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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 13)*
FRESENIUS USA, INC.
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(Name of Issuer)
Common Stock, par value $.01/share
----------------------------------------
(Title of Class of Securities)
358031 10 2
---------------------
(CUSIP Number)
Ulrich Wagner, Esq.
O'Melveny & Myers
The Citicorp Center
153 East 53rd Street, 54th Floor
New York, New York 10022-4611
(212) 326-2000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 4, 1996
----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Check the following box if a fee is being paid with the statement / /.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
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* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("ACT") or otherwise subject to the liabilities
of that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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CUSIP NO. 358031 10 2
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FRESENIUS AKTIENGESELLSCHAFT
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
GERMANY
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NUMBER OF 7 SOLE VOTING POWER
SHARES 18,673,324
BENEFICIALLY ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH REPORT-
ING PERSON ----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
18,673,324
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10 SHARED DISPOSITIVE POWER
----------------------------------
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,673,324
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
70.9%
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14 TYPE OF REPORTING PERSON
CO.
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Page 2 of Pages
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CUSIP NO. 358031 10 2
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FRESENIUS SECURITIES, INC., 68-0659754
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH REPORT- 7,833,202
ING PERSON ----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
-0-
----------------------------------
10 SHARED DISPOSITIVE POWER
7,833,202
----------------------------------
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,833,202
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.9%
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14 TYPE OF REPORTING PERSON
CO.
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Page 3 of Pages
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The Schedule 13D filed on September 18, 1987 by Fresenius
Aktiengesellschaft ("FRESENIUS AG") with respect to the Common Stock, par value
$0.01 per share ("COMMON STOCK"), of Fresenius USA, Inc. (formerly known as
Delmed, Inc. and referred to herein as the "COMPANY"), as amended by Amendment
No. 1, filed October 20, 1987, by Amendment No. 2, filed February 4, 1988, by
Amendment No. 3, filed February 22, 1990, by Amendment No. 4, filed September 4,
1990 by Fresenius AG and Fresenius Securities, Inc. (formerly known as Fresenius
U.S.A., Inc. and referred to herein as "FSI"), by Amendment No. 5, filed July 5,
1991, by Amendment No. 6, filed December 3, 1991, by Amendment No. 7, filed
January 3, 1992, by Amendment No. 8, filed October 15, 1992, by Amendment No. 9,
filed December 23, 1992, by Amendment No. 10, filed March 4, 1993, by Amendment
No. 11, filed May 16, 1994 and by Amendment No. 12, filed July 1, 1994, is
hereby further amended and restated with respect to the items set forth below.
Item 1. SECURITY AND ISSUER
This Schedule 13D relates to the Common Stock, par value $.01 per
share, of Fresenius USA, Inc., formerly called Delmed, Inc., a Massachusetts
Corporation.
Item 2. IDENTITY AND BACKGROUND.
Item 2 is amended and restated as follows:
Fresenius AG is a corporation organized under the laws of the
Federal Republic of Germany with its principal executive offices at Borkenberg
14, 61440 Oberursel/Ts, Federal Republic of Germany. Fresenius AG develops,
manufactures and distributes pharmaceutical and medical systems products.
Fresenius AG operates in three divisions: Dialysis Systems, Pharmaceuticals and
Intensive Care. In addition, Fresenius AG's project business provides scientific
and manufacturing know-how for the planning, construction and supervision of
pharmaceutical and medical systems manufacturing plants and for the equipping of
hospitals. Fresenius AG is also the beneficial owner of approximately 55% of the
outstanding common stock of Gull Laboratories, Inc. a Utah corporation that
manufactures and distributes diagnostic tests for the detection of infectious
and auto-immune diseases.
FSI is a California corporation with its principal office at 2637
Shadelands Drive, Walnut Creek, California, 94598. Until December 31, 1991, FSI
was engaged in the manufacture, distribution and sale of medical products
(principally hemodialysis products) manufactured by Fresenius AG and others. On
December 31, 1991, FSI sold its assets, subject to liabilities, to the Company,
and received 7,833,202 shares of Company Common Stock. Since that date, FSI has
been engaged solely in the holding and ownership of such stock.
Current information with respect to the members of the
Supervisory Board and the Members of the Managing Board of
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Fresenius AG and the directors and executive officers of FSI is set forth in
Schedule A to this Amendment No. 13.
During the past five years, none of Fresenius AG, the members of
Fresenius AG's Managing Board or, to Fresenius AG's best knowledge and belief,
the members of Fresenius AG's Supervisory Board, FSI and the directors and
executive officers of FSI, have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) nor was any of them a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation of such laws.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended and restated as set forth below. All figures
for Company Common Stock give effect to the Company's one-for-ten reverse stock
split effected on December 30, 1991.
On October 2, 1987, Fresenius AG purchased from the Company
1,060,759 shares of Company Common Stock upon the exercise of options previously
held by members of the Company's principal bank lending group, 200,000 shares of
the Company's Series F Series Preferred Stock and warrants to purchase 380,080
shares of Company Common Stock. The Company Common Stock, the Series F Series
Preferred Stock and the Warrants were purchased for $9,887,885, $20,000,000 and
$38,008, respectively, all of which was paid from Fresenius AG's working
capital, except that $3,000,000 of the purchase price for the Series F Series
Preferred Stock was paid by Fresenius AG's agreement to forgive future royalties
otherwise owed to Fresenius AG by the Company.
On August 30, 1990, Fresenius AG and FSI purchased from the
Company for $5,000,000 options (the "OPTIONS") to acquire, in the aggregate,
10,273,815 shares (subject to adjustments) of Company Common Stock. Of the total
purchase price for the Options, $1,600,000 was paid by Fresenius AG from its
working capital and $3,400,000 was paid by FSI from the proceeds of a capital
contribution by Fresenius AG, which acquired such funds from its working
capital.
On December 2, 1991, Fresenius AG and FSI exercised the Options
and purchased from the Company on December 31, 1991 3,046,245 and 7,833,202
shares, respectively, of Company Common Stock. The purchase price for the shares
acquired by Fresenius AG was $11,900,000, which was obtained from its working
capital and which was immediately applied by the Company to repay outstanding
obligations of FSI (which had been assumed by the Company in connection with its
acquisition of the assets and liabilities of FSI) to a subsidiary of Fresenius
AG. The consideration for the shares acquired by FSI was the assets of FSI,
subject to FSI's liabilities.
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On December 17, 1992, Fresenius AG purchased from the Company
1,501,235 shares of Company Common Stock for $7,600,000. The funds from the
purchase were obtained from a subsidiary of Fresenius AG, which acquired such
funds from its working capital. Such funds were immediately applied by the
Company to repay outstanding obligations of the Company to that subsidiary. On
that date, the Company also repurchased from Fresenius AG, for $20,066.67, the
warrants issued to Fresenius AG in October 1987.
On February 24, 1993, the Company issued to Fresenius AG warrants
(the "1993 Warrants") to purchase 1,700,000 shares of Company Common Stock at a
purchase price of $8.00 per share, subject to adjustments as provided therein.
On April 15, 1994, the Company issued to Fresenius AG warrants (the "1994
Warrants") to purchase 1,062,500 shares of Company Common Stock at a purchase
price of $10.5685 per share, subject to adjustments as provided therein. The
1994 Warrants are currently exercisable to purchase 50,000 shares of Company
Common Stock. The consideration for the 1993 Warrants was credit support
provided by Fresenius AG for certain borrowings by the Company, including
borrowings made to finance the acquisition of the United States, Australia, and
New Zealand renal dialysis business of Abbott Laboratories. The consideration
for the 1994 Warrants was Fresenius AG's agreement to provide credit support for
a line of credit which was available to the Company for use in completing and
equipping its dialyzer plant in Ogden, Utah. The Company has not drawn on that
line of credit, and the balance of the 1994 Warrants do not become exercisable
unless the Company does so.
On June 29, 1994, Fresenius AG purchased 352,000 shares of
Company Common Stock from Medihold Limited, a Canadian corporation for
$1,936,000. Fresenius AG acquired the funds for such purchase from its working
capital and from the proceeds of a placement of Fresenius AG shares to financial
institutions in Germany.
In addition to the acquisitions described above, from time to
time Fresenius AG has acquired beneficial ownership of additional shares of
Company Common Stock pursuant to the operation of the anti-dilution provisions
of the Company's Series F Series Preferred Stock owned by Fresenius AG. No
consideration was paid by Fresenius AG in connection with such anti-dilution
adjustments.
Item 4. PURPOSE OF TRANSACTION.
Item 4 is amended and restated as follows:
Fresenius AG made its initial investment in the Company in
October 1987 and acquired beneficial ownership of 49.7% of the Company Common
Stock. Fresenius AG regarded its investment in the Company as an attractive
business opportunity for both parties and believed the capital infusion,
combined with Fresenius AG's technological know-how and the Company's
manufacturing and other capabilities, would enable the Company to develop
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successfully in dialysis solutions, intravenous solutions and related
businesses.
By 1989, the Company had experienced financial difficulties and
was advised that its exclusive distribution arrangement with its sole
distributor would not be renewed. On February 14, 1990, Fresenius AG and FSI
entered into an Option Agreement pursuant to which they acquired the Options to
increase Fresenius AG's beneficial ownership of Company Common Stock to more
than 80%. Fresenius AG continued to regard its investment as an attractive
business opportunity and Fresenius AG and FSI acquired the Options in order to
make a cash capital infusion into the Company while giving consideration to a
combination of the businesses of Fresenius AG and FSI. During the period prior
to exercise of the Options, FSI become the exclusive distributor of the
Company's products. The Options were exercised in December 1991, at which time
the Company acquired the assets and liabilities of FSI and Fresenius became the
beneficial owner of in excess of 80% of the Company Common Stock. Exercise of
the Options enabled the Company to become a manufacturer and distributor of a
complete range of hemodialysis and peritoneal dialysis products.
Subsequent to the exercise of the Options, in December 1992
Fresenius AG purchased 1,501,235 shares of Company Common Stock from the Company
to assist the Company in reducing its outstanding indebtedness. In June 1994, to
accommodate the Company in connection with a public offering of Company Common
Stock, Fresenius AG purchased shares of Company Common Stock from a shareholder
who had been unable to exercise registration rights in the public offering. In
1993 and 1994 Fresenius AG acquired warrants to purchase Company Common Stock in
consideration for credit support provided by Fresenius AG to the Company.
Fresenius AG agreed to accept these warrants in lieu of cash consideration to
enable the Company to conserve its cash for operations while providing Fresenius
AG with additional participation in the long-term growth prospects of the
Company.
On February 4, 1996, Fresenius AG and W.R. Grace & Co. ("Grace")
announced that they had agreed to combine the worldwide dialysis business of
Fresenius AG ("FWD") with the health care business of Grace conducted by its
subsidiary National Medical Care, Inc. ("NMC"). The combination will be effected
pursuant to an Agreement and Plan of Reorganization between Fresenius and Grace
dated as of February 4, 1996 (the "REORGANIZATION AGREEMENT").
Pursuant to the Reorganization Agreement and a related
Contribution Agreement dated as of February 4, 1996 among Fresenius AG, Steril
Pharma GmbH (a wholly-owned subsidiary of Fresenius AG that will change its name
to, and is hereinafter referred to as, "FRESENIUS MEDICAL CARE"), and W.R. Grace
& Co.-Conn., a wholly-owned subsidiary of Grace, Fresenius AG will contribute
(the "CONTRIBUTION") its worldwide dialysis business, including the capital
stock of the Company held by Fresenius AG and the capital stock of FSI, to
Fresenius Medical Care. The
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Contribution is required to occur as soon as practicable, but in any event prior
to the Effective Time (as defined in the Reorganization Agreement). In
consideration of the Contribution and the merger of a wholly-owned subsidiary of
Fresenius Medical Care into the Company (the "COMPANY MERGER"), Fresenius AG
will be allocated a number of Fresenius Medical Care Ordinary Shares equal to
55.2% of the Fresenius Medical Care Ordinary Shares outstanding (on a fully
diluted basis) upon consummation of the transactions contemplated by the
Reorganization Agreement.
The Reorganization Agreement does not specify a number or
percentage of Fresenius Medical Care Ordinary Shares to be issued to the public
holders of the Company's securities in the Company Merger. On February 4, 1996,
Fresenius AG proposed to the Company that 3.8% of the Fresenius Medical Care
shares outstanding after the closing (on a fully diluted basis), or .77 of a
share of Fresenius Medical Care per share of Company Common Stock, be allocated
to the public shareholders of the Company. The Company's Board of Directors has
formed a special committee of independent directors (the "SPECIAL COMMITTEE") to
study and negotiate the terms of the transaction on behalf of the Company and
its public shareholders. The Company has announced that the Special Committee
has retained counsel and will retain an independent investment banker to advise
the Special Committee. Fresenius AG expects that the merger consideration to be
issued to the public shareholders of the Company will be determined by
negotiations with the Special Committee. Under the Reorganization Agreement, any
Fresenius Medical Care Ordinary Shares issued to holders of Company Common Stock
other than Fresenius AG and its subsidiaries will be deducted from the Ordinary
Shares that Fresenius AG would otherwise receive, subject to certain
limitations. No additional costs or expenses are to be borne by Grace, the
Company, or Fresenius Medical Care as a result of the Company Merger (other than
any costs and expenses for which Fresenius AG has agreed to reimburse Grace, the
Company, or Fresenius Medical Care, as applicable, at the closing.
The Reorganization Agreement also provides that Grace will spin
off to its shareholders its non-health care business, together with certain
healthcare assets and liabilities that will not be acquired by Fresenius Medical
Care (the "GRACE DISTRIBUTION"). Prior to the Grace Distribution, Grace will
also effect a recapitalization pursuant to which each holder of Grace common
stock will receive shares of a newly issued class of Grace preferred stock (the
"NEW GRACE PREFERRED"). The New Grace Preferred will remain outstanding after
the Reorganization and holders of the New Grace Preferred will be entitled to
receive certain special dividends commencing in 2002, based on operating
performance criteria applicable to Fresenius Medical Care for the prior five
years. Under the Reorganization Agreement, holders of Grace common stock and
common stock equivalents will be allocated, in the aggregate, 44.8% of the
Fresenius Medical Care Ordinary Shares Care outstanding on a fully diluted
basis.
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Following the Contribution and the Grace Distribution and prior
to the Effective Time, the Company Merger will be effected with the Company as
the surviving corporation, and another wholly-owned subsidiary of Fresenius
Medical Care will be merged into Grace, with Grace as the surviving corporation,
(the "GRACE MERGER"). As a result of the Contribution, the Company Merger and
the Grace Merger, Fresenius Medical Care will acquire the FWD Business
(including the Company), the Company will become a wholly-owned subsidiary of
Fresenius Medical Care and NMC will become an indirect wholly-owned subsidiary
of Fresenius Medical Care. The Contribution, the Grace Distribution, the Company
Merger and the Grace Merger, together with certain other transactions
contemplated by the Reorganization Agreement, are referred to as the
"REORGANIZATION". In connection with the Reorganization, Fresenius Medical Care
will take the necessary steps to convert to a public Aktiengesellschaft under
German law. The Fresenius Medical Care Ordinary Shares to be issued in the
Reorganization will be eligible for deposit in an American Depositary Receipt
("ADR") facility for such shares.
The obligations of Grace and Fresenius AG to consummate the
Reorganization are subject to certain conditions (unless the failure of certain
of such conditions to be satisfied would not have a material adverse effect on
Grace, Fresenius AG and Fresenius Medical Care), including:
- approval of the Reorganization and related transactions by the
shareholders of Grace and the shareholders of Fresenius AG;
- receipt of applicable governmental consents, including expiration
of the waiting period under the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976 and similar statutes of other countries,
(and the parties have agreed to take all actions, including
litigation and divestitures, necessary to obtain favorable review
under such laws, taking into consideration the effect of such
actions on Fresenius Medical Care);
- receipt of required third-party consents;
- absence of any statute, rule, regulation, judgment, decree,
injunction or other order prohibiting the Reorganization and
related transactions;
- effectiveness of Registration Statements under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), with respect to the
Fresenius Medical Care Ordinary Shares to be issued in the
Reorganization and the ADRs evidencing such shares and the
effectiveness of other registration statements under the
Securities Act or the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), required to effect certain of the
transactions contemplated by the Reorganization Agreement;
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- listing of the ADRs on the New York Stock Exchange or the
inclusion of the ADRs in the NASDAQ Stock Market;
- consummation of the Grace Distribution; and
- receipt of the financing necessary to consummate the
Reorganization and related transactions, on terms satisfactory to
Fresenius AG and Grace.
The Reorganization Agreement contains representations, warranties
and covenants by Grace and Fresenius AG. The Company is not a party to the
Reorganization Agreement, and the Special Committee has not passed on the terms
of the Reorganization Agreement. Pursuant to the Reorganization Agreement,
Fresenius AG has covenanted that, as between Fresenius AG and Grace, Fresenius
AG shall cause the Company's Board of Directors to adopt, approve, and ratify
the Reorganization Agreement and certain related agreements and to submit the
Company Merger to a vote of the Company's shareholders. The Reorganization
Agreement also provides, however, that nothing in the foregoing provisions shall
be construed to prevent the Special Committee from making a determination with
respect to the adequacy of the consideration to be issued to the shareholders of
the Company (other than Fresenius AG) and the entire fairness of the
Reorganization to the Company's shareholders, consistent with their fiduciary
duties.
In the Reorganization Agreement, Fresenius AG has agreed with
Grace that the Company will become a wholly-owned subsidiary of Fresenius
Medical Care and Fresenius AG has agreed with Grace that Fresenius AG will vote
its shares in the Company in favor of the Company Merger. For that purpose,
Fresenius AG intends to consider conversion of (or, if the Contribution has
occurred, causing Fresenius Medical Care to convert) the 200,000 shares of
Series F Series Preferred Stock of the Company owned by Fresenius AG into
3,129,883 shares of Common Stock issuable upon such conversion. Such 3,129,883
shares, when added to the shares of Common Stock presently held by Fresenius AG
and FSI, would represent more than 68% of the shares of Company Common Stock
outstanding on the date of this Amendment No. 13, and would be sufficient to
approve the Company Merger under applicable Massachusetts law if a vote on the
Company Merger were held on this date. Although Fresenius AG does not have any
present plans or intentions to purchase additional Company Common Stock, it
reserves the right to do so if an appropriate investment opportunity is
presented to it. As previously disclosed in Amendment No. 12 to this Schedule
13D, the Supervisory Board of Fresenius AG has authorized the expenditure of up
to $10,000,000 for such purchases, of which $1,936,000 has been spent on the
purchase of the "Medihold Shares" as described in Amendment No. 12. In addition
to conversion of its Series F Series Preferred Stock, any such purchases, if
made, may be made in open market transactions, in private purchases or pursuant
to the exercise of warrants to purchase Company Common Stock owned by Fresenius
AG.
Fresenius AG has entered into the Reorganization Agreement in
order to combine its experience in developing and
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manufacturing products for all forms of dialysis treatment with NMC's expertise
in patient treatment. Fresenius AG believes that combining FWD and NMC will
enhance quality in dialysis treatment and will generate further improvements in
patient care. Fresenius AG also believes that the vertical integration of the
FWD business and the NMC business will position Fresenius Medical Care to
compete effectively in a health care environment that is increasingly dominated
by managed care programs, and thereby ensure future success and growth, all of
which will be in the best interests of Fresenius AG, the Company, Grace and
their respective shareholders.
Except as set forth in this Item 4 of this Amendment No. 13,
Fresenius AG (and, to its knowledge, the members of the Supervisory Board and
Managing Board of Fresenius AG) and FSI (and, to FSI's knowledge, the directors
and officers of FSI) have no plans or proposals that relate to or would result
in the occurrence of any of the transactions or events described in paragraphs
(a) through (j) of Item 4 of Schedule 13D.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended and restated as follows:
FSI is a wholly-owned subsidiary of Fresenius AG, the shares of
Company Common Stock owned of record by FSI may be deemed to be beneficially
owned by Fresenius AG. Based on 21,464,874 shares of Company Common Stock
outstanding at December 31, 1995, Fresenius AG may presently be deemed to be the
beneficial owner of 18,673,324 shares of Company Common Stock, or approximately
70.9% of the outstanding Common Stock determined in accordance with Rule
13d-3(d) under the Exchange Act. Of such 18,673,324 shares, 5,960,239 shares are
presently owned of record and beneficially by Fresenius AG, 7,833,202 shares are
owned of record by FSI and may be deemed beneficially owned by Fresenius AG,
3,129,883 shares are issuable to Fresenius AG upon conversion of the Series F
Series Preferred Stock held by Fresenius AG, 1,700,000 shares are issuable to
Fresenius AG upon exercise of the 1993 Warrants and 50,000 shares are issuable
to Fresenius AG upon exercise of the 1994 Warrants. Such 18,673,324 shares do
not include 1,012,500 additional shares which may become issuable upon exercise
of the 1994 Warrants in accordance with the provisions of such warrants.
Fresenius AG has sole voting and sole dispositive power over all such shares.
At the date of this Amendment No. 13, the following officers of
FSI (each of whom is also on officer of the Company and each of whom acquired
beneficial ownership of his shares in connection with his employment by the
Company) also beneficially own shares of Company Common Stock as follows:
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<TABLE>
<CAPTION>
BENEFICIAL OWNER NO. OF SHARES NATURE OF BENEFICIAL OWNERSHIP
- ---------------- ------------- ------------------------------
<S> <C> <C>
Dr. Ben J. Lipps 500,000 80,000 shares owned
beneficially and of record and
420,000 shares subject to
presently exercisable options.
Heinz Schmidt 34,000 34,000 shares subject to
presently exercisable options.
Scott Walker 34,500 500 shares owned beneficially
and of record; 34,000 shares
subject to presently
exercisable options.
</TABLE>
Fresenius AG disclaims any beneficial interest in any of the
shares beneficially owned by the persons named in the foregoing table.
Except as stated in this Item 5, Fresenius AG (and to the best of
its knowledge, the members of the Supervisory Board and the Managing Board of
Fresenius AG) and FSI (and, to the best of its knowledge, its directors and
executive officers) do not own or have any right to acquire, directly or
indirectly, any shares of Company Common Stock or Preferred Stock and, except as
described herein, none of such persons has effected any transaction in Company
Common Stock or Preferred Stock in the last sixty days.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
For a description of the Reorganization Agreement and
Contribution Agreement, including certain agreements of Fresenius AG with
respect to the voting of the Company stock held by it, see Item 4. The
descriptions of Reorganization Agreement and the Contribution Agreement
contained in this Amendment No. 13 are qualified in their entirety by the
provisions of such documents, which have been filed as Exhibits to this
Amendment No. 13.
For additional information with respect to this Item, reference
is made to the agreements listed in Item 7 of this Amendment No. 13.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is amended and restated as follows. Only Exhibits 15 and
16 are being filed with this Amendment No. 13.
Exhibit 1 Preferred Stock and Warrant Purchase
Agreement dated as of September 8, 1987
between Delmed, Inc. and Fresenius AG.
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Exhibit 2 Amendment dated October 2, 1987 to Preferred
Stock and Warrant Purchase Agreement dated as
of September 8, 1987.
Exhibit 3 Option Agreement dated as of February 14,
1990 among Delmed, Inc., Fresenius AG and
Fresenius U.S.A., Inc. (Incorporated by
reference to Exhibit (c) to the Current
Report on Form 8-K dated February 15, 1990 of
Delmed, Inc.
Exhibit 4 Agreement between Fresenius AG and Fresenius
U.S.A., Inc. regarding the filing of a joint
Schedule 13D.
Exhibit 5 Amendment No. 1 to Option Agreement among
Fresenius AG, Fresenius Securities, Inc. and
Fresenius USA, Inc.
Exhibit 6 Stock Purchase and Warrant Repurchase
Agreement dated September 25, 1992 between
Fresenius AG and Fresenius USA, Inc.
Exhibit 7 Common Stock Purchase Warrant of Fresenius
USA, Inc. dated February 24, 1993.
Exhibit 8 Registration Agreement dated as of February
24, 1993 between Fresenius USA, Inc. and
Fresenius AG.
Exhibit 9. Common Stock Purchase Warrant dated April 15,
1994. Incorporated by reference to Exhibit
10.16 to the Company's Registration Statement
on Form S-1 (Registration No. 33-78422) filed
on May 3, 1994.
Exhibit 10. Letters dated February 9, 1994 and April 1994
from Fresenius AG and FSI to the Company
relating to voting of the Preferred Stock and
Common Stock held by them.
Exhibit 11. Agreement dated April 15, 1994 amending the
Registration Agreement among Fresenius AG,
FSI and the Company. Incorporated by
reference to Exhibit 10.7.1 to the Company's
Registration Statement on Form S-1
(Registration No. 33-78422) filed on May 3,
1994.
Exhibit 12. Letter Agreements dated April 22, 1994 from
Fresenius AG, Fresenius Securities, Inc., Ben
Lipps, Heinz Schmidt and Scott
13
<PAGE> 14
Walker undertaking to refrain from disposing
of Common Stock of the Company.
Exhibit 13. Stock Purchase Agreement dated as of June 29,
1994 between Fresenius AG and Medihold
Limited.
Exhibit 14. Letter Agreement dated June 29, 1994 amending
the Registration Agreement among Fresenius
AG, Fresenius Securities, Inc. and the
Company.
Exhibit 15 Agreement and Plan of Reorganization dated as
of February 4, 1996 between W.R. Grace & Co.
and Fresenius AG. (Filed herewith)
Exhibit 16 Contribution Agreement dated as of February
4, 1996 among Fresenius AG, Steril Pharma
GMBH and W.R. Grace & Co.-Conn. (Filed
herewith)
14
<PAGE> 15
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: February 6, 1996 FRESENIUS AKTIENGESELLSCHAFT
By: /s/ Gerd Krick
------------------------------
Gerd Krick
Managing Director
By: /s/ Mathias Klingler
------------------------------
Mathias Klingler
Managing Director
S-1
<PAGE> 16
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: February 6, 1996 FRESENIUS SECURITIES, INC.
By: /s/ Ben Lipps
------------------------------
Dr. Ben J. Lipps
President
S-2
<PAGE> 17
SCHEDULE A
The members of Fresenius AG's Supervisory Board and Managing
Board, their present principal occupations or employment (including the name,
principal business and address of any such employer), their citizenship and
their business and/or residence addresses are set forth below. All members of
the Supervisory Board and Managing Board listed on Schedule A are German
citizens.
MEMBERS OF SUPERVISORY BOARD
Dr. Alfred Stiefenhofer
Chairman of Supervisory Board
Attorney, Norr, Stiefenhofer & Lutz (law firm)
Brienner Stra(beta)e 28, 80333
Munchen, Germany
Hans Kroner
Honorary Chairman of the Supervisory Board of Fresenius AG and
Retired Chairman of the Managing Board of Fresenius AG
Am Rabenstein 23, 61350 Bad Homburg v.d.H., Germany
Wolfgang Rietzschel
Member of Works Council
Herzbergstrasse 33, 61350 Bad Homburg v.d.H., Germany
Christel Neumann
Deputy Member of Works Council
Muhlweg 20, 97525 Schwebheim, Germany
Vera Kluge
Labor Union Representative
c/o IG Chemie-Papier-Keramik Bereich Hessen
Wilh.-Leuschner Stra(beta)e 69-77, 60329 Frankfurt/Main, Germany
Arnold Danneck
Member of Works Council
In Matzenecken 6, 66636 Tholey, Germany
Dr. Oswald Jacobi
Doctor of Medicine
Sandmuhle 75, 55262 Heidesheim, Germany
Ulrich Mattik
Labor Union Representative
In der Steinriede 4, 30161 Hannover, Germany
Friedrich Meyer
Sales Manager
Usinger Stra(beta)e 16, 61273 Wehrheim, Germany
Hans-Peter Sattele
Member of the Managing Board
of Westdeutsche Landesbank Girozentrale
Westdeutsche Landesbank Girozentrale
Herzogstrasse 15, 40217 Dusseldorf, Germany
Sch. A-1
<PAGE> 18
Dr. Manfred Schaudwet
Executive Manager of Dresdner Bank AG
Dresdner Bank AG
Jurgen-Ponto-Platz 1, 60329 Frankfurt/Main, Germany
Dr. Karl Schneider
Retired Chairman of the Executive Board
Suedzucker AG
Maximilianstrasse 10, 68045 Mannheim, Germany
MEMBERS OF THE MANAGING BOARD
Dr. Gerd Krick
Chairman of the Managing Board
Fresenius AG
Borkenberg 14, 61440 Oberursel, Germany
Mathias R. Klingler
Member of the Managing Board and
Head of Medical Systems Division
Fresenius AG
Borkenberg 14, 61440 Oberursel, Germany
Gerhard Franz Krammer
Member of the Managing Board and
Head of Critical Care and Diagnostics Division
Fresenius AG
Borkenberg 14, 61440 Oberursel, Germany
Dr. Matthias Schmidt
Member of the Managing Board and
Head of Pharmaceutical Division
Fresenius AG
Borkenberg 14, 61440 Oberursel, Germany
Udo Werle
Member of the Managing Board and
Head of Finance, Administration and Personnel Matters
Fresenius AG
Borkenberg 14, 61440 Oberursel, Germany
The directors and executive officers of Fresenius Securities, Inc. their present
principal occupations or employment (including the name, principal business and
address of any such employer) and their business or residence addresses are set
forth below. Dr. Krick and Dr. Polaschegg are German citizens. Dr. Lipps and
Messrs. Schmidt and Walker are US citizens, and their business address is 2637
Shadelands Drive, Walnut Creek, California 94598.
Sch. A-2
<PAGE> 19
DIRECTORS
Dr. Gerd Krick
Chairman of the Managing Board
Fresenius AG
Borkenberg 14
Oberusel 61440/Ts
Germany
Dr. Hans Polaschegg
Consultant to Fresenius AG
Borkenberg 14
Oberusel 61440/Ts
Germany
EXECUTIVE OFFICERS
Dr. Ben Lipps
President, Fresenius USA, Inc.
Heinz Schmidt
Vice President-Finance, Fresenius USA, Inc.
Scott Walker
Vice President - Regulatory Affairs, Fresenius USA, Inc.
Sch. A-3
<PAGE> 20
EXHIBIT INDEX
---------------
Exhibit No. Description
----------- -----------
Exhibit 1 Preferred Stock and Warrant Purchase
Agreement dated as of September 8, 1987
between Delmed, Inc. and Fresenius AG.
Exhibit 2 Amendment dated October 2, 1987 to Preferred
Stock and Warrant Purchase Agreement dated as
of September 8, 1987.
Exhibit 3 Option Agreement dated as of February 14,
1990 among Delmed, Inc., Fresenius AG and
Fresenius U.S.A., Inc. (Incorporated by
reference to Exhibit (c) to the Current
Report on Form 8-K dated February 15, 1990 of
Delmed, Inc.
Exhibit 4 Agreement between Fresenius AG and Fresenius
U.S.A., Inc. regarding the filing of a joint
Schedule 13D.
Exhibit 5 Amendment No. 1 to Option Agreement among
Fresenius AG, Fresenius Securities, Inc. and
Fresenius USA, Inc.
Exhibit 6 Stock Purchase and Warrant Repurchase
Agreement dated September 25, 1992 between
Fresenius AG and Fresenius USA, Inc.
Exhibit 7 Common Stock Purchase Warrant of Fresenius
USA, Inc. dated February 24, 1993.
Exhibit 8 Registration Agreement dated as of February
24, 1993 between Fresenius USA, Inc. and
Fresenius AG.
Exhibit 9. Common Stock Purchase Warrant dated April 15,
1994. Incorporated by reference to Exhibit
10.16 to the Company's Registration Statement
on Form S-1 (Registration No. 33-78422) filed
on May 3, 1994.
Exhibit 10. Letters dated February 9, 1994 and April 1994
from Fresenius AG and FSI to the Company
relating to voting of the Preferred Stock and
Common Stock held by them.
Exhibit 11. Agreement dated April 15, 1994 amending the
Registration Agreement among Fresenius AG,
FSI and the Company. Incorporated by
reference to Exhibit 10.7.1 to the Company's
Registration Statement on Form S-1
(Registration No. 33-78422) filed on May 3,
1994.
Exhibit 12. Letter Agreements dated April 22, 1994 from
Fresenius AG, Fresenius Securities, Inc., Ben
Lipps, Heinz Schmidt and Scott
<PAGE> 21
Walker undertaking to refrain from disposing
of Common Stock of the Company.
Exhibit 13. Stock Purchase Agreement dated as of June 29,
1994 between Fresenius AG and Medihold
Limited.
Exhibit 14. Letter Agreement dated June 29, 1994 amending
the Registration Agreement among Fresenius
AG, Fresenius Securities, Inc. and the
Company.
Exhibit 15 Agreement and Plan of Reorganization dated as
of February 4, 1996 between W.R. Grace & Co.
and Fresenius AG. (Filed herewith)
Exhibit 16 Contribution Agreement dated as of February
4, 1996 among Fresenius AG, Steril Pharma
GMBH and W.R. Grace & Co.-Conn. (Filed
herewith)
<PAGE> 1
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF FEBRUARY 4, 1996
BY AND BETWEEN
W. R. GRACE & CO.
AND
FRESENIUS AG
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
RECITALS
A. Defined Terms ........................................ 1
B. Newco ................................................ 1
C. The Contribution ..................................... 1
D. The Distribution ..................................... 1
E. The Recapitalization ................................. 1
F. The Mergers and the Recapitalization ................. 1
G. Financing ............................................ 2
H. Intention of the Parties ............................. 2
I. Approvals ............................................ 2
ARTICLE I
THE REORGANIZATION; CLOSING; EFFECTIVE TIME
Section 1.1. The Distribution, Newco and the
Contribution .............................. 2
Section 1.2. The Recapitalization and the Mergers ................. 3
Section 1.3. Effective Time ....................................... 3
Section 1.4. Closing .............................................. 3
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
Section 2.1. Grace Certificate of Incorporation .................... 3
Section 2.2. Grace By-laws ......................................... 4
Section 2.3. Fresenius USA Articles of Organization ................ 4
Section 2.4. Fresenius USA By-laws ................................. 4
ARTICLE III
DIRECTORS AND OFFICERS
Section 3.1. Grace Directors ....................................... 4
Section 3.2. Grace Officers ........................................ 4
Section 3.3. Fresenius USA Directors ............................... 4
Section 3.4. Fresenius USA Officers ................................ 4
</TABLE>
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<TABLE>
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<S> <C>
ARTICLE IV
MERGER CONSIDERATION; CONTRIBUTION CONSIDERATION;
CONVERSION OR CANCELLATION OF SHARES IN THE MERGERS
Section 4.1. Grace Merger Consideration; Conversion or
Cancellation of Grace Capital Stock ................. 4
Section 4.2. Fresenius USA Merger Consideration; Conversion or
Cancellation of Fresenius USA Capital Stock ........ 5
Section 4.3. Fresenius AG Consideration ............................ 6
Section 4.4. Exchange of Old Certificates for New
Certificates ....................................... 6
(a) Appointment of Exchange Agent .......... 6
(b) Exchange Procedures .................... 6
(c) Fractional Shares ...................... 7
(d) Distributions with Respect to
Unexchanged Shares .................. 8
(e) No Transfers ........................... 8
(f) No Liability ........................... 8
(g) Withholding Rights ..................... 8
(h) Transfer Taxes ......................... 9
(i) Stock Options and Warrants ............. 9
Section 4.5. Dissenters' Rights .................................... 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1. Representations and Warranties of Grace ....... 10
(a) Capital Stock .......................... 10
(b) Corporate Organization and
Qualification ...................... 11
(c) Corporate Authority .................... 11
(d) Governmental Filings; No Violations .... 11
(e) SEC Documents; Financial Statements;
No Undisclosed Liabilities .......... 12
(f) Absence of Certain Events and Changes .. 13
(g) Compliance with Laws ................... 14
(h) Title to Assets ........................ 14
(i) Litigation ............................. 14
(j) Taxes .................................. 14
(k) Employee Benefits ...................... 15
(l) Environmental Matters .................. 17
(m) Rights Plan ............................ 17
(n) Takeover Statutes ...................... 17
(o) Brokers and Finders .................... 17
(p) Tax Matters ............................ 17
(q) Information in Disclosure Documents
and Registration Statements ......... 17
(r) Trademarks, Patents and Copyrights ..... 18
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(s) Assets 18
(t) Disclosure ............................. 18
Section 5.2. Representations and Warranties of Fresenius
USA ................................ 18
(a) Capital Stock .......................... 18
(b) Corporate Organization and
Qualification ...................... 19
(c) Corporate Authority .................... 20
(d) Governmental Filings; No Violations .... 20
(e) SEC Documents; Financial Statements;
No Undisclosed Liabilities .......... 21
(f) Absence of Certain Events and Changes .. 22
(g) Compliance with Laws ................... 22
(h) Title to Assets ........................ 22
(i) Litigation ............................. 23
(j) Taxes .................................. 23
(k) Employee Benefits ...................... 23
(l) Environmental Matters .................. 25
(m) Takeover Statutes ...................... 25
(n) Brokers and Finders .................... 25
(o) Information in Disclosure
Documents and Registration
Statements ....................... 25
(p) Trademarks, Patents and Copyrights ..... 26
(q) Disclosure ............................. 26
Section 5.3. Representations and Warranties of
Fresenius AG ............................ 26
(a) Corporation Organization and
Qualification ....................... 26
(b) Corporate Authority .................... 27
(c) Governmental Filings; No Violations .... 27
(d) Takeover Statutes ...................... 28
(e) Brokers and Finders .................... 28
(f) Contribution ........................... 28
(g) Tax Matters ............................ 28
(h) Information in Disclosure
Documents and
Registration Statements ............. 28
(i) Disclosure ............................. 29
Section 5.4. Representations and Warranties for the
FWD Business .............................. 29
(a) Corporate Organization and
Qualification ....................... 29
(b) Corporate Authority .................... 29
(c) Capitalization ......................... 29
(d) Financial Statements; No Undisclosed
Liabilities ......................... 30
(e) Absence of Certain Events and Changes .. 30
(f) Compliance with Laws ................... 30
(g) Title to Assets ........................ 31
(h) Litigation ............................. 31
(i) Taxes .................................. 31
(j) Environmental Matters .................. 32
(k) Governmental Filings; No Violations .... 32
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(l) Contracts and Commitments .............. 33
(m) Employee Benefit Plans ................. 33
(n) Lease 34
(o) Trademarks, Patents and Copyrights ..... 34
Section 5.5. Certain Definitions Relating to the
FWD Business .............................. 35
(a) FWD Business .............................. 35
(b) FWD Business Assets ....................... 35
(c) FWD Business Subsidiaries ................. 35
(d) Fresenius AG Restructuring ................ 35
ARTICLE VI
COVENANTS
Section 6.1. Interim Operations ............................ 35
Section 6.2. Newco Capital ................................. 37
Section 6.3. Acquisition Proposals ......................... 38
Section 6.4. Information Supplied .......................... 39
Section 6.5. Shareholder Approvals ......................... 39
Section 6.6. Filings; Other Actions ........................ 40
Section 6.7. Audited Financial Statements .................. 41
Section 6.8. Access ........................................ 43
Section 6.9. Notification of Certain Matters ............... 43
Section 6.10. Publicity ..................................... 43
Section 6.11. [Intentionally Omitted] ....................... 43
Section 6.12. Employee Benefits ............................. 43
Section 6.13. Expenses and Liquidated Damages ............... 44
Section 6.14. Grace Rights Agreement ........................ 45
Section 6.15. Antitakeover Statutes ......................... 45
Section 6.16. Securities Act Compliance ..................... 45
Section 6.17. Stock Exchange Listing ........................ 45
Section 6.18. Transaction Agreements ........................ 45
Section 6.19. Tax Matters ................................... 45
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to Each Party's Obligation ......... 46
(a) Shareholder Approval ................... 46
(b) Governmental and Regulatory Consents ... 46
(c) Third-Party Consents ................... 46
(d) Litigation ............................. 46
(e) Grace Tax Opinion ...................... 46
(f) Registration Statements ................ 47
(g) Financing .............................. 47
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
PAGE
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<S> <C>
(h) The Distribution ....................... 47
(i) Stock Exchange Listing ................. 47
(j) Fresenius AG Debt ...................... 47
(k) Grace Debt ............................. 47
Section 7.2. Conditions to Obligation of Grace ............. 47
(a) Representations and Warranties ......... 47
(b) Performance of Obligations ............. 47
(c) Pooling Agreement Opinion............... 47
(d) Fresenius AG Tax Opinion ............... 48
Section 7.3. Conditions to Obligation
Concerning Fresenius USA ........... 48
(a) Representations and Warranties ......... 48
(b) Performance of Obligations ............. 48
(c) Pooling Agreement Opinion .............. 48
Section 7.4. Conditions to Obligation of Fresenius AG ...... 48
(a) Representations and Warranties ......... 48
(b) Performance of Obligations ............. 48
ARTICLE VIII
TERMINATION
Section 8.1. Termination by Mutual Consent ................. 49
Section 8.2. Termination by any Party Hereto ............... 49
Section 8.3. Termination by Grace .......................... 49
Section 8.4. Termination by Either Fresenius Party ......... 49
Section 8.5. Effect of Termination and Abandonment ......... 49
ARTICLE IX
MISCELLANEOUS AND GENERAL
Section 9.1. Survival ...................................... 50
Section 9.2. Modification or Amendment ..................... 50
Section 9.3. Waiver of Conditions .......................... 50
Section 9.4. Counterparts .................................. 50
Section 9.5. Governing Law ................................. 50
Section 9.6. Notices ....................................... 50
Section 9.7. Entire Agreement, etc. ........................ 51
Section 9.8. Definitions of "Subsidiary" and "Significant
Subsidiary" ................................ 51
Section 9.9. Captions ...................................... 52
Section 9.10. Specific Performance .......................... 52
Section 9.11. Severability .................................. 52
Section 9.12. No Third-Party Beneficiaries .................. 52
Section 9.13. Fresenius AG Covenant ......................... 52
Section 9.14. Further Assurances ............................ 52
</TABLE>
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<PAGE> 7
Annex A Defined Terms
Exhibit A Distribution Agreement
Exhibit B [Intentionally omitted]
Exhibit C Certain Terms of NY Preferred Shares
Exhibit D Certain Terms of Newco Pooling Agreement
Exhibit E Contribution Agreement
Exhibit F [Intentionally omitted]
Exhibit G Tax Matters Certificates
Exhibit H Form of Grace Tax Opinions
Exhibit I Form of Fresenius AG Tax Opinion
-vi-
<PAGE> 8
AGREEMENT AND PLAN OF REORGANIZATION, dated as of February 4,
1996 (this "Agreement" or the "Reorganization Agreement"), by and between W. R.
GRACE & CO., a New York corporation ("Grace"), and FRESENIUS AG, an
Aktiengesellschaft organized under the laws of the Federal Republic of Germany
("Fresenius AG").
RECITALS
A. Defined Terms. Certain capitalized terms used herein shall
have the meanings set forth in Annex A hereto.
B. Newco. Prior to the Effective Time, Fresenius AG intends
(a) to convert a wholly owned GmbH subsidiary into an Aktiengesellschaft
organized under the laws of the Federal Republic of Germany ("Newco"), having
charter documents (the "Newco Charter Documents") and other organizational
documents consistent with the terms set forth in Exhibit D hereto and subject to
the approval of each party hereto, and (b) to enter into a Pooling Agreement
consistent with the terms set forth in Exhibit D hereto and subject to the
approval of each party hereto (the "Newco Pooling Agreement").
C. The Contribution. Prior to the Effective Time, Fresenius AG
intends to contribute its worldwide dialysis business (including its shares of
capital stock of Fresenius USA) to Newco (the "Contribution") pursuant to the
Contribution Agreement attached hereto as Exhibit E (the " Contribution
Agreement"), and shall retain and lease to Newco its real property and buildings
in the Federal Republic of Germany to the extent used in connection with the FWD
Business pursuant to a lease (or leases) (the "Lease") consistent with the terms
set forth in Exhibit B to the Contribution Agreement, and subject to the
approval of each party hereto, and shall retain and license to Newco its name
and certain related marks pursuant to a license consistent with the terms set
forth in Exhibit C to the Contribution Agreement, and subject to the approval of
each party hereto.
D. The Distribution. Simultaneously herewith, W. R. Grace &
Co.-Conn., a Connecticut corporation ("Grace-Conn."), are entering into the
Distribution Agreement attached hereto as Exhibit A (the "Distribution
Agreement") and, prior to the Effective Time, intend to consummate the
transactions contemplated thereby. Prior to the Effective Time, Grace intends to
transfer to (or retain in) Grace-Conn. all non-healthcare assets and
liabilities, its interests in the Amicon bioseparations business and GN
Holdings, Inc. and certain other assets, as contemplated by the Distribution
Agreement, and to effect a distribution to its common shareholders of all of its
equity interest in Grace-Conn. (the "Distribution").
E. The Recapitalization. Immediately prior to the Effective
Time, but following the Distribution, Grace shall be recapitalized (the
"Recapitalization") so that each holder of a Grace Common Share shall thereafter
hold one Grace Common Share and one one-hundredth of a NY Preferred Share.
F. The Mergers. At the Effective Time, the parties intend to
effect a merger of a wholly owned New York corporate subsidiary of Newco ("Grace
Merger Sub") with and into Grace, with Grace being the surviving corporation
(the "Grace Merger"), and that
<PAGE> 9
the Certificate of Incorporation of Grace shall be amended (the "Grace
Amendment") to change the name of Grace to a name mutually acceptable to the
parties hereto. Also at the Effective Time, the parties intend to effect a
merger of a wholly owned Massachusetts corporate subsidiary of Newco ("Fresenius
USA Merger Sub") with and into Fresenius USA, Inc., a Massachusetts corporation
("Fresenius USA" and, together with Fresenius AG, the "Fresenius Parties"), with
Fresenius USA being the surviving corporation (the "Fresenius USA Merger" and,
together with the Grace Merger, the "Mergers"), and Fresenius AG has committed
to vote its shares of Fresenius USA in favor of the Fresenius USA Merger, as
provided herein.
G. Financing. It is the intention of the parties hereto that,
prior to the Distribution: (i) Grace and Grace-Conn. shall use reasonable
efforts to cause NMC to arrange new credit facilities so that the transactions
contemplated by the Transaction Agreements may be consummated; (ii) Fresenius AG
shall use reasonable efforts to arrange new credit facilities for the FWD
Business so that the transactions contemplated by the Transaction Agreements may
be consummated; and (iii) the parties shall cooperate with one another with
respect to the foregoing.
H. Intention of the Parties. It is the intention of the
parties to this Agreement that for United States federal income tax purposes (a)
the Contribution shall qualify as a tax-free exchange under the Code, (b) the
Distribution shall qualify as a tax-free distribution under the Code, (c) the
Recapitalization shall be tax-free to Grace under the Code and (d) each of the
Mergers shall qualify as a "reorganization" within the meaning of Section 368(a)
of the Code.
I. Approvals. The Board of Directors of each party hereto has
determined that this Agreement is in the best interests of such party and its
shareholders and has duly approved this Agreement and authorized its execution
and delivery.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE REORGANIZATION; CLOSING; EFFECTIVE TIME
SECTION 1.1. The Distribution, Newco and the Contribution. (a)
Subject to the terms and conditions of the Distribution Agreement, prior to the
Effective Time, the parties thereto shall effect the various transactions
contemplated thereby including, immediately prior to the Effective Time, the
Distribution.
(b) Prior to the Effective Time, Fresenius AG shall cause
Newco to adopt the Newco Charter Documents (which shall be satisfactory to the
other parties hereto), shall cause Newco to adopt other organizational documents
as may be necessary or advisable (which shall be satisfactory to the other
parties hereto) and shall enter into, and shall cause Newco to enter into, the
Newco Pooling Agreement (which shall be satisfactory to the other parties
hereto).
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<PAGE> 10
(c) Subject to the terms and conditions of the Contribution
Agreement, prior to the Effective Time, Fresenius AG shall effect the various
transactions contemplated by the Contribution Agreement including the
Contribution.
SECTION 1.2. The Recapitalization and the Mergers. (a) Subject
to the terms and conditions of this Agreement, immediately prior to the
Effective Time, but following the Distribution, Grace shall consummate the
Recapitalization.
(b) At the Effective Time, Grace and Grace Merger Sub shall
consummate the Grace Merger in which Grace Merger Sub shall be merged with and
into Grace and the separate corporate existence of Grace Merger Sub shall
thereupon cease. Grace shall be the surviving corporation of the Grace Merger
(the "Grace Surviving Corporation") and shall continue to be governed by the
laws of the State of New York.
(c) Subject to the terms and conditions of this Agreement, at
the Effective Time, Fresenius USA and Fresenius USA Merger Sub shall consummate
the Fresenius USA Merger in which Fresenius USA Merger Sub shall be merged with
and into Fresenius USA and the separate corporate existence of Fresenius USA
Merger Sub shall thereupon cease. Fresenius USA shall be the surviving
corporation of the Fresenius USA Merger (the "Fresenius USA Surviving
Corporation") and shall continue to be governed by the laws of the Commonwealth
of Massachusetts.
SECTION 1.3. Effective Time. Fresenius USA and Fresenius USA
Merger Sub shall cause a certificate of merger to be submitted to the Department
of State of the Commonwealth of Massachusetts as provided in the MBCL (the
"Massachusetts Certificate"). The Fresenius USA Merger shall become effective at
such time as the Massachusetts Certificate has been filed by the Department of
State of the Commonwealth of Massachusetts in accordance with the provisions of
the MBCL or at such other time as may be specified in the Massachusetts
Certificate in accordance with applicable law. The date and time when the
Fresenius USA Merger shall become effective is referred to herein as the
"Effective Time." Grace and Grace Merger Sub shall cause articles of merger to
be submitted to the Department of State of the State of New York as provided in
the NYBCL (the "New York Certificate "). The New York Certificate shall provide
that the Grace Merger shall become effective at the Effective Time in accordance
with applicable law.
SECTION 1.4. Closing. The closing of the Reorganization (the
"Closing") shall take place at the offices of Wachtell, Lipton, Rosen & Katz,
New York, New York, at 10:00 A.M. on the first business day on which all the
conditions set forth in Article VII can be fulfilled or are waived, or at such
other place and/or time as the parties hereto may agree. The date upon which the
Closing shall occur is herein called the "Closing Date."
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
SECTION 2.1. Grace Certificate of Incorporation. The
certificate of incorporation of Grace, as in effect at the Effective Time and
taking into account the Grace Amendment, shall be the certificate of
incorporation of the Grace Surviving Corporation
-3-
<PAGE> 11
(the "Grace Certificate of Incorporation"), until duly amended in accordance
with the terms thereof and the NYBCL.
SECTION 2.2. Grace By-laws. The By-laws of Grace, as in effect
at the Effective Time, shall continue as the By-laws of the Grace Surviving
Corporation until duly amended in accordance with the terms thereof, the Grace
Certificate of Incorporation and the NYBCL.
SECTION 2.3. Fresenius USA Articles of Organization. The
articles of organization of Fresenius USA, as in effect at the Effective Time,
shall be the articles of organization of the Fresenius USA Surviving Corporation
(the "Fresenius USA Articles of Organization"), until duly amended in
accordance with the terms thereof and the MBCL.
SECTION 2.4. Fresenius USA By-laws. The By-laws of Fresenius
USA, as in effect at the Effective Time, shall continue as the By-laws of the
Fresenius USA Surviving Corporation, until duly amended in accordance with the
terms thereof, the Fresenius USA Articles of Organization and the MBCL.
ARTICLE III
DIRECTORS AND OFFICERS
SECTION 3.1. Grace Directors. Immediately after the Effective
Time, the directors of Grace Merger Sub shall be the directors of the Grace
Surviving Corporation.
SECTION 3.2. Grace Officers. Immediately after the Effective
Time, the officers of Grace Merger Sub shall be the officers of the Grace
Surviving Corporation.
SECTION 3.3. Fresenius USA Directors. Immediately after the
Effective Time, the directors of Fresenius USA Merger Sub shall be the directors
of the Fresenius USA Surviving Corporation.
SECTION 3.4. Fresenius USA Officers. Immediately after the
Effective Time, the officers of Fresenius USA Merger Sub shall be the officers
of the Fresenius USA Surviving Corporation.
ARTICLE IV
MERGER CONSIDERATION; CONTRIBUTION CONSIDERATION;
CONVERSION OR CANCELLATION OF SHARES IN THE MERGERS
SECTION 4.1. Grace Merger Consideration; Conversion or
Cancellation of Grace Capital Stock. At the Effective Time, by virtue of the
Grace Merger and without any action on the part of the holder of any capital
stock of Grace:
(a) Subject to Section 4.4(c), each Grace Common Share issued
and outstanding immediately prior to the Effective Time (other than any
Grace Common
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Share owned by Fresenius AG or its subsidiaries or
Fresenius USA or its subsidiaries or any Grace subsidiary or held in
Grace's treasury or any Grace Common Dissenting Share) shall be
converted at the Effective Time into the right to receive the Grace
Consideration Per Share.
(b) Each Grace Preferred Share and each NY Preferred Share
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and shall be unchanged by the Grace
Merger.
(c) All Grace Common Shares shall cease to be outstanding,
shall be cancelled and retired and shall cease to exist, and each
holder of an Old Grace Common Certificate (other than holders of Old
Grace Common Certificates representing Grace Common Dissenting Shares)
shall there after cease to have any rights with respect to such Old
Grace Common Certificates, except the right to receive, without
interest, upon exchange of such Old Grace Common Certificates in
accordance with Section 4.4, the Newco Ordinary Share Certificates and
payments to which such holder is entitled pursuant to this Article IV.
(d) Each Grace Common Share issued and outstanding immediately
prior to the Effective Time and owned by Fresenius AG or its
subsidiaries or Fresenius USA or its subsidiaries or any Grace
subsidiary or held in Grace's treasury shall cease to be outstanding,
shall be cancelled and retired without payment of any consideration
therefor and shall cease to exist.
(e) Each share of Grace Merger Sub common stock issued and
outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock of the Grace Surviving
Corporation.
SECTION 4.2. Fresenius USA Merger Consideration; Conversion or
Cancellation of Fresenius USA Capital Stock. At the Effective Time, by virtue of
the Fresenius USA Merger and without any action on the part of the holder of any
capital stock of Fresenius USA:
(a) Subject to Section 4.4(c), each Fresenius USA Common Share
issued and outstanding immediately prior to the Effective Time
(other than any Fresenius USA Common Share owned by
Fresenius AG or its subsidiaries or Grace or its subsidiaries or any
Fresenius USA subsidiary or held in Fresenius USA's treasury or any
Fresenius USA Common Dissenting Share) shall be converted at the
Effective Time into the right to receive the Fresenius USA
Consideration Per Share.
(b) All Fresenius USA Common Shares and Fresenius USA
Preferred Shares shall cease to be outstanding, shall be cancelled and
retired and shall cease to exist, and each holder of an Old Fresenius
USA Common Certificate (other than holders of Old Fresenius USA Common
Certificates representing Fresenius USA Common Dissenting Shares) shall
thereafter cease to have any rights with respect to such Old Fresenius
USA Common Certificates, except the right to receive, without interest,
upon exchange of such Old Fresenius USA Common Certificates in
accordance with Section 4.4, the Newco Ordinary Share Certificates and
payments to which such holder is entitled pursuant to this Article IV.
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(c) Each Fresenius USA Common Share issued and outstanding
immediately prior to the Effective Time and owned by Grace or its
subsidiaries or Fresenius AG or its subsidiaries or Newco or any
Fresenius USA subsidiary or held in Fresenius USA's treasury, and each
Fresenius USA Preferred Share, shall cease to be outstanding, shall be
cancelled and retired without payment of any consideration therefor
(except, as provided in Section 4.3) and shall cease to exist.
(d) Each share of Fresenius USA Merger Sub capital stock
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the Fresenius
USA Surviving Corporation.
(e) Prior to the vote of holders of Fresenius USA Common
Shares to be held with respect to the Fresenius USA Merger, Fresenius
AG shall advise Grace in writing as to the aggregate consideration to
be given to Fresenius USA shareholders (other than Fresenius AG and its
subsidiaries) in the Fresenius USA Merger (the "Aggregate Fresenius
USA Common Share Consideration"); provided that (i) to the extent that
the Aggregate Fresenius USA Common Share Consideration includes any
Newco Ordinary Shares, such shares shall be allocated to the holders of
Fresenius USA Common Share Equivalent (other than Fresenius AG and
its subsidiaries) in lieu of Newco Ordinary Shares which would
otherwise have been allocated to Fresenius AG under Section 4.3; (ii)
holders of Grace Common Share Equivalents shall be allocated in the
Reorganization, in the aggregate, 44.8% of Newco's equity securities
outstanding immediately following the Reorganization on a fully
diluted basis; (iii) Fresenius AG shall be allocated in the
Reorganization, in the aggregate, no less than 51%
of Newco's equity securities outstanding immediately following the Re
organization on a fully diluted basis; (iv) such transaction shall not
adversely affect the tax-free nature of the Distribution, the
Contribution or the Grace Merger; and (v) no additional costs or
expenses (including applicable taxes) shall be borne by Grace,
Fresenius USA or Newco as a result thereof, other than costs and
expenses for which Fresenius AG has agreed to reimburse Grace,
Fresenius USA or Newco, as applicable, at the Closing.
SECTION 4.3. Fresenius AG Consideration. At the Effective
Time, in consideration of the Contribution and the contribution to Newco of the
Fresenius USA Common Shares and the Fresenius USA Preferred Shares owned by
Fresenius AG and its subsidiaries (as provided in the Contribution Agreement),
and in consideration of the Fresenius USA Merger, Fresenius AG shall be
allocated 55.2% of the Newco Ordinary Shares that will be outstanding
immediately following consummation of the Reorganization on a fully diluted
basis.
SECTION 4.4. Exchange of Old Certificates for New
Certificates. (a) Appointment of Exchange Agent. From and after the Effective
Time until the end of the six-month period following the Effective Time, the
Surviving Corporations shall make available or cause to be made available to an
exchange agent appointed prior to the Effective Time by Newco with the approval
of each of Grace and Fresenius AG (the "Exchange Agent") Newco Ordinary Share
Certificates and cash in amounts sufficient to allow the Exchange Agent to make
all deliveries of Newco Ordinary Share Certificates and payments that may be
required in exchange for Old Certificates pursuant to this Article IV.
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<PAGE> 14
(b) Exchange Procedures. Promptly after the Effective Time,
the Surviving Corporations shall cause the Exchange Agent to mail or deliver to
each person (other than any party hereto or its subsidiaries and any holder of
Dissenting Shares) who was, at the Effective Time, a holder of record of Grace
Common Shares or, if applicable, Fresenius USA Common Shares a form (the terms
of which shall be mutually agreed upon by the parties hereto prior to the
Effective Time) of letter of transmittal containing instructions for use in
effecting the surrender of the Old Certificates in exchange for ADRs or Newco
Ordinary Share Certificates and payments pursuant to this Article IV. Upon
surrender to the Exchange Agent of an Old Certificate for cancellation together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, the holder of such Old Certificate shall be entitled
to receive in exchange therefor ADRs or a Newco Ordinary Share Certificate
representing the Newco Ordinary Shares, and a check in the amount to which such
holder is entitled pursuant to this Article IV, and the Old Certificate so
surrendered shall forthwith be cancelled. No interest shall be paid or shall
accrue on the amount payable upon surrender of Old Certificates. If any ADR or
Newco Ordinary Share Certificate is to be issued in a name other than that in
which the Old Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the person requesting such exchange
shall pay any transfer or other taxes required by reason of the issuance of such
ADR or Newco Ordinary Share Certificate in a name other than that of the
registered holder of the Old Certificate surrendered, or shall establish to the
satisfaction of the applicable Surviving Corporation that any such taxes have
been paid or are not applicable. Six months after the Effective Time, each
Surviving Corporation shall be entitled to cause the Exchange Agent to deliver
to it any applicable ADRs or Newco Ordinary Share Certificates and cash
(including any interest thereon) made available to the Exchange Agent that are
unclaimed by the former shareholders of its constituent corporations. Any such
former shareholders who have not theretofore exchanged their Old Certificates
for ADRs or Newco Ordinary Share Certificates and cash pursuant to this Article
IV shall thereafter be entitled to look exclusively to the applicable Surviving
Corporation and only as general creditors thereof for the Newco Ordinary Shares
and cash to which they become entitled upon exchange of their Old Certificates
pursuant to this Article IV. Each Surviving Corporation shall pay all applicable
charges and expenses, including its applicable share of those of the Exchange
Agent, in connection with the exchange of ADRs or Newco Ordinary Share
Certificates and cash for Old Certificates as contemplated hereby.
(c) Fractional Shares. No fractional ADRs or Newco Ordinary
Shares shall be issued in the Reorganization. In lieu of any such fractional
shares, each person who would otherwise have been entitled to a fraction of an
ADR or Newco Ordinary Share upon surrender of an Old Certificate for exchange
pursuant to this Article IV shall be paid an amount in cash (without interest)
equal to such holder's proportionate interest in the net proceeds from the sale
or sales in the open market by the Exchange Agent, on behalf of all such
holders, of the aggregate fractional ADRs or Newco Ordinary Shares issued
pursuant to this Article IV. As soon as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (i) the number of full
ADRs or Newco Ordinary Shares delivered to the Exchange Agent over (ii) the
aggregate number of full ADRs or Newco Ordinary Shares to be distributed in
respect of Grace Common Shares or Fresenius USA Common Shares (such excess being
herein called the "Excess Shares"), and the Exchange Agent, as agent for the
former holders of such shares, shall sell the Excess Shares at the prevailing
prices on the open market. The sale of the Excess Shares by the Exchange Agent
shall be executed on a public exchange through one or more firms and shall be
executed in round lots to the extent practicable; and, at the discretion of the
Exchange Agent, the
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<PAGE> 15
Excess Shares may be exchanged for ADRs pursuant to the ADR Facility and such
ADRs shall be sold on the Exchange as aforesaid in lieu of the Excess Shares.
Newco shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with such sale of Excess Shares. Until the net
proceeds of such sale or sales have been distributed, the Exchange Agent shall
hold such proceeds in trust for such former stockholders (the "Fractional
Securities Fund"). As soon as practicable after the determination of the amount
of cash to be paid in lieu of any fractional interests, the Exchange Agent shall
make available in accordance with this Agreement such amounts to such former
stockholders.
(d) Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no dividends shall be
paid to any person holding an Old Certificate until such Old Certificate is
surrendered for exchange as provided herein. Subject to the effect of applicable
laws, following surrender of any such Old Certificate by any holder thereof
other than an Old Certificate representing Dissenting Shares, there shall be
paid to the holder of the Newco Ordinary Share Certificate issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to the Newco Ordinary Shares represented
thereby and not paid, less the amount of any withholding taxes which may be
required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to the time of such surrender and a payment date subsequent to the time of
such surrender payable with respect to the Newco Ordinary Shares represented
thereby, less the amount of any withholding taxes which may be required thereon.
(e) No Transfers. At or after the Effective Time, there shall
be no transfers on the stock transfer books of either Surviving Corporation of
Grace Common Shares, Fresenius USA Common Shares or Fresenius USA Preferred
Shares which were outstanding immediately prior to the Effective Time.
(f) No Liability. If any Old Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Old Certificate to be lost, stolen or destroyed and, if required
by the applicable Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the applicable Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such Old
Certificate, the applicable Surviving Corporation shall, in exchange for such
lost, stolen or destroyed Old Certificates, issue or cause to be issued the
Newco Ordinary Shares and pay or cause to be paid the amounts deliverable in
respect thereof pursuant to this Article IV. None of any party hereto, the
Exchange Agent, Newco or any Surviving Corporation shall be liable to any holder
of Grace Common Shares or Fresenius USA Common Shares for any cash from the
payment fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) Withholding Rights. The Surviving Corporations shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Grace Common Shares or Fresenius USA
Common Shares such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Code, or under any provision of
state, local or foreign tax law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority, such withheld
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<PAGE> 16
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Grace Common Shares or Fresenius USA Common Shares in
respect of which such deduction and withholding was made.
(h) Transfer Taxes. Except as provided above, Fresenius USA
and Grace shall pay or cause to be paid any transfer or gains tax (including,
without limitation, any real property gains or transfer tax), other than any
income tax, imposed in connection with or as a result of the Contribution or
Fresenius USA Merger, on the one hand, or the Distribution or Grace Merger, on
the other hand, respectively.
(i) Stock Options and Warrants. At the Effective Time, each
option, warrant or other security convertible into, exchangeable for or
exercisable for the purchase of Grace Common Shares, after taking into account
adjustments pursuant to the Distribution Agreement (each, a "Grace Option"), and
each option, warrant or other security convertible into, exchangeable for or
exercisable for the purchase of Fresenius USA Common Shares (each, a "Fresenius
USA Option") which is outstanding and unconverted, unexchanged or unexercised,
as the case may be, shall cease to represent a right to acquire Grace Common
Shares or Fresenius USA Common Shares, as the case may be, and shall be
converted automatically into an option, warrant or other security, as the case
may be, to purchase Newco Ordinary Shares in an amount and at an exercise price
determined as provided below:
(A) The number of Newco Ordinary Shares to be subject to the
new option, warrant or other security shall be equal to the product of
the number of shares subject to the original option, warrant or other
security and the Grace Exchange Ratio (in the case of a Grace Option)
or the Fresenius USA Exchange Ratio (in the case of a Fresenius USA
Option), rounded down to the nearest whole number of shares; and
(B) The exercise price per share of Newco Ordinary Shares
under the new option, warrant or other security shall be equal to the
exercise price per share of Grace Common Shares or Fresenius USA Common
Shares under the original Grace Option or Fresenius USA Option, as the
case may be, divided by the Grace Exchange Ratio (in the case of a
Grace Option) or the Fresenius USA Exchange Ratio (in the case of a
Fresenius USA Option), rounded up to the nearest whole cent.
The duration and other terms of the new option, warrant or
other security shall be the same as the remaining duration and other terms of
the original Grace Option or Fresenius USA Option, as the case may be, except
that all references to Grace or Fresenius USA shall be deemed to be references
to Newco. The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be, and
is intended to be, effected in a manner which is consistent with Section 424(a)
of the Code.
SECTION 4.5. Dissenters' Rights. If any holder of Grace Common
Shares or Fresenius USA Common Shares shall file written objection or provide
notice to Grace or Fresenius USA, respectively, in order to seek appraisal with
respect to such shares, pursuant to applicable statutory procedures, Grace or
Fresenius USA, as applicable, shall give the other notice thereof. If any such
holder of Grace Common Shares or Fresenius USA Common Shares shall fail to
perfect or shall have effectively withdrawn such objection or notice or lost the
right to appraisal with respect to such shares, such shares
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shall thereupon be treated as though such shares had been converted pursuant to
Section 4.1 or Section 4.2, as applicable.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1. Representations and Warranties of Grace. Grace
hereby represents and warrants to Fresenius AG that, except as set forth in a
letter (the "Grace Disclosure Letter") delivered to Fresenius AG simultaneously
with the execution and delivery of this Agreement (provided that, as used
herein, all references to Grace (and/or its Affiliates) shall be deemed to refer
to Grace and its Affiliates which conduct the NMC Business, consistent with
Section 9.8 hereof, except as otherwise specifically provided):
(a) Capital Stock. The authorized capital stock of Grace
consists of 300,000,000 Grace Common Shares, par value $1.00 per share,
of which 97,375,339 were outstanding as of December 31, 1995, and
5,130,000 Grace Preferred Shares, par value $1.00 per share (consisting
of 40,000 authorized Grace 6% Preferred Shares, 50,000 authorized Class
A Preferred Shares, 40,000 authorized Class B Preferred Shares and
5,000,000 authorized Class C Preferred Shares), of which 36,460 were
outstanding as Grace 6% Preferred Shares, 16,356 were outstanding as
Grace Class A Preferred Shares, 21,577 were outstanding as Grace Class
B Preferred Shares and none were outstanding as Grace Class C Preferred
Shares, in each case as of December 31, 1995. As of December 31, 1995,
53,153 Grace Common Shares were held by Grace and its subsidiaries
(other than any shares held in a fiduciary capacity and beneficially
owned by a third party) . As of December 31, 1995, there were
outstanding under the Grace 1994 Stock Incentive Plan, the Grace 1989
Stock Incentive Plan, the Grace 1986 Stock Incentive Plan, the Grace
1981 Stock Incentive Plan and the Grace 1994 Stock Retainer Plan for
Non-Employee Directors (collectively, the "Grace Stock Plans") options
to acquire an aggregate of 5,694,196 Grace Common Shares (subject to
adjustment on the terms set forth in the Grace Stock Plans). As of the
date of this Agreement, there are no Grace Common Shares reserved for
issuance, other than 105,083,951 Grace Common Shares reserved for
issuance in connection with the Grace Rights and 7,655,459 Grace Common
Shares reserved for issuance pursuant to the Grace Stock Plans. All
outstanding Grace Common Shares and
Grace Preferred Shares have been duly authorized and validly issued and
are fully paid and nonassessable. Except for the Grace Common Shares
and Grace Preferred Shares, Grace has outstanding no bonds, debentures,
notes or other obligations the holders of which have the right to vote
(or are convertible or exchangeable into or exercisable for securities
having the right to vote) with the shareholders of Grace on any matter.
Each of the outstanding shares of capital stock of each of Grace's
subsidiaries has been duly authorized and validly issued and is fully
paid and nonassessable and, except for an immaterial number of shares
held by officers and directors of Grace and its subsidiaries as
nominees and for the benefit of Grace or any of its subsidiaries, is
owned, either directly or indirectly, by Grace free and clear of all
liens, pledges, security interests, claims, proxies, preemptive or
subscriptive rights or other encumbrances or restrictions of any kind.
Except as set forth above and except for Grace Common Shares issued
after December 31, 1995 pursuant to the terms of options, securities
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<PAGE> 18
or plans referred to above and except for certain preemptive rights of
certain Grace Preferred Shares as set forth in the Grace Certificate of
Incorporation, there are no shares of capital stock of Grace
authorized, issued or outstanding and there are no preemptive rights or
any outstanding subscriptions, options, puts, calls, warrants, rights,
convertible or exchangeable securities or other agreements or
commitments of Grace or any of its significant subsidiaries of any
character relating to the issued or unissued capital stock or other
securities of Grace or any of its subsidiaries (including, without
limitation, the issuance, sale, purchase, redemption, conversion,
exchange, redemption, voting or transfer thereof). Exhibit 21 to its
Annual Report on Form 10-K for the year ended December 31, 1994, as
filed with the SEC, is an accurate and correct statement of all of the
information required to be set forth therein by the regulations of the
SEC and is an accurate and correct list of all Grace subsidiaries as of
the date hereof having a book value as of December 31, 1995 or net
income for the fiscal year ended December 31, 1995 in excess of
$25,000,000. Except as set forth in such Exhibit, as of the date
hereof, Grace does not, directly or indirectly, own any capital stock
or other ownership interest in any corporation, partnership, joint
venture or other entity having a book value as of December 31, 1995 or
net income for the fiscal year ended December 31, 1995 in excess of
$25,000,000.
(b) Corporate Organization and Qualification. Each of Grace
and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its or such subsidiary's
jurisdiction of organization and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it or such subsidiary require
such qualification, except for any such failure so to qualify or be in
good standing which, when taken together with all other such failures,
is not reasonably likely to have a Material Adverse Effect with respect
to Grace. Each of Grace and its subsidiaries has the requisite
corporate power and authority to carry on its businesses as they are
now being conducted. Grace has made available to the other parties
hereto a complete and correct copy of its Certificate of Incorporation
and By-laws (or similar organizational documents), each as amended to
date and currently in full force and effect.
(c) Corporate Authority. Subject only to the receipt of the
requisite approval of its shareholders, Grace has the requisite
corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform each Transaction
Agreement to which it is a party and to consummate the transactions
contemplated hereby and thereby including, without limitation, the
approval of the Board of Directors of Grace and the resolution of the
Board of Directors of Grace to recommend the transactions contemplated
hereby and thereby for approval by Grace shareholders, subject to their
fiduciary duties. Each Transaction Agreement to which Grace is a party
is, or when executed and delivered shall be, a valid and binding
agreement of Grace enforceable in accordance with its terms.
(d) Governmental Filings; No Violations. (i) Other than the
filings provided for in the Transaction Agreements, and other than as
may be required under the HSR Act and similar statutes in other
countries, the Exchange Act, the Securities Act, and state securities
laws, no notices, reports or other filings are required to be
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made by Grace or any subsidiary with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it or any subsidiary from, any governmental or
regulatory authority, agency, court, commission or other entity,
domestic or foreign ("Governmental Entity"), in connection with the
execution, delivery or performance of each Transaction Agreement to
which it or any subsidiary is a party by it or any subsidiary and
the consummation by it of the transactions contemplated hereby and
thereby, the failure to make or obtain any or all of which,
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect with respect to Grace or enable any person to
enjoin or prevent or materially delay consummation of the
transactions contemplated hereby and thereby.
(ii) The execution, delivery and performance by Grace or any
subsidiary of each Transaction Agreement to which it is a party does
not or will not, and the consummation by it of any of the transactions
contemplated hereby and thereby will not, constitute or result in (A) a
breach or violation of, or a default under, its Certificate of
Incorporation or By-laws, or the comparable governing instruments of
any of its subsidiaries, or (B) assuming receipt of any consents and
the occurrence of any events disclosed in the Grace Disclosure Letter
as contemplated in the last sentence of this paragraph, a breach or
violation of, or a default under, or the acceleration of or the
creation of a lien, pledge, security interest or other encumbrance on
assets of it, Newco or the Surviving Corporations or any of their
respective subsidiaries (with or without the giving of notice, the
lapse of time or both) pursuant to, any provision of any agreement,
lease, contract, note, mortgage, indenture, arrangement or other
obligation or commitment ("Contracts") of it or any of its subsidiaries
or any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it
or any of its subsidiaries is subject, or any change in the rights or
obligations of any party under, or give rise to any rights of
termination under, any of the Contracts, except, in the case of clause
(B) above, for such breaches, violations, defaults, accelerations or
changes that are disclosed in the Grace Disclosure Letter or,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to Grace. The Grace Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by it or any subsidiary or events required to occur
prior to consummation of the Reorganization (other than consents the
failure to obtain of which, individually and in the aggregate, is not
reasonably likely to have a Material Adverse Effect with respect to
Grace).
(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities. (i) Grace has delivered to the other parties hereto each
SEC Document prepared and filed with the SEC by it or its subsidiaries
since December 31, 1994, including, without limitation, (A) its Annual
Report on
Form 10-K for the year ended December 31, 1994, and (B) its Quarterly
Reports on Form 10-Q for the periods ended March 31, June 30 and
September 30, 1995. As of its filing date, each such SEC Document
filed, and each SEC Document that will be filed by it or its
subsidiaries prior to the Effective Time, as amended or supplemented,
if applicable, pursuant to the Exchange Act (A) complied or will comply
in all material respects with the applicable requirements of the
Exchange Act and (B) did not or will not contain any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each of
Grace's consolidated balance sheets
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included in or incorporated by
reference into its SEC Documents (including the related notes and
schedules) fairly presents in all material respects the consolidated
financial position of it and its subsidiaries as of its date and each
of the consolidated statements of income, cash flows and shareholders'
equity included in or incorporated by reference into its SEC Documents
(including any related notes and schedules) fairly presents in all
material respects the consolidated results of operations, retained
earnings and cash flows, as the case may be, of it and its subsidiaries
for the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments), in each case in
accordance with US GAAP.
(ii) Each SEC Document which is a final registration statement
filed, and each final registration statement that will be filed by it
or any subsidiary prior to the Effective Time, as amended or
supplemented, if applicable, pursuant to the Securities Act, as of the
date such statement or amendment became or will become effective (A)
complied or will comply in all material respects with the applicable
requirements of the Securities Act and (B) did not or will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of any prospectus, in light of the
circumstances under which they were made).
(iii) Included in the Grace Disclosure Letter are a special
purpose consolidated balance sheet as of, and special purpose
consolidated statements of income, cash flows and shareholders' equity
for Grace for the year ended, December 31, 1995, for Grace, in each
case exclusive of the Grace-Conn. Business and the assets, liabilities,
income, cash flows and shareholders' equity thereof (such
financial statements, the "Grace Disclosure Letter Financial
Statements" and the balance sheet as of December 31, 1995 included
therein, the "Grace Disclosure Letter Balance Sheet"). The Grace
Disclosure Letter Balance Sheet (including any related notes and
schedules) fairly presents in all material respects, and the special
purpose consolidated balance sheet to be included in the Grace Audited
Financial Statements (including any related notes and schedules) shall
fairly present in all material respects, the consolidated financial
position of Grace and its included subsidiaries as of its date; and
each of the special purpose consolidated statements of income, cash
flows and shareholders' equity included in the Grace Disclosure Letter
Financial Statements (including any related notes and schedules) fairly
presents in all material respects, and each such statement to be
included in the Grace Audited Financial Statements (including any
related notes and schedules) shall fairly present in all material
respects, the consolidated re sults of operations, retained earnings
and cash flows, as the case may be, of Grace and its included
subsidiaries for the periods set forth therein, in each case in
accordance with US GAAP and in each case exclusive of the Grace-Conn.
Business and the assets, liabilities, income, cash flows and
shareholders' equity thereof.
(iv) Except as disclosed in the Grace Disclosure Letter
Balance Sheet or the notes thereto or in its SEC Documents filed with
the SEC prior to the date hereof, neither Grace nor its subsidiaries
has any liabilities, whether or not accrued, contingent or otherwise,
that, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect with respect to Grace.
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<PAGE> 21
(f) Absence of Certain Events and Changes. Except as disclosed
in its SEC Documents filed with the SEC prior to the date hereof, since
September 30, 1995, Grace and its subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such
businesses and there has not been any change or development or
combination of changes or developments (including any worsening of any
condition currently existing) which, individually and in the aggregate,
is reasonably likely to result in a Material Adverse Effect with
respect to Grace.
(g) Compliance with Laws. Except as disclosed in its SEC
Documents filed with the SEC prior to the date hereof, Grace and its
subsidiaries have complied, in the conduct of their respective
businesses, with all applicable federal, state, local and foreign
statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto, except where the failure to comply is not reasonably likely,
individually and in the aggregate, to have a Material Adverse Effect
with respect to Grace. To the knowledge of its executive officers, each
of Grace and its subsidiaries has, and, immediately after the Grace
Merger, will have, all permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings, applications, and
registrations with, federal, state, local, and foreign governmental or
regulatory bodies that are required in order to permit it or such
subsidiary to carry on its business as it is presently conducted,
except for such permits, licenses, certificates, orders, filings,
applications and registrations, the failure to have or make which,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to Grace.
(h) Title to Assets. Grace and its subsidiaries have and,
immediately after the Grace Merger, the NMC Group will have, good and,
with respect to real property, marketable title to its properties and
assets (other than property as to which it is lessee), except for those
defects in title which are not, individually and in the aggregate,
reasonably likely to have a Material Adverse Effect with respect to
Grace. Grace and its subsidiaries have, and immediately after the Grace
Merger, the NMC Group will either own or have adequate rights to use
(on the same basis as currently owned or used by Grace or such
subsidiaries), all assets predominantly used or useful in the NMC
Business as currently conducted and all assets reflected on the Grace
Disclosure Letter Balance Sheet, except for assets disposed of in
accordance with this Agreement and except for those failures to own or
have which are not, individually and in the aggregate, reasonably
likely to have a Material Adverse Effect with respect to Grace.
(i) Litigation. Except as disclosed in Grace's SEC Documents
filed with the SEC prior to the date hereof, there are no civil,
criminal or administrative actions, suits, claims, hearings or
proceedings pending or, to the knowledge of its executive officers,
threatened, or investigations pending, against it or any of its
subsidiaries that, individually or in the aggregate, are reasonably
likely to have a Material Adverse Effect with respect to Grace. There
are no judgments or outstanding orders, writs, injunctions, decrees,
stipulations or awards (whether rendered or issued by a court or
Governmental Entity, or by arbitration) against Grace or any of its
subsidiaries or their respective properties or businesses, which are
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect with respect to Grace.
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<PAGE> 22
(j) Taxes. Except as disclosed in its SEC Documents filed with
the SEC prior to the date hereof, all material federal, state, local
and foreign tax returns required to be filed by or on behalf of Grace
or any of its subsidiaries have been timely filed or requests for
extensions have been timely filed and any such extension shall have
been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. Except as disclosed in
its SEC Documents filed with the SEC prior to the date hereof, all
material taxes required to be shown on returns filed by Grace, as of
the date of such SEC Document, have been paid in full or have been
recorded as a liability on its consolidated balance sheet (in
accordance with US GAAP). Except as disclosed in its SEC Documents
filed with the SEC prior to the date hereof, there is no outstanding
audit examination, deficiency, or refund litigation with respect to any
taxes of Grace that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect with respect to Grace. Except
as disclosed in its SEC Documents filed with the SEC prior to the date
hereof, all material taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded litigation
relating to Grace have been paid in full or have been recorded as a
liability on its balance sheet (in accordance with US GAAP). Except as
disclosed in its SEC Documents filed with the SEC prior to the date
hereof, neither Grace nor any of its subsidiaries is a party to a tax
sharing or similar agreement or any agreement pursuant to which it or
any of its subsidiaries has indemnified another party with respect to
taxes (other than the tax sharing agreement attached to the
Distribution Agreement), except for any such agreement under which the
liabilities of Grace and its subsidiaries would not be reasonably
likely to have a Material Adverse Effect with respect to Grace. Except
as set forth in SEC Documents filed prior to the date hereof, neither
Grace nor its subsidiaries have waived any applicable statute of
limitations with respect to federal income taxes or any material state
income taxes.
(k) Employee Benefits. (i) Grace's SEC Documents filed prior
to the date hereof disclose all material information required under the
applicable rules and regulations of the SEC with respect to Grace's
bonus, deferred compensation, pension, retirement, profit sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option plans, all material employment or
severance Contracts, all other material employee benefit plans and all
applicable "change of control" or similar provisions in any material
plan, Contract or arrangement which covers employees or former
employees of Grace or its subsidiaries ("Grace Compensation Plans").
True and complete copies of the Grace Compensation Plans and all other
benefit plans, Contracts or arrangements (regardless of whether they
are funded or unfunded or foreign or domestic) covering employees or
former employees of Grace and its subsidiaries (the "Grace Employees"),
including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and all amendments thereto, have been
made available to each other party hereto.
(ii) All Grace Compensation Plans that are "employee benefit
plans", other than "multiemployer plans" within the meaning of Sections
3(37) or 4001(a)(3) of ERISA, covering Grace Employees (the "Grace
Plans"), to the extent subject to ERISA, are in substantial compliance
with ERISA, except where the failure to be so would not reasonably be
expected to have a Material Adverse Effect with respect to Grace. There
is no pending or, to the knowledge of executive officers, threatened
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<PAGE> 23
litigation relating to any Grace Plan which is reasonably likely to
have a Material Adverse Effect with respect to Grace.
(iii) No material liability that has not previously been fully
satisfied under Subtitle C or D of Title IV of ERISA, under Section 412
of the Code or under Section 302 of ERISA has been or is expected to be
incurred by Grace or any of its subsidiaries with respect to any
"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 it under Section 4001 of ERISA or Section 414 of the Code (a
"Grace ERISA Affiliate"). Grace and its subsidiaries and the Grace
ERISA Affiliates have not incurred and do not expect to incur any
material withdrawal liability with respect to a multiemployer plan
under Subtitle E of Title IV 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 of the Grace Plans or by any of the Grace ERISA
Affiliates within the 12-month period ending on the date hereof.
(iv) As of January 1, 1995, the "full-funding limitation" (as
defined in Section 412(c)(9) of the Code) has been satisfied with
respect to each Grace Pension Plan which is a single-employer plan
(within the meaning of Section 4001(a)(15) of ERISA), and there has
been no change in the financial condition of any such Grace Pension
Plan since that date that is reasonably likely to have a Material
Adverse Effect with respect to Grace. The withdrawal liability of Grace
and its subsidiaries under each Grace Plan which is a multiemployer
plan to which Grace, its subsidiaries or its ERISA Affiliates has
contributed during the preceding 12 months, determined as if a
"complete withdrawal," within the meaning of Section 4203 of ERISA, had
occurred as of the date hereof, is not reasonably likely to have a
Material Adverse Effect with respect to Grace.
(v) Except as disclosed in its SEC Documents filed prior to
the date hereof, neither Grace nor its subsidiaries have any material
obligations for retiree health and life benefits under any Grace Plan.
Except as disclosed in its SEC Documents filed prior to the date
hereof, there are no restrictions on the right of Grace to amend or
terminate any Grace Plan that provides retiree health or life benefits
to Grace Employees without Grace incurring any material liability
thereunder as a result of such amendment or termination.
(vi) All Grace Compensation Plans covering foreign Employees
comply with applicable local law except when the failure to so comply,
individually and in the aggregate, would not have a Material Adverse
Effect with respect to Grace. Grace and its subsidiaries have no
unfunded liabilities with respect to any Grace Pension Plan which cover
foreign Employees in an amount which is reasonably likely to have a
Material Adverse Effect with respect to Grace.
(vii) Except as disclosed in its SEC Documents filed prior to
the date hereof or as provided in this Agreement, the transactions
contemplated by this Agreement will not result in the vesting or
acceleration of any material amounts under any Grace Compensation Plan,
any material increase in benefits under any
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<PAGE> 24
Grace Compensation Plan or payment of any severance or similar
compensation under any Grace Compensation Plan, and the amounts,
if any, payable under the Grace Compensation Plans and not
deductible by it by reason of Section 280G
of the Code will not exceed the maximum amount previously disclosed to
the other parties hereto. Except as disclosed in its SEC Documents
filed prior to the date hereof, Grace and its subsidiaries have not
entered into any change-of-control agreement under which Grace will be
obligated to make change-of-control payments following the Closing.
(l) Environmental Matters. Except as disclosed in its SEC
Documents filed prior to the date hereof and except for such matters
that, individually and in the aggregate, are not reasonably likely to
have a Material Adverse Effect with respect to Grace, to the knowledge
of its executive officers, (i) Grace and its subsidiaries are in
compliance with all applicable Environmental Laws; and (ii) neither
Grace nor any of its subsidiaries has any outstanding notices, demand
letters or requests for information from any Government Entity or any
third party that assert that Grace or any of its subsidiaries may be in
violation of, or liable under, any Environmental Law and none of Grace,
its subsidiaries or its properties are subject to any court order,
administrative order or decree arising under any Environmental Law.
(m) Rights Plan. After giving effect to any amendments that
will be made prior to the Effective Time, execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby will not cause or permit shareholders to exercise
rights under the Grace Rights Agreement or the Grace Rights issued
pursuant thereto and the Grace Rights will not become unredeemable or
exercisable as a result of the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated
hereby.
(n) Takeover Statutes. Execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby
will not cause to be applicable to Grace any "fair price,"
"moratorium," "control share acquisition" or other similar antitakeover
statute or regulation enacted under state or federal laws in the United
States or any foreign jurisdiction (each a "Takeover Statute") (after
giving effect to any actions that will be taken prior to the Effective
Time).
(o) Brokers and Finders. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein except pursuant to
arrangements disclosed in writing to the other parties hereto prior to
the date hereof.
(p) Tax Matters. At the Effective Time, the representations
set forth in the numbered paragraphs of the form of Tax Matters
Certificate of Grace attached hereto as Exhibit G (the "Grace Tax
Matters Certificate") will be true and correct in all respects, and
such representations are hereby incorporated herein by reference with
the same effect as if set forth herein in their entirety.
(q) Information in Disclosure Documents and Registration
Statements. None of the information supplied or to be supplied by Grace
for inclusion or incorporation by reference in any Registration
Statement will, at the time such Registration
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<PAGE> 25
Statement becomes effective under the Securities Act and at
the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and the Grace Proxy Statement will not, at the date mailed
to Grace shareholders and at the time of the Grace Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. The Grace Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder, except that no representation is
made by Grace with respect to statements made therein based on
information supplied by Fresenius AG or Fresenius USA or their
respective subsidiaries.
(r) Trademarks, Patents and Copyrights. Grace and its
subsidiaries own or possess adequate licenses or other rights to use,
all patents, trademarks, trade names, service marks, copyrights,
licenses and product licenses or registrations (including applications
for any of the fore going), as are used or useful predominantly in
connection with the NMC Business (the "NMC Business Intellectual
Property") the lack of which would reasonably be expected to have a
Material Adverse Effect with respect to Grace; and none of Grace or any
of its subsidiaries has any knowledge of any conflict with the
proprietary intellectual property rights of any of Grace or its
subsidiary therein or any knowledge of any conflict by Grace or its
subsidiary with the rights of others therein which would have a
Material Adverse Effect with respect to Grace. Immediately after the
Grace Merger, Newco or its subsidiaries will own or possess adequate
licenses or other rights to use (on substantially the same basis as
currently owned or possessed by Grace and its subsidiaries) all of
the NMC Business Intellectual Property. There are no Contracts,
agreements and licenses pursuant to which Grace or any of its
subsidiaries which will not be subsidiaries of Newco after the
Grace Merger will retain rights or interests of any kind in or
affecting the NMC Business Intellectual Property.
(s) Assets. Except as contemplated herein, at the Effective
Time, the NMC Group will contain the worldwide health care business of
Grace and all assets and services predominantly used in the conduct of
Grace's worldwide health care business as presently conducted.
(t) Disclosure. Neither the representations and warranties of
Grace contained in this Agreement nor in any written instrument, list,
exhibit or certificate furnished or to be furnished by Grace to
Fresenius AG pursuant hereto or in connection herewith contains or will
contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary in order to make the statements not
misleading.
SECTION 5.2. Representations and Warranties of Fresenius USA.
Subject to Section 9.13, Fresenius AG hereby represents and warrants to
Grace that, except as set forth in a letter (the "Fresenius USA
Disclosure Letter") delivered to Grace simultaneously with the
execution and delivery of this Agreement:
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<PAGE> 26
(a) Capital Stock. The authorized capital stock of Fresenius
USA consists of 40,000,000 Fresenius USA Common Shares, par value $.01
per share, of which 21,464,874 were outstanding as of December 31,
1995, and 600,000 Fresenius USA Preferred Shares, par value $1.00 per
share, of which 200,000 were outstanding as Fresenius USA Series F
Preferred Shares as of such date. Fresenius USA Series F Preferred
Shares are convertible into an aggregate of 3,129,883 Fresenius USA
Common Shares. No Fresenius USA Common Shares were held by Fresenius
USA and its subsidiaries (other than any shares held in a fiduciary
capacity and beneficially owned by a third party) as of December 31,
1995. As of December 31, 1995, there were outstanding under the
Fresenius USA 1976 Stock Option Plan, the Fresenius USA 1985 Special
Stock Option Plan, the Fresenius USA 1987 Stock Option Plan, the
Fresenius USA 1989 Special Stock Option Plan and the Fresenius USA
Directors' Stock Option Plan (collectively, the "Fresenius USA Stock
Plans") options to acquire an aggregate of 2,146,395 Fresenius USA
Common Shares (subject to adjustment on the terms set forth in the
Fresenius USA Stock Plans). As of the date of this Agreement, there are
no Fresenius USA Common Shares reserved for issuance, other than
155,550 Fresenius USA Common Shares reserved for issuance upon exercise
of stock options, 4,512,500 Fresenius USA Common Shares reserved for
issu ance pursuant to outstanding warrants and 1,990,845 Fresenius USA
Common Shares reserved for issuance pursuant to the Fresenius USA Stock
Plans. All outstanding Fresenius USA Common Shares and Fresenius USA
Preferred Shares have been duly authorized and validly issued and are
fully paid and nonassessable. Except for the Fresenius USA Common
Shares and the Fresenius USA Preferred Shares, Fresenius USA has
outstanding no bonds, debentures, notes or other obligations the
holders of which have the right to vote (or are convertible or
exchangeable into or exercisable for securities having the right to
vote) with the shareholders of Fresenius USA on any matter. Each of the
outstanding shares of capital stock of each of Fresenius USA's
subsidiaries has been duly authorized and validly issued and is fully
paid and nonassessable and, except for an immaterial number of shares
held by officers and directors of Fresenius USA and its subsidiaries as
nominees and for the benefit of Fresenius USA or any of its
subsidiaries, is owned, either directly or indirectly, by Fresenius USA
free and clear of all liens, pledges, security interests, claims,
proxies, preemptive or subscriptive rights or other encumbrances or
restrictions of any kind. Except as set forth above and except for
Fresenius USA Common Shares issued after December 31, 1995 pursuant to
the terms of options, securities or plans referred to above, there are
no shares of capital stock of Fresenius USA authorized, issued or
outstanding and there are no preemptive rights or any outstanding
subscriptions, options, puts, calls, warrants, rights, convertible or
exchangeable securities or other agreements or commitments of Fresenius
USA or any of its subsidiar ies of any character relating to the issued
or unissued capital stock or other securities of Fresenius USA or any
of its subsidiaries (including, without limitation, the issuance, sale,
purchase, redemption, conversion, exchange, redemption, voting or
transfer thereof). Exhibit 21 to Fresenius USA's Annual Report on Form
10-K for the year ended December 31, 1994, as filed with the SEC,
contains an accurate and correct statement of all of the information
required to be set forth therein by the regulations of the SEC and is
an accurate and correct list of all Fresenius USA subsidiaries as of
the date hereof, other than subsidiaries not engaged in an active
business. Except as set forth in
such exhibit, as of the date hereof, Fresenius USA does not, directly
or indirectly, own any
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<PAGE> 27
capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity, other than
subsidiaries not engaged in an active business.
(b) Corporate Organization and Qualification. Each of
Fresenius USA and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its or such
subsidiary's jurisdiction of organization and is in good standing as a
foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it or such subsidiary
require such qualification, except for any such failure so to qualify
or be in good standing which, when taken together with all other such
failures, is not reasonably likely to have a Material Adverse Effect
with respect to Fresenius USA. Each of Fresenius USA and its
subsidiaries has the requisite corporate power and authority to carry
on its businesses as they are now being conducted. Fresenius USA has
made available to the other parties hereto a complete and correct copy
of its Certificate of Incorporation and By-laws, each as amended to
date and currently in full force and effect.
(c) Corporate Authority. Except as contemplated by Section
9.13 hereof, Fresenius USA has the requisite corporate power and
authority and has taken all corporate action necessary in order to
execute, deliver and perform each Transaction Agreement to which it is
a party and to consummate the transactions contemplated hereby and
thereby. Each Transaction Agreement to which Fresenius USA is a party
is, or when executed and delivered shall be, a valid and binding
agreement of Fresenius USA enforceable in accordance with its terms.
(d) Governmental Filings; No Violations. (i) Other than the
filings provided for in the Transaction Agreements, and other than as
may be required under the HSR Act and similar statutes in other
countries, the Exchange Act, the Securities Act, and state securities
laws, no notices, reports or other filings are required to be made by
Fresenius USA or any subsidiary with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it or any subsidiary from, any Governmental Entity in
connection with the execution, delivery or performance of each
Transaction Agreement to which it or any subsidiary is a party by it or
any subsidiary and the consummation by it or any subsidiary of the
transactions contemplated hereby and thereby, the failure
to make or obtain any or all of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect with
respect to Fresenius USA or enable any person to enjoin or prevent or
materially delay consummation of the transactions contemplated hereby
and thereby.
(ii) The execution, delivery and performance by Fresenius USA
or any subsidiary of each Transaction Agreement to which it is a party
does not or will not, and the consummation by it of any of the
transactions contemplated hereby and thereby will not, constitute or
result in (A) a breach or violation of, or a default under, its
Certificate of Incorporation or By-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) assuming receipt of any
consents and the occurrence of any events disclosed in the Fresenius
USA Disclosure Letter as contemplated in the last sentence of this
paragraph, a breach or violation of, or a default under, or the
acceleration of or the creation of a lien, pledge, security interest or
other encumbrance on assets of it, Newco or the Surviving Corporations
or any of their respective subsidiaries (with or without the giving of
notice, the lapse of
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<PAGE> 28
time or both) pursuant to, any provision of any
Contracts of it or any of its subsidiaries or any law, rule, ordinance
or regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its
subsidiaries is subject, or any change in the rights or obligations of
any party under, or give rise to any rights of termination under, any
of the Contracts, except, in the case of clause (B) above, for such
breaches, violations, defaults, accelerations or changes that are
disclosed in the Fresenius USA Disclosure Letter or, individually and
in the aggregate, are not reasonably likely to have a Material Adverse
Effect with respect to Fresenius USA. The Fresenius USA Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by it or events required to occur prior to consummation
of the Reorganization (other than consents the failure to obtain of
which, individually and in the aggregate, is not reasonably likely to
have a Material Adverse Effect with respect to Fresenius USA).
(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities. (i) Fresenius USA has delivered to the other parties
hereto each SEC Document prepared and filed with the SEC by it or its
subsidiaries since December 31, 1994, including, without limitation,
(A) its Annual Report on Form 10-K for the year ended December 31,
1994, and (B) its Quarterly Reports on Form 10-Q for the periods ended
March 31, June 30 and September 30, 1995.
As of its filing date, each such SEC Document filed, and each SEC
Document that will be filed by Fresenius USA or its subsidiaries prior
to the Effective Time, as amended or supplemented, if applicable,
pursuant to the Exchange Act (A) complied or will comply in all
material respects with the applicable requirements of the Exchange Act
and (B) did not or will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. Each of Fresenius USA's consolidated
balance sheets included in or incorporated by reference into its SEC
Documents fairly presents in all material respects the consolidated
financial position of it and its subsidiaries as of its date and each
of the consolidated statements of income, cash flows and shareholders'
equity included in or incorporated by reference into its SEC Documents
(including any related notes and schedules) fairly presents in all
material respects the consolidated results of operations, retained
earnings and cash flows, as the case may be, of Fresenius USA and its
subsidiaries for the periods set forth therein (subject, in the case
of unaudited statements, to normal year-end audit adjustments), in
each case in accordance with US GAAP.
(ii) Each SEC Document which is a final registration
statement filed, and each final registration statement that will be
filed by it or any subsidiary prior to the Effective Time, as amended
or supplemented, if applicable, pursuant to the Securities Act, as of
the date such statement or amendment became or will become effective
(A) complied or will comply in all material respects with the
applicable requirements of the Securities Act and (B) did not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of any prospectus,
in light of the circumstances under which they were made).
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<PAGE> 29
(iii) Included in the Fresenius USA Disclosure Letter are a
consolidated balance sheet as of, and consolidated statements of
income, cash flows and shareholders' equity for the year ended,
December 31, 1995 for Fresenius USA (such financial statements, the
"Fresenius USA Disclosure Letter Financial Statements"), and the
balance sheet as of December 31, 1995 included therein, (the
"Fresenius USA Disclosure Letter Balance Sheet"). The Fresenius USA
Disclosure Letter Balance Sheet (including any related notes and
schedules) fairly presents in all material respects, and the
consolidated balance sheet to be included in the
Fresenius USA Audited Financial Statements (including any related
notes and schedules) shall fairly present in all material respects,
the consolidated financial position of Fresenius USA and its
subsidiaries as of its date; and each of the consolidated statements
of income, cash flows and shareholders' equity included in the
Fresenius USA Disclosure Letter Financial Statements (including any
related notes and schedules) fairly presents in all material respects,
and each such statement to be included in the Fresenius USA Audited
Financial Statements (including any related notes and schedules) shall
fairly present in all material respects, the consolidated results of
operations, retained earnings and cash flows, as the case may be, of
Fresenius USA, and its subsidiaries for the periods set forth therein,
in each case in accordance with US GAAP.
(iv) Except as disclosed in the Fresenius USA Disclosure
Letter Balance Sheet or the notes thereto or in its SEC Documents
filed with the SEC prior to the date hereof, neither Fresenius USA nor
its subsidiaries has any liabilities, whether or not accrued,
contingent or otherwise, that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA.
(f) Absence of Certain Events and Changes. Except as
disclosed in its SEC Documents filed with the SEC prior to the date
hereof, since September 30, 1995, Fresenius USA and its subsidiaries
have conducted their respective businesses only in the ordinary and
usual course of such businesses and there has not been any change or
development or combination of changes or developments (including any
worsening of any condition currently existing) which, individually and
in the aggregate, is reasonably likely to result in a Material Adverse
Effect.
(g) Compliance with Laws. Except as disclosed in its SEC
Documents filed with the SEC prior to the date hereof, Fresenius USA
and its subsidiaries have complied, in the conduct of their respective
businesses, with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto, except where the failure to comply is not
reasonably likely, individually and in the aggregate, to have a
Material Adverse Effect with respect to Fresenius USA. To the
knowledge of its executive officers, each of Fresenius USA and its
subsidiaries has, and, immediately after the Fresenius USA Merger,
will have, all permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings, applications, and
registrations with, federal, state, local, and foreign governmental or
regulatory bodies that are required in order to permit it or such
subsidiary to carry on its business as it is presently conducted,
except for such permits, licenses, certificates, orders, filings,
applications and registrations, the failure to have or make which,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to Fresenius USA.
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(h) Title to Assets. Fresenius USA or its subsidiaries have
and, immediately after the Fresenius USA Merger, will have, good and,
with respect to real property, marketable title to its properties and
assets (other than property as to which it is lessee), except for
those defects in title which are not, individually and in the
aggregate, reasonably likely to have a Material Adverse Effect with
respect to Fresenius USA. Fresenius USA and its subsidiaries have,
and immediately after the Fresenius USA Merger, will either own or
have adequate rights to use (on the same basis as currently owned or
used by Fresenius USA or such subsidiaries), all assets used or useful
in Fresenius USA's business as currently conducted and all assets
reflected on the Fresenius USA Disclosure Letter Balance Sheet, except
for assets disposed of in accordance with this Agreement and except
for those failures to own or have which are not, individually and in
the aggregate, reasonably likely to have a Material Adverse Effect
with respect to Fresenius USA.
(i) Litigation. Except as disclosed in Fresenius USA's SEC
Documents filed with the SEC prior to the date hereof, there are no
civil, criminal or administrative actions, suits, claims, hearings or
proceedings pending or, to the knowledge of its executive officers,
threatened, or investigations pending, against Fresenius USA or any of
its subsidiaries that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA. There are no judgments or outstanding orders, writs,
injunctions, decrees, stipulations or awards (whether rendered or
issued by a court or Governmental Entity, or by arbitration) against
Fresenius USA or any of its subsidiaries or their respective
properties or businesses, which are reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect with respect to
Fresenius USA.
(j) Taxes. Except as disclosed in Fresenius USA's SEC
Documents filed with the SEC prior to the date hereof,
all material federal, state, local and foreign tax returns required to
be filed by or on behalf of Fresenius USA or any of its subsidiaries
have been timely filed or requests for extensions have been timely
filed and any such extension shall have been granted and not have
expired, and all such filed returns are complete and accurate in all
material respects. Except as disclosed in its SEC Documents filed
with the SEC prior to the date hereof, all material taxes required to
be shown on returns filed by Fresenius USA, as of the date of such SEC
Document, have been paid in full or have been recorded as a liability
on its consolidated balance sheet (in accordance with US GAAP).
Except as disclosed in its SEC Documents filed with the SEC prior to
the date hereof, there is no outstanding audit examination,
deficiency, or refund litigation with respect to any taxes of
Fresenius USA that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect with respect to Fresenius
USA. Except as disclosed in its SEC Documents filed with the SEC
prior to the date hereof, all material taxes, interest, additions, and
penalties due with respect to completed and settled examinations or
concluded litigation relating to Fresenius USA have been paid in full
or have been recorded as a liability on its balance sheet (in
accordance with US GAAP). Except as disclosed in its SEC Documents
filed with the SEC prior to the date hereof, neither Fresenius USA nor
any of its subsidiaries is a party to a tax sharing or similar
agreement or any agreement pursuant to which it or any of its
subsidiaries has indemnified another party with respect to taxes
(other than the tax sharing agreement attached to the Contribution
Agreement), except for any such agreement under which the liabilities
of Fresenius USA and its subsidiaries would not be
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reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA. Except as set forth in SEC Documents filed prior to
the date hereof, neither Fresenius USA nor its subsidiaries have
waived any applicable statute of limitations with respect to federal
income taxes or any material state income taxes.
(k) Employee Benefits. (i) Fresenius USA's SEC Documents
filed prior to the date hereof disclose all material information
required under the applicable rules and regulations of the SEC with
respect to Fresenius USA's bonus, deferred compensation, pension,
retirement, profit sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock option plans,
all material employment or severance Contracts, all other material
employee benefit plans and all applicable "change of control" or
similar provisions in any material
plan, Contract or arrangement which covers employees or former
employees of Fresenius USA or its subsidiaries ("Fresenius USA
Compensation Plans"). True and complete copies of the Fresenius USA
Compensation Plans and all other benefit plans, Contracts or
arrangements (regardless of whether they are funded or unfunded or
foreign or domestic) covering employees or former employees of
Fresenius USA and its subsidiaries (the "Fresenius USA Employees"),
including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and all amendments thereto, have been
made available to each other party hereto.
(ii) All Fresenius USA Compensation Plans that are
"employee benefit plans", other than "multiemployer plans" within the
meaning of Sections 3(37) or 4001(a)(3) of ERISA, covering Fresenius
USA Employees (the "Fresenius USA Plans"), to the extent subject to
ERISA, are in substantial compliance with ERISA, except where the
failure to be so would not reasonably be expected to have a Material
Adverse Effect with respect to Fresenius USA. There is no pending or,
to the knowledge of executive officers, threatened litigation relating
to any Fresenius USA Plan which is reasonably likely to have a
Material Adverse Effect with respect to Fresenius USA.
(iii) No material liability that has not previously been
fully satisfied under Subtitle C or D of Title IV of ERISA, under
Section 412 of the Code or Section 302 of ERISA has been or is
expected to be incurred by Fresenius USA or any of its subsidiaries
with respect to any "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 it under Section 4001 of ERISA or Section 414 of the
Code (a "Fresenius USA ERISA Affiliate"). Fresenius USA and its
subsidiaries and the Fresenius USA ERISA Affiliates have not incurred
and do not expect to incur any material withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV 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 of the Fresenius USA
Plans or by any of the Fresenius USA ERISA affiliates within the
12-month period ending on the date hereof.
(iv) As of January 1, 1995, the "full-funding limitation"
(as defined in Section 412(c)(9) of the Code) has been satisfied with
respect to each Fresenius USA Pension
Plan which is a single-employer plan (within the meaning of Section
4001(a)(15) of ERISA), and there has been no change in the financial
condition of
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any such Fresenius USA Pension Plan since that date that
is reasonably likely to have a Material Adverse Effect with respect to
Fresenius USA. The withdrawal liability of Fresenius USA and its
subsidiaries under each Fresenius USA Plan which is a multiemployer
plan to which Fresenius USA, its subsidiaries or its ERISA Affiliates
has contributed during the preceding 12 months, determined as if a
"complete withdrawal," within the meaning of Section 4203 of ERISA,
had occurred as of the date hereof, is not reasonably likely to have a
Material Adverse Effect with respect to Fresenius USA.
(v) Except as disclosed in its SEC Documents filed prior
to the date hereof, neither Fresenius USA nor its subsidiaries have
any obligations for retiree health and life benefits under any
Fresenius USA Plan. Except as disclosed in its SEC Documents filed
prior to the date hereof, there are no restrictions on the right of
Fresenius USA to amend or terminate any Fresenius USA Plan that
provides retiree health or life benefits to Fresenius USA Employees
without Fresenius USA incurring any material liability thereunder as a
result of such amendment or termination.
(vi) All Fresenius USA Compensation Plans covering foreign
Employees comply with applicable local law except when the failure to
so comply, individually and in the aggregate, would not have a
Material Adverse Effect with respect to Fresenius USA. Fresenius
USA's and its subsidiaries have no unfunded liabilities with respect
to any Fresenius USA Pension Plan which cover foreign Employees in an
amount which is reasonably likely to have a Material Adverse Effect
with respect to Fresenius USA.
(vii) Except as disclosed in its SEC Documents filed prior
to the date hereof or as provided in this Agreement, the transactions
contemplated by this Agreement will not result in the vesting or
acceleration of any material amounts under any Fresenius USA
Compensation Plan, any material increase in benefits under any
Fresenius USA Compensation Plan or payment of any severance or similar
compensation under any Fresenius USA Compensation Plan, and the
amounts, if any, payable under the Fresenius USA Compensation Plans
and not deductible by it by reason of Section 280G of the Code will
not exceed the maximum amount previously disclosed to the other
parties hereto. Except as disclosed in its SEC Documents filed prior
to the date hereof, Fresenius USA and its subsidiaries have not
entered into any change-of-control agreement under which Fresenius USA
will be obligated to make change-of-control payments following the
Closing.
(l) Environmental Matters. Except as disclosed in its SEC
Documents filed prior to the date hereof and except for such matters
that, individually and in the aggregate, are not reasonably likely to
have a Material Adverse Effect with respect to Fresenius USA, to the
knowledge of its executive officers, (A) Fresenius USA and its
subsidiaries are in compliance with all applicable Environmental Laws;
and (B) neither Fresenius USA nor any of its subsidiaries has any
outstanding notices, demand letters or requests for information from
any Government Entity or any third party that assert that Fresenius
USA or any of its subsidiaries may be in violation of, or liable
under, any Environmental Law and none of Fresenius USA, its
subsidiaries or its properties are subject to any court order,
administrative order or decree arising under any Environmental Law.
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(m) Takeover Statutes. Execution, delivery and performance
of this Agreement and consummation of the transactions contemplated
hereby will not cause to be applicable to Fresenius USA any Takeover
Statute (after giving effect to any actions that will be taken prior
to the Effective Time).
(n) Brokers and Finders. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein except pursuant
to arrangements disclosed in writing to the other parties hereto prior
to the date hereof.
(o) Information in Disclosure Documents and Registration
Statements. None of the information supplied or to be supplied by
Fresenius USA for inclusion or incorporation by reference in any
Registration Statement will, at the time such Registration Statement
becomes effective under the Securities Act and at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; and the Fresenius USA Proxy Statement will
not, at the date mailed to Fresenius USA shareholders and at the time
of the meeting of Fresenius USA shareholders to be held in
connection with the Fresenius USA Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading. The Fresenius USA Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder, except that no representation is
made by Fresenius USA with respect to statements made therein based on
information supplied by Grace or its subsidiaries.
(p) Trademarks, Patents and Copyrights. Fresenius USA and
its subsidiaries own or possess adequate licenses or other rights to
use, all patents, trademarks, trade names, service marks, copyrights,
licenses and product licenses or registrations (including applications
for any of the foregoing), as are used or useful in connection with
its business (the "Fresenius USA Intellectual Property") the lack of
which would reasonably be expected to have a Material Adverse Effect
with respect to Fresenius USA; and none of Fresenius USA or any of its
subsidiaries has any knowledge of any conflict with the proprietary
intellectual property rights of any of Fresenius USA or its subsidiary
therein or any knowledge of any conflict by Fresenius USA or its
subsidiary with the rights of others therein which would have a
Material Adverse Effect with respect to Fresenius USA. Immediately
after the Fresenius USA Merger, Newco and its subsidiaries will own or
possess adequate licenses or other rights to use (on substantially the
same basis as currently owned or possessed by Fresenius USA and its
subsidiaries) all of the Fresenius USA Intellectual Property. Except
as disclosed in its SEC Documents filed with the SEC prior to the date
hereof, there are no Contracts, agreements and licenses pursuant to
which Fresenius USA or any subsidiaries of Fresenius USA which will
not be subsidiaries of Newco after the Fresenius USA Merger will
retain rights or interests of any kind in or affecting the Fresenius
USA Intellectual Property.
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(q) Disclosure. Neither the representations and warranties
of Fresenius USA or Fresenius AG contained in this Agreement nor in
any written instrument, list, exhibit or certificate furnished or to
be furnished by Fresenius USA or Fresenius AG to Grace pursuant hereto
or in connection herewith contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements not misleading.
SECTION 5.3. Representations and Warranties of Fresenius AG.
Fresenius AG hereby represents and warrants to Grace that, except as set forth
in a letter (the "Fresenius AG Disclosure Letter") delivered to Grace
simultaneously with the execution and delivery of this Agreement:
(a) Corporate Organization and Qualification. Fresenius AG
is an Aktiengesellschaft duly organized, validly existing and in good
standing under the laws of the Federal Republic of Germany and is in
good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it
require such qualification, except for any such failure so to qualify
or be in good standing which, when taken together with all other such
failures, is not reasonably likely to have a Material Adverse Effect
with respect to the FWD Business. Fresenius AG has the requisite
corporate power and authority to carry on its businesses as they are
now being conducted. Fresenius AG has made available to the other
parties hereto a complete and correct copy of its Certificate of
Incorporation and By-laws (or similar organizational documents), each
as amended to date and currently in full force and effect.
(b) Corporate Authority. Subject only to the receipt of the
requisite approval of its shareholders (and, with respect to Fresenius
USA, as contemplated by Section 9.13 hereof), Fresenius AG and its
subsidiaries have the requisite corporate power and authority and have
taken all corporate action necessary in order to execute, deliver and
perform each Transaction Agreement to which any of them are a party
and to consummate the transactions contemplated hereby and thereby
including, without limitation, the approval of the Fresenius AG
Supervisory Board and the affirmative vote of all shareholder
representatives thereon. Each Transaction Agreement to which
Fresenius AG or its subsidiary is a party is, or when executed and
delivered shall be, a valid and binding agreement of Fresenius AG or
such subsidiary enforceable in accordance with its terms. Fresenius
AG is the legal and beneficial owner of 18,673,324 Fresenius USA
Common Shares (13,793,441 of which are owned beneficially and of
record by Fresenius AG or its subsidiaries, 3,129,883 of which are
issuable upon conversion of Fresenius USA Series F Preferred Shares
and 1,750,000 of which are issuable upon the exercise of currently
exercisable warrants) and 200,000 Fresenius USA Series F Preferred
Shares.
(c) Governmental Filings; No Violations. (i) Other than the
filings provided for in the Transaction Agreements, and other than as
may be required under the HSR Act and similar statutes in other
countries, the Exchange Act, the Securities Act, and state securities
laws, except as set forth in the Fresenius AG Disclosure Letter, no
notices, reports or other filings are required to be made by Fresenius
AG or any subsidiary with, nor are any consents, registrations,
approvals, permits or
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authorizations required to be obtained by it or
any subsidiary from, any Governmental Entity in connection with the
execution, delivery or performance of each Transaction Agreement to
which it is a party by it or any subsidiary and the consummation by it
or any subsidiary of the transactions contemplated hereby and thereby,
the failure to make or obtain any or all of which, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect
with respect to the FWD Business or enable any person to enjoin or
prevent or materially delay consummation of the transactions
contemplated hereby and thereby.
(ii) The execution, delivery and performance by Fresenius
AG or any subsidiary of each Transaction Agreement to which it is a
party does not or will not, and the consummation by it of any of the
transactions contemplated thereby will not, constitute or result in
(A) a breach or violation of, or a default under, its Certificate of
Incorporation or By-laws, or the comparable governing instruments of
any of its subsidiaries, or (B) assuming receipt of any consents and
the occurrence of any events disclosed in the Fresenius AG Disclosure
Letter as contemplated in the last sentence of this paragraph (ii), a
breach or violation of, or a default under, or the acceleration of or
the creation of a lien, pledge, security interest or other encumbrance
on assets of it, Newco or the Surviving Corporations or any of their
respective subsidiaries (with or without the giving of notice, the
lapse of time or both) pursuant to, any provision of any Contract of
it or any of its subsidiaries or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its
subsidiaries is subject, or any change in the rights or obligations of
any party under, or give rise to any rights of termination under, any
of the Contracts, except, in the case of clause (B) above, for such
breaches, violations, defaults, accelerations or changes that are
disclosed in the Fresenius AG Disclosure Letter or, individually and
in the aggregate, are not reasonably likely to have a Material Adverse
Effect with respect to the FWD Business. The Fresenius AG Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by it or any subsidiary or events required to occur
prior to consummation of the Reorganization (other than consents the
failure to obtain of which, individually and in the aggregate, is not
reasonably likely to have a Material Adverse Effect with respect to
the FWD Business).
(d) Takeover Statutes. Execution, delivery and performance
of this Agreement and consummation of the transactions contemplated
hereby will not cause to be applicable to Fresenius AG any Takeover
Statute (after giving effect to any actions that will be taken prior
to the Effective Time).
(e) Brokers and Finders. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein except pursuant
to arrangements disclosed in writing to the other parties hereto prior
to the date hereof.
(f) Contribution. Except for the shares of capital stock of
Fresenius USA, the FWD Business Assets, which are to be contributed
pursuant to the Contribution, represent the worldwide dialysis
business of Fresenius AG and all assets and services
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<PAGE> 36
predominantly used in the conduct of Fresenius AG's worldwide
dialysis business as presently conducted.
(g) Tax Matters. At the Effective time, the representations
set forth in the numbered paragraphs of the form of Tax Matters
Certificate of Fresenius AG attached hereto as Exhibit G (the
"Fresenius AG Tax Matters Certificate") will be true and correct in all
respects, and such representations are hereby incorporated herein by
reference with the same effect as if set forth herein in their
entirety.
(h) Information in Disclosure Documents and Registration
Statements. None of the information supplied or to be supplied by
Fresenius AG for inclusion or incorporation by reference in any
Registration Statement will, at the time such Registration Statement
becomes effective under the Securities Act and at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading;
and the Fresenius USA Proxy Statement will not, at the date mailed to
Fresenius USA shareholders and at the time of the Fresenius USA
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Fresenius USA Proxy
Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by Fresenius AG with
respect to statements made therein based on information supplies by
Grace or its subsidiaries.
(i) Disclosure. Neither the representations and warranties
of Fresenius USA or Fresenius AG contained in this Agreement nor in
any written instrument, list, exhibit or certificate furnished or to
be furnished by Fresenius USA or Fresenius AG to Grace pursuant hereto
or in connection herewith contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements not misleading.
(j) Assets. Except as contemplated herein, at the Effective
Time, the FWD Business Group will contain the worldwide dialysis
business of Fresenius AG and all assets and services predominantly
used in the conduct of Fresenius AG's worldwide dialysis business as
presently conducted.
SECTION 5.4. Representations and Warranties for the FWD
Business. Fresenius AG hereby represents and warrants to Grace that, except as
set forth in a letter (the "FWD Business Disclosure Letter") delivered to Grace
simultaneously with the execution and delivery of this Agreement:
(a) Corporate Organization and Qualification. A true and
complete list of all FWD Business Subsidiaries, together with the
jurisdiction of organization of each such FWD Business Subsidiary, is
set forth in the FWD Business Disclosure Letter. Each FWD Business
Subsidiary is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and is in good
standing (if recognized in such jurisdiction, or, if not, duly
qualified) as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business
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<PAGE> 37
conducted, by such FWD Business Subsidiary require such qualification,
except for any such failure so to qualify or be in good standing
which, when taken together with all other such failures, is not
reasonably likely to have a Material Adverse Effect with respect
to the FWD Business. Each FWD Business Subsidiary has the requisite
corporate power and authority to carry on its business as now being
conducted. Fresenius AG has made available to the other parties
hereto a complete and correct copy of the Certificate of
Incorporation and By-laws (or similar organizational documents) of
each FWD Business Subsidiary, each as amended to date and currently
in full force and effect.
(b) Corporate Authority. Each FWD Business Subsidiary has
the requisite corporate power and authority and has taken all
corporate action necessary in order to consummate the transactions
contemplated hereby and by the other Transaction Agreements.
(c) Capitalization. The authorized capital stock, and the
number of shares of such capital stock issued and outstanding, of each
FWD Business Subsidiary is set forth in the FWD Business Disclosure
Letter, and all such issued and outstanding shares of capital stock
are owned of record and beneficially by Fresenius AG or another FWD
Business Subsidiary, free and clear of all liens, pledges, security
interests, claims, proxies, preemptive or subscriptive rights or other
encumbrances or restrictions of any kind. There are no options,
warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of any
FWD Business Subsidiary or obligating any FWD Business Subsidiary to
issue or sell any shares of capital stock of, or other equity
interests in, any FWD Business Subsidiary. There are no outstanding
contractual obligations of any FWD Business Subsidiary to repurchase,
redeem or otherwise acquire any capital stock of any FWD Business
Subsidiary or to provide funds to make any investment (in the form of
a loan, capital contribution or otherwise) in any FWD Business
Subsidiary or any other entity. Each of the outstanding shares of
capital stock of each FWD Business Subsidiary is duly authorized,
validly issued, fully paid and nonassessable.
(d) Financial Statements; No Undisclosed Liabilities. (i)
Included in the FWD Business Disclosure Letter are a consolidated
balance sheet as of December 31, 1995, and consolidated statements of
income, cash flows and shareholders' equity for the years ended
December 31, 1995 for the FWD Business (such financial statements, the
"FWD Business Disclosure Letter Financial Statements," and the
balance sheet as of December 31, 1995 included therein,
the "FWD Business Disclosure Letter Balance Sheet"). The FWD Business
Disclosure Letter Balance Sheet (including any related notes and
schedules) fairly presents in all material respects, and the
consolidated balance sheet to be included in the FWD Business Audited
Financial Statements (including any related notes and schedules) shall
fairly present in all material respects, the consolidated financial
position of the FWD Business as of its date; and each of the
consolidated statements of income, cash flows and shareholders' equity
included in the FWD Business Disclosure Letter Financial Statements
(including any related notes and schedules) fairly presents in all
material respects, and each such statement to be included in the FWD
Business Audited Financial Statements (including any related notes and
schedules) shall fairly present in all material respects, the
consolidated results of operations, retained earnings and
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cash flows, as the case may be, of the FWD Business for the periods
set forth therein, in each case in accordance with US GAAP.
(ii) Except as disclosed on the FWD Business
Disclosure Letter Balance Sheet or the notes thereto, neither the FWD
Business nor any FWD Business Subsidiary has any liabilities, whether
or not accrued, contingent or otherwise, that, individually or in the
aggregate are reasonably likely to have a Material Adverse Effect with
respect to the FWD Business.
(e) Absence of Certain Events and Changes. Except as
disclosed in the FWD Business Disclosure Letter, since September 30,
1995, Fresenius AG, with respect to the FWD Business, and the FWD
Business Subsidiaries, have conducted their respective businesses only
in the ordinary and usual course of such businesses and there has not
been any change or development or combination of changes or
developments (including any worsening of any condition currently
existing) which, individually and in the aggregate, is reasonably
likely to result in a Material Adverse Effect with respect to the FWD
Business.
(f) Compliance with Laws. Fresenius AG has complied, in the
conduct of the FWD Business, and each FWD Business Subsidiary has
complied, in the conduct of its respective business, with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto, except where the failure to comply is not
reasonably likely, individually and in the aggregate, to have a
Material Adverse Effect with respect to the FWD Business. To the
knowledge of the executive officers of Fresenius AG,
Fresenius AG has, with respect to the FWD Business, each FWD Business
Subsidiary has, and, immediately after the Contribution, an FWD
Business Subsidiary will have, all permits, licenses, certificates of
authority, orders, and approvals of, and has made all filings,
applications, and registrations with, federal, state, local, and
foreign governmental or regulatory bodies that are required in order
to permit such party to carry on its business as it is presently
conducted, except for such permits, licenses, certificates, orders,
filings, applications and registrations, the failure to have or make
which, individually and in the aggregate, are not reasonably likely to
have a Material Adverse Effect with respect to the FWD Business.
(g) Title to Assets. Fresenius AG and the FWD Business
Subsidiaries have and, immediately after the Contribution, the FWD
Business Subsidiaries will have, good and, with respect to real
property, marketable title to its properties and assets (other than
property as to which it is lessee), except for those defects in title
which are not, individually and in the aggregate, reasonably likely to
have a Material Adverse Effect with respect to the FWD Business.
Fresenius AG and the FWD Business Subsidiaries have, and immediately
after the Contribution, the FWD Business Subsidiaries will either own
or have adequate rights to use (on the same basis as currently owned
or used by the FWD Business), all assets predominantly used or useful
in the FWD Business as currently conducted and all assets reflected on
the FWD Business Balance Sheet, except for those properties subject to
the Lease and assets disposed of in accordance with this Agreement and
except for those failures to own or have which are not, individually
and in the aggregate, reasonably likely to have a Material Adverse
Effect with respect to the FWD Business.
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(h) Litigation. There are no civil, criminal or
administrative actions, suits, claims, hearings or proceedings pending
or, to the knowledge of its executive officers, threatened, or
investigations pending, against Fresenius AG or its subsidiaries
(other than Fresenius USA) with respect to the FWD Business, or any
FWD Business Subsidiary that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect with respect to
the FWD Business. There are no judgments or outstanding orders,
writs, injunctions, decrees, stipulations or awards (whether rendered
or issued by a court or Governmental Entity, or by arbitration)
against Fresenius AG or its subsidiaries (other than Fresenius USA)
with respect to the FWD Business, or any FWD Business Subsidiary, or
any of their respective properties or businesses, which are reasonably
likely, individually or in the aggregate, to have a Material Adverse
Effect with respect to the FWD Business.
(i) Taxes. All material federal, state, local and foreign
tax returns required to be filed with respect to the FWD Business or
any FWD Business Subsidiary have been timely filed or requests for
extensions have been timely filed and any such extension shall have
been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. All material taxes
required to be shown on returns filed with respect to the FWD Business
or any FWD Business Subsidiary, have been paid in full or have been
recorded as a liability on the FWD Business Disclosure Letter Balance
Sheet. There is no outstanding audit examination, deficiency, or
refund litigation with respect to any taxes with respect to the FWD
Business or any FWD Business Subsidiary that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect with
respect to the FWD Business. All material taxes, interest, additions,
and penalties due with respect to completed and settled examinations
or concluded litigation relating to the FWD Business or any FWD
Business Subsidiary have been paid in full or have been recorded as a
liability on the FWD Business Balance Sheet (in accordance with US
GAAP). Neither Fresenius AG nor any FWD Business Subsidiary is a
party to a tax sharing or similar agreement or any agreement with
respect to the FWD Business or any FWD Business Subsidiary, except for
any such agreement under which the liabilities of FWD Business and its
subsidiaries would not be reasonably likely to have a Material Adverse
Effect with respect to FWD Business. Neither Fresenius AG (with
respect to the FWD Business) nor the FWD Business Subsidiaries have
waived any applicable statute of limitations with respect to German
tax or any material German state income taxes.
(j) Environmental Matters. Except for such matters that,
individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect with respect to the FWD Business, to the
knowledge of its executive officers (i) Fresenius AG, with respect to
the FWD Business, and the FWD Business Subsidiaries are in compliance
with all applicable Environmental Laws; and (ii) neither Fresenius AG
with respect to the FWD Business, nor any of the FWD Business
Subsidiaries has any outstanding notices,
demand letters or requests for information from any Government Entity
or any third party that assert that Fresenius AG, with respect to the
FWD Business, or any of the FWD Business Subsidiaries may be in
violation of, or liable under, any Environmental Law and none of
Fresenius AG with respect to the FWD Business, the FWD Business
Subsidiaries or its properties are subject to any court order,
administrative order or decree arising under any Environmental Law.
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(k) Governmental Filings; No Violations. (i) Other than the
filings provided for in the Transaction Agreements, and other than as
may be required under the HSR Act and similar statutes in other
countries, the Exchange Act, the Securities Act, and state securities
laws, no notices, reports or other filings are required to be made by
any FWD Business Subsidiaries with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it from, any Governmental Entity, in connection with the
execution, delivery or performance of each Transaction Agreement to
which Fresenius AG is a party by it and the consummation by it of the
transactions contemplated hereby and thereby, the failure to make or
obtain any or all of which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect with respect to
the FWD Business or enable any person to enjoin or prevent or
materially delay consummation of the transactions contemplated hereby
and thereby.
(ii) The execution, delivery and performance by each FWD
Business Subsidiary of each Transaction Agreement to which Fresenius
AG is a party does not or will not, and the consummation by it of any
of the transactions contemplated hereby and thereby will not,
constitute or result in (A) a breach or violation of, or a default
under, its Certificate of Incorporation or By-laws (or similar
organizational document), or the comparable governing instruments of
any of its subsidiaries, or (B) assuming receipt of any consents and
the occurrence of any events disclosed in the FWD Business Disclosure
Letter as contemplated in the last sentence of this paragraph, a
breach or violation of, or a default under, or the acceleration of or
the creation of a lien, pledge, security interest or other encumbrance
on assets of it, Newco or the Surviving Corporations or any of their
respective subsidiaries (with or without the giving of notice, the
lapse of time or both) pursuant to, any provision of any Contract of
it or any of its subsidiaries or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which it or any of its
subsidiaries is subject, or any change in the rights or obligations of
any party under, or give rise to any rights of termination under, any
of the Contracts, except, in the case of clause (B) above, for such
breaches, violations, defaults, accelerations or changes that are
disclosed in the FWD Business Disclosure Letter or, individually and
in the aggregate, are not reasonably likely to have a Material Adverse
Effect with respect to the FWD Business. The FWD Business Disclosure
Letter sets forth a list of all consents required under any Contracts
to be obtained by any FWD Business Subsidiary or events required to
occur prior to consummation of the Reorganization (other than consents
the failure to obtain of which, individually and in the aggregate, is
not reasonably likely to have a Material Adverse Effect with respect
to the FWD Business).
(l) Contracts and Commitments. Except as set forth in the
FWD Business Disclosure Letter, none of Fresenius AG or any of its
subsidiaries, with respect to the FWD Business, nor any FWD Business
Subsidiary is a party to any Contract that would be required to be
filed as an exhibit to a registration statement for the FWD Business
and Fresenius USA, taken as a whole, under the Exchange Act.
(m) Employee Benefit Plans. (i) The FWD Business Disclosure
Letter lists each material employee benefit plan, program, policy,
practice and arrangement and all material bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance
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or other benefit plans, programs or arrangements, and all material
employment, termination, severance or other contracts or agreements,
whether legally enforceable or not, to which Fresenius AG, its
subsidiaries or any of the FWD Business Subsidiaries is a party, with
respect to which Fresenius AG, its subsidiaries or any of the FWD
Business Subsidiaries has or could incur any obligation or
which are maintained, contributed to or sponsored by Fresenius AG,
its subsidiaries or any of the FWD
Business Subsidiaries for the benefit of any current or former
employee, officer or director of Fresenius AG, its subsidiaries or any
of the FWD Business Subsidiaries, (collectively, the "Fresenius AG
Plans"). With respect to each Fresenius AG Plan, Fresenius AG has
caused to be made available to the other parties hereto a true,
correct and complete copy of: (A) each writing constituting a part of
such Fresenius AG Plan, including without limitation all plan
documents, benefit schedules, participant agreements, trust
agreements, and insurance contracts and other funding vehicles; (B)
the current summary plan description, if any; (C) the
most recent annual financial report and actuarial valuations, if any;
and (D) the most recent determination letter from the relevant
governmental authority, if any. All financial statements and
actuarial reports for each Fresenius AG Plan have been prepared in
accordance with applicable accounting principles and actuarial
principles, applied on a uniform and consistent basis.
(ii) In all material respects, each Fresenius AG Plan
complies with, and has been managed in accordance with, all applicable
laws, regulations and requirements. Each Fresenius AG Plan required
to be registered has been registered and has been maintained in good
standing with applicable legal and regulatory authorities. Where
Fresenius AG Plans are funded or insured, all contributions and other
amounts due to or in respect of them or any state pension arrangements
by Fresenius AG, its subsidiaries or any of the FWD Business
Subsidiaries have been fully paid at the Effective Time. The fair
market value of the assets of each such funded Fresenius AG Plan, or
the liability of each insurer for any Fresenius AG Plan funded through
insurance or the book reserve established for any such Fresenius AG
Plan on the FWD Business Balance Sheet, together with any accrued
contributions, is sufficient to procure or provide for the accrued
benefit obligations, as of the Closing Date, with respect to all
current and former participants in such Fresenius AG Plan according to
the actuarial assumptions utilized in the actuary's report described
in Section 5.4(m)(i) above, and no transaction contemplated by this
Agreement shall cause such assets, book reserves or insurance
obligations to be less than such benefit obligations, and nothing has
happened since the date of that information which would have a
Material Adverse Effect on the funding position of the Fresenius AG
Plans. Where Fresenius AG Plans are unfunded or underfunded,
appropriate reserves are established therefore on the FWD Business
Balance Sheet. Fresenius AG, its subsidiaries and the FWD Business
Subsidiaries have not by any act or omission, direct or indirect,
materially increased their liabilities or obligations to the Fresenius
AG Plans since the date of the last actuary's report described in
Section 5.4(m)(i) above.
(iii) There is no dispute about the entitlements or
benefits payable under the Fresenius AG Plans, no claim by or against
the managers or administrators of the Fresenius AG Plans, Fresenius
AG, its subsidiaries or any of the FWD Business Subsidiaries has been
made or threatened, and there are no circumstances which
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might give rise to any such claim except where any such event could
not have, individually and in the aggregate, a Material Adverse
Effect with respect to the FWD Business. Except as set forth in the
FWD Business Disclosure Letter Balance Sheet, there exists no
liability (contingent or otherwise), and no event has occurred, with
respect to any Fresenius AG Plan which could reasonably be expected
to have a Material Adverse Effect with respect to the FWD Business.
(n) Lease. The Lease, pursuant to which Newco (or its
subsidiary) shall lease certain real property in Germany from
Fresenius AG, as provided therein, when executed and delivered, shall
be a valid and binding agreement of Fresenius AG, enforceable in
accordance with the terms thereof; and the total rental to be paid
pursuant to such Lease of the equivalent of $12,000,000 per year
beginning January 1, 1997 (subject to adjustment, as provided therein)
is a fair market rental for such property.
(o) Trademarks, Patents and Copyrights. Fresenius AG or a
FWD Business Subsidiary owns or possesses adequate licenses or other
rights to use, all patents, trademarks, trade names, service marks,
copyrights, licenses and product licenses or registrations (including
applications for any of the foregoing), technology, know-how, tangible
or intangible proprietary intellectual property rights, information or
material (whether conceived, reduced to practice or under
development), formulae, inventions and new and investigational
applications (including all options or other rights to acquire any of
the foregoing) as are necessary, used or useful in connection with the
FWD Business (the "FWD Business Intellectual Property"), the lack of
which would reasonably be expected to have a Material Adverse Effect
with respect to the FWD Business; and none of Fresenius AG or any of
its subsidiaries has any knowledge of any conflict with the
proprietary intellectual property rights of any of Fresenius AG or any
FWD Business Subsidiary therein or any knowledge of any conflict by
Fresenius AG or any FWD Business Subsidiary with the rights of others
therein which would have a Material Adverse Effect with respect to the
FWD Business. Immediately after the Contribution, Newco or its
Subsidiary will own or possess adequate licenses or other rights to
use (on substantially the same basis as currently owned or possessed
by the FWD Business) all of the FWD Business Intellectual Property.
There are no Contracts, agreements and licenses pursuant to which
Fresenius AG or any subsidiaries of Fresenius AG which are not FWD
Business Subsidiaries will retain rights or interests of any kind in
or affecting the FWD Business Intellectual Property.
SECTION 5.5. Certain Definitions Relating to the FWD
Business. (a) "FWD Business" means the dialysis and renal medical products
business conducted worldwide by Fresenius AG (including, without limitation,
the FWD Business Subsidiaries), other than the dialysis business of Fresenius
USA.
(b) "FWD Business Assets" means all the property and assets
(including intangible assets, goodwill and leaseholds) of the FWD Business
which are reflected on the FWD Business Balance Sheet or otherwise
predominately relating to or predominately used or useful in the business and
operations of the FWD Business (other than the property subject to the Lease),
plus (i) all property and assets which have been or will be acquired in the
ordinary course of business since the date of the FWD Business Balance Sheet,
less (ii) any property and assets which have been or will be disposed of or
consumed in the ordinary
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course of business since the date of the FWD Business Balance Sheet consistent
with the terms hereof.
(c) "FWD Business Subsidiaries" means all subsidiaries of
Fresenius AG and all other entities in which Fresenius AG holds any direct or
indirect equity interest, other than Fresenius USA and its subsidiaries, which
conduct any of the FWD Business (it being agreed and understood that (i) as of
the date hereof, the FWD Business is conducted, and the FWD Business Assets are
held, by Fresenius AG and certain of its subsidiaries (all such entities, the
"Current Subsidiaries"), (ii) as of the Contribution, by virtue of the
Fresenius AG Restructuring, the FWD Business will be conducted, and the FWD
Business Assets will be held, by certain Fresenius AG subsidiaries which may
include the Current Subsidiaries as well as other subsidiaries (all such
entities, the "Closing Subsidiaries", and (iii) all references herein to FWD
Business Subsidiaries shall be deemed to refer to the Current Subsidiaries as
of the date hereof and to the Closing Subsidiaries as of the Contribution).
(d) "Fresenius AG Restructuring" means the actions taken and
proposed to be taken by Fresenius AG and its subsidiaries to restructure the
FWD Business so that, at or prior to Contribution, the FWD Business
Subsidiaries shall own all FWD Business Assets.
ARTICLE VI
COVENANTS
SECTION 6.1. Interim Operations. Each of Grace and Fresenius
AG (for itself and on behalf of Fresenius AG) covenants and agrees as to itself
and its subsidiaries that, from and after the date hereof until the Effective
Time, except insofar as the other parties shall otherwise consent or except as
otherwise contemplated by this Agreement, the Contribution Agreement, the
Distribution Agreement or its Disclosure Letter (provided that, as used herein,
all references to Grace (and/or its Affiliates) shall be deemed to refer to
Grace and its Affiliates which conduct the NMC Business, consistent with
Section 9.8 hereof, except as otherwise specifically provided):
(a) To the extent reasonably practicable, taking into account
any operational matters that may arise that are primarily attributable
to the pendency of the Reorganization, the business of it and its
subsidiaries will be conducted only in the ordinary and usual course
consistent with past practice and existing business plans previously
disclosed to the other parties and, to the extent consistent
therewith, it and its subsidiaries will use all reasonable efforts to
preserve their business organization intact and maintain their
existing relations with customers, suppliers, employees and business
associates.
(b) It will not (i) sell or pledge or agree to sell or pledge
any stock owned by it in any of its subsidiaries or, in the case of
Fresenius AG, any FWD Business Subsidiary; (ii) amend its Certificate
of Incorporation or By-laws (or similar organizational document);
(iii) split, combine or reclassify any outstanding capital stock; or
(iv) declare, set aside or pay any dividend payable in stock or
property with respect to any of its capital stock.
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(c) Neither Grace, Fresenius USA, nor any of their respective
subsidiaries or, Fresenius AG, solely with respect to any FWD Business
Subsidiary, will issue, sell, pledge, dispose of or encumber, or
authorize or propose the issuance, sale, pledge, disposition or
encumbrance of, any shares of, or securities convertible or
exchangeable for, or options, puts, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any
class other than common shares issuable pursuant to options, warrants
and other convertible securities outstanding on the date hereof and
disclosed in its Disclosure Letter, and employee stock options
granted after the date hereof in the ordinary course of business.
(d) None of Grace, Fresenius USA or Fresenius AG, with
respect to the FWD Business, will (i) transfer, lease, license,
guarantee, sell, mortgage, pledge or dispose of any property or assets
encumber any property or assets other than in the ordinary and usual
course of business; (ii) authorize or make capital expenditures; (iii)
make any acquisition of, or investment in, assets, stock or other
securities of any other person or entity other than its wholly owned
subsidiaries or (iv) make any divestiture.
(e) Except as required by agreements or arrangements
disclosed in its SEC Documents or its Disclosure Letter, neither it
nor any of its subsidiaries or, in the case of Fresenius AG, any FWD
Business Subsidiary, will grant any severance or termination pay to,
or enter into, extend or amend any employment, consulting, severance
or other compensation agreement with, any director, officer or other
of its employees, except to other employees in the ordinary course in
a manner consistent with past practice, which would bind Newco (or its
subsidiary) after the Reorganization.
(f) Except as may be required to satisfy contractual
obligations existing as of the date hereof (and disclosed to the other
parties hereto) and the requirements of applicable law, and except in
the ordinary course of business, neither it nor any of its
subsidiaries or, in the case of Fresenius AG, any FWD Business
Subsidiary, will establish, adopt, enter into, make, amend or make any
elections under any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, employee stock ownership, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any directors, officers
or employees which would affect Newco (or its subsidiary), except in a
manner consistent with past practice.
(g) It will not implement any change in its accounting
principles, practices or methods, other than as may be required by
German GAAP, in the case of Fresenius AG, or US GAAP, in the case of
Grace and Fresenius USA, other than as may be necessary or advisable
in connection with the Distribution.
(h) Neither it nor any of its subsidiaries will authorize or
enter into an agreement to take any of the actions referred to in
paragraphs (a) through (g) above.
SECTION 6.2. Certain Transactions. (a) Prior to the
Distribution: (i) Grace and Grace-Conn. shall use reasonable efforts to cause
NMC to arrange new credit facilities so that the transactions contemplated by
the Transaction Agreements may be consummated; (ii) Fresenius AG shall use
reasonable efforts to arrange new credit facilities
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for the FWD Business so that the transactions contemplated by the Transaction
Agreements may be consummated; and (iii) the parties hereto shall cooperate with
respect to the foregoing.
(b) Prior to or concurrent with the Reorganization, the
parties hereto shall use reasonable efforts to satisfy the conditions set forth
in Sections 7.1(j) and 7.1(k).
(c) It is understood and agreed by the parties hereto that,
at the time of the Reorganization, none of Grace, Fresenius USA and the FWD
Business shall have cash or marketable securities, it being contemplated that,
in connection with the Reorganization, such cash and marketable securities
shall be provided to Grace-Conn. and Fresenius AG, respectively, and that new
working capital facilities to finance working capital needs shall be obtained.
(d) It is the intention of the parties hereto that (i) Newco
shall pay dividends to the holders of its outstanding ordinary shares in the
amounts set forth in the business plan previously disclosed to the parties
hereto beginning in January 1997, subject to the declaration of such dividends
by the Newco Board, and (ii) Newco (or its subsidiary) shall lease real
property and buildings in Germany from Fresenius AG, for a total rental of the
equivalent $12 million per year beginning January 1997 pursuant to the Lease to
be consistent with the terms set forth in Exhibit D to the Contribution
Agreement.
(e) It is the intention of the parties hereto that, following
the Reorganization, Newco shall seek to refinance up to $700 million of credit
facilities through the sale of preferred securities which will be primarily
"mezzanine" capital, which could be classified as equity under German generally
accepted accounting principles and whose interest stream would be tax
deductible. The sale (or commitments for sale) of such preferred securities
shall not be a condition to the consummation of the Reorganization.
(f) It is the intention of the parties hereto that, to the
extent that it is not possible to obtain the credit facilities and/or arrange
for the sale of the preferred securities contemplated by paragraphs (a) and (e)
above on terms which will permit the payment of cash pursuant to the lease and
dividends pursuant to paragraph (d) above, prior to the Effective Time, the
parties shall endeavor to restructure the transactions contemplated hereby so
that, commencing in January 1997, Fresenius AG shall receive cash flow from
Newco in the amount that otherwise would have been received pursuant to
paragraph (d) above.
SECTION 6.3. Acquisition Proposals. Each party hereto agrees
that neither it nor any of its subsidiaries nor any of its respective officers
and directors or the officers and directors of its subsidiaries shall, and it
shall each direct and use its best efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, it or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal; provided, however, that the Grace
Board may furnish or
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cause to be furnished information (pursuant to confidentiality arrangements) and
may participate in such discussions and negotiations directly or through its
representatives if (i) the failure to provide such information or participate in
such negotiations and discussions could, in the opinion of its outside counsel,
reasonably be deemed to cause the members of the Grace Board to breach their
fiduciary duties under applicable law or (ii) another corporation, partnership,
person or other entity or group makes a written offer or written proposal which,
based upon the identity of the person or entity making such offer or proposal
and the terms thereof, and the availability of adequate financing therefor, the
Grace Board believes, in the good faith exercise of its business judgment and
based upon advice of its outside legal and financial advisors, could reasonably
be expected to be consummated and represents a transaction more favorable to its
shareholders than the Reorganization (a "Higher Offer"); provided further,
however, that the foregoing restriction shall not apply to an Acquisition
Proposal exclusively involving all or part of the stock or assets of
Grace-Conn. Grace shall notify the other parties hereto as soon as practicable
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with it.
SECTION 6.4. Information Supplied. Each of parties hereto
agrees that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in any Registration Statement, Proxy
Statement or Schedule 14A, or any amendment or supplement thereto, will, in the
case of a Registration Statement, at the time such Registration Statement and
each amendment and supplement thereto becomes effective under the Securities
Act, or, in the case of a Proxy Statement or Schedule 14A, at the time such
Proxy Statement or Schedule 14A and each amendment and supplement thereto is
filed in definitive form with the SEC or mailed to shareholders and at the time
of the applicable Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
SECTION 6.5. Shareholder Approvals. (a) Each of Grace and
Fresenius AG (on behalf of Fresenius USA) agrees to take, in accordance with
applicable law and its Certificate of Incorporation and By-laws, all action
necessary to convene a meeting of holders of Grace Common Shares and Grace
Preferred Shares and Fresenius USA Common Shares and Fresenius USA Preferred
Shares, respectively, as promptly as practicable after the Newco Registration
Statement and the ADR Registration Statement are declared effective (and, in
the case of Grace, the NY Preferred Registration Statement and the Grace-Conn.
Registration Statement are declared effective), and its Proxy Statement is
cleared, by the SEC, to consider and vote upon the approval of the transactions
contemplated by the Transaction Agreements (including, without limitation, the
Grace Amendment). Subject to the remainder of this Section 6.5, each of the
Grace Board and the Fresenius USA Board shall recommend such adoption and
approval and shall take all lawful action to solicit such approval by
shareholders. The Grace Board may fail to make such a recommendation, or
withdraw, modify, or change any such recommendation, or recommend any other
offer or proposal, if the Grace Board, based on the opinion of its outside
counsel, determines that making such recommendation, or the failure to
recommend any other offer or proposal, or the failure to so withdraw, modify,
or change its recommendation, or the failure to recommend any other offer or
proposal, could reasonably be deemed to cause the members of the Grace Board to
breach their fiduciary duties under applicable law in connection with a Higher
Offer. In such event, notwithstanding anything contained in this Agreement to
the contrary, any such failure to recommend, withdrawal, modification, or change
of
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recommendation or recommendation of such other offer or proposal, or the
entering by Grace into an agreement with respect to a Higher Offer (provided
that Grace shall have provided Fresenius AG with at least 72 hours notice of its
intention to so enter and the identity of the other party thereto), shall not
constitute a breach of this Agreement by Grace.
(b) Fresenius AG agrees to take, in accordance with
applicable law and its organizational documents, all action necessary to
convene a meeting of Fresenius AG shareholders as promptly as practicable after
the date hereof to consider and vote upon the approval of the transactions
contemplated hereby. The Fresenius AG Management Board shall recommend such
adoption and approval and shall take all lawful action to solicit such approval
by Fresenius AG shareholders.
SECTION 6.6. Filings; Other Actions. (a) Subject to the
obligations of consultation contained herein, Grace shall promptly prepare for
filing with the SEC the Grace Proxy Statement, the Grace Schedule 14A and the
Grace-Conn. Registration Statement, Fresenius USA shall promptly prepare for
filing with the SEC the Fresenius USA Proxy Statement and Fresenius USA
Schedule 14A, and the parties hereto shall cooperate to promptly prepare for
filing with the SEC the Newco Registration Statement, the NY Preferred
Registration Statement and the ADR Registration Statement (including all
required financial statements). In connection with the foregoing, Fresenius AG
shall prepare audited financial statements prepared in accordance with US GAAP
for the FWD Business and such financial statement shall be included in the
Newco Registration Statement (and in such other Registration Statements and
Proxy Statements as may be appropriate). Each party hereto shall use its
reasonable efforts, after consultation with the other parties hereto, to
respond promptly to any comments made by the SEC with respect to such filings,
to have such filings declared effective or cleared, as the case may be, and
cause such filings to be mailed at the earliest reasonably practicable time.
Each party hereto and its counsel shall be given a reasonable opportunity to
review and comment on each version of such filings prior to the filing thereof
with the SEC. Each party hereto also shall use its reasonable efforts to
obtain all necessary state securities law or blue sky permits and approvals
required to carry out the transactions contemplated hereby and shall furnish
all information as may be reasonably requested in connection with any such
action.
(b) Each party hereto shall cooperate with the other parties
hereto, subject to the terms and conditions set forth herein, use its
reasonable efforts promptly to prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to obtain as promptly as reasonably practicable all necessary
permits, consents, orders, approvals and authorizations of, or any exemption by,
all third parties and Governmental Entities necessary or advisable to consummate
the transactions contemplated hereby. Each party hereto shall consult with the
other parties hereto with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated hereby and
each party shall keep the other parties hereto apprised of the status of matters
relating to completion of the transactions contemplated hereby.
(c) Each party hereto shall, upon reasonable request and
except as otherwise may be required by applicable law, furnish the other
parties hereto with all information concerning itself, its subsidiaries,
directors, officers and shareholders and other Affiliates and such other
matters as may be reasonably necessary or advisable in connection any
statement, filing, notice or application made by or on behalf of such other
party or any of
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its Affiliates to any Governmental Entity in connection with any transactions
contemplated by this Agreement.
(d) Each party hereto shall, subject to applicable laws
relating to the disclosure and exchange of information, promptly furnish the
other parties hereto with copies of written communications received by each
such party or any of its subsidiaries, from, or delivered by any of the
foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
(e) Each party hereto shall cooperate with each other party
hereto and promptly take or cause to be taken all actions and do or cause to be
done all things necessary, proper or advisable to obtain favorable review of
the proposed transaction under the HSR Act and any foreign antitrust or
competition laws, which efforts shall include, without limitation, undertaking
litigation and/or agreeing to hold aside or divest, or enter into any conduct
restriction with respect to, any asset or business to be part of Newco after
the Effective Time (all such decisions to be made by the parties in
consultation with one another taking into consideration the effect on Newco);
provided, however, that the foregoing shall not require that any action be
taken with respect to (or by) Grace-Conn. or its business; provided further,
however, that Grace shall not be required to commit to any action that is to be
taken prior to the Effective Time.
SECTION 6.7. Audited Financial Statements. (a) Not later
than March 31, 1996, Grace shall deliver to the other parties hereto an audited
special purpose consolidated balance sheet as of, and audited special purpose
consolidated statements of income, cash flows and shareholders' equity for the
year ended December 31, 1995, in each case for Grace and exclusive of the
Grace- Conn. Business and the assets, liabilities, income cash flows and
shareholders' equity thereof (such financial statements, the "Grace Audited
Financial Statements"), together with the unqualified opinion of Grace's
independent accountants thereon to the effect that such special purpose
consolidated balance sheet fairly presents in all material respects the
consolidated financial position of Grace and its included subsidiaries as of
its date and such special purpose consolidated statements of income, cash flows
and shareholders' equity fairly present in all material respects the
consolidated results of operations, retained earnings and cash flows, as the
case may be, of Grace and its included subsidiaries for the periods set forth
therein, in each case in accordance with US GAAP and exclusive of the
Grace-Conn. Business and the assets, liabilities, income, cash flows and
shareholders' equity thereof.
(b) Not later than March 31, 1996, Fresenius USA shall
deliver to the other parties hereto an audited consolidated balance sheet as
of, and audited consolidated statements of income, cash flows and shareholders'
equity for Fresenius USA for the year ended December 31, 1995 (such financial
statements, the "Fresenius USA Audited Financial Statements"), together with
the unqualified opinion of Fresenius USA's independent accountants thereon to
the effect that such consolidated balance sheet fairly presents in all material
respects the consolidated financial position of Fresenius USA and its
subsidiaries as of its date and such consolidated statements of income, cash
flows and shareholders' equity fairly present in all material respects the
consolidated results of operations, retained earnings and cash flows, as the
case may be, of Fresenius USA and its subsidiaries for the periods set forth
therein, in each case in accordance with US GAAP.
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(c) Not later than March 31, 1996, Fresenius AG shall deliver
to the other parties hereto: (i) an audited consolidated balance sheet as of,
and audited consolidated statements of income, cash flows and shareholders'
equity for the FWD Business for the years ended December 31, 1994 and December
31, 1995 showing consolidating adjustments made in connection with the
consolidation of Fresenius USA with the FWD Business (such financial
statements, the "FWD Business Audited Financial Statements"), together with the
unqualified opinion of Fresenius AG's independent accountants thereon to the
effect that such consolidated balance sheet fairly presents in all material
respects the consolidated financial position of the FWD Business as of its date
and such consolidated statements of income, cash flows and shareholders' equity
fairly presents in all material respects the consolidated results of operations,
retained earnings and cash flows, as the case may be, of the FWD Business for
the periods set forth therein, in each case in accordance with US GAAP, (ii) an
audited consolidated balance sheet as of, and audited consolidated statements of
income, cash flows and shareholders' equity for Fresenius AG for the year ended
December 31, 1994 and December 31, 1995 (such financial statements, the
"Fresenius AG Audited Financial Statements"), together with the unqualified
opinion of Fresenius AG's independent accountants thereon to the effect that
such consolidated balance sheet fairly presents in all material respects the
consolidated financial position of Fresenius AG as of its date and such
consolidated statements of income, cash flows and shareholders' equity fairly
presents in all material respects the consolidated results of operations,
retained earnings and cash flows, as the case may be, of Fresenius AG for the
periods set forth therein, in each case in accordance with German GAAP, and
(iii) a reconciliation showing, with such level of detail provided to support
each of the adjustments made to the 1995 Fresenius AG Audited Financial
Statements to derive the 1995 FWD Business Audited Financial Statements.
(d) If (i) there exists any material difference between the
Grace Audited Financial Statements, the Fresenius USA Audited Financial
Statements or the FWD Business Audited Financial Statements, on the one hand,
and the Grace Disclosure Letter Financial Statements, the Fresenius USA
Disclosure Letter Financial Statements or the FWD Business Disclosure Letter
Financial Statements, respectively, on the other hand, and such material
difference adversely affects a party hereto (other than the party the financial
statements of which contain such material difference, and treating, for
purposes of this parenthetical, Fresenius AG and Fresenius USA as a single
party) (such party, the "Affected Party"), and such Affected Party notifies the
other parties hereto of such difference within 10 days following receipt of the
applicable Audited Financial Statements, or (ii) if Grace believes in good
faith that the Fresenius USA Audited Financial Statements and the FWD Business
Audited Financial Statements, or if Fresenius AG believes in good faith that
the Grace Audited Financial Statements, reflect a material adverse change in
the prospects of the business of Fresenius USA and the FWD Business or Grace,
as the case may be, from the business plans previously disclosed by the parties
hereto and not otherwise disclosed in connection with this Agreement (a party
so believing being a "Change Party"), and such Change Party notifies the other
parties hereto of such change within 10 days following receipt of the applicable
Audited Financial Statements, then the parties hereto shall negotiate in good
faith to adjust the relative economics of the transactions contemplated hereby,
in consultation with financial and accounting advisors, in light of the
foregoing. If the parties do not reach agreement on such an adjustment within
14 days of notice, this Agreement shall be terminable by an Affected Party or a
Change Party.
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(e) After delivery of the Audited Financial Statements as
contemplated by this Section 6.7 (if there is no material difference or
material adverse change as contemplated by the immediately preceding paragraph)
or after the reaching of agreement as contemplated by the immediately preceding
paragraph (if there is a material difference or material adverse change as
contemplated by the immediately preceding paragraph), all references herein to
the Disclosure Letter Financial Statements shall be deemed to refer to the
Audited Financial Statements.
(f) Each party hereto shall use all reasonable efforts to
cause to be delivered to the other party is, as appropriate, and its directors
a letter of its independent accountants, dated (i) the date on which each
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such other party and its directors, in
form and substance customary for "comfort" letters delivered by independent
accountants in connection with registration statements.
(g) Time shall be of the essence with respect to the delivery
of the Audited Financial Statements.
SECTION 6.8. Access. Upon reasonable notice, and except as
may otherwise be required by applicable law, each party hereto shall afford
each other party's Representatives access, during normal business hours
throughout the period until the Effective Time to its properties, books,
Contracts and records and, during such period, shall (and shall cause each of
its subsidiaries to) furnish promptly to the other party all information
concerning its business, properties and personnel as may reasonably be
requested; provided that no investigation pursuant to this Section 6.8 shall
affect or be deemed to modify any representation or warranty made by the party
furnishing such information; provided further that with respect to the work
papers of independent accountants, the provision of access shall be subject to
the permission of such independent accountants, and each party hereto shall use
reasonable best efforts to secure such permission for the other. Each party
hereto shall not, and shall cause its respective Representatives not to, use
any information obtained pursuant to this Section for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement. All
information obtained pursuant to this paragraph shall be subject to the
provisions of the written confidentiality arrangements existing among the
parties hereto.
SECTION 6.9. Notification of Certain Matters. Each party
shall give prompt notice to the other party of any change that is reasonably
likely to result in any Material Adverse Effect to the knowledge of the
executive officers.
SECTION 6.10. Publicity. The initial press release relating
hereto shall be a joint press release and, thereafter, each party hereto shall
consult with each other party hereto prior to issuing any press releases or
otherwise making public statements with respect to the transactions
contemplated hereby and prior to making any filings with any Governmental
Entity or stock exchange with respect thereto; provided that if a party shall
be advised by counsel that any such press release, statement or filing is
required by applicable law and it shall not be practicable to consult with the
other parties prior to the time such press release, statement or filing is
required, a party may make such press release, statement or filing and shall
promptly notify the other parties thereof.
SECTION 6.11. [Intentionally omitted.]
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SECTION 6.12. Employee Benefits. (i) All Grace Employees
who are actively employed by Grace or its subsidiaries on the Effective Time
(including any Grace Employees who are receiving long term disability as of the
Effective Time) shall be provided with compensation and benefits (including,
without limitation, severance benefits and retiree benefits) substantially the
same as those benefits provided to Grace Employees as of the date hereof. In
addition, Grace Employees shall be given service credit for all periods of
employment with Grace or its Affiliates prior to the Effective Date for
purposes of eligibility and vesting (but not for benefit accrual) under any
plan adopted by Newco or any of their respective subsidiaries or Affiliates
with respect to Grace Employees to provide retirement or welfare benefits.
Following the Effective Time, NMC and Grace, and not Grace- Conn., shall bear
any costs and expenses associated with the termination of employees involved in
the NMC Business. It is the intention of Fresenius AG to consider the adoption
by Newco of a broad based equity incentive program for employees in the United
States.
(ii) Upon the request of Fresenius AG, prior to the
Effective Time, Grace shall amend or cause to be amended each Grace Pension
Plan which is a single-employer plan within the meaning of Section 4001(a)(15)
of ERISA (and which covers employees in the NMC Business) to delete any
provision that would become applicable on or after a Change of Control (as
defined in such Pension Plan), requiring (i) that Grace fund the Pension Plan
on a termination basis, and/or (ii) that benefit accruals under the Plan become
nonforfeitable as of the date of a Change of Control.
SECTION 6.13. Expenses and Liquidated Damages. (a) Except
as set forth in paragraph (b) below, whether or not the Reorganization is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense; provided, however, that the costs and expenses of printing and
mailing the Grace Proxy Statement, Fresenius USA Proxy Statement, the NY
Preferred Registration Statement and the Newco Registration Statement, and all
filing and other fees paid to the SEC or antitrust authorities in connection
with the Reorganization, shall be borne by Newco.
(b) In the event that:
(A) (1) this Agreement shall be terminated pursuant to either
Section 8.3(ii) or Section 8.3(iii) or (2) this Agreement shall be
terminated pursuant to Section 8.2(ii) (due to a failure to obtain
Grace shareholder approval) and, at the time of the meeting called for
the approval of Grace shareholders referred to in Section 7.1(a), the
Grace Board shall have failed to recommend to its shareholders the
approval of the transactions contemplated hereby, or shall have
withdrawn, modified or changed such recommendation, or (3) this
Agreement shall be terminated pursuant to Section 8.2(ii) (due to a
failure to obtain Grace shareholder approval) and, at the time of the
meeting called for the approval of Grace shareholders referred to in
Section 7.1(a), there shall have been made an Acquisition Proposal
that has become public and, within six months following such
termination, Grace shall enter into a definitive agreement with
respect to the sale of Grace's healthcare business; and
and (B), at the time of such termination, neither Fresenius
Party shall be in material breach of its covenants or agreements
contained in this Agreement;
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then, Grace shall pay to Fresenius AG, as liquidated damages, in exchange for a
complete release of any liabilities of Grace hereunder, the amount of $35
million plus actual out of pocket expenses incurred to third parties in
connection with the transactions contemplated hereby after the date of this
Agreement, payable by wire transfer of immediately available funds within 24
hours to the account specified by Fresenius AG in writing; provided that, if the
approval of the transactions contemplated hereby by the shareholders of
Fresenius AG, as contemplated by Section 6.5, or an irrevocable written
commitment to vote in favor of such transactions from the holder of an amount of
Fresenius AG capital stock sufficient under applicable law to give such
approval, shall have been obtained, the amount of liquidated damages payable
pursuant to this Section 6.13 shall be $75 million plus actual out of pocket
expenses incurred to third parties in connection with the transactions
contemplated hereby after the date of this Agreement.
SECTION 6.14. Grace Rights Agreement. The Grace Board shall
take all requisite action in order to render the Grace Rights inapplicable to
the Grace Merger and the other transactions contemplated by this Agreement and
the Distribution Agreement and to extinguish the Grace Rights in connection
with the Reorganization.
SECTION 6.15. Antitakeover Statutes. If any Takeover Statute
is or may become applicable to the transactions contemplated hereby, each of
the parties hereto and the members of its Board of Directors shall grant such
approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of any Takeover Statute on any of the transactions contemplated by this
Agreement.
SECTION 6.16. Securities Act Compliance. As soon as
practicable after the date of the Meetings, each party hereto shall identify to
Newco all persons who were, at the time of the Meetings, possible Affiliates,
shall use its reasonable efforts to obtain a written agreement in the usual and
customary form from each person who is so identified as a possible Affiliate
and shall deliver such written agreements to Newco as soon as practicable after
the Meetings.
SECTION 6.17. Stock Exchange Listing. Prior to the Effective
Time, Fresenius AG shall use reasonable efforts to cause the ADR Facility and
the listing of the ADRs on the Exchange to become effective.
SECTION 6.18. Transaction Agreements. (a) Prior to the
Effective Time, the parties shall consummate any transactions to be consummated
prior to the Effective Time pursuant to the Distribution Agreement or the
Contribution Agreement.
(b) The parties shall not waive or amend any terms of the
Distribution Agreement or the Contribution Agreement without the consent of the
other parties hereto, which consent shall not be unreasonably withheld.
(c) The parties hereto acknowledge that the indemnities of
Grace-Conn. and of Fresenius AG contained in the Distribution Agreement and the
Contribution Agreement, respectively, shall inure to the benefit of each other
and to the benefit of Newco.
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SECTION 6.19. Tax Matters. Each party agrees to report the
Distribution as a tax-free distribution under the Code and the Grace Merger as
a tax-free reorganization under the Code on all tax returns and other filings,
and take no position inconsistent therewith, except where, in the opinion of
nationally recognized tax counsel to such party, there is not "substantial
authority," as defined in Section 6662 of the Code, to support such a position.
ARTICLE VII
CONDITIONS
SECTION 7.1. Conditions to Each Party's Obligation. The
respective obligation of each party hereto to consummate the Reorganization is
subject to the fulfillment of each of the following conditions:
(a) Shareholder Approval. To the extent required by law or
stock exchange regulations, the transactions contemplated by the
Transaction Agreements shall have been duly approved by the holders of
Grace Common Shares and Grace Preferred Shares in accordance with the
NYBCL, other applicable law and the Certificate of Incorporation and
By-laws of Grace, and by the shareholders of Fresenius AG in
accordance with applicable law.
(b) Governmental and Regulatory Consents. The waiting
periods applicable to the consummation of the transactions
contemplated by the Transaction Agreements under the HSR Act shall
have expired or been terminated; and all filings required to be made
prior to the Closing by any party hereto or any of its respective
subsidiaries with,
and all consents, approvals and authorizations required to be obtained
prior to the Closing by any party hereto or any of its respective
subsidiaries from, any Governmental Entity in connection with the
execution and delivery of the Transactions Agreements and the
consummation of the transactions contemplated by the Transaction
Agreements shall have been made or obtained, except where the failure
to obtain such consents is not reasonably likely to have a Material
Adverse Effect and could not reasonably be expected to subject the
parties hereto or their Affiliates or any directors or officers of any
of the foregoing to the risk of criminal liability.
(c) Third-Party Consents. All consents or approvals of all
persons (other than Governmental Entities) required for or in
connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by the
Transaction Agreements shall have been obtained and shall be in full
force and effect, except for those the failure to obtain of which
would not have a Material Adverse Effect with respect to all parties
and Newco.
(d) Litigation. No United States or state court or other
Governmental Entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by the Transaction
Agreements.
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(e) Grace Tax Opinion. Grace shall have received opinions of
Wachtell, Lipton, Rosen & Katz and of Miller & Chevalier, Chartered,
dated the Effective Date, substantially in the form of Exhibit H
hereto. In rendering such opinions, such firms may receive and rely
upon representations contained in certificates of the Grace, Fresenius
AG, Newco and others, including, without limitation, the Grace Tax
Matters Certificate and the Fresenius AG Tax Matters Certificate.
(f) Registration Statements. The Registration Statements
shall have become effective under the Securities Act or Exchange Act
(as applicable), and no stop order suspending the effectiveness of any
Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC.
(g) Financing. The parties hereto shall have obtained the
financing necessary to consummate the transactions contemplated by the
Transaction Agreements on terms satisfactory to the parties.
(h) The Distribution. The Distribution shall have been
consummated.
(i) Stock Exchange Listing. The ADR Facility and the listing
of the ADRs on the Exchange shall have become effective; provided,
however, that the foregoing shall not apply to obligations of
Fresenius USA and Fresenius AG unless Fresenius AG has satisfied the
obligations contained in Section 6.18 hereof.
(j) Fresenius AG Debt. As of the Effective Time, Fresenius
USA and the FWD Business and their respective subsidiaries (taken
together, on a consolidated basis) shall have no Debt other than Debt
not in excess of an aggregate amount of $170 million.
(k) Grace Debt. As of the Effective Time, Grace and its
subsidiaries (on a consolidated basis) shall have no Debt, other than
Debt not in excess of an aggregate amount of (i) $2.263 billion plus
(ii) any amounts incurred to finance capital expenditures or
acquisitions permitted to be made hereunder.
SECTION 7.2. Conditions to Obligation of Grace. The
obligation of Grace to consummate the Reorganization is also subject to the
fulfillment or waiver by Grace prior to the Closing of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of each Fresenius Party set forth in this Agreement shall
be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date (except that representations and warranties that by their
terms speak as of the date of this Agreement or some other date shall
be true and correct as of such date), and Grace shall have received
certificates signed on behalf of each Fresenius Party by an officer to
such effect.
(b) Performance of Obligations. Each Fresenius Party shall
have performed in all material respects all obligations required to be
performed by it under this Agreement or the Contribution Agreement at
or prior to the Closing Date, and
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Grace shall have received a certificate signed on behalf of each
Fresenius Party by an officer to such effect.
(c) Pooling Agreement. Fresenius AG and Newco shall have
entered into the Newco Pooling Agreement; and Grace shall have
received an opinion of nationally recognized counsel, dated the
Closing Date, to the effect that the Newco Pooling Agreement is a
valid and binding agreement, enforceable against Newco and Fresenius
AG in accordance with the terms thereof, under the laws of the Federal
Republic of Germany, respectively. Such opinion shall be reasonably
acceptable to the other parties hereto.
(d) Fresenius AG Tax Opinion. Grace shall have received the
opinion of nationally recognized tax counsel (which may be, for
purposes of this provision, KPMG Deutsche Treuhand Gesellschaft AG
and/or KPMG Peat Marwick LLP), dated the Closing Date, substantially
in the form of Exhibit I hereto, to the effect that Newco shall have
no liability with respect to the Fresenius AG Restructuring and the
Contribution under the relevant provisions of the Code and applicable
law of the Federal Republic of Germany.
SECTION 7.3. Conditions to Obligation Concerning Fresenius
USA. The obligation of Fresenius AG to cause Fresenius USA to consummate the
Reorganization is also subject to the fulfillment or waiver by Fresenius USA
prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Grace set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date
(except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Fresenius USA shall have received a
certificate signed on behalf of Grace by an officer to such effect.
(b) Performance of Obligations. Grace shall have performed
in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Fresenius
USA shall have received a certificate signed on behalf of Grace by an
officer to such effect.
(c) Pooling Agreement Opinion. Fresenius AG and Newco shall
have entered into the Newco Pooling Agreement;
and Fresenius USA shall have received an opinion of nationally
recognized counsel, dated the Closing Date, to the effect that the
Newco Pooling Agreement is a valid and binding agreement, enforceable
against Newco and Fresenius AG in accordance with the terms thereof,
under the laws of the Federal Republic of Germany, respectively. Such
opinion shall be reasonably acceptable to the other parties hereto.
SECTION 7.4. Conditions to Obligation of Fresenius AG. The
obligation of Fresenius AG to consummate the Reorganization is also subject to
the fulfillment or waiver by Fresenius AG prior to the Closing of each of the
following conditions:
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(a) Representations and Warranties. The representations and
warranties of Grace set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date
(except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Fresenius AG shall have received a
certificate signed on behalf of Grace by an officer to such effect.
(b) Performance of Obligations. Grace shall have performed
in all material respects all obligations required to be performed by
it under this Agreement or the Distribution Agreement at or prior to
the Closing Date, and Fresenius AG shall have received a certificate
signed on behalf of Grace by an officer to such effect.
ARTICLE VIII
TERMINATION
SECTION 8.1. Termination by Mutual Consent. This Agreement
may be terminated, and the Reorganization may be abandoned, at any time prior
to the Effective Time, before or after the approval by the shareholders of
Grace, Fresenius AG and/or Fresenius USA, by the mutual consent of each party
hereto, which consent shall be effected by action of its Board of Directors.
SECTION 8.2. Termination by any Party Hereto. This Agreement
may be terminated, and the Reorganization may be abandoned, by action of the
Board of Directors of any party hereto, if (i) the Reorganization shall not have
been consummated by September 1, 1996 or (ii) at the Grace Meeting or at any
adjournment thereof, the approval of Grace's shareholders, or, at a meeting of
Fresenius AG shareholders or any adjournment thereof, the approval of Fresenius
AG's shareholders, each as referred to in Section 7.1(a), shall not have been
obtained or (iii) pursuant to Section 6.7.
SECTION 8.3. Termination by Grace. This Agreement may be
terminated and the Reorganization may be abandoned at any time prior to the
Effective Time, before or after the adoption and approval by shareholders of
Grace referred to in Section 7.1(a), by action of the Grace Board, if (i)
either Fresenius Party shall have failed to comply in any material respect with
any of the covenants or agreements contained herein to be performed by such
Fresenius Party at or prior to the time of termination, which failure is not
cured or capable of being cured within 30 days after notice thereof, or (ii)
the Grace Board shall have failed to recommend to its shareholders the approval
of the transactions contemplated hereby, or shall have withdrawn, modified or
changed such recommendation, in a manner permitted by Section 6.5, or (iii)
Grace shall have entered into an agreement respect to a Higher Offer in a
manner permitted by Section 6.5.
SECTION 8.4. Termination by Fresenius AG. This Agreement may
be terminated and the Reorganization may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of Fresenius AG, if (i)
Grace shall have failed to comply in any material respect with any of the
covenants or agreements contained herein to be performed by it at or prior to
the time of termination, which failure is not cured or capable of being cured
within 30 days after notice thereof, or (ii) the Grace Board shall
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have failed to recommend to its shareholders the approval of the transactions
contemplated hereby or shall have withdrawn, modified or changed in a manner
materially adverse to such Fresenius Party its approval or recommendation of
this Agreement.
SECTION 8.5. Effect of Termination and Abandonment. In the
event of termination of this Agreement and the abandonment of the
Reorganization pursuant to this Article VIII, other than as set forth in
Section 6.13, no party hereto (or any of its directors or officers) shall have
any liability or further obligation to any other party, except that nothing
herein will relieve any party from liability for any material and willful
breach of any covenant contained herein.
ARTICLE IX
MISCELLANEOUS AND GENERAL
SECTION 9.1. Survival. Only those agreements and covenants
of the parties which by their express terms apply in whole or in part after the
Effective Time shall survive the Effective Time. All other representations,
warranties, agreements and covenants shall be deemed only to be conditions of
the Reorganization and shall not survive the Effective Time.
SECTION 9.2. Modification or Amendment. Subject to the
applicable provisions of the NYBCL and the MBCL, at any time prior to the
Effective Time, the parties hereto may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized officers of the
respective parties.
SECTION 9.3. Waiver of Conditions. The conditions to each
party's obligation to consummate the Reorganization are for the sole benefit of
such party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
SECTION 9.4. Counterparts. For the convenience of the
parties hereto, this Agreement may be executed in any number of separate
counterparts signed by one or more of the parties hereto, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
SECTION 9.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 9.6. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
(a) If to Grace and Grace-Conn.:
W. R. Grace & Co.
One Town Center Road
Boca Raton, Florida 33486-1010
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Attention: Secretary
Fax: (407) 362-1635
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, N.Y. 10019
Attention: Andrew R. Brownstein, Esq.
Fax: (212) 403-2000
(b) If to Fresenius AG:
Fresenius AG
Borkenberg 14
61440 Oberursel
61343 Bad Homburg
Germany
Attention: Mr. Udo Werle
Fax: 011-49-6171-60-2104
with copies to:
O'Melveny & Myers
Citicorp Center
153 East 53rd Street
New York, NY 10022-4611
Attention: Dr. Ulrich Wagner
Fax: (212) 326-2061
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section.
SECTION 9.7. Entire Agreement, etc. This Agreement (and the
Exhibits and Disclosure Letters hereto) (a) constitute the entire agreement,
and supersede all other prior agreements, understandings, representations and
warranties, both written and oral, among the parties, with respect to the
subject matter hereof other than the written confidentiality arrangements
existing among the parties hereto, which shall survive, and (b) shall not be
assignable by operation of law or otherwise.
SECTION 9.8. Definitions of "Subsidiary" and "Significant
Subsidiary." (a) When a reference is made in this Agreement to a subsidiary
of a party, the term "subsidiary" means any corporation or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and one or more of its subsidiaries;
provided, however, that except in the context of references herein to financial
statements of Grace and its subsidiaries or as otherwise specified herein, (i)
no member of the Grace-Conn. Group shall be deemed to be
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a subsidiary of Grace, (ii) each member of the Grace-Conn. Group (other than
Grace-Conn.) shall be deemed to be a subsidiary of Grace-Conn., (iii) no member
of the NMC Group shall be deemed to be a subsidiary of Grace-Conn. and (iv) each
member of the NMC Group (other than Grace) shall be deemed to be a subsidiary of
Grace.
(b) When a reference is made in this Agreement to a
significant subsidiary of a party, the term "significant subsidiary" shall mean
a subsidiary of such party meeting the standards specified in clause (1) or (2)
of the definition of such term in Rule 1-02 of the SEC's Regulation S-X.
SECTION 9.9. Captions. The Article, Section and paragraph
captions herein are for convenience of reference only, do not constitute part
of this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof.
SECTION 9.10. Specific Performance. In the event of any
actual or threatened default in, or breach of, any of the terms, conditions and
provisions of this Agreement, the party or parties who are or are to be thereby
aggrieved shall have the right of specific performance and injunctive relief
giving effect to its or their rights under this Agreement, in addition to any
and all other rights and remedies at law or in equity, and all such rights and
remedies shall be cumulative. The parties agree that the remedies at law for
any breach or threatened breach, including monetary damages, are inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
SECTION 9.11. Severability. If any provision of this
Agreement or the application thereof to any person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it has been
held invalid or unenforceable, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so long as the economic
or legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party.
SECTION 9.12. No Third-Party Beneficiaries. Nothing
contained in this Agreement, expressed or implied, is intended to confer upon
any person or entity other than the parties hereto and Grace-Conn., any
benefit, right or remedies, other than the provisions of Section 6.11 hereof.
SECTION 9.13. Fresenius AG Covenant. (i) As between
Fresenius AG and Grace, prior to the Effective Time, Fresenius AG shall cause
the Fresenius USA Board to adopt, approve and ratify this Agreement and the
other Transaction Agreements and to submit the Fresenius USA Merger to a vote
of Fresenius USA shareholders. As a result of the foregoing, without limiting
any obligations of Fresenius AG with respect to Fresenius USA hereunder,
Fresenius USA will undertake the obligations contained herein as a "party"
hereto and make the representations and warranties contained herein with
respect to itself directly to Grace. Fresenius AG will vote its shares of
Fresenius USA in favor of the Fresenius USA Merger.
(ii) All obligations of Fresenius USA herein shall also be
obligations of Fresenius AG.
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(iii) Notwithstanding the foregoing, nothing in this
provision shall be construed to prevent the Special Committee of the Board of
Directors of Fresenius USA or any similar committee evaluating the Fresenius
USA Merger from making a determination with respect to the adequacy of the
Aggregate Fresenius USA Common Share Consideration and the entire fairness of
the transaction to the shareholders of Fresenius USA consistent with their
fiduciary duties.
SECTION 9.14. Further Assurances. In addition to the actions
specifically provided for elsewhere in this Agreement, but subject to Section
9.1 hereof, each of the parties hereto shall use reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws, regulations
and agreements to consummate and make effective the transactions contemplated
by this Agreement. Without limiting the foregoing the parties will as promptly
as practicable (and in the case of this Agreement and the Contribution
Agreement within one week after the signing hereof in Germany or Switzerland)
apply for any notarial or similar registrations with respect to the
transactions contemplated hereby in foreign jurisdictions.
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<PAGE> 61
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
W. R. GRACE & CO.
By: /s/ Albert J. Costello
-----------------------------------
Name:
Title:
FRESENIUS AG
By: /s/ Gerd Krick
-----------------------------------
Name:
Title:
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<PAGE> 62
ANNEX A
DEFINED TERMS
Acquisition Proposal: as defined in Section 6.3 hereof.
ADR: an American depositary receipt for Newco Ordinary Shares
issued pursuant to the ADR Facility.
ADR Facility: a facility for exchanging Newco Ordinary Shares
for American depositary receipts suitable for listing on the Exchange in form
and substance satisfactory to Grace and Fresenius AG.
ADR Registration Statement: the registration statement filed
in connection with the ADR Facility.
Affected Party: as defined in Section 6.7(d) hereof.
Affiliate: as defined in Rule 12b-2 under the Exchange Act.
Aggregate Fresenius USA Common Share Consideration: as defined
in Section 4.2(e).
Aggregate Grace Common Share Consideration: Newco Ordinary
Shares in an amount that represents 44.8% of the number of Newco Ordinary Shares
that will be outstanding immediately following consummation of the
Reorganization on a fully diluted basis.
Agreement: as defined in the Preamble hereof.
Audited Financial Statements: the Grace Audited Financial
Statements, the Fresenius USA Audited Financial Statements and the FWD Business
Audited Financial Statements.
Change Party: as defined in Section 6.7(d) hereof.
Closing: as defined in Section 1.4 hereof.
Closing Date: as defined in Section 1.4 hereof.
Closing Subsidiaries: as defined in Section 5.5(c) (ii)
hereof.
Code: the Internal Revenue Code of 1986, as amended.
Contracts: as defined in Section 5.1(d)(ii).
Contribution: as defined in Recital C hereof.
Contribution Agreement: as defined in Recital C hereof.
Current Subsidiaries: as defined in Section 5.5(c)(ii) hereof.
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Debt: (a) all obligations for borrowed money, whether or not
represented by a note, bond or debenture, (b) off balance sheet financing
including, without limitation, off balance sheet receivables financings at NMC,
(c) any obligation created or arising under any conditional sale agreement or
other title retention agreement that is treated as a liability under a balance
sheet prepared in accordance with US GAAP, (d) the portion of the obligations
with respect to capital leases that is properly classified as a liability on a
balance sheet in accordance with US GAAP, (e) a reasonable estimate, to be
agreed by Fresenius and Grace, of the amounts payable in respect of Dissenting
Shares of Fresenius USA or Grace, as the case may be, (f) any obligation owed in
respect of the deferred purchase price of property (excluding any obligations
incurred in the ordinary course of business), and (g) the liquidation preference
of, and accrued dividends on, preferred stock outstanding at the Effective Time
(other than NY Preferred Shares).
Disclosure Letters: the Fresenius AG Disclosure Letter, the
Fresenius USA Disclosure Letter and the Grace Disclosure Letter.
Disclosure Letter Financial Statements: the Grace Disclosure
Letter Financial Statements, the Fresenius USA Disclosure Letter Financial
Statements and the FWD Business Disclosure Letter Financial Statements.
Dissenting Shares: Grace Common Dissenting Shares and
Fresenius USA Common Dissenting Shares.
Distribution: as defined in Recital D hereof.
Distribution Agreement: as defined in Recital D hereof.
Effective Time: as defined in Section 1.3 hereof.
Employees: the Grace Employees and the Fresenius USA
Employees.
Environmental Law: any federal, state, foreign or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, common law, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity, (a) relating
to the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (b) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as now in effect.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
ERISA Affiliates: the Grace ERISA Affiliates and the Fresenius
USA ERISA Affiliates.
Excess Shares: as defined in Section 4.4(c) (ii) hereof.
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<PAGE> 64
Exchange: the New York Stock Exchange, Inc. or the NASDAQ
Stock Market.
Exchange Act: the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
Exchange Agent: as defined in Section 4.4(a) hereof.
Fractional Securities Fund: as defined in Section 4.4(c) (ii)
hereof.
Fresenius AG: as defined in the Preamble hereof.
Fresenius AG Disclosure Letter: as defined in Section 5.3
hereof.
Fresenius AG Plans: as defined in Section 5.4(m)(i) hereof.
Fresenius AG Restructuring: as defined in Section 5.5(d)
hereof.
Fresenius AG Tax Matters Certificate: as defined in Section
5.3(g) hereof.
Fresenius Parties: as defined in Recital F hereof.
Fresenius USA: as defined in Recital F hereof.
Fresenius USA Articles of Organization: as defined in Section
2.3 hereof.
Fresenius USA Audited Financial Statements: as defined in
Section 6.7(b) hereof.
Fresenius USA Board: the Board of Directors of
Fresenius USA.
Fresenius USA Common Dissenting Shares: Fresenius USA Common
Shares as to which rights of appraisal have been perfected pursuant to the MBCL.
Fresenius USA Common Share Equivalents: at any time, (i) the
aggregate number of Fresenius USA Common Shares outstanding at such time (other
than any Fresenius USA Common Share owned by Fresenius AG or its subsidiaries or
Newco or Fresenius USA or its subsidiaries or any Fresenius USA subsidiary or
held in Fresenius USA's treasury or any Fresenius USA Common Dissenting Share)
plus (ii) the aggregate number of Fresenius USA Options (other than any
Fresenius USA Option on an outstanding Fresenius USA Common Share).
Fresenius USA Common Shares: shares of common stock, par value
$.01 per share, of Fresenius USA.
Fresenius USA Compensation Plans: as defined in Section
5.2(k)(i).
Fresenius USA Consideration Per Share: the amount into which
each Fresenius USA Common Share will be converted in the Fresenius USA Merger,
to be calculated as the quotient of the Aggregate Fresenius USA Common Share
Consideration
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<PAGE> 65
divided by the number of Fresenius USA Common Share Equivalents outstanding
immediately prior to the Fresenius USA Merger.
Fresenius USA Disclosure Letter: as defined in Section 5.2
hereof.
Fresenius USA Disclosure Letter Balance Sheet: as defined in
Section 5.2(e)(iii) hereof.
Fresenius USA Disclosure Letter Financial Statements: as
defined in Section 5.2(e)(iii) hereof.
Fresenius USA Employees: as defined in Section 5.2(k)(i)
hereof.
Fresenius USA ERISA Affiliate: as defined in Section
5.2(k)(iii) hereof.
Fresenius USA Exchange Ratio: the Fresenius USA Consideration
Per Share, expressed as the numerical ratio of Newco Ordinary Shares per
Fresenius USA Common Share.
Fresenius USA Intellectual Property: as defined in Section
5.2(p) hereof.
Fresenius USA Meeting: a duly convened meeting of holders of
Fresenius USA Common Shares and Fresenius USA Preferred Shares called to vote on
and approve the transactions contemplated hereby.
Fresenius USA Merger: as defined in Recital F hereof.
Fresenius USA Merger Sub: as defined in Recital F hereof.
Fresenius USA Option: as defined in Section 4.4(i) hereof.
Fresenius USA Plans: as defined in Section 5.2(k)(ii) hereof.
Fresenius USA Preferred Shares: shares of preferred stock, par
value $1.00 per share, of Fresenius USA.
Fresenius USA Proxy Statement: the proxy statement (including
all proxy solicitation materials constituting a part thereof) to be mailed to
the holders of Fresenius USA Common Shares and Fresenius USA Preferred Shares in
connection with the Fresenius USA Meeting.
Fresenius USA Schedule 14A: the Schedule 14A filed by
Fresenius USA with the SEC including the Fresenius USA Proxy Statement.
Fresenius USA Series F Preferred Shares: Fresenius USA
Preferred Shares designated as Series F Series Convertible Preferred Stock.
Fresenius USA Stock Plans: as defined in Section 5.2(a)
hereof.
Fresenius USA Surviving Corporation: as defined in Section
1.2(c) hereof.
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<PAGE> 66
FWD Business: as defined in Section 5.5(a) hereof.
FWD Business Assets: as defined in Section 5.5(b) hereof.
FWD Business Audited Financial Statements: as defined in
Section 6.7(c) hereof.
FWD Business Disclosure Letter: as defined in Section 5.4
hereof.
FWD Business Disclosure Letter Balance Sheet: as disclosed in
Section 5.4(d)(i) hereof.
FWD Business Disclosure Letter Financial Statements: as
defined in Section 5.4(d)(i) hereof.
FWD Business Intellectual Property: as defined in Section
5.4(o) hereof.
FWD Business Subsidiary: as defined in Section 5.5(c) hereof.
German GAAP: German generally accepted accounting principles
consistently applied.
Governmental Entity: as defined in Section 5.1(d)(i) hereof.
Grace: as defined in the Preamble hereof.
Grace Amendment: as defined in Recital F hereof.
Grace Audited Financial Statements: as defined in Section
6.7(a) hereof.
Grace Board: the Board of Directors of Grace.
Grace Certificate of Incorporation: as defined in Section 2.1
hereof.
Grace Class A Preferred Shares: Grace Preferred Shares
designated as Class A.
Grace Class B Preferred Shares: Grace Preferred Shares
designated as Class B.
Grace Class C Preferred Shares: Grace Preferred Shares
designated as Class C.
Grace Common Dissenting Shares: Grace Common Shares as to
which rights of appraisal have been perfected pursuant to the NYBCL.
Grace Common Share Equivalents: at any time, (i) the aggregate
number of Grace Common Shares outstanding at such time (other than any Grace
Common Share owned by Fresenius AG or its subsidiaries or Fresenius USA or its
subsidiaries or any Grace subsidiary or held in Grace's treasury or any Grace
Common Dissenting Share) plus
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<PAGE> 67
(ii) the aggregate number of Grace Options (other than any Grace Option on an
outstanding Grace Common Share).
Grace Common Shares: shares of common stock, par value $1.00
per share, of Grace (including the associated Grace Rights).
Grace Compensation Plans: as defined in Section 5.1(k)(i)
hereof.
Grace-Conn.: as defined in Recital D hereof.
Grace-Conn. Business: as defined in the Distribution
Agreement.
Grace-Conn. Group: as defined in the Distribution Agreement.
Grace-Conn. Registration Statement: the registration statement
filed by Grace-Conn. with the SEC in connection with the Distribution.
Grace Consideration Per Share: Newco Ordinary Shares in the
amount into which each Grace Common Share (and associated Grace Right) will be
converted in the Grace Merger, to be calculated as the quotient of the Aggregate
Grace Common Share Consideration divided by the number of Grace Common Share
Equivalents outstanding immediately prior to the Grace Merger after giving
effect to the Distribution.
Grace Disclosure Letter: as defined in Section 5.1 hereof.
Grace Disclosure Letter Balance Sheet: as defined in Section
5.1(e)(iii) hereof.
Grace Disclosure Letter Financial Statements: as defined in
Section 5.1(e)(iii) hereof.
Grace Employees: as defined in Section 5.1(k)(i) hereof.
Grace ERISA Affiliate: as defined in Section 5.1(k)(iii)
hereof.
Grace Exchange Ratio: the Grace Consideration Per Share,
expressed as the numerical ratio of Newco Ordinary Shares per Grace Common
Share.
Grace Meeting: a duly convened meeting of holders of Grace
Common Shares and Grace Preferred Shares called to vote on and approve the
transactions contemplated hereby.
Grace Merger: as defined in Recital F hereof.
Grace Merger Sub: as defined in Recital F hereof.
Grace Option: as defined in Section 4.4(i) hereof.
Grace Preferred Shares: shares of preferred stock, par value
$1.00 per share, of Grace (other than NY Preferred Shares).
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Grace Proxy Statement: the proxy statement (including all
proxy solicitation materials constituting a part thereof) to be mailed to the
holders of Grace Common Shares and Grace Preferred Shares in connection with
the Grace Meeting.
Grace Rights: the common stock purchase rights of Grace issued
pursuant to the Rights Agreement.
Grace Rights Agreement: the Amended and Restated Rights
Agreement, dated as of June 7, 1990, between Grace and Manufacturers Hanover
Trust Company, as supplemented and amended.
Grace Schedule 14A: the Schedule 14A filed by Grace with the
SEC including the Grace Proxy Statement.
Grace 6% Preferred Shares: Grace Preferred Shares designated
as 6%.
Grace Stock Plans: as defined in Section 5.1(a) hereof.
Grace Surviving Corporation: as defined in Section 1.2(b)
hereof.
Grace Tax Matters Certificate: as defined in Section 5.1(p)
hereof.
Hazardous Substance: any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance as a component.
Higher Offer: as defined in Section 6.3 hereof.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
IRS: the United States Internal Revenue Service.
Lease: as defined in Recital D hereof.
knowledge of executive officers: shall mean, in the case of
Grace, the knowledge of each officer of Grace subject to Section 16 of the
Exchange Act pursuant to Rule 16a-2 under the Exchange Act.
Massachusetts Certificate: as defined in Section 1.3 hereof.
material: with respect to any party, material to such party
and its subsidiaries, taken as a whole; provided, however, that when determining
materiality with respect to Grace, only that property, business, financial
condition, results of operations or prospects which are included in or
exclusively related to the NMC Business shall be included.
Material Adverse Effect: with respect to any party, an effect
which would be materially adverse to the properties, business, financial
condition, results of operations or prospects of such party and its subsidiaries
taken as a whole; provided, however, that when
A-7
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determining Material Adverse Effect with respect to Grace, only that property,
business, financial condition, results of operations or prospects which are
included in or exclusively relate to the NMC Business shall be included.
MBCL: the Massachusetts Business Corporation Law.
Meetings: the Grace Meeting and the Fresenius USA Meeting.
Mergers: as defined in Recital F hereof.
NMC: National Medical Care, Inc., a Delaware corporation and
an indirect wholly owned subsidiary of Grace.
NMC Business: as defined in the Distribution Agreement.
NMC Business Intellectual Property: as defined in Section
5.1(r) hereof.
NMC Group: as defined in the Distribution Agreement.
Newco Board: the Supervisory Board of Newco.
Newco Charter Documents: as defined in Recital B hereof.
Newco Ordinary Share Certificate: certificates for Newco
Ordinary Shares.
Newco Ordinary Shares: ordinary shares in the capital of
Newco.
Newco Pooling Agreement: as defined in Recital B hereof.
Newco Registration Statement: the registration statement filed
with the SEC in connection with the issuance of Newco Ordinary Shares in the
Mergers.
New York Certificate: as defined in Section 1.3 hereof.
NYBCL: the New York Business Corporation Law.
NY Preferred Registration Statement: the registration
statement filed with the SEC in connection with the issuance of NY Preferred
Shares in the Recapitalization.
NY Preferred Shares: shares of a new series of preferred stock
of Grace to be issued in the Recapitalization having the terms set forth in
Exhibit C hereto.
Old Certificates: Old Grace Certificates and Old Fresenius USA
Certificates.
Old Fresenius USA Certificate: a certificate for Fresenius USA
Common Shares or Fresenius USA Preferred Shares.
Old Grace Certificate: a certificate for Grace Common Shares.
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Other Agreements: (i) as defined in the Contribution Agreement
plus (ii) as defined in the Distribution Agreement.
Proxy Statements: the Fresenius USA Proxy Statement and the
Grace Proxy Statement.
Recapitalization: as defined in Recital E hereof.
Registration Statements: the Newco Registration Statement, the
Grace-Conn. Registration Statement, the NY Preferred Registration Statement and
the ADR Registration Statement.
Reorganization: the Contribution, the Recapitalization, the
Distribution and the Mergers.
Reorganization Agreement: as defined in the Preamble hereof.
Representatives: with respect to any party, such party's
officers, employees, counsel, accountants and other authorized representatives.
Schedules 14A: the Grace Schedule 14A and the Fresenius USA
Schedule 14A.
SEC: the Securities and Exchange Commission.
SEC Documents: with respect to any party, all filings made by
such party or its Subsidiaries with the SEC since December 31, 1994, including
notes, schedules, amendments and exhibits thereto.
Securities Act: the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
significant subsidiary: as defined in Section 9.9(b) hereof.
subsidiary: as defined in Section 9.9(a) hereof.
Surviving Corporations: the Grace Surviving Corporation and
the Fresenius USA Surviving Corporation.
Takeover Statute: as defined in Section 5.1(n) hereof.
Transaction Agreements: the Reorganization Agreement, the
Newco Pooling Agreement, the Distribution Agreement, the Contribution Agreement
and the Other Agreements.
US GAAP: United States generally accepted accounting
principles consistently applied.
A-9
<PAGE> 1
Exhibit E
FINAL COPY
CONTRIBUTION AGREEMENT
BY AND AMONG
FRESENIUS AG,
STERIL PHARMA GMBH
AND
W. R. GRACE & CO.-CONN.
DATED FEBRUARY 4, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
I. Definitions......................................................................... 2
1.01 General............................................................. 2
II. Certain Transactions Prior to the
Contribution Date................................................................. 6
2.01 Certain Transfers................................................... 6
2.02 Termination of Agreements........................................... 7
2.03 Other Agreements.................................................... 7
III. [Intentionally Omitted]............................................................. 7
IV. Survival and Indemnification........................................................ 8
4.01 Survival of Agreements.............................................. 8
4.02 Indemnification..................................................... 8
4.03 Procedures for Indemnification for
Third-Party Claims................................................ 8
4.04 Remedies Cumulative................................................. 10
V. Certain Additional Covenants........................................................ 10
5.01 Notices to Third Parties............................................ 10
5.02 Licenses and Permits................................................ 10
5.03 Intercompany Agreements............................................. 10
5.04 Guarantee Obligations............................................... 11
5.05 Further Assurances.................................................. 11
VI. Access to Information............................................................... 12
6.01 Provision of Corporate Records...................................... 12
6.02 Access to Information............................................... 12
6.03 Production of Witnesses............................................. 14
6.04 Retention of Records................................................ 14
6.05 Confidentiality..................................................... 14
6.06 Cooperation with Respect to
Government Reports and Filings.................................... 15
VII. No Representations or Warranties.................................................... 15
7.01 No Representations or Warranties.................................... 15
</TABLE>
<PAGE> 3
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
VIII. Miscellaneous....................................................................... 16
8.01 Use of Fresenius AG Name and Mark................................... 16
8.02 Complete Agreement.................................................. 16
8.03 Expenses............................................................ 16
8.04 Jurisdiction and Forum.............................................. 16
8.05 Notices............................................................. 17
8.06 Amendment and Modification.......................................... 18
8.07 Successors and Assigns; No Third-Party
Beneficiaries..................................................... 18
8.08 Counterparts........................................................ 18
8.09 Interpretation...................................................... 18
8.10 Severability........................................................ 18
8.11 References; Construction............................................ 18
SIGNATURES ...................................................................................... 19
</TABLE>
<TABLE>
<S> <C>
EXHIBIT A Tax Indemnification Agreement
EXHIBIT B Terms of Lease
EXHIBIT C Terms of License
</TABLE>
-ii-
<PAGE> 4
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "Agreement"), dated February
4, 1996, by and between Fresenius AG, an Aktiengesellschaft organized under the
laws of the Federal Republic of Germany ("Fresenius AG"), Steril Pharma GmbH, a
wholly owned Gesellschaft mit beschrankter Haftung of Fresenius AG ("GmbH" or
"SP"), and W. R. Grace & Co.-Conn., a Connecticut corporation ("Grace-Conn.").
W I T N E S S E T H:
A. The Reorganization Agreement. Simultaneously herewith,
Grace and Fresenius AG are entering into an Agreement and Plan of Reorganization
(the "Reorganization Agreement") and, prior to the Effective Time, intend to
consummate the transactions contemplated hereby.
B. The Contribution. Prior to the Effective Time, Fresenius
AG intends to contribute its worldwide dialysis business to SP, as provided
herein, and to retain and lease to Newco certain real property and buildings in
the Federal Republic of Germany pursuant to a lease consistent with the terms
set forth in Exhibit B hereto and to retain and license to Newco its name and
certain derived marks pursuant to a license consistent with the terms set forth
in Exhibit C hereto.
C. Newco. In connection with the Contribution, Fresenius AG
intends that SP shall convert to an Aktiengesellschaft, pursuant to German law,
and to become "Newco," consistent with the terms of the Reorganization
Agreement.
D. The Distribution. Immediately prior to the Effective
Time, Grace intends to transfer to (or retain in) Grace-Conn. all non-healthcare
assets and liabilities, its interests in the Amicon bioseparations business and
GN Holdings, Inc. and certain other assets, as contemplated by this Agreement,
and to effect a distribution to its common shareholders of all of its equity
interest in Grace-Conn.
E. The Recapitalization. Following the Distribution and
immediately prior to the Effective Time, Grace intends to consummate the
Recapitalization in which each holder of a Grace Common Share shall hold,
immediately thereafter, a Grace Common Share and one one-hundredth of a NY
Preferred Share.
F. The Mergers. At the Effective Time, the parties intend to
effect a merger of a wholly owned New York corporate subsidiary of Newco with
and into Grace, with Grace being the surviving corporation. Also at the
Effective Time, the parties intend to effect a merger of a wholly owned
Massachusetts corporate subsidiary of Newco with and into Fresenius USA, with
Fresenius USA being the surviving corporation.
G. Financing. It is the intention of the parties hereto
that, prior to the Distribution: (i) Grace and Grace-Conn. shall use reasonable
efforts to cause NMC to arrange new credit facilities so that the transactions
contemplated by the Transaction Agreements may be consummated; (ii) Fresenius AG
shall use reasonable efforts to
<PAGE> 5
arrange new credit facilities for the FWD Business so that the transactions
contemplated by the Transaction Agreements may be consummated; and (iii) the
parties shall cooperate with one another with respect to the foregoing.
H. Intention of the Parties. It is the intention of the
parties to the Reorganization Agreement that for United States federal income
tax purposes (a) the Distribution shall qualify as a tax-free distribution under
the Code, (b) each of the Mergers shall qualify as a "reorganization" under the
Code, (c) the Contribution shall qualify as a tax-free exchange under the Code
and (d) the Recapitalization shall be tax-free to Grace under the Code.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 GENERAL. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
Affiliate: with respect to any specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person; provided,
however, that for purposes of this Agreement, no member of either Group shall be
deemed to be an Affiliate of any member of the other Group.
Agreement: as defined in the preamble to this Agreement.
Asset: any and all assets and properties, tangible or
intangible, including, without limitation, the following: (i) cash, notes and
accounts and notes receivable (whether current or non-current); (ii)
certificates of deposit, banker's acceptances, stock, debentures, evidences of
indebtedness, certificates of interest or participation in profit-sharing
agreements, collateral-trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, voting-trust
certificates, fractional undivided interests in oil, gas or other mineral
rights, puts, calls, straddles, options and other securities of any kind; (iii)
intangible property rights, inventions, discoveries, know-how, patents and
patent applications, trade secrets, confidential information, registered and
unregistered trademarks, service marks, service names, trade styles and trade
names and associated goodwill; statutory, common law and registered copyrights;
applications for any of the foregoing, rights to use the foregoing and other
rights in, to and under the foregoing; (iv) rights under leases, contracts,
licenses, permits, distribution arrangements, sales and purchase agreements,
other agreements and business arrangements; (v) real estate and buildings and
other improvements thereon; (vi) leasehold improvements, fixtures, trade
fixtures, machinery, equipment (including transportation and office equipment),
tools, dies and furniture; (vii) office supplies, production supplies, spare
parts, other miscellaneous supplies and other tangible property of any kind;
(viii) computer
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equipment and software; (ix) raw materials, work-in-process, finished goods,
consigned goods and other inventories; (x) prepayments or prepaid expenses; (xi)
claims, causes of action, choses in action, rights under express or implied
warranties, rights of recovery and rights of set-off of any kind; (xii) the
right to receive mail, payments on accounts receivable and other communications;
(xiii) lists of customers, records pertaining to customers and accounts,
personnel records, lists and records pertaining to customers, suppliers and
agents, and books, ledgers, files and business records of every kind; (xiv)
advertising materials and other printed or written materials; (xv) goodwill as a
going concern and other intangible properties; (xvi) employee contracts,
including any rights thereunder to restrict an employee from competing in
certain respects; and (xvii) licenses and authorizations issued by any
governmental authority.
Business: the Fresenius AG Business or the FWD Business.
Contribution: as defined in the Reorganization Agreement.
Contribution Date: the date on which the Effective Time
occurs.
CTC-DE: as defined in Section 8.04(b) of this Agreement.
CTC-NY: as defined in Section 8.04(b) of this Agreement.
Debt: as defined in the Reorganization Agreement.
Effective Time: as defined in the recitals to this Agreement.
Foreign Exchange Rate: with respect to any currency other
than United States dollars as of any date, the rate on such date at which such
currency may be exchanged for United States dollars as quoted in The Wall Street
Journal.
Fresenius AG: as defined in the preamble to this Agreement.
Fresenius AG Assets: all Assets owned by any member of the
Fresenius AG Group immediately prior to the Contribution Date, other than FWD
Business Assets and other than any stock or assets of Fresenius USA.
Fresenius AG Business: all of the business and operations
conducted at any time, whether prior to, on or after the Contribution Date, by
any member of the Fresenius AG Group, other than the FWD Business.
Fresenius AG Group: Fresenius AG and the Fresenius AG
Subsidiaries, other than any member of the FWD Business Group.
Fresenius AG Indemnitees: Fresenius AG, each Affiliate of
Fresenius AG and each of their respective Representatives and each of the heirs,
executors, successors and assigns of any of the foregoing.
Fresenius AG Subsidiaries: all direct and indirect
Subsidiaries of Fresenius AG, other than FWD Business Subsidiaries and other
than Fresenius USA and its
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Subsidiaries; provided, however, that for purposes of this Agreement, GmbH and
the FWD Business Subsidiaries shall not be deemed to be Subsidiaries of
Fresenius AG.
Fresenius Tax Indemnification Agreement: a tax sharing
agreement between Fresenius AG and GmbH substantially in the form attached
hereto as Exhibit B, with such changes as may be mutually satisfactory to
Fresenius AG, GmbH, and Grace-Conn.
Fresenius USA: Fresenius USA, Inc., a Massachusetts
Corporation.
Fresenius USA Merger: as defined in the Reorganization
Agreement.
FWD Business: as defined in the Reorganization Agreement,
but including all business and operations of Fresenius USA.
FWD Business Assets: as defined in the Reorganization
Agreement, but including all Assets of Fresenius USA.
FWD Business Group: GmbH and each other FWD Business
Subsidiary.
FWD Business Indemnitees: Grace-Conn., Newco, GmbH, each
Affiliate of GmbH and each of their respective Representatives and each of the
heirs, executors, successors and assigns of any of the foregoing.
FWD Business Subsidiary: (i) all FWD Business Subsidiaries
(as defined in the Reorganization Agreement), (ii) Fresenius USA and (iii) all
corporations, partnerships or other business entities in which any member of the
FWD Business Group has owned or will own any equity interest or other investment
and which predominantly relates to the FWD Business.
FWD Indemnitor: as defined in Section 2.01 of this Agreement.
GmbH: as defined in the preamble to this Agreement.
G-GmbH: as defined in Section 2.01 of this Agreement.
Grace: as defined in the Reorganization Agreement.
Grace-Conn.: as defined in the preamble to this Agreement.
Group: the Fresenius AG Group or the FWD Business Group.
Indemnifiable Losses: all losses, Liabilities, damages,
claims, demands, judgments or settlements of any nature or kind, known or
unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated,
including all reasonable costs and expenses (legal, accounting or otherwise as
such costs are incurred) relating thereto, suffered (and not actually reimbursed
by insurance proceeds) by an Indemnitee, including any reasonable costs or
expenses of enforcing any indemnity hereunder.
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<PAGE> 8
Indemnifying Party: a Person who or which is obligated under
this Agreement to provide indemnification.
Indemnitee: a Person who or which may seek indemnification
under this Agreement.
Indemnity Payment: an amount that an Indemnifying Party is
required to pay to or in respect of an Indemnitee pursuant to Article IV.
Information: all records, books, contracts, instruments,
computer data and other data and information.
Liabilities: all debts, liabilities and obligations, whether
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, and whether or not the
same would properly be reflected on a balance sheet.
Litigation Matters: actual, threatened or future litigations,
investigations, claims or other legal matters that have been or may be asserted
against, or otherwise adversely affect, Fresenius AG and/or GmbH (or members of
either Group).
NMC: National Medical Care, Inc., a Delaware corporation and
an indirect wholly owned subsidiary of Grace.
Newco: as defined in the Reorganization Agreement.
NY Preferred Registration Statement: as defined in the
Reorganization Agreement.
Other Agreements: an employee benefits agreement,
restructuring agreements, an insurance procedures agreement, a lease consistent
with the terms set forth in Exhibit B hereto, a license consistent with the
terms set forth in Exhibit C hereto, the Fresenius Tax Indemnification Agreement
and the other agreements entered into or to be entered into in connection with
the Contribution referred to in any of the foregoing as contemplated by Section
2.03.
Person: an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
Privileged Information: with respect to either Group,
Information regarding a member of such Group, or any of its operations, Assets
or Liabilities (whether in documents or stored in any other form or known to
employees or agents) that is or may be protected from disclosure pursuant to the
attorney-client privilege, the work product doctrine or other applicable
privileges, that a member of the other Group may come into possession of or
obtain access to pursuant to this Agreement or otherwise.
Recapitalization: as defined in the Reorganization Agreement.
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<PAGE> 9
Registration Statement: a registration statement to effect
the registration of the Newco capital stock (or depositary receipts therefor) to
be issued pursuant to the Reorganization Agreement under the Securities Act.
Reorganization Agreement: as defined in the recitals to this
Agreement.
Representative: with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
Securities Act: the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
SP: as defined in the preamble to this Agreement.
Subsidiary: with respect to any specified Person, (i) any
corporation or other legal entity of which such Person or any of its
subsidiaries controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body, and (ii) any corporation,
partnership or other business entity, in which such person has owned or shall
own any equity interest or other investment and which predominantly relates to
the business and operations conducted by such person's Group.
Tax: as defined in the Fresenius Tax Indemnification
Agreement.
Third-Party Claim: any claim, suit, derivative suit,
arbitration, inquiry, proceeding or investigation by or before any court, any
governmental or other regulatory or administrative agency or commission or any
arbitration tribunal asserted by a Person who or which is neither a party hereto
nor an Affiliate of a party hereto.
ARTICLE II
CERTAIN TRANSACTIONS PRIOR TO THE CONTRIBUTION DATE
SECTION 2.01 CERTAIN TRANSFERS. As promptly as practicable
following the date hereof (and in any event prior to the Contribution Date),
Fresenius AG shall contribute the FWD Business and all FWD Business Assets to
Newco. In furtherance of the foregoing:
(a) Fresenius AG shall identify all existing Subsidiaries
engaged solely in the FWD Business and contribute the capital stock of
such Subsidiaries to SP.
(b) Fresenius AG shall identify all German FWD Business Assets
(other than any capital stock, which is to be contributed pursuant to
(a) above) and shall contribute such assets to a newly formed GmbH
("G-GmbH").
(c) Fresenius AG shall contribute all capital stock of G-GmbH
to SP.
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<PAGE> 10
(d) Fresenius AG shall use reasonable best efforts to cause
each remaining Subsidiary which conducts part of the FWD Business to
divest itself of all Assets which are not FWD Business Assets; and,
immediately thereafter, Fresenius AG shall contribute the capital stock
of each such Subsidiary to SP; provided, however, that in no event
shall Fresenius AG take any action which causes any representation set
forth in the Fresenius AG Tax Matters Certificate to be untrue.
(e) To the extent that any FWD Business Assets remain in
Fresenius AG Subsidiaries other than SP (or its direct Subsidiaries)
and G-GmbH, Fresenius AG shall cause each such Subsidiary to divest
itself of such FWD Business Assets and then shall cause such FWD
Business Assets to be contributed to other Subsidiaries, which may be
newly formed, and shall then contribute all of the capital stock of
such Subsidiaries to SP.
(f) Fresenius AG shall contribute all capital stock of
Fresenius USA held by it to SP.
(g) The Subsidiaries contributed to SP shall collectively be
"FWD Indemnitor," on a joint and several basis, and none of such
Subsidiaries shall be a direct or indirect parent of Grace.
(h) Fresenius AG shall undertake such transactions as may be
necessary for SP to become Newco, consistent with the terms of the
Reorganization Agreement.
(i) The foregoing shall be effectuated pursuant to transfer
documents and agreements acceptable to Grace-Conn.
SECTION 2.02 TERMINATION OF AGREEMENTS. Except as agreed by
Grace in writing prior to the Contribution Date, Fresenius AG shall terminate
all agreements between any member of the Fresenius AG Group and any member of
the FWD Business Group except as specifically provided herein or in the Other
Agreements.
SECTION 2.03 OTHER AGREEMENTS. Each of Fresenius AG and GmbH
shall enter into, or cause the appropriate members of the Group of which it is a
member, to enter into, the Tax Indemnification Agreement and Other Agreements as
may be advisable in connection with the Distribution including, without
limitation, agreements with respect to employee benefits, restructuring,
insurance procedures and other matters, all such other agreements to be on terms
acceptable to Grace-Conn. prior to the Distribution Date.
ARTICLE III
[Intentionally Omitted.]
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<PAGE> 11
ARTICLE IV
SURVIVAL AND INDEMNIFICATION
SECTION 4.01 SURVIVAL OF AGREEMENTS. All covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Contribution Date.
SECTION 4.02 INDEMNIFICATION. (a) Except as specifically
otherwise provided in the Other Agreements, FWD Indemnitor shall indemnify,
defend and hold harmless the Fresenius AG Indemnitees from and against (1) all
Indemnifiable Losses arising from or relating to the FWD Business or the FWD
Business Assets, whether such Indemnifiable Losses relate to events, occurrences
or circumstances occurring or existing, or whether such Indemnifiable Losses are
asserted, before or after the Contribution Date; and (2) all Indemnifiable
Losses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact, or omission or alleged omission to state a
material fact required to be stated, in the Registration Statement, NY Preferred
Registration Statement or the Proxy Statement supplied by Grace or its
subsidiaries or any preliminary or final form thereof or any amendment thereto,
or necessary to make the statements therein not misleading.
(b) Except as specifically otherwise provided in the Other
Agreements, Fresenius AG shall indemnify, defend and hold harmless the FWD
Business Indemnitees from and against (1) all Indemnifiable Losses of or
relating to the Fresenius AG Group (including, without limitation, relating to
Fresenius USA or its shareholders or the Fresenius AG Business), whether such
Indemnifiable Losses relate to events, occurrences or circumstances occurring or
existing, or whether such Indemnifiable Losses are asserted, before or after the
Contribution Date, other than those Indemnifiable Losses arising from the FWD
Business; (2) all Indemnifiable Losses arising from or relating to all
litigation brought by Fresenius USA shareholders acting in such capacity
relating to the Reorganization; and (3) all Indemnifiable Losses arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact, or omission or alleged omission to state a material fact required to be
stated, in the Registration Statement, NY Preferred Registration Statement or
the Proxy Statement or any preliminary or final form thereof or any amendment
thereto, or necessary to make the statements therein not misleading, except that
such indemnifications shall not apply to any Indemnifiable Losses that arise out
of or are based upon any statement or omission, or alleged statement or
omission, in any portion of the Registration Statement, NY Preferred
Registration Statement or the Proxy Statement, or any preliminary or final form
thereof or any amendment thereto, supplied by Grace or its Subsidiaries.
(c) Notwithstanding anything to the contrary set forth herein,
indemnification relating to any arrangements between any member of the Fresenius
AG Group and any member of the FWD Business Group for the provision after the
Contribution of goods and services in the ordinary course shall be governed by
the terms of such arrangements and not by this Section 4.02.
SECTION 4.03 PROCEDURES FOR INDEMNIFICATION FOR THIRD-PARTY
CLAIMS. (a) GmbH shall, and shall cause the other FWD Business Indemnitees to,
notify Fresenius AG in writing promptly after learning of any Third-Party Claim
for which any FWD Business Indemnitee intends to seek indemnification from
Fresenius AG
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<PAGE> 12
under this Agreement. Fresenius AG shall, and shall cause the other Fresenius AG
Indemnitees to, notify GmbH in writing promptly after learning of any
Third-Party Claim for which any Fresenius AG Indemnitee intends to seek
indemnification from FWD Indemnitor under this Agreement. The failure of any
Indemnitee to give such notice shall not relieve any Indemnifying Party of its
obligations under this Article except to the extent that such Indemnifying Party
or its Affiliate is actually prejudiced by such failure to give notice. Such
notice shall describe such Third-Party Claim in reasonable detail considering
the information provided to the Indemnitee.
(b) Except as otherwise provided in subsection (c) of this
Section 4.03, an Indemnifying Party may, by notice to the Indemnitee and to FWD
Indemnitor, if Fresenius AG is the Indemnifying Party, or to the indemnitees and
Fresenius AG, if FWD Indemnitor is the Indemnifying Party, at any time after
receipt by such Indemnifying Party of such Indemnitee's notice of a Third-Party
Claim, undertake (itself or through another member of the Group of which the
Indemnifying Party is a member) the defense or settlement of such Third-Party
Claim. If an Indemnifying Party undertakes the defense of any Third-Party Claim,
such Indemnifying Party shall thereby admit its obligation to indemnify the
Indemnitee against such Third-Party Claim, and such Indemnifying Party shall
control the investigation and defense or settlement thereof, and the Indemnitee
may not settle or compromise such Third-Party Claim, except that such
Indemnifying Party shall not require any Indemnitee, without its prior written
consent, to take or refrain from taking any action in connection with such
Third-Party Claim, or make any public statement, which such Indemnitee
reasonably considers to be against its interests, nor shall the Indemnifying
Party, without the prior written consent of the Indemnitee and of FWD
Indemnitor, if the Indemnitee is a FWD Business Indemnitee, or of the Indemnitee
and of Fresenius AG, if the Indemnitee is a Fresenius AG Indemnitee, consent to
any settlement that does not include as a part thereof an unconditional release
of the Indemnitees from liability with respect to such Third-Party Claim or that
requires the Indemnitee or any of its Representatives or Affiliates to make any
payment that is not fully indemnified under this Agreement or to submit to any
non-monetary remedy; and subject to the Indemnifying Party's control rights, as
specified herein, the Indemnitees may participate in such investigation and
defense, at their own expense. Following the provision of notice to the
Indemnifying Party, until such time as an Indemnifying Party has undertaken the
defense of any Third-Party Claim, as provided herein, such Indemnified Party
shall control the investigation and defense or settlement thereof, without
prejudice to its right to seek indemnification hereunder.
(c) If an Indemnitee reasonably determines that there may be
legal defenses available to it that are different from or in addition to those
available to its Indemnifying Party which make it inappropriate for the
Indemnifying Party to undertake the defense or settlement thereof, then such
Indemnifying Party shall not be entitled to assume undertake the defense or
settlement of such Third-Party Claim; and counsel for the Indemnifying Party
shall be entitled to conduct the defense of such Indemnifying Party and counsel
for the Indemnitee shall be entitled to conduct the defense of such Indemnitee,
it being understood that both such counsel shall cooperate with each other to
conduct the defense or settlement of such action as efficiently as possible.
(d) In no event shall an Indemnifying Party be liable for the
fees and expenses of more than one counsel for all Indemnitees in connection
with any one action,
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or separate but similar or related actions, in the same jurisdiction arising out
of the same general allegations or circumstances.
(e) FWD Indemnitor shall, and shall cause the other FWD
Business Indemnitees to, and Fresenius AG shall, and shall cause the other
Fresenius AG Indemnitees to, make available to each other, their counsel and
other Representatives, all information and documents reasonably available to
them which relate to any Third-Party Claim, and otherwise cooperate as may
reasonably be required in connection with the investigation, defense and
settlement thereof. Any joint defense agreement entered into by Fresenius AG or
FWD Indemnitor with any third party relating to any Third-Party Claim shall
provide that Fresenius AG or FWD Indemnitor may, if requested, provide
information obtained through any such agreement to the Fresenius AG Indemnitees
or the FWD Business Indemnitees.
SECTION 4.04 REMEDIES CUMULATIVE. The remedies provided in
this Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any other remedies against any
Indemnifying Party. However, the procedures set forth in Section 4.03 shall be
the exclusive procedures governing any indemnity action brought under this
Agreement or otherwise and relating to a Third-Party Claim, except as otherwise
specifically provided in any of the Other Agreements.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
SECTION 5.01 NOTICES TO THIRD PARTIES. In addition to the
actions described in Section 5.02, the members of the Fresenius AG Group and the
members of the FWD Business Group shall cooperate to make all other filings and
give notice to and obtain consents from all third parties that may reasonably be
required to consummate the transactions contemplated by this Agreement and the
Other Agreements.
SECTION 5.02 LICENSES AND PERMITS. Each party hereto shall
cause the appropriate members of its Group to prepare and file with the
appropriate licensing and permitting authorities applications for the transfer
or issuance as may be necessary or advisable in connection with the Contribution
to its Group of all material governmental licenses and permits required for the
members of its Group to operate its Business after the Contribution. The members
of the Fresenius AG Group and the members of the FWD Business Group shall
cooperate and use all reasonable efforts to secure the transfer or issuance of
the licenses and permits.
SECTION 5.03 INTERCOMPANY AGREEMENTS. All contracts, licenses,
agreements, commitments or other arrangements, formal or informal, between any
member of the Fresenius AG Group, on the one hand, and any member of the FWD
Business Group (or any unit of the FWD Business), on the other hand, in
existence as of the Contribution Date, pursuant to which any member of either
Group provides to any member of the other Group services (including, without
limitation, management, administrative, legal, financial, accounting, data
processing, insurance, or technical support), or the use of any Assets of any
member of the other Group, or the secondment of any employee, or
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pursuant to which rights, privileges or benefits are afforded to members of
either Group as Affiliates of the other Group, shall terminate as of the close
of business on the day prior to the Contribution Date, except as specifically
provided herein or in the Other Agreements. From and after the Contribution
Date, no member of either Group shall have any rights under any such contract,
license, agreement, commitment or arrangement with any member of the other
Group, except as specifically provided herein or in the Other Agreements.
SECTION 5.04 GUARANTEE OBLIGATIONS. (a) Fresenius AG and FWD
Indemnitor shall cooperate, and shall cause their respective Groups to
cooperate, to terminate, or to cause a member of the FWD Business Group to be
substituted in all respects for any member of the Fresenius AG Group in respect
of, all obligations of any member of the Fresenius AG Group under any loan,
financing, lease, contract, or other obligation in existence as of the
Contribution Date pertaining to the FWD Business for which such member of the
Fresenius AG Group may be liable, as guarantor, original tenant, primary obligor
or otherwise. If such a termination or substitution is not effected by the
Contribution Date, (1) FWD Indemnitor shall indemnify and hold harmless the
Fresenius AG Indemnitees for any Indemnifiable Loss arising from or relating
thereto, and (2) without the prior written consent of the Chief Financial
Officer, Treasurer or any Assistant Treasurer of Fresenius AG, from and after
the Contribution Date, FWD Indemnitor shall not, and shall not permit any member
of the FWD Business Group or any of its Affiliates to, renew or extend the term
of, increase its obligations under, or transfer to a third party, any loan,
lease, contract or other obligation for which any member of the Fresenius AG
Group is or may be liable unless all obligations of the Fresenius AG Group with
respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to the Chief Financial Officer, Treasurer or
any Assistant Treasurer of Fresenius AG.
(b) Fresenius AG and FWD Indemnitor shall cooperate, and shall
cause their respective Groups to cooperate, to terminate, or to cause a member
of the Fresenius AG Group to be substituted in all respects for any member of
the FWD Business Group in respect of, all obligations of any member of the FWD
Business Group under any loan, financing, lease, contract or other obligation in
existence as of the Contribution Date pertaining to the Fresenius AG Business
for which such member of the FWD Business Group may be liable, as guarantor,
original tenant, primary obligor or otherwise. If such a termination or
substitution is not effected by the Contribution Date, (1) Fresenius AG shall
indemnify and hold harmless the FWD Business Indemnitees for any Indemnifiable
Loss arising from or relating thereto, and (2) without the prior written consent
of the Chief Financial Officer, Treasurer or any Assistant Treasurer of FWD
Indemnitor, from and after the Contribution Date, Fresenius AG shall not, and
shall not permit any member of the Fresenius AG Group to, renew or extend the
term of, increase its obligations under, or transfer to a third party, any loan,
lease, contract or other obligation for which any member of the FWD Business
Group is or may be liable unless all obligations of the FWD Business Group with
respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to the Chief Financial Officer, Treasurer or
any Assistant Treasurer of FWD Indemnitor.
SECTION 5.05 FURTHER ASSURANCES. In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be
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done, all things reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement including, without limitation, the
Asset transfers and debt and cash balances of the other party contemplated
thereby following the Contribution. Without limiting the foregoing, each party
hereto shall cooperate with the other party, and execute and deliver, or use
reasonable efforts to cause to be executed and delivered, all instruments, and
to make all filings with, and to obtain all consents, approvals or
authorizations of, any governmental or regulatory authority or any other Person
under any permit, license, agreement, indenture or other instrument, and take
all such other actions as such party may reasonably be requested to take by any
other party hereto from time to time, consistent with the terms of this
Agreement and the Other Agreements, in order to effectuate the provisions and
purposes of this Agreement. Without limiting the foregoing the parties will as
promptly as practicable (and in the case of this Agreement and the
Reorganization Agreement within one week after the signing hereof in Germany or
Switzerland) apply for any notarial or similar registrations with respect to the
transactions contemplated hereby in foreign jurisdictions.
ARTICLE VI
ACCESS TO INFORMATION
SECTION 6.01 PROVISION OF CORPORATE RECORDS. Prior to or as
promptly as practicable after the Contribution Date, Fresenius AG shall deliver
to GmbH all corporate books and records of the FWD Business Group in its
possession and copies of the relevant portions of all corporate books and
records of the Fresenius AG Group relating directly and primarily to the FWD
Business Assets, the FWD Business, or the Liabilities of the FWD Business Group,
including, in each case, all active agreements, active litigation files and
government filings. From and after the Contribution Date, all such books,
records and copies shall be the property of GmbH. Prior to or as promptly as
practicable after the Contribution Date, GmbH shall deliver to Fresenius AG all
corporate books and records of the Fresenius AG Group in its possession and
copies of the relevant portions of all corporate books and records of the
Fresenius AG Group relating directly and primarily to the Fresenius AG Assets,
the Fresenius AG Business, or the Liabilities of the Fresenius AG Group,
including, in each case, all active agreements, active litigation files and
government filings. From and after the Contribution Date, all such books,
records and copies shall be the property of Fresenius AG.
SECTION 6.02 ACCESS TO INFORMATION. From and after the
Contribution Date, each of Fresenius AG and GmbH shall afford to the other and
to the other's Representatives reasonable access and duplicating rights during
normal business hours to all Information within the possession or control of
such party's Group relating to the other party's Group's pre-Contribution
business, Assets or Liabilities or relating to or arising in connection with the
relationship between the Groups on or prior to the Contribution Date, insofar as
such access is reasonably required for a reasonable purpose, subject to the
provisions below regarding Privileged Information. Without limiting the
foregoing, Information may be requested under this Section 6.02 for audit,
accounting, claims, litigation and Tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations.
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In furtherance of the foregoing:
(a) Each party hereto acknowledges that: (1) Each of Fresenius
AG and GmbH (and the members of the Fresenius AG Group and the FWD
Business Group, respectively) has or may obtain Privileged Information;
(2) there are a number of Litigation Matters affecting each or both of
Fresenius AG and GmbH; (3) both Fresenius AG and GmbH have a common
legal interest in Litigation Matters, in the Privileged Information,
and in the preservation of the confidential status of the Privileged
Information, in each case relating to pre-Contribution business of the
Fresenius AG Group or the FWD Business Group or relating to or arising
in connection with the relationship between the Groups on or prior to
the Contribution Date; and (4) both Fresenius AG and GmbH intend that
the transactions contemplated hereby and by the Reorganization
Agreement and the Other Agreements and any transfer of Privileged
Information in connection therewith shall not operate as a waiver of
any potentially applicable privilege.
(b) Each of Fresenius AG and GmbH agrees, on behalf of itself
and each member of the Group of which it is a member, not to disclose
or otherwise waive any privilege attaching to any Privileged
Information relating to pre-Contribution business of the FWD Business
Group or the Fresenius AG Group, respectively, or relating to or
arising in connection with the relationship between the Groups on or
prior to the Contribution Date, without providing prompt written notice
to and obtaining the prior written consent of the other, which consent
shall not be unreasonably withheld and shall not be withheld if the
other party certifies that such disclosure is to be made in response to
a likely threat of suspension or debarment or similar action; provided,
however, that Fresenius AG and GmbH may make such disclosure or waiver
with respect to Privileged Information if such Privileged Information
relates solely to the pre-Contribution business of the Fresenius AG
Group in the case of Fresenius AG or the FWD Business Group in the case
of GmbH. In the event of a disagreement between any member of the
Fresenius AG Group and any member of the FWD Business Group concerning
the reasonableness of withholding such consent, no disclosure shall be
made prior to a resolution of such disagreement by a court of competent
jurisdiction.
(c) Upon any member of the Fresenius AG Group or any member of
the FWD Business Group receiving any subpoena or other compulsory
disclosure notice from a court, other governmental agency or otherwise
which requests disclosure of Privileged Information, in each case
relating to pre-Contribution business of the FWD Business Group or the
Fresenius AG Group, respectively, or relating to or arising in
connection with the relationship between the Groups on or prior to the
Contribution Date, the recipient of the notice shall promptly provide
to the other Group (following the notice provisions set forth herein) a
copy of such notice, the intended response, and all materials or
information relating to the other Group that might be disclosed. In the
event of a disagreement as to the intended response or disclosure,
unless and until the disagreement is resolved as provided in subsection
(b), the parties shall cooperate to assert all defenses to disclosure
claimed by either party's Group, and shall not disclose any disputed
documents or information until all legal defenses and claims of
privilege have been finally determined.
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<PAGE> 17
SECTION 6.03 PRODUCTION OF WITNESSES. Subject to Section 6.02,
after the Contribution Date, each of Fresenius AG and GmbH shall, and shall
cause each member of the Fresenius AG Group and the FWD Business Group,
respectively, to, make available to Fresenius AG or GmbH or any member of the
Fresenius AG Group or of the FWD Business Group, as the case may be, upon
written request, such Group's directors, officers, employees and agents as
witnesses to the extent that any such Person may reasonably be required in
connection with any Litigation Matters, administrative or other proceedings in
which the requesting party may from time to time be involved and relating to
pre-Contribution business of the Fresenius AG Group or the FWD Business Group or
relating to or in connection with the relationship between the Groups on or
prior to the Contribution Date.
SECTION 6.04 RETENTION OF RECORDS. Except as otherwise agreed
in writing, or as otherwise provided in the Other Agreements, each of Fresenius
AG and GmbH shall, and shall cause the members of the Group of which it is a
member to, retain all Information in such party's Group's possession or under
its control relating directly and primarily to the pre-Contribution business,
Assets or Liabilities of the other party's Group that is less than ten years old
until such Information is at least ten years old except that if, prior to the
expiration of such period, any member of either party's Group wishes to destroy
or dispose of any such Information that is at least three years old, prior to
destroying or disposing of any of such Information, (1) the party whose Group is
proposing to dispose of or destroy any such Information shall provide no less
than 30-days' prior written notice to the other party, specifying the
Information proposed to be destroyed or disposed of, and (2) if, prior to the
scheduled date for such destruction or disposal, the other party requests in
writing that any of the Information proposed to be destroyed or disposed of be
delivered to such other party, the party whose Group is proposing to dispose of
or destroy such Information promptly shall arrange for the delivery of the
requested Information to a location specified by, and at the expense of, the
requesting party.
SECTION 6.05 CONFIDENTIALITY. Subject to Section 6.02, which
shall govern Privileged Information, from and after the Contribution Date, each
of Fresenius AG and GmbH shall hold, and shall use its reasonable efforts to
cause its Affiliates and Representatives to hold, in strict confidence all
Information concerning the other party's Group obtained by it prior to the
Contribution Date or furnished to it by such other party's Group pursuant to
this Agreement or the Other Agreements and shall not release or disclose such
Information to any other Person, except its Affiliates and Representatives, who
shall be bound by the provisions of this Section 6.05, and each party shall be
responsible for a breach by any of its Affiliates or Representatives; provided,
however, that any member of the Fresenius AG Group or the FWD Business Group
may disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, in the opinion of such Person's counsel,
by other requirements of law, or (b) such party can show that such Information
was (1) available to such Person on a nonconfidential basis (other than from a
member of the other party's Group) prior to its disclosure by the other party's
Group, (2) in the public domain through no fault of such Person or (3) lawfully
acquired by such Person from another source after the time that it was
furnished to such Person by the other party's Group, and not acquired from such
source subject to any confidentiality obligation on the part of such source, or
on the part of the acquiror, known to the acquiror. Notwithstanding the
foregoing, each of Fresenius AG and GmbH shall be deemed to have satisfied its
obligations under this
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<PAGE> 18
Section 6.05 with respect to any Information (other than Privileged Information)
if it exercises the same care with regard to such Information as it takes to
preserve confidentiality for its own similar Information.
SECTION 6.06 COOPERATION WITH RESPECT TO GOVERNMENT REPORTS
AND FILINGS. Fresenius AG, on behalf of itself and each member of the Fresenius
AG Group, agrees to provide any member of the FWD Business Group, and GmbH, on
behalf of itself and each member of the FWD Business Group, agrees to provide
any member of the Fresenius AG Group, with such cooperation and Information as
may be reasonably requested by the other in connection with the preparation or
filing of any government report or other government filing contemplated by this
Agreement or in conducting any other government proceeding relating to
pre-Contribution business of the Fresenius AG Group or the FWD Business Group,
Assets or Liabilities of either Group or relating to or in connection with the
relationship between the Groups on or prior to the Contribution Date. Such
cooperation and Information shall include, without limitation, promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any government authority which relate to the Fresenius
AG Group, in the case of the FWD Business Group, or the FWD Business Group, in
the case of the Fresenius AG Group. Each party shall make its employees and
facilities available during normal business hours and on reasonable prior notice
to provide explanation of any documents or Information provided hereunder.
ARTICLE VII
NO REPRESENTATIONS OR WARRANTIES
SECTION 7.01 NO REPRESENTATIONS OR WARRANTIES. Fresenius AG
acknowledges that, prior to the date of this Agreement, it has had primary
responsibility for the operation and management of the FWD Business Assets. GmbH
understands and agrees that no member of the Fresenius AG Group is, in this
Agreement or in any other agreement or document, representing or warranting to
GmbH or any member of the FWD Business Group in any way as to the FWD Business
Assets, the FWD Business or the Liabilities of the FWD Business Group or as to
any consents or approvals required in connection with the consummation of the
transactions contemplated by this Agreement, it being agreed and understood that
GmbH and each member of the FWD Business Group shall take all of the FWD
Business Assets "as is, where is". GmbH and each member of the FWD Business
Group shall bear the economic and legal risk that conveyances of the FWD
Business Assets shall prove to be insufficient, that the title of any member of
the FWD Business Group to any FWD Business Assets, shall be other than good and
marketable and free from encumbrances or that results from the failure of GmbH
or any member of the FWD Business Group to obtain any consents or approvals
relating to the FWD Business required in connection with the consummation of the
transactions contemplated by this Agreement. The foregoing shall be without
prejudice to any rights under Section 4.02 or Section 5.05 of this Agreement.
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<PAGE> 19
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 USE OF FRESENIUS AG NAME AND MARK. Prior to
the Contribution Date, Fresenius AG shall enter into a license agreement
consistent with the terms set forth in Exhibit C hereto, providing for the use
of certain of Fresenius AG's names and marks.
SECTION 8.02 COMPLETE AGREEMENT. This Agreement, the exhibits
and schedules hereto and the agreements and other documents referred to herein
shall constitute the entire agreement between the parties hereto with respect to
the subject matter hereof (other than the Reorganization Agreement and the
schedules and exhibits thereto) and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
SECTION 8.03 EXPENSES. Fresenius AG shall bear all costs with
respect to the transactions contemplated hereby and by the Other Agreements,
except as otherwise specifically provided in the Reorganization Agreement and
the Other Agreements.
SECTION 8.04 JURISDICTION AND FORUM. (a) The parties hereto
agree that the appropriate forum for any disputes between any of the parties
hereto arising out of this Agreement or the transactions contemplated hereby
shall be any state or federal court in the State of New York or the State of
Delaware provided that the foregoing shall not limit the rights of any person to
obtain execution of judgment in any other jurisdiction. The parties hereto
further agree, to the extent permitted by law, that final and unappealable
judgment against any of them in any action or proceeding contemplated above
shall be conclusive and may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified or exemplified
copy of which shall be conclusive evidence of the fact and amount of such
judgment.
(b) By the execution and delivery of this Agreement, each of
the parties hereto (i) irrevocably designates and appoints The Corporation Trust
Company ("CTC-NY") care of CT Corporation System, at 1633 Broadway, 23rd floor,
in the City of New York, County of New York, State of New York, 10019, or The
Corporation Trust Company ("CTC-DE") care of Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware, 19801, as its authorized agent upon which
process may be served in any action or proceeding arising out of or relating to
this Agreement, (ii) submits to the personal jurisdiction of any state or
federal court in the State of New York or the State of Delaware in any such
action or proceeding, and (iii) agrees that service of process upon CTC-NY or
upon CTC-DE shall be deemed in every respect effective service of process upon
such person in any such action or proceeding. Each of the parties hereto further
agrees to take any and all action, including the execution and filing of any and
all such documents and instruments, as may be necessary to continue such
designation and appointment of CTC-NY or CTC-DE in full force and effect so long
as this Agreement shall be in effect. The foregoing shall not limit the rights
of any party to serve process in any other manner permitted by law.
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<PAGE> 20
(c) To the extent that either of the parties hereto has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, such person hereby irrevocably waives such immunity in respect
of its obligations with respect to this Agreement.
SECTION 8.05 NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to Fresenius AG or any member of the Fresenius AG Group:
Fresenius AG
Borkenberg 14
61440 Oberursel
61343 Bad Homburg
Germany
Attention: Mr. Udo Werle
Fax: 011-49-6171-60-2104
with a copy to:
O'Melveny & Myers
Citicorp Center
153 East 53rd Street
New York, NY 10022-4611
Attention: Dr. Ulrich Wagner
Fax: (212) 326-2061
If to GmbH or any member of the FWD Business Group
GmbH
c/o Fresenius AG
Borkenberg 14
61440 Oberursel
61343 Bad Homburg
Germany
Attention: Mr. Udo Werle
Fax: 011-49-6171-60-2104
with a copy to:
W. R. Grace & Co.-Conn.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Secretary
Fax: (407) 362-1635
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<PAGE> 21
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.
Fax: (212) 403-2000
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 8.05.
SECTION 8.06 AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented only by a written agreement signed by all of
the parties hereto.
SECTION 8.07 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY
BENEFICIARIES. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
and obligations hereunder shall be assigned by any party hereto without the
prior written consent of the other party. Except for the provisions of Sections
4.02 and 4.03 relating to indemnities, which are also for the benefit of the
Indemnitees, this Agreement is solely for the benefit of the parties hereto and
their Subsidiaries and Affiliates and is not intended to confer upon any other
Persons any rights or remedies hereunder.
SECTION 8.08 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 8.09 INTERPRETATION. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties hereto and shall not in any way affect the
meaning or interpretation of this Agreement.
SECTION 8.10 SEVERABILITY. If any provision of this Agreement
or the application thereof to any person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.
SECTION 8.11 REFERENCES; CONSTRUCTION. References to any
"Article," "Exhibit," "Schedule" or "Section," without more, are to Articles,
Exhibits, Schedules and Sections to or of this Agreement. Unless otherwise
expressly stated, clauses beginning with the term "including" set forth examples
only and in no way limit the generality of the matters thus exemplified.
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<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
FRESENIUS AG
By: /s/ Gerd Krick
-------------------------------
Name:
Title:
STERIL PHARMA GMBH
By: /s/ Gerd Krick
-------------------------------
Name:
Title:
W. R. GRACE & CO.-CONN.
By: /s/ Albert J. Costello
-------------------------------
Name:
Title:
<PAGE> 23
EXHIBIT A
TAX INDEMNIFICATION AGREEMENT
TAX INDEMNIFICATION AGREEMENT (the "Agreement"), dated
February , 1996, among FRESENIUS AG, an Aktiengesellschaft organized under the
laws of the Federal Republic of Germany ("Fresenius AG"), Newco and W.R. Grace
& Co.-Conn., a Connecticut corporation ("Grace-Conn.").
RECITALS
A. WHEREAS Fresenius AG has organized Newco for the purposes
of effecting the transactions described herein and in the Agreement and Plan of
Reorganization dated February 4, 1996 (the "Reorganization Agreement");
B. WHEREAS, as part of those transactions, Fresenius AG will
have made the Contribution, as such term is defined in the Reorganization
Agreement;
C. WHEREAS, as part of such transactions, W.R. Grace & Co., a
New York corporation ("Grace") will have effected the Recapitalization and the
Distribution, as such terms are defined in the Reorganization Agreement;
D. WHEREAS, as part of such transactions, the Fresenius USA
Merger and the Grace Merger, as such terms are defined in the Reorganization
Agreement, will have occurred; and
E. WHEREAS the parties hereto have determined that it is
necessary and desirable to set forth their agreement with regard to the
liability for Taxes (as such term is defined in that certain Tax Sharing and
Indemnification Agreement dated as of the Closing Date, between Grace and
Grace-Conn. (the "Tax Sharing Agreement")) relating to the Contribution and the
Fresenius USA Merger;
NOW THEREFORE, in consideration of the premises, and of the
covenants and agreements set forth herein and other good and valuable
consideration, the parties agree as follows:
Section 1. Definitions. Capitalized terms not otherwise
defined herein or by reference to a particular document referred to herein
shall have the meaning ascribed to such terms in the Tax Sharing Agreement.
Section 2. Indemnification. Subject to the other provisions
of this Agreement, Fresenius AG agrees to indemnify, defend and to hold
harmless Grace, Grace-Conn., the Grace-Conn. Indemnities, Newco and Newco's
subsidiaries from and against any Taxes, liability and Indemnifiable Losses,
(1) resulting from the Contribution or the Fresenius USA Merger or (2) arising
out of, relating to or associated with any business or assets of Fresenius AG
or its subsidiaries other than the FWD Business Assets or FWD Business ("Other
Business"). Without limiting the foregoing, in the event that a Fresenius AG
subsidiary operates both an FWD Business and an Other Business ("Dual
Subsidiary"), Fresenius AG will indemnify and hold harmless Newco and its
subsidiaries from and against any Tax liability and Indemnifiable Losses
arising from or relating to any Other Business Tax Items. "Other Business Tax
Items" shall mean a Tax Item attributable to
<PAGE> 24
Fresenius AG and its subsidiaries other than a Tax Item solely attributable to
the FWD Business. "Tax Item" means any item of income, gain, loss, deduction,
credit, provisions for reserves, recapture of credit or any other item which
increases or decreases taxes paid or payable. Fresenius AG will advance to
Newco and/or any Dual Subsidiary any Taxes attributable to Other Business Tax
Items in advance of the due date for the payment of such Taxes in respect of
any Dual Subsidiary and pay the Tax due with respect to such Tax Return. Newco
will cause to be filed any Tax Returns in respect of any Dual Subsidiary due
after the Closing Date. Fresenius AG shall not be responsible for, and shall
not indemnify, defend or hold harmless Newco or its subsidiaries from, any
Taxes for which any of the corporations that are the subject of the
Contribution or the Fresenius USA Merger are liable in connection with any of
the operations of the FWD Business (and not Other Business Tax Items), whether
occurring before or after the date of the Contribution or the Fresenius US
Merger. Disputes with respect to the calculation of Other Business Tax Items
shall be resolved in the manner set forth in Section 5.04 of the Tax Sharing
Agreement.
Section 3. Notice of Indemnity. Whenever Newco or
Grace-Conn., or any of their respective subsidiaries (hereinafter an
"Indemnitee"), becomes aware of the existence of an issue which could cause
Fresenius AG (hereinafter the "Indemnitor") to have any liability for
indemnification hereunder ("Indemnity Issue"), the Indemnitee shall promptly
give notice to the Indemnitor of such Indemnity Issue. The failure of any
Indemnity to give such notice shall not relieve the Indemnitor of its
obligations under this Agreement except to the extent the Indemnitor or any of
its affiliates is actually materially prejudiced by such failure to give
notice. The Indemnitor and its representatives, at the Indemnitor's expense,
shall be entitled to participate (i) in all conferences, meetings or
proceedings with any taxing authority, the subject matter of which is or
includes an Indemnity Issue and (ii) in all appearances before any court, the
subject matter of which is or includes an Indemnity Issue. The party who has
the responsibility for filing the Tax Return with respect to which there in an
increased Tax liability as a result of an Indemnity Issue (the "Responsible
Party") shall have the right to decide as between the parties how such matter
is to be dealt with and finally resolved with the appropriate taxing authority
and shall control all audits and similar proceedings. The Responsible Party
agrees to cooperate in the settlement of any Indemnity Issue with the other
party and to take such other party's interests into account. If the Indemnitor
is not the Responsible Party, (A) such cooperation may include permitting the
Indemnitor, at the Indemni-tor's sole expense, to litigate or otherwise resolve
any Indemnity Issue, and (B) whenever more than one action is reasonably
available in connection with any Indemnity Issue, the Responsible Party agrees
to take whatever action would mitigate the Indemnitor's liability hereunder,
after consultation with the Indemnitor. Notwithstanding the foregoing, nothing
herein shall require or obligate the Indemnitor to contest any Indemnity Issue.
Section 4. Expenses. Unless otherwise expressly provided in
this Agreement, each party shall bear any and all expenses that arise from
their respective obligations under this Agreement.
Section 5. Entire Agreement. This Agreement, together with
the Tax Sharing Agreement, constitutes the entire agreement of the parties
concerning the subject matter hereof and supersedes all other agreements,
whether or not written, in respect of any indemnification obligation of
Fresenius AG to Newco or Grace-Conn. or any of their respective subsidiaries.
This Agreement may not be amended except in writing, signed by
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<PAGE> 25
the parties hereto. Anything in this Agreement or the Distribution Agreement
to the contrary notwithstanding, in the event and to the extent that there
shall be a conflict between the provisions of this Agreement and the
Distribution Agreement, the provisions of this Agreement shall control.
Section 6. Notices.
To Grace-Conn. or any member of the Grace-Conn. Group:
Grace-Conn.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Secretary
Fax: (407) 362-1635
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.
Fax: (212) 403-2000
To Grace or any member of the NMC Group:
National Medical Care, Inc.
1601 Trapelo Road
Reservoir Place
Waltham, Massachusetts 02154
Attention: General Counsel
Section 7. Term. This Agreement shall commence on the date
of execution indicated below and shall continue in effect until otherwise
agreed to in writing by Grace-Conn. and Fresenius AG, or their successors.
Section 8. Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without in-
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<PAGE> 26
validating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Without prejudice to
any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach
of the provisions of this Agreement and agrees that the obligations of the
parties hereunder shall be specifically enforceable.
Section 9. Governing Law. This Agreement shall be governed
by the laws of New York.
Section 10. Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part or to affect the meaning or interpretation of this
Agreement.
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<PAGE> 27
In WITNESS WHEREOF, the parties have executed this Agreement
as of the day of , 1996.
FRESENIUS AG
By:
-----------------------
Name:
Title:
NEWCO
By:
-----------------------
Name:
Title:
W.R. GRACE & CO.-CONN.
By:
-----------------------
Name:
Title:
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<PAGE> 28
EXHIBIT B
PROPOSED TERMS OF LEASE
Property Land and buildings located in Germany to the
extent used in FWD's operations.
Term 30 years.
Rental The equivalent of $12 million per year,
exclusive of maintenance and other costs,
providing for adjustment in accordance with
German commercial practices for similar real
estate.
<PAGE> 29
EXHIBIT C
TERMS OF LICENSE FOR NAME AND MARK
Worldwide exclusive use of Fresenius name and trademarks in the Newco corporate
name and in connection with all aspects of the business of supplying renal
care-related goods or services (the "Renal Business"), including laboratories.
The license will be royalty-free and perpetual, subject to minimal trademark
limitations.
North American exclusive use of Fresenius name and trademarks in connection with
all aspects of other businesses of Newco in health care goods or services,
provided that such license shall apply to a particular product or service only
if, at the time of the first proposed commercial use by Newco in connection with
a product or service, such product or service does not compete with a North
American business of Fresenius AG then using the Fresenius name (i.e., first
commercial use, existing Fresenius businesses to be grandfathered). Outside
North America, Newco may obtain a license to use the Fresenius name and
trademarks in connection with health care goods and services with the consent of
Fresenius AG which will not be unreasonably withheld.
Newco to have a right of first negotiation/first refusal from Fresenius AG and
Grace-Conn. on all new technology with respect to application in or in material
special relationship to the Renal Business and the right to use the Fresenius
name and trademark in respect of goods or services manufactured, sold or
provided under such technology.
The parties will negotiate in good faith with respect to commercially reasonable
licenses of the Fresenius name and trademarks beyond the foregoing.
Fresenius AG and Grace-Conn. will each give an appropriate 10-year covenant not
to compete with Newco in the Renal Business.
Outside North America, Newco will do business under the name Fresenius Medical
Care. In North America, Newco will do business initially under the name
Fresenius/NMC.
