. On October 14, 1994, the Company announced Forstmann Little & Co. agreed
to acquire the do-it-yourself products business of L&F Products for
$700 million in cash. In addition, as part of the divestiture, the Company
is actively negotiating with potential buyers for its pharmaceutical research
and development facility and its NanoSystems unit, and anticipates closing
dates for these transactions in 1995.
As of June 30, 1994, the Company concluded that measurement dates had
occurred for the non-imaging health businesses. Accordingly, the financial
statement information related to these businesses has been presented on one
line in the Consolidated Statement of Financial Position, "net assets from
discontinued operations", and in the "discontinued operations" line of the
Consolidated Statement of Earnings. The amounts presented for prior periods
have been restated for comparability. The "net assets from discontinued
operations" represents the assets intended to be sold offset by the
liabilities anticipated to be assumed by the buyers of these businesses. The
amounts presented in the Consolidated Statement of Earnings for prior periods
have been restated to reflect the allocation of interest expense to
discontinued operations. The allocation of interest expense was performed by
reference to the interest expense on indebtedness that is anticipated to be
repaid from the net proceeds received from the sales. The third quarter 1994
loss from the health businesses was deferred and will be recognized as a
reduction of the expected gain on the sale of the health businesses.
The Company currently anticipates an overall gain on the sales of the health
businesses including income from operations during the phase-out period which
is estimated to end on or about December 31, 1994. Consequently, all gains
estimated at this time will be recognized by the Company as such transactions
close.
Summarized results of the Health businesses, including the allocation of
interest expense, are as follows:
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(in millions) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Sales $982 $917 $2,782 $2,703
==== ==== ====== ======
Earnings (loss) before income taxes $(56) $(64) $ (140) $ (203)
Provision (benefit) for income taxes (12) (11) (15) (50)
---- ---- ------ ------
Earnings (loss) before cumulative effect
of changes in accounting principle $(44) $(53) $ (125) $ (153)
==== ==== ====== ======
</TABLE>
Interest expense included in earnings (loss) before income taxes was
$115 million for each of the three month periods ended September 30, 1994 and
1993. Interest expense included in earnings (loss) before income taxes was
$344 million and $346 million for the nine month periods ended September 30,
1994 and 1993, respectively.
<PAGE>
<PAGE 9
<TABLE>
Net assets of the Health businesses as reported in the Consolidated Statement of Financial
Position are comprised of the following:
<CAPTION>
Sept. 30, Dec. 31,
(in millions) 1994 1993
<S> <C> <C>
Current assets $1,350 $1,165
Land, buildings and equipment, net 1,337 1,339
Other assets 4,214 4,281
------ ------
Total assets 6,901 6,785
------ ------
Current liabilities 926 857
Long-term borrowings 134 126
Other liabilities 480 453
------ ------
Total liabilities 1,540 1,436
------ ------
Net assets of discontinued
operations $5,361 $5,349
====== ======
</TABLE>
On June 15, 1993, the Company announced a plan to spin-off its Eastman
Chemical Company operations, which was completed on December 31, 1993.
Summarized results of the Chemicals segment, including the allocation of
interest expense, are as follows:
Third Three
Quarter Quarters
(in millions) 1993 1993
Earnings before cumulative effect of
changes in accounting principle $60 $194
=== ====
<PAGE>
<PAGE> 10
<TABLE>
LONG-TERM BORROWINGS
On October 3, 1994, the Company announced a tender offer for up to $4.8 billion of its
outstanding long-term borrowings. On October 20, 1994, the Company announced that $2.7
billion of the possible $4.8 billion was tendered during the tender offer period which ended
on that date. The table below is provided to disclose the Company's long-term borrowings
following the completion of the tender offer.
<CAPTION>
Dec. 31 Sept. 30, Oct. 31,
(in millions) 1993 1994 1994
<S> <C> <C> <C>
Eastman Kodak Company
10.05% notes due 1994 $ 350 $ - $ -
9.20% notes due 1995 750 750 502
10 3/8% Eurobonds due 1995 111 111 81
7 7/8% notes due 1997 135 135 135
8.55% notes due 1997 200 200 102
9 1/8% notes due 1998 1,100 1,100 528
7 1/4% notes due 1999 275 275 75
9 5/8% notes due 1999 275 275 275
9 1/2% notes due 2000 400 400 244
6 3/8% convertible subordinated
debentures due 2001 278 - -
10% notes due 2001 300 300 122
9 3/8% notes due 2003 400 400 145
9 7/8% notes due 2004 300 300 104
9 3/4% notes due 2004 300 300 97
9 1/2% notes due 2008 300 300 31
Zero coupon convertible subordinated
debentures due 2011 1,127 - -
9.95% debentures due 2018 125 125 3
9.20% debentures due 2021 200 200 9
Sterling Winthrop Inc.
8 7/8% notes due 1996 100 100 100
Industria Fotografica
Interamericana S.A. de C.V.
7.36% notes due 2003 110 110 110
Qualex Inc. - 215 68
Other 67 66 75
------ ------ ------
7,203 5,662 2,806
Less: Current maturities 350 861 583
------ ------ ------
6,853 4,801 2,223
Less: Amounts expected to be assumed
by discontinued operations 126 134 134
------ ------ ------
Total $6,727 $4,667 $2,089
====== ====== ======
</TABLE>
SUBSEQUENT EVENTS
In connection with the debt paydown program, the Company incurred pre-tax
losses related to the tender offer of approximately $160 million which will
result in an extraordinary charge in the fourth quarter of 1994. The Company
has also unwound substantially all of the interest rate derivatives
associated with its debt issues. The Company incurred pre-tax losses related
to the unwind of the derivatives of approximately $160 million in September,
which has been deferred, and approximately $60 million in October. These
losses will be charged to extraordinary and other charges in the fourth
quarter of 1994 along with the losses on the debt.
Harry L. Kavetas, Executive Vice President
and Chief Financial Officer
November 14, 1994
<PAGE>
<PAGE> 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations
<TABLE>
SUMMARY
<CAPTION>
(in millions, except Third Quarter Three Quarters
earnings per share) 1994 1993 Change 1994 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Sales from continuing operations $3,529 $3,160 +12% $9,709 $ 9,181 +6%
Earnings (loss) from operations
before extraordinary item and
cumulative effect of changes
in accounting principle:
Continuing 193 (74) 633 424
Discontinued-Health - (53) (81) (153)
Discontinued-Chemicals - 60 - 194
Net earnings (loss) 193 (68) 539 (1,716)
Primary earnings (loss)
per share .57 (.21) 1.61 (5.24)
Fully diluted earnings (loss)
per share .56 (.15) 1.58 (5.24)
</TABLE>
Sales from continuing operations of $3,529 million for the third quarter of
1994 were up significantly when compared with the third quarter of 1993.
Excluding the sales of Qualex, which was acquired on August 12, 1994, the
Company recorded good sales increases for the quarter. Year-to-date sales
from continuing operations of $9,709 million were moderately higher than sales
for the comparable period of last year. Earnings from continuing operations
were adversely affected by restructuring costs in 1993 of $495 million
($353 million or $1.08 per share after-tax). Third quarter earnings from
continuing operations decreased substantially from the third quarter of 1993,
before deducting the effects of restructuring costs, as the benefits of
increased unit volumes and manufacturing productivity were more than offset by
cost escalation, higher marketing and administrative expenses, lower effective
selling prices and incremental charges associated with our continuing review
of the carrying value of all assets. Year-to-date earnings from continuing
operations decreased significantly from the comparable period a year ago,
before deducting the effects of restructuring costs, as the benefits of
increased unit volumes and manufacturing productivity were more than offset by
cost escalation, lower effective selling prices, and incremental charges
associated with our continuing review of the carrying value of all assets. In
addition, the 1993 third quarter and year-to-date net earnings benefited from
net gains on strategic currency hedges of approximately $17 million and $38
million, respectively, and from the sales of assets. The 1994 third quarter
and year-to-date net earnings were adversely impacted by premium costs for
strategic currency hedges of approximately $15 million and $38 million,
respectively, and by the initial consolidation of Qualex. Net earnings for
the year-to-date periods of both years included an extraordinary charge of
$.04 per share related to the early extinguishment of debt.
The 1993 year-to-date net loss was due to an after-tax charge of $2.17 billion
($6.62 per share) associated with the adoption of Statement of Financial
Accounting Standards (SFAS) No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, and SFAS No. 112, Employers' Accounting for
Postemployment Benefits effective as of January 1, 1993.
On May 3, 1994, the Company announced its intent to divest the following
non-imaging health businesses: the pharmaceutical and consumer health
businesses of Sterling Winthrop Inc., the household products and
do-it-yourself products businesses of L&F Products and the Clinical Diagnostics
Division. These businesses are reported as discontinued operations with
results for prior periods restated. On June 23, 1994, the Company announced
Sanofi agreed to acquire the pharmaceutical business of Sterling Winthrop Inc.
for $1.675 billion in cash and its interest in the "Over the Counter" alliance
with Sterling Winthrop Inc. On October 1, 1994, the Company completed this
sale. On August 29, 1994, the Company announced SmithKline Beecham plc agreed
to acquire the consumer health business of Sterling Winthrop Inc. for $2.925
billion in cash. On November 2, 1994, the Company completed this sale. On
September 6, 1994, the Company announced Johnson & Johnson agreed to acquire the
Clinical Diagnostics Division for $1.008 billion in cash. On September 26,
1994, the Company announced Reckitt & Colman plc agreed to acquire the worldwide
household products business of L&F Products for $1.55 billion in cash. On
October 14, 1994, the Company announced Forstmann Little & Co. agreed to acquire
the do-it-yourself products business of L&F Products for $700 million in
cash. In addition, as part of the divestiture, the Company is actively
negotiating with potential buyers for its pharmaceutical research and
development facility and its NanoSystems unit, and anticipates closing dates
for these transactions in 1995. The third quarter 1994 loss from the
discontinued health operations of $44 million or $.13 per share, was deferred
and will be recognized as a reduction of the expected gain on the sale of
the health business, which is anticipated to be recorded in the fourth quarter.
<PAGE>
<PAGE> 12
On August 12, 1994, the company purchased from the Actava Group Inc. its 50%
interest in Qualex for $150 million, $50 million to Actava at the closing and
the remaining $100 million without interest in two installments over the next
twelve months. As a result of this transaction, Qualex is now a wholly owned
subsidiary of the Company and its financial statements are consolidated with
those of the Company beginning in the third quarter.
On October 7, 1994, the Company announced settlement of a civil complaint by
the Environmental Protection Agency (EPA) alleging noncompliance with federal
environmental regulations at the Company's Kodak Park manufacturing site.
The Company has been assessed a $5 million penalty, previously accrued, and
has also agreed to conduct a number of special environmental projects over an
eight-year period. The costs of these improvement projects will be expensed
or capitalized as incurred in accordance with the Company's accounting policy
for environmental costs.
On October 25, 1994, the Company announced in its third quarter earnings
release that its focus on cost management would continue and could possibly
include a restructuring program in the fourth quarter of 1994, which could
have a material impact on the results of operations.
On June 15, 1993, the Company announced a plan to spin-off its Eastman
Chemical Company operations, which was completed on December 31, 1993.
SEGMENT SALES
In the Consumer Imaging segment, sales to customers inside the U.S. showed an
excellent increase for the quarter and were up significantly year to date,
when compared with sales for the same periods of 1993, due primarily to the
initial consolidation of Qualex. Excluding the sales of Qualex, sales for
the quarter and year to date increased moderately over the comparable periods
of 1993 as higher volumes were partially offset by lower effective selling
prices. Outside the U.S., sales recorded a strong increase in the quarter as
solid volume increases and the favorable effects of foreign currency rate
changes were only partially offset by the unfavorable effects of lower
effective selling prices. Year to date, sales to customers outside the U.S.
showed a good increase, as solid increases in unit volumes were only
partially offset by the unfavorable effects of lower effective selling
prices. Worldwide volume gains in the 1994 third quarter and year to date
were led by single-use cameras, Ektacolor papers and Kodacolor 35mm films.
In the Commercial Imaging segment, the slight increases in sales to customers
inside the U.S. for the quarter and year to date were due to volume
increases. Good increases in sales to customers outside the U.S. in the
third quarter of 1994 were due to good volume gains and the favorable effects
of foreign currency rate changes, partially offset by lower effective selling
prices. For the first three quarters of 1994, sales to customers outside the
U.S. increased slightly as higher volumes were partially offset by lower
effective selling prices. Worldwide sales increases in the quarter and year
to date were led by health sciences, printing and publishing imaging, and
motion picture and television products.
<TABLE>
Sales by Segment
<CAPTION>
Third Quarter Three Quarters
(in millions) 1994 1993 Change 1994 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Sales from Continuing Operations
Consumer Imaging
Inside the U.S. $ 645 $ 516 25% $1,646 $1,475 12%
Outside the U.S. 968 836 16 2,532 2,346 8
------ ------ -- ------ ------ --
Total Consumer Imaging 1,613 1,352 19 4,178 3,821 9
------ ------ -- ------ ------ --
Commercial Imaging
Inside the U.S. 996 964 3 2,861 2,803 2
Outside the U.S. 920 844 9 2,670 2,559 4
------ ------ -- ------ ------ --
Total Commercial Imaging 1,916 1,808 6 5,531 5,362 3
------ ------ -- ------ ------ --
Deduct Intersegment Sales - - - (2)
------ ------ -- ------ ------ --
Total Sales from
Continuing Operations $3,529 $3,160 12% $9,709 $9,181 6%
====== ====== == ====== ====== ==
</TABLE>
- - --------------------------------------------------------------------------
<PAGE>
<PAGE> 13
<TABLE>
COSTS AND EXPENSES
<CAPTION>
Third Quarter Three Quarters
(in millions) 1994 1993 Change 1994 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Cost of goods sold $1,967 $1,625 21% $5,219 $4,688 11%
Percent of Sales 55.7% 51.4% 53.8% 51.1%
Marketing and administrative
expenses $ 972 $ 829 17% $2,644 $2,499 6%
Percent of Sales 27.5% 26.2% 27.2% 27.2%
Research and development costs $ 221 $ 231 -4% $ 655 $ 648 1%
Percent of Sales 6.3% 7.3% 6.7% 7.1%
</TABLE>
Cost of goods sold for the third quarter of 1994 included goodwill
amortization of $14 million compared with $10 million in the third quarter of
1993. For the 1994 year to date, goodwill amortization was $31 million
compared with $23 million for the 1993 year to date. The increases in the
cost of goods sold percentages for the quarter and year to date were
primarily due to the adverse impacts of cost escalation, lower effective
selling prices, the initial consolidation of Qualex and incremental charges
associated with our continuing review of the carrying value of all assets.
The increases in marketing and administrative expenses in the quarter and
year to date when compared with 1993 were primarily due to the initial
consolidation of Qualex, cost escalation and incremental charges associated
with our continuing review of the carrying value of all assets. Research and
development costs recorded a decrease in the quarter and were essentially
level year to date compared with last year as lower activity levels offset
cost escalation.
SEGMENT EARNINGS
Consumer Imaging operating earnings were adversely affected by restructuring
costs in 1993 of $141 million. Consumer Imaging operating earnings for the
1994 third quarter decreased substantially when compared with the 1993 third
quarter, before deducting restructuring costs, as the benefits of increased
unit volumes and manufacturing productivity were more than offset by lower
effective selling prices, cost escalation, incremental charges associated
with our continuing review of the carrying value of all assets, and higher
research and development activity. Year-to-date Consumer Imaging operating
earnings, before deducting restructuring costs in 1993, decreased as the
benefits of increased unit volumes and manufacturing productivity were more
than offset by lower effective selling prices, cost escalation and
incremental charges associated with our continuing review of the carrying
value of all assets. In addition, the 1993 third quarter and year to date
benefited from the positive effect of strategic currency hedges, while the
1994 third quarter and year to date were adversely impacted by the premium
costs for strategic currency hedges.
Commercial Imaging operating earnings were adversely affected by
restructuring costs in 1993 of $354 million. Commercial Imaging segment
operating earnings for the 1994 third quarter and year to date were
substantially lower than earnings for the comparable periods a year ago,
before deducting restructuring costs. In the quarter, the benefits of
increased unit volumes and lower research and development activity were more
than offset by cost escalation, lower effective selling prices and
incremental charges associated with our continuing review of the carrying
value of all assets. For the year to date, the benefits of increased unit
volumes, lower marketing and administrative activity and lower research and
development activity were more than offset by cost escalation, lower
effective selling prices and incremental charges associated with our
continuing review of the carrying value of all assets. In addition, the 1993
third quarter and year to date benefited from the positive effect of
strategic currency hedges, while the 1994 third quarter and year to date were
adversely impacted by the premium costs for strategic currency hedges.
- - -------------------------------------------------------------------------
<PAGE>
<PAGE> 14
<TABLE>
Earnings (loss) from
Operations by Segment
<CAPTION>
Third Quarter Three Quarters
Excluding Restructuring Costs Excluding Restructuring Costs
(in millions) 1994 1993 Change 1994 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Earnings from Operations
from Continuing Operations
Consumer Imaging $ 269 $ 333 -19% $ 756 $ 799 -5%
Percent of Sales 16.7% 24.6% 18.1% 20.9%
Commercial Imaging $ 94 $ 153 -39% $ 423 $ 554 -24%
Percent of Sales 4.9% 8.5% 7.6% 10.3%
------ ------ ---- ------ ------ ----
Total Earnings from Operations
from Continuing Operations $ 363 $ 486 -25% $1,179 $1,353 -13%
====== ====== ==== ====== ====== ====
</TABLE>
<TABLE>
Earnings (loss) from
Operations by Segment
<CAPTION>
Third Quarter Three Quarters
Including Restructuring Costs Including Restructuring Costs
1994 1993 Change 1994 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) from Operations
from Continuing Operations
Consumer Imaging $ 269 $ 192 40% $ 756 $ 658 15%
Percent of Sales 16.7% 14.2% 18.1% 17.2%
Commercial Imaging $ 94 $ (201) $ 423 $ 200 112%
Percent of Sales 4.9% (11.1%) 7.6% 3.7%
------ ------ ---- ------ ------ ----
Total Earnings (loss) from
Operations from Continuing
Operations $ 363 $ (9) $1,179 $ 858 37%
====== ====== ==== ====== ====== ====
- - --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE> 15
OTHER REVENUES AND COSTS
Earnings from equity interests and other revenues were lower in the quarter
and year to date when compared with the comparable periods of 1993. The
decreases were due to lower earnings from equity interests, lower investment
income and the inclusion of gains from the sale of assets and other items in
1993. The net effect from foreign exchange transactions was a loss of
$6 million in the quarter and a loss of $50 million for the year to date
compared with a loss of $1 million in the 1993 third quarter and a loss of
$23 million in the 1993 year to date, respectively. For continuing
operations, the year-to-date effective tax rate was 37.6%, compared with
42.7% for the 1993 year to date. The higher rate in 1993 was primarily due
to the effects of certain non-deductible restructuring charges.
- - ---------------------------------------------------------------------------
Third Quarter Three Quarters
Net Earnings (Loss) 1994 1993 1994 1993
(in millions)
Amount $193 $(68) $539 $(1,716)
Percent of Sales 5.5%
- - ----------------------------------------------------------------------------
CASH DIVIDENDS
During the third quarter of 1994, a cash dividend of $136 million ($.40 per
share) was declared on the Company's common stock. Total dividends declared
for the year to date amounted to $401 million ($1.20 per share). Total
dividends declared during the 1993 year to date were $492 million ($1.50 per
share).
FINANCIAL POSITION
Cash and marketable securities were $727 million at the end of the third
quarter, compared with $1,966 million at year-end 1993. In connection with
the spin-off of the worldwide chemical business at the end of 1993, the
Company borrowed $1.8 billion in December, 1993. The borrowings were
subsequently assumed by the worldwide chemical business on December 31, 1993.
The proceeds from the borrowings, which were retained by Kodak, were used
during the first nine months of 1994 to redeem debt and interest rate
derivatives, and terminate a Master Lease agreement and a Sale of Receivables
program. Short-term borrowings increased $1,849 million, while long-term
borrowings decreased $2,060 million from year-end 1993. The Company has been
increasing short-term borrowings to redeem long-term borrowings until
proceeds are received from the divestitures of the non-imaging health
businesses. Working capital at the end of the quarter decreased to
$407 million compared with $2,804 million at year-end 1993.
The increase in Capital Stock and Additional Paid-In-Capital since year-end
1993 is primarily attributable to the partial conversion of the 6 3/8%
convertible subordinated debentures and zero coupon convertible subordinated
debentures into Company stock.
The Company expects to have positive operating cash flow for the year and
plans to use the proceeds from the divestitures of the non-imaging health
businesses to further reduce debt and interest rate derivatives, which will
result in material extraordinary and other charges from the early
extinguishment of debt and related interest rate derivatives. On October 3,
1994, the Company announced a tender offer for up to $4.8 billion of its
long-term borrowings. On October 20, 1994, the Company announced that $2.7
billion of the possible $4.8 billion had been tendered during the tender
offer period, which ended on that date. The Company incurred pre-tax losses
related to the tender offer of approximately $160 million which will result
in an extraordinary charge in the fourth quarter of 1994. The Company has
also unwound substantially all of the interest rate derivatives associated
with its debt issues. The Company incurred pre-tax losses related to the
unwind of the derivatives of approximately $160 million in September, which
has been deferred, and approximately $60 million in October. These losses
will be charged to extraordinary and other charges in the fourth quarter of
1994 along with the losses on the debt.
CAPITAL ADDITIONS
Capital additions for the third quarter of 1994 were $187 million compared
with $174 million for the third quarter of 1993. For the 1994 year to date,
capital additions were $814 million versus $612 million a year ago. The
Company was a party to a Master Lease agreement whereby the Company could
lease equipment with the right to buy the equipment anytime at fair market
value. The Company terminated this agreement during the second quarter of
1994 by purchasing approximately $300 million of equipment it has been
leasing. The provision for depreciation for the first three quarters of 1994
was $582 million, compared with $616 million for the comparable period of 1993.
- - ----------------------------------------------------------------------------
<PAGE>
<PAGE> 16
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On October 7, the Company and the US Environmental Protection Agency (EPA)
and Department of Justice (DOJ) announced settlement of a civil complaint
alleging noncompliance by the Company with federal environmental regulations
at the Company's Kodak Park manufacturing site in Rochester, N.Y. The
Company was assessed a penalty of $5 million, and also agreed to conduct a
number of special environmental projects over an eight-year period as an
offset to $3 million in additional penalties. A consent decree was signed
under which the Company is subject to a 12-year compliance schedule
requiring, among other things, that the Company improve the characterization
of its waste, evaluate and upgrade its industrial sewer system, and upgrade
one of its incinerators.
The Company is participating in the EPA's Toxic Substances Control Act (TSCA)
Section 8 (e) Compliance Audit Program. As a participant, the Company has
agreed to audit its files for materials which under current EPA guidelines
would be subject to notification under Section 8 (e) of TSCA and to pay
stipulated penalties for each report submitted under this program. The
Company anticipates that its liability under the Program will be $1,000,000.
In addition to the foregoing environmental actions, the Company has been
designated as a potentially responsible party (PRP) under the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
(the "Superfund" law), or under similar state laws, for environmental
assessment and cleanup costs as the result of the Company's alleged
arrangements for disposal of hazardous substances at fewer than twenty
Superfund sites. With respect to each of these sites, the Company's actual
or potential allocated share of responsibility is small. Furthermore,
numerous other PRPs have similarly been designated at these sites and,
although the law imposes joint and several liability on PRPs, as a practical
matter costs are shared with other PRPs. Settlements and costs paid by the
Company in Superfund matters to date have not been material. Future costs
are also not expected to be material to the Company's financial condition or
results of operations.
The Company and its subsidiary companies are involved in lawsuits, claims,
investigations, and proceedings, including product liability, commercial,
environmental, and health and safety matters, which are being handled and
defended in the ordinary course of business. There are no such matters
pending that the Company and its General Counsel expect to be material in
relation to the Company's business, financial condition, or results of
operations.
Item 5. Other Information
Effective October 31, 1994, the Company completed the divestiture of its
Sterling Winthrop Inc. subsidiary to SmithKline Beecham for $2.925 billion in
cash. Details of the divestiture are contained in a press release issued by
the Company on November 2, 1994, and set forth herein as Exhibit 99. Pro
forma consolidated financial statements of the Company for the year ended
December 31, 1993, excluding the results of the non-imaging health businesses
(including Sterling Winthrop Inc.) that the Company is divesting, are set
forth at Item 7 of Current Report on Form 8-K dated June 30, 1994 and filed
October 17, 1994, as amended by Amendment No. 1 to Current Report on Form 8-K
dated June 30, 1994 and filed October 21, 1994.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits and financial statement schedules required as part of
this report are listed in the index appearing on page 18.
(b) Reports on Form 8-K
No reports on Form 8-K were filed or required to be filed for
the quarter ended September 30, 1994.
<PAGE>
<PAGE> 17
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.
EASTMAN KODAK COMPANY
(Registrant)
Date November 14, 1994
Harry L. Kavetas, Executive Vice President
and Chief Financial Officer
<PAGE> 18
Eastman Kodak Company and Subsidiary Companies
Index to Exhibits and Financial Statement Schedules
Page No.
11. Three Quarters 1994 Computation of Earnings
Per Common Share, Exhibit (11) 19-21
99. November 2, 1994 Press Release 22
10(A). Stock Purchase Agreement among Eastman Kodak Company,
343 Holding Corporation and SmithKline Beecham plc -
Dated as of August 28, 1994. 23-158
10(B). Amendment to the Stock Purchase Agreement among Eastman
Kodak Company, L&F Products Inc. and SmithKline Beecham
plc - Dated as of October 30, 1994. 159-177
10(C). Asset Purchase Agreement by and between Eastman Kodak
Company and Johnson & Johnson - Dated as of
September 2, 1994. 178-272
10(D). Asset Purchase Agreement among Eastman Kodak Company
and L&F Products Inc. and Sterling Winthrop Inc. and
Reckitt & Colman plc - Dated as of September 26, 1994. 273-410
10(E). Amendment to the Asset Purchase Agreement among Eastman
Kodak Company and L&F Products Inc. and Sterling Winthrop
Inc. and Reckitt & Colman plc - Dated as of
October 28, 1994. 411-412
10(F). Asset Purchase Agreement among Eastman Kodak and L&F
Products Inc. and Sterling Winthrop Inc. and MTF
Acquisition Corp. - Dated as of October 13, 1994. 413-533
27. Financial Data Schedule, Exhibit (27) - Submitted
with the EDGAR filing as a second document to this
Form 10-Q.
<PAGE>
<PAGE> 19
<TABLE>
Eastman Kodak Company and Subsidiary Companies
Exhibit (11)
Computation of Earnings Per Common Share
<CAPTION>
Third Quarter Three Quarters
1994 1993 1994 1993
(in millions, except per share amounts)
<S> <C> <C> <C> <C>
PRIMARY:
Earnings (loss) from continuing operations
before extraordinary item and cumulative
effect of changes in accounting principle $ 193 $ (74) $ 633 $ 424
Earnings (loss) from discontinued operations
before cumulative effect of changes in
accounting principle - 7 (81) 41
------ ------ ------- -------
Earnings (loss) before extraordinary item and
cumulative effect of changes
in accounting principle 193 (67) 552 465
Extraordinary item - (1) (13) (13)
------ ------ ------- -------
Earnings (loss) before cumulative effect of
changes in accounting principle 193 (68) 539 452
------ ------ ------- -------
Cumulative effect of changes in accounting
principle from continuing operations - - - (1,649)
Cumulative effect of changes in accounting
principle from discontinued operations - - - (519)
------ ------ ------- -------
Total cumulative effect of changes in
accounting principle - - - (2,168)
------ ------ ------- -------
Net Earnings (Loss) $ 193 $ (68) $ 539 $(1,716)
====== ====== ======= =======
Average number of common shares outstanding 339.4 328.7 334.3 327.7
Primary earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes in
accounting principle $ .57 $ (.23) $ 1.89 $ 1.29
Primary earnings (loss) per share from
discontinued operations before cumulative
effect of changes in accounting principle - .02 (.24) .13
------ ------ ------- -------
Primary earnings (loss) per share before
extraordinary item and cumulative effect of
changes in accounting principle .57 (.21) 1.65 1.42
Extraordinary item - - (.04) (.04)
------ ------ ------- -------
Primary earnings (loss) per share before
cumulative effect of changes in accounting
principle .57 (.21) 1.61 1.38
------ ------ ------- -------
Cumulative effect of changes in accounting
principle from continuing operations - - - (5.04)
Cumulative effect of changes in accounting
principle from discontinued operations - - - (1.58)
------ ------ ------- -------
Total cumulative effect of changes in
accounting principle - - - (6.62)
------ ------ ------- -------
Primary earnings (loss) per share $ .57 $ (.21) $ 1.61 $ (5.24)
====== ====== ======= =======
</TABLE>
<PAGE>
<PAGE> 20
<TABLE>
Eastman Kodak Company and Subsidiary Companies
Exhibit (11)
(Continued)
Computation of Earnings Per Common Share
<CAPTION>
Third Quarter Three Quarters
(in millions) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
FULLY DILUTED:
Earnings (loss) from continuing operations
before extraordinary item and cumulative
effect of changes in accounting principle $ 193 $ (74) $ 633 $ 424
Add after-tax interest expense applicable to:
6 3/8% convertible debentures - 3 - 9
Zero coupon convertible debentures - 11 - 33
------ ------ ------ -------
Adjusted earnings (loss) from continuing
operations before extraordinary item and
cumulative effect of changes in
accounting principle 193 (60) 633 466
Earnings (loss) from discontinued operations
before cumulative effect of changes in
accounting principle - 7 (81) 41
------ ------ ------ -------
Adjusted earnings (loss) before extraordinary
item and cumulative effect of changes in
accounting principle 193 (53) 552 507
Extraordinary item - (1) (13) (13)
------ ------ ------ -------
Adjusted earnings (loss) before cumulative
effect of changes in accounting principle 193 (54) 539 494
------ ------ ------ -------
Cumulative effect of changes in accounting
principle from continuing operations - - - (1,649)
Cumulative effect of changes in accounting
principle from discontinued operations - - - (519)
------ ------ ------ -------
Total cumulative effect of changes in
accounting principle - - - (2,168)
------ ------ ------ -------
Adjusted net earnings (loss) $ 193 $ (54) $ 539 $(1,674)
====== ====== ====== =======
</TABLE>
<PAGE>
<PAGE> 21
<TABLE>
Eastman Kodak Company and Subsidiary Companies
Exhibit (11)
(Continued)
Computation of Earnings Per Common Share
<CAPTION>
Third Quarter Three Quarters
1994 1993 1994 1993
(in millions, except per share amounts)
<S> <C> <C> <C> <C>
Average number of common shares outstanding 339.4 328.7 334.3 327.7
Add-incremental shares under option 5.8 3.9 5.9 3.9
Add-incremental shares applicable to:
6 3/8% convertible debentures - 5.9 - 5.9
Zero coupon convertible debentures - 20.7 - 20.7
------ ------ ------ ------
Adj'd avg. number of shares outstanding 345.2 359.2 340.2 358.2
------ ------ ------ ------
Fully diluted earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes in
accounting principle $ .56 $ (.17) $ 1.86 $ 1.29
Fully diluted earnings (loss) per share from
discontinued operations before cumulative
effect of changes in accounting principle - .02 (.24) .12
------ ------ ------ ------
Fully diluted earnings (loss) per share before
extraordinary item and cumulative effect of
changes in accounting principle .56 (.15) 1.62 1.41
Extraordinary item - - (.04) (.03)
------ ------ ------ ------
Fully diluted earnings (loss) per share before
cumulative effect of changes in
accounting principle .56 (.15) 1.58 1.38
------ ------ ------ ------
Cumulative effect of changes in accounting
principle from continuing operations - - - (5.04)
Cumulative effect of changes in accounting
principle from discontinued operations - - - (1.58)
------ ------ ------ ------
Total cumulative effect of changes in
accounting principle - - - (6.62)
------ ------ ------ ------
Fully diluted earnings (loss) per share $ .56 $ (.15) $ 1.58 $(5.24)
====== ====== ====== ======
</TABLE>
<PAGE>
<PAGE> 22
Exhibit (99)
KODAK COMPLETES STERLING WINTHROP SALE
TO SMITHKLINE BEECHAM
Rochester, N.Y., November 2 -- Eastman Kodak Company announced the completion
of the sale of its Sterling Winthrop Inc. subsidiary to SmithKline Beecham for
$2.925 billion in cash.
SmithKline Beecham purchased 100 percent of the stock of Sterling Winthrop and
thereby acquired the company's worldwide consumer health products business.
SmithKline Beecham has previously announced an agreement to sell the North
American segment of Sterling Winthrop's consumer health products business to
Miles, Inc. a wholly-owned subsidiary of Bayer, AG, of Germany.
The sale marks the second completed transaction in Kodak's divestiture program.
On October 1, Kodak completed the sale of Sterling Winthrop's pharmaceuticals
business to Sanofi, SA, of France for $1.675 billion in cash. Previously
announced agreements for the sale of the Household Products, the DIY Products
business of Kodak's L&F Products unit, and of Kodak's Clinical Diagnostics
business should be completed before year end.
Kodak also will sell Sterling Winthrop's research and development center,
located near Philadelphia, Pa., and its NanoSystems unit in separate
transactions.
NanoSystems is a technology development unit organized to commercialize Kodak's
proprietary small particle development (at the sub-micron level) technology for
pharmaceutical applications. A number of potentially promising drug
applications are in development.
<PAGE>
<PAGE> 23
Exhibit 10(A)
STOCK PURCHASE AGREEMENT
among
EASTMAN KODAK COMPANY
343 HOLDING CORPORATION
and
SMITHKLINE BEECHAM plc
Dated as of August 28, 1994
Circulated September 2, 1994
<PAGE>
<PAGE> 24
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions . . . . . . . . . . . 33
Section 1.2 Other Terms. . . . . . . . . . . . . . . . 45
Section 1.3 Other Definitional Provisions. . . . . . . 45
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase and Sale of Common Stock. . . . . 45
Section 2.2 Post-Closing Adjustments . . . . . . . . . 46
Section 2.3 Closing; Delivery and Payment. . . . . . . 50
Section 2.4 Puerto Rican Cash. . . . . . . . . . . . . 51
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.1 Organization, Qualification and
Authority of Seller. . . . . . . . . . . 55
Section 3.2 Binding Effect . . . . . . . . . . . . . . 56
Section 3.3 Organization, Qualification and
Authority of Sterling. . . . . . . . . . 56
Section 3.4 Ownership of Shares. . . . . . . . . . . . 57
Section 3.5 Investments; Joint Ventures, etc. . . . . 57
Section 3.6 Consents and Approvals . . . . . . . . . . 59
Section 3.7 Non-Contravention. . . . . . . . . . . . . 60
Section 3.8 Financial Statements . . . . . . . . . . . 61
Section 3.9 Litigation and Claims. . . . . . . . . . .
62
<PAGE>
<PAGE> 25
Section 3.10 Taxes. . . . . . . . . . . . . . . . . . . 63
Section 3.11 Employee Benefits. . . . . . . . . . . . . 65
Section 3.12 Compliance with Laws . . . . . . . . . . . 68
Section 3.13 Intellectual Property. . . . . . . . . . . 68
Section 3.14 Labor Matters; Collective
Bargaining Agreements. . . . . . . . . . 70
Section 3.15 Contracts. . . . . . . . . . . . . . . . . 70
Section 3.16 Title to Property. . . . . . . . . . . . . 71
Section 3.17 Absence of Change. . . . . . . . . . . . . 72
Section 3.18 Finders' Fees. . . . . . . . . . . . . . . 73
Section 3.19 Continuing Service and Supply
Arrangements . . . . . . . . . . . . . . 74
Section 3.20 Insurance. . . . . . . . . . . . . . . . . 74
Section 3.21 No Undisclosed Liability . . . . . . . . . 75
Section 3.22 Environmental Matters. . . . . . . . . . . 75
Section 3.23 Other Information. . . . . . . . . . . . . 76
Section 3.24 No Other Representations or Warranties . . 77
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization and Qualification . . . . . . 77
Section 4.2 Binding Effect . . . . . . . . . . . . . . 77
Section 4.3 Corporate Authorization. . . . . . . . . . 78
Section 4.4 Consents and Approvals . . . . . . . . . . 78
Section 4.5 Non-Contravention. . . . . . . . . . . . . 79
Section 4.6 Finders' Fees. . . . . . . . . . . . . . .
80
<PAGE>
<PAGE> 26
Section 4.7 Financial Capability . . . . . . . . . . . 80
Section 4.8 Securities Act . . . . . . . . . . . . . . 80
Section 4.9 No Other Representations or Warranties . . 80
ARTICLE V
COVENANTS
Section 5.1 Access . . . . . . . . . . . . . . . . . . 81
Section 5.2 Conduct of Business. . . . . . . . . . . . 84
Section 5.3 Best Efforts; Good Faith;
Cooperation in Restructuring . . . . . . 88
Section 5.4 Tax Matters. . . . . . . . . . . . . . . . 91
Section 5.5 Post-Closing Obligations to
Certain Employees . . . . . . . . . . . 110
Section 5.6 Compliance with WARN, etc . . . . . . . . 119
Section 5.7 Notification of Certain Matters. . . . . 119
Section 5.8 License Agreements . . . . . . . . . . . .120
Section 5.9 Certain Provisions Relating to
the Restructuring. . . . . . . . . . . .121
Section 5.10 Transfer of Certain Assets and
Liabilities. . . . . . . . . . . . . . .131
Section 5.11 Financial Information. . . . . . . . . . .132
Section 5.12 Retained Employees . . . . . . . . . . . .132
Section 5.13 Management of Certain Liabilities. . . . .132
Section 5.14 Further Assurances . . . . . . . . . . . .134
Section 5.15 Resignations . . . . . . . . . . . . . .
.134
<PAGE>
<PAGE> 27
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of
Purchaser and Seller . . . . . . . . . .135
Section 6.2 Conditions to the Obligations of
Purchaser. . . . . . . . . . . . . . . .136
Section 6.3 Conditions to the Obligations of
Seller . . . . . . . . . . . . . . . . .137
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival . . . . . . . . . . . . . . . . .138
Section 7.2 Indemnification by Purchaser . . . . . . .139
Section 7.3 Indemnification by Seller. . . . . . . . .140
Section 7.4 Indemnification Procedures . . . . . . . .144
Section 7.5 Characterization of Indemnification
Payments . . . . . . . . . . . . . . . .147
Section 7.6 Computation of Losses Subject to
Indemnification. . . . . . . . . . . . .147
ARTICLE VIII
TERMINATION
Section 8.1 Termination. . . . . . . . . . . . . . . .148
Section 8.2 Effect of Termination. . . . . . . . . . .149
<PAGE>
<PAGE> 28
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. . . . . . . . . . . . . . . . . .150
Section 9.2 Amendment; Waiver. . . . . . . . . . . . .151
Section 9.3 Assignment . . . . . . . . . . . . . . . .152
Section 9.4 Entire Agreement . . . . . . . . . . . . .153
Section 9.5 Fulfillment of Obligations . . . . . . . .153
Section 9.6 Parties in Interest. . . . . . . . . . . .154
Section 9.7 Public Disclosure. . . . . . . . . . . . .154
Section 9.8 Return of Information. . . . . . . . . . .154
Section 9.9 Expenses . . . . . . . . . . . . . . . . .155
Section 9.10 Schedules. . . . . . . . . . . . . . . . .155
Section 9.11 GOVERNING LAW; SUBMISSION TO
JURISDICTION; SELECTION OF FORUM . . . .155
Section 9.12 Counterparts . . . . . . . . . . . . . . .156
Section 9.13 Headings . . . . . . . . . . . . . . . . .156
Section 9.14 Severability . . . . . . . . . . . . . . .157
Section 9.15 Structure. . . . . . . . . . . . . . . . .157
<PAGE>
<PAGE> 29
SCHEDULES AND EXHIBITS
ANNEXES
Annex 6.2(c) - Opinion of Seller's Counsel
Annex 6.3(c) - Opinion of Purchaser's Counsel
<PAGE>
<PAGE> 30
SCHEDULES
Schedule 1.1 - Certain Changes
Schedule 2.4(a) - Puerto Rican Cash Schedule
2.4(d) - Puerto Rican Repatriation Schedule 3.3
- - - Organization, Qualification and
Authority of Sterling
Schedule 3.4 - Ownership of Shares Schedule
3.5(a)(i) - Investments; Joint Ventures, etc. Schedule
3.5(a)(ii) - Subsidiaries
Schedule 3.5(b) - Capital Stock of Subsidiaries
Schedule 3.6 - Consents and
Approvals Schedule 3.7 -
Non-Contravention Schedule 3.8(a)(i) -
Financial Statements Schedule 3.8(a)(ii) -
Basis of Presentation and
Exceptions to GAAP Schedule
3.8(c)(i) - Consumer Health Business Net
Sales and Earnings
Schedule 3.8(c)(ii) - Consumer Health Business
Worldwide Net Sales
Schedule 3.9(a) - Litigation and Claims
Schedule 3.9(b) - Orders and Judgments
Schedule 3.10 - Taxes
Schedule 3.11(a) - Benefit Plans
Schedule 3.11(b) - Benefit Plan Litigation
Schedule 3.11(f) - Retiree Benefits
Schedule 3.11(g) - Unfunded Liabilities
Schedule 3.12 - Compliance with Laws
Schedule 3.13(a) - Intellectual Property
Schedule 3.13(b)(i) - Intellectual Property
Infringement - Non-Trademark
Schedule 3.13(b)(ii) - Selected Marks
Schedule 3.13(b)(iii) - Intellectual Property
Infringement - Trademark
Schedule 3.14 - Collective Bargaining Agreements
Schedule 3.15(i) - Contracts
Schedule 3.15(ii) - Validity of Contracts
Schedule 3.15(iii) - Contracts in Default
Schedule 3.16(a) -
Encumbrances Schedule 3.20 -
Insurance Schedule 3.22(b) - Certain Environmental
Matters Schedule 4.1 - Organization and
Qualification Schedule 4.4 - Purchaser Consents
and Approvals Schedule 4.5 - Non-Contravention
Schedule 5.9(j) - Transitional Services Employees
Schedule 5.10(i) - Transferred Real Property
Schedule 5.10(ii) - Transferred Fixtures and
Equipment
Schedule 5.10(iv) - Other Transferred Items
Schedule 5.12 - Retained Employees
Schedule 5.13(a) - Management of Certain
Liabilities
<PAGE>
<PAGE> 31
Schedule 7.3(a)(i) - Disclosed OTC Environmental
Liabilities
Schedule 7.3(a)(ii) - Certain Retained Liabilities
<PAGE>
<PAGE> 32
STOCK PURCHASE AGREEMENT, dated as of August 28,
1994, among EASTMAN KODAK COMPANY, a New Jersey corporation
("Seller") and 343 HOLDING CORPORATION, a Delaware
corporation, on the one hand, and SMITHKLINE BEECHAM plc, an
English corporation ("Purchaser"), on the other hand.
W I T N E S S E T H :
WHEREAS, Seller is indirectly the record and
beneficial owner of all of the issued and outstanding shares
of common stock of Sterling Winthrop Inc., a Delaware
corpora- tion ("Sterling");
WHEREAS, Seller and Sterling have entered into an
Asset Purchase Agreement, dated as of June 22, 1994, with
Sanofi (the "Ethical Asset Purchase Agreement") providing for
the sale by Sterling of the Ethical Transferred Business;
WHEREAS, Seller and Sterling have agreed to transfer
the L&F Transferred Business prior to the Closing and to enter into
the L&F Continuing Services Agreement;
WHEREAS, Seller and Sterling will, to the extent set
forth herein and as otherwise reasonably practicable, complete
the Restructuring prior to the consummation of the transac-
tions contemplated hereby;
WHEREAS, Seller has agreed to manage on behalf of
Sterling environmental remediation of certain sites and
certain other environmental and other contingent liabilities
and to indemnify Purchaser for all liabilities and expenses
<PAGE>
<PAGE> 33
(including administrative expenses), arising out of,
or relating to, such remediation and liabilities; and
WHEREAS, the parties hereto desire that Seller sell
and transfer to Purchaser and Purchaser purchase from Seller
all of the issued and outstanding common stock of Sterling
(the "Shares"), which constitutes all of the outstanding
capital stock of Sterling, upon the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein, and subject to
and on the terms and conditions herein set forth, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions. As used in this
Agreement, the following terms shall have the meanings set
forth or as referenced below:
"Accounts Payable to Seller" shall mean all U.S. Intercompany
Accounts Payable of the Continuing Business that are
outstanding at any time prior to the Closing to
(x) Seller or (y) a U.S. Affiliate of Seller that does
not constitute part of the Continuing Business.
"Accounts Receivable from Seller" shall mean all U.S.
Intercompany Accounts Receivable of the Continuing
Business that are outstanding at any time prior to the
Closing from (x) Seller or (y) a U.S. Affiliate of Seller
that does not constitute part of the Continuing Business.
"Adjusted Closing Balance Sheet" shall have the meaning set
forth in Section 2.2(b).
<PAGE>
<PAGE> 34
"Affiliate" shall mean, with respect to any Person, any
Person
directly or indirectly controlling, controlled by, or
under common control with, such other Person at any time
during the period for which the determination of
affiliation is being made.
"Affiliate of Seller" shall refer to one or more Affiliates of
Seller designated by Seller to acquire certain assets and
assume certain liabilities of Sterling as contemplated in
Sections 2.2, 5.9, 5.10 and 5.12 hereof.
"Agreement" shall mean this Agreement, as the same may be
amended or supplemented from time to time in accordance
with the terms hereof.
"Balance Sheet" shall mean the unaudited pro forma consoli-
dated balance sheet of the Continuing Business at
December 31, 1993, which is attached as
Schedule 3.8(a)(i) hereto, including the notes thereto
and information relating thereto set forth in
Schedule 3.8(a)(ii) hereto.
"Benefit Plans" shall have the meaning set forth in
Section 3.11(a).
"Books and Records" shall mean all books, ledgers, files,
reports, plans and operating records of, or maintained
by, the Continuing Business (it being understood that,
pursuant to the Restructuring, originals of certain of
such items maintained by, but not primarily related to,
the Continuing Business may be transferred, in which
case, Books and Records shall refer to copies of such
items).
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York City are
authorized or obligated by law or executive order to
close.
"Chosen Courts" shall have the meaning set forth in Section
9.11.
"Claim Notice" shall have the meaning set forth in Sec-
tion 7.4.
"Closing" shall mean the closing of the transactions contem-
plated by this Agreement.
"Closing Balance Sheet" shall have the meaning set forth in
Section
2.2(a).
<PAGE>
<PAGE> 35
"Closing Date" shall have the meaning set forth in Sec-
tion 2.3(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"COLI" shall mean the corporate-owned life insurance of
Sterling.
"Competition Laws" shall mean statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines,
and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
"Confidentiality Agreement" shall mean the Agreement, dated
May 26, 1994 between Purchaser and Seller.
"Consumer Health Business" shall mean the Consumer Health
Group of Sterling as described in all material respects
in the Confidential Memorandum, dated May 1994, provided
to Purchaser.
"Continuing Business" shall mean that portion of the business
of Sterling that would continue if the Restructuring were
given effect at the date hereof.
"Contracts" shall mean any agreements, contracts, mortgages,
bonds, notes, indentures, leases, purchase orders,
arrangements, commitments and licenses, whether written
or oral.
"CPA Firm" shall have the meaning set forth in Section 2.2(b).
"Current Assets" shall mean all current assets of the Continu-
ing Business, other than (i) cash (including any Puerto
Rican Cash), (ii) short-term investments and
(iii) Accounts Receivable from Seller.
"Current Liabilities" shall mean all current liabilities of
the Continuing Business other than (i) short-term
indebtedness for money borrowed, (ii) Accounts Payable to
Seller and (iii) accrued and unpaid U.S. Federal, state
and local income Taxes with respect to the taxable
periods or portions thereof, ending on the close of
business on the Closing Date.
"Disclosed OTC Environmental Liabilities" shall mean
liabilities of the Continuing Business under any
Environmental Law in respect of the items listed on
Schedule 7.3(a)(i) hereto (it being understood solely
for
<PAGE>
<PAGE> 36
purposes of clarification that Disclosed OTC Environmental
Liabilities excludes any item listed on Schedule 5.13(a)).
"Due Date" shall mean, with respect to any Tax Return, the
date such return is due to be filed (taking into account
all applicable extensions).
"Employees" shall mean all current employees of Sterling and
its Subsidiaries employed in the Continuing Business and
all former employees of Sterling, its predecessors and
their respective subsidiaries who, immediately prior to
the time they ceased to be employees of any such entity,
were employed in the Continuing Business.
"Encumbrances" shall mean liens (including any liens for
Taxes), charges, encumbrances, security interests,
options, or any other restrictions or third party rights.
"Enhanced Pension Letter Agreements" shall mean the Enhanced
Pension Letter Agreements referred to on Sched-
ule 3.11(a).
"Environmental Law" shall mean any applicable federal, state,
local or foreign law, statute, ordinance, rule,
regulation, code, order, judgment, decree or injunction
(other than any Tax Laws) relating to (x) the protection
of the environment (including, without limitation, air,
water vapor, surface water, groundwater, drinking water
supply, surface or subsurface land), (y) occupational
safety and health to the extent it relates to exposure to
Hazardous Substances or (z) the exposure to, or the use,
storage, recycling, treatment, generation,
transportation, processing, handling, labelling,
protection, release or disposal of, radioactive materials
or Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section
3.11(c).
"Estimated Residual Cash Amount" shall mean Seller's estimate
of the Residual Cash Amount to be delivered to Purchaser
pursuant to Section 2.3(b).
"Ethical Asset Purchase Agreement" shall have the meaning set
forth in the Recitals hereto.
<PAGE>
<PAGE> 37
"Ethical Excluded Assets" shall mean the "Excluded Assets" as
such term is defined in the Ethical Asset Purchase
Agreement.
"Ethical Excluded Liabilities" shall mean the "Excluded
Liabilities" as such term is defined in the Ethical Asset
Purchase Agreement.
"Ethical Transferred Business" shall mean the "Transferred
Business" as such term is defined in the Ethical Asset
Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Financial Statements" shall have the meaning set forth in
Section 3.8(a).
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authorizations" shall mean all licenses,
permits, certificates and other authorizations and
approvals required to carry on the Continuing Business
or, with respect to the Seller, to perform its obliga-
tions under this Agreement, as the case may be, as
currently conducted under the applicable laws, ordinances
or regulations of any Governmental Entity.
"Governmental Entity" shall mean any supranational, national,
federal, state or local judicial, legislative, executive
or regulatory authority.
"Hazardous Substances" shall mean any hazardous substances
within the meaning of 101(14) of CERCLA, 42 U.S.C.
9601(14), or any pollutant or constituent that is regu-
lated under any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improve-
ments Act of 1976, as amended.
"Indemnified Liability" shall mean a liability of Sterling
that neither arises out of nor is primarily related to
(i) the Consumer Health Business, (ii) activities
relating to headquarters operations, corporate staff of
Sterling and the Consumer Health Group staff of Sterling
located at 90 Park Avenue (including the lease at 90 Park
Avenue), (iii) the assets and liabilities transferred to
Sterling pursuant to the Restructuring, or (iv) the items
listed on Schedule 5.13(a).
<PAGE>
<PAGE> 38
"Indemnified Parties" shall have the meaning set forth in
Sec-
tion 7.3(a).
"Indemnifying Party" shall have the meaning set forth in Sec-
tion 7.4.
"Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress, assumed
names, trade names and other indications of origin, the
goodwill associated with the foregoing and registrations
in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such
registration or application; inventions, discoveries and
ideas, whether patentable or not in any jurisdiction;
patents, applications for patents (including, without
limitation, divisions, continuations, continuations in-
part and renewal applications), and any renewals,
extensions or reissues thereof, or supplementary patent
certificates derived therefrom, in any jurisdiction; non-
public information, trade secrets and confidential
information and rights in any jurisdiction to limit the
use or disclosure thereof by any Person; writings and
other works, whether copyrightable or not in any
jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual
property or proprietary rights; technologies, whether
developed or currently under development; and any claims
or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
"Investments" shall have the meaning set forth in Sec-
tion 3.5(a).
"Kodak Transitional Services Agreement" shall have the meaning
set forth in Section 5.9(j) hereto.
"L&F Continuing Services Agreements" shall have the meaning
set forth in Section 5.9(i) hereto.
"L&F Purchase Agreement" shall mean the agreement or agree-
ments to be entered into among the purchaser or
purchasers of the L&F Transferred Business, Seller and
the Affiliate of Seller to which the L&F Transferred
Business is transferred pursuant to Section 5.9 hereof.
"L&F Transferred Business" shall mean the business of Sterling
conducted by the L&F Products division of Sterling and
the assets and liabilities primarily related thereto
(including the manufacturing, marketing, sales,
<PAGE>
<PAGE> 39
distribution, support operations and research and
development activities primarily related thereto and all
inventories and other assets and liabilities of such
business).
"Laws" shall include any federal, state, foreign or local law,
statute, ordinance, rule, regulation, order, judgment or
decree.
"Losses" shall have the meaning set forth in Section 7.2.
"Material Adverse Change" shall mean a change that has had a
Material Adverse Effect.
"Material Adverse Effect" shall mean an effect that is materi-
ally adverse to the value or the business, results of
operations, financial condition or prospects of the
Continuing Business taken as a whole, but shall exclude
any change or development (x) involving a prospective
change arising out of any proposed or adopted national
healthcare legislation, or any other proposal or
enactment by any governmental or regulatory authority, in
any case similarly affecting the pharmaceutical industry
generally or (y) reflected on Schedule 1.1.
"Nanoparticulate Business Unit" shall mean the nanoparticulate
technology owned or used by Sterling, including all
related Intellectual Property primarily relating thereto,
and all facilities, equipment and other assets of
Sterling primarily relating to the research, development
and production of nanoparticulates (together with all
liabilities primarily relating thereto).
"Net Working Capital" shall mean (x) Current Assets minus
(y) Current Liabilities.
"Nonmedical Leave" shall mean maternity or paternity leave,
leave under the Family and Medical Leave Act of 1993,
educational leave, military leave with veteran's reem-
ployment rights under federal law, or personal leave
(unless any of such is determined to be a medical leave).
"Notice Period" shall have the meaning set forth in Sec-
tion 7.4.
"OTC Portion" shall have the meaning assigned to such term in
the Ethical Asset Purchase Agreement.
"OTC Products Liability" shall mean all products liability
(whether in contract, tort, strict liability or
otherwise) of the Continuing Business (other than any
<PAGE>
<PAGE> 40
liability constituting an Indemnified Liability) arising
out of the manufacture or sale prior to the Closing by
the Continuing Business of any particular item or
product.
"OTC Venture" shall have the meaning assigned to such term in
the Ethical Asset Purchase Agreement.
"Pension Plan" shall have the meaning set forth in Sec-
tion 3.11(b).
"Permitted Encumbrances" shall have the meaning set forth in
Section 3.16(a).
"Person" shall mean an individual, a corporation, a partner-
ship, an association, a trust or other entity or
organization.
"Plans" shall have the meaning set forth in Section 3.11(b).
"Policies" shall have the meaning set forth in Section 3.20.
"Pre-Alliance Period" shall mean, with respect to each asset
constituting part of the OTC Portion, the period prior to
the date on which such asset was contributed to the OTC
Venture.
"Prime Rate" shall mean the annual rate of interest as
announced by Citibank, N.A. as its prime rate of interest
in effect on the Closing Date for the purpose of
determining the interest rates charged by it for United
States dollar commercial loans made in the United States.
"Puerto Rican Cash" shall mean the assets of Sterling
Pharmaceuticals Inc. that are subject to the terms of
Section 2.4.
"Puerto Rico Pension Plan" shall have the meaning set forth in
Section 5.5(d).
"Purchase Price" shall have the meaning set forth in Sec-
tion 2.1.
"Purchaser" shall have the meaning set forth in the recitals.
"Purchaser Indemnified Parties" shall have the meaning set
forth in Section 7.3(a).
"Recipient" shall have the meaning set forth in Sec-
tion 5.4(f).
<PAGE>
<PAGE> 41
"Requested Amount" shall have the meaning set forth in Sec-
tion 5.4(d)(iv).
"Required Approvals" shall mean all authorizations, consents,
orders or approvals of, permits or licenses from, or
declarations or filings with any Governmental Entity, and
all third party consents, in each case necessary to
effect the transactions contemplated by this Agreement in
all material respects and to conduct the Continuing
Business as previously conducted in all material
respects.
"Residual Cash Amount" shall mean (x) the sum of (i) cash,
(ii) short-term investments (in the case of each of (i)
and (ii), other than any Puerto Rican Cash) (iii) the
gross cash value of COLI and (iv) the amount paid by
Sterling in respect of Stay Bonuses (net of any tax
savings realized in respect thereof), minus (y) the sum
of (i) indebtedness and (ii) borrowings against COLI, and
(iii) 65% of the Specified Long-Term Obligations, in each
case as derived from the Closing Balance Sheet or the
Adjusted Closing Balance Sheet, as the case may be.
"Restructuring" shall refer to the following transactions: (i)
the transactions contemplated by the Ethical Asset
Purchase Agreement; (ii) the transfer or sale by Sterling
of the L&F Transferred Business and Sterling's entering
into the Kodak Transitional Services Agreements and the
L&F Continuing Services Agreements, all as described in
Section 5.9 hereof; (iii) the sale or transfer of the UPT
Facility and Sterling's Nanoparticulate Business Unit as
described in Section 5.9 hereof; (iv) the acquisition by
one or more Affiliates of Seller of certain assets of
Sterling and the assumption by one or more Affiliates of
Seller of certain liabilities of Sterling as set forth in
Section 5.10 hereof; (v) the disposition of Sterling's
Phisoderm business in the United States, Canada and
Puerto Rico; (vi) the adoption by Sterling of the
Enhanced Pension Letter Agreements; (vii) the transfer to
Seller or an Affiliate of Seller of the proceeds in
respect of the transactions described in clauses (i),
(ii), (iii) and (v); (viii) the transfer to Seller or an
Affiliate of Seller of certain Employees of Sterling as
provided in Section 5.12 hereof; (ix) the cancellation or
settlement of all Accounts Payable to Seller and Accounts
Receivable from Seller; and (x) the transactions and
information contemplated by Section 2.4 hereof.
"Retirement Plan Employees" shall have the meaning set forth
in Section 5.5(b)(ii).
<PAGE>
<PAGE> 42
"Royal Insurance Litigation" shall mean the Royal Insurance
Litigation set forth on Schedule 3.9(a).
"Sanofi" shall mean Sanofi, a societe anonyme organized under
the laws of the Republic of France.
"Savings Plan Employees" shall have the meaning set forth in
Section 5.5(b)(i).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selected Marks" shall have the meaning set forth in Section
3.13(b)(ii) hereto.
"Seller" shall have the meaning set forth in the recitals.
"Seller Indemnified Parties" shall have the meaning set forth
in Section 7.2.
"Seller Retirement Plan" shall have the meaning set forth in
Section 5.5(b)(ii).
"Seller Savings Plan" shall have the meaning set forth in
Section 5.5(b)(i).
"Seller's Objection" shall have the meaning set forth in
Section 2.2(b).
"Settlement Payment" shall have the meaning set forth in
Section 5.4(d)(iv).
"Shared Intellectual Property" shall have the meaning assigned
thereto in the Ethical Asset Purchase Agreement.
"Shares" shall have the meaning set forth in recitals hereto.
"Specified Long-Term Obligations" shall mean the obligations
of Sterling to Sanofi, pursuant to Section 2.5(c) of the
Ethical Asset Purchase Agreement, and the obligations of
Sterling to the purchaser or purchasers of the L&F
Transferred Business, pursuant to the L&F Purchase
Agreement, in respect of the Sterling Winthrop Inc.
Deferred Compensation Plan (currently estimated to be
$23.0 million in the aggregate) and $1.6 million in
respect of the Sterling Winthrop Inc. Affiliates Phantom
Stock Appreciation Rights Plan in respect of specified
active employees of Sterling.
<PAGE>
<PAGE> 43
"Stay Bonuses" shall mean bonuses to be paid to certain
employees of Sterling pursuant to the agreements listed
on Schedule 3.11(a).
"Sterling" shall have the meaning set forth in the recitals
hereto.
"Subsidiaries" shall mean the Investments as to which Sterling
owns, directly or indirectly, or otherwise controls, 50%
or more of the voting shares or other similar interests
after giving effect to the Restructuring.
"Tax Audit" shall have the meaning set forth in
Section 5.4(f).
"Tax Item" shall mean, with respect to Taxes, any item of
income, gain, deduction, loss or credit or any other tax
attribute.
"Tax Law" shall mean any Law relating to Taxes.
"Tax Package" shall have the meaning set forth in
Section 5.4(e)(i).
"Tax Returns" shall mean all reports and returns required to
be filed with respect to Taxes.
"Taxes" shall mean all federal, state, local or foreign taxes,
including, but not limited to, income, gross receipts,
windfall profits, alternative minimum, value added,
severance, property, production, sales, use, license,
excise, franchise, employment, withholding or similar
taxes, together with any interest, additions or penalties
with respect thereto and any interest in respect of such
additions or penalties.
"Transfer Taxes" shall have the meaning set forth in Sec-
tion 5.4(g).
"Transferee Pension Plan" shall have the meaning set forth in
Section 5.5(b)(ii).
"Transferee Savings Plan" shall have the meaning set forth in
Section 5.5(b)(i).
"Transferred Businesses" shall mean the entities, assets and
liabilities to be transferred out of Sterling or its
Affiliates or sold by Seller, Sterling or the Affiliates
of either of them, in either case pursuant to the
Restructuring.
<PAGE>
<PAGE> 44
"Undisclosed OTC Environmental Liabilities" shall
mean
liabilities of the Continuing Business under
Environmental Laws arising from conditions or
circumstances existing as of the Closing Date, other than
routine expenses incurred after the Closing Date in the
ordinary course of business consistent with historical
practice required to maintain compliance with
Environmental Laws, that were not disclosed on Sched-
ule 7.3(a)(i) hereto (other than an Unknown OTC
Environmental Liability). Items disclosed on
Schedule 5.13(a) shall be deemed not to be Undisclosed
OTC Environmental Liabilities.
"Unknown OTC Environmental Liabilities" shall mean liabilities
of the Continuing Business under Environmental Laws
arising from conditions or circumstances of which Seller
did not have knowledge as of the date hereof and shall
exclude each Disclosed OTC Environmental Liability,
Indemnified Liability and item disclosed on Schedule
5.13(a). For purposes of this paragraph, "knowledge"
means the actual knowledge of employees of Seller and
Sterling charged with environmental matters.
"UPT Facility" shall mean Sterling's facility known as the UPT
facility located in Upper Providence Township,
Pennsylvania, and the assets and liabilities primarily
related thereto.
"U.S. Affiliate of Seller" shall mean any Affiliate of Seller
(other than Sterling Pharmaceuticals, Inc.) incorporated
in a jurisdiction located in the United States (other
than Puerto Rico).
"U.S. Antitrust Laws" shall mean and include the Sherman Act,
as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other
federal and state statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other
laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of
monopolization or restraint of trade.
"U.S. Intercompany Accounts Payable of the Continuing
Business" shall mean accounts payable of the Continuing
Business that arise out of the portions of the Continuing
Business conducted in the United States.
"U.S. Intercompany Accounts Receivable of the Continuing
Business" shall mean accounts receivable of the
Continuing Business that arise out of the portions of the
Continuing Business conducted in the United
States.
<PAGE>
<PAGE> 45
"WARN" shall mean the Worker Adjustment and Retraining Notifi-
cation Act.
Section 1.2 Other Terms. Other terms may be
defined elsewhere in the text of this Agreement and, unless
otherwise indicated, shall have such meaning throughout this
Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder"
and words of similar import, when used in this Agreement,
shall refer to this Agreement as a whole and not to any parti-
cular provision of this Agreement.
(b) The terms defined in the singular shall have
a comparable meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United
States dollars.
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase and Sale of Common Stock. On
the terms and subject to the conditions set forth herein, at
the Closing, Seller agrees to cause 343 Holding Corporation,
and 343 Holding Corporation agrees, to sell and transfer to
Purchaser, and Purchaser agrees to purchase from 343 Holding
Corporation and Seller, the Shares, for an aggregate purchase
price of $2,925,000,000 (the "Purchase Price") subject to
adjustment as provided in Section 2.3 hereof.
<PAGE>
<PAGE> 46
Section 2.2 Post-Closing Adjustments.
(a) Within 45 days following the Closing, Purchaser
shall prepare, or cause to be prepared, and deliver to
Seller a Closing Date consolidated balance sheet (the
"Closing Balance Sheet"), which shall set forth the assets and
liabili- ties of the Continuing Business as of the Closing
Date and shall be prepared substantially in accordance with
the principles and methods set forth in Schedule 3.8(a)(ii)
applied on a basis consistent with the Balance Sheet. In no
event will purchase accounting adjustments relating to the
purchase of the Shares or the Restructuring be made to the
Closing Balance Sheet. The parties acknowledge that if any
portion of the Restructuring has not been completed at the
time of the Closing, the Closing Balance Sheet will be
prepared on a pro forma basis as if the Restructuring had
been completed at such time.
(b) Seller and Seller's accountants shall, within
20 days after the delivery by Purchaser of the Closing Balance
Sheet, complete their review of (i) the Residual Cash Amount
and (ii) Net Working Capital, in each case derived from the
Closing Balance Sheet. In the event that Seller determines
that the Residual Cash Amount or Net Working Capital, as
derived from the Closing Balance Sheet, has not been deter-
mined on the basis set forth in Section 2.2(a) hereof, Seller
shall inform Purchaser in writing (the "Seller's Objection"),
setting forth a specific description of the basis of Seller's
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<PAGE> 47
Objection and the adjustments to the Residual Cash Amount or
Net Working Capital which Seller believes should be made, on
or before the last day of such 20-day period. Purchaser shall
then have 20 days to review and respond to Seller's
Objection. If Purchaser and Seller are unable to resolve all
of their disagreements with respect to the determination of
the foregoing items within 10 days following the completion of
Purchaser's review of Seller's Objection, they shall refer
their remaining differences to Arthur Andersen or another
internationally recognized firm of independent public
accountants as to which Seller and Purchaser mutually agree
(the "CPA Firm"), who shall, acting as experts and not as
arbitrators, determine on the basis of the standard set forth
in Section 2.2(a) hereof, and only with respect to the
remaining differences so submitted, whether and to what
extent, if any, the Residual Cash Amount or Net Working
Capital, as derived from the Closing Balance Sheet, requires
adjustment. The parties shall instruct the CPA Firm to
deliver its written determination to Purchaser and Seller no
later than the twentieth day after the remaining differences
underlying the Seller's Objection are referred to the CPA
Firm. The CPA Firm's determination shall be conclusive and
binding upon Purchaser and Seller. The fees and disbursements
of the CPA Firm shall be shared equally by Purchaser and
Seller. Purchaser and Seller shall (and Purchaser shall cause
Sterling to) make readily available to the CPA Firm all
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<PAGE> 48
relevant books and records and any work papers (including
those of the parties' respective accountants) relating to the
Balance Sheet and the Closing Balance Sheet and all other
items reasonably requested by the CPA Firm. The "Adjusted
Closing Balance Sheet" shall be (i) the Closing Balance Sheet
in the event that (x) no Seller's Objection is delivered to
Purchaser during the 20-day period specified above or
(y) Seller and Purchaser so agree, (ii) the Closing Balance
Sheet, adjusted in accordance with the Seller's Objection, in
the event that Purchaser does not respond to Seller's
Objection within the 20-day period following receipt by
Purchaser of Seller's Objection, or (iii) the Closing Balance
Sheet, as adjusted by either (x) the agreement of Seller and
Purchaser or (y) the CPA Firm. In the event that the adjust-
ment of the Closing Balance Sheet pursuant to this Section
2.2(b) discloses that it is appropriate to include an item in
the calculation of Net Working Capital that had been omitted
from the Closing Balance Sheet or to omit an item in the
calculation of Net Working Capital that had been included in
the Closing Balance Sheet, Purchaser shall prepare a revised
Balance Sheet including or omitting such item, as the case
may be, as at the date thereof.
(c) Purchaser shall, and shall cause Sterling to,
provide Seller and its accountants (i) all data and financial
statements reasonably requested by Seller and (ii) full access
to the Books and Records, any other information, including
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<PAGE> 49
work papers of its accountants, and to any employees to the
extent necessary for Seller to review the Closing Balance
Sheet and the Adjusted Closing Balance Sheet.
(d) Within five Business Days following issuance of
the Adjusted Closing Balance Sheet, the adjustment payments
payable pursuant to this Section 2.2(d) shall be paid by wire
transfer of immediately available funds to a bank account
designated by Purchaser or Seller, as the case may be,
together with interest thereon at the Prime Rate from and
including the Closing Date to but not including the date of
payment. Purchaser or Seller, as the case may be, shall make
adjustment payments in respect of Net Working Capital in an
amount equal to the difference between: (x) Net Working
Capital as derived from the Balance Sheet and (y) Net Working
Capital as derived from the Adjusted Closing Balance Sheet.
The adjustment payment in respect of Net Working Capital will
be made by Seller to Purchaser to the extent that Net Working
Capital as derived from the Adjusted Closing Balance Sheet is
less than Net Working Capital as derived from the Balance
Sheet and by Purchaser to Seller to the extent that Net
Working Capital as derived from the Adjusted Closing Balance
Sheet is greater than Net Working Capital as derived from the
Balance Sheet. Purchaser or Seller, as the case may be,
shall
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<PAGE> 50
make adjustment payments in respect of residual cash in an
amount equal to the difference between: (x) the Estimated
Residual Cash Amount and (y) the Residual Cash Amount. The
adjustment payment in respect of residual cash will be made by
Seller to Purchaser to the extent that the Residual Cash
Amount is less than the Estimated Residual Cash Amount and by
Purchaser to Seller to the extent that the Residual Cash
Amount is greater than the Estimated Residual Cash Amount.
Section 2.3 Closing; Delivery and Payment.
(a) The Closing shall take place at the offices of
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 at
10:00 A.M. New York City time, on the later of (i) October
15, 1994, or (ii) 10 Business Days after the closing of the
transactions under the Ethical Asset Purchase Agreement, in
either event only if all of the conditions precedent
specified in Article VI have been satisfied or waived;
provided that in any event the Closing shall occur no later
than November 30, 1994; or at such other time and place as
the parties hereto may mutually agree. The date on which the
Closing occurs is called the "Closing Date".
(b) No later than five Business Days prior to the
Closing Date, Seller shall deliver to Purchaser Seller's
determination of the Estimated Residual Cash Amount.
(c) On the Closing Date, Seller shall cause 343
Holding Corporation, and 343 Holding Corporation shall,
deliver to Purchaser certificates representing the Shares
duly
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<PAGE> 51
endorsed and in form for transfer to Purchaser, and Purchaser
shall pay to Seller (i) the Purchase Price for the Shares and
(ii) the Estimated Residual Cash Amount in immediately
available funds to an account designated by Seller not less
than two Business Days prior to the Closing.
Section 2.4 Puerto Rican Cash.
(a) On the Closing Date, Sterling will own all of
the stock of Sterling Pharmaceuticals Inc. ("SPI"), a
corporation formed under the laws of the State of Arkansas
which is a "936 corporation" within the meaning of section
936 of the Code. As of the date of this Agreement, SPI has
agreed to invest $126,718,823 (the "Invested Amount") pursuant
to certain restrictions which have entitled, and, in the
future, will entitle SPI to the benefit of reduced Puerto
Rican tollgate taxes upon the distribution of the Invested
Amount. If the entire Invested Amount is distributed in the
future in a manner that reflects the aforementioned
restrictions, the distributions will be subject to a tollgate
tax of $4,127,443. If the Invested Amount were distributed
prematurely, SPI would be subject to Puerto Rican tollgate tax,
recapture tax, recapture surcharge and recapture interest in
the amount of $39,175,289, an increase of $35,047,846. The
amounts set forth in this Section 2.4(a) are set forth in
greater detail on Schedule 2.4(a).
(b) For its fiscal year ending October 31, 1993,
SPI earned $65,820,000 which SPI will distribute to Sterling
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<PAGE> 52
between the date of this Agreement and the Closing Date,
subject to a 10 percent Puerto Rican tollgate tax.
(c) For its fiscal year ending October 31, 1994,
(the "1994 Year"), SPI expects to earn approximately $75
million. SPI plans to invest such portion (one-half under
current Puerto Rican law) of the actual amount it earns for
the 1994 Year (the "1994 Invested Amount") in a manner and
for such period (currently five years) that will permit SPI to
distribute the total 1994 earnings subject to a reduced Puerto
Rican tollgate tax.
(d) The Seller and Purchaser agree that neither the
Purchase Price nor any adjustment thereto is intended to
compensate Seller for the Invested Amount and the 1994
Invested Amount owned by SPI, and Seller and Purchaser agree
that they will act together to preserve the value of such
investments for Seller as if Seller retained ownership of
Sterling and SPI distributed to Sterling the Invested Amount
and the 1994 Invested Amount in a manner that limits the
Puerto Rican tollgate tax on the Invested Amount to
$4,127,443 and on the 1994 Invested Amount to that tollgate
rate which would be applicable to a distribution of the 1994
Invested Amount if that amount is invested as provided in
Section 2.4(c). In the case of the Invested Amount, the
availability of distributions which will limit the tollgate
tax to $4,127,443 is set forth on Schedule
2.4(d).
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<PAGE> 53
(e) For the purpose of implementing the goal stated
in Section 2.4(d), Purchaser will cause SPI to invest and
reinvest its assets in a manner that will achieve such goal
and will cause SPI to pay directly to Seller as additional
purchase price such maximum portions of the Invested Amount as
may be distributed in accordance with Schedule 2.4(d) and such
maximum portions of the 1994 Invested Amount as may be
distributed without increasing the otherwise applicable
minimum Puerto Rican tollgate tax, in each case, net of the
tollgate tax and any other Taxes for which Seller has agreed
to indemnify the Purchaser Indemnified Parties pursuant to
Section 5.4(b) hereof, and, in addition, to pay to Seller as
additional purchase price any remaining assets of SPI, net of
applicable Puerto Rican tollgate tax and any other Taxes for
which Seller has agreed to indemnify the Purchaser
Indemnified Parties pursuant to Section 5.4(b) hereof.
(f) Seller shall appoint an individual (including
any successor selected by Seller) who, at Seller's expense,
will be designated as SPI's sole agent, with a power of
attorney that is not revocable by any person other than
Seller, to manage the investments and reinvestment of SPI's
assets in the manner described in this Section 2.4 and to
cause SPI to make payments directly to Seller in the manner
prescribed in this Section 2.4.
(g) Purchaser will not permit Sterling or any other
entity to transfer any assets to, or remove any assets from,
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<PAGE> 54
SPI, except as permitted under this Section 2.4 and Purchaser
will not permit Sterling to liquidate SPI or transfer SPI
stock to any other person.
(h) The foregoing to the contrary notwithstanding,
Seller will request a ruling or closing agreement from the
Puerto Rican tax authorities that will permit SPI to transfer
all of its assets to Seller or a directly or indirectly
wholly owned subsidiary of Seller without incurring any
greater
Puerto Rican taxes than would be the case if the provisions of
Section 2.4(a) through (g) were implemented as prescribed. In
the event such a ruling or closing agreement is obtained prior
to the Closing Date, Seller will cause SPI to transfer its
assets to Kodak or its designated subsidiary immediately and
Section 2.4(a) through (g) shall become null and void. If the
requested ruling or closing agreement is not obtained prior to
the Closing Date, Seller will be authorized by Purchaser or
SPI, as necessary to continue to seek the requested ruling or
closing agreement and, in the event it is obtained, SPI
immediately thereafter will transfer all of its assets
to Kodak or its designated subsidiary as additional
purchase price and Sections 2.4(a) through (g) shall
thereafter be null and void.
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<PAGE> 55
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as of
the date hereof and as of the Closing Date (except (i) that
representations and warranties that are made as of a specific
date need be true only as of such date, and (ii) to the
extent any representation or warranty may be deemed to relate
to any item constituting an Indemnified Liability, an OTC
Products Liability, an Undisclosed OTC Environmental
Liability, an Unknown OTC Environmental Liability, or any item
listed on Schedule 5.13(a), as to which no representations
and warranties other then Section 3.22 are made herein) as
follows:
Section 3.1 Organization, Qualification and
Authority of Seller. Each of Seller and 343 Holding
Corporation is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
its incorporation and has full corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance
by Seller and 343 Holding Corporation of this Agreement has
been duly and validly authorized by Seller and 343 Holding
Corporation and, subject to obtaining the approval of the
Board of Directors of Seller, no other corporate proceedings
on the part of Seller, 343 Holding Corporation or any of
their Affiliates are necessary in connection with the
execution,
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<PAGE> 56
delivery and performance by Seller and 343 Holding Corporation
of this Agreement.
Section 3.2 Binding Effect. This Agreement has
been duly and validly executed and delivered by Seller and 343
Holding Corporation and constitutes a valid and legally
binding obligation of Seller and 343 Holding Corporation
enforceable against Seller and 343 Holding Corporation in
accordance with its terms.
Section 3.3 Organization, Qualification and
Authority of Sterling. Sterling is a corporation duly organ-
ized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has all requisite
corporate power and authority to own its assets and to carry
on its business as currently conducted. Except as set forth
on Schedule 3.3 hereto, Sterling is duly qualified to do
business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its
assets or the conduct of its business requires such
qualification, except where the failure to be so qualified or
in good stand- ing, as the case may be, would not have a
Material Adverse Effect, can be cured without material expense
and will not result in the unenforceability of any material
Contract. Complete and correct copies of the certificate
of incorporation and by-laws of Seller and Sterling will
be delivered to Purchaser prior to
Closing.
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<PAGE> 57
Section 3.4 Ownership of Shares. The Shares
constitute all of the issued and outstanding capital stock of
Sterling. There are no other classes of capital stock of
Sterling authorized or outstanding. The Shares are duly
authorized, validly issued, fully paid and non-assessable.
Seller owns all of the outstanding stock of 343 Holding
Corporation. 343 Holding Corporation owns the Shares, of
record and beneficially, free and clear of Encumbrances.
Except for this Agreement, and as set forth on Schedule 3.4
hereto, there are no preemptive or other outstanding rights,
options, warrants, conversion rights or agreements or
commitments of any character relating to Sterling's authorized
and issued, unissued or treasury shares of capital stock, and
Sterling has not issued any debt securities, other securities,
rights or obligations which are convertible into or
exchangeable for, or giving any Person a right to
subscribe for or acquire, capital stock of Sterling, and no
such securities or obligations evidencing such rights are
outstanding.
Section 3.5 Investments; Joint Ventures, etc.
(a) Schedule 3.5(a)(i) hereto sets forth a list of
each corporation and other entity (together, the
"Investments") owned in whole or in part by the Continuing
Business, together with its jurisdiction of organization.
Except as set forth on Schedule 3.5(a)(ii) hereto, each
Investment which is a Subsidiary is a corporation or other
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<PAGE> 58
entity duly organized, validly existing, and in good standing
under the laws of its jurisdiction of organization and has all
requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business
as presently conducted and is duly qualified to do business
and is in good standing as a foreign corporation or other
entity in each jurisdiction where the ownership or operation
of its properties and assets or the conduct of its business
requires such qualification, except where the failure to be
so duly organized, validly existing, qualified or in good
standing would not have a Material Adverse Effect, can be
cured without material expense and will not result in the
unenforceability of any material Contract.
(b) (i) Except as set forth on Schedule 3.5(b)
hereto and except for directors' qualifying shares, Sterling
owns, or will own at the Closing Date, directly or
indirectly, all (or such lesser percentage shown on Schedule
3.5(a)(i)) of the outstanding capital stock or other equity
interest of each Subsidiary, free and clear of all
Encumbrances. There are no preemptive or other outstanding
rights, options, warrants, conversion rights or agreements
or commitments to issue or sell any shares of capital stock
or other equity interest of any such Subsidiary or any
securities, rights or obligations convertible into or
exchangeable for, or giving any Person a right to subscribe
for or acquire, any shares of capital stock or other equity
interest of any such Subsidiary, and no
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<PAGE> 59
securities or obligations evidencing such rights are
outstand- ing.
(ii) Except as set forth on Schedule 3.5(b) hereto,
Sterling owns, or will own following the closing of the trans-
actions under the Ethical Asset Purchase Agreement, directly
or indirectly, the interest in each Investment which is not a
Subsidiary set forth in Schedule 3.5(a)(i), free and clear of
all Encumbrances. The issued and outstanding shares of capi-
tal stock of each Subsidiary that is a corporation are duly
authorized, validly issued, fully paid and non-assessable.
Section 3.6 Consents and Approvals. Except as spe-
cifically set forth in Schedule 3.6 or as required by
Competition Laws, foreign investment laws, the laws governing
or regulations promulgated by the United States Drug
Enforcement Agency and Bureau of Alcohol and Tobacco of the
United States Department of the Treasury and laws requiring
registration of products for sale, no consent, approval,
waiver or authorization is required to be obtained by Seller,
Sterling or any of the Subsidiaries from, and no notice or
filing is required to be given by Seller, Sterling or any of
the Subsidiaries to or made by Seller, Sterling or any of the
Subsidiaries with, any Governmental Entity or other Person in
connection with the execution, delivery and performance by
Seller of this Agreement, other than where the failure to
have or make any such consent, approval, waiver,
authorization, notice or filing is not
material.
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Section 3.7 Non-Contravention. Except as set forth
on Schedule 3.7, the execution, delivery and performance by
Seller of this Agreement, and the consummation of the transac-
tions contemplated hereby, does not and will not (i) violate
any provision of the Certificate of Incorporation, Bylaws or
other organizational documents of Seller, Sterling or any of
the Subsidiaries, (ii) subject as to performance to obtaining
the consents referred to in Section 3.6, conflict with, or
result in the breach of, or constitute a default under, or
result in the termination, cancellation or acceleration
(whether after the giving of notice or the lapse of time or
both) of any right or obligation of Seller, Sterling or any of
the Subsidiaries under, or to a loss of any benefit to which
Seller, Sterling or any of the Subsidiaries is entitled under,
any Contract or other instrument to which Seller, Sterling or
any of the Subsidiaries is a party or result in the
creation of any Encumbrance upon any of the Shares, or (iii)
assuming as to performance compliance with the matters set
forth in Sections 3.6 and 4.4, to the knowledge of Seller,
violate or result in a breach of or constitute a default
under any law, rule, regulation, judgment, injunction, order,
decree or other restriction of any court or governmental
authority to which Seller, Sterling or any of the Subsidiaries
is subject, including any Governmental Authorization, other
than in the case of clauses (ii) and (iii), any conflict,
breach, termination, default, cancellation, acceleration,
loss,
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<PAGE> 61
violation or Encumbrance which, individually or in the
aggregate, would not be material.
Section 3.8 Financial Statements.
(a) The Balance Sheet, including the notes thereto,
fairly presents in all material respects the unaudited
pro forma, consolidated financial condition of the Continuing
Business, as of the date thereof, adjusted to give effect to
the Restructuring, and was prepared in accordance with U.S.
GAAP except as described in Schedule 3.8(a)(ii) hereto. The
unaudited pro forma statements of earnings from operations,
including the notes thereto, for the three months ended
March 31, 1994, and the years ended December 31, 1993 and
1992, attached as Schedule 3.8(a)(i) hereto (together with
the Balance Sheet, the "Financial Statements"), fairly present
in all material respects the consolidated results of
operations of the Consumer Health Business, giving effect to
the pro forma adjustments described in the notes thereto,
for the periods then ended and were prepared as described
in Schedule 3.8(a)(ii) hereto. The notes to the
Financial Statements are true and correct in all material
respects.
(b) Except as disclosed in the notes to the Balance
Sheet, all of the assets and liabilities reflected on the Bal-
ance Sheet at December 31, 1993 were related to the Continuing
Business and arose out of or were incurred in the conduct of
the Continuing
Business.
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<PAGE> 62
(c) The unaudited financial information set forth
in Schedule 3.8(c)(i) hereto and Schedule 3.8(c)(ii) hereto
has been derived from the managerial accounts of the Consumer
Health Business and fairly presents, in all material
respects, the net sales and earnings from operations of the
Consumer Health Business by geographic region for the years
ended December 31, 1992 and 1993, on a consistent basis, and
the worldwide net sales of the Consumer Health Business by
product category for the years ended December 31, 1992 and
1993, on a consistent basis, respectively.
Section 3.9 Litigation and Claims.
(a) Except as set forth in Schedule 3.9(a), there
is no civil, criminal or administrative action, suit, demand,
claim, hearing, proceeding or investigation pending or, to
the knowledge of Seller, threatened, involving the Continuing
Business other than those that individually would not reason-
ably be expected to result in a judgment of more than
$1 million or that would be, in the aggregate, material or
materially impair or delay Seller's ability to effect the
Closing.
(b) Except as set forth in Schedule 3.9(b), the
Continuing Business is not subject to any order, writ,
judgment, award, injunction, or decree of any court or govern-
mental or regulatory authority of competent jurisdiction or
any arbitrator or arbitrators other than those that, individu-
ally or in the aggregate, would not materially interfere with
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<PAGE> 63
Sterling's ability to conduct the Continuing Business
substan- tially as conducted on December 31, 1993 or
materially impair or delay the ability of Seller to effect the
Closing. The Continuing Business is not in violation of any
such material order, writ, judgment, award, injunction or
decree that is material.
Section 3.10 Taxes. Except as set forth in Sched-
ule 3.10 and except as such failure of any representation made
in this Section 3.10 to be true and correct which, when taken
in the aggregate with all other such failures (regarding the
representations made in this Section 3.10 only), would not
have a Material Adverse Effect, taking into consideration any
obligation of Seller to indemnify the Purchaser Indemnified
Parties under this Agreement;
(a) All Tax Returns that are required to be filed
on or before the date of this Agreement (taking into account
applicable extensions) by or on behalf of Sterling or the
Subsidiaries (without giving effect to the Restructuring)
have been timely filed in the manner prescribed by law; (b)
all Taxes shown to be due on the Tax Returns referred to in
clause (a) have been timely paid or recorded as reserves or
current liabilities on the Balance Sheet, with respect to
periods ending on or prior to December 31, 1993, and in the
Books and Records for periods commencing after December 31,
1993; (c) as of the time of filing, all Tax Returns referred
to in clause (a) were true, correct and complete in accordance
with the
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<PAGE> 64
governing jurisdictions' Tax Laws; (d) no adjustments or
deficiencies relating to the Tax Returns referred to in clause
(a) have been proposed, asserted or assessed in writing by the
Internal Revenue Service or the appropriate state, local or
foreign taxing authority and each adjustment or deficiency set
forth in Schedule 3.10 is being contested in good faith to the
extent appropriate; (e) there are no pending or, to the
knowledge of Seller, threatened actions or proceedings for the
assessment or collection of Taxes against any entity described
in clause (a) and any actions or proceedings set forth in
Schedule 3.10 are being handled in good faith; (f) there are
no outstanding waivers or agreements extending the applicable
statute of limitations for any period with respect to any
Taxes of any entity described in clause (a); (g) no taxing
authorities are presently conducting any audits or other
examinations of any Tax Returns referred to in clause (a);
(h) there are no written tax sharing agreements to which
Sterling or any Subsidiary is a party other than such
agreements entered into in connection with the
Restructuring; and (i) Sterling's U.S. Federal income tax
returns for the taxable years ending on or before the
acquisition of Sterling by Seller in February, 1988 have
been examined by the Audit Division of the Internal
Revenue
Service.
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<PAGE> 65
Section 3.11 Employee Benefits.
(a) All benefit plans, contracts or arrangements
covering U.S. Employees, including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of
ERISA, and plans of deferred compensation (collectively, the
"Benefit Plans"), are listed in Schedule 3.11(a). True and
complete copies of all Benefit Plans, including, but not
limited to, any trust instruments and insurance contracts
forming a part of any Benefit Plans, and all amendments
thereto have been provided or made available to Purchaser.
(b) All employee benefit plans covering U.S.
Employees (the "Plans"), to the extent subject to ERISA or
the Code, are in substantial compliance with ERISA or the
Code, as the case may be. Each Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA ("Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and
Seller is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Except
as set forth in Schedule 3.11(b), there is no material pending
or threatened litigation relating to the Plans. Neither
Sterling nor any of its Subsidiaries has engaged in a
transaction with respect to any Plan that, assuming the
taxable period of such transaction expired as of the date
hereof, could subject Sterling or any Subsidiary to a tax or
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<PAGE> 66
penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by Sterling or
any of the Subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Sec-
tion 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which
is considered one employer with Sterling under Section 4001 of
ERISA or Section 414 of the Code (an "ERISA Affiliate").
Sterling and its Subsidiaries have not incurred and do not
expect to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA.
Sterling and its Subsidiaries do not now participate in,
contribute to, or have an obligation to contribute to, and
within the preceding six years have not participated in,
contributed to or been required to contribute to, a
multiemployer plan within the meaning of Section 3(37) of
ERISA. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required
to be filed for any Pension Plan or by any ERISA Affiliate
within the 12- month period ending on the date hereof.
(d) Neither any Pension Plan nor any single-
employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the
meaning
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<PAGE> 67
of Section 412 of the Code or Section 302 of ERISA and neither
Sterling nor any ERISA Affiliate has an outstanding funding
waiver. Neither Sterling nor any of the Subsidiaries has
provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-
employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined
present value of all "benefit liabilities", within the meaning
of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Plan's most recent
actuarial valuation), did not exceed the then current value of
the assets of such Plan, and there has been no material change
in the financial condition of such Plan since the last day of
the most recent plan year.
(f) Neither Sterling nor any of the Subsidiaries
has any obligations for retiree health and life benefits under
any Benefit Plan, except as set forth on Schedule 3.11(f).
(g) All employee benefit plans, contracts or
arrangements covering non-U.S. Employees comply in all
material respects with applicable local law. Except as set
forth on Schedule 3.11(g), Sterling and the Subsidiaries have
no material unfunded liabilities with respect to any "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA which covers non-U.S.
Employees.
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Section 3.12 Compliance with Laws. Except as set
forth in Schedule 3.12 hereto, the Continuing Business is
being conducted in compliance with all applicable laws, rules
and regulations, except where the failure so to comply,
individually or in the aggregate, would not be material;
Sterling and the Subsidiaries have all Governmental Authori-
zations necessary for the conduct of the Continuing Business
as currently conducted, other than those the absence of which
would not be material; and there are no proceedings pending
or, to the knowledge of Seller, threatened which may result
in the revocation, cancellation or suspension of any such
Govern- mental Authorization except Governmental
Authorizations the absence of which would not be material; it
being understood that nothing in this representation is
intended to address any compliance issue that is the subject
of any other representa- tion or warranty set forth herein.
Section 3.13 Intellectual Property.
(a) Schedule 3.13(a) sets forth a list and brief
description (including where applicable the registration
number and country of registration or filing) of (i) all
patents, patent applications, designs, registered trademarks,
trademark applications, copyright registrations and copyright
applications related to the Continuing Business that are
owned by Sterling or the Subsidiaries and (ii) all agreements
under which Sterling or the Subsidiaries are licensed or
otherwise permitted to use patents, trademarks and copyrights
which are
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material to the Continuing Business. The sale of the Shares
to Purchaser will not result in the termination of Sterling's
rights with respect to any material item of Intellectual
Property listed on Schedule 3.13(a).
(b) To the knowledge of the Seller (i) except as
set forth in Schedule 3.13(b)(i), with respect to
Intellectual Property of the Continuing Business other than
trademarks, no product or product under development (or
component thereof or process) used, sold or manufactured by
the Continuing Business infringes on or otherwise violates the
valid and enforceable patents of any other Person or were
acquired or developed with the aid of any information obtained
or disclosed in violation of any confidentiality obligation
enforceable against Sterling or the breach of which could
result in Losses to Sterling, (ii) with respect to the
trademarks listed in Schedule 3.13(b)(ii) (the "Selected
Marks"), except as set forth in Schedule 3.13(b)(iii), there
are no restrictions that would materially impair the use of
the Selected Marks in connection with the Continuing Business
and the Selected Marks do not infringe upon or otherwise
violate the valid trademarks of any other Person, (iii) no
Person is challenging or, to the knowledge of Seller,
infringing or otherwise violating or threatening to challenge,
infringe or violate the Intellectual Property of the
Continuing Business or Shared Intellectual Property (excluding
trademarks included on
Schedule 3.13(b)(ii)), except in each case for challenges,
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infringements or violations, that individually or in the
aggregate, would not materially interfere with Sterling's
ability to conduct the Continuing Business substantially as
heretofore conducted and (iv) there are no oppositions,
revocations, reexaminations, nullity actions or the like which
are pending or threatened against the Sterling Intellectual
Property.
Section 3.14 Labor Matters; Collective Bargaining
Agreements. Except as set forth in Schedule 3.14 hereto,
there is no unfair labor practice charge or complaint or other
proceeding pending or, to the knowledge of Seller, threatened
against Sterling or the Subsidiaries or relating to the
Continuing Business before the National Labor Relations Board
or any other United States Governmental Entity. There is no
material labor strike, slowdown or stoppage pending or, to the
knowledge of Seller, threatened against or affecting Sterling,
any Subsidiary or the Continuing Business, nor has there been
any such activity within the past three years. There are no
currently on-going collective bargaining negotiations relating
to the employees of the Continuing Business.
Section 3.15 Contracts. Schedule 3.15(i) sets
forth a list, as of the date hereof, of each Contract that is
material to the Continuing Business other than (i) purchase
orders in the ordinary course of business consistent with
past practice that are not unusual in nature or amount, and
(ii) any Contract involving the payment of less than
$250,000 in
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the aggregate or with a term of less than one year. Except as
set forth in Schedule 3.15(ii), each material Contract listed
in Schedule 3.15(i) is a valid and binding agreement of
Sterling or one of the Subsidiaries, as the case may be, and
is in full force and effect. Except as otherwise provided in
Schedule 3.15(iii), Sterling (or its Subsidiaries) is not in
material default and Seller has no knowledge of any material
default under any material Contract listed in Schedule
3.15(i) which default has not been cured or waived.
Section 3.16 Title to Property.
(a) Sterling and the Subsidiaries have good (and in
the case of owned real property) marketable title to, or a
valid and binding leasehold interest in, the property and
assets reflected on the Balance Sheet (other than the Intel-
lectual Property subject to Section 3.13(b)), free and clear
of all Encumbrances, except (i) as set forth in Sched-
ule 3.16(a), (ii) any Encumbrances expressly disclosed in the
Financial Statements (including the notes thereto),
(iii) liens for Taxes, assessments and other governmental
charges not yet due and payable or due but not delinquent or
being diligently contested in good faith by appropriate
proceedings with respect to amounts that are not individually
or in the aggregate material or with respect to which
appropriate reserves have been accrued, (iv) mechanics',
workmen's, repairmen's, warehousemen's, carriers' or other
like liens arising or incurred in the ordinary course of
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business with respect to amounts that are not individually or
in the aggregate material or with respect to which appropriate
reserves have been accrued, original purchase price condi-
tional sales contracts and equipment leases with third parties
entered into in the ordinary course of business, and
(v) Encumbrances which, individually or in the aggregate,
would not materially impair Sterling's ability to conduct the
Continuing Business substantially as currently conducted (all
items included in (i) through (v), together with any matter
set forth in Schedule 3.16(a), are referred to collectively
herein as the "Permitted Encumbrances").
(b) Each of Sterling and the Subsidiaries owns or
leases and upon consummation of the Restructuring will own or
lease, directly or indirectly, all of the assets and
properties, and is and will be a party to all licenses and
other agreements, in each case which are currently being used
or are reasonably necessary to carry on the business and
operations of the Continuing Business as presently conducted.
(c) Seller makes no representation in this Agree-
ment as to the physical condition or usefulness for any par-
ticular purpose of the real or tangible personal property
constituting part of the Continuing Business.
Section 3.17 Absence of Change. Except (x) to the
extent arising out of or relating to the transactions
contemplated by this Agreement and the Restructuring, or
(y) for the Contracts entered into since December 31, 1993
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that are listed in Schedule 3.15(i), since December 31, 1993,
(i) the Continuing Business has been operated in the ordinary
course in a manner consistent with past practice; (ii) no
material obligation or liability adverse to the operations,
properties, prospects or affairs of the Continuing Business
has been incurred; (iii) no material assets of the Continuing
Business have been transferred, leased or otherwise disposed
of, mortgaged, pledged or subjected to any security interest;
(iv) no rights of material value have been waived, released
or assigned in connection with the Continuing Business; (v) no
material casualty loss or damage (whether or not such loss or
damage shall have been covered by insurance) which affects in
any material respect the Continuing Business has been
suffered; (vi) no material license, permit, registration or
other approval, authorization or consent from any
Governmental Entity or any other Person relating to the
conduct of the Continuing Business has been terminated or
surrendered; or (vii) no agreement or arrangement to take any
action described in clauses (i) - (vi) of this Section 3.17
has been entered into. Since December 31, 1993 there have not
been any occurrences that have had, or are reasonably likely
to have,
a Material Adverse Effect.
Section 3.18 Finders' Fees. Except for Goldman,
Sachs & Co. and McKinsey and Co., whose fees will be paid by Seller,
there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to
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<PAGE> 74
act on behalf of Seller or Sterling who might be entitled to
any fee or commission from Seller or Sterling in connection
with the transactions contemplated by this Agreement.
Section 3.19 Continuing Service and Supply
Arrangements. The obligations of Sterling with respect to
continuing service and supply arrangements arising pursuant
to the Ethical Asset Purchase Agreement other than the Dudley
Supply Agreement (as defined in the Ethical Asset Purchase
Agreement) and the L&F Purchase Agreement, will have initial terms
that will not exceed three years. The Dudley Supply Agreement
will have an initial term that will not exceed five years. The
continuing service and supply arrangements arising pursuant to
the Ethical Asset Purchase Agreement and the L&F Purchase Agreement
will provide for charges associated with such arrangements to
be based on fully allocated costs plus a mark up of 3%.
Section 3.20 Insurance. Schedule 3.20 is a true
and complete list of all insurance policies that relate to the
Continuing Business (the "Policies"). Such insurance is
consistent with industry practice. No notice of cancellation
or termination has been received with respect to any of the
Policies. The Policies are in full force and will remain in
effect through the Closing Date. No proceeding is pending or,
to the knowledge of the Seller, threatened, to revoke, cancel
or limit any material Policy and no notice of cancellation of
any of such Policies has been
received.
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Section 3.21 No Undisclosed Liability. Except as
reflected in the Financial Statements (including the notes
thereto) and except with respect to any item which is
otherwise disclosed as a liability in this Agreement or is
the subject of another representation or warranty in this
Article III or is the subject of an indemnity given by Seller
in favor of purchaser under Article VII, there are no
liabilities (absolute, accrued, contingent or otherwise) of
the Continuing Business that exceed, individually, $1,000,000
and are in the aggregate material, except liabilities that are
not material and were incurred since the date of the Balance
Sheet in the ordinary course of business consistent with past
practice.
Section 3.22 Environmental Matters.
(a) Other than with respect to the OTC Portion
during the Pre-Alliance Period and other than with respect to
items included on Schedule 7.3(a)(i):
(i) to the knowledge of Seller, the Continuing
Business is in compliance with all applicable Environmental
Laws and there are no material liabilities under any Environ-
mental Law with respect to the Continuing Business, other than
such non-compliance or liabilities which, individually or in
the aggregate, would not materially adversely affect
Sterling's ability to conduct the Continuing Business substan-
tially as heretofore conducted;
(ii) Seller, Sterling and the Subsidiaries have not
received, with respect to the Continuing Business, any notice
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<PAGE> 76
of any material violation or alleged material violation of, or
any material liability under, any Environmental Law affecting
the Continuing Business during the past three years;
(iii) there are no material writs, injunctions,
decrees, orders or judgments outstanding, or any actions,
suits, proceedings or investigations pending or, to the know-
ledge of Seller, threatened, relating to compliance by the
Continuing Business with or liability of the Continuing
Business under any Environmental Law affecting the Continuing
Business; and
(iv) to the knowledge of Seller, there are no
environmental liens affecting the Continuing Business, except
for such liens as would not, individually or in the aggregate,
materially adversely affect Sterling's ability to conduct the
Continuing Business substantially as heretofore conducted.
(b) With respect to the OTC Portion during the Pre-
Alliance Period, Seller repeats and confirms for the benefit
of Purchaser the representations and warranties made by Sanofi
to Seller and Sterling set out in Section 4.11 of the Ethical
Asset Purchase Agreement (a copy of which provision is
attached as Schedule 3.22(b) hereto).
Section 3.23 Other Information. The information
furnished by Seller in this Agreement, the Schedules identi-
fied herein and in any Certificate executed or delivered
pursuant hereto by or on behalf of the Seller is not
materially false or misleading and does not contain a
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<PAGE> 77
misstatement of a material fact or omit to state any material
fact required to be stated in order to make the statements
herein and therein not misleading.
Section 3.24 No Other Representations or Warran-
ties. Except for the representations and warranties contained
in this Article III, neither Seller nor any other Person makes
any other express or implied representation or warranty on
behalf of Seller or otherwise in respect of Sterling or the
Continuing Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as of
the date hereof and as of the Closing Date (except that
representations and warranties that are made as of a
specific date need be true only as of such date) as follows:
Section 4.1 Organization and Qualification. Pur-
chaser is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation.
Section 4.2 Binding Effect. This Agreement con-
stitutes a valid and legally binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity
principles.
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Section 4.3 Corporate Authorization. Purchaser has
full corporate power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder. The
execution, delivery and performance by Purchaser of this
Agreement has been duly and validly authorized by Purchaser
and, subject to obtaining the approval of the Board of Direc-
tors of Purchaser, no other corporate proceedings on the part
of Purchaser are required in connection with the execution,
delivery and performance by Purchaser of this Agreement.
Section 4.4 Consents and Approvals. Except as spe-
cifically set forth in Schedule 4.4 or as required by
Competition Laws, foreign investment laws, the laws governing
or regulations promulgated by the United States Drug
Enforcement Agency, and Bureau of Alcohol and Tobacco of the
United States Department of the Treasury and laws requiring
registration of products for sale, no consent, approval,
waiver or authorization is required to be obtained by
Purchaser from, and no notice or filing is required to be
given by Purchaser to or made by Purchaser with, any Govern-
mental Entity or other Person in connection with the
execution, delivery and performance by Purchaser of this
Agreement, other than in all those cases where the failure to
have or make such consent, approval, waiver, authorization,
notice or filing is not
material.
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<PAGE> 79
Section 4.5 Non-Contravention. Except as set forth
in Schedule 4.5, the execution, delivery and performance by
Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby and thereby, does not and
will not (i) violate any provision of the Certificate of
Incorporation, Bylaws or other organizational documents of
Purchaser, (ii) subject as to performance to obtaining the
consents referred to in Section 4.4, conflict with, or result
in the breach of, or constitute a default under, or result in
the termination, cancellation or acceleration (whether after
the giving of notice or the lapse of time or both) of any
right or obligation of Purchaser under, or to a loss of any
benefit to which Purchaser is entitled under, any Contract or
other instrument to which Purchaser or any of its
subsidiaries is a party, or (iii) assuming as to
performance compliance with the matters set forth in
Sections 3.6 and 4.4, to the knowledge of Purchaser,
violate or result in a breach of or constitute a default
under any law, rule, regulation, judg- ment, injunction,
order, decree or other restriction of any court or
governmental authority to which Purchaser is subject,
including any Governmental Authorization, other than in the
cases of clauses (ii) and (iii), any conflict, breach,
termination, default, cancellation, acceleration, loss or
violation which, individually or in the aggregate, would not
be
material.
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Section 4.6 Finders' Fees. Except for Wasserstein,
Perella & Co., whose fees will be paid by Purchaser, there is no
investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on
behalf of Purchaser who might be entitled to any fee or
commission from Purchaser in connection with the
transactions contem- plated by this Agreement.
Section 4.7 Financial Capability. On the Closing
Date, Purchaser will have sufficient funds to purchase the
Shares on the terms and conditions contemplated by this
Agree- ment.
Section 4.8 Securities Act. Purchaser 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.
Purchaser acknowledges that 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.
Section 4.9 No Other Representations or Warranties.
Except for the representations and warranties contained in
this Article IV, neither Purchaser nor any other Person makes
any other express or implied representation or warranty on
behalf of
Purchaser.
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ARTICLE V
COVENANTS
Section 5.1 Access.
(a) Prior to the Closing, Seller shall permit
Purchaser and its representatives (and assignees of Purchaser
pursuant to Section 9.3 hereof) to have access, during regular
business hours and upon reasonable advance notice, to the
assets, employees, books and records of Sterling relating to
the Continuing Business and any assets or liabilities related
to any portion of the Transferred Businesses not reasonably
expected to be transferred prior to the Closing Date, subject
to reasonable rules and regulations of Seller, and shall
furnish, or cause to be furnished, to Purchaser, such
financial, tax (including available tax basis and earnings and
profits calculations) and operating data and other information
that is available with respect to the Continuing Business and
any such assets or liabilities as Purchaser shall from time to
time reasonably request.
(b) In the event of the termination of this Agree-
ment, Purchaser shall promptly deliver (without retaining any
copies thereof) to Seller, or (at Seller's option) certify to
Seller that it has destroyed, all documents, work papers and
other material obtained by Purchaser or on its behalf from
Seller, Sterling, any of the Subsidiaries, or any of their
respective agents, employees or representatives as a result
hereof or in connection herewith, whether so obtained before
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<PAGE> 82
or after the execution hereof. Purchaser shall at all times
prior to the Closing Date, and in the event of termination of
this Agreement, cause any information so obtained to be kept
confidential and will not use, or permit the use of, such
documents, work papers and other materials in its business or
in any other manner or for any other purpose except as
contemplated hereby. The foregoing shall not preclude
Purchaser from (i) the use or disclosure of such information
which currently is known generally to the public or which
subsequently has come into the public domain, other than by
way of disclosure in violation of this Agreement, (ii) the
use or disclosure of such information that becomes available
to Purchaser on a non-confidential basis from a source other
than Seller or Seller's agents provided that such source is
not known by Purchaser to have a legal obligation prohibiting
the disclosure of such information, or (iii) the disclosure
of such information required by law or court order,
provided that, to the extent practicable, prior to such
disclosure required by law or court order Purchaser will
give Seller prior written notice of the nature of the law
or order requiring disclosure and the disclosure to be made
in accordance therewith.
(c) From and after the date hereof, Seller shall
keep, shall cause its Affiliates to keep, and shall use
reasonable efforts to cause its officers, directors,
employees and agents to keep, confidential all information
proprietary
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<PAGE> 83
to the Continuing Business that has been acquired by Seller,
through its ownership and management of Sterling provided that
the foregoing restriction shall not apply to information that
(i) is or hereafter becomes generally available to the public
other than by reason of any default with respect to
confidentiality under this Agreement, (ii) was included in the
Confidential Memorandum -- Sterling Health (including
annexes), dated May, 1994, prepared by Goldman, Sachs & Co., or the
Sterling Health Management Presentation Book dated June 21,
1994, (iii) is hereafter disclosed to Seller by a third party
who is not in default of any confidentiality obligation to
Purchaser, (iv) is hereafter developed by or on behalf of
Seller, without reliance on confidential information acquired
prior to the date hereof through the ownership and management
of Sterling, (v) is reasonably required or desirable to be
submitted by Seller to governmental agencies, provided that
reasonable measures shall be taken to assure confidential
treatment of such information, (vi) is provided by Seller
under appropriate terms and conditions, including
confidentiality provisions equivalent to those in this
Agreement, (X) to third parties for consulting, accounting,
legal and similar purposes, or (Y) to prospective purchasers
of Seller or of all or any portion of the Transferred
Businesses to the extent considered reasonably necessary by
Seller to facilitate such purchase, (vii) Seller considers
reasonably necessary to disclose in connection with any
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<PAGE> 84
action, suit or proceeding before any court or any
governmental or other regulatory agency or body or any
arbitral panel, or any audit or investigation brought by any
governmental or other regulatory agency or body, (viii)
Seller considers reasonably necessary to disclose in order to
assert any claim against any insurer or other third party,
(ix) Seller considers reasonably necessary to disclose in
connection with the performance of its obligations under this
Agreement and the consummation of the transactions
contemplated hereby or (x) is required to be disclosed in
compliance with applicable laws or regulations or order by a
court or other governmental or regulatory agency or body
having competent jurisdiction. It is understood for purposes
of the foregoing that Seller will undertake reasonable
efforts to cause the employees of Sterling to comply with the
confidentiality provisions set forth in this Section 5.1(c)
but that any breach of this Section 5.1(c) by an employee of
Sterling shall be deemed not to be a breach by Seller of its
obligations hereunder.
Section 5.2 Conduct of Business. During the period
from the date hereof to the Closing, except (i) as otherwise
contemplated by this Agreement, (ii) as reasonably necessary
in connection with the Restructuring, or (iii) as Purchaser
shall otherwise agree in writing in advance, Seller covenants
and agrees that it shall cause Sterling to operate the
Continuing Business in the ordinary and usual course
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<PAGE> 85
consistent with past practice, and use its reasonable
efforts to preserve intact, to the extent constituting part
of the Continuing Business, its business and relationships
with customers, suppliers and other third parties. During the
period from the date hereof to the Closing, except (i) as
otherwise contemplated by this Agreement, (ii) as reasonably
necessary in connection with the Restructuring, or (iii) as
Purchaser shall otherwise consent (which consent shall not be
unreasonably withheld), Seller covenants and agrees that it
shall, with respect to the Continuing Business, cause
Sterling and the Subsidiaries to:
(i) maintain insurance coverage at presently
existing levels so long as such insurance is available at
commercially reasonable rates;
(ii) not approve any new individual capital
expenditure in excess of $1,000,000;
(iii) not dispose of or incur, create or assume
any Encumbrance other than Permitted Encumbrances on any
individual capital asset if the greater of the book value
or the fair market value of such capital asset exceeds
$1,000,000;
(iv) not (A) incur any indebtedness for money
borrowed in excess of $1,000,000 in the aggregate other
than any indebtedness incurred in the ordinary course of
business to refinance existing indebtedness on reasonable
terms not materially less advantageous to the Continuing
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<PAGE> 86
Business in the aggregate than the terms of the indebtedness
being refinanced and (B) assume, guarantee or endorse the
obligations of any person other than a Subsidiary or an
employee pursuant to a relocation policy;
(v) not enter into any material transaction or
amend any material term of, or waive any substantial
right under, any material Contract;
(vi) not effectuate (a) a "plant closing" as
defined in the WARN Act affecting any site of employment
or one or more facilities or operating units within any
site of employment or facility of the Continuing Business
or (b) a "mass layoff" as defined in the WARN Act
affecting any site of employment or one or more
facilities or operating units within any site of
employment or facilities of the Continuing Business,
except, in either case, after complying fully with the
notice and other requirements of the WARN Act;
(vii) not change or amend its charter or by-
laws, other than to change the names of Sterling or any
of the Subsidiaries; provided, that no such name change
shall involve the deletion of the word "Sterling";
(viii) not issue, sell, pledge, transfer,
repurchase or redeem or propose to issue, sell, pledge,
transfer, repurchase or redeem any shares of its capital
stock, or securities convertible into or exchangeable or
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<PAGE> 87
exercisable for, or options with respect to, or warrants to
purchase or rights to subscribe for, any shares of its capital
stock;
(ix) not declare or set aside for payment any
dividends to be paid after the Closing;
(x) not enter into any other agreements,
commitments or contracts which, individually or in the
aggregate, are material to the Continuing Business,
except agreements, commitments or contracts for the
purchase or sale of goods or services in the ordinary
course of business, consistent with past practice and not
in excess of current requirements;
(xi) not transfer or otherwise dispose of any
substantial assets of the Continuing Business other than
sales of inventory in the ordinary course of business
consistent with past practice;
(xii) except as required by law or regulation,
pursuant to existing agreements or as may be reasonably
necessary to secure or protect intellectual or industrial
property rights of the Continuing Business, not provide
any confidential or proprietary information with respect
to the Continuing Business to any Person other than
Purchaser, Seller or their respective Affiliates;
(xiii) not take any action which could be
reasonably expected to prevent or materially delay the
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<PAGE> 88
consummation of the transactions contemplated by this
Agreement;
(xiv) not change any of the accounting
principles or practices applied with respect to the
Continuing Business;
(xv) not enter into, adopt, amend (except as
required by applicable law or any existing contract, with
notice to the Purchaser) or terminate any Plan or
increase the amount or accelerate the payment or vesting
of any benefit payable thereunder, in each case in any
way that materially increases the amount of the liability
attributable to the Continuing Business in respect of
such Plan, or grant any material increases in the
compensation or fringe benefits of employees of the
Continuing Business; and
(xvi) not agree to take any of the foregoing
actions.
Notwithstanding the foregoing, but subject to clause
(ix) above, Sterling shall be permitted at all times prior to
the Closing Date to make distributions of cash to Seller.
Section 5.3 Best Efforts; Good Faith; Cooperation
in Restructuring.
(a) Seller and Purchaser will cooperate and use
their mutual best efforts to fulfill the conditions precedent
to the other party's obligations hereunder, including but not
limited to, securing as promptly as practicable all consents,
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<PAGE> 89
approvals, waivers and authorizations required in connection
with the transactions contemplated hereby and further
including taking all reasonable steps to consummate the
Closing (as defined in Section 1.1 of the Ethical Asset
Purchase Agreement). Purchaser and Seller will promptly file
documentary materials required by the Competition Laws,
Environmental Laws and each of the other items referred to in
Section 3.6 and Section 4.4 (whether or not material) and
promptly file any additional information requested as soon as
practicable after receipt of request thereof.
(b) Without limiting the provisions set forth in
paragraph (a) above, Purchaser shall use its best efforts to
take or cause to be taken all actions necessary, proper or
advisable to obtain any consent, waiver, approval or
authorization relating to any Competition Law that is
required for the consummation of the transactions contemplated
by this Agreement, which efforts shall include, without
limitation,
the proffer by Purchaser of its willingness to accept an order
providing for the divestiture by Purchaser of such of the
assets of the Continuing Business (or, in lieu thereof, assets
and businesses of the Purchaser having an approximately
equivalent value), as are necessary for the Purchaser fully to
consummate the transactions contemplated by this Agreement,
and an offer to hold separate such assets and businesses
pending such divestiture. In the event that regulatory
authorities require the divestiture and the holding separate
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<PAGE> 90
by Purchaser following the Closing of any of the assets or
entities of the Continuing Business, no adjustment shall be
made to the Purchase Price and Purchaser shall be required to
hold such assets or entities separate and divest them
following the Closing.
(c) Seller shall, and shall cause each of its
Affiliates (other than Sterling and the Subsidiaries) to, pay
all amounts from time to time payable to Sterling or its
Subsidiaries within 30 days after such payable arises (it
being understood that such obligation shall not apply with
respect to any such payable arising after Closing). Seller
shall cause Sterling and its Subsidiaries to pay all amounts
from time to time payable to Seller and its Affiliates within
30 days after such payable arises (it being understood that
such obligation shall not apply with respect to any such
payable arising after Closing).
(d) Seller will cooperate with Purchaser in
attempting to structure the sale of the Continuing Business
to Purchaser in a manner that would enable the Purchaser to
sell a portion of the Continuing Business to one or more
third parties; provided that such structure does not result
in economic detriment (including additional tax costs) to
Seller.
(e) If the Closing (as defined in Section 1.1 of
the Ethical Asset Purchase Agreement) of the transactions
under the Ethical Asset Purchase Agreement shall not have
occurred prior to the Closing Date, then immediately prior
to
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the Closing Date, Seller shall cause the transfer of such
portions of the Ethical Transferred Business that would have
been transferred had such Closing (as defined in Section 1.1
of the Ethical Asset Purchase Agreement) occurred.
Section 5.4 Tax Matters.
(a) Tax Treatment. Seller and Purchaser agree that
an election under Section 338 of the Code (or any similar
provision of the law of any country or taxing jurisdiction)
will not be made with respect to the sale of the Shares
pursuant to this Agreement.
(b) Indemnification.
(i) Seller's Indemnification of Purchaser. Seller
shall indemnify the Purchaser Indemnified Parties from,
against and in respect of (A) any Taxes (including Transfer
Taxes) imposed in connection with or arising directly from
the Restructuring or the Transferred Businesses whether
arising with respect to a period before or after the Closing
Date, (B) except to the extent reflected as Current
Liabilities on the Adjusted Closing Balance Sheet and except
to the extent such Taxes are incurred solely as a result of
Purchaser's failure to comply with Section 5.4(i)(i), any
Taxes (including any Taxes imposed pursuant to Treas. Regs.
1502-6 or a similar provision of any state, local or foreign
income tax law imposing several liability upon the members of
a consolidated, combined, affiliated or unitary group) imposed
on Sterling or the Subsidiaries with respect to the taxable
periods, or
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portions thereof, ending on or before the Closing Date; and
(C) any Transfer Taxes for which Seller is liable pursuant to
Section 5.4(g) hereof.
(ii) Purchaser's Indemnification of Seller.
Purchaser shall indemnify the Seller Indemnified Parties
from, against and in respect of any liability of Seller for
(A) any Taxes reflected as Current Liabilities on the Adjusted
Closing Balance Sheet, (B) any Taxes imposed with respect to
Sterling, the Subsidiaries or the Continuing Business for the
taxable periods, or portions thereof, beginning after the
Closing Date except to the extent that such Taxes (including
any Transfer Taxes) are imposed in connection with or arising
directly from the Restructuring or the Transferred Businesses;
(C) any Taxes incurred by any Seller Indemnified Party solely
as a result of Purchaser's failure to comply with Section
5.4(i)(i); and (D) any Transfer Taxes for which Purchaser is
liable pursuant to Section 5.4(g) hereof.
(iii) For purposes of this Section 5.4(b), the term
Taxes shall include Losses directly or indirectly relating to
or arising out of any liability for Taxes.
(c) Computation of Tax Liabilities.
(i) Proration of Taxes and Earnings and Profits. To
the extent permitted by law or administrative practice, the
taxable years of Sterling and each Subsidiary shall end on and
include the Closing Date. Whenever it is necessary to
determine the liability for Taxes, or the earnings and
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profits, of Sterling or any Subsidiary for a portion of a
taxable year or period that begins before and ends after the
Closing Date, the determination of the Taxes or the earnings
and profits for the portion of the year or period ending on,
and the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that the taxable
year or period ended on and included the Closing Date, except
that exemptions, allowances or deductions that are calculated
on an annual basis and annual property taxes shall be prorated
on the basis of the number of days in the annual period
elapsed through the Closing Date as compared to the number of
days in the annual period elapsing after the Closing Date.
(ii) Standalone Basis. Whenever it is necessary to
determine the liability of Sterling and the Subsidiaries for
Taxes, such liability shall be computed as if Sterling and
the Subsidiaries were not members of Seller's affiliated,
combined or unitary group for Tax purposes.
(d) Tax Returns.
(i) Seller shall prepare, or cause to be prepared,
and file or cause to be filed when due (A) all Tax Returns for
Sterling or the Subsidiaries due to be filed on or prior to
the Closing Date and (B) all Tax Returns for Sterling or the
Subsidiaries with respect to U.S. Federal, state and local
income taxes imposed with respect to the taxable periods, or
portions thereof, beginning before and ending on the Closing
Date which are required or permitted by law or
administrative
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practice to be filed with respect to a taxable period, or
portion thereof, beginning before and ending on the Closing
Date.
(ii) Purchaser shall prepare, or cause to be
prepared, and file or cause to be filed when due all other Tax
Returns with respect to the Continuing Business due to be
filed after the Closing Date.
(iii) If either Purchaser or Seller may be liable
for any material portion of the Tax payable in connection with
any Tax Return to be filed by the other, the party responsible
for filing such return (the "Preparer") shall prepare and
deliver to the other party (the "Payor") a copy of such return
and any schedules, work papers and other documentation then
available that are relevant to the preparation of the portion
of such return for which the Payor is or may be liable
hereunder not later than 60 days before the Due Date. The
Preparer shall not file such return until the earlier of
either the receipt of written notice from the Payor indicating
the Payor's consent thereto, or the Due Date.
The Payor shall have the option of providing to the
Preparer, at any time at least 30 days prior to the Due Date,
written instructions as to how the Payor wants any, or all, of
the items for which it may be liable reflected on such Tax
Return. Failure by the Payor to give such written notice at
least 30 days prior to the Due Date shall constitute a waiver
by the Payor of its right to provide
instructions.
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The Preparer shall, in preparing such return, cause
the items for which the Payor is liable hereunder to be
reflected in accordance with the Payor's instructions and, in
the absence of having received such instructions, in
accordance with past practice, subject in each case to the
Preparer's consent thereto.
A party may withhold its consent only if such party
believes that the manner of reporting of an item on the
return adversely affects that party. With respect to any Tax
Return covering the taxable period beginning before and ending
after the Closing Date the parties agree that the Purchaser
shall
not fail to consent to reflecting on such return all items for
which the Seller is liable on a basis which is consistent with
past practice. With respect to any Tax Return, the Purchaser
shall not object to any item which relates to the allocation
of purchase price with respect to any Restructuring
transaction and is in accordance with a written agreement
entered into by Seller or Sterling, or both.
If the Preparer refuses to consent to preparing the
return as instructed by the Payor or the Payor refuses to
consent to the return as prepared by the Preparer, or both,
the parties shall cooperate in good faith in attempting to
resolve their disagreement and prepare a return which both
parties consent to. If the disagreement has not been
resolved at least 20 days before the Due Date, the dispute
shall be referred to the CPA Firm which shall determine, with
respect
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to each disputed item: (1) which party (the "Prevailing
Party") is advocating the more reasonable legal position for
reporting that item (the "Prevailing Position") and (2) if
requested, which party's estimate of the present value of the
cost the Prevailing Party will incur as a result of taking
the position (the "Non-Prevailing Position") put forth by
the other party (the "Non-Prevailing Party") is more
reasonable (the "Reasonable Cost").
After the dispute has been resolved, each disputed
item shall be recorded, if the dispute is resolved prior to
the Due Date, on the initial return which is filed by the
Preparer, or if the dispute is resolved after the Due Date,
on an amended return (if at the time the dispute is resolved
the return has already been filed and it is still possible at
that time to file an amended return) in accordance with (A)
the Prevailing Position or (B) if the Non-Prevailing Party
agrees to pay to the Prevailing Party the Reasonable Cost, the
Non- Prevailing Position.
If the dispute has not been resolved or the CPA Firm
has not made its determination prior to the Due Date, (1) each
disputed item shall be reported on the return that is filed by
the Preparer on the Due Date in accordance with the Preparer's
position (modified to the extent necessary to incorporate any
changes the parties have agreed upon) and (2) the Payor shall
pay to the Preparer the amount for which the Payor would be
liable if the return was filed as instructed by the Payor
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(modified to the extent necessary to incorporate any changes
the parties have agreed upon) (the "Requested Amount"). When
the amount due to the Preparer from the Payor in respect of
such Tax Return is finally determined, a settlement payment
shall be made in an amount equal to the amount finally
determined to be due minus the Requested Amount plus interest
on such difference at the Prime Rate calculated from the Due
Date.
If the Preparer fails to satisfy its obligations
pursuant to this Section 5.4(d), the Payor shall have no
obligation to indemnify the Preparer for any Taxes which are
reflected on any such return or any related Loss, and shall
retain any and all remedies it may otherwise have which arise
out of such failure.
(e) Information to be Provided by Purchaser.
(i) With respect to Tax Returns to be filed by
Seller pursuant to Section 5.4(d) hereof, Purchaser shall,
within 60 days following the end of the taxable year
beginning before and ending on or after the Closing Date,
prepare and provide to Seller a package of tax information
materials (the "Tax Package"), which shall be completed in
accordance with the past practice of Sterling and any
Subsidiary included on any such returns, including past
practice as to providing the information, schedules, work
papers and other documentation, as to the method of
computation of separate taxable income or other relevant
measures of income and as to the calculation
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and claiming of foreign tax credits. Purchaser shall cause the
Tax Package for the portion of the taxable period ending on
the Closing Date to be delivered to Seller within 60 days
after the Closing Date.
(ii) Foreign Tax Receipts. To the extent not con-
tained in the Tax Package, Purchaser shall to the extent
possible promptly, after receipt, deliver or cause to be
delivered to the tax director of Seller certified copies of
all receipts for foreign Taxes with respect to any taxable
period, or portion thereof, ending on or before the Closing
Date, and any other documentation required in connection with
Seller or its Affiliates claiming or supporting a claim for
foreign tax credits in connection with such foreign Taxes. In
addition, Purchaser, upon request of Seller's tax director,
agrees to request and obtain, at Seller's expense, for Seller
from local tax authorities receipts for foreign Taxes which
have not been provided to Seller or Purchaser.
(f) Contest Provisions.
(i) Notification of Contests. Each of Purchaser and
its Affiliates, on the one hand, and Seller, on the other
hand (the "Recipient"), shall notify the tax director of the
other party in writing within 30 days of receipt by the
Recipient of written notice of any pending or threatened
audits, adjustments or assessments (a "Tax Audit") which
may affect the liability for Taxes of such other party. If
the Recipient fails to give such prompt notice to the other
party it shall
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not be entitled to indemnification for any Taxes arising in
connection with such Tax Audit if such failure to give notice
materially adversely affects the other party's right to
participate in the Tax Audit.
(ii) Which Party Controls. (A) Seller's Items. If
such Tax Audit relates to any period ending on or prior to the
Closing or for any Taxes for which Seller is liable in full
hereunder, Seller shall at its expense control the defense and
settlement of such Tax Audit.
(B) Purchaser's Items. If such Tax Audit relates to
any period beginning after the Closing or for any Taxes for
which Purchaser is liable in full hereunder, Purchaser shall
at its expense control the defense and settlement of such Tax
Audit.
(C) Combined and Mixed Items. If such Tax Audit
relates to Taxes for which both Seller and Purchaser are
liable hereunder, to the extent possible such Tax Items will
be distinguished and each party will control the defense and
settlement of those Taxes for which it is so liable.
If such Tax Audit relates to a taxable period, or
portion thereof, beginning before and ending after the
Closing Date and any Tax Item can not be identified as being a
liability of only one party or cannot be separated from a Tax
Item for which the other party is liable, the party which has
the greater potential liability for those Tax Items that
cannot be so attributed or separated (or both) shall control
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the defense and settlement of the Tax Audit, provided that
such party defends the items as reported on the relevant Tax
Return. In defending the item as reported on the relevant
Tax Return, the party may negotiate any settlement that is
reasonable provided that it does not increase the liability of
the other party in an amount that is greater than such other
party's pro rata share of those items and does not trade any
item for which the other party has a greater liability for any
item for which it has a lesser liability, unless it obtains
the other's party consent thereto.
(D) Participation Rights. Any party whose liability
for Taxes may be affected by a Tax Audit shall be entitled to
participate at its expense in such defense and to employ
counsel of its choice at its expense.
(g) Transfer Taxes. All excise, sales, use, trans-
fer, (including real property transfer or gains), stamp,
documentary, filing, recordation and other similar taxes
together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions
or penalties resulting directly from the sale and transfer by
Seller to Purchaser of the Shares (the "Transfer Taxes"),
shall be borne equally by Seller and Purchaser. Any such
Transfer Taxes or fees resulting from any transfer of all or
any portion of the Shares, the Investments or any asset
constituting part of the Continuing Business occurring on or
subsequent to the transfer of the Shares from Seller to
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<PAGE> 101
Purchaser contemplated hereby shall be borne entirely by the
Purchaser, and Purchaser shall indemnify Seller for any
liabilities arising in connection therewith. Notwithstanding
Section 5.4(d), which shall not apply to Tax Returns relating
to Transfer Taxes, any Tax Returns that must be filed in
connection with Transfer Taxes shall be prepared and filed
when due by the party primarily or customarily responsible
under the applicable local law for filing such Tax Returns,
and such party will use its reasonable efforts to provide
such Tax Returns to the other party at least 10 days prior to
the Due Date for such Tax Returns.
(h) Certain Post-Closing Settlement Payments.
(i) Purchaser's Claiming, Receiving or Using of
Refunds and Overpayments. If, after the Closing, Purchaser,
Sterling or any of their Affiliates (A) receive any refund, or
(B) utilize the benefit of any overpayment of Taxes (except to
the extent reflected on the Adjusted Closing Balance Sheet
as a Current Asset) which, in each case (A) and (B), (x)
relates to a Tax paid by Seller, Sterling or any Affiliate of
either of them prior to the Closing, or (y) is the subject of
indemnification by Seller pursuant to Article VII hereof,
Purchaser shall promptly transfer, or cause to be
transferred, to Seller the entire amount of the refund or
overpayment (including interest) received or utilized by
Purchaser, Sterling or any of their Affiliates net of
Purchaser's out-of- pocket costs of obtaining such refund
(including Taxes).
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<PAGE> 102
Purchaser agrees to notify Seller within a reasonable period
of time after the discovery of a right to claim any such
refund or overpayment and the receipt of any such refund or
utilization of any such overpayment. Purchaser agrees to
claim any such refund or to utilize any such overpayment as
soon as possible and to furnish to Seller all information,
records and assistance necessary to verify the amount of the
refund or overpayment.
(ii) Purchaser's Use of Tax Credits. Neither the
Purchaser nor any of its Affiliates shall be under any
obligation to make any payment to Seller for the use, after
the Closing, of any excess Tax credit (including any excess
foreign tax credit) or net operating loss of Sterling or any
Subsidiary of either of them existing as of the Closing Date,
and Seller shall not be liable to Purchaser for any change in
the amount of such credits or net operating loss after the
Closing Date which results from any adjustments made to any
Tax Return which affects the amount of such credits or net
operating loss.
(iii) Each Party's Claiming and Realizing of Tax
Benefits in Respect of Indemnified Liabilities. (A) If,
after the Closing, (a) Purchaser or any of its Affiliates
realizes any Loss for which it is indemnified by Seller
pursuant to Article VII hereof, or (b) an adjustment
required by any taxing authority in any item reflected on
a Tax Return increases Seller's liability for
indemnification payments
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<PAGE> 103
under this Agreement, Purchaser and its Affiliates agree to
claim any such Loss and recognize any such adjustment on their
Tax Returns to the extent such position is supported by
substantial authority and claim to the fullest extent possible
all deductions available as a result of any such Loss or
adjustment. Purchaser agrees to furnish to Seller at Seller's
expense all information, records and assistance necessary to
verify the amount of the decrease, if any, in Purchaser's and
its Affiliate's income taxes paid solely as a result of
recognizing such Loss or adjustment and claiming all such
available deductions (as compared to the income taxes
Purchaser and its Affiliates would otherwise have paid solely
without such adjustment). Purchaser shall promptly transfer,
or cause to be transferred, to Seller an amount equal to the
entire amount of such decrease (to the extent such decrease
has not been accounted for in the computation of the Loss
being indemnified for pursuant to Section 7.6 hereof) at the
time such decrease is realized, whether realized by Purchaser
and its Affiliates paying less income taxes or receiving a
refund.
(B) If, after the Closing, (a) Seller or any of its
Affiliates realizes any Loss for which it is indemnified by
Purchaser pursuant to Article VII hereof, or (b) an adjustment
required by any taxing authority in any item reflected on a
Tax Return increases Purchaser's liability for indemnification
payments under this Agreement, Seller and its Affiliates
agree
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to claim any such Loss and recognize any such adjustment on
their Tax Returns to the extent such position is supported by
substantial authority and claim to the fullest extent possible
all deductions available as a result of any such Loss or
adjustment. Seller agrees to furnish to Purchaser at
Purchaser's expense all information, records and assistance
necessary to verify the amount of the decrease, if any, in
Seller's and its Affiliate's income taxes paid solely as a
result of recognizing such Loss or adjustment and claiming all
such available deductions (as compared to the income taxes
Seller and its Affiliates would otherwise have paid solely
without such adjustment). Seller shall promptly transfer, or
cause to be transferred, to Purchaser an amount equal to the
entire amount of such decrease (to the extent such decrease
has not been accounted for in the computation of the Loss
being indemnified for pursuant to Section 7.6 hereof) at the
time such decrease is realized, whether realized by Seller
and its Affiliates by paying less income taxes or receiving a
refund.
(C) In no event shall this Section 5.4(h)(iii)
relate to a taxable year ending after December 31, 2010;
provided, however, that at any time Seller and Purchaser may
negotiate a settlement pursuant to which all rights and
obligations under this Section 5.4(h)(iii) shall be
terminated.
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(iv) Purchaser's Carryback of Post-Closing Deduc-
tions or Losses. If Sterling or the Subsidiaries are entitled
to carryback any net operating loss, capital loss, excess
foreign tax paid, or other similar losses, deductions or
credits derived with respect to any period beginning after the
Closing Date to any period prior to the Closing Date, and any
such carryback results in a decrease in Seller's income taxes
paid (as compared to the income taxes Seller would otherwise
have paid solely without giving effect to such carryback),
Seller shall pay to Purchaser the amount of such decrease at
the time such decrease is realized by refund or otherwise.
Seller shall take all necessary actions to claim any such
carryback and Purchaser shall indemnify Seller for its reason-
able out-of-pocket expenses incurred in reviewing and
responding to a request for its consent pursuant to this
Section 5.4(h)(iv), and in filing and securing any such
decrease.
(v) Methodology and Procedure.
(A) Ordering Rules. In determining, for the
purposes of any provision in this Section 5.4 or Section 7.6,
the amount of the decrease or increase in Taxes paid by a
party as a result of realizing or utilizing any Tax Item
such calculation shall be made by comparing the income taxes
paid by the party taking into account such Tax Item with the
income taxes the party would have paid had it not taken such
Tax Item into account. It is understood that in making such
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calculation, any Tax Item that such party would have had in
the absence of the Tax Item whose effect is being determined,
shall be deemed to be recognized or used first, and that the
Tax Item whose effect is being determined shall be deemed to
be utilized last.
(B) Subsequent Adjustment. In the event that any
Tax refund, benefit or savings described in any clause of
this Section 5.4(h) is subsequently reduced as a result of any
adjustment required by any determination as defined in Section
1313 of the Code, this Section 5.4(h) shall be applied, taking
into account such adjustment. Additionally, if subsequent to
the application of any provision of this Agreement relating to
the effect of any Tax Item, any person generates any Tax Item
which could have been utilized in place of the Tax Item the
effect of which was previously determined to result in a Tax
benefit to such person, the provision of this Agreement
relating to the effect of such Tax Item shall be reapplied
taking into account such subsequently created Tax Item and the
parties shall make any additional payment or refund any
portion of any prior payment received necessary to settle the
difference between the amount previously paid and the amount
subsequently determined to be due.
(C) Resolution of All Tax Related Disputes. For
the purposes of computing the amount of any payment due
relating to the effect of any Tax Item, each party shall
provide to the other, as reasonably requested by the other,
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all information, records and assistance necessary to verify
the relevant Tax effects. In the event that Seller and
Purchaser cannot agree on any calculation of any amount
relating to Taxes or the interpretation or application of any
provision of this Agreement relating to Taxes, such dispute
shall be resolved by the CPA Firm, whose decision shall be
final and binding upon all persons involved and whose
expenses shall be shared equally by Seller and Purchaser.
(i) Post-Closing Actions Which Affect Seller's
Liability for Taxes.
(i) Purchaser shall not permit Sterling or any
Subsidiary to take any action on the Closing Date which could
materially increase Seller's liability for Taxes
(including any liability of Seller to indemnify Purchaser
for Taxes pursuant to this Agreement).
(ii) Purchaser shall indemnify the Seller
Indemnified Parties for all Taxes resulting solely from any
distribution or any deemed distribution by Sterling or any
Subsidiary to its respective shareholders in excess of such
entity's current earnings and profits (as computed for U.S.
Federal income tax purposes and pursuant to Section
5.4(c)(i)) derived during the period beginning on the day
following the Closing Date and ending on the first December
31st thereafter if the Closing Date shall not be December 31
of any year.
(iii) Except to the extent required by law, neither
Purchaser, Sterling, nor any Affiliate of either of them
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<PAGE> 108
shall, without the prior written consent of Seller, amend any
Tax Return filed by, or with respect to, Sterling or any of
its Affiliates for any taxable period, or portion thereof,
beginning before the Closing Date.
(j) Post-Closing Actions which Affect Purchaser's
Liability for Taxes. Seller shall not reattribute any net
operating losses or similar items from Sterling or any
Subsidiary to Seller under Treas. Regs. 1.1502-20 or a similar
law of any other taxing jurisdiction without the prior written
consent of Purchaser.
(k) Maintenance of Books and Records. Until the
applicable statute of limitations (including periods of
waiver) has run for any Tax Returns filed or required to be
filed covering the periods up to and including the Closing
Date, Purchaser shall retain all Books and Records in
existence on the Closing Date and after the Closing Date will
provide Seller access to such Books and Records for
inspection and copying by Seller and its representatives
during normal business hours upon reasonable request and upon
reasonable notice. After the expiration of such period, no
such Books and Records shall be destroyed by Purchaser without
first advising the tax director of Seller in writing
detailing the contents of any such Books and Records and
giving Seller at least 120 days to obtain possession
thereof.
(l) Termination of Existing Tax Sharing Agreements.
Any and all existing Tax sharing agreements or arrangements,
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written or unwritten, binding Sterling or any Subsidiary,
other than an agreement entered into in connection with the
Restructuring, shall be terminated as of the Closing.
(m) At or prior to Closing Seller shall deliver to
Purchaser a certificate of non-foreign status in compliance
with Section 1445 of the Code and applicable Treasury
Regulations.
(n) Assistance and Cooperation. The parties agree
that, after the Closing Date:
(A) Each party shall assist (and cause their
respective Affiliates to assist) the other party in
preparing any Tax Returns which such other party is
responsible for preparing and filing;
(B) The parties shall cooperate fully in preparing
for any audits of, or disputes with taxing authorities
regarding, any Tax Returns and payments in respect
thereof;
(C) The parties shall make available to each other
and to any taxing authority as reasonably requested all
relevant Books and Records relating to Taxes;
(D) Each party shall provide timely notice to the
other in writing of any pending or proposed audits or
assessments with respect to Taxes for which the other may
have an indemnification obligation under this Agreement;
(E) The parties shall furnish the other with copies
of all relevant correspondence received from any taxing
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authority in connection with any audit or information request
with respect to any Taxes referred to in subsection (D) above;
and
(F) Except as otherwise provided herein, the party
requesting assistance or cooperation shall bear the other
party's out-of-pocket expenses in complying with such
request to the extent that those expenses are
attributable to fees and other costs of unaffiliated
third-party service providers.
(o) This Article V shall govern the procedure for
all Tax indemnification claims.
(p) Any reference in this Section 5.4 to Purchaser
and its Affiliates with respect to any time after the Closing
shall be deemed to include Sterling and the Subsidiaries.
Section 5.5 Post-Closing Obligations to Certain
Employees.
(a) Purchaser shall cause each of Sterling and the
Subsidiaries to continue the employment on the Closing Date,
in comparable positions, of all active Employees on such date
or upon the return to active employment of any Employee who
is, on such date, on disability or medical leave or on
Nonmedical Leave, and will maintain for a period of two years
after the Closing Date, without interruption, employee
compensation and benefit plans, programs and policies and
fringe benefits (including post-employment welfare benefits)
that, in the aggregate, will provide benefits to Employees
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that are no less favorable than those provided pursuant to
such employee benefit plans, programs and policies, and fringe
benefits, of each of Sterling and the Subsidiaries as in
effect on the Closing Date. Notwithstanding the foregoing,
for a period of two years after the Closing Date, Purchaser
will cause each of Sterling and the Subsidiaries to maintain
severance programs which provide to each Employee severance
pay and benefits which are no less favorable than those under
the severance plan, program or policy of Sterling or the
Subsidiary applicable to such Employee as in effect on the
date of this Agreement. Employees shall be given credit for
all service with Sterling or any of the Subsidiaries or any
Affiliate of Sterling (or service credited by Sterling or any
of the Subsidiaries or Seller) to the same extent as such
service was credited for such purpose by Sterling or any of
the Subsidiaries or Seller, under (i) all employee benefit
plans, programs and policies, and fringe benefits of
Purchaser in which they become participants for purposes of
eligibility, vesting and benefit accrual and (ii) severance
plans for purposes of calculating the amount of each
Employee's severance benefits. Nothing in this Section 5.5(a)
shall be deemed to require the employment of any Employee to
be continued for any particular period of time after the
Closing Date.
(b) (i) Seller shall cause to be transferred from
the Eastman Kodak Employees' Savings and Investment Plan (the
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"Seller Savings Plan") to the Sterling Winthrop Inc. Salaried
Employees' Savings Plan (the "Transferee Savings Plan") the
liability for the account balances of active Employees who
were participants in the Seller Savings Plan (the "Savings
Plan Employees"), together with assets which are reasonably
acceptable to the trustee of the Transferee Savings Plan and
the fair market value of which is equal to such liability,
and Purchaser shall cause the Transferee Savings Plan to
accept such transfer (the acceptance of the liability being
conditioned upon the asset transfer). The transfer of assets
shall take place within 90 days after the Closing Date;
provided, however, that in no event shall such transfer take
place until the later of (A) the furnishing to Seller by
Purchaser of a favorable determination letter from the
Internal Revenue Service with respect to the qualification of
the Transferee Savings Plan under Section 401(a) of the Code,
as amended to comply with changes to the qualification
requirements of Section 401(a) of the Code made by the Tax
Reform Act of 1986 and other recent legislation and
regulations, and (B) the receipt by Seller of a favorable
determination letter from the Internal Revenue Service with
respect to the continued qualification of the Seller Savings
Plan under Section 401(a) of the Code, as amended to comply
with changes to the qualification requirements of Sec-
tion 401(a) of the Code made by the Tax Reform Act of 1986 and
other recent legislation and
regulations.
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(ii) Effective as of the Closing Date, Purchaser
shall establish (or, in Purchaser's discretion, designate) a
defined benefit plan (the "Transferee Pension Plan") for the
benefit of Employees who participated in the Kodak Retirement
Income Plan (the "Seller Retirement Plan"). Such Employees are
referred to hereinafter as the "Retirement Plan Employees".
The Transferee Pension Plan shall (A) recognize for all
purposes thereunder the service of the Retirement Plan
Employees which was recognized under the Seller Retirement
Plan and (B) provide, upon the transfer of assets referred to
below, that the benefit liabilities of the Retirement Plan
Employees under the Transferee Pension Plan shall in no event
be less than their benefit liabilities under the Seller
Retirement Plan as of the Closing Date.
Seller shall cause to be transferred from the trust
under the Seller Retirement Plan to the trust under the
Transferee Pension Plan assets in the form of cash, cash
equivalents and marketable securities (reasonably acceptable
to the trustee of the Transferee Pension Plan), the fair
market value of which shall be equal to the product of (x)
times (y), where (x) equals the fair market value of the
assets of the Seller Retirement Plan on the date of actual
transfer of assets from the trust thereunder to the trust
under the Transferee Pension Plan, and (y) equals a fraction,
the numerator of which is the present value of the benefit
liabilities on a termination basis of the Retirement Plan
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Employees under the Seller Retirement Plan as of the effective
date of the transfer (the last day of the calendar month in
which the Closing Date occurs) and the denominator of which is
the present value of the benefit liabilities on a termination
basis of all participants in the Seller Retirement Plan as of
the effective date of the transfer (the last day of the
calendar month in which the Closing Date occurs); provided,
however, that the benefits of the Retirement Plan Employees
under the Seller Retirement Plan shall be calculated as if the
credited service for each Retirement Plan Employee continued
to accrue through the last day of the calendar month in which
the Closing Date occurs. Notwithstanding any other provision
hereof, such transfer of assets shall be made in compliance
with Section 414(l) of the Code. Purchaser shall cause the
Transferee Pension Plan to accept such transfer.
The amount to be transferred shall be equitably
adjusted to take into account non-investment receipts and
disbursements of the Seller Retirement Plan after the Closing
Date but prior to the date of transfer provided for in this
subparagraph, such as distributions, contributions and plan
to plan transfers.
The benefit liabilities under the Seller Retirement
Plan shall be valued as of the effective date of the transfer
(the last day of the calendar month in which the Closing Date
occurs), on the basis of the actuarial assumptions for the
Seller Retirement Plan as contained in the most recent
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actuarial report for such Plan that is available as of the
date of this Agreement, as determined by the actuary for the
Seller Retirement Plan and reviewed by the actuary for the
Transferee Pension Plan.
The transfer of assets referred to above shall take
place within 180 days after the Closing Date; provided,
however, that in no event shall such transfer take place
until the last to occur of the following: (i) Purchaser has
furnished to Seller a favorable determination letter from the
Internal Revenue Service with respect to the qualification of
the Transferee Pension Plan under Section 401(a) of the Code,
as amended to comply with the changes to the qualification
requirements of Section 401(a) of the Code made by the Tax
Reform Act of 1986 and other recent legislation and
regulations, (ii) the receipt by Seller of a favorable
determination letter from the Internal Revenue Service with
respect to the continued qualification of the Seller
Retirement Plan under Section 401(a) of the Code, as amended
to (A) comply with changes to the qualification requirements
of Section 401(a) of the Code made by the Tax Reform Act of
1986 and other recent legislation and regulations and
(B) provide for the transfer of assets and benefit liabilities
referred to in this Section, and (iii) the receipt of any
other necessary governmental approval. Notwithstanding any
other provision of this Section 5.5, until the date of the
actual transfer of assets from the Seller Retirement Plan to
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the Transferee Pension Plan, Purchaser and the Transferee
Pension Plan shall be entitled to offset (i) the benefit which
would otherwise be payable to an Employee by the Transferee
Pension Plan at the Employee's retirement or vested
termination of employment by (ii) the accrued benefit with
respect to such Employee under the Seller Retirement Plan
(the offset so calculated to apply without regard to the
benefit actually paid by the Seller Retirement Plan).
Notwithstanding anything contained in this Section
to the contrary, (A) in the event that the Internal Revenue
Service or any other governmental agency takes the position
in a determination letter, ruling, advisory opinion or other
written or oral communication that the transfer of assets
referred to in this Section cannot be made unless (i) addi-
tional contributions are made to the Seller Retirement Plans
or the Transferee Pension Plan or (ii) the Seller Retirement
Plan retains primary or secondary liability with respect to
the benefit liabilities under such Seller Retirement Plan
attributable to Retirement Plan Employees or (B) in the event
that a lawsuit is instituted by any of the foregoing or by
one or more participants in, or fiduciaries (other than Seller
or Purchaser) of, the Seller Retirement Plan or the Transferee
Pension Plan which seeks to enjoin such transfer, to require
additional contributions to the Seller Retirement Plan or the
Transferee Pension Plan, or to have the Seller Retirement Plan
remain liable in whole or in part with respect to any of the
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benefit liabilities under such Seller Retirement Plan attribu-
table to Retirement Plan Employees, then the transfer of
assets referred to in this Section from the Seller Retirement
Plan will not be made until the earliest of (I) the date the
issues raised by the Internal Revenue Service or any other
governmental agency or such lawsuit are resolved favorably,
and Seller and the Seller Retirement Plan shall make every
effort in good faith to carry out the asset transfer, includ-
ing, but not limited to, the vigorous defense of any lawsuit
described in clause (B), and the exhaustion of all rights of
available judicial review and appeal, or (II) the date Seller
and Purchaser enter into a written agreement to resolve on a
basis mutually satisfactory to them the issues raised by the
Internal Revenue Service or any other governmental agency or
such lawsuit.
(iii) Pending the completion of the transfers des-
cribed in this paragraph (b), Seller and Purchaser shall make
arrangements for any required payments to the Savings Plan
Employees and the Retirement Plan Employees from the Seller
Savings Plan and the Seller Retirement Plan. Seller and
Purchaser shall provide each other with access to information
reasonably necessary in order to carry out the provisions of
this paragraph. Seller and Purchaser shall each use their
best efforts to satisfy promptly the conditions for such
transfers and to implement such transfers as soon as
practicable.
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(c) If Purchaser shall include the Employees and
their beneficiaries in Purchaser's medical, dental or health
plans, such plans shall waive any preexisting condition limi-
tations and shall, if such inclusion occurs in the calendar
year which includes the Closing Date, honor any deductible and
out of pocket expenses incurred by such Employees and their
beneficiaries under the medical, dental or health plans of
Seller and the Subsidiaries during the portion of the calendar
year preceding the Closing Date.
(d) Purchaser shall give Seller at least 90 days
advance written notice of any transfer of assets and liabili-
ties from the Sterling Winthrop Inc. Hourly Employees' Savings
Plan or the Sterling Products International Inc. Pension Plan
for Employees who are Employed at Facilities Located in Puerto
Rico (the "Puerto Rico Pension Plan") pursuant to Section
5.5(c) of the Ethical Purchase Agreement. At the time such
notice is given, Purchaser shall cause Sterling to provide
Seller with appropriate information in order to enable Seller
to verify the determination of the calculation of the assets
and liabilities to be transferred, including information
relating to such transfer which Sterling (or its
representatives) provides to Sanofi (or its representatives)
pursuant to the Ethical Purchase Agreement.
(e) Purchaser shall use its best efforts to provide
for transfers of assets and liabilities from (i) Sterling's
non-U.S. benefit plans to non-U.S. benefit plans for
employees
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of the L&F Transferred Business in an equitable manner and (ii) the
Puerto Rico Pension Plan to a defined benefit plan for
employees of the L&F Transferred Business participating therein, in
an equitable manner.
Section 5.6 Compliance with WARN, etc. Purchaser
with respect to the Employees will timely give all notices
required to be given under WARN or other similar statutes or
regulations of any jurisdiction relating to any plant closing
or mass layoff or as otherwise required by any such statute.
Section 5.7 Notification of Certain Matters. Seller
shall give prompt notice to Purchaser and Purchaser shall give
prompt notice to Seller of the occurrence, or non-occurrence,
of any event the occurrence or non-occurrence of which
would be reasonably likely to cause (i) any representation
or warranty of Seller or Purchaser, as the case may be,
contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Closing as the case may
be, or (ii) Seller or Purchaser, as the case may be, to
fail to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to
this Section 5.7 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such
notice.
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Section 5.8 License Agreements.
(a) At the Closing, Sterling and Seller shall
execute and deliver, and Seller shall cause any other
Affiliate of Seller necessary to the effectiveness of this
Section 5.8 to execute and deliver, an exclusive, non-
assignable (except in whole or in part to Affiliates of
Sterling or Purchaser or upon the sale by Sterling of a
substantial portion of the assets related to the license),
perpetual, worldwide, royalty-free license agreement pursuant
to which Seller will license to Sterling nanoparticulate
technology (including patents and patent applications) to the
extent necessary to permit Sterling to, and to hire others
(on terms reasonably satisfactory to Seller) to, develop,
manufacture and sell products containing naproxen as an over-
the-counter product; provided, however, that no representation
will be made that Seller's technology constitutes all the
technology necessary for the development, manufacture or sale
of such product. In addition to the terms stated above, the
other provisions of said licenses shall be those normal and
customary to similar licenses consistent with Seller's past
practices.
(b) At the Closing, Sterling and Seller shall
execute and deliver, and Seller shall cause any other
Affiliate of Seller necessary to the effectiveness of this
Section 5.8 to execute and deliver, a non-assignable (except
in whole or in part to Affiliates of Sterling or Purchaser
or
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upon the sale by Sterling of a substantial portion of the
assets related to the license), perpetual, worldwide, royalty-
free license agreement pursuant to which Seller will license
to Sterling gelcap and geltab technology (including patents
and patent applications) to the extent necessary to permit
Sterling to, and to hire others (on terms reasonably
satisfactory to Seller) to, develop, manufacture and sell
human pharmaceutical products currently under development or
similar products for the same or similar indications to be
sold as part of the Continuing Business as over-the-counter
products; provided, however, that no representation will be
made that Seller's technology constitutes all the technology
necessary for the development, manufacture or sale of such
products. Such license shall be exclusive as to analgesics
that are over-the-counter human pharmaceutical products and
shall be non-exclusive as to other over-the-counter human
pharmaceutical products. In addition to the terms stated
above, the other provisions of said licenses shall be those
normal and customary to similar licenses consistent with
Seller's past practices.
Section 5.9 Certain Provisions Relating to the
Restructuring.
(a) Seller shall, to the extent reasonably
practicable, complete the Restructuring prior to the Closing.
Purchaser will cooperate with Seller and Sterling in carrying
out the Restructuring. If Seller becomes aware that any
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portion of the Restructuring is not likely to be complete
prior to the Closing (including, without limitation, in the
event that assets and liabilities of Sterling constituting
part of the Transferred Businesses will not be sold,
assigned, transferred, conveyed or delivered prior to the
Closing), Seller shall attempt to identify such portion of the
Restructuring (and such assets and liabilities) and give
Purchaser notice thereof. In the event that portions of the
Restructuring are not complete prior to the Closing
(including, without limitation, in the event that assets and
liabilities of Sterling constituting part of the Transferred
Businesses have not been sold, assigned, transferred,
conveyed or delivered because a required authorization,
approval, consent or waiver has not been obtained), then (i)
Purchaser shall cause Sterling and the Subsidiaries, at
Seller's sole cost and expense, to comply with any provisions
of the Ethical Asset Purchase Agreement and any other
agreement to which Sterling or any of the Subsidiaries is a
party relating to holding, operating and transferring any such
assets and liabilities and performing any unperformed
obligations of Sterling or any such Subsidiary in connection
with such por- tions of the Restructuring as are not complete
and (ii) Pur- chaser shall cause Sterling and the Subsidiaries
to take such steps as directed in writing by Seller as are
necessary to permit Seller to complete the Restructuring in
the manner selected by Seller and to transfer to Seller (or
the Person
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designated by Seller), without payment of further
consideration, any assets or cash received by Sterling or any
of the Subsidiaries in connection with the Restructuring.
(b) In the event that record ownership of any
assets or liabilities related to a portion of a Transferred
Business has not been transferred prior to the Closing,
Purchaser shall hold, solely of record and not beneficially,
the portion of such Transferred Business represented by such
assets and liabilities for the benefit of such Person as may
be designated by Seller, and Purchaser shall use its
reasonable best efforts, and shall cause Sterling and its
Affiliates to use their reasonable best efforts pending the
transfer of record ownership of the portion of such
Transferred Business represented by such assets and
liabilities, to provide to Seller's designee all of the
benefits and liabilities associated with the ownership and
operation of the portion of such Transferred Business
represented by such assets and liabilities and, accordingly,
Purchaser and Sterling shall cause the portion of such
Transferred Business represented by such assets and
liabilities to be operated as may reasonably be instructed by
Seller or its designee; provided, however, that Purchaser,
Sterling and their respective Affiliates shall not have any
liability to Seller or any other Person in respect of any
action taken with respect to such assets and liabilities in
accordance with such instructions. In performing its
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obligations hereunder, neither Purchaser, nor Sterling, nor
any of their respective Affiliates shall be construed to be a
trustee or other fiduciary for the beneficial owner of such
portion of the Transferred Business.
(c) Purchaser acknowledges that, in connection with
the Restructuring, Seller and Sterling have entered into the
Ethical Asset Purchase Agreement, and that Seller, Sterling
and certain Affiliates of Sterling will enter into certain
other agreements relating to the Restructuring. Seller will
consult with Purchaser before entering into such other
agreements and will not agree to any terms which impose
material liabilities or obligations on Sterling or any of the
Subsidiaries following the Closing without Purchaser's
consent, which consent shall not be unreasonably withheld.
Purchaser's consent shall not be deemed to have been
reasonably withheld if Seller shall have agreed to fully
indemnify Purchaser against any Losses associated with such
liabilities or obligations and Purchaser believes in its
reasonable judgment that such indemnity is enforceable.
Purchaser agrees to cause Sterling and its Subsidiaries to
perform their obligations under the Ethical Asset Purchase
Agreement and such other agreements relating to the
Restructuring in accordance with their respective terms.
(d) Seller shall use its reasonable best efforts to
bring about the Closing (as defined in the Ethical Asset
Purchase Agreement) of the transfer of the Ethical
Transferred
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Business by the end of the day on October 1, 1994 or as
promptly as practicable thereafter. Seller shall provide to
Purchaser for its review, and shall consult with Seller with
respect to, all schedules prepared identifying assets and
liabilities to be transferred pursuant to the Ethical Asset
Purchase Agreement.
(e) Prior to the Closing, Seller shall cause
Sterling to transfer the UPT Facility to Seller, an Affiliate
of Seller or any other Person designated by Seller.
(f) Prior to the Closing, Seller shall cause
Sterling either to transfer the Nanoparticulate Business Unit
to Seller, an Affiliate of Seller or any other Person
designated by Seller.
(g) Prior to the Closing, Seller shall cause
Sterling to transfer the L&F Transferred Business to Seller, an
Affiliate of Seller or any other Person designated by Seller.
Notwithstanding any provision to the contrary contained in
this Agreement and in furtherance of the provisions set forth
in paragraph (a) of this Section 5.9, Purchaser acknowledges
that record ownership of certain assets and liabilities
constituting part of the L&F Transferred Business may not be
transferred out of Sterling or its Subsidiaries prior to the
Closing. With respect to any such assets and liabilities,
Purchaser shall agree with Seller, the Affiliate of Seller or
such other Person, as the case may be,
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<PAGE> 126
as to the means of such transfer of such assets and
liabilities.
(h) On the closing date under the L&F Purchase Agreement,
Purchaser or Seller, as the case may be, shall cause Sterling
to execute and deliver a transitional services agreement or
agreements with the purchaser or purchasers of the L&F Transferred
Business pursuant to which for a period of 12 months following
the closing date under the L&F Purchase Agreement, Sterling shall
make available to such purchaser or purchasers the support and
administrative services currently being provided to the L&F
Transferred Business on terms, and for a price equal to
Sterling's fully allocated cost determined on a basis,
substantially consistent with Sterling's recent historical
practice, including, without limitation, computer and data
processing services and any software associated therewith,
customer billing services, customer equipment services, site
services, utility services, distribution services and
maintenance services for equipment included in the L&F Transferred
Business.
(i) At the closing under the L&F Purchase Agreement,
Purchaser or Seller, as the case may be, shall cause Sterling
to execute and deliver a supply agreement pursuant to which
Sterling shall agree to maintain in place all written
agreements existing on the closing date under the L&F Purchase
Agreement that provide for the supply by Sterling of materials
to the L&F Transferred Business for a period of
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three years from the closing date under the L&F Purchase Agreement.
The supply agreement under this Section 5.9(i) and the
transitional services agreement under Section 5.9(h), the
performance of which are not material to the Continuing
Business, shall collectively be referred to as the "L&F Continuing
Services Agreements".
(j)(i) On the Closing Date, Seller and Purchaser
shall execute and deliver a transitional services agreement
(the "Kodak Transitional Services Agreement") pursuant to
which Purchaser will agree to cause Sterling to provide Seller
with support and administrative services (other than tax-
related services) through December 31, 1995. Such services
will be provided to Seller at a price equal to Sterling's
fully allocated cost determined on a basis substantially
consistent with Sterling's recent historical practice. Such
transitional services shall include, without limitation,
services in respect of finance, legal and human resources.
Purchaser acknowledges that the employees of Sterling listed
in Schedule 5.9(j) hereto have entered into letter agreements
with Sterling providing for their continued employment by
Sterling for the term specified in Schedule 5.9(j).
Purchaser agrees that so long as such employees remain
employees of Sterling, Purchaser will make such employees
(other than those employees identified as tax employees)
available to Seller in carrying out its obligations under the
Kodak Transitional Services Agreement. In the event that,
prior to December 31,
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1995, any of the employees listed in Schedule 5.9(j) shall
cease to be employees of Sterling, Purchaser shall arrange for
the provision by other employees (other than those employees
identified as tax employees) of, or consultants to, Sterling
or by employees (other than those employees identified as tax
employees) of, or consultants to, Purchaser of the services
required pursuant to the Kodak Transitional Services
Agreement. The parties acknowledge that such employees or
consultants may also be required to perform services for
Sanofi and the purchaser under the L&F Purchase Agreement and
Purchaser agrees to make such employees or consultants
available pursuant to the Ethical Asset Purchase Agreement
and the L&F Purchase Agreement. Seller shall reimburse Purchaser for
the post-closing stay bonuses provided for in the letter
agreements of the employees of Sterling listed on Schedule
5.9(j) (to the extent earned by such individuals in accordance
with the terms of their letter agreements).
(ii) On the Closing Date, Seller and Purchaser
shall execute and deliver a tax transitional services
agreement pursuant to which (i) Purchaser shall agree that on
the Closing Date, Purchaser shall cause Sterling to offer
continued employment to the employees identified as tax
employees on Schedule 5.9(j) and that so long as such
employees remain employees of Sterling, they shall report
directly to the tax department of Seller during the term of
their letter agreements, (ii) Seller shall agree that, so
long
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as such employees remain employees of Sterling and during the
term of the letter agreements (A) it will direct such
employees to devote a reasonable amount of their time, at no
charge to Purchaser or Sterling, to the work necessary in
connection with Sterling's ongoing tax compliance and (B)
Seller will perform Sterling's continuing obligations to
provide tax-related services pursuant to the Ethical Asset
Purchase Agreement and the L&F Purchase Agreement and (iii) in the
event that, prior to December 31, 1995, any of the tax
employees identified on Schedule 5.9(j) shall cease to be
employees of Sterling, Purchaser shall arrange for the
provision by other tax employees of, or consultants to,
Sterling or by tax employees of, or consultants to, Purchaser
of the services formerly provided by such tax employees
identified on Schedule 5.9(j). For the period through
December 31, 1995, Seller shall reimburse Purchaser (or
Sterling, as the case may be) for Purchaser's (or Sterling's)
fully allocated cost of providing such tax services
determined on a basis substantially consistent with Sterling's
recent historical practice, including, in the case of the tax
employees identified on Schedule 5.9(j), the post-closing stay
bonuses provided for in such employees' letter agreements (to
the extent earned by such individuals in accordance with the
terms of their letter agreements). Seller shall be entitled
to receive all compensation and reimbursement payments payable
under the Ethical Asset Purchase Agreement and the L&F
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Purchase Agreement in respect of services performed by the tax
employees prior to December 31, 1995.
(k) Except as otherwise expressly provided herein
or in the Ethical Asset Purchase Agreement, the following
general principles shall be applied in any agreement entered
into in connection with the Restructuring whereunder Sterling
or any of its Subsidiaries is to supply goods or services to
or in respect of any Person, asset or liability that is not
part of the Continuing Business: (i) services shall be
supplied at a price equal to Sterling's fully allocated cost,
(ii) goods shall be supplied at a price equal to Sterling's
fully allocated cost plus 3%, (iii) Sterling's fully allocated
cost shall be determined on a basis substantially consistent
with Sterling's recent historical practice, (iv) such
agreement shall be terminable at Sterling's option after three
years, and (v) such agreement shall otherwise be on terms
substantially consistent with Sterling's recent historical
practice.
(l) If any payment of monies is made by Sterling or
any of its Subsidiaries pursuant to this Section 5.9 in
respect of any assets or liabilities which are, or are to be,
part of the Transferred Business, to Seller or another Person
designated by Seller, such payment shall be made net of all
remittance costs (i.e., the costs of being a "conduit"),
including withholding, documentary, stamp and similar Taxes
related to the making of such payment. Purchaser may set
off,
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and may cause Sterling or any of its Subsidiaries to set off,
against payments due pursuant to this Section 5.9 to Seller,
the amount of any indemnity payments due under Section 7.3
hereof but unpaid.
(m) Notwithstanding any provision of this Section
5.9, (i) neither Sterling nor any of its Subsidiaries shall be
required to hold or operate any assets or liabilities which
are to be part of the Transferred Business for any period
after the third anniversary of the Closing Date, and from and
after such third anniversary Purchaser may require Seller to
cause any such assets or liabilities to be transferred to
Seller or a Person designated by Seller, and (ii) Purchaser
shall not be required to, and shall not be required to cause
Sterling or any of its Subsidiaries to take, or refrain from
taking, any action with respect to assets or liabilities
which are to be part of the Transferred Business, if such
action or omission to act would constitute a violation of law
or if Purchaser reasonably believes that the indemnities
provided to Purchaser under this Agreement are insufficient to
hold Purchaser harmless, against any loss, claim, damage,
liability or expense resulting from such action or omission.
Section 5.10 Transfer of Certain Assets and Lia-
bilities. Prior to the Closing, Seller shall cause Sterling to
transfer to one or more Affiliates of Seller (i) the items of
owned and leased real property listed in Schedule 5.10(i);
(ii) the fixtures and equipment listed in Schedule 5.10(ii);
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(iii) Sterling's rights under the Royal Insurance Litigation
(and Seller shall assume responsibility for prosecuting such
litigation); and (iv) the items listed on Schedule 5.10(iv).
Section 5.11 Financial Information. Purchaser
shall, and shall cause Sterling to, provide Seller and its
accountants (i) all data and financial statements requested
by Seller and (ii) full access to the Books and Records, any
other information, including work papers of its accountants,
and to any employees to the extent reasonably necessary for
Seller (i) to prepare its consolidated financial statements
and to comply with reporting obligations in respect thereof
and (ii) to comply with its other obligations hereunder,
under the Ethical Asset Purchase Agreement, the L&F Purchase
Agreement and any other agreement relating to the Restructur-
ing.
Section 5.12 Retained Employees. Prior to the
Closing, Seller and Sterling will take such steps as are
necessary to transfer employment of the persons listed in
Schedule 5.12 from Sterling to Seller or an Affiliate of
Seller. Purchaser acknowledges and consents to such transfer.
Section 5.13 Management of Certain Liabilities.
(a) Seller and Purchaser agree that Seller shall
hereby be hired by Sterling and Purchaser to undertake the
complete administration and management of the environmental
remediation of the properties listed in Schedule 5.13(a) and
the other environmental and other contingent liabilities
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listed in Schedule 5.13(a). Pursuant thereto, Seller or an
Affiliate of Seller designated by Seller shall administer,
manage and conduct such remediation (to the extent such
remediation is required by any Environmental Laws,
Governmental Entity or agreement of the parties). Such
administration and management shall include, but shall not be
limited to, direct payment, on behalf of Sterling and
Purchaser, of all out-of-pocket expenses incurred in
connection with administering, managing and conducting such
remediation (including, but not limited to, all costs related
to hiring third parties and all administrative costs
including costs related to Seller's or such Affiliate of
Seller's personnel) and shall bill Sterling for all such
expenses and Seller's or such Affiliate's management
services and provide a summary of the status of each
remediation or liability at least annually.
(b) Sterling and Purchaser shall appoint Seller or
such Affiliate of Seller their attorney-in-fact to take
actions required to be taken in connection with the admini-
stration and management of such properties and liabilities
and shall take all such further actions as are necessary to
give effect to the provisions of this Section 5.13.
(c) Purchaser shall not (i) assign or transfer any
such properties or liabilities or take any other similar
action with respect to such properties or liabilities that
could (x) cause Purchaser to lose the ability to deduct for
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income tax purposes expenses paid by Seller on behalf of
Purchaser in respect of such properties and liabilities or (y)
increase Seller's liability in respect of such properties or
adversely affect Seller's ability to manage such properties or
liabilities, or (ii) enter upon or permit any other person to
enter upon any such properties or take any other action that
could increase the liability of Seller to Purchaser pursuant
to Section 7.3(a)(v).
Section 5.14 Further Assurances. At any time after
the Closing Date, Seller and Purchaser shall promptly execute,
acknowledge and deliver any other assurances or documents
reasonably requested by Seller and Purchaser, as the case may
be, and necessary for Seller and Purchaser, as the case may
be, to satisfy its respective obligations hereunder or obtain
the benefits contemplated hereby.
Section 5.15 Resignations. At the Closing and
except as otherwise requested by Purchaser, Seller will
deliver to Purchaser the resignations (effective on or prior
to Closing) of all directors of Sterling and of each
Subsidiary from their positions as directors, and Seller will
cause each such director holding director's qualifying shares
in the relevant entity to transfer at Closing to Purchaser
(or Purchaser's designee) without payment therefor such
shares.
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ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Pur-
chaser and Seller. The obligations of the parties hereto to
effect the Closing are subject to the satisfaction (or waiver)
prior to the Closing of the following conditions:
(a) HSR and Other Antitrust Laws. All required
filings under the HSR Act and other Competition Laws shall
have been made and any required waiting period under the laws
applicable to the transactions contemplated hereby shall have
expired or been earlier terminated. In the case of each
country or territory (including, for this purpose the Member
States of the European Union) in which Sterling or any of its
Affiliates or Purchaser or any of its Affiliates carries on
business and in which the implementation of the transactions
contemplated by this Agreement will or might give rise to any
investigation or other proceeding under the Competition Laws
of that country or territory, neither this Agreement nor any
of the material transactions contemplated hereby nor any
actual or potential consequences thereof shall have been
referred to any Governmental Entity having jurisdiction under
the Competition Laws of that country or territory for
investigation or review pursuant to those Competition Laws
and no proceedings with respect thereto shall have been
initiated before any such Governmental Entity and be
continuing;
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(b) No Injunctions. There shall not (i) be in
effect any statute, regulation, order, decree or judgment of
any Governmental Entity which makes illegal or enjoins or
prevents in any material respect the consummation of the
transactions contemplated by this Agreement or (ii) have been
commenced or threatened in writing, and shall be continuing,
any action or proceeding by any Governmental Entity which
seeks to prevent or enjoin in any material respect the
transactions contemplated by this Agreement; and
(c) Consents and Approvals. All Required Approvals
shall have been made or obtained and shall not have expired or
been rescinded.
Section 6.2 Conditions to the Obligations of Pur-
chaser. The obligation of Purchaser to effect the Closing is
subject to the satisfaction (or waiver by the Purchaser) prior
to the Closing, of the following conditions:
(a) Representations and Warranties. The represen-
tations and warranties of Seller contained herein shall have
been true and correct in all material respects when made and
shall be true and correct in all material respects as of the
Closing, as if made as of the Closing (except that
representations and warranties that are made as of a specific
date need be true in all material respects only as of such
date), and Purchaser shall have received certificates to such
effect dated the Closing Date and executed by a duly
authorized officer of
Seller;
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(b) Covenants. The covenants and agreements of
Seller to be performed on or prior to the Closing shall have
been duly performed in all material respects, and Purchaser
shall have received certificates to such effect dated the
Closing Date and executed by a duly authorized officer of
Seller;
(c) Legal Opinions. Purchaser shall have received
the opinions of Seller's counsel, dated as of the Closing
Date, addressed to Purchaser substantially to the effect set
forth in Annex 6.2(c) hereto; and
(d) No Material Adverse Change. Since December 31,
1993, the Continuing Business shall not have suffered a
Material Adverse Change and Purchaser shall have received a
certificate to such effect dated the Closing Date and executed
by a duly authorized officer of Seller.
Section 6.3 Conditions to the Obligations of
Seller. The obligation of Seller to effect the Closing is
subject to the satisfaction (or waiver) prior to the Closing
of the following conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Purchaser contained herein shall
have been true and correct in all material respects when made
and shall be true and correct in all material respects as of
the Closing, as if made as of the Closing (except that
representations and warranties that are made as of a specific
date need be true in all material respects only as of such
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date), and Seller shall have received a certificate to such
effect dated the Closing Date and executed by a duly
authorized officer of Purchaser.
(b) Covenants. The covenants and agreements of
Purchaser to be performed on or prior to the Closing shall
have been duly performed in all material respects, and Seller
shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of
Purchaser.
(c) Legal Opinions. Seller shall have received the
opinions of Purchaser's counsel dated as of the Closing Date,
addressed to Seller substantially to the effect set forth in
Annex 6.3(c) hereto.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival. The representations and
warranties of Seller and Purchaser contained in this Agreement
shall survive the Closing for the period set forth in this
Section 7.1. All of the representations and warranties of
Seller contained in this Agreement and all claims and causes
of action with respect thereto shall terminate upon expiration
of 18 months after the Closing Date, except that the
representations and warranties in Sections 3.1, 3.2, 3.3, 3.4,
3.5(b), 3.6 and 3.7 shall have no expiration date, the
representation and warranty in Section 3.10 shall survive,
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with respect to any Tax Return, until the applicable statute
of limitations has run for any such Tax Return required to be
filed on or before the date of this Agreement and the
representations and warranties in Sections 3.11(b) and
3.11(c) shall survive, with respect to any transaction that
could subject Sterling or any Subsidiary to any Tax or penalty
under ERISA, until the applicable statute of limitations has
run for such transaction. The representations and warranties
of Purchaser contained in Sections 4.1, 4.2, 4.3, 4.4 and 4.5
shall have no expiration date, the representation and warranty
of Purchaser contained in Section 4.8 shall terminate three
years after the Closing Date and the representations and
warranties of Purchaser contained in Sections 4.6 and 4.7
shall terminate upon the expiration of 18 months after the
Closing Date. In the event notice of any claim for
indemnification under Section 7.2(a) or Section 7.3(a)(i)
hereof shall have been given (within the meaning of Sec- tion
9.1) within the applicable survival period, the represen-
tations and warranties that are the subject of such indemnifi-
cation claim shall survive until such time as such claim is
finally resolved.
Section 7.2 Indemnification by Purchaser.
(a) Purchaser hereby agrees that it shall
indemnify, defend and hold harmless Seller, its Affiliates,
and, if applicable, their respective directors, officers,
shareholders, partners, attorneys, accountants, agents and
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employees and their heirs, successors and assigns (the "Seller
Indemnified Parties") from, against and in respect of any
damages, claims, losses, charges, actions, suits, proceedings,
deficiencies, Taxes, interest, penalties, and reasonable costs
and expenses (including without limitation reasonable attor-
neys' fees, removal costs, remediation costs, closure costs,
fines, penalties and expenses of investigation and ongoing
monitoring) (collectively, the "Losses") imposed on, sus-
tained, incurred or suffered by or asserted against any of the
Seller Indemnified Parties, directly or indirectly relating to
or arising out of (i) subject to Section 7.2(b), any breach of
any representation or warranty made by Purchaser contained in
this Agreement; (ii) the breach of any covenant or agreement
of Purchaser contained in this Agreement; and (iii) all other
liabilities (other than Indemnified Liabilities) relating to,
or constituting a cost of, the Continuing Business.
(b) Purchaser shall not be liable to the Seller
Indemnified Parties for any Losses with respect to the
matters contained in Section 7.2(a)(i) except to the extent
(and then only to the extent) the Losses therefrom exceed
$20,000,000 and then only for all such Losses in excess
thereof up to an aggregate amount equal to $1,000,000,000.
Section 7.3 Indemnification by Seller.
(a) Seller hereby agrees that it shall indemnify,
defend and hold harmless Purchaser, its Affiliates and, if
applicable, their respective directors, officers,
share
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holders, partners, attorneys, accountants, agents and
employees and their heirs, successors and assigns (the
"Purchaser Indemnified Parties" and, collectively with the
Seller Indemnified Parties, the "Indemnified Parties") from,
against and in respect of any Losses imposed on, sustained,
incurred or suffered by or asserted against any of the Pur-
chaser Indemnified Parties, directly or indirectly relating
to or arising out of (i) subject to Section 7.3(b), any breach
of any representation or warranty made by Seller contained in
this Agreement (other than Section 3.22); (ii) any liability
or expense of Sterling relating to, or arising out of, the
Transferred Businesses or holding and operating any assets or
liabilities which are to be part of the Transferred Business,
or otherwise constituting a cost of the Restructuring (in
each case to the extent not reimbursed by a third party),
whether arising prior to or after the Closing, including any
liability of Sterling relating to the Transferred Businesses
listed in Schedule 7.3(a)(ii); provided that this Section
7.3(a)(ii) shall not apply to any liability to the extent that
such liability arises out of the breach by Purchaser
of any covenant contained in Article V with respect to
the Transferred Businesses or the breach by Sterling of any of
the agreements of Sterling referred to in Section 5.9(c);
(iii)
the breach of any covenant or agreement of Seller contained in
this Agreement; (iv) any item listed on Schedule 5.13(a),
including any expense incurred by Sterling or Purchaser in
the
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management, administration and satisfaction of such
liabilities and any other liabilities associated with the
properties to which such liabilities relate; (v) any
Indemnified Liability; (vi) any Undisclosed OTC Environmental
Liability; (vii) 50% of any Unknown OTC Environmental
Liability; and (viii) 50% of any OTC Products Liability to
the extent that the aggregate of all OTC Products Liabilities
exceeds the reserve included on the Balance Sheet in respect
of products liabilities plus the amount of all additional such
reserves accrued after the date of the Balance Sheet and prior
to the Closing Date (to the extent such additional reserves
result in a decrease in Net Working Capital). It is
understood that Seller shall not indemnify Purchaser for any
Disclosed OTC Environmental Liability. The right of Purchaser
to indemnification pursuant to Section 7.3(a)(vi), Section
7.3(a)(vii) and Section 7.3(a)(viii) shall terminate upon the
eighth anniversary of this Agreement, provided that the right
of Purchaser to indemnification under Section 7.3(a)(viii)
with respect to Reyes Syndrome cases shall terminate upon the
fifteenth anniversary of this Agreement. Purchaser
acknowledges that this Article VII constitutes Purchaser's
sole remedy with respect to any Losses or liability under any
Environmental Law or with respect to any Hazardous Substance
and expressly waives any other rights or cause of action
under any Environmental Law or with respect to any claim
involving the presence or exposure to any Hazardous
Substance.
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(b) Seller shall not be liable to the Purchaser
Indemnified Parties for any Losses with respect to the matters
contained in Section 7.3(a)(i) except to the extent (and then
only to the extent) the Losses therefrom exceed $20,000,000
and then only for all such Losses in excess thereof up to an
aggregate amount equal to $1,000,000,000 (it being understood
that the foregoing limitation does not apply to the matters
contained in Section 7.3(a)(ii), (iii), (iv), (v), (vi),
(vii), and (viii)).
(c) In the event that Seller is the subject of a
proposed Change In Control Transaction (as defined below),
Seller agrees that, as a condition to the consummation of
such Change in Control Transaction, it will cause the
acquiring Person to expressly assume Seller's obligations
under this Agreement, including, without limitation, all of
Seller's indemnification obligations hereunder and thereunder.
For purposes of this Section 7.3(c), the term "Change in
Control Transaction" shall mean any transaction pursuant to
which (i) any Person acquires 50% or more of the outstanding
shares of Seller capital stock pursuant to an agreement with
Seller, (ii) any Person acquires 50% or more of the total
assets of Seller and its subsidiaries, taken as a whole,
(iii) any Person merges, consolidates or combines in any
other way with Seller or any of its subsidiaries and (iv)
Seller makes a stock dividend or any other distribution (of
stock or assets) with respect to its common stock or
subdivides, combines or
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reclassifies its common stock and, as a result thereof, any
Person owns more than 50% of the voting power of Seller's
capital stock.
Section 7.4 Indemnification Procedures. With
respect to third party claims other than those relating to
Taxes, all claims for indemnification by any Indemnified Party
hereunder shall be asserted and resolved as set forth in this
Section 7.4. In the event that any claim or demand for which
an indemnifying party, Seller or Purchaser as the case may be
(an "Indemnifying Party") may be liable to any Indemnified
Party hereunder (a "Claim") is asserted against or sought to
be collected from any Indemnified Party by a third party, such
Indemnified Party shall promptly, but in no event more than 15
days following such Indemnified Party's receipt of written
notice of such Claim, notify the Indemnifying Party in writing
of such Claim and the amount or the estimated amount
thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such Claim) (the
"Claim Notice"). The failure on the part of the Indemnified
Party to give any such Claim Notice within such 15 day period
shall relieve the Indemnifying Party of any indemnification
obligation hereunder unless, and only to the extent that, the
Indemnifying Party is materially prejudiced thereby. The
Indemnifying Party shall have 60 days from the personal
delivery or mailing of the Claim Notice (the "Notice Period")
to notify the Indemnified Party (a) whether or not the
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Indemnifying Party disputes the liability of the Indemnifying
Party to the Indemnified Party hereunder with respect to such
Claim and (b) whether or not it desires to defend the Indemni-
fied Party against such Claim. All costs and expenses
incurred by the Indemnifying Party in defending such Claim
shall be a liability of, and shall be paid by, the
Indemnifying Party; provided, however, that the amount of
such costs and expenses that shall be a liability of the
Indemnifying Party hereunder shall be subject to the
limitations set forth in Section 7.3(b) hereof. Except as
hereinafter provided, in the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that
it desires to defend the Indemnified Party against such Claim,
the Indemnifying Party shall, at its sole cost and expense,
have the right to defend the Indemnified Party by appropriate
proceedings and shall have the sole power to direct and
control such defense; provided, that the Indemnifying Party
shall not take any action which would result in the creation,
and shall promptly seek the removal, of any Encumbrance on
the property or assets of the Indemnified Party resulting
from such Claim or the litigation thereof. If any
Indemnified Party desires to participate in any such defense
it may do so at its sole cost and expense. The Indemnified
Party shall not settle a Claim for which it is indemnified by
the Indemnifying Party without the written consent of the
Indemnifying Party unless the Indemnifying Party elects not to
defend the
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Indemnified Party against such Claim. The Indemnifying Party
may, with the consent of the Indemnified Party (which consent
shall not be unreasonably withheld), settle or compromise any
action or consent to the entry of any judgment which (i)
includes as a term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a duly executed written
unconditional release of the Indemnified Party from all
liability in respect of such action, which release shall be
reasonably satisfactory in form and substance to counsel for
the Indemnified Party and (ii) would not adversely affect the
right of the Indemnified Party and its Affiliates to own, hold
and use their respective assets or operate businesses.
Notwithstanding the foregoing, the Indemnified Party shall
have the sole right to defend, settle or compromise any Claim
with respect to which it has waived its right to
indemnification pursuant to this Agreement. Notwithstanding
the foregoing, the Indemnified Party, during the period the
Indemnifying Party is determining whether to elect to assume
the defense of a matter covered by this section, may take
such reasonable actions as it deems necessary to preserve any
and all rights with respect to the matter, without such
actions being construed as a waiver of the Indemnified Party's
rights to defense and indemnification pursuant to this
Agreement. If the Indemnifying Party elects not to defend the
Indemnified Party against such Claim, whether by not
giving the Indemnified Party timely notice as
provided above or
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otherwise, then the amount of any such Claim, or, if the same
be contested by the Indemnified Party, then that portion
thereof as to which such defense is unsuccessful (and the
reasonable costs and expenses pertaining to such defense)
shall be the liability of the Indemnifying Party hereunder,
subject to the limitations set forth in Section 7.3(b)
hereof. To the extent the Indemnifying Party shall direct,
control or participate in the defense or settlement of any
third party claim or demand, the Indemnified Party will give
the Indemnifying Party and its counsel access to, during
normal business hours, the relevant business records and other
documents, and shall permit them to consult with the employees
and counsel of the Indemnified Party. The Indemnified Party
shall use its reasonable efforts in the defense of all such
claims.
Section 7.5 Characterization of Indemnification
Payments. All amounts paid by Seller or Purchaser under
Article V and this Article VII shall be treated for all Tax
purposes as adjustments to the Purchase Price except to the
extent such treatment is not permitted by the applicable Tax
Law. In the event that such treatment is disputed by any
taxing authority, the party receiving notice of such dispute
shall promptly notify and consult with the other party
concerning resolution of such dispute.
Section 7.6 Computation of Losses Subject to Indem-
nification. The amount of any Loss for which
indemnification
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is provided under this Article VII or otherwise in this
Agreement shall be computed net of the actual decrease in
income taxes paid as a result of realizing or reflecting such
Loss for tax purposes (calculated in accordance with the
methodology and procedures set forth in Section 5.4(h)) and
any insurance proceeds received by the Indemnified Party
pursuant to an insurance policy listed on Schedule 3.20 with
respect to such Loss.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by agreement of Purchaser and Seller;
(b) by either Purchaser or Seller, by giving
written notice of such termination to the other party, if
Closing shall not have occurred on or prior to January 31,
1995 (unless the failure to consummate the Closing by such
date shall be due to the failure of the party seeking to
terminate this Agreement to have fulfilled any of its
obligations under this Agreement, including, without
limitation, the obligations of Purchaser under Section 5.3
hereof);
(c) by either Seller or Purchaser if any court of
competent jurisdiction or other competent Governmental Entity
shall have issued a statute, rule, regulation, order, decree
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or injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such statute,
rule, regulation, order, decree or injunction or other action
shall have become final and nonappealable;
(d) by Purchaser if Seller has materially breached
any representation, warranty, covenant or agreement contained
in this Agreement and such breach is either not capable of
being cured prior to the Closing or if such breach is capable
of being cured, is not so cured within a reasonable amount of
time;
(e) by Seller if Purchaser has materially breached
any representation, warranty, covenant or agreement contained
in this Agreement and such breach is either not capable of
being cured prior to the Closing or if such breach is capable
of being cured, is not so cured within a reasonable amount of
time; or
(f) by Seller or Purchaser, as the case may be, if
the Closing shall not have occurred within two Business Days
of the date set forth in Section 2.4(a) for the Closing as a
result of any action or inaction by Seller or Purchaser, as
the case may be.
Section 8.2 Effect of Termination. In the event of
the termination of this Agreement in accordance with Section
8.1 hereof, this Agreement shall thereafter become void and
have no effect, and no party hereto shall have any liability
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to the other party hereto or their respective Affiliates,
directors, officers or employees, except for the obligations
of the parties hereto contained in this Section 8.2 and in
Sections 9.1, 9.7, 9.8, 9.9 and 9.11 hereof, and except that
nothing herein will relieve any party from liability for any
breach of this Agreement prior to such termination.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. All notices or other communi-
cations hereunder shall be deemed to have been duly given and
made if in writing and if served by personal delivery upon the
party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national
courier service, or if sent by telecopier, provided that the
telecopy is promptly confirmed by telephone confirmation
thereof, to the person at the address set forth below, or such
other address as may be designated in writing hereafter, in
the same manner, by such person:
To Purchaser:
SMITHKLINE BEECHAM
plc 1 New Horizons
Court Great West Road,
Brentford
Middlesex TW8
9EP United
Kingdom Telephone:
011-44-81-975-2030 Telecopy:
011-44-81-975-2040 Attn:
General Counsel
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With a copy to:
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM
919 Third Avenue
New York, New York 10022
Telephone: 212-735-3000
Telecopy: 215-735-2000
Attn: Eileen Nugent Simon
To Seller:
EASTMAN KODAK COMPANY
343 State Street
Rochester, New York
14650 Telephone:
716-724-4332 Telecopy:
716-724-9448 Attn:
General Counsel
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
Attn: George H. White
Section 9.2 Amendment; Waiver. Any provision of
this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of
an amendment, by Purchaser and Seller, or in the case of a
waiver, by the party against whom the waiver is to be
effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and, except
as
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otherwise provided herein, shall not be exclusive of any
rights or remedies provided by law.
Section 9.3 Assignment. (a) No party to this
Agreement may assign any of its rights or obligations under
this Agreement without the prior written consent of the other
party hereto.
Notwithstanding the foregoing, (i) Purchaser and
Seller may assign all or any portion of their rights and
obligations pursuant to this Agreement to one or more of
their respective Affiliates, (ii) Purchaser may assign all or
any portion of its rights and obligations pursuant to this
Agreement to one or more third parties who shall have agreed
to acquire from Purchaser all or part of the Continuing
Business; provided, in the case of each of clause (i) and
clause (ii) above, that the assigning party shall remain
jointly and severally liable for the performance of the
obligations hereunder that are so assigned and the assignee
shall agree in writing, in form and substance satisfactory to
the other party, to be bound hereby. In connection with any
assignment pursuant to this Section 9.3, copies of this
Agreement may be provided to the assignee or offeree, as the
case may be, subject to appropriate confidentiality
provisions and to the deletion of information relating to such
matters as Purchaser and Seller may agree.
(b) Purchaser shall indemnify Seller and its
Affiliates against, and hold each of them harmless from, any
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<PAGE> 153
loss, claim, damage, liability or expense arising out of or
relating to the assignment by Purchaser to one or more third
parties, of all or any portion of its rights and obligations
pursuant to this Agreement including, without limitation any
increased liability for Taxes or Transfer Taxes.
(c) The indemnity provided for in paragraph (b)
above shall be in addition to any liability that Purchaser may
otherwise have under this Agreement and shall not be subject
to the limitations provided in Sections 7.1, 7.2, and 7.3
hereof.
Section 9.4 Entire Agreement. This Agreement
(including all Schedules and Annexes hereto) contains the
entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements
and understandings, oral or written, with respect to such
matters, except for the Confidentiality Agreement which will
remain in full force and effect for the term provided for
therein and other than any written agreement of the parties
that expressly provides that it is not superseded by this
Agreement.
Section 9.5 Fulfillment of Obligations. Any obli-
gation of any party to any other party under this Agreement,
which obligation is performed, satisfied or fulfilled by an
Affiliate of such party, shall be deemed to have been per-
formed, satisfied or fulfilled by such party.
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Section 9.6 Parties in Interest. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Purchaser, Seller, or their
successors or permitted assigns, any rights or remedies under
or by reason of this Agreement.
Section 9.7 Public Disclosure. Notwithstanding
anything herein to the contrary, each of the parties to this
Agreement hereby agrees with the other party hereto that,
except as may be required to comply with the requirements of
any applicable Laws, and the rules and regulations of each
stock exchange upon which the securities of one of the parties
is listed, no press release or similar public announcement or
communication shall, if prior to the Closing, be made or
caused to be made concerning the execution or performance of
this Agreement unless the parties shall have consulted in
advance with respect thereto.
Section 9.8 Return of Information. If for any
reason whatsoever the transactions contemplated by this
Agree- ment are not consummated, Purchaser shall promptly
return to Seller all Books and Records furnished by Seller,
Sterling, any of the Subsidiaries or any of their respective
agents, employees, or representatives (including all copies,
if any, thereof) and shall not use or disclose the
information
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contained in such Books and Records for any purpose or make
such information available to any other entity or person.
Section 9.9 Expenses. Except as otherwise
expressly provided in this Agreement, whether or not the
transactions contemplated by this Agreement are consummated,
all costs and expenses incurred in connection with this
Agree- ment and the transactions contemplated hereby shall be
borne
by the party incurring such expenses.
Section 9.10 Schedules. The disclosure of any
matter in any schedule to this Agreement shall be deemed to be
a disclosure for all purposes of this Agreement to which such
matter could reasonably be expected to be pertinent, but shall
expressly not be deemed to constitute an admission by
Seller or Purchaser, or to otherwise imply, that any such
matter is material for the purposes of this Agreement.
SECTION 9.11 GOVERNING LAW; SUBMISSION TO JURISDIC-
TION; SELECTION OF FORUM. THE AGREEMENT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO AGREES
THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT OF ANY
CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT,
WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY,
EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE
STATE OF NEW YORK FOR THE COUNTY OF NEW YORK (THE "CHOSEN
COURTS") AND SOLELY IN CONNECTION WITH CLAIMS ARISING UNDER
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THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR
CONTEMPLATED BY THIS AGREEMENT (I) IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II) WAIVES ANY
OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN
THE CHOSEN COURTS, (III) WAIVES ANY OBJECTION THAT THE CHOSEN
COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION
OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF PROCESS
UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE
EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 9.1
OF THIS AGREEMENT. PURCHASER IRREVOCABLY DESIGNATES C.T.
CORPORATION AS ITS AGENT AND ATTORNEY IN FACT FOR THE
ACCEPTANCE OF SERVICE OF PROCESS AND MAKING AN APPEARANCE ON
ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING ALL SUCH
ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER
JURISDICTION OVER IT UPON THE CHOSEN COURTS AND PURCHASER
STIPULATES THAT SUCH CONSENT AND APPOINTMENT IS IRREVOCABLE
AND COUPLED WITH AN INTEREST.
Section 9.12 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, and all of which shall constitute one and
the same Agreement.
Section 9.13 Headings. The heading references
herein and the table of contents hereto are for convenience
purposes only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions
hereof.
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Section 9.14 Severability. The provisions of this
Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof
to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid
or unenforceable provision and (b) the remainder of this
Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity
or unenforceability affect the validity or enforceability of
such provision, or the application thereof, in any other
jurisdiction.
Section 9.15 Structure. If Purchaser determines to
restructure the transactions contemplated by this Agreement as
a reverse subsidiary merger, the parties shall make such
changes to this Agreement as shall be appropriate; provided,
however, that such transaction structure shall not have an
adverse tax impact on Seller as compared to the purchase of
the Shares.
<PAGE>
<PAGE> 158
IN WITNESS WHEREOF, the parties have executed or
caused this Agreement to be executed as of the date first
written above.
EASTMAN KODAK COMPANY
By:
Name:
Title:
343 HOLDING CORPORATION
By:
Name:
Title:
SMITHKLINE BEECHAM plc
By:
Name:
Title:
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<PAGE> 159
Execution Copy
Exhibit 10(B)
Amendment
to
Stock Purchase Agreement
Amendment, dated as of October 30, 1994 (this "Amendment"), to
the Stock Purchase Agreement, dated as of August 28, 1994 (the "Stock
Purchase Agreement"), between Eastman Kodak Company, a New Jersey
corporation ("Seller"), L&F Products Inc. (formerly known as 343 Holding
Corporation), a Delaware corporation ("L&F"), and SmithKline Beecham plc, an
English corporation ("Purchaser").
WHEREAS, pursuant to the Stock Purchase Agreement, Purchaser
has agreed to purchase from Seller all of the issued and outstanding
shares of common stock of Sterling Winthrop Inc., a Delaware corporation
("Sterling"); and
WHEREAS, Purchaser, Seller and L&F desire to amend the Stock
Purchase Agreement in certain respects as more fully set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereby agree as follows:
Section 1. Terms used in this Amendment that are not otherwise
defined herein shall have the meanings ascribed to such terms in the Stock
Purchase Agreement.
Section 2. As of the date hereof, the Stock Purchase Agreement
shall be amended as follows:
2.1 Section 1.1 shall be amended to add the following
definitions:
"Demolition" shall mean the demolition of building seven at Rensselaer Site
I which is currently used for manufacturing the Phiso Products.
<PAGE>
<PAGE> 160
"Chase Bank Claim" shall mean the right of Sterling to recover amounts
(including any insurance proceeds) from The Chase Manhattan Bank,
N.A. ("Chase"), in respect of instruments purporting to be checks
drawn on an account of Sterling which were not authorized checks or
were forged instruments (currently estimated to be $600,000) which
were paid by Chase when presented.
"Gelcap and Geltab Patents" means the patents, patent applications
(including, without limitation, divisions, continuations,
continuations-in-part, and renewal applications, and any
re-examinations, renewals, extensions or reissues thereof, in any
jurisdiction), which relate to Gelcap and Geltab Technology including
those which are listed in attached Schedule X or which are filed
after the Closing based on the Kodak Gelcap and Geltab Know-how.
"Gelcap and Geltab Technology" means process and apparatus technology,
whether or not patentable, developed for use in handling and coating
with a gelatinous coating solid compact medicaments such as caplets
(solid, substantially cylindrical shaped medicaments), pills (solid,
substantially round shaped medicaments), and tablets (solid,
substantially spherical shaped medicaments).
"Kodak Gelcap and Geltab Intellectual Property" means Gelcap and Geltab
Patents and the Kodak Gelcap and Geltab Know-how.
"Kodak Gelcap and Geltab Know-how" means the Seller and its direct and
indirect subsidiaries, rights in Gelcap and Geltab Technology
(excluding Gelcap and Geltab Patents) represented by technical
reports, drawings and invention disclosures and other tangible form
as of Closing, including those listed in attached Schedule Y.
"L&F Household Purchase Agreement" shall mean the Asset Purchase Agreement,
dated as of September 26, 1994, among Seller, L&F, Sterling and
Reckitt & Colman plc, a public limited liability company incorporated
under the laws of England and Wales.
"L&F DIY Purchase Agreement" shall mean the Asset Purchase Agreement, dated
as of October 13, 1994, among Seller, L&F, Sterling and MTF
Acquisitions Corp., a Delaware corporation.
<PAGE>
<PAGE> 161
"Phiso Products" shall mean the products currently sold under the
trademarks Phisohex and Phisoderm and all other related products.
"Pre-Sanofi Closing Date Former Employees" shall mean all employees of
Sterling and its subsidiaries who, on or before the Closing Date (as
defined in the Ethical Asset Purchase Agreement), have retired, are
receiving or are eligible to receive long-term disability benefits,
or have otherwise terminated employment, and the beneficiaries and
survivors of such employees.
"Rensselaer Site I" shall mean the Sterling Organics main manufacturing
plant located in Rensselaer, New York. The plant is generally
bordered by the Columbia Turnpike, Rensselaer Avenue, Belmore Avenue,
Riverside Avenue, a common boundary with Wyandotte Corporation and a
Conrail right-of-way.
2.2 The following definitions shall be amended and restated
in their entirety to read as follows:
"L&F Purchase Agreement" shall mean, collectively, the L&F Household
Purchase Agreement and the L&F DIY Purchase Agreement.
"Specified Long-Term Obligations" shall mean the account balances under the
Sterling Winthrop Inc. Deferred Compensation Plan of (i) the
Transferred Employees (as defined in the Ethical Asset Purchase
Agreement) on the Closing Date under the Ethical Asset Purchase
Agreement, (ii) the Active Employees, Inactive Employees and Post-
Sanofi Closing Date Former Employees (in each case as defined in the
L&F Household Purchase Agreement) on the Closing Date under the L&F
Household Purchase Agreement, (iii) the Applicable Employees (as
defined in the L&F DIY Purchase Agreement) on the Closing Date under
the L&F DIY Purchase Agreement and (iv) the former employees of
Sterling listed on Schedule 1.1 hereto who have transferred their
employment to Seller in connection with the transfer of the UPT
Facility and the Nanoparticulate Business Unit, as contemplated by
Section 5.9(e) and 5.9(f) hereof.
2.3 Section 2.4 shall be amended and restated in its entirety
to read as follows:
Section 2.4 Puerto Rican Cash. Seller and Purchaser agree
that, prior to the Closing, Seller shall cause Sterling
Pharmaceuticals Inc. ("SPI") to distribute all of its assets and
liabilities (including
<PAGE>
<PAGE> 162
any amounts SPI has invested in Puerto Rico) to Sterling as a
liquidating distribution, and shall cause Sterling to distribute all
such assets and liabilities to Seller as a dividend. Seller and
Purchaser shall cooperate in order to effect a dissolution of SPI as
soon as practical following the liquidating distribution, which shall
be at Seller's sole cost and expense. For all purposes under this
Agreement, Seller and Purchaser agree that SPI's assets and
liabilities (including any amounts SPI has invested in Puerto Rico)
are not part of the Continuing Business.
2.4 The following provisions shall be added to Section 5.5:
(f) Seller hereby assumes Sterling's obligations in respect
of the Sterling Winthrop Inc. Affiliates Phantom Stock Appreciation
Rights Plan.
(g) Seller shall pay to Sterling quarterly on an estimated
basis, within 30 days after the end of the quarter, in accordance
with Sterling's statement of the estimated annual cost of (A) the
deferred compensation payable under the Sterling Winthrop Inc.
Deferred Compensation Plan to the Pre-Sanofi Closing Date Former
Employees, an amount equal to the result of multiplying one fourth of
such annual cost for such plan by the fraction, the numerator of
which is equal to the sum of (i) the number of U.S. Applicable
Employees (as defined in the L&F DIY Purchase Agreement) on the
Closing Date (as defined in the Ethical Asset Purchase Agreement) and
(ii) the number of employees of Sterling who were engaged in the
business currently conducted by the Nanoparticulate Business Unit on
the Closing Date (as defined in the Ethical Asset Purchase Agreement)
and the denominator of which is equal to the number of U.S. active
employees of Sterling and all of its subsidiaries on the Closing Date
(as defined in the Ethical Asset Purchase Agreement), (B) the amounts
payable under the Sterling Winthrop Inc. Foreign Service Pension Plan
to the Pre-Sanofi Closing Date Former Employees, an amount equal to
the result of multiplying one fourth of such annual cost for such
plan by the fraction, the numerator of which is equal to the number
of non-U.S. Applicable Employees (as defined in the L&F DIY Purchase
Agreement) on the Closing Date (as defined in the Ethical Asset
Purchase Agreement) and the denominator of which is equal to the
number of non-U.S. active employees of Sterling and all of its
subsidiaries on the Closing Date (as defined in the Ethical Asset
Purchase Agreement), (C) the amounts payable
<PAGE>
<PAGE> 163
under the Sterling Winthrop Inc. Supplemental Executive Retirement
Plan to the Pre-Sanofi Closing Date Former Employees, an amount equal
to the result of multiplying one-fourth of such annual cost for such
plan by the fraction, the numerator of which is equal to the sum of
(i) the number of U.S. Applicable Employees (as defined in the L&F
DIY Purchase Agreement) on the Closing Date (as defined in the
Ethical Asset Purchase Agreement) and (ii) the number of employees of
Sterling who were engaged in the business currently conducted by the
Nanoparticulate Business Unit on the Closing Date (as defined in the
Ethical Asset Purchase Agreement), and the denominator of which is
equal to the number of U.S. active employees of Sterling and all of
its subsidiaries on the Closing Date (as defined in the Ethical Asset
Purchase Agreement. Any overpayment or underpayment of such annual
cost shall be adjusted within 60 days after Sterling furnishes to
Seller a final statement of such annual costs, by a payment to Seller
or to Sterling, as applicable.
2.5 (a) The following provision shall be added to Section
5.8:
(c) Purchaser agrees that it will cause Sterling and the
Subsidiaries to carry out the terms of the resolution contained in
Schedule 5.8(c) hereto and will not permit or direct Sterling or the
Subsidiaries to rescind, annul or amend the terms of such resolution,
and that such resolutions shall remain in full force and effect.
2.5 (b) Section 5.8(a) shall be amended and restated in its
entirety to read as follows:
(a) At the Closing, Sterling and Seller shall execute the
Assignment of Nanoparticulate Technology in the form attached as
Annex 5.8(a) hereto.
2.5 (c) Section 5.8(b) shall be amended and restated in its
entirety to read as follows:
(b) Seller does hereby assign, sell, transfer, convey and
deliver to Sterling, its successors and assigns, its and its direct
and indirect subsidiaries' entire title, right, and interest in and
to Kodak Gelcap and Geltab Intellectual Property; and the right to
file applications for Letters Patent on any invention based on said
Kodak Gelcap and Geltab Intellectual Property, and any divisional,
continuation, continuation-in-part, or reissue applications
<PAGE>
<PAGE> 164
which have been or may be filed, or substitute or extension
applications thereof, applications corresponding thereto in whole or
in part in all other countries, and title to Letters Patent and
similar protective rights granted on said applications, as well as
the right to claim any applicable priority rights arising from said
applications under the terms of any applicable conventions, treaties,
statutes or regulations, said applications to be filed and issued in
the name of Sterling or its designee; and Seller agrees to execute
such documents as in the judgment of Sterling or its designee may be
necessary to obtain any such patents and similar protective rights
and maintain the title thereto in Sterling or its designee; and
Seller further agrees that promptly after the Closing, Seller shall
furnish to Sterling or its designee the technical reports, drawings,
and invention disclosures set forth in Schedules X and Y hereto which
relate to said inventions or improvements and shall, at Sterling's
expense, testify in any ex parte or inter partes legal or
administrative proceedings relating thereto; and Seller authorizes
and requests issuance of all Letters Patent and similar protective
rights that may be granted on any of said applications, to the extent
that in such manner as such issuance shall be requested by Sterling
or its designee. With respect to any Kodak Gelcap and Geltab
Intellectual Property that for any reason is not effectively
assigned, sold, transferred, conveyed or delivered hereunder on the
date hereof, Seller shall take all reasonable actions to provide to
Sterling all the benefits and burdens of ownership thereof, until
such assignment, transfer, conveyance and delivery is effective (and
if such assignment, transfer, conveyance or delivery may not become
effective, perpetually).
2.6 Section 5.9(e) shall be amended and restated in its
entirety to read as follows:
(e) Prior to the Closing, Seller shall cause Sterling to
transfer an equitable interest comprising all the benefits, burdens
and obligations of ownership other than record ownership in the UPT
Facility to Seller, an Affiliate of Seller or any other Person
designated by Seller, and after the Closing Purchaser shall cause
Sterling to retain record ownership of the UPT Facility for the
benefit of Seller or its designee pursuant to Section 5.9(b) until
such time as Sterling transfers record ownership of the UPT Facility
in accordance with this Section 5.9(e), provided, however, that such
record ownership shall not in any way affect
<PAGE>
<PAGE> 165
or limit any right of Purchaser to indemnification from Seller with
respect to the UPT Facility or alter the UPT Facility's status as a
Transferred Business. Upon Seller's instruction, Purchaser, at
Seller's sole expense, shall cause Sterling to take all reasonable
steps which are reasonably necessary and appropriate to enable
Sterling to transfer record ownership to the designated transferee of
the UPT Facility and to cause record ownership to be established as
directed by Seller. If such transfer has not taken place by October
31, 1996, the Purchaser will immediately transfer record ownership of
the UFT Facility to Seller at Seller's own cost and expense, and
Seller shall accept such transfer.
2.8 Section 5.10 shall be amended and restated in its
entirety to read as follows:
Section 5.10 Transfer of Certain Assets and Liabilities.
Prior to the Closing, Seller shall cause Sterling to transfer to one
or more Affiliates of Seller (i) the items of owned and leased real
property listed in Schedule 5.10(i); (ii) the fixtures and equipment
listed in Schedule 5.10(ii); (iii) Sterling's rights under the Royal
Insurance Litigation (and Seller shall assume responsibility for
prosecuting such litigation); (iv) the items listed on Schedule
5.10(iv); and (v) Sterling's rights under the Chase Bank Claim.
2.9 The following provision shall be added to the Agreement:
Section 5.16 Phiso. The costs associated with the relocation
of the production of the Phiso Products from Rensselaer Site I to the
Sterling facility located in Myerstown, Pennsylvania, all of which
costs constitute costs relating to or arising out of the
Restructuring shall be allocated as follows:
(a) The Closing Balance Sheet shall include, and
notwithstanding anything to the contrary herein, the Balance Sheet
shall not include, a reserve of $0.9 million established for the
payment of those severance costs associated with the termination of
the Employees at Rensselaer Site I who manufacture the Phiso
Products.
(b) Seller shall indemnify Purchaser for any Demolition costs
in excess of $1 million.
<PAGE>
<PAGE> 166
(c) The cost of relocating any equipment used to manufacture
the Phiso Products from Rensselaer Site I to the Myerstown,
Pennsylvania facility and the cost of purchasing equipment to be used
at the Myerstown, Pennsylvania facility for the manufacture of the
Phiso Products shall be paid by Purchaser. Purchaser shall be able
to recover such relocation and equipment costs in full from the owner
of the Ethical Transferred Business relating to the Phiso Products
pursuant to the supply arrangements contemplated by Section 5.12 of
the Ethical Asset Purchase Agreement prior to or upon the expiration
of initial term of such supply arrangements.
Section 3. References. All references to "this Agreement" in
the Stock Purchase Agreement shall mean the Stock Purchase Agreement as
amended hereby.
Section 4. Controlling Law. This Amendment shall be governed
by and construed in accordance with the laws of the State of New York,
without regard to principles of conflicts-of-law.
Section 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts, each of which shall be deemed to be
an original as against any party whose signature appears thereon, and all
of which shall together constitute one and the same instrument.
Section 6. No Other Amendments. The amendment set forth
herein is limited precisely as written and shall not be deemed to be an
amendment to any other term or condition of the Stock Purchase Agreement
or any of the documents referred to therein. Whenever the Stock Purchase
Agreement is referred to in the Stock Purchase Agreement or in any other
agreements, documents and instruments, such reference shall be to the Stock
Purchase Agreement as amended hereby. Except as expressly amended hereby,
the terms and conditions of the Stock Purchase Agreement shall continue in
full force and effect.
<PAGE>
<PAGE> 167
Section 7. Notices. All Notices or other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended,
if delivered by registered or certified mail, return receipt requested, or
by a national courier service, or if sent by telecopier, provided, that
the telecopy is promptly confirmed by telephone confirmation thereof, to
the person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
To Purchaser:
SMITHKLINE BEECHAM plc
1 New Horizons Court
Great West Road, Brentford
Middlesex TW8 9EP
United Kingdom
Telephone: 011-44-81-975-2030
Telecopy: 011-44-81-975-2040
Attn: General Counsel
With a copy to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York, New York 10022
Telephone: 212-735-3000
Telecopy: 215-735-2000
Attn: Eileen Nugent Simon
To Seller:
EASTMAN KODAK COMPANY
343 State Street
Rochester, New York 14650
Telephone: 716-724-4332
Telecopy: 716-724-9448
<PAGE>
<PAGE> 168
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
Attn: George H. White
Section 8. Parties in Interest. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than Purchaser,
Seller, or their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
Section 9. Assignment and Assumptions. Kodak and L&F Products Inc.
hereby acknowledge that, with respect to a certain stock purchase
agreement, as it may be amended from time to time (the "Miles Agreement"),
dated as of September 11, 1994, Purchaser's rights and obligations under
this Amendment will be assigned to and assumed by Miles Inc. from and after
the Closing Date (as defined in the Miles Agreement) and subject to the
provisions of Section 9.3 of the Stock Purchase Agreement.
<PAGE>
<PAGE> 169
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment on the date first written above.
EASTMAN KODAK COMPANY
By_________________________________
Name:
Title:
L&F PRODUCTS INC.
By:
Name:
Title:
SMITHKLINE BEECHAM plc
By:
Name:
Title:
<PAGE>
<PAGE> 170
Schedule 1.1
G. Bolster
A. Porte
L. Sternson
G. Cooper
N. Neill
G. Liversidge
J. Rejeange
M. Coyne
<PAGE>
<PAGE> 171
SCHEDULE X
GELCAP AND GELTAB PATENTS
Title Docket No. U.S. Serial No. Filing Date
1. Apparatus for 67,126 264,391 June 23, 1994
Orienting and Loading
Solid Compact Medicaments
2. Aparatus for Holding 66,661 88,500 July 7, 1993
Solid Compact Medicaments
During Processing
3. Apparatus for Holding 65,386 88,501 July 7, 1993
Solid Compact Medicaments
During Processing
4. Apparatus for Holding 64,780 88,467 July 7, 1993
Compact Medicaments
During Processing
<PAGE>
<PAGE> 172
SCHEDULE Y
KODAK GELCAP AND GELTAB KNOW-HOW
I. Technical Reports and Drawings
Caplet Dabber for Gelating
Coating Apparatus Technical Report No. 279264H
Drawing Series 71-88-xxxx Pilot Equipment Drawings
Drawing Series 002SH-700-xxxxx GELX P&IDs
Drawing Series 002SH-720-xxxxx GELX Process Control Drawings
Drawing Series 002SH-600-xxxxx GELX Wet End Equipment Drawings
Drawing Series 002SH-602-xxxxx GELX Equipment Layouts
Drawing Series 002SH-604-xxxxx GELX Piping Drawings
Drawing Series 002SH-620-xxxxx GELX Equipment Details
Drawing Series 002SH-640-xxxxx GELX Piping Details
Drawing Series 002SH-601-xxxxx GELX Drying Equipment Layout
Drawing Series 002SH-603-xxxxx GELX HVAC Equipment Layout
Drawing Series 002SH-630-xxxxx GELX Dryer Plenum Modules
Drawing Series 002SH-701-xxxxx GELX PFDs
Drawing Series 71-90-xxxxx GELX Layout Drawings
Drawing Series 71-90-50xxx GELX Electrical/Controls
Drawing Series D5-533-xxxxx GELX Carrier Product Drawings
<PAGE>
<PAGE> 173
II. INVENTION DISCLOSURES
Title Docket No.
1. Solid Form Medicament Orientating Feed Track 67,129
2. Vacuum Gripping Method and Apparatus for Dip 70,216
Coating Solid Dosage Form Medicaments
3. Caplet Gripping Methods 70,476
4. Wetted Pin Excess Solution Removal Apparatus 67,620
for Dip Coating
5. Wetted Plate Excess Solution Removal 67,622
Apparatus for Dip Coating
6. Excess Coating Solution Removal Apparatus 64,682
and Method
7. Caplet Dabber for Gelatine Coating Apparatus 66,436
8. Ph Sensitive, Moisture Barrier Layer for 65,383
Aspirin
9. Tablet Holding Apparatus-2 Piece, Spring- 71378
Loaded Plates Wintegrated Vacuum Tubes
10. Keyhole Carrying/Securing Device for 71379
Tablets
11. T-Brid Carrying/Securing Device for Tablets 71381
12. Method and Apparatus for Caplet Coating Not yet docketed
with
13. Gelatinous Coated Aspirin Not yet docketed
14. Method and Apparatus for Drying Gelatinous Not yet docketed
Coated Medicaments
15. Method and Apparatus for Coating Gelatinous Not yet docketed
Material onto Medicaments
16. Caplet Feeder/Loader for Gelatine Coating 64,779
Apparatus
17. Method and Apparatus for Reorienting Not yet docketed
Gelatinous Coated Medicaments
18. Method and Apparatus for Aligning Not yet docketed
Medicaments prior to Gelatinous Coating
<PAGE>
<PAGE> 174
Annex 5.8(a)
ASSIGNMENT OF NANOPARTICULATE TECHNOLOGY
L&F Products Inc., a Delaware corporation ("L&F"), does hereby assign, sell,
transfer, convey and deliver to Eastman Kodak Company, a New Jersey corporation
("Kodak"), its successors and assigns, its entire title, right, and
interest, if any, including, without limitation, priority rights, in
and to nanoparticulate technology, including, without limitation, all trade
secrets, know-how, formulae, practices, methods, ideas, research and
development, compositions, compounds, poorly water soluble drugs,
biocompatible surfactants and other substances and materials used in
nanoparticulate compositions, technical data, designs, drawings, laboratory
notebooks, or portions thereof, specifications, software source and object
code and firm-ware (whether or not patentable), discoveries, inventions and
improvements, and further including, without limitation, the technical
reports and invention disclosures listed in attached Schedule 1, which
represent in their entirety a portion of said nanoparticulate technology;
and the right to file applications for Letters Patent on any invention
based on said nanoparticulate technology, and any divisional, continuation,
continuation-in-part, or reissue applications which have been or may be
filed, or substitute or extension applications thereof, applications
corresponding thereto in whole or in part in all other countries, and title
to Letters Patent and similar protective rights granted on said
applications, as well as the right to claim any applicable priority rights
arising from said applications under the terms of any applicable
conventions, treaties, statutes or regulations, said applications to be
filed and issued in the name of Kodak or its designee; and L&F agrees to execute
such documents as in the judgment of Kodak or its designee may be necessary
to obtain any such patents and similar protective rights and maintain the
title thereto in Kodak or its designee; and L&F further agrees that, upon
request, but without out-of-pocket expense to itself, L&F shall furnish to Kodak
or its designee any data, information, exhibits, memoranda, or other evidence
in its possession relating to any of said inventions or improvements and
shall testify in any ex parte or inter partes legal or administrative
proceedings relating thereto; and L&F authorizes and requests issuance of all
Letters Patent and similar protective rights that may be granted on any
of said applications, to the extent that and in such manner as such
issuance shall be requested by Kodak or its designee.
<PAGE>
<PAGE> 175
This document shall be governed, construed and interpreted in all respects
in accordance with the laws of the State of New York, USA.
L&F PRODUCTS INC. EASTMAN KODAK COMPANY
Signature of Assignor: Signature of Assignee:
Title: Title:
Date: Date:
Witnessed: Witnessed:
Witness Name and Address: Witness Name and Address:
<PAGE>
<PAGE> 176
Schedule 5.8(c)
RESOLVED, that a perpetual, irrevocable, worldwide, royalty-
free nonexclusive license under the primary packaging patents and patent
applications listed in Annex A hereto (including, without limitation,
divisions, continuations, continuations-in-part, reissues, extensions and
renewal applications) to make, have made, use, sell and/or otherwise
dispose of any products other than Over-the-Counter Human Pharmaceutical
Products (as defined in the Sanofi Agreement), be granted, and hereby is
granted, to Eastman Kodak Company and its affiliates ("Seller"). The
aforementioned license shall be non-assignable by Seller without the
written approval of the Company, except that Seller may freely assign such
license upon the sale of all or substantially all of the assets or business
pertaining to any product to which the license relates. The Company shall
have no obligations to Seller with respect to the filing, prosecution, or
maintenance of any of the patents or patent applications included in the
foregoing license, and the Company, at its sole discretion, may freely
discontinue, any such filing, prosecution or maintenance.
<PAGE>
<PAGE> 177
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment on the date first written above.
EASTMAN KODAK COMPANY
By:
Name:
Title:
L&F PRODUCTS INC.
By:
Name:
Title:
SMITHKLINE BEECHAM plc
By:
Name:
Title:
<PAGE>
<PAGE> 178
Exhibit 10(C)
ASSET PURCHASE AGREEMENT
by and between
EASTMAN KODAK COMPANY
and
JOHNSON & JOHNSON
Dated as of September 2, 1994
_____________________
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.. . . . . . . . . . . . . 184
1.2 Certain Terms . . . . . . . . . . . . . . . . 195
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale; Acquired Assets. . . . . . 195
2.2 Purchase and Sale; Assumption of Liabilities. 196
2.3 Purchase Price. . . . . . . . . . . . . . . . 196
2.4 Post-Closing Adjustment . . . . . . . . . . . 197
2.5 Closing . . . . . . . . . . . . . . . . . . . 199
2.6 Deliveries by Buyer . . . . . . . . . . . . . 199
2.7 Deliveries by Seller. . . . . . . . . . . . . 200
2.8 Nonassignability of Assets. . . . . . . . . . 201
2.9 Certain Dispositions. . . . . . . . . . . . . 202
2.10 Agreement of Means of Transfer. . . . . . . . 202
2.11 Additional Payments.. . . . . . . . . . . . . 203
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization. . . . . . . . . . . . . . . . . 203
3.2 Authorization . . . . . . . . . . . . . . . . 204
3.3 Noncontravention. . . . . . . . . . . . . . . 204
3.4 Binding Effect. . . . . . . . . . . . . . . . 205
3.5 Consents and Approvals. . . . . . . . . . . . 205
3.6 Lawsuits; Claims. . . . . . . . . . . . . . . 205
3.7 Financial Capability. . . . . . . . . . . . . 206
3.8 Finder's Fees . . . . . . . . . . . . . . . . 206
3.9 No Other Representations or Warranties. . . . 206
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization. . . . . . . . . . . . . . . . . 206
4.2 Subsidiaries. . . . . . . . . . . . . . . . . 207
4.3 Corporate Authorization . . . . . . . . . . . 208
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4.4 Noncontravention. . . . . . . . . . . . . . . 208
4.5 Binding Effect. . . . . . . . . . . . . . . . 209
4.6 Taxes.. . . . . . . . . . . . . . . . . . . . 209
4.7 Financial Statements. . . . . . . . . . . . . 211
4.8 Consents and Approvals. . . . . . . . . . . . 211
4.9 Intellectual Property . . . . . . . . . . . . 211
4.10 Title to and Condition of Property. . . . . . 213
4.11 Contracts . . . . . . . . . . . . . . . . . . 214
4.12 Lawsuits; Claims. . . . . . . . . . . . . . . 214
4.13 Compliance with Laws. . . . . . . . . . . . . 215
4.14 Labor Relations . . . . . . . . . . . . . . . 215
4.15 Absence of Certain Changes. . . . . . . . . . 215
4.16 Employee Benefits . . . . . . . . . . . . . . 216
4.17 Environmental Matters . . . . . . . . . . . . 219
4.18 No Other Representations or Warranties. . . . 219
4.19 Finder's Fees . . . . . . . . . . . . . . . . 220
4.20 Representations . . . . . . . . . . . . . . . 220
ARTICLE V
COVENANTS
5.1 Access. . . . . . . . . . . . . . . . . . . . 220
5.2 Conduct of Business . . . . . . . . . . . . . 221
5.3 Reasonable Efforts; Further Assurances. . . . 222
5.4 Tax Matters . . . . . . . . . . . . . . . . . 223
5.5 Post-Closing Obligations of the Business to Certain
Employees . . . . . . . . . . . . . . . . . . 233
5.6 No Shop . . . . . . . . . . . . . . . . . . . 242
5.7 Compliance with WARN. . . . . . . . . . . . . 242
5.8 Use of Kodak Name . . . . . . . . . . . . . . 242
5.9 Reporting . . . . . . . . . . . . . . . . . . 242
5.10 Licensed Trademarks . . . . . . . . . . . . . 243
5.11 Patent and Hopper Licenses. . . . . . . . . . 243
5.12 Software Licenses . . . . . . . . . . . . . . 246
5.13 Customer Equipment Services . . . . . . . . . 246
5.14 Kodak Park Product Supply Agreement . . . . . 246
5.15 KEMD Product Supply Agreement . . . . . . . . 247
5.16 Clinical Diagnostic Support Services Supply Agreement 247
5.17 Non-U.S. Support Services . . . . . . . . . . 247
5.18 Master Sales Agency Agreement . . . . . . . . 247
5.19 Biolyzer Supply Agreement . . . . . . . . . . 247
5.20 Lease Agreements. . . . . . . . . . . . . . . 248
5.21 Right of First Refusal. . . . . . . . . . . . 249
5.22 GECC Contract . . . . . . . . . . . . . . . . 250
5.23 Removal of Coating Machines . . . . . . . . . 250
5.24 Capital Improvement Projects. . . . . . . . . 250
5.25 Research and Development. . . . . . . . . . . 250
5.26 Provision of Equipment. . . . . . . . . . . . 251
5.27 Additional Distribution Agreements. . . . . . 251
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5.28 Further Assurances. . . . . . . . . . . . . . 251
5.29 Buyer's Knowledge of Business; Seller's
Representations Modified by Buyer's Knowledge 252
5.30 Certain Environmental Arrangements. . . . . . 252
5.31 Agreement Not to Compete. . . . . . . . . . . 253
5.32 Confidentiality . . . . . . . . . . . . . . . 254
5.33 Non Solicitation. . . . . . . . . . . . . . . 254
5.34 Insurance Proceeds. . . . . . . . . . . . . . 255
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Both Parties 255
6.2 Conditions to the Obligations of Buyer. . . . 256
6.3 Conditions to the Obligations of Seller . . . 256
ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1 Survival. . . . . . . . . . . . . . . . . . . 258
7.2 Indemnification by Buyer. . . . . . . . . . . 258
7.3 Indemnification by Seller . . . . . . . . . . 259
7.4 Indemnification Procedures. . . . . . . . . . 260
7.5 Characterization of Indemnification Payments. 261
ARTICLE VIII
TERMINATION
8.1 Termination . . . . . . . . . . . . . . . . . 261
8.2 Effect of Termination . . . . . . . . . . . . 262
ARTICLE IX
MISCELLANEOUS
9.1 Notices . . . . . . . . . . . . . . . . . . . 263
9.2 Amendment; Waiver . . . . . . . . . . . . . . 264
9.3 Assignment. . . . . . . . . . . . . . . . . . 264
9.4 Entire Agreement. . . . . . . . . . . . . . . 265
9.5 Parties in Interest . . . . . . . . . . . . . 265
9.6 Public Disclosure . . . . . . . . . . . . . . 265
9.7 Expenses. . . . . . . . . . . . . . . . . . . 265
9.8 Schedules . . . . . . . . . . . . . . . . . . 266
9.9 GOVERNING LAW; SUBMISSION TO JURISDICTION . . 266
9.10 Counterparts. . . . . . . . . . . . . . . . .
266
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9.11 Headings. . . . . . . . . . . . . . . . . . . 266
9.12 Severability. . . . . . . . . . . . . . . . . 267
9.13 Confidentiality . . . . . . . . . . . . . . . 267
ANNEXES
A - Transitional Trademarks License Agreement
B - Trademark License Agreement
C - Hopper License Agreement
D - Software License Agreements
E - Customer Equipment Services Agreement
F - Kodak Park Product Supply Agreement
G - KEMD Product Supply Agreement
H - Clinical Diagnostic Support Services Supply
Agreement
I - Biolyzer Supply Agreement
J - Real Property Leases
SCHEDULES
Schedule 1.1(a)CDD Specific Intellectual Property
Schedule 1.1(b)Financial Statements
Schedule 1.1(c)Leased Real Property
Schedule 2.4 Working Capital Statement
Schedule 3.1 Organization
Schedule 3.3 Noncontravention
Schedule 3.5 Consents and Approvals
Schedule 3.6 Lawsuits; Claims
Schedule 4.1 Organization
Schedule 4.2 Transferred Subsidiaries
Schedule 4.4 Noncontravention
Schedule 4.6 Taxes
Schedule 4.7 Financial Statement Practices
Schedule 4.8 Consents & Approvals
Schedule 4.9 Infringements on Intellectual Property
Schedule 4.10 Encumbrances
Schedule 4.11 Contracts
Schedule 4.12 Lawsuits; Claims
Schedule 4.13 Compliance with Laws
Schedule 4.14 Labor Relations
Schedule 4.15 Absence of Changes
Schedule 4.16 Employee Benefits
Schedule 4.17 Environmental Matters
Schedule 5.24 Capital Improvement Projects
Schedule 5.25 Research and Development
Schedule 5.5(g)Employee
Agreements
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of September 2, 1994
by and between JOHNSON & JOHNSON, a corporation organized under the laws of New
Jersey ("Buyer"), and EASTMAN KODAK COMPANY, a corporation organized under
the laws of the State of New Jersey ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is engaged in, among other things, the business
of designing, discovering, developing, manufacturing, marketing, selling
and servicing products for in vitro diagnostic testing worldwide through
its Clinical Diagnostics Division (hereinafter referred to as the
"Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase and assume from Seller, certain of the assets and liabilities
related to the Business, all as more fully set forth herein, on the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or as referenced below:
"Accounts Receivable" means all accounts receivable of the
Business as of the Closing Date arising out of the sale or other
disposition of goods or services of the Business except to the extent
included in Excluded Assets.
"Acquired Assets" has the meaning set forth in Section 2.1
hereof.
"Affiliates" mean, with respect to any Person, any Persons
directly or indirectly controlling, controlled by, or under common control
with, such other Person at any time during the period for which the
determination of affiliation is being made. For purposes of this
definition, the term "control" (including the correlative meanings of the
terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management policies of
such Person, whether through the ownership of voting securities or by
contract or otherwise.
"Agreement" means this Asset Purchase Agreement, as the same
may be amended or supplemented from time to time in accordance with the
terms hereof.
"Ancillary Agreements" means the Transitional Trademarks
License Agreement, the Trademark License Agreement, the Hopper License
Agreement, the Software License Agreements, the Customer Equipment
Services Agreement, the Kodak Park Product Supply Agreement, the KEMD
Product Supply Agreement, the Clinical Diagnostic Support Services Supply
Agreement, the Biolyzer Supply Agreement and the Real Property Leases.
"Assumed Liabilities" means all debts, liabilities, or
obligations whatsoever, other than Excluded Liabilities, that arise out of
or relate to the Business (but only to the extent so related) i.e. not
general allocations (including, without limitation, the Employees and, as
of the Effective Date of Transfer, the Post-Closing CESD Employees) or the
Acquired Assets, whether arising
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before or after the Closing and whether known or unknown, fixed or
contingent.
"Benefit Plans" has the meaning set forth in Section 4.16
hereof.
"Biolyzer Supply Agreement" has the meaning set forth in
Section 5.19 hereof.
"Books and Records" means all books, ledgers, files, reports,
plans and operating records of, or maintained by, the Business, except
to the extent included in or related to any Excluded Assets.
"Business" has the meaning set forth in the recitals of this
Agreement.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banks in New York City are authorized or obligated by law or
executive order to close.
"Buyer" has the meaning set forth in the recitals of this
Agreement.
"Buyer's Objection" has the meaning set forth in Section 2.4(b)
hereof.
"Cardiff Property" means the Leased Real Property located at
Cardiff, Wales.
"CDD General Intellectual Property" means Intellectual Property
Related to the Business other than patents, patent applications, computer
software and related databases, registered trademarks, service marks and
trade names, except to the extent included in Excluded Assets.
"CDD Specific Intellectual Property" means the Intellectual
Property Related to the Business set forth on Schedule 1.1(a) hereto.
"Clinical Diagnostic Support Services Supply Agreement" has the
meaning set forth in Section 5.16 hereof.
"Closing" means the closing of the transactions contemplated by
this Agreement.
"Closing Date" has the meaning set forth in Section 2.5 hereof.
"Code" means the Internal Revenue Code of 1986, as
amended.
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"Competitor" means a manufacturer of thin film coated,
multilayer Imaging Products.
"Confidentiality Agreement" means the confidentiality
agreement, dated March 14, 1994, between Seller and Buyer.
"Consideration" has the meaning set forth in Section 5.4
hereof.
"Contracts" means all agreements, contracts, purchase orders,
arrangements, commitments and licenses that are Related to the Business
or to which the Acquired Assets are subject, except to the extent included
in Excluded Assets.
"CPA Firm" has the meaning set forth in Section 2.4(b) hereof.
"Current Assets" means all current assets Related to the
Business, except to the extent included in Excluded Assets and except that
for purposes of the June 30 Working Capital Statement cash and cash
equivalents are excluded.
"Current Liabilities" means all current liabilities of the
Business, except to the extent included in Excluded Liabilities.
"Customer Equipment Services Agreement" has the meaning set
forth in Section 5.13 hereof.
"Dental Field" means the prevention, diagnosis, treatment, or
monitoring of human or animal diseases, state of health, pathological
conditions, or genetic traits or predispositions, in each case relating to
the teeth or the tissue or bone around the teeth.
"Dental Products" means all products or services which are
designed, developed, manufactured, marketed, or serviced in the Dental
Field, including without limitation, materials, processes or equipment.
"Effective Date of Transfer" means the Post-Closing CESD
Employees' last day of employment with Seller.
"Employees" means all current employees of Seller or any of the
Transferred Subsidiaries who are dedicated to the Business and all current
employees of any other Subsidiary (which number shall not exceed 245) who
are dedicated to the Business, not to exceed in the aggregate 2825.
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"Encumbrances" means with respect to any property, asset or
rights, mortgages, pledges, liens, charges, encumbrances, security
interests, options, or any other restrictions or third party rights with
respect to such property, asset or right. For purposes of this Agreement,
a Person shall be deemed to own subject to an Encumbrance any property,
asset or right which it has acquired or holds subject to the interest of a
vendor, lessor or licensor under any conditional sales agreement, capital
lease or other title retention agreement relating to such property, asset
or right.
"Environmental Actions" means any and all actions or causes of
action, suits, liabilities, losses, litigations, arbitrations,
proceedings, executory decrees, judgments, penalties, fees, costs,
expenses, demands, demand letters, orders, claims (including any claims
involving liability in tort, strict, absolute or otherwise),
Encumbrances, notices of noncompliance or violations, or legal fees or
costs of investigations or proceedings, relating to compliance or
non-compliance with any Environmental Law or any governmental permit issued
under any Environmental Law, or arising from the presence or release (or
alleged presence or release) into the environment of any Hazardous
Substance. Environmental Actions include, without limitation, and
regardless of the merit, any and all of the foregoing by any Person for
enforcement, cleanup, removal, response, remedial or other actions for
damages, contribution, indemnification, cost, recovery, compensation or
injunctive relief pursuant to any Environmental Law or arising from any
alleged injury or threat of injury to human health, welfare, safety the
environment or natural resources.
"Environmental Law" means any applicable federal, state, local
or foreign law, statute, ordinance, rule, regulation, code, order,
judgment, decree or injunction relating to (x) the protection of the
environment, (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply and surface or subsurface
land), or (y) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of, Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any entity which is considered a
predecessor of Seller or one employer with Seller under Section 4001 of
ERISA or Section 414 of the
Code.
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"Excluded Assets," notwithstanding any other provision of this
Agreement, means the following assets of Seller or any Subsidiary which are
not to be acquired by Buyer hereunder:
(a) all inter-company loans receivable of Seller and the
Subsidiaries;
(b) all causes of action, choses in action, rights of
recovery and rights of set-off of any kind against any Person arising
out of or relating to the Excluded Assets or the Excluded
Liabilities;
(c) the unpatented technology which, as of the Closing Date,
Seller or any Subsidiary has the right to license and has developed,
created, or otherwise acquired in connection with the design,
development, manufacture, marketing, or service of Imaging Products,
including without limitation, coating formulations and handling
technology, chemical materials analysis and manufacturing technology,
paper and film converting technology, materials assembly technology,
plastics and finishing technology, optical system, electrical
component, and mechanical equipment design and manufacturing
technology, and information systems technology;
(d) any refunds of Taxes to the extent such Taxes were paid
by Seller or any Subsidiary prior to the Closing, or are, or if not
so paid would be, Excluded Liabilities;
(e) all prepaid Taxes to the extent such Taxes relate to any
taxable period, or portion thereof, ending on or before the Closing
Date;
(f) all Tax Returns and all other books and records related
thereto which the Seller or a Subsidiary other than a Transferred
Subsidiary is required by law to retain;
(g) all real property other than the Leased Real Property,
including any fixtures thereon;
(h) all raw material and work in process inventories and all
equipment that are utilized in the manufacture of the products to be
offered to Buyer under any Ancillary Agreement; provided that the
injection molding machine and the assembly machine for the
manufacture of IDx wells, the molds used therein and the tooling for
the E-250 sample handler shall be Acquired
Assets;
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(i) all inter-company accounts receivable of Seller and the
Subsidiaries;
(j) all licenses to Seller or any Subsidiary with respect to
computer software and related databases, and patents or patent
applications other than those set forth on Schedule 1.1(a) hereto;
and
(k) all distribution agreements with any third party that
relate to any business of Seller and the Subsidiaries other than the
Business.
"Excluded Liabilities," notwithstanding any other provision of
this Agreement, shall mean the following liabilities and obligations of
Seller or any Subsidiary, which are not to be assumed by Buyer hereunder:
(a) all liabilities and obligations arising out of or
relating to the Excluded Assets, other than (i) with respect to
environmental matters, those liabilities and obligations arising out
of or relating to the assets set forth in subsection (g) of the
Excluded Assets definition (which liabilities and obligations are the
subject of subsection (b) of this definition), (ii) those liabilities
and obligations arising out of or caused by Buyer's use or operation
of the Kodak Leased Property following the Closing and (iii) as
provided in the leases covering any real property included in the
Kodak Leased Property;
(b) subject to Section 5.30 hereof, all liabilities and
obligations arising in connection with or relating to any
Environmental Law or Environmental Action occurring at any real
property included in Kodak Leased Property or at the Cardiff Property
at any time, whether before or after the Closing, other than those
liabilities and obligations arising out of or caused by Buyer's use
or operation of the real property following the Closing and other
than as provided in the leases covering the real property included in
the Kodak Leased Property;
(c) all liabilities and obligations of Seller or any
Subsidiary for Taxes for any taxable period, or portion thereof,
ending on or before the Closing Date;
(d) all liabilities and obligations arising out of the
following litigation listed on Schedule 4.12 hereto: Kollsman
Manufacturing Company, Inc. v. Eastman Kodak Company and Hock v.
Eastman Kodak Company;
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(e) all intercompany liabilities, including without
limitation, accounts payable and loans payable of Seller and the
Subsidiaries; and
(f) all other liabilities and obligations for which Seller
has expressly assumed responsibility pursuant to this Agreement.
"Final Working Capital Amount" means (i) if Current Liabilities
exceed Current Assets as reflected on the Final Working Capital Statement,
such excess, expressed as a negative number, or (ii) if Current Assets
exceed Current Liabilities as reflected on the Final Working Capital
Statement, such excess, expressed as a positive number.
"Final Working Capital Statement" shall have the meaning set
forth in Section 2.4(b) hereof.
"Financial Statements" means the unaudited balance sheet of the
Business as of December 31, 1993 and the related unaudited income
statement for the year then ended attached hereto as Schedule 1.1(b).
"Fixtures and Equipment" means all furniture, fixtures,
furnishings, machinery, vehicles, equipment and other tangible personal
property Related to the Business, including prototypes, molds, and
demonstration, training and clinical trial materials, except to the extent
included in Excluded Assets.
"GAAP" means U.S. generally accepted accounting principles.
"Hazardous Substance" means any chemical, substance or material
(a) listed, defined, designated or classified as hazardous, toxic,
pollutant, contaminant, or words of similar import under any Environmental
Law and (b) the handling, use or disposal of, or exposure to, which is
prohibited, limited or regulated by a governmental body.
"Hopper License Agreement" has the meaning set forth in
Section 5.11(e) hereof.
"H-S-R Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Imaging Products" means all products used in, and services
provided with respect to, the Imaging Field, including, without limitation,
materials, processes, equipment and processes for manufacturing, using or
servicing the same. Materials in Imaging Products include,
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among others, energy sensitive media (e.g., silver and non-silver films,
papers, discs, tapes, drums, belts, and plates), image-receiving media
(e.g., transparencies, coated films, and coated papers), chemicals used to
formulate, process, develop or finish such media (e.g., dyes, polymers,
developers, toners, and inks), and circuit boards, semiconductors, and
electronic components used in image-forming processes and equipment (e.g.,
sensors, emitters, and solid state devices). For purposes of this
definition, "Imaging Field" means the capture, storage, retrieval,
manipulation, communication, display or processing of an image or other
information pattern in digital or analog form.
"Intellectual Property" means patents, patent applications,
inventions, trade secrets, know-how, copyrights, works of authorship, mask
rights, trademarks, service marks, trade names, and any similar proprietary
rights, including without limitation, such rights embodied in technical
reports, laboratory reports and notebooks and invention disclosures.
"Inventory" means all inventory held for resale and all raw
materials, work in process, finished products, and wrapping, supply and
packaging items, in each case Related to the Business as of the Closing
Date except to the extent included in Excluded Assets.
"In Vitro Diagnostic Products" means products for use in
detecting, analyzing or quantifying a substance or characteristic of a
sample of human or animal tissue or human or animal biological fluid which
is indicative of a disease, state of health, pathological condition, or
genetic trait or predisposition, other than Dental Products and other than
products that are both image forming and radiation sensitive; it being
understood that such definition includes radioimmunoassay products but does
not include in-vivo applications.
"June 30 Working Capital Amount" means (i) if Current
Liabilities exceed Current Assets as reflected on the June 30 Working
Capital Statement, such excess, expressed as a negative number, or (ii)
if Current Assets exceed Current Liabilities as reflected on the June 30
Working Capital Statement, such excess, expressed as a positive number.
"June 30 Working Capital Statement" means the June 30, 1994
working capital statement of the Business.
"KEMD Product Supply Agreement" has the meaning set forth in
Section 5.15
hereof.
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"Knowledge of Seller" or any similar phrase means the actual
knowledge of key management employees of Seller or any Subsidiary as set
forth in any documentation prior to the Closing; it being understood that
actual knowledge includes any information that such employees should have
known after reasonable due diligence prior to the Closing, even if not set
forth in any documentation.
"Kodak Germany-Parent" means Kodak Beteiligungs-GmbH.
"Kodak Germany-Sub" means Kodak Diagnostic (Deutschland) GmbH.
"Kodak Leased Property" means those assets that are to be
leased, licensed or otherwise provided by Seller and/or any Subsidiary to
Buyer pursuant to this Agreement or any Ancillary Agreement, including,
without limitation, the Kodak Licensed Intellectual Property.
"Kodak Licensed Intellectual Property" means the Intellectual
Property to be licensed to Buyer by Seller or any Subsidiary pursuant to
this Agreement or any Ancillary Agreement.
"Kodak Park Leased Real Property" means the real property owned
by Seller consisting of portions of buildings known as Building 59,
Building 82, Building 83, Building 313 and Building 642, each of which is
located within Seller's manufacturing facility known as Kodak Park located
in the City of Rochester and the Town of Greece, New York and which is to
be leased to Buyer pursuant to certain of the Real Property Leases.
"Kodak Park Product Supply Agreement" has the meaning set forth
in Section 5.14 hereof.
"Kodak Services" means those services to be provided by Seller
and/or any Subsidiary to Buyer pursuant to this Agreement or any Ancillary
Agreement.
"Leased Real Property" means all real property leased by Seller
or any Subsidiary from third parties prior to the Closing, including any
buildings, structures and improvements thereon or appurtenances thereto,
Related to the Business set forth on Schedule 1.1(c) hereto.
"Losses" has the meaning set forth in Section 7.2 hereof.
"Master Purchasing Plans" means any master purchase agreements,
group purchasing plans and similar
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master agreements of Seller relating to the purchase of goods and services
not particular to the Business.
"Material Adverse Effect" means a material adverse effect, or a
reasonable likelihood of resulting in a material adverse effect, on the
business, financial condition or results of operations of the Business,
taken as a whole.
"Operating Agreement" means the Amended and Restated Operating
Agreement by and among Seller, Imaging Financial Services, Inc. and an
Unconditional Guarantee by General Electric Credit Corporation, dated
December 31, 1992.
"Pension Excess" has the meaning set forth in
Section 5.5(c)(ii) hereof.
"Pension Plan" means a Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA.
"Pension Shortfall Amount" has the meaning set forth in
Section 5.5(c)(ii) hereof.
"Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Plans" has the meaning set forth in Section 4.16(b) hereof.
"Post-Closing CESD Employee" means any person designated by
Buyer and agreed to by Seller who is employed by the Customer Equipment
Services Division of Seller and accepts employment with Buyer after the
Closing Date.
"Purchase Price" has the meaning set forth in Section 2.3
hereof.
"Real Property Leases" has the meaning set forth in Section
5.20 hereof.
"Related to the Business" means primarily related to, or used
primarily in connection with, the Business as conducted prior to the
Closing.
"Required Approvals" has the meaning set forth in Section 4.8
hereof.
"Seller" has the meaning set forth in the recitals of this
Agreement.
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"Seller Retirement Plan" has the meaning set forth in
Section 5.5(c)(ii) hereof.
"Shared Real Property" means all real property leased or owned
by Seller (other than the Kodak Park Leased Real Property, the Hawkeye
Building, located on St. Paul Boulevard, Rochester, New York, Building
800, located on Buffalo Road, Rochester, New York, the Marketing Education
Center Building, located at 4545 East River Road in the town of Henrietta,
New York, and the warehouse space located at 58 McKee Road in the City of
Rochester, New York) a portion of which is, and a portion of which is not,
Related to the Business.
"Software License Agreements" has the meaning set forth in
Section 5.12 hereof.
"Subsidiary" means (a) any corporation in an unbroken chain of
corporations beginning with Seller if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain, (b) any partnership in which
Seller is a general partner, or (c) any partnership in which Seller
possesses a 50% or greater interest in the total capital or total income
of such partnership.
"Tax Returns" means any return, amended return or other report
required to be filed with respect to any Tax, including declaration of
estimated tax and information returns.
"Taxes" means any federal, state, local or foreign taxes,
including but not limited to income, gross receipts, windfall profits,
value added, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes together with any
interest, additions or penalties with respect thereto and any interest in
respect of such penalties.
"Third Party Acquisition" has the meaning set forth in
Section 5.6 hereof.
"Trademark License Agreement" has the meaning set forth in
Section 5.10 hereof.
"Transferred Subsidiaries" means Kodak Japan Diagnostics
Limited, Kodak Diagnostic S.A., Kodak Diagnostic S.p.A., Kodak Clinical
Diagnostics (Europe) S.A. and Kodak Clinical Diagnostics Limited, except
that in the event Seller makes an election under Section 2.10 hereof,
Kodak Diagnostic S.A. and Kodak Clinical Diagnostics (Europe)
S.A.
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shall not be included and any entity referred to in Section 2.10(b) shall
be included.
"Transferee Pension Plan" has the meaning set forth in
Section 5.5(c)(ii) hereof.
"Transitional Trademarks License Agreement" has the meaning set
forth in Section 5.8 hereof.
"WARN" means the Worker Adjustment and Retraining Notification
Act.
1.2 Certain Terms. (a) The words "hereof", "herein" and
"hereunder" and words of similar import, when used in this Agreement,
refer to this Agreement as a whole and not to any particular provision of
this Agreement unless otherwise specifically stated to the contrary.
(b) The terms defined in the singular have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" mean United States dollars.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale; Acquired Assets. On the terms and
subject to the conditions set forth herein, at the Closing, Seller agrees
to sell, convey, transfer, assign and deliver to Buyer or cause to be
sold, conveyed, transferred, assigned and delivered, and Buyer agrees to
purchase from Seller, or from certain of the Subsidiaries (i) all of
Seller's or the Subsidiaries' right, title and interest in and to the
assets of Seller or the Subsidiaries, other than the Transferred
Subsidiaries, Related to the Business, whether tangible or intangible, real
or personal, and whether or not in the stages of discovery, development
or commercialization, except for the Excluded Assets and except as
specifically limited by any definition in any of (a)
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through (i) of this Section 2.1 and (ii) subject to Section 5.22 hereof,
all of Seller's rights under the Operating Agreement to the extent related
to the Business (the "Acquired Assets"), including, without limitation,
all of Seller's or the Subsidiaries' other than the Transferred
Subsidiaries right, title and interest in and to the following:
(a) Leased Real Property;
(b) Accounts Receivable;
(c) Inventory;
(d) Fixtures and Equipment;
(e) Contracts;
(f) Books and Records;
(g) CDD General Intellectual Property;
(h) CDD Specific Intellectual Property;
(i) all of the outstanding capital stock of the Transferred
Subsidiaries; and
(j) all claims, causes of action and choses in action to the
extent related to the Acquired Assets or the Assumed
Liabilities.
2.2 Purchase and Sale; Assumption of Liabilities. On the
terms and subject to the conditions set forth herein, at the Closing, Buyer
agrees to assume and discharge or perform when due the Assumed Liabilities.
2.3 Purchase Price. On the terms and subject to the
conditions set forth herein, Buyer agrees to pay Seller an amount in cash
equal to $1,008,000,000 (the "Purchase Price"), plus the amount, if any,
required to be paid by Buyer pursuant to Section 2.4(d)
hereof.
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2.4 Post-Closing Adjustment. (a) Within 60 days after the
Closing Date, Seller shall prepare, or cause to be prepared, and deliver to
Buyer a working capital statement of the Business as of the Closing Date,
which statement shall set forth the Current Assets and Current Liabilities
as of the Closing Date and shall be prepared using the same accounting
methods, policies, practices and procedures, with consistent
classification, judgments and estimation methodology, as were used in
preparing the June 30 Working Capital Statement, other than as set forth
on Schedule 2.4(a) hereto (the "Preliminary Working Capital Statement").
(b) In the event Buyer determines that the Preliminary
Working Capital Statement has not been prepared on the basis set forth in
Section 2.4(a) hereof, Buyer shall so inform Seller in writing
(the "Buyer's Objection"), setting forth a reasonably specific description
of the basis of the Buyer's Objection and the adjustments to the
Preliminary Working Capital Statement which Buyer believes should be made,
on or before the thirtieth day following the delivery by Seller of the
Preliminary Working Capital Statement. In the event of the Buyer's
Objection, Seller shall have 15 days to review and respond to the Buyer's
Objection and Seller and Buyer shall attempt to resolve the differences
underlying the Buyer's Objection within 10 days following the completion
of Seller's review of the Buyer's Objection. If Seller and Buyer are
unable to resolve all their differences within such ten-day period, they
shall refer their remaining differences to Arthur Andersen & Co., or such other
nationally recognized firm of independent public accountants as to which
Buyer and Seller may mutually agree (the "CPA Firm"), who shall, acting as
experts and not as arbitrators, determine on the basis of the standard set
forth in Section 2.4(a) hereof and only with respect to the remaining
differences so submitted, whether and to what
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extent, if any, the Preliminary Working Capital Statement requires
adjustment. The CPA Firm shall deliver its written determination to Buyer
and Seller no later than the twentieth day after the remaining differences
underlying the Buyer's Objection are referred to the CPA Firm, or such
longer period of time as the CPA Firm determines is necessary. The CPA
Firm's determination shall be conclusive and binding upon the parties. The
fees and disbursements of the CPA Firm shall be allocated between Buyer and
Seller in such a way that Buyer shall be responsible for that portion of
the fees and expenses equal to such fees and expenses multiplied by a
fraction the numerator of which is the aggregate dollar value of disputed
items submitted to the CPA Firm that are resolved against Buyer (as
finally determined by the CPA Firm) and the denominator of which is the
total dollar value of the disputed items so submitted and Seller shall be
responsible for the remainder. Buyer and Seller shall make readily
available to the CPA Firm all relevant books and records and any work
papers relating to the Preliminary Working Capital Statement and all other
items reasonably requested by the CPA Firm. The "Final Working Capital
Statement" shall be (i) the Preliminary Working Capital Statement in the
event that (x) the Buyer's Objection is not delivered to Seller in the
period set forth in Section 2.4(b) hereof, or (y) Seller and Buyer so
agree, or (ii) the Preliminary Working Capital Statement, as adjusted by
either (x) the agreement of Seller and Buyer or (y) the CPA Firm.
(c) Buyer shall provide Seller and its accountants full
access to the Books and Records, any other information, including work
papers of its accountants, and to any employees during regular business
hours and on reasonable advance notice, subject to Buyer's reasonable
rules and regulations, to the extent necessary for Seller
to
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prepare the Preliminary Working Capital Statement and to review the Buyer's
Objection. All information provided pursuant to this Section 2.4(c) shall
be subject to the provisions of Section 5.32(a) hereof.
;$E If the Final Working Capital Amount exceeds the June 30
Working Capital Amount, then Buyer shall pay to Seller an amount equal to
such excess, together with simple interest thereon from the Closing Date to
the date of payment at the rate of 8% per annum, calculated over a 365-day
year. If the June 30 Working Capital Amount exceeds the Final Working
Capital Amount, then Seller shall pay to Buyer an amount equal to such
excess, together with simple interest thereon from the Closing Date to the
date of payment at the rate of 8% per annum, calculated over a 365-day
year.
(e) Any amount payable pursuant to Section 2.4(d) hereof
shall be paid by wire transfer of immediately available funds to a bank
account designated by Buyer or Seller, as the case may be, as soon as
practicable following the Closing Date and in no event more than three
Business Days following the determination of the Final Working Capital
Statement.
2.5 Closing. The Closing shall take place at the offices of
Sullivan & Cromwell, 250 Park Avenue, New York, New York 10177 at 10:00 a.m. New
York City time, on the fifth Business Day following the date on which all
the conditions set forth in Sections 6.1 and 6.3(e) hereof have been
satisfied or waived, or at such other time and place as the parties hereto
may mutually agree. The date on which the Closing occurs is called the
"Closing Date".
2.6 Deliveries by Buyer. At the Closing, Buyer shall deliver
to Seller the
following:
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(a) the Purchase Price, in immediately available funds by
wire transfer to an account designated by Seller prior to the
Closing;
(b) such instruments of assumption and other instruments or
documents, in form and substance reasonably acceptable to Seller, as
may be necessary for Buyer to assume the Assumed Liabilities;
(c) a duly executed copy of each of the Ancillary Agreements;
and
(d) the certificates and other documents to be delivered
pursuant to Section 6.3 hereof.
2.7 Deliveries by Seller. At the Closing, Seller shall
deliver to Buyer the following:
(a) bills of sale or other appropriate documents, in form and
substance reasonably acceptable to Buyer, transferring all tangible
personal property included in the Acquired Assets to Buyer;
(b) stock certificates representing all of the shares of
stock of the Transferred Subsidiaries duly endorsed or with stock
powers executed in blank or otherwise in form suitable for transfer;
(c) assignments, in form and substance reasonably acceptable
to Buyer, assigning to Buyer all Contracts and Intellectual Property
included in the Acquired Assets;
(d) such other instruments or documents, in form and substance
reasonably acceptable to Buyer, as may be necessary to effect the
Closing;
(e) a duly executed copy of each of the Ancillary Agreements;
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(f) the certificates and other documents to be delivered
pursuant to Section 6.2 hereof; and
(g) the resignations of all directors of the Transferred
Subsidiaries.
2.8 Nonassignability of Assets. Notwithstanding anything to
the contrary contained in this Agreement, to the extent that the sale,
assignment, transfer, conveyance or delivery or attempted sale,
assignment, transfer, conveyance or delivery to Buyer of any Acquired
Asset or any claim or right or any benefit arising thereunder or resulting
therefrom is prohibited by any applicable law or would require any
governmental or third party authorizations, approvals, consents or waivers
and such authorizations, approvals, consents or waivers shall not have been
obtained prior to the Closing, this Agreement shall not constitute a sale,
assignment, transfer, conveyance or delivery, or any attempted sale,
assignment, transfer, conveyance or delivery, thereof. Following the
Closing, the parties shall use reasonable efforts, and cooperate with each
other, to obtain promptly such authorizations, approvals, consents or
waivers; provided, however, that neither Seller nor Buyer shall be required
to pay any consideration therefor. Pending such authorization, approval,
consent or waiver, the parties shall cooperate with each other in any
mutually agreeable, reasonable and lawful arrangements designed to provide
to Buyer the benefits of use of such Acquired Asset. Once authorization,
approval, consent or waiver for the sale, assignment, transfer, conveyance
or delivery of an Acquired Asset not sold, assigned, transferred, conveyed
or delivered at the Closing is obtained, Seller shall or shall cause a
Subsidiary to, assign, transfer, convey and deliver such Acquired Asset to
Buyer at no additional cost. To the extent that any such Acquired Asset
cannot be transferred or the full benefits of use of any such Acquired
Asset cannot
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be provided to Buyer following the Closing pursuant to this Section 2.8,
then Buyer and Seller shall enter into such arrangements (including
subleasing or subcontracting if permitted) to provide to the parties the
economic (taking into account tax costs and benefits) and operational
equivalent of obtaining such authorization, approval, consent or waiver and
the performance by Buyer of the obligations thereunder. With respect to
the provisions of this Section 2.8, Seller shall pay to Buyer, when
received, all income, proceeds and other monies received by Seller with
respect to any Acquired Asset, except to the extent same represents or
relates to an Excluded Asset (net of any Taxes (and any other costs)
imposed upon Seller or any Subsidiary in connection with the arrangements
under this Section 2.8).
2.9 Certain Dispositions. Notwithstanding anything to the
contrary contained herein (a) at any time prior to the Closing, Seller
may, upon 10 days prior written notice to Buyer, to the extent permitted
under applicable law, cause all cash and cash equivalents, including,
without limitation, investment securities and other short- and medium-term
investments, held by any Subsidiary or otherwise allocated to the Business
to be removed from the Business in a manner chosen by Seller, and (b)
at any time prior to the Closing, Seller may, upon 10 days prior written
notice to Buyer, cause any asset of a Transferred Subsidiary that would
not be included in Acquired Assets if the assets, rather than the stock,
of such Transferred Subsidiary were being conveyed hereunder, to be
transferred to Seller or one or more of the Subsidiaries that are not
Related to the Business.
2.10 Agreement of Means of Transfer. Notwithstanding anything
to the contrary contained in this Agreement, in lieu of selling the stock
of Kodak Diagnostic
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S.A. and Kodak Clinical Diagnostics (Europe) S.A. to Buyer, Seller may,
upon 10 days prior written notice to Buyer, elect to transfer to Buyer (a)
such assets and liabilities of such entities as are Acquired Assets and
Assumed Liabilities, or (b) equity interests in one or more corporate or
unincorporated entities which in the aggregate own all of such assets and
liabilities.
2.11 Additional Payments. On the date of any transfer of
assets from a Seller Retirement Plan to a Transferee Pension Plan, Seller
shall pay to Buyer the Pension Shortfall Amount, if applicable, or the
Buyer shall pay to Seller the Pension Excess, if applicable, any of such
payments to be made in cash or cash equivalents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1 Organization. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of New
Jersey. Buyer has all requisite corporate power and authority to own and
operate its properties and assets and to carry on its business as
currently conducted. Except as set forth on Schedule 3.1 hereto, Buyer is
duly qualified to do business and is in good standing as a foreign
corporation
in each jurisdiction where the ownership or operation of its properties and
assets or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing individually or in
the aggregate would not materially impair or delay Buyer's ability to
perform its obligations
hereunder.
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3.2 Authorization. Buyer has full corporate power and
authority to execute and deliver this Agreement and each of the Ancillary
Agreements, and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Buyer of this Agreement and each
of the Ancillary Agreements have been duly and validly authorized, and no
additional corporate authorization or consent is required in connection
with the execution, delivery and performance by Buyer of this Agreement
and each of the Ancillary Agreements.
3.3 Noncontravention. Except as set forth on Schedule 3.3
hereto, the execution, delivery and performance by Buyer of each of this
Agreement and each of the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby, does not and will not
(i) violate any provision of the Articles of Incorporation, ByLaws or other
organizational documents of Buyer, (ii) subject to obtaining the consents
referred to in Section 3.5 hereof, conflict with, or result in a breach of,
or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or lapse
of time or both) of any right or obligation of Buyer under, or to a loss
of any benefit to which Buyer is entitled under, any agreement, license,
permit, easement, right of way, instrument or undertaking to which Buyer is
a party or by which it is bound or to which any of its assets are subject
or result in the creation of any Encumbrance upon any of said assets, or
(iii) assuming the governmental consents, approvals, authorizations and
waivers set forth in Section 3.5 hereof are obtained, violate or result
in a breach of or constitute a default under any judgment, order,
injunction, decree, law, rule, regulation or other restriction of any
court or governmental authority to which Buyer is subject, other than in
the case of clauses (ii)
and
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(iii), any conflict, breach, default, termination, cancellation,
acceleration, loss, violation or Encumbrance which, individually or in the
aggregate, would not materially impair or delay Buyer's ability to perform
its obligations hereunder.
3.4 Binding Effect. This Agreement constitutes, and each of
the Ancillary Agreements when executed and delivered by each party thereto
will constitute, a valid and legally binding obligation of Buyer
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
3.5 Consents and Approvals. Except as specifically set forth
in Schedule 3.5 hereto and as required by the H-S-R Act or comparable
statutes to which any Subsidiary is subject, no consent, approval, waiver
or authorization is required to be obtained by Buyer from, and no notice
or filing is required to be given by Buyer to or made by Buyer with, any
Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by Buyer of this
Agreement and each of the Ancillary Agreements other than those the failure
of which to obtain, give or make would not materially impair or delay the
ability of Buyer to effect the Closing.
3.6 Lawsuits; Claims. Except as set forth in Schedule 3.6
hereto, there is no civil, criminal or administrative action, suit, demand,
claim, hearing, proceeding or investigation pending or, to the knowledge of
Buyer, threatened against Buyer which would materially impair or delay the
ability of Buyer to effect the Closing. Buyer is not subject to any order,
writ, judgment, award, injunction or decree of any court or governmental or
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regulatory authority of competent jurisdiction or any arbitrator or
arbitrators which would materially impair or delay the ability of Buyer to
effect the Closing.
3.7 Financial Capability. On the Closing Date, Buyer will
have sufficient funds to effect the Closing and all other transactions
contemplated by this Agreement.
3.8 Finder's Fees. Except for J.P. Morgan Securities Inc.,
whose fees will be paid by Buyer, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission from
Buyer
in connection with the transactions contemplated by this Agreement.
3.9 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither Buyer
nor any other Person makes any representation or warranty on behalf of
Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Organization. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
New Jersey and has all requisite corporate power and authority to own and
operate the Acquired Assets, directly or indirectly through its
Subsidiaries, and to carry on the Business as currently conducted. Except
as set forth on Schedule 4.1 hereto, Seller is duly qualified to
do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of the Acquired Assets
or the conduct of the Business requires such qualification, except where
the failure to be so qualified or in good standing
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would not individually or in the aggregate have a Material Adverse Effect
or materially impair or delay Seller's ability to perform its obligations
hereunder.
4.2 Subsidiaries. (a) Schedule 4.2 hereto sets forth as to
each Transferred Subsidiary, its jurisdiction of incorporation and its
authorized and outstanding capital stock as of the date hereof. Each
Transferred Subsidiary is a corporation or other entity duly organized and
validly existing and, to the extent applicable, is in good standing (or
such analogous concept) under the laws of its jurisdiction of organization
and has all requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as presently conducted.
Each Transferred Subsidiary is duly qualified to do business and, to the
extent applicable, is in good standing (or such analogous concept) as a
foreign corporation or other entity in each jurisdiction where the
ownership or operation of its properties and assets or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not individually or in the aggregate have a Material
Adverse Effect. Seller has heretofore delivered to Buyer true and
complete copies of each Transferred Subsidiary's governing documents as in
effect as of the date hereof.
(b) Except as set forth on Schedule 4.2 hereto, Seller owns,
directly or indirectly, all of the outstanding capital stock or other
equity interest of each Transferred Subsidiary free and clear of all
Encumbrances and are fully paid and non-assessable (or such analogous
concept). There are no preemptive or other outstanding rights, options,
warrants, conversion rights or agreements or commitments to issue or sell
any shares of capital stock or other equity interest of any Transferred
Subsidiary or any securities or obligations convertible into or
exchangeable for, or giving
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any Person a right to subscribe for or acquire, any shares of capital stock
or other equity interest of any Transferred Subsidiary, and no securities
or obligations evidencing such rights are outstanding. Except as set forth
on Schedule 4.2 immediately prior to the Closing, each Transferred
Subsidiary will be wholly owned by Seller or by one or more wholly owned
Subsidiaries except for qualifying shares required by law, which shares
will be transferred at the Closing to such Persons as Buyer may designate.
4.3 Corporate Authorization. Seller has full corporate power
and authority to execute and deliver this Agreement and each of the
Ancillary Agreements, and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by Seller of this
Agreement and each of the Ancillary Agreements have been duly and validly
authorized, and no additional corporate or shareholder authorization or
consent is required in connection with the execution, delivery and
performance by Seller of this Agreement and each of the Ancillary
Agreements (other than, in connection with performance, the shareholder
approval required with respect to Kodak Japan Diagnostics Limited, which
consent will be obtained prior to the Closing).
4.4 Noncontravention. Except as set forth on Schedule 4.4
hereto, the execution, delivery and performance by Seller of this
Agreement and each of the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby, does not and will not
(i) violate any provision of the Articles of Incorporation, ByLaws or other
organizational documents of Seller or any of the Transferred Subsidiaries,
(ii) subject to obtaining the consents referred to in Section 4.8 hereof,
conflict with, or result in a breach of, or constitute a default under, or
result in the termination, cancellation or acceleration
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(whether after the filing of notice or lapse of time or both) of any right
or obligation of Seller or any of the Transferred Subsidiaries under, or to
a loss of any benefit to which Seller or any of the Transferred
Subsidiaries is entitled under, any contract, agreement or other instrument
binding upon Seller or any of the Transferred Subsidiaries or result in the
creation of any Encumbrance upon any of the Acquired Assets, or
(iii) assuming the governmental consents, approvals, authorizations and
waivers set forth in Section 4.8 hereof are obtained, violate or result
in a breach of or constitute a default under any judgment, order,
injunction, decree, law, rule, regulation or other restriction of any
court or governmental authority to which Seller or any of the Transferred
Subsidiaries is subject, other than in the case of clauses (ii) and (iii)
any conflict, breach, default, termination, cancellation, acceleration,
loss, violation or Encumbrance which, individually or in the aggregate,
would not have a Material Adverse Effect or materially impair or delay
Seller's ability to perform its obligations hereunder.
4.5 Binding Effect. This Agreement constitutes, and each of
the Ancillary Agreements when executed and delivered by the parties thereto
will constitute, a valid and legally binding obligation of Seller
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
4.6 Taxes. With respect to the Business, except as set forth on
Schedule 4.6 attached hereto (a) all Tax Returns that are required to be
filed on or before the date of this Agreement (taking into account
applicable extensions) by Seller and its Subsidiaries have been duly filed,
except for such Tax Returns as to which the failure
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to file, when taken together with all other such failures, would not have a
Material Adverse Effect, (b) all Taxes shown to be due on the Tax Returns
referred to in clause (a) have been timely paid or are recorded as reserves
or current liabilities on the Financial Statements, with respect to periods
ending on or prior to December 31, 1993, and in the Books and Records for
periods commencing after December 31, 1993, except for such Taxes as to
which the failure to pay or record, when taken together with all other such
failures, would not have a Material Adverse Effect, (c) no adjustments
relating to the Tax Returns referred to in clause (a) have been proposed by
the Internal Revenue Service or the appropriate state, local or foreign
taxing authority, except for such adjustments which, when taken together
with all other such adjustments that have been proposed, would not have a
Material Adverse Effect, (d) there are no pending or, to the Knowledge of
Seller, threatened actions or proceedings for the assessment or collection
of Taxes against Seller or any of its Subsidiaries, except for such actions
or proceedings which, when taken together with all other such actions and
proceedings that are pending or have been threatened, would not have a
Material Adverse Effect, (e) there are no outstanding waivers or agreements
extending the applicable statute of limitations for any period with respect
to any Taxes, except for any such waivers or agreements which, when taken
together with all other such waivers and agreements that are outstanding,
would not have a Material Adverse Effect, (f) no taxing authorities are
presently conducting any audits or other examinations of any Tax Returns
referred to in clause (a), except for such audits or examinations which,
when taken together with all other such audits and examinations that are
presently being conducted, would not have a Material Adverse Effect.
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4.7 Financial Statements. The Financial Statements fairly
present in all material respects the financial condition of the Business as
of the date thereof or the period then ended, as the case may be, and were
prepared generally in accordance with GAAP except as described on
Schedule 4.7 hereto. The June 30 Working Capital Statement sets forth the
Current Assets and Current Liabilities as of June 30, 1994 and was prepared
using the same accounting methods, policies, practices and procedures, with
consistent classification, judgments and estimation methodology, as were
used in preparing the Financial Statements to the extent related to Current
Assets and Current Liabilities.
4.8 Consents and Approvals. Except as specifically set forth
in Schedule 4.8 hereto and as required by the H-S-R Act or comparable
statutes to which Seller or any Subsidiary is subject, no consent,
approval, waiver or authorization is required to be obtained by Seller or
any Subsidiary from, and no notice or filing is required to be given by
Seller or any Subsidiary to or made by Seller or any Subsidiary with, any
Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by Seller of this
Agreement and each of the Ancillary Agreements other than those the
failure of which to obtain, give or make would not have a Material
Adverse Effect or materially impair or delay the ability of Seller to
effect the Closing (together with the consents, approvals, waivers,
authorizations, notices and filings referred to in Section 3.5 hereof,
the "Required Approvals").
4.9 Intellectual Property. (a) Except for any rights under
the Master Purchasing Plans, (i) the CDD General Intellectual Property,
(ii) the CDD Specific Intellectual Property and (iii) the Kodak
Licensed
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Intellectual Property constitute all of the Intellectual Property
necessary to conduct the Business in all material respects as currently
conducted.
(b) Except as set forth on Schedule 4.9 hereto or as otherwise
disclosed to Buyer prior to the date hereof, to the Knowledge of Seller
(i) no product (or component thereof or process for making or using such
product or component) used, sold or manufactured by or on behalf of the
Business infringes on or otherwise violates the Intellectual Property of
any other Person, (ii) none of the products under development in the
projects generally described as the Gemini program, the PCR program (and
the probes to be used therein) and the immunorate program infringes on or
otherwise violates the Intellectual Property of any other Person,
(iii) Seller has not during the three years preceding the date of this
Agreement been a defendant in, or otherwise been notified of, any action,
suit, investigation or proceeding Related to the Business relating to any
alleged claim of infringement of any Intellectual Property, and (iv) no
Person is challenging, infringing or otherwise violating the Intellectual
Property Related to the Business, except in each case for challenges,
infringements or violations, that, individually or in the aggregate,
would not have a Material Adverse Effect.
(c) None of the material processes and formulae, research and
development results and other know-how Relating to the Business, the value
of which to Seller is contingent upon maintenance of the confidentiality
thereof, has been disclosed by Seller or any Affiliate thereof to any
Person other than to any Person bound by a written confidentiality
agreement.
(d) Except as otherwise provided in Schedule 4.9 hereto, to
the Knowledge of Seller, there has been no material default under any
Contract which is a
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confidentiality or consulting agreement, except for any such breach which,
individually or in the aggregate, would not have a Material Adverse Effect.
4.10 Title to and Condition of Property. (a) Except for the
Master Purchasing Plans and the distribution agreements included in
Excluded Assets, the Acquired Assets and the Kodak Leased Property when
taken together with the Kodak Services, constitute all the assets,
properties and rights necessary to conduct the Business in all material
respects as currently conducted.
(b) Seller or the Subsidiaries, as the case may be, have, and
upon consummation of the transactions contemplated hereby Buyer will have,
good and marketable title where applicable to, or a valid and binding
leasehold interest in, the tangible and real property included in the
Acquired Assets, free and clear of all material Encumbrances, except (i)
as set forth in Schedule 4.10 hereto and (ii) those which, individually or
in the aggregate, would not have a Material Adverse Effect.
(c) To the Knowledge of Seller and subject to the matters set
forth on Schedule 5.24 hereof (i) the plants, buildings, structures and
material equipment included in the Acquired Assets have no material
defects, are in good operating condition and repair and have been
reasonably maintained consistent with standards generally followed in the
industry (giving due account to the age and length of use of same,
ordinary wear and tear excepted), are suitable for their present
uses in all material respects and, in the case of plants, buildings
and other structures (including without limitation, the roofs
thereof), are structurally sound in all material respects, and (ii) the
plants, buildings and structures included in the Kodak Park Leased Real
Property currently have access to (1) public roads or valid easements over
private streets or private property
for
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such ingress to and egress from all such plants, buildings and structures
and (2) water supply, storm and sanitary sewer facilities, telephone, gas
and electrical connections, fire protection, drainage and other utilities,
as is necessary for the conduct of the Business as it is presently
conducted.
4.11 Contracts. Schedule 4.11(a) hereto sets forth a list,
as of the date hereof, of each written Contract that is material to the
Business other than purchase orders in the ordinary and usual course of
business. Except as set forth in Schedule 4.11(b) hereto, to the
Knowledge of Seller, each material Contract is a valid and binding
agreement of Seller or a Subsidiary and is in full force and effect.
Except as otherwise provided in Schedule 4.11(b) hereto, there has been
no material default under any Contract listed on Schedule 4.11(a) hereto
except for defaults that have been cured or waived and defaults which would
not have a Material Adverse Effect nor, to the Knowledge of Seller, has any
event or circumstance occurred that, with notice or lapse of time or both,
would constitute such a default thereunder.
4.12 Lawsuits; Claims. Except as set forth in Schedule 4.12
hereto, there is no civil, criminal or administrative action, suit, demand,
claim, hearing, proceeding or investigation pending or, to the Knowledge of
Seller, threatened, involving the Business or any of the Acquired Assets
other than those which, individually or in the aggregate, would not have a
Material Adverse Effect or materially impair or delay Seller's ability to
effect the Closing. Except as set forth in Schedule 4.12 hereto, none of
the Acquired Assets is subject to any order, writ, judgment, award,
injunction or decree of any court or governmental or regulatory authority
of competent jurisdiction or any arbitrator or arbitrators other than
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those which, individually or in the aggregate, would not have a Material
Adverse Effect or materially impair or delay Seller's ability to effect the
Closing.
4.13 Compliance with Laws. Except as set forth in
Schedule 4.13 hereto, to the Knowledge of Seller the Business is being
conducted in compliance with all applicable laws, rules and regulations,
except where the failure to so comply, individually or in the aggregate,
would not have a Material Adverse Effect; it being understood that nothing
in this representation is intended to address any compliance issue that is
the subject of the representations and warranties set forth in
Sections 4.16 and 4.17 hereof. The Business has all licenses, permits,
certificates and other authorizations and approvals necessary for the
conduct of the Business by Seller and the Subsidiaries as currently
conducted under applicable laws, ordinances or regulations of any
governmental authority, other than those the absence of which would not
have a Material Adverse Effect.
J.A2 Labor Relations. Except as set forth in Schedule 4.14
hereto, neither Seller nor any Subsidiary is a party to or bound by any
labor agreement or collective bargaining agreement respecting the
Employees, nor is there pending, or to the Knowledge of Seller threatened,
any strike, walkout or other work stoppage by the Employees.
4.15 Absence of Certain Changes. Except as set forth in
Schedule 4.15 hereto or in Schedule 5.5(g) hereto, since the date of the
Financial Statements, the Business has been conducted in the ordinary
course consistent with past practices, and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts which would have a Material Adverse
Effect;
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(b) any incurrence, assumption or guarantee by Seller of any
long-term indebtedness for borrowed money related to the Business other
than in the ordinary course of business and in amounts and on terms
consistent with past practices, but in any event not exceeding $500,000 in
the aggregate;
(c) any change in any method of accounting or accounting
practice by Seller with respect to the Business except for any such change
after the date hereof required by reason of a concurrent change in
generally accepted accounting principles;
(d) any (i) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any employee of
the Business (or any amendment to any such existing agreement), (ii) grant
of any severance or termination pay to any such employee or (iii) change in
compensation or other benefits payable to any such employee pursuant to any
severance or retirement plans or policies, other than in the ordinary
course of business.
4.16 Employee Benefits. (a) All benefit plans, contracts or
arrangements covering U.S. Employees maintained or contributed to by Seller
(whether or not "employee benefit plans" within the meaning of Section 3(3)
of ERISA), and plans of deferred compensation covering U.S. Employees (the
"Benefit Plans"), are listed in Schedule 4.16(a) hereto. Copies of all
Benefit Plans, including, but not limited to, any trust instruments and
insurance contracts forming a part of any Benefit Plans, and all amendments
thereto have been provided or made available to Buyer.
(b) All employee benefit plans covering U.S. Employees (the
"Plans"), to the extent subject to ERISA, are in compliance in all material
respects with ERISA. Each Pension Plan which is intended to be qualified
under
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Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service, and Seller is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. Except as set forth in Schedule 4.16(b) there is no
material pending or threatened litigation relating to the Plans. Seller
has not engaged in a transaction with respect to any Plan that, assuming
the taxable period of such transaction expired as of the date hereof,
could subject Seller to a material tax or penalty imposed under either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Seller with respect to any
ongoing, frozen or terminated "single-employer plan", within the meaning
of Section 4001 (a)(15) of ERISA, currently or formerly maintained by
Seller or any ERISA Affiliate. Seller has not incurred and does not
expect to incur any withdrawal liability under Subtitle E of Title IV of
ERISA with respect to a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA in an amount which would be material. No notice of a
"reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to
be filed for any Pension Plan or by an ERISA Affiliate within the 12-month
period ending on the date hereof.
(d) Neither any Pension Plan nor any single-employer plan of
an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA and no ERISA Affiliate has an outstanding funding waiver. Seller
has not provided, nor is it required to provide,
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security to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(e) Seller does not have any obligations for retiree health
and life benefits under any Benefit Plan with respect to U.S. Employees,
except as set forth on Schedule 4.16(e) hereto.
(f) All benefit plans, contracts or arrangements covering
non-U.S. Employees comply in all material respects with applicable local
laws. Except as disclosed on Schedule 4.16(f) hereto, Seller and the
Subsidiaries have no material unfunded liabilities with respect to any
"employee pension benefit plan" (within the meaning of Section 3(2) of
ERISA) which covers ten or more non-U.S. Employees.
(g) No payment made to any employee, officer, director or
independent contractor of Seller pursuant to any employment contract,
severance agreement or other arrangement (a "Severance Payment") is or
will be non-deductible by Buyer because of the application of Articles 280G
and 4999 of the Code to the Severance Payment, and Buyer will not be
required to compensate any recipient of any such payment because of the
imposition of any excise tax (including any interest or penalties related
thereto) on such recipient by reason of Articles 280G and 4999 of the
Code.
(h) The execution and performance of this Agreement and the
transactions contemplated hereby shall not result in any employee being
entitled to any payment or other right or benefit of any nature from Buyer
under Seller's Employee Protection Plan or any other similar agreement or
plan and Buyer shall assume no liability thereunder; it being understood
that nothing in this representation is intended to cover statutorily
required severance programs outside the
U.S..
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4.17 Environmental Matters. Except as set forth in
Schedule 4.17 hereto or with respect to any Excluded Liability:
(a) to the Knowledge of Seller, the Business is in compliance
with all applicable Environmental Laws and there are no material
liabilities under any Environmental Law or Environmental Action with
respect to the Business, other than non-compliance or liabilities
which, individually or in the aggregate would not have a Material
Adverse Effect;
(b) Seller and the Subsidiaries have not received any notice
of any violation or alleged violation that is material to the
Business of, or any material liability under, any Environmental Law
or Environmental Action in connection with the Business during the
past three years;
(c) there are no writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, proceedings or
investigations pending or, to the Knowledge of Seller, threatened,
relating to compliance with or liability under any Environmental Law
or Environmental Action materially affecting the Business or the
Acquired Assets; and
(d) to the Knowledge of Seller, there are no material
environmental permits that are nontransferable or require consent,
notification or other action to remain in full force and effect
following the consummation of the transactions contemplated hereby
(other than certain air control permits which will be obtained prior
to Closing).
4.18 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither
Seller nor any other Person makes
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any other express or implied representation or warranty on behalf of
Seller.
4.19 Finder's Fees. Except for Goldman, Sachs & Co., whose fees are
the sole responsibility of Seller, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission from
Seller in connection with the transactions contemplated by this Agreement.
4.20 Representations. The representations and warranties of
the Seller contained in this Agreement (other than those set forth in
Section 4.15 hereto), disregarding the phrases "in all material
respects", "in any material respect" or "materially impair" or the
qualification relating to Material Adverse Effect, are true and correct
with only such exceptions as would not in the aggregate have a Material
Adverse Effect.
ARTICLE V
COVENANTS
5.1 Access. (a) Prior to the Closing, Seller shall permit
Buyer and its representatives to have access, during regular business
hours and upon reasonable advance notice, to the Business, subject to
Seller's reasonable rules and regulations, and shall furnish, or cause to
be furnished, to Buyer and its representatives any financial and
operating data and other information relating to the Business as Buyer or
its representatives shall from time to time reasonably request. All
information provided pursuant to this Section 5.1 shall remain subject to
the terms of the Confidentiality Agreement.
(b) Buyer agrees to retain all Books and Records in existence on
the Closing Date. Following the Closing, Buyer shall provide Seller and
its representatives, during
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normal business hours and upon reasonable notice, reasonable access to the
Books and Records and other underlying data and documentation relating to
the Business and make personnel of Buyer available to Seller in Seller's
review thereof to the extent such access is reasonably related to any
Excluded Liabilities or otherwise necessary for Seller to comply with the
terms of this Agreement or any applicable law. With respect to any such
access, Seller agrees to treat all information regarding Buyer and the
Business as confidential pursuant to Section 5.32(a) below.
5.2 Conduct of Business. During the period from the date
hereof to the Closing, except as otherwise contemplated by this Agreement
or as Buyer shall otherwise consent to (which consent shall not be
unreasonably withheld), Seller covenants and agrees that Seller shall
conduct the Business in the ordinary and usual course consistent with
past practice, and use its reasonable efforts to preserve intact its
business and relationships with third parties and keep available the
services of present employees of the Business. During the period from the
date hereof to the Closing, except as otherwise contemplated by this
Agreement (including, without limitation, Sections 2.9 and 2.10 hereof) or
as Buyer shall otherwise consent to (which consent shall not be
unreasonably withheld), Seller covenants and agrees that with respect to
the Business it shall not, and shall cause each of the Subsidiaries not to:
(a) amend the organizational documents of the Transferred
Subsidiaries, except as required by law or as required to change the
name of any Transferred Subsidiary;
(b) incur, create or assume any Encumbrance on any of its
properties other than those that would not
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individually or in the aggregate have a Material Adverse Effect;
(c) sell, lease, license transfer or dispose of any assets
other than in the ordinary and usual course of business, except as
part of a restructuring or reorganization as to which Buyer has been
given notice and which reorganization or restructuring would not
adversely affect in any way the Business;
(d) enter into, terminate, or materially extend or modify any
Contract except in the ordinary course of business;
(e) with respect to any Transferred Subsidiary, set aside or
pay any dividend or distribution with respect to its capital stock,
repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interest, grant any options to purchase shares
of its capital stock or any other equity interest or issue any shares
of its capital stock or any other equity interest;
(f) intentionally do any other act which would cause any
representation or warranty of Seller in this Agreement to be or
become untrue in any material respect or intentionally omit to take
any action necessary to prevent any such representation or warranty
from being untrue in any material respect at such time; or
(g) enter into any agreement or commitment with respect to
any of the foregoing.
5.3 Reasonable Efforts; Further Assurances. Seller and Buyer
will cooperate and use their respective reasonable efforts to fulfill the
conditions precedent to the other party's obligations hereunder and to
vest in Buyer good and marketable title to the Acquired Assets as
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represented in Section 4.10 hereby, including but not limited to, to
secure as promptly as practicable all consents, approvals, waivers and
authorizations required in connection with the transactions contemplated
hereby. Buyer and Seller will promptly file documentary materials required
by the H-S-R Act and comparable statutes to which any Subsidiary is subject
and promptly file any additional information requested as soon as
practicable after receipt of request thereof. To the extent that, as an
accommodation to Buyer and with Buyer's prior written consent, Seller
incurs costs that Buyer would otherwise have to incur in order to secure
any authorization, consent, waiver or approval, Buyer shall promptly
reimburse Seller for any such costs which are invoiced by Seller to Buyer.
Without limiting the foregoing, Buyer and Seller shall use their reasonable
efforts to take or cause to be taken all actions necessary, proper or
advisable to obtain any consent, waiver, approval or authorization relating
to any anti-competition law that is required for the consummation of the
transactions contemplated by this Agreement.
5.4 Tax Matters. (a) Proration of Taxes. To the extent
permitted by law or administrative practice, the taxable years of each
Transferred Subsidiary shall be closed at the close of business on the
Closing Date. Whenever it is necessary to determine the liability for
Taxes for a portion of a taxable year or period that begins before and ends
after the Closing Date, the determination of the Taxes for the portion of
the year or period ending on, and the portion of the year or period
beginning after, the Closing Date shall be determined by assuming that the
taxable year or period ended at the close of business on the Closing Date,
except that exemptions, allowances or deductions that are calculated on an
annual basis (other than net operating losses and tax credits carried
forward from years ending
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prior to the Closing Date) shall be prorated on the basis of the number of
days in the annual period elapsed through the Closing Date as compared to
the number of days in the annual period elapsing after the Closing Date.
Net operating losses and tax credits carried forward from years ending
prior to the Closing shall be allocated first, to the extent that they can
be utilized, to the taxable year or period ending on the Closing Date.
(b) Transfer Taxes. All excise, sales, use, transfer,
documentary, filing, recordation and other similar taxes and fees which
may be imposed or assessed as a result of the transactions effected
pursuant to this Agreement, together with any interest, additions or
penalties with respect thereto and any interest in respect of such
additions or penalties ("Transfer Taxes"), shall be borne entirely by
Buyer. Buyer and Seller shall cooperate in the timely preparation and
filing of any Tax Returns that must be filed in connection with any
Transfer Taxes. Buyer shall promptly pay all Transfer Taxes. Any such
Taxes or fees resulting from any subsequent transfer of the Acquired Assets
or Assumed Liabilities or any transfer of property on or subsequent to the
Closing shall be borne
entirely by the Buyer, and Buyer shall indemnify Seller for any liabilities
arising in connection therewith.
(c) Tax Returns. (i) Seller shall file or cause to be filed
when due all Tax Returns due to be filed on or prior to the Closing Date
and all U.S. Federal, state and local income Tax Returns with respect to
the Business imposed with respect to the taxable periods, or portions
thereof, beginning before and ending on or after the Closing Date.
(ii) Buyer shall file or cause to be filed when due all other
Tax Returns with respect to the Business due to be filed after the Closing
Date.
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(iii) If Seller may be liable for any portion of the Tax
payable in connection with any Tax Return to be filed by Buyer, Buyer shall
cause such return to be prepared (A) by the same party or parties who
customarily have prepared the Tax Returns filed in prior taxable periods
for or by the corporation, partnership, joint venture or other business
entity whose return it is and (B) on a basis which is consistent with such
previously filed returns and in accordance with past practice. In
addition, if any Tax Return to be filed by Buyer reflects any transaction
undertaken in connection with the sale contemplated by this Agreement,
Buyer shall cause such transactions to be reflected in such return in the
manner directed by Seller. Buyer shall deliver a copy of each Tax Return
described in either, or both, of the prior two sentences, and any
schedules, work papers and other documentation then available that are
relevant to the preparation of such return to Seller not less than 60 days
prior to the date on which such Tax Return is due to be filed (taking into
account any applicable extensions) (the "Due Date"). At any time prior to
the Due Date, Seller may object to any item reflected on such Tax Return
if such item may affect Seller's liability for Taxes and request Buyer to
make any changes to any such item as Seller may direct. Buyer shall, prior
to the Due Date, make any and all such changes requested by Seller and
shall not file such return until it has made such changes and received
Seller's written consent to such filing. Seller may, in its sole
discretion, withhold its consent to the filing of such Tax Return until
Buyer has made the changes, if any, Seller has requested. If Buyer does
not satisfy its obligations pursuant to this Section 5.4(c)(iii), Seller
shall have no obligation to indemnify Buyer for any Taxes which are
reflected on any such return or any related Loss, and shall retain any and
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all remedies it may otherwise have which arise out of such failure.
(iv) If Buyer shall be liable hereunder for any portion of the
Taxes shown due on any Tax Returns required to be filed by Seller, Seller
shall deliver a copy of the relevant portions of such Tax Return to Buyer
for its review and approval, which may not be unreasonably withheld, not
less than sixty (60) days prior to the Due Date. If Buyer objects to any
items reflected on such returns, the parties shall attempt to resolve the
disagreement. If the parties are unable to resolve the disagreement, the
dispute shall be referred to the CPA Firm whose determination shall be
binding upon the parties. The fees and expenses of such CPA Firm shall be
borne equally by Seller and Buyer. If the dispute has not been resolved or
the CPA Firm has not made its determination prior to the Due Date, Buyer
shall pay to Seller the amount requested by Seller (the "Requested
Amount"). When the amount due to Seller from Buyer in respect of such Tax
Return is finally determined, a settlement payment (the "Settlement
Payment") shall be made in an amount equal to the Requested Amount minus
the amount finally determined to be due, from Seller to Buyer if the
Settlement Payment is a positive number, and from Buyer to Seller if the
Settlement Payment is a negative number.
(d) Information to be Provided by Buyer. (i) With respect to
Tax Returns to be filed by Seller pursuant to Section 5.4(c) hereof, Buyer
shall within 60 days following the end of the taxable year beginning
before and ending on or after the Closing Date prepare and provide to
Seller a package of tax information materials (the "Tax Package"), which
shall be completed in accordance with past practice including past practice
as to providing the information, schedules and work papers and as to the
method
of computation of separate taxable income or other relevant
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measures of income of the Seller. Buyer shall cause the Tax Package for
the portion of the taxable period ending on the Closing Date to be
delivered to Seller within 60 days after the Closing Date.
(ii) Foreign Tax Receipts. To the extent not contained in the
Tax Package, Buyer shall deliver to the tax director of Seller certified
copies of all receipts for any foreign Tax with respect to which Seller or
any of its Affiliates could claim a foreign tax credit, and any other
documentation required in connection with Seller or any of its Affiliates
claiming or supporting a claim for such foreign tax credits promptly
following either a request by Seller for such receipts or documentation or
payment of any such foreign Taxes by Buyer, any Affiliate of Buyer or any
other Person to whom Buyer or an Affiliate of Buyer transfers any portion
of the Acquired Assets.
(e) Contest Provisions. Buyer shall promptly notify Seller
in writing upon receipt by Buyer, of notice of any pending or threatened
audits or assessments with respect to Taxes which may affect the
liabilities for Taxes which constitute Excluded Liabilities. Seller shall
be entitled to participate at its expense in the defense of and, at its
option, take control of the complete defense of, Seller's interests in any
tax audit or administrative or court proceeding relating to Taxes which
constitute Excluded Liabilities, and to employ counsel of its choice at
its expense. Buyer may not agree to settle any claim for Taxes which
constitute Excluded Liabilities without the prior written consent of Seller
which may not be unreasonably withheld.
(f) Determination and Allocation of Consideration. The
parties to this Agreement agree to determine the amount of and allocate the
total consideration transferred by Buyer to Seller pursuant to this
Agreement
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(the "Consideration") in accordance with the fair market value of the
assets and liabilities transferred; provided, however, that the parties
agree that the fair market value of the stock of Kodak Clinical
Diagnostics Limited shall be at least $150,000,000. Seller shall
provide Buyer with one or more schedules allocating the Consideration.
If Buyer disagrees with any items reflected on the schedules so provided,
Buyer shall have the right to notify Seller of such disagreement and its
reasons for so disagreeing, in which case Seller and Buyer shall attempt to
resolve the disagreement, provided, however, that Buyer agrees to accept
and be bound by the determination of Seller, which agrees that such
determination and allocation shall be reasonable. Seller and Buyer agree
to prepare and file an IRS Form 8594 in a timely fashion in accordance with
the rules under Section 1060 of the Code. To the extent that the
Consideration is adjusted after the Closing Date, the parties agree to
revise and amend the schedule and IRS Form 8594 in the same manner and
according to the same procedure. The determination and allocation of the
Consideration derived pursuant to this subsection shall be binding on
Seller and Buyer for all Tax reporting purposes.
(g) Employee Withholding and Reporting Matters. With respect
to those Employees who are employed by Buyer within the same calendar year
as the Closing, Buyer shall, in accordance with and to the extent permitted
pursuant to Revenue Procedure 84-77, 1984-2 C.B. 753, assume all
responsibility for preparing and filing Form W-2, Wage and Tax Statement,
Form W-3, Transmittal of Income and Tax Statements, Form 941, Employer's
Quarterly Federal Tax Return, Form W-4, Employee's Withholding Allowance
Certificate, and Form W-5, Earned Income Credit Advance Payment
Certificate. Seller and Buyer agree to comply with
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the procedures described in Section 5 of Revenue Procedure 84-77.
(h) Section 338 Election. The Buyer will not make an election
pursuant to Section 338 of the Code or a similar law of any other country
with respect to the transfer by Seller or any Subsidiary of any Transferred
Subsidiary other than Kodak Clinical Diagnostics Limited, with respect to
which Buyer shall make an election pursuant to Section 338 of the Code.
(i) Certain Post-Closing Settlement Payments. (i) Buyer's
Claiming, Receiving or Using of Refunds and Overpayments. If, after the
Closing, Buyer or its Affiliates (A) receive any refund, or (B) utilize the
benefit of any overpayment, of Taxes (except to the extent reflected as a
Current Asset on the Final Working Capital Statement) which were paid by
Seller or any Affiliate (as determined at the time such Taxes were paid),
Buyer shall promptly transfer, or cause to be transferred, to Seller the
entire amount of the refund or overpayment (including interest) received or
utilized by Buyer or its Affiliates. Buyer agrees to notify Seller
promptly of both the discovery of a right to claim any such refund or
overpayment and the receipt of any such refund or utilization of any such
overpayment. Buyer agrees to claim any such refund or to utilize any such
overpayment and to furnish to Seller all information, records and
assistance necessary to verify the amount of the refund or overpayment.
(ii) Buyer's Claiming and Realizing of Tax Benefits in Respect
of Indemnified Liabilities. If, after the Closing, (A) Buyer or its
Affiliates realizes any Loss for which it is indemnified by Seller
pursuant to Article VII hereof, or (B) an adjustment is required by any
taxing authority in any item reflected on a Tax Return which increases
Seller's liability for indemnification payments
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pursuant to Article VII hereof, Buyer and its Affiliates agree, as soon as
possible, to claim any such Loss and recognize any such adjustment on their
Tax Returns and claim to the fullest extent possible all deductions
available as a result of any such Loss or adjustment. Buyer agrees to
furnish to Seller all information, records and assistance necessary to
verify the amount of the decrease, if any, in Buyer and its Affiliate's
cumulative income taxes paid (as compared to the cumulative income taxes
Buyer and its Affiliates would otherwise have paid) as a result of
recognizing such Loss or adjustment and claiming all such available
deductions. Buyer shall promptly transfer, or cause to be transferred, to
Seller an amount equal to the entire amount of such decrease at the time
such decrease is realized, whether realized by Buyer and its Affiliates
paying less income taxes, receiving a refund or otherwise.
(iii) Subsequent Adjustment. In the event that any Tax
refund, benefit or savings described in any clause of this Section 5.4(i)
is subsequently reduced as a result of any adjustment required by any
taxing authority, this Section 5.4(i) shall be applied, taking into
account such adjustment. If Seller or its Affiliates, on the one hand, or
Buyer or its Affiliates, on the other hand, have paid any amount to the
other on the basis of the application of this Section 5.4(i) prior to such
subsequent adjustment and the amount due pursuant to this Section 5.4(i)
taking into account such subsequent adjustment is determined to have
changed as a
result of such subsequent adjustment, the parties agree to make any payment
necessary to settle the difference between the amount previously paid and
the amount subsequently determined to be due.
(iv) Resolution of Calculation Disputes. In the event that
Seller and Buyer cannot agree on any calculation required under this
Section 5.4(i), such calculation shall
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be made by the CPA Firm, whose decision shall be final and binding and
whose expenses shall be shared equally by Seller and Buyer.
(j) Post-Closing Actions Which Affect Seller's Liability for
Taxes.
(i) Buyer shall not permit any Transferred Subsidiary to take
any action on the Closing Date which could materially increase Seller's
liability for Taxes (including any liability of Seller to indemnify Buyer
for Taxes pursuant to this Agreement).
(ii) During the period beginning on the Closing Date and
ending on the first December 31st thereafter, Buyer shall not permit the
Transferred Subsidiaries to (A) sell (including a deemed sale pursuant to
Section 338 of the Code or a similar law of any other country), exchange,
distribute, reorganize or otherwise dispose of the stock of any foreign
subsidiary corporation, or dispose of any other property the sale of which
produces personal holding company income within the meaning of Section
954(a)(1) of the Code or a similar law of any other country which could be
reflected in any consolidated U.S. Federal income Tax return of Seller, or
(B) make any distribution to shareholders in excess of current earnings and
profits (as computed for U.S. Federal income tax purposes) derived during
the period beginning on the day following the Closing Date and ending on
the first December 31st thereafter.
(iii) Except to the extent required by law, Buyer or its
Affiliates shall not, without the prior written consent of Seller, amend
any Tax Return filed by, or with respect to, any Transferred Subsidiary for
any taxable period, or portion thereof, beginning before the Closing
Date.
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(k) Termination of Tax Allocation Agreements. Any agreement
or arrangement with respect to the allocation or sharing of Taxes, whether
or not written, that may have been entered into by Seller and any
Transferred Subsidiary shall be terminated as to Seller and any Transferred
Subsidiary as of the Closing Date, and no payments which are owed by Seller
pursuant thereto shall be made thereunder.
(l) Assistance and Cooperation. After the Closing Date, each
of Seller and Buyer shall:
(A) assist (and cause their respective Affiliates to assist)
the other party in preparing any Tax Returns which such other party
is responsible for preparing and filing in accordance with this
Section 5.4;
(B) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns and
payments in respect thereof;
(C) make available to the other and to any taxing authority as
reasonably requested all relevant information, records, and documents
relating to Taxes;
(D) provide timely notice to the other in writing of any
pending or proposed audits or assessments with respect to Taxes for
which the other may have a liability under this Agreement;
(E) furnish the other with copies of all relevant
correspondence received from any taxing authority in connection with
any audit or information request with respect to any Taxes referred
to in subsection (D) above; and
(F) bear the other party's out-of-pocket expenses in complying
with a request by a party for the other party's assistance or
cooperation to the extent that
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those expenses are attributable to fees and other costs of unaffiliated
third-party service providers.
5.5 Post-Closing Obligations of the Business to Certain
Employees. (a) Buyer shall offer employment, or in the case of any
Subsidiaries included in the Business, subject to local law, employ all
Transferred Employees (as hereinafter defined) on the Closing Date or upon
the return of any Transferred Employee to active employment (within a
period not to exceed 12 months from the Closing Date and subject to
Section 5.5(b) hereof) in comparable positions, and will maintain for a
period of two years after the Closing Date, without interruption,
employee compensation and benefit plans, programs and policies and fringe
benefits (including post-employment welfare benefits) that will provide
benefits to Transferred Employees that are in the aggregate substantially
no less favorable (as determined by Seller prior to Closing) than those
provided pursuant to such employee compensation and benefit plans,
programs and policies, and fringe benefits, of the Business as in effect
on the Closing Date; it being understood, that notwithstanding the
foregoing aggregation, for such two year period Buyer will maintain a
comparable severance plan for Transferred Employees; and it being further
understood that Buyer shall indemnify and hold harmless Seller for any
Losses incurred under applicable law with respect to Employees of any
Subsidiary outside of the United States included in the Business who,
under applicable law, elect not to be transferred. Except as provided in
the preceding sentence, Buyer shall assume no liability whatsoever, and
Seller shall indemnify and hold Buyer harmless for any Losses with respect
to Transferred Employees who decline Buyer's initial offer of employment
with Buyer. With regard to Employees who are not actively employed as of
the Closing Date, Seller shall
(i) prior to the Closing Date, provide
to
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Buyer a listing of all such Employees, including but not limited to, the
circumstances of their employment status, projected date of return to
active status and all benefits being provided (including without
limitation all Severance Payments) and (ii) continue those benefit
coverages and payments that cannot be reasonably transferred to Buyer and
Buyer shall reimburse Seller for any related expenses. Transferred
Employees shall be given credit for all service with Seller or any
Subsidiary (or service credited by Seller or any Subsidiary) under (i) all
employee benefit plans, programs and policies, and fringe benefits of
the Business or Buyer in which they become participants for purposes of
eligibility, vesting and benefit accrual and (ii) severance plans for
purposes of calculating the amount of each Transferred Employee's severance
benefits. In addition, for so long as the sales agency agreement entered
into pursuant to Section 5.18 hereto is in effect, all of Buyer's employees
needed by Seller to perform under such agreement and located at any office
of Seller or any Subsidiary will be seconded to Seller, and Seller shall
promptly reimburse Buyer for all compensation and other expenses related to
such persons.
(b) "Transferred Employees" means all of the following:
(i) All Persons who are active Employees as of the close of
business on the Closing Date. Employees on temporary leave for
purpose of jury or annual two-week national service/military duty
shall be deemed to be active status Employees;
(ii) Employees who on the Closing Date are on nonmedical
leaves of absence; provided, however, that no such Employee shall be
guaranteed reinstatement to active service if his return to
employment is contrary to the terms of his leave, unless otherwise
required
by
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applicable law. For the purposes of this Section, nonmedical leaves
shall include maternity or paternity leaves, leaves under the Family and
Medical Leave Act of 1993, educational leaves, military leaves with
veteran's reemployment rights under federal law, or personal leaves
(unless any of such is determined to be a medical leave); and
(iii) Employees who on the Closing Date are on disability or
medical leave; provided, however, that no such Employee shall be
guaranteed reinstatement to active service if he is incapable of
working in accordance with the policies, practices and procedures of
Buyer;
it being understood that for purposes of this Agreement, other than with
respect to the obligation to offer employment, Transferred Employees means
all of the preceding who accept employment with Buyer.
(c) (i) Effective as of the Closing Date, Buyer shall
establish a defined contribution plan or cover such employee under a
defined contribution plan sponsored by Buyer for the benefit of
Transferred Employees who were participants in the Eastman Kodak Employees'
Savings and Investment Plan (the "Seller Savings Plan"). Such Transferred
Employees
are referred to hereinafter as the "Savings Plan Employees".
Seller shall cause to be transferred from the Seller Savings
Plan to the plan covering the Savings Plan Employees (the "Transferee
Savings Plan") the liability for the account balances, including any
outstanding loans, of the Savings Plan Employees, together with assets
the fair market value of which on such Transfer Date is equal to such
liability, and Buyer shall cause the Transferee Savings Plan to accept
such transfer. The transfer of assets shall take
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place within 90 days after the Closing Date; provided, however, that in no
event shall such transfer take place until the later of (i) the furnishing
to Seller by Buyer of a favorable determination letter from the Internal
Revenue Service with respect to the qualification of the Transferee Savings
Plan under Section 401(a) of the Code, as amended to comply with the
changes to the qualification requirements of Section 401(a) of the Code
made by the Tax Reform Act of 1986, and (ii) the receipt by Seller of a
favorable determination letter from the Internal Revenue Service with
respect to the continued qualification of the Seller Savings Plan under
Section 401(a) of the Code, as amended to comply with changes to the
qualification requirements of Section 401(a) of the Code made by the Tax
Reform Act of 1986 and other recent legislation and regulations.
(ii) Effective as of the Closing Date, Buyer shall establish a
defined benefit plan for the benefit of Transferred Employees who
participated in the Kodak Retirement Income Plan (the "Seller Retirement
Plan") or cover such Employee under a defined benefit plan sponsored by
Buyer. Such Transferred Employees are referred to hereinafter as the
"Retirement Plan Employees"). The plan covering the Retirement Plan
Employees (the "Transferee Pension Plan") shall (A) recognize for all
purposes thereunder the service of the Retirement Plan Employees which was
recognized under the Seller Retirement Plan and (B) provide, upon the
transfer of assets referred to below, that the benefit liabilities of the
Retirement Plan Employees under the Transferee Pension Plan shall in no
event be less than their benefit liabilities under the Seller Retirement
Plan as of the Closing Date.
Seller shall cause to be transferred from the trust under the
Seller Retirement Plan to the trust under the Transferee Pension Plan
assets in the form of cash,
cash
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equivalents, and marketable securities, the value of which shall be equal
to (x) the "accumulated benefit obligation" (as defined in Statement of
Financial Accounting Standards No. 87) of the Retirement Plan Employees
under such Seller Retirement Plan as of the Closing Date, calculated using
the actuarial assumptions that were used in preparing the audited
financial statements of Seller for the year ended December 31, 1993, except
that the interest rate assumption shall be equal to the sum of (A) the
yield to maturity of 30-year U.S. Treasury bonds on the Closing Date and
(B) 75 basis points or (y) no more than the amount permitted to be
transferred in accordance with Section 414(l) of the Code. With respect to
the Seller Retirement Plan, the excess, if any, of the amount described in
clause (x) of the preceding sentence over the amount described in
clause (y) therein, is referred to herein as the "Pension Shortfall
Amount".
Notwithstanding anything to the contrary in the preceding
paragraph, if the minimum amount required to be transferred in accordance
with Section 414(l) of the Code exceeds the amount described in clause (x)
of the first sentence of the preceding paragraph (such excess being
referred to as the "Pension Excess"), then Seller shall cause such minimum
amount to be transferred from the trust under the applicable Seller
Retirement Plan to the trust under the Transferee Pension Plan. Buyer
shall cause the Transferee Pension Plans to accept such transfers.
The amount to be transferred shall be equitably adjusted to
take into account benefit payments made from the Seller Retirement Plans to
the Retirement Plan Employees after the Closing Date but prior to the date
of transfer. The amounts under the preceding two paragraphs shall be
determined by the actuary for the Seller Retirement Plan and reviewed and
agreed to as being done in accordance with the
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methodology and assumptions set forth in this Section 5.5(c) by the
actuary for the Transferee Pension Plan.
The transfer of assets referred to above shall take place
within 180 days after the Closing Date; provided, however, that in no event
shall such transfer take place until the last to occur of the following:
(i) Buyer has furnished to Seller a favorable determination letter from the
Internal Revenue Service with respect to the qualification of the
Transferee Pension Plan under Section 401(a) of the Code, as amended to
comply with the changes to the qualification requirements of Section
401(a) of the Code made by the Tax Reform Act of 1986, (ii) the receipt by
Seller of a favorable determination letter from the Internal Revenue
Service with respect to the continued qualification of the Seller
Retirement Plan under Section 401(a) of the Code, as amended to (A) comply
with changes to the qualification requirements of Section 401(a) of the
Code made by the Tax Reform Act of 1986 and other recent legislation and
regulations and
(B) provide for the transfer of assets and benefit liabilities referred to
in this Section, and (iii) the receipt of any other necessary governmental
approval.
Notwithstanding anything contained in this Section to the
contrary, (A) in the event that the Internal Revenue Service or any other
governmental agency takes the position in a determination letter, ruling,
advisory opinion or other written or oral communication that the transfer
of assets referred to in this Section cannot be made unless (i) additional
contributions are made to the Seller Retirement Plan or the Transferee
Pension Plan or (ii) the Seller Retirement Plan retains primary or
secondary liability with respect to the benefit liabilities under the
Seller Retirement Plan attributable to the Transferred Retirement Plan
Employees or (B) in the event that a lawsuit is
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instituted by any of the foregoing or by one or more participants in, or
fiduciaries (other than Seller or Buyer) of the Seller Retirement Plan or
the Transferee Pension Plan which seeks to enjoin such transfer, to require
additional contributions to the Seller Retirement Plan or the Transferee
Pension Plan, or to have the Seller Retirement Plan or the Transferee
Pension Plan remain liable in whole or in part with respect to any of the
benefit liabilities under the Seller Retirement Plan attributable to the
Transferred Retirement Plan Employees, then the transfer of assets referred
to in this Section will not be made until the earliest of (I) the date the
issues raised by the Internal Revenue Service or any other governmental
agency or such lawsuit are resolved favorably, and Seller and the Seller
Retirement Plan shall make every reasonable effort in good faith to carry
out the asset transfer, including, but not limited to, the vigorous defense
of any lawsuit described in clause (B), and the exhaustion of all rights of
available judicial review and appeal, and (II) the date Seller and Buyer
enter into a written agreement to resolve on a basis mutually satisfactory
to them the issues raised by the Internal Revenue Service or any other
governmental agency or such lawsuit.
(iii) Pending the completion of the transfers described in this
paragraph (c), Seller and Buyer shall make arrangements for any required
payments to the Savings Plan Employees and the Retirement Plan Employees
from the Seller Savings Plan and the Seller Retirement Plan. Seller and
Buyer shall provide each other with access to information reasonably
necessary in order to carry out the provisions of this paragraph.
(d) Effective as of the Closing Date, all Transferred
Employees on the U.S. payroll shall cease to be covered by Seller's
employee welfare benefit plans,
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including plans, programs, policies and arrangements which provide medical
and dental coverage, life and accident insurance, disability coverage, and
vacation and severance pay (collectively, "Welfare Plans") except to the
extent otherwise provided by the applicable Welfare Plan. Seller shall
retain responsibility for providing employees of Seller who were employed
in connection with the Business, who terminated employment prior to the
Closing Date, and who elected group health coverage required by
Section 4980B of the Code ("Continuation Coverage") under the terms of the
health plan maintained by Seller with such Continuation Coverage.
Effective as of the Closing Date, Buyer shall perform the duties required
of a successor employer with respect to Continuation Coverage, including,
but not limited to, making such coverage available to the Transferred
Employees on and after the Closing Date upon their termination of employ-
ment subsequent to the Closing Date to the extent required by law.
(e) Seller shall retain responsibility for all Welfare Plan
claims incurred by Transferred Employees on the U.S. payroll (i) under any
medical, dental or health plans for treatment or service rendered prior to
the Closing Date; (ii) under any life insurance plans with respect to
deaths occurring prior to the Closing Date; and (iii) for any other
payments or benefits owing prior to the Closing Date under any other
Welfare Plans. For purposes of this paragraph, a claim shall be deemed to
have been incurred on the date on which medical or other treatment or
service was rendered and not the date of the inception of the related
illness to injury or the date of submission of a claim related thereto.
(f) Buyer shall include the U.S. Transferred Employees on the
payroll and their beneficiaries in Buyer's medical, dental or health plans
as of the Closing Date and such plans shall waive any preexisting
condition
limitations
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and shall honor any deductible and out of pocket expenses incurred by such
Transferred Employees and their beneficiaries under Seller's medical,
dental or health plans during the portion of the calendar year preceding
the Closing Date such deductible and out of pocket expenses to be provided
by Buyer as soon as practicable following the Closing.
(g) Buyer shall assume the agreements listed in Schedule
5.5(g) hereto and all statutory obligations relating to the Transferred
Employees.
(h) Seller and Buyer shall use their reasonable efforts to
provide for the transition of coverage, and for the transfer of plan
assets where applicable, from Seller's non-U.S. benefit plans for
Transferred Employees, to the extent, and only to the extent, of assets in
such plans in a manner consistent with the general principles expressed in
this Section 5.5, subject to any applicable law.
(i) For purposes of this Section 5.5, Post-Closing CESD
Employees shall be treated as if they were Transferred Employees, except
that:
(i) any transfer made on behalf of such Employees
pursuant to Section 5.5(c) hereof shall be made on a date agreed upon
by Buyer and Seller;
(ii) for purposes of Section 5.5(c)(ii) hereof, the
"accumulated benefit obligation" for such Employees and yield to
maturity of 30-year U.S. Treasury Bonds shall be as of the Effective
Date of Transfer, and the term "immediately prior to the Effective
Date of Transfer" shall replace the term "December 31, 1993"; and
(iii) the term "Effective Date of Transfer" shall
replace the term "Closing Date" every place such term appears in
Sections 5.5(d)-(h)
hereof.
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5.6 No Shop. From the date hereof until the Closing or the
earlier termination of this Agreement, Seller shall not, directly or
indirectly, through any director, officer, agent or otherwise, in any
manner solicit or encourage from any Person any inquiries or proposals
relating to the sale of the Business or initiate or continue any
discussions or negotiations with any such Person with respect thereto.
From the date hereof until the Closing, Seller will not furnish any Person
any non-public information concerning the Business.
5.7 Compliance with WARN. Buyer will timely give all notices
required to be given under WARN relating to any plant closing or mass
layoff (within the meaning of WARN) caused by Buyer on or after the
Closing Date with respect to individuals employed by Seller prior to the
Closing Date. For this purpose, Buyer shall be deemed to have caused a
mass layoff if the mass layoff would not have occurred but for Buyer's
failure to offer to employ the Transferred Employees in accordance with the
terms of this Agreement.
5.8 Use of Kodak Name. At the Closing, Buyer and Seller
shall enter into the transitional trademarks license agreement attached as
Annex A hereto (the "Transitional Trademarks License Agreement"), licensing
to Buyer the right to use the name "KODAK" on certain products for the
period set forth in such agreement. Following the Closing, except as
permitted in the Transitional Trademarks License Agreement, Buyer shall not
use the name KODAK.
5.9 Reporting. Without limiting the generality of any other
provision of this Agreement, following the Closing, Buyer agrees to file
with governmental authorities all reports and notices required to be filed
by the Business under any applicable law, including, without limitation,
under the medical device reporting regulations promulgated pursuant to the
Federal Food, Drug, and Cosmetic
Act.
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5.10 Licensed Trademarks. At the Closing, Buyer and Seller
shall enter into the trademark agreement attached as Annex B hereto (the
"Trademark License Agreement"), licensing to Buyer the right to use for
two years the EKTACHEM, EKTANET, EKTIMMA and KODATROL marks for those
products on which they are used as of the Closing or until new models or
systems are available, whichever is earlier. Following the Closing,
except as permitted in the Trademark Agreement, Buyer shall not use
any of the following marks: EKTACHEM, EKTANET, EKTIMMA and KODATROL.
5.11 Patent and Hopper Licenses. (a)Seller hereby grants
Buyer, effective at the Closing, a worldwide, royalty-free exclusive
license, subject to existing licenses, solely to make, have made, use,
sell, or otherwise dispose of In Vitro Diagnostic Products under the
patented and unpatented technology not included in the Acquired Assets
that Seller owns or has the right to license as of the Closing Date and
which has been used in the Business within two years prior to the Closing
Date; provided that such license shall not include a license to any
technology embodied in coating machines, the license to which technology
is exclusively set forth in Section 5.11(b) hereof. This license shall be
binding on the parties and their respective successors and assigns, but
Buyer may not, nor shall Buyer have the power to, assign this license or
transfer any rights or obligations under this license to a third party,
without the prior written consent of Seller, which consent, except as
otherwise expressly provided herein, may be granted or withheld by Seller
in its sole discretion. For purposes of this Section 5.11(a), the sale to
another Person of the Business or all or substantially all of the assets
of the Business or a merger or consolidation of Buyer into or with another
Person or the acquisition of control of Buyer, directly or indirectly, by
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another Person shall constitute an assignment of this license to the Person
acquiring such assets or control or surviving such merger or consolidation.
An assignment by Buyer of the type specified in the immediately preceding
sentence or to a wholly-owned direct or indirect subsidiary of Buyer may be
effected without Seller's consent unless the Person to which such
assignment is to be made or any of its Affiliates is a Competitor, in which
case Seller may grant or withhold its consent in its sole discretion. This
license shall be sublicensable by Buyer (i) without Seller's consent, to
any entity (A) in which Buyer has at least a 50% equity interest (B) which
is not a Competitor or whose other equity holders are not Competitors and
(C) which agrees to be bound by the provisions of this license and (b)
with Seller's prior written consent, which consent shall not be
unreasonably withheld, to an entity (A) which is not a Competitor, (B) in
which Buyer
has an equity interest of less than 50% and (C) which agrees to be bound by
the provisions of this license. Any attempted assignment or sublicense in
contravention hereof shall be null and void. This license shall be subject
to the confidentiality provisions of Section 5.32(b) hereof.
(b) Seller hereby grants Buyer, effective at the Closing, a
worldwide, royalty-free, exclusive license, subject to existing licenses
and subject to the Hopper License Agreement set forth in Section 5.11(e)
below, solely to make, have made, use, sell and otherwise dispose of In
Vitro Diagnostic Products under the patented and unpatented technology
embodied in the J-1, 71 and Yasui gravure coating machines and used in the
Business within two years prior to the Closing Date. This license shall
be binding on the parties and their respective successors and assigns, but
Buyer may not, nor shall Buyer have the power to, assign this license or
transfer any rights or obligations under
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this license to a third party, without the prior written consent of Seller,
which consent, except as otherwise expressly provided herein, may be
granted or withheld by Seller in its sole discretion. For purposes of this
Section 5.11(b), the sale to another Person of the Business or all or
substantially all of the assets of the Business or a merger or
consolidation of Buyer into or with another Person or the acquisition of
control of Buyer, directly or indirectly, by another Person shall
constitute an assignment of this license to the Person acquiring such
assets or control or surviving such merger or consolidation. An
assignment by Buyer of the type specified in the immediately preceding
sentence or to a wholly-owned direct or indirect subsidiary of Buyer may
be effected without Seller's consent unless the Person to which such
assignment is to be made or any of its Affiliates is a Competitor, in
which case Seller may grant or withhold its consent in its sole
discretion. This license shall be sublicensable by Buyer (i) without
Seller's consent, to any entity
(A) in which Buyer has at least a 50% equity interest, (B) which is not a
Competitor or whose other equity holders are not Competitors and (C) which
agrees to be bound by the provisions of this license and (ii) with
Seller's prior written consent, which shall not be unreasonably withheld,
to an entity (A) which is not a Competitor, (B) in which Buyer has an
equity interest of less than 50% and (C) which agrees to be bound by
the provisions of this license. Any attempted assignment or
sublicense in contravention hereof shall be null and void. This license
shall be subject to the confidentiality provisions of Section 5.32(b)
hereof.
(c) Buyer hereby grants Seller, effective at the Closing, a
worldwide, royalty-free nonexclusive license, without sublicensing rights,
solely to make, have made, use, sell or otherwise dispose of Imaging
Products under the
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technology included in the Acquired Assets. This license is freely
assignable other than for In Vitro Diagnostic Products.
(d) Buyer hereby grants Seller, effective at the Closing, a
worldwide, royalty-free exclusive license, with royalty-free sublicensing
rights, solely to make, have made, use, sell, or otherwise dispose of
Dental Products under the technology included in the Acquired Assets.
This license is freely assignable other than for In Vitro Diagnostic
Products.
(e) At the Closing, Buyer and Seller shall execute and
deliver the hopper license agreement attached hereto as Annex C (the
"Hopper License Agreement").
5.12 Software Licenses. At the Closing, Buyer and Seller shall
execute and deliver the software license agreements attached hereto as
Annex D (the "Software License Agreements") pursuant to which Seller shall
license the software specified therein to Buyer in accordance with the
terms thereof.
5.13 Customer Equipment Services. At the Closing, Buyer and
Seller shall enter into the customer equipment services agreement attached
hereto as Annex E (the "Customer Equipment Services Agreement") pursuant
to which for a transitional period following the Closing, Seller and/or
certain of the Subsidiaries shall make available to Buyer certain customer
equipment services currently being provided to customers of the Business.
5.14 Kodak Park Product Supply Agreement. At the Closing,
Buyer and Seller shall execute and deliver the supply agreement attached
hereto as Annex F (the "Kodak Park Product Supply Agreement") pursuant
to which Seller and certain of the Subsidiaries shall supply to Buyer the
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products set forth therein in accordance with the terms thereof.
5.15 KEMD Product Supply Agreement. At the Closing, Buyer and
Seller shall execute and deliver the product supply agreement attached
hereto as Annex G (the "KEMD Product Supply Agreement") pursuant to which
Seller and certain of the Subsidiaries shall supply to Buyer certain
optical, mechanical, electrical and other products in accordance with the
terms thereof.
5.16 Clinical Diagnostic Support Services Supply Agreement.
At the Closing, Buyer and Seller shall execute and deliver the support
services agreement attached hereto as Annex H (the "Clinical Diagnostic
Support Services Supply Agreement") pursuant to which Seller and certain
of the Subsidiaries shall supply to Buyer the services set forth therein in
accordance with the terms thereof.
5.17 Non-U.S. Support Services. Seller shall, or shall cause
the Subsidiaries to, provide Buyer with such support services outside of
the United States similar to those provided by Seller and the
Subsidiaries to the Business as of the date hereof as are requested by
Buyer prior to the Closing to be provided to Buyer following the Closing
on the terms and in the manner agreed by the parties hereto prior to the
Closing.
5.18 Master Sales Agency Agreement. Seller shall, or shall
cause the Subsidiaries, to provide Buyer with such sales agency services
similar to those services provided by Seller and the Subsidiaries to the
Business as of the date hereof as are requested by Buyer prior to the
Closing to be provided following the Closing on the terms and in the
manner agreed by the parties hereto prior to the Closing.
5.19 Biolyzer Supply Agreement. At the Closing, Buyer and
Seller shall execute and deliver the biolyzer
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supply agreement attached hereto as Annex I (the "Biolyzer Supply
Agreement") pursuant to which Buyer will sell to Seller the equipment and
consumable supplies described in such agreement.
5.20 Lease Agreements. At the Closing, Buyer and Seller shall
execute and deliver the lease and facility services agreements attached
hereto as Annex J (the "Real Property Leases") pursuant to which Buyer
shall (a) lease from Seller the headquarters building located in the Canal
Ponds Business Park, Greece, New York, (b) lease from Seller the Kodak
Park Leased Real Property, (c) lease from Seller part of the
following buildings: the Hawkeye Building, located at 1447 St.
Paul Street, Rochester, New York, the building known as Building 800,
located on Buffalo Road (near the intersection with Mt. Read Boulevard),
Rochester, New York, the Marketing Education Center building located at
4545 East River Road in the town of Henrietta, New York and the warehouse
space located at 58 McKee Road, Rochester, New York and (d) at its
election, sublease or lease, as appropriate, the portion of any Shared
Real Property which is Related to the Business. Any sublease or lease
referred to in clause (d) of this Section 5.20 shall (i) be for a term
not to exceed twelve (12) months; (ii) provide that Buyer shall pay rent
equal to (x) the proportionate share of the rent payable by Seller under
its lease for such space, in the case of a sublease, or (y) the internal
charges which would have been allocated to the Business as charges for
occupancy of and services related to such portion of the Shared Real
Property if the Business had not been sold by Seller to Buyer; and (iii)
provide that Buyer shall reimburse Seller for the allocable portion of all
operating costs and expenses associated with the use, occupancy,
maintenance and repair of such portion of the Shared Real
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Property, in each case in accordance with the terms of such Real Property
Leases.
5.21 Right of First Refusal. As a material inducement to
Seller to enter into this Agreement, Buyer agrees that Buyer shall not sell
or transfer the Yasui gravure coating machine, the J-1 coating machine or
the 71 coating machine or any coating machine developed by Buyer after the
Closing which utilizes Intellectual Property embedded in the Yasui, J-1 or
71 coating machines unless Buyer complies with the terms of this
Section 5.21. In the event Buyer intends to effect such a sale or transfer
during such period, Buyer shall send to Seller a written notice which shall
describe, in such detail as Seller may require, the proposed sale or
transfer, including, without limitation (i) the manner of such proposed
sale or transfer; (ii) the identity of each proposed purchaser or
transferee; (iii) a statement that each proposed purchaser or transferee
has agreed to be bound by the provisions of Section 9.13 as if it were the
Buyer; (iv) the coating machine proposed to be sold or transferred to each
purchaser or transferee; and (v) the proposed amount of cash and nature of
any other consideration to be received for the coating machine proposed to
be sold or transferred to each such purchaser or transferee. If, within
20 days after Seller has received such notice, Seller does not notify Buyer
in writing of a firm commitment by Seller or a designee of Seller to
purchase the coating machine to be so sold or transferred, at the price set
forth in the notice to Seller, Buyer shall be free for a period of 60 days
following such twenty-day period to sell or transfer the coating machine so
proposed to be sold or transferred, but only to such transferees and at the
price
and under the terms and conditions set forth in such notice. If, within 20
days after Seller has received such notice, Seller notifies Buyer in
writing of a firm
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commitment by Seller or a designee thereof to purchase the coating machine
(or any part thereof) so proposed to be sold or transferred, at the price
applicable to such coating machine set forth in Buyer's notice to Seller,
Buyer shall at a date fixed by Buyer not more than ten days after receiving
such notice from Seller, sell the coating machine set forth in Buyer's
notice to Seller to Seller at the purchase price applicable to the coating
machine set forth in such notice.
5.22 GECC Contract. Upon the execution hereof, Buyer agrees
to use its reasonable efforts to negotiate and conclude an agreement with
Seller and the General Electric Credit Corporation ("GECC") pursuant to
which Buyer will substitute itself for Seller with respect to the Operating
Agreement as it relates to the products of the Business, so that Seller
will have no rights or obligations with respect to such products under the
Operating Agreement effective as of the Closing.
5.23 Removal of Coating Machines. Buyer agrees that at the
end of the respective term of each of the Real Property Leases with respect
to the buildings in which each of the J-1 coating machine, the 71 coating
machine and the Yasui gravure coating machine is located, Buyer, at its own
cost, will remove such machines from Seller's premises.
5.24 Capital Improvement Projects. Seller and Buyer agree
that following the Closing, Seller will complete those capital improvement
projects currently in process and set forth on Schedule 5.24 hereto. Buyer
agrees to pay Seller an amount not to exceed $6,000,000 for completing such
projects on the terms and in the manner set forth on Schedule 5.24 hereto.
5.25 Research and Development. Seller and Buyer agree that
following the Closing, Seller will complete
those
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research and development projects currently in process and set forth on
Schedule 5.25 hereto. Buyer agrees to pay Seller an amount not to exceed
$600,000 for completing such projects on the terms and in the manner set
forth on Schedule 5.25 hereto.
5.26 Provision of Equipment. Buyer agrees to provide Seller
free of charge with the injection molding machine and the assembly
machine for the manufacture of IDx wells, the molds therefor and the
tooling for the E-250 sample handler for the duration of the respective
Ancillary Agreements relating thereto except as otherwise provided
therein.
5.27 Additional Distribution Agreements. Seller will
cooperate with Buyer to attempt to secure distribution agreements between
Buyer and the existing third party distributors of Seller and the
Subsidiaries under distribution agreements related to the Business which
are included in Excluded Assets.
5.28 Further Assurances. At any time after the Closing Date,
Seller and Buyer shall promptly execute, acknowledge and deliver any other
assurances or documents or take such action reasonably requested by Seller
and Buyer, as the case may be, and necessary for Seller and Buyer, as the
case may be, to satisfy its respective obligations hereunder or obtain the
benefits contemplated hereby including the payment of funds rightfully
belonging to Buyer. Buyer and Seller shall each use reasonable efforts to
cooperate with the other in the conduct of the litigation and arbitration
assumed by Buyer pursuant to this Agreement or retained by Seller as an
Excluded Liability, as the case may be. In addition, Seller will
reasonably cooperate with Buyer in the transfer of any benefit plan
relating to Transferred Employees at any Subsidiary; it being
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acknowledged, to the Knowledge of Seller, no Person has a basis for
preventing or inhibiting such tranfer.
5.29 Buyer's Knowledge of Business; Seller's Representations
Modified by Buyer's Knowledge. Buyer hereby agrees that to the extent that
any of the key management personnel of Buyer who are responsible for the
analysis and negotiation of this Agreement and the transactions
contemplated hereby has actual knowledge prior to the date hereof that any
representations or warranty of Seller made herein or in any Ancillary
Agreement is untrue or incorrect, (i) Buyer shall have no rights
thereunder by reason of such untruth or inaccuracy and (ii) any such
representation or warranty by Seller shall be deemed to be amended to the
extent necessary to render it consistent with such knowledge of Buyer.
5.30 Certain Environmental Arrangements. Notwithstanding
anything to the contrary contained in this Agreement, with respect to the
Cardiff Property: (a) Buyer and Seller agree to share equally the first
$10,000,000 of liabilities arising in connection with or relating to any
Environmental Law or Environmental Action and (b) Buyer shall (i) permit
Seller and its representatives to have access, during regular business
hours and upon reasonable advance notice, to the Cardiff Property, subject
to Buyer's reasonable rules and regulations and subject to the lease
covering the Cardiff Property, (ii) not conduct or cause to be conducted
any environmental testing or sampling whatsoever, including without
limitation any testing or sampling of the soil, surface or subsurface
waters and air quality at, in on or beneath the Cardiff Property without
Seller's prior written consent, which consent will not be unreasonably
withheld, (iii) promptly, taking into account the circumstances, notify
Seller in writing of any communication to Buyer from any third party
concerning any
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environmental matter, (iv) unless, otherwise required by law or
governmental regulation, not respond to or communicate with any third party
concerning any environmental matter without Seller's prior written consent,
which consent will not be unreasonably withheld and (v) afford Seller the
opportunity and right to control any action, suit, investigation or
proceeding relating to any environmental matter, Environmental Law or
Environmental Action, unless in each case (b)(ii)-(v) of this Section 5.30,
Buyer agrees in writing with Seller that any such action, suit,
investigation or proceeding or any actions, suits, investigations or
proceedings arising from or relating to such testing or sampling,
communication or response shall be the sole responsibility of Buyer; it
being understood that to the extent Seller enters into any settlement with
respect to any such matters and such settlement would, pursuant to this
Section 5.30, require Buyer to pay any amounts thereunder, such settlement
shall be subject to Buyer's prior written consent, which consent shall not
be unreasonably withheld.
5.31 Agreement Not to Compete. (a) Seller agrees that the
going concern value of the Business and the Acquired Assets is important to
Buyer and acknowledges that Buyer would not have entered into this
Agreement and the Ancillary Agreements absent the provisions of this
Section 5.31 and, therefore, further agrees that it will not until the
fifth anniversary of the Closing Date, directly or indirectly, engage in
the manufacture, development, sale or distribution of In Vitro Diagnostic
Products.
(b) Nothing in this Section 5.31 shall prevent:
(i) Seller and its Affiliates from owning less than 10%
in the aggregate of the equity securities of any company's voting
securities, if none of the employees of Seller or any of its
Affiliates is
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involved in any way in the management of such company (other than as
directors); or
(ii) Seller and its Affiliates from passively
participating in venture capital, mutual or investment funds which
hold ownership interests of persons which engage in activities
relating to the Business.
5.32 Confidentiality. (a) Seller will not, directly or
indirectly, at any time communicate or divulge any secret or confidential
information, knowledge or data included in the Acquired Assets or the
Kodak Leased Property to any Person, except (i) with respect to the Kodak
Leased Property, to any Person other than a Person engaged in the
manufacture, development, sale or distribution of In Vitro Diagnostic
Products and (ii) with respect to the Acquired Assets, to any Person
in the Imaging Products.
(b) Buyer will not, directly or indirectly, at any time
communicate or divulge any unpatented technology licensed by Seller under
Section 5.11(a) or 5.11(b) hereof to any Person other than an authorized
sublicensee or assignee which agrees in writing to be bound by the
provisions hereof.
5.33 Non Solicitation. (a) Seller agrees that it will not
directly or indirectly prior to the second anniversary of the Closing Date,
induce, encourage, or solicit any Transferred Employee to reject Buyer's
offer of employment or leave such employment, or to accept any other
position or employment or assist any other entity in hiring such employee.
(b) Buyer agrees that it will not directly or indirectly prior
to the second anniversary of the Closing Date, induce, encourage, or
solicit any employee of Seller or its Subsidiaries to leave such
employment, or to accept
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any other position or employment or assist any other entity in hiring such
employee other than any employee working in the customer equipment services
division of Seller so long as (i) such solicitation is done within one 90-
day period and (ii) all such employees are hired on the same date.
5.34 Insurance Proceeds. Seller shall assign to Buyer any
proceeds of Seller's third party insurance policies related to Assumed
Liabilities or Losses to the extent and only to the extent assignable.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Both Parties. The
obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver) prior to the Closing of the following conditions:
(a) Antitrust Filings and Approvals. Any required waiting
period under the H-S-R Act applicable to the transactions contemplated
hereby shall have expired or been earlier terminated and the German
Federal Cartel Office and similar governmental offices in each of Belgium,
Greece, Ireland, Italy, Portugal and Japan shall have approved the
transactions contemplated hereby.
(b) No Injunctions. No court or governmental authority of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, or non-appealable judgment, decree,
injunction or other order which is in effect on the Closing Date and
prohibits the consummation of the Closing.
(c) Consents and Approvals. All Required Approvals shall
have been
obtained.
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6.2 Conditions to the Obligations of Buyer. The obligation
of Buyer to effect the Closing is subject to the satisfaction (or waiver)
prior to the Closing, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller contained herein shall have been true and correct in
all material respects when made and shall be true and correct in all
material respects as of the Closing, as if made as of the Closing (except
that representations and warranties that are made as of a specific date
need be true in all material respects only as of such date), and Buyer
shall have received a certificate to such effect dated the Closing Date
and executed by a duly authorized officer of Seller.
(b) Covenants. The covenants and agreements of Seller to be
performed on or prior to the Closing shall have been duly performed in all
material respects, and Buyer shall have received a certificate to such
effect dated the Closing Date and executed by a duly authorized officer of
Seller.
(c) Legal Opinions. Buyer shall have received the opinions
of (i) Sullivan & Cromwell and (ii) the General Counsel of Seller, each dated as
of the Closing Date, addressed to Buyer and in form and substance
reasonably acceptable to Buyer.
(d) Ancillary Agreements. Seller shall have executed and
delivered the Ancillary Agreements.
6.3 Conditions to the Obligations of Seller. The obligation
of Seller to effect the Closing is subject to the satisfaction (or waiver)
prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Buyer contained herein
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shall have been true and correct in all material respects when made and
shall be true and correct in all material respects as of the Closing, as if
made as of the Closing (except that representations and warranties that are
made as of a specific date need be true in all material respects only as of
such date), and Seller shall have received a certificate to such effect
dated the Closing Date and executed by a duly authorized officer of Buyer.
(b) Covenants. The covenants and agreements of Buyer to be
performed on or prior to the Closing shall have been duly performed in all
material respects, and Seller shall have received a certificate to such
effect dated the Closing Date and executed by a duly authorized officer of
Buyer.
(c) Legal Opinions. Seller shall have received the opinions
of (i) the office of general counsel of Buyer and (ii) Davis Polk & Wardwell,
each dated as of the Closing Date, addressed to Seller and in form and
substance reasonably acceptable to Seller.
(d) Ancillary Agreements. Buyer shall have executed and
delivered the Ancillary Agreements.
(e) Completion of Asset Transfers. (i) In the event that
Seller elects to transfer the assets of Kodak Diagnostic S.A. and Kodak
Clinical Diagnostics (Europe) S.A. in accordance with Section 2.10(b)
hereof, the completion of the transfer of such assets to a separate
entity shall have occurred and (ii) Kodak Germany-Sub shall have
transferred all of its assets to Kodak Germany-Parent.
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ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1 Survival. The representations and warranties contained
in this Agreement shall survive the Closing for the period set forth in
this Section 7.1. All representations and warranties contained in this
Agreement and all claims and causes of action with respect thereto shall
terminate upon expiration of 18 months after the Closing Date, except that
the representations and warranties in Sections 3.1, 3.2, 3.4, 4.1, 4.2, 4.3
and 4.5 and all claims and causes of action with respect thereto shall
survive forever and the representations and warranties in Section 4.6 and
all claims and causes of action with respect thereto shall survive until
the expiration of the applicable statute of limitations with respect to the
matters addressed in such Section and the representations in Section 4.17
shall survive for 5 years after Closing; it being understood that in the
event notice of any claim for indemnification under Section 7.2(a) or
Section 7.3(a)(i) hereof shall have been given (within the meaning of
Section 9.1) within the applicable survival period, the representations and
warranties that are the subject of such indemnification claim shall survive
until such time as such claim is finally resolved.
7.2 Indemnification by Buyer. Buyer hereby agrees that it
shall indemnify, defend and hold harmless Seller, its Affiliates, and, if
applicable, their respective directors, officers, shareholders, partners,
attorneys, accountants, agents and employees and their heirs, successors
and assigns (the "Seller Indemnities") from, against and in respect of any
damages, claims, losses, liabilities, charges, actions, suits, proceedings,
deficiencies, taxes, interest, penalties, and reasonable costs and expenses
(including without limitation reasonable
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attorneys' fees, removal costs, remediation costs, closure costs, fines,
penalties and expenses of investigation and ongoing monitoring)
(collectively, the "Losses") imposed on, sustained, incurred or suffered by
or asserted against any of the Seller Indemnities, directly or indirectly
relating to or arising out of (a) any breach of any representation or
warranty made by Buyer contained in this Agreement for the period such
representation or warranty survives, (b) the Assumed Liabilities
(including, without limitation, liabilities relating to (A) investigation,
removal, remediation, containment, cleanup or abatement of the presence,
release or threatened release of any Hazardous Substance, whether on-site
or off-site and (B) any claim by any third party, including, without
limitation, tort suits for personal or bodily injury, property damage or
injunctive relief) and (c) the breach of any covenant or agreement of
Buyer contained in this Agreement. Buyer shall not be liable to the Seller
Indemnities for any Losses with respect to the matters contained in
Section 7.2(a) except to the extent (and then only to the extent) the
Losses exceed $9,500,000.
7.3 Indemnification by Seller. (a) Seller hereby agrees that
it shall indemnify, defend and hold harmless Buyer, its Affiliates and
their respective directors, officers, shareholders, partners, attorneys,
accountants, agents and employees (other than the Transferred Employees)
(the "Buyer Indemnities") from, against and in respect of any Losses
imposed on, sustained, incurred or suffered by or asserted against any of
the Buyer Indemnities, directly or indirectly relating to or arising out
of (i) subject to Section 7.3(b) hereof, any breach of any representation
or warranty made by Seller contained in this Agreement for the period such
representation or warranty survives, (ii) all Excluded Liabilities
(including, without limitation,
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liabilities relating to (A) investigation, removal, remediation,
containment, cleanup or abatement of the presence, release or threatened
release of any Hazardous Substance, whether on-site or off-site and (B) any
claim by any third party, including, without limitation, tort suits for
personal or bodily injury, property damage or injunctive relief) and
(iii) subject to Section 7.3(b) hereof, the breach of any covenant or
agreement of Seller contained in this Agreement. Buyer acknowledges that
this Article VII constitutes the Buyer's sole remedy with respect to any
Losses or liability under any Environmental Law or Environmental Action or
with respect to any Hazardous Substance or any representation, warranty or
covenant relating thereto and expressly waives any other rights or cause of
action under any Environmental Law or with respect to any claim involving
the presence or exposure to any Hazardous Substance.
(b) Seller shall not be liable to the Buyer Indemnities for
any Losses with respect to the matters contained in Section
7.3(a)(i) except to the extent (and then only to the extent) the Losses
therefrom exceed $20,000,000; provided, however, that Seller shall not be
liable for any individual Loss which does not exceed $10,000.
7.4 Indemnification Procedures. With respect to third party
claims other than those relating to Taxes, promptly after receipt by an
indemnified party of notice of the commencement of any action or the
presentation or other assertion of any claim which could result in a claim
for indemnification, such indemnified party shall assume the defense
thereof, shall give prompt notice thereof to the indemnifying party, and
the indemnifying party shall be entitled to participate in, or assume, the
defense thereof with its own counsel and at its own expense. The
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indemnifying party shall not compromise or settle any such action or claim
without the consent of the indemnified party (which shall not be
unreasonably withheld), and shall not be liable for any compromise or
settlement of any such action or claim effected without its consent (which
shall not be unreasonably withheld). The parties agree to cooperate to the
fullest extent possible in connection with any claim for which
indemnification is or may be sought under this Agreement.
7.5 Characterization of Indemnification Payments. All
amounts paid by Seller to Buyer or by Buyer to Seller, as the case may be,
under Article II (other than Section 2.8), Article V and this Article VII
shall be treated as adjustments to the Purchase Price for all Tax purposes.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated at any
time prior to the Closing only as follows:
(a) by written agreement of Buyer and Seller;
(b) by either Buyer or Seller, by giving written notice of
such termination to the other party, if the Closing shall not have
occurred on or prior to December 12, 1994 (assuming no additional
request for information pursuant to the HSR Act); provided that the
terminating party is not in material breach of its obligations under
this Agreement;
(c) by either Buyer or Seller if there shall be in effect any
law or regulation that prohibits the consummation of the Closing or
if consummation of the Closing would violate any non-appealable final
order, decree or judgment of any court or governmental body having
competent
jurisdiction;
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(d) by Buyer if Seller has breached any representation,
warranty, covenant or agreement contained in this Agreement and such
breach, if existing immediately prior to Closing, would entitle Buyer
not to effect the Closing, unless such breach is capable of being
cured prior to the Closing and is so cured within a reasonable amount
of time, but no later than the Closing;
(e) by Seller if Buyer has breached any representation,
warranty, covenant or agreement contained in this Agreement and such
breach, if existing immediately prior to the Closing, would entitle
Seller not to effect the Closing, unless such breach is capable of
being cured prior to the Closing and is so cured within a reasonable
amount of time, but no later than the Closing; or
(f) by Seller if the Closing shall not have occurred on or
prior to ten Business Days following the satisfaction of all the
conditions to Closing set forth in Sections 6.1 and 6.2 hereof as a
result of any action or inaction by Buyer.
8.2 Effect of Termination. In the event of the termination
of this Agreement in accordance with Section 8.1 hereof, this Agreement
shall thereafter become void and have no effect, and no party hereto
shall have any liability to the other party hereto or their respective
Affiliates, directors, officers or employees, except for the obligations
of the parties hereto contained in this Section 8.2 and in Sections 9.1,
9.7, 9.9, 9.12 and 9.13 hereof, and except that nothing herein will relieve
any party from liability for any breach of this Agreement prior to such
termination.
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ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices or other communications hereunder
shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended on the
day so delivered, if delivered by registered or certified mail, return
receipt requested, on the third Business day following such mailing or by
a national courier service on the Business Day following such mailing, or
if sent by telecopier on the day telecopied, or if not a Business Day,
the next succeeding Business Day, provided that the telecopy is promptly
confirmed by telephone confirmation thereof, to the person at the address
set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
To Buyer:
JOHNSON & JOHNSON
1 Johnson & Johnson Plaza
New Brunswick, N.J. 08933
Telephone: (908) 524-2846
Telecopy: (908) 524-8822
Attn: Office of General Counsel
With a copy to:
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Telecopy: (212) 450-4800
Attn: William Rosoff
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To Seller:
EASTMAN KODAK COMPANY
343 State Street
Rochester, New York 10650
Telephone: (716) 724-4332
Telecopy: (716) 724-9448
Attn: Gary Van Graafeiland
General Counsel,
Senior Vice President
and Secretary
With a copy to:
SULLIVAN & CROMWELL
250 Park Avenue
New York, New York 10177
Telephone: (212) 558-4000
Telecopy: (212) 883-1186
Attn: Alexandra D. Korry
9.2 Amendment; Waiver. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Buyer and Seller, or
in the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Except as
otherwise provided herein, the rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
9.3 Assignment. No party to this Agreement may assign any of
it rights or obligations under this Agreement without the prior written
consent of the other party hereto; provided that Buyer may assign its
rights and obligations hereunder to one or more of its Affiliates without
obtaining any such consent from Seller, except that if any such
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assignment would adversely affect Seller's ability to transfer any
material Acquired Assets hereunder, such assignment shall be subject to
Seller's prior written consent, which consent shall not be unreasonably
withheld. Any attempted assignment in contravention hereof shall be null
and void.
9.4 Entire Agreement. This Agreement (including all
Schedules and Annexes hereto) contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to such
matters.
9.5 Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than Buyer, Seller, or
their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
9.6 Public Disclosure. Notwithstanding anything herein to
the contrary, each of the parties to this Agreement hereby agrees with the
other party hereto that, except as may be required to comply with the
requirements of any applicable Laws, and the rules and regulations of each
stock exchange upon which the securities of one of the parties is
listed, no press release or similar public announcement or communication
shall ever, whether prior to or subsequent to the Closing, be made or
caused to be made concerning the execution or performance of this
Agreement unless specifically approved in advance by all parties hereto.
9.7 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions
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contemplated by this Agreement are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such expenses.
9.8 Schedules. The disclosure of any matter in any schedule
to this Agreement shall be deemed to be a disclosure for all purposes of
this Agreement to which such matter could reasonably be expected to be
pertinent, but shall expressly not be deemed to constitute an admission by
Seller or Buyer or to otherwise imply, that any such matter is material for
the purposes of this Agreement.
9.9 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES
THEREOF. BUYER HEREBY AGREES TO SUBMIT TO THE JURISDICTION OF ANY COURT OF
GENERAL JURISDICTION SITTING IN THE STATE OF NEW YORK, AND BUYER DESIGNATES
CT CORPORATION, AS ITS AGENT AND ATTORNEY IN FACT FOR THE PURPOSE OF
ACCEPTING SERVICE AND MAKING AN APPEARANCE ON ITS BEHALF IN SUCH PROCEEDING
AND TAKING ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO
CONFER JURISDICTION ON IT UPON SUCH COURT AND BUYER STIPULATES THAT SUCH
CONSENT AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
9.10 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Agreement.
9.11 Headings. The heading references herein and the table
of contents hereto are for convenience purposes only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of
the provisions
hereof.
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9.12 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to
any person or entity or any circumstance, is invalid or unenforceable,
(a) a suitable and equitable provision shall be substituted therefor in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of such invalid or unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to other persons,
entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof,
in any other jurisdiction.
9.13 Confidentiality. Buyer hereby acknowledges that it has
obtained confidential information relating to the business, operations and
assets of Seller and its Subsidiaries. Following the Closing, for a period
of five years, Buyer and its Affiliates shall treat such information, other
than any information related to the Business, as confidential, preserve the
confidentiality thereof, not duplicate or use such information and instruct
its employees who have had access to such information to keep such
information confidential and not to use any such information unless such
information is now or hereafter disclosed through no act or omission of
Buyer or its
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Affiliates, in a manner making such information available to the
general public.
IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
EASTMAN KODAK COMPANY
By:
JOHNSON & JOHNSON
By:
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SCHEDULE 3.1
None.
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SCHEDULE 3.3
None.
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SCHEDULE 3.5
None.
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SCHEDULE 3.6
None.
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Exhibit 10(D)
ASSET PURCHASE AGREEMENT
among
EASTMAN KODAK COMPANY
and
L&F PRODUCTS INC.
and
STERLING WINTHROP INC.
and
RECKITT & COLMAN PLC
Dated as of September 26, 1994
Circulated October 5, 1994
<PAGE>
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions . . . . . . . . . . . . . . . . . . 281
Section 1.2 Other Terms . . . . . . . . . . . . . . . . . . . . . . 292
Section 1.3 Other Definitional Provisions . . . . . . . . . . . . . 292
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
Section 2.1 Purchase and Sale of Assets . . . . . . . . . . . . . . 293
Section 2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . 294
Section 2.3 Assumption of Liabilities . . . . . . . . . . . . . . . 297
Section 2.4 Excluded Liabilities . . . . . . . . . . . . . . . . . . 298
Section 2.5 Purchase Price . . . . . . . . . . . . . . . . . . . . . 301
Section 2.6 Business Post-Closing Adjustments . . . . . . . . . . . 301
Section 2.7 The Closing . . . . . . . . . . . . . . . . . . . . . . 305
Section 2.8 Deliveries by Purchaser and Its Affiliates At the Closing
307
Section 2.9 Deliveries by Seller, Sterling, Kodak and Kodak's
Affiliates At the Closing . . . . . . . . . . . . . . 308
Section 2.10 Means of Transfer . . . . . . . . . . . . . . . . . . . 310
Section 2.11 Additional Payments . . . . . . . . . . . . . . . . . . 311
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER, STERLING AND KODAK
Section 3.1 Organization and Qualification . . . . . . . . . . . . . 311
Section 3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 312
Section 3.3 Corporate Authorization . . . . . . . . . . . . . . . . 313
Section 3.4 Consents and Approvals . . . . . . . . . . . . . . . . . 314
Section 3.5 Non-Contravention . . . . . . . . . . . . . . . . . . . 315
Section 3.6 Binding Effect . . . . . . . . . . . . . . . . . . . . . 317
Section 3.7 Financial Statements . . . . . . . . . . . . . . . . . . 317
Section 3.8 Litigation and Claims . . . . . . . . . . . . . . . . . 318
Section 3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 319
Section 3.10 Employee Benefits . . . . . . . . . . . . . . . . . . . 322
Section 3.11 Compliance with Laws . . . . . . . . . . . . . . . . . . 325
Section 3.12 Environmental Matters . . . . . . . . . . . . . . . . . 326
Section 3.13 Intellectual Property . . . . . . . . . . . . . . . . . 327
Section 3.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . 329
Section 3.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . 330
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Section 3.16 Entire Business; Shared Assets; Title to and Condition of
Property . . . . . . . . . . . . . . . . . . . . . . . 331
Section 3.17 Finders' Fees . . . . . . . . . . . . . . . . . . . . . 335
Section 3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . 335
Section 3.19 Absence of Undisclosed Liabilities . . . . . . . . . . . 335
Section 3.20 Intercompany Transactions . . . . . . . . . . . . . . . 336
Section 3.21 Customers and Suppliers . . . . . . . . . . . . . . . . 336
Section 3.22 Certain Documents . . . . . . . . . . . . . . . . . . . 337
Section 3.23 No Other Representations or Warranties . . . . . . . . . 337
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization and Qualification . . . . . . . . . . . . . 338
Section 4.2 Corporate Authorization . . . . . . . . . . . . . . . . 338
Section 4.3 Consents and Approvals . . . . . . . . . . . . . . . . . 339
Section 4.4 Non-Contravention . . . . . . . . . . . . . . . . . . . 340
Section 4.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . 340
Section 4.6 Finders' Fees . . . . . . . . . . . . . . . . . . . . . 341
Section 4.7 Financial Capability . . . . . . . . . . . . . . . . . . 341
Section 4.8 No Other Representations or Warranties . . . . . . . . . 341
ARTICLE V
COVENANTS
Section 5.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . 341
Section 5.2 Conduct of Business . . . . . . . . . . . . . . . . . . 342
Section 5.3 Reasonable Efforts; Good Faith . . . . . . . . . . . . . 345
Section 5.4 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 346
Section 5.5 Post-Closing Obligations of the Business to Certain
Employees . . . . . . . . . . . . . . . . . . . . . . 364
Section 5.6 Compliance with WARN, etc. . . . . . . . . . . . . . . . 376
Section 5.7 Compliance with State Property Transfer Statutes . . . . 377
Section 5.8 Further Assurances . . . . . . . . . . . . . . . . . . . 377
Section 5.9 Use of Corporate Names . . . . . . . . . . . . . . . . . 378
Section 5.10 Certain Matters Involving the Intellectual Property . . 378
Section 5.11 [Intentionally omitted.]
Section 5.12 Transition Services . . . . . . . . . . . . . . . . . . 379
Section 5.13 Supply Agreements . . . . . . . . . . . . . . . . . . . 380
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Section 5.14 No Shopping . . . . . . . . . . . . . . . . . . . . . . 381
Section 5.15 Non-Compete . . . . . . . . . . . . . . . . . . . . . . 382
Section 5.16 PineSol Litigation . . . . . . . . . . . . . . . . . . . 382
Section 5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . 383
Section 5.18 Reserve . . . . . . . . . . . . . . . . . . . . . . . . 386
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Purchaser and Seller . 386
Section 6.2 Conditions to the Obligations of Purchaser . . . . . . . 387
Section 6.3 Conditions to the Obligations of Kodak and Seller . . . 389
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . 390
Section 7.2 Indemnification by Purchaser . . . . . . . . . . . . . . 391
Section 7.3 Indemnification by Seller and Kodak . . . . . . . . . . 392
Section 7.4 Indemnification Procedures . . . . . . . . . . . . . . . 397
Section 7.5 Characterization of Indemnification Payments . . . . . . 400
Section 7.6 Computation of Losses Subject to Indemnification . . . . 400
ARTICLE VIII
TERMINATION
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . 401
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . 402
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . 402
Section 9.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . . 404
<PAGE>
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Section 9.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . 404
Section 9.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . 405
Section 9.5 Fulfillment of Obligations . . . . . . . . . . . . . . . 405
Section 9.6 Parties in Interest . . . . . . . . . . . . . . . . . . 405
Section 9.7 Public Disclosure . . . . . . . . . . . . . . . . . . . 406
Section 9.8 Return of Information . . . . . . . . . . . . . . . . . 406
Section 9.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 406
Section 9.10 Schedules . . . . . . . . . . . . . . . . . . . . . . . 407
SECTION 9.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF
FORUM . . . . . . . . . . . . . . . . . . . . . . . . 407
Section 9.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . 408
Section 9.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . 408
Section 9.14 Severability . . . . . . . . . . . . . . . . . . . . . . 408
<PAGE>
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SCHEDULES
Schedule 1.1(a) - Current Products
Schedule 1.1(b) - Certain Individuals Employed by
Kodak, Seller and Sterling
Schedule 1.1(c) - Certain Individuals Employed by
Purchaser and its Subsidiary
Schedule 2.1(g) - Transferred Subsidiaries
Schedule 2.2(d) - Excluded Intellectual Property
Schedule 2.2(f) - Excluded Litigation
Schedule 2.6 - Net Worth
Schedule 2.10 - Form of Purchase Schedule
3.1(a) - Exceptions to Qualification and
Good Standing Warranty
Schedule 3.2(a)(i) - Subsidiaries
Schedule 3.2(a)(ii) - Exceptions to Qualification and
Good Standing Warranty
Subsidiaries
Schedule 3.2(b) - Exceptions to Stock Ownership
Warranty
Schedule 3.4 - Consents and Approvals
Schedule 3.5 - Non-Contravention Schedule
3.7(a)(i) - Financial Statements and Basis of
Presentation
Schedule 3.7(a)(ii) - Basis of Presentation and
Exceptions to GAAP
Schedule 3.8(a) - Litigation and Claims
Schedule 3.8(b) - Orders and Consent
Agreements Schedule 3.9 - Taxes
Schedule 3.10(a) - Benefit Plans
Schedule 3.10(b) - Benefit Plan Litigation
Schedule 3.10(e) - Retiree Benefits
Schedule 3.10(f) - Non-US Benefit Plans Schedule
3.11 - Exceptions to Compliance with
Laws Warranty
Schedule 3.12 - Environmental Matters
Schedule 3.13(a) - Intellectual Property Schedule
3.13(b)(i) - Exclusive License Agreements and
Restrictions of Use Concerning
Trademarks Listed in
3.13(b)(ii)
Schedule 3.13(b)(ii) - Trademarks Schedule 3.14
- - - Collective Bargaining Agreements
Schedule 3.14(a) -
Grievances Schedule 3.15(i) -
Contracts Schedule 3.15(ii) - Validity of
Contracts Schedule 3.15(iii) - Contracts
in Default Schedule 3.16(a) - Shared Facilities and
Services Schedule 3.16(b) - Leased Real Property;
Owned Real
Property
Schedule 3.16(d) - Encumbrances
Schedule 3.18 - Insurance
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<PAGE> 279
Schedule 3.18(a) - Denied Insurance Claims
Schedule 3.20 - Intercompany Transactions
Schedule 4.1 - Organization and Qualification
Schedule 4.3 - Consents and
Approvals Schedule 4.4 -
Non-Contravention Schedule 5.5(i) -
Certain Seller Benefit
Liabilities
Schedule 5.5(j) - Employment Agreements Schedule
5.11(a) - Products Under Development Schedule 5.12
- - - Shared Services
Schedule 5.17(a) - Form of Claim Services Agreement
<PAGE>
<PAGE> 280
ASSET PURCHASE AGREEMENT, dated as of September 26, 1994,
among EASTMAN KODAK COMPANY, a New Jersey corporation ("Kodak"), L&F
PRODUCTS INC., a Delaware corporation ("Seller"), STERLING WINTHROP INC.
("Sterling"), a Delaware corporation, and RECKITT & COLMAN PLC, a public
limited company incorporated under the laws of England and Wales
("Purchaser").
W I T N E S S E T H:
WHEREAS, Sterling, a wholly-owned direct subsidiary of Seller,
is engaged worldwide, through its L&F Products Division (including the
entities identified on Schedule 3.2(a)(i)) and certain other subsidiaries
of Kodak, in household products, professional products, personal products
and "Do It Yourself" ("DIY") products businesses; and
WHEREAS, Kodak and Seller, a wholly-owned direct subsidiary of
Kodak, have agreed to cause Sterling to transfer, and Sterling has agreed
to transfer, the L&F Products Division to Seller and one or more Affiliates
of Kodak (the "L&F Transfer") prior to consummation of the sale of the
stock of Sterling pursuant to the Stock Purchase Agreement, dated as of
August 28, 1994, between Kodak and SmithKline Beecham plc (the "Sterling
Stock Purchase Agreement"); and
WHEREAS, following the L&F Transfer, Seller and Kodak desire to
sell, transfer and assign to Purchaser and
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to cause Affiliates of Seller to sell, transfer and assign to Purchaser,
and Purchaser desires to purchase and assume from Seller, Kodak and such
Affiliates of Seller, substantially all the assets and specified liabili-
ties of the household products, professional products and personal products
businesses of the L&F Division (including, without limitation, the
manufacturing, marketing, sale and distribution of the Current Products and
related support operations, research and development activities and all
inventories and other assets of such businesses) (collectively, the
"Business"), all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions. As used in this Agreement,
the following terms shall have the meanings set forth or as referenced
below:
"Accounts Payable to Kodak" shall mean all U.S. Intercompany
Accounts Payable that are outstanding at any time prior to the Closing to
(x) Kodak or (y) a U.S. Affiliate of Kodak that does not constitute part of
the Business.
"Accounts Receivable from Kodak" shall mean all U.S.
Intercompany Accounts Receivable that are outstanding at any time prior to
the Closing from (x) Kodak or (y) a
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U.S. Affiliate of Kodak that does not constitute part of the Business.
"Active Employees" shall have the meaning set forth in Section
5.5(d).
"Adjusted Closing Balance Sheet" shall have the meaning set
forth in Section 2.6(b).
"Affiliates" shall mean, with respect to any Person, any
Persons directly or indirectly controlling, controlled by, or under common
control with, such other Person as of the date on which, or at any time
during the period for which, the determination of affiliation is being
made.
"Agreement" shall mean this Agreement, as the same may be
amended or supplemented from time to time in accordance with the terms
hereof.
"Ancillary Agreements" shall mean the Transition Services
Agreement and the Supply Agreement.
"Assumed Liabilities" shall have the meaning set forth in
Section 2.3.
"Balance Sheet", which is included as Schedule 3.7(a)(i)
hereto, shall mean the unaudited pro forma balance sheet of the Business
as at December 31, 1993 prepared on the basis set forth in the notes
thereto and Schedule 3.7(a)(ii) hereto.
"Base Amount" shall mean U.S. $146.2 million.
"Benefit Plans" shall have the meaning set forth in Section
3.10(a).
"Books and Records" shall mean all books, ledgers, files,
reports, customer and supplier lists, documents (including, without
limitation, credit information), plans and operating records of, or
maintained by, the Business, as the case may be, except to the extent
included in or related solely to any Excluded Assets.
"Business" shall have the meaning set forth in the recitals of
this Agreement.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York City or London are authorized or
obligated by law or executive order to close.
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"Cap" shall have the meaning set forth in Section 7.3(c).
"Chosen Courts" shall have the meaning set forth in Section
9.11.
"Claim Notice" shall have the meaning set forth in Section
7.4.
"Closing" shall mean the closing of the transactions
contemplated by this Agreement.
"Closing Balance Sheet" shall have the meaning set forth in
Section 2.6(a).
"Closing Date" shall have the meaning set forth in Section
2.7(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Competition Laws" shall mean statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws
that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
"Confidentiality Agreement" shall mean the Agreement, dated
May 26, 1994, between Purchaser and Kodak.
"Consideration" shall have the meaning set forth in Section
5.4(e).
"Contracts" shall mean all agreements, powers of attorney,
contracts, leases including with respect to the Leased Real Property),
purchase orders, arrangements, commitments and non-governmental licenses
that are Related to the Business or to which the Transferred Assets are
subject.
"CPA Firm" shall have the meaning set forth in Section 2.6(b).
"Current Assets" shall mean all Inventory and all other current
assets of the Business (including written-off accounts receivable) other
than (i) cash (net of cash overdrafts), (ii) investment securities
and other short-term investments and (iii) Accounts Receivable from
Kodak.
"Current Liabilities" shall mean all current liabilities of the
Business other than (i) short-term indebtedness for money borrowed (other
than overdrafts),
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(ii) Accounts Payable to Kodak and (iii) accrued and unpaid U.S. Federal,
state and local income Taxes and foreign income Taxes other than those
relating to the Transferred Subsidiaries and their subsidiaries with
respect to the taxable periods, or portions thereof, ending on or before
the Closing Date.
"Current Products" shall mean those products currently
manufactured by the Business, as listed in Schedule 1.1(a).
"Currently" shall mean since January 1, 1993.
"Determination Time" shall mean the close of business on the
date immediately preceding the Closing Date.
"DIY Business" shall have the meaning set forth in Section
2.2(a).
"Due Date" shall mean, with respect to a Tax Return, the date
on which such Tax Return is due to be filed (taking into account all
applicable extensions).
"Employees" shall mean all current and former employees of
Seller or any Affiliate of Seller who were or are dedicated to the
Business.
"Encumbrances" shall mean liens, charges, encumbrances,
security interests, options, or any other restrictions or third party
rights.
"Environmental Claim" shall mean any accusation, allegation,
notice of violation, action, claim, Environmental Lien, demand, abatement
or other order or direction (conditional or otherwise) arising under any
Environmental Law or Environmental Permit by any Person for personal
injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of,
or exposure to, any Hazardous Substance, odor or audible noise in, into or
onto the environment (including, without limitation, the air, soil, surface
water or groundwater) at, in, by, from or related to any property,
activities or operations; (ii) the transportation, storage, treatment or
disposal of Hazardous Substances in connection with any property,
activities or operations; or (iii) otherwise involving the violation, or
<PAGE>
<PAGE> 285
alleged violation, of any Environmental Law or Environmental Permit
relating to any property, activities or operations.
"Environmental Law" shall mean any Laws or other requirement
relating to the environment, natural resources, or, as they relate to
Hazardous Substances, employee health and safety and includes, but is not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. sec. 9601 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. sec. 1801 et seq., the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. sec. 6901 et seq., the
Clean Water Act, 33 U.S.C. sec. 1251 et seq., the Clean Air Act, 33 U.S.C.
sec. 2601 et seq., the Toxic Substances Control Act, 15 U.S.C. sec. 2601
et seq., FIFRA, the Oil Pollution Act of 1990, 33 U.S.C sec. 2701 et seq.,
the Occupational Safety and Health Act, 29 U.S.C. sec. 651 et seq. and
Section 25249.6 of the California Health and Safety Code, as such laws have
been or may be amended or supplemented, and the regulations promulgated
pursuant thereto, and all analogous state or local statutes.
"Environmental Lien" shall mean any lien in favor of any
Federal, state, local or foreign governmental authority arising under
Environmental Laws.
"Environmental Permit" shall mean any permit, approval,
authorization, license, variance, registration or permission required under
any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section
3.10(c).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Excluded Assets" shall have the meaning set forth in Section
2.2.
"Excluded Liabilities" shall have the meaning set forth in
Section 2.4.
"FIFRA" shall mean the Federal Insecticide, Fungicide and
Rodenticide Act, as amended.
"Financial Statements" shall have the meaning set forth in
Section 3.7(a).
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<PAGE> 286
"Fixtures and Equipment" shall mean all furniture, fixtures,
furnishings, machinery, vehicles, equipment, tools and other tangible
personal property Related to the Business.
"Former Employees" shall mean all Employees of Sterling, Seller
and their Affiliates, who, on or before the Closing Date, have retired, are
receiving or are eligible to receive long-term disability benefits, or have
otherwise terminated employment, and beneficiaries and survivors of such
Employees.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authorizations" shall mean all licenses, permits,
certificates, orders, decrees and other authorizations and approvals
required to carry on the Business as currently conducted under any
applicable Laws.
"Hazardous Substances" shall mean any hazardous substances
within the meaning of 101(14) of CERCLA, 42 U.S.C. sec. 9601(14), or any
substance, pollutant or constituent that is regulated under any
Environmental Law, including, without limitation, petroleum and petroleum
products.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"ILRPTA" shall have the meaning set forth in Section 5.7.
"Inactive Employees" shall have the meaning set forth in
Section 5.5(d).
"Indemnified Parties" shall have the meaning set forth in
Section 7.3(a).
"Indemnifying Party" shall have the meaning set forth in
Section 7.4.
"Intellectual Property" shall mean the intellectual property
rights Related to the Business including: trademarks (including the
Selected Marks), service marks, brand names, certification marks, license
rights, software rights, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing, including any extension, modification or
renewal of any such registration or
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application; inventions, discoveries and ideas, whether patentable or not
in any jurisdiction; patents, applications for patents (including, without
limitation, divisions, continuations, continuations in-part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; non-public information, trade secrets, know how and
confidential information and rights in any jurisdiction to limit the use
or disclosure thereof by any Person; writings and other works, whether
copyrightable or not in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; any similar intellectual property or proprietary
rights; and any claims, causes of action or rights to past, present and
future damages arising out of or related to any infringement or
misappropriation of any of the foregoing. Schedule 3.13(a) sets forth a
list of certain of the Intellectual Property.
"Inventory" shall mean all inventory held for resale and all
raw materials, work in process, finished products, wrapping, supply and
packaging items Related to the Business.
"Investment Canada Act" shall mean the Investment Canada Act,
R.S.C. ch. 20 (1985), as amended.
"ISRA" shall have the meaning set forth in Section 5.7.
"Knowledge" or any similar phrase means the actual knowledge of
the individuals listed on Schedule 1.1(e) hereto.
"Knowledge of Purchaser" or any similar phrase means the
actual knowledge of the individuals listed on Schedule 1.1(f) hereto.
"Kodak" shall have the meaning set forth in the recitals.
"Kodak Affiliated Transferor" shall have the meaning set forth
in Section 3.3.
"Kodak Transferred Assets" shall mean Transferred Assets that
are owned directly or indirectly by Kodak and subsidiaries of Kodak other
than Seller or subsidiaries of Seller.
"L&F Transfer" shall have the meaning set forth in the recitals.
<PAGE>
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"Laws" shall include any federal, state, foreign or local law
(including common law), statute, code, ordinance, rule, regulation, order,
judgment, injunction or decree.
"Leased Real Property" shall mean all real property leased by
Seller or any of its Affiliates, including any buildings, facilities, fixed
assets, structures and improvements thereon or appurtenances thereto,
Related to the Business.
"Licenses" shall mean all governmental franchises, licenses,
authorizations and permits held by Seller or any of its Affiliates which
pertain to and are used in connection with the Business and/or the
Transferred Assets.
"London Stock Exchange" shall mean the International Stock
Exchange of the United Kingdom and the Republic of Ireland Limited.
"Losses" shall have the meaning set forth in Section 7.2.
"Material Adverse Change" shall mean a change that has been or
is reasonably likely to be, materially adverse to the value of the
Transferred Assets taken as a whole or materially adverse to the business,
financial condition or results of operations of the Business taken as a
whole.
"Material Adverse Effect" shall mean an effect that is, or is
reasonably likely to be, materially adverse to the value of the Transferred
Assets taken as a whole or materially adverse to the business, financial
condition, or results of operations of the Business taken as a whole.
"Net Worth" shall be determined in accordance with Schedules
2.6 and 3.7(a)(ii).
"Nonmedical Leave" shall mean maternity or paternity leave,
leave under the Family and Medical Leave Act of 1993, educational leave,
military leave with veteran's reemployment rights under federal law, or
personal leave (unless any of such leaves could have been granted for
medical reasons).
"Notice Period" shall have the meaning set forth in Section
7.4.
"Owned Real Property" shall mean all real property
beneficially owned by Seller or any of its Affiliates, including any
buildings, facilities, fixed assets,
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structures and improvements thereon or appurtenances thereto, Related to
the Business.
"Payor" shall have the meaning set forth in Section 5.4(b).
"Payor's Amount" shall have the meaning set forth in Section
5.4(b).
"Pension Plan" shall have the meaning set forth in Section
3.10(b).
"Permitted Encumbrances" shall have the meaning set forth in
Section 3.16(b).
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization.
"PineSol Litigation" shall mean L&F Products v. The Clorox Co., Civ.
No. C-247-91 (N.J. Superior Ct. - Bergen County) and Clorox Co. v. Sterling
Winthrop Inc., CV 92-0386 (RJD) (E.D.N.Y.).
"Post-Sanofi Closing Date Former Employees" shall mean all
Employees who, on or after the Closing Date under the Sanofi Agreement,
retire, become eligible to receive long-term disability benefits, or
otherwise terminate employment.
"Preparer" shall have the meaning set forth in Section 5.4(b).
"Proceedings" shall have the meaning set forth in Section
3.8(a).
"Purchase Price" shall have the meaning set forth in Section
2.5.
"Purchaser" shall have the meaning set forth in the recitals.
"Purchaser Indemnified Parties" shall have the meaning set
forth in Section 7.3(a).
"Purchaser's Objection" shall have the meaning set forth in
Section 2.6(b).
"Recipient" shall have the meaning set forth in Section
5.4(d).
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"Related to the Business" or "Related to the Transferred
Assets" shall mean primarily arising out of or related to, or used
primarily in connection with, the Business or the Transferred Assets, as
the case may be, prior to the Closing.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching, or migration on or into the indoor or outdoor
environment or into or out of any property.
"Remedial Action" means all actions, including, without
limitation, any capital expenditures, required under any applicable
Environmental Law or voluntarily undertaken to (i) clean up, remove, treat,
or in any other way address any Hazardous Substance or other substance to
the extent required by Environmental Laws; (ii) prevent the Release or
threat of Release, or minimize the further Release, of any Hazardous
Substance or other substance so it does not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment
to the extent required by applicable Environmental Laws; (iii) perform pre-
remedial studies and investigations or post-remedial monitoring and care to
the extent required by applicable Environmental Laws; or (iv) otherwise
bring any property and the facilities located and operations conducted
thereon into compliance with all Environmental Laws and Environmental
Permits.
"Retirement Plan Employees" shall have the meaning set forth in
Section 5.5(f).
"Savings Plan Employees" shall have the meaning set forth in
Section 5.5(e).
"Selected Marks" shall have the meaning set forth in Section
3.13(b).
"Seller" shall have the meaning set forth in the recitals.
"Seller Indemnified Parties" shall have the meaning set forth
in Section 7.2.
"Seller Retirement Plans" shall have the meaning set forth in
Section 5.5(f).
"Seller Savings Plans" shall have the meaning set forth in
Section 5.5(e).
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"Seller Transferred Assets" shall mean Transferred Assets that
are beneficially owned directly or indirectly by Seller.
"Sterling Foreign Service Pension Plan" shall have the meaning
set forth in Section 5.5(h).
"Sterling Materials" shall have the meaning set forth in
Section 5.13.
"Sterling Trademarks" shall have the meaning set forth in
Section 2.2(o).
"Subsidiaries" shall mean the corporations and other entities
engaged in the Business 50% or more of the equity interests in which are
beneficially owned directly or indirectly by Kodak, as set forth in
Schedule 3.2(a)(i).
"Supply Agreement" shall have the meaning set forth in Section
5.13.
"Tax Audit" shall have the meaning set forth in Section 5.4(d).
"Tax Item" shall mean, with respect to Taxes, any item of
income, gain, deduction, loss or credit or any other tax attribute.
"Tax Package" shall have the meaning set forth in Section
5.4(c).
"Tax Returns" shall mean all reports and returns required to be
filed with respect to Taxes.
"Taxes" shall mean all federal, state, local or foreign taxes,
including but not limited to income, gross receipts, windfall profits,
value added, ad valorum, profits, payroll, stamp, occupational, premium,
severance, property, production, sales, use, license, excise, franchise,
employment, withholding or similar taxes, together with any interest,
additions or penalties with respect thereto and any interest in respect of
such additions or penalties.
"Transfer Taxes" shall have the meaning set forth in Section
5.4(g).
"Transferee Pension Plans" shall have the meaning set forth in
Section 5.5(f).
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"Transferee Savings Plans" shall have the meaning set forth in
Section 5.5(e).
"Transferred Assets" shall have the meaning set forth in
Section 2.1.
"Transferred Employees" shall have the meaning set forth in
Section 5.5(b).
"Transferred Subsidiaries" shall mean Schulke & Mayr GmbH and any
other Subsidiaries the equity interests in which (as opposed to the assets
and liabilities of which) are to be transferred to Purchaser pursuant to
this Agreement, as set forth in Schedule 2.1(g).
"Transition Services Agreement" shall have the meaning set
forth in Section 5.12.
"U.S. Antitrust Laws" shall mean and include the Sherman Act,
as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other United States federal or state
Competition Laws.
"U.S. Intercompany Accounts Payable" shall mean accounts
payable of the Business that Relate to portions of the Business conducted
in the United States.
"U.S. Intercompany Accounts Receivable" shall mean accounts
receivable of the Business that arise out of the portions of the Business
conducted in the United States.
"WARN" shall mean the Worker Adjustment and Retraining
Notification Act.
Section 1.2 Other Terms. Other terms may be defined elsewhere
in the text of this Agreement and, unless otherwise indicated, shall have
such meaning throughout this Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
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(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
Section 2.1 Purchase and Sale of Assets. On the terms and
subject to the conditions set forth herein, at the Closing, Seller and
Kodak agree to, and Kodak agrees to cause Seller and all other Affiliates
of Kodak to, convey, transfer, assign and deliver to Purchaser, and
Purchaser agrees to purchase, or to cause its Affiliates to purchase, from
Seller, Kodak or any other Affiliate of Kodak, as the case may be, all
direct or indirect right, title and interest of Seller, Kodak or such other
Affiliates of Kodak, as the case may be, in and to all of the Business and
all of the assets Related to the Business, whether tangible or intangible,
real or personal, and wherever located (the "Transferred Assets"). The
Transferred Assets shall include without limitation (other than as
specifically limited by (a) through (m) of this Section 2.1), all of the
direct and indirect right, title and interest of Seller, Kodak and any
other Affiliate of Kodak in the following:
(a) The Owned Real Property, Leased Real Property and no
other real property;
(b) The Fixtures and Equipment;
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(c) The Current Assets;
(d) The Intellectual Property;
(e) The Contracts;
(f) All insurance policies owned by Seller that relate
primarily to Assumed Liabilities or are Related to the Business or are
Related to the Transferred Assets, provided, in each case, that such
policies are assignable and remain in effect following the Closing;
(g) All of the capital stock and other equity interests in
the Transferred Subsidiaries;
(h) All Books and Records of, or maintained by, the Business;
(i) All prepaid Taxes to the extent such Taxes would, if not
prepaid, be Assumed Liabilities;
(j) Subject to Section 5.4(i), all refunds of Taxes to the
extent such Taxes are, or if not paid would be, Assumed Liabilities;
(k) All rights to the extent Related to the Business of
Seller, Sterling or Kodak under confidentiality agreements with prospective
purchasers of the Transferred Assets or the DIY Business;
(l) All Licenses; and
(m) All other tangible and intangible assets of the Business,
including the goodwill of the Business.
Section 2.2 Excluded Assets. Notwithstanding anything herein
to the contrary, from and after the Closing,
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Seller, Sterling or Kodak, as the case may be, shall retain all of its
direct and indirect right, title and interest in and to, and there shall be
excluded from the sale, conveyance, assignment or transfer to Purchaser
hereunder, and the Transferred Assets shall not include, the following
(collectively, the "Excluded Assets"):
(a) The DIY Business of the L&F Products Division, including
the business conducted by Minwax Company Inc., Thompson & Formby Inc., L&F
Products (UK) Limited and L&F Products Ireland Limited and similar DIY
businesses conducted by L&F Canada, Inc., L&F Products Caribbean Inc. and
such other indirect and direct foreign subsidiaries of Seller and Sterling,
to the extent such subsidiaries are engaged in the DIY Business (including
the manufacturing, marketing, sales, distribution, support operations and
research and development activities related to the above-described
businesses and all inventories and other assets of such businesses) (the
"DIY Business");
(b) Sterling's ethical and over-the-counter drug businesses,
including the business conducted by the Pharmaceuticals Group and Sterling
Health divisions of Sterling (including the manufacturing, marketing,
sales, distribution, support operations and research and development
activities related thereto and all inventories and other assets of such
businesses) (the "Ethical and OTC Businesses");
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(c) The joint ventures established by the OTC Business Joint
Venture Agreement between Sterling and Sanofi, a societe anonyme organized
under the laws of the French Republic;
(d) All Intellectual Property set forth in Schedule 2.2(d);
(e) Subject to the provisions of Section 5.17, Seller's
rights under all insurance policies, including insurance policies in
respect of directors and officers who are Transferred Employees and to all
claims against insurance carriers (other than rights under any insurance
policy or to any claim referred to in Section 2.1(f);
(f) Seller's rights in connection with and any recovery
arising from the proceedings set forth in Schedule 2.2(f);
(g) Cash, investment securities and other short-and medium-
term investments and Accounts Receivable from Kodak;
(h) All prepaid Taxes to the extent such Taxes are not
reflected on the Adjusted Closing Balance Sheet and are, or if not prepaid
would be, Excluded Liabilities;
(i) All refunds of Taxes to the extent such Taxes are not
reflected on the Adjusted Closing Balance Sheet and are, or if not paid,
would be, Excluded Liabilities;
(j) Subject to the provisions of Section 5.4(m), all Tax
Returns of Seller, Sterling or Kodak;
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(k) All real property or interests in real property other
than the Owned Real Property and the Leased Real Property;
(l) The Fixtures and Equipment on all real property or
interests in real property described in Section 2.2(k);
(m) All Books and Records which Seller, Sterling or Kodak is
required by law to retain;
(n) All rights to the names "Eastman" and "Kodak";
(o) Subject to the provisions of Section 5.9, all rights to
the names "Sterling", "Winthrop", "Valmont", "Hinds" and to the Sterling
"ankh" symbol (such names and symbols, the "Sterling Trademarks"); and
(p) All rights of Seller or any Affiliate of Seller that has
any direct or indirect interest in the name "Kodan" to commence
interferences, litigations or administrative proceedings to restrict the
use of the "Kodak" name by Kodak or any Affiliate of Kodak.
Section 2.3 Assumption of Liabilities. On the terms and
subject to the conditions set forth herein, at the Closing, Purchaser
agrees to assume and discharge or perform when due, or to cause to be
assumed and discharged or performed when due, all debts, liabilities, or
obligations whatsoever, other than Excluded Liabilities, that are Related
to the Business, whether arising before or after the
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Closing and whether known or unknown, fixed or contingent (the "Assumed
Liabilities") including, without limitation, the following:
(a) The Contracts;
(b) All liabilities reflected or reserved for in the Adjusted
Closing Balance Sheet to the extent so reflected or reserved for;
(c) All liability, if any, for damages awarded upon final
adjudication or settlement of the PineSol Litigation relating solely to the
period commencing on the Closing Date and 80% of the fees and expenses of
attorneys, experts and consultants incurred in the PineSol Litigation with
respect to the period from and after the Closing Date; and
(d) All liabilities arising out of or relating to the
employment or termination of employment of Active and Inactive Employees,
the obligation to reimburse Sterling as provided in Section 5.5(h) and the
liability referred to in Section 5.5(i).
Section 2.4 Excluded Liabilities. Notwithstanding anything to
the contrary contained in this Agreement, neither Purchaser, any of its
Affiliates nor any of its or its respective Affiliates' directors,
shareholders, officers, employees, agents, consultants, attorneys,
advisers, representatives, successors, transferees or assignees shall, as a
result of this Agreement or
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the transactions contemplated hereby, assume or have any responsibility or
liability for the following debts, liabilities and obligations (the
"Excluded Liabilities"):
(a) All liabilities arising out of or relating to the
Excluded Assets (including, without limitation, all spontaneous combustion
and other product liability claims arising from products of the DIY
Business, whether manufactured before, on or after the Closing Date);
(b) Subject to Section 5.4(g), (i) all liabilities for Taxes
imposed with respect to the taxable periods, or portions thereof, ending on
or before the Closing Date, including, without limitation, any Taxes
resulting from any Transferred Subsidiary (or its subsidiaries) having
been, or ceasing to be, included in any consolidated, combined or unitary
Tax Return that included a Transferred Subsidiary (or its subsidiaries) for
taxable periods, or portions thereof, ending on or before the Closing Date
and (ii) all liabilities for Taxes of any member of a consolidated,
combined or unitary group of which a Transferred Subsidiary (or its
subsidiaries) is or was a member on or prior to the Closing Date, by reason
of the application of Treasury Department Regulation Section 1.1502-6 or a
similar provision of any state, local or foreign income tax law or
regulation, except, with respect to clause (i) or (ii), to the extent such
Taxes are
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reflected as Current Liabilities on the Adjusted Closing Balance Sheet;
(c) All Accounts Payable to Kodak and cash overdrafts;
(d) Subject to Sections 2.3(c) and 5.16, all liability, if
any, for damages awarded upon final adjudication or settlement of the
PineSol Litigation relating to the period prior to the Closing Date and any
and all fees and expenses of attorneys, experts and consultants incurred in
the PineSol Litigation;
(e) All liabilities and obligations arising from any
Environmental Claims or Remedial Action (i) resulting from the Release,
disposal or arrangement for disposal of Hazardous Substances relating to
the Business (by Seller, Sterling, any of their Affiliates or any
predecessor thereof) other than on or emanating from the Owned Real
Property or the Leased Real Property, and (ii) otherwise relating to any
property other than the Owned Real Property and the Leased Real Property;
(f) All other debts, liabilities and obligations for which
Seller, Kodak or any of their Affiliates, as the case may be, has expressly
assumed responsibility pursuant to this Agreement, including pursuant to
Article VII;
(g) Subject to Section 2.5(b), 5.5(h) and 5.5(i), all
liabilities arising out of or relating to the employment
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or termination of employment of Former Employees by Seller or its
Affiliates; and
(h) All debts, liabilities or obligations whatsoever, whether
arising before or after the Closing and whether known or unknown, fixed or
contingent, that are not Related to the Business or the Transferred Assets.
Section 2.5 Purchase Price.
(a) On the terms and subject to the conditions set forth
herein, Purchaser agrees to pay Seller, for the account of Seller, Kodak
and the Affiliates of Kodak that transfer Transferred Assets,
$1,550,000,000 (the "Purchase Price"). The Purchase Price shall be
allocated among Seller, Kodak and its Affiliates as provided in Section
5.4(e). The Purchase Price shall be subject to adjustment as provided in
Section 2.6.
(b) In addition to the foregoing, Purchaser shall pay to
Sterling within 30 days after the later of the Closing Date or the date
Purchaser receives a statement of the account balances of all Active
Employees, Inactive Employees and Post-Sanofi Closing Date Former Employees
under the Sterling Winthrop Inc. Deferred Compensation Plan on the Closing
Date (subject to review and acceptance by Purchaser), an amount equal to
such balances.
Section 2.6 Business Post-Closing Adjustments.
(a) Within 60 days following the Closing, Seller shall, at
its expense, prepare, or cause to be prepared, and
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deliver to Purchaser a balance sheet (the "Closing Balance Sheet") which
shall set forth the assets and liabilities of the Business as of the
Determination Time in accordance with the principles and the methods set
forth on Schedule 3.7(a)(ii).
(b) Purchaser and Purchaser's accountants shall, within 60
days after the delivery by Seller of the Closing Balance Sheet, complete
their review of Net Worth as derived from the Closing Balance Sheet. In
the event that Purchaser determines that Net Worth as derived from the
Closing Balance Sheet, has not been determined on the basis set forth in
Schedule 3.7(a)(ii), Purchaser shall inform Seller in writing (the
"Purchaser's Objection"), setting forth a specific description of the basis
of Purchaser's Objection and the adjustments to Net Worth which Purchaser
believes should be made, on or before the last day of such 60-day period.
Seller shall then have 30 days to review and respond to Purchaser's
Objection. If Seller and Purchaser are unable to resolve all of their
disagreements with respect to the determination of the foregoing items
within 10 days following the completion of Seller's review of Purchaser's
Objection, they shall refer their remaining differences to KPMG Peat
Marwick or another internationally recognized firm of independent public
accountants as to which Seller and Purchaser mutually agree (the "CPA
Firm"), who shall, acting as experts and not as arbitrators,
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determine on the basis of the standard set forth in Schedules 2.6 and
3.7(a)(ii), and only with respect to the remaining differences so
submitted, whether and to what extent, if any, Net Worth as derived from
the Closing Balance Sheet, requires adjustment. The CPA Firm's
determination shall be conclusive and binding upon Purchaser and Seller.
The fees and disbursements of the CPA Firm shall be shared equally by
Purchaser and Seller. Purchaser and Seller shall make readily available to
the CPA Firm all relevant books and records and any work papers (including
those of the parties' respective accountants) relating to the Balance Sheet
and the Closing Balance Sheet and all other items reasonably requested by
the CPA Firm. The "Adjusted Closing Balance Sheet" shall be (i) the
Closing Balance Sheet in the event that (x) no Purchaser's Objection is
delivered to Seller during the 60-day period specified above, or (y) Seller
and Purchaser so agree, (ii) the Closing Balance Sheet, adjusted in
accordance with the Purchaser's Objection in the event that Seller does not
respond to Purchaser's Objection within the 30-day period following receipt
by Seller of Purchaser's Objection, or (iii) the Closing Balance Sheet, as
adjusted by either (x) the agreement of Seller and Purchaser or (y) the CPA
Firm.
(c) Purchaser shall provide Seller and its accountants full
access to the Books and Records, any other
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information, including work papers of its accountants, and to any
employees
to the extent necessary for Seller to prepare the Closing Balance Sheet.
Purchaser and its accountants shall have the opportunity to observe the
taking of the Inventory of the Business (which may begin prior to the
Closing Date) in connection with the preparation of the Closing Balance
Sheet and shall have full access to all information used by Seller in
preparing the Closing Balance Sheet, including the work papers of its
accountants.
(d) Within 10 Business Days following issuance of the
Adjusted Closing Balance Sheet, the adjustment payments payable pursuant to
this Section 2.6(d) shall be paid by wire transfer of immediately available
funds to a bank account designated by Purchaser or Seller, as the case may
be. Purchaser or Seller, as the case may be, shall make an adjustment
payment in an amount equal to the difference between (x) the Base Amount
and (y) Net Worth as derived from the Adjusted Closing Balance Sheet. The
adjustment payment will be made by Seller to Purchaser to the extent that
the Net Worth as derived from the Adjusted Closing Balance Sheet is less
than the Base Amount and by Purchaser to Seller to the extent that Net
Worth as derived from the Adjusted Closing Balance Sheet is greater than
the Base Amount plus, in either case, interest thereon from the Closing
Date through the date of payment at the rate of interest publicly announced
by Citibank, N.A. or any
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successor thereto in New York, New York from time to time as its "base
rate".
(e) The short period reserve as reflected in Accrued Expenses
in the Adjusted Closing Balance Sheet shall be allocated into categories of
specified and non-specified items with respect to liabilities arising from
incidents that occurred on or before December 31, 1993; provided, however
that the amount of such non-specified items at Closing shall not be less
than the aggregate amount of non-specified items included in the Reserve
Schedule and such specified items shall be itemized in accordance with GAAP
and in reasonable detail.
Section 2.7 The Closing.
(a) The Closing shall take place at the offices of Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004 at 10:00 A.M.,
New York City time, on the fifth Business Day following the satisfaction or
waiver of all conditions precedent set forth in Article VI, or at such
other time and place as the parties hereto may mutually agree. The date on
which the Closing occurs is called the "Closing Date". If the parties so
agree, the Closing for the purchase and sale of any Transferred Assets
comprising the Business in any jurisdiction other than the United States
may be held in the country in which such Transferred Assets are located or
elsewhere. Any portion of the Purchase Price allocated otherwise than to
Seller shall be
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payable to such entity as shall be reasonably determined by Purchaser to be
necessary to comply with applicable Laws.
(b) Notwithstanding anything to the contrary contained in
this Agreement, to the extent that the sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer, conveyance
or delivery to Purchaser of any Transferred Asset is prohibited by any
applicable Law or would require any governmental or third party
authorizations, approvals, consents or waivers and such authorizations,
approvals, consents or waivers shall not have been obtained prior to the
Closing, this Agreement shall not constitute a sale, assignment, transfer,
conveyance or delivery, or any attempted sale, assignment, transfer,
conveyance or delivery, thereof. Following the Closing, the parties shall
use reasonable efforts and shall cooperate with each other, to obtain
promptly such authorizations, approvals, consents or waivers; provided,
however, that none of Seller, Sterling, Kodak, Purchaser or the Affiliates
of any of them shall be required to pay any consideration therefor, other
than filing, recordation or similar fees payable to any governmental
authority, which fees (other than to the extent relating to the L&F
Transfer) shall be shared equally by Purchaser and Seller. Pending such
authorization, approval, consent or waiver, the parties shall cooperate
with each other in any reasonable and lawful arrangements designed to
provide to Purchaser the benefits
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and liabilities of use of such Transferred Asset. Once such authorization,
approval, consent or waiver for the sale, assignment, transfer, conveyance
or delivery of a Transferred Asset not sold, assigned, transferred,
conveyed or delivered at the Closing is obtained, Seller, Kodak, Sterling,
or such other Affiliate of Kodak, as the case may be, shall promptly
assign, transfer, convey and deliver, or cause to be assigned, transferred,
conveyed and delivered, such Transferred Asset to Purchaser for no
additional consideration. To the extent that any such Transferred Asset
cannot be transferred or the full benefits and liabilities of use of any
such Transferred Asset cannot be provided to Purchaser following the
Closing pursuant to this Section 2.7(b), then Purchaser, Seller, Sterling
(to the extent provided in the Sterling Stock Purchase Agreement assuming
that Kodak indemnifies Sterling against any associated Losses) and Kodak
shall enter into such arrangements (including subleasing or subcontracting
if permitted) to provide to Purchaser the economic (taking into account Tax
costs and benefits) and operational equivalent of obtaining such
authorization, approval, consent or waiver and the performance by Purchaser
of the obligations thereunder.
Section 2.8 Deliveries by Purchaser and Its Affiliates At the
Closing. Purchaser and its Affiliates shall deliver to Seller, and with
respect to Sections
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2.8(a), 2.8(b) and 2.8(c) as applicable, to Kodak or its Affiliates, the
following:
(a) the Purchase Price in immediately available funds by wire
transfer to an account or accounts designated by Seller not less than two
Business Days prior to the Closing;
(b) such instruments of assumption and other instruments or
documents, in form and substance reasonably acceptable to Seller and Kodak,
as may be necessary to effect Purchaser's assumption of the Assumed
Liabilities;
(c) such other instruments and documents, in form and
substance reasonably acceptable to Seller and Kodak, as may be necessary to
effect the Closing;
(d) a duly executed copy of each of the Ancillary Agreements;
and
(e) the certificates and other documents to be delivered
pursuant to Section 6.3 hereof.
Section 2.9 Deliveries by Seller, Sterling, Kodak and Kodak's
Affiliates At the Closing. At the Closing, Seller, and, as applicable,
Sterling, Kodak and Kodak's Affiliates shall deliver to Purchaser or its
Affiliates the following:
(a) bills of sale or other documents or instruments of
transfer in proper form to effect the transfer of Transferred Assets in the
jurisdiction in which such Transferred Assets are located, and in each case
in form and
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substance reasonably acceptable to Purchaser, transferring to Purchaser all
tangible personal property included in the Transferred Assets;
(b) certificates evidencing all outstanding capital stock or
other equity or participation interests of the Transferred Subsidiaries in
proper form for transfer to Purchaser or its Affiliates with all requisite
stock transfer stamps attached;
(c) assignments, in form and substance acceptable to
Purchaser, assigning to Purchaser all Intellectual Property included in the
Transferred Assets;
(d) deeds, in form and substance reasonably acceptable to
Purchaser, transferring all Owned Real Property to Purchaser free and clear
of all Encumbrances, subject only to any and all Permitted Encumbrances
(each of such deeds to constitute a bargain and sale deed or equivalent
deed in the applicable jurisdiction, in proper statutory short form for
recording);
(e) assignments or, where necessary, subleases, in form and
substance reasonably acceptable to Purchaser, assigning or subleasing to
Purchaser all Leased Real Property free and clear of all Encumbrances and,
where necessary, the consent of each landlord to such assignment under any
of the leases for the Leased Real Property;
(f) such other instruments or documents, in form and
substance reasonably acceptable to Purchaser, as may be
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necessary to effect the Closing or evidence the transactions contemplated
hereby;
(g) a duly executed copy of each of the Ancillary Agreements;
(h) the certificates and other documents to be delivered
pursuant to Section 6.2 hereof;
(i) a copy of resolutions of the board of directors of each
of Kodak, Sterling and Seller authorizing the execution, delivery and
performance, respectively, of this Agreement and the Ancillary Agreements
and a certificate of its respective secretary or assistant secretary, dated
as of the Closing Date, to the effect that such resolutions were duly
adopted, have not been amended and are in full force and effect; and
(j) to the extent requested by Purchaser, resignations of the
directors of each of the Transferred Subsidiaries from their positions as
directors.
Section 2.10 Means of Transfer.
The parties acknowledge that, notwithstanding whether a
transfer of assets and liabilities occurs by transferring an equity
interest in an entity or the assets held by such entity, or any other means
agreed to by the parties, the transfer shall be structured in a manner that
gives effect to the definitions of Transferred Assets (other than Section
2.1(g)), Excluded Assets, Assumed Liabilities and Excluded Liabilities.
The foregoing shall include,
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without limitation, the right of Seller to remove or cause to be removed
any Excluded Asset (and any associated liability) from an entity
constituting a Transferred Subsidiary prior to transferring such entity.
The Transferred Assets and Assumed Liabilities shall be transferred in the
form (i.e., a transfer of assets and liabilities held by an entity or a
transfer of equity interests in such entity) set forth on Schedule 2.10.
Section 2.11 Additional Payments. On the date of any transfer
of assets from a Seller Retirement Plan to a Transferee Pension Plan,
Seller shall pay to Purchaser the Pension Shortfall Amount, if applicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER, STERLING AND KODAK
Seller, Sterling and Kodak, jointly and severally, represent
and warrant to Purchaser as follows:
Section 3.1 Organization and Qualification.
(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own,
lease and operate the Transferred Assets and to carry on the Business as
currently conducted. Except as set forth on Schedule 3.1(a), Seller is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership, leasing or operation
of the Transferred Assets or
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the conduct of the Business requires such qualification, except where the
failure to be so qualified or in good standing, as the case may be, would
not have a Material Adverse Effect.
(b) Sterling is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.
(c) Kodak is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation.
Section 3.2 Subsidiaries.
(a) Schedule 3.2(a)(i) sets forth a list of each Subsidiary
that is engaged, in whole or in part, in the Business, together with its
jurisdiction of organization and its authorized and outstanding capital
stock or other equity interests as of the date hereof. The Subsidiaries
are the only Affiliates of Kodak (other than Seller) through which the
Business is conducted on the date hereof. Except as set forth on Schedule
3.2(a)(ii), each such entity is a corporation or other entity duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate or similar
power and authority to own, lease and operate its properties and assets and
to carry on its business as presently conducted and is duly qualified to do
business and is in good standing as a foreign corporation or other entity
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in each jurisdiction where the ownership, leasing or operation of its
properties and assets or the conduct of its business requires such
qualification, except where the failure to be so duly organized, validly
existing, qualified or in good standing would not have a Material Adverse
Effect.
(b) Except as set forth on Schedule 3.2(b), Seller
beneficially owns, directly or indirectly, all of the outstanding capital
stock or other equity interest of each such entity free and clear of all
Encumbrances. There are no preemptive or other outstanding rights,
options, warrants, conversion rights or agreements or commitments to issue
or sell any shares of capital stock or other equity interest of any such
entity or any securities or obligations convertible into or exchangeable
for, or giving any Person a right to subscribe for or acquire, any shares
of capital stock or other equity interest of any such entity, and no
securities or obligations evidencing such rights are outstanding.
Section 3.3 Corporate Authorization. Each of Seller, Sterling
and Kodak has, and as of the Closing Date each Affiliate of Kodak that
transfers Transferred Assets (each such Affiliate, a "Kodak Affiliated
Transferor") will have, full corporate power and authority to execute and
deliver this Agreement and each of the Ancillary Agreements, and to perform
their obligations hereunder and thereunder.
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The execution, delivery and performance by Seller, Sterling, Kodak and each
Kodak Affiliated Transferor of this Agreement and each of the Ancillary
Agreements have been (or in the case of each Kodak Affiliated Transferor as
of the Closing Date will have been) duly and validly authorized and no
additional corporate authorization or consent is (or in the case of each
Kodak Affiliated Transferor as of the Closing Date will be) required in
connection with the execution, delivery and performance by Seller,
Sterling, Kodak and each Kodak Affiliated Transferor of this Agreement and
each of the Ancillary Agreements.
Section 3.4 Consents and Approvals. Except (i) as
specifically set forth in Schedule 3.4, (ii) for registrations to be
effected after the Closing Date in accordance with Section 5.10 or (iii) as
required by U.S. Antitrust Laws, European Union Competition Law (or the
Competition Law of France, Germany, Italy, Spain or the United Kingdom, in
each case to the extent not subject to European Union jurisdiction), the
Competition Laws of Australia, Canada or Japan, or the Exchange Act, no
consent, approval, waiver, registration or authorization is required to be
obtained by Seller, Sterling, Kodak or any Kodak Affiliated Transferor
from, and no notice or filing is required to be given by Seller, Sterling,
Kodak or any Kodak Affiliated Transferor to or made by Seller, Sterling,
Kodak or any Kodak Affiliated Transferor with, any Federal, state,
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local or other governmental authority or other Person in connection with
the execution, delivery and performance by Seller, Sterling, Kodak or any
Kodak Affiliated Transferor of this Agreement and each of the Ancillary
Agreements, other than in all cases where the failure to obtain such
consent, approval, waiver, registration or authorization, or to give or
make such notice of filing would not have a Material Adverse Effect or
materially impair or delay the ability of Seller, Sterling, Kodak and any
Kodak Affiliated Transferor to effect the Closing.
Section 3.5 Non-Contravention. Except as set forth on
Schedule 3.5, the execution, delivery and performance by Seller, Sterling,
Kodak and any Kodak Affiliated Transferor of this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate any provision of the
charter, bylaws or other organizational documents of Seller, Sterling,
Kodak or any Kodak Affiliated Transferor, (ii) subject to obtaining the
consents referred to in Section 3.4, conflict with, or result in the breach
of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or the
lapse of time or both) of any right or obligation of Seller, Sterling,
Kodak or any Kodak Affiliated Transferor under, or to a loss of any benefit
to which Seller, Sterling, Kodak or any Kodak
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Affiliated Transferor is entitled under, (A) the Sterling Stock
Purchase
Agreement or the agreement for the disposition of the Ethical Business, or
(B) any other contract, agreement or other instrument to which it is a
party (including, without limitation, the Contracts) or result in the
creation of any Encumbrance upon the Transferred Asset), or (iii) assuming
compliance with the matters set forth in Sections 3.4 and 4.3, violate or
result in a breach of or constitute a default under any Laws or other
restriction of any court or governmental authority to which Seller,
Sterling, Kodak or any Kodak Affiliated Transferor is subject, including
any Governmental Authorization, other than in the cases of clauses (ii)(B)
and (iii), any conflict, breach, termination, default, cancellation,
acceleration, loss, violation or Encumbrance which, individually or in the
aggregate, would not have a Material Adverse Effect or materially impair or
delay Seller's, Sterling's, Kodak's or any Kodak Affiliated Transferor's
ability to convey the Transferred Assets or otherwise perform its
obligations hereunder. The agreements to which Seller and Kodak become
parties relating to the disposition of the DIY Business will not, assuming
Purchaser's compliance with its covenants and obligations under this
Agreement, conflict with, or result in the breach of, or result in the loss
of any benefit to which Purchaser is entitled under, this Agreement.
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Section 3.6 Binding Effect. This Agreement constitutes, and
each of the Ancillary Agreements when executed and delivered by the parties
thereto will constitute, a valid and legally binding obligation of each of
Seller, Sterling and Kodak enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 3.7 Financial Statements.
(a) The Balance Sheet and the unaudited pro forma statements
of earnings from operations of the Business for the year ended December 31,
1993 and the six months ended June 30, 1994 attached as Schedule 3.7(a)(i)
(together, the "Financial Statements") fairly present, in accordance with
GAAP as modified as described in Schedule 3.7(a)(ii), the financial
condition of the Business as of the date thereof, or the results of
operations for the respective periods then ended, as the case may be.
(b) All of the assets and liabilities reflected on the Balance
Sheet are Related to the Business and arose out of or were incurred in bona
fide transactions in the conduct of the Business.
(c) Since December 31, 1993, there has been no Material
Adverse Change.
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(d) Since January 1, 1994, there have been no material changes
in promotional allowances or credit terms relating to Current Products that
have been sold by the Business since such date.
Section 3.8 Litigation and Claims.
(a) Except as set forth in Schedule 3.8(a), there is no civil,
criminal or administrative action, suit, demand, claim, hearing, proceeding
or investigation (or series of actions, suits, demands, claims, hearings,
proceedings or investigations based on the same or similar facts or
allegations of fact) (collectively, "Proceedings") pending or, to the
Knowledge of Seller, Sterling, or Kodak, threatened, involving the Business
or any of the Transferred Assets and Seller, Sterling and Kodak have no
Knowledge of any basis for any such Proceeding, other than those which,
individually or in the aggregate, would not have a Material Adverse Effect
or materially impair or delay the ability of Seller, Sterling, Kodak or any
Kodak Affiliated Transferor to effect the Closing.
(b) Except as set forth in Schedule 3.8(b), none of the
Transferred Assets is subject to any order, writ, judgment, ruling, award,
injunction, or decree of any court or governmental or regulatory authority
of competent jurisdiction or any arbitrator or arbitrators other than those
which, individually or in the aggregate, would not have a Material Adverse
Effect or materially impair or delay
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the ability of Seller, Sterling, Kodak or any Kodak Affiliated Transferor
to effect the Closing.
Section 3.9 Taxes. With respect to the Business, except as
set forth in Schedule 3.9:
(a) All Tax Returns that are required to be filed on or before
the date of this Agreement (taking into account applicable extensions) by
or with respect to Sterling, Seller and the Subsidiaries, have been duly
filed, except for Tax Returns the failure to file which, when taken
together with all other such failures, will not have a Material Adverse
Effect and all such Tax Returns are true and complete in all material
respects; (b) all Taxes that are due with respect to the periods covered by
the Tax Returns referred to in clause (a) have been timely paid or recorded
as reserves or current liabilities on the Balance Sheet with respect to
periods ending on or prior to December 31, 1993, and in the Books and
Records for periods commencing after December 31, 1993, except for such
Taxes as to which the failure to pay or record, when taken together with
all other such failures, will not have a Material Adverse Effect; (c) no
adjustments relating to the Tax Returns referred to in clause (a) have been
proposed in writing by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority, other than those adjustments
which individually or in the aggregate would not result in Losses of
$1,000,000 or more; (d) there are no
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pending or, to the Knowledge of Seller, threatened actions or proceedings
for the assessment or collection of Taxes against any entity described in
clause (a) as of the date of this Agreement, other than those actions or
proceedings which individually or in the aggregate would not result in
Losses of $1,000,000 or more; (e) there are no outstanding waivers or
agreements extending the applicable statute of limitations for any period
with respect to any Taxes of any entity described in clause (a) as of the
date of this Agreement, other than those waivers or agreements which
individually or in the aggregate would not result in Losses of $1,000,000
or more; (f) no taxing authorities are presently conducting any audits or
other examinations of any Tax Returns referred to in clause (a), other than
those audits or examinations which individually or in the aggregate would
not result in Losses of $1,000,000 or more; (g) no closing agreement
pursuant to Section 7121 of the Code (or any predecessor provision) or any
similar provision of any state, local, or foreign Law has been entered into
by or with respect to any Transferred Subsidiary or any Transferred Asset;
(h) the Seller has previously made available to the Purchaser true and
complete copies of each of (i) any written audit reports issued by any
taxing authority within the last two years relating to the United States
Federal, state, local or foreign Taxes due from or with respect to the
Business or the Transferred Subsidiaries
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and (ii) the United States federal, state, local, and foreign Tax Returns,
for each of the last two taxable years, filed by each of Sterling and the
Subsidiaries or (insofar as such returns relate to the Business or any
Transferred Subsidiary) filed by any affiliated, consolidated, combined, or
unitary group of which Sterling or any Subsidiary or any of their
respective Affiliates was then a member; (i) none of the Transferred Assets
or the Assets of any Transferred Subsidiary is an asset or property that
is, as of the date of this Agreement, or will be required to be, as a
result of any action taken prior to Closing, treated as being (i) owned by
any Person (other than the Purchaser or the Subsidiaries) pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately before the enactment of the Tax Reform
Act of 1986 (or any similar provision under state, local or foreign law) or
(ii) tax-exempt use property within the meaning of Section 168(h)(i) of the
Code (or any similar provision under state, local or foreign law) other
than, with respect to both clause (i) and (ii), such treatment which
individually or in the aggregate would not result in Losses of $1,000,000
or more; (j) at the Closing, neither Purchaser nor any Transferred
Subsidiary will be a party to, be bound by, or have any obligation under
any tax sharing agreement or similar contract or arrangement, except as
specifically contemplated by this Agreement or as a result
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of an action taken by the Purchaser; (k) no Transferred Subsidiary other
than L&F Products International, Inc. is or has been subject to taxation
for income Taxes or material other Taxes by any United States Federal,
state or local government authority other than pursuant to Sections 951
through 964 and 1296 of the Code (and the equivalent local and state
provisions); and (l) Seller and any Affiliate transferring Transferred
Assets are either (i) not a foreign person within the meaning of Section
1445 of the Code or (ii) not subject to Tax under Section 897 of the Code
with respect to the transfer of any Transferred Asset.
Section 3.10 Employee Benefits.
(a) Schedule 3.10(a) sets forth a list of all benefit plans,
contracts, policies or arrangements covering U.S. Employees, including, but
not limited to, "employee benefit plans" within the meaning of Section 3(3)
of ERISA, bonus or other incentive compensation plans, leave of absence
policies, relocation policies and plans of deferred compensation (the
"Benefit Plans"). True and complete copies of all Benefit Plans,
including, but not limited to, any trust instruments and insurance
contracts forming a part of any Benefit Plans, and all amendments thereto,
and the most recent summary plan descriptions related thereto, have been
provided to Purchaser. For this purpose, all documents located in the
Household Products Group on September 9, 1994
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and set forth on the Data Room Index dated September 1, 1994 shall be
deemed to have been provided.
(b) The Benefit Plans, to the extent subject to ERISA, are in
substantial compliance with ERISA. Each Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension
Plan") and which is intended to be qualified under Section 401(a) of the
Code, has received a favorable determination letter from the Internal
Revenue Service, and to the Knowledge of Seller, Sterling or Kodak there
are no circumstances likely to result in any failure of any such plans to
be so qualified. Except as set forth in Schedule 3.10(b), there is no
pending or, to the Knowledge of Seller, Sterling or Kodak, threatened
Proceeding relating to the Benefit Plans, other than those which,
individually or in the aggregate, would not result in Losses of $1 million
or more. Neither Seller nor any of its Subsidiaries has engaged in a
transaction with respect to any Benefit Plan that could subject Seller or
any such Subsidiary to a tax or penalty imposed under either Section 4975
of the Code or Section 502(i) of ERISA other than those which, individually
or in the aggregate, would not result in taxes or penalties of $1 million
or more.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Seller or any of its Subsidiaries
with respect to any
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ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or any such plan with respect to any entity which is considered one
employer with Seller under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Seller, Sterling and their Subsidiaries have not
incurred any withdrawal liability with respect to a multiemployer plan
under Subtitle E of Title IV of ERISA and do not have any obligation to
contribute to a multiemployer plan. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the 12-month period ending on
the date hereof.
(d) Neither any Pension Plan nor any single-employer plan of
an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA, and no ERISA Affiliate has an outstanding funding waiver. Neither
Seller nor any of its Subsidiaries has provided, or is required to provide,
security to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(e) Except as set forth in Schedule 3.10(e), neither Seller
nor any of its Subsidiaries has any
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obligations for retiree health, life or other welfare benefits under
any
Benefit Plan.
(f) All benefit plans, contracts or arrangements covering non-
U.S. Employees ("Non-U.S. Benefit Plans") comply in all material respects
with applicable local Law. Schedule 3.10(f) sets forth a list of all Non-
U.S. Benefit Plans covering more than 25 non-U.S. Employees. Except as set
forth in Schedule 3.10(f), Seller and its Subsidiaries have no unfunded
liabilities with respect to any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA which covers non-U.S. Employees of
$1,000,000 or more. The information relating to the Non-U.S. Benefit Plans
provided (as determined in a manner similar to that of Section 3.10(a)) is
correct in all material respects.
(g) Any Active or Inactive Employee who accepts employment
with Purchaser will not be entitled to any severance under the L&F Products
Severance Plan.
Section 3.11 Compliance with Laws. Except as set forth in
Schedule 3.11, the Business is being conducted in compliance with all
applicable Laws and the Business has all Governmental Authorizations
necessary for the conduct of the Business as currently conducted, other
than any such noncompliance or lack of Governmental Authorization the
absence of which would not have a Material Adverse Effect; it being
understood that nothing in this representation is
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intended to address any compliance issue that is the subject of any other
representation or warranty set forth herein.
Section 3.12 Environmental Matters. Except as set forth in
Schedule 3.12 and, in each case, other than as relates to an Excluded
Liability:
(a) the Business is in compliance with all applicable
Environmental Laws and there are no liabilities under any Environmental Law
with respect to the Business, other than liabilities for non-compliance or
other liabilities which, individually or in the aggregate, would not have a
Material Adverse Effect;
(b) None of Seller, Sterling or any of the Subsidiaries or
Kodak Affiliated Transferors has received from any Governmental Authority
any written notice of any violation or alleged violation of, or any
liability under, any Environmental Law in connection with the Business
since September 26, 1989, other than any violations or alleged violations
which, individually or in the aggregate, would not have a Material Adverse
Effect;
(c) there are no writs, injunctions, decrees, orders or
judgments outstanding, or any Proceedings pending or, to the Knowledge of
Seller, Sterling or Kodak, threatened, relating to compliance with or
liability under any Environmental Law affecting the Business or the
Transferred Assets;
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(d) all Owned Real Property and Leased Real Property or
property otherwise operated by Seller or its Subsidiaries in connection
with the Business, and, to the Knowledge of Seller, Sterling and Kodak, all
property adjacent to such properties, are free from contamination by any
Hazardous Substance, which would have a Material Adverse Effect;
(e) neither the Seller, Sterling nor its Subsidiaries is
conducting any Remedial Action arising from or in connection with the
Business or the Transferred Assets which would have a Material Adverse
Effect, and no facts or circumstances exist which could give rise to any
Remedial Action with respect to Hazardous Substances which would have a
Material Adverse Effect; and
(f) (i) Seller and its Subsidiaries currently maintain all
Environmental Permits necessary for the operations of the Business and are
in compliance with such Environmental Permits, except where the failure to
obtain such Permits or such non-compliance would not have a Material
Adverse Effect.
Section 3.13 Intellectual Property.
(a) Schedule 3.13(a) sets forth a list and description
(including the country of registration) of (i) all patents, patent
applications, registered trademarks, trademark applications, registered
service marks, service mark applications, registered copyrights and
copyright
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applications included in the Transferred Assets and (ii) all
agreements
under which Seller, Sterling, Kodak or any Transferred Subsidiary or any
Affiliate of any of them is licensed by a Person (excluding Seller,
Sterling, Kodak or any Affiliate of any of them) to use any Intellectual
Property that is individually or in the aggregate material to the Business,
all of which are assignable to Purchaser and may be used and exploited by
Purchaser to the same extent Currently used and exploited in the Business
as Currently conducted without any required consent or other approval or
additional consideration, except as set forth in Schedule 3.13(a). The
Intellectual Property constitutes all of the intellectual property rights,
including without limitation, all copyrights, trademarks, service marks,
trade secrets, knowhow and patent rights used in, necessary for, or
attributable to, the Business as Currently conducted. All of the
Intellectual Property is valid, enforceable and subsisting and all
reasonably necessary actions have been taken to maintain the registration
of the patents, copyrights and trademarks.
(b) (i) Except as set forth in Schedule 3.13(b)(i) with
respect to Intellectual Property other than trademarks, no product (or
component thereof or process) used, sold or manufactured in connection with
the Business infringes on or otherwise violates valid and enforceable
patents or registered copyrights or, to the Knowledge of
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Seller, Sterling and Kodak, unregistered or common law copyrights of any
other Person, or, to the Knowledge of Seller, Sterling or Kodak,
misappropriates trade secrets of any other Person, (ii) with respect to
trademarks listed in Schedule 3.13(b)(ii) (the "Selected Marks") and except
as set forth in Schedule 3.13(b)(i), there are no restrictions that would
materially affect the use of the Selected Marks in connection with the
Business and the Selected Marks do not infringe upon or otherwise violate
the valid and registered trademarks of any other Person, and (iii) to the
Knowledge of Seller, Sterling or Kodak, there is no basis for cancelling or
rendering unenforceable any Intellectual Property and no Person is
challenging or, to the Knowledge of Seller, Sterling or Kodak, infringing
or otherwise violating the Intellectual Property. Except as set forth in
Schedule 3.13(b)(i), the operation of the Business as it is Currently
operated or has been operated does not infringe any valid and enforceable
copyrights, trademarks, trade secrets, patent rights or other rights of any
Person. Purchaser's operation of the Business as it is Currently operated
and the use by Purchaser of the trademarks and service marks that are
included in the Intellectual Property will not contravene, or be
inconsistent with, any registered user certificate or similar filing or
authorization.
Section 3.14 Labor Matters. (a) Except as set forth in
Schedule 3.14, neither Seller, Sterling, Kodak nor
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any Affiliate of any of them is a party to or bound by any labor agreement
or collective bargaining agreement respecting the Active or Inactive
Employees, nor is there pending, or, to the Knowledge of Seller, Sterling
or Kodak, threatened, any strike, walkout, work stoppage, slow down, lock
out, other labor dispute or any union organizing effort by or respecting
the Active or Inactive Employees. Except as set forth in Schedule 3.14(a),
no charges, grievances, arbitrations or complaints are pending or, to the
Knowledge of Seller, Sterling or Kodak, threatened by or on behalf of any
Employee or group of Employees.
(b) With respect to the Business, there has been no mass
layoff, as defined for purposes of WARN and no plant closing, or any notice
given of any contemplated mass layoff or plant closing, in each case since
March 26, 1994.
Section 3.15 Contracts. Schedule 3.15(i) sets forth a list,
as of the date hereof, of each written Contract that is Related to the
Business (other than (i) purchase orders in the ordinary and usual course
of business involving less than $250,000, (ii) any Contract involving the
payment of less than $250,000 in the aggregate or with a term of less than
one year, (iii) confidentiality agreements entered into in the usual course
of business, (iv) employment agreements covering non-U.S. Employees (other
than contracts with key non-U.S. Employees) and (v) trademark agreements
not related to Selected Marks and
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not containing restrictions on the use of Selected Marks). Schedule
3.15(i) does not omit any Contract (written or oral) that is material to
the Business. Except as set forth in Schedule 3.15(ii), each Contract that
is material to the Business as Currently conducted is a valid and binding
agreement of Seller or a Subsidiary and is in full force and effect.
Except as otherwise provided in Schedule 3.15(iii), none of Seller,
Sterling or Kodak has Knowledge of any material default by the other party
to or any event, occurrence or circumstance which, upon the passage of time
or the giving of notice or both, would result in a material default under
any Contract that is material to the Business as Currently conducted, which
default or potential default has not been cured or waived.
Section 3.16 Entire Business; Shared Assets; Title to and
Condition of Property.
(a) Except as set forth in Schedule 3.16(a), the Transferred
Assets constitute, and the sale of the Transferred Assets pursuant to this
Agreement will effectively convey to Purchaser, all the assets, properties
and rights that are used in connection with, or are necessary to conduct,
the Business as currently conducted. Except as set forth on Schedule
3.16(a), there are no (i) shared facilities that are used in connection
with the Business and with other operations of Seller, Sterling, Kodak,
Kodak's other Affiliates (including, without
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limitation, the DIY Business) or the purchasers of the Ethical and
OTC
Businesses or (ii) services provided to the Business by Seller, Sterling,
Kodak, any of Kodak's other Affiliates (including, without limitation, the
DIY Business) or the purchasers of the Ethical and OTC Businesses.
(b) Schedule 3.16(b) sets forth a list of the Leased Real
Property as of the date hereof. Schedule 3.16(b) sets forth a list of the
Owned Real Property as of the date hereof. Seller has good (and in the
case of Owned and Leased Real Property marketable) title to, or a valid and
binding leasehold interest in, the property included in the Transferred
Assets, free and clear of all Encumbrances, except (i) as set forth in
Schedule 3.16(b), (ii) any Encumbrances disclosed in the Balance Sheet,
(iii) liens for Taxes, assessments and other governmental charges not yet
due and payable or due but not delinquent or being contested in good faith
by appropriate proceedings, (iv) original purchase price conditional sales
contracts and equipment leases with third parties entered into in the
ordinary course of business, (v) other liens incurred in the ordinary
course of business which, individually or in the aggregate, do not secure
liabilities of $1 million or more, (vi) with respect to real property,
easements, quasi-easements, licenses, covenants, rights-of-way, zoning,
building and other similar restrictions that are not material to the
Business, or to the operations or condition of the property
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so encumbered (all items included in (i) through (vi), together with any
matter set forth in Schedule 3.16(b), are referred to collectively herein
as the "Permitted Encumbrances").
(c) The leases described on Schedule 3.16(b) constitute all of
the leases under which Seller holds a leasehold interest in real estate
that is Related to the Business. Except as set forth on Schedule 3.16(b),
the leases described on Schedule 3.16(b) are in full force and effect.
Seller has made available to Purchaser complete and accurate copies of each
of the leases described on Schedule 3.16(b) and none of such leases have
been modified in any material respect, except to the extent that such
modifications are disclosed by the copies made available to Purchaser.
(d) Seller has made available to Purchaser complete and
accurate copies of all the title insurance policies and surveys in its or
any of its Affiliates' possession with respect to each of the Owned Real
Properties. Except as set forth on Schedule 3.16(d), the uses for which
the Owned Real Property and the Leased Real Property are zoned do not
restrict, or in any manner impair, the use thereof for purposes of the
Business, as Currently conducted, other than restrictions which,
individually or in the aggregate, would not materially impair the use of
the
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Owned Real Property and the Leased Real Property in the Business as
Currently conducted.
(e) All of the material machinery, equipment and other
tangible personal property and assets at or upon any of the Owned Real
Property or Leased Real Property are in satisfactory condition for use in
the ordinary course of the Business consistent with Sterling's past
practice and Seller, Sterling or their Affiliates have performed regular
maintenance on such machinery, equipment and other tangible personal
property in accordance with Sterling's past practice (giving due account to
the age and length of use of the same, ordinary wear and tear excepted).
(f) None of Seller, Sterling or Kodak has received any notice
of any violation of any applicable zoning, building code or subdivision
ordinance or other Laws, or requirements relating to the operation of the
Owned Real Property or the Leased Real Property or any of the other
Transferred Assets (including, without limitation, applicable occupational
health and safety laws and regulations) or any condemnation, eminent domain
or other Proceeding with respect to or any of the Transferred Assets, other
than violations or requirements which, individually or in the aggregate,
would not have a Material Adverse Effect. The representation in this
Section 3.16(f) shall not pertain to Environmental Laws.
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Section 3.17 Finders' Fees. Except for Goldman, Sachs & Co.
and McKinsey and Co., whose fees will be paid by Seller, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Seller or any Affiliate of
Seller who might be entitled to any fee or commission from Seller in
connection with the transactions contemplated by this Agreement.
Section 3.18 Insurance. All material insurance policies or
binders insuring the Transferred Assets or business liabilities with
respect to the Business which are currently in effect are listed in
Schedule 3.18, and true and complete copies thereof have been delivered or
made available to Purchaser. With respect to the Business: (i) Seller
and/or its Affiliates have paid all premiums due and have not received any
notice of cancellation with respect to any insurance policy identified on
Schedule 3.18; (ii) except as described on Schedule 3.18(a), there are no
pending or asserted material claims against such insurance by the Seller or
its Affiliates as to which the insurers have denied liability; and
(iii) there exist no material claims under such insurance that have not
been properly filed by Seller or its Affiliates.
Section 3.19 Absence of Undisclosed Liabilities. There is no
indebtedness, obligation or liability Related to the Business of a nature
required to be reflected on a
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balance sheet prepared in accordance with GAAP as modified as described in
Schedule 3.7(a)(ii) except for (i) liabilities reflected or reserved for in
the Balance Sheet (including Schedule 3.7(a)(ii)), (ii) Excluded
Liabilities and (iii) liabilities or obligations incurred in the ordinary
course (A) from the date of the Balance Sheet until the date hereof,
consistent with past practice, or (B) from and after the date hereof as
permitted by this Agreement.
Section 3.20 Intercompany Transactions. Except as disclosed
in Schedule 3.20, since December 31, 1993, all transactions between Kodak
or any of its Affiliates, on the one hand, and Seller or Sterling, on the
other hand, with respect to the Business, including any such transactions
effected in anticipation of the execution, delivery and performance of this
Agreement but excluding any such transactions relating solely to Excluded
Assets or to the L&F Transfer have been undertaken on commercially
reasonable terms. The receivables and payables relating to non-U.S.
intercompany transactions as disclosed on the Adjusted Closing Balance
Sheet will have arisen not more than 30 days prior to the Closing Date and
will be settled within 30 days following the Closing Date.
Section 3.21 Customers and Suppliers. To the Knowledge of
Seller, Sterling and Kodak as of the date hereof, no material customer or
supplier of the Business
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will cease or substantially reduce the business conducted with the
Purchaser after, or as a result of, the consummation of any transaction
contemplated hereby.
Section 3.22 Certain Documents. Seller has made available to
Purchaser complete and accurate copies (i) of all minute books or
comparable corporate records of the Transferred Subsidiaries, and (ii) all
provisions of the Sterling Stock Purchase Agreement, and of any agreement
entered into by Kodak, Seller, Sterling or any of their Affiliates in
connection with the Sterling Stock Purchase Agreement or the dispositions
of the Ethical and OTC Businesses that restrict or relate in any manner to
(A) the L&F Transfer, (B) any assets or services of the L&F Products
Division that were used by or related to the Business, on the one hand, and
the DIY Business or the Ethical and OTC Businesses, on the other hand,
(C) obligations of the purchaser of the Business to the purchaser or
purchasers of Sterling, the DIY Business or the Ethical and OTC Businesses,
or (D) obligations of the purchaser or purchasers of the DIY Business or
Sterling's Ethical and OTC Businesses to the Purchaser of the Business.
Section 3.23 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, none
of Seller, Sterling, Kodak nor any other Person makes any other express or
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implied representation or warranty on behalf of Seller, Sterling or Kodak.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller, Sterling and Kodak
as follows:
Section 4.1 Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate and to carry on its
business as currently conducted. Except as set forth on Schedule 4.1,
Purchaser is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or leasing of
its properties or the operation of its business requires such
qualification, except where the failure to be so qualified or in good
standing, as the case may be, would not have a Material Adverse Effect.
Section 4.2 Corporate Authorization. Purchaser has full
corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and to perform their obligations
hereunder and thereunder. The execution, delivery and performance by
Purchaser of this Agreement and each of the Ancillary Agreements have been
duly and validly authorized and no additional corporate
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authorization or consent is required in connection with the
execution,
delivery and performance by Purchaser of this Agreement and each of the
Ancillary Agreements, other than approval of this Agreement and the
transactions contemplated hereby by the shareholders of Purchaser in
accordance with the requirements of the London Stock Exchange.
Section 4.3 Consents and Approvals. Except as specifically
set forth in Schedule 4.3 or as required by U.S. Antitrust Laws, European
Union Competition Law (or the Competition Law of France, Germany, Italy,
Spain or the United Kingdom, in each case to the extent not subject to
European Union jurisdiction), the Competition Laws of Australia, Canada or
Japan, or the rules and regulations of the London Stock Exchange, no
consent, approval, waiver or authorization is required to be obtained by
Purchaser or any Purchaser Subsidiary from, and no notice or filing is
required to be given by Purchaser or any Purchaser Subsidiary to or made by
Purchaser or any Purchaser Subsidiary with, any Federal, state, local or
other governmental authority or other Person in connection with the
execution, delivery and performance by Purchaser of this Agreement and each
of the Ancillary Agreements, other than in all cases those the failure of
which to obtain, give or make would not have a Material Adverse Effect or
materially impair or delay the ability of Purchaser to effect the Closing.
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Section 4.4 Non-Contravention. Except as set forth in
Schedule 4.4, the execution, delivery and performance by Purchaser of this
Agreement and each of the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby, does not and will not
(i) violate any provision of the charter, bylaws or other organizational
documents of Purchaser or (ii) assuming compliance with the matters set
forth in Sections 3.4 and 4.3, to the Knowledge of Purchaser, violate or
result in a breach of or constitute a default under any law, rule,
regulation, judgment, injunction, order, decree or other restriction of any
court or governmental authority to which Purchaser is subject, including
any Governmental Authorization, other than any conflict, breach,
termination, default, cancellation, acceleration, loss, violation or
Encumbrance which, individually or in the aggregate, would not have a
Material Adverse Effect or materially impair or delay Purchaser's ability
to perform its obligations hereunder.
Section 4.5 Binding Effect. This Agreement constitutes, and
each of the Ancillary Agreements when executed and delivered by the parties
thereto will constitute, a valid and legally binding obligation of
Purchaser enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or
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affecting creditors' rights and to general equity principles.
Section 4.6 Finders' Fees. Except for S.G. Warburg & Co.
Ltd., whose fees will be paid by Purchaser, there is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Purchaser or any Affiliate of Purchaser who
might be entitled to any fee or commission from Purchaser in connection
with the transactions contemplated by this Agreement.
Section 4.7 Financial Capability. On the Closing Date,
Purchaser will have sufficient funds to effect the Closing and all other
transactions contemplated by this Agreement.
Section 4.8 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV,
neither Purchaser nor any other Person makes any other express or implied
representation or warranty on behalf of Purchaser.
ARTICLE V
COVENANTS
Section 5.1 Access. Prior to the Closing, Seller shall,
during regular business hours and upon reasonable advance notice, permit
Purchaser and its representatives to have full access to the Transferred
Assets and Business and reasonable access to management employees of the
Business
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and shall furnish, or cause to be furnished, to Purchaser, any financial
and operating data and other information that is available with respect to
the Business as Purchaser shall from time to time reasonably request.
Seller shall instruct its accountants and advisers to cooperate with
Purchaser and to provide Purchaser with reasonable access to such
accountants (including their workpapers) and advisers. Seller shall also
afford Purchaser and its advisers access to all documents and instruments
used to effect the L&F Transfer.
Section 5.2 Conduct of Business. During the period from the
date hereof to the Closing, except as otherwise contemplated by this
Agreement or as Purchaser shall otherwise agree in writing in advance, each
of Seller, Sterling and Kodak, as applicable, covenants and agrees that it
shall, and shall cause the Subsidiaries to, conduct the Business in the
ordinary and usual course, and use its reasonable efforts to preserve
intact the Business and relationships with third parties. During the
period from the date hereof to the Closing, except as otherwise provided
for in this Agreement or as Purchaser shall otherwise consent (which
consent shall not be unreasonably withheld), each of Seller, Sterling and
Kodak, as applicable covenants and agrees that, with respect to the
Business, it shall and shall cause the Subsidiaries to:
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(i) maintain the Owned Real Property and Leased Real Property
in accordance with Sterling's past practice;
(ii) not approve any new capital expenditure or other
financial commitment in excess of $1,000,000;
(iii) not dispose of or incur, create or assume any
Encumbrance, other than Permitted Encumbrances, on any individual capital
asset of the Business if the greater of the book value and the fair market
value of such capital asset exceeds $1,000,000;
(iv) not incur any indebtedness for money borrowed that
constitutes an Assumed Liability in excess of $1,000,000;
(v) not permit any Transferred Subsidiary to (1) amend its
certificate of incorporation or by-laws (or similar governing instruments),
(2) except as permitted pursuant to clause (iv) above, issue, sell, redeem
or otherwise acquire any capital stock, bonds, debentures, notes or other
securities or grant any options (including employee stock options),
warrants or other rights entitling any Person to require the issuance of
delivery of any capital stock, bonds, debentures, notes or other
securities, or (3) declare, or set aside for payment, any dividend to be
paid subsequent to the Closing Date;
(vi) not enter into any material transaction or any
intercompany transaction other than on commercially reasonable terms;
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(vii) not grant material salary or wage increases, or change or
amend any Benefit Plan covering Employees in any way that materially
changes the amount of the Assumed Liability in respect of such plan;
(viii) not terminate, cancel, surrender, amend or otherwise
modify any of the leases for the Leased Real Property;
(ix) not sell, transfer, assign or otherwise convey or
encumber (except for Permitted Encumbrances) any of the Owned Real
Property; or
(x) agree, in writing or otherwise, to do any of the
foregoing.
Notwithstanding the foregoing, (x) this Section 5.2 shall not
restrict Seller's ability to make distributions of cash or short-term
investments to holders of its capital stock; (y) subject to clauses (v) and
(vi) above, this Section 5.2 shall not restrict the ability of any
Subsidiary to make distributions of cash or short-term investments to the
holders of its capital stock at any time prior to the Closing Date; and
(z) this Section 5.2 shall not restrict the ability of Sterling or any
Affiliate of Sterling to effect the L&F Transfer. Seller, Sterling and
Kodak shall complete the L&F Transfer, to the extent reasonably
practicable, prior to consummating the sale of the stock of Sterling
pursuant to the Sterling Stock
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Purchase Agreement unless Purchaser shall otherwise consent (such consent
not to be unreasonably withheld).
Section 5.3 Reasonable Efforts; Good Faith.
(a) Seller and Purchaser will cooperate and use their
respective reasonable efforts to fulfill the conditions precedent to the
other party's obligations hereunder, including but not limited to, securing
as promptly as practicable all consents, approvals, waivers and
authorizations required in connection with the transactions contemplated
hereby. Purchaser and Seller will promptly file documentary materials
required by the HSR Act and any other U.S., European Union and other
applicable Competition Laws and promptly file any additional information in
order to satisfy any applicable requirements of such Competition Laws as
soon as practicable after receipt of request thereof.
(b) Without limiting the provisions set forth in paragraph (a)
above, Purchaser shall take or cause to be taken all reasonable actions
necessary, proper or advisable to obtain any consent, waiver, approval or
authorization relating to any Competition Law that is required for the
consummation of the transactions contemplated by this Agreement.
Purchaser's reasonable actions shall be deemed satisfied by the proffer by
Purchaser of its willingness to accept an order providing for the
divestiture by Purchaser of assets Relating to the Business (other than
assets that
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constitute the essence of the Business) or, in lieu thereof,
substantially
comparable assets of Purchaser, and an offer to "hold separate" such assets
pending such divestiture (it being understood that Purchaser shall not be
required to accept any order or make any "hold separate" offer if, as a
result of such order or offer, Purchaser would not retain the exclusive
right in the United States and the rest of the world to own, use and
exploit the LYSOL trademark and service mark). In the event that Purchaser
agrees with the appropriate regulatory authorities to divest or hold
separate following the Closing any of the Transferred Assets, no adjustment
shall be made to the Purchase Price.
(c) Purchaser shall convene an extraordinary general meeting
of its shareholders as soon as practicable after the date hereof to
consider approval of this Agreement and the transactions contemplated
hereby. As promptly as practicable after the execution of this Agreement,
Kodak shall use its reasonable efforts to cause to be prepared such
financial statements of the Business and reports thereof as shall be
required to be included in Purchaser's shareholder circular as agreed
between Purchaser and the London Stock Exchange.
Section 5.4 Tax Matters.
(a) Proration of Taxes and Earnings and Profits. To the
extent permitted by law or administrative practice, the taxable years of
each Transferred Subsidiary shall end
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on and include the Closing Date. Whenever it is necessary to determine the
liability for Taxes or the earnings and profits for a portion of a taxable
year or period that begins before and ends after the Closing Date, the
determination of the Taxes or the earnings and profits for the portion of
the year or period ending on, and the portion of the year or period
beginning after, the Closing Date shall be determined by assuming that the
taxable year or period ended on and included the Closing Date, except that
exemptions, allowances or deductions that are calculated on an annual basis
and annual property taxes shall be prorated on the basis of the number of
days in the annual period elapsed through and including the Closing Date as
compared with the number of days in the annual period elapsing after the
Closing Date.
(b) Tax Returns. (i) Kodak shall prepare, or cause to be
prepared, and file, or cause to be filed, when due all Tax Returns relating
to Taxes imposed with respect to the Business for the taxable periods, or
portions thereof, beginning before and ending before, on or after the
Closing Date other than Tax Returns of any Transferred Subsidiary and its
subsidiaries which are not U.S. Federal consolidated or state or local
combined or unitary returns and are due to be filed after the Closing Date.
Kodak shall pay, or cause to be paid, when due all Taxes payable with
respect to such returns and, except to the extent any such
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Taxes are Assumed Liabilities, Kodak shall be liable for such Taxes. Kodak
shall also prepare, or cause to be prepared, and file, or cause to be
filed, when due all other Tax Returns with respect to the Business due
before or on the Closing Date; Kodak shall pay, or cause to be paid, when
due any Taxes payable with respect to such returns and except to the extent
any such Taxes are Assumed Liabilities, Kodak shall be liable for such
Taxes.
(ii) Purchaser shall prepare, or cause to be prepared, and
file, or cause to be filed, when due Tax Returns of any Transferred
Subsidiaries and its subsidiaries due to be filed after the Closing (other
than U.S. Federal consolidated or state or local combined and unitary
returns) and all other Tax Returns relating to Taxes imposed with respect
to the Business for the taxable periods, or portions thereof, beginning
after the Closing. Purchaser shall pay or cause to be paid, when due all
Taxes payable with respect to such returns and, except to the extent any
such Taxes are Excluded Liabilities, Purchaser shall be liable for such
Taxes.
(iii) If either party (the "Payor") may be liable hereunder
for any portion of the Taxes payable in connection with any Tax Return to
be filed by the other party (the "Preparer"), the Preparer shall prepare
and deliver to the Payor a copy of the relevant portions of such return,
and any schedules, work papers and other documentation then
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available that are relevant to the preparation of such portions of the Tax
Return, not later than 45 days before the Due Date. The Preparer shall not
file such return until the earlier of either the receipt of written notice
from the Payor indicating the Payor's consent thereto, or the Due Date.
The Payor's consent to the return as prepared by the Preparer may not be
unreasonably withheld.
If the Payor objects to any items reflected on such returns,
the Preparer and the Payor shall attempt to resolve the disagreement. If
the Preparer and the Payor are unable to resolve the disagreement by 20
days before the Due Date, the dispute shall be referred to the CPA Firm
whose determination shall be binding upon both parties.
(iv) If a dispute has not been resolved or the CPA Firm has
not made its determination at least five (5) days prior to the earlier of
the Due Date or the date payment is due, (1) each disputed item shall be
reported on the return that is filed in accordance with the Preparer's
position (modified to the extent necessary to incorporate any changes the
parties have agreed upon), and (2) the Payor shall pay to the Preparer at
least five (5) days prior to the earlier of the Due Date or the date
payment is due the amount for which the Payor would be liable if the return
was filed as instructed by the Payor (modified to the extent necessary to
incorporate any changes the parties have agreed upon) (the "Payor's
Amount"). When the amount of the
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Payor's liability in respect of such Tax Return is finally determined, a
settlement payment shall be made, in an amount equal to the difference
between the amount finally determined to be due and the Payor's Amount,
from the Payor to the Preparer if such amount is a positive number and from
the Preparer to the Payor if such amount is a negative number.
(v) Except with respect to Tax Returns for which there is an
on-going dispute governed by clause (iv), the Payor shall pay to the
Preparer, at least five (5) days prior to the earlier of the Due Date or
the date payment is due, the amount of Taxes reflected on such Tax Returns
for which the Payor is liable hereunder (i.e., if the Payor is Kodak, the
amount of such Taxes which constitute Excluded Liabilities, and if the
Payor is Purchaser, the amount of such Taxes which constitute Assumed
Liabilities.
(c) Information to be Provided by Purchaser. (i) With
respect to Tax Returns to be filed by Kodak pursuant to Section 5.4(b)
hereof, Purchaser shall within 60 days following the end of the taxable
year beginning before and ending on or after the Closing Date, prepare and
provide to Kodak a package of tax information materials relating to such
Tax Returns (the "Tax Package"), which shall be completed generally in
accordance with past practice, including past practice as to providing the
information, schedules and work papers and as to the method
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of computation of separate taxable income or other relevant measures of
income of Seller (and Sterling, as its predecessor with respect to the
Business) and any Subsidiary included on any such returns.
(ii) Foreign Tax Receipts. To the extent not contained in the
Tax Package, Purchaser shall deliver to the attention of the Director of
Corporate Tax of Kodak certified copies of all receipts in the possession
of Purchaser and its Affiliates for any foreign Tax with respect to which
Seller, Sterling, Kodak or their Affiliates could claim a foreign tax
credit, and any other reasonably necessary documentation required in
connection with Seller, Sterling, Kodak or their Affiliates claiming or
supporting a claim for such foreign tax credits promptly following a
request by Kodak for such receipts or documentation. Purchaser agrees,
upon request of the Director of Corporate Tax of Kodak, to request, at
Seller's expense, for Kodak from local tax authorities receipts for foreign
Taxes which have not been provided to Purchaser.
(d) Contest Provisions. (i) Notification of Contests. Each
of Purchaser and its Affiliates, on the one hand, and Kodak, Seller and
their Affiliates, on the other (the "Recipient"), shall notify the tax
director of each other party in writing within 30 days of receipt by the
Recipient of written notice of any pending or threatened audits,
adjustments or assessments (a "Tax Audit") which may
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affect the liability for Taxes of such other party. If the Recipient fails
to give such prompt notice to the other party it shall not be entitled to
indemnification for any Taxes arising in connection with such Tax Audit if
such failure to give notice materially adversely affects Kodak's liability
as a result of the outcome of the Tax Audit.
(ii) Which Party Controls. (A) Kodak and Seller's Items. If
such Tax Audit relates to any period ending on or prior to the Closing
(except with respect to Taxes constituting Assumed Liabilities) or for any
Taxes for which Kodak or Seller is liable in full hereunder, Kodak shall at
its expense control the defense and settlement of such Tax Audit.
(B) Purchaser's Items. If such Tax Audit relates to any
period beginning after the Closing or for any Taxes for which Purchaser is
liable in full hereunder, Purchaser shall at its expense control the
defense and settlement of such Tax Audit.
(C) Combined and Mixed Items. If such Tax Audit relates to
Taxes for which both Kodak or Seller, on the one hand, and Purchaser
(including Taxes of Affiliates of Purchaser for any post-Closing periods),
on the other, are liable hereunder, to the extent possible such Tax Items
will be distinguished and each party will control the defense and
settlement of those Taxes for which it is so liable.
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If such Tax Audit relates to a taxable period, or portion
thereof, beginning before and ending after the Closing and any Tax Item can
not be identified as being a liability of only one party or cannot be
separated from a Tax Item for which the other party is liable, the party
which has the greater potential liability for those Tax Items that cannot
be so attributed or separated (or both) shall control the defense and
settlement of the Tax Audit, provided that such party defends the items as
reported on the relevant Tax Return. In defending the item as reported on
the relevant Tax Return, the party may negotiate any settlement that is
reasonable provided that it does not increase the liability of the other
party in an amount that is greater than such other party's pro rata share
of those items and does not trade any item for which the other party has a
greater liability for any item for which it has a lesser liability, unless
it obtains the other's party consent thereto.
(D) Participation Rights. (i) Any party whose liability for
Taxes may be affected by a Tax Audit shall be entitled to participate at
its expense in such defense and to employ counsel of its choice at its
expense.
(ii) If settlement of any Tax Audit could materially and
adversely affect Purchaser and its Affiliates' liability for Taxes for any
taxable period beginning after the Closing, Kodak will not settle such Tax
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Audit without Purchaser's consent, which shall not be unreasonably
withheld.
(e) Determination and Allocation of Consideration. The
parties to this Agreement agree to determine the amount of and allocate the
total consideration transferred by Purchaser to Seller pursuant to this
Agreement (the "Consideration") in accordance with the fair market value of
the assets and liabilities transferred. Purchaser shall deliver to the
attention of the Director of Corporate Tax of Kodak one or more schedules
allocating the Consideration no later than 30 days prior to the Closing.
If Kodak disagrees with any items reflected on the schedules so provided,
Kodak shall have the right to notify Purchaser of such disagreement and its
reasons for so disagreeing, in which case Purchaser and Kodak shall attempt
to resolve the disagreement, provided, however, that the parties agree that
$150,000,000 shall be allocated to the participation interests of Schulke &
Mayr GmbH and $2,000,000 shall be allocated to the stock of L&F Products
International, Inc. If the parties have not resolved any such dispute at
least 10 days prior to the Closing, the dispute shall be referred to the
CPA Firm whose determination shall be binding on both parties. Seller and
Purchaser agree to prepare, or cause to be prepared, and file, or cause to
be filed, an IRS Form 8594 in a timely fashion in accordance with the rules
under Section 1060 of the Code. To the extent that the
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Consideration is adjusted after the Closing Date, the parties agree
to
revise and amend the schedule and IRS Form 8594 in the same manner and
according to the same procedure. The determination and allocation of the
Consideration derived pursuant to this subsection shall be binding on
Kodak, Seller and Purchaser for all Tax reporting purposes.
(f) Employee Withholding and Reporting Matters. With respect
to the Employees, from and after the Closing Date, Purchaser shall, in
accordance with and to the extent permitted pursuant to Revenue Procedure
84-77, 1984-2 C.B. 753, assume all responsibility for preparing and filing
Form W-2, Wage and Tax Statement, Form W-3, Transmittal of Income and Tax
Statements, Form 941, Employer's Quarterly Federal Tax Return, Form W-4,
Employee's Withholding Allowance Certificate, and Form W-5, Earned Income
Credit Advance Payment Certificate. Seller and Purchaser agree to comply,
and cause their respective Affiliates to comply, with the procedures
described in Section 5 of Revenue Procedure 84-77.
(g) Transfer Taxes. All excise, sales, use, transfer
(including real property transfer or gains), stamp, documentary, filing,
recordation and other similar taxes which may be imposed or assessed as the
result of the transactions effected pursuant to this Agreement (the
"Transfer Taxes"), together with any interest, additions or penalties with
respect thereto and any interest in respect
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of such additions or penalties shall be borne equally by Seller and
Purchaser. Any such Transfer Taxes or fees arising in connection with the
L&F Transfer shall be borne entirely by Kodak, and Kodak shall indemnify
the Purchaser Indemnified Parties for any liabilities arising in connection
therewith. Any such Transfer Taxes or fees resulting from any subsequent
transfer by the Purchaser or its Affiliates of all or any portion of the
Transferred Assets or Assumed Liabilities occurring on or subsequent to the
Closing shall be borne entirely by the Purchaser, and Purchaser shall
indemnify the Seller Indemnified Parties for any liabilities arising in
connection therewith. Notwithstanding the provisions of Section 5.4(b),
which shall not apply to Tax Returns relating to Transfer Taxes, any Tax
Returns that are required to be filed in connection with Transfer Taxes
shall be prepared and filed when due by the party primarily or customarily
responsible under the applicable local law for filing such Tax Returns, and
such party shall use its reasonable best efforts to provide such Tax
Returns to the other parties at least 10 days prior to the Due Date for
such Tax Returns. Such Tax Returns shall be prepared on a basis consistent
with the determination and allocation of the Consideration pursuant to
Section 5.4(e).
(h) Section 338 Election. Purchaser will not make an election
pursuant to Section 338 of the Code or a similar Law of any other country
with respect to the
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purchase of any Transferred Subsidiary pursuant to this Agreement except,
the parties agree, upon Purchaser's request, to make an election under
Section 338(h)(10) of the Code and Section 1.338(h)(10)-1(d) of the
Treasury Regulations and comparable provisions of state or local law with
respect to L&F Products International, Inc. The parties agree to cooperate
fully in completing all forms required to effect such an election.
(i) (A) Purchaser's Claiming, Receiving or Using Refunds and
Overpayments. If, after the Closing, Purchaser or its Affiliates
(1) receive any refund, or (2) utilize the benefit of any overpayment, of
Taxes (except to the extent reflected as an asset on the Adjusted Closing
Balance Sheet) which (x) were paid by Kodak, Seller or any Affiliate of
either of them prior to the Closing, or (y) were the subject of
indemnification by Kodak or Seller pursuant to Article VII hereto,
Purchaser shall promptly transfer, or cause to be transferred, to Kodak, or
at Kodak's direction Seller, the entire amount of the refund or overpayment
(including interest but net of Tax costs) received or utilized by Purchaser
or its Affiliates. Purchaser agrees to claim any such refund or to utilize
any such overpayment and to furnish to Kodak all information, records and
assistance reasonably necessary to verify the amount of the refund or
overpayment provided that such refund, claim or overpayment utilization
does not have any adverse effect on
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Purchaser or its Affiliates. Kodak shall reimburse Purchaser's reasonable
costs in connection with claiming such refund or utilizing such
overpayment.
(B) Seller's Claiming, Receiving or Using Refunds and
Overpayments. If, after the Closing, Seller or its Affiliates (1) receive
any refund, or (2) utilize the benefit of any overpayment, of Taxes which
were paid by Purchaser or any Affiliate as an Assumed Liability, Seller
shall promptly transfer, or cause to be transferred, to Purchaser, the
entire amount of the refund or overpayment (including interest but net of
Tax costs) received or utilized by Seller or its Affiliates. Seller agrees
to claim any such refund or to utilize any such overpayment and to furnish
to Purchaser all information, records and assistance reasonably necessary
to verify the amount of the refund or overpayment provided that such
refund, claim or overpayment utilization does not have any adverse effect
on Seller or its Affiliates. Purchaser shall reimburse Seller's reasonable
costs in connection with claiming such refund or utilizing such
overpayment.
(j) Each Party's Claiming and Realizing of Tax Benefits in
Respect of Indemnified Liabilities
(i) Procedures. If, after the Closing, any Purchaser
Indemnified Party or any Seller Indemnified Party realizes any Loss for
which such party is indemnified hereunder, such Indemnified Party shall, if
reasonable,
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claim any such Loss and claim to the fullest extent possible all deductions
available as a result of such Loss. Each of Purchaser and Kodak agree to
furnish, or cause to be furnished, to the other a certificate of Purchaser
or Kodak's, respective, tax directors verifying the amount of the decrease,
if any, in the income taxes paid by the Purchaser Indemnified Parties or
the Seller Indemnified Parties, respectively, as a result of recognizing
such Loss and claiming all such available deductions (as compared to the
income taxes such parties and their respective Affiliates would otherwise
have paid without recognizing such Loss and deductions).
(ii) Methodology. In determining for the purposes of this
Section 5.4 and Section 7.6 the decrease in income taxes paid by a party as
a result of recognizing a Loss and claiming a deduction such calculation
shall be made by comparing the income taxes paid by the party taking into
account such Loss and deduction with the income taxes the party would have
paid had it not taken into account such Loss and deduction.
(k) Post-Closing Actions Which Affect Kodak or Seller's
Liability for Taxes. (i) During the period beginning on the Closing Date
and ending on December 31, 1994 Purchaser shall not permit the Transferred
Subsidiaries to (A) sell (including a deemed sale pursuant to Section 338
of the Code or a similar law of any other country),
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exchange, distribute, reorganize or otherwise dispose of the stock of any
foreign subsidiary corporation, or dispose of any other property the sale
of which produces foreign personal holding company income within the
meaning of Section 954(a)(1) of the Code or a similar law of any other
country or (B) make any distribution (including a deemed distribution) to
shareholders in excess of current earnings and profits (as computed for
U.S. Federal income tax purposes) derived during the period beginning on
the day following the Closing Date and ending on December 31, 1994.
(ii) Except to the extent required by law, neither Purchaser,
the Transferred Subsidiaries nor any Affiliate of either of them shall,
without the prior written consent, which shall not be unreasonably
withheld, of Kodak on the one hand, and neither Kodak, Seller, Sterling,
the Subsidiaries nor any of their respective Affiliates shall, without the
prior written consent, which shall not be unreasonably withheld, of
Purchaser on the other hand, amend any Tax Return filed by, or with respect
to, the Transferred Subsidiaries or any of their subsidiaries for any
taxable period, or portion thereof, beginning before the Closing Date.
(l) Maintenance of Books and Records. Until the applicable
statute of limitations (including periods of waiver) has run for any Tax
Returns filed or required to be filed covering the periods up to and
including the Closing
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Date, Purchaser shall retain all Books and Records with respect to the
Business in existence on the Closing Date and after the Closing Date will
provide Kodak access to such Books and Records for inspection and copying
by Kodak (at Kodak's expense) and its agents upon reasonable request and
upon reasonable notice. Up to three years after the expiration of such
period, no such Books and Records shall be destroyed by Purchaser without
first advising the Director of Corporate Tax of Kodak in writing detailing
the contents of any such Books and Records and giving Kodak (at Kodak
expense) at least 90 days to obtain possession thereof.
(m) Assistance and Cooperation. The parties agree that, after
the Closing Date:
(A) The parties shall assist (and cause their respective
affiliates to assist) the other parties in preparing any Tax Returns
with respect to the Business which such other parties are responsible
for preparing and filing;
(B) The parties shall cooperate fully in preparing for any
audits of, or disputes with taxing authorities regarding, any Tax
Returns and payments in respect thereof;
(C) The parties shall make available to each other and to any
taxing authority as reasonably
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requested all relevant Books and Records relating to Taxes;
(D) The parties shall provide timely notice to the other in
writing of any pending or proposed audits or assessments with respect
to Taxes for which the other may have an indemnification obligation
under this Agreement;
(E) The parties shall furnish the other with copies of all
relevant correspondence received from any taxing authority in
connection with any audit or information request with respect to any
Taxes referred to in subsection (D) above; and
(F) The party requesting assistance or cooperation shall bear
the other party's out-of-pocket expenses in complying with such
request to the extent that those expenses are attributable to fees
and other costs of unaffiliated third-party service providers.
(n) Future Elections. Without Purchaser's consent, which
shall not be unreasonably withheld, the Seller and Kodak will refrain, and
will cause each of its Affiliates and the Subsidiaries (excluding, after
the Closing, the Transferred Subsidiaries and their subsidiaries) to
refrain, from making, filing, or entering into any election, consent, or
agreement relating to Taxes with respect to the Transferred Subsidiaries or
any of their subsidiaries which may have any material adverse impact upon
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the Purchaser, any of the Transferred Subsidiaries or the Business, except
for extensions of the statute of limitations with respect to Tax Returns of
the U.S. Federal, state or local affiliated, consolidated, combined or
unitary group with respect to which Kodak or Seller is the common parent.
(o) Arbitration of All Disputes. In the event that Seller and
Kodak, on the one hand, and Purchaser, on the other, cannot agree on any
calculation of any amount relating to Taxes or the interpretation or
application of any provision of this Agreement relating to Taxes, such
dispute shall be resolved by the CPA Firm, whose decision shall be final
and binding upon all parties involved and whose expenses shall be divided
equally between Kodak, on the one hand, and Purchaser, on the other.
(p) Powers of Attorney. At least 15 days prior to Closing,
Kodak will provide, or cause to be provided, to Purchaser a schedule
listing any powers of attorney which were granted by any Transferred
Subsidiary and are outstanding as of such date. At least 5 days prior to
Closing, Purchaser shall provide Kodak with a schedule listing which of
those powers of attorney Purchaser wants terminated as of the Closing, and
immediately prior to the Closing Kodak will terminate, or cause to be
terminated, each such power of attorney appearing on the schedule provided
by Purchaser.
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Section 5.5 Post-Closing Obligations of the Business to
Certain Employees.
(a) Purchaser shall assume the collective bargaining
agreements set forth on Schedule 3.14 to the extent permitted under such
agreements and shall offer employment on the Closing Date to the same
extent provided by Seller immediately prior to the Closing Date to the
bargaining unit employees Related to the Business covered by such
agreements.
(b) Purchaser shall offer employment at the same salary rate,
at the same location (or within 30 miles thereof) and with comparable
responsibilities to all Active Employees on the Closing Date. Purchaser
shall offer employment to all Inactive Employees when they are eligible to
return to active service; provided, however, that no such employee shall be
entitled to reinstatement to active service if he is incapable of working
in accordance with the policies, practices and procedures of Purchaser, his
return to employment is contrary to the terms of his leave, or he does not
have any right to reinstatement under Seller's written employment policies
(or non-written policies described in Schedule 3.10(a)) or applicable Law.
Active and Inactive Employees shall sometimes be referred to herein as
"Transferred Employees."
(c) Purchaser will maintain for a period of two years after
the Closing Date, without interruption, a
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severance pay plan covering U.S. Transferred Employees from their date of
employment with Purchaser which provides, under the terms of such plan,
severance pay for such U.S. Transferred Employees which is equal to the
greater of (i) the amount of severance pay that would have been available
to them under the Seller's severance pay plan set forth on Schedule 3.10(a)
and applicable to such Employees prior to the Closing Date, or (ii) the
amount of severance pay that would be available to them under the
Purchaser's severance pay plan applicable to such Employees. Purchaser
will also provide coverage for U.S. Transferred Employees under its other
employee benefit plans and programs and its incentive compensation plans
and programs which is no less favorable than that generally provided from
time to time by Purchaser to similarly situated employees of its United
States business. Purchaser will provide coverage for non-U.S. Transferred
Employees under its employee benefit plans and programs and its incentive
compensation plans and programs which is no less favorable than that
generally provided from time to time by Purchaser to its similarly situated
employees in the applicable jurisdictions. Transferred Employees shall be
given credit, without duplication, for all service with Seller or any
Subsidiary or Affiliate (or service credited by Seller or any Subsidiary or
Affiliate) under (i) all employee benefit plans, programs and policies, and
fringe benefits of the
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Purchaser in which they become participants for purposes of eligibility
(including eligibility for early retirement) and vesting, but not for
purposes of calculating the amount of the matching contributions under
Purchaser's Savings Investment Plan, and (ii) the Purchaser's vacation,
service award and severance plans for purposes of calculating the amount of
each Transferred Employee's benefits under such plans. For purposes of
calculating benefit accruals under Purchaser's defined benefit pension
plan, Purchaser shall credit, without duplication of benefits, Transferred
Employees with their service with Seller or any Subsidiary or Affiliate (or
service credited by Seller or any Subsidiary or Affiliate) under Seller's
defined benefit pension plan applicable to such Employees.
(d) "Active Employees" means all active, non-bargaining unit
Employees whose employment is Related to the Business, including employees
on temporary leave for purposes of jury or annual two-week national
service/military duty and employees on vacation or a regularly scheduled
day off from work. "Inactive Employees" means all non-bargaining unit
Employees (other than Former Employees) whose employment is Related to the
Business and who on the Closing Date are on a Nonmedical Leave, short-term
disability or a medical leave of absence. Employees of Seller who perform
services with respect to the Business and the DIY Business have been
allocated equitably on a full-
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time basis to the Business or DIY Business. Prior to the Closing Date,
Seller shall provide Purchaser with a complete and correct list of current
and former employees of the DIY Business as of a date on or after the date
hereof, together with such other information regarding such employees as
the Purchaser may reasonably request.
(e) Effective as of the Closing Date, Purchaser shall cause
one or more defined contribution plans (the "Transferee Savings Plans") to
be established for or to accept the transfer of account balances of
Employees who were participants in the L&F Products Employee Savings Plan I
and the L&F Products Employee Savings Plan II (the "Seller Savings Plans").
Such Employees are referred to hereinafter as the "Savings Plan Employees".
Seller shall cause to be transferred from the Seller Savings
Plans to the Transferee Savings Plans the liability for the account
balances as of the date of transfer of the Savings Plan Employees, together
with cash equal to such liability, and Purchaser shall cause the Transferee
Savings Plans to accept such transfers. The transfer of cash shall take
place within 90 days after the Closing Date; provided, however, that in no
event shall such transfer take place until the later of (i) the furnishing
to Seller by Purchaser of a favorable determination letter from the
Internal Revenue Service with respect to the qualification of the
Transferee Savings Plans under Section 401(a)
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of the Code, as amended to comply with changes to the qualification
requirements of Section 401(a) of the Code made by the Tax Reform Act of
1986 and other recent legislation and regulations and (ii) the receipt by
Seller of favorable determination letters from the Internal Revenue Service
with respect to the continued qualification of the Seller Savings Plans
under Section 401(a) of the Code, as amended to comply with changes to the
qualification requirements of Section 401(a) of the Code made by the Tax
Reform Act of 1986 and other recent legislation and regulations.
(f) Effective as of the Closing Date, Purchaser shall amend or
establish one or more defined benefit plans (the "Transferee Pension
Plans") to accept the transfer of accrued benefits of Employees who
participated in the Kodak Retirement Income Plan, the Sterling Products
International Inc. Pension Plan for Salaried Employees who are Employed at
Facilities Located in Puerto Rico and the Retirement Income Plan for the
Hourly Employees of L&F Products (the "Seller Retirement Plans"). Such
Employees are referred to hereinafter as the "Retirement Plan Employees").
The Transferee Pension Plans shall provide, upon the transfer of assets
referred to below, that the benefit liabilities of the Retirement Plans
Employees under the Transferee Pension Plans shall in no event be less than
their benefit
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liabilities under the Seller Retirement Plans as of the Closing
Date.
With respect to each Seller Retirement Plan, Kodak, Seller or
Sterling, as applicable, shall cause to be transferred from the trust under
such Seller Retirement Plan to the trust under the applicable Transferee
Pension Plan cash equal to the product of (x) times (y), where (x) equals
the fair market value of the assets of each Seller Retirement Plan on the
date of actual transfer of assets from the trust thereunder to the trust
under the applicable Transferee Pension Plan, and (y) equals a fraction,
the numerator of which is the present value of the benefit liabilities on a
termination basis of the Retirement Plan Employees under the applicable
Seller Retirement Plan as of the effective date of the transfer (the last
day of the calendar month in which Closing Date occurs) and the denominator
of which is the present value of the benefit liabilities on a termination
basis of all participants in the applicable Seller Retirement Plan as of
the effective date of the transfer (the last day of the calendar month in
which Closing Date occurs); provided, however, that the benefits of the
Retirement Plan Employees shall be calculated as if the credited service
for each Retirement Plan Employee continued to accrue through the last day
of the calendar month in which the Closing Date occurs.
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Purchaser shall cause the Transferee Pension Plans to accept such
transfers.
The "Pension Shortfall Amount" shall be equal to the excess, if
any, of (x) the "accumulated benefit obligations" (as defined in Statement
of Financial Accounting Standards No. 87) of the Retirement Plan Employees
under such Seller Retirement Plan as of the Closing Date, calculated using
(i) the same census data and the same precision as for purposes of Section
414(l) of the Code and (ii) the actuarial assumptions that were used in
preparing the audited financial statements of Seller for the year ended
December 31, 1993, except that the interest rate assumption shall be equal
to the sum of (A) the yield to maturity of 30-year U.S. Treasury bonds on
the Closing Date and (B) 75 basis points over (y) the amount actually
transferred to the applicable Transferee Pension Plan.
The amount to be transferred shall be equitably adjusted to
take into account non-investment receipts and disbursements of the Seller
Retirement Plans (i) after the Closing Date but prior to the date of
transfer provided for in this subparagraph, such as distributions and
contributions and (ii) relating to plan-to-plan transfers after the date
hereof. The amounts under the preceding two paragraphs shall be determined
by the actuary for the Seller Retirement Plan and reviewed and approved
(such approval not to be unreasonably withheld) as being done in accordance
with the
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methodology and assumptions set forth in this Section 5.5(f) by the
actuary
for the Transferee Pension Plan. The Seller Retirement Plans shall not be
amended on or after the date hereof through the Closing Date to increase
the benefit liabilities under such Plans.
The benefit liabilities under each Seller Retirement Plan shall
be valued as of the effective date of the transfer (the last day of the
calendar month in which the Closing Date occurs), on the basis of the
actuarial assumptions for the applicable Seller Retirement Plan as
contained in the most recent actuarial report for such Plan that is
available as of the date of this Agreement, as determined by the actuary
for the Seller Retirement Plan and reviewed by the actuary for the
Transferee Pension Plan.
The transfer of cash referred to above shall take place within
180 days after the Closing Date; provided, however that in no event shall
such transfer take place until the last to occur of the following:
(i) Purchaser has furnished to Kodak, Seller or Sterling, as applicable, a
favorable determination letter from the Internal Revenue Service with
respect to the qualification of the applicable Transferee Pension Plan
under Section 401(a) of the Code, as amended to comply with changes to the
qualification requirements of Section 401(a) of the Code made by the Tax
Reform Act of 1986 and other recent legislation and regulations, (ii) the
receipt by Kodak, Seller or Sterling,
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as applicable, of a favorable determination letter from the Internal
Revenue Service with respect to the continued qualification of the
applicable Seller Retirement Plan under Section 401(a) of the Code, as
amended to (A) comply with changes to the qualification requirements of
Section 401(a) of the Code made by the Tax Reform Act of 1986 and other
recent legislation and regulations and (B) provide for the transfer of
assets and benefit liabilities referred to in this Section, and (iii) the
receipt of any other necessary governmental approval.
Notwithstanding anything contained in this Section to the
contrary, (A) in the event that the Internal Revenue Service or any other
governmental agency takes the position in a determination letter, ruling,
advisory opinion or other written or oral communication that the transfer
of assets referred to in this Section cannot be made unless (i) additional
contributions are made to a Seller Retirement Plan or a Transferee Pension
Plan or (ii) a Seller Retirement Plan retains primary or secondary
liability with respect to the benefit liabilities under such Seller
Retirement Plan attributable to Retirement Plan Employees or (B) in the
event that a lawsuit is instituted by any of the foregoing or by one or
more participants in, or fiduciaries (other than Seller, Sterling, Kodak or
Purchaser) of, a Seller Retirement Plan or a Transferee Pension Plan which
seeks to enjoin such transfer, to require additional contributions to
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a Seller Retirement Plan or Transferee Pension Plan, or to have a Seller
Retirement Plan remain liable in whole or in part with respect to any of
the benefit liabilities under such Seller Retirement Plan attributable to
Retirement Plan Employees, then the transfer of assets referred to in this
Section from such Seller Retirement Plan will not be made until the
earliest of (I) the date the issues raised by the Internal Revenue Service
or any other governmental agency or such lawsuit are resolved favorably,
and Seller, Sterling or Kodak and, as applicable, the Seller Retirement
Plan shall make every effort in good faith to carry out the asset transfer,
including, but not limited to, the vigorous defense of any lawsuit
described in clause (B), and the exhaustion of all rights of available
judicial review and appeal, or (II) the date Seller and Purchaser, Sterling
and Purchaser, or Kodak and Purchaser, as applicable, enter into a written
agreement to resolve on a basis mutually satisfactory to them the issues
raised by the Internal Revenue Service or any other governmental agency or
such lawsuit.
Pending the completion of the transfers described in this
paragraph (f), Seller, Sterling or Kodak, as applicable, and Purchaser
shall make arrangements for any required payments to the Retirement Plan
Employees from the Seller Retirement Plans. Seller and Purchaser shall
provide
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each other with access to information reasonably necessary in order to
carry out the provisions of this paragraph.
(g) Purchaser shall waive any preexisting condition
limitations for such conditions covered under Seller's medical, health or
dental plans and shall honor any deductible and out of pocket expenses
incurred by Employees and their beneficiaries under Seller's medical,
dental or health plans during the portion of the calendar year preceding
the Closing Date. Purchaser shall waive any medical certification under
its group term life insurance plan for any Employees up to the amount of
coverage such Employee had under Seller's life insurance plan (but subject
to any limits on the maximum amount of coverage under Purchaser's life
insurance plan).
(h) Sterling shall retain the liability for amounts payable
under the Sterling Winthrop Inc. Deferred Compensation Plan, Sterling
Winthrop Inc. Supplemental Executive Retirement Plan and Sterling Winthrop
Inc. Foreign Service Pension Plan (the "Sterling Foreign Service Pension
Plan") to all employees of Sterling and its subsidiaries who, on or before
the closing date under the Asset Purchase Agreement among Kodak, Sterling
and Sanofi (the "Sanofi Agreement"), have retired, are receiving or are
eligible to receive long-term disability benefits, or have otherwise
terminated employment, and to the beneficiaries and survivors of such
employees (herein referred to collectively
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as the "Pre-Sanofi Closing Date Former Employees"). Purchaser shall pay to
Sterling quarterly on an estimated basis, within 30 days, in accordance
with Seller's statement of the estimated annual cost of the amounts payable
to the Pre-Sanofi Closing Date Former Employees under such Plans, an amount
equal to the result of multiplying one-fourth of such annual cost for each
such Plan by a fraction, the numerator of which is equal to the number of
U.S. Active Employees on the closing date under the Sanofi Agreement, and
the denominator of which is equal to the number of U.S. active employees of
Sterling and all of its subsidiaries on the closing date under the Sanofi
Agreement (which must be on or before the Closing Date for purposes of this
Section 5.5(h)). (The determination of whether an employee of Sterling and
its subsidiaries is an active employee shall be determined using the
principles set forth in Section 5.5(d); provided, however, that with
respect to the Foreign Service Pension Plan such fraction shall be
determined on the basis of non-U.S. Active Employees and non-U.S. active
employees of Sterling and its subsidiaries.) Any overpayment or
underpayment of such annual cost shall be adjusted within 60 days after
Sterling furnishes to Purchaser a statement of such annual costs (subject
to review and acceptance by Purchaser), by a payment to Sterling or to
Purchaser, as applicable.
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(i) Purchaser shall assume the liability for amounts payable
under the L&F Products Inc. Deferred Compensation Plan, L&F Products Inc.
Supplemental Executive Retirement Plan and certain other liabilities
described in Schedule 5.5(i) to all Former Employees, except as provided in
Section 5.5(h).
(j) Purchaser shall assume the liability for, and honor the
terms and conditions of, all executive employment agreements of Active and
Inactive Employees in effect on the date of this Agreement. All employment
contracts covering U.S. Active or Inactive Employees or key non-U.S. Active
or Inactive Employees are listed on Schedule 5.5(j).
(k) Sterling and Purchaser shall use their best efforts to
provide for transfers of assets and liabilities from Seller's non-U.S.
benefit plans with respect to Transferred Employees in a manner consistent
with the general principles expressed in this Section.
Section 5.6 Compliance with WARN, etc. Purchaser with respect
to the Active and Inactive Employees will timely give all notices required
to be given under WARN or other similar statutes or regulations of any
jurisdiction relating to any plant closing or mass layoff or as otherwise
required by any such statute, and Seller shall reasonably cooperate with
Purchaser to enable Purchaser to provide such notices. For this purpose,
Purchaser shall be deemed to have caused a mass layoff if the mass layoff
would not have
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occurred but for Purchaser's failure to offer employment to the Active or
Inactive Employees in accordance with the terms of this Agreement.
Section 5.7 Compliance with State Property Transfer Statutes.
(a) The parties shall use their reasonable efforts to comply with all
requirements of applicable state property transfer statutes, including,
without limitation, the New Jersey Industrial Site Recovery Act ("ISRA")
and the Illinois Responsible Property Transfer Act ("ILRPTA"), as may be
required by the relevant governmental authorities. Seller, Sterling and
Kodak agree to provide Purchaser with any documents to be submitted to the
relevant governmental authorities prior to submission, and Seller, Sterling
and Kodak shall not take any action to comply with such statutes without
Purchaser's prior consent, which consent shall not be unreasonably
withheld.
(b) Seller agrees to cooperate with Purchaser and to assist
Purchaser by identifying the Environmental Permits required by Purchaser to
operate the Business from and after the Closing Date and either
transferring existing Environmental Permits of Seller, Sterling and their
Subsidiaries, where permissible, or obtaining new Environmental Permits for
Purchaser.
Section 5.8 Further Assurances. At any time after the Closing
Date, Seller, Sterling and Kodak, on the one hand, and Purchaser, on the
other hand, shall promptly
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execute, acknowledge and deliver any other assurances or documents
reasonably requested by the other, as the case may be, and necessary for
it, as the case may be, to satisfy its respective obligations hereunder or
obtain the benefits contemplated hereby.
Section 5.9 Use of Corporate Names. Except as set forth in
the subsections of this Section 5.9, after the Closing, Purchaser shall not
use any of the Sterling Trademarks.
(a) For a period of nine months after the Closing, Purchaser
may continue to use the Sterling Trademarks on signage, invoices and
stationery;
(b) For a period of nine months after the Closing, or until
inventory of labels, packaging, nameplates and promotional materials are
exhausted (whichever occurs first), Purchaser may continue to use the
Sterling Trademarks on labels, packaging, nameplates and promotional
materials in existence as of the Closing Date and marked with Sterling
Trademarks; Purchaser may apply such labels, nameplates and packaging only
to inventory of Product that is in existence as of the Closing Date, which
was manufactured by Seller.
Section 5.10 Certain Matters Involving the Intellectual
Property. On or before the Closing Date Kodak, Sterling and Seller will
take, or cause to be taken, at their expense, all necessary steps to record
with the
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appropriate United States governmental agencies the transfer from
Seller,
Sterling, Kodak or any of their Affiliates, as the case may be, to
Purchaser of all Intellectual Property previously registered or patented in
the United States. As soon as practicable after the Closing Date Kodak,
Sterling and Seller will take, or cause to be taken, at their expense, all
necessary steps to record with the appropriate foreign governmental agents
the transfer of all Intellectual Property previously registered or patented
in such jurisdictions and to otherwise record or evidence Purchaser's
rights in and to the Intellectual Property, including the filing or
amendment of any registered user certificates, licenses, agreements or
similar documents.
Section 5.11 [Intentionally omitted.]
Section 5.12 Transition Services. On the Closing Date,
Purchaser shall execute and deliver, and Kodak shall cause Seller or an
Affiliate of Seller other than Sterling to execute and deliver, a
transition services agreement, in form and substance reasonably
satisfactory to Purchaser, pursuant to which (i) for a period of one year
following the Closing Date, Sterling shall make available to Purchaser, to
the extent requested, the support and administrative services currently
being provided to the Business on terms, and for a price equal to
Sterling's fully allocated cost determined on a basis, substantially
consistent with Sterling's recent historical practice, including, without
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limitation, computer and data processing services and any
software
associated therewith, customer billing services, customer equipment
services, services related to the maintenance of Intellectual Property, the
use of office and warehouse facilities and related site services, utility
services, distribution services and maintenance services for equipment
included in the Transferred Assets (such services, "Transition Services"),
and (ii) Purchaser shall enter into an agreement with Seller or any
purchaser of the DIY Business, in form and substance reasonably
satisfactory to Seller or such purchaser, pursuant to which Purchaser shall
make available to Seller, or any purchaser of the DIY Business, to the
extent requested, on terms, and for a price equal to Purchaser's fully
allocated cost determined on a basis substantially consistent with
Sterling's recent historical practice, such Transition Services as are
currently being provided to the DIY Business for a period ending one year
after the closing of the sale of the DIY Business (but in any event not
later than two years from the date hereof).
Section 5.13 Supply Agreements. (a) At the Closing,
Purchaser and Sterling shall execute and deliver a supply agreement (the
"Sterling Supply Agreement"), in form and substance reasonably satisfactory
to Purchaser, pursuant to which Sterling shall agree to maintain in place
all arrangements existing on the Closing Date that provide for
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the supply by Sterling of materials to the Business for a period of three
years from the Closing Date.
(b) At the Closing, Purchaser and Seller or the purchaser of
the DIY Business shall execute and deliver a supply agreement (the "DIY
Supply Agreement"), in form and substance reasonably satisfactory to
Purchaser, pursuant to which Seller or the purchaser of the DIY Business,
as the case may be, shall agree to maintain in place all arrangements
existing on the Closing Date that provide for the supply by Seller or the
purchaser of the DIY Business, as the case may be, of materials to the
Business for a period of three years from the Closing Date.
(c) At the Closing, Purchaser and (as designated by Kodak)
Seller or the purchaser of the DIY Business shall execute and deliver a
supply agreement (the "Purchaser Supply Agreement"), in form and substance
reasonably satisfactory to Seller or the purchaser of the DIY Business, as
the case may be, pursuant to which Purchaser shall agree to maintain in
place all arrangements existing on the Closing Date that provide for the
supply by Purchaser of materials to the DIY Business for a period of three
years from the Closing Date.
Section 5.14 No Shopping. Kodak, Sterling and Seller agree
that they shall not, and shall not permit their Affiliates or
representatives to, directly or indirectly, in any way contact, initiate,
solicit, enter into or conduct
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any discussions or negotiations, or enter into any agreement, whether
written or oral, with any Person with respect to the direct or indirect
sale of the Business or the Transferred Assets (except, in the latter case,
in the ordinary course of business). Kodak shall, immediately upon receipt
thereof by any officer of Kodak, Sterling or Seller or any of their
respective Affiliates, notify Purchaser of the existence and terms of any
contact, proposal or offer with respect to any of the foregoing.
Section 5.15 Non-Compete. Each of Kodak, Sterling and Seller
agrees that, for a period of five years from the Closing Date, neither
Kodak, Seller any of Seller's Subsidiaries nor any of their respective
transferees, successors or assignees will compete with the Business as
conducted on the Closing Date; provided, however, that this provision shall
not (i) apply to the purchaser of the DIY Business except in respect of the
use of shared Intellectual Property, if any, or (ii) prohibit Kodak from
owning less than 10% in the aggregate of any Person's voting securities, if
none of the employees of Seller, Kodak or their affiliates is involved in
any way in the management of such Person.
Section 5.16 PineSol Litigation. Notwithstanding any other
provision of this Agreement to the contrary, immediately following the
Closing Purchaser shall assume, and shall thereafter have the sole power to
direct and
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control, the defense of the PineSol Litigation. Purchaser shall provide on
a periodic basis such information, including the opportunity for
discussions with counsel, as Seller shall reasonably request and shall not
adversely affect the preservation of Purchaser's attorney-client privilege
regarding the status of and developments with respect to the PineSol
Litigation. Purchaser agrees that it shall not, without the prior written
consent of Kodak, settle, compromise or offer to settle or compromise the
PineSol Litigation on a basis which would result in the imposition of
monetary damages with respect to the period prior to the Closing Date
without the consent of Kodak, which consent shall not be unreasonably
withheld. Prior to the Closing, Kodak, Sterling and Seller agree to
diligently defend the PineSol Litigation and not to file or amend any
pleadings or alter their defense strategy without the consent of Purchaser
(which shall not be unreasonably withheld). In addition, Kodak, Sterling
and Seller agree not to settle, compromise or offer to settle or compromise
the PineSol Litigation without the consent of Purchaser.
Section 5.17 Insurance. (a) Kodak and Seller
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shall, until the Closing, maintain insurance coverage with respect to the
Business and the Transferred Assets at presently existing levels. At the
closing, Kodak and Purchaser shall enter into a mutually satisfactory claim
service agreement on terms substantially in accordance with Schedule 5.17.
(b) With respect to property insurance underwritten by all
insurance companies that are not Affiliates of Kodak, Kodak or Seller will
promptly file and diligently prosecute all claims relating to any Loss
suffered by the Business after December 31, 1993 that is covered by such
insurance. To the extent that Kodak or Seller receives payment in respect
of any such claim Kodak or Seller will either (a) apply the amounts
received to the Business in the event such amounts are received prior to
Closing or (b) pay over such amounts to Purchaser. To the extent
permissible under the terms of such insurance policies and applicable Law,
Kodak or Seller shall cause Purchaser to be a named beneficiary under such
insurance policies and, as of the Closing Date, to assign outstanding
claims to Purchaser.
(c) With respect to insurance covering liability to third
parties underwritten by all insurance companies that are not Affiliates of
Kodak and that is written on a claims-made basis, Kodak or Seller will
promptly file and diligently prosecute all claims relating to any liability
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that constitutes or would constitute an Assumed Liability and that is
covered by such insurance. To the extent that Kodak or Seller receives
payment in respect of any such liability which had not been discharged by
Seller prior to Closing, Kodak or Seller will either apply such amounts to
discharge (to the extent of such amounts) such liability prior to the
Closing or pay over such amounts to Purchaser at or after Closing, in
either case promptly after the receipt thereof by Kodak or Seller. Seller
will assign outstanding claims to Purchaser as of the Closing Date.
(d) With respect to insurance of Seller covering liability to
third parties that is written on an occurrence basis, to the extent Seller
receives payment in respect of any claim relating to a liability that
constitutes or would constitute an Assumed Liability and has not been
discharged prior to Closing, Seller will either apply such amounts to
discharge (to the extent of such amounts) such liability prior to the
Closing or will pay over such amounts to Purchaser at or after Closing, in
either case promptly after receipt thereof by Seller. Seller shall, to the
extent permissible under the terms of such insurance policies and
applicable law, cause Purchaser to be a named beneficiary in respect of any
claims relating to Assumed Liabilities which had not been discharged by
Seller prior to Closing and, as of the Closing Date, to assign outstanding
claims to Purchaser.
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Section 5.18 Reserve. Seller hereby covenants and agrees to
prepare and deliver to Purchaser within 60 days after the date of this
Agreement a schedule (the "Reserve Schedule") which shall (i) restate the
short period reserve as reflected in Accrued Expenses in the Balance Sheet,
(ii) allocate such reserve into the categories of specified and non-
specified items with respect to liabilities arising from incidents that
occurred on or before December 31, 1993 and (iii) in accordance with GAAP
itemize each specified item included therein in reasonable detail.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Purchaser and
Seller. The obligations of the parties hereto to effect the Closing are
subject to the satisfaction (or waiver) prior to the Closing of the
following conditions:
(a) HSR and Other Competition Laws. All filings under U.S.
Antitrust Laws and any other applicable Competition Laws shall have been
made and any required waiting period under the such laws applicable to the
transactions contemplated hereby shall have expired or been earlier
terminated.
(b) No Injunctions. No court or governmental authority of
competent jurisdiction shall have enacted,
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issued, promulgated, enforced or entered any statute, rule, regulation, or
non-appealable judgment, decree, injunction or other order which is in
effect on the Closing Date and prohibits the consummation of the Closing.
(c) Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the shareholders of
Purchaser in accordance with the requirements of the London Stock Exchange.
Section 6.2 Conditions to the Obligations of Purchaser. The
obligation of Purchaser to effect the Closing is subject to the
satisfaction (or waiver) prior to the Closing, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller, Sterling and Kodak contained herein (i) that are
unqualified as to materiality shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing, as if made as of the Closing and (ii) that are
qualified as to materiality shall have been true and correct when made and
shall be true and correct as of the Closing, as if made as of the Closing
(except, in the case of both (i) and (ii), that representations and
warranties that are made as of a specific date need be true and correct in
all material respects or true and correct, as the case may be, only as of
such date), and Purchaser shall have received certificates to such effect
dated the Closing
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Date and executed by a duly authorized officer of Seller, by a duly
authorized officer of Sterling and by a duly authorized officer of Kodak.
(b) Covenants. The covenants and agreements of Seller,
Sterling and Kodak to be performed on or prior to the Closing shall have
been duly performed and Purchaser shall have received certificates to such
effect dated the Closing Date and executed by a duly authorized officer of
Seller, by a duly authorized officer of Sterling and by a duly authorized
officer of Kodak.
(c) Legal Opinions. Purchaser shall have received the
opinions of Seller's counsel, each dated as of the Closing Date, addressed
and reasonably satisfactory to Purchaser as to the matters set forth in
Schedule 6.2(c).
(d) Ancillary Agreements. Seller and Kodak shall have
executed and delivered the Ancillary Agreements.
(e) No Material Adverse Change. Since December 31, 1993, the
Business and the Transferred Assets shall not have suffered a Material
Adverse Change.
(f) Other Consents and Approvals. All required approvals
shall have been obtained under ISRA and ILRPTA, and all other required
consents, approvals, waivers, authorizations, notices and filings shall
have been obtained, which, if not obtained or made, would have a Material
Adverse Effect or would materially impair or delay the ability of Purchaser
to effect the Closing or to own the
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Transferred Assets and conduct the Business immediately following
the
Closing.
(g) Absence of Proceedings. No Proceeding shall have been
instituted by any Federal, state, local or foreign governmental authority
(i) to restrain or prohibit the consummation by Purchaser or any of its
Affiliates, or to invalidate, the transactions contemplated by this
Agreement in any material respect, or (ii) which may affect the right of
Purchaser or any of its Affiliates to own, operate or control, after the
Closing any Selected Marks or any other portion of the Transferred Assets
or the Business that is material to the Business taken as a whole.
Section 6.3 Conditions to the Obligations of Kodak and Seller.
The obligation of Seller to effect the Closing is subject to the
satisfaction (or waiver) prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained herein (i) that are unqualified as to
materiality shall have been true and correct in all material respects when
made and shall be true and correct in all material respects as of the
Closing, as if made as of the Closing, and (ii) that are qualified as to
materiality shall have been true and correct when made and shall be true
and correct as of the Closing (except that, in the case of both (i) and
(ii), representations and warranties that are made as of a specific date
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need be true and correct in all material respects or true and correct, as
the case may be, only as of such date), and Seller and Kodak shall have
received a certificate to such effect dated the Closing Date and executed
by a duly authorized officer of Purchaser.
(b) Covenants. The covenants and agreements of Purchaser to
be performed on or prior to the Closing shall have been duly performed, and
Seller and Kodak shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of Purchaser.
(c) Legal Opinions. Seller and Kodak shall have received the
opinions of the Purchaser's counsel, dated as of the Closing Date,
addressed and reasonably satisfactory to Seller and Kodak as to the matters
set forth in Schedules 6.3(c).
(d) Ancillary Agreements. Purchaser shall have executed and
delivered the Ancillary Agreements.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival. The representations and warranties of
Seller, Sterling and Kodak contained in this Agreement shall survive the
Closing for the respective periods set forth in this Section 7.1
notwithstanding any investigation at any time by or on behalf of Purchaser
and shall not be considered waived by Purchaser's consummation of the
purchase and sale under this Agreement with knowledge
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of any breach or misrepresentation by Seller, Sterling or Kodak. All of
the representations and warranties of Seller, Sterling and Kodak contained
in this Agreement and all claims and causes of action with respect thereto
shall terminate upon expiration of 24 months after the Closing Date, except
that (i) the representations and warranties in Sections 3.1, 3.2, 3.3, 3.4,
3.5, 3.6, 3.16, 3.17 and 3.22 shall have no expiration date, (ii) the
representation and warranty in Section 3.9 shall survive, with respect to
any Tax Return, until the applicable statute of limitations has run for any
such Tax Return required to be filed on or before the date of this
Agreement, (iii) the representation and warranty in Section 3.12 shall
survive for eight years, (iv) the representation and warranty in Section
3.13 shall survive for 42 months, and (v) the representations and
warranties of Purchaser contained in this Agreement shall have no
expiration date; it being understood that in the event notice of any claim
for indemnification under Section 7.2(i) or Section 7.3(a) (i), (ii) and
(vi) (insofar as related to Section 3.12) hereof shall have been given
(within the meaning of Section 9.1) within the applicable survival period,
the representations and warranties that are the subject of such
indemnification claim shall survive until such time as such claim is
finally resolved.
Section 7.2 Indemnification by Purchaser. Purchaser hereby
agrees that it shall indemnify, defend and
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hold harmless Seller, Sterling, Kodak, their Affiliates, and, if
applicable, their respective directors, officers, shareholders, partners,
attorneys, accountants, agents and employees and their heirs, successors
and assigns (the "Seller Indemnified Parties") from, against and in respect
of any damages, claims, losses, charges, actions, suits, proceedings,
deficiencies, taxes, interest, penalties, and reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees, removal costs,
remediation costs, closure costs, fines, penalties and expenses of
investigation and ongoing monitoring) (collectively, the "Losses") imposed
on, sustained, incurred or suffered by or asserted against any of the
Seller Indemnified Parties, directly or indirectly relating to or arising
out of:
(i) any breach of any representation or warranty made by
Purchaser contained in this Agreement for the period such representation or
warranty survives;
(ii) the Assumed Liabilities; and
(iii) any breach of any covenant or agreement of Purchaser
contained in this Agreement.
Section 7.3 Indemnification by Seller and Kodak.
(a) Seller and Kodak hereby agree, jointly and severally, that
they shall indemnify, defend and hold harmless Purchaser, its Affiliates
and, if applicable, their respective directors, officers, shareholders,
partners,
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attorneys, accountants, agents and employees and their heirs, successors
and assigns (the "Purchaser Indemnified Parties" and, collectively with the
Seller Indemnified Parties, the "Indemnified Parties") from, against and in
respect of any Losses imposed on, sustained, incurred or suffered by or
asserted against any of the Purchaser Indemnified Parties, directly or
indirectly relating to or arising out of:
(i) subject to Section 7.3(c) and 7.3(d), any breach of any
representation or warranty made by Seller, Sterling or Kodak contained in
this Agreement (other than Section 3.9 and Section 3.12) for the period
such representation or warranty survives;
(ii) any breach by Seller, Sterling or Kodak of the representation
and warranty contained in Section 3.9 for the period such representation
and warranty survives;
(iii) any and all Excluded Liabilities;
(iv) any breach of any covenant or agreement of Seller, Sterling
or Kodak contained in this Agreement;
(v) the failure of Seller or any of its Affiliates to comply with
the provisions of the "bulk transfer" or similar laws of any jurisdiction
in connection with the transactions contemplated by this Agreement (other
than Losses arising as a result of Purchaser's failure to discharge any
Assumed Liabilities);
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(vi) any breach of the representation and warranty made in Section
3.12 for the period such representation and warranty survives and any and
all Environmental Claims and Remedial Actions (including, without
limitation, any costs of compliance with ISRA) with respect to the Owned
Real Property and Leased Real Property to the extent resulting or arising
from the conduct of the Business prior to the Closing Date; provided,
however, that Seller and Kodak shall not be liable to the Purchaser
Indemnified Parties except to the extent the Losses arising from such
breaches, Environmental Claims and Remedial Actions exceed $5 million in
the aggregate and then only for 50% of all such Losses in excess thereof;
(vii) subject to Section 7.3(c), the employment or termination of
employment of Employees by Seller, Sterling or their respective Affiliates
prior to the Closing Date except (A) to the extent accrued on the Adjusted
Closing Balance Sheet, and (B) for liabilities assumed under Sections
5.5(i) and 5.6;
(viii) subject to Section 7.3(c), product liability Proceedings
arising out of occurrences on or prior to the Closing Date (whether any
such Proceeding arises before, on or after the Closing Date);
(ix) subject to Section 5.4(g), (i) all liabilities for Taxes
imposed with respect to the taxable periods, or portions thereof, ending on
or before the Closing Date,
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including, without limitation, any Taxes resulting from any Transferred
Subsidiary (or its subsidiaries) having been, or ceasing to be, included in
any consolidated, combined or unitary Tax Return that included a
Transferred Subsidiary (or its subsidiaries) for taxable periods, or
portions thereof, ending on or before the Closing Date and (ii) all
liabilities for Taxes of any member of a consolidated, combined or unitary
group of which a Transferred Subsidiary (or its subsidiaries) is or was a
member on or prior to the Closing Date, by reason of the application of
Treasury Department Regulation Section 1.1502-6 or a similar provision of
any state, local or foreign income tax law or regulation, except, with
respect to clause (i) or (ii), to the extent such Taxes are reflected as
Current Liabilities on the Adjusted Closing Balance Sheet; and
(x) the L&F Transfer.
(b) Seller's and Kodak's obligations under Section 7.3(a)(vi),
(vii) and (viii) shall survive with respect to any claim initially asserted
prior to the time the applicable statute of limitations has run but in no
event to any claim initially asserted beyond eight (8) years after the
Closing Date. Seller's and Kodak's obligation under Sections 7.3(a)(iii),
(iv), (v), (ix) and (x) shall be unlimited as to time.
(c) Seller and Kodak shall not be liable to the Purchaser
Indemnified Parties for any Losses with respect to
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the matters contained in Sections 7.3(a)(i), (vii) and (viii) except to the
extent (and then only to the extent) the Losses from such matters exceed an
aggregate amount equal to $20 million (the "Deductible") and then only for
all such Losses in excess thereof up to an aggregate amount equal to
$500 million (the "Cap"); provided, however, that the Cap shall not be
applicable to any Losses with respect to any breach of any representation
or warranty by Seller, Sterling or Kodak made in Sections 3.1, 3.2, 3.3,
3.4, 3.5, 3.6, 3.13, 3.16, 3.17 or 3.22 or with respect to the matters
contained in Section 7.3(a)(ii), (iii), (iv), (v), (vi), (ix) and (x).
Notwithstanding the foregoing, if Purchaser makes a claim against an
Indemnifying Party pursuant to Section 7.3(a) with respect to any matter
for which there exists in the short period reserve on the Adjusted Closing
Balance Sheet a specified item determined in accordance with Section
2.6(e), such specified item or any remaining portion thereof shall be
applied to satisfy such claim before Purchaser shall have any right to
indemnification, subject to this Section 7.3(c), from an Indemnifying Party
with respect to such claims.
(d) Solely for purposes of this Section 7.3, a breach of the
representations and warranties made in Sections 3.8, 3.11, 3.12 and 3.16(d)
and 3.16(f) shall be deemed to have occurred only and to the extent that
any such breach individually or in the aggregate for all such
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breaches under the specific representation, disregarding the phrase
"materially impair" or the qualification relating to Material Adverse
Effect, results in Losses of $1 million or more.
Section 7.4 Indemnification Procedures. With respect to third
party claims other than those relating to Taxes and the PineSol Litigation,
all claims for indemnification by any Indemnified Party hereunder shall be
asserted and resolved as set forth in this Section 7.4. In the event that
any written claim or demand for which an indemnifying party, Seller, Kodak
or Purchaser as the case may be (an "Indemnifying Party") would be liable
to any Indemnified Party hereunder is asserted against or sought to be
collected from any Indemnified Party by a third party, such Indemnified
Party shall promptly, but in no event more than 15 days following such
Indemnified Party's receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim
Notice"). The Indemnifying Party shall have 30 days from the personal
delivery or mailing of the Claim Notice, except in the case of a claim or
demand that includes the filing of legal process in which case the
Indemnifying Party shall have no more than 1/2 the applicable statutory
period for answering such process (in
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either such case, the "Notice Period") to notify the Indemnified Party (a)
whether or not the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such
claim or demand, and (b) for any claim or demand that asserts a liability
of $1 million or more (or which from its face appears reasonably likely to
assert a liability of $1 million or more), whether or not it desires to
defend the Indemnified Party against such claim or demand; provided,
however, that the Indemnifying Party shall not have the right to defend
against any such claim or demand if the Indemnifying Party disputes its
liability with respect thereto. All costs and expenses incurred by the
Indemnifying Party in defending such claim or demand shall be a liability
of, and shall be paid by, the Indemnifying Party. If the liability of the
Indemnifying Party with respect to such claim or demand is subject to a
deductible pursuant to Section 7.3(a)(vi) or 7.3(c) hereof that has not yet
been fully satisfied, the Indemnified Party shall either, at its election,
(i) reimburse the Indemnifying Party for any amount actually incurred by
the Indemnifying Party up to the amount of the remaining applicable
deductible or (ii) increase the applicable deductible by an amount equal to
the lesser of the amount actually incurred by the Indemnifying Party and
the remaining amount of such applicable deductible. Except as hereinafter
provided, in
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the event that the Indemnifying Party notifies the Indemnified Party within
the Notice Period that it desires to defend the Indemnified Party against
such claim or demand, the Indemnifying Party shall have the right to defend
the Indemnified Party by appropriate proceedings and shall have the sole
power to direct and control such defense. If any Indemnified Party desires
to participate in any such defense it may do so at its sole cost and
expense. The Indemnified Party shall not settle a claim or demand without
the prior written consent of the Indemnifying Party. The Indemnifying
Party shall not, without (i) the prior written consent of the Indemnified
Party, settle, compromise or offer to settle or compromise any such claim
or demand on a basis which would result in the imposition of a consent
order, injunction or decree which would restrict the future activity or
conduct of the Indemnified Party or any subsidiary or affiliate thereof and
(ii) obtaining an unconditional release of all Indemnified Parties with
respect to such claim or demand. If the Indemnifying Party elects not to
defend the Indemnified Party against such claim or demand, whether by not
giving the Indemnified Party timely notice as provided above or otherwise,
then the amount of any such claim or demand, or, if the same be contested
by the Indemnified Party, then that portion thereof as to which such
defense is unsuccessful (and the reasonable costs and expenses pertaining
to such defense)
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shall be the liability of the Indemnifying Party hereunder, subject to the
limitations set forth in Section 7.3(c) hereof. The Indemnified Party will
give the Indemnifying Party and its counsel access to, during normal
business hours, the relevant business records and other documents, and
shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnified Party shall use its best efforts in the
defense of all such claims.
Section 7.5 Characterization of Indemnification Payments. All
amounts paid by Seller, Kodak or Purchaser, as the case may be, under
Article II (other than Section 2.7(b)), Article V or this Article VII shall
be treated as adjustments to the Purchase Price for all Tax purposes. Such
adjustments shall be allocated in a manner consistent with the allocation
provided in Section 5.4(e) hereof.
Section 7.6 Computation of Losses Subject to Indemnification.
The amount of any Loss for which indemnification is provided under Article
II (other than Section 2.7(b)) or this Article VII shall be computed net of
the actual decrease in income taxes paid as a result of realizing or
reflecting such Loss for Tax purposes (calculated in accordance with the
procedures and methodology set forth in Section 5.4(j) hereof) and net of
any insurance proceeds received by the Indemnified Party in connection with
such Loss.
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ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by agreement of Purchaser and Seller;
(b) by either Purchaser or Seller, by giving written notice of
such termination to the other party, if the Closing shall not have occurred
on or prior to March 31, 1995; provided that the terminating party is not
in material breach of its obligations under this Agreement;
(c) by either Purchaser or Seller if there shall be in effect
any law or regulation that prohibits the consummation of the Closing or if
consummation of the Closing would violate any non-appealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction;
(d) by either Purchaser or Seller if, as a result of action or
inaction by the other party, the Closing shall not have occurred on or
prior to the date that is 10 Business Days following the date on which all
of the conditions to Closing set forth in Section 6.1 or 6.2 are satisfied
or waived; and
(e) by either Purchaser or Seller if shareholder approval of
this Agreement and the transactions contemplated hereby shall not be given
at the extraordinary general
<PAGE>
<PAGE> 402
meeting of Purchaser's shareholders held pursuant to Section 5.3(c).
Section 8.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 8.1 hereof, this
Agreement shall thereafter become void and have no effect, and no party
hereto shall have any liability to the other party hereto or their
respective Affiliates, directors, officers or employees, except for the
obligations of the parties hereto contained in Sections 9.1, 9.7, 9.8 and
9.9, and except that nothing herein will relieve any party from liability
for any breach of this Agreement prior to such termination.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. All notices or other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended,
if delivered by registered or certified mail, return receipt requested, or
by a national courier service, or if sent by telecopier, provided that the
telecopy is promptly confirmed by telephone confirmation thereof, to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
<PAGE>
<PAGE> 403
To Purchaser:
RECKITT & COLMAN PLC
One Burlington Lane
London W4 2RW
Telephone: 011-44-81-994-6464
Telecopy: 011-44-81-994-8920
Attn: P. David Saltmarsh
With copies to:
RECKITT & COLMAN INC.
1655 Valley Road
Wayne, New Jersey 07474
Telephone: 201-633-3600
Telecopy: 201-633-3633
Attn: Lawrence J. Friedman
SATTERLEE STEPHENS BURKE & BURKE
230 Park Avenue
New York, NY 10169
Telephone: (212) 818-9200
Telecopy: (212) 818-9606/7
Attn: Gilman S. Burke
WEIL, GOTSHAL & MANGES
767 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Attn: Ellen J. Odoner
To Kodak:
EASTMAN KODAK COMPANY
343 State Street
Rochester, New York 14650
Telephone: (716) 724-4000
Telecopy: (716) 724-9448
Attn: General Counsel
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
Attn: Robert S. Risoleo
<PAGE>
<PAGE> 404
To Seller:
L&F PRODUCTS INC.
c/o Eastman Kodak Company
343 State Street
Rochester, New York 14650
Telephone: (716) 724-1932
Telecopy: (716) 724-9448
Attn: Kenneth K. Doolittle
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 883-3588
Attn: Robert S. Risoleo
Section 9.2 Amendment; Waiver. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Purchaser,
Seller and Kodak, or in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
Section 9.3 Assignment. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the prior
written consent of the other parties hereto; provided, however, that
Purchaser may
<PAGE>
<PAGE> 405
assign any or all of its rights and obligations under this Agreement to any
of its wholly-owned Subsidiaries without the consent of the other parties
hereto but such assignment shall not relieve Purchaser of any of its
obligations hereunder.
Section 9.4 Entire Agreement. This Agreement (including all
Schedules and Annexes hereto) contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to such
matters, except for the Confidentiality Agreement which will remain in full
force and effect until the Closing Date, when it shall terminate.
Section 9.5 Fulfillment of Obligations. Any obligation of any
party to any other party under this Agreement or any of the Ancillary
Agreements, which obligation is performed, satisfied or fulfilled by an
Affiliate of such party, shall be deemed to have been performed, satisfied
or fulfilled by the such party.
Section 9.6 Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer upon any Person other than
Purchaser, Seller, Kodak or their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
<PAGE>
<PAGE> 406
Section 9.7 Public Disclosure. Notwithstanding anything
herein to the contrary, each of the parties to this Agreement hereby agrees
with the other parties hereto that, except as may be required to comply
with the requirements of any applicable Laws or the rules and regulations
of each stock exchange upon which the securities of one of the parties is
listed and, in each such case, after notice to the other party, no press
release or similar public announcement or communication shall ever, whether
prior to or subsequent to the Closing, be made or caused to be made
concerning the execution or performance of this Agreement unless
specifically approved in advance by all parties hereto (such consent not to
be unreasonably withheld).
Section 9.8 Return of Information. If for any reason
whatsoever the transactions contemplated by this Agreement are not
consummated, Purchaser shall promptly destroy or return to Seller all Books
and Records furnished by Kodak, Seller, the Business or any of their
respective agents, employees, or representatives (including all copies, if
any, thereof), and shall not use or disclose the information contained in
such Books and Records for any purpose or make such information available
to any other entity or person.
Section 9.9 Expenses. Except as otherwise expressly provided
in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated,
<PAGE>
<PAGE> 407
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the party incurring such
expenses.
Section 9.10 Schedules. The disclosure of any matter in any
schedule to this Agreement shall be deemed to be a disclosure for all
purposes of this Agreement to which such matter could reasonably be
expected to be pertinent, but shall expressly not be deemed to constitute
an admission by Seller or Purchaser or to otherwise imply, that any such
matter is material for the purposes of this Agreement.
SECTION 9.11 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SELECTION OF FORUM. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO
AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTAINED
IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW
OR IN EQUITY, EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE STATE OF NEW YORK
FOR THE COUNTY OF NEW YORK (THE "CHOSEN COURTS") AND (I) IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II) WAIVES ANY
OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN
COURTS, (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION
<PAGE>
<PAGE> 408
OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF PROCESS UPON SUCH
PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS
GIVEN IN ACCORDANCE WITH SECTION 9.1 OF THIS AGREEMENT. PURCHASER
IRREVOCABLY DESIGNATES SATTERLEE STEPHENS BURKE & BURKE, 230 PARK AVENUE,
NEW YORK, NEW YORK 10169 AS ITS AGENT AND ATTORNEY IN FACT FOR THE
ACCEPTANCE OF SERVICE OF PROCESS AND MAKING AN APPEARANCE ON ITS BEHALF IN
ANY SUCH ACTION OR PROCEEDING AND TAKING ALL SUCH ACTS AS MAY BE NECESSARY
OR APPROPRIATE IN ORDER TO CONFER JURISDICTION OVER IT UPON THE CHOSEN
COURTS, AND PURCHASER STIPULATES THAT SUCH CONSENT AND APPOINTMENT IS
IRREVOCABLE AND COUPLED WITH AN INTEREST.
Section 9.12 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and
all of which shall constitute one and the same Agreement.
Section 9.13 Headings. The heading references herein and the
table of contents hereto are for convenience purposes only, do not
constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 9.14 Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
<PAGE>
<PAGE> 409
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision, and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity
or unenforceability, nor shall such invalidity or unenforceability affect
the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
EASTMAN KODAK COMPANY
By:
Name:
Title:
L&F PRODUCTS INC.
By:
Name:
Title:
STERLING WINTHROP INC.
By:
Name:
<PAGE>
<PAGE> 410
Title:
RECKITT & COLMAN PLC
By:
Name:
Title:
<PAGE>
<PAGE> 411
Exhibit 10(E)
Amendment No. 1 to the Asset Purchase Agreement
AMENDMENT NO.1 (this "Amendment"), dated as of October 28, 1994, to the
Asset Purchase Agreement (the "Agreement"), dated as of September 26, 1994,
among EASTMAN KODAK COMPANY, a New Jersey corporation, L&F PRODUCTS INC., a
Delaware corporation, STERLING WINTHROP INC., a Delaware corporation, and
RECKITT & COLMAN PLC, a public limited company incorporated under the laws of
England and Wales.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to amend the Agreement; and
WHEREAS, Section 9.2 of the Agreement permits amendments to the
Agreement by written instrument signed by Purchaser, Seller and Kodak;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
Amendments to the Agreement
1.1 Amendments to Article II. Article II of the Agreement is
hereby amended as follows:
Section 2.5(b) is hereby amended by deleting the word
"Sterling" in the second line and substituting the word "Seller" therefor.
1.2 Amendments to Article V. Article V of the Agreement is
hereby amended as follows:
Section 5.15 of the Agreement is hereby amended by adding
to the end of subsection (i) the phrase "the purchaser of the stock of
Sterling pursuant to the Sterling Stock Purchase Agreement or any of its
transferees or assigns (including any subsequent purchaser of the stock
thereof), and following the consummation of the sale of stock of Sterling
pursuant to the Sterling Stock Purchase Agreement, Sterling, L&F Products
Philippines, Inc., Sterling Winthrop (NZ) Ltd., Laboratories de Sterling de
Venezuela, S.A., Sterling Winthrop K.K., Sterling Winthrop (Australia) Pty.
Ltd., Maggioni Winthrop S.p.A., Winthrop A.G., Sterling Health AB, Sterling
Health A/S, Sterling Health OY, Laboratories Winthrop BV, or Sterling
Winthrop B.V., 225 Holdings Inc., Minwax Company, Mainway Warehouse, Inc.,
CXQ Limited and 964435 Ontario Inc. or".
<PAGE>
<PAGE> 412
ARTICLE II
Miscellaneous
2.1 Definitions. Capitalized terms used in this Amendment
and not defined herein shall have the meanings ascribed to them in the
Agreement.
2.2 Entire Agreement; Restatement. The Agreement, as amended
by this Amendment, is hereinafter referred to as the "Agreement", and the
parties hereto hereby agree that the Agreement may be restated to reflect
the amendments provided for in this Amendment.
2.3 Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
2.4 Counterparts. This Amendment may be executed in
counterparts, each of which shall be an original and all of which shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed or
caused this Amendment to be executed as of the date first written above.
EASTMAN KODAK COMPANY
By:
Name:
Title:
L&F PRODUCTS INC.
By:
Name:
Title:
RECKITT & COLMAN PLC
By:
Name:
Title:
<PAGE> 413
Conforming Copy
Exhibit 10(F)
ASSET PURCHASE AGREEMENT
among
EASTMAN KODAK COMPANY
and
L&F PRODUCTS INC.
and
STERLING WINTHROP INC.
and
MTF ACQUISITION CORP.
Dated as of October 13, 1994
<PAGE>
<PAGE> 414
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions . . . . . . . . . . . . . 420
Section 1.2 Other Terms . . . . . . . . . . . . . . . . . . 429
Section 1.3 Other Definitional Provisions . . . . . . . . . 430
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
Section 2.1 Purchase and Sale of Assets . . . . . . . . . . 430
Section 2.2 Excluded Assets . . . . . . . . . . . . . . . . 432
Section 2.3 Assumption of Liabilities . . . . . . . . . . . 434
Section 2.4 Excluded Liabilities . . . . . . . . . . . . . 437
Section 2.5 Purchase Price . . . . . . . . . . . . . . . . 439
Section 2.6 Business Post-Closing Adjustments . . . . . . . 439
Section 2.7 Closing . . . . . . . . . . . . . . . . . . . . 444
Section 2.8 Deliveries by Purchaser . . . . . . . . . . . . 446
Section 2.9 Deliveries by Seller and Kodak . . . . . . . . 447
Section 2.10 Removal of Seller's Other
Businesses from the Transferred
Subsidiary . . . . . . . . . . . . . . . . . 448
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND KODAK
Section 3.1 Organization and Qualification . . . . . . . . 449
Section 3.2 Subsidiaries . . . . . . . . . . . . . . . . . 449
Section 3.3 Corporate Authorization . . . . . . . . . . . . 450
Section 3.4 Consents and Approvals . . . . . . . . . . . . 451
Section 3.5 Non-Contravention . . . . . . . . . . . . . . . 452
Section 3.6 Binding Effect . . . . . . . . . . . . . . . . 453
Section 3.7 Financial Statements . . . . . . . . . . . . . 454
Section 3.8 Litigation and Claims . . . . . . . . . . . . . 454
Section 3.9 Taxes . . . . . . . . . . . . . . . . . . . . . 455
Section 3.10 Employee Benefits . . . . . . . . . . . . . . . 457
Section 3.11 Compliance with Laws . . . . . . . . . . . . . 460
Section 3.12 Environmental Matters . . . . . . . . . . . . . 460
Section 3.13 Intellectual Property . . . . . . . . . . . . . 462
Section 3.14 Collective Bargaining Agreements . . . . . . . 463
Section 3.15 Commitments . . . . . . . . . . . . . . . . . . 464
Section 3.16 Title to Property . . . . . . . . . . . . . . . 465
Section 3.17 Finders' Fees . . . . . . . . . . . . . . . . . 466
Section 3.18 Absence of Change . . . . . . . . . . . . . . . 467
Section 3.19 Insurance . . . . . . . . . . . . . . . . . . . 467
Section 3.20 Products . . . . . . . . . . . . . . . . . . . 468
<PAGE>
<PAGE> 415
Section 3.21 Undisclosed Liabilities . . . . . . . . . . . . 468
Section 3.22 No Other Representations or
Warranties . . . . . . . . . . . . . . . . . 469
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization and Qualification . . . . . . . . 469
Section 4.2 Corporate Authorization . . . . . . . . . . . . 470
Section 4.3 Consents and Approvals . . . . . . . . . . . . 470
Section 4.4 Non-Contravention . . . . . . . . . . . . . . . 471
Section 4.5 Binding Effect . . . . . . . . . . . . . . . . 472
Section 4.6 Finders' Fees . . . . . . . . . . . . . . . . . 472
Section 4.7 Financial Capability . . . . . . . . . . . . . 472
Section 4.8 No Other Representations or
Warranties . . . . . . . . . . . . . . . . . 472
ARTICLE V
COVENANTS
Section 5.1 Access . . . . . . . . . . . . . . . . . . . . 473
Section 5.2 Conduct of Business and Seller's
Other Businesses . . . . . . . . . . . . . . 473
Section 5.3 Reasonable Efforts; Good Faith . . . . . . . . 476
Section 5.4 Tax Matters . . . . . . . . . . . . . . . . . . 477
Section 5.5 Post-Closing Obligations of the
Business to Certain Employees . . . . . . . . 489
Section 5.6 Compliance with WARN, etc. . . . . . . . . . . 501
Section 5.7 Further Assurances . . . . . . . . . . . . . . 501
Section 5.8 Use of Corporate Names . . . . . . . . . . . . 501
Section 5.9 Transition Services . . . . . . . . . . . . . . 502
Section 5.10 Supply Agreement . . . . . . . . . . . . . . . 504
Section 5.11 Software License Agreement . . . . . . . . . . 505
Section 5.12 Insurance . . . . . . . . . . . . . . . . . . . 506
Section 5.13 Acquisition of Rights to
Confidentiality . . . . . . . . . . . . . . 509
Section 5.14 No Shopping . . . . . . . . . . . . . . . . . . 509
Section 5.15 Certain Litigation and Related
Matters . . . . . . . . . . . . . . . . . . 510
Section 5.16 Purchaser's Access . . . . . . . . . . . . . . . . 512
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of
Purchaser and Seller . . . . . . . . . . . . 512
Section 6.2 Conditions to the Obligations of
Purchaser . . . . . . . . . . . . . . . . . 513
<PAGE>
<PAGE> 416
Section 6.3 Conditions to the Obligations of
Kodak and Seller . . . . . . . . . . . . . . 514
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival . . . . . . . . . . . . . . . . . . . 515
Section 7.2 Indemnification by Purchaser . . . . . . . . . 517
Section 7.3 Indemnification by Seller, Sterling
and Kodak . . . . . . . . . . . . . . . . . 518
Section 7.4 Indemnification Procedures . . . . . . . . . . 521
Section 7.5 Characterization of Indemnification
Payments . . . . . . . . . . . . . . . . . . 523
Section 7.6 Computation of Losses Subject to
Indemnification . . . . . . . . . . . . . . 524
ARTICLE VIII
TERMINATION
Section 8.1 Termination . . . . . . . . . . . . . . . . . . 524
Section 8.2 Effect of Termination . . . . . . . . . . . . . 525
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices . . . . . . . . . . . . . . . . . . . . 526
Section 9.2 Amendment; Waiver . . . . . . . . . . . . . . . 527
Section 9.3 Assignment . . . . . . . . . . . . . . . . . . 528
Section 9.4 Entire Agreement . . . . . . . . . . . . . . . 528
Section 9.5 Fulfillment of Obligations . . . . . . . . . . 528
Section 9.6 Parties in Interest . . . . . . . . . . . . . . 528
Section 9.7 Public Disclosure . . . . . . . . . . . . . . . 529
Section 9.8 Return of Information . . . . . . . . . . . . . 529
Section 9.9 Expenses . . . . . . . . . . . . . . . . . . . 530
Section 9.10 Schedules . . . . . . . . . . . . . . . . . . . 530
SECTION 9.11 GOVERNING LAW; SUBMISSION TO
JURISDICTION; SELECTION OF FORUM . . . . . . 530
Section 9.12 Counterparts . . . . . . . . . . . . . . . . . 531
Section 9.13 Headings . . . . . . . . . . . . . . . . . . . 531
Section 9.14 Severability . . . . . . . . . . . . . . . . . 531
SCHEDULES AND EXHIBITS
ANNEXES
Annex 6.2(c) - Opinions of Seller's Counsel
Annex 6.3(c) - Opinions of Purchaser's Counsel
<PAGE>
<PAGE> 417
List of Schedules
Schedule 1.1(a) - Applicable Employees
Schedule 1.1(b) - Former Employees Schedule 1.1(c)
- - - Certain Individuals Employed by Kodak Schedule 1.1(d) -
Certain Individuals Employed by Purchaser Schedule 1.1(e) -
Certain Individuals Employed by Seller Schedule
1.1(f) - L&F Restructuring Notes Schedule 1.1(g)
- - - Leased Real Property Schedule 1.1(h) -
Owned Real Property Schedule 2.2(c) -
Excluded Litigation Schedule 2.2(i) - Certain Fixtures
and Equipment Schedule 2.3(f) - Certain Products
Schedule 2.6(b) - Closing Balance Sheet Basis of
Presentation
Schedule 3.1(a) - Exceptions to Qualification and Good
Standing Warranty
Schedule 3.2(a)(i) - Subsidiaries
Schedule 3.2(a)(ii) - Exceptions to Qualification and Good
Standing Warranty-Subsidiaries
Schedule 3.2(b) - Exceptions to Stock Ownership
Warranty Schedule 3.4 - Consents and
Approvals Schedule 3.5 -
Non-Contravention Schedule 3.7(a)(i) -
Financial Statements Schedule 3.7(a)(ii) - Basis of
Presentation and Exceptions
to GAAP
Schedule 3.8(a) - Litigation and Claims
Schedule 3.8(b) - Orders and Consent Agreements
Schedule 3.9 - Taxes
Schedule 3.10(a) - Employee Benefit Plans
Schedule 3.10(b) - Benefit Plan Litigation
Schedule 3.10(e) - Retiree Benefits Schedule 3.10(f)
- - - Unfunded Liabilities with Respect
to non-U.S. Employees
Schedule 3.11 - Exceptions to Compliance with Laws
Warranty
Schedule 3.12 - Environmental Matters
Schedule 3.13(a) - Intellectual Property (See Appendix)
Schedules 3.13(b)(i) - Exclusive License Agreements and
Restrictions of Use Concerning
Trademarks Listed in 3.13(b)(ii)
Schedule 3.13(b)(ii) - Encumbrances on selected DIY Trademarks
Schedule 3.14 - Collective Bargaining Agreements--U.S.
Schedule 3.15(i) - Commitments
Schedule 3.15(ii) - Certain Commitments
Schedule 3.15(iii) - Commitments in Default
Schedule 3.16(a) - Necessary Property
Schedule 3.16(b) - Encumbrances
Schedule 3.16(c) - Certain Structural Defects
<PAGE>
<PAGE> 418
Schedule 3.18 - Certain Exceptions to Absence of
Change
Schedule 3.19(a) - Insurance Schedule
3.19(b)(ii) - Claims Against Insurance Schedule
3.20 - Product Liabilities Schedule 3.21
- - - Undisclosed Liabilities Schedule 4.1 -
Organization and Qualification Schedule 4.3
- - - Consents and Approvals Schedule 4.4
- - - Non-Contravention Schedule 5.10 - Agreements to be
Maintained After the
Closing
Schedule 7.3 - Certain Litigation
Appendix 3.13(a)
<PAGE>
<PAGE> 419
ASSET PURCHASE AGREEMENT, dated as of October 13, 1994, among
EASTMAN KODAK COMPANY, a New Jersey corporation ("Kodak"), L&F PRODUCTS
INC., a Delaware corporation ("Seller"), STERLING WINTHROP INC., a Delaware
corporation ("Sterling") and MTF ACQUISITION CORP., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller, a wholly-owned direct subsidiary of Kodak, and
certain of its foreign subsidiaries, are the successors to the Do-It-
Yourself ("DIY") products businesses formerly conducted through the L&F
Products Division ("L&F") of Sterling, a wholly-owned indirect subsidiary
of Kodak; and
WHEREAS, the DIY products businesses conducted through Seller
and such foreign subsidiaries of Seller are the businesses formerly
conducted by Sterling's subsidiaries Minwax Company Inc., Thompson & Formby
Inc., L&F Products (UK) Limited and L&F Products Ireland Limited, as well
as the DIY businesses conducted by L&F and L&F Canada Inc., (including the
manufacturing, marketing, sales, distribution, support operations and
research and development activities related to the above-described
businesses and all inventories and other assets of such businesses) (the
"Business"); and
WHEREAS, the parties hereto desire that Seller sell, transfer
and assign to Purchaser, or cause to be sold, transferred and assigned to
Purchaser, and Purchaser purchase and assume from Seller or the transferor
thereof, the assets and
<PAGE>
<PAGE> 420
liabilities of the Business, all as more specifically provided
herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions. As used in this Agreement,
the following terms shall have the meanings set forth or as referenced
below:
"Accounts Payable to Kodak" shall mean all U.S. Intercompany Accounts
Payable that are outstanding at any time prior to the Closing to (x)
Kodak or (y) a U.S. Affiliate of Kodak that is not a Subsidiary.
"Accounts Receivable from Kodak" shall mean all U.S. Intercompany Accounts
Receivable that are outstanding at any time prior to the Closing from
(x) Kodak or (y) a U.S. Affiliate of Kodak that is not a Subsidiary.
"Adjusted Closing Balance Sheet" shall have the meaning set forth in
Section 2.6(c).
"Affiliates" shall mean, with respect to any Person, any Persons directly
or indirectly controlling, controlled by, or under common control
with, such other Person as of the date on which, or at any time
during the period for which, the determination of affiliation is
being made; provided, however, that with respect to Sterling,
"Affiliate" shall be deemed to exclude any Person that is not also an
Affiliate of Seller or Kodak.
"Agreement" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
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"Ancillary Agreements" shall mean the Transition Services Agreement, the
Supply Agreement and the Software License Agreement.
"Applicable Employees" shall have the meaning set forth in Section 5.5(b).
A list of the Applicable Employees as of the date of this Agreement
is set forth in Schedule 1.1(a).
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
"Balance Sheet", which is included in Schedule 3.7(a)(i) hereto, shall mean
the unaudited pro forma balance sheet of the Business at December 31,
1993.
"Benefit Plans" shall have the meaning set forth in Section 3.10(a).
"Books and Records" shall mean originals or copies of all books, ledgers,
files, reports, plans and operating records of, or maintained by, the
Business, as the case may be, except to the extent included in or
related to any Excluded Assets.
"Business" shall have the meaning set forth in the recitals of this
Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banks in New York City are authorized or obligated by law or
executive order to close.
"Chosen Courts" shall have the meaning set forth in Section 9.11.
"Claim Notice" shall have the meaning set forth in Section 7.4.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Balance Sheet" shall have the meaning set forth in Section 2.6(b).
"Closing Date" shall have the meaning set forth in Section 2.7(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitments" shall mean all agreements, contracts, leases, purchase
orders, arrangements, commitments and licenses that relate to the
Business or to which the Transferred Assets are subject.
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"Competition Laws" shall mean statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that
are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
"Confidentiality Agreement" shall mean the Agreement, dated August 19, 1994
between Purchaser and Kodak.
"Consideration" shall have the meaning set forth in Section 5.4(e).
"Continuation Coverage" shall have the meaning set forth in Section 5.5(d).
"Contracts" shall mean all agreements, contracts, leases, purchase orders,
arrangements, commitments and licenses that are Related to the
Business or to which the Transferred Assets are subject, except to
the extent included in the Excluded Assets.
"CPA Firm" shall have the meaning set forth in Section 2.6(c).
"Current Assets" shall mean all current assets of the Business other than
(i) Accounts Receivable from Kodak and (ii) the L&F Restructuring
Notes.
"Current Liabilities" shall mean all current liabilities of the Business
other than (i) short-term indebtedness for money borrowed, (ii)
Accounts Payable to Kodak, (iii) accrued and unpaid U.S. Federal,
state and local income Taxes with respect to the taxable periods, or
portions thereof, ending on or before the Closing Date and (iv) the
L&F Restructuring Notes.
"DIY" shall have the meaning set forth in the recitals to this Agreement.
"Due Date" shall mean, with respect to a Tax Return, the date on which such
Tax Return is due to be filed (taking into account all applicable
extensions).
"Employees" shall mean (i) all current employees of Seller or any Affiliate
who are dedicated to the Business and who are set forth on Schedule
1.1(a) and (ii) all former such employees retired from the Business
or with respect to whom Seller or any Affiliates has any liability
derived from the Business and who are listed on Schedule 1.1(b).
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"Encumbrances" shall mean liens, charges, encumbrances, security
interests,
options, or any other restrictions or third party rights.
"Environmental Law" shall mean any applicable federal, state, local or
foreign law, statute, ordinance, rule, regulation, code, order,
judgment, decree or injunction (other than Laws relating to Taxes)
relating to (x) the protection of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking
water supply, surface or subsurface land), (y) occupational safety
and health to the extent it relates to exposure to Hazardous
Substances, or (z) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling,
labelling, protection, release or disposal of, Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 3.10(c).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 2.4.
"Excluded Marks" shall have the meaning set forth in Section 2.2(l).
"FIFRA" shall mean the Federal Insecticide, Fungicide and Rodenticide Act,
as amended.
"Financial Statements" shall have the meaning set forth in Section 3.7(a).
"Fixtures and Equipment" shall mean all Tangible Property Related to the
Business, except to the extent included in the Excluded Assets.
"GAAP" shall mean United States generally accepted accounting principles.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required
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to carry on the Business as currently conducted under applicable Laws.
"Governmental Entity" shall mean any supernational, national, federal,
state or local judicial, legislative, executive or regulatory
authority.
"Hazardous Substances" shall mean any hazardous substances within the
meaning of 101(14) of CERCLA, 42 U.S.C. sec. 9601(14), or any
pollutant but including petroleum or any fractions thereof.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section 7.3(a).
"Indemnifying Party" shall have the meaning set forth in Section 7.4.
"Intellectual Property" shall mean the intellectual property rights Related
to the Business including: trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names and
other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications
in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or
application; inventions, discoveries and ideas, whether patentable or
not in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continua-
tions in-part and renewal applications), and any renewals, extensions
or reissues thereof, in any jurisdiction; computer software
(including software, data and related documentation); non-public
information, trade secrets, know-how (including, without limitation,
research and development, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings and specifications) and confidential information and rights
in any jurisdiction to limit the use or disclosure thereof by any
Person; writings and other works, whether copyrightable or not in any
jurisdiction; registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and
any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
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"Inventory" shall mean all inventory held for resale and all raw
materials,
work in process, finished products, wrapping, supply and packaging
items Related to the Business, except to the extent included in the
Excluded Assets.
"Investment Canada Act" shall mean the Investment Canada Act, R.S.C. ch. 20
(1985), as amended.
"Knowledge of Kodak" or any similar phrase means the actual knowledge of
the individuals listed in Schedule 1.1(c).
"Knowledge of Purchaser" or any similar phrase means the actual knowledge
of any of the individuals listed in Schedule 1.1(d).
"Knowledge of Seller" or any similar phrase means the actual knowledge of
the individuals listed on Schedule 1.1(e).
"Kodak" shall have the meaning set forth in the recitals.
"Kodak Transferred Assets" shall mean Transferred Assets that are on the
date hereof or will be, immediately prior to the Closing, owned
directly or indirectly by Kodak or subsidiaries of Kodak other than
Seller or the Subsidiaries.
"L&F Restructuring" shall mean the contemplated transfer of the Business
from Sterling and Sterling's DIY Subsidiaries to Seller and its
subsidiaries in accordance with the terms of the Stock Purchase
Agreement, dated as of August 28, 1994 (the "Sterling Stock Purchase
Agreement"), among Kodak, 343 Holding Corporation, a Delaware
corporation and wholly-owned direct subsidiary of Kodak, and
Smithkline Beecham, plc, an English corporation, pursuant to which
Kodak has agreed to sell the stock of Sterling to Smithkline Beecham
plc;
"L&F Restructuring Notes" shall mean those promissory notes entered into by
the Subsidiaries in connection with the L&F Restructuring, as set
forth in Schedule 1.1(f).
"Laws" shall include any federal, state, foreign or local law, statute,
ordinance, rule, regulation, order, judgment or decree.
"Leased Real Property" shall mean all real property leased on the date
hereof by Seller or any of its Affiliates as lessee, including any
buildings, structures and improvements thereon or appurtenances
thereto, Related to the Business. Schedule 1.1(g) sets forth a list
of the Leased Real Property as of the date hereof.
"Losses" shall have the meaning set forth in Section 7.2(a).
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"Material Adverse Change" shall mean a change that has a Material
Adverse
Effect.
"Material Adverse Effect" shall mean an effect that is materially adverse
to the value of the Transferred Assets taken as a whole or materially
adverse to the business, financial condition or results of operations
of the Business taken as a whole.
"Nonmedical Leave" shall mean maternity or paternity leave, leave under the
Family and Medical Leave Act of 1993, educational leave, military
leave with veteran's reemployment rights under federal law, or
approved personal leave (unless any of such is determined to be a
medical leave).
"Notice Period" shall have the meaning set forth in Section 7.4.
"Owned Real Property" shall mean all real property beneficially owned by
Seller or any of its Affiliates, including any buildings, structures
and improvements thereon or appurtenances thereto, Related to the
Business. Schedule 1.1(h) sets forth a list of the Owned Real
Property as of the date hereof.
"Pension Plan" shall have the meaning set forth in Section 3.10(b).
"Permitted Encumbrances" shall have the meaning set forth in Section
3.16(b).
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization or a government
or any agency or political subdivision thereof.
"Plans" shall have the meaning set forth in Section 3.10(b).
"Purchase Price" shall have the meaning set forth in Section 2.5.
"Purchaser" shall have the meaning set forth in the recitals.
"Purchaser Indemnified Parties" shall have the meaning set forth in Section
7.3(a).
"Purchaser's Objection" shall have the meaning set forth in Section 2.6(c).
"Purchaser Subsidiary" shall mean the corporations and other entities 50%
or more of the equity interests in which are beneficially owned by
the Purchaser.
"Recipient" shall have the meaning set forth in Section 5.4(d).
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"Related to" shall mean primarily related to, or used or held for use
primarily in connection with.
"Related to the Business" shall mean primarily related to, or used or held
for use primarily in connection with, the Business prior to the
Closing.
"Remedial Action" means all actions, including, without limitation, any
capital expenditures, required under any applicable Environmental Law
(i) to clean up, remove, treat, or in any other way address any
Hazardous Substance to the extent required by all applicable
Environmental Laws; (ii) to prevent the release or discharge or
threat of release or discharge of any Hazardous Substance to the
extent required by applicable Environmental Laws; (iii) to perform
pre-remedial studies and investigations or post-remedial monitoring
and care to the extent required by applicable Environmental Laws; or
(iv) otherwise to bring any property and the facilities located and
operations conducted thereon into compliance with all applicable
Environmental Laws.
"Required Approvals" shall mean all consents, approvals, waivers and
authorizations required to be obtained, and all notices and filings
required to be given or made by any party hereto or its Affiliates in
connection with the execution, delivery and performance of this
Agreement and the Ancillary Agreements (including the consents,
approvals, waivers, authorizations, notices and filings referred to
in Sections 3.4 and 4.3 and Schedules 3.4 and 4.3), other than any
such consent, approvals, waivers, authorizations, notices or filings
which, if not obtained or made, would not, individually or in the
aggregate, have a Material Adverse Effect, affect Purchaser's ability
to conduct the Business after the Closing substantially as heretofore
conducted in a manner that is material and adverse to the Purchaser,
or materially impair or delay the ability of Seller, Kodak and
Sterling, on the one hand, or Purchaser on the other hand, as the
case may be, to effect the Closing.
"Retirement Plan Employees" shall have the meaning set forth in Section
5.5(d).
"Savings Plan Employees" shall have the meaning set forth in Section
5.5(c).
"Selected Marks" shall have the meaning set forth in Section 3.13(a).
"Seller" shall have the meaning set forth in the recitals.
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"Seller Indemnified Parties" shall have the meaning set forth in Section
7.2.
"Seller Retirement Plans" shall have the meaning set forth in Section
5.5(d).
"Seller Savings Plans" shall have the meaning set forth in Section 5.5(c).
"Seller Transferred Assets" shall mean Transferred Assets that are
beneficially owned directly or indirectly by Seller.
"Seller's Other Businesses" shall have the meaning set forth in Section
2.2(a).
"Software License Agreement" shall have the meaning set forth in Section
5.11.
"Sterling's DIY Subsidiaries" shall mean the following entities, each of
which conducted a portion of the Business prior to the L&F
Restructuring: Minwax Company Inc., a New Jersey corporation,
Thompson & Formby Inc., a Florida corporation, L&F Products (UK)
Limited, a corporation organized under the laws of England and L&F
Canada Inc., an Ontario corporation.
"Sterling Stock Purchase Agreement" shall have the meaning set forth under
the definition of "L&F Restructuring".
"Subsidiaries" shall mean the corporations and other entities (other than
Seller) engaged in the Business any of the equity interests in which
are beneficially owned directly or indirectly by Kodak, as set forth
in Schedule 3.2(a)(i).
"Supply Agreement" shall have the meaning set forth in Section 5.10.
"Tangible Property" shall mean all furniture, fixtures, furnishings,
machinery, vehicles, equipment and other tangible personal property.
"Tax Audit" shall have the meaning set forth in Section 5.4(d).
"Tax Item" shall mean, with respect to Taxes, any item of income, gain,
deduction, loss or credit or any other tax attribute.
"Tax Package" shall have the meaning set forth in Section 5.4(c)(i).
"Tax Returns" shall mean all reports and returns required to be filed with
respect to Taxes.
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"Taxes" shall mean all federal, state, local or foreign taxes, including
but not limited to income, gross receipts, windfall profits, value
added, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes, together with
any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
"Transfer Taxes" shall have the meaning set forth in Section 5.4(g).
"Transferee Pension Plans" shall have the meaning set forth in Section
5.5(d).
"Transferee Savings Plans" shall have the meaning set forth in Section
5.5(c).
"Transferred Assets" shall have the meaning set forth in Section 2.1.
"Transferred Subsidiary" shall mean L&F Products (Ireland) Limited.
"Transition Services Agreement" shall have the meaning set forth in Section
5.9.
"U.S. Antitrust Laws" shall mean and include the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other United States federal or
state Competition Laws.
"U.S. Intercompany Accounts Payable" shall mean accounts payable of the
Business that arise out of the portions of the Business conducted in
the United States.
"U.S. Intercompany Accounts Receivable" shall mean accounts receivable of
the Business that arise out of the portions of the Business conducted
in the United States.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act.
Section 1.2 Other Terms. Other terms may be defined elsewhere
in the text of this Agreement and, unless otherwise indicated, shall have
such meaning throughout this Agreement.
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Section 1.3 Other Definitional Provisions. (a) The words
"hereof", "herein", and "hereunder" and words of similar import, when used
in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
Section 2.1 Purchase and Sale of Assets. On the terms and
subject to the conditions set forth herein, at the Closing, Seller agrees
to sell, convey, transfer, assign and deliver to Purchaser, or cause an
Affiliate of Seller to sell, convey, transfer, assign and deliver to
Purchaser, and Purchaser agrees to purchase from Seller or such Affiliate
of Seller, as the case may be, all direct or indirect right, title and
interest of Seller or such Affiliate of Seller, as the case may be, in and
to the assets Related to the Business, whether tangible or intangible, real
or personal, except for the Excluded Assets (the "Transferred Assets"),
including in each case without limitation (other than as specifically
limited by (a) through (k) of this Section 2.1), all of the direct and
indirect right, title and
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interest of the Seller or any Affiliate of Seller, as the case may be, in
the following:
(a) The Owned Real Property and Leased Real Property and no
other real property;
(b) The Fixtures and Equipment, including without limitation
the Tangible Property located on the Owned Real Property and the
Leased Real Property;
(c) All Current Assets as of the Closing Date;
(d) The Intellectual Property, including the items listed on
Schedules 3.13(a);
(e) The Contracts;
(f) Subject to the provisions of Section 5.12, all insurance
policies owned by the Seller, Kodak or an Affiliate that relate
primarily to an Assumed Liability or are Related to the Business,
provided, in each case, that such policies are assignable and remain
in effect following the Closing, and all rights and claims under any
insurance policy of Kodak or any Affiliate to the extent they relate
to an Assumed Liability, Transferred Assets or the Business;
(g) All of the stock of the Transferred Subsidiary;
(h) All Books and Records of, or maintained by, the Business,
including, without limitation, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals;
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(i) All prepaid Taxes to the extent such Taxes would, if not
prepaid, be Assumed Liabilities;
(j) Subject to Section 5.4(i), all refunds of Taxes to the
extent such Taxes are, or if not paid would be, Assumed Liabilities;
and
(k) All goodwill associated with or attributable to the
Business.
If the capital stock or assets of any Affiliate of Seller,
including without limitation, Sterling, is sold or otherwise disposed of
prior to the Closing, Kodak shall cause, or shall have made provision for,
such entity to transfer to Seller, prior to such sale or disposition, any
asset of such entity which constitutes a Transferred Asset.
Section 2.2 Excluded Assets. Notwithstanding anything herein
to the contrary, from and after the Closing, Seller or Kodak, as the case
may be, shall retain all of its direct and indirect right, title and
interest in and to, and there shall be excluded from the sale, conveyance,
assignment, transfer or delivery to Purchaser hereunder, and the
Transferred Assets shall not include, the following (collectively, the
"Excluded Assets"):
(a) The consumer and professional products business conducted,
or formerly conducted, by the Household Products Division, the
National Laboratories Division of Sterling and the Personal Products
Division of Sterling or Seller in the United States, and Schulke &
Mayr GmbH, L&F Canada, Inc., L&F Products (UK) Limited and such other
current or former
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direct or indirect foreign subsidiaries of Seller, Sterling or Kodak, to
the extent such subsidiaries are, or were, engaged in consumer and
professional products businesses ("Seller's Other Businesses");
(b) Subject to the provisions of Section 5.12, Seller's rights
under all insurance policies, including insurance policies in respect
of directors and officers who are Applicable Employees and to all
claims against insurance carriers (other than any insurance policies
and any rights and claims referred to in Section 2.1(f));
(c) Subject to the provisions of Section 5.12, Seller's rights
in connection with and any recovery arising from the proceedings set
forth in Schedule 2.2(c);
(d) All Accounts Receivable from Kodak;
(e) All prepaid Taxes to the extent such Taxes are, or if not
prepaid would be, Excluded Liabilities;
(f) All refunds of Taxes to the extent such Taxes are, or if
not paid, would be, Excluded Liabilities;
(g) All Tax Returns of Seller, Sterling or Kodak;
(h) All real property or interests in real property other than
the Owned Real Property and the Leased Real Property;
(i) The Fixtures and Equipment listed in Schedule 2.2(i);
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(j) All Books and Records which Seller or Kodak is required by
law to retain, so long as copies of such Books and Records are
included in the Transferred Assets;
(k) All rights to the names "Eastman" and "Kodak";
(l) Subject to the provisions of Section 5.8, all rights to
the names "Sterling", "Winthrop", "Valmont", "L&F", and "Lehn &
Fink", and to the Sterling "ankh" symbol (such names and symbol, the
"Excluded Marks");
(m) All rights of Seller or any Affiliate of Seller that has
any direct or indirect interest in the name "Kodan" to commence
interferences, litigations or administrative proceedings to restrict
the use of the "Kodan" name by Kodak or any Affiliate of Kodak;
(n) the L&F Restructuring Notes; and
(o) the stock of any Subsidiary other than the Transferred
Subsidiary.
Section 2.3 Assumption of Liabilities. On the terms and
subject to the conditions set forth herein, at the Closing, Purchaser
agrees to assume and discharge or perform when due, all debts, liabilities,
or obligations whatsoever, of Seller, Kodak, Sterling or any of their
Affiliates, other than Excluded Liabilities, that (but only to the extent
that they) arise out of or relate to the Business or the Transferred
Assets, whether arising before or after the Closing and whether known or
unknown, fixed or contingent (the "Assumed Liabilities"), including,
without limitation (other than as specifically limited by the
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provisions of clauses (a) through (f) below or by Section 2.4 hereof),
the
following:
(a) The Contracts, including all licenses from third parties
(including Kodak and any Affiliate of Kodak that is not a Subsidiary)
assigned or otherwise transferred to Purchaser;
(b) All Current Liabilities as of the Closing Date;
(c) All liabilities with respect to all actions, suits,
proceedings, disputes, claims or investigations that (but only to the
extent that they) arise out of or relate to the Business or the
Transferred Assets (other than to the extent arising out of or
relating to any Excluded Assets or Excluded Liabilities), at law, in
equity or otherwise, including but not limited to liability for any
damage arising out of or relating to, and for any obligation to
undertake, any Remedial Action of the Owned Real Property and Leased
Real Property but no other real property;
(d) Subject to Section 5.4(g), all liabilities for Taxes with
respect to the taxable periods, or portions thereof, ending on or
before the Closing Date but only for the amount of such Taxes that
are reflected as Current Liabilities on the Adjusted Closing Balance
Sheet;
(e)(1) All employee benefit, compensation and severance
liabilities associated with all Employees, except (i) liabilities
under plans maintained by Kodak or any of its Affiliates providing
benefits relating to securities of
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Kodak, (ii) to the extent provided in Sections 5.5(e), (f), and (g) or
elsewhere in this Agreement and (iii) any liabilities or obligations
associated with any Employee whose employment is terminated or deemed
terminated pursuant to any contract, by operation of law or otherwise as a
result of the consummation of the transactions contemplated by this
Agreement or the transactions relating to the disposition of Seller's
Other Businesses; provided, however, that this clause (iii) shall not
apply to liabilities or obligations for severance pay and benefits that
become payable as a result of the Purchaser's failure to comply with the
provisions set forth in Section 5.5(a), (2) all liabilities under
collective bargaining agreements with respect to all such Employees and
(3) all liabilities with respect to any HH Employee (as defined in
Section 5.5(i)) to the extent provided in Section 5.5(i); and
(f) All responsibility for product liability claims relating
to the products listed in Schedule 2.3(f), provided that the article
which is the subject of the claim was sold by the Purchaser after the
Closing Date.
Nothing in this Section 2.3 shall affect, limit or impair
Purchaser's right to indemnification for the breach by Seller or Kodak of
any of its representations, warranties or covenants contained herein, to
the extent provided in, for the time period, if any, set forth in, and
otherwise subject to the terms of, Sections 7.1 and 7.3.
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Section 2.4 Excluded Liabilities. Notwithstanding any other
provision of this Agreement, the liabilities and obligations of Seller,
Kodak, Sterling or any of their Affiliates which are not to be assumed by
Purchaser hereunder (the "Excluded Liabilities") are the following:
(a) All liabilities arising out of or relating to the Excluded
Assets;
(b) Subject to Section 5.4(g), (i) all liabilities for Taxes
imposed with respect to the taxable periods, or portions thereof,
ending on or before the Closing Date, except for the amount of such
Taxes that are reflected as Current Liabilities on the Adjusted
Closing Balance Sheet; (ii) all liabilities for Taxes resulting from,
relating to or arising out of the L&F Restructuring, transfers of
Excluded Assets, or any transfers (including transfers of cash) among
Seller and its Affiliates in settlement of intercompany accounts or
otherwise in connection with the transactions contemplated by this
Agreement; and (iii) any income or gains Taxes arising from the sale
of the Transferred Assets pursuant to this Agreement.
(c) All indebtedness for money borrowed and all Accounts
Payable to Kodak;
(d) All Current Liabilities as of the Closing Date, but only
to the extent that (i) such liabilities are not reflected on the
Adjusted Closing Balance Sheet and (ii) a greater adjustment payment
pursuant to Section 2.6 would
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have been payable to Purchaser if such liabilities had been properly
reflected on the Adjusted Closing Balance Sheet;
(e) All responsibility for product liability claims relating
to the products listed on Schedule 2.3(f), provided that the article
which is the subject of the claim was sold by Seller or any Affiliate
on or prior to the Closing Date;
(f) All liabilities arising under any applicable
Environmental Laws or otherwise (i) relating to the release or
disposal of Hazardous Substances (by Seller, Kodak, Sterling, any of
their Affiliates or any prior owner or operator of the property or
any predecessor thereof or their respective agents or independent
contractors), which release or disposal occurred at locations other
than on the Owned Real Property or the Leased Real Property, or (ii)
relating to any property other than the Owned Real Property and the
Leased Real Property or any activity conducted therefrom;
(g) Two-thirds of any Losses in excess of $5 million in the
aggregate arising from violations of applicable Environmental Laws
relating to, or Remedial Action undertaken with respect to, the
Roncraft Thorncliffe Park site, but only to the extent that (i) such
violations arose or such Remedial Action would be required as a
result of facts, circumstances and conditions existing with respect
to such site on or prior to the Closing Date and (ii) such violations
or such obligations to undertake such Remedial Action shall have
arisen, and notice thereof shall have been
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given to Seller and Kodak, prior to the tenth anniversary of the Closing
Date.
(h) All liabilities and obligations resulting from, relating
to or arising out of any former operations of the Business that have
been discontinued or disposed of prior to the Closing;
(i) The L&F Restructuring Notes;
(j) All other liabilities and obligations, and all actions,
proceedings, disputes, claims or investigations, for which Seller or
Kodak, as the case may be, has expressly assumed or retained
responsibility pursuant to this Agreement, or which relate to the
litigation described in Schedule 2.2(c); and
(k) All debts, liabilities, or obligations whatsoever, that do
not arise out of or relate to the Business or that do not otherwise
arise out of or relate to the Transferred Assets.
Section 2.5 Purchase Price. On the terms and subject to the
conditions set forth herein, Purchaser agrees to pay Seller $700,000,000
(the "Purchase Price"). The Purchase Price shall be subject to adjustment
as provided in Section 2.6.
Section 2.6 Business Post-Closing Adjustments. (a) For
purposes of this Section 2.6, the following terms shall have the meanings
set forth below:
(i) "APB#16" shall mean Accounting Principles Board
Opinion No. 16.
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(ii) "Net Assets Amount" shall mean (x) Total Assets
minus (y) Total Liabilities.
(iii) "Sterling Reserve" shall mean the "Accrued Short
Period -- Corporate" reserve allocated to DIY at December 31, 1993, and
reflected on the Balance Sheet in the amount of $3,750,000.
(iv) "Total Assets" shall mean total assets of the
Business as reflected on the Adjusted Closing Balance Sheet.
(v) "Total Liabilities" shall mean total liabilities of
the Business as reflected on the Adjusted Closing Balance Sheet.
(vi) "Veraline Reserve" shall mean the "Accrued Veraline
Environmental Claims" reserve at December 31, 1993, and reflected on the
Balance Sheet in the amount of $3,000,000.
(b) Within 90 days following the Closing, Seller shall
prepare, or cause to be prepared, and deliver to Purchaser a balance sheet
(the "Closing Balance Sheet") which shall set forth the assets and
liabilities of the Business as of the Closing Date. The Closing Balance
Sheet shall be prepared in accordance with GAAP, applied on a basis
consistent with the Balance Sheet, except as set forth in Schedule 2.6(b),
and except that (i) the purchase accounting adjustments required by APB#16
with respect to Kodak's acquisition of Sterling shall not be reflected
thereon; (ii) the Excluded Assets and Excluded Liabilities shall be
excluded therefrom; (iii) deferred income tax assets and liabilities shall
be excluded therefrom; (iv) any fixed asset and
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intangible asset reflected on the Balance Sheet that is required to be
reflected on the Closing Balance Sheet shall be recorded on the Closing
Balance Sheet on the same basis on which it was recorded on the Balance
Sheet, provided that such amounts shall be adjusted in accordance with GAAP
for depreciation, amortization, valuation provisions, and the like, to the
extent appropriate for the time elapsed and to reflect events occurring
between the date of the Balance Sheet and the Closing Date; (v) no
reserves, liabilities or similar items reflected on the Balance Sheet or
created thereafter shall be reversed or reallocated to cover any other
reserve, liability or similar item required to be provided for on the
Closing Balance Sheet; (vi) the amount of the Sterling Reserve reflected on
the Closing Balance Sheet shall be $3,750,000, (vii) the Veraline Reserve
will be omitted from the Closing Balance Sheet; and (viii) the Fixtures and
Equipment listed in Annex II to Schedule 2.6(b) representing approximately
$800,000 will be excluded from the Closing Balance Sheet. The Closing
Balance Sheet shall be accompanied by a schedule setting forth the
calculation of the Net Assets Amount.
(c) Purchaser and Purchaser's accountants shall, within 60
days after the delivery by Seller of the Closing Balance Sheet and
accompanying schedule, complete their review of the Closing Balance Sheet
and the Net Assets Amount derived from the Closing Balance Sheet. In the
event that Purchaser determines that the Closing Balance Sheet has not been
prepared,
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or that the Net Assets Amount as derived from the Closing Balance Sheet has
not been determined, on the basis set forth in Section 2.6(b), Purchaser
shall inform Seller in writing (the "Purchaser's Objection"), setting forth
a description in reasonable detail of the basis of Purchaser's Objection
and the adjustments to the Net Assets Amount which Purchaser believes
should be made, on or before the last day of such 60-day period. Seller
shall then have 30 days to review and respond to Purchaser's Objection. If
Seller and Purchaser are unable to resolve all of their disagreements with
respect to Purchaser's Objections within 10 days following the completion
of Seller's review of Purchaser's Objection, they shall refer their
remaining differences to a "Big Six" or other nationally recognized firm of
independent public accountants as to which Seller and Purchaser mutually
agree (the "CPA Firm"), who shall determine on the basis of the standards
set forth in Section 2.6(b), and only with respect to the remaining
differences so submitted, whether and to what extent, if any, the Closing
Balance Sheet, and the Net Assets Amount as derived from the Closing
Balance Sheet require adjustment. The parties shall instruct the CPA Firm
to deliver its written determination to Purchaser and Seller no later than
the twentieth day after the remaining differences underlying the
Purchaser's Objection are referred to the CPA Firm. The CPA Firm's
determination shall be conclusive and binding upon Purchaser and Seller.
The fees and disbursements of the CPA Firm shall be shared equally by Pur-
chaser and Seller. Purchaser and
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Seller shall make available to the CPA Firm all relevant books and records
and any work papers (including those of the parties' respective
accountants) relating to the Balance Sheet and the Closing Balance Sheet
and all other items reasonably requested by the CPA Firm. The "Adjusted
Closing Balance Sheet" shall be (i) the Closing Balance Sheet in the event
that (x) no Purchaser's Objection is delivered to Seller during the 60-day
period specified above, or (y) Seller and Purchaser so agree, (ii) the
Closing Balance Sheet, adjusted in accordance with the Purchaser's
Objection in the event that Seller does not respond to Purchaser's
Objection within the 30-day period following receipt by Seller of
Purchaser's Objection or agrees with Purchaser's objection, or (iii) the
Closing Balance Sheet, as adjusted by either (x) the agreement of Seller
and Purchaser or (y) the CPA Firm.
(d) Purchaser shall provide Seller and its accountants full
access to the Books and Records, any other information, including work
papers of its accountants, and to any employees to the extent necessary for
Seller to prepare the Closing Balance Sheet, the Adjusted Closing Balance
Sheet and the Net Assets Amount.
(e) Seller shall make an adjustment payment to Purchaser in an
amount equal to the excess, if any, of (x) $126,000,000 over (y) the Net
Assets Amount. The adjustment payment payable pursuant to this
Section 2.6(e) shall be paid within 10 Business Days following issuance of
the Adjusted
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Closing Balance Sheet by wire transfer of immediately available funds to a
bank account designated by Purchaser.
Section 2.7 Closing. (a) The Closing shall take place at the
offices of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004
at 10:00 A.M. New York City time, on the 18th day of November, 1994;
provided, however, that if the conditions set forth in Article VI shall not
have been satisfied or waived on or prior to November 18, 1994, the Closing
shall take place on the third Business Day following the satisfaction or
waiver of such conditions, or at such other time and place as the parties
hereto may mutually agree. The date on which the Closing occurs is called
the "Closing Date".
(b) With respect to the Kodak Transferred Assets, subject to
the provisions of paragraph (c) below Kodak shall take or cause to be taken
all action necessary to effect the sale and transfer to Purchaser of the
Kodak Transferred Assets at the Closing. Delivery by Kodak or any
subsidiary thereof (other than Seller) of any of the items set forth in
Section 2.9, duly executed by the appropriate transferor, shall be deemed
for purposes of this Agreement to constitute delivery of such items by
Seller.
(c) Notwithstanding anything to the contrary contained in
this Agreement, to the extent that the sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer, conveyance
or delivery to Purchaser of any Transferred Asset is prohibited by any
applicable law or would require any
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governmental or third party authorizations, approvals, consents or
waivers
and such authorizations, approvals, consents or waivers shall not have been
obtained prior to the Closing, this Agreement shall not constitute a sale,
assignment, transfer, conveyance or delivery, or any attempted sale,
assignment, transfer, conveyance or delivery, thereof. Following the
Closing, and without limiting the provisions set forth in Section 5.3(b),
the parties shall use reasonable efforts and shall cooperate with each
other, to obtain promptly such authorizations, approvals, consents or
waivers; provided, however, that none of Seller, Kodak, Purchaser or the
Affiliates of any of them shall be required to pay any consideration
therefor, other than filing, recordation or similar fees payable to any
governmental authority, which fees shall be shared equally by Purchaser and
Seller. Pending such authorization, approval, consent or waiver, the
parties shall cooperate with each other in any reasonable and lawful
arrangements designed to provide to Purchaser the benefits and liabilities
of use of such Transferred Asset. Once such authorization, approval,
consent or waiver for the sale, assignment, transfer, conveyance or
delivery of a Transferred Asset not sold, assigned, transferred, conveyed
or delivered at the Closing is obtained, Seller (or Kodak, with respect to
any Kodak Transferred Assets) shall promptly assign, transfer, convey and
deliver, or cause to be assigned, transferred, conveyed and delivered, such
Transferred Asset to Purchaser for no additional consideration. To the
extent that
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<PAGE> 446
any such Transferred Asset cannot be transferred or the full benefits and
liabilities of use of any such Transferred Asset cannot be provided to
Purchaser following the Closing pursuant to this Section 2.7(c), then
Purchaser, Seller, and Kodak shall enter into such arrangements (including
subleasing or subcontracting if permitted) to provide to Purchaser the
economic (taking into account Tax costs and benefits) and operational
equivalent of obtaining such authorization, approval, consent or waiver and
the performance by Purchaser of the obligations thereunder.
Section 2.8 Deliveries by Purchaser. At the Closing,
Purchaser shall deliver to Seller, and with respect to Sections 2.8(d) and
2.8(e) as applicable, to Kodak, the following:
(a) the Purchase Price, in immediately available funds by wire
transfer to an account designated by Seller not less than two Business Days
prior to the Closing;
(b) such instruments of assumption and other instruments or
documents, in form and substance reasonably acceptable to Seller and Kodak,
as may be necessary to effect Purchaser's assumption of the Assumed
Liabilities;
(c) such other instruments and documents, in form and
substance reasonably acceptable to Seller and Kodak, as may be necessary to
effect the Closing;
(d) a duly executed copy of each of the Ancillary Agreements;
and
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(e) the certificates and other documents to be delivered
pursuant to Section 6.3 hereof.
Section 2.9 Deliveries by Seller and Kodak. At the Closing,
Seller, and, as applicable, Sterling and Kodak, shall deliver to Purchaser
the following:
(a) bills of sale and any other customary instruments of sale
and conveyance, in form and substance reasonably acceptable to Purchaser,
transferring to Purchaser all Transferred Assets;
(b) assignments, in form and substance acceptable to
Purchaser, assigning to Purchaser all Intellectual Property included in the
Transferred Assets and, subject to Section 2.10, Seller's interests in all
corporations, partnerships and other entities which interests are included
in the Transferred Assets;
(c) deeds, in limited warranty or other similar form and any
other customary instruments of sale and conveyance in form and substance
reasonably acceptable to Purchaser, transferring all Owned Real Property to
Purchaser subject to any and all Permitted Encumbrances;
(d) assignments or, where necessary, subleases, in form and
substance reasonably acceptable to Purchaser, assigning or subleasing to
Purchaser all Leased Real Property;
(e) such other instruments or documents, in form and substance
reasonably acceptable to Purchaser, as may be necessary to effect the
Closing;
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(f) a duly executed copy of each of the Ancillary Agreements;
(g) the certificates and other documents to be delivered
pursuant to Section 6.2 hereof; and
(h) copies of surveys and title insurance policies, if any, in
the possession of Seller or its Affiliates with respect to Owned Real
Property and Leased Real Property and, if applicable, copies of
certificates in the possession of Seller or its Affiliates with respect to
Owned Real Property and Leased Real Property.
Section 2.10 Removal of Seller's Other Businesses from the
Transferred Subsidiary. The parties acknowledge that Seller shall have the
right to remove or cause to be removed any Excluded Asset from the
Transferred Subsidiary prior to transferring such entity to Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND KODAK
Seller and, with respect only to Sections 3.1, 3.2(a), 3.3,
3.4, 3.5, 3.6, 3.10 insofar as it relates to Plans maintained by Kodak,
3.11, 3.12(a), 3.13(b) and 3.16(b), Kodak, and with respect only to
Sections 3.1, 3.3, 3.4, 3.5 and 3.6, Sterling, represent and warrant to
Purchaser as of the date hereof and as of the Closing Date (except that
representations and warranties that are made as of a specific date need be
true only as of such date) as follows:
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Section 3.1 Organization and Qualification. (a) Seller is
a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own and operate the Transferred Assets and
to carry on the Business as currently conducted. Except as set forth on
Schedule 3.1(a), Seller is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the ownership
or operation of the Transferred Assets or the conduct of the Business
requires such qualification, except where the failure to be so qualified or
in good standing, as the case may be, would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Each of Kodak and Sterling is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
Section 3.2 Subsidiaries. (a) Schedule 3.2(a)(i) sets forth a
list of each Subsidiary, together with its jurisdiction of organization and
its authorized and outstanding capital stock or other equity interests as
of the date hereof. The Subsidiaries are the only Affiliates of Kodak
(other than Seller) through which the Business is conducted on the date
hereof, and Kodak does not conduct the Business other than through Seller
and the Subsidiaries. Except as set forth on Schedule 3.2(a)(ii), each
Subsidiary is a corporation or other entity duly organized, validly
existing, and in good standing under the laws of its
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<PAGE> 450
jurisdiction of organization and has all requisite corporate or
similar
power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and is duly qualified to do
business and is in good standing as a foreign corporation or other entity
in each jurisdiction where the ownership or operation of its properties and
assets or the conduct of its business requires such qualification, except
where the failure to be so duly organized, validly existing, qualified or
in good standing would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth on Schedule 3.2(b), Seller owns,
directly or indirectly, all of the outstanding capital stock or other
equity interest of each such entity free and clear of all Encumbrances.
There are no preemptive or other outstanding rights, options, warrants,
conversion rights or agreements or commitments to issue or sell any shares
of capital stock or other equity interest of any such entity or any
securities or obligations convertible into or exchangeable for, or giving
any Person a right to subscribe for or acquire, any shares of capital stock
or other equity interest of any such entity, and no securities or
obligations evidencing such rights are outstanding.
Section 3.3 Corporate Authorization. Each of Seller, Kodak
and Sterling has full corporate power and authority to execute and deliver
this Agreement and each of the Ancillary Agreements, and to perform their
obligations hereunder and
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thereunder. The execution, delivery and performance by Seller, Kodak
and
Sterling of this Agreement and each of the Ancillary Agreements have been
duly and validly authorized and no additional corporate authorization or
consent is required in connection with the execution, delivery and
performance by Seller, Kodak and Sterling of this Agreement and each of the
Ancillary Agreements.
Section 3.4 Consents and Approvals. Except as specifically
set forth in Schedule 3.4 or as required by U.S. Antitrust Laws, European
Union Competition Law (or the Competition Law of France, Germany, Italy,
Spain or the United Kingdom, in each case to the extent not subject to
European Union jurisdiction), the Competition Laws of Australia, Canada or
Japan, the Exchange Act, the Investment Canada Act, FIFRA, the laws
governing or regulations promulgated by the United States Drug Enforcement
Agency or Bureau of Alcohol and Tobacco of the United States Department of
the Treasury, laws or regulations of the United States Food and Drug
Administration or any state, local or foreign governmental authority
requiring the registration of products for sale, or Hazardous Substance
facility permits, air permits, water permits or any other permits required
by any Environmental Law, no consent, approval, waiver or authorization is
required to be obtained by Seller, Kodak, Sterling or any Affiliate of any
of them from, and no notice or filing is required to be given by Seller,
Kodak, Sterling or any Affiliate of any of them to or made by Seller,
Kodak, Sterling or
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any Affiliate of any of them with, any Federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by Seller, Kodak or Sterling of this Agreement and
each of the Ancillary Agreements, other than in all cases where the failure
to obtain such consent, approval, waiver or authorization, or to give or
make such notice of filing would not, individually or in the aggregate,
have a Material Adverse Effect or materially impair or delay the ability of
Seller or Kodak to effect the Closing or affect Purchaser's ability to
conduct the Business after the Closing substantially as heretofore
conducted in a manner that is material and adverse to the Purchaser.
Section 3.5 Non-Contravention. Except as set forth on
Schedule 3.5, the execution, delivery and performance by Seller, Kodak and
Sterling of this Agreement and each of the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, does not
and will not (i) violate any provision of the charter, bylaws or other
organizational documents of Seller, Kodak or Sterling, (ii) subject to
obtaining the consents referred to in Section 3.4, conflict with, or result
in the breach of, or constitute a default under, or result in the
termination, cancellation or acceleration (whether after the filing of
notice or the lapse of time or both) of any right or obligation of Seller,
Kodak or Sterling under, or to a loss of any benefit to which Seller, Kodak
or Sterling is entitled under, any Commitment or result in the creation of
any Encumbrance upon
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<PAGE> 453
any of the Transferred Assets, or (iii) assuming the consents, approvals,
waivers, authorizations, notices and filings set forth in Sections 3.4 and
4.3 are obtained or given or made, as the case may be, violate or result in
a breach of or constitute a default under any law, rule, regulation, judg-
ment, injunction, order, decree or other restriction of any court or
governmental authority to which Seller, Kodak or Sterling is subject,
including any Governmental Authorization, other than in the cases of
clauses (ii) and (iii), any conflict, breach, termination, default,
cancellation, acceleration, loss, violation or Encumbrance which, individ-
ually or in the aggregate, would not have a Material Adverse Effect or
materially impair or delay Seller's, Kodak's or Sterling's ability to
perform its obligations hereunder or affect Purchaser's ability to conduct
the Business after the Closing substantially as heretofore conducted in a
manner that is material and adverse to the Purchaser.
Section 3.6 Binding Effect. This Agreement constitutes, and
each of the Ancillary Agreements when executed and delivered by the parties
thereto will constitute, a valid and legally binding obligation of each of
Seller, Kodak and Sterling enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
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Section 3.7 Financial Statements. (a) (i) The Balance Sheet
and the unaudited pro forma statement of earnings from operations of the
Business for the year ended December 31, 1993 attached as Schedule
3.7(a)(i), and (ii) as of the Closing Date, the interim unaudited pro forma
statement of earnings from operations for the nine months ended
September 30, 1994 (which interim statement (the "Interim Statement") shall
be provided to Purchaser not later than ten days prior to the Closing Date)
(together, the "Financial Statements") fairly present, in all material
respects, the financial condition of the Business as of the date thereof,
or the results of operations for the respective periods then ended, as the
case may be. The Financial Statements (other than the Interim Statements)
were, and the Interim Statements will be, prepared in accordance with GAAP
except as otherwise described in Schedule 3.7(a)(ii).
(b) Except as otherwise described in Schedule 3.7(a)(ii), all
of the liabilities reflected on the Balance Sheet are related to the
Business and arose out of or were incurred in the conduct of the Business.
Section 3.8 Litigation and Claims. (a) Except as set forth
in Schedule 3.8(a), there is no civil, criminal or administrative action,
suit, demand, claim, hearing, proceeding or investigation pending or, to
the Knowledge of Seller or to the Knowledge of Kodak, threatened, involving
the Business or any of the Transferred Assets other than those which,
individually or in the aggregate, would not have a Material Adverse Effect
or
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materially impair or delay the ability of Seller or Kodak to effect
the
Closing or affect Purchaser's ability to conduct the Business after the
Closing substantially as heretofore conducted in a manner that is material
and adverse to the Purchaser.
(b) Except as set forth in Schedule 3.8(b), none of the
Transferred Assets is subject to any order, writ, judgment, award,
injunction, or decree of any court or governmental or regulatory authority
of competent jurisdiction or any arbitrator or arbitrators other than those
which, individually or in the aggregate, would not have a Material Adverse
Effect or materially impair or delay the ability of Seller or Kodak to
effect the Closing or affect Purchaser's ability to conduct the Business
after the Closing substantially as heretofore conducted in a manner that is
material and adverse to the Purchaser.
Section 3.9 Taxes. With respect to the Business, except as
set forth in Schedule 3.9:
(a) All Tax Returns that are required to be filed on or before
the date of this Agreement (taking into account applicable extensions) have
been duly filed, except for Tax Returns the failure to file which, when
taken together with all other such failures, will not have a Material
Adverse Effect; (b) all Taxes shown to be due on the Tax Returns referred
to in clause (a) and all Taxes for which a notice of, or assessment or
demand for, payment has been received, have been timely paid, are not yet
due, or are recorded as reserves or current liabilities on the Balance
Sheet with respect to periods ending on or prior
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to December 31, 1993, and in the Books and Records for periods commencing
after December 31, 1993, except for such Taxes as to which the failure to
pay or record, when taken together with all other such failures, will not
have a Material Adverse Effect; (c) no adjustments relating to the Tax
Returns referred to in clause (a) have been proposed in writing, or, to the
Knowledge of Seller or Kodak, threatened, by the Internal Revenue Service
or the appropriate state, local or foreign taxing authority, except for
such adjustments which, when taken together with all other such adjustments
that have been proposed, are not reasonably expected to have a Material
Adverse Effect; (d) there are no pending or, to the Knowledge of Seller or
Kodak, threatened actions or proceedings for the assessment or collection
of Taxes except for such actions or proceedings which, when taken together
with all other such actions and proceedings that are pending or have been
threatened, are not reasonably expected to have a Material Adverse Effect;
(e) there are no outstanding waivers or agreements extending the applicable
statute of limitations for any period with respect to any Taxes of the
Transferred Subsidiary except for any waivers or agreements which, when
taken together with all other such waivers and agreements that are
outstanding, are not reasonably expected to have a Material Adverse Effect;
(f) no taxing authorities are presently conducting any audits or other
examinations of any Tax Returns referred to in clause (a), except for such
audits or examinations which, when taken together with all other such
audits and
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examinations that are presently being conducted, are not
reasonably
expected to have a Material Adverse Effect; (g) there are no Tax rulings,
requests for rulings, or closing agreements which could reasonably be
expected to have a Material Adverse Effect; (h) none of the Transferred
Assets is property that is required to be treated as being owned by any
other person pursuant to the "safe harbor lease" provisions of former
section 168(f)(8) of the Code; (i) no changes in the accounting method of
the Transferred Subsidiary occurring prior to the Closing Date will give
rise to adjustments after the Closing Date pursuant to a provision of
foreign law similar to section 481 of the Code; and (j) none of the
Transferred Assets (other than cash) was at any time owned by the
Transferred Subsidiary on or after July 25, 1991.
Section 3.10 Employee Benefits. (a) Schedule 3.10(a) sets
forth a list of all benefit plans, contracts or arrangements covering U.S.
Employees, including, but not limited to, "employee benefit plans" within
the meaning of Section 3(3) of ERISA, and plans of deferred compensation
(the "Benefit Plans"). True and complete copies of all Benefit Plans,
including, but not limited to, any trust instruments and insurance
contracts forming a part of any Benefit Plans, and all amendments thereto
have been provided or made available to Purchaser.
(b) All employee benefit plans covering U.S. Employees (the
"Plans"), to the extent subject to ERISA, are in substantial compliance
with ERISA and the Code. Each Plan which is an
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"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified under Section 401(a)
of the Code, is and since its inception has been so qualified and has
received a favorable determination letter from the Internal Revenue
Service, and Seller is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Except as set forth
in Schedule 3.10(b), there is no material pending or, to the Knowledge of
Seller or to the Knowledge of Kodak, threatened litigation relating to the
Plans. Neither Seller nor any of its Affiliates with respect to the
Business has engaged in a transaction with respect to any Plan that could
subject Seller or any such Affiliate to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Seller or any of its Affiliates
with respect to the Business with respect to any ongoing, frozen or termi-
nated "single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the single-
employer plan of any entity which is considered one employer with Seller
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affili-
ate"). Seller and its Affiliates with respect to the Business have not
incurred any withdrawal liability with respect to a multiemployer plan
under Subtitle E of Title IV of ERISA and do not have any
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obligation to contribute to a multiemployer plan. No notice of a
"report-
able event", within the meaning of Section 4043 of ERISA for which the 30-
day reporting requirement has not been waived, has been required to be
filed for any Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(d) Neither any Pension Plan nor any single-employer plan of
an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA and no ERISA Affiliate has an outstanding funding waiver. Neither
Seller nor any of its Subsidiaries has provided, or is required to provide,
security to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(e) Except as set forth in Schedule 3.10(e), neither Seller
nor any of its Affiliates with respect to the Business has any obligations
for retiree health and life benefits under any Benefit Plan.
(f) All benefit plans, contracts or arrangements covering non-
U.S. Employees comply in all material respects with applicable Law. Except
as set forth in Schedule 3.10(f), Seller and its Affiliates with respect to
the Business have no material unfunded liabilities with respect to any non-
U.S. Employees.
(g) The transactions contemplated by this Agreement will not
result in the payment or series of payments to any
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Employee of a "parachute payment" within the meaning of Section 280G of the
Code.
(h) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any Employee to severance pay, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due to any such Employee, except as expressly provided in this
Agreement or as listed on Schedule 3.10(a) and designated as a Section
3.10(h) plan.
Section 3.11 Compliance with Laws. Except as set forth in
Schedule 3.11, the Business has been at all times and is being conducted in
compliance with all applicable laws, rules and regulations, except where
the failure so to comply, individually or in the aggregate, would not have
a Material Adverse Effect or affect Purchaser's ability to conduct the
Business after the Closing substantially as heretofore conducted in a
manner that is material and adverse to the Purchaser, and the Business has
all Governmental Authorizations necessary for the conduct of the Business
as currently conducted, other than those the absence of which, individually
or in the aggregate, would not have a Material Adverse Effect or affect
Purchaser's ability to conduct the Business after the Closing substantially
as heretofore conducted in a manner that is material and adverse to the
Purchaser.
Section 3.12 Environmental Matters. Except as set forth in
Schedule 3.12:
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(a) (x) the Business has been at all times and is in
compliance with all applicable Environmental Laws, (y) the Business has all
Governmental Authorizations required under applicable Environmental Laws
that are necessary for the conduct of the Business as currently conducted
and (z) there are no liabilities under any Environmental Law with respect
to the Business, in each case (x), (y) and (z) other than non-compliance or
liabilities which, or such Governmental Authorizations the absence of
which, individually or in the aggregate, would not have a Material Adverse
Effect or affect Purchaser's ability to conduct the Business after the
Closing substantially as heretofore conducted in a manner that is material
and adverse to the Purchaser;
(b) Seller and its Subsidiaries have not received any notice
of any violation or alleged violation of, or any liability under, any
Environmental Law in connection with the Business during the past three
years, other than violations and liabilities which, individually or in the
aggregate, would not have a Material Adverse Effect or affect Purchaser's
ability to conduct the Business after the Closing substantially as
heretofore conducted in a manner that is material and adverse to the
Purchaser;
(c) there are no material writs, injunctions, decrees, orders
or judgments outstanding, or any actions, suits, proceedings or
investigations pending or, to the Knowledge of Seller, threatened, relating
to compliance with or liability
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under any Environmental Law affecting the Business or the Transferred
Assets; and
(d) Except as set forth on Schedule 3.12, no Hazardous
Substance has been handled, treated, stored, released, disposed of or
discharged into the environment at, on or from any of the Owned Real
Property or Leased Real Property, which is required by Law or judicial or
administrative order, contractual obligation or common law currently in
effect to be remediated by or at the expense of Seller or any Affiliate,
where the costs of such remediation, individually or in the aggregate,
would have a Material Adverse Effect. Except as set forth on Schedule 3.12,
to the Knowledge of Seller and to the Knowledge of Kodak, there are no
underground storage tanks on any Owned Real Property or Leased Real
Property.
Section 3.13 Intellectual Property. (a) Schedule 3.13(a)
sets forth a list and description (including the country of registration)
of (i) all patents, patent applications, registered trademarks, trademark
applications, copyrights and copyright applications Related to the
Business, and (ii) all agreements under which Seller, Kodak or any
Affiliate of any of them is licensed or otherwise permitted by any Person
(other than Seller, Kodak or any Affiliate of either of them) to use the
Intellectual Property which are material to the Business. The trademarks
listed in Schedule 3.13(b)(i) (the "Selected Marks") include all of the
trademarks that are material to the Business.
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(b) (i) Except as set forth in Schedule 3.13(b)(i), with
respect to Intellectual Property other than trademarks, no product (or
component thereof) or process used, sold or manufactured by the Business
(x) infringes on or has infringed on or otherwise violates or has violated
valid and enforceable patents or registered copyrights of any other Person
or (y) misappropriates or has misappropriated the Intellectual Property of
any other Person, (ii) with respect to the Selected Marks and except as set
forth in Schedule 3.13(b)(ii), there are no restrictions that would
materially affect the use of the Selected Marks in connection with the
Business and the Selected Marks do not infringe upon or otherwise violate
and have not infringed upon or otherwise violated the valid and enforceable
trademarks of any other Person, and (iii) Seller has not received notice
that any Person is challenging, infringing or violating nor, to the
Knowledge of Seller or to the Knowledge of Kodak, is any Person
challenging, infringing or otherwise violating the Intellectual Property,
except in the case of (i), (ii) and (iii) above, for infringements,
violations, misappropriations or challenges which, individually or in the
aggregate, would not have a Material Adverse Effect or affect Purchaser's
ability to conduct the Business after the Closing substantially as
heretofore conducted in a manner that is material and adverse to the
Purchaser.
Section 3.14 Collective Bargaining Agreements. Except as set
forth in Schedule 3.14, neither Seller nor any Subsidiary
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is a party to or bound by any material labor agreement or collective
bargaining agreement respecting the Applicable Employees, nor is there
pending, or to the Knowledge of Seller threatened, any strike, walkout or
other work stoppage or any union organizing effort by or respecting the
Applicable Employees.
Section 3.15 Commitments. Schedule 3.15(i) sets forth a list,
as of the date hereof, of each written Commitment that, to the Knowledge of
Seller, relates to the Business (other than (i) purchase orders in the
ordinary and usual course of business, (ii) any Commitment involving the
payment of less than $250,000 in the aggregate or with a term of less than
one year, (iii) confidentiality agreements entered into in the usual course
of business, (iv) employment agreements covering non-U.S. Employees (other
than contracts with key non-U.S. Employees) and (v) trademark agreements
not related to Selected Marks and not containing restrictions on the use of
Selected Marks). Such Schedule does not omit any Commitment that is
material to the Business. Except as set forth in Schedule 3.15(ii), each
material Commitment is a valid and binding agreement of Seller or a
Subsidiary and is in full force and effect. Except as otherwise provided
in Schedule 3.15(iii), there is no default under any Commitment listed on
Schedule 3.15(i) which default has not been cured or waived and which
default would, individually or in the aggregate, have a Material Adverse
Effect or affect Purchaser's ability to conduct the Business after the
Closing
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substantially as heretofore conducted in a manner that is material
and
adverse to the Purchaser.
Section 3.16 Title to Property. (a) Except as set forth in
Schedule 3.16(a), the Transferred Assets constitute all the assets,
properties and rights necessary to conduct the Business in all material
respects as currently conducted.
(b) Seller has good (and, in the case of Owned Real Property,
marketable) title to, or a valid and binding leasehold interest in, the
property included in the Transferred Assets free and clear of all
Encumbrances, except (i) as set forth in Schedule 3.16(b), (ii) any
encumbrances disclosed in the Financial Statements, (iii) liens for Taxes,
assessments and other governmental charges not yet due and payable or due
but not delinquent or being contested in good faith by appropriate
proceedings, (iv) mechanics', workmen's, repairmen's, warehousemen's,
carriers' or other like liens arising or incurred in the ordinary course of
business, original purchase price conditional sales contracts 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 which would be shown by a current title report or other
similar report or listing, (B) any conditions that may be shown by a
current survey or physical inspection and (C) zoning, building and other
similar
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restrictions and (vi) Encumbrances which, individually or in the
aggregate,
would not have a Material Adverse Effect or affect Purchaser's ability to
conduct the Business after the Closing substantially as heretofore
conducted in a manner that is material and adverse to the Purchaser (all
items included in (i) through (vi), together with any matter set forth in
Schedule 3.16(b), are referred to collectively herein as the "Permitted
Encumbrances").
(c) Except as set forth on Schedule 3.16(c), the plants and
material buildings and structures included in the Transferred Assets have
no material structural defects. All of the material plants, buildings,
structures, machinery and equipment at or upon any of the Owned Real
Property or Leased Real Property are in satisfactory condition for use in
the ordinary course of the Business consistent with Sterling's and Seller's
past practice and Seller, Sterling or their Affiliates have performed
regular maintenance on such plants, buildings, structures, machinery,
equipment and other tangible personal property in accordance with
Sterling's and Seller's past practice (giving due account to the age and
length of use of the same, ordinary wear and tear excepted).
Section 3.17 Finders' Fees. Except for Goldman, Sachs & Co.
and McKinsey and Co., whose fees will be paid by Seller, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Seller or any Subsidiary
who might be entitled to
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any fee or commission from Seller in connection with the transactions
contemplated by this Agreement.
Section 3.18 Absence of Change. Except (i) as set forth in
Schedule 3.18, or (ii) for the Commitments entered into since January 1,
1994 that are listed in Schedule 3.15(i), since January 1, 1994, the
Business has not suffered a Material Adverse Change. Except to the extent
arising out of or relating to the transactions contemplated by this
Agreement and the L&F Restructuring, since January 1, 1994, the Business
has been operated in the ordinary course in a manner consistent with past
practice.
Section 3.19 Insurance. (a) Schedule 3.19(a) sets forth a
list of all material insurance policies or binders which are currently in
effect insuring the Transferred Assets or liabilities with respect to the
Business, and true and complete copies thereof have been delivered or made
available to Purchaser.
(b) With respect to the Business, (i) Seller or its Affiliates
have paid all premiums due and have not received any notice of cancellation
with respect to any insurance policy identified on Schedule 3.19(a), and
(ii) except as described on Schedule 3.19(b)(ii), (x) there are not pending
or asserted material claims against such insurance by the Seller or its
Affiliates as to which the insurers have denied liability, (y) there exist
no material claims under such insurance that have not been properly filed
by Seller or its Affiliates, and (z) none of
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Seller or its Affiliates has received notice of any pending or threatened
termination of any of such policies or any premium increases for the
current policy period with respect to any of such policies.
Section 3.20 Products. Except as set forth on Schedule 3.20,
there are no written statements, citations or decisions by any Governmental
Entity stating that any Product sold by Seller, Kodak or its Affiliates on
or prior to the Closing Date (each a "Product") is adulterated, misbranded,
defective or unsafe. Except as set forth on Schedule 3.20, to the
Knowledge of Seller or the Knowledge of Kodak, neither Seller, Kodak or any
Affiliate thereof has any liability with respect to any Product, other than
liability for returns or replacements under standard warranties and other
than liabilities which, individually or in the aggregate, would not have a
Material Adverse Effect.
Section 3.21 Undisclosed Liabilities. To the Knowledge of
Seller and to the Knowledge of Kodak, except as set forth in Schedule 3.21,
(i) the Transferred Subsidiary has no liabilities or obligations of any
kind whatsoever (whether absolute, accrued, contingent, determined,
determinable or otherwise), and (ii) none of Seller, Kodak or any Affiliate
of either of them has any such liabilities or obligations that, in any such
case, constitute Assumed Liabilities, except for liabilities or obligations
(x) to the extent reflected (as to amount and description) as liabilities
or reserved for on the
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Balance Sheet, (y) to the extent disclosed in a Schedule hereto or
(z) which were incurred in the ordinary course of business since
December 31, 1993 and are not subject to pending or threatened litigation,
other than those liabilities or obligations which, individually or in the
aggregate, would not have a Material Adverse Effect or affect Purchaser's
ability to conduct the Business after the Closing substantially as
heretofore conducted in a manner that is material and adverse to the
Purchaser.
Section 3.22 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, none
of Seller, Kodak, Sterling or any other Person makes any other express or
implied representation or warranty on behalf of Seller, Kodak or Sterling.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and Kodak as
follows:
Section 4.1 Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own and operate and to carry on its
business as currently conducted. Except as set forth on Schedule 4.1,
Purchaser is duly qualified to do business and is in good standing as a
foreign corporation
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in each jurisdiction where the ownership of its properties or the operation
of its business requires such qualification, except where the failure to be
so qualified or in good standing, as the case may be, would not materially
impair or delay Purchaser's ability to perform its obligations hereunder.
Section 4.2 Corporate Authorization. Purchaser has full
corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and to perform its obligations hereunder
and thereunder. The execution, delivery and performance by Purchaser of
this Agreement and each of the Ancillary Agreements have been duly and
validly authorized and no additional corporate authorization or consent is
required in connection with the execution, delivery and performance by
Purchaser of this Agreement and each of the Ancillary Agreements.
Section 4.3 Consents and Approvals. Except as specifically
set forth in Schedule 4.3 or as required by U.S. Antitrust Laws, European
Union Competition Law (or the Competition Law of France, Germany, Italy,
Spain or the United Kingdom, in each case to the extent not subject to
European Union jurisdiction), the Competition Laws of Australia, Canada or
Japan, the Exchange Act, the Investment Canada Act, FIFRA, the laws
governing or regulations promulgated by the United States Drug Enforcement
Agency or Bureau of Alcohol and Tobacco of the United States Department of
the Treasury, laws or regulations of the United States Food and Drug
Administration or any state, local or foreign governmental authority
requiring the
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registration of products for sale, or Hazardous Substance facility
permits,
air permits, water permits or any other permits required by any
Environmental Law, no consent, approval, waiver or authorization is
required to be obtained by Purchaser or any Affiliate of Purchaser from,
and no notice or filing is required to be given by Purchaser or any
Affiliate of Purchaser to or made by Purchaser or Affiliate of any
Purchaser with, any Federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance
by Purchaser of this Agreement and each of the Ancillary Agreements, other
than in all cases those the failure of which to obtain, give or make would
not have a material adverse effect on the business, financial condition or
results of operations of Purchaser or materially impair or delay the
ability of Purchaser to effect the Closing.
Section 4.4 Non-Contravention. Except as set forth in
Schedule 4.4, the execution, delivery and performance by Purchaser of this
Agreement and each of the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby, does not and will not
(i) violate any provision of the charter, bylaws or other organizational
documents of Purchaser or (ii) assuming compliance with the matters set
forth in Sections 3.4 and 4.3, violate or result in a breach of or
constitute a default under any law, rule, regulation, judgment, injunction,
order, decree or other restriction of any court or governmental authority
to which Purchaser is subject, including any
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Governmental Authorization, other than any conflict, breach,
termination,
default, cancellation, acceleration, loss, violation or Encumbrance which,
individually or in the aggregate, would not have a Material Adverse Effect
or materially impair or delay Purchaser's ability to perform its
obligations hereunder.
Section 4.5 Binding Effect. This Agreement constitutes, and
each of the Ancillary Agreements when executed and delivered by the parties
thereto will constitute, a valid and legally binding obligation of
Purchaser enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
Section 4.6 Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Purchaser or any Purchaser Subsidiary who
might be entitled to any fee or commission from Purchaser in connection
with the transactions contemplated by this Agreement.
Section 4.7 Financial Capability. On the Closing Date,
Purchaser will have sufficient funds to effect the Closing and all other
transactions contemplated by this Agreement.
Section 4.8 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV,
neither Purchaser nor any other Person makes any
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other express or implied representation or warranty on behalf of Purchaser.
ARTICLE V
COVENANTS
Section 5.1 Access. Prior to the Closing, Seller shall permit
Purchaser and its representatives to have full access, during regular
business hours and upon reasonable advance notice, to the Transferred
Assets and personnel of the Business, subject to reasonable rules and
regulations of Seller, and shall furnish, or cause to be furnished, to
Purchaser, any financial and operating data and other information that is
available with respect to the Business as Purchaser shall from time to time
reasonably request.
Section 5.2 Conduct of Business and Seller's Other Businesses.
(a) During the period from the date hereof to the Closing, except as
otherwise contemplated by this Agreement or as Purchaser shall otherwise
agree in writing in advance, Seller covenants and agrees that Seller and
each of the Affiliates shall conduct the Business in the ordinary and usual
course, and use its reasonable efforts to preserve intact its business and
relationships with third parties. During the period from the date hereof
to the Closing, except as otherwise provided for in this Agreement or as
Purchaser shall otherwise consent (which consent shall not be unreasonably
withheld), Seller covenants and agrees that with respect to the Business,
other than in the
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ordinary and usual course, it shall and shall cause its Affiliates to:
(i) maintain insurance coverage with respect to the Business
at presently existing levels;
(ii) not approve any new capital expenditures that exceed
$1,000,000 in the aggregate;
(iii) not dispose of, or incur, create or assume any
Encumbrance on, any capital assets of the Business if the greater of the
book value and the fair market value of such capital assets exceed
$1,000,000 in the aggregate;
(iv) not incur any indebtedness for money borrowed in excess
of $1,000,000 in the aggregate;
(v) not permit any Transferred Subsidiary to declare, or set
aside for payment, any dividend to be paid subsequent to the Closing Date;
(vi) not enter into any transaction that would materially
adversely affect Purchaser's ability to conduct the Business substantially
as heretofore conducted;
(vii) not increase materially the salary, wage, rate of
compensation, commission, bonus or other direct or indirect remuneration
payable to, or other compensation of, any Applicable Employees, or enter
into any contract or other binding commitment in respect of any such
increase nor amend, adopt or terminate any Benefit Plan covering Applicable
Employees or Former Employees in any way that materially increases the
amount of the Assumed Liability in respect of such plan, or enter into any
negotiations
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in respect of or enter into any collective bargaining agreement covering
Applicable Employees that would constitute an Assumed Liability except as
required by law or pursuant to the terms of a collective bargaining
agreement set forth in Schedule 3.14;
(viii) continue its pricing, marketing and sales practices
substantially in accordance with its past practices; or
(ix) not modify, terminate, amend or grant any waiver in
respect of any confidentiality agreement entered into with other parties in
connection with or relating to a possible sale of the Business if such
modification, termination, amendment or waiver would adversely affect the
Business.
Notwithstanding the foregoing, (x) this Section 5.2(a) shall
not restrict Seller's ability to make distributions of cash or short-term
investments to holders of its capital stock, (y) subject to clause (v)
above, this Section 5.2 shall not restrict the ability of any Subsidiary to
make distributions of cash or short-term investments to the holders of its
capital stock at any time prior to the Closing Date and (z) Seller's and
Kodak's effectuation of the L&F Restructuring shall in no event be deemed
to be a breach of the first sentence of this Section 5.2.
(b) During the period from the date hereof until March 31,
1995, Purchaser covenants and agrees that it shall cooperate with Seller
and shall use its reasonable efforts to assist Seller in Seller's
conducting Seller's Other Businesses in the ordinary and usual course and
in Seller's preserving intact Seller's Other Businesses and its
relationships with third parties, including
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making the management of the Business available to Seller's Other
Businesses as may reasonably be required by Seller; provided, however, that
compliance by Purchaser with this covenant shall not unduly disrupt the
operation of the Business.
Section 5.3 Reasonable Efforts; Good Faith. (a) Seller and
Purchaser shall cooperate and use their respective reasonable efforts to
fulfill the conditions precedent to the other party's obligations
hereunder, including but not limited to, securing as promptly as
practicable all consents, approvals, waivers and authorizations required in
connection with the transactions contemplated hereby. Purchaser and Seller
will promptly file documentary materials required by the U.S. Antitrust
Laws and European Union Competition Laws and promptly file any additional
information requested as soon as practicable after receipt of request
thereof.
(b) Without limiting the provisions set forth in paragraph
(a) above, Purchaser shall use its best efforts to take or cause to be
taken all actions necessary, proper or advisable to obtain any consent,
waiver, approval or authorization relating to any Competition Law that is
required for the consummation of the transactions contemplated by this
Agreement, which efforts shall include, without limitation, the proffer by
Purchaser of its willingness to accept an order providing for the
divestiture by Purchaser of such of the assets Relating to the Business
(or, in lieu thereof, assets and businesses of the Purchaser having an
approximately equivalent value), as are necessary for the
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Purchaser fully to consummate the transactions contemplated by this
Agreement, and an offer to hold separate such assets and businesses pending
such divestiture. In the event that regulatory authorities require the
divestiture or the holding separate by Purchaser following the Closing of
any of the Transferred Assets, no adjustment shall be made to the Purchase
Price and Purchaser shall be required to hold such assets or entities
separate, or to divest them, as the case may be, following the Closing.
Section 5.4 Tax Matters. (a) Proration of Taxes and Earnings
and Profits. To the extent permitted by law or administrative practice,
the taxable year of the Transferred Subsidiary shall end on and include the
Closing Date. Whenever it is necessary to determine the liability for
Taxes or the earnings and profits for a portion of a taxable year or period
that begins before and ends after the Closing Date, the determination of
the Taxes or the earnings and profits for the portion of the year or period
ending on, and the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that the taxable year or
period ended on and included the Closing Date, except that (i) with respect
to the Transferred Subsidiary, exemptions, allowances or deductions that
are calculated on an annual basis, and (ii) annual property taxes, shall be
prorated on the basis of the number of days in the annual period elapsed
through the Closing Date as compared
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with the number of days in the annual period elapsing after the Closing
Date.
(b) Tax Returns. (i) Kodak shall prepare, or cause to be
prepared, all Tax Returns relating to Taxes imposed with respect to the
Business for the taxable periods, or portions thereof, beginning before and
ending before or on the Closing Date. Kodak shall also prepare, or cause
to be prepared, any income Tax Returns for the Transferred Subsidiary for
the taxable period beginning before the Closing Date and ending in 1994.
Kodak shall file, or cause to be filed, when due all such Tax Returns which
Kodak or any of its Affiliates is required or permitted by law or
administrative practice to file.
(ii) Purchaser shall prepare, or cause to be prepared, and file,
or cause to be filed, when due all other Tax Returns with respect to the
Business due to be filed after the Closing Date.
(iii) To the extent permitted by law, all Tax Returns prepared
pursuant to Section 5.4(b)(i) and all Tax Returns prepared by Purchaser
with respect to taxable periods, or portions thereof, beginning before and
ending after the Closing Date, shall be prepared in all material respects,
and all elections with respect to such Tax Returns shall be made, in a
manner that is consistent with Kodak's, Seller's or their Affiliates' prior
practice, provided that, in the case of such Tax Returns to be prepared by
Purchaser, information regarding such prior practice is available to
Purchaser.
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(iv) If one party ("Payor") shall be liable hereunder for any
portion of the Tax payable in connection with any Tax Return to be filed by
the other party ("Preparer"), Preparer shall prepare and deliver to Payor a
copy of the relevant portions of such Tax Return, and any schedules, work
papers and other documentation then available that are relevant to the
preparation of such portions of the Tax Return, not later than 30 days
before the Due Date. Payor shall have the right to object to the Tax
Return on the grounds that such Tax Return violates the provisions of
clause (iii) above or does not conform with applicable law. If Preparer
and Payor are unable to resolve the disagreement by 20 days before the Due
Date, the dispute shall be referred to the CPA Firm whose determination
shall be binding upon both parties. Fees and expenses of the CPA Firm
shall be shared equally by the parties.
(v) If any party is liable for any Taxes reflected on a Tax
Return to be filed by the other party, the party that does not file the Tax
Return will transfer to the filing party the amount of Taxes for which the
non-filing party is liable as shown on such Tax Return, at least 2 days
before the Due Date. In case a dispute has been referred to the CPA Firm
and the decision of the CPA Firm is made after the Due Date, the filing
party will file any amendment to the Tax Return which is necessary to
reflect the CPA Firm's decision, and adjustment payments will be made
between the parties within 3 days to reflect such a decision.
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(c) Information to be Provided by Purchaser. (i) With
respect to Tax Returns to be prepared by Kodak pursuant to Section 5.4(b)
hereof, Purchaser shall not later than 60 days before the Due Date, prepare
and provide to Kodak a package of tax information materials (the "Tax
Package"), which shall be completed in accordance with past practice,
including past practice as to providing the information, schedules and work
papers.
(ii) Foreign Tax Receipts. To the extent not contained in the
Tax Package, Purchaser shall deliver to the tax director of Kodak certified
copies of all receipts that are reasonably available to Purchaser for any
foreign Tax with respect to which Sterling, Kodak or the Affiliates of
either of them could claim a foreign tax credit, and any other
documentation required and reasonably available to Purchaser in connection
with such entities claiming or supporting a claim for such foreign tax
credits promptly following either a request by Kodak for such receipts or
documentation or payment of any such foreign Taxes by Purchaser, any
Affiliate of Purchaser or any other party to whom Purchaser or an Affiliate
of Purchaser transfers any portion of the Transferred Assets. Purchaser
agrees, upon request of the Director of Corporate Tax of Kodak, to request,
for Kodak at Kodak's expense, from local tax authorities receipts for
foreign Taxes which have not been provided to Purchaser.
(d) Contest Provisions. (i) Notification of Contests. Each
of Purchaser and its Affiliates, on the one hand,
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and Kodak and Seller on the other (the "Recipient"), shall notify the tax
director of each other party in writing within 30 days of receipt by the
Recipient of written notice of any pending or threatened audits,
adjustments or assessments (a "Tax Audit") which may affect the liability
for Taxes of such other party. If the Recipient fails to give such notice
to the other party it shall not be entitled to indemnification for any
Taxes arising in connection with such Tax Audit to the extent such failure
to give notice materially adversely affects the other party's liability for
Taxes as a result of the outcome of the Tax Audit.
(ii) Which Party Controls. The party which has the greater
potential liability for the Tax Items which are being disputed shall
control the defense and settlement of the Tax Audit, provided that such
party defends the items as reported on the relevant Tax Return. In
defending the item as reported on the relevant Tax Return, the party may
negotiate any settlement that is reasonable provided that such party shall
be prohibited from reaching a settlement with regard to any such Tax Item
without the other's party consent, provided that such consent shall not be
unreasonably withheld. Any party whose liability for Taxes may be affected
by a Tax Audit shall be entitled to participate at its expense in such
defense and to employ counsel of its choice at its expense.
Notwithstanding the foregoing, in the case of a Tax Audit with respect to
the Transfer Taxes, Purchaser and Seller shall jointly control the defense
and settlement of such Tax Audit.
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<PAGE> 482
(e) Determination and Allocation of Consideration. The
parties to this Agreement agree to determine the amount of and allocate the
total consideration transferred by Purchaser to Seller pursuant to this
Agreement (the "Consideration") in accordance with the fair market value of
the assets and liabilities transferred. Kodak, Seller and Purchaser shall
each prepare one or more schedules determining and allocating the
Consideration and shall negotiate in good faith to reconcile such
schedules. If the Purchaser and Kodak cannot agree on a mutually
acceptable determination, allocation or determination and allocation of the
Consideration, Purchaser and Seller shall each determine, allocate or
determine and allocate, as the case may be, such Consideration in the
manner it considers appropriate. Seller and Purchaser each agree to
prepare and file an IRS Form 8594 in a timely fashion in accordance with
the rules under Section 1060 of the Code. To the extent that the
Consideration is adjusted after the Closing Date, the parties agree to
revise and amend the schedule and IRS Form 8594 in the same manner and
according to the same procedure. Any determination, allocation or
determination and allocation of the Consideration agreed upon by the
parties pursuant to the second sentence of this subsection shall be binding
on Kodak, Seller and Purchaser for all Tax reporting purposes.
(f) Employee Withholding and Reporting Matters. With respect
to the Employees, Purchaser shall, in accordance with and to the extent
permitted pursuant to Revenue Procedure 84-77,
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<PAGE> 483
1984-2 C.B. 753 and to the extent that Seller provides Purchaser with the
necessary information, assume all responsibility for preparing and filing
Form W-2, Wage and Tax Statement, Form W-3, Transmittal of Income and Tax
Statements, Form 941, Employer's Quarterly Federal Tax Return, Form W-4,
Employee's Withholding Allowance Certificate, and Form W-5, Earned Income
Credit Advance Payment Certificate, provided that Purchaser's compliance
with this Section 5.4(f) shall not cause Purchaser to incur any additional
costs under the Transition Services Agreement. Seller and Purchaser agree
to comply, and cause their respective Affiliates to comply, with the
procedures described in Section 5 of Revenue Procedure 84-77.
(g) Transfer Taxes. All excise, sales, use, transfer
(including real property transfer), stamp, documentary, filing, recordation
and other similar taxes which may be imposed or assessed as the result of
the transactions effected pursuant to this Agreement, excluding any real
property gains taxes which shall be the sole liability of Seller, (the
"Transfer Taxes"), together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties
shall be borne equally by Seller and Purchaser. Any such Transfer Taxes or
fees resulting from any subsequent transfer of all or any portion of the
Transferred Assets or Assumed Liabilities occurring on or subsequent to the
Closing shall be borne entirely by the Purchaser, and Purchaser shall
indemnify Kodak and Seller for any liabilities arising in
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<PAGE> 484
connection therewith. Notwithstanding the provisions of Section
5.4(b),
which shall not apply to Tax Returns relating to Transfer Taxes, any Tax
Returns that are required to be filed in connection with Transfer Taxes
shall be prepared and filed when due by the party primarily or customarily
responsible under the applicable local law for filing such Tax Returns, and
such party shall use its reasonable best efforts to provide such Tax
Returns to the other parties, for the other parties' review and approval
which shall not be unreasonably withheld, at least 5 days prior to the Due
Date for such Tax Returns. At least 2 days before the Due Date, the non-
filing party will transfer to the filing party 50 percent of the liability
shown on such Tax Returns. Prior to the preparation of any Transfer Tax
Returns the parties will use their best efforts to agree on the values of
the Transferred Assets subject to Transfer Taxes.
(h) No Section 338 Election. The Purchaser will not make an
election pursuant to Section 338 of the Code or a similar law of any other
country with respect to the Transferred Subsidiary.
(i) Purchaser's Claiming, Receiving or Using Refunds and
Overpayments. If, after the Closing, Purchaser or its Affiliates (1)
receive any refund, or (2) utilize the benefit of any overpayment, of Taxes
(except to the extent reflected as an asset on the Adjusted Closing Balance
Sheet) which were Excluded Liabilities, Purchaser shall promptly transfer,
or cause to be transferred, to Kodak, or at Kodak's direction to Seller,
the
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<PAGE> 485
entire amount of the refund or overpayment (including interest received in
respect of such refund or overpayment, and net of any Taxes incurred by
Purchaser as a result of the receipt of such refund or overpayment)
received or utilized by Purchaser or its Affiliates. If (i) the amount of
Taxes reflected as Current Liabilities on the Adjusted Closing Balance
Sheet exceeds the actual liability for such Taxes or (ii) after the
Closing, Purchaser or its Affiliates receive a refund of Taxes reflected as
Current Liabilities on the Adjusted Closing Balance Sheet or utilize the
benefit of any overpayment of Taxes so reflected, then the amount of any
such excess, refund or utilization (net of any Taxes incurred by Purchaser
as a result of the receipt of any refund or overpayment) shall be for the
benefit of and transferred promptly to Seller (without duplication of any
amount paid pursuant to the previous sentence) to the extent (and only to
the extent) that such amount does not exceed the excess of (x) the amount
paid to Purchaser pursuant to Section 2.6(e) over (y) the sum of (A) the
amount that would have been paid to Purchaser pursuant to Section 2.6(e)
had such excess, refund or overpayment been reflected on the Adjusted
Closing Balance Sheet as an asset of the Business (with the amount of Taxes
reflected as Current Liabilities being taken into account as recorded on
the Adjusted Closing Balance Sheet) and (B) the amount of any prior
payments to Kodak or Seller pursuant to this Section 5.4(i). Purchaser
agrees to cooperate with Seller and Kodak with respect to matters
concerning refunds and
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<PAGE> 486
overpayments. If requested by Seller or Kodak, Purchaser agrees to
claim
any such refund or to utilize any such overpayment, to the extent
Purchaser, in its reasonable judgement, will not be adversely affected by
such claim or utilization, and to furnish to Kodak all information, records
and assistance necessary to verify the amount of any such refund so claimed
or overpayment so utilized.
(j) Post-Closing Actions Which Affect Kodak or Seller's
Liability for Taxes. (i) During the period beginning on the Closing Date
and ending on the first December 31st thereafter Purchaser shall not permit
the Transferred Subsidiary to (A) if Purchaser assigns its right under this
Agreement to purchase the stock of the Transferred Subsidiary to a foreign
Affiliate, sell (including a deemed sale pursuant to Section 338 of the
Code or a similar law of any other country), exchange, distribute,
reorganize or otherwise dispose of any property the sale of which produces
foreign personal holding company income within the meaning of Section
954(a)(1) of the Code or a similar law of any other country or (B) make any
distribution (including a deemed distribution) to shareholders in excess of
current earnings and profits (as computed for U.S. Federal income tax
purposes) derived during the period beginning on the day following the
Closing Date and ending on the first December 31st thereafter.
(ii) Except to the extent required by law, neither Purchaser,
the Transferred Subsidiary nor any Affiliate of either
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<PAGE> 487
of them shall, without the prior written consent of Kodak which consent
shall not be unreasonably withheld, amend any Tax Return filed by, or with
respect to, the Transferred Subsidiary for any taxable period, or portion
thereof, beginning before the Closing Date.
(k) Maintenance of Books and Records. Until the applicable
statute of limitations (including periods of waiver) has run for any Tax
Returns filed or required to be filed covering the periods up to and
including the Closing Date, Purchaser shall retain all Books and Records
with respect to the Business in existence on the Closing Date and Kodak and
Seller shall retain all Books and Records not described in Section 2.1(h)
or 2.2(j) with respect to the Business in existence on the Closing Date,
and after the Closing Date Purchaser will provide Kodak, and Kodak and
Seller will provide Purchaser, access to such Books and Records for
inspection and copying by Kodak, Purchaser and either of their agents upon
reasonable request and upon reasonable notice. After the expiration of
such period, no such Books and Records shall be destroyed by Purchaser
without first advising the Director of Corporate Tax of Kodak, or by Kodak
or Seller without first advising the Director of corporate tax of
Purchaser, in writing identifying such Books and Records and giving Kodak
or Purchaser, as the case may be, at least 60 days to obtain possession
thereof.
(l) Assistance and Cooperation. The parties agree that,
after the Closing Date:
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<PAGE> 488
(A) The parties shall reasonably assist (and cause their
respective affiliates reasonably to assist) the other parties in
preparing any Tax Returns with respect to the Business which such
other parties are responsible for preparing and filing;
(B) The parties shall reasonably cooperate fully in preparing
for any audits of, or disputes with taxing authorities regarding, any
Tax Returns and payments in respect thereof;
(C) The parties shall make available to each other and to any
taxing authority as reasonably requested all relevant Books and
Records relating to Taxes;
(D) The parties shall provide timely notice to the other in
writing of any pending or proposed audits or assessments with respect
to Taxes for which the other may have an indemnification obligation
under this Agreement;
(E) The parties shall furnish the other with copies of all
relevant correspondence received from any taxing authority in
connection with any audit or information request with respect to any
Taxes referred to in subsection (D) above; and
(F) The party requesting assistance or cooperation shall bear
the other party's out-of-pocket expenses in complying with such
request to the extent that those expenses are attributable to fees
and other costs of unaffiliated third-party service providers.
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<PAGE> 489
(m) Tax Certification. Seller shall deliver to Purchaser at
the Closing a certification described in Treasury Regulation section
1.1445-2(b)(2)(i) that is substantially in the form set forth in Treasury
Regulation section 1.1445-2(b)(2)(iii)(B).
Section 5.5 Post-Closing Obligations of the Business to
Certain Employees. (a) Purchaser shall offer employment (or, in the case
of Applicable Employees of the Transferred Subsidiary, continue employment)
on substantially similar terms and conditions in comparable positions to
all Applicable Employees on the Closing Date or upon the return of any such
Applicable Employee to active employment, and will maintain for a period of
two years after the Closing Date, without interruption, employee
compensation and benefit plans, programs and policies and fringe benefits
(including post-employment welfare benefits) that, in the aggregate, will
provide benefits to Applicable Employees that are no less favorable than
those provided pursuant to such employee benefit plans, programs and
policies, and fringe benefits, of the Business as in effect on the Closing
Date which, with respect to U.S. Applicable Employees, are listed on
Schedule 3.10(a); provided, however, that nothing herein shall require or
be construed to require Purchaser or any of its Affiliates to continue the
employment of any Applicable Employee for any particular period of time
after the Closing Date nor shall it prohibit or be construed to prohibit
Purchaser or any of its Affiliates from terminating the employment of any
Applicable
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<PAGE> 490
Employee; provided, further, however, that the requirements of this
sentence shall not apply to: (i) Employees who are covered by a collective
bargaining agreement, (ii) benefits which vest, or the payment of which is
accelerated or increased in amount, upon a change in control of Kodak,
Seller or Purchaser, (iii) benefits or changes therein mandated by
applicable law, or (iv) benefits the value of which is based on the value
of the securities of Kodak, Seller or Purchaser or any of their respective
Affiliates or which gave (or give) Applicable Employees the right to
purchase securities of Kodak, Seller or Purchaser or any of their
respective Affiliates. Notwithstanding the foregoing, for a period of two
years after the Closing Date, Purchaser will provide to each Applicable
Employee (other than any Applicable Employee subject to a collective
bargaining agreement) who is terminated by Purchaser after the Closing Date
severance pay and benefits which are no less favorable than the severance
pay and benefits, if any, that would be payable under similar circumstances
under the applicable severance plans, programs and policies of Seller or
any Subsidiary or Affiliate as in effect on the date of this Agreement
which, with respect to U.S. Applicable Employees, are listed on Schedule
3.10(a). Applicable Employees shall be given credit for all service with
Kodak, Seller, Sterling or any Subsidiary or Affiliate (or service credited
by Kodak, Seller, Sterling or any Subsidiary or Affiliate) under (i) all
employee benefit plans, programs and policies, and fringe benefits of the
Business or Purchaser in
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<PAGE> 491
which they become participants (other than the Transferee Pension Plan) for
purposes of eligibility, vesting and benefit accrual; provided, however,
that nothing herein shall require Purchaser to provide duplicate benefits
for the same period of service and (ii) severance plans for purposes of
calculating the amount of each Applicable Employee's severance benefits.
In addition, and notwithstanding the foregoing, Purchaser will assume the
responsibility to pay, and shall provide to, Applicable Employees the
benefits due and owing under the L&F Products Relocation Program listed on
Schedule 3.10(a).
(b) "Applicable Employees" means all active Employees.
Active Employees for this purpose shall include Employees on temporary
leave for purposes of jury or annual two-week national service/military
duty; Employees who on the Closing Date are on Nonmedical Leave of Absence;
provided, however, that no such Employee shall be guaranteed reinstatement
to active service if his return to employment is contrary to the terms of
his leave, unless otherwise required by applicable law; and Employees who
on the Closing Date are on disability or medical leave; provided, however,
that no such Employee shall be guaranteed reinstatement to active service
if he is incapable of working in accordance with the policies, practices
and procedures of Purchaser.
(c) Effective as of the Closing Date, Purchaser shall
establish one or more defined contribution plans (the "Transferee Savings
Plans") for the benefit of Employees who were participants in the L&F
Products Employee Savings Plan I and the
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<PAGE> 492
L&F Products Employee Savings Plan II (the "Seller Savings Plans"). Such
Employees are referred to hereinafter as the "Savings Plan Employees".
Seller shall cause to be transferred from the Seller Savings
Plans to the Transferee Savings Plans the liability for the account
balances of the Savings Plan Employees, together with cash or other assets
acceptable to Purchaser, the fair market value of which is equal to such
liability, and Purchaser shall cause the Transferee Savings Plans to accept
such transfers. The transfer of assets shall take place within 90 days
after the Closing Date; provided, however, that in no event shall such
transfer take place until the later of (i) the furnishing to Seller by
Purchaser of a favorable determination letter from the Internal Revenue
Service with respect to the qualification of the Transferee Savings Plans
under Section 401(a) of the Code, and (ii) the receipt by Seller of
favorable determination letters from the Internal Revenue Service with
respect to the continued qualification of the Seller Savings Plans under
Section 401(a) of the Code, as amended to comply with changes to the
qualification requirements of Section 401(a) of the Code made by the Tax
Reform Act of 1986 and other recent legislation and regulations.
(d) Effective as of the Closing Date, Purchaser shall
establish one or more defined benefit plans (the "Transferee Pension
Plans") for the benefit of Employees who participated in the Kodak
Retirement Income Plan and the Retirement Income Plan for the Hourly
Employees of L&F Products (the "Seller Retirement
<PAGE>
<PAGE> 493
Plans"). (Such Employees are referred to hereinafter as the "Retirement
Plan Employees"). The Transferee Pension Plans shall (A) recognize for all
purposes thereunder the service of the Retirement Plan Employees which was
recognized under the Seller Retirement Plans; provided, however, that
nothing herein shall require Purchaser to provide duplicate benefits for
the same period of service; and provided further, however, that nothing
herein shall require the Transferee Pension Plans to recognize increases in
the compensation of the Retirement Plan Employees after the second
anniversary of the Closing Date with respect to their benefit accrual
service as of such date if the transfer of assets referred to below has not
occurred as of such date, and (B) provide, upon the transfer of assets
referred to below, that the benefit liabilities of the Retirement Plans
Employees under the Transferee Pension Plans shall in no event be less than
their benefit liabilities under the Seller Retirement Plans as of the
Closing Date.
With respect to each Seller Retirement Plan, Kodak or Seller,
as applicable, shall cause to be transferred from the trust under such
Seller Retirement Plan to the trust under the Transferee Pension Plan
assets in cash, cash equivalents or marketable securities acceptable to
Purchaser, the value of which shall be equal to the greater of (1) the
amount required to be transferred under Section 414(l) of the Code or (2)
the product of (x) times (y), where (x) equals the fair market value of the
assets of each Seller Retirement Plan on the date of actual
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<PAGE> 494
transfer of assets from the trust thereunder to the trust under the
applicable Transferee Pension Plan, and (y) equals a fraction, the
numerator of which is the present value of the benefit liabilities on a
termination basis of the Retirement Plan Employees under the applicable
Seller Retirement Plan as of the effective date of the transfer (the last
day of the month in which the Closing Date occurs) and the denominator of
which is the present value of the benefit liabilities on a termination
basis of all participants in the applicable Seller Retirement Plan as of
the effective date of the transfer (the last day of the month in which the
Closing Date occurs); provided, however, that benefits of the Retirement
Plan Employees shall be calculated as if the credited service for each
Retirement Plan Employee continued to accrue through the last day of the
calendar month in which the Closing Date occurs. Purchaser shall cause the
Transferee Pension Plans to accept such transfers.
The amount to be transferred shall be equitably adjusted to
take into account benefit payments from the Seller Retirement Plans after
the Closing Date but prior to the date of transfer provided for in this
paragraph (d).
Subject to the procedures set forth in Section 5.5(j), the
actuary for the applicable Seller Retirement Plan shall determine the
benefit liabilities under each Seller Retirement Plan, valued as of the
effective date of the transfer (the last day of the month in which the
Closing Date occurs), on the basis of an interest rate selected by the
respective Plan's actuary
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<PAGE> 495
such that, together with the other actuarial assumptions contained in the
most recent actuarial report for such Plan available as of the date of this
Agreement, the actuarial basis for such valuation will be similar to that
used as of the effective date of the transfer (the last day of the month in
which the Closing Date occurs), by insurance companies for annuity
purchases in connection with single employer pension plan terminations
which, in the case of the interest rate used for the Kodak Retirement
Income Plan, would refer only to terminating plans with liabilities in
excess of $100 million.
The transfer of assets referred to above shall take place
within 180 days after the Closing Date; provided, however, that in no event
shall such transfer take place until the last to occur of the following:
(i) Purchaser has furnished to Kodak or Seller, as applicable, a favorable
determination letter from the Internal Revenue Service with respect to the
qualification of the applicable Transferee Pension Plan under Section
401(a) of the Code, (ii) the receipt by Kodak or Seller, as applicable, of
a favorable determination letter from the Internal Revenue Service with
respect to the continued qualification of the applicable Seller Retirement
Plan under Section 401(a) of the Code, as amended to (A) comply with
changes to the qualification requirements of Section 401(a) of the Code
made by the Tax Reform Act of 1986 and other recent legislation and
regulations and (B) provide for the transfer of assets and benefit
liabilities
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<PAGE> 496
referred to in this Section, and (iii) the receipt of any other necessary
governmental approval.
Notwithstanding anything contained in this Section to the
contrary, (A) in the event that the Internal Revenue Service or any other
governmental agency takes the position in a determination letter, ruling,
advisory opinion or other written or oral communication that the transfer
of assets referred to in this Section cannot be made unless (i) additional
contributions are made to a Seller Retirement Plan or a Transferee Pension
Plan or (ii) a Seller Retirement Plan retains primary or secondary
liability with respect to the benefit liabilities under such Seller
Retirement Plan attributable to Transferred Retirement Plan Employees or
(B) in the event that a lawsuit is instituted by any of the foregoing or by
one or more participants in, or fiduciaries (other than Seller, Kodak or
Purchaser) of, a Seller Retirement Plan or a Transferee Pension Plan which
seeks to enjoin such transfer, to require additional contributions to a
Seller Retirement Plan or Transferee Pension Plan, or to have a Seller
Retirement Plan remain liable in whole or in part with respect to any of
the benefit liabilities under such Seller Retirement Plan attributable to
Transferred Retirement Plan Employees, then the transfer of assets referred
to in this Section from such Seller Retirement Plan will not be made until
the earliest of (I) the date the issues raised by the Internal Revenue
Service or any other governmental agency or such lawsuit are resolved
favorably, and Seller or Kodak and, as applicable,
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<PAGE> 497
the Seller Retirement Plan shall make every effort in good faith to carry
out the asset transfer, including, but not limited to, the vigorous defense
of any lawsuit described in clause (B), and the exhaustion of all rights of
available judicial review and appeal, or (II) the date Seller and
Purchaser, or Kodak and Purchaser, as applicable, enter into a written
agreement to resolve on a basis mutually satisfactory to them the issues
raised by the Internal Revenue Service or any other governmental agency or
such lawsuit. Furthermore, if such transfer has not occurred by the fourth
anniversary of the Closing Date by reason of the preceding sentence, then
there shall be no transfer of such assets and liabilities. Purchaser shall
have no obligation to recognize service of the Retirement Plan Employees
under the Transferee Pension Plan accrued after the second anniversary of
the Closing Date.
Pending the completion of the transfers described in this
paragraph (d), Seller or Kodak, as applicable, and Purchaser shall make
arrangements for any required payments to the Retirement Plan Employees
from the Seller Retirement Plans. Seller and Purchaser shall provide each
other with access to information reasonably necessary in order to carry out
the provisions of this paragraph.
(e) With respect to the Applicable Employees and their
beneficiaries who are participants in Seller's medical, dental or health
plans as of the Closing Date, Purchaser shall include them in Purchaser's
medical, dental or health plans as of the Closing
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<PAGE> 498
Date and such plans shall waive any preexisting condition limitations and
shall honor any deductible and out of pocket expenses incurred by such
Applicable Employees and their beneficiaries under Seller's medical, dental
or health plans during the portion of the calendar year preceding the
Closing Date. Seller shall retain responsibility for all claims incurred
by Employees (i) under any medical, dental or health plans for treatment or
service rendered prior to the Closing Date; (ii) under any life insurance
plans with respect to deaths occurring prior to the Closing Date; and (iii)
any other payments or benefits due and payable but not paid on or prior to
the Closing Date under any other employee welfare benefit plans. For the
purposes of the preceding sentence, a claim shall be deemed to have been
incurred on the date on which medical or other treatment or service was
rendered and not the date of the inception of the related illness to injury
or the date of submission of a claim related thereto.
(f) Purchaser shall not assume (i) any obligations or
liabilities under the Sterling Winthrop Inc. Deferred Compensation Plan,
Sterling Winthrop Inc. Supplemental Executive Retirement Plan, Sterling
Winthrop Inc. Foreign Service Pension Plan, L&F Products Inc. Deferred
Compensation Plan, L&F Products Inc. Supplemental Executive Retirement Plan
or any other deferred compensation or supplemental executive retirement
plan; (ii) any obligations or liabilities relating to any disability claims
with respect to Employees who are disabled prior to October 1, 1994;
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<PAGE> 499
(iii) any obligations or liabilities under any employment contract not
listed on Schedule 3.10(a) and Schedule 3.15(i) and (iv) any obligations or
liabilities under any Benefit Plan, contract or other arrangement for
bonuses or other payments that arise as a result of the transactions
contemplated by this Agreement or the transactions relating to the
disposition of Seller's Other Businesses.
(g) Purchaser shall assume the liability for, and honor the
terms and conditions of, all executive employment agreements of active
Employees as in effect on the date of this Agreement and listed on Schedule
3.10(a) and Schedule 3.15(i), except that it shall not assume any
liabilities under such agreements that arise by reason of the termination
or deemed termination of any such Employee's employment resulting from the
consummation of the transactions contemplated by this Agreement or the
transactions relating to the disposition of Seller's Other Businesses.
(h) Sterling and Purchaser shall use their best efforts to
provide for transfers of assets and liabilities from Seller's non-U.S.
benefit plans with respect to Employees in a manner consistent with the
general principles expressed in this Section.
(i) Purchaser shall not offer employment to any current
employee of Seller not set forth in Schedule 1.1(a) prior to the closing
date under the Asset Purchase Agreement among Kodak, Seller, Sterling and
Reckitt & Colman plc dated as of
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<PAGE> 500
September 26, 1994 (the "HH Employees") unless Purchaser assumes all
liabilities with respect to such employees under the L&F Products Inc.
Supplemental Executive Retirement Plan.
(j) With respect to the determination of the amount of the
assets and liabilities relating to the pension transfer described in
Section 5.5(d), the following procedures shall apply. Prior to the
transfer of any such assets or liabilities Seller shall present to
Purchaser a statement ("Seller's Statement") setting forth the proposed
amount of such assets and/or liabilities and containing a detailed
explanation of the bases and methods used in calculating such amount(s).
If Purchaser believes that any amount set forth in any such statement has
not been properly calculated in accordance with Section 5.5(d), Purchaser
shall deliver to Seller a written notice of dispute within 30 days after
Purchaser's receipt of Seller's Statement and Seller shall supply Purchaser
with all information Purchaser may reasonably request to assist Purchaser
in assessing the accuracy of Seller's Statement. If the parties are not
able to resolve their dispute within 20 days after Purchaser is provided
with the requested information, the dispute shall be submitted to an
independent accounting or actuarial firm selected by mutual agreement of
Seller and Purchaser the fees and expenses of which shall be shared equally
by the parties. The decision of such accounting or actuarial firm shall be
rendered within 30 days after the dispute is submitted to such accounting
or actuarial firm and shall be binding on all parties.
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<PAGE> 501
(k) If the actual liability under FAS 106 with respect to
former Employees, determined as of the Closing Date for purposes of the
Closing Balance Sheet in accordance with the methodology described in
footnote (B) to Annex 1 to Section 2.6(b) (but without regard to the
limitation on the amount of such liability that may be included in the
Closing Balance Sheet as described in footnote (B) to said Annex I),
exceeds $700,000, the Seller shall promptly pay to Purchaser the amount of
such liability in excess of $700,000.
Section 5.6 Compliance with WARN, etc. Purchaser with respect
to the Applicable Employees will timely give all notices required to be
given under WARN or other similar statutes or regulations of any
jurisdiction relating to any plant closing or mass layoff occurring on or
after the Closing or as otherwise required by any such statute.
Section 5.7 Further Assurances. At any time after the Closing
Date, Seller and Purchaser shall promptly execute, acknowledge and deliver
any other assurances or documents reasonably requested by Seller and
Purchaser, as the case may be, and necessary for Seller and Purchaser, as
the case may be, to satisfy its respective obligations hereunder or obtain
the benefits contemplated hereby.
Section 5.8 Use of Corporate Names. Except as set forth in
the subsections of this Section 5.8, after the Closing, Purchaser shall not
use any of the Excluded Marks.
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<PAGE> 502
(a) Purchaser may continue to use the Excluded Marks for a
period of six months after the Closing (one year after the Closing in
the case of "L&F" and "Lehn & Fink"), or until inventory of labels,
packaging, nameplates and promotional materials are exhausted
(whichever occurs first), on labels, packaging, nameplates and
promotional materials in existence as of the Closing Date and marked
with Excluded Marks; Purchaser may apply such labels, nameplates and
packaging only to inventory of Product that is in existence as of the
Closing Date, which was manufactured by Seller.
Section 5.9 Transition Services. (a) Subject to the
provisions of Section 5.9(b) below, on the Closing Date, Purchaser and each
of Sterling and Seller shall execute and deliver, or shall have executed
and delivered, a transition services agreement or agreements (the
"Transition Services Agreement"), in form and substance mutually agreeable
to the parties, pursuant to which (i) for a period of one year following
the Closing Date, Sterling and Seller shall make available to Purchaser the
support and administrative services currently being provided by Sterling or
Seller, as the case may be, to the Business on a basis substantially
consistent with Sterling's and Seller's recent historical practice and for
a price equal to the fully allocated cost of the service provider (which
shall be substantially similar to that reflected with respect to such
services in the Financial Statements), including, without
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<PAGE> 503
limitation, computer and data processing services and any
software
associated therewith, customer billing services, customer equipment
services, employee benefit plan administration, the use of office and
warehouse facilities and related site services, utility services,
distribution services and maintenance services for equipment included in
the Transferred Assets (such services, "Transition Services"), and
(ii) Purchaser shall make available to Seller such Transition Services, on
a basis substantially consistent with Seller's recent historical practice
with respect to the Business and for a price equal to the fully allocated
cost of the service provider, as are necessary for the normal operation of
Seller's Other Businesses during such period of one year following the
closing of the purchase and sale of Seller's Other Businesses or such
shorter period as Seller or such purchaser may request. It is understood
and agreed that Seller's rights and obligations under the Transition
Services Agreement shall be assumed by the purchaser of Seller's Other
Businesses, in accordance with the terms of the purchase and sale agreement
relating to Seller's Other Businesses, in connection with the closing of
the transactions contemplated by such agreement, but Seller shall remain
secondarily liable in respect of its obligations thereunder notwithstanding
such assumption.
(b) Notwithstanding the provisions of Section 5.9(a), if the
closing under the agreement relating to the purchase and sale of Seller's
Other Businesses shall have occurred prior to
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the Closing Date, then Seller covenants and agrees that, on or prior to
such closing date, it shall enter into a Transition Services Agreement with
the purchaser of Seller's Other Businesses in form and substance reasonably
satisfactory to Purchaser that incorporates the terms and conditions set
forth in clauses (i) and (ii) in Section 5.9(a), and it is understood and
agreed that Seller's rights and obligations thereunder shall be assigned to
Purchaser on the Closing Date, but Seller shall remain secondarily liable
in respect of its obligations thereunder notwithstanding such assignment.
Section 5.10 Supply Agreement. (a) Subject to the provisions
of Section 5.10(b) below, on the Closing Date, Purchaser and each of
Sterling and Seller shall execute and deliver, or shall have executed and
delivered, a supply agreement or agreements (the "Supply Agreement") in
form and substance mutually agreeable to the parties pursuant to which (i)
Sterling and Seller shall agree to maintain in place all agreements
existing on the Closing Date listed in Schedule 5.10 that provide for the
supply by Seller to Purchaser of materials to the Business for a period of
three years from the Closing Date for a price equal to the supplier's fully
allocated cost (as specified in Section 5.9(a)) plus three percent (3%) and
(ii) Purchaser shall agree to maintain in place all agreements existing on
the Closing Date listed in Schedule 5.10 that provide for the supply by
Purchaser to Seller or the purchaser of Seller's Other Businesses, as the
case may be, of materials to Seller's Other
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Businesses for a period of three years following the closing date under
the
agreement for the purchase and sale of Seller's Other Businesses and for a
price equal to the supplier's fully allocated cost plus three percent (3%).
It is understood and agreed that Seller's rights and obligations under the
Supply Agreement shall be assumed by the purchaser of Seller's Other
Businesses, in accordance with the terms of the purchase and sale agreement
relating to Seller's Other Businesses, in connection with the closing of
the transactions contemplated by such agreement, but Seller shall remain
secondarily liable in respect of its obligations thereunder notwithstanding
such assumption.
(b) Notwithstanding the provisions of Section 5.10(a), if the
closing date for the purchase and sale of Seller's Other Businesses shall
have occurred prior to the Closing Date, then Seller covenants and agrees
that, on or prior to such closing date, it shall enter into a Supply
Agreement with the purchaser of Seller's Other Businesses, in form and
substance reasonably satisfactory to Purchaser, that incorporates the terms
and conditions set forth in clauses (i) and (ii) in Section 5.10(a), and it
is understood and agreed that Seller's rights and obligations thereunder
shall be assigned to Purchaser on the Closing Date, but Seller shall remain
secondarily liable in respect of its obligations thereunder notwithstanding
such assignment.
Section 5.11 Software License Agreement. At the Closing,
Purchaser and Seller shall execute and deliver a non-
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assignable (except upon the sale by Purchaser of the Business)
perpetual
royalty-free license for the benefit of Purchaser upon customary terms and
otherwise in form and substance reasonably satisfactory to the Purchaser,
to use (i) the computer software (but not future enhancements or
improvements thereto except as provided in clause (ii) below) that supports
the applications described in Schedule 5.11 and (ii) all improvements or
enhancements to such software made at the expense of the Purchaser
following the Closing Date; provided, however, that (x) such software and
related improvements and enhancements may be used only to the extent
necessary to support the Business and the products currently sold by the
Business and any other products that would reasonably by characterized as
"do-it-yourself" products within the context of Seller's activities as
currently conducted, and (y) Seller shall make no representation or
warranty with respect to such software, including without limitation any
implied warranty of merchantability or fitness for a particular purpose.
Section 5.12 Insurance. (a) Kodak and Seller shall, until
the Closing, maintain insurance coverage with respect to the Business and
the Transferred Assets at presently existing levels.
(b) With respect to property insurance underwritten by all
insurance companies that are not Affiliates of Kodak, Kodak or Seller will
promptly file and diligently prosecute all claims relating to any Loss
suffered by the Business after December 31,
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1993 that is covered by such insurance. To the extent that Kodak or Seller
receives payment in respect of any such claim Kodak or Seller will either
(a) apply the amounts received to the Business in the event such amounts
are received prior to Closing or (b) pay over such amounts to Purchaser.
To the extent permissible under the terms of such insurance policies and
applicable Law, Kodak or Seller shall cause Purchaser to be a named
beneficiary under such insurance policies and, as of the Closing Date, to
assign outstanding claims to Purchaser.
(c) With respect to insurance covering liability to third
parties underwritten by all insurance companies that are not Affiliates of
Kodak and that is written on a claims-made basis, Kodak or Seller will
promptly file and diligently prosecute all claims relating to any liability
that constitutes or would constitute an Assumed Liability and that is
covered by such insurance. To the extent that Kodak or Seller receives
payment in respect of any such liability which had not been discharged by
Seller prior to Closing, Kodak or Seller will either apply such amounts to
discharge (to the extent of such amounts) such liability prior to the
Closing or pay over such amounts to Purchaser at or after Closing, in
either case promptly after the receipt thereof by Kodak or Seller. Seller
will assign outstanding claims to Purchaser as of the Closing Date. Seller
shall, to the extent permissible under the terms of such insurance policies
and applicable law, cause Purchaser to be a named beneficiary in respect of
any claims relating to
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Transferred Assets or Assumed Liabilities which had not been discharged
by
Seller prior to Closing and, as of the Closing Date, to assign outstanding
claims to Purchaser.
(d) With respect to insurance covering liability to third
parties that is written on an occurrence basis, Kodak or Seller will
promptly file and diligently prosecute all claims relating to any liability
that constitutes or would constitute an Assumed Liability and that is
covered by such insurance. To the extent Kodak or Seller receives payment
in respect of any claim relating to a liability that constitutes or would
constitute an Assumed Liability and has not been discharged prior to
Closing, Seller or Kodak will either apply such amounts to discharge (to
the extent of such amounts) such liability prior to the Closing or will pay
over such amounts to Purchaser at or after Closing, in either case promptly
after receipt thereof by Seller or Kodak. Seller shall, to the extent
permissible under the terms of such insurance policies and applicable law,
cause Purchaser to be a named beneficiary in respect of any claims relating
to Assumed Liabilities which had not been discharged by Seller prior to
Closing and, as of the Closing Date, to assign outstanding claims to
Purchaser.
(e) If any liability which would, but for the application of
this Section 5.12(e), constitute an Assumed Liability, is covered by
insurance under policies underwritten by insurance companies that are not
Affiliates of Kodak, then such
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liability shall, to the extent (but only to the extent) of such coverage,
be deemed to be an Excluded Liability.
Section 5.13 Acquisition of Rights to Confidentiality. At the
Closing, Kodak, Seller or their Affiliates shall assign to Purchaser all
rights of Kodak, Seller or any Affiliate under any confidentiality
agreements between Kodak, Seller or any Affiliate and Persons other than
Purchaser that were entered into in connection with or relating to a
possible sale of the Business or any part thereof, including, without
limitation, the right to enforce all terms of such confidentiality
agreements to the extent related to the Business. At the Closing, Kodak,
Seller or any Affiliate shall deliver to Purchaser the original executed
copies of all such confidentiality agreements.
Section 5.14 No Shopping. Kodak and Seller agree that they
shall not, and shall not permit their Affiliates or representatives to,
directly or indirectly, in any way contact, initiate, solicit, enter into
or conduct any discussions or negotiations, or enter into any agreement,
whether written or oral, with any Person with respect to the direct or
indirect sale of the Business or the Transferred Assets (except, in the
latter case, in the ordinary course of business). Kodak shall, immediately
upon receipt thereof by any officer of Kodak, Sterling or Seller or any of
their respective Affiliates, notify Purchaser of the existence and terms of
any contact, proposal or offer with respect to any of the foregoing.
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Section 5.15 Certain Litigation and Related Matters. (a) In
relation to the pending and threatened litigation (i) set forth on Schedule
3.8(a) and (ii) that constitutes an Excluded Liability ((i) and (ii), as
well as any pending or threatened litigation against Purchaser in respect
of the products listed in Schedule 2.3(f), collectively, the "Actions"),
each of Purchaser, on the one hand, and Kodak and Seller, on the other
hand, agrees to cooperate with each other and their respective attorneys,
agents and employees in connection with the defense of any Actions by
Purchaser, on the one hand, or Kodak or Seller, on the other hand.
(b) Each of Purchaser, on the one hand, and Kodak and Seller,
on the other hand, agrees, upon the reasonable request of the other party
which shall not unduly disrupt the operation of Purchaser's business or
Kodak's or Seller's business, as the case may be, to use reasonable best
efforts (i) to make all employees who may have knowledge of the claims,
counterclaims or defenses asserted in the Actions available to the other
party to testify in person at depositions related to and at the trial of,
the Actions, (ii) to provide the other party and their respective
attorneys, agents and employees with access (x) at their respective place
of employment, to all employees who may have knowledge of the claims,
counterclaims or defenses asserted in the Actions, (y) to all documents in
the possession, custody or control of the other party and each of their
respective agents or employees which may be related to the claims,
counterclaims or
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defenses asserted in the Actions, and (z) to all facilities which are or
were involved in the production of the relevant products or may contain
information related to the Actions and any physical evidence which is in
the possession, custody or control of the other party or their respective
employees or agents.
For the purposes of clause (x) of this paragraph (b)(ii),
"access" shall include oral contact (by telephone or in person) and written
contact (by letter or facsimile). For the purposes of clause (y) of this
paragraph (b)(ii), "access" shall include the ability to review documents
at the location where such documents are usually maintained on reasonable
notice and during normal business hours, to review documents with the
agents or employees of Purchaser or Kodak or Seller, as the case may be, at
the usual place of business of such agents or employees, and to obtain
copies of such documents.
(c) Each of Kodak and Seller, on the one hand, and Purchaser,
on the other hand, agrees to reimburse the other (and, in the case of Kodak
and Seller, all assignees or transferees of, or successors to, Purchaser's
interests in any relevant products) for all transportation costs, lodging
and other out-of-pocket costs and expenses incurred by Purchaser, on the
one hand, or Kodak or Seller, on the other hand, as the case may be (and,
in the case of Kodak and Seller, all assignees or transferees of, or
successors to, Purchaser's interests in any relevant products), in
complying with the provisions of this Section 5.15.
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<PAGE> 512
(d) In the event that Purchaser or Seller sells or assigns,
or a third party succeeds to, Purchaser's or Seller's interest in any
relevant products or this Agreement, Purchaser or Seller agrees to cause
such transfer, assignment, or succession, to be made subject to the
assumption by the assignee, transferee or successor, of all of the
obligations of Purchaser or Seller contained in paragraphs (a), (b) and (c)
of this Section 5.15.
Section 5.16 Purchaser's Access. For a period of three years
from the Closing Date, Seller shall provide Purchaser with reasonable
access to its personnel and independent accountants and advisors, and to
such of its and their data and work papers that relate to, and is not
otherwise available at, the Business, which is reasonably required to
enable Purchaser and the Business to prepare audited financial statements
of the Business for the latest three fiscal years to comply with applicable
U.S. securities laws; provided, however, that Purchaser shall reimburse
Seller for its reasonable out-of-pocket expenses incurred in connection
with performing its obligations under this Section 5.16.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Purchaser and
Seller. The obligations of the parties hereto to effect the Closing are
subject to the satisfaction (or waiver) prior to the Closing of the
following conditions:
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<PAGE> 513
(a) HSR and Other Antitrust Laws. All filings under U.S.
Antitrust Laws and any other applicable Competition Laws shall have been
made and any required waiting period under such laws applicable to the
transactions contemplated hereby shall have expired or been earlier
terminated.
(b) No Injunctions. No court or governmental authority of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, or non-appealable judgment, decree,
injunction or other order which is in effect on the Closing Date and
prohibits the consummation of the Closing.
(c) Consents and Approvals. All Required Approvals shall
have been obtained.
Section 6.2 Conditions to the Obligations of Purchaser. The
obligation of Purchaser to effect the Closing is subject to the
satisfaction (or waiver) prior to the Closing, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller and Kodak contained herein shall have been true and
correct in all material respects when made and shall be true and correct in
all material respects as of the Closing, as if made as of the Closing
(except that representations and warranties that are made as of a specific
date need be true in all material respects only as of such date), and
Purchaser shall have received certificates to such effect
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<PAGE> 514
dated the Closing Date and executed by a duly authorized officer of Seller
and by a duly authorized officer of Kodak.
(b) Covenants. The covenants and agreements of Seller and
Kodak to be performed on or prior to the Closing shall have been duly
performed in all material respects, and Purchaser shall have received
certificates to such effect dated the Closing Date and executed by a duly
authorized officer of Seller and by a duly authorized officer of Kodak.
(c) Legal Opinions. Purchaser shall have received the
opinions of Seller's counsel, each dated as of the Closing Date, addressed
to Purchaser substantially to the effect set forth in Annex 6.2(c) hereto.
(d) Ancillary Agreements. Seller, or an Affiliate of Seller,
and Kodak, as the case may be, shall have executed and delivered, or
assigned its rights and obligations under, as the case may be, the
Ancillary Agreements.
(e) No Material Adverse Change. Since December 31, 1993, the
Business shall not have suffered a Material Adverse Change.
Section 6.3 Conditions to the Obligations of Kodak and Seller.
The obligation of Seller to effect the Closing is subject to the
satisfaction (or waiver) prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained herein shall have been true and correct
in all material respects when
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<PAGE> 515
made and shall be true correct in all material respects as of the Closing,
as if made as of the Closing (except that representations and warranties
that are made as of a specific date need be true in all material respects
only as of such date), and Seller and Kodak shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of Purchaser.
(b) Covenants. The covenants and agreements of Purchaser to
be performed on or prior to the Closing shall have been duly performed in
all material respects, and Seller and Kodak shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of Purchaser.
(c) Legal Opinions. Seller and Kodak shall have received the
opinions of the Purchaser's counsel, dated as of the Closing Date,
addressed to Seller, Sterling and Kodak substantially to the effect set
forth in Annex 6.3(c) hereto.
(d) Ancillary Agreements. Purchaser shall have executed and
delivered, or assumed the obligations under, as the case may be, the
Ancillary Agreements.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival. The representations and warranties of
Seller and Kodak contained in this Agreement shall survive the Closing for
the period set forth in this Section 7.1.
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<PAGE> 516
All of the representations and warranties of Seller and Kodak contained in
this Agreement shall terminate upon expiration of 18 months after the
Closing Date, except that the representation and warranty in Section
3.16(a) shall terminate upon expiration of 30 months after the Closing
Date, the representations and warranties in Sections 3.1, 3.2, 3.3, 3.4,
3.5, 3.6, 3.16 (only as to title to Owned Real Property, Leased Real
Property and Tangible Property) and 3.17 shall have no expiration date, the
representation and warranty in Section 3.9 shall survive, with respect to
any Tax Return, until the applicable statute of limitations has run for any
such Tax Return required to be filed on or before the date of this
Agreement, and the representation in Section 3.12 shall survive for eight
years and the representations and warranties of Purchaser contained in this
Agreement shall have no expiration date; it being understood that in the
event notice of any claim for indemnification under Section 7.2(i) or
Section 7.3(a)(i) hereof shall have been given (within the meaning of
Section 9.1) within the applicable survival period, the representations and
warranties that are the subject of such indemnification claim shall survive
until such time as such claim is finally resolved. Seller, Sterling and
Kodak shall have no indemnification obligation with respect to any
indemnification claim made for breach of a representation or warranty
contained in this Agreement if such claim is made after the end of the
applicable survival period.
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Section 7.2 Indemnification by Purchaser. Purchaser hereby
agrees that it shall indemnify, defend and hold harmless Seller, Kodak,
their Affiliates, and, if applicable, their respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees and
their heirs, successors and assigns (the "Seller Indemnified Parties")
from, against and in respect of any damages, claims, losses, charges,
actions, suits, proceedings, deficiencies, interest, penalties, and
reasonable costs and expenses (including without limitation reasonable
attorneys' fees, removal costs, remediation costs, closure costs, fines,
penalties and expenses of investigation and ongoing monitoring)
(collectively, the "Losses") imposed on, sustained, incurred or suffered by
or asserted against any of the Seller Indemnified Parties, directly or
indirectly relating to or arising out of (i) any breach of any representa-
tion or warranty made by Purchaser contained in this Agreement, (ii) the
Assumed Liabilities, and (iii) the breach of any covenant or agreement of
Purchaser contained in this Agreement. Each of Seller, Sterling and Kodak
(x) acknowledges that this Article VII constitutes its sole remedy against
the Purchaser Indemnified Parties with respect to any Losses arising under
any Environmental Law or with respect to any Hazardous Substance, and
(y) expressly waives any rights or causes of action which it may have
against the Purchaser Indemnified Parties under any Environmental Law with
respect to such Losses, in each case (x) and (y), to the extent
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<PAGE> 518
(but only to the extent) that such Losses are in respect of Assumed
Liabilities.
Section 7.3 Indemnification by Seller, Sterling and Kodak.
(a) Seller, Sterling and Kodak hereby agree that they shall jointly and
severally indemnify, defend and hold harmless Purchaser, its Affiliates
and, if applicable, their respective directors, officers, shareholders,
partners, attorneys, accountants, agents and employees and their heirs,
successors and assigns (the "Purchaser Indemnified Parties"; collectively
with the Seller Indemnified Parties, the "Indemnified Parties") from,
against and in respect of any Losses imposed on, sustained, incurred or
suffered by or asserted against any of the Purchaser Indemnified Parties,
directly or indirectly relating to or arising out of (i) subject to Section
7.3(b), any breach of any representation or warranty made by Seller,
Sterling or Kodak contained in this Agreement, (ii) subject to Section
7.3(b), the litigation referred to in Schedule 7.3, (iii) liabilities
arising out of or relating to the L&F Restructuring, (iv) all Excluded
Liabilities (including, without limitation, liabilities relating to
(A) investigation, removal, remediation, containment, cleanup or abatement
of the presence, release or threatened release of any Hazardous Substance,
whether on-site or off-site and (B) any claim by any third party,
including, without limitation, tort suits for personal or bodily injury,
property damage or injunctive relief, in each case relating to an Excluded
Asset), (v) the breach of any covenant or agreement of Seller,
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<PAGE> 519
Sterling or Kodak contained in this Agreement and (vi) the failure of
Seller or any of its Affiliates to comply with the provisions of the "bulk
transfer" or similar laws of any jurisdiction (including any so-called "tax
bulk sales provisions") in connection with the transactions contemplated by
this Agreement (other than Losses arising as a result of Purchaser's
failure to discharge any Assumed Liabilities). Purchaser (x) acknowledges
that this Article VII constitutes Purchaser's sole remedy against the
Seller Indemnified Parties with respect to any Losses arising under any
Environmental Law or with respect to any Hazardous Substance, and
(y) expressly waives any rights or causes of action which it may have
against the Seller Indemnified Parties under any Environmental Law with
respect to such Losses, in each case (x) and (y), to the extent (but only
to the extent) such Losses are in respect of Excluded Liabilities.
(b) As to any Losses with respect to the matters contained in
Section 7.3(a)(ii), Seller, Sterling and Kodak shall be jointly and
severally liable for 50% of such Losses to the extent that such Losses do
not exceed $1,000,000 in the aggregate. As to any Losses in excess of
$1,000,000 in the aggregate with respect to the matters contained in
Section 7.3(a)(ii) and as to any Losses with respect to the matters
contained in Section 7.3(a)(i), Seller, Sterling and Kodak shall be jointly
and severally liable to the Purchaser Indemnified Parties to the extent
(but only to the extent) the Losses
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<PAGE> 520
therefrom exceed an aggregate amount equal to $14 million (the
"Deductible") and then only for all such Losses in excess thereof up to an
aggregate amount of recovery equal to $100 million (the "Cap"); provided,
however, that Seller and Kodak shall not be liable for any individual Loss
(or series of Losses arising from (x) a continuing breach of a particular
representation and warranty or (y) a common set of facts) with respect to
the matters contained in Section 7.3(a)(i) which does not exceed $50,000,
unless the amount of all such Losses exceeds $1,000,000 in the aggregate,
in which case all of the provisions of this Article VII, except this
proviso, shall apply. Notwithstanding the provisions of the next preceding
sentence, Seller and Kodak shall be liable to the Purchaser Indemnified
Parties for any Losses related to a breach of the representations and
warranties made in Section 3.16(a), but only to the extent such Losses
exceed an aggregate amount equal to $50,000 and then only for all such
Losses in excess thereof up to an aggregate amount of recovery equal to the
Purchase Price. For purposes of determining whether the Deductible and the
Cap have been exceeded, Losses with respect to the matters contained in
Section 7.3(a)(i) and Section 7.3(a)(ii) shall be aggregated, except that
the Losses referred to in the first sentence of this Section 7.3(b) shall
be excluded from such determination.
(c) The Material Adverse Effect and materiality (or
correlative meaning) qualifications included in the representations and
warranties set forth in Articles III and IV
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<PAGE> 521
(other than in Section 3.16(c)) shall have no effect on any provisions in
this Section 7.3 concerning the indemnities of Kodak, Seller, Sterling or
Purchaser with respect to such representations and warranties, each of
which is given as though there were no Material Adverse Effect or
materiality qualification for purposes of such indemnities.
Section 7.4 Indemnification Procedures. With respect to third
party claims other than those relating to Taxes, all claims for
indemnification by any Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 7.4. In the event that any written
claim or demand for which an indemnifying party, Seller, Sterling, Kodak or
Purchaser, as the case may be (an "Indemnifying Party"), would be liable to
any Indemnified Party hereunder is asserted against or sought to be
collected from any Indemnified Party by a third party, such Indemnified
Party shall promptly, but in no event more than 30 days following such
Indemnified Party's receipt of such claim or demand, notify the Indemnify-
ing Party of such claim or demand and the amount or the estimated amount
thereof to the extent then feasible (which estimate shall not be conclusive
of the final
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amount of such claim and demand) (the "Claim Notice"); provided, however,
that if the Claim Notice has been given within any applicable survival
period, failure to notify the Indemnifying Party within such 30-day period
shall relieve the Indemnifying Party of its indemnification obligation only
to the extent that the Indemnifying Party is actually prejudiced thereby.
The Indemnifying Party shall have 30 days from the personal delivery or
mailing of the Claim Notice (the "Notice Period") to notify the Indemnified
Party (a) whether or not the Indemnifying Party disputes the liability of
the Indemnifying Party to the Indemnified Party hereunder with respect to
such claim or demand and (b) whether or not it desires to defend the
Indemnified Party against such claim or demand. All costs and expenses
incurred by the Indemnifying Party in defending such claim or demand shall
be a liability of, and shall be paid by, the Indemnifying Party; provided,
however, that the amount of such costs and expenses that shall be a
liability of the Indemnifying Party hereunder shall be subject to the
limitations set forth in Section 7.3(b) hereof. Except as hereinafter
provided, in the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it desires to defend the Indemnified
Party against such claim or demand, the Indemnifying Party shall have the
right to defend the Indemnified Party by appropriate proceedings and shall
have the sole power to direct and control such defense. If any Indemnified
Party desires to participate in any such defense it may do so at its sole
cost and expense. Neither
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the Indemnifying Party nor the Indemnified Party shall settle a claim or
demand without the consent of the other party (which consent will not be
unreasonably withheld). If the Indemnifying Party elects not to defend the
Indemnified Party against such claim or demand, whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the
amount of any such claim or demand, or, if the same be contested by the
Indemnified Party, then that portion thereof as to which such defense is
unsuccessful (and the reasonable costs and expenses pertaining to such
defense) shall be the liability of the Indemnifying Party hereunder,
subject to the limitations set forth in Section 7.3(b) hereof. To the
extent the Indemnifying Party shall direct, control or participate in the
defense or settlement of any third party claim or demand, the Indemnified
Party will give the Indemnifying Party and its counsel access to, during
normal business hours, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the
Indemnified Party. Regardless of which Person assumes control of the
defense of any claim, each party shall cooperate in the defense thereof.
Section 7.5 Characterization of Indemnification Payments. All
amounts paid by Seller, Kodak or Purchaser, as the case may be, under
Article II (other than Section 2.7(c)), Article V or this Article VII
shall, to the extent permitted by law, be treated as adjustments to the
Purchase Price for all Tax purposes.
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Section 7.6 Computation of Losses Subject to Indemnification.
The amount of any Loss for which indemnification is provided under Article
II or this Article VII shall be computed net of any net insurance proceeds
received by the Indemnified Party in connection with such Loss. For the
purposes of this paragraph, the term "net insurance proceeds" shall mean
the insurance proceeds received by the Indemnified Party less the amount of
any premiums paid in respect thereof and any retrospective premium
adjustments or reimbursement obligations relating thereto and less any
increase in premiums attributable thereto.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by agreement of Purchaser and Seller;
(b) by either Purchaser or Seller, by giving written notice
of such termination to the other party, if (x) any condition thereto other
than the conditions set forth in Section 6.1 (but only insofar as related
to Competition Laws) shall not have been satisfied or waived and (y) the
Closing shall not have occurred on or prior to January 31, 1995; provided
that the terminating party is not in material breach of its obligations
under this Agreement;
<PAGE>
<PAGE> 525
(c) by either Purchaser or Seller if there shall be in effect
any law or regulation that prohibits the consummation of the Closing or if
consummation of the Closing would violate any non-appealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction;
(d) by either Purchaser or Seller if, as a result of action
or inaction by the other Party, the Closing shall not have occurred on or
prior to the date that is 10 Business Days following the later of (i)
November 18, 1994, and (ii) the date on which all of the conditions to
Closing set forth in Section 6.1 or 6.2 are satisfied or waived.
Section 8.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 8.1 hereof, this
Agreement shall thereafter become void and have no effect, and no party
hereto shall have any liability to the other party hereto or their
respective Affiliates, directors, officers or employees, except for the
obligations of the parties hereto contained in this Section 8.2 and in
Sections 9.1, 9.7, 9.8, 9.9, 9.10 and 9.11 except that nothing herein will
relieve any party from liability for any breach of this Agreement prior to
such termination.
<PAGE>
<PAGE> 526
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. All notices or other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended,
if delivered by registered or certified mail, return receipt requested, or
by a national courier service, or if sent by telecopier, provided that the
telecopy is promptly confirmed by telephone confirmation thereof, to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
To Purchaser: MTF Acquisition Corp.
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 355-5656
Telecopy: (212) 759-9059
Attn: Steven B. Klinsky
With a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Telephone: (212) 820-8000
Telecopy: (212) 747-1526
Attn: Aviva F. Diamant
To Kodak:
EASTMAN KODAK COMPANY
343 State Street
Rochester, New York 14650
Telephone: (716) 724-4000
Telecopy: (716) 724-9448
Attn: General Counsel
<PAGE>
<PAGE> 527
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
Attn: Robert S. Risoleo
To Seller:
L&F PRODUCTS INC.
c/o Eastman Kodak Company
343 State Street
Rochester, New York 14650
Telephone: (716) 724-1932
Telecopy: (716) 724-9448
Attn: Kenneth K. Doolittle
With a copy to:
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
Attn: Robert S. Risoleo
Section 9.2 Amendment; Waiver. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Purchaser,
Seller and Kodak, or in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
<PAGE>
<PAGE> 528
Section 9.3 Assignment. No party to this Agreement may assign
any of it rights or obligations under this Agreement without the prior
written consent of the other parties hereto provided that Purchaser may
assign its rights and obligations hereunder to one or more of its
Affiliates without obtaining any such consent from Seller, except that if
any such assignment would adversely affect Seller's ability to transfer any
material Transferred Assets hereunder, such assignment shall be subject to
Seller's prior written consent, which consent shall not be unreasonably
withheld. Any attempted assignment in contravention hereof shall be null
and void.
Section 9.4 Entire Agreement. This Agreement (including all
Schedules and Annexes hereto) contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to such
matters, except for the Confidentiality Agreement which will remain in full
force and effect for the term specified therein.
Section 9.5 Fulfillment of Obligations. Any obligation of any
party to any other party under this Agreement or any of the Ancillary
Agreements, which obligation is performed, satisfied or fulfilled by an
Affiliate of such party, shall be deemed to have been performed, satisfied
or fulfilled by the such party.
Section 9.6 Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon the parties hereto
<PAGE>
<PAGE> 529
and their respective successors and permitted assigns. Except as expressly
provided in Article VII with respect to Indemnified Parties, nothing in
this Agreement, express or implied, is intended to confer upon any Person
other than Purchaser, Seller, Kodak or their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
Section 9.7 Public Disclosure. Notwithstanding anything
herein to the contrary, each of the parties to this Agreement hereby agrees
with the other party hereto that, except as may be required to comply with
the requirements of any applicable Laws, and the rules and regulations of
each stock exchange upon which the securities of one of the parties is
listed, no press release or similar public announcement or communication
shall ever, whether prior to or subsequent to the Closing, be made or
caused to be made concerning the execution or performance of this Agreement
unless specifically approved in advance by all parties hereto.
Section 9.8 Return of Information. If for any reason
whatsoever the transactions contemplated by this Agreement are not
consummated, Purchaser shall promptly return to Seller all Books and
Records furnished by Kodak, Seller, the Business or any of their respective
agents, employees, or representatives (including all copies, if any,
thereof), and shall not use or disclose the information contained in such
Books and Records for any purpose or make such information available to any
other entity or person.
<PAGE>
<PAGE> 530
Section 9.9 Expenses. Except as otherwise expressly provided
in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be borne
by the party incurring such expenses.
Section 9.10 Schedules. The disclosure of any matter in any
schedule to this Agreement shall be deemed to be a disclosure for all
purposes of this Agreement to which such matter is evident from the face of
the Schedule, except that the matters addressed in Schedule 3.16(a) shall
be addressed solely as described in Schedule 3.16(a). Any such disclosure
shall expressly not be deemed to constitute an admission by Seller or
Purchaser or to otherwise imply that any such matter is material for the
purposes of this Agreement.
SECTION 9.11 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SELECTION OF FORUM. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO
AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTAINED
IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW
OR IN EQUITY, EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE STATE OF NEW YORK
FOR THE COUNTY OF NEW YORK (THE "CHOSEN COURTS") AND (I) IRREVOCABLY
SUBMITS TO THE EXCLUSIVE
<PAGE>
<PAGE> 531
JURISDICTION OF THE CHOSEN COURTS, (II) WAIVES ANY OBJECTION TO
LAYING
VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURTS, (III) WAIVES
ANY OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO NOT
HAVE JURISDICTION OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF
PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE
IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 9.1 OF THIS AGREEMENT.
PURCHASER IRREVOCABLY DESIGNATES CT CORPORATION SYSTEMS AS ITS AGENT AND
ATTORNEY IN FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS AND MAKING AN
APPEARANCE ON ITS BEHALF IN ANY SUCH ACTION OR PROCEEDING AND TAKING ALL
SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER
JURISDICTION OVER IT UPON THE CHOSEN COURTS, AND PURCHASER STIPULATES THAT
SUCH CONSENT AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
Section 9.12 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and
all of which shall constitute one and the same Agreement.
Section 9.13 Headings. The heading references herein and the
table of contents hereto are for convenience purposes only, do not
constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 9.14 Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any
<PAGE>
<PAGE> 532
provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so
far as may be valid and enforceable, the intent and purpose of such invalid
or unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances
shall not be affected by such invalidity or unenforceability, nor shall
such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
<PAGE>
<PAGE> 533
IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
EASTMAN KODAK COMPANY
By:\s\ Wilbur J. Prezzano
Name: Wilbur J. Prezzano
Title: Executive Vice President
L&F PRODUCTS INC.
By:\s\ Douglas A. Mabon
Name: Douglas A. Mabon
Title: Vice President
STERLING WINTHROP INC.
By:\s\ Wilbur J. Prezzano
Name: Wilbur J. Prezzano
Title: Chairman
MTF ACQUISITION CORP.
By:\s\ Steven B. Klinsky
Name: Steven B. Klinsky
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
THIRD QUARTER 1994 FORM 10-Q OF EASTMAN KODAK COMPANY, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000031235
<NAME> EASTMAN KODAK COMPANY
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1.0
<CASH> 585
<SECURITIES> 142
<RECEIVABLES> 3,148
<ALLOWANCES> 108
<INVENTORY> 1,765
<CURRENT-ASSETS> 6,489
<PP&E> 12,429
<DEPRECIATION> 7,003
<TOTAL-ASSETS> 19,083
<CURRENT-LIABILITIES> 6,082
<BONDS> 4,667
<COMMON> 966
0
0
<OTHER-SE> 3,094
<TOTAL-LIABILITY-AND-EQUITY> 19,083
<SALES> 9,709
<TOTAL-REVENUES> 9,779
<CGS> 5,219
<TOTAL-COSTS> 5,219
<OTHER-EXPENSES> 3,432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 113
<INCOME-PRETAX> 1,015
<INCOME-TAX> 382
<INCOME-CONTINUING> 633
<DISCONTINUED> (81)
<EXTRAORDINARY> (13)
<CHANGES> 0
<NET-INCOME> 539
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.58
</TABLE>
