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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
November 30, 1999
Date of Report (Date of earliest event reported)
OSI PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15190 13-3159796
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
106 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NY 11553
(Address of principal executive offices)
(516) 222-0023
(Registrant's telephone number, including area code)
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ITEM 2. DISPOSITION OF ASSETS
Effective as of November 30, 1999 and pursuant to an Asset Purchase
Agreement dated as of November 17, 1999, and amended November 30, 1999, OSI
Pharmaceuticals, Inc. ("OSI" or the "Company") sold certain assets of its
diagnostics business to Bayer Corporation, including the assets of the Company's
wholly owned diagnostics subsidiary, Oncogene Science Diagnostics Inc., based in
Cambridge, Massachusetts ("OSDI"). The assets sold include certain contracts,
equipment and machinery, files and records, intangible assets, intellectual
property, inventory, prepaid expenses and other assets primarily related to the
operation of the diagnostics business. Bayer intends to retain all employees of
OSDI and will maintain the unit's headquarters in Cambridge. Under the terms of
the agreement, the Company received $9.75 million in cash up-front from Bayer
and will receive additional contingent payments of $1.25 million to be made to
the Company by 2001. The Company expects to apply the proceeds of the sale to
working capital.
In connection with the sale, the Company and OSDI entered into
certain agreements with Bayer including the following: (a) an Assignment and
Assumption of Lease with respect to the OSDI facility located in Cambridge, (b)
a Patent Assignment pursuant to which OSI assigned its right, title and interest
in, to and under certain patents to Bayer, (c) a Patent License Agreement
pursuant to which OSI obtained an exclusive license for the use of the patents
granted under the Patent Assignment with respect to therapeutic products, (d) an
Assignment of Trademarks pursuant to which OSI and OSDI assigned each of their
right, title and interest in and to certain unregistered trademarks to Bayer,
(e) an Assignment and Assumption of Assumed Contracts pursuant to which OSI and
OSDI assigned each of their right, title and interest in, to and under certain
contracts to Bayer, (f) a Domain Name Transfer Agreement pursuant to which OSI
and OSDI transferred the domain name www.oncogene.com to Bayer, and (g) a
Transition Services Agreement pursuant to which OSI agreed to provide certain
services to Bayer, including, without limitation, general ledger and financial
support and cash replenishment support. Furthermore, certain employees of OSI
and OSDI entered into Executive Employment Agreements with Bayer.
Effective January 1, 1997, the Company and Bayer entered into an
agreement to develop serum-based cancer diagnostic products. Under the
agreement, the Company granted to Bayer licenses to manufacture, use and sell
clinical diagnostic products based on the Company's cancer diagnostic technology
in exchange for royalties on net sales. The Company retained rights and was
actively selling non-automated, or manual, versions of these tests to the
clinical research market and retained the right to commercialize the manual
versions in the clinical diagnostic market. Upon the sale of the Company's
diagnostics business to Bayer, the agreement was terminated. Effective April 1,
1998, the Company, through OSDI, entered into a research collaboration and
license agreement with Fujirebio, Inc. creating a collaborative program focused
on discovering and developing certain proprietary cancer assays and
commercializing cancer products. Upon the sale of the Company's diagnostics
business to Bayer, the agreement was assigned to Bayer.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined financial information
related to the sale of the diagnostics business by the Company is filed herewith
as Exhibit 99.1. The unaudited pro forma condensed combined financial statements
combine the historical balance sheets and statements of operations of the
Company giving effect to the sale.
The unaudited pro forma condensed combined balance sheet as of June
30, 1999 assumes that the asset sale to Bayer occurred on June 30, 1999 and the
statements of operations for the nine months ended June 30, 1999 and for the
year ended September 30, 1998 assume that the asset sale to Bayer occurred on
October 1, 1997.
The unaudited pro forma condensed combined financial statements have
been prepared by the Company based upon assumptions deemed proper by it. The
unaudited pro forma condensed combined financial statements are not necessarily
indicative of the future financial position or result of operations or actual
results that would have occurred had the transaction been in effect as of the
dates presented.
The unaudited pro forma financial information is only a summary and
should be read in conjunction with the Company's historical consolidated
financial statements and related notes contained in the annual reports and other
information that was previously filed with the Securities and Exchange
Commission.
(c) Exhibits.
2.1* Asset Purchase Agreement, dated November 17, 1999, by
and among OSI Pharmaceuticals, Inc., Oncogene Science
Diagnostics, Inc. and Bayer Corporation (without
exhibits and schedules).
2.2 Amendment No. 1 to Asset Purchase Agreement, dated
November 30, 1999.
99.1 Unaudited Pro Forma Condensed Combined Balance Sheet
and Statements of Operations of OSI Pharmaceuticals,
Inc.
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99.2 Press Release, dated November 18, 1999.
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* The exhibits and schedules to the Asset Purchase
Agreement have been omitted pursuant to Item 601(b)(2)
of Regulation S-K under the Securities Exchange Act of
1934, as amended. The omitted exhibits and schedules
from this filing will be provided upon request.
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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: December 15, 1999 OSI PHARMACEUTICALS, INC.
By: /s/ Robert L. Van Nostrand
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Name: Robert L. Van Nostrand
Title: Vice President and Chief Financial
Officer, Secretary and Treasurer
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EXHIBIT INDEX
Exhibit No. Description
2.1* Asset Purchase Agreement, dated November 17, 1999, by and among OSI
Pharmaceuticals, Inc., Oncogene Science Diagnostics, Inc. and Bayer
Corporation (without exhibits and schedules).
2.2 Amendment No. 1 to Asset Purchase Agreement, dated November 30,
1999.
99.1 Unaudited Pro Forma Condensed Combined Balance Sheet and
Statements of Operations of OSI Pharmaceuticals, Inc.
99.2 Press Release, dated November 18, 1999.
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* The exhibits and schedules to the Asset Purchase Agreement have been
omitted pursuant to Item 601(b)(2) of Regulation S-K under the Securities
Exchange Act of 1934, as amended. The omitted exhibits and schedules from
this filing will be provided upon request.
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EXHIBIT 2.1
Portions of this Exhibit 2.1 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated as of November 17, 1999 (the
"EXECUTION DATE ") among OSI PHARMACEUTICALS, INC., a Delaware corporation
("OSIP"), ONCOGENE SCIENCE DIAGNOSTICS, INC., a Delaware corporation ("OSDI"),
and BAYER CORPORATION, an Indiana corporation (the "PURCHASER"). OSIP and OSDI
shall sometimes be collectively referred to in this Agreement as the "SELLER
PARTIES."
PREAMBLE
A. OSIP is a biopharmaceutical company which is generally engaged in the
discovery and development of novel, small molecule pharmaceutical products for
commercialization by the pharmaceutical industry, including the innovation,
assembly and reduction to practice of drug discovery and development
technologies and other assets.
B. OSIP, together with its wholly-owned subsidiary OSDI, is specifically
engaged in the Diagnostics Business (as defined in Section 1 below).
C. The Purchaser desires to purchase substantially all of the assets
comprising the Diagnostics Business from the Seller Parties, and the Seller
Parties desire to sell such assets to the Purchaser, upon the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, and intending to be legally
bound hereby, the parties agree as follows:
Section 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"ACQUISITION" shall mean any transaction or series of related transactions
(whether by means of stock purchase, purchase of all or substantially all of the
assets, merger, business combination, reorganization, consolidation, joint
venture or otherwise) pursuant to which the counterparty experiences a Change of
Control. For purposes of this definition, "CHANGE OF CONTROL" shall mean any
event as a result of which (i) the subject party is not the surviving entity and
shareholders of the acquiring party have directly or indirectly acquired more
than a majority of the combined voting power of the then-outstanding voting
securities of the subject party immediately after such event; (ii) the subject
party sells or transfers all or substantially all of its assets to another
Person; (iii) less than a majority of the combined voting power of the
then-outstanding voting securities of the subject party immediately after such
sale or transfer is held in the aggregate by the holders of Voting Equity
Securities (as defined below) immediately prior to such sale or transfer; (iv)
there is a report filed on Schedule 13D or 14D-1 (or any successor schedule,
form or report), each as promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), disclosing that any person (as defined in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial
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owner (as defined in Rule 13d-3 or any successor rule or regulation promulgated
under the Exchange Act) of securities representing ten percent (10%) or more of
the combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors of the subject party ("VOTING EQUITY
SECURITIES") and such person has publicly disclosed or otherwise manifested an
intention to cause the occurrence of an event described in subclauses (i), (ii),
(iii), (v) or (vi) of this definition; (v) the subject party files a report or
proxy statement with the SEC pursuant to the Exchange Act disclosing in response
to Form 8-K or Schedule 14A (or any successor schedule, form, item or report
therein) that a Change of Control of the subject party has occurred or shall
occur in the future pursuant to any then-existing contract or transaction; or
(vi) during any period of two (2) consecutive years individuals who at the
beginning of such period constitute the directors of the subject party cease for
any reason to constitute at least a majority thereof, unless the election or
nomination for election by the subject party's stockholders of each director of
the subject party first elected during such period was approved by at least a
majority of the directors of the subject party then still in office.
"AFFILIATE" shall mean, with respect to any Person, any Person which
directly or indirectly through stock ownership or through other arrangements,
either controls, is controlled by or is under common control with such Person.
"CONTROL" shall mean the power to direct the management plans and policies of a
specified Person.
"AGGRIEVED PARTY" -- See Section 11.4.
"ALLOCATION STATEMENT" -- See Section 3.4.
"ANCILLARY AGREEMENTS" shall refer collectively to the Cambridge
Assignment of Lease, the Patent Assignment, the Patent License Agreement, the
Transition Services Agreement and the Executive Employment Agreements.
"ASSUMED CONTRACTS" shall mean, collectively, the Distributorship
Agreements, Equipment Leases, License Agreements, Purchase Orders, Sales Orders,
and such other contracts to which either or both of the Seller Parties is a
party, but only as are described in Section 5.17 hereto.
"ASSUMED LIABILITIES" -- See Section 2.4.
"BUSINESS DAY" shall mean days other than Saturdays, Sundays and days on
which banks in New York City, New York are authorized or obligated by law to be
closed.
"CAMBRIDGE LEASE" -- See Section 5.11.
"CAMBRIDGE ASSIGNMENT OF LEASE" shall mean the Assignment and Assumption
of Lease to be entered into by the Purchaser and OSIP relating to the Seller
Parties' facilities at (i) 80 Rogers Street/129 Binney, (ii) 84 Rogers Street,
and (iii) 135 Binney, each in
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Cambridge, Massachusetts, the form of which is attached hereto as Exhibit A and
made a part hereof.
"CELL LINES" shall mean all cell lines, strains, cultures, and other
biological or biochemical source stocks and their progeny used or useful by
either or both of the Seller Parties in connection with the Diagnostics
Business.
"CERCLA" -- See Section 5.27.
"CLOSING" -- See Section 4.
"CLOSING DATE" -- See Section 4.
"COBRA" shall mean the provisions of the Code, ERISA and the Public Health
Service Act enacted by Sections 10001 through 10003 of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (P.L. 99-272), including any subsequent
amendments to such provisions.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"DEFERRED PAYMENT" -- See Section 3.2.
"DIAGNOSTICS BUSINESS" shall mean either or both of the Seller Parties'
businesses of identifying, developing, producing, clinically testing,
manufacturing and marketing Diagnostics Products and related services.
"DIAGNOSTICS EMPLOYEES" -- See Section 5.25.
"DIAGNOSTICS PRODUCTS" shall mean any product for the testing of human,
animal or forensic specimens for the purpose of diagnosis, prognosis, monitoring
of disease or monitoring of treatment, or for any purpose relating to the
determination of the nature of a disease or the effect of its treatment,
including without limitation (i) the products manufactured and sold by either or
both of the Seller Parties as listed on Schedule 1.0 hereto, and (ii) those
products which are in the process of development for manufacturing, clinical
testing and/or commercialization by either or both of the Seller Parties as
listed on Schedule 1.0 hereto; provided, however, that Diagnostic Products shall
not include the Transprobe Products.
"DISTRIBUTORSHIP AGREEMENTS" shall mean those distributorship agreements
of either or both of the Seller Parties relating to the sale and distribution of
the Diagnostics Products that are listed in Schedule 5.17.
"DOMAIN NAME" -- See "Intangible Assets".
"ENVIRONMENTAL LAWS" -- See Section 5.27.
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"EQUIPMENT AND MACHINERY" shall mean (i) all of the equipment, machinery,
furniture, tooling, spare parts, and supplies that are (x) owned by either or
both of the Seller Parties, (y) located at the Premises and (z) utilized by
either or both of the Seller Parties in connection with the Diagnostics
Business; (ii) all of the replacements for any of the foregoing owned by either
or both of the Seller Parties other than all video-conferencing equipment
located at the Premises; (iii) all rights of either or both of the Seller
Parties to the warranties (to the extent assignable) and licenses received from
manufacturers and sellers of the aforesaid items; and (iv) all related claims,
credits, rights of recovery and set-off with respect thereto, including without
limitation those items with an approximate fair market value in excess of $5,000
listed on Schedule 5.12.
"EQUIPMENT LEASES" shall mean those lease agreements to which either or
both of the Seller Parties are a party relating to the Leased Equipment and
Machinery.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXECUTION DATE" -- See Preamble.
"EXCLUDED ASSETS" - See Section 2.1.
"EXCLUDED LIABILITIES" -- See Section 2.4.
"EXECUTIVE EMPLOYMENT AGREEMENTS" shall mean the Executive Employment
Agreements to be entered into by the Purchaser and each of ** the forms of which
are attached hereto as Exhibit B and made part hereof.
"FILES AND RECORDS" shall mean all files and records, whether in hard copy
or magnetic format, of either or both of the Seller Parties relating to the
Diagnostics Business or the Purchased Property, including without limitation the
following types of files and records relating to the Diagnostics Business:
customer and supplier lists; customer correspondence, including complaint files
and customer specifications; copies of financial schedules, records, spread
sheets, purchase orders, check registers and similar financial records
pertaining to the Diagnostics Business; correspondence with licensors and other
members of the academic, clinical and scientific community relating to research
products; product manufacturing data, including batch manufacturing records and
quality control records; product catalogue data bases; equipment maintenance
records, equipment warranty information, laboratory plans, specifications and
drawings, and equipment drawings; all files relating to those employees of the
Diagnostics Business to be employed by the Purchaser following the Closing; and
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** This portion has been redacted pursuant to a request for confidential
treatment.
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correspondence with national, state and local governmental agencies relating to
the operation of the Diagnostics Business and related files and records of
either or both of the Seller Parties; provided, however, that where such files
and records also contain data which is unrelated to the Diagnostics Business,
the Seller Parties may redact such unrelated data prior to furnishing such files
and records to the Purchaser and provided, further, that in the event that the
Purchaser obtains any files and records containing data that is unrelated to the
Diagnostics Business, the Purchaser shall keep such files and records in strict
confidence and shall not disclose such files and records to any other Person
whatsoever.
"FINANCIAL DATA" -- See Section 5.7.
"GAAP" -- See Section 5.7.
"INDEMNIFIED PARTY" -- See Section 11.3.
"INDEMNIFYING PARTY" -- See Section 11.3.
"INTANGIBLE ASSETS" shall mean all intangible personal property rights
(other than the Intellectual Property) owned or held by either or both of the
Seller Parties and used in connection with the Diagnostics Business, including
without limitation all goodwill of either or both of the Seller Parties relating
to the Diagnostics Business, all software, software systems, databases and all
other information systems (other than those management information systems based
in Uniondale, New York) used in connection with the Diagnostics Business, the
current toll free "800" telephone numbers utilized by either or both of the
Seller Parties in connection with the Diagnostics Business, all internet domain
names owned by either or both of the Seller Parties which are based on the name
"Oncogene Science" and variations thereof, other than "OSI Pharmaceuticals",
including without limitation "www.oncogene.com" (the "DOMAIN NAME"), and all
rights on the part of either or both of the Seller Parties to proceeds of any
insurance policies and all claims on the part of either or both of the Seller
Parties for recoupment, reimbursement and coverage under any insurance policies,
in each case in connection with the Diagnostics Business.
"INTELLECTUAL PROPERTY" shall mean (i) know-how, trade secrets and other
confidential information, inventions, ideas, discoveries, patent applications
and granted patents anywhere in the world owned or controlled by or licensed to
either or both of the Seller Parties that (a) are used by the Diagnostics
Business as currently conducted on the Execution Date; (b) are or were used or
useful in the conduct of the Diagnostics Business and as described on Schedule
5.13; or (c) were developed, originated, invented or generated by any
Diagnostics Employee during his or her tenure with either of the Seller Parties
and that are or were used or useful in the conduct of the Diagnostics Business
(including in each of cases (a) through (c) above and without limitation any and
all continuations, continuations-in-part, additions, and divisions thereof, and
any and all patents issuing from the aforesaid patent applications, and any
reissues, reexaminations, renewals, extensions, and substitutions of any of the
aforesaid patents); and (ii) the registered and unregistered trademarks, service
marks, brand names,
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trade names, trade dress, and copyrights owned or controlled by either or both
of the Seller Parties used in the Diagnostics Business and described on Schedule
5.13.
"INVENTORY" shall mean (i) all of the finished goods, raw materials, work
in progress and supplies owned by either or both of the Seller Parties on the
Closing Date and held for use in the operations of the Diagnostics Business, and
(ii) any and all rights of either or both of the Seller Parties to the
warranties received from its suppliers with respect to such inventory (to the
extent assignable) and related claims, credits, rights of recovery and set-off
with respect thereto.
"INVENTORY SCHEDULE" -- See Section 5.19.
"KNOWLEDGE OF THE SELLER PARTIES" as used in this Agreement shall mean the
knowledge, following due inquiry, of (i) Robert L. Van Nostrand, (ii) the
executive officers of OSDI and (iii) general management personnel of both of the
Seller Parties involved, in whole or in part, with the Diagnostics Business.
"LEASED EQUIPMENT AND MACHINERY" shall mean all equipment, machinery and
furniture used by either or both of the Seller Parties in connection with the
Diagnostics Business that, if owned by either or both of the Seller Parties,
would constitute Equipment and Machinery as defined above, and that are held by
either or both of the Seller Parties under one or more equipment leases.
"LICENSE AGREEMENTS" shall mean those license agreements to which either
or both of the Seller Parties are a party which provide either or both of the
Seller Parties with rights to technology or products used in the conduct of the
Diagnostics Business that are listed on Schedule 5.17.
"LICENSES AND PERMITS" -- See Section 5.14.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or other) or conditional sale agreement.
"LOSSES" -- See Section 11.1.
"MATERIAL ADVERSE EFFECT" shall mean (a) any effect that is materially
adverse to the Purchased Property, the Diagnostics Business, or the condition
(financial or otherwise) or results of operations of the Diagnostics Business,
in each case taken as a whole, or (b) any effect or series of effects that could
reasonably be expected, individually or in the aggregate, to materially impair,
hinder or delay the ability to effect the Closing.
"MINIMUM LOSS" -- See Section 11.4.
"MINIMUM THRESHOLD CONDITIONS" -- See Section 4.
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"OSDI" -- See Paragraph 1.
"OSIP" -- See Paragraph 1.
"OSIP PLANS" -- See Section 5.21.
"OSIP SAVINGS PLAN" shall mean the OSI Pharmaceuticals, Inc. Savings
and Investment Plan.
"PATENT ASSIGNMENT" shall mean the assignment to be entered into by the
Purchaser and the Seller Parties relating to Seller Parties' assignment of all
of their rights under and to the patent applications and granted patents that
are part of the Intellectual Property, the form of which is attached hereto as
Exhibit C and made a part hereof.
"PATENT LICENSE AGREEMENT" shall mean the limited license to be entered
into by the Purchaser and the Seller Parties relating to the Purchaser's license
to the Seller Parties of its rights under and to the patent applications and
granted patents that are part of the Intellectual Property, the form of which is
attached hereto as Exhibit D and made a part hereof.
"PERMITTED ENCUMBRANCES" - See Section 5.6.
"PERSON" shall mean any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust or
unincorporated organization.
"PREMISES" shall mean the premises occupied by either or both of the
Seller Parties at (i) 80 Rogers Street/129 Binney, (ii) 84 Rogers Street, and
(iii) 135 Binney, each in Cambridge, Massachusetts, all as more particularly
described in the Cambridge Lease.
"PRODUCT LIABILITY LAWSUITS" -- See Section 5.26.
"PURCHASE ORDERS" shall mean all of the outstanding purchase orders,
contracts or other commitments of either or both of the Seller Parties to
suppliers of goods and services for materials, supplies or other items used in
the Diagnostics Business.
"PURCHASE PRICE" -- See Section 3.1.
"PURCHASED PROPERTY" shall mean the Assumed Contracts, Equipment and
Machinery, Files and Records, Intangible Assets, Intellectual Property,
Inventory, any prepaid expenses, and other assets (whether tangible or
intangible, real, personal or mixed) which other assets primarily relate to the
operation of the Diagnostics Business on the Execution Date. For purposes of
this definition, the term "Purchased Property" shall exclude any item that
constitutes an Excluded Asset under Section 2.1(b) hereof.
"PURCHASER" -- See Paragraph 1.
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"PURCHASER INDEMNITEES" -- See Section 11.1.
"RCRA" -- See Section 5.27.
"RESTRICTED PERIOD" -- See Section 7.7.
"SALES ORDERS" shall mean all of the sales orders, contracts or other
commitments of either or both of the Seller Parties to purchasers of goods and
services of the Diagnostics Business.
"SELLER PARTIES INDEMNITEES" -- See Section 11.2.
"TAXES" shall mean for all purposes of this Agreement all taxes however
denominated, including any interest, penalties or additions to tax that may
become payable in respect thereof, imposed by any governmental body, which taxes
shall include, without limiting the generality of the foregoing, all income
taxes, payroll and employee withholding taxes, unemployment insurance, social
security, sales and use taxes, excise taxes, franchise taxes, gross receipts
taxes, occupation taxes, real and personal property taxes, stamp taxes, transfer
taxes, workmen's compensation taxes and other obligations of the same or a
similar nature, whether arising before, on or after the Closing; and "TAX" shall
mean any one of them.
"TAX RETURNS" shall mean any return, report, information return or other
document (including any related or supporting information) filed or required to
be filed with any governmental body in connection with the determination,
assessment, collection or administration of any Taxes.
"THIRD PARTY COLLABORATORS" -- See Section 5.28.
"TRANSFERRED EMPLOYEES" -- See Section 9.1.
"TRANSITION SERVICES AGREEMENT" shall mean the agreement to be entered
into by the Purchaser and OSIP relating to the provision by OSIP to the
Purchaser of certain goods and services, including without limitation
administrative and management information systems and financial reporting
services, the form of which is attached hereto as Exhibit E and made a part
hereof.
"TRANSPROBE PRODUCTS" shall mean Transprobe 1(TM), an FDA-approved
diagnostic DNA probe kit used to detect the presence of the bcr-210 Philadelphia
(Ph')_translocation, including for these purposes any inventory thereof on hand,
related work in process, and related purchase orders.
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Section 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY.
Section 2.1. Transfer of Assets. (a) Subject to the terms and upon the
conditions herein set forth, the Seller Parties shall sell, convey, transfer,
assign and deliver to the Purchaser, and the Purchaser shall purchase and accept
from the Seller Parties, on the Closing Date, all right, title and interest of
the Seller Parties in and to the Purchased Property, free and clear of any Lien.
(b) The parties hereby acknowledge and agree that the Seller Parties
are not selling and the Purchaser is not purchasing any of the Seller Parties'
right, title or interest in or to any of the following (collectively, the
"EXCLUDED ASSETS"):
(i) cash on hand;
(ii) bank accounts;
(iii) accounts receivable relating to the Diagnostics
Business;
(iv) any Tax refunds or Tax credits;
(v) any Inventory of the Diagnostics Business disposed of by
the Seller Parties in the ordinary course of business prior to the Closing Date
in accordance with the terms and conditions of this Agreement;
(vi) any assets related to the OSIP Plans or the OSIP Savings
Plans except as provided for in Section 9.2 hereof;
(vii) except as otherwise provided in Section 1 with respect
to "Files and Records," all books, records and other assets of the Seller
Parties relating solely to corporate level activities including, without
limitation, those relating to filings with the Internal Revenue Service and
those relating to accounting and tax functions, (ii) any corporate minute books,
stock ledgers and other corporate books and records of the Seller Parties and
(iii) all books and records relating to any division or business of the Seller
Parties other than the Diagnostics Business; and
(viii) agreements set forth on Schedule 2.1(b).
Section 2.2. Sale at Closing Date. The sale, transfer, assignment and
delivery by the Seller Parties of the Purchased Property to the Purchaser, as
herein provided, shall be effected on the Closing Date by bills of sale,
endorsements, assignments and other instruments of transfer and conveyance
reasonably satisfactory in form and substance to Purchaser and its counsel.
Section 2.3. Subsequent Documentation; Further Assurances. The Purchaser
and the Seller Parties shall, at any time and from time to time after the
Closing Date, upon the
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reasonable request of the counterparty or parties, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
further (a) assignments, transfers and conveyances as may be required for the
better assigning, transferring, granting, conveying and confirming the
transactions contemplated herein, including without limitation aiding and
assisting the Purchaser in collecting and reducing to possession any or all of
the Purchased Property, and (b) documents and instruments as may be reasonably
necessary for the further completion of any of the transactions contemplated
herein.
Section 2.4. Assumption of Assumed Contracts; Exclusion of
Excluded Liabilities.
(a) Assumption of Assumed Contracts. On the Closing, the
Purchaser shall assume and agree to pay, perform and discharge when due all of
the obligations, debts and liabilities of Seller Parties (i) under the Assumed
Contracts and (ii) relating to the Purchased Property which arise following the
Closing Date, but only in connection with circumstances or conditions arising
after the Closing Date (collectively, the "ASSUMED LIABILITIES"). Such
assumption shall be pursuant to an Assignment and Assumption Agreement in form
and substance reasonably satisfactory to counsel for the Purchaser and the
Seller Parties.
(b) Exclusion of Excluded Liabilities. The Purchaser shall not
assume or pay, perform or discharge, nor shall the Purchaser be responsible,
directly or indirectly, for any other debts, obligations, contracts, or
liabilities of either or both of the Seller Parties, including without
limitation any and all debts, obligations, contracts or liabilities of whatever
nature or kind which arise out of or are in any way related or connected to the
conduct of the Diagnostics Business prior to the Closing Date (all such debts,
obligations, contracts or liabilities of either or both of the Seller Parties
being herein referred to as the "EXCLUDED LIABILITIES").
(c) Consent to Assumption. To the extent that the assignment
of any Assumed Contract shall require the consent of the other party thereto,
this Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof. The Seller Parties will
use commercially reasonable efforts to obtain the consent of the other parties
to such contracts for the assignment thereof to the Purchaser. If such consent
is not obtained in respect of any such Assumed Contract or if an attempted
assignment thereof would be ineffective or would adversely affect the rights of
the Seller Parties thereunder so that the Purchaser would not in fact receive
all of such rights, the Seller Parties will cooperate with the Purchaser in any
commercially reasonable arrangement requested by the Purchaser, including
subcontracting or subleasing, to provide to the Purchaser the benefits under any
such Assumed Contract, including enforcement at the cost of and for the benefit
of the Purchaser, of any and all rights of either or both of the Seller Parties
against the other party thereto with respect to such Assumed Contract.
Notwithstanding any provision contained herein to the contrary, the Seller
Parties and the Purchaser hereby agree that obtaining the consent of the other
parties to the Assumed Contracts set forth in Section 13.3 is a condition to the
Purchaser's obligation to proceed to closing the transactions described herein.
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Section 3. PURCHASE PRICE.
Section 3.1. Purchase Price. The purchase price for the sale and transfer
of the Purchased Property shall be $11,000,000 in cash (the "PURCHASE PRICE"),
which price shall be payable and deliverable in accordance with Section 3.2 and
shall be subject to adjustment as provided in Section 3.3.
Section 3.2. Payment of Purchase Price. Subject to the adjustments to the
Purchase Price described in Section 3.3 below and subject to satisfaction of the
conditions set forth herein, and in consideration of the sale by the Seller
Parties hereunder of the Purchased Property, the Purchaser will pay to the
Seller Parties (i) on the Closing Date, $10,000,000, and (ii) on the second
anniversary of the Closing Date, $1,000,000 (the payment described in the
foregoing clause (ii) being referred to herein as the "DEFERRED PAYMENT"), in
each case by wire transfer of immediately available funds to an account of the
Seller Parties as identified by the Seller Parties in writing at least two
Business Days before such payment is due. ** The Deferred Payment may, at
Purchaser's option, be offset by any unpaid indemnification obligations of
either of the Seller Parties from the Closing Date to the second anniversary of
the Closing Date.
Section 3.3. Adjustments to Purchase Price. The Seller Parties shall pay
to the Purchaser at the Closing the following amounts, each of which amounts
shall be credited against the Purchase Price:
(a) The Seller Parties shall pay to Purchaser an amount
equal** ;
(b) The Seller Parties shall pay to Purchaser an amount equal
to $216,667, representing amounts prepaid by Fujirebio, Inc. in connection with
research and development services to be performed by the Purchaser after the
Closing Date pursuant to that certain agreement set forth on Schedule 5.17;
provided, however, that for every day the Closing Date is extended beyond
November 30, 1999, the amount of such payment shall be reduced by $1,100;
(c) The Seller Parties shall pay to Purchaser an amount
determined pursuant to Section 9.3;
(d) The Seller Parties shall pay to Purchaser an amount
determined pursuant to Section 9.4(b); and
- --------------------
** This portion has been redacted pursuant to a request for confidential
treatment.
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<PAGE> 13
(e) The Seller Parties shall pay to the Purchaser $10,000 in
connection with the server being purchased (but not paid for) by the Seller
Parties prior to the Closing Date, as referenced on Schedule 5.17.
The amount referred to in (c) above shall be agreed to by the Purchaser
and the Seller Parties not later than the day prior to the Closing.
Section 3.4 Allocation of Purchase Price. The Purchaser and the Seller
Parties agree to allocate the Purchase Price for all Tax purposes in accordance
with the allocation statement attached hereto as Schedule 3.4 (the "ALLOCATION
STATEMENT") and in accordance with Section 1060 of the Code, including the
regulations promulgated thereunder. All Tax Returns, including IRS Form 8594,
shall be filed consistent with such Allocation Statement. Neither the Purchaser
nor the Seller Parties shall voluntarily take a position on any Tax Return or
before any governmental agency charged with the collection of any such Tax that
is any manner inconsistent with the terms of such Allocation Statement.
Section 4. CLOSING.
The closing hereunder (the "CLOSING") shall take place at the offices of
Purchaser at 511 Benedict Avenue, Tarrytown, New York 10591, at 10:00 a.m. on
the third Business Day after the Minimum Threshold Conditions shall have been
met (or waived) or at such other place and time as may be mutually agreed to by
the parties hereto (the "CLOSING DATE"). For the purposes of this Section, the
"MINIMUM THRESHOLD CONDITIONS" shall mean the closing conditions set forth in
Sections 12 and 13 of this Agreement, qualified as to the receipt of consents,
approvals, licenses and permits as follows: (a) the Purchaser shall have
obtained licenses and permits comparable to the Licenses and Permits as to all
subject matters material to Purchaser's ability to legally commence operations
at the Premises as owner of the Diagnostics Business; (b) the Seller Parties
shall have obtained the consent of the landlord under the Cambridge Lease to the
Cambridge Assignment of Lease; and (c) the Seller Parties shall have obtained
the consent to the assignment to the Purchaser of those agreements listed in
Schedule 13.3.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller Parties hereby jointly and severally represent and warrant to
the Purchaser, on and as of the date hereof and on and as of the Closing Date,
as follows:
Section 5.1. Corporate Organization. OSIP and OSDI are corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and each has all requisite corporate power and authority to own their
respective properties and assets and to conduct their respective businesses as
now conducted. Copies of the Certificates of Incorporation and By-laws of OSIP
and OSDI, with all amendments thereto to the date hereof, have been furnished to
the Purchaser or its representatives, and such copies are accurate and complete
as of the date hereof.
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Section 5.2. Qualification to Do Business. Each of the Seller Parties is
duly qualified to do business as a foreign corporation and each is in good
standing in the Commonwealth of Massachusetts and in every other jurisdiction
where the character of the properties owned or leased by it or the nature of
their respective businesses makes such qualification necessary except where
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect.
Section 5.3. Authorization and Validity of Agreement. Each of OSIP and
OSDI has all requisite corporate power and authority to enter into this
Agreement and to carry out their respective obligations hereunder. The execution
and delivery of this Agreement and the performance of the obligations of OSIP
and OSDI hereunder have been duly authorized by all necessary corporate action
by the Board of Directors of OSIP and the Board of Directors of OSDI, and no
other corporate proceedings on the part of either OSIP and OSDI are necessary to
authorize such execution, delivery and performance. This Agreement has been duly
executed by each of OSIP and OSDI and constitutes the valid and binding
obligation of each, enforceable against them in accordance with its terms
subject to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and to the
effect of general principles of equity, whether considered in a proceeding at
law or in equity.
Section 5.4. No Conflict or Violation. The execution, delivery and
performance by OSIP and OSDI of this Agreement do not and will not violate or
conflict with any provision of the Certificate of Incorporation or By-laws of
OSIP and OSDI and do not and will not violate any provision of law, or any
order, judgment or decree of any court or other governmental or regulatory
authority, nor violate nor will result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which either OSIP or OSDI is a party or by which either is bound
or to which any of their respective properties or assets is subject, nor will
result in the creation or imposition of any Lien upon any of the Purchased
Property, nor will result in the cancellation, modification, revocation or
suspension of any of the Licenses and Permits except as set forth on Schedule
5.4.
Section 5.5. Consents and Approvals. Schedule 5.5 sets forth a true and
complete list of each consent, waiver, authorization or approval of any
governmental or regulatory authority, domestic or foreign, or of any other
person, firm or corporation, and each declaration to or filing or registration
with any such governmental or regulatory authority, that is required in
connection with the execution and delivery of this Agreement by the Seller
Parties or the performance by the Seller Parties of their respective obligations
hereunder.
Section 5.6 Good Title: Necessary Assets and Rights. The Seller Parties
have, and on the Closing Date the Purchaser will have, good title in and to the
Purchased Property free and clear of any Liens except for (a) Liens for Taxes
not yet payable and for Taxes being contested in good faith, (b) Liens arising
out of, or in connection with, this Agreement, and (c) Liens disclosed on
Schedule 5.6 (collectively, the "PERMITTED ENCUMBRANCES"). The Purchased
Property, together with the Cambridge Assignment of Lease, constitutes
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<PAGE> 15
substantially all the assets, properties and rights including without limitation
contract rights, necessary or used to conduct the Diagnostics Business as
currently conducted.
Section 5.7. Financial Information. The Seller Parties have heretofore
furnished to the Purchaser a pro-forma statement of operations and balance sheet
of the Diagnostics Business, which statement includes the effect on the
Diagnostics Business of the Transprobe Products for the one-year fiscal period
ended September 30, 1998 (the "FINANCIAL DATA"), copies of which are set forth
in Schedule 5.7. The Financial Data (i) have been prepared from the books and
records of the Seller Parties, which books and records are used to prepare
financial statements which are in accordance with U.S. generally accepted
accounting principles ("GAAP"), (ii) reflect the adjustments set forth on
Schedule 5.7, (iii) fairly present revenues and direct expenses of the
Diagnostics Business (including the effect on the Diagnostics Business of the
Transprobe Products), which revenues and expenses, after giving effect to such
adjustments, can be legitimately reconciled with the financial statements and
the financial records maintained and the accounting methods applied by the
Seller Parties for its financial reporting purposes, and (iv) contain allocation
estimates for all allocated items not individually accounted for in connection
with the Diagnostics Business (including the Transprobe Products) as described
in Schedule 5.7, which estimates the Seller Parties believe to be reasonable.
Section 5.8. Absence of Certain Changes or Events.
(a) Except as set forth in Schedule 5.8, since September 30,
1998, there has not been:
(i) any change in the business, operations,
properties, assets or condition (financial or other) of the Diagnostics Business
which has had a Material Adverse Effect, and, to the Knowledge of the Seller
Parties, no factor or condition exists and no event has occurred that would be
likely to result in any such change;
(ii) any material loss, damage, destruction or other
casualty to the Purchased Property;
(iii) any change in any method of accounting or
accounting practice of the Diagnostics Business or the Seller Parties
relating to the Diagnostics Business; or
(iv) any loss of the employment, services or
benefits of any key employee of the Diagnostics Business.
(b) Since September 30, 1998, the Seller Parties have operated
the Diagnostics Business in the ordinary course of their businesses consistent
with past practice and, except as set forth in Schedule 5.8 hereto, have not:
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(i) incurred any material obligation or liability
(whether absolute, accrued, contingent or otherwise) relating to the operations
of the Diagnostics Business except in the ordinary course of business consistent
with past practice;
(ii) failed to discharge or satisfy any Lien or pay
or satisfy any obligation or liability (whether absolute, accrued, contingent or
otherwise) arising from the operation of the Diagnostics Business, other than
liabilities being contested in good faith and for which adequate reserves have
been provided;
(iii) mortgaged, pledged or subjected to any Lien any
of the Purchased Property;
(iv) sold or transferred any of the assets of the
Diagnostics Business or canceled any debts or claims or waived any rights
relating to the operations of the Diagnostics Business, except in the ordinary
course of business consistent with past practice;
(v) disposed of any patents, trademarks or
copyrights or any patent, trademark, or copyright applications used in the
operations of the Diagnostics Business;
(vi) defaulted on any material obligation relating
to the operations of the Diagnostics Business;
(vii) entered into any transaction material to the
Diagnostics Business or relating to the Diagnostics Business, except in the
ordinary course of business consistent with past practice;
(viii) written down the value of any inventory
or written off as uncollectible any accounts receivable specifically relating to
the Diagnostics Business or the Transprobe Products or any portion thereof other
than in the ordinary course of business consistent with past practice;
(ix) granted any increase in the compensation or
benefits of employees of the Diagnostics Business other than increases in
accordance with past practice not exceeding 10% or entered into any employment
or severance agreement or arrangement with any of them;
(x) made any capital expenditure in excess of
$10,000, or additions to property, plant and equipment used in the operations of
the Diagnostics Business other than ordinary repairs and maintenance;
(xi) discontinued the manufacture or sale of any
Diagnostics Products except in the ordinary course of business; or
(xii) entered into any agreement or made any
commitment to do any of the foregoing.
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<PAGE> 17
Section 5.9. Tax Matters. All Tax Returns required to be filed before the
Closing Date (taking into account all relevant extensions of time to file) in
respect of the Seller Parties have been (or will have been by the Closing Date)
filed, and the Seller Parties have (or will have by the Closing Date (taking
into account all relevant extensions of time to file)) paid, accrued or
otherwise adequately reserved for the payment of all Taxes required to be paid
in respect of the periods covered by such returns with the exception of all
Taxes being contested in good faith by the Seller Parties and have (or will have
by the Closing Date) adequately reserved for the payment of all Taxes with
respect to periods ended on or before the Closing Date for which tax returns
have not yet been filed.
Section 5.10. Warranties. Schedule 5.10 sets forth all of the
forms of warranties (if any) given by the Seller Parties in connection with
the sale of Diagnostics Products, together with samples of such forms.
Section 5.11. Cambridge Lease.
(a) The Seller Parties have previously delivered to the Purchaser a
true and correct copy of the lease of the Premises, including all amendments
thereto through the date hereof (the "CAMBRIDGE LEASE").
(b) Except as set forth in Schedule 5.11, the landlord under the
Cambridge Lease has not given the Seller Parties written notice of or made a
claim with respect to any breach or default by the Seller Parties.
(c) Except as set forth in Schedule 5.11, the Cambridge Lease is not
subject to any sublease, license or other agreement granting to any person or
entity any right to the use, occupancy or enjoyment of such property or any
portion thereof.
(d) To the Knowledge of Seller Parties, the plumbing, electrical,
heating, water, air conditioning, ventilating and all other mechanical or
structural systems of the Premises are in good working order and condition, and
the roof, basement and foundation walls of the Premises are in good condition
and free of leaks and other material defects.
Section 5.12. Equipment and Machinery. Schedule 5.12 sets forth a complete
and correct list and brief description of each item of Equipment and Machinery
or of Leased Equipment and Machinery having an original purchase cost or
aggregate lease cost exceeding $5,000. Except as set forth in Schedule 5.12, as
of the date hereof, the Seller Parties have good title, free and clear of all
title defects and objections and Liens (other than the Lien of current property
taxes and assessments not in default, if any), to the Equipment and Machinery
owned by each of them. None of the title defects, objections or Liens (if any)
listed in Schedule 5.12 adversely affects the value of any of the items of
Equipment and Machinery or interferes with their use in the conduct of the
Diagnostics Business. Except as set forth in Schedule 5.12, the Seller Parties
hold good and transferable leaseholds in all of the Leased Equipment and
Machinery, in each case under valid and enforceable leases. The Seller Parties
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<PAGE> 18
are not in default with respect to any item of Leased Equipment and Machinery,
and no event has occurred that constitutes or with due notice or lapse of time
or both may constitute a default under any lease thereof. The Equipment and
Machinery and the Leased Equipment and Machinery are sufficient and adequate to
carry on the Diagnostics Business as presently conducted by the Seller Parties,
and all items thereof are in good operating condition and repair, ordinary wear
and tear excepted.
Section 5.13. Intellectual Property; Intangible Assets.
(a) Schedule 5.13(a) sets forth a complete and correct listing of
the Intellectual Property. Except as described in Schedule 5.13(a), to the
Knowledge of the Seller Parties all Intellectual Property listed therein is
owned by or licensed to the Seller Parties, free and clear of all Liens and is
not the subject of any challenge. As of the date hereof, except as described in
Schedule 5.13(a), there are no unresolved claims made and there has not been
communicated to either of the Seller Parties the threat of any claim that the
holder of such Intellectual Property is in violation or infringement of any
service mark, patent, trademark, trade name, trademark or trade name
registration, copyright or copyright registration of any other Person. The
Seller Parties are the owners of, or have a valid license to use, the patents,
patent licenses, trade names, trademarks, service marks, brand marks, brand
names, copyrights, know-how, formula and other proprietary and trade rights
necessary or used for the conduct of the Diagnostics Business, without, to the
Knowledge of the Seller Parties, any conflict with the rights of others, and
neither of the Seller Parties have, to the Knowledge of the Seller Parties,
forfeited or otherwise relinquished any such patent, patent license, trade name,
trademark, service mark, brand mark, brand name, copyright, know-how, formula or
other proprietary right necessary for the conduct of the Diagnostics Business as
conducted on the date hereof, and, except as set forth on Schedule 5.13(a),
neither of the Seller Parties has granted licenses under the foregoing to any
third party. Except as set forth in Schedule 5.13(a), the Seller Parties are not
under any obligation to pay any royalties or similar payments in connection with
any license to any of its Affiliates.
(b) Schedule 5.13(b) sets forth a true and complete list of all of
the Intangible Assets and a summary description of each such item. There is no
restriction affecting the use of any of the Intangible Assets, and no license
has been granted with respect thereto. None of the Intangible Assets is
currently being challenged, is involved in any pending or, to the Knowledge of
the Seller Parties, threatened administrative or judicial proceeding, or, to the
Knowledge of Seller Parties, conflicts with any rights of any other person, firm
or corporation. The Seller Parties own or have the right to use all computer
software, software systems and databases and all other information systems
included in the Purchased Property. The Seller Parties' rights in and to the
Intangible Assets and Intellectual Property are sufficient and adequate in all
material respects to permit the conduct of the Diagnostics Business as now
conducted, and, to the Knowledge of the Seller Parties, none of the Diagnostics
Products or operations of the Diagnostics Business involves any infringement of
any proprietary right of any other Person.
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Section 5.14. Licenses and Permits. Schedule 5.14 sets forth a true and
complete list of all licenses, permits, franchises, authorizations and approvals
issued or granted to the Seller Parties with respect to the Diagnostics Business
by the federal government, any state or local government, any foreign national
or local government, or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (the "LICENSES AND PERMITS"), and all
pending applications therefor. Such list contains a summary description of each
such item and, where applicable, specifies the date issued, granted or applied
for, the expiration date and the current status thereof. Each License and Permit
has been duly obtained, is valid and in full force and effect, and is not
subject to any pending or, to the Knowledge of the Seller Parties, threatened
administrative or judicial proceeding to revoke, cancel, suspend or declare such
License and Permit invalid in any respect. To the Knowledge of the Seller
Parties, the Licenses and Permits are sufficient and adequate in all material
respects to permit the continued lawful conduct of the Diagnostics Business in
the manner currently conducted by the Seller Parties, and none of the operations
of the Diagnostics Business are being conducted in a manner that violates in any
material respect any of the terms or conditions under which any License and
Permit was granted. Except as set forth in Schedule 5.14, no such License and
Permit will in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement.
Section 5.15. Compliance with Law. The operations of the Diagnostics
Business and the manufacture and sale of the Transprobe Products have been
conducted in all material respects in accordance with all applicable laws,
regulations, orders and other requirements of all courts and other governmental
or regulatory authorities having jurisdiction over the Seller Parties and their
respective assets, properties and operations. The Seller Parties have not
received notice of any violation of any such law, regulation, order or other
legal requirement, and are not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign,
applicable to the Diagnostics Business or the manufacture and sale of the
Transprobe Products or any of the assets, properties or operations with respect
thereto. To the Knowledge of the Seller Parties, there is no proposed change in
any such laws, rules or regulations (other than laws of general applicability)
that would materially and adversely affect the transactions contemplated by this
Agreement or all or a material part of the Diagnostics Business or the Purchased
Property.
Section 5.16. Litigation. Except as set forth in Schedule 5.16, there are
no claims, actions, suits, proceedings, labor disputes or investigations pending
or, to the Knowledge of the Seller Parties, threatened, before any national,
state or local court or governmental or regulatory authority, domestic or
foreign, or before any arbitrator of any nature, brought by or against the
Seller Parties or any of their respective officers, directors, employees, agents
or Affiliates, involving, affecting or relating to the Diagnostics Business, the
Transprobe Products, the Purchased Property or the transactions contemplated by
this Agreement, nor is any basis known, to the Knowledge of the Seller Parties
for any such action, suit, proceeding or investigation. Neither the Diagnostics
Business nor the Purchased Property is subject to any order, writ, judgment,
award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign, that
affects or might
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affect the Diagnostics Business or the Purchased Property, or that would or
might interfere with the transactions contemplated by this Agreement.
Section 5.17. Assumed Contracts.
(a) Schedule 5.17 sets forth a complete and correct list and a
summary description of all Assumed Contracts (as in effect on the date hereof),
other than individual Purchase Orders or Sales Orders for amounts less than
$10,000.
(b) Each Assumed Contract is valid, binding and enforceable against
the parties thereto in accordance with its terms, and is in full force and
effect on the date hereof. The Seller Parties have performed in all material
respects the obligations required to be performed by them to date under, and
neither of the Seller Parties are in default or delinquent in the performance
(claimed or actual) in connection with any Assumed Contract, and no event has
occurred which, with due notice or lapse of time or both, would constitute such
a default. To the Knowledge of the Seller Parties, no other party to any Assumed
Contract is in default in respect thereof, and no event has occurred which, with
due notice or lapse of time or both, would constitute such a default. The Seller
Parties have delivered to the Purchaser or its representatives true and complete
copies of the Assumed Contracts listed on Schedule 5.17.
(c) Except as set forth on Schedule 5.17, the Seller Parties are not
parties to any partnership or joint venture agreements, license agreements,
service contracts, commission and consulting agreements, suretyship contracts,
reimbursement agreements, sales agency agreements or distribution agreements, in
each such case relating to the Diagnostics Business or the Purchased Property,
or any contracts or commitments limiting or restraining the Seller Parties with
respect to the Diagnostics Business from engaging or competing in any lines of
business or with any Person, or any documents granting the power of attorney
with respect to the conduct of the Diagnostics Business, or any options to
purchase any assets or property rights of the Diagnostics Business.
Section 5.18. Prepaid Expenses. Schedule 5.18 sets forth a true and
complete listing of the prepaid expenses of the Diagnostics Business as of
September 30, 1999.
Section 5.19. Inventories. Schedule 5.19 sets forth a true and complete
listing as of September 30, 1999 of the categories of Inventory of the
Diagnostics Business (the "INVENTORY SCHEDULE"). Such inventories as are
reflected on the Inventory Schedule are of a type, quality and quantity
merchantable (as to finished goods) and useable (as to raw material and supply)
in the ordinary course of the conduct of the Diagnostics Business.
Section 5.20 Cell Lines; Biological Materials. The Cell Lines, taken as a
whole, are biologically active and provide the source material necessary to
generate the biological materials included in the Diagnostics Products. A list
and description of each of the Cell Lines is attached hereto as Schedule 5.20
and made a part hereof. Such Cell Lines have been properly maintained by the
Seller Parties so as to retain their viability, minimize deterioration and avoid
contamination, and the Seller Parties have established and maintained
duplicate-
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back-up stocks of the most significant of such Cell Lines (from the point of
view of volume of sales of the Diagnostics Products they generate) to enable the
Diagnostics Business to continue as presently conducted in the event of the
expiration or contamination of the primary stocks of such Cell Lines. The Seller
Parties have (i) manufactured or prepared the other biological materials
included in the Inventory in accordance with what, to the Knowledge of the
Seller Parties, constitute good standards generally utilized by its competitors
in the research reagent industry, (ii) maintained accurate quality control
records by production lot of all such biological materials, and (iii) have
maintained such materials in a manner reasonably designed to preserve their
viability and to avoid contamination and deterioration.
Section 5.21. Employee Plans.
(a) Except as set forth on Schedule 5.21, neither of the
Seller Parties nor any Affiliate of the Seller Parties maintains, contributes
to, or is a party to, any "employee benefit plan," as defined in Section 3(3) of
ERISA, or any other written, unwritten, formal or informal plan or agreement
involving direct or indirect compensation other than workers compensation,
unemployment compensation and other government programs, under which the Seller
Parties or any Affiliate thereof has any present or future obligation or
liability with respect to the current employees of the Diagnostics Business
("OSIP PLANS").
(b) Each OSIP Plan has been maintained in substantial
compliance with its terms and the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to it. The OSIP
Savings Plan is qualified and tax-exempt under Sections 401(a) and 501(a) of the
Code, respectively, and meets the requirements of a "qualified cash or deferred
arrangement" under Section 401(k) of the Code.
(c) The Seller Parties have or have caused to be provided, or
will have caused to be provided, to current and former employees of the
Diagnostics Business entitled thereto all required notices within the applicable
time period and coverage pursuant to COBRA with respect to any "qualifying
event" (as defined in COBRA) occurring prior to and including the Closing Date.
(d) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the OSIP Plans have been made by the due date thereof (including any
valid extension), and all contributions for any period ending on or before the
Closing Date which are not yet due will have been paid or accrued on or prior to
the Closing Date.
(e) True, correct and complete copies of the OSIP Plans, and
related trust documents and summary plan descriptions, have been delivered to
the Purchaser by the Seller Parties, to the extent requested by the Purchaser.
Additionally, the Seller Parties have delivered to the Purchaser descriptions of
each of the OSIP Plans in a form and with a level of detail reasonably
satisfactory to the Purchaser.
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(f) There are no pending actions, claims or lawsuits which
have been asserted or instituted against any party regarding the OSIP Plans or,
to the Knowledge of the Seller Parties, against any fiduciary of such plans with
respect to their operation (other than routine benefit claims), and there are no
other circumstances regarding any of the OSIP Plans, which could result in any
liability to the Purchaser, or any lien on the Purchased Property, on or after
the Closing Date.
Section 5.22. Compensation. The Seller Parties have previously delivered
to the Purchaser a schedule setting forth the current base salary of each of the
employees of the Diagnostics Business listed on Schedule 9.1 as well as the
aggregate bonus paid to each such employee in respect of the most recently
completed bonus measuring period for such employee. Except for the OSIP Plans,
the Seller Parties have not, by reason of past practices with respect to such
employees, established any rights on the part of such employees to additional
compensation with respect to any period after the Closing Date.
Section 5.23. Customers, Suppliers and Distributors. Schedule 5.23 sets
forth a complete and correct list of (a) all customers whose purchases exceeded
5% of the aggregate net sales of the Diagnostics Business since January 1, 1999,
setting forth with respect to each such customer the aggregate volume of
purchases made during such period; (b) all material suppliers from whom the
Diagnostics Business purchased its raw materials and supplies since January 1,
1999; (c) all distributors of any Diagnostics Products; and (d) all sales agents
or representatives of the Diagnostics Business or of the Seller Parties with
respect to the Diagnostics Business. Except as set forth in Schedule 5.23, none
of such customers, suppliers, distributors or representatives has or, to the
Knowledge of the Seller Parties, intends to terminate or change significantly
its relationship with the Diagnostics Business.
Section 5.24. Insurance. The Diagnostics Business, the Premises and the
Purchased Property are covered by the Seller Parties' comprehensive blanket
insurance policies. The Seller Parties will continue all of such policies of
insurance in full force and effect through the Closing Date. To the Knowledge of
Seller Parties, neither of the Seller Parties have been refused any insurance by
any insurance carrier to which it has applied for insurance with respect to the
Premises, the Purchased Property or the Diagnostics Business at any time since
January 1, 1999.
Section 5.25. Labor Matters; Employment Agreements. Neither of the Seller
Parties is a party to any union or collective bargaining agreements covering any
of the employees of the Diagnostics Business (the "DIAGNOSTICS EMPLOYEES") nor,
to the Knowledge of the Seller Parties, is either of the workforces of the
Seller Parties engaged in any activities or proceedings of any labor union to
organize any Diagnostics Employees nor, except as set forth on Schedule 5.25,
does either of the Seller Parties have any employment agreements with any of the
Diagnostics Employees which are not terminable at will without cost or expense
at the election of the Seller Parties. The Seller Parties are in compliance in
all material respects with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment in
each case relating to the Diagnostics Business, and there are no charges with
respect to or relating to the Diagnostics Business pending before the Equal
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Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices.
Section 5.26. Products Liability. There is no notice, demand, claim,
action, suit, inquiry, hearing, proceeding, notice of violation or, to the
Knowledge of the Seller Parties, investigation, of a civil, criminal or
administrative nature before any court or governmental or other regulatory or
administrative agency, commission or authority, domestic or foreign, against or
involving any Diagnostic Product or any Transprobe Product distributed by or on
behalf of the Diagnostics Business, or class of claims or lawsuits involving any
Diagnostic Product or any Transprobe Product which is pending or, to the
Knowledge of the Seller Parties, threatened, resulting from an alleged defect in
design, manufacture, materials or workmanship of any such Diagnostics Product or
any Transprobe Product, or any alleged failure to warn, or resulting from any
breach of implied warranties or representations (collectively, "PRODUCT
LIABILITY LAWSUITS"); and (ii) there has not been any Occurrence. For purposes
of this Section 5.26, the term "OCCURRENCE" shall mean any accident or event
which takes place at any time which is caused or allegedly caused by any alleged
hazard or alleged defect in manufacture, design, materials or workmanship,
including without limitation any alleged failure to warn or any breach of
express or implied warranties or representations with respect to, or any such
accident, happening or event otherwise involving any Diagnostic Product or any
Transprobe Product that is likely to result in a claim or loss.
Section 5.27. Environmental Matters and Employee Health and Safety
Matters.
(a) Except as set forth in Schedule 5.27, (i) the Seller
Parties and the Diagnostics Business are in material compliance with all
Environmental Laws (as defined below); (ii) the Seller Parties and the
Diagnostics Business have obtained all applicable Environmental Permits (as
defined below); (iii) all such permits are in full force and effect; (iv) the
Seller Parties and the Diagnostics Business are in material compliance with all
Environmental Permits. As used herein, "ENVIRONMENTAL LAWS" shall mean all
applicable federal, state, and local laws, ordinances, rules, regulations,
judgments, orders, or decrees relating to the protection or regulation of human
health, safety, or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA") (42 U.S.C. Sections 9601 et Seq.), the Resource
Conservation and Recovery Act ("RCRA") (42 U.S.C. Sections 6901 Et seq.),
the Clean Water Act (33 U.S.C. Sections 1251 et seq.), the Atomic Energy
Act (42 U.S.C. Section 2201 et seq.), and similar state and local laWS.
"ENVIRONMENTAL PERMITS" shall mean all applicable licenses and permits or other
approvals required under applicable Environmental Law in connection with the
ownership, operation, and/or use of the Diagnostics Business.
(b) To the Knowledge of the Seller Parties, neither of the
Seller Parties in the operation of the Diagnostics Business, the manufacture and
sale of the Transprobe Products or with respect to the Premises has violated,
done or suffered to exist any act or condition which could reasonably be
expected to give rise to liability under any Environmental Law that would
materially affect the operations of the Diagnostics Business.
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(c) Except as set forth in Schedule 5.27, (i) there is no
pending or, to the Knowledge of the Seller Parties, threatened claim,
litigation, or administrative proceeding, or known prior claim, litigation or
administrative proceeding arising under any Environmental Law involving the
Diagnostics Business or any property formerly owned, leased, operated or
occupied by the Diagnostics Business; (ii) there are no ongoing negotiations
with or agreements with any governmental authority relating to any Remedial
Action (as defined in CERCLA Section 101(24), 42 U.S.C. Section 9601(24)) or
other environmentally-related claim involving the Diagnostics Business; and
(iii) neither the Seller Parties nor the Diagnostics Business have received any
request for information from any governmental or private entity with respect to
any liability or alleged liability under any Environmental Law related to the
Diagnostics Business.
(d) Except as set forth in Schedule 5.27, to the Knowledge of
the Seller Parties, the Premises (i) have never been used for the treatment or
disposal of hazardous materials, hazardous substances or hazardous waste (as
those terms are defined under any Environmental Law) nor as a landfill or other
waste disposal site; and (ii) is not now nor ever has been subject to
investigation by any governmental authority evaluating the need to undertake any
environmental remedial action.
(e) Except as set forth on Schedule 5.27, to the Knowledge of
the Seller Parties, (i) there are and never have been any underground storage
tanks present on the Premises; (ii) there is no asbestos present on the
Premises; and (iii) there are no polychlorinated biphenyls present on the
Premises.
(f) To the Knowledge of the Seller Parties, neither of the
Seller Parties in their operation of the Diagnostics Business or with respect to
the Premises has disposed of any hazardous wastes (as defined under any
Environmental Law) at any location which is currently identified or proposed for
inclusion on (A) the National Priorities List, 40 CFR Part 300 Appendix B, (B)
the Comprehensive Environmental Response, Compensation and Liability Inventory
List, or (C) any analogous state list.
(g) The Seller Parties have provided to the Purchaser copies
of all environmental reports or investigations regarding the Premises in the
control or possession of Seller Parties.
Section 5.28. Oral Collaboration Arrangements. The Seller Parties have
described the nature of certain oral arrangements currently in effect with
certain third parties on Schedule 5.28 (the "THIRD PARTY COLLABORATORS").
Section 5.29. Year 2000 Compliance. Except as otherwise disclosed on
Schedule 5.29: (a) the Management Systems and Production Systems used by the
Seller Parties in the conduct of the Diagnostics Business at the Premises are
Year 2000 Compliant; and (b) to the Knowledge of the Seller Parties, no Person
with whom either of the Seller Parties does business in the context of the
Diagnostics Business has notified any Seller Party that it will not be Year 2000
Compliant on or before December 31, 1999. As used in this Section, the following
terms have the following meanings:
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"MANAGEMENT SYSTEMS" shall mean all computer hardware (including
integrated circuit/chip and firmware) and software applications that a Person
uses for managing and operating its business, including without limitation
functions such as accounting and billing, inventory tracking and maintenance and
vendor and supplier sourcing.
"PRODUCTION SYSTEMS" shall mean all computer hardware (including
integrated circuit/chip and firmware) and software applications, and all
automated or electronic equipment, controls and other systems used by a Person
in its production process, from the point of input of raw material to final
products offered for sale to customers.
"YEAR 2000 COMPLIANT" means that all Management Systems and
Production Systems shall properly and correctly:
(a) handle date information before, during, and after midnight,
December 31, 1999, including but not limited to accepting date input and
performing calculations and comparisons on dates or portions of dates (date
interruption and manipulation must be correct for all valid dates within the
application domain);
(b) function accurately and without interruption before, during and
after January 1, 2000, without change in operations associated with the advent
of the new century or other date related events;
(c) respond to two-digit year date input in a way that resolves
ambiguity as to the century in a disclosed, defined and predetermined manner
(Interfacing software must make the same century assumptions when processing
two-digit years);
(d) process 2000 as a leap year;
(e) process any date with a year specified as "99" or "00",
regardless of other subjective meanings attached to these values; and
(f) reset to correct current date in the event of a power
interruption.
Section 5.30. Accuracy of Information. None of the Seller Parties'
representations, warranties or statements contained in this Agreement, or in the
schedules or exhibits hereto, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make any of such
representations, warranties or statements in light of the circumstances under
which they were made not misleading.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller Parties as
follows:
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Section 6.1. Corporate Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana, and the Purchaser has all requisite corporate power and authority to
own its respective properties and assets and to conduct its respective
businesses as now conducted.
Section 6.2. Qualification to Do Business. The Purchaser is duly qualified
to do business as a foreign corporation in and is in good standing in every
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to so qualify would not reasonably be expected to have
a material adverse effect. On or prior to the Closing Date, the Purchaser will
be qualified to do business in the Commonwealth of Massachusetts.
Section 6.3. Authorization and Validity of Agreement. The Purchaser has
all requisite corporate power and authority to enter into this Agreement and to
carry out its respective obligations hereunder. The execution and delivery of
this Agreement and the performance of the obligations of the Purchaser hereunder
have been duly authorized by all necessary corporate action by its Board of
Directors, and no other corporate proceedings on the part of the Purchaser are
necessary to authorize such execution, delivery and performance. This Agreement
has been duly executed by the Purchaser and constitutes its valid and binding
obligation, enforceable against it in accordance with its terms subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditor's rights generally and to the effect of general
principles of equity, whether considered in a proceeding at law or in equity.
Section 6.4. No Conflict or Violation. The execution, delivery and
performance the Purchaser of this Agreement does not and will not violate or
conflict with any provision of its Articles of Incorporation or By-laws and does
not and will not violate any provision of law, or any order, judgment or decree
of any court or other governmental or regulatory authority, nor violate nor will
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Purchaser is a
party or by which it is bound or to which its properties or assets is subject.
Section 6.5. Consents and Approvals. The execution, delivery and
performance of this Agreement on behalf of the Purchaser does not require the
consent or approval of, or filing with, any government, governmental body or
agency or other entity or person except: (i) as may be required to transfer any
Licenses and Permits; and (ii) as may be required in connection with the
assignment and assumption of the Assumed Contracts.
Section 7. COVENANTS OF THE SELLER PARTIES.
Section 7.1. Conduct of Business Before the Closing Date.
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(a) Without the prior written consent of the Purchaser, between the
date hereof and the Closing Date, the Seller Parties shall not, except as
required or expressly permitted pursuant to the terms hereof:
(i) make any material change in the conduct of the Diagnostics
Business or enter into any transaction with respect to the Diagnostic Business
other than in the ordinary course of business consistent with past practices;
(ii) make any sale, assignment, lease, license, transfer,
abandonment or other conveyance of the Purchased Property or any part thereof,
except transactions pursuant to the Assumed Contracts hereto and dispositions of
Inventory or of worn-out or obsolete equipment for fair or reasonable value in
the ordinary course of business consistent with past practice;
(iii) subject any of the Purchased Property, or any part
thereof, to any Lien or suffer such to exist other than (a) Permitted
Encumbrances, (b) Liens that will be released at or prior to the Closing Date,
(c) Liens as may arise in the ordinary course of business consistent with past
practice, and (d) Liens created by operation of law;
(iv) acquire any assets, raw materials or properties related
to the Diagnostics Business, or enter into any other transaction related to the
Diagnostics Business, other than in the ordinary course of business consistent
with past practice;
(v) enter into any new (or amend any existing) employee
benefit plan, program or arrangement affecting the Diagnostics Employees or any
new (or amend any existing) employment, severance or consulting agreement
relating to any Diagnostics Employee, grant any general increase in the
compensation of any Diagnostics Employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or grant any
increase in the compensation payable or to become payable to any Diagnostics
Employee, except in accordance with pre-existing contractual provisions or
consistent with past practice;
(vi) make capital expenditures related to the Diagnostics
Business in excess of $5,000 in respect of the remainder of calendar year 1999;
(vii) fail to keep in full force and effect insurance
comparable in amount and scope to coverage maintained in respect of the
Diagnostics Business;
(viii) knowingly take any other action that would cause any of
the representations and warranties made by the Seller Parties in this Agreement
not to remain true and correct in any material respect;
(ix) settle, release or forgive any material claim or
litigation or waive any material right thereto;
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(x) make, enter into, modify, amend in any material respect or
terminate any Assumed Contract where such contract is (A) a contract entailing
payments in excess of $5,000 (B) a contract having a term in excess of twelve
months or (C) a contract pertaining to the distribution of any Diagnostics
Products; or
(xi) commit to do any of the foregoing.
(b) Unless consented to in writing by the Purchaser, from and after
the date hereof and until the Closing Date, the Seller Parties shall:
(i) continue to maintain, in all material respects, the
Purchased Property in accordance with present practice in a condition reasonably
suitable for its current use, ordinary wear and tear excepted;
(ii) file, when due or required, national, state, foreign and
other tax returns and other reports required to be filed and pay when due all
material taxes, assessments, fees and other charges lawfully levied or assessed
against them, unless the validity thereof is contested in good faith and by
appropriate proceedings diligently conducted;
(iii) continue to conduct the Diagnostics Business in the
ordinary course consistent with past practice;
(iv) keep their books of account, Files and Records in the
ordinary course and in accordance with existing practice except for any
modifications necessary in connection with this transaction; and
(v) continue to maintain existing business relationships with
suppliers and customers.
(c) The Seller shall make commercially reasonable efforts to modify
the Domain Name registrations to reflect the contacts and domain servers as
specified by the Purchaser.
Section 7.2. Consents and Approvals. The Seller Parties (a) shall use
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and of all other persons, firms or corporations required
in connection with the execution, delivery and performance by it of this
Agreement, including without limitation all required consents, waivers,
authorizations and approvals of the other parties to the agreements listed on
Schedule 13.3, and (b) shall diligently assist and cooperate with the Purchaser
in preparing and filing all documents required to be submitted by the Purchaser
to any governmental or regulatory authority, domestic or foreign, in connection
with such transactions and in obtaining any governmental consents, waivers,
authorizations or approvals (including without limitation licenses and permits
for the Purchaser comparable to the Licenses and Permits) which may be required
to be obtained by the Purchaser in connection with such transactions (which
assistance and cooperation shall include,
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without limitation, timely furnishing to the Purchaser all information
concerning the Seller Parties that counsel to the Purchaser determines is
required to be included in such documents or would be helpful in obtaining any
such required consent, waiver, authorization or approval).
Section 7.3. Notice of Breach. Through the Closing Date, the Seller
Parties shall promptly give the Purchaser written notice of any matter that may
constitute a breach of any representation, warranty, agreement or covenant
contained in this Agreement.
Section 7.4. Access to Properties and Records. The Seller Parties shall
afford to the Purchaser, and to the accountants, counsel and representatives of
the Purchaser, reasonable access during normal business hours throughout the
period prior to the Closing Date (or the earlier termination of this Agreement
pursuant to Section 14) to all properties, books, contracts, commitments and
Files and Records of the Seller Parties relating to the Diagnostics Business
and, during such period, shall furnish promptly to the Purchaser all other
information concerning the Diagnostics Business, properties and personnel as the
Purchaser may reasonably request, provided that no investigation or receipt of
information pursuant to this Section 7.4 shall qualify any representation or
warranty of the Seller Parties or the conditions to the obligations of the
Purchaser. The Seller Parties shall also afford the Purchaser reasonable access
to the Diagnostics Business, all operations of the Diagnostics Business and to
all Purchased Property throughout the period prior to the Closing Date.
Section 7.5. Negotiations.
(a) From and after the date hereof until the Closing Date or the
earlier termination of this Agreement pursuant to Section 14 hereto, neither the
Seller Parties, nor any of their officers or directors nor anyone acting on
behalf of the Seller Parties (including, without limitation, any attorney,
accountant, investment banker or financial advisor acting on behalf of any
Seller Party) shall, directly or indirectly, encourage, solicit, engage in
discussions or negotiations with, or provide any information to, any person,
firm, or other entity or group (other than the Purchaser or its representatives)
concerning (i) the sale of all or any portion of the assets of the Diagnostics
Business or any similar transaction involving the Seller Parties or the
Diagnostics Business or (ii) any other transaction inconsistent with the
transactions contemplated hereby.
Section 7.6. Commercially Reasonable Efforts. Upon the terms and subject
to the conditions of this Agreement, the Seller Parties will use commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
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Section 7.7. Restrictive Covenants.
(a) **
(b) **
(c) Covenants Independent. The covenants contained in this Section
7.7 shall be construed and enforced independently of each other and
independently of any other provision of this Agreement or any other
understanding or agreement between the parties, and the existence of any claim
or cause of action of the Seller Parties against the Purchaser, of whatever
nature, shall not constitute a defense to the enforcement of the covenants
contained herein against the Seller Parties or their Affiliates.
(d) Severability. Any provision of this Section 7.7 which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 7.8. Preparation of Financial Statements. The Seller Parties shall
engage KPMG Peat Marwick to perform the procedures set forth in Schedule 7.8
hereto with respect to a pro forma statement of revenue and expenses of the
Diagnostics Business for the one-year fiscal period ended September 30, 1999.
Section 7.9. Accounts Payable. The Seller Parties shall promptly pay and
discharge in accordance with their respective due dates all accounts payable of
the Seller Parties arising from the acquisition of products or services used by
the Seller Parties in the conduct of the Diagnostics Business prior to the
Closing Date.
Section 7.10. Notices of Certain Events. The Seller Parties shall promptly
notify the Purchaser of:
(a) any written communication of which either or both of the Seller
Parties has Knowledge from any person alleging that the consent of such person
is or may be required in connection with the transactions contemplated by this
Agreement;
(b) any written communication of which either or both of the Seller
Parties has Knowledge from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement that would
materially affect the ability of either or both of the Seller Parties to
consummate the transactions contemplated hereby or that would reasonably be
expected to have a Material Adverse Effect on either party or the Diagnostics
Business; or
- ---------------------
** This portion has been redacted pursuant to a request for confidential
treatment.
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(c) any actions, suits, charges, complaints, claims, investigations
or proceedings commenced or, to the Knowledge of the Seller Parties, threatened
to restrain, prohibit or otherwise challenge the legality of any transactions
contemplated by this Agreement.
Section 7.11. Confidentiality.
(a) As used in this Section the "CONFIDENTIAL INFORMATION" of a
party shall mean all information concerning or related to the business,
operations, financial condition or prospects of such party or any of its
Affiliates, regardless of the form in which such information appears and whether
or not such information has been reduced to a tangible form, and shall
specifically include (i) all information regarding the officers, directors,
employees, equity holders, customers, suppliers, distributors, sales
representatives and licensees of such party and its Affiliates, in each case
whether present or prospective, (ii) all inventions, discoveries, trade secrets,
processes, techniques, methods, formulae, ideas and know-how of such party and
its Affiliates and (iii) all financial statements, audit reports, budgets and
business plans or forecasts of such party and its Affiliates; provided, that the
Confidential Information of a party shall not include (A) information which is
or becomes generally known to the public through no act or omission of the other
party and (B) information which has been or hereafter is lawfully obtained by
the other party from a source other than the party to whom such Confidential
Information belongs (or any of its Affiliates or their respective officers,
directors, employees, equity holders or agents) so long as, in the case of
information obtained from a third party, such third party was or is not,
directly or indirectly, subject to an obligation of confidentiality owed to the
party to whom such Confidential Information belongs or any of its Affiliates at
the time such Confidential Information was or is disclosed to the other party.
(b) Except as otherwise permitted by subsection (c) below, each
party agrees that it will not, without the prior written consent of the other
party, disclose or use for its own benefit any Confidential Information of the
other party.
(c) Notwithstanding subsection (b) above, each of the parties shall
be permitted to:
(i) disclose Confidential Information of the other party to
its officers, directors, employees, equity holders, lenders, agents and
Affiliates, but only to the extent reasonably necessary in order for such party
to perform its obligations and exercise its rights and remedies under this
Agreement, and such party shall take all such action as shall be necessary or
desirable in order to ensure that each of such Persons maintains the
confidentiality of any Confidential Information that is so disclosed;
(ii) make additional disclosures of or use for its own benefit
Confidential Information of the other party, but only if and to the extent that
such disclosures or use are specifically contemplated by this Agreement; and
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(iii) disclose Confidential Information of the other party to
the extent, but only to the extent, required by applicable law; provided, that
prior to making any disclosure pursuant to this subparagraph, the disclosing
party shall notify the affected party of the same, and the affected party shall
have the right to participate with the disclosing party in determining the
amount and type of Confidential Information of the affected party, if any, which
must be disclosed in order to comply with applicable law.
(d) OSIP agrees to exercise commercially reasonable efforts to seek
confidential treatment of the contents of this Agreement and all Ancillary
Agreements in periodic and other reports filed by OSIP with the U.S. Securities
and Exchange Commission ("SEC") and to consult with Purchaser regarding the
content of any such disclosure prior to any such filing. Purchaser shall
promptly consult with and respond to OSIP's requests for consultation under this
Section and shall promptly grant or withhold its approval of any request by OSIP
to disclose any Confidential Information in its periodic or other reports.
(e) In the event that this Agreement is terminated at any time
pursuant to Section 14.1 hereof, the Confidentiality Agreement among Seller and
Buyer dated June 14, 1999 shall continue in full force and effect for the term
specified therein. In the event this Agreement is consummated pursuant to
Sections 12 and 13 hereof at any time, such Confidentiality Agreement shall be
deemed terminated and of no further force and effect, and the provisions of this
Section 7.11 shall govern the confidentiality obligations of the parties hereto
from and after the Closing.
Section 7.12. Disposal of Inventory. Prior to the Closing Date, the Seller
Parties shall remove all Transprobe Products from the Premises and shall
lawfully dispose of all unmerchantable or stale Inventory.
Section 7.13. Change of Name. Promptly following the Closing, OSDI shall
file such documents as are required by the State of Delaware, Commonwealth of
Massachusetts and any jurisdiction where OSDI has qualified to do business to
effect the change of OSDI's name from "Oncogene Science Diagnostics, Inc." to
"OSDI, Inc.".
Section 7.14. Information and Data Related to Intellectual Property. After
the Effective Date, OSIP hereby agrees (i) to provide the Purchaser and its
representatives with reasonable access during normal business hours to any
information and data relating to the Intellectual Property that is located at
OSIP's facilities in Uniondale, New York as the Purchaser may reasonably request
upon prior notice to OSIP, (ii) not to dispose of or to destroy any such
information and/or data, and (iii) to permit the Purchaser to make copies of
such information and/or data at the Purchaser's expense.
Section 8. COVENANTS OF THE PURCHASER.
Section 8.1. Actions Before Closing Date. The Purchaser shall not take any
action which shall cause it to be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
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Section 8.2. Consents and Approvals. The Purchaser shall use reasonable
commercial efforts to obtain all consents and approvals of third parties, if
any, required to be obtained by the Purchaser to effect the transactions
contemplated by this Agreement.
Section 8.3. Reasonable Efforts. Upon the terms and subject to the
conditions of this Agreement, the Purchaser will use reasonable commercial
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with applicable law
to consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
Section 8.4. Notices of Certain Events. The Purchaser shall promptly
notify the Seller Parties of:
(a) any written communication of which the Purchaser has knowledge
from any person alleging that the consent of such person is or may be required
in connection with the transactions contemplated by this Agreement;
(b) any written communication of which the Purchaser has knowledge
from any governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement that would materially affect the
ability of the Purchaser to consummate the transactions contemplated hereby or
that would reasonably be expected to have a material adverse effect on the
Diagnostics Business; or
(c) any actions, suits, charges, complaints, claims, investigations
or proceedings commenced or, to Purchaser's knowledge, threatened to restrain,
prohibit or otherwise challenge the legality of any transaction contemplated by
this Agreement.
Section 8.5. Investigation. The Purchaser acknowledges and agrees that,
subject to the terms and conditions herein provided, it (a) has made its own
inquiry and investigation into, and, based thereon, has formed an independent
judgment concerning, the Seller Parties and the Diagnostics Business; and (b)
has been furnished with or given adequate access to such information about the
Diagnostics Business as it has requested.
Section 9. EMPLOYEES AND EMPLOYEE PLANS.
Section 9.1. Offer of Employment. The Purchaser shall offer employment to
those employees of the Diagnostics Business as are listed on Schedule 9.1,
effective as of the Closing at their respective current base salary levels.
Those employees who accept such offers of employment are referred to herein as
the "TRANSFERRED EMPLOYEES." The Transferred Employees shall be employed under
terms and conditions determined in the sole discretion of the Purchaser, and the
Purchaser shall not be obligated to provide any particular type or level of
compensation or benefits to such persons, other than as specifically required
hereunder. The Purchaser shall not be responsible for any compensation, benefits
or other liabilities attributable to (i) the Transferred Employees, to the
extent arising under any OSIP Plan or
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otherwise prior to or as of the Closing, or (ii) any other employee of the
Diagnostics Business, irrespective of when or under what circumstances arising.
Section 9.2. OSIP Savings Plan. OSIP shall cause each Transferred
Employee's "Matching Contribution Account" under the OSIP Savings Plan to become
fully vested and nonforfeitable as of the Closing Date. OSIP shall take any
actions necessary to allow lump sum distributions to be made to the Transferred
Employees from the OSIP Savings Plan in accordance with Section 401(k)(10) of
the Code on account of the purchase of the Diagnostics Business by the
Purchaser. The Transferred Employees shall be allowed to elect such
distributions during the period beginning no later than the close of the
calendar quarter which follows, or begins on, the Closing Date, and ending on
the latest date allowed under Section 401(k)(10) of the Code.
Section 9.3. Accrued Vacation and Bonuses. At the Closing, the Seller
Parties shall pay to the Purchaser, via an adjustment to the Purchase Price as
provided in Section 3.3:
(a) all accrued but unused vacation days earned prior to the Closing
Date by the Transferred Employees, and;
(b) the pro rata portion of unpaid annual bonuses earned by the
Transferred Employees prior to the Closing Date (based upon historical bonus
payments made to such individuals or to persons in similar positions), which
amounts shall be paid by Purchaser to any such Transferred Employee on or before
December 31, 1999; provided however, that this Section 9.3(b) shall not apply in
respect of ** .
In consideration thereof, Purchaser shall assume, as of the Closing, the
Seller Parties' obligations with respect to such accrued but unused vacation
days and such earned and unpaid bonuses.
Section 9.4. Post-Retirement Non-Pension Liabilities.
(a) Retained Liabilities. The Seller Parties will retain liability
for and will pay post-retirement medical and life insurance benefits to those
Transferred Employees who satisfy the age and service requirements for such
benefits under the Seller Parties' plan as of the Closing Date.
(b) Payment for other Liabilities. At the Closing, the Seller
Parties shall pay to Purchaser, via an adjustment to the Purchase Price as
provided in Section 3.3, an amount equal to $160,000, representing the Seller
Parties' accrued liability as of the Closing Date for all other Transferred
Employees' post-retirement medical and life insurance benefits.
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** This portion has been redacted pursuant to a request for confidential
treatment.
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Section 10. BULK SALES LAW.
The Purchaser hereby waives compliance by the Seller Parties with the
provisions of any so-called bulk transfer law of any jurisdiction in connection
with the transactions contemplated hereby or under Massachusetts General Laws
62(c), Section 152. The Seller Parties hereby agree to indemnify and hold
harmless the Purchaser from and against any and all liabilities, losses,
damages, costs and expenses, including reasonable counsel fees, incurred or
sustained by the Purchaser due to such non-compliance.
Section 11. INDEMNIFICATION.
Section 11.1. Indemnification by the Seller Parties. The Seller Parties
shall jointly and severally indemnify and defend, save and hold the Purchaser,
any Affiliate of the Purchaser and their respective directors, officers and
employees (the "PURCHASER INDEMNITEES"), harmless from and against any claim,
damage, liability, loss, judgment, cost, expense (including all reasonable
attorneys' fees and court costs), deficiency, interest, penalty, impositions,
assessments or fines (collectively, "LOSSES") arising out of or resulting from:
(a) the breach of any representation or warranty made by either of
the Seller Parties in this Agreement or in any of the Ancillary Agreements;
(b) any failure of the Seller Parties duly to perform or observe any
term, provision, covenant, agreement or condition on the part of the Seller
Parties to be performed or observed hereunder or under any of the Ancillary
Agreements;
(c) the Excluded Liabilities or any failure of the Seller Parties to
pay and discharge when due any Excluded Liabilities, or any claim or cause of
action by any party against any Purchaser Indemnitee, with respect to the
Excluded Liabilities;
(d) any liability under any Environmental Law or under common law
for the Release (as defined in CERCLA 5 101(22), 42 U.S.C. Section 9601(22)) or
threat of Release or for exposure or potential exposure to hazardous or toxic
substances, arising from events occurring prior to the Closing Date;
(e) any failure of the Seller Parties' Management Systems to
properly function on or after January 1, 2000 in any manner which materially
impairs the Purchaser's ability to meet its obligations to third parties; or
(f) the failure of Calbiochem-Novabiochem Corporation ("CNC") to
vacate the leased premises by January 7, 1999 under that certain Sublease dated
as of August 2, 1995 between CNC and OSIP, as amended by Amendment of Sublease
dated as of March 31, 1999, which expired on October 31, 1999, and is being
carried over on a day to day basis pursuant to such amendment, and any damages
to such leased premises caused by CNC and/or related to its vacation of the
leased premises.
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Section 11.2. Indemnification by the Purchaser. The Purchaser shall
indemnify and agree to fully defend, save and hold the Seller Parties, any
Affiliate of the Seller Parties, and their respective directors, officers and
employees (the "SELLER PARTIES INDEMNITEES"), harmless from and against any
Losses arising out of or resulting from:
(a) the breach of any representation or warranty made by the
Purchaser in this Agreement or in any of the Ancillary Agreements;
(b) any failure of the Purchaser duly to perform or observe any
term, provision, covenant, agreement or condition on the part of the Purchaser
to be performed or observed hereunder or under any of the Ancillary Agreements;
(c) the Assumed Liabilities; or
(d) the operation of the Diagnostics Business or the use or
ownership of the Purchased Property following the Closing Date, but only in
respect of circumstances or conditions arising after the Closing Date.
Section 11.3. Conduct of Proceedings.
(a) In the event that any person or entity not a party to this
Agreement (including a governmental authority) shall levy an assessment or
commence or file or threaten to commence or file any lawsuit or proceeding,
which pending or threatened lawsuit or proceeding or assessment may result in
any Losses subject to indemnification under this Agreement (collectively, the
"PROCEEDINGS"), then the indemnified party (the "INDEMNIFIED PARTY") shall
provide written notice of such Proceeding to the indemnifying party (the
"INDEMNIFYING PARTY") as soon as is reasonably practicable but in any event
within thirty (30) days after discovery or receipt of such Proceeding (provided,
however, that failure to notify within such time period shall not rescind or
revoke the Indemnifying Party's obligation to indemnify but shall only reduce
the amount of the indemnification to the extent that the Indemnifying Party is
damaged by such delay).
(b) The Indemnifying Party shall have the option, at its own cost
and expense (which cost and expense shall not be credited against or recoverable
from the Deferred Payment and shall have no impact or effect whatsoever upon the
maximum indemnity amounts provided in Section 11.4), to participate in or assume
control of the defense of such Proceedings (including, without limitation,
monitoring and conducting all discussions and negotiations with any insurance
carrier) by retaining counsel for and reasonably acceptable to the Indemnified
Party to defend the same. If the Indemnifying Party elects to assume control of
the defense of any such Proceedings, the Indemnifying Party shall give prompt
written notice to the Indemnified Party of such election and the Indemnified
Party shall have the right to participate in the defense of such assessment or
such pending or threatened Proceeding or proceeding at its own expense.
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(c) If the Indemnifying Party does not, within thirty (30) days of
its receipt of the written notice specified in subsection (b) above, notify the
Indemnified Party that it will assume control or otherwise participate in the
defense of any such Proceeding or thereafter ceases so to do, the Indemnifying
Party shall be bound by the results obtained by the Indemnified Party with
respect to such claim.
(d) In the event that the defense is tendered to the Indemnifying
Party and the Indemnifying Party assumes control of the defense, the Indemnified
Party shall cooperate and assist the Indemnifying Party in defending any such
Proceeding.
(e) (i) If the Indemnifying Party receives a monetary settlement
offer (the terms of which provide only for a monetary settlement in exchange for
a complete release and dismissal with prejudice of any Proceeding) that such
party desires to accept, it shall request the Indemnified Party's consent. If
the Indemnified Party has failed to consent to such settlement within thirty
(30) days of its receipt of the settlement offer (or such shorter period as is
provided in the settlement offer), the Indemnifying Party shall have the right
to pay the amount of settlement to the Indemnified Party, in which event the
Indemnifying Party shall be relieved of any further liability or obligation
arising out of such claim and the Indemnified Party shall be entitled to proceed
with the defense of such claim.
(ii) If the Indemnifying Party receives a settlement offer,
the terms of which provide for performance or compliance other than or in
addition to a monetary payment in exchange for a complete release and dismissal
with prejudice as referenced above, such settlement shall only be accepted with
the Indemnified Party's consent.
(f) In effecting the settlement of any Proceeding, each party shall
at all times act in good faith and shall consult with the other. In addition,
each party shall take and shall cause its Affiliates to take all reasonable
steps to mitigate their Losses upon and after becoming aware of any event which
could reasonably be expected to give rise to any Losses.
Section 11.4. Limitations.
(a) No claim for indemnification may be made pursuant to this
Section 11 with respect to any item of Loss unless such item (or series of
similar items) exceeds $5,000 (each such claim being herein referred to as a
"CLAIM"), nor shall any such item (or series of similar items) which is less
than $5,000 be applied to or considered a part of the Minimum Loss (as
hereinafter defined). An aggrieved party ("AGGRIEVED PARTY") shall not be
entitled to recover any Losses pursuant to Sections 11.1 and 11.2 until the
aggregate amount of Claims suffered by the Aggrieved Party shall exceed $50,000
(the "MINIMUM LOSS "), at which time the indemnification provided under this
Section 11 shall apply only to Losses in excess of the Minimum Loss and only
until the amounts paid in respect of such Claims aggregate $7,500,000, provided
that the limitations provided for in this Section 11.4(a) shall not be
applicable to any of the Seller Parties' obligations under Sections 11.1(d) or
11.1(f) or those Losses described in subsection (b) below. For the purposes of
computing such individual or aggregate amounts of Losses, the amount of each
Loss shall be deemed to be an amount (i) net
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of any Tax benefit to the Aggrieved Party or any Affiliate thereof and (ii) net
of any insurance proceeds and any indemnity, contribution or other similar
payment recoverable by the Aggrieved Party or any of its Affiliates from any
third party with respect thereto.
(b) No Claim for indemnification in the case of Losses resulting
from a breach of the representations and warranties under Section 5.29 or the
operation of Section 11.1(e) shall be subject to the Minimum Loss provisions of
subsection (a) above, and the aggregate amounts paid by Seller Parties in
respect of Claims for indemnification provided under this Section 11 for such
Losses shall not exceed $500,000 in the aggregate.
Section 11.5. Environmental Liability After Closing. As to any liability
under any Environmental Law or common law for the Release (as defined in CERCLA
Section 101(22), 42 U.S.C. Section 9601(22)) or threat of release or for
exposure or potential exposure to hazardous substances, hazardous materials, or
hazardous wastes (as defined in any Environmental Law) arising from events
occurring after the Closing Date, the parties agree as follows:
(a) The party whose act or omission caused, or which controlled the
instrumentality giving rise to such liability shall defend, indemnify, and hold
harmless the other party for such liability;
(b) In the event the parties do not agree which party is liable
pursuant to subsection (a), the parties shall resolve the dispute in accordance
with the provisions of Section 15.2; and
(c) In the event a Response Action (as defined in CERCLA Section
101(25), 42 U.S.C. Section 9601(25)) is necessary as a result of such liability,
the Response Action selected shall be the most cost-effective response action
which complies with applicable laws, regulations, or orders, and which
interferes with the use of the Premises to the least extent practicable. If the
parties do not agree on the appropriate Response Action, then the parties shall
resolve the dispute in accordance with subsection (b).
Section 12. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER.
The obligations of the Seller Parties to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Seller Parties in its sole discretion:
Section 12.1. Representations and Warranties of the Purchaser. All
representations and warranties made by the Purchaser in this Agreement shall be
true and correct in all material respects (and in all respects in the case of
each representation and warranty that is qualified as to materiality) on and as
of the Closing Date as if again made by the Purchaser on and as of such date
except for changes in the ordinary course of business after the date hereof and
in conformity with the covenants and agreements contained herein, and the Seller
Parties
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shall have received a certificate dated the Closing Date and signed by the
President or any Vice President of the Purchaser to that effect.
Section 12.2. Performance of the Obligations of the Purchaser. The
Purchaser shall have performed in all material respects all obligations required
under this Agreement to be performed by the Purchaser on or before the Closing
Date, and the Seller Parties shall have received a certificate dated the Closing
Date and signed by the President or any Vice President of the Purchaser to that
effect.
Section 12.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and required in connection with the execution, delivery and
performance of this Agreement, shall have been duly obtained and shall be in
full force and effect on the Closing Date. All consents, waivers,
authorizations, approvals and modifications of and by the other parties to the
agreements listed on Schedule 13.3 required in connection with the assignment of
such agreements and in connection with the execution, delivery and performance
of this Agreement shall have been duly obtained and shall be in full force and
effect on the Closing Date.
Section 12.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares this
Agreement invalid or unenforceable in any respect or which prevents the
consummation of the transactions contemplated hereby shall be in effect.
Section 12.5. Delivery of Ancillary Agreements. The Purchaser shall have
executed and delivered to the Seller Parties each of the Ancillary Agreements.
Section 12.6 Opinion of Purchaser's Counsel. The Seller Parties shall have
received an opinion, dated as of the Closing Date, from counsel to the
Purchaser, in form and substance reasonably satisfactory to the Seller Parties
and their counsel, that:
(a) The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Indiana, and the Purchaser
has all requisite corporate power and authority to own its properties and assets
and to conduct its business as now conducted and is qualified to do business as
foreign corporation and is in good standing in the Commonwealth of
Massachusetts;
(b) The Purchaser has the corporate power to enter into this
Agreement and the Ancillary Agreements and to carry out their respective
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Ancillary Agreements and the performance of the obligations of
the Purchaser hereunder and thereunder have been duly authorized by its Board of
Directors, and no other corporate proceedings on the part of the Purchaser are
necessary to authorize such execution, delivery and performance. This Agreement
and the Ancillary Agreements have been duly executed by the Purchaser and
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constitute the legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforceability of creditors' rights generally and except that the
remedy of specific performance or similar equitable relief may be subject to
equitable defenses and to the discretion of the court before which enforcement
is sought; and
(c) The execution, delivery or performance by the Purchaser of this
Agreement and the Ancillary Agreements does not and will not violate or conflict
with any provision of its certificate of incorporation or by-laws and does not
and will not violate any provision of law, or any order, judgment or decree of
any court or other governmental or regulatory authority known to such counsel
(after inquiry of appropriate officers of the Purchaser).
Such opinion shall also contain assumptions and qualifications which are
customary for transactions of this type and which are agreed to by the
respective counsels of the Purchaser and the Seller Parties.
Section 12.7. Other Closing Documents. The Seller Parties shall have
received such other certificates, instruments and documents in confirmation of
the representations and warranties of the Purchaser or in furtherance of the
transactions contemplated by this Agreement as the Seller Parties or its counsel
may reasonably request.
Section 12.8. Legal Matters. All certificates, instruments, opinions and
other documents required to be executed or delivered by or on behalf of the
Purchaser under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Purchaser in furtherance
of the transactions contemplated hereby, shall be reasonably satisfactory in
form and substance to counsel for the Seller Parties.
Section 12.9. Secretary's Certificate. The Seller Parties shall have
received a copy of resolutions adopted by the Board of Directors of the
Purchaser authorizing the execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Purchaser, and a certificate of the
Assistant Secretary of the Purchaser, dated the Closing Date, certifying that
such resolutions were duly adopted and are in full force and effect at such date
and setting forth the incumbency of each person executing this Agreement on
behalf of the Purchaser.
Section 13. CONDITIONS PRECEDENT TO PERFORMANCE BY THE PURCHASER.
The obligations of the Purchaser to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Purchaser in its sole discretion:
Section 13.1. Representations and Warranties of the Seller Parties. All
representations and warranties made by the Seller Parties in this Agreement
shall be true and correct in all material respects (and in all respects in the
case of each representation and warranty that is
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qualified as to materiality) on and as of the Closing Date as if again made by
the Seller Parties on and as of such date except for changes in the ordinary
course of business after the date hereof and in conformity with the covenants
and agreements contained herein, and the Purchaser shall have received a
certificate dated the Closing Date and signed by the President or any Vice
President of the Seller Parties to that effect.
Section 13.2. Performance of the Obligations of the Seller Parties. The
Seller Parties shall have performed in all material respects all obligations
required under this Agreement to be performed by the Seller Parties on or before
the Closing Date, and the Purchaser shall have received a certificate dated the
Closing Date and signed by the President or any Vice President of the Seller
Parties to that effect.
Section 13.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and the execution, delivery and performance of this
Agreement shall have been duly obtained and shall be in full force and effect on
the Closing Date. All consents, waivers, authorizations, approvals and
modifications of and by the other parties to the agreements listed on Schedule
13.3 required in connection with the assignment of such agreements and in
connection with the execution, delivery and performance of this Agreement shall
have been duly obtained and shall be in full force and effect on the Closing
Date.
Section 13.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, which declares this Agreement invalid in any respect or
prevents the consummation of the transactions contemplated hereby, or which
materially and adversely affects the assets, properties, operations, prospects,
net income or financial condition of the Diagnostics Business shall be in
effect.
Section 13.5. Delivery of Ancillary Agreements. The Seller Parties shall
have executed and delivered to the Purchaser each of the Ancillary Agreements.
Section 13.6. No Material Adverse Change. During the period from the date
hereof to the Closing Date, there shall not have been any material adverse
change in the assets, properties, business, operations, or prospects of the
Diagnostics Business which has, or could have, a Material Adverse Effect.
Section 13.7. Opinion of Counsel. The Purchaser shall have received an
opinion, dated the Closing Date, from counsel to the Seller Parties, in form and
substance reasonably satisfactory to the Purchaser and its counsel, that:
(a) Each of OSIP and OSDI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each
of OSIP and OSDI has all requisite corporate power and authority to own their
respective properties and assets and to conduct their respective businesses as
now conducted. Each of OSIP and OSDI is duly
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qualified to do business as a foreign corporation and is in good standing in the
Commonwealth of Massachusetts and in every jurisdiction where the character of
the properties owned or leased by it or the nature of their respective
businesses makes such qualification necessary and in which the absence of such
qualification could have a material adverse effect on the respective businesses
of OSIP and OSDI;
(b) The Seller Parties have the corporate power to enter into this
Agreement and the Ancillary Agreements and to carry out their respective
obligations hereunder and thereunder. The execution and delivery of this
Agreement, the Ancillary Agreements and the instruments of conveyance executed
by the Seller Parties in connection with the sale of the Purchased Property and
the performance of the obligations of the Seller Parties hereunder and
thereunder have been duly authorized by the Board of Directors of each of the
Seller Parties, and no other corporate proceedings on the part of the Seller
Parties are necessary to authorize such execution, delivery and performance.
This Agreement, the Ancillary Agreements and the instruments of conveyance
executed by the Seller Parties in connection with the sale of the Purchased
Property have been duly executed by each of the Seller Parties and constitute
the legal, valid and binding obligation of each of the Seller Parties,
enforceable against both of the Seller Parties in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforceability of creditors, rights
generally and except that the remedy of specific performance or similar
equitable relief may be subject to equitable defenses and to the discretion of
the court before which enforcement is sought, except that no opinion will be
given as to the matters set forth in Section 7.7 and as to jurisdictional
matters;
(c) The execution, delivery or performance by the Seller Parties of
this Agreement, the Ancillary Agreements and the instruments of conveyance
executed by the Seller Parties in connection with the sale of the Purchased
Property do not and will not violate or conflict with any provision of the
Certificate of Incorporation or By-laws of either of the Seller Parties and do
not and will not violate any provision of law, or any order, judgment or decree
of any court or other governmental or regulatory authority, nor violate nor will
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument known to such counsel (after
inquiry of appropriate officers of the Seller Parties) to which the Seller
Parties are a party or by which either of the Seller Parties is bound or to
which their respective properties or assets are subject, nor will result in the
creation or imposition of any Lien upon any of the respective properties or
assets of the Seller Parties, nor will result in the cancellation, modification,
revocation or suspension of any of the licenses, franchises, permits,
authorizations or approvals referred to in Section 5.14; and
(d) To the best of such counsels' knowledge after inquiry of
appropriate officers of the Seller Parties, except as set forth in Schedule
5.16, there are no claims, actions, suits, proceedings, labor disputes or
investigations of any nature pending or threatened before any national, state or
local court or governmental or regulatory authority, domestic or foreign, or
before any arbitrator, brought by or against the Seller Parties, any of its
officers, directors, employees, agents or Affiliates involving, affecting or
relating to the Purchased Property, the
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Diagnostics Business or the transactions contemplated by this Agreement. To the
best of such counsels' knowledge after inquiry of appropriate officers of the
Seller Parties, neither the Seller Parties, nor any of its assets or properties
is subject to any order, writ, judgment, award, injunction or decree of any
national, state or local court or governmental or regulatory authority or
arbitrator, that could have a material adverse effect on the Purchased Property,
the Diagnostics Business or that would or might interfere with the transactions
contemplated by this Agreement.
Such opinion shall also contain assumptions and qualifications which are
customary for transactions of this type and which are agreed to by the
respective counsels of the Purchaser and the Seller Parties.
Section 13.8. Other Closing Documents. The Purchaser shall have received
such other certificates, instruments and documents in confirmation of the
representations and warranties of the Seller Parties or in furtherance of the
transactions contemplated by this Agreement as the Purchaser or its counsel may
reasonably request.
Section 13.9. Domain Name Transfer Documents. The Seller Parties shall
have delivered to the Purchaser all such executed documents as may be required
to transfer to the Purchaser control and ownership of the Domain Name.
Section 13.10. Legal Matters. All certificates, instruments, opinions and
other documents required to be executed or delivered by or on behalf of the
Seller Parties under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Seller Parties in
furtherance of the transactions contemplated hereby, shall be reasonably
satisfactory in form and substance to counsel for the Purchaser.
Section 13.11. Effective Assignment. The Seller Parties shall have caused
an effective assignment of all of the Assumed Contracts and Intellectual
Property to the Purchaser at or prior to the Closing.
Section 13.12. Executive Employment Agreements. The Executive Employment
Agreements shall be executed by all parties thereto on or prior to the Closing.
Section 13.13. Closing Date Financial Adjustments. The Closing Date
Adjustments shall be applied to the Purchase Price.
Section 13.14. Secretary's Certificate. The Purchaser shall have received
a copy of resolutions adopted by the Boards of Directors of the Seller Parties
authorizing the execution, delivery and performance of this Agreement and the
Ancillary Agreements by the Seller Parties, and a certificate of the Secretary
of each of the Seller Parties, dated the Closing Date, certifying that such
resolutions were duly adopted are in full force and effect at such date and
setting forth the incumbency of each person executing this Agreement on behalf
of the Seller Parties.
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Section 14. TERMINATION.
Section 14.1. Conditions of Termination. Notwithstanding anything to the
contrary contained herein, this Agreement may be terminated at any time before
the Closing:
(a) By mutual consent of the Seller Parties and the Purchaser;
(b) By the Seller Parties if, as of November 30, 1999, any of the
conditions set forth in Section 12 shall not have been met or waived; or
(c) By the Purchaser if, as of November 30, 1999, any of the
conditions set forth in Section 13 shall not have been met or waived.
Section 14.2. Effect of Termination. In the event of termination pursuant
to Section 14.1, this Agreement shall become null and void and have no effect,
with no liability on the part of the Seller Parties or the Purchaser, or their
respective directors, officers, agents or stockholders, with respect to this
Agreement, except for (i) the liability of Seller Parties under Section 7.5 or
(ii) the liability of a party for expenses pursuant to Section 15.3.
Section 15. MISCELLANEOUS.
Section 15.1. Successors and Assigns. Except as otherwise provided in this
Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect, provided, that the Purchaser may
assign its rights hereunder to an Affiliate and to any party providing financing
in connection with the transactions contemplated hereby, provided further, that
no such assignment shall reduce or otherwise vitiate any of the obligations of
the Purchaser hereunder. This Agreement shall inure to the benefit of and shall
be binding upon the successors and permitted assigns of the parties hereto.
Section 15.2. Governing Law, Jurisdiction. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the
internal laws of the State of New York, without giving effect to the principles
of conflicts of laws thereof. The parties hereto irrevocably elect as the sole
judicial forum for the adjudication of any matters arising under or in
connection with this Agreement, and consent to the jurisdiction of, the courts
of the County of Westchester, State of New York or the United States of America
for the Southern District of New York; provided, however, that any dispute
arising under Section 11.5 shall be submitted solely to the courts of the United
States of America for the Southern District of New York.
Section 15.3. Expenses. Except as otherwise provided herein, each of the
parties hereto shall pay its own expenses in connection with this Agreement and
the transactions contemplated hereby, including without limitation any legal and
accounting fees, whether or not the transactions contemplated hereby are
consummated. The Seller Parties and the
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Purchaser shall each bear one-half of the cost of any state and local sales,
transfer, excise, value-added or other similar taxes, and all recording and
filing fees that may be imposed by reason of the sale, transfer, assignment and
delivery of the Purchased Property.
Section 15.4. Broker's and Finder's Fees. Except as set forth on Schedule
15.4, each of the parties represents and warrants that it has dealt with no
broker or finder in connection with any of the transactions contemplated by this
Agreement and, insofar as it knows, no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions.
Section 15.5 Access to Records.
(a) For a period of five years after the date hereof (or the earlier
termination of this Agreement), the Seller Parties shall have reasonable access
to all of the books and records of the Diagnostics Business with respect to
periods prior to the Closing Date that are held by the Purchaser to the extent
that such access may reasonably be required by the Seller Parties in connection
with matters relating to or affected by the operations of the Diagnostics
Business prior to the Closing Date. The Purchaser shall afford such access upon
receipt of reasonable advance notice and during normal business hours. The
Purchaser shall permit the Seller Parties to make copies of such books and
records at the Seller Parties' expense. Notwithstanding the foregoing and the
consummation of the transactions contemplated hereby, the Seller Parties may
retain copies of certain financial and personnel records and files with the
written consent of Purchaser (which consent shall not be unreasonably withheld).
The Seller Parties shall be solely responsible for any costs or expenses
incurred by it pursuant to this Section 15.5. If the Purchaser shall desire to
dispose of any of such books and records prior to the expiration of such
three-year period, the Purchaser shall, prior to such disposition, give the
Seller Parties a reasonable opportunity, at the Seller Parties' expense, to
segregate and remove such books and records as the Seller Parties may elect; and
(b) For a period of five years after the date hereof, the Purchaser
shall have reasonable access to all of the books and records relating to the
Diagnostics Business which the Seller Parties may retain after the Closing Date.
Such access shall be afforded by the Seller Parties upon receipt of reasonable
advance notice and during normal business hours. The Seller Parties shall permit
the Purchaser to make copies of such books and records at the Purchaser's
expense. The Purchaser shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section 15.5. If the Seller Parties shall desire
to dispose of any of such books and records prior to the expiration of such
five-year period, the Seller Parties shall, prior to such disposition, give the
Purchaser a reasonable opportunity, at the Purchaser's expense, to segregate and
remove such books and records as the Purchaser may elect.
Section 15.6. Survival. All representations and warranties and agreements
made by the parties hereto in this Agreement or pursuant hereto shall survive
the Closing hereunder and any investigation at any time made by or on behalf of
the Purchaser or the Seller Parties, provided, that the Purchaser shall not
commence any action against the Seller Parties in respect
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<PAGE> 46
of any provision of this Agreement at any time more than 24 months after the
Closing Date except:
(i) with respect to a breach of the representations and warranties
under Section 5.9 or with respect to the Seller Parties' indemnification
obligations under Section 11.1(c), as to which the only limitations shall be
those provided by applicable statutes of limitation;
(ii) with respect to a breach of the representations and warranties
under Sections 5.13, 5.27 or 5.28 or with respect to the Seller Parties'
indemnification obligations under Section 11.1(d), in which case such time limit
shall extend for 60 months after the Closing Date; or
(iii) with respect to a breach of the representations and warranties
under Section 5.29 or with respect to the Seller Parties' indemnification
obligations under Section 11.1(e), in which case such time limit shall extend
until July 1, 2000.
Section 15.7. Severability. In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be null,
void or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in full
force and effect.
Section 15.8. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given; (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission;
(iii) on the day after delivery to Federal Express or similar overnight courier
or the Express Mail service maintained by the United States Postal Service; or
(iv) on the fifth day after mailing, if mailed to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:
If to the Seller Parties: With a copy to:
OSI Pharmaceuticals, Inc. Squadron, Ellenoff, Plesent &
106 Charles Lindbergh Blvd. Sheinfeld, LLP
Uniondale, New York 11553 551 Fifth Avenue
Attn: Colin Goddard, Ph.D., New York, NY 10176
President and CEO Attn: Barbara A. Wood, Esq.
Telecopier No.: 516.222.0114 Telecopier No.: 212.697.6686
If to the Purchaser: With a copy to:
Bayer Corporation/Diagnostics Division Bayer Corporation/Diagnostics Division
511 Benedict Avenue 511 Benedict Avenue
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<PAGE> 47
Tarrytown, NY 10591-5097 Tarrytown, NY 10591-5097
Attn: Group Licensing, Alliances and Attn: Law and Patents
New Business Development Telecopier No.: 914.524.3594
Telecopier No.: 914.524.3693
Any party may change its address for the purpose of this Section by giving
the other party written notice of its new address in the manner set forth above.
Section 15.9. Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as further or continuing
waiver of any such condition, or of the breach of any other provision, term,
covenant, representation or warranty of this Agreement.
Section 15.10. Public Announcements. The parties agree that neither party
shall make any press release or public announcement concerning this transaction
without the prior written approval of the other party, which approval shall not
unreasonably be withheld, unless in the written opinion of counsel to the
disclosing party, addressed to the Purchaser, such press release or public
announcement is required by law. If any such announcement or other disclosure is
determined to be required by law, the disclosing party agrees to give the
nondisclosing party prior notice and an opportunity to comment on the proposed
disclosure and to obtain the nondisclosing party's prior written approval of the
proposed disclosure.
Section 15.11. Entire Agreement. This Agreement and the Ancillary
Agreements contain the entire understanding between the parties hereto with
respect to the transactions contemplated hereby and supersede and replace all
prior and contemporaneous agreements and understandings, oral or written, with
regard to such transactions. All schedules hereto and any documents and
instruments delivered pursuant to any provision hereof are expressly made a part
of this Agreement as fully as though completely set forth herein.
Section 15.12. Parties in Interest. Nothing in this Agreement is intended
to confer any rights or remedies under or by reason of this Agreement on any
persons other than the Seller Parties, the Purchaser, and their respective
successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligations or liability of any third persons to the
Seller Parties or the Purchaser. No provision of this Agreement shall give any
third persons any right of subrogation or action over or against the Seller
Parties or the Purchaser.
Section 15.13. Section and Paragraph Headings. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
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<PAGE> 48
Section 15.14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
Section 15.15. Termination of Collaboration Agreement. Upon the
consummation at the Closing of the transactions contemplated hereunder, the
Collaborative Research and License Agreement between the Purchaser and OSIP,
effective January 1, 1997, as amended on November 2, 1999 (the "COLLABORATION
AGREEMENT"), shall terminate, subject to Section 10.6 of the Collaboration
Agreement (relating to the survival of certain rights and obligations of the
parties thereto following termination of the Collaboration Agreement).
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 49
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
OSI PHARMACEUTICALS, INC.
By: /s/
Name: Colin Goddard
Title: President and CEO
ONCOGENE SCIENCE DIAGNOSTICS, INC.
By: /s/
Name: Robert L. Van Nostrand
Title: Vice President
BAYER CORPORATION
By: /s/
Name: Rolf Classon
Title: Executive Vice President,
President - Diagnostics Div.
-48-
<PAGE> 50
EXHIBITS
EXHIBIT A FORM OF CAMBRIDGE ASSIGNMENT OF LEASE
EXHIBIT B FORMS OF EXECUTIVE EMPLOYMENT AGREEMENTS
EXHIBIT C FORM OF PATENT ASSIGNMENT
EXHIBIT D FORM OF PATENT LICENSE AGREEMENT
EXHIBIT E FORM OF TRANSITION SERVICES AGREEMENT
SCHEDULES
<TABLE>
<S> <C>
Schedule 1.0 Research Products Being Commercialized
Schedule 2.1(b) Contracts Not Being Assigned
Schedule 3.4 Allocation of Purchase Price
Schedule 5.4 Agreements and Contracts that Are Not Assignable Upon
Closing of this Agreement
Schedule 5.5 All Consents, Waivers, Authorizations and Approvals Required
in Connection with Execution, Delivery and Performance of
Asset Purchase Agreement by the Seller Parties
Schedule 5.6 Liens
Schedule 5.7 Financial Data
Schedule 5.8 Material Changes or Events
Schedule 5.10 Warranties on Products
Schedule 5.11(c) Cambridge Lease Exceptions
Schedule 5.12 Equipment and Machinery
Schedule 5.13(a) Intellectual Property
Schedule 5.13(b) Intangible Assets
Schedule 5.14 Licenses and Permits
Schedule 5.16 Litigation
Schedule 5.17 Principal Assumed Contracts
Schedule 5.18 Prepaid Expenses
Schedule 5.19 Inventory
Schedule 5.20 Cell Lines: Biological Materials
Schedule 5.21 Benefit Plans of the Seller Parties
Schedule 5.23 Principal Customers, Suppliers, Distributors and Sales Agents
Schedule 5.25 Labor Matters; Employment Agreements
Schedule 5.27 Environmental Matters
Schedule 5.28 Oral Collaboration Agreements
Schedule 5.29 Year 2000 Compliance
Schedule 7.7 Restrictive Covenants
Schedule 7.8 Financial Procedures
Schedule 9.1 Transferred Employees
Schedule 13.3 Consents Required as a Condition to the Purchaser's Obligation
to Close
Schedule 15.4 Broker's and Finder's Fees
</TABLE>
-49-
<PAGE> 1
EXHIBIT 2.2
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT is dated as of November
30, 1999 among OSI PHARMACEUTICALS, INC., a Delaware corporation, ONCOGENE
SCIENCE DIAGNOSTICS, INC., a Delaware corporation, and BAYER CORPORATION, an
Indiana corporation.
PREAMBLE
A. The parties entered into an Asset Purchase Agreement dated as of November
17, 1999 (the "APA"). All capitalized terms used herein have the meanings
assigned thereto in the APA.
B. The obligations of the Purchaser to consummate the transactions
contemplated by the APA are subject to the fulfillment of, among other
conditions, the obtaining of the consents listed on Schedule 13.3 to the
APA (the "Consents").
C. The parties required to provide certain of the Consents require, as a
condition to providing such Consents, that the Purchaser undertake
obligations or otherwise commit to a course of action not contemplated
under the APA or the terms of the existing contracts with such parties.
Purchaser is prepared to agree to such conditions, provided that the
Seller Parties enter into this Amendment No. 1 to the APA.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, and intending to be legally
bound hereby, the parties agree as follows:
1. The Finsen Lab.
(a) In connection with the Consent to be obtained from
Cancerforskningfondet af 1989 (the "Foundation"), OSIP and the Purchaser
requested, inter alia, that the Foundation agree to Sections 3(c) and 4 in the
attached Exhibit A. The Consent ultimately obtained from the Foundation set
forth that the Foundation will negotiate said Section 3(c) with the Purchaser
after the Closing under the APA and deleted said Section 4 entirely.
(b) The parties hereby agree that the Purchaser shall defer payment
of $250,000 of the Purchase Price until the Foundation and the Purchaser have
agreed in writing
<PAGE> 2
to terms and conditions, satisfactory to Purchaser in its sole discretion,
relating to the subject matter set forth in said Sections 3(c) and 4. Purchaser
agrees to exercise reasonable diligence to reach such agreement. Promptly
following the execution of such written agreement, Purchaser shall pay to the
Seller Parties the $250,000 in cash deferred hereunder; provided, however, that
the Purchase Price shall be permanently reduced by $250,000 if the Purchaser and
the Foundation do not reach such agreement prior to December 31, 2000.
2. Cambridge Assignment of Lease. Under the Cambridge Assignment of Lease,
Purchaser may be obligated to discharge certain Excluded Liabilities arising
under the Cambridge Lease. In connection therewith, the parties hereby agree
that the limitations provided for in Section 11.4(a) of the APA shall not apply
to any of the Seller Parties' indemnification obligations with respect to such
Excluded Liabilities. Nothing contained in the Cambridge Assignment of Lease
shall be deemed to amend, modify or restate the obligations of the Seller
Parties and Purchaser to each other under Article 11 of the APA.
3. Effect of Amendment. All other provisions of the APA shall remain in
full force and effect.
<PAGE> 3
SIGNATURE PAGE TO AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
WITNESS the due execution hereof as of the date and year first above
written.
OSI PHARMACEUTICALS, INC.
By /s/
-----------------------------------
Title
--------------------------------
ONCOGENE SCIENCE DIAGNOSTICS, INC.
By /s/
-----------------------------------
Title
--------------------------------
BAYER CORPORATION
By /s/
-----------------------------------
Title
--------------------------------
<PAGE> 1
EXHIBIT 99.1
OSI PHARMACEUTICALS, INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
<TABLE>
<CAPTION>
June 30, 1999 Pro Forma June 30, 1999
Actual Adjustments(1) Pro Forma
------------- ---------------- -------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 10,497,363 $ 8,420,000(2) $ 18,917,363
Short-term investments 10,589,676 10,589,676
Receivables including trade receivables 2,300,993 2,300,993
Prepaid and other current assets 1,267,730 1,267,730
------------- -------------
Total current assets 24,655,762 33,075,762
Property, equipment and leasehold improvements - net 7,499,727 (683,000)(3) 6,816,727
Compound library assets - net 4,313,901 4,313,901
Other assets-net 1,351,512 1,351,512
Intangible assets-net 6,628,446 (5,068,000)(4) 1,560,446
------------- -------------
Total assets $ 44,449,348 $ 47,118,348
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 3,605,902 (58,000)(5) $ 3,547,902
Unearned revenue - current 982,196 (382,000)(6) 600,196
Loans payable - current 166,656 166,656
------------- -------------
Total current liabilities 4,754,754 4,314,754
Unearned revenue - long term 428,571 428,571
Loans payable - long term 319,140 319,140
Deferred acquisition costs 701,007 701,007
Accrued postretirement benefits cost 1,499,267 (160,000)(7) 1,339,267
------------- -------------
Total liabilities 7,702,739 7,102,739
Stockholders' equity:
Preferred stock -- --
Common stock 223,684 223,684
Additional paid-in capital 105,049,815 105,049,815
Accumulated deficit (62,202,589) 3,269,000(8) (58,933,589)
Accumulated other comprehensive loss (266,599) (266,599)
Treasury stock (6,057,702) (6,057,702)
------------- -------------
Total stockholders' equity 36,746,609 40,015,609
------------- -------------
Commitments and contingencies
$ 44,449,348 $ 47,118,348
============= =============
</TABLE>
<PAGE> 2
OSI PHARMACEUTICALS, INC.
Unaudited Pro Forma Condensed Combined Statements of Operations
<TABLE>
<CAPTION>
June 30, 1999 Pro Forma June 30, 1999
Actual Adjustments(9) Pro Forma
------------- --------------- -------------
<S> <C> <C> <C>
Revenues:
Collaborative program revenues, principally from related parties $ 12,600,139 (1,208,000)(10) $ 11,392,139
Sales 915,608 (201,000)(11) 714,608
Other research revenue 814,203 814,203
License revenue 2,171,016 2,171,016
------------ ------------
16,500,966 15,091,966
Expenses:
Research and development 14,765,720 (915,000)(12) 13,850,720
Production and service costs 1,239,443 (502,000)(13) 737,443
Selling, general and administrative 6,363,907 (207,000)(14) 6,156,907
Amortization of intangibles 1,095,555 (575,000)(15) 520,555
------------ ------------
23,464,625 21,265,625
Loss from operations (6,963,659) (6,173,659)
Net other income 603,251 250,000(16) 853,251
------------ ------------
Net loss $ (6,360,408) $ (5,320,408)
============ ============
Basic and diluted net loss per weighted average share of common
stock outstanding $ (0.30) $ (0.25)
Shares used in calculation of basic and diluted net loss per share 21,430,958 21,430,958
</TABLE>
<PAGE> 3
OSI PHARMACEUTICALS, INC.
Unaudited Pro Forma Condensed Combined Statements of Operations
<TABLE>
<CAPTION>
September 30, 1998 Pro Forma September 30, 1998
Actual Adjustments(9) Pro Forma
------------------ -------------- ------------------
<S> <C> <C> <C>
Revenues:
Collaborative program revenues, principally from related parties $ 16,165,613 (1,600,000)(10) $ 14,565,613
Sales 1,121,449 (130,000)(11) 991,449
Other research revenue 1,428,853 1,428,853
License revenue 752,422 752,422
------------ ------------
19,468,337 17,738,337
Expenses:
Research and development 19,877,339 (1,665,000)(12) 18,212,339
Production and service costs 813,464 (328,000)(13) 485,464
Selling, general and administrative 8,691,386 (45,000)(14) 8,646,386
Amortization of intangibles 1,460,740 (767,000)(15) 693,740
------------ ------------
30,842,929 28,037,929
Loss from operations (11,374,592) (10,299,592)
Net other income 1,190,124 335,000(16) 1,525,124
------------ ------------
Net loss $(10,184,468) $ (8,774,468)
============ ============
Basic and diluted net loss per weighted average share of common
stock outstanding $ (0.48) $ (0.41)
Shares used in calculation of basic and diluted net loss per share 21,372,655 21,372,655
</TABLE>
<PAGE> 4
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
(1) All pro forma information contained in the June 30, 1999 balance sheet
assumes that the asset sale by the Company to Bayer occurred on June
30, 1999.
(2) This adjustment represents the cash received in connection with the
asset sale to Bayer, net of direct disposition costs of $730,000 and
amounts withheld by Bayer for OSI liabilities assumed by Bayer of
$600,000.
(3) This adjustment represents the net book value of the fixed assets that
were purchased by Bayer.
(4) This adjustment represents the net book value of the intellectual
property assets (capitalized patent costs) that were purchased by
Bayer.
(5) This adjustment represents the accrued vacation costs assumed by Bayer.
(6) This adjustment represents the deferred revenue obligation under the
Fujirebio collaboration that was assumed by Bayer.
(7) This adjustment represents the post retirement liability assumed by
Bayer.
(8) This adjustment represents the gain on the net assets sold to Bayer.
The gain on the sale of the assets has been excluded from the
accompanying pro forma condensed combined statements of operations
since the gain is non-recurring.
(9) All pro forma information presented for the nine months ended June 30,
1999 and for the year ended September 30, 1998 assumes that the asset
sale to Bayer was completed on October 1, 1997.
(10) This adjustment reflects the loss of revenue that would have resulted
had the Company consummated the asset sale to Bayer on October 1, 1997,
related to the research collaborations with Bayer and Fujirebio.
(11) This adjustment reflects the loss of revenue from diagnostic sales that
would have resulted had the Company consummated the asset sale to Bayer
on October 1, 1997.
(12) This adjustment represents the reduction of research and development
expenses that would have resulted if the Company consummated the asset
sale on October 1, 1997.
(13) This adjustment represents the reduction of diagnostic manufacturing
costs that would have resulted if the Company consummated the asset
sale on October 1, 1997.
(14) This adjustment represents the reduction of administrative costs that
would have resulted if the Company consummated the asset sale on
October 1, 1997.
(15) This adjustment represents the reduction of patent amortization that
would have resulted if the Company consummated the asset sale on
October 1, 1997.
(16) Assumes investment earnings on net proceeds received based on 4% per
annum.
<PAGE> 1
EXHIBIT 99.2
BAYER TO ACQUIRE OSI PHARMACEUTICALS'
DIAGNOSTICS BUSINESS
UNIONDALE, N.Y., Nov. 18 /PRNewswire/ -- OSI Pharmaceuticals, Inc.
(Nasdaq: ) today announced that the company has signed an agreement under which
Bayer Corporation will acquire the assets of OSI's diagnostics business,
including the assets of OSI's wholly owned diagnostics subsidiary, Oncogene
Science Diagnostics (OSDI), based in Cambridge, MA. Under the terms of the
agreement, OSI will receive $10 million up-front from Bayer for the acquisition
of OSDI, with an additional payment of $1 million to be made to OSI by 2001.
Bayer intends to retain all employees of OSDI and will maintain the unit's
headquarters in Cambridge.
"Over the past year, we have made substantial progress in our core drug
discovery and development programs, and we anticipate further acceleration of
these and other efforts in the near term," commented Colin Goddard, Ph.D.,
President and Chief Executive Officer of OSI Pharmaceuticals, Inc. "Our
strategic decision to sell our diagnostics business to Bayer is based on our
belief that the growth of this business would require significant continued
investment by OSI that could otherwise be focused in these drug discovery and
development programs."
Dr. Goddard continued, "We are proud of our accomplishments in our
collaborative relationship with Bayer since 1997, which have included the
development of a diagnostic test for the breast cancer marker HER-2/neu, which
is currently marketed abroad."
"This acquisition is a key part of our strategy to become the world leader
in cancer diagnostics," said Rolf Classon, President of Bayer Diagnostics.
"Early identification of tumor markers is key for cancer diagnostics, and
acquiring OSI's diagnostics business provides Bayer access to impressive
intellectual property in this area. The clinical research capabilities that we
are acquiring are the ideal compliment to our expertise in commercializing
assays across testing platforms."
Oncogene Science Diagnostics is engaged in the development of a series of
cancer diagnostic tests based on oncogenes, tumor suppressor genes and other
gene targets whose proteins are directly involved in tumor growth or metastasis.
These tests are designed to aid oncologists in the confirmation, monitoring,
staging, screening or prognosis of human cancer.
Headquartered in Tarrytown, New York, Bayer Diagnostics
(http://www.bayerdiag.com) is one of the largest diagnostics companies in the
world. The company serves customers in 100 countries with an offering that
includes diagnostics systems in five key segments: Critical Care Testing,
Laboratory Testing, Point of Care Testing, Nucleic Acid Testing and
Self-Testing. With more than 7,500 employees worldwide and 1998 sales of close
to $1.2 billion, Bayer Diagnostics is a Business Group of the worldwide Bayer
Group, a $31 billion chemical and
<PAGE> 2
pharmaceutical company based in Leverkusen, Germany.
OSI Pharmaceuticals is a leading drug discovery company with a substantial
pipeline of product opportunities for commercialization with the pharmaceutical
industry. OSI's research programs are focused in the areas of cancer
therapeutics, cosmeceuticals, diabetes, and GPCR-directed drug discovery. OSI
utilizes a comprehensive drug discovery and development capability to facilitate
the rapid and cost-effective discovery and development of novel, small molecule
compounds in more than 40 research and development programs. OSI is involved in
long-term research alliances with Pfizer, Tanabe, Novartis, Hoechst Marion
Roussel, Sankyo, Solvay, and Bayer.
This news release contains forward-looking statements. These statements
are subject to known and unknown risks and uncertainties that may cause actual
future experience and results to differ materially from the statements made.
Factors that might cause such a difference include, among others, uncertainties
related to the identification of lead compounds, the successful pre-clinical
development thereof, the completion of clinical trials, the FDA review process
and other governmental regulation, pharmaceutical collaborators' ability to
successfully develop and commercialize drug candidates, competition from other
pharmaceutical companies, product pricing and third party reimbursement, and
other factors described in OSI Pharmaceuticals' filings with the Securities and
Exchange Commission.
For additional information on OSI Pharmaceuticals,
please visit OSI's website at:
http://www.osip.com
###
