SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 30, 1997
Mallinckrodt Inc.
(Exact name of registrant as specified in its charter)
New York 1-483 36-1263901
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7733 Forsyth Boulevard, St. Louis, MO 63105-1820
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, (314) 854-5200
including area code
<PAGE>
Item 2. Acquisition or Disposition of Assets.
------------------------------------
On June 30, 1997, Mallinckrodt Inc. ("Mallinckrodt") closed the
sale of its animal health business to Schering-Plough Corporation
("Schering-Plough"). In this disposition, Mallinckrodt sold the
stock of its existing foreign animal health subsidiaries and the
stock of a domestic corporation formed to hold the United States
animal health assets and liabilities being transferred. Mallinckrodt
retained certain real property, certain environmental liabilities for
transferred properties, and certain other liabilities, including
liabilities for income taxes and certain employee benefits, including
post-retirement benefits. The consideration received for the sale
was approximately $400 million in cash based on estimates of debt and
working capital as of June 30, 1997, and is subject to further
adjustment based on a post-closing audit of final debt and working
capital amounts, and the agreement of Schering-Plough to assume
certain lease obligations, which agreement remains subject to third
party consents. The Company recorded, as of March 31, 1997, an
estimated net after tax loss of $275 million on the transaction. The
consideration for the sale was determined by arms-length negotiations
between the parties. There does not exist any material relationship
between Schering-Plough, on the one hand, and Mallinckrodt or any of
its affiliates, any director or officer of Mallinckrodt, or any
associate of any such director or officer, on the other hand.
Item 7. Financial Statement and Exhibits.
--------------------------------
(b) Pro Forma Financial Information.
The Mallinckrodt Inc. Form 10-Q for the quarterly
period ended March 31, 1997 had the operating
results and the estimated loss on disposal of the
animal health segment reported as discontinued
operations and, accordingly, prior year results
were restated.
(c) Exhibits.
Number Description
------ -----------
2.1 Stock Purchase Agreement, dated
May 19, 1997, among Mallinckrodt Inc.,
Mallinckrodt Veterinary, Inc.,
Mallinckrodt Veterinary International,
Inc. and Schering-Plough Corporation.
2.2 Amendment No. 1, dated June 30, 1997,
to the Stock Purchase Agreement among
Mallinckrodt Inc., Mallinckrodt
Veterinary, Inc., Mallinckrodt
Veterinary International, Inc. and
Schering-Plough Corporation, which
amendment was also executed for
certain purposes by Mallinckrodt
Veterinary Holdings, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: July 14, 1997 MALLINCKRODT INC.
By--------------------------------
Name: Roger A. Keller
Title: Vice President, Secretary
and General Counsel
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT is made as of May 19, 1997, by and
among MALLINCKRODT INC., a New York corporation ("MI"), and
MALLINCKRODT VETERINARY, INC., a Delaware corporation and a wholly
owned subsidiary of MI ("MVI") and MALLINCKRODT VETERINARY
INTERNATIONAL, INC., a Delaware corporation ("MVII") (together, the
"Sellers") and SCHERING-PLOUGH CORPORATION, a New Jersey corporation,
or its designated affiliates (the "Buyer").
WHEREAS, MI owns all of the outstanding capital stock of MVII
and MVI owns all of the outstanding capital stock of Mallinckrodt
Veterinary Holdings, Inc., a Delaware corporation ("New MVI");
WHEREAS, MI desires to cause MVI and MVII to sell all of the
outstanding capital stock of each Veterinary Subsidiary owned by it,
and MVI desires to sell all of the outstanding capital stock of New
MVI, and Buyer desires to purchase all of the outstanding capital
stock of each Veterinary Subsidiary owned by MVI and MVII and of New
MVI, on the terms and conditions contained in this Agreement;
WHEREAS, MI, MVI, MVII and New MVI and their appropriate
affiliates are or have been engaged in the Animal Health Business (as
defined below); and
WHEREAS, MI and MVI have completed as of the date hereof or will
have completed as of the Closing Date all transfers of stock and
assets and have taken all other actions necessary for MVII and New
MVI to collectively own or control the entire Animal Health Business.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants, agreements, and conditions contained in this
Agreement, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
1.1 Capitalized Terms. The following capitalized terms, when
-----------------
used in this Agreement and not otherwise defined, shall have the
following indicated meanings:
1.1.1 Accounting Firm shall have the meaning set forth
---------------
in Section 2.3.3.
1.1.2 Acquisition Transaction shall have the meaning set
-----------------------
forth in Section 5.1.6.
1.1.3 Adjusted Purchase Price shall mean an amount equal
-----------------------
to the Purchase Price, and (A) either (i) increased by the Working
Capital Adjustment, if the Net Working Capital as of the Closing
Date exceeds the Working Capital Baseline, or (ii) decreased by the
Working Capital Adjustment, if the Working Capital Baseline exceeds
the Net Working Capital as of the Closing Date, and (B) either (i)
decreased by the Debt Adjustment, if the Debt as of the Closing Date
exceeds the Debt Baseline, or (ii) increased by the Debt Adjustment
if the Debt Baseline exceeds the Debt as of the Closing Date, and (c)
either (i) decreased by the PST Lease Liability Adjustment if the PST
Lease Liability as of the Closing Date exceeds the PST Lease
Liability Baseline or (ii) increased by the PST Lease Liability
Adjustment if the PST Lease Baseline exceeds the PST Lease Liability
as of the Closing Date.
1.1.4 The term "affiliate" as used herein shall mean any
firm, person, corporation or other entity controlling, controlled by
or under common control with any firm, person, corporation or entity.
1.1.5 Agreement shall mean this Agreement, the
---------
Disclosure Schedule and all exhibits, schedules, annexes, and
appendices hereto.
1.1.6 Animal Health Business shall mean all of the
----------------------
worldwide business of discovering, developing, manufacturing,
marketing, selling and distributing animal health products as
conducted by the Companies, Sellers and their affiliates.
1.1.7 Annual Balance Sheet shall mean the audited
--------------------
combined balance sheet of the Companies (and any predecessor in
interest) as of June 30, 1996, and the accompanying notes to such
balance sheet, which are contained in the Annual Financial
Statements.
1.1.8 Annual Financial Statements shall mean the Annual
---------------------------
Balance Sheet, and the audited combined statement of operations and
audited combined statement of cash flows of the Companies (and any
predecessor in interest) for the fiscal year ended June 30, 1996, and
the accompanying notes to such financial statements.
1.1.9 Australasian Business shall mean the assets of and
---------------------
business activities relating to the Animal Health Business conducted
by the Sellers through any of the Companies, as of any relevant date
hereunder, in the continent of Asia (excluding Russia) and in
countries on the western Pacific rim, including Australia and New
Zealand.
1.1.10 Baseline Study shall have the meaning set forth in
--------------
Section 5.4.
1.1.11 Business Personnel shall have the meaning set
------------------
forth in Section 4.1.17.
1.1.12 Buyer Pension Plan shall have the meaning set
------------------
forth in Section 10.2.2.
1.1.13 Buyer Profit-Sharing Plan shall have the meaning
-------------------------
set forth in Section 10.2.3.
1.1.14 Buyer Savings Plan shall have the meaning set
------------------
forth in Section 10.2.3.
1.1.15 Buyer Welfare Plans shall have the meaning set
-------------------
forth in Section 10.2.4.
1.1.16 Closing shall mean the closing described in
-------
Article III.
1.1.17 Closing Date shall mean the date upon which the
------------
transactions contemplated by this Agreement are consummated.
1.1.18 Code shall mean the Internal Revenue Code of 1986,
----
as amended.
1.1.19 Commission Agent shall have the meaning set forth
----------------
in Section 4.1.20.
1.1.20 Companies shall mean MVI, MVII, New MVI, and the
---------
Veterinary Subsidiaries, and Company shall mean any one of the
Companies.
1.1.21 Competitive Business shall have the meaning set
--------------------
forth in Section 10.9.
1.1.22 Confidentiality Agreement shall mean the letter
-------------------------
dated October 1, 1996, between J. P. Morgan Securities Inc., as agent
for MI, and the Buyer.
1.1.23 Continuing Employees shall have the meaning set
--------------------
forth in Section 10.1.1.
1.1.24 Contract Base shall have the meaning set forth in
-------------
Section 6.1.8.
1.1.25 Damages shall have the meaning set forth in
-------
Section 8.1.1.
1.1.26 Debt shall mean, as of any date, the indebtedness
----
of New MVI and the Veterinary Subsidiaries which would be classified
as a liability under the headings "Short-Term Debt", "Current
Maturities of Long-Term Debt" and "Long-Term Debt less Current
Maturities" on a combined consolidated balance sheet of New MVI and
the Veterinary Subsidiaries prepared in a manner consistent with the
practices and methodologies used in preparing the Annual Balance
Sheet.
1.1.27 Debt Adjustment shall mean, as of any date, an
---------------
amount equal to either (i) (if the Debt at such time exceeds the Debt
Baseline) the amount by which the Debt at such time exceeds the Debt
Baseline or (ii) (if the Debt Baseline exceeds the Debt at such time)
the amount by which the Debt Baseline exceeds the Debt at such time;
provided, however, that if the Debt at such time equals the Debt
Baseline, the Debt Adjustment shall be zero.
1.1.28 Debt Baseline shall mean the Debt of the Companies
-------------
on the Annual Balance Sheet, which was an amount equal to Twenty-Four
Million Eight Hundred Twenty-Two Thousand Dollars ($24,822,000).
1.1.29 Defined Contribution Asset Transfer Date shall
----------------------------------------
have the meaning set forth in Section 10.2.3.
1.1.30 Designated Transfers shall have the meaning set
--------------------
forth in Section 5.1.2.
1.1.31 Disclosure Schedule shall mean that compilation of
-------------------
information, schedules, financial statements and other documents,
materials and information assembled and prepared by the Sellers as
required by the terms hereof and delivered by the Sellers to the
Buyer as part of this Agreement.
1.1.32 Election Period shall have the meaning set forth
---------------
in Section 10.2.3.
1.1.33 Environment shall mean the ocean, natural
-----------
resources (including flora and fauna), soil, surface water, ground
water, any present or potential drinking water supply, subsurface
strata or the ambient air.
1.1.34 Environmental Action shall have the meaning set
--------------------
forth in Section 8.6.4.
1.1.35 Environmental Indemnity Matters shall have the
-------------------------------
meaning set forth in Section 8.6.4.
1.1.36 Environmental Liability shall mean any Damages
-----------------------
resulting from any claim or requirement to take corrective action
arising from or incurred in connection with (i) any violation or
alleged violation of any Environmental Requirement by any of the
Companies and any predecessor companies, whether now owned or
previously divested by Seller or their affiliates (whether such
violation or alleged violation is known or unknown or involves
property owned or leased by the Sellers or the Companies or any
predecessor company) or (ii) any claim for any personal injury or
property damage resulting from exposure to any Hazardous Substance
used, stored, handled, spilled, discharged or disposed of in the
course of operating the business of the Companies and any predecessor
companies, whether now owned or previously divested by Sellers or
their affiliates.
1.1.37 Environmental Requirements shall mean all laws,
--------------------------
rules, regulations, orders, decrees, judgments, permits and licenses
relating to health, safety and the Environment or the generation,
handling, disposal, transportation, release or threatened release of
Hazardous Substances, including but not limited to the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., as amended
("FWPCA"), the Safe Drinking Water Act, 42 U.S.C. Section 300 et
seq., as amended ("SDWA"), the Clean Air Act, 42 U.S.C. Section 7401
et seq., as amended ("CAA"), the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 et seq., as amended ("RCRA"), the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., as amended
("TSCA"), the Occupational Safety and Health Act, 29 U.S.C. Section
651 et seq., as amended ("OSHA"), the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, as
amended ("CERCLA"), the Emergency Planning and Community
Right-To-Know Act, 42 U.S.C. Section 11001, as amended ("EPCRA") and
the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.A.
Sections 136 to 136y, as amended ("FIFRA") and the substantive
equivalent of any of the foregoing in any state or foreign
jurisdiction, including any laws, rules, regulations, orders,
decrees, judgments, permits and licenses governing the disclosure or
notice of the presence or release of Hazardous Substances or of
underground storage tanks.
1.1.38 ERISA shall mean the Employee Retirement Income
-----
Security Act of 1974, as amended.
1.1.39 Estimated Adjusted Purchase Price shall mean an
---------------------------------
amount equal to the Purchase Price, and (A) either (i) increased by
the Estimated Working Capital Adjustment, if the Net Working Capital
as of the Closing Date as estimated by the Sellers exceeds the
Working Capital Baseline, or (ii) decreased by the Estimated Working
Capital Adjustment, if the Working Capital Baseline exceeds the Net
Working Capital as of the Closing Date as estimated by the Sellers,
and (B) either (i) decreased by the Estimated Debt Adjustment if the
Debt as of the Closing Date as estimated by the Sellers exceeds the
Debt Baseline, or (ii) increased by the Estimated Debt Adjustment if
the Debt Baseline exceeds the Debt as of the Closing Date as
estimated by the Sellers and (c) either (i) decreased by the
Estimated PST Lease Liability Adjustment if the PST Lease Liability
as of the Closing Date as estimated by the Sellers exceeds the PST
Lease Liability Baseline, or (ii) increased by the estimated PST
Lease Liability Adjustment if the PST Lease Liability Baseline
exceeds the PST Lease Liability as of the Closing Date as estimated
by the Sellers.
1.1.40 Estimated Debt Adjustment shall mean the Debt
-------------------------
Adjustment determined based upon the Sellers' estimate of the balance
of Debt as of the Closing Date, as delivered to the Buyer by the
Sellers pursuant to Section 2.3.1.
1.1.41 Estimated PST Lease Liability Adjustment shall
----------------------------------------
mean the PST Lease Liability Adjustment determined based upon the
Sellers' estimate of the balance of the PST Lease Liability as of the
Closing Date, as delivered to the Buyer by the Sellers pursuant to
Section 2.3.1.
1.1.42 Estimated Working Capital Adjustment shall mean
------------------------------------
the Working Capital Adjustment determined based upon the Sellers'
estimate of the balances of Total Current Assets and Total Current
Liabilities as of the Closing Date, as delivered to the Buyer by the
Sellers pursuant to Section 2.3.1.
1.1.43 European Business shall mean the assets of and
-----------------
business activities relating to the Animal Health Business conducted
by the Sellers through any of the Companies, as of any relevant date
hereunder, in Europe (excluding Eastern European countries and
Russia).
1.1.44 Excluded Assets shall have the meaning set forth
---------------
in Section 2.1.2.
1.1.45 Excluded Assets Reorganization shall have the
------------------------------
meaning set forth in Section 2.1.2.
1.1.46 Excluded Liabilities shall have the meaning set
--------------------
forth in Section 2.1.3.
1.1.47 Excluded Liabilities Reorganization shall have the
-----------------------------------
meaning set forth in Section 2.1.3.
1.1.48 FCPA shall have the meaning set forth in Section
----
4.1.12.
1.1.49 Final Report shall have the meaning set forth in
------------
Section 5.4.
1.1.50 Financial Statements shall mean the Annual
--------------------
Financial Statements and the audited combined balance sheets of the
Companies as of June 30, 1995, and 1994, and the audited combined
statements of operations and audited combined statements of cash
flows of the Companies for the fiscal years ended June 30, 1995 and
1994, and the accompanying notes to such financial statements as set
forth on Schedule 1.1.50.
1.1.51 Fiscal Year 1996 shall mean the twelve months
----------------
ended June 30, 1996.
1.1.52 FlexSecurity Plan shall have the meaning set forth
-----------------
in Section 10.2.4.
1.1.53 GAAP shall mean generally accepted accounting
----
principles as in effect in the United States of America at the time
of the preparation of the financial statements with respect to which
such term is used.
1.1.54 Governmental Authority shall mean any United
----------------------
States (federal, state or local) or non-United States government or
governmental agency, department, commission, authority, court or
tribunal.
1.1.55 Hazardous Substances shall mean any materials
--------------------
defined as hazardous materials, substances or waste in any way by
Environmental Requirements as of the Closing Date, including without
limitation: (i) any "hazardous substance" or "Pollutant or
Contaminant" (as defined in Sections 101(14), (33) of CERCLA or the
regulations designated pursuant to Section 102 of CERCLA, 42 U.S.C.
Section 9602 and found at 40 C.F.R. Part 302), and any element,
compound, mixture, solution, or substance designated pursuant to
Section 102 of CERCLA and as regulated by CERCLA, (ii) any substance
designated pursuant to Section 311(b)(2)(A) of FWPCA and as regulated
by FWPCA, (iii) any hazardous waste having the characteristics
identified under or listed pursuant to Section 3001 of RCRA, 42
U.S.C. Sections 6901, 6921, (iv) any substance containing petroleum,
as defined in Section 9001(8) of RCRA, 42 U.S.C. Section 6991(8) or
40 C.F.R. Part 280 and as regulated by RCRA, (v) any toxic pollutant
listed under Section 307(a) of the FWPCA, 33 U.S.C. Section 1317(a)
and as regulated by FWPCA, (vi) any hazardous air pollutant listed
under Section 112 of the Clean Air Act, 42 U.S.C. Sections 7401,
7412, as amended and as regulated by the Clean Air Act, (vii) any
imminently hazardous chemical substance or mixture with respect to
which action has been taken pursuant to Section 7 of TCSA, 15 U.S.C.
Sections 2601, 2606, as amended and as regulated by TSCA, or (viii)
any other hazardous, pathogenic or toxic materials, contaminants,
substances or wastes, including asbestos, pesticides and
polychlorinated biphenyls, regulated by applicable Environmental
Requirements and the substantive equivalents of any of the foregoing
in any foreign jurisdiction.
1.1.56 HSR Act shall mean the Hart-Scott-Rodino Antitrust
------
Improvements Act of 1976, as amended.
1.1.57 Indemnifiable Remediation Standard shall have the
----------------------------------
meaning set forth in Section 8.6.4.
1.1.58 Indemnified Party shall have the meaning set forth
-----------------
in Section 8.2.1.
1.1.59 Indemnifying Party shall have the meaning set
------------------
forth in Section 8.2.1.
1.1.60 Intellectual Property shall have the meaning set
---------------------
forth in Section 4.1.21.
1.1.61 International Employee shall have the meaning set
----------------------
forth in Section 10.3.
1.1.62 Key Executives shall have the meaning set forth in
--------------
Section 10.1.3.
1.1.63 Latin American Business shall mean the assets of
-----------------------
and business activities relating to the Animal Health Business
conducted by the Sellers through any of the Companies, as of any
relevant date hereunder, in South America, Central America (including
Mexico) and the Caribbean region.
1.1.64 Major Business shall mean each of the following:
--------------
the Australasian Business (considered as a whole), the European
Business (considered as a whole), the Latin American Business
(considered as a whole) and the United States Business (considered as
a whole).
1.1.65 Net Working Capital shall mean, as of any date, an
-------------------
amount equal to the difference between (i) the amount of Total
Current Assets on such date, and (ii) the amount of Total Current
Liabilities on such date.
1.1.66 Non-Competition Period shall have the meaning set
----------------------
forth in Section 10.9.
1.1.67 Non-Domestic Company shall mean (i) any Company
--------------------
that is not a United States Company or (ii) a foreign branch of a
United States Company.
1.1.68 PST Lease shall mean that certain lease dated as
---------
of March 7, 1990, by and between MVI (then known as Pitman-Moore,
Inc.) and The First National Bank of Boston (which has been succeeded
by Merchants National Bank of Terre Haute), as amended, relating to
the PST facility in Terre Haute, Indiana, the obligations and
liabilities of the Companies thereto being referenced in the notes to
the Annual Balance Sheet.
1.1.69 PST Lease Liability shall mean, as of any date,
-------------------
the total of the remaining principal payments and equity return
payments yet to be made under the PST Lease. Such payments are set
forth on Schedule 1.1.69.
1.1.70 PST Lease Liability Adjustment shall mean, as of
------------------------------
any date, an amount equal to either (i) (if the PST Lease Liability
at such time exceeds the PST Lease Liability Baseline) the amount by
which the PST Lease Liability at such time exceeds the PST Lease
Liability Baseline or (ii) (if the PST Lease Liability Baseline
exceeds the PST Lease Liability at such time) the amount by which the
PST Lease Liability Baseline Exceeds the PST Lease Liability at such
time; provided, however, that if the PST Lease Liability at such time
equals the PST Lease Liability Baseline, the PST Lease Liability
Adjustment shall be zero.
1.1.71 PST Lease Liability Baseline shall mean the PST
----------------------------
Lease Liability as of March 7, 1997 which was an amount equal to
$35,591,753 of remaining principal payments and $14,168,431 of
remaining equity return payments, for a total of $49,760,184.
1.1.72 Permits shall have the meaning set forth in
-------
Section 4.1.13.
1.1.73 Perpetual Representations shall have the meaning
-------------------------
set forth in Section 8.5.1.
1.1.74 Post-Closing Claim shall have the meaning set
------------------
forth in Section 8.2.1.
1.1.75 Preliminary Closing Statement shall have the
-----------------------------
meaning set forth in Section 2.3.2.
1.1.76 Product Registrations shall have the meaning set
---------------------
forth in Section 4.1.27.
1.1.77 Purchase Price shall mean an amount equal to Four
--------------
Hundred Five Million Dollars ($405,000,000).
1.1.78 Reimbursement Accounts shall have the meaning set
----------------------
forth in Section 10.2.4.
1.1.79 Reorganization shall mean the actions (if any)
--------------
necessary (i) for the transfer from MVI to New MVI of all assets used
by MVI in connection with the Animal Health Business, other than any
Excluded Assets, and other than shares of capital stock and other
equity interests owned by MVI in Veterinary Subsidiaries which are
Non-Domestic Companies, all of which shares and equity interests are
to be sold by MVI to the Buyer hereunder, and for the assumption by
New MVI of all obligations and liabilities of MVI, other than any
Excluded Liabilities or (ii) in connection with the Section 338
Elections; provided that, it is understood and agreed that the
Sellers shall not be required prior to the Closing to complete the
process of updating product labels to reflect the transfer of product
registrations from MVI to New MVI, or to take any other actions not
necessary to transfer all such assets to New MVI if such actions will
need to be taken again after the Closing by the Buyer in connection
with its purchase of the Shares or its acquisition of control of the
Animal Health Business pursuant to this Agreement.
1.1.80 Restricted Contract means any contract, indenture,
-------------------
license, lease or other agreement to which any Company is a party, or
by which any Company's assets are bound, which does not permit, or in
any manner restricts (including without limitation, through the
payment of a termination indemnity), the assignment or transfer
thereof to any person including without limitation any restriction
which prohibits or requires the consent of the other party to a
change of control or ownership of such Company.
1.1.81 Section 338 Elections shall have the meaning set
---------------------
forth in Section 9.9.1.
1.1.82 Select Employees shall have the meaning set forth
----------------
in Section 10.1.4.
1.1.83 Seller Pension Plan shall have the meaning set
-------------------
forth in Section 10.2.2.
1.1.84 Seller Savings Plan shall have the meaning set
-------------------
forth in Section 10.2.2.3.
1.1.85 Sellers shall mean the collective reference to MI,
-------
MVI and MVII and Seller shall mean any of MI, MVI or MVII, as the
------
context requires.
1.1.86 Sellers' Knowledge, or any similar phrase with
------------------
comparable intent, shall mean the actual knowledge of any of the
Specified Officers, after diligent inquiry.
1.1.87 Severed Employee shall have the meaning set forth
----------------
in Section 10.2.5.
1.1.88 Severed International Employee shall have the
------------------------------
meaning set forth in Section 10.3.3.
1.1.89 Shares shall have the meaning set forth in Section
------
2.1.1.
1.1.90 Specified Officers shall mean the following: P.D.
------------------
Cottone, President and CEO; D.S. Benson, Vice President,
Asia/Pacific; D. Chantry, Vice President, Europe; T.S. Lytle, Vice
President, North America; D.H. McIntyre, Vice President, Latin
America; E.J. Andrews, Senior Vice President, Research & Development;
R. Gretton, Vice President, Operations; R. Querido, Vice President,
Strategic Management & Global Marketing; B.L. Hayes, Vice President,
Human Resources; T.L. Farquer, Vice President, Law; M.J. Van Gelder,
Vice President, Finance; Michael McKee, Environmental Manager; Peter
Hall, Director, Environmental Health & Safety; Richard Sharpee, Vice
President of Development; and the current general manager (or
individual with equivalent function) of the operations of the Animal
Health Business in each of the following countries: Brazil, United
Kingdom, Ireland, Germany, France, Australia and New Zealand; and J.
Donald Todd, President of Syntro Corporation.
1.1.91 Subsidiary Agreements shall have the meaning set
---------------------
forth in Section 2.1.4.
1.1.92 Syntro shall have the meaning set forth in Section
------
4.1.21.
1.1.93 Syntro Agreements shall have the meaning set forth
-----------------
in Section 4.1.21.
1.1.94 Taxes shall mean any federal, state, local or
-----
foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or penalty, imposed
by any Governmental Authority.
1.1.95 Tax Return shall mean any return, report or
----------
similar statement (including any attached schedules) required to be
filed with respect to any Taxes, including, without limitation, any
information return, claim for refund, amended return or declaration
of estimated Taxes.
1.1.96 Technology shall mean any significant aspect of
----------
the Syntro technology rights owned by or licensed to Syntro or any of
the other Companies.
1.1.97 Third Party Consultant shall have the meaning set
----------------------
forth in Section 8.6.4.
1.1.98 Total Current Assets shall mean, as of any date,
--------------
the total of all items which would be classified as a current asset
under the heading "Current Assets" on a combined consolidated
balance sheet of the Companies determined and prepared in a manner
consistent with the practices and methodologies used in preparing the
Annual Balance Sheet, except that (i) net accounts receivable shall
not exceed the amount of net accounts receivable included in the
Working Capital Baseline, which was an amount equal to One Hundred
Twenty-Seven Million Three Hundred Thirty-Nine Thousand Dollars
($127,339,000), (ii) net inventory shall not exceed the amount of net
inventory included in the Working Capital Baseline, which was an
amount equal to One Hundred Twenty-Seven Million Six Hundred Eight
Thousand Dollars ($127,608,000), and (iii) all current deferred
income Tax assets shall be excluded from Total Current Assets.
1.1.99 Total Current Liabilities shall mean, as of any
-------------------------
date, the total of all items (including Taxes for which the Buyer is
liable on a current basis pursuant to Article IX), which would be
classified as a current liability under the heading "Current
Liabilities" on a combined consolidated balance sheet of the
Companies prepared in a manner consistent with the practices and
methodologies used in preparing the Annual Balance Sheet, except that
Total Current Liabilities shall exclude (i) the worldwide accrual for
the annual management incentive compensation plan, (ii) all accrued
amounts (employer match, management fees, etc.) relating to the
Investment Plan for Employees of Mallinckrodt Inc., (iii) all
environmental accruals, (iv) all accrued amounts included in the line
item called "Restructuring Accruals, Current", (v) all current
deferred income Tax liabilities, (vi) any income Taxes for which the
Sellers are liable pursuant to Article IX, and (vii) short-term debt
and current maturities of long-term debt. Total Current Liabilities,
as of the Closing Date, shall include an aggregate amount for accrued
vacation for U.S. Continuing Employees calculated for each individual
U.S. Continuing Employee as one-half the number of vacation days each
U.S. Continuing Employee is entitled to in calendar 1997, less the
number of calendar 1997 vacation days actually taken by each U. S.
Continuing Employee through and including June 30, 1997, less the
number of calendar 1997 vacation days sold by each U.S. Continuing
Employee either for cash or to pay for benefits under the
FlexSecurity Plan, multiplied by the daily salary for each U.S.
Continuing Employee as of June 30, 1997.
1.1.100 United States Business shall mean the assets of
----------------------
and business activities relating to the Animal Health Business
conducted by the Sellers through any of the Companies, as of any
relevant date hereunder, in the United States and Canada.
1.1.101 United States Companies shall mean those Companies
-----------------------
incorporated or organized under the laws of any state of the United
States.
1.1.102 U.S. Continuing Employees shall have the meaning
-------------------------
set forth in Section 10.1.2.
1.1.103 U.S. Covered Employees shall have the meaning set
----------------------
forth in Section 10.1.5.
1.1.104 Valuation Date shall have the meaning set forth
--------------
in Section 10.2.3.
1.1.105 Veterinary Subsidiaries shall mean those entities
-----------------------
set forth in Exhibit A hereto, which are all of the direct or
---------
indirect subsidiaries owned or controlled by MVII or MVI, and
Veterinary Subsidiary shall mean any one of the Veterinary
- ---------------------
Subsidiaries.
1.1.106 Working Capital Adjustment shall mean, as of any
--------------------------
date, an amount equal to either (i) (if the Net Working Capital at
such time exceeds the Working Capital Baseline) the amount by which
the Net Working Capital at such time exceeds the Working Capital
Baseline, or (ii) (if the Working Capital Baseline exceeds the Net
Working Capital at such time) the amount by which the Working Capital
Baseline exceeds the Net Working Capital at such time; provided,
however, that if the Net Working Capital at such time equals the
Working Capital Baseline, the Working Capital Adjustment shall be
zero.
1.1.107 Working Capital Baseline shall mean the amount of
------------------------
Net Working Capital determined from the Annual Balance Sheet, which
was an amount equal to Two Hundred Twenty-Eight Million Sixty-Seven
Thousand Dollars ($228,067,000).
1.2 Currency. All references in this Agreement to "dollars" or
--------
"$" shall be deemed to mean and refer to United States dollars.
1.3 Materiality. Whenever the terms "material", "material
-----------
adverse effect" or "material adverse change" are used herein, unless
the context otherwise clearly and unambiguously requires, such terms
shall be interpreted and construed as meaning (i) "material" to the
financial condition, business or operations of the Companies or the
Animal Health Business, taken as a whole, or referencing a "material
adverse effect" upon or "material adverse change" with respect to the
financial condition or operations of the Companies or the Animal
Health Business, taken as a whole or (ii) "material" to or
referencing a "material adverse effect" on or "material adverse
change" with respect to any significant aspect of the Syntro
Corporation technology rights owned by or licensed to the Companies
or (iii) "material" to the financial condition, business or
operations of the Companies' Latin American Business, taken as a
whole, or referencing a "material adverse effect" upon or "material
adverse change" with respect to the financial condition or operations
of the Latin American Business, taken as a whole or (iv) "material"
to the financial condition, business or operations of the Companies'
Australasian Business, taken as a whole, or referencing a "material
adverse effect" upon or "material adverse change" with respect to the
financial condition or operation of the Australasian Business, taken
as a whole, or (v) "material" to the financial condition, business or
operations of the Companies' European Business, taken as a whole, or
referencing a "material adverse effect" upon or "material adverse
change" with respect to the financial condition or operation of the
European Business, taken as a whole or (vi) "material" to the
financial condition, business or operations of the Companies' United
States Business, taken as a whole, or referencing a "material adverse
effect" upon or "material adverse change" with respect to the
financial condition or operation of the United States Business, taken
as a whole.
1.4 Ordinary Course of Business. Whenever the term "ordinary
---------------------------
course of business" or any substantially equivalent phrase is used in
this Agreement, unless the context otherwise clearly and
unambiguously requires, such term shall be interpreted and construed
as meaning the Animal Health Business as conducted for the twelve
(12) month period prior to July 1, 1996.
ARTICLE II
PURCHASE AND SALE OF SHARES
---------------------------
2.1 Purchase and Sale.
-----------------
2.1.1 Subject to the terms and conditions of this
Agreement, at the Closing, Sellers agree to sell to the Buyer in
exchange for the Adjusted Purchase Price, and the Buyer agrees to
purchase from the Sellers, all of the outstanding shares of capital
stock of each Veterinary Subsidiary owned by MVI or MVII and of New
MVI, and any nominal shares of any of the Veterinary Subsidiaries not
owned by either of the Sellers or any of the Companies, if and as
required (the "Shares").
2.1.2 Notwithstanding the provisions of Section 2.1.1 set
forth immediately above, it is understood that the Buyer will not be
purchasing any real and personal property assets of the Animal Health
Business set forth and described on Schedule 2.1.2 hereof, excluding
any Intellectual Property or other intangible rights associated
therewith ("Excluded Assets") or assuming any liabilities associated
with the Excluded Assets. The Sellers will take all actions
necessary and appropriate to ensure that, prior to the Closing Date,
the Excluded Assets are removed from the ownership and responsibility
of New MVI and the Veterinary Subsidiaries (such actions, the
"Excluded Assets Reorganization") so that, on and as of and after the
Closing Date, the Buyer, New MVI and the Veterinary Subsidiaries will
have and will assume no rights, responsibilities or liabilities of
any kind with respect to any of the Excluded Assets; provided that,
the immediately foregoing shall have no effect on any right to
indemnification the Buyer may have pursuant to Article VIII hereof.
Furthermore, it is understood that the Sellers are entitled to sell
or otherwise transfer any of the Excluded Assets to third parties
prior to the Closing (at no ultimate expense to the Buyer), and upon
such sale or transfer the proceeds therefrom shall similarly be
considered to be Excluded Assets (or otherwise included in Total
Current Assets), and all continuing obligations or liabilities of the
Sellers with respect to any such transferred Excluded Assets shall be
Excluded Liabilities.
2.1.3 Notwithstanding the provisions of Section 2.1.1
above, it is understood that the Buyer will not be assuming those
liabilities of the Companies described on Schedule 2.1.3 (the
"Excluded Liabilities"). The Sellers will take all actions necessary
and appropriate to ensure that, prior to the Closing Date, the
Excluded Liabilities are removed from the ownership and
responsibility of New MVI and the Veterinary Subsidiaries (such
actions, the "Excluded Liabilities Reorganization") so that, on and
as of and after the Closing Date, the Buyer will have no liability,
obligation or responsibility with respect to any of the Excluded
Liabilities, and none of such actions will adversely affect New MVI,
the Veterinary Subsidiaries or the Buyer. Excluded Liabilities will,
in every case, be assumed or retained by the Sellers.
2.1.4 MVI, MVII and other affiliates of the Sellers shall
on the date hereof, or as promptly as practicable hereafter, enter
into separate agreements for the purchase and sale of the Shares of
each Veterinary Subsidiary owned by MVII (the "Subsidiary
Agreements"), substantially in the form of the agreement draft set
forth on Schedule 2.1.4.
2.2 Purchase Price; Allocation. The Estimated Adjusted
--------------------------
Purchase Price shall be paid by the Buyer to the Sellers by wire
transfer at the Closing, to such account or accounts as MI shall have
delivered notice to the Buyer at least three (3) business days prior
to the Closing Date which accounts relating to the sale of the
Veterinary Subsidiaries owned by MVII or MVI shall be located outside
of the United States. The Purchase Price, as adjusted herein, shall
be allocated in accordance with Schedule 2.2, which allocation shall
be adjusted appropriately and proportionately after the Closing Date
to give effect to any adjustments pursuant to Section 2.3 below. The
Buyer and the Sellers shall reflect the Shares purchased hereunder in
a manner consistent with the allocation set forth on Schedule 2.2,
shall file all Tax Returns and Tax reports in a manner consistent
with and based upon such allocations and shall take no position with
respect to any return, proceeding or audit which is inconsistent with
such allocation.
2.3 Determination of Adjusted Purchase Price.
----------------------------------------
2.3.1 Five (5) business days prior to the Closing Date,
the Sellers shall cause to be prepared and delivered to the Buyer the
Sellers' good-faith estimate of the amounts of Total Current Assets,
Total Current Liabilities, Debt and PST Lease Liability on the
Closing Date, together with the Sellers' calculation of the Estimated
Working Capital Adjustment, Estimated Debt Adjustment and Estimated
PST Lease Liability Adjustment on the Closing Date based upon such
estimates, which shall be used in determining the Estimated Adjusted
Purchase Price payable on the Closing Date.
2.3.2 As soon as possible after the Closing Date but in
no event more than forty-five (45) days thereafter, the Sellers will
prepare and deliver to the Buyers a combined statement of Total
Current Assets and Total Current Liabilities (and each component
thereof), Debt, the PST Lease Liability and the resulting Net Working
Capital, as well as the Net Working Capital Adjustment, Debt
Adjustment and PST Lease Liability Adjustment as of the Closing Date,
which statement will also set forth the proposed Adjusted Purchase
Price ("Preliminary Closing Statement"). The Preliminary Closing
Statement shall be prepared in a manner consistent with the practices
and methodologies used in preparing the Annual Balance Sheet and,
using the same line item descriptions on the Annual Balance Sheet,
shall set forth the components of Total Current Assets, Total Current
Liabilities, Debt and PST Lease Liability. The Preliminary Closing
Statement shall include or be accompanied by a detailed explanation
of the conclusions reached by the Sellers in connection with the
Preliminary Closing Statement.
2.3.3 The Buyer shall have a period of forty-five (45)
days from delivery of the Preliminary Closing Statement pursuant to
Section 2.3.2 to review the Preliminary Closing Statement. If the
Buyer disagrees with the Preliminary Closing Statement, the Buyer
shall, at or before the end of such forty-five (45) day period,
deliver to the Sellers a written notice setting forth a detailed
explanation of the Buyer's good faith determination of the amounts of
Total Current Assets and Total Current Liabilities (and each
component thereof), Debt and PST Lease Liability and the resulting
Net Working Capital, Working Capital Adjustment, Debt Adjustment and
PST Lease Liability Adjustment as of the Closing Date, prepared in a
manner consistent with the practices and methodologies used in
preparing the Annual Balance Sheet. If the Buyer does not deliver
the Sellers such notice within said forty-five (45) day period, the
Preliminary Closing Statement shall be deemed correct and conclusive,
and the Working Capital Adjustment, Debt Adjustment and PST Lease
Liability Adjustment shall be determined based upon the Net Working
Capital, Debt and PST Lease Liability set forth in the Preliminary
Closing Statement. If the Buyer proposes any adjustments to the Net
Working Capital, Debt or PST Lease Liability set forth in the
Preliminary Closing Statement, the Sellers and the Buyer, within
thirty (30) days of the delivery to the Sellers of the Buyer's
proposed adjustments, shall attempt to resolve any disagreement. If
the Sellers and the Buyer, within thirty (30) days of the delivery by
the Buyer of any proposed adjustments, shall fail to resolve all such
disagreements, any unresolved disagreements shall be referred
immediately to an accounting firm that does not perform substantial
services for the Buyer or the Sellers and that is mutually acceptable
to the Buyer and the Sellers (the "Accounting Firm") for
determination in accordance with this Agreement and any such
determination shall be final and binding upon the parties. The
Accounting Firm shall render its determination as soon as
practicable, and in any event within forty-five (45) days after
referral of the disagreements. The fees and expenses of the
Accounting Firm in acting pursuant to this Section 2.3.3 shall be
paid one-half by the Buyer and one-half by the Sellers, except that
if, in the judgment of the Accounting Firm, one party has adopted a
position or positions with respect to the Preliminary Closing
Statement that is frivolous or clearly without merit, the Accounting
Firm may, in its discretion, assign a greater portion of any such
fees and expenses to such party, up to and including one hundred
percent (100%) of such fees and expenses. The Estimated Working
Capital Adjustment, Estimated Debt Adjustment and Estimated PST Lease
Liability Adjustment as modified based upon the Net Working Capital,
Debt and PST Lease Liability set forth in the Preliminary Closing
Statement, and any adjustments to such Net Working Capital, Debt and
PST Lease Liability pursuant to any agreement of the parties or any
determination by the Accounting Firm in accordance with this Section
2.3.3, shall become the Working Capital Adjustment, Debt Adjustment
and PST Lease Liability Adjustment, all of which shall be used to
determine the Adjusted Purchase Price.
2.3.4 If as a consequence of any adjustments made in
accordance with Section 2.3, the Estimated Adjusted Purchase Price
exceeds the Adjusted Purchase Price, then the Sellers shall pay to
the Buyer the amount of such excess within ten (10) days after the
determination of the Adjusted Purchase Price. If as a consequence of
the adjustments to be made in accordance with Section 2.3, the
Adjusted Purchase Price exceeds the Estimated Adjusted Purchase
Price, then the Buyer shall pay to the Sellers the amount of any such
excess within ten (10) days after the determination of the Adjusted
Purchase Price. Any such payment shall be made by wire transfer or
certified check, to an account or accounts designated by the
recipient of any payment under this Section 2.3.4 in a notice to the
party making payment delivered at least three (3) business days prior
to the date payment is due pursuant to this Section 2.3.4.
2.3.5 Access to Books and Records. The Sellers shall
---------------------------
afford the Buyer and its accountants such access to the books and
records of the Companies (as may still be in the possession of the
Sellers and other than those already transferred to the Buyer)
following the Closing as is reasonably necessary for the review of
the Preliminary Closing Statement and the documents related thereto.
The Buyer shall afford the Sellers and its accountants such access to
the books and records of the Companies in the possession of the Buyer
following the Closing as is reasonably necessary for the preparation
and review of the Preliminary Closing Statement and documents related
thereto.
ARTICLE III
CLOSING
-------
3.1 Closing. The Closing of the transaction contemplated in
-------
this Agreement shall take place at the offices of MI on the fifth
business day following the satisfaction or waiver by the relevant
party of the last to occur of the conditions in Article VI, or at
such other place, date and time as may be agreed upon by the parties.
All transactions at the closing of this Agreement and transactions at
the closings of the Subsidiary Agreements shall be deemed to have
occurred simultaneously. Notwithstanding the foregoing or anything
to the contrary in the Subsidiary Agreements, none of the closings
contemplated under any of the Subsidiary Agreements shall occur
unless and until the Closing under this Agreement shall occur.
3.2 Deliveries at Closing. At or prior to the Closing, the
---------------------
parties will deliver or cause to be delivered all documents or
instruments required to be delivered by them pursuant to this
Agreement and the Subsidiary Agreements. At the Closing, the Sellers
will deliver to the Buyer the certificates representing all of the
Shares, duly endorsed in blank or with appropriate stock powers, or
the Sellers shall take such other actions as may be necessary under
applicable law to transfer ownership of the Shares to the Buyer,
against payment by the Buyer of the Estimated Adjusted Purchase Price
as required by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 Representations and Warranties of the Sellers. The
---------------------------------------------
Sellers, jointly and severally, hereby make the representations and
warranties set forth in this Article IV to the Buyer, except as set
forth to the contrary in or explained on the Disclosure Schedule and
except that no representations and warranties (other than those set
forth in Section 4.1.7) are made hereunder with respect to the
Excluded Assets or Excluded Liabilities (except as specifically set
forth in this Section 4.1). Matters disclosed on the Disclosure
Schedule concerning a specific representation or warranty shall be
deemed disclosed with respect to such representation or warranty only
and not for any other specific representation or warranty.
4.1.1 Existence of the Sellers. MI is a corporation
------------------------
duly incorporated and validly existing in good standing under the
laws of the State of New York. MVI is a corporation duly
incorporated and validly existing in good standing under the laws of
the State of Delaware. MVII is a corporation duly incorporated and
validly existing in good standing under the laws of the State of
Delaware.
4.1.2 Existence of New MVI and the Veterinary
---------------------------------------
Subsidiaries. New MVI is a corporation duly incorporated and
- ------------
validly existing in good standing under the laws of the State of
Delaware. Each of the Veterinary Subsidiaries is duly organized and
validly existing under the laws of the jurisdiction in which it is
organized. Each of New MVI and the Veterinary Subsidiaries has the
necessary power and authority to carry on its business as now
conducted. Each of New MVI and the Veterinary Subsidiaries is duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure to be qualified or licensed would
not, individually or in the aggregate, have a material adverse effect
on such Company.
4.1.3 Ownership of New MVI and the Veterinary
---------------------------------------
Subsidiaries; Necessary Property.
- --------------------------------
(a) The outstanding capital stock of New MVI
consists of 300 shares of common stock, no par value, all of which
are owned by MVI, free and clear of any pledges, security interests,
liens, encumbrances or adverse claims. The ownership (including
percentage of ownership) of each of the Veterinary Subsidiaries
(including the ownership interest of any third party) is described on
Exhibit A hereto. All outstanding shares of common stock of New MVI
are duly authorized, validly issued, fully paid and nonassessable.
There are no options, warrants, calls, rights or agreements to which
New MVI or any of the Veterinary Subsidiaries is a party obligating
any of them to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of or ownership
interests in New MVI or any of the Veterinary Subsidiaries or
obligating New MVI or any of the Veterinary Subsidiaries to grant,
extend or enter into any such option, warrant, call, right or
agreement. The interest of MVII, MVI or New MVI, as the case may be,
in any Veterinary Subsidiary as set forth in Exhibit A hereto is
owned free and clear of any pledges, security interests, liens,
claims, encumbrances or adverse claims. The interest of any
Veterinary Subsidiary in any other Veterinary Subsidiary as set forth
in Exhibit A hereto is owned by such Veterinary Subsidiary free and
clear of any pledges, security interests, liens, claims, encumbrances
or adverse claims. The transfer of the nominal or qualifying shares
of the Veterinary Subsidiaries not owned by any of the Sellers or any
of the Companies to persons designated by the Buyer (i) will be
accomplished on or before the Closing and (ii) shall not require any
additional payment by the Buyer to any person or result in the
creation of any obligation or liability of the Buyer to any person.
(b) The Companies or the Sellers own or have the
right to use all of the assets, rights, properties and interests
necessary to operate the Animal Health Business as it has been
conducted by the Companies, and where applicable the Sellers, since
July 1, 1995, with such exceptions as would not individually or in
the aggregate have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology. The Veterinary Subsidiaries and New MVI, among them,
own all of the assets that comprise the Animal Health Business and
none of the Sellers (except for the equity interests of MVI and MVII
in the Veterinary Subsidiaries) nor any other subsidiaries or
affiliates of Sellers own any assets of the Animal Health Business or
operate the Animal Health Business, except for those (if any) arising
out of any transactions with affiliates set forth and described on
the Disclosure Schedule which are not material, individually or in
the aggregate, to the Animal Health Business or the Companies, taken
as a whole, or to any Major Business or Technology. The Designated
Transfers shall have no adverse effect, either monetary or otherwise,
on the Buyer, New MVI, the Veterinary Subsidiaries or the Animal
Health Business. The Veterinary Subsidiaries, the Sellers and New
MVI have not developed any products for human use that comprise any
of the assets included in the Animal Health Business. Prior to the
Closing, the Sellers shall have taken all actions necessary to
complete the Reorganization. None of New MVI or the Veterinary
Subsidiaries has any assets or liabilities other than those relating
to the Animal Health Business.
(c) Following the consummation of the
transactions contemplated in this Agreement and the Subsidiary
Agreements, the Buyer will own or have the right to use all of the
assets, rights, properties and interests necessary to operate the
Animal Health Business as it was conducted on March 31, 1997.
4.1.4 Authority and Validity. Each Seller has the
----------------------
necessary power and authority to enter into this Agreement and the
Subsidiary Agreements, to perform its respective obligations
hereunder and thereunder, and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and each of the Subsidiary Agreements has been authorized
by all necessary corporate action by the Sellers or their affiliates,
as the case may be. This Agreement has been duly and validly
executed and delivered by the Sellers (and following the signing each
of the Subsidiary Agreements will be duly and validly executed and
delivered by the Sellers) and constitutes (or in the case of a
Subsidiary Agreement will constitute) the binding obligation of the
Sellers (and their affiliates, as appropriate) enforceable against
each of them in accordance with its (and their) terms, except as the
foregoing may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, or other similar laws relating
to or affecting the rights of creditors generally and by equitable
principles, including those limiting the availability of specific
performance, injunctive relief, and other equitable remedies and
those providing for equitable defenses.
4.1.5 No Violations. The execution and delivery of this
-------------
Agreement by the Sellers do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof by the Sellers will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any right or obligation (whether direct, indirect or contingent) or
to the loss of a material benefit under, or result in the creation of
any lien, security interest, or encumbrance upon any of the
properties or assets of any of the Companies under: (i) any
provision of the charter or organizational documents of MVII, New
MVI, the Sellers, or any of the Companies, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease, agreement,
instrument, permit, concession, franchise or license applicable to
any of the Companies, (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to any of the Companies
or any of their respective properties or assets, or (iv) any contract
(other than those described in clause (ii) above) to which any of the
Companies is a party or to which its assets are subject, other than,
in the case of clauses (ii), (iii) and (iv), any such violations,
defaults, rights, liens, security interests, terminations or
encumbrances that would not, individually or in the aggregate, have a
material adverse effect on the Animal Health Business or the
Companies, taken as a whole, or on any Major Business or Technology
and would not impair the ability of the Sellers to perform their
obligations hereunder or prevent the consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement
(or, as applicable, the Subsidiary Agreements).
4.1.6 Consents and Approvals. No filing or registration
----------------------
with, or authorization, consent or approval of, any Governmental
Authority or any other person or entity is required by the Sellers or
the Companies to permit the execution and delivery by the Sellers of
this Agreement or the consummation by the Sellers of the transactions
contemplated by this Agreement, except: (i) such filings or other
actions as may be necessary to comply with the HSR Act, (ii) such
consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the laws of any
foreign country in which any of the Companies is organized, conducts
any business or owns any property or assets (as set forth on the
Disclosure Schedule), and (iii) such other consents, orders,
authorizations, registrations, declarations and filings the absence
of which, individually or in the aggregate, would not have a material
adverse effect on the Animal Health Business or the Companies, as a
whole, or on any Major Business or Technology.
4.1.7 Financial Statements. The Financial Statements
--------------------
fairly present the combined financial condition of the Companies as
of their respective dates and the combined results of their
operations and cash flows for the periods indicated therein, in
accordance with GAAP applied on a basis consistent throughout the
periods presented. Since the date of the Annual Financial
Statements, there have been no changes in the financial condition or
the assets or liabilities of the Companies taken as a whole as set
forth in the Annual Financial Statements, except for changes in the
ordinary course of business that, individually or in the aggregate,
have not been materially adverse to the Companies, taken as a whole.
The financial templates previously delivered to the Buyer and
attached hereto as Schedule 4.1.7(i) were true and correct in all
material respects on and as of their respective dates. Set forth on
Schedule 4.1.7(ii) is a true and correct description of the financial
terms of the PST Lease Liability.
4.1.8 No Undisclosed Liabilities. Other than as
--------------------------
disclosed on the Annual Financial Statements, the Companies did not,
as of the date of the Annual Financial Statements, have any direct or
contingent material liabilities, known or unknown, whether accrued or
not. Other than as accrued on the combined balance sheet for the
Companies on and as of March 31, 1997 (a copy of which has been
provided to the Buyer), the Companies did not, as of that date, have
any direct or contingent material liabilities, known or unknown,
whether accrued or not. Since March 31, 1997, there are no
liabilities of a nature that would not be required to be reflected on
a regularly prepared balance sheet for the Companies on a
consolidated basis that are material to the Animal Health Business or
the Companies, taken as a whole, or to any Major Business or
Technology. Since June 30, 1996, the Companies have incurred no
material liabilities other than in the ordinary course of business.
4.1.9 Absence of Certain Changes or Events. Since the
------------------------------------
date of the Annual Balance Sheet, and except for any damages,
liabilities, agreements, liens, indebtedness, transactions or other
events of any kind that would not, individually or in the aggregate,
have a material adverse effect on the Animal Health Business or the
Companies, taken as a whole, or on any Major Business or Technology,
and except for the Reorganization, the Excluded Assets Reorganization
or the Excluded Liabilities Reorganization, (i) none of the Companies
has incurred any liability or obligation (indirect, direct or
contingent), or entered into or modified any agreement or other
transaction; (ii) none of the Companies has sustained any loss,
destruction or interference with its business or properties from
fire, flood, windstorm, accident or other calamity or casualty
(whether or not covered by insurance); (iii) there has been no change
in the indebtedness of any of the Companies; (iv) none of the assets
of the Companies has been subjected to any liens; (v) none of the
Companies has made any change in any method of accounting or
accounting practice; (vi) none of the Companies has sold,
transferred, leased, subleased, licensed or otherwise disposed of, to
any third party, any properties or assets; (vii) none of the
Companies (x) has entered into any employment, deferred compensation
or other similar agreement (or any amendment to any such existing
agreement) with any employee, (y) has increased benefits payable
under existing severance or termination pay policies or employment
agreements, or (z) has increased compensation, bonus or other
benefits payable to employees, other than "stay" bonuses or any other
bonuses or payments deemed reasonably necessary by the Sellers in
connection with the transactions contemplated herein (all of which
such bonuses and payments are set forth on Schedule 4.1.9(vii));
(viii) except for expenditures in accordance with a previously
approved capital plan, none of the Companies has made any capital
expenditures, or commitment for a capital expenditure, for additions
or improvements to property, plant and equipment, other than those
that are not in excess of $100,000 individually or $500,000 in the
aggregate; (ix) none of the Companies has agreed, whether in writing
or otherwise, to do any of the foregoing, except as expressly
contemplated by this Agreement; (x) none of the Companies has
suffered any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union, works council or
representative thereof to organize any employees, or any lockouts,
strikes, slowdowns, picketing, work stoppages or threats thereof by
or with respect to such employees; (xi) none of the Companies has
sold, assigned or otherwise disposed of or paid a dividend of any of
its material assets except to replace the same with assets of
substantially equivalent type and value; and (xii) none of the
Companies has transferred, granted or knowingly terminated any rights
under any licenses, patents, trademarks, trade names, service marks
or copyrights. Since the date of the Annual Balance Sheet, to
Sellers' Knowledge, no supplier, agent, vendor, customer, licensee or
licensor has threatened to withdraw from any contract or arrangement
with the Companies, except for any such contracts or arrangements
which, individually or in the aggregate, would not be material to the
Animal Health Business or the Companies, taken as a whole, or to any
Major Business or Technology. Since the date of the Annual Balance
Sheet, to Sellers' Knowledge, no entity for which the Companies act
as a distributor or supplier has threatened to withdraw from, or
materially change, any agreement with the Companies, except for any
such contracts or arrangements which, individually or in the
aggregate, would not be material to the Animal Health Business or the
Companies, taken as a whole, or to any Major Business or Technology.
4.1.10 Accounts Receivable. All accounts receivable of
-------------------
the Companies reflected on the aging of accounts receivable included
in the Disclosure Schedule and all accounts receivable of the
Companies recorded on the books of the Companies since the date of
such aging arose out of bona fide transactions in the ordinary course
of business of the Companies.
4.1.11 Inventories. The inventories of the Companies
-----------
shown on the Annual Balance Sheet or thereafter acquired are all
items of a quality usable or saleable in the ordinary course of
business within a reasonable period of time (taking into account any
expiration dates), and (with respect to those products named on
Schedule 4.1.11) in quantities sufficient to conduct the Animal
Health Business in the ordinary course of business, except for
inventory items which are obsolete, expired, deteriorated or
otherwise not usable or saleable in the ordinary course of business
and which are in a small enough quantity that, individually or in the
aggregate, they would not have a material adverse effect on the
ability of the Companies, taken as a whole, or any Major Business to
conduct operations in the ordinary course of business.
4.1.12 Compliance With Laws. Except to the extent that
--------------------
there would not be a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology (i) the Companies are conducting, and have during the
period of three (3) years immediately prior to the date hereof
conducted, their business in compliance with their organizational or
charter documents, (ii) none of the Companies is, or has been during
a period of three (3) years prior to the date hereof, in violation
of (and there exists no event that, with notice or the passage of
time or both, would constitute a violation of) any applicable laws or
regulations, and (iii) none of the Companies is in violation of any
outstanding judgment, order, writ, injunction or decree of any
Governmental Authority; provided, however, that this Section 4.1.12
does not cover any Environmental Requirements. None of the Specified
Officers has received written notice of any violation of any laws or
regulations, including, but not limited to, laws and regulations
comprising United States foreign trade controls, United States
anti-boycott laws and regulations, laws relating to pricing controls
or pricing practices, competition laws and regulations of the
European Union or any member state thereof or the Foreign Corrupt
Practices Act (the "FCPA"), nor do the Specified Officers have
knowledge of any information, fact or data which constitutes such
violation. To the Sellers' Knowledge, none of the Companies nor any
officer, director, employee or agent of any of the Companies acting
on behalf of the Companies has made, directly or indirectly, any
payment or promise to pay, or gift or promise to give, or authorized
such a promise or gift, of any money or anything of value, directly
or indirectly, to (i) any foreign official (as such term is defined
in the FCPA) for the purpose of influencing any official act or
decision of such official or inducing him to use his influence to
affect any act or decision of a Governmental Authority or (ii) any
foreign political party or official thereof or candidate for foreign
political office for the purpose of influencing any official act or
decision of such party, official or candidate or inducing such party,
official or candidate to use its influence to affect any act or
decision of a foreign government or agency or subdivision thereof in
the case of both (i) and (ii) in order to assist any of the Companies
to obtain or retain business or direct business to any of the
Companies, under circumstances which would subject any of the
Companies or their respective affiliates, officers or directors to
liability under the FCPA.
4.1.13 Licenses and Permits. Except for any Permits
--------------------
relating to Environmental Requirements as covered by Section 4.1.14
below, in the aggregate, each Company holds (or upon completion of
the Reorganization will hold) all permits, licenses, authorizations,
certificates, exemptions and approvals of or from Governmental
Authorities that are necessary for the conduct of the Animal Health
Business as it is currently being conducted by the Companies, except
for such permits, licenses, authorizations, certificates, exemptions
or approvals the failure of which to obtain would not have a material
adverse effect on the Animal Health Business or the Companies, taken
as a whole, or on any Major Business or Technology ("Permits"). To
Sellers' Knowledge, none of the Companies is in material violation of
or material default under any Permit used by the Companies in their
business as presently conducted and, to Sellers' Knowledge, no such
Permit will be revoked, terminated prior to its normal expiration
date or not renewed. No consent of any Governmental Authority is
required in connection with the transfer of any Permit as and if
reasonably required in connection with the transactions contemplated
hereunder.
4.1.14 Environmental Matters. The properties, assets and
---------------------
operations of the Companies and the Animal Health Business are on the
date hereof, will be on the Closing Date and have been during the
five (5) year period immediately prior to the date hereof, in
compliance with all applicable Environmental Requirements, except for
any such non-compliance that, individually or in the aggregate, would
not have a material adverse effect on the Animal Health Business or
the Companies, taken as a whole, or on any Major Business or
Technology. In the five (5) years immediately prior to the date
hereof, no spill, release, threatened release or discharge of
Hazardous Substances into the Environment, which is required by
applicable Environmental Requirements to be reported, has occurred at
any of the Companies' facilities to be transferred to the Buyer
pursuant to the transactions contemplated hereby that would have a
material adverse effect on the Animal Health Business or the
Companies, taken as a whole, or on any Major Business or Technology
or, to the Sellers' Knowledge, on any real property adjacent thereto
or on any properties, sites or facilities for which the Companies
have responsibility, by contract or otherwise, for compliance with
Environmental Requirements, and there has been no corrective action,
remediation or clean up required as a consequence of any such spill,
release, threatened release or discharge. All corrective action,
remediation or other clean up activities undertaken by the Companies,
if any, have been performed or are being performed in accordance with
applicable Environmental Requirements in all material respects. Each
of the Companies has performed in all material respects any and all
recordkeeping and reporting requirements required by applicable
Environmental Requirements, and all such reports and records are
complete and correct in all material respects and have been retained
by the Companies for the length of time required by any applicable
Environmental Requirements setting forth document retention
requirements. None of the facilities of the Companies to be
transferred pursuant to this Agreement, or, to Sellers' Knowledge,
any property adjacent thereto, or any sites used for the disposal of
wastes generated by the Companies, or any properties, sites or
facilities for which the Companies have responsibility, by contract
or otherwise, for compliance with Environmental Requirements, or, to
Sellers' Knowledge, any sites, properties or facilities which
produce, formulate or manufacture products or materials on behalf of
any of the Companies, have been designated as a "Superfund Site" or
are otherwise the subject of an order of removal or remedial action
pursuant to the provisions of applicable Environmental Requirements,
and there are no conditions or circumstances affecting the facilities
of the Companies to be transferred pursuant to this Agreement, or, to
Sellers' Knowledge, any property adjacent thereto, or any properties,
sites or facilities for which the Companies have responsibility, by
contract or otherwise, for compliance with Environmental
Requirements, or, to Sellers' Knowledge, any sites, properties or
facilities which produce, formulate or manufacture products or
materials on behalf of the Companies, which might reasonably cause
them to be designated as a "Superfund Site" or render them subject to
any such order of removal or remedial action. None of the Specified
Officers know of any claim of liability or remedial action, or
potential liability or remedial action, under any Environmental
Requirements that would, individually or in the aggregate, have a
material adverse effect on the Animal Health Business or the
Companies, taken as a whole, or on any Major Business or Technology,
nor do the Specified Officers know of any reasonable basis for the
assertion of any such claim. All Permits required by applicable
Environmental Requirements and necessary for the operation of the
Companies' businesses as they are currently being conducted or the
use of a material portion of the Companies' assets have been obtained
or have been applied for, and if already obtained are in effect on
the date hereof in accordance with their terms except for those
which, if not obtained or not in effect, would not, individually or
in the aggregate, have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology. The Companies are in material compliance with the
terms of such Permits, no action or investigation has been taken,
commenced or, to the Sellers' Knowledge, threatened by any
Governmental Authority or any other persons to revoke or modify such
Permits or applications or to enforce the terms of or take action for
violation of such Permits, and the Specified Officers do not know of
any reasonable basis for any such action or investigation. None of
the Specified Officers possesses any evidence that any Permits
applied for will not be granted or that Permits or Permit renewals
which have been applied for but have not yet been granted or renewed
will, when issued or as a condition of issuance, require material
capital expenditures or materially interrupt the operations of the
Companies in order to bring any subject facility or apparatus into
material compliance with Environmental Requirements.
4.1.15 Tax Matters. With respect to Taxes and Tax
-----------
Returns: (i) each of the Companies has filed all federal and all
state, local and foreign Tax Returns required to have been filed on
or prior to the date hereof or appropriate extensions therefor have
been properly obtained, and all such Tax Returns are true, correct
and complete; (ii) all Taxes shown to be due on such Tax Returns have
been collected, withheld and/or timely paid (as appropriate) to the
appropriate taxing authority or extensions for payment have been duly
obtained, or such Taxes are being timely and properly contested;
(iii) none of the Companies has waived or extended by agreement any
statute of limitations for any taxable period in respect of its Tax
Returns or Taxes; (iv) no such Tax Returns are the subject of a
pending audit by the applicable taxing authority and no notice of the
commencement of any such audit has been received, and there are no
disputes with, and no notice (including notices of deficiency or
proposed assessments) of the commencement of any such dispute has
been received from, any taxing authority which are the subject of any
litigation, administrative proceeding or other formal dispute; (v)
all claims or deficiencies asserted or assessments made as a result
of any audit of such Tax Returns by any taxing authority have been
paid in full or adequately provided for on the Annual Balance Sheet,
or subsequent regularly prepared balance sheets of the Companies, or
are being timely contested as indicated on the Disclosure Schedule,
and there is no reasonable basis for the assertion of any such
deficiencies, claims or assessments; (vi) there are no liens for
Taxes upon any of the assets of the Companies, except for statutory
liens for current Taxes not yet due; (vii) there is no election or
consent to have Code Section 341(f)(2) apply to any disposition of
"subsection (f) asset" (as such term is defined in Code Section
341(f)(4)) owned by any of the Companies; (viii) no Company is a
party to or otherwise subject to any agreement or arrangement entered
into in anticipation of the Closing (considered individually or in
the aggregate), not in accordance with past practice and not required
by this Agreement, that would have a material adverse tax consequence
to the Buyer, its affiliates or the Companies, (ix) no Company has
made an election or is required to treat any material assets of the
Companies as owned by another person for federal, state, local or
foreign income tax purposes, and (x) there is no private letter
ruling related to Taxes issued to the Sellers by, or any closing
agreement executed with, any taxing or other Governmental Authority
that will be binding upon any of the Companies or the Buyer after the
Closing.
4.1.16 Orders or Judgments. There are no outstanding
-------------------
orders, judgments, injunctions, awards or decrees of any Governmental
Authority in effect, pending or, to the Sellers' Knowledge,
threatened against any of the Companies or any of their properties,
assets or the Animal Health Business that would, individually or in
the aggregate, have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology. There are no actions, suits or claims or legal,
administrative or arbitration proceedings or investigations pending
against or, to the Sellers' Knowledge, threatened against or
affecting, any of the Companies or any of their properties, assets or
the Animal Health Business that would, individually or in the
aggregate, have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology. There are no actions, suits or claims or legal,
administrative or arbitration proceedings pending against or, to the
Sellers' Knowledge, threatened against the Sellers or any of the
Companies (i) seeking to enjoin or prevent the consummation of the
transactions contemplated in this Agreement or otherwise claiming
that this Agreement or any of the Subsidiary Agreements or the
consummation of the transactions contemplated herein or therein are
illegal or (ii) which would, individually or in the aggregate, result
in the revocation or termination of any of the Permits and would
thereby have a material adverse effect on the Animal Health Business
or the Companies, taken as a whole, or on any Major Business or
Technology. The Disclosure Schedule sets forth all actions, suits,
investigations, claims or proceedings pending or, to Sellers'
Knowledge, threatened that might reasonably result in payment or
settlement by any of the Companies in an amount in excess of $100,000
or might otherwise result in a material adverse effect on the Animal
Health Business or the Companies, taken as a whole, or on any Major
Business or Technology.
4.1.17 Labor Matters. None of the Companies has any
-------------
labor contracts, collective bargaining agreements, work council
agreements or material employment or material consulting agreements
with any persons employed by or otherwise performing services
primarily for any of the Companies (collectively, the "Business
Personnel") or any representative of any Business Personnel. None of
the Companies has engaged during the five (5) years prior to the date
hereof in any unfair labor practice with respect to Business
Personnel, and there is no unfair labor practice complaint pending
against any of the Companies with respect to Business Personnel.
None of the Business Personnel are members of any labor union or
subject to any labor contracts or collective bargaining agreements,
except as disclosed on the Disclosure Schedule. There is no labor
strike, dispute, slowdown or stoppage pending against or, to the
Sellers' Knowledge, threatened against or affecting, any of the
Companies that would have a material adverse effect on the Animal
Health Business or the Companies, taken as a whole, or on any Major
Business or Technology, and none of the Companies has experienced any
work stoppage or other material labor difficulty involving its
Business Personnel during the five (5) years prior to the date hereof
that has had or would have a material adverse effect on the Animal
Health Business or the Companies, taken as a whole, or on any Major
Business or Technology. The Companies are in compliance with the
requirements of the labor and employment laws, rules and regulations
of any applicable jurisdiction, except such noncompliance as would
not have a material adverse effect on the Animal Health Business or
the Companies, taken as a whole, or on any Major Business or
Technology. The Companies and MVI have been exempt from, or have
complied with, all applicable provisions of the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Sections 2101 - 2109, as
amended, and the regulations thereunder, and any comparable state or
foreign legal requirements, in connection with all reductions in work
force in connection with the Animal Health Business.
4.1.18 Contracts. The Disclosure Schedule lists the
---------
parties, the products involved and the approximate net sales for
Fiscal Year 1996 with respect to all material contracts of the
Companies. For purposes of this Agreement, the phrase "material
contracts of the Companies" or any substantially similar phrase shall
mean, other than purchase orders or contracts calling for performance
within 60 days or permitting termination on notice of 60 days or
less, (i) each contract that involves the acquisition by any of the
Companies of finished products for resale, or the acquisition by any
of the Companies of significant actives or product components which
any of the Companies uses to produce or incorporates into finished
products, if the combined net sales of such products by the Companies
in Fiscal Year 1996 exceeded $500,000, (ii) any agreement made by any
of the Companies or any Seller or affiliate thereof (except for
distribution and licensing agreements or arrangements entered into
the ordinary course of business) that prevents the Companies from
engaging in their respective normal business in any geographic
location or any product or business area, and (iii) any other
contracts of the Companies which, if terminated, would have a
material adverse effect on the Animal Health Business or the
Companies, taken as a whole, or on any Major Business or Technology.
All of the material contracts of the Companies are the valid and
binding obligations of the appropriate Company or Companies and to
Sellers' Knowledge, each other party thereto. None of the Companies
nor, to the Sellers' Knowledge, any other party thereto, is in breach
of or default under any of the material contracts of the Companies.
None of the Specified Officers has knowledge that any of the material
contracts of the Companies will be rescinded, terminated prior to its
expiration date or not renewed. Except for the Restricted Contracts,
all material contracts are assignable or will otherwise be
transferred to the Buyer without any consent or other action by any
other party to such contracts, and upon consummation of the
transactions contemplated by this Agreement all material contracts of
the Companies which are not Restricted Contracts will be transferred
to the Buyer without payment or penalty as a consequence of such
transfer. None of the Companies is a party to or has any obligation
under any agreement, written or oral, which contains any covenants
currently or prospectively limiting the freedom of any of the
Companies to engage in any line of business or to compete with any
entity, except for any such agreements that relate to products
licensed by or distributed by or on behalf of any of the Companies.
The Disclosure Schedule contains a list of all Restricted Contracts
that are material to the Companies. With respect to those contracts
of the Companies relative to the Animal Health Business that are not
material contracts, none of such contracts contains provisions which,
individually or in the aggregate, would have a material adverse
effect on the Animal Health Business.
4.1.19 Customers. For the ten countries that had the
---------
highest combined net sales of all products of the Companies in Fiscal
Years 1995 and 1996, the Disclosure Schedule lists (i) the customers
that purchased from the Company the five highest amounts of combined
net sales of products of the Companies in each such country in such
fiscal years; and (ii) any written contract that any of the Companies
has with such listed customer. None of the Companies nor, to the
Sellers' Knowledge, any other party thereto, is in breach of or
default under any such written contract, except for such breaches and
defaults which would not, individually or in the aggregate, have a
material adverse effect on the Animal Health Business or the
Companies, taken as a whole, or on any Major Business or Technology.
None of the Specified Officers has received notice from any other
party to any such written contract that any such agreement will be
rescinded, terminated or not renewed, except for any such rescission,
termination or non-renewal which would not, individually or in the
aggregate, have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major
Business or Technology.
4.1.20 Employee Benefits.
-----------------
(a) The Disclosure Schedule contains accurate
descriptions of each Plan (as hereinafter defined) established,
sponsored or maintained by any of the United States Companies, their
affiliates or any of their ERISA Affiliates (as hereinafter defined)
as of the date of this Agreement or to which any of the Companies,
their affiliates or their ERISA Affiliates has contributed or may
otherwise have liability.
(i) True and correct copies of each
written Plan (including any trust agreement) and all
amendments thereto that are currently in effect, the most
recent actuarial or similar reports, if any, any required form
5500, Internal Revenue Service ("IRS") Determination Letter
with respect thereto, if any, and any significant
communication to or from the IRS, the United States Department
of Labor, the Pension Benefit Guaranty Corporation ("PBGC"),
or any other Governmental Authority relating thereto have been
provided or made available to the Buyer.
(ii) Each Plan complies in all material
respects with ERISA and the Code (if applicable) and all other
applicable laws and administrative or governmental rules and
regulations.
(iii) No "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to
any defined benefit pension Plan of the United States
Companies, their affiliates or their ERISA Affiliates for
which the 30 day notice requirement has not been waived, and
if properly waived, such "reportable event" has been
adequately reported in the annual report made by the Plan
(other than with respect to the transactions contemplated by
this Agreement), and no condition exists which would subject
any of the United States Companies, their affiliates or any of
their ERISA Affiliates to any fine under Section 4071 of
ERISA.
(iv) None of the United States Companies,
their affiliates nor any of their ERISA Affiliates, has
withdrawn from any Multiemployer Plan (as hereinafter defined)
or has taken, or is currently considering taking, any action
to do so.
(v) No action has been taken, or is
currently being considered by the United States Companies,
their affiliates nor any of their ERISA Affiliates to
terminate any Plan subject to Title IV of ERISA.
(vi) No pension Plan of the United States
Companies, their affiliates or any of their ERISA Affiliates
nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived.
(vii) There are no actions, suits, audits,
investigations, claims or other similar proceedings pending,
or, to the Sellers' Knowledge, threatened (other than routine
claims for benefits) with respect to any Plan, or the assets
of any trust under any such Plan, or the sponsor,
administrator or any fiduciary of any such Plan which would,
individually or in the aggregate, have a material adverse
effect on the Companies or become the liability of the Buyer
or the Companies or their affiliates upon the consummation of
the transactions contemplated herein.
(viii) There are no liabilities or
obligations with respect to any of the Plans for which the
Buyer, the Companies or their affiliates may be liable that
have not been disclosed on the Disclosure Schedule or
appropriately reflected on the Annual Balance Sheet, or (for
amounts accruing subsequent to June 30, 1996) any subsequent
regularly prepared balance sheet, including liabilities for
benefits that may accrue through the date of Closing.
(ix) There are no increases in credited
service, enhancements or increase in severance or similar
arrangements as a result of the transactions contemplated
herein or otherwise with respect to any employees or other
persons.
(x) None of the United States Companies,
their affiliates nor any of the ERISA Affiliates has incurred
or, to the Sellers' Knowledge, would reasonably be expected to
incur, individually or in the aggregate, any material
liability under or pursuant to Title IV of ERISA.
(xi) No prohibited transactions described
in Section 406 of ERISA or Section 4975 of the Code have
occurred which would, individually or in the aggregate, result
in material liability to the Companies.
(xii) All Plans of the United States
Companies, their affiliates or their ERISA Affiliates that are
intended to be qualified under Section 401(a) of the Code have
received a favorable determination letter as to such
qualification from the IRS and, to the Sellers' Knowledge, no
event has occurred, either by reason of any action or failure
to act, which would cause the loss of any such qualification
and no merger or consolidation of any plan or transfer of plan
assets into such Plan has adversely impacted such
qualification. To the Sellers' Knowledge, there is no reason
why any such Plan is not so qualified in operation.
(xiii) None of the United States Companies,
their affiliates or their ERISA Affiliates is a party to or
has participated in, contributed to or been required to
contribute to a Multiemployer Plan.
(xiv) The United States Companies have
complied in all material respects with the health care
continuation requirements of Part 6, Subtitle B of Title I of
ERISA and Code Section 4980B.
(xv) Except as provided in this Agreement,
the execution of this Agreement does not, and the consummation
of the transactions contemplated hereby and compliance with
the provisions hereof will not, result in an increase in the
amount of compensation or benefits or accelerate the vesting
or timing of payment of any compensation or benefits payable
by the Buyer (other than with respect to any existing benefit
plans of the Buyer) or any of the United States Companies (or
for which any of the United States Companies would have
liability) or their affiliates pursuant to any Plan, or in
respect of any current or former employee or other person.
(b) The Disclosure Schedule contains accurate
descriptions of each Non-ERISA Plan (as hereinafter defined)
established, sponsored or maintained by any of the United States
Companies or their affiliates as of the date of this Agreement or to
which any of the Companies, their affiliates or their ERISA
Affiliates has contributed or may otherwise have liability.
(i) True and correct copies of each
written Non-ERISA Plan (including any trust agreement) and all
amendments thereto that are currently in effect, the most
recent actuarial or similar reports, if any, any annual filing
required by applicable law, and any significant communication
to or from any Governmental Authority relating thereto have
been provided or made available to the Buyer.
(ii) Each Non-ERISA Plan complies in all
material respects with all applicable laws and administrative
or governmental rules and regulations.
(iii) There are no actions, suits, audits,
investigations, claims or other similar proceedings pending,
or, to the Sellers' Knowledge, threatened (other than routine
claims for benefits) with respect to any Non-ERISA Plan, or
the assets of any trust under any such Non-ERISA Plan, or the
sponsor, administrator or any fiduciary of any such Non-ERISA
Plan which would, individually or in the aggregate, have a
material adverse effect on the Companies or become the
liability of the Buyer or the Companies or their affiliates
upon the consummation of the transactions contemplated herein.
(iv) There are no liabilities or
obligations with respect to any of the Non-ERISA Plans for
which the Buyer, the Companies or their affiliates may be
liable that have not been disclosed on the Disclosure Schedule
or appropriately reflected on the Annual Balance Sheet, or
(for amounts accruing subsequent to June 30, 1996) any
subsequent regularly prepared balance sheet, including
liabilities for benefits that may accrue through the date of
Closing.
(v) There are no increases in credited
service, enhancements or increase in severance or similar
arrangements as a result of the transactions contemplated
herein, or otherwise with respect to any employees or other
persons.
(vi) Except as provided in this Agreement,
the execution of this Agreement does not, and the consummation
of the transactions contemplated hereby and compliance with
the provisions hereof will not, result in an increase in the
amount of compensation or benefits or accelerate the vesting
or timing of payment of any compensation or benefits payable
by the Buyer (other than with respect to any existing benefit
plans of the Buyer) or any of the United States Companies (or
for which any of the United States Companies would have
liability) or their affiliates pursuant to any Non-ERISA Plan,
or in respect of any current or former employee or other
person.
(c) The Disclosure Schedule contains accurate
descriptions of each International Plan (as hereinafter defined)
established, sponsored or maintained (including all International
Plans required by any Governmental Authority) by any of the Companies
or their affiliates as of the date of this Agreement or to which any
of the Companies or their affiliates has contributed or may otherwise
have liability.
(i) True and correct copies of each
written International Plan (including any trust agreement)
and all amendments thereto (to the extent documentation
exists) that are currently in effect, the most recent
actuarial or similar reports, if any, any required annual
report, and any significant communication to or from any
Governmental Authority relating thereto have been provided or
made available to the Buyer.
(ii) Each International Plan complies in
all material respects with all applicable laws and
administrative or governmental rules and regulations.
(iii) There are no actions, suits, audits,
investigations, claims or other similar proceedings pending,
or, to the Sellers' Knowledge, threatened (other than routine
claims for benefits) with respect to any International Plan,
or the assets of any trust under any such International Plan,
or the sponsor, administrator or any fiduciary of any such
International Plan which would, individually or in the
aggregate, have a material adverse effect on the Companies or
become the liability of the Buyer or the Companies or their
affiliates upon the consummation of the transactions
contemplated herein.
(iv) There are no liabilities or
obligations with respect to any of the International Plans for
which the Buyer, the Companies or their affiliates may be
liable that have not been disclosed on the Disclosure Schedule
or appropriately reflected on the Annual Balance Sheet, or
(for amounts accruing subsequent to June 30, 1996) any
subsequent regularly prepared balance sheet including
liabilities for benefits that may accrue through the date of
Closing.
(v) There are no increases in credited
service, enhancements or increase in severance or similar
arrangements as a result of the transactions contemplated
herein, or otherwise with respect to any employees or other
persons.
(vi) None of the Companies nor their
affiliates has incurred or, to the Sellers' Knowledge, would
reasonably be expected to incur, individually or in the
aggregate, any material liability under or pursuant to any
applicable laws similar to Title IV of ERISA.
(vii) No prohibited transactions described
in any applicable laws similar to Section 406 of ERISA or
Section 4975 of the Code have occurred which would,
individually or in the aggregate, result in material liability
to the Companies.
(viii) Except as provided in this Agreement,
the execution of this Agreement does not, and the consummation
of the transactions contemplated hereby and compliance with
the provisions hereof will not, result in an increase in the
amount of compensation or benefits or accelerate the vesting
or timing of payment of any compensation or benefits payable
by the Buyer (other than with respect to any existing benefit
plans of the Buyer) or any of the Companies (or for which any
of the Companies would have liability) or their affiliates
pursuant to any International Plan, or in respect of any
current or former employee or other person.
(ix) No International Plan offering any
retiree medical or other post-retirement benefit (other than
pension) has been established for the benefit of current or
former employees and other service providers of the Companies
(or any predecessor) and their dependents other than for 3
employees in Canada, 7 employees in the United Kingdom and 11
employees in Argentina.
(x) From and after the Closing Date, the
Buyer, New MVI and the Veterinary Subsidiaries will get the
full benefit of any funds available under any International
Plan to pay benefits or segregated in respect of benefits
accrued under any such plan together with any accruals or
reserves with respect to benefits accrued under any such plan.
(d) The following representations are specific to
the plan or plans referred to in the representation:
(i) The Sellers have purchased or caused
to be purchased (and shall continue to maintain through the
Closing Date) life insurance policies, the proceeds of which
are sufficient to pay all benefits pursuant to the
Mallinckrodt Inc. Executive Life Insurance Plan or any similar
plan, relating to employees of the Companies.
(ii) Employees of the Companies may not
carry over or accrue any sick days or vacation days and no
employee of the Companies is entitled to payment for any sick
days or vacation days other than for vacation days accrued but
unused during the year of termination of employment or for a
maximum of 5 vacation days accrued but unused during the year
that are sold pursuant to certain cafeteria plans.
(iii) The Mallinckrodt Veterinary Inc.
Retirement Plan has been merged with and into the Mallinckrodt
Inc. Retirement Plan (and IRS approval of the merger was
obtained) and was determined by the IRS to be a qualified plan
under Code Section 401(a) prior to such merger, and all
participants in such Plan to the extent still employed or
still eligible to participate are now participants in the
Mallinckrodt Inc. Retirement Plan and credited with all prior
years of service.
(iv) The Retiree Medical Plan for Hourly
Employees covers only current and former employees of Coopers
Animal Health, Inc.
(v) All severance payments and benefits
resulting from the June, 1993 restructuring of Mallinckrodt
Animal Health and the December, 1995 administrative
restructuring of Mallinckrodt Inc. (relating to the
Companies), except and to the extent that such liabilities are
reflected on the Annual Balance Sheet, shall be the sole
liability of the Sellers.
(e) The Disclosure Schedule contains accurate
descriptions (and, in the case of any agreement or arrangement that
is not in writing, a description of severance benefits afforded and
past practices) of every severance or similar agreement, policy or
arrangement, worldwide pursuant to which there may be any liability
to Buyer, New MVI or the Veterinary Subsidiaries, relating to
employees or other service providers of the Companies (including any
required by any Governmental Authority), and true and correct copies
of the same (if in writing) have been provided to the Buyer.
(f) The following definitions shall apply to this
Agreement:
(i) "Plan" means a "pension plan" (as
described in Section 3(2) of ERISA, other than a Multiemployer
Plan) or a "welfare plan" (as described in Section 3(1) of
ERISA) established, sponsored or maintained by any of the
United States Companies, their affiliates or any of their
ERISA Affiliates or to which any of the United States
Companies or any of their ERISA Affiliates has contributed or
otherwise may have any liability.
(ii) "Non-ERISA Plan" means any plan or
arrangement, whether funded or unfunded, in writing or not,
other than the Plans, including but not limited to any bonus,
savings, welfare, incentive compensation, options, stock
appreciation right, or restricted stock plan, supplemental
executive retirement or benefit plan, or insurance plan
established, sponsored or maintained by any of the United
States Companies, their affiliates or any of their ERISA
Affiliates or to which any of the United States Companies,
their affiliates or any of their ERISA Affiliates has
contributed or otherwise may have any liability.
(iii) "Multiemployer Plan" means a
"multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) to which any of the United States Companies, their
affiliates or any of their ERISA Affiliates is or has been
obligated to contribute or otherwise may have any liability.
(iv) With respect to any person, "ERISA
Affiliate" means any trade or business (whether or not
incorporated) which is under common control or would be
considered a single employer with such person pursuant to
Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated thereunder or pursuant to Section
4001(b) of ERISA and the regulations promulgated thereunder.
(v) "International Plan" means any plan
or arrangement, whether funded or unfunded, in writing or not,
other than the Plans and Non-ERISA Plans, including but not
limited to any bonus, retirement, savings, welfare, incentive
compensation, options, stock appreciation right or restricted
stock plan, supplemental executive retirement or benefit plan,
insurance plan, retiree medical or other post-retirement
benefit plan established, sponsored or maintained (including
those required by any Governmental Authority) by any of the
Companies or their affiliates, anywhere in the world, or to
which any of the Companies or their affiliates has contributed
or otherwise may have liability.
(g) The Disclosure Schedule sets forth a list of,
and the Buyer has been provided with copies of, all currently
existing agreements and arrangements with commission agents
and any other similar independent contractors of any of the
Companies ("Commission Agents"), and no agreement or
arrangement of any of the Companies with any Commission Agent
shall result in the Buyer, New MVI or any of the Veterinary
Subsidiaries having any obligation or liability relating to
employee benefits or severance (whether as described in
Article X herein or otherwise) other than any benefits or
severance set forth in such agreement or any benefit or amounts
payable pursuant to applicable law or regulation. The Disclosure
Schedule sets forth the period of time for which each Commission
Agent has acted as a Commission Agent for any Company and the volume
of sales generated by such Commission Agent in Fiscal Year 1996.
(h) The Disclosure Schedule sets forth a list of,
and the Buyer has been provided with or given access to a copy of all
employment agreements relative to the Animal Health Business to which
any of the Companies is a party or pursuant to which any of the
Companies has any outstanding liability or obligation.
(i) Neither the Buyer, New MVI or the Veterinary
Subsidiaries nor any of their affiliates shall have any liability
under any Plan, Non-ERISA Plan or International Plan as a direct
result of any significant inaccuracy in any information with respect
to any employee of the Companies provided by the Sellers to the
Buyer.
4.1.21 Intellectual Property. The Disclosure Schedule
---------------------
lists all patents, patent applications, trademark and service mark
applications and registrations therefor, service marks and copyrights
owned by the Companies and/or used in the Animal Health Business.
The Companies own or have the right to use all patents, trademarks,
service marks, trade names, copyrights, trade secrets, logos, package
designs, trade dress slogans, inventions, formulae, know-how,
technology, compositions of matter, methods or processes currently
used in the Animal Health Business and whether listed on the
Disclosure Schedule or not (collectively the "Intellectual
Property"). All Intellectual Property owned by the Companies is
owned free and clear of all security interests, liens, claims,
pledges, charges, third party rights or encumbrances, except (i) for
any license rights granted to third parties, and (ii) for any such
security interests, liens, claims, pledges, charges, third party
rights or encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology. The Disclosure Schedule contains a list of each
license agreement (with any of the Companies as licensor or licensee)
covering any Intellectual Property used or owned by the Companies in
the conduct of the Animal Health Business which (i) involved the
payment or receipt by the Companies of more than $200,000 of license
fees or royalties in Fiscal Year 1996, or (ii) which is material to
the Animal Health Business or the Companies, taken as a whole, or to
any Major Business or Technology; all of such license agreements are
in full force and effect, and there exists no default by any of the
Companies or, to the Sellers' Knowledge, any other party thereto,
under such license agreements, which default would, individually or
in the aggregate, have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology. To Sellers' Knowledge, none of the products
manufactured, sold or used in or under development by the Animal
Health Business infringes upon, or otherwise violates, the rights
(patent, trade secret or otherwise) of any person. To the Sellers'
Knowledge, no third party is infringing upon the rights of the
Companies in the Intellectual Property and there are no significant
patent applications pending with respect to which the underlying
patent will not be issued. To Sellers' Knowledge, there are no
threats of infringement or offers for license in response to any
threat of infringement concerning any third party patents. No party
other than the Companies owns any rights to the following trade names
or any substantially equivalent variation thereof as used in the
Animal Health Business: "Coopers Animal Health", "Coopers",
"Pitman-Moore" and "Pitman-Moore Animal Health"; provided that, it is
understood that, in a variety of jurisdictions and for good business
reasons, the Companies have not taken steps to protect the use of one
or more of such trade names and that, in some jurisdictions, the use
of one or more of the aforementioned trade names has been abandoned
by the Companies. Syntro Corporation and Syntro Vet Incorporated
(collectively "Syntro") have transferred to Hoechst-Roussel Agri-Vet
Company and its affiliates (collectively "Hoechst") all of the
information and materials listed and described in that certain letter
dated February 7, 1996 from J. Donald Todd of Syntro Corporation to
Chris Ragland of Hoechst. Hoechst has expressed no dissatisfaction
with the scope, composition or completeness of the information and
materials transferred and there is no dispute currently ongoing
between Hoechst and Syntro with respect thereto. Hoechst has
requested no information or materials outside the scope of the
information and materials provided to sublicensee(s) designated by
Hoechst for completing "the then current Research Plan" as provided
in Article 10.3(4) of the agreements listed below ("Syntro
Agreements"); neither has Hoechst expressed to Syntro an opinion that
it is entitled to any rights, information or materials other than
that reasonably required to enable the sublicensee(s) of Hoechst to
complete "the then current Research Plan". In reliance upon the
foregoing and the terms and provisions of the Syntro Agreements, (i)
except with respect to non-exclusive licenses to use technology
granted in the Syntro Agreements, Hoechst has no rights of any kind
with respect to current research being conducted by Syntro or to any
of the products currently projected to be derived therefrom, (ii)
Syntro has satisfied whatever obligations it had to transfer
technology to sublicensee(s) of Hoechst under the change of control
provisions of the Syntro Agreements in all material respects, and
(iii) any rights or interest that Hoechst may previously have had
under terms of the Syntro Agreements to technology or products
currently under development by Syntro have terminated, expired or
been waived or relinquished.
The Sellers and Syntro have complied with their material
obligations under the following agreements (copies of which,
including all amendments, have been provided to the Buyer):
(i) that certain Research, Development and
License Agreement dated March 8, 1991 by and between Syntro
Corporation and Syntrovet Incorporated, on the one hand, and
Hoechst-Roussel Agri-Vet Company, on the other hand, and
(ii) those two Research, Development and
License Agreements dated July 29, 1992 by and between Syntro
Corporation and Syntrovet Incorporated, on the one hand, and
Hoechst-Roussel Agri-Vet Company and Hoechst Veterinar GmbH,
on the other hand.
Neither Syntro Corporation nor Syntrovet Incorporated nor any of
the other Companies have any obligation with respect to Prutech
Research and Development Limited Partnership and/or Prutech Research
and Development Limited Partnership II.
4.1.22 Properties. The Companies and the Sellers have
----------
good and marketable title to or have the right to use all real and
personal property necessary to the conduct of the Animal Health
Business in all material respects, such properties are in all
material respects in good operating condition and repair, there exist
no material restrictions on the right of any of the Companies to use
such property in the conduct of their business, and all such property
owned by the Companies is free and clear of all security interests,
liens, claims, pledges, and other encumbrances. All personal
property leases material to the Animal Health Business are in full
force and effect, and there exists no material default by any of the
Companies or, to the Sellers' Knowledge, any other party thereto,
under any such personal property leases. True and complete copies of
any such personal property leases material to the Animal Health
Business have been made available to the Buyer. All real property
owned by any of the Companies and used in the Animal Health Business
is listed in the Disclosure Schedule (and those facilities which are
idle or substantially idle are identified thereon), and none of such
real property is subject to any mortgage or lien which secures debt
of any person or entity other than the Companies. The Disclosure
Schedule contains a list of all leases of real property by any of the
Companies (whether as lessor or as lessee), all such real property
leases are in full force and effect, and there exists no material
default by any of the Companies or, to the Sellers' Knowledge, any
other party thereto, under any such real property leases which would,
individually or in the aggregate, have a material adverse effect on
the Animal Health Business or the Companies, taken as a whole, or on
any Major Business or Technology. True and complete copies of all
such real property leases have been made available to the Buyer.
4.1.23 Brokers and Finders. Neither the Sellers nor the
-------------------
Companies have employed any broker, finder or agent or agreed to pay
any brokerage fee, finder's fee or commission with respect to the
transaction contemplated by this Agreement other than J.P. Morgan
Securities Inc., for which the Sellers shall be solely responsible.
4.1.24 Investments, etc. Other than their interest in
----------------
New MVI and the Veterinary Subsidiaries, MVI and MVII do not own any
shares of capital stock or other equity securities of, or equity
interest in, any other person, and do not own any other assets other
than the Excluded Assets and other than any assets to be transferred
by MVI to New MVI in the Reorganization.
4.1.25 Insurance. Each of the Companies is covered by
---------
valid and currently effective insurance policies issued in favor of
the Sellers and/or such Company, that, in the reasonable judgment of
the Sellers, are customary for companies of similar size in the
industry and locale in which it operates. Such policies, copies of
which have been given to or have been made available to the Buyer,
(i) are in full force and effect, (ii) all premiums due thereon have
been paid, and (iii) the Sellers and the Companies (as appropriate)
have complied with the provisions of such policies, except for any
failure with respect to clauses (i), (ii) or (iii) set forth in this
sentence which, individually or in the aggregate, would not have a
material adverse effect on the Animal Health Business or the
Companies, taken as a whole, or on any Major Business or Technology.
4.1.26 Affiliate Transactions. The Disclosure Schedule
----------------------
contains a complete and correct list of all current contracts,
arrangements, understandings, transfers of assets or liabilities or
other commitments or transactions, whether or not entered into, made
or incurred in the ordinary course of business, between (i) any of
the Companies and any of the Sellers or any affiliates of the
Sellers, or (ii) any present or former officer, director or employee
of the Companies and the Sellers or any affiliates of the Sellers.
4.1.27 Product Registrations; Regulatory Compliance.
--------------------------------------------
(a) The Disclosure Schedule sets forth, as of the
date hereof and to the extent material to the Animal Health Business
or the Companies, taken as a whole, or to any Major Business or
Technology, and whether currently in force or pending, all product
applications, marketing authorizations, manufacturing authorizations,
registrations, licenses, permits, approvals and similar items granted
or issued by any Governmental Authority for any of the Companies
(collectively, the "Product Registrations"). With respect to all
pending Product Registrations, the Disclosure Schedule also sets
forth the current status thereof, including any significant
modifications or amendments thereto (including without limitation
those related to studies of maximum residue levels) and any rejected
submissions. All Product Registrations that are not pending approval
have been duly obtained and are in full force and effect. The
Companies are in compliance with all Product Registrations in effect
which are material to the Animal Health Business or the Companies,
taken as a whole, or to any Major Business or Technology, and have
taken all actions and measures as are reasonably required to
prosecute and maintain or extend all such Product Registrations,
including without limitation renewals of any such Product
Registrations in Europe required for purposes of establishing maximum
residue levels. There are no undisclosed safety or efficacy issues
under any such Product Registrations, or any notices of deficiencies,
warnings, product recalls, or adverse inspection reports or
investigations by any Governmental Authority. All products sold
under the Product Registrations are manufactured and marketed in
accordance with the specifications and standards contained in such
Product Registrations. Set forth on the Disclosure Schedule is a
list of all of the license or other rights granted by the Companies
to any third party with respect to any such Product Registrations,
including the amount of compensation to be received by the Companies
in connection with each such license or grant. No consent of any
Governmental Authority is required in connection with the transfer of
Product Registrations pursuant to the transactions contemplated
hereby, except for any such consents the failure of which to obtain
would not have a material adverse effect on the Animal Health
Business or the Companies, taken as a whole, or on any Major Business
or Technology. Each of the products produced or sold in connection
with the Animal Health Business (i) is, and at all times has been, in
material compliance with all applicable laws, (ii) has been
manufactured materially in accordance with good manufacturing
practices and any other requirements or standards under the relevant
Product Registration, and (iii) is not adulterated or misbranded
within the meaning of the U.S. Food, Drug and Cosmetic Act or any
substantively similar law or regulations of the U.S. or another
jurisdiction.
(b) To Seller's Knowledge, there is no reasonable
basis in fact or circumstances (i) for the recall, withdrawal or
suspension by any Governmental Authority, or by order of any court,
of any product sold or registered for sale by the Animal Health
Business, or (ii) which would otherwise reasonably be expected to
cause the Animal Health Business to withdraw, recall or suspend any
product or product registration from the market or to terminate or
suspend the manufacturing or testing of any product.
4.1.28 Disclosure. The representations and warranties
----------
set forth in this Section 4.1, including the Disclosure Schedule, do
not contain any untrue statement of a material fact or omit to state
a material fact required to be stated herein or therein necessary to
make the statements herein or therein, in light of the circumstances
under which they were made, not materially misleading.
4.2 Representations and Warranties of the Buyer. The Buyer
-------------------------------------------
hereby makes the representations and warranties set forth in this
Article IV to the Sellers:
4.2.1 Existence. The Buyer is a corporation duly
---------
incorporated and validly existing in good standing under the laws of
the State of New Jersey.
4.2.2 Authority and Validity. The Buyer and its
----------------------
respective affiliates have the necessary power and authority to enter
into this Agreement and the Subsidiary Agreements, as appropriate, to
perform its and their obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and each of the Subsidiary
Agreements has been authorized by all necessary corporate action by
the Buyer and its respective affiliates, as appropriate. This
Agreement has been duly and validly executed and delivered by the
Buyer and (following the signing, each of the Subsidiary Agreements
will be duly and validly executed by the respective affiliates of the
Buyer) and constitutes (and, in the case of a Subsidiary Agreement,
will constitute) the binding obligation of the Buyer (and its
affiliates, as appropriate) enforceable against the Buyer (and its
affiliates, as appropriate) in accordance with its (and their) terms,
except as the foregoing may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, or other similar
laws relating to or affecting the rights of creditors generally and
by equitable principles, including those limiting the availability of
specific performance, injunctive relief, and other equitable remedies
and those providing for equitable defenses.
4.2.3 No Violations. The execution and delivery of this
-------------
Agreement by the Buyer does not (and the execution of the Subsidiary
Agreements by its affiliates will not) and the consummation of the
transactions contemplated hereby (and thereby) and compliance with
the provisions hereof by the Buyer (and thereof by its affiliates)
will not result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the
loss of a material benefit under, or result in the creation of any
lien, security interest, or encumbrance upon any of the properties or
assets of the Buyer or any of its affiliates under: (i) any material
provision of the charter or organizational documents of the Buyer or
any of its affiliates, (ii) any material loan or credit agreement,
note, bond, mortgage, indenture, lease, agreement, instrument,
permit, concession, franchise or license applicable to the Buyer or
any of its affiliates, or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Buyer or any of
its affiliates or their properties or assets.
4.2.4 Consents and Approvals. No filing or registration
----------------------
with, or authorization, consent or approval of, any Governmental
Authority, or any other entity or person not a party to this
Agreement or any Subsidiary Agreement, is required by the Buyer (or
any of its affiliates) to permit the execution and delivery by the
Buyer (or any of its affiliates) of this Agreement or any Subsidiary
Agreement or the consummation by the Buyer (or any of its affiliates)
of the transactions contemplated by this Agreement, except such
filings or other actions as may be necessary by the Buyer (or any of
its affiliates) to comply with (i) the HSR Act, (ii) such consents,
approvals, orders, authorizations, registrations, declarations and
filings as may be required under the laws of any foreign country in
which the Buyer or any of the Buyer's affiliates that are or will be
signatories to the Subsidiary Agreements are organized, conduct any
business or own any property or assets (as set forth on Schedule
4.2.4).
4.2.5 Litigation. There are no actions, suits or claims
----------
or legal, administrative or arbitration proceedings pending against
or, to the Buyer's knowledge, threatened against the Buyer (or any of
its affiliates) seeking to enjoin or prevent the consummation of the
transactions contemplated in this Agreement or any of the Subsidiary
Agreements or otherwise claiming that this Agreement or any of the
Subsidiary Agreements or the consummation of the transactions
contemplated herein or therein are illegal.
4.2.6 Brokers and Finders. The Buyer has not employed
-------------------
any broker, finder or agent or dealt with anyone purporting to act in
such capacity or agreed to pay any brokerage fee, finder's fee or
commission with respect to the transaction contemplated by this
Agreement or any Subsidiary Agreement, except for Merrill Lynch &
Co., for which the Buyer shall have sole responsibility.
4.2.7 Investment Intent. The Buyer and its affiliates
-----------------
are acquiring the Shares for investment for their own account and not
with a view to the distribution of any part thereof. The Buyer
acknowledges, on behalf of itself and its affiliates, that the Shares
have not been registered under federal or any applicable state
securities laws and cannot be resold without registration under such
laws or an exemption therefrom. The Buyer further acknowledges, on
behalf of itself and its affiliates, that it and its affiliates have
knowledge and experience in financial and business matters, that it
and its affiliates are capable of evaluating the merits and risks of
an investment in the Shares, and that they can bear the economic risk
of an investment in the Shares.
4.2.8 Disclosure. The representations and warranties
----------
set forth in this Section 4.2 do not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated herein necessary to make the statements herein, in light of
the circumstances under which they were made, not materially
misleading.
ARTICLE V
COVENANTS
---------
5.1 Covenants of the Sellers. The Sellers, jointly and
------------------------
severally, agree that between the date of this Agreement and the
Closing Date, the Sellers shall comply, and shall cause the Companies
to comply, with the following covenants:
5.1.1 Access. The Sellers and the Companies will permit
------
the Buyer and its authorized representatives reasonable access to,
and make available for inspection, during normal business hours and
on reasonable advance notice, all of the assets and business of the
Companies, and the Sellers and the Companies will furnish to the
Buyer copies of or access to all documents, records and information
with respect to the affairs of the Companies that the Buyer and its
representatives may reasonably request, subject to any existing
obligations of confidentiality or non-disclosure obligating the
Sellers or any of the Companies. Between the date hereof and the
Closing Date, the Buyer shall be provided reasonable opportunity to
meet with Animal Health Business personnel (for the purpose, among
other things, of exploring with such personnel the Buyer's interest
in continuing their employment with the Animal Health Business
following the Closing), to review research and development projects
and clinical studies, to review information systems and to conduct
physical inventories; provided, that, such opportunities shall be
made available on reasonable advance notice and (except with respect
to discussions with personnel) representatives of the Sellers shall
have the right to be present during such activities if, in the
Sellers' judgment, there is legitimate business reason. Upon
reasonable request by the Buyer, the Sellers will provide the Buyer,
among other things, with (i) updates concerning research and
development projects and clinical studies and (ii) a list of all
derivative financial instruments which are obligations of any of the
Companies, including, without limitation, purchased or written
foreign exchange options, forward rate agreements, and currency and
interest rate swap contracts. The Sellers shall provide the Buyer
with copies of all regulatory correspondence, warnings from
Governmental Authorities, inspection notices, and adverse event
claims and reports received by the Sellers between the date hereof
and the Closing Date. The Sellers shall also provide the Buyer with
a list of all contested Taxes for which the Buyer may have any
liability hereunder pursuant to Article 9.
5.1.2 Operations. Except as may otherwise be provided
----------
herein or with the written consent of the Buyer, and except for the
Reorganization, the Excluded Assets Reorganization and the Excluded
Liabilities Reorganization, the Sellers shall cause the Companies to:
(i) conduct their respective operations in compliance with applicable
laws and in the ordinary course of the Animal Health Business and
without substantial change in practice or policy and in a
commercially reasonable manner, (ii) maintain their respective
properties and facilities in their present condition, reasonable use
and ordinary wear and tear excepted, and maintain and prosecute all
Product Registrations (iii) use reasonable best efforts to maintain
their respective relationships with customers, suppliers, third party
researchers and key employees and fulfill all material contract
obligations, (iv) continue to maintain insurance with coverages,
deductibles and limits which are the same, in all respects material
to the Companies, as exist on the date of this Agreement, (v) not
incur, create or assume any lien with respect to any material asset,
(vi) except for the settlement of intercompany debt or as may be
necessary to minimize the Sellers' Tax cost associated with the sale
of Veterinary Subsidiaries by MVII, so long as no action taken has an
adverse effect on the Buyer, New MVI or any Veterinary Subsidiary,
not incur any long-term indebtedness for money borrowed, factoring
arrangements, sale and leaseback transactions and other similar
financing transactions or incur any short-term indebtedness for
borrowed money in excess in the aggregate of $5,000,000 of short-term
indebtedness, (vii) except for the Excluded Assets and except for
sales of products to customers and distributors in an ordinary and
normal fashion, not acquire or dispose of any assets except in a
commercially reasonable manner in the context of normal daily
operations and provided that no acquisition or disposition of any
intangible assets shall occur and no acquisition or disposition of
tangible assets shall individually exceed $25,000 in value, (viii)
not amend any term of, or waive any right under, any material
contract, nor exercise any option or similar right under any of such
contracts (except that purchase orders in the ordinary course of
business shall not be deemed to be an amendment for purposes of this
clause (viii)), (ix) not change or amend the charter or bylaws of any
Company, (x) not issue, sell, pledge, transfer, repurchase or redeem
or propose to issue, sell, pledge, transfer, repurchase or redeem any
shares of capital stock of any Company (other than directors'
qualifying or nominee shares), or securities convertible into or
exchangeable or exercisable for, or options with respect to, or
warrants to purchase or rights to subscribe for, shares of capital
stock of any Company, except for the transfer of the shares of
Mallinckrodt Medical Argentina Limited and one share of Mallinckrodt
Medical Holdings (UK) Limited to the Sellers or any of their
affiliates (other than New MVI or the Veterinary Subsidiaries) (the
"Designated Transfers") and except for any capital contribution
required to satisfy applicable laws with respect to allowable
debt-to-equity ratios, so long as no action taken has an adverse
effect on the Buyer, New MVI or any Veterinary Subsidiary, (xi) not
enter into any agreements, commitments or contracts which are
material to the Animal Health Business (including, without
limitation, employment agreements and collective bargaining
agreements), and shall not enter into any agreements or contracts
which are not in the ordinary course of business, (xii) except where
the Companies are bound by contract or by law or are meeting the
lawful request of a Governmental Authority, not provide any
confidential information with respect to the Animal Health Business
to any person other than the Buyer, (xiii) not enter into, adopt or
amend (except as required by applicable law or any existing
agreement) any plan or increase the amount or accelerate the payment
or vesting of any benefit payable thereunder, in each case in any way
that increases the amount of the liability attributable to the Animal
Health Business in respect of such plan, or grant any increases in
the compensation or fringe benefits of employees of the Animal Health
Business, (xiv) not make capital expenditures (or enter into
commitments for capital expenditures) in excess of $50,000 in any
case or $250,000 in the aggregate except for capital expenditures
that have already been budgeted or have otherwise been approved for
expenditure, which budgeted and approved capital expenditures in the
aggregate will not exceed $2,000,000, (xv) except for the Designated
Transfers, an election that may be made pursuant to Code Regulation
Section 301.7701-3 with respect to Mallinckrodt Veterinary Holdings
Limited and any dividends paid or deemed paid by Mallinckrodt Vet
GmbH or other Veterinary Subsidiaries owned by MVII, so long as no
action taken has an adverse effect on the Buyer, New MVI or any
Veterinary Subsidiary, not sell, assign or otherwise dispose of or
pay a dividend of any of its material assets except (x) as otherwise
permitted in accordance with the terms of this Section 5.1.2, (y) to
replace the same with assets of substantially equivalent value or (z)
for dividends made in cash, or (xvi) not transfer, grant or knowingly
terminate any rights under any licenses, patents, trademarks, trade
names, service marks or copyrights, or (xvii) not agree to take any
of the foregoing actions. Notwithstanding the preceding portions of
this Section 5.1.2, the Buyer shall make appropriate representatives
(whose identity has been provided in writing to the Sellers)
available at reasonable times to consider requests with respect to
any actions that, failing the receipt of the Buyer's written consent,
might violate the provisions of this Section and if, in any instance,
the Buyer has failed to act in a commercially reasonable manner, the
Sellers shall not be liable, in that instance, for non-compliance
with this Section. The provisions of Section 5.1.2 shall not be
interpreted as prohibiting the Sellers from taking reasonable actions
which are necessary to minimize any Tax liability that may result
from the sale by MVII of the Veterinary Subsidiaries it owns,
directly or indirectly, so long as no action taken has an adverse
effect on the Buyer, New MVI or any Veterinary Subsidiary.
5.1.3 Buyer Concurrence on Specific Items. During the
-----------------------------------
period after the date hereof and on or prior to the Closing Date,
prior to taking any of the following actions, the Sellers shall
consult with the Buyer and obtain the Buyer's concurrence: (i)
hiring, termination or transfer of any personnel of the Animal Health
Business, (ii) making any agreement or commitment with respect to the
taking of any remediation, corrective action or similar action
relative to facilities and real property being transferred to the
Buyer pursuant to this Agreement (unless and to the extent required
by law or a Governmental Authority under circumstances in which the
seeking of the Buyer's concurrence involves substantial risk of
prejudice to the Sellers or in which the Sellers, in the exercise of
their reasonable judgment, believe they have no alternative but to
make any such commitment or agreement), (iii) making any significant
decisions concerning research and development projects and clinical
studies, or (iv) making any significant decisions concerning product
or technology registrations in progress.
5.1.4 Financial Statements. On or before the Closing
--------------------
Date, the Sellers shall deliver or cause to be delivered to the Buyer
an unaudited combined balance sheet and a combined statement of
operations of the Companies as of and for the interim period ending
on the last day of the most recent accounting period of the Companies
prior to the Closing Date for which such statements are available.
During the period between the date hereof and the Closing Date, the
Sellers shall deliver or cause to be delivered to the Buyer, within
fifteen business (15) days after the end of each month, such
statements of profits and losses for the prior month and such balance
sheets relative to the prior month for the Animal Health Business as
are regularly prepared in the ordinary and normal course of business.
Further, prior to the Closing Date and as and when available, the
Sellers shall deliver or cause to be delivered to the Buyer such
statements of profits and losses, cash flow and balance sheets for
the Animal Health Business for the calendar quarter ended as are
available and regularly prepared by the Sellers in the ordinary
course of business. The statements to be delivered pursuant to this
Section shall be true and complete in all material respects and
prepared in accordance with the customary accounting practices,
procedures and policies of the Companies used in connection with
regularly prepared, internal financial statements, which practices,
procedures and policies will not necessarily be consistent in all
respects with GAAP or the practices, procedures and policies used in
preparing the Financial Statements. Subject to the approval of the
Sellers (which approval shall not unreasonably be withheld), the
Buyer shall have access to certain other information customarily
prepared by the Companies concerning the financial condition and
results of operations of the Companies.
5.1.5 Intercompany Loans. Prior to the Closing, the
------------------
Sellers will cause New MVI and the Veterinary Subsidiaries to repay
any intercompany loans outstanding to New MVI and the Veterinary
Subsidiaries from the Sellers or their affiliates (other than New MVI
and the Veterinary Subsidiaries), as described in Schedule 5.1.5 and
in accordance with any procedures set forth in said Schedule 5.1.5.
5.1.6 No Solicitations. During the term of this
----------------
Agreement, neither the Sellers nor the Companies or any of their
respective officers, directors, employees, representatives or agents
shall directly or indirectly solicit, initiate, entertain, encourage
or enter into any inquiries or proposals for, or enter into or
continue any discussions or negotiations with respect to, the
acquisition by any person of any of the Shares, any other shares of
capital stock or other securities of the Companies, or all or
substantially all of the Animal Health Business (an "Acquisition
Transaction"). The Sellers will promptly inform the Buyer of any
such inquiries, proposals, discussions or negotiations. The Sellers
shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any person other than
the Buyer in respect of any Acquisition Transaction.
5.1.7 Confidentiality. For a period of three years from
---------------
the date hereof, except (i) as may be required by law (including,
without limitation, any disclosures the Sellers shall reasonably
determine are necessary under any applicable law, rule or regulation
concerning the obligations of publicly traded companies to make
disclosures of material information) or otherwise required to be
disclosed to any works council or similar organizations and (ii) in
the ordinary course of business of the Sellers or their affiliates,
none of the Sellers will at any time disclose to any person, firm or
company or use to the detriment of the Companies or the Animal Health
Business any confidential information related thereto, provided,
however, that this Section 5.1.7 shall not apply to any information
that (x) is generally available to the public or (y) is subsequently
disclosed by a third party not having a confidential relationship
with the Buyer or any of its affiliates.
5.1.8 Excluded Assets and Excluded Liabilities. Prior
----------------------------------------
to the Closing Date, the Sellers will complete the Reorganization,
the Excluded Asset Reorganization and the Excluded Liabilities
Reorganization.
5.2 Covenants of the Buyer. The Buyer agrees that
----------------------
between the date of this Agreement and the Closing Date, the Buyer
shall comply with all of its obligations under the Confidentiality
Agreement.
5.3 Mutual Covenants of the Sellers and the Buyer.
---------------------------------------------
5.3.1 Satisfaction of Conditions. From and after the
--------------------------
date hereof, the Sellers and the Buyer shall use their reasonable
best efforts, individually or jointly (as the case may be), to cause
all conditions precedent set forth in Sections 6.1 and 6.2 of this
Agreement, respectively, to be satisfied and fulfilled at the
earliest practicable date, to the extent the satisfaction or
fulfillment thereof is its responsibility hereunder or within its
reasonable control. If any event should occur, either within or
without the control of any party hereto, which would prevent
fulfillment of the conditions precedent to the obligations of any
party to consummate the transactions contemplated by this Agreement,
the relevant parties shall use their reasonable best efforts to cure
or remove the effect of the event as expeditiously as possible;
provided however, that (without limitation) nothing set forth herein
shall be construed as requiring any party to enter into any
litigation or expend any sums in the defense or settlement of any
litigation in order to cure or remove the effect of any such event.
5.3.2 Governmental Consents. Promptly following the
---------------------
full execution of this Agreement, the Sellers and the Buyer shall
take, prepare, make or file, or cause to be taken, prepared, made or
filed, with each appropriate Governmental Authority, all actions,
filings and requests for approvals, consents, permits, authorizations
or waivers that are required from such Governmental Authority (and
all relevant works councils or other similar organizations) for the
consummation of the transactions contemplated by this Agreement and
shall diligently and expeditiously prosecute, and shall cooperate
fully with each other in the prosecution of, such actions, filings
and requests and all proceedings necessary to secure such approvals,
consents, permits, authorizations and waivers. The parties
acknowledge and agree that the actions, filings and requests required
to be made pursuant to this Section may include, without limitation,
compliance with the HSR Act, the merger and antitrust laws and
regulations of Argentina, Australia, Colombia, Germany, Greece,
Ireland, New Zealand, Portugal, Taiwan, and Thailand and such other
similar laws or regulations as may be applicable given the nature of
the business of the Companies or the parties hereto (as to which the
parties will reach agreement).
5.3.3 Public Announcements. Neither party (and for
--------------------
purposes of this Section 5.3.3, the Sellers shall be deemed to be a
single party) shall make any public announcement at any time
concerning this Agreement or the transactions contemplated hereby
without the prior approval of the other party (which approval shall
not unreasonably be withheld) and without giving the other party the
opportunity to review and comment on any such proposed public
announcement. In the event either party reasonably determines that a
public announcement concerning this Agreement or the transactions
contemplated hereby is required by law, such party shall give the
other party advance notice of, and opportunity to review and comment
on, the proposed form and substance of the required announcement as
is practicable under the circumstances, but such review by the other
party shall in no event prevent the party wishing to disclose, if it
is legally required to make such announcement, from making an
announcement in such form and substance as it shall reasonably
determine is required.
5.4 Joint Environmental Baseline Study. The parties agree that
----------------------------------
the Buyer will, in consultation with the Sellers as provided herein
and in accordance with the procedures set forth in this Section 5.4,
conduct an environmental baseline study ("Baseline Study") of those
Animal Health Business facilities listed on Schedule 5.4 hereto, it
being understood that the environmental indemnity set forth in
Section 8.1.1(iii) hereunder shall apply to all facilities owned or
leased by the Sellers and conveyed or transferred to the Buyer in
accordance herewith whether or not the Baseline Study includes any
investigation or examination of such facilities. It is understood
that the Baseline Study will be carried out by Metcalf & Eddy or by
another independent environmental consultant or consultants selected
by the Buyer and reasonably acceptable to the Sellers, and that the
Sellers will be entitled to use their own independent consultants to
participate in and review the results of the Baseline Study. The
performance of any tests or investigations in connection with the
Baseline Study shall be arranged with the Sellers in advance to occur
at reasonable times and with a view to making certain that the
Sellers and their consultants (if they desire) can be present at any
testing or investigation conducted in connection with the Baseline
Study. The Buyer and the Sellers shall take all steps necessary to
ensure that they and any consultants utilized by them to perform the
Baseline Study keep all data and information learned or generated by
them strictly confidential to the extent allowed by law. The Buyer
shall prepare an anticipated scope of work, including the analytical
methods to be used, for the Baseline Study. The Buyer shall provide
the Sellers with a reasonable opportunity to review and comment upon
such scope of work and the Buyer will, in good faith, consider all
suggestions made by the Sellers with respect to such scope of work,
though it is understood that the Sellers do not have a right to
approve such scope of work. The Sellers recognize that actual
testing and investigation performed by the Buyer's consultant in
connection with the Baseline Study may deviate from the procedures
set forth in the anticipated scope of work as a result of field
conditions. The Buyer reserves the right, after seeking consultation
and advice from the Sellers or the Sellers' consultant, to modify the
Baseline Study scope of work or methodologies (including modifying
the location and number of samples to be taken to more fully
delineate the extent of any Environmental Liability or violation of
any Environmental Requirement) as circumstances reasonably warrant.
The parties agree that the Baseline Study shall be commenced on or
about the Closing Date and the Buyer agrees to employ reasonable best
efforts to have the Baseline Study completed within six (6) months
after the Closing Date and further agrees that, absent unusual
circumstances, the Baseline Study will be completed within one (1)
year after the Closing Date. The results of such Baseline Study will
be reflected in a final report containing questionnaires, testing
results and analytic data from field work ("Final Report") to be
simultaneously delivered to and reviewed by the Buyer and the Sellers
and upon issuance of the Final Report the Baseline Study will be
deemed completed. In addition to the Final Report, the Buyer and the
Sellers shall be simultaneously entitled to receive all testing
results and all other data generated during the course of the
Baseline Study (including any additional test results or other data
generated as a consequence of the modification of the Baseline Study
in accordance herewith and prior to the issuance of the Final
Report). It is understood that the failure of the Baseline Study to
detect any Hazardous Substance at any particular facility of the
Companies shall give rise to a rebuttable presumption that such
Hazardous Substance was not present at the facility in question on
the Closing Date and that any responsibility that may arise as a
result of its presence is not the responsibility or liability of
Sellers in accordance herewith. It is also understood that the
absence of a Baseline Study at a particular facility or portion
thereof shall not give rise to a presumption of any kind regarding
responsibility or liability that may arise as a result of the
presence of Hazardous Substances. Each of the Buyer and the Sellers
will be responsible for the costs and expenses of its own consultants
in connection with the Baseline Study.
5.5 Cooperation Concerning Excluded Assets. The Buyer
--------------------------------------
understands that, from and after the date hereof, the Sellers will be
attempting to sell certain real estate and facilities included in the
Excluded Assets to other potential purchasers. The Buyer hereby
agrees that, upon request by the Sellers, the Buyer will provide all
information within its possession concerning the Excluded Assets to
the Sellers and will make available its personnel and representatives
to provide any aid the Sellers may reasonably request in connection
with sale of the Excluded Assets to any third parties, provided that,
the Buyer will be reimbursed its out-of-pocket expenses in providing
any such assistance and, provided further, that the Buyer will not be
required to take any actions that might unreasonably disrupt or
interfere with the normal prosecution of its business activities. It
is further understood that any sale or transfer, or attempted sale or
transfer, by the Sellers of any real estate and facilities included
in the Excluded Assets shall under no circumstances be deemed to be a
violation of the Sellers' obligations under Section 10.9 hereof.
5.6 Use of Names. From and after the Closing Date, the Buyer
------------
shall have the right (to the extent the Sellers have any right) to
use any trade names, trademarks, identifying logos or service marks
employing the words "Mallinckrodt Veterinary", "Coopers Animal
Health", "Coopers", "Pitman-Moore" and "Pitman-Moore Animal Health"
or any substantially identical variations of any of the foregoing
(collectively, the "Animal Health Trademarks") in the names of the
Companies, as applicable, or in connection with the operation of the
Animal Health Business, including in connection with the use of
materials containing any Animal Health Trademark; provided that, the
Buyer's rights to the "Mallinckrodt Veterinary" name (or any other
Animal Health Trademark containing, in any fashion, the name
"Mallinckrodt") shall expire one hundred eighty (180) days after the
Closing Date (with the exception of packaging materials on finished
product and advertising or promotional materials printed prior to the
Closing for which such period shall extend up to the applicable
product expiration date).
5.7 Transitional Services. The Sellers and the Buyer will, on
---------------------
the Closing Date, enter into an agreement for the provision by the
Sellers to the Buyer of such interim and transitional services with
respect to the Animal Health Business and the Companies for a period
of up to six (6) months and at a charge equal to the actual direct
cost to the Sellers of providing such services, and (in any event) at
a cost no greater than the current cost of providing such services
excluding any allocated overhead costs, such charges to be billed by
the Sellers and payable by the Buyer on a monthly basis. Set forth
on Schedule 5.7 is a list of the services that will be included in
the agreement referred to in the immediately preceding sentence.
5.8 Subsidiary Agreements. Notwithstanding any other provision
---------------------
hereof or the terms and conditions of any Subsidiary Agreement, in
the event that there is no closing of this Agreement, it is
understood that none of the parties hereto (or their affiliates)
shall be entitled to insist on the closing or the consummation of any
of the transactions under, or enforcement of any of the terms or
provisions of, any of the Subsidiary Agreements and it is further
understood that, in the event this Agreement is terminated for any
reason, the parties shall take such actions as are necessary to
ensure that each of the Subsidiary Agreements is terminated without
liability to any party.
5.9 Rapinovet Contract. From and after the date hereof, the
------------------
Sellers shall exert their reasonable best efforts to secure the
consent to assignment or transfer of those certain license and/or
distribution agreements by and between Imperial Chemical Industries
and Coopers Animal Health, Inc., of various dates, related to
propofol (otherwise known as "Rapinovet").
5.10 Other Products. From and after the date hereof and until
--------------
the Closing Date, the Sellers shall exert their reasonable best
efforts to preserve for the Buyer, without any additional cost or
obligation to the Buyer, the Buyer's ability to continue to sell the
following products from and after the Closing Date: (i)
Diprinovet/Zaquilan as described under 4.1.27(2)(D)(i) of the
Disclosure Schedule, (ii) the CBM Products in Brazil as described
under 4.1.27(2)(F) of the Disclosure Schedule, (iii) the FMD products
manufactured in Paraguay which are subject to the government
requirement noted under 4.1.14 of the Disclosure Schedule and (iv)
the products noted as requiring modification of product registrations
or notification to regulatory authorities under Section
4.1.27(2)(D)(i) of the Disclosure Schedule.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
6.1 Conditions to Obligations of the Buyer. The obligations of
--------------------------------------
the Buyer hereunder are subject to the fulfillment, at or prior to
Closing, of the following conditions (unless waived in writing by the
Buyer):
6.1.1 Representations and Warranties. The
------------------------------
representations and warranties of the Sellers contained herein shall
be true and correct in all material respects as of the Closing as if
made on and as of the Closing Date; provided, however, that if any
such representation or warranty is already qualified by materiality,
for the purpose (and only for the purpose) of determining whether
this condition has been satisfied, such representation and warranty
as so qualified shall be true and correct in all respects. The
Sellers shall each have delivered to the Buyer a certificate of an
appropriate Specified Officer of the Companies, dated as of the
Closing Date, to that effect.
6.1.2 Covenants. The Sellers and their affiliates shall
---------
each have performed and complied in all material respects with all
covenants or conditions required by this Agreement and each
Subsidiary Agreement to be performed and complied with by them prior
to Closing, and the Sellers shall each have delivered to the Buyer a
certificate of an appropriate officer of the Sellers, dated as of the
Closing Date, to that effect.
6.1.3 No Pending Actions. There shall be no pending or
------------------
threatened claim, action, suit, investigation or proceeding by or
involving any Governmental Authority (including the Justice
Department and the Federal Trade Commission) against the Buyer, the
Sellers, or the Companies for the purpose of enjoining or preventing
the consummation of the transactions contemplated in this Agreement
or any Subsidiary Agreement or otherwise claiming that this
Agreement, any Subsidiary Agreement, or the consummation of the
transactions contemplated herein is illegal, and there shall be no
claim, action, suit, investigation or proceeding which may, in the
reasonable opinion of the Buyer result in the entry of any judgment,
order or decree requiring the Buyer and/or its affiliates to hold
separate or dispose of any assets of the Animal Health Business
and/or any existing assets of the Buyer or its affiliates.
6.1.4 Antitrust Laws. All filings required to be made
--------------
with all Governmental Authorities (including without limitation any
filings under the HSR Act) shall have been made, and any applicable
waiting periods thereunder shall have expired or been terminated or
all permissions or consents that are sought in connection with such
filings shall have been granted. Any approvals, waiting periods or
conditions of clearance of any Governmental Authority required under
any competition, foreign investment or other similar law of any
jurisdiction required to consummate the transactions contemplated
hereby, including (without limitation) approvals required in
Argentina, Australia, Colombia, Germany, Greece, Ireland, New
Zealand, Portugal, Taiwan and Thailand shall have been received,
waived or satisfied by the appropriate Governmental Authority.
6.1.5 No Material Adverse Change. There shall not have
--------------------------
been any material adverse change in the business, assets, financial
condition, or operations of the Animal Health Business or the
Companies, taken as a whole, or of any Major Business or Technology
between the date of this Agreement and the Closing (except for any
such changes that (i) result from known deterioration in sales and
operating profitability, including pre-operating costs at the Raleigh
biological facility, of the United States Business of which the Buyer
is aware and of which the Buyer informed the Sellers on March 5, 1997
and at various other times prior to the date hereof and (ii) are
manifested by reductions in the sales and earnings of the Companies
if and to the extent such changes are due to (A) biocontainment
regulations in Brazil, (B) the impact of BSE or "mad cow" disease on
the European Business and (c) the impact of FMD or "foot and mouth"
disease on the Australasian Business), and the Sellers shall each
have delivered to the Buyer a certificate of an appropriate Specified
Officer of the Companies, dated as of the Closing Date, to that
effect.
6.1.6 Legal Opinion. The Buyer shall have received from
-------------
Roger A. Keller, Esq., Vice President and General Counsel of MI, a
legal opinion substantially as attached hereto as Exhibit B.
---------
6.1.7 Share Certificates. The Sellers shall have
------------------
delivered to the Buyer certificates representing the Shares, duly
endorsed in blank or with appropriate stock powers, or the Sellers
shall have taken such other actions as may be necessary under
applicable law to transfer ownership of the Shares to the Buyer, free
and clear of any pledges, security interests, liens, encumbrances or
adverse claims.
6.1.8 Transfer of Contracts Generally. With respect to
-------------------------------
those third party sales Restricted Contracts and other third party
sales contracts that together constitute the approximately
$182,000,000 of third party contract sales of the Animal Health
Business for its Fiscal Year 1996 ("Contract Base"), there shall have
been received by the Sellers from the other parties to any of such
contracts included in the Contract Base appropriate consents or
waivers with respect to any contractual restrictions on transfer
relative to such contracts (without amendment of the current terms of
any such contracts) such that there are no restrictions on transfer
to the Buyer of that portion of contracts included in the Contract
Base comprising in the aggregate at least $136,500,000 of third party
sales with respect to the Animal Health Business for its Fiscal Year
1996. All assignments and transfers contemplated by this Section
6.1.8 shall be without payment by or penalty to the Buyer, New MVI or
any Veterinary Subsidiaries as a consequence of such assignment or
transfer.
6.1.9 Transfer of Specific Contracts. Notwithstanding
------------------------------
the condition to closing set forth in Section 6.1.8 immediately
above, with respect to all of the contracts set forth on Schedule
6.1.9 hereof, there shall have been received by the Sellers from the
other parties to such contracts appropriate consents or waivers with
respect to any contractual restrictions (including change of control
provisions) on transfer to the Buyer contained in such contracts
(without amendment of the current terms of any such contracts). All
assignments and transfers contemplated by this Section 6.1.9 shall be
without payment by or penalty to the Buyer, New MVI or any Veterinary
Subsidiaries as a consequence of such assignment or transfer.
Furthermore, all material contracts that are not Restricted Contracts
shall have been assigned or otherwise transferred to the Buyer
without any payment by or penalty to the Buyer, New MVI or any
Veterinary Subsidiary as a consequence of such assignment or
transfer.
6.1.10 Resignations. The Sellers shall have delivered to
------------
the Buyer the resignations (effective as of the Closing) of all
directors of New MVI and the Veterinary Subsidiaries from their
positions as directors.
6.1.11 Reorganization. All transfers and other actions
--------------
necessary to effectuate the Reorganization shall have been completed
by the Sellers.
6.1.12 Excluded Assets. The Sellers shall have taken all
---------------
steps necessary to complete the Excluded Assets Reorganization and
the Excluded Liabilities Reorganization.
6.2 Conditions to Obligations of the Sellers. The obligations
----------------------------------------
of the Sellers hereunder are subject to the fulfillment, at or prior
to Closing, of the following conditions (unless waived in writing by
the Sellers):
6.2.1 Representations and Warranties. The
------------------------------
representations and warranties of the Buyer contained herein shall be
true and correct in all material respects as of the Closing as if
made on and as of the Closing Date, and the Buyer shall have
delivered to the Sellers a certificate of an appropriate officer of
the Buyer, dated as of the Closing Date, to that effect.
6.2.2 Covenants. The Buyer and its affiliates shall
---------
have performed and complied in all material respects with all
covenants or conditions required by this Agreement and any Subsidiary
Agreement to be performed and complied with by them prior to Closing,
and the Buyer shall have delivered to the Sellers a certificate of
an appropriate officer of the Buyer and the appropriate affiliates of
the Buyer, dated as of the Closing Date, to that effect.
6.2.3 No Pending Actions. There shall be no pending or
------------------
threatened claim, action, suit, investigation or proceeding by or
involving any Governmental Authority (including the Justice
Department and the Federal Trade Commission) against the Buyer, the
Sellers, or the Companies for the purpose of enjoining or preventing
the consummation of the transactions contemplated in this Agreement
or any Subsidiary Agreement or otherwise claiming that this
Agreement, any Subsidiary Agreement or the consummation of the
transactions contemplated herein is illegal.
6.2.4 Antitrust Laws. All filings required to be made
--------------
with all Governmental Authorities (including without limitation any
filings under the HSR Act) shall have been made, and any applicable
waiting periods thereunder shall have expired or been terminated or
all permissions or consents that are sought in connection with such
filings shall have been granted. Any approvals, waiting periods or
conditions of clearance of any Governmental Authority required under
any competition, foreign investment or other similar law of any
jurisdiction required to consummate the transactions contemplated
hereby, including (without limitation) approvals required in
Argentina, Australia, Colombia, Germany, Greece, Ireland, New
Zealand, Portugal, Taiwan and Thailand shall have been received,
waived or satisfied by the appropriate Governmental Authority.
6.2.5 Purchase Price. The Buyer shall have delivered to
--------------
the Sellers the Estimated Adjusted Purchase Price, as required by
this Agreement.
6.2.6 Legal Opinion. The Sellers shall have received
-------------
from Riker, Danzig, Scherer, Hyland & Perretti LLP, counsel to the
Buyer, a legal opinion substantially as attached hereto as Exhibit C.
---------
6.2.7 Removal of Guarantees. The Sellers shall have
---------------------
been released from all liability and responsibility with respect to
the PST Lease and MI shall have been released from its guaranty of
the PST Lease, dated as of March 7, 1990. Furthermore, the Sellers
shall have been released from all liability and responsibility with
respect to the Loan Agreement, dated 15 December 1989, by and between
Pitman-Moore Pharmaceutical Limited and the Governor and Company of
the Bank of Ireland and MI shall have been released from its guaranty
of the foregoing agreement under the Guaranty and Indemnity, dated 7
December 1989, by and between International Minerals & Chemical
Corporation and the Governor and Company of the Bank of Ireland. It
is understood that such removal of guarantees and releases from
liability shall be at no cost to the Buyer, New MVI or any Veterinary
Subsidiary, except to the extent of any cost associated with and
expressly contemplated by the terms of the leases and agreements
described in this Section 6.2.7, and only to the extent of any costs,
obligations or liabilities thereunder arising after the Closing Date
by the express terms of such leases and agreements.
ARTICLE VII
TERMINATION
-----------
7.1 Right to Terminate. Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and the
transactions contemplated herein abandoned at any time prior to the
Closing only as provided in this Section 7.1:
(i) by mutual written consent of the
Buyer and the Sellers, or
(ii) by either the Buyer or the Sellers if
the Closing shall not have occurred by the date that is sixty
(60) days after the date of this Agreement; provided, however,
that the right to terminate this Agreement under this clause
(ii) shall not be available to any party whose failure to
fulfill any obligation or satisfy any condition (to the extent
within such party's reasonable control) under this Agreement
has been the cause of, or resulted in, the failure of the
Closing Date to occur on or before such date, or
(iii) by either the Buyer or the Sellers if
a court or Governmental Authority of competent jurisdiction
shall have issued an order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and
nonappealable, or
(iv) by the Sellers, if the Buyer breaches
any of the Buyer's representations and warranties in any
material respect and within twenty (20) days after notice
thereof from the Sellers is unable to cure such breach, or if
the Buyer fails to comply in any material respect with any of
the Buyer's covenants or agreements contained herein and
within twenty (20) days after notice thereof from the Sellers
is unable to cure such breach, or
(v) by the Buyer, if any Seller breaches
any of its representations and warranties in any material
respect and within twenty (20) days after notice thereof from
the Buyer is unable to cure such breach, or if any Seller
fails to comply in any material respect with any of its
covenants or agreements contained herein and within twenty
(20) days after notice thereof from the Buyer is unable to
cure such breach.
7.2 Obligations to Cease. In the event of the termination of
--------------------
this Agreement pursuant to the provisions of Section 7.1, this
Agreement shall become void and of no further effect, and neither the
Buyer nor the Sellers (nor any of their directors, officers,
employees and affiliates) shall be liable to any person in respect
hereof or of the transactions contemplated hereby except (i) for any
liability resulting from any breach of any agreement or covenant
hereunder or (ii) any liability arising from any termination of this
Agreement which is not in accordance with its express terms. The
Confidentiality Agreement shall survive the termination of this
Agreement for any reason.
7.3 Termination of Subsidiary Agreements. The parties hereto
------------------------------------
agree that they will take all actions necessary so that they will not
terminate and none of their respective affiliates will terminate any
Subsidiary Agreement while this Agreement is still in force, unless
the parties hereto all agree to such termination. The parties hereto
also agree that they will take all actions necessary to terminate or
to cause their respective affiliates to terminate each of the
Subsidiary Agreements if this Agreement is terminated.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 Agreement to Indemnify.
----------------------
8.1.1 Subject to the terms and conditions of this
Article VIII, the Sellers, jointly and severally, hereby agree to
indemnify, defend and hold harmless the Buyer and its affiliates and
their respective directors, officers, employees, agents,
representatives, successors, transferees and assignees from and
against any and all demands, claims, actions or causes of action,
debts, litigation, proceedings, arbitrations, investigations,
assessments, losses, damages, liabilities (tangible or intangible,
known or unknown, whether or not contingent), costs and expenses,
including without limitation, interest, penalties and reasonable
attorneys' fees and expenses (collectively "Damages") asserted
against, resulting to, imposed upon or incurred by the Buyer or its
affiliates or their respective directors, officers, employees,
agents, representatives, successors, transferees and assignees,
directly or indirectly arising out of or resulting from:
(i) any breach of any covenant or
agreement in Article IX creating an obligation of the Sellers
or a right of the Buyer relating to Taxes,
(ii) any breach of any representation or
warranty, or any covenant or agreement (other than as set
forth in Article IX), of the Sellers or the Companies
contained in this Agreement,
(iii) any and all violations of
Environmental Requirements and any Environmental Liabilities
(including, without limitation, those identified in any
Baseline Studies) that (x) are at, on or under any and all
facilities owned or leased by the Sellers or any Company and
conveyed or transferred to the Buyer in accordance herewith,
as such violations of Environmental Requirements and such
Environmental Liabilities exist on the Closing Date, or (y)
arise from activities conducted by or on behalf of the
Sellers, any Company or any predecessor company on or before
the Closing Date,
(iv) any third party litigation arising
out of the operation and conduct of the Animal Health Business
by the Sellers, their affiliates or predecessor companies
prior to the Closing Date, including, without limitation, any
of the known potential claims or matters in litigation, in
dispute or under investigation that are specifically described
in Schedule 8.1.1(iv) attached hereto,
(v) the Excluded Assets, the Excluded
Assets Reorganization, the Excluded Liabilities, the Excluded
Liabilities Reorganization, the transfer of the nominal and
directors' qualifying shares and the Reorganization,
(vi) the sale, prior to the Closing Date,
by the Companies or any of their predecessors of any of the
Companies' or their predecessors products,
(vii) to the extent not already included in
Environmental Liabilities and indemnified pursuant to clause
(iii) above, any claims for personal injury by current or
former employees of the Sellers, their affiliates or
predecessor companies to the extent arising out of any
occupational exposure to Hazardous Substances prior to the
Closing Date,
(viii) any claims arising out of assets
which were divested, sold or transferred by the Sellers, their
affiliates or predecessor companies prior to the date hereof,
(ix) notwithstanding any other provision
of this Agreement, any claim by any International Employee for
any amounts of salary, severance payments or other benefits
claimed on the basis of employment within or as a result of
termination during the period from the Closing Date through
and including the first anniversary of the Closing Date which
(A) are in excess of the amount that would be required to be
paid or given to any such employee in accordance with the
requirements of applicable law and past practice of the
Sellers as evidenced by those policies and circumstances
specifically disclosed on Annex 4.1.20(c), Annex 10.3.2(a) or
Annex 10.3.2(b) and specifically not including any agreements
disclosed on Annex 4.1.20(h), and/or (B) are for those amounts
based on or in the nature of salary or other benefits which
are greater than that which is reasonable and customary,
except to the extent of any requirements of applicable laws
and past practice by the Sellers which has the force of law in
any applicable jurisdiction, and without regard to any
agreements disclosed on Annex 4.1.20(h), and
(x) the transfer or failure to transfer
to the Buyer or its designee any or all nominal and qualifying
shares of Mallinckrodt Vet, S.A. de C.V., a Veterinary
Subsidiary organized under the laws of Mexico, and/or any
dividends, distributions or other payments required to be made
in connection therewith.
8.1.2 Subject to the terms and conditions of this
Article VIII, the Buyer hereby agrees to indemnify, defend and hold
harmless the Sellers and their affiliates (other than New MVI and the
Veterinary Subsidiaries) and their respective directors, officers,
employees, agents, representatives, successors, transferees and
assignees from and against any and all Damages asserted against,
resulting to, imposed upon or incurred by the Sellers and their
affiliates or their respective directors, officers, employees,
agents, representatives, successors, transferees and assignees,
directly or indirectly arising out of or resulting from:
(i) any breach of any covenant or
agreement in Article IX creating an obligation of the Buyer or
a right of the Sellers relating to Taxes, and
(ii) any breach of any representation or
warranty, or any covenant or agreement (other than as set
forth in Article IX), of the Buyer contained in this
Agreement.
8.1.3 The indemnity provided for in Section 8.1.1 and in
Section 8.1.2 shall survive the Closing hereof, subject to any
applicable claim limitation periods set forth in Section 8.5 below,
and notwithstanding, among other things, the implicit or explicit
waiver by any party of the conditions to its obligation to close the
transactions contemplated hereunder as set forth in Sections 6.1 or
6.2 hereof.
8.2 Post-Closing Claims.
-------------------
8.2.1 In the event that a party (the "Indemnified
Party") shall reasonably believe that it has a claim for Damages
("Post-Closing Claim"), it shall give prompt notice in accordance
herewith to the responsible party (the "Indemnifying Party") of the
nature and extent of such Post-Closing Claim and the Damages incurred
by it. If the Damages are liquidated in amount, the notice shall so
state, and such amount shall be deemed the amount of such
Post-Closing Claim of the Indemnified Party against the Indemnifying
Party
(subject to the right of the Indemnified Party to submit claims for
additional Damages incurred after the date of any such notice). If
the amount is not liquidated, the notice shall so state and, in such
event, such Post-Closing Claim shall be deemed asserted against the
Indemnifying Party, but no payment or satisfaction shall be made on
account thereof until the amount of such claim is liquidated.
8.2.2 If the Indemnifying Party shall not, within thirty
(30) days after the giving of such notice by the Indemnified Party
(or ten (10) days in the event of a claim for indemnification arising
under Section 8.1.1(ix)), notify the Indemnified Party in accordance
herewith that the Indemnifying Party disputes the right of the
Indemnified Party to indemnity in respect of such Post-Closing Claim,
then any such Post-Closing Claim shall be paid or satisfied as
follows: (i) if said Post-Closing Claim is liquidated, then the full
amount of Damages associated with such Post-Closing Claim shall be
paid to the Indemnified Party by the Indemnifying Party at the end of
such thirty (30) day period (or at the end of ten (10) days in the
event of a claim for indemnification arising under Section
8.1.1(ix)), or (ii) if the amount of such Post-Closing Claim is
unliquidated at the time notice is originally given to the
Indemnifying Party, the Indemnified Party shall give a second notice
to the Indemnifying Party when the liquidated amount of such
Post-Closing Claim is known and, unless the Indemnifying Party shall
object in writing to such amount (as opposed to the Post-Closing
Claim itself, as to which the right to dispute had expired) within
thirty (30) days after the giving of said second notice, then the
payment of such Post-Closing Claim shall be made by the Indemnifying
Party to the Indemnified Party at the end of such thirty (30) day
period (or at the end of ten (10) days in the event of a claim for
indemnification arising under Section 8.1.1(ix)).
8.2.3 If on its own initiative and in accordance with
the provisions of Section 8.2.2 and any other provisions herein as
applicable, the Indemnifying Party shall not have made payment to the
Indemnified Party of any Post-Closing Claim when said payment is due,
the Indemnified Party shall have the right to take any and all
actions required to collect from the Indemnifying Party the amount of
such Post-Closing Claim.
8.2.4 Any portion of the amount of Damages asserted by
an Indemnified Party in connection with a Post-Closing Claim shall,
if not objected to by the Indemnifying Party in accordance with the
procedures established herein, be considered to be subject to
satisfaction by payment without further objection.
8.2.5 If an Indemnifying Party shall notify the
Indemnified Party that it disputes any Post-Closing Claim or the
amount thereof (which notice shall only be given if the Indemnifying
Party has a good faith belief that the Indemnified Party is not
entitled to indemnity or the full amount of indemnity as claimed)
then the parties hereto shall endeavor to settle and compromise such
claim, and if unable to agree on any settlement or compromise, such
claim shall be settled by appropriate litigation, and any liability
and the amount of the Damages established by reason of such
settlement, compromise or litigation, or incurred as a result
thereof, shall be paid and satisfied as provided herein.
8.3 Conditions of Indemnification with Respect to Third-Party
---------------------------------------------------------
Claims.
------
8.3.1 An Indemnified Party will promptly give notice to
the Indemnifying Party of any claim of a third party which may
reasonably be expected to result in a Post-Closing Claim by the
Indemnified Party, provided that the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of its
obligations hereunder unless such failure shall have actually
prejudiced the Indemnifying Party. Subject only to Section 8.6.4
hereunder, an Indemnifying Party shall have the right to direct the
defense, compromise or settlement of such claim with counsel selected
by it, provided the Indemnifying Party gives written notice to the
Indemnified Party of its election to do so within thirty (30) days
after receipt of notice in accordance with the preceding sentence.
If the Indemnifying Party fails to so notify the Indemnified Party of
its election to defend any such third-party claim, the Indemnified
Party will (upon further notice to the Indemnifying Party) have the
right to undertake the defense, compromise or settlement of such
claim on behalf of and for the account and expense of the
Indemnifying Party, subject to the right of the Indemnifying Party to
assume the defense of such claim at any time prior to settlement,
compromise or final determination thereof if and only if such
assumption would not materially prejudice the defense of such claim
or the rights of the Indemnified Party.
8.3.2 In the event an Indemnifying Party has assumed the
defense of any such claim, the Indemnified Party shall nonetheless
have the right to select its own counsel and participate in the
defense of such claim at and for its own expense and account.
Counsel for the Indemnified Party in such circumstances shall consult
and cooperate at all times with counsel for the Indemnifying Party in
defending against any such third-party claim.
8.3.3 An Indemnifying Party shall not under any
circumstances, without the written consent of the Indemnified Party,
settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the
giving by the claimant and the plaintiff (if other than the claimant)
to the Indemnified Party a release from all liability in respect of
such claim, in form and substance reasonably satisfactory to the
Indemnified Party. An Indemnifying Party shall not settle on terms
that would be prejudicial to the Indemnified Party without the
Indemnified Party's consent.
8.3.4 Notwithstanding anything to the contrary contained
herein, if a third-party claim is made which the third party has
unequivocally offered in writing to settle on a basis that satisfies
the requirements of Section 8.3.3 above (an "Unequivocal Offer") but
an Indemnified Party elects not to settle on the basis of such
Unequivocal Offer, then the Indemnifying Party shall not be liable
hereunder, with respect to any Indemnification Claim arising from
such third-party claim, for more than the lowest amount set forth in
such Unequivocal Offer plus any related costs and expenses reasonably
incurred by the Indemnified Party as of the date of such Unequivocal
Offer unless either (i) the Unequivocal Offer was delivered to and
rejected by the Indemnifying Party, or (ii) the Unequivocal Offer was
delivered to the Indemnifying Party and the Indemnifying Party did
not, within ten (10) days after receipt of such Unequivocal Offer,
notify the Indemnified Party in writing that such Indemnifying Party
would pay the amount requested in the Unequivocal Offer.
8.4 Claims Made in Written Notice.
-----------------------------
All claims for indemnification hereunder shall be made in a
written notice setting forth, with particularity, the nature of the
claim for which indemnification is sought. Both parties agree that
no claim for indemnification shall be made hereunder unless the party
requesting indemnification shall have a good faith belief that it is
entitled to indemnification hereunder.
8.5 Survival of Representations and Warranties; Claim Periods.
---------------------------------------------------------
8.5.1 The representations and warranties set forth in
Section 4.1 shall survive the Closing Date for a period of two (2)
years, except for the representations and warranties set forth in
Section 4.1.1, 4.1.2 and 4.1.3 which shall survive in perpetuity
("Perpetual Representations"), and no claim by the Buyer for
indemnity pursuant to Section 8.1.1(ii) (except with respect to the
Perpetual Representations) based on any alleged breach by any Seller
of any representation or warranty shall be effective unless such
claim is asserted by written notice from the Buyer to the Sellers
given as required hereunder prior to the second anniversary of the
Closing Date.
8.5.2 The representations and warranties set forth in
Section 4.2 shall survive the Closing Date for a period of two (2)
years, and no claim for indemnity by the Sellers pursuant to Section
8.1.2(ii) based on any alleged breach by the Buyer of any
representation or warranty shall be effective unless such claim is
asserted by written notice from the Sellers to the Buyer given as
required hereunder (including, without limitation, in accordance with
all provisions of Article VIII hereof) prior to the second
anniversary of the Closing Date.
8.5.3 No claim by the Buyer for indemnity pursuant to
Section 8.1.1(i) shall be effective unless such claim is asserted by
written notice from the Buyer to the Sellers given as required
hereunder (including, without limitation, in accordance with all
provisions of Article VIII hereof) prior to the end of the third
month after the expiration of the applicable statute of limitation
governing such claim.
8.5.4 Any claim by the Buyer for indemnity pursuant to
Section 8.1.1(ii) (with respect only to the Perpetual
Representations), Section 8.1.1(v), Section 8.1.1(viii), or Section
8.1.1(x) shall be effective at any time hereafter if such claim is
asserted by written notice from the Buyer to the Sellers given as
required hereunder (including, without limitation, in accordance with
all provisions of Article VIII hereof).
8.5.5 No claim by the Buyer for indemnity pursuant to
Section 8.1.1(iii) shall be effective unless such claim is asserted
by written notice from the Buyer to the Sellers given as required
hereunder (including, without limitation, in accordance with the
requirements of Section 8.6.4 hereof and all other provisions of
Article VIII hereof) prior to the expiration of the fifteenth
anniversary of the Closing Date.
8.5.6 No claim by the Buyer for indemnity pursuant to
Section 8.1.1(iv) shall be effective unless such claim is asserted by
written notice from the Buyer to the Sellers given as required
hereunder (including, without limitation, in accordance with all
provisions of Article VIII hereof) prior to the expiration of the
fifteenth anniversary of the Closing Date.
8.5.7 No claim by the Buyer for indemnity pursuant to
Section 8.1.1(vi) or Section 8.1.1(vii) shall be effective unless
such claim is asserted by written notice from the Buyer to the
Sellers given as required hereunder (including, without limitation,
in accordance with all provisions of Article VIII hereof) prior to
the expiration of the fifteenth anniversary of the Closing Date.
8.5.8 No claim by the Buyer for indemnity pursuant to
Section 8.1.1(ix) shall be effective unless such claim is asserted by
written notice from the Buyer to the Sellers given as required
hereunder (including, without limitation, in accordance with all
provisions of Article VIII hereof) within six (6) months after the
expiration of any applicable statute of limitations governing the
right of an International Employee to assert or commence any claim
arising out of the matters for which the Buyer is indemnified
pursuant to Section 8.1.1(ix).
8.5.9 No claim by the Sellers for indemnity pursuant to
Section 8.1.2(i) shall be effective unless such claim is asserted by
written notice from the Sellers to the Buyers given as required
hereunder prior to the end of the third month after the expiration of
the applicable statute of limitation governing such claim.
8.6 Limitations.
-----------
8.6.1 The sole and exclusive remedy of either party for
damages or other monetary relief shall be the indemnification
provisions set forth herein; provided that, notwithstanding the
foregoing, (i) each party shall retain the right to pursue any claims
in equity that may be available (whether for specific performance,
injunction or some other equitable remedy) with respect to the
nonperformance or breach of any obligation contemplated to be
performed hereunder or under any document, exhibit or certificate to
be delivered in connection herewith and (ii) each party shall further
retain the right to receive damages or other monetary relief against
the other party that arise out of any fraudulent action or other
willful or intentional wrongdoing in any manner related to the
transactions contemplated hereunder.
8.6.2 Notwithstanding any provision of this Agreement
(or any certificate, document, exhibit, list or schedule delivered in
accordance herewith) to the contrary, the Buyer shall not be entitled
to recover any Damages hereunder pursuant to Section 8.1.1(ii) above
for breaches of representations and warranties (except for any claims
for Damages with respect to the Perpetual Representations) except to
the extent the Damages claimed by the Buyer in good faith under and
pursuant to Section 8.1.1(ii) are in excess of Five Million Dollars
($5,000,000) in the aggregate. It is agreed by the Sellers and the
Buyer that the deductible set forth in the immediately preceding
sentence applies only to claims for Damages made under Section
8.1.1(ii) above (except for any claims for Damages with respect to
the Perpetual Representations) and shall not have any effect
whatsoever on the right of the Buyer to collect, in accordance with
the terms and provisions set forth herein, all Damages to which it is
entitled under other applicable provisions of Sections 8.1.1.
8.6.3 Notwithstanding any other provision hereof, in no
event shall the liability of the Sellers for Damages pursuant to
Sections 8.1.1(ii), (iii), (iv), (v), (vi), (vii), (viii), (ix) and
(x) hereof in the aggregate exceed Two Hundred Million Dollars
($200,000,000). In no event shall any Indemnifying Party be
responsible and liable for any Damages that are consequential,
special, punitive or other than actual Damages; provided that,
notwithstanding the immediately foregoing, an Indemnifying Party
shall be responsible and liable for any Damages (including
consequential, special and punitive damages) awarded in connection
with or as part of any judgment, order, decree or other final
resolution by a court, tribunal or other judicial authority arising
out of any claim, suit or action commenced by any third party for
which indemnification is available in accordance with the terms
hereof.
8.6.4 With respect to those matters that may be subject
to indemnification pursuant to Section 8.1.1(iii) above
("Environmental Indemnity Matters"), it is understood by the parties
that the Buyer will have overall and daily control and management of
such matters, including the right to defend any third party claims
that might result in a claim for environmental indemnification
pursuant to Section 8.1.1(iii). Notwithstanding the immediately
preceding sentence, the right of Buyer to indemnification hereunder
with respect to Environmental Indemnity Matters is subject to each of
the following:
(i) The Sellers' liability and
responsibility to indemnify the Buyer with respect to any
Environmental Indemnity Matter is conditioned upon the Buyer
giving the Sellers prior written notice of any proposed
remedial, corrective or similar action that might give rise to
a claim by the Buyer for indemnification ("Environmental
Action") pursuant to Section 8.1.1(iii) hereof (which notice
shall be in reasonable detail) and is further conditional upon
Buyer providing Sellers with a meaningful opportunity to
provide Buyer with consultation and advice regarding the
Environmental Action described in the notice (which
consultation and advice shall be provided by the Sellers
reasonably promptly and shall be carefully considered by the
Buyer, in good faith); provided that, Sellers' right of
consultation and advice shall in no manner be considered a
right of prior approval or consent with respect to the noticed
Environmental Action nor shall it prevent the Buyer from
proceeding with the noticed Environmental Action, regardless
of any suggestions for modification made by the Sellers,
following receipt of consultation and advice from the Sellers.
(ii) The Sellers' liability and
responsibility to indemnify the Buyer with respect to any
Environmental Indemnity Matter, whether or not it results in
any Environmental Action, is conditioned upon the Buyer giving
the Sellers a notice concerning the details of any
investigation or examination by the Buyer other than the
Baseline Study, with respect to any facilities or other
matters, that might give rise to a claim by the Buyer for
indemnification pursuant to Section 8.1.1(iii), which notice
shall be given on the later of (x) one (1) year after the
commencement of any such investigation or examination or (y)
within sixty (60) days following the date upon which
sufficient data and other information has been uncovered by
the investigation or examination to give rise to the
reasonable inference that a claim may result against the
Sellers pursuant to Section 8.1.1(iii); provided that,
notwithstanding the foregoing, the Sellers' liability and
responsibility to indemnify the Buyer with respect to
Environmental Indemnity Matters shall not be conditioned upon
the notice referred to in this clause (ii) unless and only to
the extent that, by failing to receive such notice, the
Sellers can demonstrate that they were materially prejudiced
in the defense of any claim by the Buyer for indemnification
hereunder.
(iii) No Environmental Indemnity Matter
will be indemnifiable except to the extent that it represents
an Environmental Liability or a violation of Environmental
Requirements or environmental standards as they exist or
existed on or before the Closing Date (and not as such
Environmental Requirements or environmental standards may be
amended or reinterpreted after the Closing Date).
(iv) At the time when the Buyer asserts a
claim against the Sellers for indemnification under Section
8.1.1(iii) hereof, the Buyer agrees to provide the Sellers (to
the extent not already provided by the Buyer) with such
documents and other data and information the Buyer has
available that will catalog the history and evolution of the
claim subsequent to the Closing Date, subject to any
applicable confidentiality requirements or requirements for
third party consent and further subject to both the Buyer and
the Sellers taking whatever actions are reasonably necessary
to avoid the loss or waiver of any privilege the Buyer may
have against disclosure of any such documents, data or
information to any third party whose position may reasonably
be considered adverse to the Buyer.
(v) The Buyer will not be required in
connection with any Environmental Action to utilize the least
costly alternative available or to utilize the most cost-
effective methods and technologies applicable, but will make a
reasonable effort to do so if and to the extent so doing will
not cause any unreasonable interference with the Buyer's
business or its environmental objectives.
(vi) The costs and expenses for which the
Buyer may receive indemnity hereunder in connection with
Environmental Indemnity Matters will be those incurred in
connection with investigations, feasibility studies, and
remedial action only to the extent they are conducted pursuant
to standards that are no more restrictive or onerous than
those required under applicable Environmental Requirements
with respect to the uses of the Animal Health Business
facilities on and as of the Closing Date ("Indemnifiable
Remediation Standard"). However, the Buyer, in its sole
discretion, may elect to perform Environmental Action with
respect to facilities that is more restrictive or more onerous
than the Indemnifiable Remediation Standard in any given case;
provided that, the portion of costs and expenses attributable
to that portion of any such Environmental Action accomplished
shall not be subject to indemnification by the Sellers
hereunder.
(vii) The Sellers shall have no right of
approval with respect to any investigation and/or
Environmental Actions the Buyer takes with respect to the
Animal Health Business facilities after the Closing Date. To
the extent there is a dispute between the parties over
whether, with respect to any site or sites which are the
subject of a claim for indemnification pursuant to Section
8.1.1(iii), (x) Environmental Action taken by the Buyer meets
or exceeds the Indemnifiable Remediation Standard or (y) any
investigation undertaken by the Buyer is reasonable, the
parties shall in good faith attempt to resolve such dispute
within thirty (30) days of the date any such dispute arises
(or at the end of such additional period as the parties shall
mutually agree) and, upon failing to do so, the parties shall
promptly select (each time such a dispute arises) a third,
independent and mutually acceptable environmental consultant
("Third Party Consultant") who shall, on the basis of whatever
scientific, legal or other information the Buyer and the
Sellers shall individually choose to submit to the Third Party
Consultant for consideration, determine whether any
Environmental Action by the Buyer that relates to the dispute
met or exceeded the Indemnifiable Remediation Standard or the
extent to which any investigation undertaken by the Buyer is
reasonable. If, in connection with any such dispute, the Third
Party Consultant determines that any Environmental Action
which is the subject of any dispute between the Buyer and the
Sellers met the Indemnifiable Remediation Standard, then all
costs and expenses of such Environmental Action (if they are
otherwise indemnifiable in accordance with the requirements
hereof) are subject to indemnification by the Sellers. If,
on the other hand, the Third Party Consultant determines that
the Environmental Action by the Buyer exceeds the
Indemnifiable Remediation Standard, then the Third Party
Consultant shall also determine the amount or proportion of
cost and expense attributable to the excess and this
proportion or amount shall not be indemnifiable hereunder by
the Sellers. Notwithstanding anything set forth above in this
clause (vii), it is understood that the Third Party Consultant
is entitled, if the facts and circumstances so warrant, to
reach the conclusion that the Buyer is not entitled to any
payment from the Sellers with respect to a particular
Environmental Action or with respect to an investigation
undertaken by the Buyer, and it is further understood that, if
the Third Party Consultant should reach the conclusion, in
particular, that an investigation undertaken by the Buyer is
not reasonable, but such investigation nonetheless resulted in
Environmental Action, then this resultant Environmental Action
shall not be considered to be ineligible for indemnification
by the Sellers merely because it results from an investigation
that is not reasonable. The decision of the Third Party
Consultant as contemplated hereunder shall be binding on the
parties and shall not in any way impair or affect the Buyer's
right to conduct such investigations and/or Environmental
Actions as it deems necessary in its sole discretion. The
costs and expenses of the Third Party Consultant in acting
pursuant to this clause (vii) shall be borne equally by the
Buyer and the Sellers. The Buyer and the Sellers shall not be
required on any occasion to select any firm to act as Third
Party Consultant hereunder that has previously acted in such
capacity in accordance herewith.
8.6.5 The amount of any Damages for which
indemnification is provided under this Article VIII shall be reduced
by any directly applicable insurance proceeds received by the
Indemnified Party or any of its affiliates on account of such claim,
but in no event shall any party hereof be required to file any claim
against any insurance company or any other party for the recovery of
any such amounts, regardless of the availability or not of any
insurance coverage.
ARTICLE IX
TAX PROVISIONS
--------------
9.1 Tax Liability.
-------------
9.1.1 The Sellers shall be liable for and shall pay (i)
any Taxes on income and state franchise taxes based on income
relating to the Companies or any asset or business of any of the
Companies (excluding any penalties or interest arising from any act
or omission by the Buyer or, after the Closing Date, New MVI or the
Veterinary Subsidiaries) that are attributable to any taxable period
or portion thereof ending on or prior to the Closing Date (including
periods subsequent to the end of any tax period immediately preceding
the Closing Date and ending on the Closing Date), and (ii) any Taxes
for which the Sellers are liable pursuant to Section 9.6 hereunder.
In the event New MVI or the Veterinary Subsidiaries are required to
pay any Taxes for which the Sellers have liability in accordance with
the immediately preceding sentence, the Sellers will reimburse the
Buyer for the payment of such Taxes upon delivery to the Sellers by
the Buyer of documentation reasonably satisfactory to the Sellers
demonstrating payment of such liability.
9.1.2 The Buyer shall be liable for and shall pay all
other Taxes relating to New MVI and the Veterinary Subsidiaries or
any asset or business of New MVI and the Veterinary Subsidiaries for
which Sellers are not liable pursuant to the provisions of Section
9.1.1 hereof.
9.1.3 Each Company's earnings and profits and liability
for Taxes for a portion of a taxable year or period that begins
before and ends after the Closing Date shall be determined by
assuming that the taxable year or period ended on and included the
Closing Date.
9.2 Tax Returns
-----------
9.2.1 The Sellers shall prepare, or cause to be
prepared, and file, or cause to be filed, on a timely basis all Tax
Returns pertaining to jurisdictions other than the United States
relating to the business or assets of each of the Companies required
to be filed on or prior to the Closing Date taking into account any
applicable extension. The Sellers shall prepare, or cause to be
prepared, and file, or cause to be filed, on a timely basis all
United States and state and local income tax returns relating to the
business or assets of each of the Companies for all taxable periods
ending on or prior to the Closing Date. The Buyer shall cause New
MVI and the Veterinary Subsidiaries to prepare and submit to the
Sellers, for the portions of any such returns pertaining to New MVI
and the Veterinary Subsidiaries, the necessary data for such portions
as determined from the closing of the books as of the day the
relevant taxable period ends, or on such other basis as the relevant
tax statutes or regulations require, and to prepare and submit to the
Sellers the data and information necessary for the Sellers to file
all required United States state and local income or franchise tax
returns for the Companies for all taxable periods ending on or prior
to the Closing Date.
9.2.2 The Buyer shall prepare or cause to be prepared,
and file, or cause to be filed, on a timely basis all Tax Returns
relating to the business or assets of each of New MVI and the
Veterinary Subsidiaries, consistent with all applicable laws, rules
or regulations, other than those Tax Returns for which the Sellers
have responsibility pursuant to Section 9.2.1; provided that, the
Buyer shall provide the Sellers, for the Sellers' review and
reasonable approval at least thirty (30) days prior to filing, with
copies of all Tax Returns for which Seller has any responsibility for
the reimbursement of the Buyer or the payment of any Taxes pursuant
to this Article IX.
9.3 Refunds and Carrybacks.
----------------------
9.3.1 The Sellers shall be entitled to any refunds of
Taxes paid by or on behalf of the Companies (including refunds paid
by means of a credit against other or future Tax liabilities)
relative to any Taxes with respect to which the Sellers are liable
pursuant to this Article IX.
9.3.2 The Buyer shall be entitled to all other refunds
of Taxes paid by or on behalf of New MVI and the Veterinary
Subsidiaries (including refunds paid by means of a credit against
other or future Tax liabilities), other than those refunds of Taxes
to which the Sellers are entitled pursuant to Section 9.3.1.
9.3.3 The Buyer shall reimburse the Sellers for any
refunds due the Sellers (pursuant to the terms of this Section 9.3)
within five (5) days after receipt thereof, and the Sellers shall
reimburse the Buyer for any refunds due the Buyer (pursuant to the
terms of this Section 9.3) within five (5) days after receipt
thereof. In the case of a refund received in the form of a credit
against other or future Tax liabilities, reimbursement in respect of
such refund shall be due in each case on the due date for payment of
the Taxes against which such refund has been credited.
9.4 Cooperation. After the Closing Date, each of the Buyer and
-----------
the Sellers shall make available to the other, as reasonably
requested, and to any taxing authority (whether federal, state,
local, domestic or foreign), all information, records and documents
relating to Tax liabilities or potential Tax liabilities relating to
any of the Companies and shall preserve all such information, records
and documents until the expiration of any applicable statute of
limitations or extension thereof.
9.5 Tax Sharing. Any and all existing Tax sharing, allocation,
-----------
compensation or like agreements or arrangements that include any one
or more of New MVI and the Veterinary Subsidiaries shall be
terminated as of the Closing Date without liability to New MVI and
the Veterinary Subsidiaries or the Buyer; provided that, such
agreements or arrangements shall remain in effect for so long as and
to the extent necessary to allow the Sellers and Sellers' affiliates
to complete Tax Returns of New MVI, the Veterinary Subsidiaries and
their affiliates for taxable periods ending on or prior to the
Closing Date.
9.6 Transfer Taxes. The Buyer and the Sellers shall share
--------------
equally the cost of all excise, real property transfer, stamp,
filing, recordation or other similar Taxes payable in respect of or
as a consequence of the transfer of the shares of New MVI hereunder
and the Buyer shall be responsible for the cost of all excise, real
property, transfer, stamp, filing, recordation or other similar Taxes
payable in respect of or as a consequence of the transfer of the
shares of each Veterinary Subsidiary.
9.7 Audits. The Buyer shall promptly notify the Sellers, and
------
the Sellers shall promptly notify the Buyer, as the case may be, in
writing upon receipt of notice of any pending or threatened Tax
audits or assessments which may affect the Tax liabilities of any one
or more of the Companies relating to a period with respect to which
the other is liable for Taxes pursuant to this Agreement, including
this Article IX. The Sellers, at their sole cost and expense, shall
represent their own interests and the interests of the relevant
Companies in any matter, including any audit, examination,
assessment, notice of deficiency or other adjustment or proposed
adjustment, or administrative or judicial proceeding, the settlement
of any of the foregoing, or the filing of any amended return
involving a liability for Taxes relating to a period with respect to
which the Sellers are liable pursuant to this Article IX.
Notwithstanding the foregoing, the Buyer, at its sole cost and
expense, shall represent its own interest and the interests of New
MVI and the Veterinary Subsidiaries in any Tax matters involving a
liability for Taxes relating to a period with respect to which the
Buyer has liability pursuant to this Article IX. The Buyer and the
Sellers shall cooperate fully with each other and their respective
counsel in the defense or compromise of any Tax matter for which
either or both could be liable including, without limitation, the
provision of any necessary powers of attorney.
9.8 FIRPTA Certificate. Each of the Sellers shall have
------------------
delivered to the Buyer a certificate, as contemplated under and
meeting the requirements of section 1.1445-2(B)(2)(i) of the United
States Treasury Regulations, to the effect that each such Seller is
not a foreign person within the meaning of the Code and the
applicable United States Treasury Regulations.
9.9 Section 338 Elections and Forms.
-------------------------------
9.9.1 With respect to the Buyer's acquisition of New MVI
(and the deemed acquisition of the Veterinary Subsidiaries that are
U.S. subsidiaries of New MVI), the Buyer and the Sellers shall
properly make all joint elections available under Section 338(g) and
338(h)(10) of the Code and any comparable provisions of state tax
laws ("Section 338 Elections"), in accordance with the principles
outlined in a letter from John Cannova of MI to Peter Bouchoux of the
Buyer dated May 7, 1997, a copy of which is attached as Exhibit D.
The Buyer and the Sellers agree to report the transfers under this
Agreement consistent with the Section 338 Elections and the portion
of Purchase Price allocated to New MVI pursuant to Section 2.2 of
this Agreement, and shall take no position contrary thereto unless
required to do so by applicable Tax laws.
9.9.2 The Buyer and the Sellers shall (i) cooperate with
each other and furnish such information to each other as may be
reasonably requested in connection with the preparation and filing
relative to the Section 338 Elections and (ii) execute and deliver to
the other party such documents or forms as are required by any Tax
laws properly to complete such forms at least twenty (20) days prior
to the date such forms are required to be filed.
9.9.3 The Buyer and the Sellers agree that they shall,
prior to the Closing Date, enter into an agreement concerning the
computation of the "Modified Aggregate Deemed Sale Price" (as defined
in the Treasury Regulations promulgated under Section 338 of the
Code) and the allocation of such "Modified Aggregate Deemed Sale
Price" among the assets of New MVI and the appropriate Veterinary
Subsidiaries (the "Allocation Agreement").
9.10 Conduct of Tax Affairs. Except to the extent otherwise
----------------------
specifically provided in relevant portions of Section 5.1.2, from the
date hereof until the Closing Date, the Sellers and the Companies
will conduct all Tax affairs relating to the Companies only in the
ordinary course of business and in good faith, in substantially the
same manner as heretofore conducted and in substantially the same
manner as such affairs would have been conducted absent this
Agreement.
ARTICLE X
FURTHER AGREEMENTS
------------------
10.1 Certain Definitions. The following terms (as used
-------------------
primarily in this Article X) shall have the meanings set forth below:
10.1.1 Continuing Employees. The term "Continuing
--------------------
Employees" shall mean all employees of the Companies (other than
Coopers Animal Health, Inc., MVI and MVII) on the Closing Date,
including those employees of the Companies receiving benefits under
any of the short-term disability plans or the long-term disability
plans of the Sellers on the Closing Date.
10.1.2 U.S. Continuing Employees. The term "U.S.
-------------------------
Continuing Employees" shall mean all Continuing Employees of any of
the United States Companies on the Closing Date.
10.1.3 Key Executives. The term "Key Executives" shall
--------------
mean all employees of any of the Companies of executive rank with an
agreement or other arrangement with any of the Sellers (or their
affiliates) relating to "stay bonuses", severance benefits and/or
payments or other incentive compensation. All Key Executives as well
as all such agreements and arrangements are set forth on Schedule
10.1.3.
10.1.4 Select Employees. The term "Select Employees"
----------------
shall mean all employees of any of the Companies that are designated
as Select Employees on Schedule 10.1.4.
10.1.5 U. S. Covered Employees. The term "U. S. Covered
-----------------------
Employees" shall mean (i) U.S. Continuing Employees, including Select
Employees, whose employment with the Buyer, New MVI or the Veterinary
Subsidiaries does not terminate within ninety (90) days after the
Closing Date and (ii) U.S. Continuing Employees who are Key
Executives whose employment with the Buyer, New MVI or the Veterinary
Subsidiaries does not terminate within thirty (30) days after the
Closing Date.
10.2 Employee Benefit Plan Obligations.
---------------------------------
10.2.1 Sellers' Obligations. The Sellers shall pay the
--------------------
cost of all awards and payments with respect to current and former
employees of the Companies under the following incentive compensation
and benefit plans and arrangements:
(a) the Sellers' Management Incentive
Compensation Plan ("MICP"),
(b) the Sellers' Long-Term Incentive Compensation
Plan ("LTIP"),
(c) any agreement or other arrangement with a Key
Executive (as disclosed on Schedule 10.1.3),
(d) the "stay bonuses" and other incentive
compensation under the agreements with the Select Employees,
(e) the Sellers' Supplemental Executive
Retirement Plan and Supplemental Benefit Plan, and
(f) payments of all matching amounts (including
the Supermatch) pursuant to the Seller Savings Plan.
The only obligation of the Buyer, New MVI, the Veterinary
Subsidiaries or their affiliates regarding employee benefits and
severance shall be set forth in Sections 10.2.2, 10.2.3, 10.2.4,
10.2.5 and 10.3 herein. All other liability for employee
benefits and severance shall be retained and/or assumed by the
Sellers.
10.2.2 Coverage under the Buyer's Pension Plan.
---------------------------------------
At the Closing Date, the Buyer shall begin to provide U. S.
Continuing Employees with retirement benefits under the current
pension plan maintained by the Buyer for its own similarly situated
employees (the "Buyer Pension Plan") in accordance with the terms of
such plans except as set forth herein. The Buyer Pension Plan shall
take into account all service with the Sellers or any of the
Companies (other than service credited pursuant to any enhanced
severance benefits in connection with the transactions contemplated
by this Agreement or any other severance arrangement of the Sellers
or the Companies) for purposes (except accrual of benefits) of
determining eligibility to participate, vesting of benefits, and
eligibility for early retirement subsidies and for any benefit, right
or feature under the Buyer Pension Plan to the extent such service is
taken into account under the Mallinckrodt Inc. Retirement Plan
(together with any predecessor plan, the "Seller Pension Plan").
The Seller Pension Plan shall continue to retain the assets and
liabilities (including any liability for credited service or
enhancements as a result of the transaction contemplated herein or as
a result of any severance arrangement) accrued as of the Closing Date
with respect to all current and former employees of the Companies (or
any surviving spouse or other beneficiary thereof), including U.S.
Continuing Employees who will be participants under the Buyer Pension
Plan. At the Closing Date, the Seller shall freeze the Seller
Pension Plan with respect to the retirement benefits of U.S.
Continuing Employees thereunder. The Seller Pension Plan shall make
direct payment of any accrued benefits from the Seller Pension Plan
to any U.S. Continuing Employees as provided for by the terms
thereunder. The Seller will provide the required notice under ERISA
Section 204(h) to all U.S. Continuing Employees under the Seller
Pension Plan whose future benefits will cease to accumulate.
10.2.3 Coverage under the Buyer's Investment Plan.
------------------------------------------
(a) Coverage. At the Closing Date, the Buyer
--------
shall begin to provide U.S. Continuing Employees with coverage
under the current fully qualified 401(k) plan maintained by the
Buyer for its own similarly situated employees (the "Buyer
Savings Plan") in accordance with the terms of such plan except
as set forth herein. In addition, the Buyer shall provide U. S.
Continuing Employees with coverage under the Schering-Plough
Employees' Profit-Sharing Incentive Plan (the "Buyer Profit-
Sharing Plan") in accordance with the terms of such plan except
as set forth herein. The Buyer Savings Plan and the Buyer
Profit-Sharing Plan shall take into account all service with the
Sellers or any of the Companies (other than service credited
pursuant to any enhanced severance benefits in connection with
the transactions contemplated by this Agreement or any other
severance arrangement of the Sellers or the Companies) for all
purposes including the determination of eligibility to participate,
vesting of benefits, computing the annual contribution percentage
(for the Buyer Profit-Sharing Plan) and for any benefit, right or
feature under the Buyer Savings Plan and under the Buyer
Profit-Sharing Plan (other than allocations relating to periods on or
prior
to the Closing Date), to the extent such service is taken into
account under the Investment Plan for Employees of Mallinckrodt Inc.
(together with any predecessor plan, the "Seller Savings Plan").
With respect to any U.S. Continuing Employee who is not a U.S.
Covered Employee, the Buyer Profit-Sharing Plan shall waive the
requirement that an employee be employed through the end of the plan
year.
(b) Transfer of Accounts. The Seller shall amend
--------------------
the Seller Savings Plan to permit U. S. Covered Employees to elect to
transfer their accounts under the Seller Savings Plan to the Buyer
Savings Plan, during the period commencing one hundred twenty (120)
days subsequent to the Closing Date and ending one hundred fifty
(150) days subsequent to the Closing Date (the "Election Period"), so
that the transfers qualify as "elective transfers" within the meaning
of Treasury Regulation section 1.411(d)-4 Q&A-3(b)(1). The Buyer
Savings Plan shall permit U.S. Covered Employees to make a one-time
election to transfer their accounts from the Seller Savings Plan to
the Buyer Savings Plan during the Election Period.
(i) Transfers shall be made in cash and,
with respect to any participant with a loan from the Seller
Savings Plan who elects to transfer his or her account to the
Buyer Savings Plan during the Election Period, the loan to the
participant will be transferred (which transfer shall be made
in kind by transfer to the trustee of the Buyer Savings Plan
by transfer of all documentation of such loan, including
promissory note and any other security for such loan). The
Sellers shall provide the Buyer with, along with the assets to
be transferred, a copy of the reports and all supporting
documentation relating to the determination of such amounts
together with such related materials as the Buyer may
reasonably request.
(ii) Account balances shall be transferred
on a date agreed upon by the Sellers and the Buyer, which in
no event shall be later than the close of the second calendar
year following the calendar year of the Closing Date (the
"Defined Contribution Asset Transfer Date"); provided however,
prior to any transfer the parties shall exchange favorable IRS
determination letters under Code Section 401(a) relating to
qualification of the Buyer Savings Plan and the Seller Savings
Plan.
(iii) The Sellers shall cause the trustee and
the administrator for the Seller Savings Plan to transfer to
the Buyer Savings Plan, an amount equal to the sum of all of
the account balances of all U.S. Covered Employees who elect
to transfer their accounts to the Buyer Savings Plan during
the Election Period, determined as of the periodic valuation
date (the "Valuation Date") under the Seller Savings Plan
which immediately precedes the Defined Contribution Asset
Transfer Date, plus or minus any investment returns allocable
to those accounts from that Valuation Date through the Defined
Contribution Asset Transfer Date, plus contributions allocable
to those accounts that are due to the Seller Savings Plan for
periods prior to the Closing Date, less benefit payments made
from the Seller Savings Plan which have not been allocated as
of the Valuation Date to the U.S. Covered Employees' accounts
in the Seller Savings Plan that are to be transferred. The
determination of the account balances of the U.S. Covered
Employees under the Seller Savings Plan will be made by the
record keeper for the Seller Savings Plan, and such balances
shall be subject to reasonable verification by the Buyer. The
Sellers shall not be obligated to make contributions to the
Seller Savings Plan for the U.S. Continuing Employees for
periods following the Closing Date; provided, that the Sellers
will make any contributions due to the Seller Savings Plan for
periods ending on or before the Closing Date no later than the
Defined Contribution Asset Transfer Date.
(c) Compliance of Transfer With Law. The Sellers
-------------------------------
warrant that the Seller Savings Plan is qualified, both in form and
operation, under the applicable provisions of the Code and that such
amounts of assets to be transferred hereunder shall not be less than
the amounts which would be determined in accordance with Section
414(l) of the Code and Section 208 of ERISA and the applicable
regulations and rulings under those sections.
(d) Buyer Savings Plan. The Buyer warrants that
------------------
the Buyer Savings Plan is qualified, both in form and operation,
under the applicable provisions of the Code. The Buyer further
warrants that on the Defined Contribution Asset Transfer Date the
accrued benefits to be provided under the Buyer Savings Plan relating
to U.S. Covered Employees electing a transfer during the Election
Period shall be equal to the U.S. Covered Employees' account balances
under, and assets to be transferred to, the Buyer Savings Plan.
(e) Continued Operation After Closing. On or
---------------------------------
after the Closing Date, but prior to the Defined Contribution Asset
Transfer Date, the Sellers shall direct payment of benefits from the
Seller Savings Plan to or on behalf of any U.S. Continuing Employee,
or any surviving spouse or other beneficiary thereof, who becomes
entitled to benefit payments under the terms of the Seller Savings
Plan during such period. All such payments shall reduce the amount
of U.S. Continuing Employee account balances and transferable assets.
On or after the Closing Date except as set forth above in Subsection
(b) and below in Subsection (h), U.S. Continuing Employees shall not
be entitled to make further contributions to the Seller Savings Plan
nor shall the Sellers make further contributions to the Seller
Savings Plan on behalf of U.S. Continuing Employees nor shall U.S.
Continuing Employees be entitled to obtain loans under the Seller
Savings Plan.
(f) Participation in Buyer Savings Plan. Each
-----------------------------------
U.S. Continuing Employee who, as of the Closing Date, had satisfied
the service requirements for participation in the Buyer Savings Plan,
and who is actually participating in the Seller Savings Plan shall
become an active participant in the Buyer Savings Plan, shall make
new salary deferral and investment elections and execute such other
documentation as may be reasonably required by the Buyer Savings
Plan.
(g) Records. As soon as practicable after the
-------
Closing Date but in no event later than sixty (60) days after the
Closing Date, the Sellers shall deliver or cause to be delivered to
the Buyer such copies of all applicable personnel records pertaining
to the Seller Savings Plan and the participation therein of the U.S.
Continuing Employees as of the Closing Date and copies of any other
applicable records pertaining to the participation of the U.S.
Continuing Employees in the Seller Savings Plan as the Buyer may
reasonably request.
(h) Loans. The Sellers agree to amend the
-----
provisions of the Seller Savings Plan to permit U.S. Continuing
Employees with account balances in the Seller Savings Plan and who
have loans outstanding under that Plan as of the Closing Date to
continue to repay those loans in periodic installments through the
Defined Contribution Asset Transfer Date and while such persons are
actively employed by the Buyer or any of its affiliates subsequent to
the Closing Date. All employee payments due on such loans between
the Closing Date and the Defined Contribution Asset Transfer Date
(or, for U.S. Covered Employees who do not elect an account transfer
during the Election Period, one hundred fifty (150) days after the
Closing Date) will be collected and transmitted to the Seller Savings
Plan by the Buyer, so long as such employees are still employed by
the Buyer or its affiliates, and the Sellers shall take any action
necessary to cause the Seller Savings Plan to accept such payments.
The Sellers shall be responsible for all administration for loans
that are not transferred to the Buyer Savings Plan by virtue of an
election by a U.S. Covered Employee during the Election Period.
The Seller Savings Plan shall: (i) retain the assets and
liabilities existing thereunder, as of the Closing Date with respect
to all current and former employees of the Companies (or any
surviving spouse or other beneficiary thereof), other than U.S.
Covered Employees who have made an election to transfer assets to the
Buyer Savings Plan pursuant to Section 10.2.3(b), and, (ii) make
direct payment of any benefits from the Seller Savings Plan (as and
when required by the terms thereof) to or on behalf of such current
and former employees of the Companies (or any surviving spouse or
other beneficiary thereof), other than U.S. Covered Employees who
have made an election to transfer assets to the Buyer Savings Plan
pursuant to Section 10.2.3(b).
10.2.4 Welfare Plans. On the Closing Date, the Buyer
-------------
shall allow the U.S. Continuing Employees to participate in all of
the welfare benefit plans provided by the Buyer to its similarly
situated employees (the "Buyer Welfare Plans") in accordance with the
terms of such plans except as set forth herein.
(a) Coverage. The Buyer shall provide U. S.
--------
Continuing Employees, to the extent eligible, with life, disability
and health insurance coverage under the Buyer Welfare Plans without
requiring evidence of insurability and without application of any
restrictions or limitations for any pre-existing physical or mental
conditions, to the extent permitted pursuant to the relevant Buyer
Welfare Plan and applicable law. The Buyer Welfare Plans shall take
into account claims arising during the plan year of the Sellers'
health plan in which the Closing Date occurs for the purposes of
satisfying deductibles, out-of-pocket maximums, benefit maximums and
all similar limitations, to the extent permitted pursuant to the
relevant Buyer Welfare Plan and applicable law.
(b) Credited Service. The Buyer shall credit
----------------
U.S. Continuing Employees with periods of employment with the Sellers
or any United States Company (but not including any additional
credited service that the Sellers may grant to U. S. Continuing
Employees in connection with severance plans or arrangements adopted
to benefit employees whose employment ends as a result of the
transactions contemplated by this Agreement or otherwise) for the
purposes of determining the amount of benefits to be provided under
the following and all other Buyer Welfare Plans, to the extent
permitted pursuant to the relevant Buyer Welfare Plan and applicable
law:
(i) vacation pay policies to determine
vacation entitlement, vacation days and pay and eligibility,
(ii) sick pay policies (including short-term
disability) to determine entitlement to sick pay, days of paid
sick leave and eligibility,
(iii) post-retirement health,
hospitalization, medical or insurance plans, programs and
policies, and
(iv) severance benefits payable to U.S.
Covered Employees; provided however, any U.S. Continuing
Employee that is a Severed Employee under Section 10.2.5(a) or
to whom the Sellers are obligated to provide severance
benefits under Section 10.2.6 shall not participate in any
severance plan, policy or arrangement of the Buyer.
(c) Retiree Medical Benefits. It is understood
------------------------
that the Buyer is undertaking all liability and responsibility for
providing post-retirement medical and other welfare benefits to all
U.S. Covered Employees and that no assets will be transferred from
the Sellers to the Buyer to fund such obligation. However, it is
also understood that the Sellers are retaining all liability and
responsibility for providing post-retirement medical and other
welfare benefits to all employees of the Animal Health Business who
have retired prior to the Closing Date and all other employees who
are not U. S. Covered Employees; provided, however that the Buyer
shall pay the Sellers for retaining such liabilities an amount equal
to fifty percent (50%) of the amount of the actual claims paid
relating to such liabilities that arise during the five (5) year
period immediately subsequent to the Closing Date, up to an aggregate
amount of Six Million Five Hundred Thousand Dollars ($6,500,000).
(d) Continuation of Mallinckrodt Veterinary
---------------------------------------
Cafeteria Plan.
- --------------
(i) The Buyers shall cause New MVI to
assume sponsorship of the health care reimbursement plan and
dependent care reimbursement plan under the FlexSecurity Plan
for Salaried Employees of MVI (the "FlexSecurity Plan") for
the remainder of the plan year in which the Closing Date
occurs. Existing elections by U.S. Continuing Employees with
respect to reimbursement accounts under the health care
reimbursement plan and dependent care reimbursement plan under
the FlexSecurity Plan (the "Reimbursement Accounts") shall
continue in force for the remainder of the coverage periods to
which such elections relate, subject to any rights that a
participating employee may have under the FlexSecurity Plan to
change an existing election.
(ii) Nothing in this paragraph (d) shall
require the Buyer to continue the FlexSecurity Plan beyond the
plan year in which the Closing Date occurs or, subject to
Section 10.2.4(a), prevent the Buyer from discontinuing any
benefit plans or options under the FlexSecurity Plan other
than the Reimbursement Accounts. Furthermore, the Buyer shall
have no obligation to provide coverage to U.S. Continuing
Employees under any health care reimbursement plan of the
Buyer or dependent care reimbursement plan of the Buyer for as
long as the Reimbursement Accounts are continued in force.
10.2.5 Buyer's Obligation for Severance Benefits for
---------------------------------------------
Continuing Employees. The Buyer shall make severance payments to
- --------------------
employees of the United States Companies who meet the definition of
Severed Employee in Section 10.2.5(a). The amount of severance
payments shall be determined under Section 10.2.5(b). The Buyer
shall have no obligation to make severance payments that the Sellers
are obligated to make under Section 10.2.6.
(a) A "Severed Employee" is any U.S. Continuing
Employee (other than any Key Executives for which the Sellers have an
obligation to make severance payments pursuant to section 10.2.6
hereof) who is terminated at any time within the one (1) year period
commencing on the Closing Date, other than for death, disability or
cause, and other than voluntarily, and who executes any release of
claims reasonably required under the terms of the applicable
severance arrangement in Section 10.2.5(b) and/or by the Buyer.
Transfer of employment from one Company to another Company or to an
affiliate of the Buyer (if the employee is transferred at
substantially the same rate of pay and to a substantially equivalent
position) shall not constitute termination for this purpose, unless
the transfer presents a personal financial hardship to such employee.
(b) The amount and type of severance benefits
payable to a Severed Employee shall be the benefits set forth on
Exhibit E, which are similar to those provided in the Mallinckrodt
Strategic Change Initiative termination package (provided that, the
Buyer, New MVI, the Veterinary Subsidiaries and any of their
affiliates shall not have any liability or responsibility for any
additional enhancements to any Plan or Non-ERISA Plan) or, if the
Severed Employee is a Key Executive with a letter agreement
addressing severance payments and benefits, inter alia, the benefits
shall be those set forth in the letter agreement instead of those set
forth on Exhibit E.
(c) Subject to subsection (b) set forth
immediately above, the Buyer shall be responsible for providing
health care continuation coverage that complies with the requirements
of Part 6 of Title I of ERISA and Code section 4980B to Severed
Employees, at the Severed Employees' sole cost and expense, under the
Buyer's group health plans.
(d) It is understood that each Severed Employee
shall be entitled to receive payment for all earned and unused
vacation for the calendar year of the termination of employment on
and as of the date of severance.
10.2.6 Sellers' Obligations for Severance Benefits. The
-------------------------------------------
Sellers shall be jointly and severally liable for the following
severance payments:
(a) to the extent not included on the Annual
Balance Sheet, all severance payments and benefits resulting from the
June, 1993 restructuring of Mallinckrodt Animal Health and the
December, 1995 administrative restructuring of Mallinckrodt Inc.
(relating to the Companies),
(b) all severance and benefit payments for any
Key Executive pursuant to any agreement or arrangement referenced in
Section 10.1.3 (as disclosed on Schedule 10.1.3) whose employment
with the Buyer, New MVI or the Veterinary Subsidiaries is terminated
by the Buyer on or before thirty (30) days after the Closing Date,
(c) any enhancements to any Plan, Non-ERISA or
International Plan pursuant to any severance agreement or
arrangement, and
(d) any other severance liability of the
Companies not set forth in Section 10.2.5 or 10.3.2.
10.3 International Employees. At the Closing Date, the Buyer
-----------------------
shall provide any Continuing Employee whose principal place of
employment is outside the United States and who is not a U.S.
Continuing Employee (an "International Employee") with such pension
plans, investment plans and welfare plans which on average are not
less favorable than the plans currently provided by the Sellers. If
the Buyer has no employees in a jurisdiction in which there are
International Employees, the Buyer will take such actions as may be
necessary to ensure continued participation of the relevant
International Employees in the employee benefit plans maintained by
the relevant Non-Domestic Company, to the extent permitted by
applicable law. Any International Employee that is a Severed
International Employee under Section 10.3.3 or to whom the Sellers
are obligated to provide severance benefits under Section 10.2.6
shall not participate in any severance plan, policy or arrangement of
the Buyer.
10.3.1 To the extent permitted by applicable law and
where applicable, the Sellers shall cause assets of such pension,
investment and any funded welfare plans to be transferred. Where
plans are maintained solely for the benefit of International
Employees, the assets and liabilities of the plans will be
transferred in their entirety to the Buyer or its affiliates. For
all other pension, investment and welfare plans maintained for
employees which include International Employees, the Buyer and the
Sellers shall mutually agree upon the amount, timing and manner of
payment of the asset transfers referred to in the immediately
preceding sentence; the timing and manner of payment shall be
similar to that which would be customary in the applicable country in
transactions of the type contemplated in this Section 10.3. The
parties understand and agree that any pension, investment and welfare
plan assets to be transferred with respect to International Employees
will be those held by or accrued with respect to the appropriate
International Employees of the Sellers on and as of the Closing Date,
adjusted for earnings through the transfer date.
10.3.2 Other than payments for which the Sellers are
liable pursuant to Section 10.2.6, the Buyer shall make severance
payments in accordance with applicable local law (including past
practice where this has the force of law) and applicable agreements
(which agreements and practices are set forth on Schedule 10.3.2) to
International Employees who meet the definition of Severed
International Employee in Section 10.3.3.
10.3.3 A "Severed International Employee" is any
International Employee on the Closing Date who is terminated at any
time within the one-year period commencing on the Closing Date, other
than for death, disability or cause, and other than voluntarily, and
who executes any release of claims reasonably required under the
terms of the applicable severance arrangement and/or by the Buyer.
Transfer of employment from one Company to another Company or to an
affiliate of the Buyer (if the employee is transferred at
substantially the same rate of pay and to a substantially equivalent
position) shall not constitute termination for this purpose, unless
the transfer presents a personal financial hardship to such employee.
10.4 Employment of Continuing Employees. On the Closing Date,
----------------------------------
the Buyer shall become the employer of all International Employees
and the Buyer shall become the employer of all U. S. Continuing
Employees and shall offer such employees equivalent positions and at
least the same wage as in effect immediately prior to the Closing
Date (which shall not have increased other than in the normal course
from the wage data provided by the Sellers to the Buyer prior to the
Closing Date); provided however, no International Employee or U.S.
Continuing Employee shall be paid wages in excess of the wages paid
to employees of the Buyer or its affiliates who are of equivalent
position as of the Closing Date. Notwithstanding anything set forth
herein, the Buyer may terminate the employment of any International
Employee or U.S. Continuing Employee in its sole and absolute
discretion.
10.5 Executive Life; Commission Agents.
---------------------------------
10.5.1 Executive Life Insurance Plan. The Sellers shall
-----------------------------
be liable for the payment of all benefits pursuant to and all costs
associated with the Mallinckrodt Inc. Executive Life Insurance Plan
or any similar life insurance plan or arrangement relating to the
Companies' employees prior to the Closing Date, and the Buyer, its
affiliates and any Company shall not be liable for any payments or
charged for any costs associated with the same.
10.5.2 Worker's Compensation and Similar Liability. The
-------------------------------------------
Sellers shall be liable for any worker's compensation, auto, general
and similar liabilities relating to the employees of the Companies
and arising prior to the Closing Date, except to the extent of the
aggregate dollar amount of accruals for such liabilities as reflected
in Total Current Liabilities as of the Closing Date.
10.5.3 Commission Agents. The Sellers shall be liable
-----------------
for claims for any employee benefits, severance or similar benefits
(to the extent arising out of facts, circumstances and services
provided or occurring prior to the Closing Date) of any party to a
Commission Agent agreement or arrangement that such person is
entitled to under such agreement or arrangement, except to the
extent of the aggregate dollar amount of accruals for such
liabilities as reflected in Total Current Liabilities as of the
Closing Date.
10.6 Employee Records; Transition Assistance. The Sellers
---------------------------------------
shall provide all records (including personnel and corporate records)
to the Buyer within a reasonable time prior to the Closing. The
Sellers shall assist the Buyer as appropriate to assure the orderly
transition of Continuing Employees as a part of the transactions
contemplated pursuant to this Agreement. The Sellers shall also
generally assist the Buyer by providing information and access to
information to facilitate the orderly transfer of the Animal Health
Business to the Buyer.
10.7 Further Assurances. After the Closing Date, the Sellers
------------------
and the Buyer shall, from time to time upon any other party's
request, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, all such further assignments, documents,
instruments, transfers, conveyances, discharges, releases, assurances
and consents, and shall take or cause to be taken such further
actions, as such other party may reasonably request to further
evidence or carry out the transactions contemplated by, and the
purposes of, this Agreement.
10.8 Record Retention and Access. For a period of seven (7)
---------------------------
years following the Closing Date, the Buyer shall grant each of the
Sellers and their respective representatives access to, and shall
make available to each of the Sellers and their respective
representatives, all properties, facilities, records, files,
documents and correspondence of the Companies, during regular
business hours and upon reasonable prior notice, for purposes of
preparing tax returns and securities filings, prosecution and defense
of litigation and all other proper business purposes. If within such
seven (7) year period the Buyer desires to destroy any records,
files, documents or correspondence of the Companies, the Buyer shall
not destroy such items without giving thirty (30) days prior written
notice to the Sellers, upon which notice the Sellers shall have the
right to take possession of such records, files, documents and
correspondence.
10.9 Noncompetition. During the period commencing on the
--------------
Closing Date and continuing until the second annual anniversary of
the Closing Date (the "Noncompetition Period"), the Sellers shall
not, directly or indirectly, own, manage, operate or control any
business anywhere in the world which develops, manufactures and sells
any products or services in competition with the Animal Health
Business (a "Competitive Business"); provided, however, that the
foregoing covenant shall not prohibit, or be interpreted as
prohibiting, the Sellers from (i) manufacturing or selling raw
materials to a Competitive Business, (ii) developing, manufacturing
or selling ingredients and compounds used in the Competitive Business
for purposes other than those related directly to the Competitive
Business, (iii) entering into any relationship with a person or
entity not owned, managed, operated or controlled by the Sellers for
purposes primarily unrelated to the Competitive Business, (iv) making
equity investments in publicly owned companies which conduct a
Competitive Business, provided such investments do not confer control
of any such company upon the Sellers, (v) acquiring any person or
entity which conducts a Competitive Business if either (a) in the
calendar year prior to such acquisition, the revenues of such person
or entity from its Competitive Business do not constitute more than
25% of the total revenues of such person or entity, or (b) the
Sellers promptly commence and thereafter pursue for a period of six
(6) months the transfer of that portion of the business of such
person or entity as constitutes a Competitive Business upon terms and
conditions and at a price determined by the Sellers in their sole
discretion, failing which the Sellers shall for a period of three (3)
months following such six (6) month period negotiate with the Buyer
in good faith for the sale of such Competitive Business to the Buyer
on terms and conditions and at a price mutually agreeable to the
Sellers and the Buyer, or (vi) engaging in any activities
contemplated by Section 5.5 hereof.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Source of Representations and Warranties. The
----------------------------------------
representations and warranties contained herein or in any schedule or
other document attached hereto shall be deemed representations and
warranties by the party by whom, or on whose behalf, the same is
delivered, except and unless as otherwise provided herein.
11.2 Payment of Fees and Expenses. The Buyer shall pay and be
----------------------------
responsible for all of its own fees and expenses (including fees and
expenses of its counsel, accountants and other advisers) incurred
incident to the negotiation, preparation and execution of this
Agreement and the Subsidiary Agreements and the consummation of the
transactions contemplated herein and therein. The Sellers shall pay
and be responsible for all of their own and Companies' fees and
expenses (including fees and expenses of counsel, accountants and
other advisers) incurred by them incident to the negotiation,
preparation and execution of this Agreement and the Subsidiary
Agreements and the consummation of the transactions contemplated
herein and therein.
11.3 Entire Agreement. This Agreement, any exhibits,
----------------
schedules, annexes and appendices to this Agreement, and any other
documents referenced herein constitute the entire agreement and
understanding of the parties as to the subject matter hereof, and
supersede any and all prior discussions, negotiations, letters of
intent, and agreements, whether written or oral, express or implied,
between the parties with respect to its subject matter. Any
references in any Subsidiary Agreement to the mutual agreement of the
parties shall be determined expressly in accordance with the
principles, agreements, conditions and other terms of this Agreement.
In the event of any conflict or inconsistency in the interpretation
of this Agreement and any Subsidiary Agreement, the former shall
prevail.
11.4 Modification. This Agreement may not be modified except
------------
by a writing specifically referring to this Agreement and executed by
duly authorized representatives of the parties.
11.5 Waiver. The failure by any party to exercise any of its
------
rights hereunder or to enforce any of the terms or conditions of this
Agreement on any occasion shall not constitute or be deemed a waiver
of that party's rights thereafter to exercise any rights hereunder or
to enforce each and every term and condition of this Agreement.
11.6 Notices. All notices, consents, approvals or other
-------
notifications required to be sent by one party to the other party
hereunder shall be in writing and shall be deemed served upon the
other party if delivered by hand or sent by United States registered
or certified mail, postage prepaid, with return receipt requested, or
by facsimile or air courier addressed to such other party at the
address set out below, or the last address of such party as shall
have been communicated to the other party. If a party changes its
address, written notice shall be given promptly to the other party of
the new address. Unless otherwise specified in this Agreement,
notice shall be deemed given on the day after it is sent (in the case
of delivery by method other than hand delivery) or the date of
delivery (in the case of delivery by hand) in accordance with the
provisions of this section. The address for notices is as follows:
The Buyer: Raul E. Kohan, President
Schering-Plough Animal Health
c/o Schering-Plough Corporation
1095 Morris Avenue
Union, NJ 07083-1982
Copy to: William J. Silbey
Staff Vice President, Secretary and
Associate General Counsel
Schering-Plough Corporation
One Giralda Farms
Madison, NJ 07946
The Sellers: Mallinckrodt Inc.
675 McDonnell Blvd.
St. Louis, Missouri 63134
Attn: Ashok Chawla
Vice President, Strategic Management
Copy to: Mallinckrodt Inc.
675 McDonnell Blvd.
St. Louis, Missouri 63134
Attn: Roger A. Keller
Vice President and General Counsel
11.7 Binding Effect and Assignment. This Agreement shall inure
-----------------------------
to the benefit of and be binding upon the parties hereto, their
successors and assigns. Neither party shall, without the written
consent of the other party, assign or transfer any of its rights,
benefits, obligations, or other interest under this Agreement to any
other party; except that, without the written consent of the other
party, either or both of the Sellers or the Buyer may assign this
Agreement to an affiliate. Notwithstanding any such assignment to an
affiliate, the assignor shall remain fully liable to the other party
in accordance with the terms hereof, regardless of whether or not
such assignment was effected with or without the necessity of
obtaining the consent of the other party hereto.
11.8 Governing Law: Jurisdiction and Venue; Service of Process.
---------------------------------------------------------
This Agreement shall be construed, interpreted and enforced in
accordance with the laws (both substantive and procedural) of the
State of New York, but excluding its law of conflicts; provided that,
any action which relates solely to a claim regarding title to or a
lien on any real property or concerning any real property lease shall
be governed by the law of the jurisdiction in which the property as
to which the claim is brought is located and may also be brought in
the appropriate court of local jurisdiction; provided further that,
notwithstanding the immediately preceding proviso, action may also be
brought in the appropriate court of local jurisdiction if the federal
district court or state courts sitting in the Southern District of
New York or the Borough of Manhattan, City of New York, New York,
United States of America do not accept jurisdiction upon first
application, which court of local jurisdiction shall apply New York
law in such case. All parties to this Agreement irrevocably consent
to jurisdiction and venue in the federal courts in the Southern
District of New York for the purposes of any court proceedings
hereunder, irrevocably agree to service of process by the means set
forth in Section 11.6, and hereby waives the right to raise any
argument of forum non conveniens or any similar argument in objection
to the selection of venue set forth in this Section 11.8.
11.9 Counterparts. This Agreement may be executed in several
------------
counterparts, and each executed counterpart shall be considered an
original of this Agreement.
11.10 Headings. The parties agree that the section and article
--------
headings are inserted only for ease of reference, shall not be
construed as part of this Agreement, and shall have no effect upon
the construction or interpretation of any part hereof.
11.11 Construction and Representation by Counsel. The parties
------------------------------------------
hereto represent that in the negotiation and drafting of this
Agreement they have been represented by and relied upon the advice of
counsel of their choice. The parties affirm that their counsel have
had a substantial role in the drafting and negotiation of this
Agreement and, therefore, the rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any
Exhibit or Schedule attached hereto.
11.12 No Third Party Beneficiaries. Nothing in this Agreement
----------------------------
shall confer any rights upon any person or entity other than the
parties hereto and their respective heirs, successors and permitted
assigns.
11.13 Severability. If any provision, including any phrase,
------------
sentence, clause, section or subsection, of this Agreement is
invalid, inoperative or unenforceable for any reason, such
circumstances shall not have the effect of rendering such provision
in question invalid, inoperative or unenforceable in any other case
or circumstance, or of rendering any other provision herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
SELLERS: BUYER:
- ------- -----
MALLINCKRODT INC. SCHERING-PLOUGH CORPORATION
By /s/ ASHOK CHAWLA By /s/ RICHARD KOGAN
----------------------- ---------------------------
Ashok Chawla Richard Kogan
Vice President, President and Chief Exeuctive
Strategic Management Officer
MALLINCKRODT VETERINARY, INC.
By /S/ PAUL COTTONE
-------------------------
Paul Cottone
President
MALLINCKRODT VETERINARY
INTERNATIONAL, INC.
By /s/ PAUL COTTONE
-------------------------
Paul Cottone
President
<PAGE>
List of Schedules, Exhibits and Annexes
to the Stock Purchase Agreement
Schedule 1.1.49 Financial Statements
Schedule 1.1.67 PST Lease Liability
Schedule 2.1.2 Excluded Assets
Schedule 2.1.3 Excluded Liabilities
Schedule 2.1.4 Subsidiary Stock Purchase and Sale Agreement
Schedule 2.2 Purchase Price Allocation
Disclosure Schedule Exceptions of the Sellers to Representations and
Warranties
Schedule 4.1.7(i) Financial Templates
Schedule 4.1.7(ii) PST Lease Liability
Schedule 4.1.11 Products List
Schedule 4.2.2 Exceptions of the Buyer as to Authority and
Validity
Schedule 4.2.3 Exceptions of the Buyer as to No Violations
Schedule 4.2.4 Exceptions of the Buyer as to Consents and
Approvals
Schedule 5.1.5 Intercompany Loans
Schedule 5.4 Animal Health Business facilities to be included
in the Environmental Baseline Study
Schedule 5.7 Transitional Services
Schedule 6.1.9 Necessary Contracts
Schedule 8.1.1(iv) Specifically Indemnified Claims and Litigation
Schedule 10.1.3 Key Executives
Schedule 10.1.4 Select Employees
Schedule 10.3.2 Agreements and Past Practices of Non-Domestic
Companies Relating to Severance Payments
Exhibit A Veterinary Subsidiaries
Exhibit B Legal Opinion of Mallinckrodt Inc. General
Counsel
Exhibit C Legal Opinion of Buyer's Counsel
Exhibit D Letter regarding Section 338 Election
Exhibit E Severance Benefits
Annex 4.1.8 Commitments and Contingencies
Annex 4.1.9(vii)(y) Certain Severance and Pension Matters
Annex 4.1.20(c) Summary of International Plans required by
Governmental Authorities
Annex 4.1.20(h) Business Personnel with Written Employment
Agreements
Annex 4.1.21(1) List of Patents, Trademarks, Service Marks and
Related Applications
Annex 4.1.27(1) List of Product Registration Information
Annex 10.3.2(a) Summary of International Severance Plans and
Practices
Annex 10.3.2(b) Summary of Governmentally Mandated International
Severance Policies and Practices
The list set forth above briefly identifies the contents of all
Schedules, Exhibits and Annexes to the Stock Purchase Agreement,
dated May 19, 1997, among Mallinckrodt Inc., Mallinckrodt Veterinary,
Inc., Mallinckrodt Veterinary International, Inc. and Schering-Plough
Corporation (the "Agreement"). All of the Schedules, Exhibits and
Annexes listed above are omitted from the Agreement filed as Exhibit
2.1 to the foregoing Current Report on Form 8-K, and Mallinckrodt
Inc. agrees to furnish supplementally a copy of any of the omitted
Schedules, Exhibits or Annexes to the Securities and Exchange
Commission upon request.
Exhibit 2.2
Schering-Plough Corporation
One Giralda Farms
Madison, New Jersey 07940-7040
June 30, 1997
Mallinckrodt Inc.
675 McDonnell Blvd.
St. Louis, Missouri 63134
Re: Amendment No. 1 to the Stock Purchase Agreement
dated as of May 19, 1997 among Mallinckrodt Inc.,
Mallinckrodt Veterinary, Inc., Mallinckrodt
Veterinary International, Inc. and Schering-Plough
Corporation, as the same may be amended from
time to time (the "Stock Purchase Agreement")
--------------------------------------------------
Dear Sirs:
This letter (this "Amendment") will confirm our agreement with
respect to certain amendments to the Stock Purchase Agreement and is
being entered into immediately prior to the Closing thereunder. All
capitalized terms used herein without definition shall have the
meanings ascribed to them in the Stock Purchase Agreement.
Notwithstanding anything herein, in the Stock Purchase Agreement
or in any Subsidiary Agreement to the contrary, the parties hereto
hereby agree as follows:
1. Veterinary Subsidiaries
-----------------------
(a) Exhibit A to the Stock Purchase Agreement ("Exhibit
A") is hereby amended to delete the entry thereon for Coopers Animal
Health (Holdings) Limited, a company organized under the laws of
England and designated in the "Subsidiary" column of Exhibit A as
#34. Accordingly, such company is not a Veterinary Subsidiary.
(b) With respect to Mallinckrodt Veterinaria S.A., a
company organized under the laws of Spain and designated in the
"Subsidiary" column of Exhibit A as #30, Exhibit A is hereby amended
to provide that MVII owns 99.99% of the Shares thereof and MVI owns
.01% of the Shares thereof.
2. Buyer Designee. The Buyer hereby designates MVI
--------------
Acquisition Co., a Delaware corporation, as its designated affiliate
for the purchase of the Shares of New MVI and of Mallinckrodt
Veterinary Asia, Inc., upon the terms and subject to the conditions
set forth in the Stock Purchase Agreement.
3. Use of Names. Section 5.6 of the Stock Purchase Agreement
------------
is hereby amended by replacing the parenthetical at the end of such
Section to read as follows: "(with the exception of packaging
materials on finished product and advertising or promotional
materials printed prior to the Closing and any such materials printed
within one hundred eighty (180) days after the Closing in the
ordinary course of business for which, in each such case, such period
of permitted use shall extend up to the applicable product expiration
date)." In addition, with respect to any Deferred Subsidiary (as
defined in Section 5 hereof), all references in Section 5.6 of the
Stock Purchase Agreement to the "Closing" or the "Closing Date" shall
be deemed instead to refer to the applicable Deferred Closing Date
(as defined in Section 5(b) hereof).
4. Schedule 2.2. Section 2.2 to the Stock Purchase Agreement
------------
is hereby amended in its entirety to read as set forth in Annex A
hereto.
5. Deferred Closings.
-----------------
(a) The parties hereto acknowledge and agree that, as of
the date hereof, the Shares of each Veterinary Subsidiary listed on
Annex B hereto (each a "Deferred Subsidiary") cannot be transferred,
directly or indirectly, to the Schering-Plough affiliate or
affiliates that are parties to the applicable Subsidiary Agreement
with respect to such Deferred Subsidiary (or the applicable
Subsidiary Agreement with respect to a parent of such Deferred
Subsidiary) because certain governmental approvals have not yet been
obtained. The Sellers and the Buyer desire to proceed with the
Closing and, accordingly, the Sellers and the Buyer agree that at the
Closing the Estimated Adjusted Purchase Price shall be reduced by an
amount equal to the amount set forth beside each Deferred
Subsidiary's name, except for Thailand, on Annex B hereto (each a
"Deferred Amount"), which amount for the avoidance of doubt is One
Million Eight Hundred Fifty-Seven Thousand Dollars ($1,857,000). In
the event that the Deferred Amount with respect to a Deferred
Subsidiary is not required to be paid to Sellers as provided herein,
the Working Capital Adjustment, if theretofore calculated, shall be
recalculated to reflect such circumstance. The parties hereto shall
cooperate in making all filings and taking all action necessary to
enable all Shares of each Deferred Subsidiary to be transferred to
the Buyer at the earliest possible date after the Closing Date.
(b) With respect to each Deferred Subsidiary, on the fifth
business day following the receipt of all necessary governmental
approvals for the sale of the Shares of such Deferred Subsidiary to
the Buyer (the "Deferred Closing Date"), (i) the Buyer shall pay the
Deferred Amount to the Sellers and purchase from the Sellers all the
Shares of such Deferred Subsidiary and (ii) the Sellers shall deliver
to the Buyer (x) certificates representing such Shares, duly endorsed
in blank or with appropriate stock powers, or the Sellers shall have
taken such other actions as may be necessary under applicable law and
the applicable Subsidiary Agreement to transfer ownership of such
Shares to the Buyer, free and clear of any pledges, security
interests, liens, encumbrances or adverse claims and (y) the
resignation of all directors of such Deferred Subsidiary (except for
any resignation(s) the Buyer specifically instructs the Sellers not
to obtain) and any documents of Sellers or their affiliates necessary
to elect the Buyer's designees as directors (each such payment and
delivery a "Deferred Closing").
(c) Sellers shall cause each Deferred Subsidiary to
conduct the business of such Deferred Subsidiary strictly in
accordance with the instructions of the Buyer to the fullest extent
permitted by law in the relevant jurisdiction; it is understood that
any such actions taken by the Sellers with respect to a Deferred
Subsidiary shall be taken for the benefit of the Buyer. Subject to
the provisions of the immediately preceding sentence, with respect to
each Deferred Subsidiary, the Buyer and the Sellers shall remain
obligated under Article V of the Stock Purchase Agreement until their
respective obligations under this Amendment and the Subsidiary
Agreement with respect to such Deferred Subsidiary have been fully
completed. Without limiting the generality of the foregoing, the
Sellers shall cause each Deferred Subsidiary not to pay any dividends
or to issue, repurchase or redeem any shares of its capital stock or
to make any other cash or non-cash distributions to the Sellers or
any of their affiliates. In taking any actions required by the
provisions of this Section 5 (and, in particular, this subsection
(c)), the Buyer agrees that the Sellers will not be deemed to be in
violation of the requirements and restrictions set forth in Section
10.9 of the Stock Purchase Agreement.
(d) The Sellers shall report to Buyer on a monthly basis
with respect to each Deferred Subsidiary. If the Shares of any
Deferred Subsidiary cannot be legally transferred to the Buyer or any
affiliate thereof within six months after the date of this Amendment,
the Buyer and the Sellers shall use their reasonable best efforts to
negotiate an equitable alternative to such transfer that shall afford
to the Buyer and the Sellers, respectively, the economic benefits
that they had anticipated with respect to such transfer. With
respect to Colombia, in addition to the foregoing and in the event
that, due to the failure of the appropriate governmental authority to
approve the transfer of the animal health operations resident in
Colombia ("Colombian Business") by December 31, 1997 or the
affirmative disapproval by the appropriate governmental authority of
such transfer before December 31, 1997 (either date referred to
hereunder as the "Decision Date"), the Buyer will not be able to
purchase the Colombian Business, it is understood that the Buyer will
pay to the Sellers an amount equal to the operating cash flow with
respect to the Colombian Business (as calculated in accordance with
the historical accounting policies and practices of the Sellers) for
the period beginning on July 1, 1997 and ending on the Decision Date,
provided that, in no event shall the Buyer be responsible to pay to
the Sellers pursuant to this sentence an amount in excess of the
lesser of One Hundred Forty Thousand Dollars ($140,000) per month or
Eight Hundred Thousand Dollars ($800,000) in the aggregate.
6. Reorganization.
--------------
(a) The parties acknowledge and agree that nothing in the
Assignment and Assumption Agreement, dated as of May 19, 1997 (the
"MVI Assignment"), between MVI and New MVI with respect to the
Reorganization, or any other instrument of assignment, assumption,
conveyance (including, without limitation, deeds) or other document
relating to the Reorganization (collectively with the MVI Assignment,
the "Reorganization Agreements"), amends or otherwise modifies or
limits any of the provisions of (i) the Assumption Agreement, dated
as of June 29, 1997, among the Sellers, New MVI and the Buyer with
respect to the Excluded Liabilities or (ii) the Stock Purchase
Agreement (including, without limitation, the Buyer's rights under
Article 8 thereof). The Sellers represent and warrant to the Buyer
that the Sellers have delivered to the Buyer a true and correct copy
of or have given the Buyer access to all of the Reorganization
Agreements, including any and all amendments thereto.
(b) Without limiting Section 6(a) hereof, and
notwithstanding anything in the Reorganization Agreements to the
contrary, (i) the Sellers, jointly and severally, shall be solely
responsible for all obligations and liabilities arising under each
agreement or other instrument assigned to New MVI in connection with
the Reorganization with respect to all periods prior to the Closing,
except for any such liability which is taken into account in the
Working Capital Adjustment, and (ii) neither the Buyer, New MVI, nor
any other affiliate of the Buyer shall have any obligations or
liabilities to the Sellers or to any other Indemnified Party (as
defined in the MVI Assignment) pursuant to Section 4 of the MVI
Assignment. The parties acknowledge and agree that all obligations
and liabilities referred to in clause (i) of the preceding sentence
are deemed to arise out of the Reorganization for purposes of Section
8.1.1(v) of the Stock Purchase Agreement.
7. Waiver of Closing Condition by the Buyer. The Buyer hereby
----------------------------------------
waives the condition set forth in Section 6.1.9 of the Stock Purchase
Agreement with respect to the contracts listed as items 2 through 7
on Schedule 6.1.9.
8. Certain Indemnities. Section 8.1.1(x) of the Stock
-------------------
Purchase Agreement is hereby amended to read in its entirety as
follows: "(A) the transfer or failure to transfer to the Buyer or
its designee any or all nominal and qualifying shares of Mallinckrodt
Vet, S.A. de C.V., a Veterinary Subsidiary organized under the laws
of Mexico, and/or any dividends, distributions or other payments
required to be made in connection therewith, (B) the failure to
transfer to the Buyer or its designee all certificates representing
the Shares of any Veterinary Subsidiary or (c) the failure to deliver
to the Buyer or its designee all resignations (effective as of the
Closing) of directors of the Veterinary Subsidiaries from their
positions as directors (except for any resignation(s) the Buyer
specifically instructs the Sellers not to obtain)." Notwithstanding
the foregoing, in the case of each Deferred Subsidiary, the foregoing
clauses (B) and (c) shall take effect from the Deferred Closing Date
with respect to such Deferred Subsidiary.
9. Miscellaneous. Except as set forth herein, all other
-------------
provisions of the Stock Purchase Agreement remain unaffected and in
full force and effect. This letter may be executed in several
counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same
agreement.
10. Time of Closing. Except for the Deferred Closings, the
---------------
Closing shall be deemed to occur as of the close of business in each
relevant jurisdiction on June 30, 1997; except for (i) Australia,
which shall be deemed to close as of the opening of business on July
1, 1997 and (ii) Hong Kong, which shall be deemed to close as of the
opening of business on July 3, 1997.
If the foregoing is in accordance with our agreement, please so
indicate by signing below.
Very truly yours,
SCHERING-PLOUGH CORPORATION
By: /s/ William J. Silbey
-----------------------
Name: William J. Silbey
Title: Secretary
Acknowledged and Agreed:
MALLINCKRODT INC.
By: /s/ Ashok Chawla
-----------------------
Name: Ashok Chawla
Title: Vice President, Strategic Management
MALLINCKRODT VETERINARY, INC.
By: /s/ C. Stephen Kriegh
----------------------
Name: C. Stephen Kriegh
Title: Vice President
MALLINCKRODT VETERINARY
INTERNATIONAL, INC.
By: /s/ C. Stephen Kriegh
---------------------
Name: C. Stephen Kriegh
Title: Vice President
The undersigned is executing this Amendment for purposes of
Section 5 hereof:
MALLINCKRODT VETERINARY
HOLDINGS, INC.
By: /s/ C. Stephen Kriegh
----------------------
Name: C. Stephen Kriegh
Title: Vice President
<PAGE>
List of Annexes
to
Amendment No. 1 to the
Stock Purchase Agreement
Annex A Revised Schedule of Purchase Price Allocation
Annex B Deferred Subsidiaries
The list set forth above briefly identifies the contents of all
Annexes to Amendment No. 1, dated June 30, 1997, to the Stock
Purchase Agreement, among Mallinckrodt Inc., Mallinckrodt Veterinary,
Inc., Mallinckrodt Veterinary International, Inc. and Schering-Plough
Corporation, which amendment was also executed by Mallinckrodt
Veterinary Holdings, Inc. (the "Amendment"). All of the Annexes
listed above are omitted from the Amendment filed as Exhibit 2.2 to
the foregoing Current Report on Form 8-K, and Mallinckrodt Inc.
agrees to furnish supplementally a copy of any of the omitted Annexes
to the Securities and Exchange Commission upon request.
