Page 5 of 5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of report (Date of earliest event reported): May 2, 2000
ALPHARMA INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8593 22-2095212
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification Number)
Incorporation)
One Executive Drive Fort Lee, New Jersey 07024
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code:(201)947-7774
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
On May 2, 2000, Alpharma completed the acquisition of the
Medicated Feed Additive Business of Roche ("MFA") for a cash
payment of approximately $258 million and issuance of a $30
million promissory note to Roche. The promissory note is due
December 31, 2000 and will bear interest at the prime rate. The
purchase price will be adjusted based on actual product
inventories as of May 2, 2000. In addition, certain international
inventories will be purchased from Roche during a transition
period of approximately three months. These inventories are
estimated at approximately $10 million.
The MFA business had 1999 sales of over $200 million and consists
of products used in the livestock and poultry industries for
preventing and treating diseases in animals. MFA sales by region
are approximately 56% in North America, 20% in Europe and 12% in
both Latin America and Southeast Asia.
The acquisition includes inventories, five manufacturing and
formulation sites in the United States (two of which will be
operated by Roche until third party consents are received),
global product registrations, licenses, trademarks and associated
intellectual property. Approximately 200 employees primarily in
manufacturing and sales and marketing are included in the
acquisition.
The Company financed the $258 million cash payment under a $225
million bridge financing agreement ("Bridge Financing") with the
balance of the financing being provided under its current $300
million credit facility ("1999 Credit Facility").
The Bridge Financing was arranged by First Union National Bank,
Union Bank of Norway, and a group of other banks. It has an
initial term of 90 days; extendable up to two additional 30 day
periods at the option of the bank group if the Company is in the
active process of refinancing. The Bridge Financing is guaranteed
by substantially all of the Company's U.S. subsidiaries and the
stock in substantially all of the Company's U.S. subsidiaries has
been pledged to the banks.
Under the Bridge Financing the Company has paid a 1% fee for the
banks' commitment and in connection with drawing the funds.
Interest is payable at Libor plus 2.75% to 3.00%.
If the Bridge Financing is not repaid at the end of its term, the
facility will convert to a senior secured facility that will
amortize over the remaining term of the 1999 Facility and be
secured by substantially all of the assets of the Company and its
U.S. subsidiaries. All collateral under the senior secured
facility will be held equally as security for the payment of the
1999 Credit Facility.
The bridge financing agreement and two amendments to the 1999
Credit Facility will be filed with the Form 10-Q for the quarter
ended March 31, 2000. The complete 1999 Credit Facility has
previously been filed with the Securities and Exchange
Commission. Both documents include the names of banks
participating therein.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(a) Financial Statements of Acquired Assets and Business
(i) Independent Auditors' Report (F-2)
(ii) Roche Holding Ltd. Combined Statement of Assets to be
Sold and of Revenues and Direct Operating Expenses of
the MFA Business as of December 31, 1999 and for the
year then ended. (F-1 to F-11).
(b) Pro Forma Financial Information.
i) Alpharma Inc. Unaudited Pro Forma Condensed Combined Balance
Sheet as of December 31, 1999 (F-13).
ii) Alpharma Inc. Unaudited Pro Forma Condensed Combined
Statement of Income for the year ended December 31, 1999 (F-14).
iii) Notes to Unaudited Pro Forma Condensed Combined Financial
Statements (F-15 to F-19).
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of April 19, 2000
among Roche Vitamins Inc. (RVI) and F.Hoffman-La Roche Ltd.
(Roche Basle) (collectively, Sellers) and Alpharma Inc. and
Alpharma (Luxembourg) SARL (collectively, Buyers).
23.1 Consent of PricewaterhouseCoopers AG
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ALPHARMA INC.
By: \s\ Jeffrey E. Smith
Jeffrey E. Smith
Executive Vice President
and Chief Financial
Officer
Date: May 5, 2000
Roche Holding LTD. and its subsidiaries
Combined Statement of Assets to be Sold
and of Revenues and Direct Operating Expenses
of the MFA Business
as of December 31, 1999
and for the year then ended
Board of Directors
Roche Holding Ltd. and its subsidiaries
4070 Basel
March 31, 2000
Report of Independent Accountants
We have audited the accompanying combined statement of
assets to be sold and combined statement of revenues
and direct operating expenses of the Roche MFA
business (the "Statements") as of December 31, 1999
and for the year then ended. These Statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these
Statements based upon our audit.
We conducted our audit in accordance with auditing
standards generally accepted in the United States.
Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the
Statements are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
Statements. An audit also includes assessing the
accounting principles used and significant estimates
made by management, as well as evaluating the overall
Statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying Statements were prepared to present
the assets to be sold and the revenues and direct
operating expenses of the MFA business subject to a
potential sale transaction as described in Note 1, and
are not intended to be a complete presentation of the
Roche MFA business' financial position and results of
operations.
In our opinion, the Statements referred to above
present fairly, in all material respects, the combined
assets to be sold and the revenues and direct
operating expenses as of December 31, 1999 and the
year then ended, in conformity with accounting
principles generally accepted in the United States.
PricewaterhouseCoopers AG
Basel, Switzerland
Ralph R Reinertsen Dana Bultman
December 31,
1999
ASSETS TO BE SOLD
Inventories $ 39,950
Property, plant and equipment, net 94,631
Goodwill and other intangibles, net 97,674
Total assets to be sold $ 232,255
See accompanying notes to combined statements.
Year ended
December 31, 1999
Net revenues $ 213,614
Cost of revenues, including
distribution cost of $6,775 152,708
Gross profit 60,906
Direct and related expenses:
Marketing 47,297
Research and development 11,160
Administration 7,228
Amortization 18,610
Other operating expense 344
Operating loss (23,733)
Foreign currency exchange
gains and losses 33
Other non-operating (income)
expense, net 7
Loss before interest and taxes $ (23,773)
See accompanying notes to combined statements.
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
The combined statements of assets to be sold and of revenues
and direct operating expenses as of December 31, 1999 and for
the year then ended have been prepared for the purpose of
selling the Medicated Feed Additives (MFA) business. The MFA
business is a fully integrated business unit of the Roche
Group ("Roche"), consisting of Roche Holding AG and its
subsidiaries. The business produces Medicated Feed Additives
(MFAs) used by food producers (livestock, poultry and
aquaculture) for the purpose of treating or preventing
disease in animals, or for promoting more efficient growth.
As an integrated business unit of Roche, the business relies
on Roche and other Roche affiliates to provide administration
management and other services including, but not limited to,
management information systems, accounting and financial
reporting, treasury, cash management, human resources,
employee benefit administration, payroll, legal and certain
other support. Costs for such services are charged by Roche
directly to the operating units utilizing such services.
However, these costs may not be indicative of costs that
would have been incurred had the MFA business operated
autonomously or as an entity independent of Roche.
MFA Assets to be Sold
The MFA assets to be sold do not include trade receivables
and payables and certain other assets and liabilities related
to the operation of the MFA Business prior to closing. Also,
the MFA assets to be sold exclude certain assets related to
the Lasolocid product line. In addition, the MFA business
may enter into certain supply contracts with Roche related to
Lasalocid.
Principles of Combination
The MFA business, as an integrated business unit of the Roche
Group Vitamins and Fine Chemicals division, does not prepare
separate financial statements in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP") in the
normal course of operations. Accordingly, the accompanying
combined statements of assets to be sold and of revenues and
direct operating expenses have been derived by extracting the
assets, revenues and expenses of the MFA business from the
consolidated assets, revenues and expenses and the accounting
records of Roche.
The accompanying combined statements reflect the assets to be
sold and revenues and expenses directly attributable to the
MFA business as well as allocations deemed reasonable by
Roche management to present the financial position and
results of operations of the MFA business on a stand alone
basis (the "Combined Statements"). Although Roche management
is unable to estimate the actual costs that would have been
incurred if the services performed by Roche had been
purchased from independent third parties, the allocation
methodologies have been described within the respective
footnotes, where appropriate, and Roche management considers
the allocations to be reasonable. However, the financial
position and the revenues and direct operating expenses of
the MFA business may differ from those that may have been
achieved had the MFA business operated autonomously or as an
entity independent of Roche.
All significant intercompany accounts and transactions
between MFA business entities have been eliminated.
Basis of Presentation
The Combined Statements of the MFA business have been
prepared in accordance with accounting principles generally
accepted in the United States.
Revenue Recognition
Sales revenue is recognized upon shipment of products to
customers after deducting volume discounts and sales taxes.
Net revenues have been adjusted for sales returns and
allowances.
Operating Expenses
Operating expenses of the MFA business include payroll and
other expenses relating to cost of sales, marketing,
distribution, research and development, amortization of
intangibles, and operations as well as charges from Roche for
certain common support costs such as accounting, financial
management, legal, information systems, human resources,
employee benefits and support services. Charges for common
costs from Roche have been determined on bases that Roche
consider to be reasonable. Such methods included sales,
headcount and others.
Cost of Goods Sold
Cost of goods sold includes the corresponding direct
production costs and related production overhead of goods
manufactured and services rendered. Manufacturing site costs
specifically related to MFA products are included in cost of
goods sold. Certain Roche costs for international logistics
have been charged to the MFA business based on relative
production costs and the relative degree to which management
efforts are expended.
Research and Development
Research and development costs are charged against income as
incurred, with the exception of buildings and major items of
equipment, which are capitalized and depreciated. The
expenses for research and development included in these
financial statements relate to projects specific to the MFA
business.
Inventories
Inventories are stated at the lower of cost or net realizable
value. Provision is made for slow-moving goods and obsolete
materials are written off. Cost is determined primarily by
the last-in, first-out (LIFO) method for all inventories in
the United States. Other inventories are stated at the lower
of cost or market determined by the first-in, first-out
(FIFO) method.
Property, Plant and Equipment
Property, plant and equipment are stated at historical cost,
net of accumulated depreciation. These assets are initially
recorded at cost, which includes interest costs attributable
to and incurred during an asset's construction period.
Depreciation is computed using the straight-line method over
the estimated useful lives or lease terms, if shorter.
Estimated useful lives of major classes of depreciable assets
are as follows:
Land improvements and buildings 40 years
Machinery and equipment 5 to 15 years
Office equipment 3 years
Motor vehicles 5 years
The costs of major renewals and betterments, which extend the
useful lives of assets, are capitalized. The costs of
maintenance, repairs and minor equipment items are charged to
operations as incurred. Upon sale or other dispositions of
property, plant and equipment, the cost and related
accumulated depreciation are removed from the accounts and
any gain or loss is recorded in the income statement.
Intangible Assets
The excess of the cost over the fair value of net assets
acquired including identifiable intangible assets of
purchased businesses has been allocated to goodwill. Other
intangible assets include acquired intellectual property
(including patents, technology and know-how), trademarks,
licenses, and other similarly identifiable rights and are
recorded at their acquisition cost. Intangible assets and
goodwill are amortized using the straight-line method over
their estimated economic lives for a period not exceeding 20
years from the date of acquisition.
Long-lived Assets
The MFA business periodically evaluates the recoverability of
the carrying amount of long-lived assets (including property,
plant and equipment, goodwill and other intangible assets)
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable.
Impairment is assessed when the undiscounted expected future
cash flows derived from an asset are less than its carrying
amount. Impairment losses are recognized in operating income
to the extent that an impaired asset's carrying amount
exceeds its fair value.
Management Estimates and Assumptions
The preparation of the combined statements requires
management to make estimates and assumptions that affect the
reported amounts of assets to be sold, disclosure of
contingent assets at the date of the statements and reported
amounts of revenues and direct operating expenses during the
reporting period. If in the future such estimates and
assumptions, which were based on Roche management's best
judgment at the date of the financial statements, deviate
from the actual circumstances, the original estimates and
assumptions will be modified as appropriate in the year that
the circumstances change.
2. INVENTORIES
Inventories to be sold consisted of the following at
December 31, 1999:
Raw materials and supplies $ 4,217
Work in process 275
Finished goods 42,110
Other inventories 1,617
Total inventories to be sold, at cost 48,219
Less allowance for obsolete
inventories (768)
Less excess of cost over LIFO cost (7,501)
Total inventories to be sold, net $ 39,950
Inventories are stated at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for
approximately 63% of the MFA business's inventories and by the
first-in, first-out (FIFO) method for all other inventories. The
FIFO method approximates current cost. During 1999, LIFO
inventory quantities were reduced resulting in a partial
liquidation of the LIFO bases, the effect of which increased net
earnings by approximately $1,394.
The MFA assets to be sold exclude Lasalocid raw materials and
work-in-process. Therefore, these amounts have been excluded
from the above inventories to be sold.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment to be sold consisted of the
following at December 31, 1999:
Land $ 495
Buildings 16,040
Machinery, equipment and fixtures 82,050
Uncompleted capital projects 20,202
Property, plant and equipment
to be sold, at cost 118,787
Less accumulated depreciation (24,156)
Property, plant and equipment
to be sold, net $ 94,631
Total depreciation expense was $10,197, of which $5,225
represents depreciation on assets to be sold. Interest expense
of $433 incurred in 1999 has been capitalized as part of the cost
of property, plant and equipment and is depreciated over the
useful lives of the related assets.
The MFA assets to be sold exclude the Lasalocid manufacturing
facilities in Belvidere, New Jersey, blending facilities located
in Fresno, California; Sisseln, Switzerland; and Sao Paulo,
Brazil, and packaging facilities located at Istituto delle
Vitamine in Milan, Italy. Therefore, these amounts are excluded
from the above property plant and equipment to be sold.
4. GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangibles to be sold consisted of the
following at December 31, 1999:
Goodwill $ 94,353
Patents, licenses and trademarks 110,354
Goodwill and other intangibles
to be sold, at cost 204,707
Less accumulated amortization (107,033)
Goodwill and other intangibles
to be sold, net $ 97,674
5. RELATED PARTY TRANSACTIONS
The MFA business purchased various materials and other
products from related Roche entities approximating $317 in
1999. The MFA business sold certain products to other Roche
entities for blending with other Roche vitamins products for
sale to customers. Net revenues include only revenues
related to the MFA products and not any other Roche products
blended for sales to third parties.
6. COMMITMENTS
The MFA business leases various office facilities, vehicles,
telephone and data processing equipment.
Minimum future rental commitments under non-cancelable
operating leases having an initial or remaining term in
excess of one year as of December 31, 1999 are as follows:
2000 $ 10,078
2001 10,039
2002 10,019
2003 10,013
2004 and thereafter 10,013
Total minimum rental
payments $ 50,162
See "MFA Assets to be Sold" in note 1 above.
7. CONTINGENCIES AND LEGAL PROCEEDINGS
The operations and earnings of the MFA business continue,
from time to time and in varying degrees, to be affected by
political, legislative, fiscal and regulatory developments,
including those relating to environmental protection. The
industries in which the MFA business is engaged are also
subject to physical risks of various kinds. The nature and
frequency of these developments and events, not all of which
are covered by insurance, as well as their effect on future
operations and earnings are not predictable.
ALPHARMA INC.
Index to Unaudited Pro Forma
Condensed Combined Financial Statements
Unaudited Pro Forma Condensed Combined
Balance Sheet at December 31, 1999 F - 13
Unaudited Pro Forma Condensed Combined
Statement of Income for the Year Ended
December 31, 1999 F - 14
Notes to the Unaudited Pro Forma Condensed
Combined Financial Statements F-15 to F-19
Alpharma Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 1999
(Dollars in thousands)
Pro Forma Unaudited
Alpharma MFA Adjust- Pro Forma
Historical Historical ments Combined
ASSETS
Current assets:
Cash and cash $ 17,655 $17,655
equivalents
Accounts receivable, 199,207 199,207
net (a)
Inventories 155,338 39,950 9,500 204,788
Prepaid expenses and
other current assets 13,923 13,923
Total current 386,123 39,950 9,500 435,573
assets
Property, plant and
equipment, net 244,413 94,631 (a) 339,044
Intangible assets, net 488,958 97,674 50,865 637,497
Other assets and
deferred 45,023 45,023
charges
Total assets $1,164,517 $232,255 $60,365 $1,457,137
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of
long-term deby $ 9,111 $ 9,111
Short-term debt 4,289 4,289
Accounts payable 51,621 51,621
Accrued expenses 83,660 83,660
Accrued and deferred
income taxes 17,175 17,175
Total current
liabilities 165,856 165,856
Long-term debt: (a)
Senior 225,110 292,620 517,730
Convertible
subordinated
notes, including
$67,850 to related 366,674 366,674
party
Deferred income taxes 35,065 35,065
Other non-current
liabilities 17,208 17,208
(a)
Stockholders' equity 354,604 232,255 (232,255) 354,604
Total liabilities
and $1,164,517 $232,255 $ 60,365 $1,457,137
stockholders'
equity
See accompanying notes to the unaudited pro forma condensed
combined financial
statements.
Alpharma Inc.
Unaudited Pro Forma Condensed Combined Statement of Income
For the year ended December 31, 1999
(In thousands, except per share data)
Pro Forma Unaudited
Alpharma MFA Adjust- Pro Forma
Historical Historical ments Combined
(d)
Total revenue $742,176 $213,614 $(2,600) $953,190
(d)
Cost of sales 397,890 152,708 (2,500) 548,098
Gross profit 344,286 60,906 (100) 405,092
Selling, general
and administrative (a)(c)
expenses 244,775 84,639 (11,310) 318,104
Operating income 99,511 (23,733) 11,210 86,988
(b)
Interest expense (39,174) (29,260) (68,434)
Other income
(expense), net 1,450 (40) - 1,410
Income before
provision 61,787 (23,773) (18,050) 19,964
for income taxes
Provision for income (e)
taxes 22,236 (15,040) 7,196
Net income $39,551 $( 3,010) $ 12,768
Average common shares
outstanding:
Basic 27,745 27,745
Diluted 34,848 28,104
Earnings per share:
Basic $1.43 $0.46
Diluted $1.34 * $0.45
* Includes addback to net income for adjustments required under
the if-converted method applicable to dilution of convertible
notes.
See accompanying notes to the unaudited pro forma condensed
combined financial statements.
1. Basis of Presentation
The unaudited pro forma condensed combined financial
statements (pro forma financials) are presented for illustrative
purposes only, giving effect to the acquisition, as described and
therefore are not indicative of the operating results that might
have been achieved had the combination occurred as of an earlier
date, nor are they indicative of operating results which may
occur in the future.
On May 2, 2000 Alpharma's Animal Health Division ("AHD")
purchased the Medicated Feed Additives (MFA) business of Roche
Holdings AG and Subsidiaries ("Roche"). The MFA business was a
fully integrated business unit of Roche. The business produces
Medicated Feed Additives (MFAs) used by food producers
(livestock, poultry and aquaculture) for the purpose of treating
or preventing disease in animals, or for promoting more efficient
growth. MFAs are currently marketed in more than 100 countries.
As an integrated business unit of Roche, the business relied
on Roche to provide significant administrative management and
other services including, but not limited to, management
information systems, accounting and financial reporting,
treasury, cash management, human resources, employee benefit
administration, payroll, legal and other support. Costs for such
services were charged or allocated by Roche directly to the
operating units utilizing such services. However, these costs are
not indicative of costs that would have been incurred had the MFA
business operated autonomously or as a business within AHD.
The acquisition will be accounted for in accordance with the
purchase method. The purchase price is expected to be allocated
to the intangible assets, goodwill, inventory and plant, property
and equipment. (Plant, property and equipment includes two
facilities which will be operated by Roche until third party
consents are received.) The final allocation and actual lives to
be assigned will be determined by a professional valuation to be
completed within one year of purchase. The accompanying unaudited
pro forma condensed combined income statement reflects the
acquisition as if it occurred as of the beginning of the period
presented. A balance sheet is required since the accounts of MFA
are not included in the Company Form 10-K filed as of December
31, 1999. The financial statements of MFA, consisting of
statements of assets acquired and revenues and direct expenses,
were prepared in accordance with the accounting principles
generally accepted in the United States for inclusion in this
Form 8-K and for pro forma purposes.
The actual results of MFA will be consolidated with the
Company from the date of acquisition, May 2, 2000.
2. Pro Forma adjustments - Balance Sheet at December 31, 1999
The unaudited pro forma balance sheet gives effect to the
acquisition as if it had been consummated at December 31, 1999.
(a) To record purchase of MFA business based on a preliminary
estimate of the purchase price allocation. The purchase price
paid in cash and an issuance of a $30,000 promissory note to
Roche is calculated as follows:
Recorded as
Purchase price per
agreement $287,620
Additional estimated
direct costs of
acquisition 5,000
Purchase price assumed
borrowed $292,620 Long-term debt
Net book value of
MFA assets acquired 232,255
Amount to be allocated $ 60,365
Allocated as follows:
Record inventory at
estimated fair value 9,500 Inventory
Intangible assets/excess
of cost over net book
value* 50,865 Intangible assets
$ 60,365
* Net amount resulting from elimination of Roche historical
intangibles and establishment of Alpharma intangibles and goodwill.
3. Pro Forma adjustments - Statement of Income
The unaudited pro forma income statement assumes the
purchase as of the beginning of the period presented. The
adjustments which follow are those which are required by Article
11 of Regulation S-X. The Company believes the business will be
run as part of the AHD in a much different manner than in 1999 as
part of Roche. The resulting pro forma income statement is
therefore not indicative of the results had the business been
purchased as of the beginning of the respective period. The
required adjustments are as follows:
Year Ended
December 31,
1999
(a) Amortization of intangibles $13,000
To record amortization of
estimated intangibles based on
5 to 15 year lives and residual
goodwill based on a 20 year life.
Amortization of intangibles (18,610)
To reverse historical amortization
included in MFA financial
statements
(Net amounts are included
in selling, general and
administrative expenses.)
(b) Interest expense $29,260
To record interest expense at
10.00% on assumed average
borrowings of $292,600.
(c) Selling general and administrative (5,700)
expense
To reduce expenses for MFA
employees not assumed by AHD under
the terms of the purchase
agreement. These employees
primarily consist of sales,
regulatory, and manufacturing
personnel, whose positions were
deemed redundant due to significant
overlap of Alpharma's and MFA's
customer base. (See Note 5a)
(d) Sales (2,600)
Cost of goods sold (2,500)
To reduce sales and cost of sales
for sales made by Alpharma to MFA
in 1999.
(e) Tax benefit 15,040
To record estimated income tax
effect of pro forma adjustments
and non-tax effected financial
results of MFA. (Loss of $41,823 at
an approximate combined federal,
state and foreign rate of 36%.)
The interest rate of 10.00% used for the pro forma condensed
combined statement of income is based on the Company's financing
from Roche and the bridge financing agreement both of which bear
interest at approximately 9.00% plus debt amortization expenses
not expected to exceed 1.00%. For each 1/8% change in interest
rates interest expense would increase/decrease by approximately
$365 for a full year. No effect of refinancing the Bridge with a
combination of debt and equity has been included in the pro forma
income statement.
4. Items excluded from pro forma combined statement of income
The impact on cost of sales of the write up of inventory to
net realizable value pursuant to Accounting Principles Board
Opinion No. 16 "Business Combinations" is not reflected in the
pro forma statement of income. This non-recurring charge is
estimated at between $2,000 - $3,000 and will be reflected in
cost of sales as inventory is sold during the second and third
quarters of 2000.
In addition, certain employees of AHD will be severed as a
result of the acquisition. This will result in a non-recurring
charge of approximately $500 in the second quarter.
Under the Bridge Financing the Company has paid a 1% fee for
the banks commitment and in connection with drawing the funds.
These non-recurring fees and other related expenses will be
amortized over the term of the bridge loan.
5. Cost savings and future synergies
The Company in its evaluation of the MFA acquisition
identified significant cost savings resulting from the operation
of the business as a important part of the AHD as opposed to MFA
being a small part of the Roche organization. Cost savings and
synergies include the following:
a) Included in the pro forma statement of income.
Under the terms of the asset purchase agreement, AHD was not
obligated to offer employment to all of MFA's employees. Prior to
the closing, the Company has determined that due to the
significant overlap in sales, regulatory and production
activities of the AHD and MFA, 65 MFA employees were redundant
and are not required for the on-going conduct of the business.
These employees remained with Roche. Should Roche terminate any
of these employees, AHD will reimburse Roche for the portion of
the severance specified in the agreement. The Company estimates
$5,700 in direct salary and benefit expenses have been eliminated
as a result of this determination.
b) Not included in the pro forma statement of income.
As part of the worldwide Roche organization and the vitamins
division the MFA was allocated expenses for manufacturing,
marketing, distribution and administration in 1999 of
approximately $36,000. The Company, based on its due diligence
review of MFA, believes it can replace the allocated services by
utilizing resources already existing in its organization or by
adding incremental expenses at a significantly reduced amount.
MFA as part of Roche in 1999 engaged in discovery research
costing over $11,000 and a significant clinical study costing
approximately $6,000. The Company does not intend to actively
continue the discovery research and no employees relating to the
research will be employed by AHD. Certain development projects
will be continued by outside parties at a significantly reduced
level. The clinical study has been evaluated and will not be
continued.
The amount and timing of savings and synergies cannot be
assured. The Company estimates that the acquisition before one-
time charges for severance, inventory write up and bridge
financing fees will be neutral to slightly accretive in 2000.
_______________
Statements made in this Form 8-K, are forward-looking statements
made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Such statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those in the forward looking statements.
Information on other significant potential risks and
uncertainties not discussed herein may be found in the Company's
filings with the Securities and Exchange Commission included
under the caption "Risk Factors" in its Form 10-K for the years
ended December 31, 1999.
G
ASSET PURCHASE AGREEMENT
Dated as of
April 19, 2000
Among
ROCHE VITAMINS INC.
(RVI)
And
F.HOFFMANN-LA ROCHE LTD
(ROCHE BASLE)
(collectively, Sellers)
And
ALPHARMA INC.
And
ALPHARMA (Luxembourg) SARL
(collectively, Buyers)
Table of Contents
TABLE OF CONTENTS I
ARTICLE 1 1
DEFINITIONS 1
SECTION 1.1 DEFINITIONS 1
ARTICLE 2 5
PURCHASE AND SALE 5
SECTION 2.1 PURCHASED ASSETS
5
SECTION 2.1.1 PATENTS
6
SECTION 2.1.2 TRADEMARKS
6
SECTION 2.1.3 PRODUCT REGISTRATIONS
6
SECTION 2.1.4 THIRD PARTY CONTRACTS
7
SECTION 2.1.5 PROPERTY
7
SECTION 2.1.6 MANUFACTURING TECHNOLOGY AND KNOW-HOW
8
SECTION 2.1.7 MARKETING AND PROMOTIONAL MATERIALS
9
SECTION 2.1.8 CUSTOMER INFORMATION
9
SECTION 2.1.9 DISCOVERY RESEARCH INFORMATION
9
SECTION 2.1.10 INVENTORY
10
SECTION 2.1.11INSTRUMENTS AND CHOSES IN ACTION AND CUSTOME
R ADVANCES10
SECTION 2.1.12 PREPAID EXPENSES
10
SECTION 2.1.13 BOOKS AND RECORDS
10
SECTION 2.2 EXCLUDED ASSETS
11
SECTION 2.3 ASSUMPTION OF LIABILITIES
12
SECTION 2.4 EXCLUDED LIABILITIES
13
SECTION 2.5 OTHER PURCHASE AGREEMENTS
15
SECTION 2.6 ASSIGNMENT OF CONTRACTS AND RIGHTS
15
SECTION 2.7 PURCHASE PRICE: ALLOCATION OF PURCHASE PRICE
16
SECTION 2.8 CLOSING
19
ARTICLE 3 22
REPRESENTATIONS AND WARRANTIES OF SELLERS 22
SECTION 3.1 CORPORATE EXISTENCE AND POWER
22
SECTION 3.2 CORPORATE AUTHORIZATION
24
SECTION 3.3 GOVERNMENTAL AUTHORIZATION
24
SECTION 3.4 NON-CONTRAVENTION
24
SECTION 3.5 REQUIRED CONSENTS
24
SECTION 3.6 FINANCIAL INFORMATION
25
SECTION 3.7 ERISA
25
SECTION 3.8 ABSENCE OF CERTAIN CHANGES
25
SECTION 3.9 PROPERTIES
27
SECTION 3.10 SUFFICIENCY OF ASSETS
29
SECTION 3.11 NO UNDISCLOSED MATERIAL LIABILITIES
29
SECTION 3.12 LITIGATION
29
SECTION 3.13 MATERIAL THIRD PARTY CONTRACTS
30
SECTION 3.14 LICENSE AND PERMITS
30
SECTION 3.15 COMPLIANCE WITH LAWS
31
SECTION 3.16 PATENTS AND TRADEMARKS
31
SECTION 3.17 LABOR AND EMPLOYMENT MATTERS
33
SECTION 3.18 INVENTORIES
34
SECTION 3.19 PRODUCTS REGISTRATIONS
34
SECTION 3.20 ENVIRONMENTAL COMPLIANCE
35
SECTION 3.21 FINDERS' FEES
35
ARTICLE 4 36
REPRESENTATIONS AND WARRANTIES OF BUYERS 36
SECTION 4.1 CORPORATION EXISTENCE AND POWER
36
SECTION 4.2 CORPORATE AUTHORIZATION
36
SECTION 4.3 GOVERNMENTAL AUTHORIZATION
36
SECTION 4.4 NON-CONTRAVENTION
36
SECTION 4.5 ADVISORY FEES
37
SECTION 4.6 FINANCING
37
ARTICLE 5 37
COVENANTS OF SELLERS 37
SECTION 5.1 CONDUCT OF THE BUSINESS
37
SECTION 5.2 ACCESS TO INFORMATION
38
SECTION 5.3 NOTICES OF CERTAIN EVENTS
39
SECTION 5.4 REAL ESTATE
40
SECTION 5.5 COOPERATION IN FINANCINGS
40
SECTION 5.6 DUCOA LP MANUFACTURING AND OTHER AGREEMENTS
41
ARTICLE 6 41
COVENANTS OF BUYERS 41
SECTION 6.1 ACCESS
41
SECTION 6.2 TRANSFER OF THE PRODUCTS
41
SECTION 6.3 NOTICES OF CERTAIN EVENTS
42
SECTION 6.4 LABELING
42
SECTION 6.5 FINANCING
43
ARTICLE 7 44
COVENANTS OF BUYERS AND SELLERS 44
SECTION 7.1 DISCLOSURE SCHEDULES AND EXHIBITS
44
SECTION 7.2 CONFIDENTIALITY
44
SECTION 7.3DILIGENT EFFORTS; FURTHER ASSURANCES; ISRA COMP
LIANCE 46
SECTION 7.4 CERTAIN FILINGS
47
SECTION 7.5 PUBLIC ANNOUNCEMENTS
47
SECTION 7.6 ASSIGNMENT OF PATENTS AND TRADEMARKS
48
SECTION 7.7 ASSIGNMENT OF THE PRODUCT REGISTRATIONS
49
SECTION 7.8 RETURNS
49
SECTION 7.9 LITIGATION
49
ARTICLE 8 50
TAX MATTERS 50
SECTION 8.1 TAX DEFINITIONS
50
SECTION 8.2 TAX MATTERS
50
SECTION 8.3 TAX COOPERATION; ALLOCATION OF TAXES
51
ARTICLE 9 53
EMPLOYEE BENEFITS 53
SECTION 9.1 EMPLOYEES AND OFFERS OF EMPLOYMENT
53
SECTION 9.2 SELLERS' EMPLOYEE BENEFIT PLANS
55
SECTION 9.3 BUYERS' BENEFIT PLANS
56
SECTION 9.4 LABOR MATTERS
58
SECTION 9.5 NO THIRD PARTY BENEFICIARIES
59
SECTION 9.6 EMPLOYEE BENEFIT PLAN - NON - U.S.
59
ARTICLE 10 60
CONDITIONS TO CLOSE 60
SECTION 10.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY
60
SECTION 10.2 CONDITIONS TO OBLIGATION OF BUYERS
60
SECTION 10.3 CONDITIONS TO OBLIGATION OF SELLERS
63
ARTICLE 11 63
SURVIVAL; INDEMNIFICATION 63
SECTION 11.1 SURVIVAL
63
SECTION 11.2 INDEMNIFICATION
64
SECTION 11.3 CERTAIN PROCEDURES: EXCLUSIVITY
65
ARTICLE 12 67
TERMINATION 67
SECTION 12.1 GROUNDS FOR TERMINATION
67
SECTION 12.2 EFFECT OF TERMINATION
68
ARTICLE 13 68
NONCOMPETITION 68
ARTICLE 14 69
CERTAIN AGREEMENTS 69
SECTION 14.1 LASALOCID AND PRODUCT SUPPLY
69
SECTION 14.2 TRANSITIONAL SERVICES AGREEMENT
69
ARTICLE 15 69
MISCELLANEOUS 69
SECTION 15.1 NOTICES
69
SECTION 15.2 AMENDMENTS; NO WAIVERS
71
SECTION 15.3 EXPENSES
71
SECTION 15.4 SUCCESSORS AND ASSIGNS
71
SECTION 15.5 GOVERNING LAW
71
SECTION 15.6 COUNTERPARTS: EFFECTIVENESS
72
SECTION 15.7 ENTIRE AGREEMENT
72
SECTION 15.8 SEVERABILITY
72
SECTION 15.9 BULK SALES LAWS
72
SECTION 15.10 CAPTIONS
73
SCHEDULES A
SCHEDULE 1.1(A)(I) A
PRODUCTS A
SCHEDULE 1.1(A)(II) B
SHARED ASSETS B
SCHEDULE 2.1.1 C
PATENTS C
SCHEDULE 2.1.2 E
TRADEMARKS E
US TRADEMARK APPLICATIONS F
PUERTO RICAN TRADEMARK REGISTRATIONS F
FOREIGN TRADEMARKS G
SCHEDULE 2.1.3 H
PRODUCT REGISTRATION H
SCHEDULE 2.1.4 I
THIRD PARTY MATERIAL CONTRACTS I
SCHEDULE 2.1.5(A) O
REAL PROPERTY O
SCHEDULE 2.1.5(B) P
PERSONAL PROPERTY P
SCHEDULE 2.1.9 Q
DISCOVERY RESEARCH ACTIVITIES - LIMITATIONS Q
SCHEDULE 2.4 R
EXCLUDED ENVIRONMENTAL LIABILITIES R
SCHEDULE 2.5(A) U
OTHER PURCHASE AGREEMENTS U
SECTION 2.5(B) V
FORMS OF OTHER PURCHASE AGREEMENTS V
SCHEDULE 2.7(A) W
PROMISSORY NOTE FOR US $30 MILLION FROM BUYERS TO SELLERSW
SCHEDULE 2.7(B) X
PURCHASE PRICE ALLOCATION X
SCHEDULE 2.7(E) Y
INVENTORY UNIT PRICES Y
SCHEDULE 2.8(A)(VI) Z
OPINION OF BUYERS COUNSEL Z
SCHEDULE 2.8(B)(VI) AA
OPINION OF SELLERS COUNSEL AA
SCHEDULE 3.3 BB
GOVERNMENTAL AUTHORIZATION BB
SCHEDULE 3.5 CC
REQUIRED CONSENTS CC
SCHEDULE 3.6 HH
FINANCIAL INFORMATION HH
SCHEDULE 3.8 II
ABSENCE OF CERTAIN CHANGES II
SCHEDULE 3.9(C) JJ
EXCEPTIONS: LIENS ON REAL OR PERSONAL PROPERTY JJ
SCHEDULE 3.9(E) KK
EXCEPTION: PERSONAL PROPERTY KK
SCHEDULE 3.12 LL
LITIGATION LL
SCHEDULE 3.13(C) MM
EXCEPTION: RESTRICTIONS ON DOING BUSINESS MM
SCHEDULE 3.13(E) NN
EXCEPTION: CUSTOMER RIGHT TO RETURN PRODUCT NN
SCHEDULE 3.13(G) OO
CONTRACTS REQUIRING PREPAYMENT OR REBATES AFTER THE
CLOSING OF SUMS PAID OR PAYABLE PRIOR TO THE CLOSING BASED
UPON THE VOLUME OF PRODUCTS PURCHASED AFTER THE CLOSINGOO
SCHEDULE 3.14 PP
PERMITS PP
SCHEDULE 3.16(B) QQ
EXCEPTIONS: PATENT AND TRADEMARKS NOT REGISTERED QQ
SCHEDULE 3.16(C) RR
PATENTS AND TRADEMARKS LICENSES RR
SCHEDULE 3.16(D) SS
EXCEPTIONS: RIGHTS OF USE GRANTED TO THIRD PARTIES SS
SCHEDULE 3.16(E) TT
EXCEPTIONS: INFRINGEMENTS REGARDING PATENTS OR TRADEMARKS
TT
SCHEDULE 3.16(F) UU
EXCEPTION - PATENT/TRADEMARK CERTIFICATES OF TITLE NOT IN
SELLERS' POSSESSION (OTHER THAN THOSE SENT TO AUTHORITIES
FOR RENEWAL) UU
SCHEDULE 3.16(G) VV
EXCEPTION: PATENTS AND TRADEMARKS SUBJECT TO ANY
OUTSTANDING ORDER, JUDGMENT, ETC. VV
SCHEDULE 3.16(H) WW
EXCEPTION: PATENTS AND TRADEMARKS TRANSFERRED OR ASSIGNED
TO THIRD PARTIES WW
SCHEDULE 3.16(I) XX
EXCEPTION: PATENTS AND TRADEMARKS NOT OWNED, DIRECT AND
UNRESTRICTED BY SELLERS (OTHER THAN THOSE ASSIGNED TO
DISTRIBUTORS OF SELLERS WHERE REQUIRED BY LAW) XX
SCHEDULE 3.16(J) YY
INFRINGEMENT ACTIONS/PROCEEDING AGAINST SELLERS PATENTS OR
TRADEMARKS YY
SCHEDULE 3.16(K) ZZ
EXCEPTION TECHNOLOGY AND KNOW-HOW ZZ
SCHEDULE 3.17 AAA
EXCEPTION: LABOR AND EMPLOYMENT MATTERS AAA
SCHEDULE 3.18(I) BBB
EXCEPTIONS: INVENTORY BBB
SCHEDULE 3.18(II) CCC
INVENTORY LOCATION(S) CCC
SCHEDULE 3.19 DDD
EXCEPTIONS: PRODUCT REGISTRATIONS DDD
SCHEDULE 3.20 GGG
EXCEPTIONS: ENVIRONMENTAL COMPLIANCE GGG
SCHEDULE 4.6 HHH
FIRST UNION BANK COMMITMENT LETTER HHH
SCHEDULE 9.1(B) III
SEVERANCE BENEFITS III
SCHEDULE 9.3(B) JJJ
BUYER WELFARE BENEFIT PLANS JJJ
SCHEDULE 9.3(F) KKK
TRANSFERRED EMPLOYEES RECEIVING "RELOCATION" OR "SIGN ON"
AWARDS KKK
SCHEDULE 9.3(G) LLL
VACATION EXCEPTIONS LLL
SCHEDULE 10.1(A) MMM
LIST OF COUNTRIES WITH WAITING PERIODS MMM
EXHIBIT A - CONVEYANCE DOCUMENTS NNN
EXHIBIT B - ASSIGNMENT AND ASSUMPTION DOCUMENTS OOO
EXHIBIT C - WORLDWIDE DEED OF ASSIGNMENTS - PATENTS AND
TRADEMARKS PPP
EXHIBIT D - LASALOCID SUPPLY AGREEMENT QQQ
EXHIBIT E - FORMULATION AGREEMENTS RRR
EXHIBIT F - TRANSITION SERVICES AGREEMENT SSS
ASSET PURCHASE AGREEMENT
Agreement, dated as of April 19, 2000, between Roche
Vitamins Inc., a Delaware corporation located and having a
place of business at 45 Waterview Boulevard, Parsippany, New
Jersey 07054 (hereafter RVI), jointly and severally with
F.Hoffmann-La Roche Ltd, Postfach CH-4070, Basel,
Switzerland (hereafter ROCHE BASLE) (collectively referred
to as "Sellers") jointly and severally with Alpharma Inc., a
Delaware corporation having its principal place of business
at One Executive Drive, Fort Lee, New Jersey, jointly and
severally with Alpharma (Luxembourg) SARL, having a place of
business at 26, rue Philippe II - L2340, Luxembourg
("Buyers").
WITNESSETH:
WHEREAS, Sellers are engaged in, among other things, the
Business (defined below):
and
WHEREAS, Buyers desire to purchase substantially all of the
assets of the Business from Sellers, and Sellers desire to
sell substantially all of the assets of the Business to
Buyers, upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions
The following terms, as used herein, have the following
meanings:
"Accounts Receivable" means any account due from customers
for Products shipped by Sellers or their Affiliates to
customers prior to the Closing.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under
common control with such other Person, provided, however,
that Genentech, Inc., with its principal office at One DNA
Way, South San Francisco, California 94080, shall not be an
Affiliate of Sellers for purposes of this Agreement
"Ancillary Agreements" means the Formulation Agreements,
Lasalocid Supply Agreement, the Transitional Services
Agreement, and ancillary agreements agreed to by the parties
as necessary to consummate the transactions contemplated
hereby.
"Applicable Laws" means all laws, treaties, statutes,
ordinances, judgments, decrees, directives, rules,
injunctions, writs, regulations, orders, interpretations,
authorizations and permits relating to, or of any
international, national, regional, local, or other
governmental body, instrumentality, agency, authority, court
or other body having jurisdiction over the Business or the
Purchased Assets, as may be in effect from time to time.
"Business" means the assets and operations of the medicated
feed additive business of Sellers and their Affiliates,
including research, development, manufacture, distribution
and sale of the Products, as currently conducted by or
proposed to be conducted by Sellers and their Affiliates (it
being understood that the term "proposed" as used herein
refers to medicated feed ingredients registrations currently
pending before the USFDA or comparable governmental agency
outside the US and to any current medicated feed ingredients
research projects being carried out by Sellers).
Notwithstanding the preceding sentence, Sellers' vitamin
businesses, (including vitamin premixes containing medicated
feed additives manufactured by Persons other than Sellers
and their Affiliates) are not deemed a part of the Business.
"Closing Date" means the date of the Closing.
"Competition Laws" means statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and
other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade excluding the HSR Act.
"Inventory" means the Inventory located in the United
States, Canada, Mexico and Brazil plus all inventory in said
countries being transferred under the Other Purchase
Agreements.
"Contaminant" means any material, pollutant, substance or
waste which is defined in, regulated by, or subject to any
Environmental Law.
"Environmental Condition" means the presence of Contaminants
in, affecting or emanating from (x) the surface,
subsurface, soil, air, surface waters, including streams,
channels, marshes, and wetlands, groundwater, wastewater,
leachate and run-on and run-off of precipitation beneath,
interior or exterior to any building or improvements; (y)
any and all structures above or below ground, improvements,
appurtenances, pipes, pumps, valves, fittings, tanks,
vessels and containers; and (z) any and all systems for the
collection, treatment, storage, disposal or release of
Contaminants.
"Environmental Laws" means all applicable federal, state or
local governmental rules and all applicable common law
relating to the protection or pollution of the environment,
including, with respect to U.S. facilities, the
Comprehensive Environmental Response Compensation and
Liability Act, as amended, the Federal Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery
Act and the Hazardous and Solid Waste Amendments, the Clean
Air Act, the Clean Water Act, the Toxic Substances Control
Act and the Safe Drinking Water Act and any similar or
analogous statutes, regulation and applicable decisional law
of any Governmental Authority as such laws exist as of the
Closing Date.
"Formulation Agreements" means the three agreements pursuant
to which Sellers or their Affiliates shall formulate certain
Products for Buyers or their Affiliates.
"Governmental Authority" means any governmental department,
commission, board, bureau, agency, court or other
instrumentality of the United States or any jurisdiction,
municipality or other political subdivision thereof or any
foreign jurisdiction where Sellers are now operating or have
operated.
"HSR Act" means Title II of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended and the regulations
promulgated thereunder (16 C.F.R. 801.1 et seq.)
"Knowledge of Sellers" means the knowledge of the senior
management responsible for the Business or the officials of
the Sellers responsible for the sale of the Business.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, hypothecation, assignment of rents, charge, security
interest or encumbrance of any kind in respect to such
asset.
"Material Adverse Change" means a development or occurrence
that has a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on
the business, assets or financial condition of the Business
taken as a whole.
"Material Contracts" means any contract (or series of
contracts with the same third party) relating to the
Business which involve aggregate liabilities, obligations or
benefits of $1,000,000 or more and any other contract if a
default thereunder would have a Material Adverse Effect on
the Business.
"Persons" means an individual, corporation, partnership,
association, trust or other entity or organization,
including a government or political subdivision or agency or
instrumentality thereof.
"Products" means Sellers' medicated feed additive products
listed on Schedule 1.1(a)(i) which include all discontinued
medicated feed additive products other than Avoparcin.
"Statements" means the financial statements attached hereto
as Schedule 3.6 including the audited statements of
operations before interest and taxes of the Business for the
year ended December 31, 1999.
"Supply Agreement" means the supply agreement related to
Lasalocid to be provided by Sellers or their Affiliates.
"Third Party Shared Assets" means the tangible and
intangible assets and properties identified on Schedule
1.1(a)(ii) currently owned by either American Home Products
Corporation or American Cyanamid Company or Cytec Industries
and used in the Business. These Third Party Shared Assets
are the subject of license and other agreements to be
assigned to Buyers.
"Transitional Services Agreement" means the agreements
related to certain administrative, technical and other
similar services to be provided by Sellers, or their
Affiliates to Buyers or their Affiliates as detailed in such
agreements between Sellers or their Affiliates and Buyers or
their Affiliates, to be dated as of the Closing Date.
(b) Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
Accounting Firm 2.7(g)
Active Employee 9.1(a)
Apportioned Obligations 8.3(b)
Assumed Liabilities 2.3
Buyer's Welfare Plans 9. 3(b)
Buyer's Retirement Plans 9.3(a)
Buyer's Savings Plan 9.3(c)
Closing 2.8
Closing Statement 2.7(g)
Code 8.1
Contracts 2.1.4
Conveyance Documents 2.8(b)(i)
Disagreement Notice 2.7(g)
Employee Agreement 9.4 (c)
ERISA 3.7
Estimated Closing Inventory
Amount 2.7(f)
Estoppel Certificates 10.2(f)
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Value 14.2
GAAP 3.6
Government Order 2.8
Improvements 3.9(d)
Indemnified Party 11.3(a)
Indemnifying Party 11.3(a)
Inventory 2.1.10
Leased Real Property 2.1.5(a)
Leases 2.1.5(a)
Leasehold Improvements 2.1.5(a)
Legal Action 3.12
Loss 11.2(a)
Material Leased Real Estate 10.2(d)
Other Purchase Agreements 2.5(a)
Owned Real Property 2.1.5 (a)
Patents 2.1.1
Permit(s) 3.14
Permitted Liens 3.9(f)
Personal Property 2.1.5(b)
Post-Closing Tax Period 8.1
Pre-Closing Tax Period 8.1
Product Registrations 2.1.3
Purchased Assets 2.1
Purchase Price 2.7(a)
Real Property 3.9(c)
Required Consent(s) 3.5
Surveys 10.2(d)
Technology and Know How 2.1.6
Tax or Taxes 8.1
Title Commitment 10.2(d)
Title Company 10.2(d)
Title Policies 10.2(d)
Trademarks 2.1.2
Transferred Employee(s) 9.1 (a)
ARTICLE 2
PURCHASE AND SALE
Section 2.1 Purchased Assets
Upon the terms and subject to the conditions of this
Agreement, Sellers agree to sell transfer, assign, convey
and deliver, or cause to be sold, transferred, assigned,
conveyed and delivered, to Buyers at Closing, free and clear
of all Liens, other than Permitted Liens, all of Sellers'
worldwide right and title and interest in, to and under the
assets listed below, and all other assets (other than
Excluded Assets) exclusively used in the Business (the
"Purchased Assets"), and Buyers agree to acquire all of
Sellers' right, title and interest in and to the Purchased
Assets and, to the extent set forth herein, all obligations
and responsibilities associated therewith. All intangible
assets with a situs outside the United States shall be
purchased by and transferred to Alpharma (Luxembourg) SARL
and all other Purchased Assets shall be transferred to
Alpharma Inc.
Section 2.1.1 Patents
On a worldwide basis, the patents, patent applications
(including all reissues, reexaminations, divisions,
continuations, continuations-in-part, and extensions
thereof), and patent disclosures set forth on Schedule
2.1.1, together with all documentation associated therewith
(the "Patents").
Section 2.1.2 Trademarks
On a worldwide basis, the trademarks, trademark applications
and registrations and trade names set forth on Schedule
2.1.2 (the "Trademarks"), including any extensions and
renewals thereof together with all documentation associated
therewith, including without limitation, Certificates of
Registration, Renewal Certificates, pending application
files, license agreements, prior-rights agreements, consent
letters and any other documentation pertaining to the
information disclosed in Section 3.16 herein or in any of
the Schedules referenced in Section 3.16. Trademarks shall
also include any distinctive trade dress, logos, slogans,
domain names, service marks, service mark licenses, service
mark applications and registrations, copyrights, copyright
licenses, copyright applications and registrations owned by
Sellers and solely associated with the Products.
"Trademarks" does not include (i) those company names,
symbols or logos specifically relating to Sellers and its
Affiliates (as opposed to the Products or the Business) and
(ii) any copyrights or trade dress associated with the
Products and also associated with products not being
transferred to Buyers hereunder.
Section 2.1.3 Product Registrations
On a worldwide basis, the Products including the licenses,
permits, drug master files, drug registrations, product
registrations (i.e, INADAs, NADAs, ANADAs, SNADAs, DER's and
equivalent foreign registrations and approvals) and
registration applications listed on Schedule 2.1.3,
including all documentation relating thereto and all
scientific, technical and other information contained
therein (the "Product Registrations").
Section 2.1.4 Third Party Contracts
Including, without limitation, the contracts listed on
Schedule 2.1.4 (Third Party Material Contracts), all
executory and partially executed contracts, agreements,
orders, commitments and understandings of Sellers related to
the Business, including, without limitation, contracts and
licenses related to Third Party Shared Assets. To the extent
any of such contracts relate to the Business and other
product lines of Sellers, the rights and obligations
relating to such other product lines or businesses under
said contracts shall remain with Sellers.
Section 2.1.5 Property
(a) Real Property
(i) All land, together with all buildings,
structures, improvements and fixtures located
thereon, and all easements and other rights
and interests appurtenant thereto, owned by
RVI and used or intended to be used in, or
otherwise related to, the Business (the
"Owned Real Property"), as set forth on
Schedule 2.1.5(a).
(ii) All of RVI's right, title and interest in all
leases, subleases, licenses, concessions and
other agreements (written or oral) (the
"Leases"), pursuant to which RVI holds a
leasehold or subleasehold estate in, or is
granted the right to use or occupy, any land,
buildings, structures, improvements, fixtures
or other interest in real property which is
used or intended to be used in, or otherwise
related to, the Business (the "Leased Real
Property"), as set forth on Schedule
2.1.5(a).
(iii) All buildings, structures, improvements
and fixtures located on any Leased Real
Property which are owned by RVI, regardless
of whether title to such buildings,
structures, improvements or fixtures are
subject to reversion to the landlord or any
other third party upon the expiration or
termination of the Lease for such Leased Real
Property (the "Leasehold Improvements"), as
set forth on Schedule 2.1.5(a).
(b) Personal Property
All machinery and equipment and other personal property
located at Van Buren, Arkansas; Willow Island, West
Virginia; Hannibal, Missouri; Salisbury, Maryland and
Wrightstown, New Jersey, the Product formulation equipment
located at the VFA facility at Nutley, New Jersey; Quality
Control Laboratory equipment located at Sellers' Belvidere,
New Jersey facility used solely to test and release
medicated feed additive final product forms; and the
equipment located at DuCoa LLP facilities located at
Highland, Illinois and Chattanooga, Tennessee including that
detailed on Schedule 2.1.5(b)(the "Personal Property").
Section 2.1.6 Manufacturing Technology and Know-How
(1) The technology, trade secrets and know-how
exclusively related to the manufacturing,
packaging and release of the Products or the
medicated feed additive ingredients contained in
the Products (including but not limited to
fermentation and recovery technologies, master
cultures, fermentation strains and stability
testing related to the Products, formulation and
packaging procedures, quality control and release
testing records and procedures, product and
packaging specifications, supplier lists) together
with a non-exclusive, perpetual, irrevocable, paid-
up, royalty free license, with the right to sub-
license or assign the right to use, any technology
that is necessary or used in the manufacture,
packaging or release of the Products or the
medicated feed additives contained in the Products
or in any new medicated feed additive product
developed by Buyers (but not exclusively thereto),
with such license or sub-license being restricted
to use with the Business and any new medicated
feed additive products developed by Buyers and
Seller retaining the right to use or license such
technology for any other purpose; and (2) all
engineering documents and know-how and all
environmental and other permits, licenses and
other records relating to the Real Property or
Personal Property, as the case may be, including
but not limited to site drawings and plans,
engineering data, design and engineering
specifications and all other know-how relating to
the operation of such Property in the way they are
currently operated by Sellers ((1) and (2)
collectively, the "Technology and Know-How").
Section 2.1.7 Marketing and Promotional Materials
On a worldwide basis, all hard copies (and, to the extent
existing, any electronic copies) of any documents or other
materials owned by Sellers and exclusively related to the
marketing, promotion or advertising of the Products,
including all sales training materials and, to the extent
owned by Sellers all films, artwork, photography, mechanical
art, color separations, prints, plates and other graphic
materials related thereto.
Section 2.1.8 Customer Information
On a worldwide basis, the customer lists with respect to the
Business, including the information relating to the Business
contained in the marketing data base and, to the extent
available, all written customer correspondence and any
marketing plans, market research data and sales histories
with respect to the Products.
Section 2.1.9 Discovery Research Information
Subject to the limitations set forth in Schedule 2.1.9 and
Sections 2.2 and 2.4, the information related to Sellers'
discovery research activities in the area of medicated feed
additive ingredients, conducted at its animal health
research facilities in Nutley, New Jersey, Wrightstown, New
Jersey and Village Neuf, France (VFA) including, without
limitation, any developmental products and all information
previously developed, presently under development or
developed between execution of this Agreement and the
Closing. It being understood that with respect to such
information, Buyers shall grant to Sellers a non-exclusive,
perpetual, paid-up, royalty-free, irrevocable, license, with
the right to sublicense or assign to third parties, to use
such information for any activities relating to the
research, development, manufacturing, marketing and sale of
human and animal nutrition products following the Closing.
It being further understood that the Collaboration Agreement
among Sellers and certain of its Affiliates with Curagen
Corporation dated January 1, 1999, that certain database
developed under said agreement and currently the property of
RVI shall remain the property of RVI and Buyers shall be
granted a sole and exclusive paid-up, royalty-free,
irrevocable, perpetual license with the right to sublicense
or assign to third parties, for any activities relating to
the research, development, manufacturing, marketing and sale
of medicated feed additive products.
Section 2.1.10 Inventory
The inventory of the Products owned by Sellers of a quality
and quantity currently useable and saleable in the ordinary
course of business consistent with past practice including,
without limitation, raw materials, work-in-process,
quarantined materials, finished goods and supplies, (except
the Lasalocid raw materials and work-in-process and
quarantined material, at Sellers' Belvidere, New Jersey
manufacturing facility), in the custody and control of
Sellers or, to the extent listed in Schedule 3.18(ii), any
of their warehouses, blenders, toll manufacturers,
suppliers, distributors, consignees or other third parties
(the "Inventory").
Section 2.1.11 Instruments and Choses in Action and Customer
Advances
All claims, choses in action, and rights of action of
Sellers relating to the Business (whether with respect to
contracts, Patents, Trademarks, proprietary information or
otherwise), including, without limitation the promissory
note payable by the Pleasants County (West Virginia)
Developmental Authority relating to the property subject to
the Willow Island Industrial Revenue Bond Lease and any
amounts due from, or paid to Sellers by, customers for
Products included in the Inventory at the Closing.
Section 2.1.12 Prepaid Expenses
All prepaid expenses and deposits attributable to the
Business.
Section 2.1.13 Books and Records
All books, records, files and other written documentation,
excluding scientific literature in the public domain, and
such other files that Sellers are legally required to
retain, related to the Business, including such books,
records and files located at any of Sellers' facilities to
the extent that the same are physically separable and
transferable, otherwise Sellers shall provide, upon request,
a reasonable summary or extract of such information, except
that Buyers agree that no records containing medical
information of any employees shall be given to Buyers or
abstracted without the written consent of the affected
individual, (except that Buyer shall receive copies of
hearing conservation and respiratory protection medical
surveillance records and all other records required to be
maintained by Sellers under OSHA regulations with respect to
Transferred Employees) and that no personnel records other
than copies of personnel files at the plant locations, will
be transferred or abstracted. However, Sellers shall
provide Buyers with a description of any medical
restrictions applicable to any Transferred Employees as well
as a summary of the salary increases and variable pay awards
of any Transferred Employee for the three (3) years prior to
the Closing Date and such other information as is reasonably
necessary for Buyer to offer employment to or employ
Transferred Employees.
Section 2.2 Excluded Assets
Buyers expressly understand and agree that any assets of
Sellers, which are not described in Section 2.1 above are
excluded from the transaction contemplated hereunder (the
"Excluded Assets"). Without limiting the generality of the
foregoing, the Excluded Assets shall include the following:
(i) cash, cash equivalents and Accounts
Receivable as of the Closing Date;
(ii) except as provided in 2.1.11 and 2.1.12, all
prepayments, deferred assets, overpayments or
other receivables;
(iii) Sellers' Lasalocid manufacturing
facilities in Belvidere, New Jersey, as well
as any Quality Control Laboratory equipment
located at such facility used to test and
release bulk lasalocid sodium and any such
equipment used to test both medicated feed
additive products and other products of
Sellers;
(iv) Sellers' blending facilities located in
Fresno, California; Sisseln, Switzerland; Sao
Paulo, Brazil; and packaging facilities
located at Istituto Delle Vitamine in Milan,
Italy;
(v) Any technology or know-how located in
Sellers' facilities listed in subsections 2.2
(iii) and 2.2 (iv) above, other than the
Technology and Know-How;
(vi) Except as otherwise set forth herein,
Sellers' owned or leased highway vehicles,
personal computers (other than those personal
computers in the possession of those field
personnel of Sellers' who accept employment
with Buyers) software and financial systems
or programs shared with other operations of
the Sellers (except that the Purchased Assets
include all information related to the
Business contained on such software and
financial systems or programs and the right
to transfer such information to systems under
the control of Buyers);
(vii) Any real or personal property of Sellers
not exclusively used in the Business(for the
avoidance of doubt, any interest in Sellers'
Parsippany, New Jersey facility is an
"Excluded Asset") provided that this
exception shall not apply to the Real
Property or any Personal Property located
thereon;
(viii) Subject to the license created in
Section 2.1.6, any assets, intellectual
property or know-how related to any product
of Sellers or Sellers' Affiliates (whether or
not such product contains medicated feed
additive ingredients) other than the
Products;
(ix) All tangible assets utilized in research
activities at the VFA, with the exception of
certain equipment used for the development of
Product formulations which equipment is
listed in Schedule 2.1.5(b);
(x) Cylactin and Avotan (Avoparcin)
Section 2.3 Assumption of Liabilities
Upon the terms and subject to the conditions of this
Agreement, Buyers agree, effective at the time of Closing,
to assume all obligations, liabilities, costs and damages
relating to the ownership and operation of the Business on
or after the Closing, including without limitation, any and
all liabilities with respect to (A) Product sold (except as
to Products manufactured prior to Closing and sold after the
Closing, Buyers shall not assume liability for any
manufacturing defects or deficiencies, in such Products) or
manufactured on or after the Closing (B) occupational health
and safety hazards to the extent related to the operation of
the Business on or after Closing and (C) any Environmental
Condition to the extent arising out of or related to the
operation of the Business at the Van Buren, Arkansas;
Wrightstown, New Jersey; Hannibal, Missouri; Willow Island,
West Virginia, Salisbury, Maryland on or after the Closing,
including any violation of Environmental Laws arising from
post Closing operations (the "Assumed Liabilities"). The
foregoing notwithstanding, Buyers shall also assume any
liabilities or obligations under the Environmental Laws
(other than CERCLA) which are brought about solely by a
legislative change in such Laws, which change would have the
effect of creating such liabilities or obligations after
Closing which did not otherwise exist before Closing. All
Assumed Liabilities related to intangible assets with a
situs outside the United States shall be assumed by Alpharma
(Luxembourg) SARL (and guaranteed by Alpharma Inc.) and all
other Assumed Liabilities shall be assumed by Alpharma Inc.
Section 2.4 Excluded Liabilities
Other than as specifically stated in any of the documents
executed pursuant to the consummation of the transaction
contemplated herein, the Assumed Liabilities do not include
and Buyers are not assuming any liability or obligation of
Sellers or their Affiliates (or any predecessor owner of all
or part of its business and assets) of whatever nature
whether presently in existence or arising hereafter with
respect to the ownership or operation of the Business by
Sellers or their Affiliates prior to the Closing or of the
Sellers or their Affiliates with respect to the Excluded
Assets. All such other liabilities and obligations shall be
retained by and remain obligations and liabilities of
Sellers or their Affiliates and, without limiting the
generality of the foregoing, none of the following shall be
Assumed Liabilities for the purposes of this Agreement:
(i) All claims, obligations, liabilities, costs
and damages relating to the ownership and
operation of the Business prior to the
Closing, including all liabilities with
respect to (A) any Product sold or
manufactured prior to the Closing, (it being
understood that as to product manufactured
prior to the Closing but sold after the
Closing, Buyers are not assuming any
liability for any manufacturing defects or
deficiencies in any such Product) (B)
occupational health and safety hazards
related to the operation of the Business or
the Purchased Assets prior to the Closing (C)
any liability or obligation arising under
Environmental Laws arising out of or related
to the ownership or operation of the Business
or the Real Property or the Environmental
Condition relating to the Real Property or
Purchased Assets prior to the Closing, or
violation of Environmental Laws prior to the
Closing (including, without limitation, the
matters set forth on Schedule 2.4 hereto) and
(D) all obligations under the contracts
transferred pursuant to Section 2.1.4
(whether payable before or after the Closing)
to the extent relating to benefits received
prior to the Closing including without
limitation any payments due hereafter under
the contracts between APV and RVI and Jacobs
Construction Co. and RVI, (as listed in
Paragraphs 12 and 13 of Schedule 2.1.4) both
of which are related to the construction,
installation and start-up of the zinc
bacitracin facility at Willow Island, West
Virginia.. The foregoing notwithstanding,
Sellers will not incur any liability or
obligation under (c) above arising under the
Environmental Laws (other than CERCLA) where
such liability or obligation results solely
from a legislative l change in such Laws
after Closing, which change would have the
effect of creating such obligation or
liability after Closing which did not
otherwise exist before Closing.
(ii) All accounts payable related to the Business
as of the Closing Date.
(iii) Any obligation, or liability or deferred
credit for taxes arising from or with respect
to the Purchased Assets or the operations of
the Business which is incurred in or
attributable to the Pre-Closing Tax Period;
(iv) Any liability or obligation related to (1)
the continued operations or closing of the
VFA at Village Neuf, France and Nutley, NJ,
including any employee termination expenses
and (2) the dairy cattle clinical development
trial obligations from and after the Closing.
(v) Any liability or obligation arising from the
failure to obtain a Required Consent; and
(vi) Any liability or obligation related to the current or
former employees of the Sellers, except as set forth in
Article 9.
(vii) Any rebates payable after the Closing under the
contracts listed on Schedule 3.13(g) to the extent such
payments relate to or are required by sales prior to the
Closing.
All of the foregoing shall be referred to herein as the
"Excluded Liabilities."
Section 2.5 Other Purchase Agreements
(a) On or before the Closing Date, Sellers and Buyers
shall, or shall cause their respective Affiliates
to, execute and deliver supplementary Asset
Purchase Agreements for the Business outside the
U.S. in each of the jurisdictions listed on
Schedule 2.5(a) (the "Other Purchase Agreements")
which Schedule 2.5(a) shall also list each
individual Other Purchase Agreement as well as the
respective parties thereto (it being understood
that Buyers and Sellers have the right to
designate which Affiliates shall be a party to any
such Other Purchase Agreement), the respective
purchase price and such other information as may
be appropriate. In all other jurisdictions
outside the U.S in which the Business is
conducted, Sellers and Buyers shall, or shall
cause their respective Affiliates to, execute and
deliver documents of asset conveyance and
liability transfer for the Business in such
jurisdiction.
(b) The Other Purchase Agreements shall be in the form
of Schedule 2.5(b) hereto.
Section 2.6 Assignment of Contracts and Rights
(a) Any provision in this Agreement to the contrary
notwithstanding, this Agreement shall not
constitute an agreement to assign any Purchased
Asset or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third
party thereto, would constitute a breach or other
contravention thereof or in any way materially
adversely affect the rights of Buyers or Sellers
thereunder. Sellers and Buyers will use their
diligent efforts (but without any payment of money
by Sellers or Buyers) to obtain the consent of the
other parties to any such Purchased Asset or any
claim or right or any benefit arising thereunder
for the assignment thereof to Buyers as Buyers may
reasonably request. If such consent is not
obtained (an "Event of Non-Consent"), or if an
attempted assignment thereof would be ineffective
or would materially adversely affect the rights of
Sellers thereunder so that Buyer would not in
effect receive all such rights, Sellers and Buyers
will cooperate in a mutually agreeable arrangement
for a commercially reasonable period of time under
which, to the extent feasible, Buyers would obtain
the benefits and assume the obligations thereunder
in accordance with this Agreement, including
subcontracting , sub-licensing, or sub-leasing to
Buyer, or under which Sellers would enforce for
the benefit of Buyers, with Buyers assuming
Sellers' obligations, any and all rights of
Sellers' against a third party thereto and
consistent with such actions Sellers will promptly
pay to Buyers all monies which may be received by
Sellers on or after the Closing relating to any
Purchased Asset or any claim or right or any
benefit arising thereunder, except to the extent
the same represents an Excluded Asset.
(b) If there is an Event of Non-Consent with respect to a
Required Consent, Buyers and Sellers will, in good faith,
attempt to reach an alternative arrangement under clause (a)
above. Buyers will waive any such Required Consent if, in
its reasonable opinion (taking into the consideration the
importance of the contract to the Business and the number of
Required Consents as to which there are Events of Non-
Consent) such arrangements protect Buyers, and the Business
of any material risk of not receiving the benefits of any
contracts as to which there is an Event of Non-Consent.
Provided, however, that Buyers shall be under no obligation
to consider waiving a Required Consent with respect to the
contracts listed in Paragraphs 5 through 29 of
Schedule 2.1.4.
Section 2.7 Purchase Price: Allocation of Purchase Price
(a) Subject to Section 2.7(b), the purchase price for
the Purchased Assets, excluding Inventory, in U.S.
Dollars shall be US $250 Million (the "Purchase
Price"). The Purchase Price shall be paid as
follows:
(i) An aggregate of US $220 Million in cash at
the Closing payable by Alpharma Inc. to RVI
and Alpharma (Luxembourg) SARL to Roche Basle
in the individual sums of US $135,800,000 and
US $84,200,000 respectively and
(ii) US $30 Million pursuant to a promissory note (Note)
payable by Alpharma Inc. to RVI with interest equal to the
prevailing prime rate charged by Chase Manhattan Bank N.A.
calculated on the basis of the actual number of days elapsed
from the Closing to the maturity date of the Note, which
Note shall be in the form attached hereto as Schedule
2.7(a).
(iii) US $10 Million of the $84,200,000 payable to Roche
Basle is being accepted by Roche Basle on behalf of those
Affiliates of Sellers who are parties to the Other Purchase
Agreements and represents the consideration set forth in and
payable under the Other Purchase Agreements.
(b) The Purchase Price shall be allocated among the
Purchased Assets in accordance with Schedule
2.7(b).
(c) The Sellers and Buyers agree to report an
allocation of such Purchase Price among the
Purchased Assets in a manner entirely consistent
with Schedule 2.7(b) and agree to act in
accordance with such Schedule 2.7(b) in the filing
of all tax returns (including, without limitation,
to the extent required by law, filing Form 8594
with its Federal income tax return for the taxable
year that includes the Closing Date) and in the
course of any tax audit, tax review or tax
litigation relating thereto.
(d) Not later than 10 days prior to the filing of
their respective Form 8594 relating to this
transaction, each party shall deliver to the other
party a copy of its Form 8594.
(e) As more fully set forth in Section 2.7 (f) and (g)
below, in addition to the Purchase Price according
to Section 2.7 (a) above, Buyers shall pay or
cause an Affiliate of Buyers to pay to Sellers or
an Affiliate of Sellers for the Inventory, based
on the actual amount of Inventory transferred to
Buyers or their Affiliates and based on the unit
prices and other information set forth on Schedule
2.7 (e).
(f) At the Closing, Buyers shall pay to Sellers for
such Inventory owned by RVI and its Affiliates in
Mexico, Brazil and Canada (said Brazilian,
Canadian, and Mexican Inventory being transferred
by way of the appropriate "Other Agreements") an
estimated amount equal to US $38,610,044 which is
an amount equal to Sellers' book value of the
Inventory as of the close of the business on March
31, 2000 (the "Estimated Closing Inventory
Amount") The balance of the Inventory shall be
purchased by Buyers in accordance with the Terms
and Conditions of the Transition Services
Agreement.
(g) No later than 30 days following the Closing, the
Sellers shall prepare and deliver to Buyers a
calculation of the Inventory based upon a physical
inventory taken immediately prior to the Closing
and prepared in accordance with Schedule 2.7(e)
(the "Closing Statement"). Buyers and its
independent accountants shall have the right to
observe the physical inventory and review (but not
control) the Sellers preparation of the Closing
Statement. The Closing Statement and the amount
of the Inventory as calculated by the Sellers,
when delivered by the Sellers to Buyers, shall be
deemed conclusive and binding upon the parties
hereto, unless Buyers notify the Sellers in
writing within 30 days after receipt of the
Closing Statement of their disagreement therewith,
which notice shall state with reasonable
specificity the reasons for any disagreement and
the amounts in dispute (a "Disagreement Notice").
During this 30-day period, the Sellers will
reasonably cooperate with Buyers to facilitate
Buyers' review of the Closing Statement. Such
cooperation will include providing any reasonably
requested information with respect to the
preparation of the Closing Statement. If there is
a disagreement, and such disagreement cannot be
resolved by the Buyers and Sellers within 20
working days following the date of the
Disagreement Notice, the items in dispute shall be
submitted immediately to an independent
internationally recognized accounting firm
reasonably acceptable to both Buyers and Sellers
(the accounting firm so engaged shall hereinafter
be referred to as the "Accounting Firm"). The
Accounting Firm shall be required to render a
determination of the parties' dispute within 30
days after referral of the matter to the
Accounting Firm, which determination must be in
writing and must set forth, in reasonable detail,
the bases therefor. The Accounting Firm shall
make its determination solely in accordance with
the terms of this Agreement and Schedule 2.7(e).
The determination of the Accounting Firm shall be
binding and conclusive upon the parties hereto
assuming compliance with the preceding sentence.
The fees and disbursements of the Accounting Firm
shall be paid equally by Buyers and Sellers.
(h) The Inventory amount shall be deemed to have been
finally determined on the first to occur of (i)
the 31st day after the Sellers' delivery of the
Closing Statement to Buyers, unless Buyers shall
have, prior to such date, given a Disagreement
Notice, (ii) the date upon which the parties
hereto agree in writing on the amount of the
Inventory, or (iii) the date upon which the
Accounting Firm renders its determination in
accordance with subsection (g) above. Within
three (3) Business Days after such final
determination, any difference between the
Inventory amount and the Estimated Closing
Inventory Amount shall be paid by the Buyers to
Sellers or by Sellers to Buyers, as the case may
be, by wire transfer of immediately available
funds to an account designated by the party being
paid, together with interest thereon at a rate
equal to the prevailing prime rate charged by
Chase Manhattan Bank N.A. calculated on the basis
of the actual number of days elapsed from the
Closing to the date of payment.
Section 2.8 Closing
Unless this Agreement is sooner terminated pursuant to
Section 12.1 hereof, the Closing (the "Closing") of the
purchase and sale of the Purchased Assets and the assumption
of the Assumed Liabilities hereunder shall take place
simultaneously at the offices of Roche Vitamins Inc. in
Parsippany, New Jersey and F.Hoffmann-La Roche Ltd in Basle,
Switzerland on the latest of (A) May 2, 2000; (B) ten (10)
working days after all Conditions Precedent to Closing set
forth in Article X have been met and shall take effect as of
12:01 a.m. on the day of such Closing. At the Closing:
(a) On behalf of Buyers and their Affiliates, Buyers shall
deliver to Sellers the following:
(i) By wire transfer, such amounts of immediately
available funds, denominated in US currency,
as are equal, in the aggregate, to US $220
million plus the book value of Inventory
Established pursuant to Section 2.7(f) to the
respective bank accounts designated by RVI
and Roche Basle by notice to Buyers, such
notice to be delivered no later than five (5)
business days prior to the Closing Date;
(ii) The promissory note required by Section 2.7(a) together
with an Intercreditor Agreement in form and substance
satisfactory to the Agent under Buyers Bank Credit
Agreement;
(iii) The Other Purchase Agreements and all
closing documents required thereunder, Supply
Agreement, Formulation Agreements and
Transitional Services Agreement agreed to by
the Parties to be necessary to consummate the
transactions contemplated hereby and to which
Buyers or any of their Affiliates are a
party; and
(iv) The documents relating to the existence of Buyers and
the incumbency of the Persons signing this Agreement, the
Other Purchase Agreements and the Ancillary Agreements.
(v) A certificate signed by a principal officer
of the Buyers that the representations and
warranties made by the Buyers in this
Agreement are accurate in all material
respects on and as of the Closing with the
same effect as though such representations
and warranties had been made or given on and
as of the Closing and that the Buyers
performed and complied with all of the
obligations under this Agreement which are
required to be performed or complied with by
it on or prior to the Closing.
(vi) A certified copy of the duly adopted
resolutions of the Board of Directors or
Board of Managers (as appropriate) of Buyers
authorizing the execution of this Agreement
and the consummation of the transactions
contemplated hereby.
(vii) A written opinion of Buyers' counsel
dated as of the Closing addressed to Sellers
in the form of Schedule 2.8(a)(vi).
(b) On behalf of Sellers and their Affiliates, Sellers
shall deliver to Buyers the following:
(i) The bills of sale, endorsements, assignments
and other good and sufficient instruments of
conveyance and assignments (the "Conveyance
Documents") attached hereto as Exhibits A and
B; provided that Buyers shall, at their
expense, prepare any individual assignment
documents required in any country and record
such documents in the national patent and
trademark and other government offices, as
applicable;
(ii) The Other Purchase Agreements and all closing
documents required thereunder, Supply
Agreement, Formulation Agreements, the
Transition Services Agreement agreed to by
the parties to be necessary to consummate the
transactions contemplated hereby and to which
any Sellers or any of its Affiliates are a
party;
(iii) The documents relating to the existence
of the Sellers and the incumbency of the
Persons signing this Agreement, the Other
Purchase Agreements and the Ancillary
Agreements;
(iv) A certificate signed by a principal officer
of the Sellers that the representations and
warranties made by the Sellers in this
Agreement are accurate in all material
respects on and as of the Closing with the
same effect as though such representations
and warranties had been made or given on and
as of the Closing and that the Sellers have
performed and complied with all of the
obligations under this Agreement which are
required to be performed or complied with by
it on or prior to the Closing.
(v) A certified copy of the duly adopted
resolutions of the Board of Directors of
Roche Vitamins Inc. authorizing the execution
of this Agreement and consummation of the
transactions contemplated hereby, and a
certificate issued by F.Hoffmann-La Roche Ltd
confirming that all necessary corporate
approvals have been obtained to authorize the
consummation of the transaction contemplated
herein.
(vi) A written opinion of Sellers' counsel dated
as of the closing, addressed to Buyer, in the
form of Schedule 2.8 (b)(vi).
(vii) The assignment documents transferring a
good and marketable leasehold estate to the
Leased Real Property along with all Lease
Consents and Estoppel Certificates and
documentation necessary for Buyers to obtain
title insurance on all buildings, fixtures
and improvements located on the Leased Real
Property.
(viii) The Patent, Trademark and Product
Registration assignment documents as required
by Sections 7.6 and 7.7 hereof.
(ix) The Required Consents, subject to Section
2.6(b) of this Agreement.
(x) A deed of bargain and sale with covenants
against grantor's acts with respect to each
Owned Real Property (and such Improvements as
requested by Buyers) conveying to Buyers fee
simple title to such Owned Real Property,
subject only to Permitted Encumbrances, in
form and substance satisfactory to Buyers.
(xi) Any affidavits, indemnities and other
agreements or assurances required by the
Title Company to issue the Title Policies.
(xii) The 1998 statements of assets to be sold
and operations before interest and taxes with
an opinion of PricewaterhouseCoopers.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
EXCEPT AS PROVIDED IN THIS AGREEMENT AND THE OTHER PURCHASE
AGREEMENTS, BUYERS AGREE THAT (1) THE PURCHASED ASSETS ARE
BEING SOLD ON AN "AS IS, WHERE IS" BASIS WITHOUT ANY
REPRESENTATION OR WARRANTY AND (2) SELLERS SHALL HAVE NO
OBLIGATION OR LIABILITY WITH RESPECT TO THE ASSETS AFTER THE
CLOSING DATE.
Subject to Section 7.1, Sellers hereby, jointly and
severally, represent and warrant to Buyers as follows:
(Certain matters disclosed on any Schedule hereto may not be
required to be disclosed therein, but may be stated therein
for informational purposes only, and no such disclosure
shall constitute an indication or admission of the
materiality thereof or create a standard for disclosure or
constitute any admission by Sellers that any disclosed
matter is (i) in violation of any Applicable Law or (ii) in
breach of any contractual obligation. For purposes of
disclosure, disclosure on any Schedule shall be considered
disclosure for any other Schedules, if the relevancy of such
additional disclosure(s) to the subsequent schedules are
clear on the face of the first Schedule.) Sellers agree that
the warranties, covenants and representations contained in
this Agreement (including Sellers' responsibility therefor
pursuant to Article 11 hereof) extend to the assets being
transferred pursuant to the Other Purchase Agreements to the
extent that said warranties, covenants, and representations
would relate to such assets had such provisions appeared in
the Other Purchase Agreements. The foregoing
notwithstanding, these representations and warranties do no
extend to any Products listed as "discontinued" in Schedule
1.1(a)(i).
Section 3.1 Corporate Existence and Power
Each Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of its
jurisdiction of organization. Each Seller has all corporate
powers and all material governmental licenses,
authorizations, consents and approvals required (i) to carry
on its business as now conducted and as conducted on the
Closing Date (ii) to enter into this Agreement, and the
Ancillary Agreements to which it is a party and (iii) to
consummate the transactions contemplated hereunder and
thereunder. Each Seller is duly qualified to do business as
a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or
leased by it or the nature of its activities make such
qualification necessary, except for those jurisdictions
where failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect.
Section 3.2 Corporate Authorization
The execution, delivery and performance by each Seller of
this Agreement, and the Ancillary Agreements to which it is
a party and the consummation by Sellers of the transactions
contemplated hereby and thereby are within such Sellers'
corporate powers and have been duly authorized by all
necessary corporate action on the part of Sellers. With
respect to Sellers, each of this Agreement, and the
Ancillary Agreements to which Sellers are a party
constitutes a valid and binding agreement of Sellers,
enforceable against Sellers in accordance with its terms,
except as may be limited by bankruptcy, insolvency or
similar laws affecting the rights of creditors generally and
by the application of equitable principles.
Section 3.3 Governmental Authorization
The execution, delivery and performance by Sellers of this
Agreement require no action by or in respect of, or filing
with, any governmental body, agency, official or authority
other than compliance with any applicable requirements of
the HSR Act, the other Competition Laws and other
requirements, all as listed on Schedule 3.3.
Section 3.4 Non-Contravention
With respect to Sellers, the execution, delivery and
performance by Sellers of this Agreement, or the Ancillary
Agreements to which they are Parties do not and will not (i)
contravene or conflict with the certificate of incorporation
or bylaws (or similar organizational documents) of Sellers;
(ii) assuming compliance with the matters referred to in
Section 3.3, contravene or conflict with or constitute a
violation of any provision of any Applicable Law, (iii)
assuming the obtaining of all Required Consents and other
consents, constitute a default under or give rise to any
right of termination, cancellation or acceleration of any
right or obligation by Buyers or to a loss of any benefit
relating to the Business to which Sellers are entitled under
any provision of any agreement, contract or other instrument
binding upon Sellers or by which any of the Purchased Assets
is or may be bound or any Permit; or (iv) result in the
creation or imposition of any Lien on any Purchased Asset,
other than Permitted Liens.
Section 3.5 Required Consents
Schedule 3.5 sets forth each Material Contract or other
material instrument binding upon Sellers or their Affiliates
or any Permit requiring a consent with respect to the
execution, delivery and performance of this Agreement or the
other Purchase Agreements or the consummation of the
transactions contemplated hereby or thereby (each such
consent, and each Lease Consents is a "Required Consent" and
together the "Required Consents").
Section 3.6 Financial Information
Attached as Schedule 3.6 are, true, correct and complete
copies of its combined statements of assets to be sold and
of revenues and direct operating expenses of the of the
Business for the year ended December 31, 1999 (the
"Statements"). The Statements have been prepared in
accordance with accounting principles generally accepted in
the United States and present fairly in all material
respects the combined assets to be sold of the Business as
of the statement date and the operations before interest and
taxes of the Business for the period then ended. The
Statements have been audited by PricewaterhouseCoopers AG
who are independent public accountants within the meaning of
the United States Securities Act of 1933 and they have
expressed an opinion thereon in the form attached to the
Statements. As of the respective dates of the Statements,
the Business had no material liabilities or obligations of
any nature (absolute, accrued, contingent or otherwise)
except as were reflected on, or disclosed in, any notes
contained in the Statements. The costs associated with all
Active Employees and allocated employees performing work for
the Business and other business of Sellers, or their
Affiliates are reflected in the Statements.
Section 3.7 ERISA
With respect to each employee benefit plan maintained or
contributed to by RVI, to the best of their knowledge, RVI
is in full compliance with the applicable requirements of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Internal Revenue Code of 1986, as
amended, and other laws. RVI has no obligation to
contribute to any multiemployer plan (as defined in Section
3(37) of ERISA) with respect to any employee of the
Business. Roche Basle maintains no benefit plans subject to
ERISA.
Section 3.8 Absence of Certain Changes
(i) Except as set forth in Schedule 3.8 since
December 31, 1998 Sellers and their
Affiliates have conducted the Business in the
ordinary course consistent with past
practices and there has not been
(a) any Material Adverse Change;
(b) any incurrence, assumption or guarantee
by Seller and their Affiliates of any
indebtedness for borrowed money with
respect to the Business;
(c) any damage, destruction or other
casualty loss (whether or not covered by
insurance) affecting the Business or any
Purchased Asset which, individually or
in the aggregate, has had or is
reasonably likely to have a Material
Adverse Effect;
(d) any transaction, contract, agreement or
other instrument entered into, or
commitment made, by Sellers or their
Affiliates with any third party or
between or among Sellers or their
Affiliates and any of their Affiliates
relating to the Business or any
Purchased Asset (including the
acquisition or disposition of any
assets) or any relinquishment by Seller
of any contract or other right, in the
case of contracts with non-Affiliates,
material to the Business taken as a
whole, other than those contemplated by
this Agreement;
(e) any labor dispute, other than routine
individual grievances, or any activity
or proceeding by a labor union or
representative thereof to organize any
employees of the Business, or any
lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with
respect to such employees; or
(f) any capital expenditure, or commitment
for Five Million Dollars ($5,000,000) or
more , for additions or improvements to
property, plant and equipment of the
Business
(ii) Since December 31, 1999, Sellers have not
taken any action that, if taken after the
date hereof, would require the consent of
Buyer pursuant to Section 5.1 of the
Agreement.
Section 3.9 Properties
(a) Schedule 2.1.5(a) sets forth the address and
description of each Owned Real Property. With respect to
each Owned Real Property: (A) Except as may be disclosed on
Schedule 2.1.5(a), RVI has good and marketable indefeasible
fee simple title to such Owned Real Property, free and clear
of all liens and encumbrances, except Permitted Liens, (B)
except as set forth in Schedule 3.9(c), RVI has not leased
or otherwise granted to any Person the right to use or
occupy such Owned Real Property or any portion thereof; (C)
other than the right of Buyers pursuant to this Agreement,
there are no outstanding options, rights of first offer or
rights of first refusal to purchase such Owned Real Property
or any portion thereof or interest therein, and (D) Sellers
are not a party to any agreement or option to purchase any
real property or interest therein relating to the Business.
(b) Schedule 2.1.5(a) sets forth the address of each
Leased Real Property, and a true and complete list
of all Leases (including all amendments,
extensions, renewals, guaranties and other
agreements with respect thereto) for each such
Leased Real Property (including the date and name
of the parties to such Lease document, and the
commencement date, expiration date and fixed
annual rent payable under each such Lease). RVI
has delivered to Buyers a true and complete copy
of each such Lease document, and in the case of
any oral Lease, a written summary of the material
terms of such Lease. Except as set forth in
Schedule 3.9(c), with respect to each of the
Leases: (A) such Lease is legal, valid, binding,
enforceable and in full force and effect; (B)
Seller's possession and quiet enjoyment of the
Leased Real Property under such Lease has not been
disturbed; (C) neither RVI nor, to the knowledge
of RVI, any other party to the Lease is in breach
or default under such Lease, and no event has
occurred or circumstance exists which, with the
delivery of notice, the passage of time or both,
would constitute such a breach or default, or
permit the termination, modification or
acceleration of rent under such Lease; (D) no
security deposit or portion thereof deposited with
respect such Lease has been applied in respect of
a breach or default under such Lease which has not
been redeposited in full; (E) RVI does not owe any
brokerage commissions or finder's fees with
respect to such Lease; (F) the other party to such
Lease is not an affiliate of, or otherwise has any
economic interest in, Sellers; (G) RVI has not
subleased, licensed or otherwise granted any
Person the right to use or occupy such Leased Real
Property or any portion thereof; (H) Sellers have
not collaterally assigned or granted any other
security interest in such Lease or any interest
therein; and (I) there are no liens or
encumbrances on the estate or interest created by
such Lease. All action necessary to extend the
Lease relating the Van Buren, Arkansas facility
through May 1, 2001 has been validly completed by
RVI.
(c) The Owned Real Property and Leased Real Property
identified in Schedule 2.1.5(a) , (collectively,
the "Real Property") comprise all of the United
States real property used in the Business except
for field sales facilities and Sellers Nutley, NJ,
Belvidere, New Jersey and Parsippany, New Jersey
facilities.
(d) All buildings, structures, improvements, fixtures,
building systems and equipment, and all components
thereof, included in the Real Property (the
"Improvements") are in reasonably good condition
and repair and sufficient for the operation of the
Business. There are no known structural
deficiencies or defects affecting any of the
Improvements and, to the knowledge of Sellers,
there are no facts or conditions affecting any of
the Improvements which would, individually or in
the aggregate, interfere in any material respect
with the use or occupancy of the Improvements or
any portion thereof in the operation of the
Business.
(e) Except as described in Schedule 3.9(e), all Personal
Property including but not limited to machinery, equipment
or furniture, which Sellers own, lease or sublease, is in
good operating condition and fit for operation in the usual
course of business, ordinary wear and tear excepted. Except
as set forth on Schedule 3.9(e), Sellers have good and
marketable title to, or valid possessory interest in, the
Personal Property. All leases of Personal Property are
valid, binding and enforceable in accordance with their
respective terms, and there does not exist under any such
lease of Personal Property any material default or any event
which with notice or lapse of time or both would constitute
a material default. All buildings, fixtures and Personal
Property located on the Real Property are Purchased Assets.
(f) No Real Property or Personal Property is subject to any
Lien, except:
(i) Liens disclosed on Schedule 3.9(c);
(ii) Liens for assessments or governmental charges or taxes
not yet due or being contested in good faith; or
(iii) Liens which do not materially detract
from the value of such Purchased Asset as now
used, or materially interfere with any
present or intended use of such Purchased
Asset;
(clauses (i), (ii) and (iii) are, collectively, the
"Permitted Liens").
Section 3.10 Sufficiency of Assets
The Purchased Assets and the Third Party Shared Assets
constitute all of the assets which are used in the Business
except for the Excluded Assets. Since December 31, 1998
Sellers have not sold, transferred, licensed, assigned or
delivered to any Affiliate of Sellers any asset or property
related to the Business, except for intercompany transfers
of Products in the ordinary course of business.
Section 3.11 No Undisclosed Material Liabilities
To the Knowledge of Sellers there are no material
liabilities of the Business of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, other than the Excluded Liabilities.
Section 3.12 Litigation
Except as set forth in Schedule 3.12, there is no
investigation, action, suit or proceeding pending, or to the
Knowledge of Sellers, threatened against or affecting, the
Business or any Purchased Asset before any court or
arbitrator or any governmental body, agency or official (a
"Legal Action") which is reasonably likely to have a
Material Adverse Effect nor do Sellers have any knowledge of
any event or condition pertaining to the Business or any
Product that could reasonably result in a Legal Action which
would or is reasonably likely to have a Material Adverse
Effect. The foregoing notwithstanding the term "Legal
Action" is not intended to cover appeals pending before the
US Patent and Trademark Office Board of Appeals or Trademark
and Trial and Appeal Board (or comparable such bodies
throughout the world).
Section 3.13 Material Third Party Contracts
(a) Except for the Contracts disclosed in Schedule 2.1.4
neither Sellers nor their Affiliates are a Party to any
other Material Contracts.
(b) Each Material Contract is a valid and binding agreement
and is in full force and effect, and neither Sellers nor to
the Knowledge of Sellers, any other party thereto is in
default in any material respect under the terms of any such
Material Contract)
(c) Except as set forth in Schedule 3.13 (c),
Sellers are not restricted by agreement from
carrying on the Business anywhere in the world;
(c) Sellers grant no discounts or rebates to their
customers with respect to the Business nor are any sales
commissions or other payments made directly or indirectly
which are not properly reflected on the books and records of
the Business;
(e) Except as set forth on Schedule 3.13(e) no
customer has any right to return Products which
have either (i) been delivered to the customer or
(ii) recorded by the Business as a sale except as
in accordance with Sellers' return policy (a copy
of which is included as a part of the
aforementioned Schedule 3.13(e)).
(f) The commencement date for the Initial Term of the
Blending Agreement between Sellers and Farmland
Industries, Inc. is January 1, 1999. The total
payments for Plant Upgrades under said Agreement
is $1,980,000 of which $495,000 has been paid as
of the date hereof.
(g) Except as set forth on Schedule 3.13(g), Sellers
and their Affiliates have not entered into any
contracts relating to the Business which would
require the repayment or rebate after the Closing
of any sums paid or payable prior to the Closing
whether based upon the volume of Products
purchased after the Closing or otherwise.
Section 3.14 License and Permits
Schedule 3.14 lists each material license, permit or other
similar authorization used in the Business (the "Permits").
Except as set forth in Schedule 3.14, such Permits are valid
and in full force and effect; no material violations exist
in respect of any Permit; and no proceeding is pending or,
to the Knowledge of Sellers, threatened, looking towards the
revocation or limitation of any such Permit and, to the
Knowledge of Sellers, there is no basis or ground for any
such revocation or limitation except as specifically set
forth in Schedule 3.14. The Permits are all of the material
licenses, permits, or similar authorizations necessary to
operate the Business as operated by Sellers and their
Affiliates (it being understood that with regard to non- US
permits, this requirement is satisfied by those Product
Registrations listed in Schedule 2.1.3).
Section 3.15 Compliance with Laws
Sellers have complied and are complying in all respects,
with any Applicable Law, except for violations that have not
had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.16 Patents and Trademarks
(a) Schedules 2.1.1 and 2.1.2 identify the Patents and
Trademarks relating to the Business and owned directly or
indirectly (i.e., by way of example but not limitation, by
way of license) by Sellers and their Affiliates;
(b) Except as set forth on Schedules 3.16(b), the Patents
and Trademarks are duly registered and are subsisting on the
patent and trademark registers set forth therein. To the
best knowledge and belief of Sellers, including without
limitation those individuals responsible for the handling
and maintenance of the Patents and Trademarks, the Patents
and Trademarks (registered and non opposable) are in full
force and effect at the present time(subject to the
understanding that Schedule 2.1.2 may contain trademark
registrations and applications which are not supported by
use and may therefore be vulnerable to cancellation or may
unavoidably expire due to non-use) and all applications
listed in Schedules 2.1.1 and 2.1.2 are pending in the
patent and trademark offices of such countries;
(c) Schedule 3.16(c) sets forth all material licenses,
sublicenses and other agreements to which Sellers and their
Affiliates are Parties and pursuant to which Sellers and
their Affiliates and any third party are authorized to use
the Patents or the Trademarks;
(d) Except as set forth on Schedule 3.16(d), Sellers and
its Affiliates have not granted any rights of use to any
third party patents and trademarks or any other proprietary
rights or agreed to restrictions on limitations of use
relating to any of the Patents and Trademarks (registered
and non opposable). Schedule 3.16(d) also sets forth all
opposition involving the Trademarks (registered and not
opposable) filed by or against Sellers or their Affiliates.
(e) Except as set forth in Schedule 3.16(e), Sellers
and their Affiliates have no knowledge of any
continuing infringement by any third party of any
of the Patents or Trademarks transferred
hereunder, other than infringements against which
Sellers have filed an opposition.
(f) Except as set forth on Schedule 3.16(f), the
latest certificates and/or instruments evidencing
title of record in Sellers and its Affiliates to
the registrations or applications set forth in
Schedules 2.1.1 and 2.1.2 are in the possession of
the Sellers and its Affiliates (other than
certificates sent to trademark or patent
authorities for the purpose of recording renewals,
ownership changes or other administrative
proceedings.
(g) Except as set forth in Schedule 3.16(g) none of
the Patents or Trademarks (registered and not
opposable) is subject to any outstanding order,
judgment, decree, stipulation or agreement
restricting the use thereof by Sellers and its
Affiliates with respect to the Business or
restricting the licensing thereof by Sellers and
its Affiliates to any Person.
(h) Except as set forth in Schedule 3.16(h), Sellers
and their Affiliates are the direct and
unrestricted owner of all right, title and
interest in and to the Patents and Trademarks and
in and to the registrations thereof and the
applications therefor listed in Schedules 2.1.1
and 2.1.2 and no such right, title and interest
has been mortgaged, pledged, transferred or
assigned to any third party or is held subject to
any trust, or similar right, in favor of any third
party.
(i) Except as set forth in Schedule 3.16(i) the
Patents and Trademarks comprise all patents,
trademarks, service marks, trade dress, trade
names, service names and copyrights (including all
applications, registrations, extensions and
renewals thereof) which are necessary for the
conduct of the Business as currently conducted by
Sellers and their Affiliates other than those
which may have been registered by agents or
distributors of Sellers in accordance with local
laws and regulations.
(j) Except as set forth in Schedule 3.16(j), (i) to
the Knowledge of Sellers, including without
limitation those individuals directly responsible
for the handling and maintenance of the Patents
and Trademarks, the Products, Patents and
Trademarks (registered and not opposable) and the
sale and use thereof and the operation of the
Business by Sellers and their Affiliates do not
infringe any patents, trademarks or any other
proprietary rights of any third parties and (ii)
there is no action, suit or proceeding pending or,
to the Knowledge of Sellers, including without
limitation those individuals directly responsible
for the handling and maintenance of the Patents
and Trademarks, threatened against Sellers and its
Affiliates with respect thereto.
(k) Except as set forth on Schedule 3.16(k), the Technology
and Know-How comprise all technology, trade secrets, and
know-how which are necessary for the conduct of the Business
as currently conducted by Sellers and their Affiliates.
Section 3.17 Labor and Employment Matters
Except as disclosed on Schedule 3.17, with respect to the
Business: (i) there is no collective bargaining agreement
or relationship with any labor organization to which the
Business is a party or is otherwise bound; (ii) to the
Knowledge of Sellers, no executive or manager of the
Business is a party to any confidentiality, non-competition,
proprietary rights or other such agreement between such
employee and any other Person besides the Business that
would be material to the performance of such employee's
employment duties, or the ability of the Business to conduct
its business in the ordinary course; (iii) no labor
organization or group of employees has filed any
representation petition or made any written or oral demand
for recognition; (iv) to the Knowledge of Sellers, no union
organizing or decertification efforts are underway or
threatened and no other question concerning representation
exists; (v) no labor strike, work stoppage, slowdown, or
other material labor dispute has occurred within the past
[five] years, and none is underway or, to the knowledge of
Sellers, threatened; (vi) there is no workman's compensation
liability, experience or matter that could have a Material
Adverse Effect; (vii) there is no employment-related charge,
complaint, grievance, investigation, inquiry or obligation
of any kind, pending or, to the knowledge of Sellers',
threatened in any forum, relating to an alleged violation or
breach by the Business (or its officers or directors) of any
law, regulation or contract; (viii) to the knowledge of
Seller no employee or agent of Sellers or the Business has
committed any act or omission giving rise to liability for
any violation or breach identified in subsection (vii)
above; (ix) no Active Employee has rights under an unfunded
SERP or benefits under a life insurance policy funded by
Sellers; (x) no Active Employee will become vested in any
rights or benefits as a result of the transfer of the
Business to Buyers; and (xi) the operation of the Business
is in material compliance with all applicable health and
safety laws and regulations.
With respect to this transaction, any notice required under
any law or collective bargaining agreement has been given,
or will be given prior to Closing, and all bargaining
obligations with any employee representative have been, or
prior to the Closing will be, satisfied. Within the past
five years, Sellers have not implemented any plant closing
or mass layoff of employees as those terms are defined in
the Worker Adjustment and Retraining Notification Act of
1988, as amended, or any similar foreign, state or local
law, regulation or ordinance.
Section 3.18 Inventories
Except as set forth on Schedule 3.18(i), the Inventories
included in the Purchased Assets consist of items of a
quality and quantity currently useable and saleable in the
ordinary course of business consistent with past practice.
Schedule 3.18(ii) lists the manufacturing, warehousing,
distribution and consignee locations where inventory is
located.
Section 3.19 Products Registrations
Except as set forth in Schedule 3.19, the Product
Registrations are valid and in full force and effect and
represent all of the Product Registrations used in the
Business or necessary to conduct the Business except for
such Product Registrations which are in the aggregate
immaterial to the Business. Sellers have complied with their
obligations under the Product Registrations and with all
Applicable Laws in all material respects. Except as set
forth on Schedule 3.19, there is no pending governmental or
third party proceeding nor, to Seller's knowledge, is any
such proceeding threatened or reasonably anticipated, except
in each case for such as would be immaterial to the
Business.
Section 3.20 Environmental Compliance
Except as set forth in Schedule 3.20 (i) the operations of
the Business and the Purchased Assets have complied and are
in compliance with Environmental Laws; except for such
instances of non-compliance which, individually or in the
aggregate, could not reasonably be expected to have a
Material Adverse Effect (ii) there is no pending or, to the
Knowledge of Sellers, threatened civil or criminal
litigation or suit, action, claim, enforcement, proceeding
or investigation by any Person, including any Governmental
Authority, or written notice of violation of, or formal
administrative proceeding relating to, any existing
Environmental Laws involving the Business or the Purchased
Assets (iii) neither Sellers, nor their Affiliates has,
with respect to the Business or the Purchased Assets,
treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any
substance, or owned or operated the Business or any other
property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has
given or would give rise to any liabilities or
investigatory, corrective or remedial obligations pursuant
to Environmental Laws and (iv) Sellers have furnished to
Buyer all environmental audits, reports and other material
environmental documents relating to the Business or the
Purchased Assets which are in its possession or under its
reasonable control.
Section 3.21 Finders' Fees
There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to
act on behalf of Sellers who might be entitled to any fee or
commission from Sellers or any of their Affiliates upon
consummation of the transactions contemplated by this
Agreement and Sellers will indemnify Buyers and hold them
harmless from and against any liabilities to any such
investment banker, broker, finder or other intermediary
retained by or authorized to act on behalf of Sellers.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers hereby, jointly and severally, represent and warrant
to Sellers that:
Section 4.1 Corporation Existence and Power
Buyers are a corporation or general partnership (as
designated in the first paragraph of this Agreement) duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of organization. Buyers have
all corporate or partnership powers (as appropriate) and all
material governmental licenses, authorizations, consents and
approvals required (i) to carry on their business as now
conducted and as conducted on the Closing Date and (ii) to
enter into this Agreement the Other Purchase Agreements to
which they are a party and the Ancillary Agreements to which
they are a party and (iii) to consummate the transactions
contemplated hereunder and thereunder.
Section 4.2 Corporate Authorization
The execution, delivery and performance by Buyers of this
Agreement, and the Ancillary Agreements to which they are a
party and the consummation by Buyers to the transactions
contemplated hereby and thereby are within the corporate or
partnership powers (as appropriate) of Buyers and have been
duly authorized by all necessary corporate action on the
part of Buyers. Each of this Agreement, and the Ancillary
Agreements to which Buyers are a party constitutes a valid
and binding agreement of Buyers, enforceable against Buyers
in accordance with their terms, except as may be limited by
bankruptcy, insolvency or similar laws affecting the rights
of creditors generally and by the application of equitable
principles.
Section 4.3 Governmental Authorization
The execution, delivery and performance by Buyers and their
Affiliates of this Agreement require no action by or in
respect to, or filing with, any governmental body, agency,
official or authority other than compliance with any
applicable requirements of the HSR Act, the other
Competition Laws and other requirements, all as listed on
Schedule 3.3.
Section 4.4 Non-Contravention
The execution, delivery and performance by Buyers of this
Agreement, the Other Purchase Agreements to which they are a
party and the Ancillary Agreements to which they are a party
do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws (or similar
organization documents) of Buyers; or (ii) assuming
compliance with the matters referred to in Section 4.3,
contravene or conflict with any provision of any law,
regulation, judgment, injunction, order or decree binding
upon or applicable to Buyers.
Section 4.5 Advisory Fees
Except for the retention of Bear Stearns & Co., and
Donaldson, Lufkin and Jenrette the fees and expenses with
respect to which will be paid by Buyers, there is no
investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf
of Buyers who might be entitled to any fee or commission
from Buyers or any of their Affiliates upon consummation of
the transactions contemplated by this Agreement and Buyers
will indemnify Sellers and hold them harmless from and
against any liability to any such investment banker, broker,
finder or other intermediary retained by or authorized to
act on behalf of Buyers.
Section 4.6 Financing
As of the date of execution of this Agreement, Buyers have
received and furnished a copy to Sellers of a commitment
letter signed by First Union Bank, in form attached as
Schedule 4.6, to provide for the financing of $225 Million
of Purchase Price (the "Commitment Letter"), along with a
letter from the Treasurer of Alpharma Inc. certifying that
the Sellers have at least $100 Million in unused borrowing
capacity under existing lines of credit. The Commitment
Letter is in full force and effect. At Closing, Buyers
shall have sufficient funds to pay the Purchase Price.
ARTICLE 5
COVENANTS OF SELLERS
Section 5.1 Conduct of the Business
From the date hereof until the Closing Date, Sellers shall
conduct the Business in the ordinary course consistent with
past practice, use their diligent efforts to preserve intact
the Business and relationships with third parties and,
taking into account the effects of this Agreement and the
transactions contemplated hereby, keep available the
services of the present employees of the Business in light
of the present circumstances and without requiring Sellers
to pay stay bonuses to such employees in more than an
aggregate amount of $2,385,858.40. Without limiting the
generality of the foregoing, from the date hereof until the
Closing Date, Sellers will not, without the consent of
Buyers, which consent shall not be unreasonably withheld or
delayed (A) sell, lease, license or otherwise dispose of any
Purchased Asset other than sales of inventory in the
ordinary course of business, (B) make any significant
capital improvements, except (i) pursuant to existing
contracts or commitments (ii) in the ordinary course
consistent with past practice, (C) other than the
implementation of scheduled merit or step-rate wage
increases, increase or decrease the rates of pay or fringe
benefits of the employees of the Business, (D) bid upon or
enter into any contract or commitment or engage in any
transaction not in the usual and ordinary course of the
Business consistent with its past practices including
without limitation any price discounts, extended payment
terms or other business methods having the effect of
abnormally increasing distributor or customer inventories or
requiring Buyers to deliver Products at a price which is
less than that paid by the customer at any time between the
date hereof and the Closing (E) enter into any leases of
capital equipment not consistent with past practices, (F)
create any indebtedness or obligation which would be or
could reasonably become a lien or encumbrance on the
Purchase Assets, (G) do any acts or omit to do any acts or
permit any acts or omissions to act, which will cause a
breach of any Material Contract, or other material
obligation related to the Business, (H) fail to keep in
effect and undiminished any insurance now in effect, (I)
settle or agree to settle, any significant claim, action,
suit, proceeding or investigation involving the Business or
to waive any material right with respect thereto in a manner
that adversely affects the Business (J) fail to maintain the
tangible Purchased Assets in substantially the same
condition as existing on this date, ordinary wear and tear
excepted, (K) amend, extend, or terminate any Material
Contract, (L) hire any new employees-other than as
replacements for terminated employees-for the Business
without the consent of Buyer, and (M) take or agree or
commit to take any action that would make any representation
and warranty of Sellers hereunder inaccurate in any material
respect at, or as of any time prior to, the Closing Date.
Section 5.2 Access to Information
Except as prohibited by any Applicable Law, from the date
hereof until the Closing Date, Sellers, subject to
Applicable Laws, will continue to furnish to Buyers and its
authorized representatives such financial and operating data
and other information relating to the Business as Buyers may
reasonably request and Buyers shall have reasonable access
to the facilities and non-union employees of the Business
during normal business hours upon reasonable prior notice;
provided that (i) Buyers shall not interfere unreasonably
with the conduct of the Business and (ii) all persons
receiving such information shall have agreed in writing to
abide by the provisions of Section 7.2(a).
Section 5.3 Notices of Certain Events
Sellers shall promptly notify Buyers of:
(i) any notice or other communication from any person
alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement;
(ii) any material notice or other communication from any
governmental or regulatory agency or authority in connection
with the Business or the transactions contemplated by this
Agreement;
(iii) any actions, suits, claims,
investigations or proceedings commenced or,
to the knowledge of Sellers threatened
against, relating to or involving or
otherwise affecting Sellers or the Business
that, if pending on the date of this
Agreement would have been required to have
been disclosed pursuant to Section 3.12 or
that relate to the consummation of the
transactions contemplated by this Agreement;
and,
(iv) any breach of this Agreement
Section 5.4 Real Estate
Sellers shall use their reasonable best efforts to assist
Buyers in obtaining the Title Commitments, Title Policies
and Surveys in form and substance as set forth in Section
10.2 of this Agreement, within the time periods set forth
therein, including, without limitation, removing from title
any liens or encumbrances which are not Permitted Liens.
Sellers shall provide the Title Company with any affidavit,
indemnity or other assurances requested by the Title Company
to issue the Title Policies.
Section 5.5 Cooperation in Financings
Sellers agree to cooperate with, and provide reasonable
assistance to, Buyers (at Buyers' expense) in connection
with any sale or distribution of securities (whether
registered or otherwise) made by Buyers or any of their
Affiliates in connection with the consummation of the
transactions contemplated hereby, including, without
limitation; (i) making available on a timely basis such
information of Sellers as may reasonably be required in
connection with any such sale or distribution; (ii)
obtaining "cold comfort" letters and updates thereof from
Sellers' independent certified public accountants' , with
such letters to be in customary form and to cover matters of
the type customarily covered by accountants in such
transactions; (iii) making available representatives of
Sellers and their accountants in connection with any such
sale or distribution, including for purposes of due
diligence related thereto, and (iv) an opinion of counsel to
the effect that this Agreement has been duly authorized an
executed by Sellers and is a binding obligation upon
Sellers. It is understood and agreed that this Agreement
shall not create responsibility or any liability of Sellers
for the success (or failure) of Buyers' financing efforts
under any circumstances.
Section 5.6 DuCoa LP Manufacturing and Other Agreements
Sellers agree to use all reasonable efforts to secure the
execution by DuCoa LP ("DuCoa") of the following agreements,
all of which are designed to insure that current manufacture
of certain Products can continue in the event that DuCoa
becomes financially incapable of doing so, such agreements
are the Amendment No. 1 to the Contract Manufacturing
Agreement, Lease Agreement, License Agreement, Sublease
Agreement, Intercreditor Agreement and Security Agreement ;
all as relating to the manufacturing actually carried on at
DuCoa's facilities located at Chattanooga, Tennessee and
Highland, Illinois.
ARTICLE 6
COVENANTS OF BUYERS
Section 6.1 Access
Buyers agree that on and after the Closing Date, Buyers will
afford promptly to Sellers and their agents reasonable
access (including the right to make copies, as appropriate)
at reasonable times during normal business hours and on
reasonable notice to the Business properties, books and
records transferred to Buyers by Sellers, and Buyer's
employees and auditors, to the extent necessary to permit
Sellers to determine any matter relating to their rights and
obligations hereunder or to any period ending on or before
the Closing Date; provided that any such access by Sellers
shall not unreasonably interfere with the conduct of the
business of Buyers; and provided further that Buyers shall
cause any documents that have an attorney-client privilege
to be treated in such a way as to maintain, to the extent
reasonably practicable, such attorney-client privilege.
Sellers will hold, and use their diligent efforts to cause
their officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative
process or by other requirements of law (in which case
Sellers shall promptly notify Buyers of such judicial or
administrative process and cooperate with Buyers, at Buyers'
sole cost, in Buyers' attempt to obtain protective orders or
other available relief), all confidential documents and
information concerning the Business provided to it pursuant
to this Section 6.1.
Section 6.2 Transfer of the Products
Following Closing, Buyers and their Affiliates shall use
their best efforts and Sellers shall reasonably cooperate,
to obtain, at Buyer's expense, as expeditiously as possible
such material governmental approvals and registrations from
the competent regulatory authorities, as may be necessary to
enable Buyers or Buyer's designee to market, promote and
sell the Products. It is understood that Buyers shall use
their best efforts to obtain the balance of such approvals
within nine (9) months after the Closing.
Section 6.3 Notices of Certain Events
Buyers shall promptly notify Sellers of:
(i) any notice or other communication from any person
alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement;
(ii) any material notice or other communication from any
governmental or regulatory agency or authority in connection
with the Business or the transactions contemplated by this
Agreement;
(iii) any actions, suits, claims,
investigations or proceedings commenced or,
to the knowledge of Buyers, threatened
against, relating to or involving or
otherwise affecting Buyers or the Business
that, if pending on the date of this
Agreement, relate to the consummation of the
transactions contemplated by this Agreement;
and,
(iv) any breach of this Agreement
Section 6.4 Labeling
Following Closing, Buyers and their Affiliates shall, at
their own expense and as expeditiously as possible, use all
reasonable efforts to create Buyers' own labeling of the
Products and to obtain such regulatory approvals as may be
necessary therefore. Buyers' labeling shall not contain any
references to Sellers or Sellers' Affiliates. Following
regulatory approval, Buyers shall implement Buyer's labeling
on all packaging materials, promotional materials and all
advertising, provided however that Buyers may use Sellers'
labeling on the Inventory existing as of the Closing for a
period not to exceed the 6 (six) months after regulatory
approval of Buyers' labels. Subject to applicable laws and
regulations, Buyers and their Affiliates may use the
Sellers' labeling on the Inventory only in connection with
clearly identifying Buyers and their Affiliates as the
responsible person for commercializing the Products in a way
which is customary in the industry and which is to be
approved in advance by Sellers.
Section 6.5 Financing
Buyers agree to use their best efforts to complete the
financing referred to in Section 4.6 or alternate financing
fully satisfactory for Buyers to perform their commitments
under Section 2.8. Without limitation, in the case of a
financing referred to in Section 4.6, Buyers agree to use
their best efforts (i) to perform all of Buyers' obligations
under the Commitment Letter, (ii) to take all actions
necessary to cause the conditions of the Commitment Letter
to be satisfied and (iii) not to amend or waive any
provision of the Commitment Letter in any manner which would
adversely affect the consummation of this transaction
without the prior written consent of Sellers.
ARTICLE 7
COVENANTS OF BUYERS AND SELLERS
Section 7.1 Disclosure Schedules and Exhibits
Notwithstanding any other provision herein to the contrary,
Sellers and Buyers agree that:
(i) Sellers shall deliver to Buyers concurrently herewith,
a complete set of the Schedules referred to herein which
shall be attached to this Agreement and deemed to be the
Schedules referred to herein;
(ii) the representations and warranties made herein by
Sellers on the date hereof except for the representations
and warranties set forth in Sections 3.1, 3.2 and 3.4, are
qualified to the extent set forth in the first paragraph of
Article 3 by the Schedules to be delivered by Sellers as
contemplated by subsection (i) above; and,
(iii) the Ancillary Agreements, shall
concurrently herewith be attached hereto as
Schedules to this Agreement .
Section 7.2 Confidentiality
(a) Buyers agree that prior to the Closing Date and after
any termination of this Agreement, Buyers and their
Affiliates will hold, and will use their diligent efforts to
cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements
of law (in which case Buyers shall promptly notify Sellers
of such judicial or administrative process and cooperate
with Sellers, at Sellers' sole cost, in Sellers' attempt to
obtain protective orders or other available relief), all
confidential documents and information concerning the
Business or Sellers or their Affiliates furnished to Buyers
or their Affiliates in connection with the transactions
contemplated by this Agreement, except to the extent that
such information can be shown by written records to have
been (i) previously known on a nonconfidential basis by
Buyers other than from Sellers or their Affiliates, (ii) in
the public domain through no fault of Buyers or anyone to
whom Buyers disclosed the information or (iii) later
lawfully acquired by Buyers from sources other than Sellers
or their Affiliates; provided that Buyers may disclose such
information to their officers, directors, employees,
accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this
Agreement so long as such persons have a need to know and
are informed by Buyers of the confidential nature of such
information and agree to treat such information
confidentially. The obligation of Buyers and their
Affiliates to hold any such information in confidence shall
be satisfied if they exercise the same care with respect to
such information as they would take to preserve the
confidentiality of their own similar information. If this
Agreement is terminated, Buyers and their Affiliates will,
and will use their diligent efforts to cause their
respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or
deliver to Sellers, upon request, all documents and other
materials, and all copies thereof, obtained by Buyers or
their Affiliates or on their behalf from Sellers or their
Affiliates in connection with this Agreement that are
subject to such confidential treatment.
(b) Sellers agree that on or after the Closing Date,
Sellers and their Affiliates will hold, and will
use their diligent efforts to cause their
respective officers, directors, employees,
accountants, counsel, consultants, advisors and
agents to hold in confidence, unless compelled to
disclose by judicial or administrative process or
by other requirements of law (in which case
Sellers shall promptly notify Buyers of such
judicial or administrative process and cooperate
with Buyers, at Buyer's sole cost, in Buyer's
attempt to obtain protective orders or other
available relief), all confidential documents and
information concerning the Business and
transferred at Closing to Buyers or their
Affiliates in connection with the transactions
contemplated by this Agreement, except to the
extent that such information can be shown by
written records to have been (i) previously known
on a non-confidential basis by Sellers other than
from Buyers or their Affiliates, (ii) in the
public domain through no fault of Sellers, (iii)
later lawfully acquired by Sellers from
independent sources or (iv) as otherwise provided
in any Ancillary Agreement. The obligation of
Sellers and their Affiliates to hold any such
information in confidence shall be satisfied if
they exercise the same care with respect to such
information as they would take to preserve the
confidentiality of their own similar information.
Section 7.3 Diligent Efforts; Further Assurances; ISRA
Compliance
(a) Subject to the terms and conditions of this
Agreement, both before and after the Closing, each
party will use its diligent efforts to take, or
cause to be taken, all actions and to do, or cause
to be done, all things necessary or desirable
under Applicable Laws to consummate the
transactions contemplated by this Agreement
whether at or after the Closing. Sellers and
Buyers each agree to execute and deliver such
other documents, certificates, agreements and
other writings and to diligently take such other
actions as may be necessary or desirable in order
to consummate or implement expeditiously the
transactions contemplated by this Agreement.
(b) If any objections under any Competition Law are
asserted with respect to the transactions contemplated
hereby, or if any suit is instituted by any Governmental
Authority challenging any of the transactions contemplated
hereby as violative of any Competition Law, Buyers and
Buyer's Affiliates shall use their best efforts to resolve
such objections in order to permit consummation of the
transactions contemplated by this Agreement.
(c) Both before and after the Closing, RVI shall, acting
diligently and in good faith, take all actions necessary, at
RVI's sole cost and expense, to achieve compliance with the
New Jersey Industrial Site Recovery Act with respect to the
Wrightstown, New Jersey facility (including any
investigation or remediation required for purposes of such
compliance after the Closing, whether in connection with a
Remediation Agreement or otherwise) and shall present Buyers
with written approval from all appropriate Governmental
Authorities with respect to completion of such compliance
(including without limitation such post-Closing
investigation or remediation). Sellers shall take all such
actions in a manner which does not interfere with Buyers'
conduct of the Business at such facility, shall keep Buyers
reasonably appraised of the progress of such actions, and
shall obtain Buyers' approval (not to be unreasonably
withheld or delayed) with respect to any material decisions,
governmental filings, or actions relating to such
compliance.
Section 7.4 Certain Filings
Sellers and Buyers shall use their reasonable efforts to
cooperate with one another (a) in determining whether any
action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of
the transactions contemplated by this Agreement and (b) in
taking such actions or making any such filings, furnishing
information required in connection therewith and seeking
timely to obtain any such actions, consents, approvals or
waivers.
Section 7.5 Public Announcements
Neither Buyers nor Sellers shall issue any notice, press
release or similar communication concerning this Agreement
or the transactions contemplated hereby except (a) in
connection with the financing referred to in Section 4.6
hereof or any alternate financing (b) with the prior written
approval of the other party (not to be unreasonably withheld
or delayed) or (c) to the extent required by Applicable Law
or any listing agreement with any national securities
exchange (but in either case only after using reasonable
efforts to review such communication with each other party).
Section 7.6 Assignment of Patents and Trademarks
At Closing, Buyers and Sellers shall execute a general,
worldwide Deed of Assignment in the form attached hereto as
Exhibit C. Following the Closing, Buyers shall use all
reasonable efforts to record, as expeditiously as possible,
the transfer of the Patents and Trademarks with the
competent authorities in each applicable territory. Buyers
shall prepare and Sellers and their Affiliates shall execute
such documents as Buyers may reasonably request in order to
assign the Patents and Trademarks and record the assignment
of the Patents and Trademarks in each applicable territory.
The responsibility and expense of preparing and filing such
documents and any actions required ancillary thereto, shall
be borne by Buyers. Until assignment and recordation of all
legal right, title and interest in the Patents and
Trademarks in Buyers' name, or that of its designees, has
been effectuated in each territory, Sellers and their
Affiliates agree to cooperate fully with Buyers, at the
discretion and expense of Buyers, in protecting such rights,
by way of example but not limitation: maintaining the
Patents and Trademarks; protecting the Trademarks against
hostile attack in the nature of cancellation and opposition
proceedings; and in defending against infringement or
attempts to register confusingly similar marks by third
parties. After such assignment and recordation of legal
right, title and interest is effectuated, Sellers and their
Affiliates will reasonably cooperate with Buyers, after the
Closing, at the discretion and expense of Buyers, in such
protection when it is necessary to refer to intellectual
property rights formerly owned by Sellers and its
Affiliates. Notwithstanding anything contained elsewhere
herein, Buyers shall hold Sellers and their Affiliates
harmless from and against any loss or damage, including but
not limited to fees, penalties, fines or third party claims,
due to Buyers' failure to record any assignment of any such
Patents and Trademarks pursuant to this Article, except if
such loss or damage is due to the conduct of Sellers and/or
their Affiliates.
Sellers and their Affiliates will take all reasonable
actions in connection with all Patent and Trademark
maintenance and renewals falling due in the year 2000 prior
to the Closing. Sellers will pay the renewal and
maintenance fees for any Patent and Trademark renewals
initiated by Sellers prior to the Closing. All other
renewals and maintenance fees as well as the costs and
expenses of defending the Patents and Trademarks against
infringements by third parties (subject to Section 11.2
hereof) occurring after the Closing Date shall be paid by
Buyers. On and after the Closing, neither Sellers nor any
of their Affiliates shall utilize any of the Patents and
Trademarks set forth in Schedules 2.1.1 and 2.1.2 except as
contemplated under the Transition Services Agreements
Section 7.7 Assignment of the Product Registrations
Following the Closing, Buyers shall use all reasonable
efforts to record, as expeditiously as possible, the
transfer of the Registrations with the competent authorities
in each applicable territory, except where such assignment
may be prohibited by law and Sellers and their Affiliates
shall reasonably cooperate with such efforts. At or
following Closing, Buyers shall prepare and Sellers and
their Affiliates shall execute such documents as Buyers may
reasonably request in order to record the assignment of the
Registrations. The responsibility and expense of preparing
and filing such documents and any actions required ancillary
thereto, shall be borne by Buyers. Notwithstanding anything
contained elsewhere herein, Buyers shall hold Sellers and
their Affiliates harmless from and against any loss or
damage, including but not limited to fees, penalties, fines
or third party claims, due to Buyer's failure to record any
assignment of any such Registrations pursuant to this
Article, except if such loss or damage is due to the conduct
of Sellers or their Affiliates.
Sellers will pay the user fees for the Registrations
accruing prior to Closing. Any such fees occurring after the
Closing Date shall be paid by Buyers.
Section 7.8 Returns
Notwithstanding any other provision herein to the contrary,
Sellers and Buyers agree that, for a period of six (6)
months after the Closing Date Sellers, or their Affiliates,
shall reimburse Buyers, or their Affiliates, for refunds
(and the documented reasonable costs and expenses associated
therewith) made with respect to Product which was sold by
Sellers prior to the Closing Date, but returned to Buyers on
or after the Closing Date pursuant to Sellers' return policy
or as permitted by applicable laws relating to defective or
non-conforming goods and during such six (6) month period
Buyers shall be responsible for all other Product returns
and the costs and expenses associated therewith.
Section 7.9 Litigation
Sellers and Buyers agree to notify each other of any
action, suit, investigation or proceeding pending, or to the
knowledge of Buyers or Sellers threatened or affecting,
Buyer or Seller before any court or arbitrator or any
governmental body, agency or official which in any manner
challenges or seeks to prevent, enjoin, after or materially
delay the transactions contemplated hereby
ARTICLE 8
TAX MATTERS
Section 8.1 Tax Definitions
The following terms, as used herein, have the following
meanings:
"Code" means the Internal Revenue Code of 1986, as amended;
"Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.
"Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the close of business on the
Closing Date.
"Tax" or "Taxes" means any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad
valorem, franchise, capital, paid-up capital, profits, value
added, green mail, license, withholding, payroll, employment
and unemployment disability, social security (or similar),
excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty, VAT or
other tax, transfer, registration, governmental fee or other
like assessment or charge of any kind whatsoever, together
with any interest or any penalty, addition to tax or
additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of any
such tax ("Taxing Authority").
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
Section 8.2 Tax Matters
(a) Sellers hereby represent and warrant to Buyers
that the Purchased Assets shall be free and clear
of any and all Liens for Taxes with respect to the
Pre-Closing Tax Period other than Permitted Liens
for Taxes not yet due and payable and any Taxes
for the Pre-Closing Tax Period which are or become
assessable and not paid prior to the Closing shall
be paid by the Sellers.
(b) The Sellers have withheld and timely paid all
taxes they reasonably believe were required to
have been withheld and paid in connection with
amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third
party related to the Business.
(d) The Sellers have filed all tax returns that they
reasonably believe were required to be filed which relate to
or include the Business. All such Tax Returns were correct
and complete in all material respects and all taxes shown on
such Tax Returns have been paid.
Section 8.3 Tax Cooperation; Allocation of Taxes
(a) Buyers and Sellers agree to furnish or cause to be
furnished to each other, upon request, as promptly
as practicable, such information and assistance
relating to the Purchased Assets and the Business
as is reasonably necessary for the filing of all
returns, and making of any election related to
Taxes (other than an election under Section
338(h)(10) of the Code), the preparation for any
audit by any Taxing Authority, and the prosecution
or defense of any claim, suit or proceeding
relating to any Tax Return. Buyers and Sellers
agree to retain or cause to be retained all books
and records pertinent to the Business for at least
10 years or until the applicable period for
assessment under Applicable Law has expired
(giving effect to any and all extensions or
waivers) and to abide by or cause the abidance
with all record retention agreements entered into
with any Taxing Authority. After the Closing,
Buyers will give Sellers reasonable notice prior
to transferring, discarding or destroying any
books or records relating to Tax matters and, if
the Sellers so request, Buyers will allow Sellers
to take possession of such books and records.
Sellers and Buyers shall cooperate with each other
in the conduct of any audit or other proceeding
related to Taxes involving the Business and each
shall execute and deliver such documents as are
necessary to carry out the intent of this
paragraph (a) of Section 8.3.
(b) All real property Taxes, personal property Taxes
and similar ad valorem obligations levied with
respect to the Purchased Assets for a taxable
period which includes (but does not end on) the
Closing Date (collectively, the "Apportioned
Obligations") shall be apportioned between Sellers
and Buyers as of the Closing Date based on the
number of days of such taxable period included in
the Pre-Closing Tax Period and the number of days
of such taxable period included in the Post-
Closing Period. Sellers shall be liable for the
proportionate amount of such Taxes that is
attributable to the Pre-Closing Tax Period, and
Buyers shall be liable for the proportionate
amount of such Taxes that is attributable to the
Post-Closing Tax Period. At the Closing, Sellers
and Buyers shall present statements to each other
setting forth the amount of reimbursement to which
each is entitled under this Section 8.3(b)
together with such supporting evidence as is
reasonably necessary to calculate the proration
amount. The proration amount shall be paid by the
party owing it to the other at the Closing.
Thereafter, Sellers shall notify Buyers upon
receipt of any bill for real or personal property
taxes relating to the Purchased Assets, part or
all of which are attributable to the Post-Closing
Tax Period, and shall promptly deliver such bill
to Buyers who shall pay the same to the
appropriate Taxing Authority. In the event that
either Sellers on the one hand or Buyers on the
other hand shall thereafter make a payment for
which it is entitled to reimbursement under this
Section 8.3(b), the other party shall make such
reimbursement promptly but in no event later than
thirty (30) days after the presentation of a
statement setting forth the amount of
reimbursement to which the presenting party is
entitled along with supporting evidence as is
reasonably necessary to calculate the amount of
reimbursement. Any payment required under this
Section and not made within 10 days of receipt of
the statement shall bear interest at LIBOR from
the date such payment was due through the date
such payment is made.
(c) Subject to Section 8.3(d), any transfer,
documentary, sales, use or other Taxes assessed
upon or with respect to the transfer of the
Purchased Assets to Buyers and any recording or
filing fees with respect thereto shall be borne by
Buyers.
(d) Any value added tax (or equivalent tax) to which
Buyers are entitled to claim a credit shall be
borne one hundred percent (100%) by Buyers.
ARTICLE 9
EMPLOYEE BENEFITS
Section 9.1 Employees and Offers of Employment
(a) Prior to Closing and effective on the Closing
Date, Buyers or an Affiliate of Buyers will offer
employment to substantially all Active Employees
(as defined below); Buyers shall give Sellers a
list of those Active Employees who will and will
not receive job offers. Buyers shall inform
Sellers if any such employment offers will only be
for a transition period of one year or less as
well as give Sellers the dates for which Buyers
shall need such employees. Sellers shall keep such
employees on Sellers' payroll and sever them at
the end of such identified transition period in
which case such employees will not be Transferred
Employees, as defined below, and such services
shall be covered as part of a Transition Services
Agreement between Sellers and Buyers. Such
employment offers shall be at base pay equivalent
to or greater in value to that which said employee
has with Sellers immediately preceding the Closing
Date and, shall be for employment at a location
that requires a commute from the employee's
residence of no more than fifty (50) miles greater
than said employees commute to the location at
which such employee was located while employed by
Sellers on the Closing Date ("Same Geographic
Location") unless Buyers otherwise notify Sellers
in writing. Any employee who accepts such offer
is a "Transferred Employee". Except for the
obligations to the Sellers as set forth in Section
9.1(b) hereof, Buyers shall have no obligation
with respect to any employee of Sellers who does
not accept an offer of employment from Buyers.
For purposes of this Article 9, the term "Active
Employee" shall mean any person who, on the
Closing Date, is actively employed by Sellers in
connection with the Business and is designated as
a "direct" employee in the list of employees given
by Sellers to Buyers including any Active Employee
who is on short term disability leave, authorized
leave of absence for reasons other than
disability, or military service as of the Closing
Date (such inactive employees may be offered
employment by Buyers as of the date they return to
active employment), but shall exclude all
employees of the VFA centers at Village Neuf,
France and Nutley, New Jersey and any other
inactive or former employee including any Person
who has been on long-term disability leave or
unauthorized leave of absence or who has
terminated his or her employment or retired on or
before the Closing Date. From and after the
Closing, Buyers shall be liable for and provide
the Transferred Employees with benefit
arrangements and conditions of employment no less
favorable than those provided to similarly
situated employees of Buyers, except as varied by
this Article 9. Buyers agree to grant to
Transferred Employees prior service credit for all
purposes, other than benefit accrual, under
Buyers' employee benefit plans including Buyers'
Retirement Plan and Buyers' Savings Plan. Prior
service will include all service recognized by
Seller as of the Closing Date. Buyers are
responsible for the selection of the Active
Employees and shall indemnify and hold harmless
Sellers from and against any damages, claims,
costs, liabilities, or expenses (including
reasonable attorneys fees) arising from the
employees selection decision.
(b) In the event Buyers terminate the employment of
any Transferred Employee after such employee has
begun working for the Buyers, Buyers shall pay
severance to such Transferred Employee in
accordance with Buyers' severance plan in effect
at the time of such termination. However, in the
event a non-union Transferred Employee is
terminated by Buyers within one year of the
Closing Date, other than for disciplinary reasons,
Buyers agree to pay severance benefits to such
Transferred Employees equal to the severance
benefits set forth on Schedule 9.1(b), which are
equal to what Sellers have agreed to pay employees
terminated as a result of this transaction. This
shall include severance pay, outplacement and
three free months COBRA medical including
prescription. Sellers shall reimburse Buyers
eight weeks' base pay for each employee so
terminated. If Sellers are obligated by operation
of law to pay severance to Transferred Employees,
Buyers shall not be required to pay the severance
required by the preceding sentence, but shall
reimburse Sellers an amount equal to two weeks'
base pay for each such employee terminated by
Buyers multiplied by the employee's full years of
service with Sellers. For those Active Employees
entitled to severance from Sellers because they do
not get a job offer from Buyers, or because the
job offer is not at the same base pay or in the
Same Geographic Location or because their services
will be covered under the Transition Services
Agreement pursuant to Section 9.1 Sellers shall
pay the required severance and Buyers shall
reimburse Sellers an amount equal to two weeks'
base pay for each such employee multiplied by the
employee's full years of service with Sellers.
Sellers shall be liable for any severance payments
in excess of the severance benefit set forth on
Schedule 9.1(b) to the extent such payments are
based upon or required by a commitment of Sellers
or Sellers course of conduct prior to the Closing.
After the Closing Date, Buyers will have sole
responsibility for any obligations or liabilities
to Transferred Employees that arise from events
occurring after the Closing Date at all locations
under the Worker Adjustment and Retraining
Notification Act ("WARN") or other similar statute
or regulations of any jurisdiction relating to any
plant closing or mass layoff. Sellers shall not
be liable for any increase in severance payment
for a Transferred Employee caused by Buyer's
failure to comply with law or to conduct a fair
dismissal.
Section 9.2 Sellers' Employee Benefit Plans
(a) Sellers or their designated Affiliates shall retain all
liabilities and obligations in respect of benefits accrued
on or prior to the Closing Date by Active Employees under
any employee plans and benefit arrangements. Sellers shall
be liable for all employer contributions to be made to the
employee plans on behalf of Transferred Employees with
respect to benefits accrued prior to the Closing Date.
Neither Buyers nor any of their Affiliates shall have any
liability with respect to Sellers' employee plans and
benefit arrangements. No assets of any employee plan or
benefit arrangement shall be transferred to Buyers or any of
their Affiliates or to any plan of Buyers or any of their
Affiliates.
(b) With respect to all Active Employees (including
any beneficiary or dependent thereof), Sellers
shall retain responsibility under any group life,
accident, medical, prescription drug, dental or
disability plan or similar arrangement (whether or
not insured) for any claims incurred on or prior
to the Closing Date (provided such claims are
filed within the normal filing deadline for such
plans; if such claims are not timely filed, Buyers
are not assuming such claims and is in no way
liable for those claims either directly or through
the Buyer's' medical plans) and Buyers agree that
any claims incurred after the Closing Date, with
respect to any Transferred Employee under any
group life, accident, medical, prescription drug,
dental or disability plan or similar arrangement
maintained by Buyers or its Affiliates shall be
the responsibility of Buyers. Except as set forth
below, a claim under this Section 9.2(b) is deemed
to have been incurred when services relating to
the condition that is the subject of the claim
were performed. In the case of an Active Employee
who is hospitalized or on short term disability on
the Closing Date, all claims relating to such
hospitalization (including, without limitation,
hospital charges and physician fees) or short term
disability shall be deemed to be claims arising on
or before the Closing Date. With respect to any
benefit arrangements covering medical expenses,
Sellers shall be responsible for all claims
(whether or not reported) and expenses arising
during the period prior to and ending on the
Closing Date.
Section 9.3 Buyers' Benefit Plans
(a) Buyers maintain a qualified defined benefit pension
plan ("Buyers' Retirement Plan"). Effective as of the
Closing Date, all United States based Transferred Employees
shall be eligible to participate in Buyers' Retirement Plan
in accordance with its terms, except that service shall be
recognized as set forth in Section 9.1(a) hereof.
(b) Buyers maintain the welfare benefit plans set
forth on Schedule 9.3(b) ("Buyers' Welfare Plans")
for active, nonunion employees. As of the Closing
Date, all nonunion Transferred Employees shall be
eligible to participate in Buyers' Welfare Plans
in accordance with the terms of such plans and
union Transferred Employees may participate
pursuant to the terms of the applicable collective
bargaining agreement. No pre-existing condition
limitations will apply to the Transferred
Employees under Buyers' medical plan. To the
extent that Buyers have evidence of Transferred
Employees payments under Sellers' medical plans,
Buyers shall honor any deductibles and out-of-
pocket expenses incurred by such Transferred
Employees and their beneficiaries under Sellers'
medical, dental or health plans during the portion
of the calendar year which includes the Closing
Date and these shall count for purposes of
satisfying applicable coinsurance, maximum out-of-
pocket provisions of Buyers' medical, dental and
health plans. Sellers and Buyers shall agree on a
mechanism by which Buyers will receive required
evidence of these amounts.
(b) Buyers maintain a qualified defined contribution plan
("Buyers' Savings Plan"). As of the Closing Date, all
Transferred Employees shall be eligible to participate in
Buyers' Savings Plan in accordance with the terms of such
plan. Neither Buyers nor any of their Affiliates shall
assume any obligations or liabilities arising under or
attributable to the Sellers' savings plan, the same to be
retained or assumed by Sellers. To the extent permitted by
the Code, and by Internal Revenue Service interpretations of
the "same desk" rule, Buyers' Savings Plan will accept a
direct rollover, within the meaning of Section 401(a)(31) of
the Code, of the Transferred Employees account balance.
(d) The post-retirement medical (including
prescription) benefits for Transferred Employees
who retire under the Sellers' Pension Plan shall
be the responsibility of the Sellers, provided
that Buyers shall provide primary medical
(including prescription) coverage to such
Transferred Employees (to the extent offered to
Buyers' employees generally) while they are
actively employed by Buyers.
(e) Buyers shall be responsible for any legally mandated
continuation of health care coverage for all Transferred
Employees and/or their covered dependents who have a loss of
health care coverage due to a qualifying event (as defined
in Section 4980B of the Code) that occurs after the Closing
Date.
(f) From and after the Closing Date, Buyers shall
honor the terms of the relocation or "sign on"
award agreements entered into by Sellers that are
applicable to Transferred Employees and which are
set forth on Schedule 9.3(f).
(g) Buyers shall provide vacation entitlement to
Transferred Employees in accordance with Buyers' vacation
policies applicable to all of its other employees, based on
Transferred Employee's prior service credit and will honor
for periods after the Closing, exceptions increasing the
number of weeks of annual vacation that Sellers may have
granted to such "Transferred Employees" to the extent set
forth on Schedule 9.3(g). Sellers shall pay to Non-Union
Transferred Employees the cash value of any unused vacation.
Transferred Employees will begin to accrue vacation with
Buyers as of the Closing Date. For those Transferred
Employees covered by collective bargaining agreements,
Sellers shall assume liability for all accrued unpaid
vacation even though such vacation accrued before the
Closing Date.
Section 9.4 Labor matters
(a) Except as set forth below, neither Sellers nor any
of Sellers' Affiliates are a party to or bound by
any labor agreement or a collective bargaining
agreement respecting the Transferred Employees.
(b) Union Represented Employees - Willow Island
(i) Buyers agree to offer employment to Sellers'
medicated feed additive production and
maintenance employees located at the Willow
Island, West Virginia, Plant, and agrees to
recognize Local 3-499 of the Oil, Chemical
and Atomic Workers Union as the collective
bargaining representative of said employees
and honor the terms of the existing
Collective Bargaining Agreement.
(ii) Buyers agree to offer employment to Sellers'
medicated feed additive utility employees
located at the Willow Island, West Virginia,
Plant, and agrees to recognize Local 589,
International Union of Operating Engineers as
the collective bargaining representative of
said employees and honor the terms of the
existing Collective Bargaining Agreement.
(c) Union Represented Employees - Hannibal, Missouri.
Buyers agree to assume that Employee Agreement
dated July 31, 1995 as amended as of January 31,
1998 with respect to those employees who are
members of Local 887 ICWU working at Sellers'
medicated feed additive facility at Hannibal,
Missouri.
(d) Buyers further agree that in the event of a breach
of any of the provisions of the above-referenced
labor agreements pertaining to Sellers' medicated
feed additive employees by Buyers or by any person
for whose actions Buyers are responsible, Buyers
will indemnify and hold harmless Sellers from and
against any and all losses, costs, damages, or
expenses including, without limitation reasonable
attorneys fees incurred by Sellers arising out of
any such breach.
Section 9.5 No Third Party Beneficiaries
No provision of this Article shall create any third party
beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of
Sellers or of any of its subsidiaries in respect of
continued employment (or resumed employment) with either
Buyers or the Business or any of their Affiliates and no
provision of this Article 9 shall create any such rights in
any such Persons in respect of any benefits that may be
provided, directly or indirectly, under any employee plan or
benefit arrangement or any plan or arrangement which may be
established by Buyers or any of their Affiliates. No
provision of this Agreement shall constitute a limitation on
rights to amend, modify or terminate after the Closing Date
any terms of employment or any such plans or arrangements of
Buyers or any of their Affiliates, subject to Section 9.1(b)
and the obligation to recognize service credit with Sellers
under Buyers employee benefit plans as they may exist from
time to time.
Section 9.6 Employee Benefit Plan - Non - U.S.
Separate arrangements, similar to the substantive provisions
set forth above in this Article 9 (to the extent not
superseded by law) will be made regarding the subjects
covered in this Article 9 including offers of employment,
compensation, benefits and severance (redundancy) payments
to Transferred Employees employed by foreign affiliates of
Sellers which shall be agreed upon by Sellers and Buyers and
in conformance with applicable local laws, custom and
practice. Nothing in this Agreement applicable to U.S.
employees shall be binding on Buyers for purposes of the
separate arrangements unless specifically agreed to by the
Sellers and Buyers in such arrangements.
ARTICLE 10
CONDITIONS TO CLOSE
Section 10.1 Conditions to the Obligations of Each Party
The obligations of Buyers and Sellers to consummate the
Closing are subject to the satisfaction of the following
conditions:
(a) Any applicable waiting period under the laws listed on
Schedule 10.1(a) hereto relating to the transactions
contemplated hereby shall have expired or been terminated
and any approval or consent required under such laws has
been received.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to
prohibit, alter, prevent or materially delay the
Closing shall have been instituted by any Person
before any court, arbitrator or governmental body,
agency or official and be pending.
(c) The Formulation Agreements, Supply Agreement and
Transition Agreement, in form and substance fully acceptable
to both Buyers and Sellers, have been agreed upon and
executed by Buyers and Sellers (or their Affiliates, as
appropriate).
Section 10.2 Conditions to Obligation of Buyers
The obligation of Buyers to consummate the Closing is
subject to the satisfaction or waiver of the following
further conditions.
(a) (i) Sellers shall have performed in all
material respects all of their obligations
hereunder required to be performed by them at
or prior to the Closing Date, and
(iii) the representations and warranties of Sellers
contained in this Agreement, , shall be true at and as of
the Closing Date, as if made at and as of such date with
only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect.
(b) No event shall have occurred, prior to the
Closing, which materially and adversely affects
the value of the Purchased Assets or Business,
whether or not any such event is covered by
insurance; provided however that a decrease in the
Business' sales for the first quarter of the year
2000 of 15% or less or 20% or less in the second
quarter of the year 2000 (when compared to the
same periods in 1999) resulting substantially from
the voluntary resignation of employees of the
Business from and after January 1, 2000 shall not
be deemed such an event as described in this
Section10.2(b).
(c) Subject to Section 2.6, Buyers shall have received
all the documents required to be received pursuant
to Section 2.8(b) hereof.
(d) Buyers shall have obtained a commitment for an
ALTA Owner's Title Insurance Policy 1970 Form
B/1992 Form B (or other form of policy acceptable
to Buyer) for each Owned Real Property and for the
Leased Real Property located in Willow Island,
West Virginia., Hannibal, Missouri and Van Buren,
Arkansas (the "Material Leased Real Property"),
issued by a title insurance company satisfactory
to Buyers (the "Title Company"), together with a
copy of all documents referenced therein (the
"Title Commitments").
At Closing, Buyers shall have caused the Title
Company to issue title insurance policies (which
may be in the form of a mark-up of a pro forma of
the Title Commitments) in accordance with the
Title Commitments, insuring Buyers' fee simple
title to each Owned Real Property or Buyers'
legal, valid, binding and enforceable leasehold
interest in each Material Leased Real Property (as
the case may be) as of the Closing Date (including
all recorded appurtenant easements insured as a
separate legal parcel) with gap coverage through
the date of recording, subject only to Permitted
Liens, in such amount as Buyers reasonably
determine to be the value of the Real Property
insured thereunder (the "Title Policies"). Each
of the Title Policies shall have the creditor's
rights exception deleted, and shall include an
extended coverage endorsement (insuring over the
general or standard exceptions) and all other
endorsements reasonably requested by Buyers to the
extent permitted by applicable law. Buyers shall
pay all fees, costs and expenses with respect to
the Title Commitments and Title Policies.
(e) Buyers shall have obtained a survey for each Owned
Real Property and Material Leased Real Property,
dated no earlier than the date of this Agreement,
prepared by a licensed surveyor satisfactory to
Buyer, and conforming to 1997 ALTA/ACSM Minimum
Detail Requirements for Urban Land Title Surveys,
including Table A Items Nos. 1, 2, 3, 4, 6, 7(a),
7(b)(1), 8, 9, 10, 11 and 12, and such other
standards as the Title Company and Buyers require
as a condition to the removal of any survey
exceptions from the Title Policies, and certified
to Buyers, Buyers' lender and the Title Company,
in a form satisfactory to each of such parties
(the "Surveys"). The Surveys shall not disclose
any encroachment from or onto any of the Real
Property or any portion thereof or any other
survey defect which has not been cured or insured
over to Buyer's reasonable satisfaction prior to
the Closing. Buyer shall pay all fees, costs and
expenses with respect to the Surveys.
(f) Sellers shall have obtained and delivered to
Buyers an Estoppel certificate with respect to
each of the Leases, dated no more than thirty (30)
days prior to the Closing Date, from the other
party to such Lease, in the form and substance
satisfactory to Buyers the ("Estoppel
Certificates"). Sellers shall also obtain an
estoppel certificate with respect to that certain
Ground Lease between Cytec Industries Inc.
(Lessor) and American Cyanamid Company (Lessee)
dated December 17, 1993 and assigned by American
Cyanamid Company to Hoffmann-La Roche Inc. on July
19, 1995 and assigned by Hoffmann-La Roche Inc. to
Roche Vitamins Inc. on January 1, 1997 and a
partial assignment by Roche Vitamins Inc. to
Pleasants County Development Authority, Inc. on
December 31, 1998.
(g) RVI shall have obtained, a No Further Action
Letter, a Letter of Non-Applicability, a Negative
Declaration Letter or a Remediation Agreement
(such Agreement being in form substance reasonably
satisfactory to Buyers), from the New Jersey
Department of Environmental Protection in
connection with RVI's New Jersey Industrial Site
Recovery Act application for the Wrightstown, New
Jersey facility.
(h) Buyers may, in their sole discretion, waive any one or
more of the conditions precedent set forth in (a) through
(g) above for the purpose of proceeding with the Closing.
Such waiver shall not have any effect on Seller's
responsibilities and liabilities under the representations,
warranties and agreements made hereunder.
Section 10.3 Conditions to Obligation of Sellers
The obligation of Sellers to consummate the Closing is
subject to the satisfaction or waiver of the following
further conditions:
(a) (i) Buyers shall have performed in all
respects all of its obligations hereunder
required to be performed by it at or prior to
the Closing Date,
(ii) the representations and warranties of
Buyers contained in this Agreement and in any
certificate or other writing delivered by
Buyers pursuant hereto shall be true in all
material respects at and as of the Closing
Date, as if made at and as of such date.
(b) Sellers shall have received all the documents
required to be received pursuant to Section 2.8(a)
hereof.
(c) Sellers may, in their sole discretion, waive any
one or more of the conditions precedent set forth
in (a) and (b) above for the purpose of proceeding
with the Closing. Such waiver shall not have any
effect on Buyer's responsibilities and liabilities
under the representations, warranties and
agreements made hereunder.
ARTICLE 11
SURVIVAL; INDEMNIFICATION
Section 11.1 Survival
The representations and warranties of the parties hereto
contained in this Agreement and the indemnity obligations
contained in Section 11.2 (a) (i) and section 11.2(b)(i)
shall survive the Closing until the first anniversary of the
Closing Date except that the representations and warranties
set forth in Section 3.20 and the indemnity obligations
contained in Section 11.2(a)(ii) shall survive the Closing
until the third anniversary of the Closing Date and further
except that the indemnity obligations contained in Articles
8 and 9 and Sections 11.2(a)(iii), 11.2(a)(iv), 11.2(b)(ii)
and 11.2(b)(iii) shall survive the Closing until the
expiration of the applicable statue of limitations for the
underlying liability or obligation. A representation and
warranty and the obligation to indemnify shall be deemed to
survive for all purposes if notice of a breach thereof is
given within the applicable periods described in this
paragraph.
Section 11.2 Indemnification
(a) Sellers hereby indemnify Buyers and their
Affiliates against and agree to hold each of them
harmless from any and all damage, loss, liability
and expense (including, without limitation,
reasonable expenses of investigation and
reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding)
(collectively, "Loss") incurred by Buyers or any
of their Affiliates arising out of:
(i) Any misrepresentation or breach of warranty
made or to be performed by Sellers pursuant
to this Agreement other than under Section
3.20;
(ii) Any misrepresentation or breach of warranty
made or to be performed by Sellers pursuant
to Section 3.20 of this Agreement;
(iii) Any breach of covenant or agreement made
or to be performed by Sellers pursuant to
this Agreement; or
(iv) The failure of Sellers to satisfy any
Excluded Liability;
provided that (A) Sellers shall not be liable under Section
11.2(a)(i) unless the aggregate amount of Loss with respect
to all matters referred to in Section 11.2(a)(i) exceeds
$3,000,000 and then only to the extent of such excess and
(B) Sellers maximum liability under Section 11.2(a)(i) shall
not exceed thirty five percent (35%) of the Purchase Price
actually paid hereunder (less any amounts repaid).
(b) Buyers, jointly and severally, hereby indemnify
Sellers and their Affiliates against and agrees to
hold each of them harmless from any and all Loss
incurred by Sellers or any of their Affiliates
arising out of:
(i) Any misrepresentation or breach of warranty
made or to be performed by Buyers pursuant
to this Agreement;
(ii) Any breach of covenant or agreement made or
to be performed by Buyers pursuant to this
Agreement;
(iii) The failure of Buyers to satisfy any
Assumed Liability;
provided that (A) Buyers shall not be liable under Section
11.2(b)(i) unless the aggregate amount of Loss with respect
to all matters referred to in Section 11.2(b)(i) exceeds
$3,000,000 and then only to the extent of such excess and
(B) Buyer's maximum liability under Section 11.2(b)(i) shall
not exceed thirty five percent (35%) of the Purchase Price
actually paid hereunder (less any amounts repaid).
Notwithstanding the foregoing, no limitation shall apply to
Buyer's obligation to pay in full the Purchase Price and the
Payment for Inventory set forth in Section 2.7 above.
Section 11.3 Certain Procedures: Exclusivity
(a) Promptly after the receipt by any Person entitled
to indemnity hereunder of notice of (i) any
written claim from any third party or (ii) the
commencement of any action or proceeding, such
Person (the "Indemnified Party") will, if a claim
with respect thereto is to be made against any
party obligated to provide indemnification (the
"Indemnifying Party") pursuant to Section 11.2,
give such Indemnifying Party written notice of
such claim or the commencement of such action or
proceeding and shall permit the indemnifying Party
to assume the defense of any such claim, action or
proceeding, or any litigation resulting from such
claim; provided that the failure of the
Indemnified Party to give such notice or delay
thereof shall not affect the Indemnified Party's
rights to indemnification hereunder except to the
extent such failure or delay materially impairs
the Indemnifying Party's ability to contest any
such claim, action, proceeding or litigation, and
upon such assumption, shall cooperate fully (at
the Indemnifying Party's expense) with the
Indemnifying Party in the conduct of such defense.
Failure by the Indemnifying Party to notify the
Indemnified Party of its election to defend any
such action within a reasonable time, but in no
event more than fifteen (15) days after notice
thereof shall have been given to the Indemnifying
Party, shall be deemed a waiver by the
Indemnifying Party of its right to defend such
action. If the Indemnifying Party assumes the
defense of any such claim or litigation resulting
therefrom, the obligations of the Indemnifying
Party to the Indemnified Party as to such claim or
litigation shall be limited to taking all steps
necessary in the defense or settlement of such
claim or litigation resulting therefrom and to
holding the Indemnified Party harmless from and
against any and all Loss (other than the
Indemnified Party's attorneys' fees and expenses)
caused by or arising out of any settlement
approved by the Indemnifying Party or any judgment
or other resolution in connection with such claim
or litigation resulting therefrom, all in
accordance with this Section 11.3(a). The
Indemnified Party may participate, at its expense,
in the defense of such claim or litigation;
provided that the Indemnifying Party shall direct
and control the defense of such claim or
litigation, unless the claim relates to the
reputation of the Indemnified Party or is a claim
for injunctive relief. The Indemnifying Party
shall not, in the defense of such claim or any
litigation resulting therefrom, consent to entry
of any judgment, except with the written consent
of the Indemnified Party, or enter into any
settlement, except with the written consent of the
Indemnified Party, which does not include as an
unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party
of a release from all liability in respect of such
claim or litigation. With respect to a claim or
litigation defended by the Indemnifying Party
pursuant to this Section 11.3(a), all awards
payable by a third party to an Indemnifying Party
and all costs payable by a third party to the
Indemnified Party or the Indemnifying Party shall
belong to the Indemnifying Party.
(b) If the Indemnifying Party shall not assume the
defense of any such claim or litigation resulting
therefrom, (i) the Indemnified Party may defend
against such claim or litigation in such manner as
it may deem appropriate; (ii) the Indemnifying
Party shall cooperate with the Indemnified Party
in the conduct of the defense; (iii) unless the
Indemnifying Party shall deposit with the
Indemnified Party a sum equivalent to the total
amount demanded in such claim or litigation less
(in the case of a claim pursuant to Section
11.2(a)(i) or 11.2(b)(i), as appropriate) an
amount equal to the difference between $3,000,000
in the aggregate to the extent that such amount
has not previously been deducted pursuant to this
Section 11.2 and the aggregate amount of Loss
previously incurred by the Indemnified Party, or
shall deliver to the Indemnified Party a surety
bond in form and substance reasonably satisfactory
to the Indemnified Party in such amount, the
Indemnified Party may settle such claim or
litigation on such terms as it may deem
appropriate; and (iv) the Indemnifying Party shall
promptly reimburse the Indemnified Party in
connection with the defense against or settlement
of such claim or litigation. If no settlement of
such claim or litigation is made, the indemnifying
party shall promptly reimburse the Indemnified
Party for the amount of any judgment rendered with
respect to such claim or in such litigation and of
all Loss, legal or otherwise, incurred by the
Indemnified Party in the defense against such
claim or litigation.
(c) After the Closing, Section 11.2 will provide the
exclusive remedy for any misrepresentation, breach
of warranty, covenant or other agreement (other
than those contained in Articles 8 and 9 and
Section 15.9 or other claim arising out of this
Agreement or the transactions contemplated hereby
(except to the extent otherwise provided in any
Ancillary Agreement) other than equitable
remedies.
(d) In calculating any indemnification payments
required to be made under this Article 11, there
shall be deducted any insurance recovery,
determined in good faith by the Indemnified
Party to be related to any matter for which
indemnification payments have been made, in
respect thereof (and no right of subrogation shall
accrue hereunder to any insurer). If the Loss for
which the indemnification is sought under this
Article 11 has provided the Indemnified Party a
Tax benefit, as determined in good faith by the
Indemnified Party, the amount of such Tax benefit
(computed assuming the Indemnified Party is
subject to federal income Tax at the highest
federal marginal rate and to state Tax at the
highest state marginal rate,- shall reduce the
Indemnifying Party's liability to indemnify the
Indemnified Party under this Article 11.
ARTICLE 12
TERMINATION
Section 12.1 Grounds for Termination
This Agreement may be terminated at any time prior to the
Closing:
(i) by mutual written agreement of Sellers and
Buyers;
(ii) by either Sellers or Buyers if the Closing
shall not have been consummated on or before
June 1, 2000 unless mutually extended by the
parties in writing;
(iii) by Sellers if Buyers have failed within ten days
following a request by Sellers to provide a letter related
to the availability of financing from First Union Bank in
substantially the same form as delivered to Sellers on this
date or a similar letter relating to substitute financing
acceptable to Sellers and confirm in writing to Sellers that
Buyers' financing continues to be in full force and effect;
or
(iv) By either Sellers or Buyers, if the waiting
period under any other Competition Law has
not been received, within six months
following the date of this Agreement.
The party desiring to terminate this Agreement shall give
notice of such termination to the other party.
Section 12.2 Effect of Termination
If this Agreement is terminated as permitted by Section
12.1, such termination shall be without liability of either
party (or any shareholder, director, officer, employee,
agent, consultant or representative of such party) to the
other party to this Agreement; provided that if such
termination (other than termination under Section 12.1(iv)
shall result from the willful failure of either party to
fulfill a condition to the performance of the obligations of
the other party or to perform a covenant of this Agreement
or from a breach by either party to this Agreement, such
party shall be fully liable for any and all Losses incurred
or suffered by the other party as a result of such failure
or breach. The provisions of Sections 7.2(a), 15.3 and 15.5
shall survive any termination hereof pursuant to Section
12.1.
ARTICLE 13
NONCOMPETITION
Sellers agree that for a period of five (5) years from the
Closing Date, Sellers shall and shall cause their Affiliates
to refrain from engaging in the manufacture, marketing,
distribution and sale of the Products or any product
competitive with Products (or competitive with the subjects
of the Discovery Research referred to in Schedule 2.1.9);
provided that nothing in this clause shall in any way
restrict or preclude Sellers or any of their Affiliates from
acquiring a diversified company, the principal business or
line of products (constituting 85% of the sales of such
acquired business) of which does not consist of the Products
(or products competitive with the Products) and to continue
to operate such company or business following such
acquisition. For purposes of this Agreement, a product shall
be deemed competitive with a Product if it (i) is produced
by either chemical or fermentation synthesis; (ii) requires
approval by Governmental Authorities; (iii) bears package
and labeling claims for the prevention and treatment of
disease or for the promotion of growth in food producing
animals; and (iv) is of the class of compounds currently
defined by regulatory authorities as either ionophores,
antibacterials, antibiotics or anticoccidials, and
competitive with Discovery Research if it is a probiotic or
a bacterial competitive exclusion product (in each case for
use in animal health applications, as opposed to animal
nutrition applications or a coccidiosis vaccine). All of
the foregoing notwithstanding, it is understood and agreed
that Sellers may manufacture, market, distribute and sell
Cylactin. For the avoidance of doubt, Sellers and Buyers
acknowledge that Sellers and their Affiliates will continue
to develop, manufacture, distribute, market and sell
finished vitamin premix products (in all cases other than
the Products) containing medicated feed ingredients
developed and manufactured by third parties.
ARTICLE 14
CERTAIN AGREEMENTS
Section 14.1 Lasalocid and Product Supply
At the Closing the parties agree to enter into the Supply
Agreement and the Formulation Agreements attached hereto as
Exhibits D and E.
Section 14.2 Transitional Services Agreement
At the Closing, the parties agree to enter into a
Transitional Services Agreement, in the form of Exhibit F,
relating to, among other matters, the supply by Sellers of
Quality Control/Quality Assurance services in the US and
such other transition services outside the US as may be
agreed upon by Sellers and Buyers.
ARTICLE 15
MISCELLANEOUS
Section 15.1 Notices
All notices, requests and other communications to either
party shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by telecopy
(confirmed thereafter by certified mail with receipt
acknowledged) to the parties at the following addresses as
shall be specified by the parties by like notice:
If to Buyers, to: Alpharma Inc.
One Executive Drive
Fort Lee, New Jersey 07024
Attn: President, Animal Health Division
Fax: (201) 947-0912
with a copy to: Chief Legal Officer
Alpharma Inc.
One Executive Drive
Fort Lee, New Jersey 07024
Fax: (201) 592-1481
If to Sellers, to:
Roche Vitamins Inc.
45 Waterview Boulevard
Parsippany, New Jersey 07054
Attention: President
Fax: 973.257.8469
with a copies to:
Hoffmann-La Roche Inc.
340 Kingsland Street
Nutley, New Jersey 07110
Attention: Corporate Secretary
Fax: 973.235.2800
F.Hoffmann-La Roche Ltd
Postfach CH-4070
Basle, Switzerland
Attention: Corporate Law
Fax: 41 61 688-1396
Section 15.2 Amendments; No Waivers
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver
is in writing and signed, in the case of an
amendment, by Buyer and Sellers, or in the case of
a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by either party in exercising
any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any
other right, power or privilege.
Section 15.3 Expenses
Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense whether or not the
transactions contemplated by this Agreement are consummated.
Section 15.4 Successors and Assigns
The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither
party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the
consent of the other party hereto except that Buyer may
transfer or assign, in whole or from time to time in part,
to one or more of its Affiliates, the right to purchase all
or a portion of the Purchased Assets pursuant to the terms
of this Agreement, but no such transfer or assignment will
relieve Buyer of its obligations hereunder.
Section 15.5 Governing Law
This Agreement shall be construed in accordance with and
governed by the law of Delaware without regard to the
conflicts of law rules of such state, it being understood
that with respect to the Other Purchase Agreements, the
governing law(s) shall be as agreed upon between Buyer and
Sellers.
Section 15.6 Counterparts: Effectiveness
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed
by the other party hereof.
Section 15.7 Entire Agreement
This Agreement, the Other Purchase Agreements and the
Ancillary Agreements constitute the entire agreement between
the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties
with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding,
condition or warranty not set forth herein has been made or
relied upon by either party hereto. Neither this Agreement
nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
Section 15.8 Severability
If any provision contained in this Agreement shall for any
reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but
this Agreement shall be constituted as if such invalid,
illegal or unenforceable provision had never been contained
herein. It is the intention of the parties that if any of
the restrictions or covenants contained herein is held to
cover a geographic area or to be for a length of time which
is not permitted by Applicable Law, or in any way construed
to be too broad or to any extend invalid, if legally
possible such provision shall not be construed to be null,
void and of no effect, but to the extent such provision
would be valid or enforceable under Applicable Law, a court
of competent jurisdiction shall construe and interpret or
reform such provision to provide for a covenant having the
maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as
shall be valid and enforceable under such Applicable Law.
Section 15.9 Bulk Sales Laws
Buyer and Sellers each hereby waive compliance by Sellers
with the provisions of the "bulk sales", "bulk transfer" or
similar laws of any state. Sellers agree to indemnify and
hold Buyer harmless against any and all claims, losses,
damages, liabilities, costs and expenses incurred by Buyer
or any of its affiliates as a result of any failure to
comply with any such "bulk sales", "bulk transfer" or
similar laws.
Section 15.10 Captions
The captions herein are included for convenience of
reference only and shall be ignored in the construction or
interpretation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers
as of the day and year first above written.
ROCHE VITAMINS INC.
By:________________________
Name:Christoph Goppelsroeder
Title: President
F.HOFFMANN-LA ROCHE LTD
By:__________________________
Name: Markus Altwegg
Title: President, Vitamins and Fine
Chemicals Division
By:__________________________
Name: Joerg Zulauf
Title: Head,
Management Services
Vitamins and Fine Chemicals
Division
ALPHARMA INC.
By:____________________________
Name:Bruce I. Andrews
Title: Vice President and President
Alpharma Animal Health Division
ALPHARMA(LUXEMBOURG) SARL
By:_______________________________
Name: Ingrid
Wiik
Title:
Managing Director
C:\My Documents\ahd\North America\Agreements\ROCHE
TRANSACTION\AssetPurchase3800bw.doc
SCHEDULES
TO THE
ASSET PURCHASE AGREEMENT
Dated as of
April 19, 2000
Among
ROCHE VITAMINS INC.
(RVI)
And
F.HOFFMANN-LA ROCHE LTD
(ROCHE BASLE)
(collectively, Sellers)
And
ALPHARMA INC.
And
ALPHARMA (LUXEMBOURG) SARL
(collectively, Buyers)
Schedule 1.1(a)(i)
Products
Aureo S700 (chlortetracycline (CTC),
sulfamethazine)
Aureo S.P. 250 (CTC, penicillin,
sulfamethazine)
Aureomix (CTC, sulfamethazine)
Aureomycin (CTC)
Aureozol (CTC, sulfathiazole)
Aurofac (CTC)
Aureovet
Avatec (lasalocid)
Baciferm (zinc bacitracin)
Bio-Cox (salinomycin)
Bio-Gro (salinomycin) (Cattle & Swine)
Bovatec (lasalocid)
Cattlyst (laidlomycin)
CTC feed grade (CTC)
Cycarb (nicarbazine)
Cycostat (robenidene)
Cyfac (CTC, penicillin, sulfamathazine)
Cygro (maduramycin)
Eco-cyline (CTC)
Gromax (maduramycin/nicarbazine)
Intagen (contract manufacturing agreement
with Medeva
terminated as of December 16, 1999)
Ipronidazole (Ipropran)-discontinued
Robenz (robenidene)
Rofenaid (sulfadimethoxine and ormetoprim)
Romacox (maduramycin)
Romet (sulfadimethoxine and ormetoprim)
Salinomax (salinomycin)
Taurotec (lasalocid)
Schedule 1.1(a)(ii)
Shared Assets
1. The following assets at Sellers' Hannibal, Missouri
Plant Facility
Ammonia Systems
Clarified Water System (up to and including the first
shut off valve following the meter to be installed by
ACC)
Cooling Tower Water System
Gas Supply Line
Potable Water Distribution System
Instrument Air System
Steam System
Fire Detection and Suppression Systems
Electrical Distribution System - main feeder brakers,
loop cable & looping switches
Wastewater Treatment Plant
2. The following assets at Seller's Willow Island, West
Virginia Plant Facility
Wastewater Treatment Plant
Steam System
Purchase of Natural Gas through Cytec's pipelines
Purchase both Potable Water (Municipality) and
Clarified Water via Cytec's water lines
Fire protection services
Ground transportation services (rail lines and car
spotting equipment)
Schedule 2.1.1
Patents
US Patents:
US 4407946
US 4313885
US 4267191
US 4278663
US 4368265
US 4431665
US 4447421
US 4485102
US 4510134
US 4649143
US 4704276
US 4705688
US 4753798
US 4808404
US 4816480
US 4824829
US 4968493
US 5068104
US 5077277
US 5152995
US 5185146
US 5286745
US 5403581
US 5407917
US 5661015
US 5688513
US 5814613
US 5814615
USSN 744793
USSN 770035
Canadian Patents:
No. 1161361
No. 1198386
No. 1225031
No. 1281936
No. 1338168
European Patents:
EP 0313846B1
EP 0439056A3
EP 0531642B1
Schedule 2.1.2
Trademarks
A "a Stylized Letter BACIFERM
AUREO BIO-COX
AUREOBS BIO-GRO(APPLIED)
AUREO-F BOVATEC
AUREO N BOVATEC(STYLIZED)
AUREO S CATTLYST &
AUREO S 700 & Design STEERHEAD
DESIGN
AUREO SD RAINBOW DESIGN
AUREO S.P. CLOSE DOSE
AUREO SP COMBIGRO.
AUREO SP 250 (AND LOGO) CYAMIX
AUREO SP 500 CYMIX
AUREO SULFATHIAZOLE CYCARB
AUREOFORTE CYCOSTAT
AUREOMICINA CYFAC
AUREOMIX CYGRO
AUREOMYCIN CYTRONIC
AUREOSUP ECO-CYCLINE
AUREOZOL GROMAX
AURO-F INTAGEN
AUROFAC LASOTEC
AUROFUR PAYZONE
AUROMIX PREGOR
AUROVET ROBENZ
AVASON ROFENAID
AVATEC ROMACOX
ROMET
SALINOMAX
TAUROTEC
US Trademark Registrations
Trademark Reg. No.
A (Stylized)
809,161
AGRI-BIO 1,457,139
AUREO 1,395,489
AUREO S 700 924,594
AUREO S 700 & Design 894,926
AUREO S.P. 250
964,021
AUREO S.P. 250 & Design 898,607
AUREOMIX 810,374
AUREOMYCIN 639,933
AUREOZOL 1,425,420
AUROFAC 566,241
AUROVET 851,800
AVATEC 990,496
BACIFERM 1,820,965
BIO-COX 1,161,593
BOVATEC 1,132,059
BOVATEC (Stylized) 1,222,332
*CATTLYST 1,740,480
*CATTLYST & Rainbow 1,867,439
Design
*CATTLYST & Steerhead 2,285,752
Design
CLOSE DOSE 1,658,020
CYGRO 1,343,757
ROBENZ 912,443
ROFENAID 864,147
ROMET 1,347,152
*(See attached for additional Cattlyst
trademark information.)
US Trademark Applications
BIO-GRO 75/305,141
BIO-GRO 75/873,595
Puerto Rican Trademark Registrations
AUREO S.P. 14,206
AUREOMYCIN 10,077
AUROFAC 9,930
BACIFERM 14,368
CYGRO 29,670
Foreign Trademarks
See Attachment
Schedule 2.1.3
Product Registration
Global Product Registration List
Listing--NADAs/INADs/MASTER FILES
Registered MFA's (Asia Pacific)
Registered MFA's (Europe/Emerging Markets)
Registered MFA's (Canada)
Registered MFA's (Latin America)
Schedule 2.1.4
Third Party Material Contracts
License Agreements:
1. Software License Agreement (Willow Island and Hannibal)
between Roche Vitamins Inc. and Honeywell, dated
January, 2000.
2. License Agreement for CTC Fermentation Technology Know
How between F.Hoffmann-LaRoche Ltd, Hoffmann-LaRoche
Inc. and American Home Products dated July 31, 1995.
3. License Agreement for Know How for conversion of CTC
biomass to CTC HCl between American Home Products and
F.Hoffmann-LaRoche Ltd, Hoffmann-La Roche Inc. dated
July 31, 1995.
Lease Agreements:
4. Ground Lease between American Home Products and
Hoffmann-LaRoche Inc. dated May 5, 1994 and amended
April 6, 1999. (Van Buren, Arkansas)
5. Ground Lease between American Cyanamid and Hoffmann-
LaRoche Inc. dated July 31, 1995. (Hannibal, Missouri)
6. Ground Lease Agreement between Cytec Industries Inc.
and American Cyanamid dated December 17, 1993. (Willow
Island, West Virginia)
7. Independent Contractor Agreement for leased employees
in Hannibal, Missouri, between American Cyanamid and
Hoffmann-LaRoche Inc. dated July 31, 1995.
8. Lease Agreement between Pleasants County, West Virginia
Development Authority and Roche Vitamins Inc. dated
December 10, 1998.
Service Agreements:
9. Service Agreement (utilities, etc.) between American
Cyanamid and Hoffmann-LaRoche Inc. dated July 31, 1995.
10. Maintenance Agreement between Unnico (previously
Ogden-Hannibal, Missouri) and Roche Vitamins Inc. dated
August 1, 1995.
11. Service Agreements between Cytec Industries Inc. and
American Cyanamid (Willow Island) (2) dated December
17, 1993.
12. Agreement between APV and Roche Vitamins Inc. for zinc
bacitracin spray dryer installation and start-up at
Willow Island dated December 4, 1998.
13. Agreement between Jacobs Construction Co. and Roche
Vitamins Inc. for construction of zinc bacitracin
facility at Willow Island dated April 5, 1999.
14. Service Agreement on cooling towers between Betz
Dearborn and Roche Vitamins Inc. expired end of 1999.
(Replaced with purchase order for 2000).
Supply Agreements:
Bulk Actives:
15. Supply Agreement for Penicillin G Procaine between
Roche Vitamins Inc and FERMGB, N.V. dated May 18, 1998.
16. Supply agreements for salinomycin (2) between Kaken
Pharmaceutical Co. Ltd. and Roche Vitamins Inc. dated
June 1, 1997 and April 1, 1996. Amended July 26,
1999.
17. Supply Agreement for ormetoprim between Shanghai Sunve
Pharmaceutical Co., Ltd. and Roche Vitamins Inc. dated
August 1, 1999.
18. Supply Agreement for sulfadimethoxine between Shanghai
Sunve Pharmaceutical Co., Ltd. and Roche Vitamins Inc.
dated August 1, 1999.
19. Supply Agreement (AFI Cake) between F.Hoffmann-La Roche
Ltd (Switzerland) and Sogeval (France) dated
February 7, 2000.
Raw Materials:
20. Supply Agreement for corn cob grit (carrier for
lasalocid and maduramicin) between F.Hoffmann-LaRoche
Ltd and EUROCOB dated December 12, 1999.
21. Supply Agreement for corn starch for Willow Island
between Cargill, Inc. and Roche Vitamins Inc. dated May
17, 1999.
22. Supply Agreements (3) for corn cob grit between
Timberlake Sales and Roche Vitamins Inc. for corn cob
grit supplied by The Andersons, Mt. Pulasky and Green
Products all dated February 15, 1995.
23. Supply Agreement for oleic acid (for Belvidere, Willow
Island and Hannibal) between Unichema North America and
Roche Vitamins Inc. dated May 1, 1997 (due to expire in
April of this year - new contract for supply through
2003 has been sent to Unichema).
24. Supply Agreement for corn starch for Hannibal between
Grain Processing Corp. and Roche Vitamins Inc. dated
April 1, 1999.
25. Supply Agreement for corn starch for Hannibal between
Roquette America, Inc. and Roche Vitamins Inc. dated
April 1, 1999.
Finished Form:
Nicarbazin:
26. Supply agreement for Cycarb between Planalquimica
Industrial LTDA and Productos Roche Quimicas E
Farmaceuticas SA (Sao Paulo, Brazil) dated March 1,
1996.
Maduramicin:
27. Supply agreement for Cygro, maduramicin .87% and
Romacox between Puyang Hongtianwei Pharmaceuticals Ltd.
and F.Hoffmann-LaRoche Ltd dated February 3, 1999.
28. Interim Supply agreement for Cygro, maduramicin .87%
and Romacox between Puyang Hongtianwei Pharmaceuticals
Ltd. and F.Hoffmann-LaRoche Ltd dated June 21, 1999.
29. Amendment to Supply Contract for Cygro, maduramicin
.87% and Romacox between Puyang Hongtianwei
Pharmaceuticals Ltd. and F.Hoffmann-LaRoche Ltd dated
June 21, 1999.
Formulation Agreements:
Bulk Active Purchased from Roche by Contract Manufacturer:
30 Supply agreement for Gromax between Planalquimica
Industrial LTDA and Productos Roche Quimicas E
Farmaceuticas SA (Sao Paulo, Brazil) dated January 1,
1997.
31. Contract Manufacturing Agreement (Aurofac) between
Produits Roche (France) and Sogeval (France) dated
February 7, 2000.
Toll Agreements: Bulk Active owned by Roche, not Purchased
by Toll Manufacturer:
32. Contract Manufacturing Agreement for Cycostat 66, Bio-
Cox and Salinomax between ADICA and IdV dated June 4,
1997.
33. Contract Manufacturing Agreement for Aurofac between
Belafarm and Hoffmann-LaRoche AG (Germany) dated August
4, 1998.
34. Contract Manufacturing Agreement for chlortetracycline
finished forms between Crack Processing and Roche
Products Ltd. (England).
35. Contract Manufacturing Agreement for chlortetracycline
finished forms between Custom Powders and Roche
Products Ltd. (England) dated September, 1999.
36. Contract Manufacturing Agreement for bacitracin
formulation (back-up for CTC combos) between Ducoa L.P.
(Highland) and Roche Vitamins Inc. dated December 1,
1996.
37. Contract Manufacturing Agreement for chlortetracycline
formulation between Ducoa L.P. (Chattanooga) and Roche
Vitamins Inc. dated October 1, 1999.
38. Contract Manufacturing Agreement for chlortetracycline
combination products between Farmland Industries, Inc.
and RVI dated October 12, 1997 and amended April 1,
1999. (This agreement not yet implemented because of
FDA's not recommending approval of the manufacturing
facility based on questions they have about the
chilsonation process. Approval unlikely until FDA
requirements have been met. The Aureozole manufacture
has been shifted to DuCoa's Chattanooga facility until
FDA approval at Farmland).
39. Contract Manufacturing Agreement for Cattlyst between
Glatt Air Techniques and Roche Vitamins Inc. dated
March 15, 1999.
40. Contract Manufacturing Agreement for Aurofac between
Trouw Nutrition and Roche Vitaminas SA (Spain) dated
January 1, 1996.
Distribution Agreements:
41. Distribution Agreement between F.Hoffmann-LaRoche Ltd
and Puyang Hongtianwei Pharmaceuticals, Ltd for Cygro
(China) dated February 3, 1999.
42. Distribution Agreement between Cyanamid Inter-American
Corporation and Brugal & Co (Dominican Republic) dated
January 1, 1980 and amended June 17, 1985.
43. Distribution Agreement between F.Hoffmann-LaRoche Ltd
and Casa Boller Srl (Paraguay) dated July, 1985.
44. Agent Agreement between F.Hoffmann-LaRoche Ltd and
Devries & Co. Ltd. (Israel) dated March, 1997.
45. Distribution Agreement between F.Hoffmann-LaRoche Ltd
and Lapapharm Inc. (Greece) dated March 1, 1996.
46. Distribution Agreement and Authorization to Register
Aurofac between Roche Vitamins Asia Pacific, Roche
Products Ltd. Korea and World Life Stock Co. Ltd.
(Korea) dated November 11, 1998.
47. Distribution and Stock Agreement (Aurofac) between
Roche Vitamins Europe Ltd (Switzerland) and Sogeval
(France) dated February 7, 2000.
Sales Agreements:
48. Sales Agreement for Bio-Cox, Avatec and Baciferm
between GoldKist and Roche Vitamins Inc. dated August
5, 1999.
49. Sales Agreement for Aureozol and Aureomycin between
Land `O Lakes and Roche Vitamins Inc. dated May 13,
1998.
50. Sales Agreement for MFA Products between Conagra and
Roche Vitamins Inc. dated June 11, 1999.
Research Agreements:
Collaboration/License:
51. Research and License Agreement between Roche Vitamins
Inc. and University of Guelph as to animal health
applications only. dated June 1, 1999.
52. Research Collaboration and License Agreement between
CuraGen Corp. and Roche Vitamins Inc. dated January 1,
1999. (Sellers will grant Buyers a sole and exclusive,
perpetual, irrevocable royalty-free license, with the
right to sublicense and assign, for animal health use
only.)
53. Research Agreement between Biological Mimetics Inc. and
Roche Vitamins Inc. dated December 14, 1998.
Consulting:
54. Agreement between MRL Pharmaceutical Services and Roche
Vitamins Inc. for preparation of reports on antibiotics
resistance, dated October 27, 1999.
Schedule 2.1.5(a)
Real Property
The real property and buildings thereon identified in the
plot plans attached to, or other descriptions set forth in,
the following agreements, which plot plans are incorporated
herein by reference.
(a) The Ground Lease, dated December 17, 1993, between ACC
and Cytec, pursuant to which Cytec leases to ACC property
located in Willow Island, West Virginia.
(b) The Ground Lease, dated 7/31/95, between Sellers and
American Cyanamid Company pursuant to which American
Cyanamid Company leases to Sellers property owned by
American Cyanamid Company and located in Hannibal, Missouri.
(c) The Lease dated 5/5/94, as extended, pursuant to which
Sellers lease the property at Van Buren, Arkansas from
American Home Products Corporation. Extended for one year
as of 5/4/99; extended an additional year as of 5/4/00;
three one year extension options remain.
(d) The land and buildings located at North Hanover
(Wrightstown), New Jersey.
(e) The land and buildings located at Salisbury, Maryland.
Schedule 2.1.5(b)
Personal Property
1. The Personal Property located at Willow Island, West
Virginia
2. The Personal Property located at Hannibal, Missouri
3. The Personal Property located at Van Buren, Arkansas
4. The Personal Property located at North Hanover
(Wrightstown), New Jersey
5. The Personal Property located at Salisbury, Maryland.
6. Personal Property located at DuCoa's Highland, Illinois
and Chattonooga, Tennessee facilities.
7. Medicated Feed Additives Support Group Equipment List.
Exhibit A. to this Schedule 2.1.5(b).
8. Quality Control Laboratory Equipment located at
Sellers' Belvidere, New Jersey facility used to test
and release medicated feed additive final product
forms. Exhibit B to this Schedule 2.1.5(b).
Schedule 2.1.9
Discovery Research Activities - Limitations
None
Schedule 2.4
Excluded Environmental Liabilities
All facts, events or circumstances referred to or listed on
"Schedule 3.20, Exceptions: Environmental Compliance."
Hannibal (Palmyra), Missouri
Non-compliance with state and federal categorical wastewater
pretreatment standards or the discharge limits of the
existing or anticipated wastewater discharge permits for the
American Cyanamid facility in Palmyra (Hannibal), Missouri
(the "Cyanamid Facility") and the inability for the Cyanamid
Facility wastewater treatment system to meet required
discharge limits, in each case to the extent resulting from
or attributed to wastewater discharges from the Roche
Medicinal Feed Additives facility.
Non-compliance with OSHA requirements concerning the
presence of asbestos-containing materials in on-site
structures.
Impacts of documented groundwater contamination from the
Cyanamid Facility.
Van Buren, Arkansas
Soil and groundwater contamination by chlorinated solvents,
metals and petroleum hydrocarbons.
Willow Island, West Virginia
Failure of the facility to apply for a "Title V" permit
under the federal Clean Air Act Permit Program and any other
non-compliance with state and federal air emissions laws and
regulations.
Contamination from the dumping of soil and debris and
discarded out-of-service anhydrous aboveground storage tanks
and 55-gallon drums in the northwestern portion of the site.
Non-compliance with OSHA requirements concerning the
presence of asbestos-containing materials in on-site
structures.
Non-compliance with state and federal categorical wastewater
pretreatment standards or the discharge limits in the
existing or anticipated wastewater discharge permits for the
Cytec Industries facility in Willow Island, West Virginia
("Cytec Facility"), in each case to the extent resulting
from or attributed to wastewater discharges from the Roche
Medicinal Feed Additives facility.
RCRA closure obligations for the inactive hazardous waste
accumulation area and any other areas of hazardous waste
accumulation, treatment, storage and disposal at the site.
Releases from below-ground wastewater and stormwater sewer
lines at the site.
Impacts of groundwater contamination from the Cytec
Facility.
Other
Any open or outstanding environmental compliance or
liability matters referred to or identified in the following
reports and documents:
Loss Prevention Survey Report of Roche Holdings, Inc., Roche
Vitamins Inc., Hannibal, Missouri, prepared by Industrial
Risk Insurers, dated March 11, 1999.
Loss Prevention Survey Report of Roche Holdings, Inc., Roche
Vitamins Inc., Willow Island, West Virginia, prepared by
Industrial Risk Insurers, dated November 9 and 13, 1998.
K-1 Risk Analysis, AFI Fermentation Process
(Chlortetracycline Production), Roche Vitamins Inc.,
Hannibal, Missouri, draft report prepared by Roche Vitamins
Inc., dated May 13 and 14, 1999.
Memorandum from J. Brandl and H. Tole regarding the
Bacitracin Zinc Incident Investigation, dated March 9, 2000.
Hoffmann-La Roche Inc. CESA Auditing Program Report, Roche
Vitamins Inc., Palmyra, Missouri, dated April 28, 1997.
Hoffmann-La Roche Inc. CESA Auditing Program Report, Roche
Vitamins Inc., Willow Island, West Virginia, dated April 29,
1997.
Hoffmann-La Roche Inc. CESA Auditing Program Report, Roche
Vitamins Inc., Salisbury MFA Plant, dated April 9,1999.
Hoffmann-La Roche Inc. CESA Auditing Program Report, Roche
Vitamins Inc., Van Buren MFA Plant, dated May 11,1999.
Hoffmann-La Roche Inc. CESA Auditing Program Report, Roche
Vitamins Inc., ASRS - Wrightstown, New Jersey, dated June
24, 1999.
Nothing on this Schedule is intended to alter Buyer's
responsibility for any Environmental
Condition to the extent arising out of or related to the
operation of the Business on or
after the Closing, including any violation of Environmental
Laws arising from post-Closing operations.
Schedule 2.5(a)
Other Purchase Agreements
France, U.K., Italy, Spain, Germany, Canada, Thailand,
Mexico, Brazil
Section 2.5(b)
Forms of Other Purchase Agreements
Schedule 2.7(a)
Promissory Note for US $30 Million from Buyers to Sellers
Schedule 2.7(b)
Purchase Price Allocation
Schedule 2.7(e)
Inventory Unit Prices
See Attached
Schedule 2.8(a)(vi)
Opinion of Buyers Counsel
Schedule 2.8(b)(vi)
Opinion of Sellers Counsel
Schedule 3.3
Governmental Authorization
None
Schedule 3.5
Required Consents
License Agreements:
1. Software License Agreement (Willow Island and Hannibal)
between Roche Vitamins Inc. and Honeywell, dated January,
2000.
2. License Agreement for CTC Fermentation Technology Know
How between F.Hoffmann-LaRoche Ltd, Hoffmann-LaRoche Inc.
and American Home Products dated July 31, 1995.
3. License Agreement for Know How for conversion of CTC
biomass to CTC HCl between American Home Products and
F.Hoffmann-LaRoche Ltd, Hoffmann-LaRoche Inc. dated July 31,
1995.
Lease Agreements:
4. Lease between American Home Products and Hoffmann-
LaRoche Inc. dated May 5, 1994 and amended March 14,
2000. (Van Buren, Arkansas)
5. Ground Lease between American Cyanamid and Hoffmann-
LaRoche Inc. dated July 31, 1995. (Hannibal, Missouri)
6. Ground Lease Agreement between Cytec Industries Inc.
and American Cyanamid dated December 17, 1993
7. Independent Contractor Agreement for leased employees
in Hannibal, Missouri, between American Cyanamid and
Hoffmann-LaRoche Inc. dated July 31, 1995.
8. Lease Agreement between Pleasants County, West Virginia
Development Authority and Roche Vitamins Inc. dated
December 10, 1998.
Service Agreements:
9. Service Agreement (utilities, etc.) between American
Cyanamid and Hoffmann-LaRoche Inc. dated July 31, 1995.
10. Maintenance Agreement between Unnico (previously Ogden)
and Roche Vitamins Inc. (previously Ogden - Hannibal
Missouri), August 1, 1995.
11. Service Agreements between Cytec Industries Inc. and
American Cyanamid (Willow Island) (2) dated December
17, 1993.
Supply Agreements:
Bulk Actives:
12. Supply Agreement for Penicillin G Procaine between
Roche Vitamins Inc and FERMGB, N.V. dated May 18, 1998.
13. Supply agreements for salinomycin (2) between Kaken
Pharmaceutical Co. Ltd. and Roche Vitamins Inc. dated
June 1, 1997 and April 1, 1996. Amended July 26, 1999.
14. Supply Agreement for ormetoprim between Shanghai Sunve
Pharmaceutical Co., Ltd. and Roche Vitamins Inc. dated
August 1, 1999.
15. Supply Agreement for sulfadimethoxine between Shanghai
Sunve Pharmaceutical Co., Ltd. and Roche Vitamins Inc.
dated August 1, 1999.
16. Supply Agreement (AFI Cake) between F.Hoffmann-La Roche
Ltd (Switzerland) and Sogeval (France) dated February
7, 2000.
Finished Form:
Nicarbazin:
17. Supply agreement for Cycarb between Planalquimica
Industrial LTDA and Productos Roche Quimicas E
Farmaceuticas SA (Sao Paulo, Brazil) dated March 1,
1996.
Maduramicin:
18. Supply agreement for Cygro, Maduramicin .87% and
Romacox between Puyang Hongtianwei Pharmaceuticals Ltd.
and F.Hoffmann-LaRoche Ltd dated February 3, 1999.
19. Interim Supply agreement for Cygro, maduramicin .87%
and Romacox between Puyang Hongtianwei Pharmaceuticals
Ltd. and F.Hoffmann-LaRoche Ltd dated June 21, 1999.
20. Amendment to Supply Contract for Cygro, Maduramicin
.87% and Romacox between Puyang Hongtianwei
Pharmaceuticals Ltd. and F.Hoffmann LaRoche Ltd dated
June 21, 1999.
Formulation Agreements:
Bulk Active Purchased from Roche by Contract Manufacturer:
21. Contract Manufacturing Agreement (Aurofac) between
Produits Roche (France) and Sogeval (France) dated February
7, 2000.
22. Supply agreement for Gromax between Planalquimica
Industrial LTDA and Productos Roche Quimicas E
Farmaceuticas SA (Sao Paulo, Brazil) dated January 1,
1997.
23. Contract Manufacturing Agreement (Aurofac) between
Produits Roche (France) and Sogeval (France) dated
February 7, 2000.
Toll Agreements: Bulk Active owned by Roche, not Purchased
by Toll Manufacturer:
24. Contract Manufacturing Agreement for Cycostat 66, Bio-
Cox and Salinomax between ADICA and IdV dated June 4,
1997.
25. Contract Manufacturing Agreement for Aurofac between
Belafarm and Hoffmann-LaRoche AG (Germany) dated August
4, 1998.
26. Contract Manufacturing Agreement for chlortetracycline
finished forms between Crack Processing and Roche
Products Ltd. (England).
27. Contract Manufacturing Agreement for chlortetracycline
finished forms between Custom Powders and Roche
Products Ltd. (England) dated September, 1999.
28. Contract Manufacturing Agreement for chlortetracycline
formulation between Ducoa L.P. (Highland) and Roche
Vitamins Inc. dated December 1, 1996.
29. Contract Manufacturing Agreement for bacitracin
formulation (back-up for CTC combos) between Ducoa L.P.
(Chattanooga) and Roche Vitamins Inc. dated October 1,
1999.
30. Contract Manufacturing Agreement for chlortetracycline
combination products between Farmland Industries, Inc.
and Roche Vitamins Inc. dated October 12, 1997 and
amended April 1, 1999.
31. Contract Manufacturing Agreement for Cattlyst between
Glatt Air Techniques and Roche Vitamins Inc. dated
March 15, 1999.
32. Contract Manufacturing Agreement for Aurofac between
Farmosan division of Trouw Nutrition and Roche
Vitaminas SA (Spain) dated January 1, 1996.
33. Contract Manufacturing Agreement for Avatec between
Janos and Roche Product Pty Ltd (Australia) dated
January 1, 1982.
Research Agreements:
Collaboration/License:
34. Research and License Agreement between Guelph and Roche
Vitamins Inc. dated June 1, 1999.
35 Research Collaboration and License Agreement between
CuraGen Corp. and Roche Vitamins Inc. dated January 1,
1999.
36. Research Agreement between Biological Mimetics Inc. and
Roche Vitamins Inc. dated December 14, 1998.
Schedule 3.6
Financial Information
See Attached
Schedule 3.8
Absence of Certain Changes
Capital Expenditures $5,000,000 or Greater Since December
31, 1998
1. MFA Technical Support Facility in Willow Island
2. Zinc Bacitracin Production Facility in Willow Island
Schedule 3.9(c)
Exceptions: Liens on Real or Personal Property
Mechanics Lien recorded March 8,2000 related to some work
done at Willow Island by Professional Painting Service, a
painting contractor. This lien has been discharged as of
April 11, 2000.( recorded at Pleasants County, West Virginia
Release Book 38, page 378)
Schedule 3.9(e)
Exception: Personal Property
None
Schedule 3.12
Litigation
Fine Equine Stables, Inc. v. Culpepper Farmers'
Cooperative
Filed in the Commonwealth of Virginia.
Allegation that horses fed a feed containing Bovatec
either died or otherwise suffered injury. Roche
Vitamins Inc. is not a party in this case.
F.Hoffmann-La Roche AG et al v. Bio Agri Mix Ltd.
Patent Infringement Litigation
Neopharm v. Hoffmann-La Roche Inc. and F.Hoffmann-La
Roche Ltd
Superior Court, NJ, Law Division, Essex County
Division. (Motion to dismiss Roche Basle for lack of
jurisdiction granted on March 17,2000).
For avoidance of doubt, this litigation is not an
Assumed Liability
Schedule 3.13(c)
Exception: Restrictions on Doing Business
Countries where Roche Medicinal Feed Additives business is
restricted from conducting business:
Salinomycin Country Sales Restrictions per the Kaken
Agreement are as follows:
Japan, South Korea and China
Cygro restrictions per the Puyang Agreement:
No restrictions
Restrictions per the Summit (Cyanamid) acquisition:
Taiwan: CyTai holds the trademarks for all Cyanamid
branded products. The manufacturing patents
for maduramicin will be up in June 2000,
which will allow sales of other sources of
maduramicin in Taiwan. Registration for the
trademark Romacox has been initiated to
market maduramicin in Taiwan.
A trademark search on the mark Ecocycline has been
initiated for a brand umbrella to market CTC products
in Taiwan.
Romet is still in the registration process due to some
labeling issues that are expected to be resolved in the
immediate future.
India: The Cyanamid business in India was not
transferred to Roche and continues to be
serviced by Fort Dodge Animal Health. Fort
Dodge continues to manufacture CTC and sell
Avotan, Aurofac, Cygro and Cycostat under
Roche trademarks that belong to them in
India. Roche sells Fort Dodge robenidine
that they in turn blend into Cycostat.
Schedule 3.13(e)
Exception: Customer Right to Return Product
None - See Attached
Schedule 3.13(g)
Contracts Requiring Prepayment or Rebates after the Closing
of Sums Paid Or Payable prior to the Closing Based Upon the
Volume of Products Purchased After The Closing
ConAgra
Supply of MFA's
June 1999 to December 2000
Rebate payable monthly on purchases of Bio-Cox to ConAgra
Poultry
OK Feed
Supply of MFA's
September 1999 to August 2000
Tiered rebate payable at termination dependent upon
purchases
Land O' Lakes
Aureozol and Aureomycin
August 1999 to December 2000
Rebate payable in December 2000 for market development
activities provided that sales targets are met.
Schedule 3.14
Permits
See Attached
Schedule 3.16(b)
Exceptions: Patent and Trademarks Not Registered
None
Schedule 3.16(c)
Patents and Trademarks Licenses
1. University of Guelph and Roche Vitamins Inc. dated June
1, 1999
2. Trademark License Agreement dated 7/31/1995 among
American Home Products Corporation, F.Hoffmann-La Roche
AG and Hoffmann-La Roche Inc.
3. Grant of Trademark License dated 7/17/1990 to Eagle
Chemical Co., Ltd, South Korea
4. The Third Party Contracts referenced in Schedule 2.1.4
(items 41-46) and such other agreements referenced in
Section 2.1.4 to the extent that the same confer
implied licenses under distribution and agency
agreements.
5. Software License Agreement (Willow Island and Hannibal)
between Roche Vitamins Inc. and Honeywell, dated
January, 2000.
6. License Agreement for CTC Fermentation Technology Know
How between F.Hoffmann-LaRoche Ltd, Hoffmann-LaRoche
Inc. and American Home Products dated July 31, 1995.
7. License Agreement for Know How for conversion of CTC
biomass to CTC HCl between American Home Products and
F.Hoffmann LaRoche Ltd and Hoffmann-La Roche Inc. dated
July 31, 1995.
7. Undertaking and Pre-Right Declaration between
F.Hoffmann-La Roche AG and Eli Lilly and Company use of
Avatak vs. Avatec.
8. License Agreement between American Cyanamid Company and
Takeda Chemical Industries Ltd. relating to the use by
Takeda of certain Aureomycin and related trademarks.
9. Agreement between Hoffmann-La Roche Inc. and Trace
America Inc. regarding Trade America's use of the trademark
Biocol vs. Bio-Cox.
10. Roche does not own the Bio-Cox trademark in certain
European markets, but has been granted rights to utilize the
Bio-Cox trademark by Kaken.
Schedule 3.16(d)
Exceptions: Rights of Use Granted to Third Parties
Refer to Schedule 3.12 and see Attachment
Schedule 3.16(e)
Exceptions: Infringements Regarding Patents or Trademarks
Refer to Schedule 3.12
Since Roche's acquisition of the MFA business, TAKEDA,
without being legally entitled to do so, was selling
products for feed use in Japan under the trademark Aurofac,
which is owned by Roche. There was an issue to whom (AHP or
Roche) TAKEDA had to pay the respective royalties. Roche
informed TAKEDA to stop using the Aurofac trademark in
November 1999 and March 31, 2000. Takeda responded by
letter dated April 10, 2000 requesting, among other things,
the ability to continue to use the mark. RVI intends to
respond that the rights to feed use of the trademark are
being transferred to Alpharma.
Schedule 3.16(f)
Exception - Patent/Trademark Certificates of Title not in
Sellers' Possession (other than those sent to authorities
for renewal)
None
Schedule 3.16(g)
Exception: Patents and Trademarks subject to any
outstanding order, judgment, etc.
None
Schedule 3.16(h)
Exception: Patents and Trademarks Transferred or Assigned
to Third Parties
None
Schedule 3.16(i)
Exception: Patents and Trademarks not owned, direct and
unrestricted by Sellers (other than those assigned to
distributors of Sellers where required by law)
Third Party Agreements referenced in Schedule 2.1.4 (items
41-46)
Schedule 3.16(j)
Infringement Actions/Proceeding against Sellers Patents or
Trademarks
Refer to Schedule 3.12
Schedule 3.16(k)
Exception Technology and Know-How
None
Schedule 3.17
Exception: Labor and Employment Matters
1. Willow Island Employee Grievance Overtime Issue
2. J.F. Heinle has rights under a life insurance policy
funded by Sellers
3. Working agreement between the International Union of
Operating Engineers, Local 18-S AFL-CIO and the Willow
Island Plant of Roche Vitamins Inc., April 21, 1997.
4. Working agreement between the Oil, Chemical and Atomic
Workers International Union, Local 3-499 and the Willow
Island Plant of Roche Vitamins Inc., April 7, 1997.
Schedule 3.18(i)
Exceptions: Inventory
None
Schedule 3.18(ii)
Inventory Location(s)
See Attached
Schedule 3.19
Exceptions: Product Registrations
The European Union or its equivalent national authorities
have, during the last several years, reviewed the use of
medicated feed additives in Europe and have subsequently
disallowed the use of certain antibiotic and anticoccidial
substances as medicated feed ingredients. There can be no
assurance that these authorities will not attempt to limit
or disallow the use of further substances as medicated feed
ingredients, which may include Products.
Cygro for Broilers (U.S.)
The approval is still in place and in the same status as
when acquired from AHP (AMCY). Any attempt to market the
product in the U.S. would be expected to result in forced
withdrawal of the approval by CVM/FDA. Previously AMCY was
required to withdraw approvals for all combination approvals
for Cygro as a result of FDA claims regarding integrity of
pivotal data supporting the combinations. Subsequently,
AMCY repeated the questionable studies and since acquiring
the product Roche has compiled and submitted by CVM five (5)
supplemental NADAs covering 2-and 3-way combinations of
Cygro, Roxarsone and BMD or Zinc Bacitracin. CVM has
informed that the supplements will not be reviewed until the
Cygro alone NADA (NADA 139-075) is remediated to CVM's
satisfaction. Roche's latest effort to move toward
remediation was a submission to NADA 139-075 of a
Remediation Plan (including data from 87 anticoccidial
sensitivity battery studies with chicks). No response to
this submission has been received from CVM to date
(28Jan00).
Aurofac (chlortetracycline) is registered in several EU
countries as a "Veterinary Medicinal Product". The
chlortetracycline registrations held by Roche in Europe are
for biomass (i.e. low potency/purity)I products. EU
legislation covering "Veterinary Medicinal Products"
strongly favors high potency purified products. This has
resulted in considerable scrutiny (strongest from France and
Germany) toward the low potency of the active ingredient
(Dried Streptomyces aureofaciens fermentation product - i.e.
CTC biomass). Roche has focused efforts toward
"characterization" of constituents of the biomass and has
within the past year provided a large volume of data to
French regulatory authorities in an effort to lessen their
concerns about low potency drug sources in veterinary
Products. French authorities are currently reviewing the
submitted characterization data. It is not possible to know
with certainty whether there will be future adverse action
toward Aurofac in at least some European countries due to
the inclusion of a low potency drug source.
Bio-Coxr and Salinomaxr EU Brand Specific Approval (BSA)
Status
BSA dossiers for Bio-Cox and Salinomax were submitted to
rapporteur (UK Vet Medicines Directorate) in April, 1999 and
June, 1999, respectively. Both dossiers have been reviewed
and validated (letter) to the EU Commission by the
rapporteur. An assessment report for Bio-Cox was prepared
(January, 2000) by the rapporteur based on dossier review.
The report includes numerous questions regarding dossier
content, particularly Quality and Safety sections, which
need to be addressed to allow BSA approval. Responses to
many questions require input/action by Kaken and some
additional safety studies (specifics to be negotiated with
rapporteur) will likely be required to attain BSA for Bio-
Cox. Rapporteur review and resulting assessment report for
Salinomax has not yet been completed but is expected to
yield a similar set of questions plus any additional
questions specific to use in swine. Based on our
understanding of BSA Directive 96/51, Salinomax is not
currently being marketed in the EU. Due to ambiguities in
BSA Directive 96/51 regarding current marketing status of
feed additives approved for marketing in the EU prior to
01/01/88 (e.g. Bio-Cox) the pre-BSA marketing status of Bio-
Cox in the EU is uncertain. EU marketing
of Bio-Cox continues pending resolution of the status of
generics (Bio-Cox) during BSA dossier review
AVATECr China Registration Status
The notification for re-licensing of AVATEC in China was not
provided to the authorities within the required deadline.
Roche China has informed that the matter is being resolved
locally. Pending resolution of re-licensing status,
marketing of AVATEC continues. If re-licensing is not
successful then AVATEC has to be re-registered and marketing
suspended prior to approval. It has recently been learned
that this registration will be renewed.
Schedule 3.20
Exceptions: Environmental Compliance
1. Notice of Violation dated March 29, 2000 from the West
Virginia Division of Environmental Protection-Corrective
Action Underway.
2. American Cyanamid's ammonia permit expired three years
ago and they applied or renewal at that time. They are
still awaiting a formal response. On an unofficial
informal basis, indications appear to indicate that
this is likely to be granted.
3 During some piloting work involving zinc bacitracin at
an off-site location reported a variety of health symptoms
which cleared up after a few days. After an extensive
investigation it was concluded that bacitracin zinc is
neither a significant respiratory irritant nor a significant
respiratory allergen (which conclusions are supported by
literature). To prevent recurrence, RVI instituted an
internal occupational exposure limit of 1mg/ml zinc
bacitracin as an 8 hour time-weighted average.
4. The Van Buren, Arkansas site, where Biocox and zinc
bacitracin are manufactured, is leased from American
Home Products ( AHP). When Biocox was purchased from
AHP, this site was not purchased because of the
presence of groundwater contamination generated from
activities carried on at adjacent sites. RVI monitors
this site on a regular basis and there is no evidence
of any additional contamination due to RVI operations.
Schedule 4.6
First Union Bank Commitment Letter
See Attached
Schedule 9.1(b)
Severance Benefits
8 Weeks Base Pay, plus
2 weeks base pay per full year of service* plus
3 months free COBRA medical (including prescription) plus
outplacement.
*Employees with less than 2 years get minimum 4 weeks.
Employees with at least 2 years but less than 4 get 6 weeks.
Schedule 9.3(b)
Buyer Welfare Benefit Plans
Schedule 9.3(f)
Transferred Employees Receiving "Relocation" or "Sign On"
Awards
1. "Sign On" Awards: there are no sign on bonuses which
carry an obligation to the Buyer. Any bonuses which had a
pay back amount remaining will be "forgiven" by the Seller.
2. Relocation Pay Back Obligations: Any pay back
obligations for employees going to Alpharma or being
terminated as a result of the divestiture will be "forgiven"
by the Seller.
3. Mortgage & Rental Differential Subsidies: The
following employees transferring to Alpharma have a mortgage
or rental subsidy:
Name Type Year Start
Date End Date
Melanie Rental 1 5/1/99 4/30/01
Mainquist
M.Todd Mortgage 4 12/1/96 11/30/00
Rhodes
Troy Smith Mortgage 2 10/1/98 9/30/02
4. Repatriation to UK - David Holman: David Holman, Willow
Island, has a repatriation agreement which provides for
payment of shipment of his household goods,
transportation for his family back to the UK should his
project assignment in the US end through termination of the
project or by mutual agreement. If he accepts an offer and
transfers to the Buyer, this obligation ends for Roche
Vitamins.
Schedule 9.3(g)
Vacation Exceptions
Peter Criddle 5 weeks
Ed Seed 5 weeks
John Larson - Swine 3 weeks
John Langemeier 3 weeks
National Accounts
Joe Henry 3 weeks
Willow Island
Gary Burgi - Swine 3 weeks
Xinfa Xiao 3 weeks
Willow Island Tech Center
Malcolm Casey 5 weeks
Schedule 10.1(a)
List of Countries with Waiting Periods
Germany
Exhibit A - Conveyance Documents
Exhibit B - Assignment and Assumption Documents
Exhibit C - Worldwide Deed of Assignments - Patents and
Trademarks
See Attached
Exhibit D - Lasalocid Supply Agreement
Exhibit E - Formulation Agreements
Not yet agreed upon.
Exhibit F - Transition Services Agreement
Not yet agreed upon.
C:\My Documents\ahd\North America\Agreements\ROCHE
TRANSACTION\AssetPurchase31300.doc
CONSENT OF INDEPENDENT ACCOUNTANTS
___________
We hereby consent to the incorporation by reference in the
Registration Statements of Alpharma Inc. and Subsidiaries on
Form S-8 (File No. 33-60495) and Form S-3 (File Nos.333-
57501, 333-70229, 333-86037 and 333-86153) of our report
dated March 31, 2000, relating to the combined statements of
assets to be sold and of revenues and direct operating
expenses of the Roche MFA Business as of December 31, 1999
and for the year then ended, which appears in the Current
Report on Form 8-K of Alpharma Inc. and Subsidiaries dated
May 5, 2000.
.
PricewaterhouseCoopers AG
Ralph R. Reinertsen Dana Bultman
Basel, Switzerland
May 5, 2000
