=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
October 13, 1997
Date of Report (Date of earliest event reported)
SYBRON CHEMICALS INC.
(Exact name of Registrant Specified in its Charter)
0-19983
(Commission File No.)
51-0301280
(I.R.S. Employer Identification Number)
Birmingham Road, P.O. Box 66, Birmingham, NJ 08011
(Address of principal executive offices) (Zip Code)
(609) 893-1100
(Registrant's telephone number, including area code)
=================================================================
<PAGE>
Item 2. Acquisition or Disposition of Assets
Acquisition
On July 29, 1997, the Company acquired certain operating assets, not
including manufacturing facilities, of the Textile and Garment Processing
businesses (the "Business") of IVAX Industries, Inc. ("IVAX"), IVAX Industries
Canada, Inc. and IVAX Industries U.K. Ltd. The purchase price for such assets
was $13,770,000, subject to certain post-closing adjustments. The purchase price
was financed primarily from the Company's existing revolving credit facility.
The Company intends to use the acquired assets to continue the product lines of
the Business, which the Company will operate out of its existing facilities in
Wellford, South Carolina and other locations around the world. For a
transitional period not to exceed 270 days, IVAX agreed to continue
manufacturing products on behalf of the Company in IVAX's existing facilities.
The following financial statements related to the Company and to
certain of the transactions described above are included herein:
(a) Unaudited pro forma combined financial information of the Company
as of June 30, 1997 and for the year ended December 31, 1996 and for the six
months ended June 30, 1997.
(b) Financial statements of Textile Products and Garment Processing
Division of IVAX Industries, Inc. as of December 31, 1996 and June 30, 1997
(unaudited) and for the year ended December 31, 1996 and for the six months
ended June 30, 1997 and 1996 (unaudited).
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibit
(a) Financial Statements of Business Acquired:
Textile Products and Garment Processing Division of
IVAX Industries, Inc. Statements of Net Assets to be
sold as of June 30, 1997 and December 31, 1996
Statements of Revenues and Expenses for the year ended
December 31, 1996 and the six months ended June 30, 1997 and
1996
Notes to Financial Statements
Report of Independent Public Accountants
-1-
<PAGE>
(b) Pro Forma Financial Information:
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1996
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the six months ended June 30, 1997
Unaudited Pro Forma Condensed Consolidated Balance
Sheet at June 30, 1997
Notes to Unaudited Pro Forma Condensed Financial
Statements
(c) Exhibit:
Asset Purchase Agreement by and among IVAX Corporation,
IVAX Industries Inc., IVAX Industries Canada, Inc.,
IVAX Industries U.K., Ltd. and Sybron Chemicals Inc.
dated July 29, 1997.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto authorized, on October 13, 1997.
SYBRON CHEMICALS INC.
/s/ Dennis J. Fiore
--------------------
Dennis J. Fiore
Vice President, Finance and
Chief Financial Officer
-3-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Management of
IVAX Industries, Inc.:
We have audited the accompanying statement of net assets to be sold of the
Textile Products and Garment Processing Division of IVAX Industries, Inc. (the
"Division") as of December 31, 1996, and the related statement of revenues and
expenses for the year then ended. These financial statements are the
responsibility of the Division's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1, the accompanying financial statements were prepared to
present the net assets to be sold and the revenues and expenses of the Division,
which does not have a separate legal status or existence, and are not intended
to be a complete presentation of the assets and liabilities or the results of
operations of the Division.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets to be sold of the Division as of December
31, 1996, and the revenues and expenses for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
- -----------------------
Philadelphia, Pa.,
September 11, 1997
F-1
<PAGE>
TEXTILE PRODUCTS AND GARMENT PROCESSING DIVISION
OF IVAX INDUSTRIES, INC.
STATEMENTS OF NET ASSETS TO BE SOLD
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS:
Accounts receivable, net $ 3,016 $ 2,983
Inventories, net 1,630 1,631
Prepaid expenses and other
current assets 106 69
--- --
Total current assets 4,752 4,683
Property and equipment, net 47 40
-- --
Total assets 4,799 4,723
----- -----
LIABILITIES:
Accrued liabilities 102 98
--- --
Total liabilities 102 98
--- --
Net assets to be sold $ 4,697 $ 4,625
======== ========
</TABLE>
The accompanying notes are an
integral part of these
financial statements.
F-2
<PAGE>
TEXTILE PRODUCTS AND GARMENT PROCESSING DIVISION
OF IVAX INDUSTRIES, INC.
STATEMENTS OF REVENUES AND EXPENSES
(in thousands)
<TABLE>
<CAPTION>
For the Six For the Year
Months Ended Ended
June 30 December 31,
1996 1997 1996
(Unaudited)
<S> <C> <C> <C>
NET SALES $9,516 $10,448 $19,281
------ ------- -------
COSTS AND EXPENSES:
Cost of goods sold 6,968 6,985 14,202
Selling, general and administrative 2,715 3,056 6,305
Research and development 581 393 1,112
Write-down of assets (Note 4) -- -- 23,396
------ ------- -------
Total costs and expenses 10,264 10,434 45,015
------ ------ -------
OTHER INCOME 107 124 353
--- --- ---
Revenues over (under) expenses $ (641) $ 138 $(25,381)
======== ======= =========
</TABLE>
The accompanying notes are
an integral part of these
financial statements.
F-3
<PAGE>
TEXTILE PRODUCTS AND GARMENT PROCESSING DIVISION
OF IVAX INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT AS NOTED)
1. ORGANIZATION AND NATURE OF BUSINESS:
------------------------------------
The Textile Products and Garment Processing Division (the "Division") of IVAX
Industries, Inc. ("IVAX Industries") is engaged in the manufacture and use of
specialized chemicals such as resins, softeners, enzymes, oxidants and dyes used
in preparation, dyeing, washing and finishing products for the textile and
garment processing industries. The Division's primary manufacturing and
distribution facilities are located in Rockhill, South Carolina. Additional
distribution facilities are located in Canada and the United Kingdom.
BASIS OF PRESENTATION:
- ----------------------
The accompanying financial statements present, on a historical cost basis, the
statements of net assets to be sold and the statements of revenues and expenses
of the Division. The Division is part of IVAX Industries and does not have a
separate legal status or existence. These statements are presented as if the
Division had existed as a separate entity during the periods presented. The
accompanying financial statements are not intended to be a complete presentation
of the assets, liabilities or the result of operations of the Division on a
stand-alone basis.
The Division has incurred significant losses from operations in recent years.
The working capital required to sustain the operations of the Division has been
provided by IVAX Corporation ("IVAX"), the parent company of IVAX Industries.
The continued existence of the Division is dependent upon a significant
improvement in the results of operations or continued additional funding by
IVAX. In the second half of 1996, the Division was restructured and selling,
general and administrative costs were reduced. Management of IVAX Industries
believes that it has taken the appropriate steps to ensure the long-term future
of the Division. In addition, management of IVAX has committed to providing the
necessary level of financial support to the Division to enable it to pay its
debts as they become due for a period ending on January 1, 1998 and believes
IVAX has the financial resources to fulfill that commitment.
The statement of net assets to be sold as of June 30, 1997 and the statements of
revenues and expenses for the six month periods ended June 30, 1997 and 1996 are
unaudited; however, in the opinion of management, all adjustments (consisting
solely of normal recurring adjustments) necessary for the fair presentation of
the above mentioned statements have been included. The results for such interim
periods are not necessarily indicative of the results for an entire year.
F-4
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- -------------------------------------------
Accounts Receivable
- -------------------
Accounts receivables are shown net of allowances for doubtful accounts of $245
and $138 (unaudited) as of December 31, 1996 and June 30, 1997.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or market.
Components of inventory cost include materials, labor and manufacturing
overhead. Consistent with the Purchase Agreement discussed in Note 9, as only
finished goods are to be sold, only finished goods have been included in the
accompanying financial statements recorded net of reserves of $215 and $239
(unaudited) as of December 31, 1996 and June 30, 1997, respectively. Raw
materials held by the Division of $569 and $568 (unaudited), net of reserves of
$72 and $68 (unaudited) as of December 31, 1996 and June 30, 1997, respectively,
have been excluded from these financial statements.
Property and Equipment
- ----------------------
Property and equipment are recorded at cost (see Note 4). Additions,
improvements and betterments are capitalized when incurred. Maintenance and
repairs are charged to operations as the costs are incurred. When property and
equipment is retired or otherwise disposed, the related cost and accumulated
depreciation are eliminated from the accounts. Any gain or loss from disposition
of property and equipment is included in income. Depreciation is computed using
the straight-line method over the estimated useful life of the related assets as
follows:
Building and improvements 25-40 years
Machinery and equipment 10 years
Furniture and fixture and computer equipment 5-7 years
Property and equipment consist of specific office and lab equipment identified
in the Purchase Agreement discussed in Note 9 and are shown net of accumulated
depreciation of $1 and $2 (unaudited) as of December 31, 1996 and June 30, 1997,
respectively.
Long-Lived Assets
- -----------------
On January 1, 1996, IVAX Industries adopted Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets To Be Disposed Of". SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles and goodwill (see Note 4).
Revenue Recognition
- -------------------
The Company recognizes revenues at the time the product is shipped to the
customer.
Other Income
- ------------
Other Income primarily represents royalties recognized on the licensing of
patent rights to unrelated third parties.
F-5
<PAGE>
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Foreign Exchange
- ----------------
As discussed in Note 1 above, the accompanying statements of net assets to be
sold includes assets and liabilities held by the Division's foreign operations.
These assets and liabilities have been converted to their United States dollar
equivalent at current exchange rates for statement presentation. Statement of
revenues and expenses amounts have been translated at the average exchange rate
for the periods presented.
ASSET WRITE-DOWNS:
- ------------------
At September 30, 1996, management of IVAX Industries reevaluated the carrying
value of certain long-lived assets and goodwill related to those assets to be
held and used in the Division's operations. This reevaluation was required by
management's determination that, based on recent results of operations and
conditions and trends within the industry, the expected future cash flows
derived from the assets and related goodwill would be substantially lower than
had been previously expected. Consequently, management reduced the carrying
value of certain long-lived assets and goodwill of the Division by approximately
$4,782 and $18,614, respectively. Management determined the amount of the
charges based on a discounted cash flow analysis. The impairment loss recognized
in 1996 is included in the accompanying statement of revenues and expenses.
F-6
<PAGE>
SELECTED CASH FLOW INFORMATION:
- -------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended For the Year Ended
June 30 December 31,
------- ------------
1996 1997 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Provision for bad debts $ 26 $ (6) $ 66
Provision for excess and
obsolete inventory 188 116 275
Changes in working capital balances:
Accounts receivable (235) 74 (739)
Inventory (234) (23) 141
Accrued liabilities (14) 4 8
Capital expenditures 51 17 319
Depreciation and amortization 646 10 939
Write-down of fixed assets
and goodwill (Note 4) - - 23,396
</TABLE>
TRANSACTIONS WITH AFFILIATES:
- -----------------------------
The Division sells products to a related business of IVAX. For the year ended
December 31, 1996 and the six months ended June 30, 1997, such sales totaled
$236 and $369 (unaudited), respectively. Included in the accompanying statement
of revenues and expenses for the year ended December 31, 1996 and the six months
ended June 30, 1997, is gross profit of $115 and $184 (unaudited), respectively,
related to these sales.
COMMITMENTS:
- ------------
The Division leases certain machinery and equipment and office equipment under
various operating leases. Future minimum lease payments under noncancelable
operating leases as of December 31, 1996, are as follows:
1997 $ 153
1998 100
1999 30
2000 7
----------
$ 290
Total rent expense included in operations was approximately $120 for the year
ended December 31, 1996 and $77 (unaudited) for the six month period ended June
30, 1997.
F-7
<PAGE>
SIGNIFICANT CUSTOMER:
- ---------------------
Two customers accounted for approximately 16% and 11% of net sales for the year
ended December 31, 1996, and 13% and 14% (unaudited) of net sales for the six
months ended June 30, 1997.
SUBSEQUENT EVENTS:
- ------------------
On July 29, 1997, IVAX Industries entered into an agreement with Sybron
Chemicals Inc. to sell certain assets and liabilities of the Business to Sybron
for approximately $13.8 million. The purchase price is subject to adjustment
after closing on a dollar-for-dollar basis to the extent that operating working
capital, as defined, at closing is not equal to the estimates used to determine
the purchase price.
F-8
<PAGE>
SYBRON CHEMICALS INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma financial statements give retroactive effect to
the acquisition as if it had occurred as of January 1, 1996. The acquisition
will be accounted for under the purchase method of accounting. The purchase
price allocations are preliminary pending final settlement of the net book value
of the assets transferred and a more thorough assessment of certain pending
litigation. The Company expects that purchase price allocations can be made
final by the time the Company's financial statements are issued as of December
31, 1997, except possibly for certain pending litigation. The pro forma
statements do not reflect expected increases to sales due to synergies realized
from combining product lines nor have adjustments been made to reflect expected
cost savings due to economies of scale.
The pro forma adjustments are based upon preliminary estimates,
available information and certain assumptions that management deems appropriate.
The unaudited pro forma combined financial data presented herein does not
purport to represent the results that the Company would have obtained had the
transactions which are the subject of pro forma adjustments occurred at the
beginning of the period, as assumed, or the future results of the Company. The
pro forma combined financial statements should be read in conjunction with the
other financial statements and notes thereto included elsewhere in this report
and in other reports filed by the Company.
F-9
<PAGE>
SYBRON CHEMICALS INC. AND SUBSIDIARIES
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
SCI IVAX Sub-Total Adj. Total
--- ---- --------- ---- -----
<S> <C> <C> <C> <C> <C>
Net Sales $174,346 $ 19,281 $193,627 $ (857)(a) $192,770
Cost of Sales 110,190 14,202 124,392 350 (b) 124,742
SG&A 42,380 6,305 48,685 (1,925)(c) 46,760
Research & development 4,154 1,112 5,266 20 (d) 5,286
Write-down of assets 23,396 23,396 (e) 23,396
-------- -------- -------- --------- --------
156,724 45,015 201,739 (1,555) 200,184
Operating income (loss) 17,622 (25,734) (8,112) 698 (7,414)
Other income (expense)
Interest income 400 400 400
Interest expense (1,969) (1,969) (875)(f) (2,844)
Amortization of intangibles (1,316) (1,316) (580)(g) (1,896)
Other, net (343) 353 10 10
---------- --------- ---------- --------- ----------
(3,228) 353 (2,875) (1,455) (4,330)
Income (loss) before income
taxes 14,394 (25,381) (10,987) (757) (11,744)
Provision for income taxes 5,880 5,880 (257)(h) 5,623
----------- --------- --------- --------- ---------
Net income (loss) $ 8,514 $(25,381) $(16,867) $ (500) $(17,367)
========== ========= ========= ======== =========
</TABLE>
F-10
<PAGE>
SYBRON CHEMICALS INC. AND SUBSIDIARIES
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
SCI IVAX Sub-Total Adj. Total
--- ---- --------- ---- -----
<S> <C> <C> <C> <C> <C>
Net Sales $92,132 $10,448 $102,580 $ (604)(a) $101,976
Cost of Sales 55,858 6,985 62,843 350 (b) 63,193
SG&A 21,583 3,056 24,639 (1,077)(c) 23,562
Research & development 1,836 393 2,229 10 (d) 2,239
Write-down of assets -- -- (e) --
-------- -------- --------- ------- --------
79,277 10,434 89,711 (717) 88,994
Operating income 12,855 14 12,869 113 12,982
Other income (expense)
Interest income 201 201 201
Interest expense (853) (853) (438)(f) (1,291)
Amortization of intangibles (669) (669) (290)(g) (959)
Other, net (124) 124 -- -- --
--------- --------- -------- -------- ---------
(1,445) 124 (1,321) (728) (2,049)
Income before income taxes 11,410 138 11,548 (615) 10,933
Provision for income taxes 4,679 4,679 (209)(h) 4,470
--------- --------- -------- --------- ---------
Net income $ 6,731 $ 138 $ 6,869 $ (406) $ 6,463
======== ======= ======== ======== ========
</TABLE>
F-11
<PAGE>
SYBRON CHEMICALS INC. AND SUBSIDIARIES
UNAUDITED PRO-FORMA CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1997
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
SCI IVAX Sub-Total Adj. Total
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 17,205 $ 17,205 $ 17,205
Accounts receivable, net 37,078 $ 3,016 40,094 40,094
Inventories, net 23,209 1,630 24,839 $ 350 (i) 25,189
Prepaid and other current assets 2,593 106 2,699 2,699
Deferred income taxes 43 43 43
-------- -------- -------- ------- --------
Total current assets 80,128 4,752 84,880 350 85,230
Property, plant and equipment, net 31,315 47 31,362 53 (i) 31,415
Intangible assets, net 11,714 11,714 9,139 (j) 20,853
Other assets 622 622 622
-------- -------- -------- -------- --------
$123,779 $ 4,799 $128,578 $ 9,542 $138,120
======== ========= ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 311 $ 311 $ 311
Accounts payable 17,779 17,779 17,779
Accrued liabilities 12,936 102 13,038 13,038
Current portion of long-term debt 2,431 2,431 2,431
Income taxes payable 3,444 3,444 3,444
Deferred income taxes 205 205 205
--------- -------- -------- -------- -------
Total current liabilities 37,106 102 37,208 37,208
Long-term debt 17,891 14,239 32,130
Deferred income taxes 2,882 2,882
Postretirement benefits 3,959 3,959
Other liabilities 2,284 2,284
--------- -------- -------- -------- --------
Total liabilities 64,122 102 64,224 14,239 78,463
--------- -------- -------- -------- --------
Net assets to be acquired 4,697 4,697 (4,697) -0-
Commitments and Contingencies
Shareholders' equity:
Preferred stock, $.01 par value -
500,000 shares authorized; none issued
Common stock - $.01 par value -
20,000,000 shares authorized;
issued 5,905,150 shares 59 59 59
Additional paid-in capital 23,519 23,519 23,519
Retained earnings 48,080 48,080 48,080
Cumulative translation adjustment (7,015) (7,015) (7,015)
--------- -------- -------- --------- --------
64,643 64,643 64,643
Less treasury stock, at cost - 236,702
shares of common stock at June 30, 1997,
254,440 at December 31, 1996 (4,734) (4,734) (4,734)
Less minimum pension liability,
net of tax (252) (252) (252)
--------- -------- -------- --------- ---------
Total shareholders' equity 59,657 59,657 59,657
--------- -------- -------- --------- ---------
$123,779 $ 4,799 $128,578 $ 9,542 $138,120
========= ========= ========= ========= ========
</TABLE>
F-12
<PAGE>
SYBRON CHEMICALS INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME ADJUSTMENTS
------------------------------------------------------------
(a) Adjustment made to reclassify the outbound freight as a sales
deduction to conform to the Company's accounting practice.
Amount is $857 for the year 1996 and $604 for the six months
ended June 30, 1997.
(b) Adjustment reflects the expensing in each period of the
inventory write-up ($350) during the first inventory turn.
(c) Adjustment to SG&A made to eliminate the corporate overhead
allocation to the acquired company, offset by an add-on for
direct charges from the Company's corporate office. Also see
note (a).
(d) Adjustment reflects depreciation on miscellaneous equipment
acquired.
(e) At September 30, 1996 management of IVAX Industries
reevaluated the carrying value of certain long-lived assets
and goodwill related to those assets to be held and used in
the Division's operations. Consequently, management reduced
the carrying value of certain long-lived assets and goodwill
of the Division by approximately $4,782 and $18,614,
respectively. The Company considers this a one time charge
that will not be a factor in ongoing costs.
(f) Adjustment to reflect an increase in interest expense as a
result of borrowings made to complete the acquisition as if
the debt had been outstanding for the entire period. Each 1/4%
change in the interest rate results in a $35 change in the
amount shown.
(g) Adjustment to reflect the amortization of intangibles,
including patents (est. life 10 years), customer list (est.
life 10 years) and goodwill (est. life 30 years).
(h) Adjustment to calculate the provision for income taxes on the
pro forma adjustments at an effective tax rate of 34%.
2. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS
----------------------------------------------------------
(i) Adjustment reflects a write-up of acquired inventory and
miscellaneous equipment to fair market value.
(j) Adjustment is to record the excess of acquisition cost over
the fair value of net assets acquired. Amounts have been
assigned to patents ($2,800), customer lists ($350) and to
goodwill ($6,313).
F-13
<PAGE>
ASSET PURCHASE AGREEMENT
by and among
IVAX Corporation
("IVAX"),
IVAX Industries Inc.
("Seller"),
IVAX Industries Canada, Inc.
("IVAX Canada"),
IVAX Industries U.K., Ltd.
("IVAX UK")
and
Sybron Chemicals Inc.
("Buyer")
dated
July 29, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of the 29th day
of July, 1997, among Ivax Corporation, a Florida corporation ("IVAX"), IVAX
Industries, Inc., a Delaware corporation (the "Seller"), IVAX Industries Canada,
Inc., an Ontario, Canada corporation ("IVAX Canada") and IVAX Industries U.K.,
ltd., a United Kingdom corporation ("IVAX UK") (the Seller, IVAX Canada and IVAX
UK are sometimes collectively referred to herein as, the "Industries Group") and
Sybron Chemicals Inc., a Delaware corporation (the "Buyer").
Whereas, the Seller is a wholly-owned subsidiary of IVAX; and
Whereas, IVAX Canada and IVAX UK are wholly-owned subsidiaries of the
Seller; and
Whereas, the Buyer desires to purchase from the Industries Group, and the
Industries Group desires to sell to the Buyer, upon the terms and conditions set
forth herein, certain assets of the Industries Group that relate to the
Industries Group's textile and garment processing business principally located
in Rock Hill, South Carolina (the "Business"); and
Whereas, the Buyer acknowledges that the assets being purchased are not all
of the assets used in the Business:
Now, Therefore, in consideration of the respective covenants and
representations and warranties contained herein, the parties hereto hereby agree
as follows:
1. Purchase And Sale Of Assets.
1.1 Description of Transferred Assets. The Industries Group agrees
-----------------------------------
to sell and transfer to the Buyer, and the Buyer agrees to purchase from the
Industries Group at the Closing (as defined in Section 2), subject to and upon
the terms and conditions contained herein, free and clear of any pledge, lien,
option, security interest, mortgage, claim, charge or other encumbrance of
any kind whatsoever except Permitted Encumbrances (as defined in Section 3.10),
the following properties and assets of the Industries Group (collectively,
the "Transferred Assets"):
(a)
(i) all finished goods inventory and supplies of
the Seller as of the Closing Date relating
exclusively to the Business ("Inventory");
(ii) all accounts receivable and notes receivable
of the Seller as of the Closing Date
relating exclusively to the Business and
prepaid expenses as of the Closing Date
relating exclusively to the assets being
sold;
(iii) the personal property and other physical
assets of the Seller relating exclusively to
the Business which are set forth on Schedule
1.1(a)(iii); and
-1-
<PAGE>
(iv) the research and development equipment set
forth on Schedule 1.1(a)(iv);
(b) All rights of the Seller with respect to leasehold
interests relating to the personal property used exclusively in the Business as
listed on Schedule l.l(b) (the "Leases");
(c) All rights of the Seller under all governmental
licenses, permits, authorizations, approvals, consents and franchises to the
extent assignable and listed on Schedule l.l(c);
(d) All rights of the Seller in the patents, patent
rights, inventions, processes, designs and applications for patents used by
Seller exclusively in the Business, and the trademarks, trademark applications,
service marks, service mark applications, copyrights, copyright applications,
trade names, registered designs and unregistered design rights, used by Seller
exclusively in the Business listed in Schedule 1.1(d) hereto (collectively,
"Intellectual Property");
(e) All rights of the Seller in trade secrets, processes,
engineering data, know-how, manufacturing procedures, safety data sheets,
formulae and confidential information used by Seller exclusively in the
operation of the Business ("Technical Information");
(f) All rights of the Seller in the customer and supplier
mailing lists and records, account histories, sales and pricing information,
advertising and promotional materials, marketing programs and quality control
records and procedures relating exclusively to the Business;
(g) All rights of the Seller under all contracts,
customer and vendor orders, and agreements exclusively relating to the Business
as well as any assignable warranties and indemnities from third parties relating
to the Transferred Assets, including, without limitation, to the extent
assignable, any such rights under that certain Asset Purchase and Sale Agreement
(the "Ecolab Purchase Agreement"), dated as of December 7, 1993, among Ecolab
Inc., Ecolab Ltd. (collectively, "Ecolab"), IVAX Industries Canada, Inc. and the
Seller, that certain Purchase Agreement, dated April 23, 1993, among Elf Atochem
North America, Inc., Elf Atochem Canada Inc. and IVAX;
(h) All rights of Seller under all assignable
confidentiality and non-competition agreements from present and past employees
of the Business and from other third parties to the extent they relate
exclusively to the Business (collectively, with the agreements described under
subsection 1.1(g) above, the "Contracts");
(i) those assets of IVAX Canada which are set forth on
Schedule 1.1(i); and
(j) those assets of IVAX UK which are set forth on
Schedule 1.1(j).
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<PAGE>
1.2 Excluded Assets. The following assets of the Industries Group
----------------
shall be excluded from the assets to be sold to the Buyer hereunder (the
"Excluded Assets"):
(a) cash, cash equivalents and bank accounts;
(b) all assets of any nature located in the Seller's
Horsham facility;
(c) except as otherwise specifically provided in this
Agreement, all financial or administrative records;
(d) all computer systems and software;
(e) all other assets of the Industries Group of every
kind and description, tangible or intangible, not specifically identified in
Section 1.1 whether or not they pertain to or are useful or used in the
Business, including, without limitation, assets shared with other divisions
of the Industries Group, and assets listed on Schedule 1.2.
1.3 Assumption of Certain Liabilities. On the terms and subject
----------------------------------
to the conditions set forth herein, and subject to Section 1.4 hereof, from and
after the Closing, the Buyer (or, with respect to obligations and liabilities of
IVAX Canada or IVAX UK, its designee) will assume and satisfy or perform when
due (A) all obligations and liabilities of the Industries Group reflected on the
Closing Date Balance Sheet (as defined in Section 1.7), (B) all obligations and
liabilities of the Industries Group arising or to be performed or discharged
after the Closing Date under the Leases, Permits, and Contracts, (C) all
obligations and liabilities of the Seller under the Indemnity Letters (as
hereinafter defined) related to sales or distributions by the Buyer or its
affiliates after the Closing of BLUE-J(R) INDI-GO POWDER, and (D) such other
obligations and liabilities as are specifically assumed in this Agreement
(collectively, "Assumed Liabilities").
1.4 Liabilities Not Assumed. Notwithstanding anything in this
------------------------
Agreement to the contrary, the Buyer will not assume or perform any liabilities
or obligations not specifically contemplated by Section 1.3 hereof including,
without limitation, any of the following obligations and liabilities:
(a) any liability or obligation of the Industries Group
for Taxes based on or measured by any income or gain realized by the Industries
Group upon the transfer of the Transferred Assets hereunder, or for Taxes
applicable for all periods ending on or before the Closing Date;
(b) any liability or obligation of the Industries Group
arising out of any "employee benefit plan," as such term is defined by the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
established or maintained by the Industries Group or to which the Industries
Group contributes or any liability with respect to any other pension, benefit
or profit sharing plan of the Industries Group or the termination of any such
plan;
(c) other than as set forth in Section 5.2, any liability
or obligation of the Industries Group for making payments of any kind (including
as a result of the sale of
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<PAGE>
Transferred Assets or as a result of the termination of employment by the
Industries Group of employees or other labor claims) to employees of the
Industries Group or in respect of payroll taxes for employees of the Industries
Group, including without limitation any liabilities or obligations of the
Industries Group arising under or with respect to the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), the Worker Adjustment and Retaining
Notification Act ("WARN") and the Occupational Safety and Health Act ("OSHA");
(d) any liability or obligation of the Industries Group
with respect to any claims or actions arising under or relating to any
Environmental Laws (as defined in Section 3.16), or related common law theories,
including third party claims and any liability or obligation for any penalties,
fines, expenses, costs, losses, claims or damages arising out of or resulting
from any generation, storage, treatment, handling, disposal or release of
Hazardous Materials (as defined in Section 3.16);
(e) any liability or obligation of the Industries Group
with respect to the litigation described under item 2 of Schedule 3.13;
(f) any liability or obligation of the Seller arising
under any of the letters (the "Indemnity Letters") provided by the Seller to
certain of its customers whereby the Seller agreed to indemnify and hold
harmless such customers against any and all claims, expenses, losses and/or
damages assessed against such customers or their customers in a suit brought for
infringement of United States Letters, Patent No. 5,366,510 because of the
purchase or use by such customers of the Seller's IVX-1664 commercialized as
BLUE-J(R) INDI-GO POWDER, but only with respect to sales or distributions of
such product by the Seller or its affiliates prior to the Closing; and
(g) except as assumed pursuant to Section 1.3(A), (B) or
(C), any liability or obligation of the Industries Group arising out of the
Industries Group's conduct of the Business or any other business of the
Industries Group prior to the Closing.
1.5 Purchase Price. The total purchase price (the "Purchase
---------------
Price") which the Buyer shall pay to the Industries Group for the Transferred
Assets and in consideration of the other covenants and agreements of the
Industries Group contained herein is Thirteen Million Seven Hundred Seventy
Thousand Dollars ($13,770,000).
1.6 Allocation of the Purchase Price. The parties hereto agree
---------------------------------
that the Purchase Price shall be allocated as set forth in Schedule 1.6 and
agree that such allocation is based upon the fair market value of the
Transferred Assets and is an appropriate allocation. Such allocation shall be
binding upon the parties hereto and the parties hereto shall file their
respective tax returns in accordance with such allocation and shall not take any
position or action inconsistent with such allocation.
1.7 Purchase Price Adjustment.
--------------------------
(a) Within 45 days after the Closing Date (as defined in
Section 2), the Seller shall deliver to the Buyer a balance sheet of the
Transferred Assets and Assumed Liabilities as
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<PAGE>
of 11:59 p.m. on the Closing Date (the "Closing Date Balance Sheet")
prepared by the Seller accompanied by a report from Seller's independent
certified public accountants that the Closing Date Balance Sheet has been
prepared in accordance with generally accepted accounting principles ("GAAP"),
consistently applied, except as noted on Schedule 1.7(a) (the "Closing Date
Balance Sheet GAAP Exceptions"), and, subject to the Closing Date Balance Sheet
GAAP Exceptions, presents fairly, in all material respects, the Transferred
Assets and Assumed Liabilities at the Closing Date. The amount of Inventory
included on the Closing Date Balance Sheet shall be determined pursuant to
physical inventories conducted not later than 10 days after the Closing Date, as
adjusted for additions and deletions occurring between the Closing Date and the
taking of such physical inventories, and each party's independent certified
public accountants shall be permitted to personally observe all such physical
inventories. Seller and Buyer each shall pay the fees and expenses of its own
accountant incurred in connection with the preparation and audit of the Closing
Date Balance Sheet.
(b) If the Buyer has any objection to the Closing Date
Balance Sheet, it shall deliver to the Seller a statement describing with
reasonable detail such objections within 30 days after the Buyer's receipt of
the Closing Date Balance Sheet. During such 30-day period, Buyer and its
accountants shall have access to the work papers and such other documents and
information relating to the preparation of the Closing Date Balance Sheet as
they shall reasonably request. The Buyer and the Seller shall use reasonable
efforts to resolve any such objections. If the Buyer and the Seller are unable
to finally resolve such objections within 20 days after the Seller's receipt of
such objections, the Buyer and the Seller shall, within 20 days after such 20-
day period, select a mutually acceptable, neutral "Big Six" accounting firm
("Neutral Arbitrator") to resolve any remaining objections. A firm will be
considered neutral if it has not within the past three years performed, and does
not currently perform or contemplate performing, any accounting, consulting or
other services for any of the parties. The Buyer and Seller will present their
remaining unresolved objections in writing, along with supporting documentation,
to the Neutral Arbitrator and opposing party, within 15 days after retaining the
Neutral Arbitrator. The Neutral Arbitrator will, using the standards prescribed
in Section 1.7(a) hereof, render its decision to the parties in writing within
30 days after being retained. The Neutral Arbitrator's decision will be based
solely on each parties written documentation and shall be final and binding on
the parties. The fees and expenses of the Neutral Arbitrator shall be shared
equally by the Buyer and the Seller. The Seller will revise the Closing Date
Balance Sheet to reflect the resolution of any objections thereto pursuant to
this paragraph Section 1.7(b).
(c) If the excess of the Transferred Assets over the
Assumed Liabilities, as reflected on the Closing Date Balance Sheet, as revised
to reflect any revisions thereto made pursuant to Section 1.7(b) ("Closing
NBV"), is greater or less than Three Million Seven Hundred Eighteen Thousand
Dollars ($3,718,000) ("Threshold NBV"), then (i) the amount, if any, by which
the Closing NBV is greater than Threshold NBV shall be added to the Purchase
Price, and (ii) the amount, if any, by which the Closing NBV is less than
Threshold NBV shall be deducted from the Purchase Price.
(d) On or before the second business day following the
date on which the Closing Date Balance Sheet is finally determined, Buyer shall
pay the amount of any net upward adjustment of the Purchase Price pursuant to
Section 1.7(c) to Seller or Seller shall pay the
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<PAGE>
amount of any net downward adjustment of the Purchase Price pursuant to
Section 1.7(c) to Buyer. In either case, such payment shall be made by wire
transfer of immediately available funds plus interest thereon from the Closing
Date, at the "prime" rate of interest as reported in The Wall Street Journal.
1.8 Acknowledgment. The Buyer acknowledges that the Transferred
---------------
Assets are not sufficient to enable the Buyer to operate and conduct the
Business after the Closing in substantially the same manner as the Business has
previously been conducted by the Industries Group. The Transferred Assets
constitute less than all of the assets currently used by the Industries Group in
connection with the Business. The Buyer is purchasing the Transferred Assets
for use in its business where it has an existing operational infrastructure to
realize the value of the Transferred Assets.
2. Closing. The closing of the purchase and sale of the
Transferred Assets and the other transactions contemplated hereby (the
"Closing") shall take place at the offices of the Seller in Horsham,
Pennsylvania at 10:00 a.m. on July 29, 1997 or such other location or later date
and time as may be agreed to by the Buyer and the Seller (the "Closing Date").
At the Closing:
(a) Each of the Industries Group shall execute and deliver to the
Buyer a Bill of Sale, in the form agreed to by the parties, and shall execute
and deliver to the Buyer all such other instruments and documents of conveyance
and assignment (including without limitation assignments of patents, trademarks
and other intellectual property), as are reasonably requested by the Buyer to
vest in the Buyer title to the Industries Group's rights in the Transferred
Assets.
(b) The Seller shall deliver to the Buyer duly executed termina-
tion statements terminating all liens and encumbrances, if any, to the
Transferred Assets, other than Permitted Encumbrances.
(c) The Seller and IVAX, on the one hand, and Buyer, on the other,
each shall deliver to the other a Certificate, duly executed by their respective
Presidents or Corporate Secretaries, in the form agreed to by the parties.
(d) The Seller and Buyer shall each execute and deliver to each
other a Toll Manufacturing and Supply Agreement in the form agreed to by the
parties.
(e) The Buyer shall execute and deliver to each of the Industries
Group an Assumption Agreement in the form agreed to by the parties, and such
other instruments and documents as are reasonably requested by the Seller to
effect the assumption by the Buyer of the Assumed Liabilities.
(f) The Buyer shall pay to the Industries Group the Purchase Price
payable to the Seller at the Closing, by wire transfer of immediately available
funds in accordance with Seller's instructions.
-6-
<PAGE>
3. Representations And Warranties Of The Industries Group And Ivax.
The Industries Group and IVAX each make the following representations
and warranties as of the Closing Date:
3.1 Due Organization. Each of the Industries Group is a
-----------------
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization. The Seller has delivered
to the Buyer complete and correct copies of its Articles of Incorporation, as
amended, and its By-Laws.
3.2 Authorization. Each of the Industries Group has all corporate
--------------
power and authority to enter into and perform this Agreement and the other
documents and instruments to be executed and delivered by it pursuant to this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by the Industries Group and IVAX of this Agreement and the
consummation by the Industries Group and IVAX of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Industries Group and IVAX. This Agreement has been duly executed and
delivered by the Industries Group and IVAX and constitutes the legal, valid and
binding obligation of the Industries Group and IVAX and is enforceable against
the Industries Group and IVAX in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors rights generally and to general
principles of equity.
3.3 No Conflicts; Approvals.
------------------------
(a) Neither the execution, delivery and performance of
this Agreement by the Industries Group nor the consummation of the transactions
contemplated hereby will, except where the conflict, breach, default or result
would not have a material adverse effect on the Transferred Assets taken as a
whole, (i) conflict with or result in a breach of any provision of the charter
or other organizational documents of any of the Industries Group, (ii) result in
any material conflict with, breach of, or default under any agreement or instru-
ment to which any of the Industries Group is a party and the Transferred Assets
may be subject, (iii) violate any order, law, rule or regulation applicable to
any of the Industries Group or (iv) result in the creation of any pledge, lien,
security interest, mortgage, charge or other encumbrance of any kind upon the
Transferred Assets.
(b) No material action, consent or approval by, or filing
by the Industries Group with, any federal, state, municipal, foreign or other
court or governmental body or agency, or any other regulatory body, or any other
person is required in connection with the execution, delivery or performance by
the Industries Group of this Agreement or the consummation of transactions
contemplated hereby, except any filing, consent or approval that has been made
or obtained prior to the Closing, or as set forth in Schedule 3.3.
3.4 Financial Statements. Attached as Schedule 3.4(a) are the
--------------------
following financial statements of the Business (the "Financial Statements"):
The unaudited selected balance sheet information of the Business as at June 30,
1997, December 31, 1996 and December 31, 1995, and the unaudited statement of
revenues and expenses of the Business for the periods of the Business
-7-
<PAGE>
then ended. The Financial Statements have been prepared on a consistent
basis throughout the periods indicated in accordance with GAAP, except as noted
on Schedule 3.4(b) (the "Financial Statement GAAP Exceptions"), and, subject to
the Financial Statement GAAP Exceptions, present fairly in all material respects
the financial condition of the Business at the respective dates thereof and the
results of its operations for the periods covered thereby.
3.5 Accounts Receivable. Seller has delivered to Buyer a true and
--------------------
complete aged list of the accounts receivable of the Business as of December 31,
1996 and June 30, 1997. All accounts receivable included in the Transferred
Assets constitute only bona fide, valid and binding claims arising in the
ordinary course of Business, subject to no known counterclaims or setoffs.
3.6 Inventories. All Inventory has been produced or purchased in
------------
the ordinary course of conduct of the Business, satisfies the applicable
specifications therefor and is salable in the ordinary course of business of the
Business.
3.7 Customers and Sales; Suppliers. Schedule 3.7 is a complete
-------------------------------
and correct list of (i) customers of the Business who purchased in excess of
(a) $400,000 of products from the Business during the 12-month period ended
December 31, 1996 or (b) $200,000 of products from the Business during the
6-month period ended June 30, 1997 and (ii) the top five suppliers to the
Business for the 12-month period ended December 31, 1996 and the 6-month period
ended June 30, 1997, together with summaries of the sales made to each such
customer and purchases made from each such supplier, for each of the 12-month
period ended December 31, 1996 and the 6-month period ended June 30, 1997.
Except as set forth on Schedule 3.7, to the Best Knowledge of the Seller (as
hereinafter defined), no such customer or supplier intends to cease doing
business with the Industries Group, or materially decrease the amount of the
business that it is presently doing with the Industries Group. Except as set
forth on Schedule 3.7, to the Best Knowledge of Seller or IVAX, the consummation
of the transactions contemplated hereby will not, and is not reasonably expected
to, materially adversely affect the relationship of the Buyer (as successor to
Seller) with any such customer or supplier.
3.8 Permits; Intellectual Property.
-------------------------------
(a) Schedule 1.1(c) sets forth a list of all material
governmental licenses, permits, authorizations, approvals, consents and
franchises owned, held, licensed or otherwise used by the Industries Group
exclusively with respect to the Transferred Assets (collectively, "Permits"),
all of which are in full force and effect except where the failure would not
have a material adverse effect on the Transferred Assets taken as a whole.
Except as set forth on Schedule 3.8, neither the execution and delivery of this
Agreement nor consummation of the transactions contemplated hereby will
adversely affect the status of the Permits.
(b) Schedule 1.1(d) sets forth a list of all material
Intellectual Property used by the Industries Group exclusively in the Business.
Except as disclosed on Schedule 3.8, the Industries Group owns or possesses the
sole and exclusive rights to use (without making any payment or granting any
right to any person in exchange) all such material Intellectual Property.
Except as disclosed on Schedule 3.8, the Industries Group has not received
written notice of any
-8-
<PAGE>
claims asserting the invalidity or unenforceability of any of such material
Intellectual Property, and the Industries Group has not received written notice
asserting the infringement by the Industries Group of any trademark, service
mark, copyright, patent, patent right or other proprietary right of any other
person in connection with such material Intellectual Property, and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, will alter or impair any such material
Intellectual Property.
3.9 Personal Property. The tangible personal property listed on
------------------
Schedules 1.1(a)(iii) and 1.1(a)(iv) is transferred strictly "as is, where is"
with no further representation or warranty whatsoever.
3.10 Title. The Industries Group has, and will convey to Buyer
------
hereunder, good and valid title to the Transferred Assets owned by the
Industries Group, free and clear of all mortgages, liens, pledges, charges or
other encumbrances, except for encumbrances listed on Schedule 3.10 ("Permitted
Encumbrances").
3.11 Contracts.
----------
(a) Listed on Schedule 3.11 are all Contracts. The Seller
has delivered to the Buyer complete and correct copies of the Contracts.
(b) Except as set forth on Schedule 3.11, (i) the
Industries Group has complied with all material commitments and obligations
pertaining to the Contracts, (ii) the Industries Group is not in material
default under any Contract and has not received or given any notice of default
thereunder, and to the Seller's Best Knowledge no other party to any Contract is
in material default thereunder, and (iii) to the Seller's Best Knowledge, no
condition exists or event has occurred which, with the giving of notice or lapse
of time or both, would constitute a material default thereunder.
(c) Subject to limitations imposed by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors rights generally, and to general principles of
equity, and application of non-U.S. law, each of the Contracts is (i) the legal,
valid and binding obligation of the Industries Group entity which is a party
thereto and, to the Best Knowledge of the Seller, the other parties thereto, and
(ii) in full force and effect and will continue in full force and effect
following the consummation of the transactions contemplated hereby.
3.12 Labor Matters.
--------------
(a) None of the Industries Group's employees in the
Business are represented by any labor union or covered by any collective
bargaining agreement.
(b) Schedule 3.12 sets forth, with respect to each of the
Transferred Employees (as hereinafter defined), (A) his or her (i) rate of
compensation, (ii) title, (ii) original date of hire, and (iii) vacation
benefits, sick leave and personal leave benefits to the extent, if any, payable
in cash upon termination of his or her employment, and (B) whether the
Transferred Employee
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<PAGE>
has an employment agreement to which any of the Industries Group is a party
or by which it is bound, including covenants not to compete and non-disclosure
agreements.
(c) The Seller has delivered or made available to the
Buyer copies of all of the personnel policies, handbooks, procedures, forms of
employment applications and employment agreements relating to the Transferred
Employees, if any, to which any of the Industries Group is a party.
(d) The Industries Group, with respect to the Transferred
Employees, has complied in all material respects with all laws relating to the
employment of labor, including but not limited to any provisions thereof
relating to wages, hours, collective bargaining and the payment of social
security, unemployment compensation and similar taxes, and none of the
Industries Group is liable for any arrears of wages or any taxes or penalties
for failures to comply with any of the foregoing, in each case, where such
failure to comply or liability would materially and adversely affect the
Business or the Transferred Assets, taken as a whole.
3.13 Litigation. Except as set forth in Schedule 3.13, there are
-----------
no claims, actions, suits, proceedings or investigations, pending or, to the
Best Knowledge of the Seller, threatened, against the Industries Group with
respect to the Business or the Transferred Assets.
3.14 Conformity with Law. Except as set forth on Schedule 3.14,
--------------------
the Industries Group is conducting the Business in substantial compliance with
all applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, rules and regulations and is not in violation of any of the
foregoing that would materially and adversely affect the Transferred Assets
taken as a whole.
3.15 Absence of Changes. Except as set forth in any Schedule to
-------------------
this Agreement, since December 31, 1996, the Industries Group has carried on the
Business in the ordinary course, and since December 31, 1996 with respect to the
Business, there has not been any material adverse change in the financial
condition, assets, liabilities (contingent or otherwise), revenues or income of
the Business, or any damage, destruction or other casualty loss to or forfeiture
of any of the Transferred Assets (whether or not covered by insurance) which
would be material to the Transferred Assets taken as a whole.
3.16 Environmental Matters.
----------------------
(a) Except as set forth on Schedule 3.16, the Business is
not in violation of any existing federal, state or local law, statute or
regulation, or any existing decree, order, arbitration award, or any license or
permit issued by any federal, state or local governmental authority relating to
occupational health and safety or pollution or protection of the environment
(the "Environmental Laws") that would have a material adverse effect on the
Transferred Assets taken as a whole, including without limitation Environmental
Laws relating to: (i) treatment, storage, disposal, generation and transporta-
tion of pollutants, contaminants, toxic substances, hazardous substances, solid
wastes, or hazardous wastes as any of those terms are defined in any of the
Environmental Laws ("Hazardous Materials"); (ii) air, water and noise pollution;
(iii) ground water contamination; (iv) the release into the environment of
Hazardous Materials; (v) storage
-10-
<PAGE>
tanks, vessels and related equipment; (vi) abandoned or discarded barrels,
containers and other closed receptacles; or (vii) health and safety of employees
and other persons.
(b) Except as set forth on Schedule 3.16, none of the
Industries Group has received any written notice or written complaint in the
last five years of any violation of the Environmental Laws with respect to the
Transferred Assets which would have a material adverse impact on the Transferred
Assets taken as a whole.
3.17 Absence of Certain Business Practices. In connection with the
--------------------------------------
Business, none of the Industries Group nor any officer, employee or agent of the
Industries Group, nor, to the Best Knowledge of Seller, any other person acting
on its behalf, has, directly or indirectly, within the past five years given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the Business (or assist Seller in connection with any actual or proposed
transaction) which (A) could reasonably be expected to subject the Industries
Group to any damage or penalty in a material civil, criminal or governmental
litigation or proceeding, (B) if not given in the past, could reasonably be
expected to have had a material adverse effect on the assets, business or
operations of Business or (C), if not continued in the future, could reasonably
be expected to materially adversely affect the Business or to subject the
Industries Group to suit or penalty in any material private or governmental
litigation or proceeding.
3.18 Technical Information. Except as set forth on Schedule 3.18,
---------------------
the Industries Group has not granted to any third party any right to use the
Technical Information or disclosed such Technical Information to any third
party, other than in the ordinary course of business and, as it relates to
confidential information, subject to confidentiality or non-disclosure
provisions or agreements. A list of any such confidentiality provisions or
agreements entered into by any of the Industries Group since December 31, 1993,
which are currently in effect, with persons other than employees, distributors,
sales representatives or agents of the Industries Group, is set forth on
Schedule 3.18 hereto. The Technical Information together with the other
Transferred Assets includes all information necessary to produce the products
presently manufactured and sold by the Business in substantially the same manner
in which they presently are manufactured and sold by the Industries Group.
3.19 Brokers and Finders. Neither the Industries Group nor any
--------------------
officer, director, or employee of the Industries Group has incurred any
liabilities for any brokerage fees, commissions or finders' fees in connection
with this Agreement or the transactions contemplated hereby.
3.20 Insurance. The Seller maintains (or IVAX maintains on behalf
----------
of the Seller) liability (including product liability), casualty, property loss
and other insurance coverage upon the Transferred Assets and with respect to the
conduct of the Business, in such amounts as are, at a minimum, deemed
appropriate and sufficient for companies of similar size engaged in similar
types of business and operations. Schedule 3.20 sets forth a list identifying
the name of the insurers issuing such insurance policies.
3.21 Product Performance. Products the Industries Group is
--------------------
currently promoting and selling in 1997, being offered for stone washed
performance, are technologically advanced and
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<PAGE>
superior on a cost performance basis as compared to the Stone-Eze products
sold in the 1989- 1990 time frame, and referred to in the affidavit of Shelby L.
Polk dated May 6, 1997. Further, these technologically advanced products
represent the major part of the Business and the Business' current sales and
marketing efforts in the denim products business.
3.22 Disclosure. This Agreement and the schedules hereto and all
-----------
other documents and information furnished to the Buyer and their representatives
pursuant hereto do not and will not include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
4. Representations Of The Buyer.
The Buyer makes the following representations and warranties as of the
Closing Date:
4.1 Due Organization. The Buyer is a corporation duly organized,
-----------------
validly existing and in good standing under the laws of the State of Delaware.
The Buyer has delivered to the Seller complete and correct copies of its
Certificate of Incorporation, as amended, and its By-Laws.
4.2 Authorization. The Buyer has all power and authority to
--------------
execute and deliver this Agreement and the other documents and instruments to be
delivered pursuant to this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by the Buyer of this Agreement
and the consummation of the transactions contemplated hereby by the Buyer have
been duly and validly authorized by all necessary corporate action on the part
of the Buyer. This Agreement has been duly executed and delivered by the Buyer
and constitutes the valid and binding obligation of the Buyer enforceable in
accordance with its terms except as limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
effecting creditors rights generally and to general principles of equity.
4.3 No Conflicts; Approvals.
------------------------
(a) Neither the xecution, delivery and performance of
this Agreement nor the consummation of the transactions contemplated hereby by
the Buyer will (i) conflict with or result in a breach of any provision of the
Certificate of Incorporation or By-Laws of the Buyer, (ii) result in any
conflict with, breach of, or default (or give rise to any right of termination,
cancellation or acceleration or loss of any right or benefit) under or require
any consent or approval which has not been waived or obtained prior to the
Closing with respect to any of the terms, conditions or provisions of any
indenture, lease, agreement, permit, license, judgment or other instrument to
which the Buyer is a party or by which the Buyer or any of its properties may
be bound or (iii) violate any order, law, rule or regulation applicable to the
Buyer or by which the Buyer or any of its properties is bound.
(b) action, consent or approval by, or filing by the
Buyer with, any federal, state, municipal, foreign or other court or
governmental body or agency, or any other regulatory body or any other person,
is required in connection with the execution and delivery by the Buyer of this
Agreement or the consummation by the Buyer of the transactions contemplated
hereby, except any filing, consent or approval that has been made or obtained
prior to the Closing.
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4.4 Brokers and Finders. Neither the Buyer nor any member,
--------------------
officer, or employee of the Buyer has incurred any liabilities for any brokerage
fees, commissions or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
4.5 Financial Ability. The Buyer has the financial ability to
------------------
consummate the transactions and perform its obligations, as contemplated by this
Agreement.
5. Covenants.
5.1 Covenant Not to Compete. In furtherance of the sale to Buyer
------------------------
of the Transferred Assets, for a period of five (5) years following the Closing
Date (the "Covenant Period"), neither the Industries Group, so long as they are
owned, directly or indirectly by IVAX, nor IVAX shall, directly or indirectly
(other than through an entity (an "Acquired Entity") acquired by IVAX or its
affiliates after the date hereof and during the Covenant Period which is not
primarily engaged in the Prohibited Business (as hereafter defined)), compete
with Buyer, anywhere in the world, in the Business as conducted by the
Industries Group prior to the Closing (the "Prohibited Business"); provided,
however, that nothing herein shall be construed to prevent the Industries
Group from owning, as an investment, up to 5% of a class of equity securities
issued by any competitor of Buyer that is publicly traded and registered under
Section 12 of the Securities Exchange Act of 1934. In the event that the
Acquired Entity is engaged in the Prohibited Business, IVAX or its affiliates as
the case may be, shall (to the extent it directly or indirectly controls such
Acquired Entity) within 60 days after the acquisition, offer to sell to the
Buyer the assets relating exclusively to the Prohibited Business on terms and
conditions and for a purchase price to be mutually agreed to by the parties
(IVAX hereby agreeing to furnish or cause to be furnished, to the Buyer such
access to information concerning the Prohibited Business as shall be reasonably
necessary for the Buyer to respond to such offer). In the event the parties are
unable to agree upon a purchase price for such assets within 60 days after the
Buyer is offered to purchase such assets, then IVAX shall thereafter offer to
sell such assets to the Buyer for cash in an amount equal to the fair market
value of such assets (the "Appraised Value") as determined by a nationally
recognized independent investment banking firm mutually selected by IVAX and the
Buyer and otherwise on terms and conditions as shall be agreed to by the
parties. The Buyer shall have a period of 15 days after determination of the
purchase price by such investment banking firm in which to notify IVAX or its
affiliates, as the case may be, of its desire to accept or decline such offer.
If the Buyer declines or fails to accept such offer and thereafter IVAX or
its affiliates shall, within the shorter of (i) one year after acquisition of
the Prohibited Business or (ii) the remaining period under the Covenant Period,
determine to sell the assets related to the Prohibited Business to any third
party for a purchase price less than the Appraised Value, the Buyer shall have a
right of first refusal, exercisable within 30 days, to purchase such assets on
the same terms and conditions as were offered to such third party. Any sale to
the Buyer of assets pursuant to this Section 5.1 shall be consummated as
promptly as practicable. In the event of a breach by the Industries Group of
any of the provisions of this Section 5.1, Buyer may, in addition to other
rights and remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions hereof. If the period of
time or territory of any restriction set forth in this Section 5.1 shall be
adjudged unreasonable in any proceeding, the period of time shall be
reduced by such number of months or the territory shall be reduced by the
elimination of such
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<PAGE>
unreasonable portion thereof, or both, so that such restrictions may be
enforceable for such time and in the manner adjudged to be reasonable. The
running of the Covenant Period set forth in this Section 5.1 shall be tolled
with respect to the Industries Group and their affiliates during the continuance
of any actual breach thereof, but only if the Buyer notifies IVAX that it
believes that such a breach is occurring and of the facts giving rise to such
breach promptly after the Buyer becomes aware of such breach and only if it is
determined by agreement of the parties or by a court of competent jurisdiction
that such a breach has occurred.
5.2 Transferred Employees. Buyer agrees to offer employment to the
-----------------------
listed employees of the Industries Group ("Transferred Employees") and on such
terms as are set forth on Schedule 5.2. Effective as of the Closing Date,
each Transferred Employee shall be offered employment at will by Buyer at a
salary or hourly rate not less than that indicated on Schedule 5.2 and,
upon the Transferred Employee's acceptance thereof, the employment by Seller of
the Transferred Employee shall terminate. Buyer shall provide such benefits,
holidays, vacation days and the like to the Transferred Employees as Buyer
provides to its employees generally. Except to the extent accrued on the Closing
Date Balance Sheet, Seller shall be responsible to the Transferred Employees for
all compensation for past services and benefits accrued to the Closing Date
(including wages and accrued vacation) to which they may be entitled. Seller
shall cooperate with Buyer in the orderly transfer of the Transferred Employees
to Buyer. In administering employee benefit plans for the Transferred Employees
after the Closing Date, Buyer will credit each Transferred Employee solely for
vesting and eligibility purposes with all years of service of such Transferred
Employee credited for such purpose with the Industries Group. Without limiting
the generality of the foregoing, no waiting period or exclusion from coverage of
any pre- existing medical condition shall apply to the Transferred Employees'
participation in any employee benefit plan of Buyer after the Closing Date if
such Transferred Employee was a participant in Seller's benefit plans for at
least thirty days prior to the date of employment of such Transferred Employee
by Buyer. Notwithstanding anything herein to the contrary, Buyer shall be
responsible for and assume all compensation, benefits and severance of
Transferred Employees to the extent accrued on the Closing Date Balance Sheet.
Buyer shall promptly reimburse IVAX and/or Seller for any and all payments made
to or for the benefit of an employee of Seller in connection with the
termination of an employee's employment with Seller ("Severance Payments") made
by IVAX and/or Seller to any person who is not a Transferred Employee but who
was an employee of the Seller and involved in the conduct of the Business during
the one (1) month period ending on the Closing Date and who is employed with
Buyer within one (1) year after the Closing Date.
5.3 Further Assurances. The parties shall deliver any and all other
-------------------
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including
without limitation all instruments of transfer as may be necessary or desirable
to transfer ownership of the Transferred Assets and effect assumption of the
Assumed Liabilities and to consummate the transactions contemplated by this
Agreement.
5.4 Publicity. The parties agree to cooperate in issuing any press
----------
release or other public announcement concerning this Agreement or the trans-
actions contemplated hereby. Nothing contained herein shall prevent any party
from at any time furnishing any information to any governmental authority which
it is by law or otherwise so obligated to disclose or from
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<PAGE>
making any disclosure which its counsel deems necessary or advisable in
order to fulfill such party's disclosure obligations under applicable law or
stock exchange rules.
5.5 Use of Names. Immediately upon consummation of the Closing,
-------------
Buyer shall cease using any and all trade names and any other names, trademarks,
logos and trade dress of Seller not included in the Intellectual Property
(collectively, the "Trademarks"), including without limitation those containing
the word "IVAX"; provided, however, that Buyer shall have the royalty-free
right to use the inventory, products, labels, invoices, promotional materials,
packaging and containers included in the Inventory ("Materials") until the
earlier of (i) the date twelve (12) months after the Closing Date, or
(ii) such time as such Materials are depleted.
5.6 Delivery of Property Received After Closing. From and after
----------------------------------------------
the date hereof, (a) Buyer shall promptly transfer and deliver to Seller any
cash, checks (properly endorsed) or other property, including mail, which Buyer
may receive and which may belong to the Industries Group, and (b) the Industries
Group shall promptly transfer and deliver to Buyer any cash, checks (properly
endorsed) or other property, including mail, which the Industries Group may
receive and which may belong to Buyer.
5.7 Post Closing Financial Statements. Within 60 days after the
------------------------------------
Closing, Seller shall deliver to Buyer an audited statement of net assets to be
acquired as of December 31, 1996 and, if requested by Buyer within 60 days
after the Closing, as of December 31, 1995, and an audited statement of revenues
and expenses for the year or years then ended, in each case, in compliance with
Regulations 3-01 and 3-02 of Regulation S-X promulgated by the Securities and
Exchange Commission. Buyer shall pay all fees and costs of Seller's accountants
incurred in connection with the preparation and audit of the December 31, 1995
financial statements.
5.8 Seller's Access. After the Closing Date, the Buyer shall permit
----------------
the Seller reasonable access during normal business hours, upon not less than
five (5) days' prior notice, to all books, records and files of the Business
transferred pursuant to this Agreement, relating to a period prior to the
Closing Date, and to any employees of the Buyer formerly employed by the Seller,
as may be necessary or advisable in connection with the preparation of the tax
returns of Seller and/or IVAX, the prosecution or defense of any tax audits or
third party claims, suits, actions or proceedings by or against the Seller
and/or IVAX relating to the Business, to collect accounts receivable repurchased
by Seller pursuant to this Agreement, or as is otherwise reasonably requested by
Seller and/or IVAX. Buyer agrees to retain all such books and records for a
period of not less than seven (7) years after the Closing Date in order to
afford the Seller such access, and the Seller shall have the right at any
reasonable time to make copies thereof. If Buyer or any of its affiliates shall
desire in accordance with its normal record keeping practices, to dispose of any
of such books, records and files, after two years following the Closing Date,
but prior to the expiration of such seven-year period, Buyer shall, prior to
such disposition, give IVAX a reasonable opportunity at IVAX's expense, to
segregate and remove such books, records and files as IVAX may select.
5.9 CPN Litigation. Buyer shall assume control of the litigation
---------------
identified on item 1 of Schedule 3.13 (the "Assumed Litigation") and shall
conduct the Assumed Litigation in a good faith manner. Seller and IVAX shall
remain liable and responsible only for damages, losses and
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claims assessed against Seller, IVAX, Ecolab or Buyer or any of their
respective affiliates in connection with a judgment rendered in, or settlement
of, the Assumed Litigation which arise out of or are attributable to actions of
Seller, IVAX or Ecolab or any of their respective affiliates prior to the
Closing Date. Buyer shall be liable and responsible only for damages, losses and
claims assessed against Seller, IVAX, Ecolab or Buyer or any of their respective
affiliates in connection with a judgment rendered in, or settlement of, the
Assumed Litigation which arise out of or are attributable to actions of Buyer or
its affiliates after the Closing Date. From and after the Closing Date, Buyer
shall be responsible for all fees, costs and expenses of conducting the Assumed
Litigation (other than the fees and expenses of counsel incurred in defending
the counterclaims against Seller, IVAX or Ecolab relating to the conduct of
Seller, IVAX or Ecolab), including with respect to Seller's claims of patent
infringement, the defense of the validity of the patents, and the appeal of the
ruling with respect to the reexamined patent. Buyer shall not settle or
voluntarily dismiss all or any part of the Assumed Litigation without the prior
written consent of IVAX and Seller, except that neither Seller's nor IVAX's
consent to any such settlement may be withheld if the terms of such settlement
or dismissal do not impose on Seller, IVAX or Ecolab any financial or other
liability, obligation or restriction (other than the payment of its own fees and
expenses) and such party receives an appropriate written release of any claims
being asserted against it, in a form reasonably acceptable to such party, and
further provided that if IVAX does not consent to any settlement or dismissal by
Buyer of that portion of the Assumed Litigation involving Seller's patent
infringement claims and reexamination of the patent, Buyer shall have the right,
exercisable upon written notice to IVAX, to require IVAX to reassume control of
such portion of the Assumed Litigation which Buyer seeks to settle or dismiss,
in which event IVAX shall (or shall, pursuant to Section 7.8 of the Ecolab
Purchase Agreement, cause Ecolab to) assume control and thereafter IVAX or
Ecolab, as the case may be, shall be solely responsible for all costs relating
to the conduct thereof. Each of the parties hereto will execute all necessary
documents to make any such action effective, and Buyer shall cooperate with IVAX
(or, at the direction of IVAX, with Ecolab) to the extent necessary to enable
IVAX or Ecolab, as the case may be, to continue the conduct of such portion of
the Assumed Litigation. Seller shall have the right to participate in the
Assumed Litigation at its own expense to the extent of any claims made therein
for which Buyer is not responsible as provided herein. The parties will provide
each other with such information and data regarding the Assumed Litigation as
each such party reasonably requests and Seller and IVAX shall use reasonable
efforts to make available to Buyer for consultation, testimony and related
matters in connection with the conduct of the Assumed Litigation, such personnel
and advisors (including counsel) of IVAX or Seller as may reasonably be
requested by Buyer. IVAX shall also request, pursuant to Section 7.8 of the
Ecolab Purchase Agreement, the availability of such personnel of Ecolab as may
reasonably be requested by Buyer. This Section 5.9 sets forth the
responsibilities and liabilities, rights and remedies of IVAX and Seller on the
one hand, and Buyer on the other, vis-a-vis each other, in respect of the
Assumed Litigation and nothing expressed or implied in this Section 5.9 is
intended, or shall be construed, to confer upon or give any person or entity
(including, without limitation, Ecolab) other than the parties hereto and their
respective successors and permitted assigns, any rights or remedies under or by
reason of this Section 5.9.
5.10 Accounts Receivable. With respect to the accounts receivable
--------------------
included in the Transferred Assets and acquired by Buyer pursuant to this
Agreement, (i) Buyer shall use reasonable and customary efforts to collect
such accounts receivable; and (ii) as to each such
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<PAGE>
account receivable that is not collected by the date which is 120 days
after the Closing Date, Buyer, during the five (5) business day period
commencing after the expiration of such 120 day period (said period of five
business days is sometimes referred to herein as the "AR Assignment Period"),
shall have the right to require Seller to repurchase such receivable, on an
invoice-by-invoice basis, for a price equal to the amount thereof included on
the Closing Date Balance Sheet, less any payments, credits or other reductions
in the amount thereof received or occurring after the Closing Date. The right of
Buyer hereunder to require Seller to repurchase such an account receivable shall
be exercisable by written notice given by Buyer to Seller during (and shall
terminate upon expiration of ) the AR Assignment Period with respect thereto,
which notice shall include the written certification of the chief financial
officer, controller or assistant controller of Buyer that such receivable has
not been collected, credited or reduced in whole or in part. Not later than five
(5) business days after Seller receives such an exercise notice and
certification, Seller shall pay to Buyer the repurchase price for the applicable
receivable, payable by check or wire transfer at Buyer's option, to such account
as is designated by Buyer, provided Seller shall have received from Buyer such
written assignment instruments and other documents as it may reasonably request
for the purpose of conveying to Seller right and title to the receivable. Buyer
also agrees to provide Seller with all information relating to the receivable,
including, the payment and collection experience with the account debtor, as
Seller shall reasonably request to assist it in collecting such receivable. The
rights of Buyer and the obligations of Seller under this Section 5.10 shall not
apply to any receivable or portion thereof as to which Buyer has granted the
obligor thereon a release, waiver or other excuse from payment thereof including
any such release granted in connection with a compromise or settlement of such
account. All amounts received from account debtors from and after the Closing
Date shall be applied first against the oldest invoice of such debtor unless
such debtor, without direction or encouragement by Buyer, shall have directed
otherwise and such debtor has made a claim or dispute against Seller with
respect to an older invoice.
5.11 Discharge of Permitted Encumbrances. The Seller agrees to
------------------------------------
satisfy and discharge, as the same shall become due and payable, any Permitted
Encumbrances arising from the operation of the Business prior to the Closing
Date (other than those related to Assumed Liabilities) which attach and
vest on any of the Transferred Assets.
5.12 AGF Litigation. The Buyer shall assume control of the litigation
--------------
identified on item 2 of Schedule 3.13 (the "AGF Litigation") and shall conduct
the AGF Litigation in a good faith manner. The Seller and IVAX shall remain
liable and responsible only for damages, losses and claims assessed against the
Seller, IVAX or the Buyer or any of their respective affiliates in connection
with a judgment rendered in, or settlement of, the AGF Litigation which arise
out of or are attributable to actions of the Seller or IVAX or any of their
respective affiliates prior to the Closing Date. The Buyer shall be liable and
responsible for all damages, losses and claims assessed against the Seller, IVAX
or the Buyer or any of their respective affiliates in connection with a judgment
rendered in, or settlement of, the AGF Litigation which arise out of or are
attributable to actions of the Buyer or its affiliates after the Closing Date.
From and after the Closing Date, the Buyer shall be responsible for all fees,
costs and expenses of conducting the AGF Litigation. The Buyer shall not settle
or voluntarily dismiss all or any part of the AGF Litigation without the prior
written consent of IVAX and the Seller, except that neither the Seller's nor
IVAX's consent to any such settlement may be withheld if the terms of such
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<PAGE>
settlement or dismissal do not impose on the Seller or IVAX any financial
or other liability, obligation or restriction and such party receives an
appropriate written release of any claims being asserted against it, in a form
reasonably acceptable to such party, and further provided that if IVAX does not
consent to any settlement or dismissal by Buyer of that portion of the AGF
Litigation for which Seller is responsible as provided herein, Buyer shall have
the right, exercisable upon written notice to IVAX, to require IVAX to reassume
control of such portion of the AGF Litigation which Buyer seeks to settle or
dismiss, in which event IVAX shall assume control and thereafter IVAX shall be
solely responsible for all costs relating to the conduct thereof. Each of the
parties hereto will execute all necessary documents to make any such action
effective, and Buyer shall cooperate with IVAX to the extent necessary to enable
IVAX to continue the conduct of such portion of the AGF Litigation. Seller shall
have the right to participate in the AGF Litigation at its own expense to the
extent of any claims made therein for which Buyer is not responsible as provided
herein. The parties will provide each other with such information and data
regarding the AGF Litigation as each such party reasonably requests and the
Seller and IVAX shall use reasonable efforts to make available to the Buyer for
consultation, testimony and related matters in connection with the conduct of
the AGF Litigation, such personnel and advisors (including counsel) of IVAX or
the Seller as may reasonably be requested by the Buyer.
6. Survival; Indemnification.
6.1 Survival. The representations and warranties of the parties
---------
contained herein shall survive the Closing for a period of two years following
the Closing Date, except that the representations and warranties set forth in
Section 3.10 and those relating to tax matters shall survive until 90 days
after the expiration of the applicable statute of limitations.
6.2 Indemnification by IVAX. Subject to the limitations contained
-----------------------
in this Article 6, IVAX will indemnify, defend, protect, and hold harmless the
Buyer and each of its officers, directors and employees from and against (a) all
losses, claims, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including without limitation reasonable attorneys' fees and
expenses of investigation) and damages (excluding punitive damages)
(collectively "Losses") caused by or arising out of any breach of any
representation, warranty covenant or agreement of IVAX or the Industries Group
set forth in this Agreement; (b) any failure by the Industries Group to pay or
discharge any tax liabilities relating to Business arising or accrued through
the Closing Date (except as otherwise provided in this Agreement) and (c) all
Losses arising from any liabilities of the Business relating to the period prior
to the Closing Date which were not specifically assumed hereunder.
6.3 Limitations. Notwithstanding any provisions contained in this
------------
Agreement to the contrary, the obligations of IVAX as set forth in this Article
6 shall be subject to and limited by the following:
(a) No claim for indemnification under Section 6.2(a)
shall be made unless written notice is provided to IVAX within the time period
specified for such breach of representation and warranty in Section 6.1 hereof.
No claim for indemnification shall be made under Sections 6.2(b) and (c) unless
written notice is provided to IVAX within ninety (90) days
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after the expiration of the applicable statute of limitations. If a claim
for indemnification may be made or brought under either 6.2(a), (b) or (c), then
the shortest period available for bringing any such claim shall be deemed
applicable and any claim or demand which may be made after the period has
expired from bringing such claim under any one of the aforementioned provisions
shall be deemed thereafter barred hereunder.
(b) In determining the extent of any Losses which the
Buyer suffers or becomes subject to as a result of matters for which it is
entitled to indemnification under this Article 6, appropriate deductions shall
be made for any insurance proceeds actually collected by the Buyer or its
affiliates, it being acknowledged that the Buyer shall take reasonable actions
to pursue such collection.
(c) IVAX's (and its affiliates') aggregate obligations to
indemnify the Buyer under this Agreement shall in no event exceed the amount of
the Purchase Price less the amount of the Closing NBV. IVAX (and its affiliates)
shall in no event be liable for any consequential, special or incidental Losses
except for any such Losses payable to third parties in connection with a Third
Party Claim (as hereinafter defined).
(d) In determining the Losses incurred by the Buyer here-
under, and the amount to be paid pursuant to the provisions of Article 6 hereof,
the tax benefits related to the payment of any Losses shall be taken into
account and the indemnification payment shall be net of all tax effects,
including any tax effect associated with the receipt of the indemnification
payment.
(e) In no event shall any of the Industries Group have
any liability or responsibility or obligations of any nature whatsoever with
respect to the breach of any representation, warranty or covenant contained in
this Agreement, or fulfillment of any indemnification obligations hereunder, it
being understood that IVAX has sole responsibility for any such matters. The
Buyer specifically agrees to and acknowledges the foregoing and agrees not to
make any demand or claim or to bring any action or proceeding against any of the
Industries Group or their successors or assigns after the Closing for any matter
of any nature whatsoever relating to this Agreement or the transactions
contemplated hereby.
6.4 Indemnification by the Buyer. Subject to the limitations con-
-----------------------------
tained in this Article 6, Buyer will indemnify, defend, protect, and hold harm-
less the Industries Group and IVAX and each of their respective officers,
directors and employees from and against (a) all Losses caused by or arising out
of any breach of any representation, warranty covenant or agreement of the Buyer
set forth in this Agreement; (b) any failure by the Buyer to pay or discharge
any tax liabilities relating to Business arising or accrued after the Closing
Date, (c) all Losses arising from the operation of the Business after the
Closing Date, and (d) all Losses arising from the use by the Buyer or any other
person of the name "IVAX" or any derivation thereof in connection with the
conduct of the Business after the Closing Date, excluding any claims relating to
the ownership of the name "IVAX" (the provision of this Section 6.4(d) being
solely for the benefit of IVAX). No claim for indemnification under Section
6.4(a) shall be made unless written notice is provided to the Buyer within the
time period specified for such breach of representation and warranty in
Section 6.1 hereto. No claim for indemnification shall be made under Section
(b), (c) or (d) shall be made unless written notice is provided to the Buyer or
the Subsidiary within
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<PAGE>
90 days after the expiration of the applicable statue of limitations. If a
claim for indemnification may be made or brought under either 6.4(a), (b), (c)
or (d), then the shortest period available for bringing any such claim shall be
deemed applicable and any claim or demand which may be made after the period has
expired from bringing such claim under any one of the aforementioned provisions
shall be deemed thereafter barred hereunder.
6.5 Limitations. Notwithstanding any provisions contained in
------------
this Agreement to the contrary, the obligations of the Buyer as set forth in
this Article 6 shall be subject to and limited by the following:
(a) In determining the extent of any Losses which the
Industries Group or IVAX suffers or becomes subject to as a result of matters
for which it is entitled to indemnification under this Article 6, appropriate
deductions shall be made for any insurance proceeds actually collected by IVAX
or its affiliates, it being acknowledged that IVAX shall take reasonable actions
to pursue such collection.
(b) Buyer (and its affiliates) shall in no event be
liable for any consequential, special or incidental Losses and shall only be
liable for actual direct out-of-pocket expenses expended by IVAX and the
Industries Group.
(c) In determining the Losses incurred by IVAX or the
Industries Group hereunder, and the amount to be paid pursuant to the provisions
of Article 6 hereof, the tax benefits related to the payment of any Losses shall
be taken into account and the indemnification payment shall be net of all tax
effects, including any tax effect associated with the receipt of the indemnifi-
cation payment.
6.6 Exclusive Remedy. Except for any claim involving fraud, the
-----------------
sole and exclusive remedy for the breach of any representation, warranty or
covenant of this Agreement or otherwise relating to this Agreement shall be the
indemnification provisions contained in this Article 6 (other than specific
performance with respect to the covenants in Sections 5.1 and 7.2 to the extent
provided for therein).
6.7 Procedures for Claims Arising from a Third Party Claim. In
-------------------------------------------------------
the case of any claim for indemnification arising from a claim made by a
claimant not a party to this Agreement and not affiliated with any of such
parties (a "Third Party Claim"), an indemnified party shall give prompt written
notice, in no event more than thirty (30) days following such indemnified
party's receipt of such claims or demand, to the indemnifying party of any
claims or demand of which such indemnifying party has knowledge and as to which
it may request indemnification hereunder. The indemnifying party shall have the
right to defend and to direct the defense against any such claims or demand, in
its name or in the name of the indemnified party, as the case may be, at the
expense of the indemnifying party, and with counsel selected by the indemnifying
party. Notwithstanding anything in this Agreement to the contrary, the indemni-
fied party shall, at the expense of the indemnifying party, cooperate with the
indemnifying party, and keep the indemnifying party fully informed, in the
defense of such claim or demand. The indemnified party shall have the right to
participate in the defense of any claim or demand with counsel employed at its
own expense. The indemnifying party shall have no indemnification
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<PAGE>
obligations with respect to any such claim or demand which shall be settled
by the indemnified party without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed. The
indemnifying party shall have the ability to settle any claim with the prior
written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed. Any settlement involving solely the payment of
monies by the indemnifying party shall presumptively be deemed reasonable.
6.8 Method of Payment. All claims for indemnification shall be
------------------
paid in cash.
7. Nondisclosure Of Confidential Information.
7.1 The Industries Group. The Industries Group recognizes and
----------------------
acknowledges that it has in the past, currently has, and in the future may
possibly have, access to certain confidential information about the Transferred
Assets, such as lists of customers, operational policies, and pricing and cost
policies. The Industries Group agrees that it will not use any such
confidential information for its own benefit or disclose such confidential
information to any person or entity for any purpose whatsoever, except to the
Buyer, unless such information becomes known to the public generally through no
fault of the Industries Group or unless the Industries Group is required by law
or subpoena to disclose such information. If the Industries Group is requested
to provide such information pursuant to requirements of applicable law or by
subpoena, it shall notify the Buyer as promptly as possible and shall allow
the Buyer the opportunity to oppose such request or to seek an appropriate
protective order. Notwithstanding the preceding, the Industries Group may
use and disclose its confidential information in connection with (i) the
sale or disposition of its stock or assets, provided such disclosure is
limited to information which (a) is shared among Industries Group's operating
divisions and which is not exclusively related to the Business or (b) relates
to liabilities or obligations of the Industries Group which are not Assumed
Liabilities; (ii) the performance of any of its obligations to Buyer under this
or any other agreement with Buyer; (iii) as required by law; and (iv) in the
course of any litigation brought by or against the Industries Group or their
respective successors arising from the transactions contemplated hereby.
7.2 Remedies. The parties acknowledge and agree that, because
---------
legal remedies may be inadequate in the event of a breach of any of the
covenants set forth in Section 7.1, in addition to any other remedy or relief
available (including without limitation damages at law), the provisions of
Section 7.2 may be enforced by injunction and other equitable relief.
8. General.
8.1 Bulk Sales Laws. Each of the Seller and the Buyer hereby
---------------
waives compliance by each other with the so-called "bulk sales law" and other
similar law in any jurisdiction in respect of the transactions contemplated by
this Agreement.
8.2 Best Knowledge. References herein to the "Best Knowledge" of
---------------
the Seller or IVAX or any similar phrase shall be deemed to mean and be limited
to the actual knowledge of Gerald Saluti, Ph.D., Robert Allen, Charles Stryker,
Richard Metzler, Bud MacKillop, Joseph Diebold and Michael Abadi.
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8.3 Successors and Assigns. This Agreement shall be binding upon
-----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that, the obligations of any party
hereto may not be assigned without the prior written consent of the other
parties hereto, which consent shall not be unreasonably withheld. Notwith-
standing anything contained in this Section 8.3 to the contrary, the Industries
Group shall have the right to assign this Agreement (and any other writing
referred to herein) to IVAX, without the consent of the Buyer, and upon the
making of such assignment by the Industries Group and the assumption by IVAX of
the Industries Group's obligations and liabilities thereunder, the Industries
Group shall be released from any and all obligations or liabilities hereunder to
Buyer and its successors and assigns, and the Buyer and its successors and
assigns shall look solely to IVAX to fulfill any obligations or liabilities of
the Industries Group which might otherwise have arisen in connection with this
Agreement and the transactions contemplated hereby.
8.4 Entire Agreement. This Agreement, including the Schedules and
-----------------
Exhibits attached hereto and other writing referred to herein, contains every
obligation and understanding between the parties relating to the subject hereof
and supersedes all prior discussions, negotiations and agreements, if any,
between them, and none of the parties shall be bound by any conditions,
definitions, understandings, warranties or representations other than as
expressly provided or referred to herein or therein.
8.5 Amendment. This Agreement may be modified or amended only by
----------
a written instrument executed by the Buyer and the Seller.
8.6 Counterparts. This Agreement may be executed in any number of
-------------
counterparts which together shall constitute one instrument.
8.7 Expenses. Except as otherwise provided in this Agreement,
---------
each of the parties hereto shall bear all expenses, costs and fees incurred by
it or him in connection with the preparation of this Agreement, the consummation
of the Closing and compliance by it or him with the terms and provisions hereof,
including the fees and expenses of any attorneys, accountants, brokers or other
persons engaged by it or him.
8.8 Notices. All notices, requests, consents and other communica-
--------
tions required or permitted under this Agreement shall be in writing and shall
be (as elected by the person giving such notice) sent by facsimile (with
confirmation received of the recipient's number) to the numbers set forth below
or shall be hand delivered by messenger or courier service, or mailed by
registered or certified mail (postage prepaid), return receipt requested, or
delivered by overnight delivery service, addressed to:
If to the Buyer, addressed to it at:
Sybron Chemicals Inc.
Birmingham Road, P.O. Box 66
Birmingham, New Jersey 08011
Attention: President
Telecopy No.: (609) 894-8641
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<PAGE>
with a copy to:
David Gitlin, Esq.
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor Packard Building
S.E. Corner 15th and Chestnut Streets
Philadelphia, PA 19102-2678
Telecopy No.: (215) 977-2740
If to the Industries Group or IVAX, addressed to it at:
IVAX Industries, Inc.
Rock Plaza III
101 Rock Road
Horsham, PA 19044
Attention: President
Telecopy No.: (215) 957-0428
and
IVAX Corporation
4400 Biscayne Boulevard
Miami, Florida 33137
Attention: General Counsel
Telecopy No.: (305) 575-6049
with a copy to:
Steven D. Rubin, Esq.
Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
150 West Flagler Street
Miami, Florida 33130
Telecopy No.: (305) 789-3395
Each such notice shall be deemed delivered (1) on the date delivered
if by personal or overnight delivery, (2) on the date sent by telecopy if so
sent, and (3) on the date upon which the return receipt is signed or delivery is
refused or the notice is designated by the postal authorities as not
deliverable, as the case may be, if mailed.
By giving to the other parties prior written notice thereof, the
parties and their respective successors and permitted assigns shall have the
right from time to time and at any time during the term of this Agreement to
change their respective addresses.
8.9 Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of Delaware without
regard to principles of conflict of laws.
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<PAGE>
8.10 No Waiver. The failure of any party hereto to exercise any
----------
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
8.11 No Third-Party Beneficiaries. This Agreement is not intended
-----------------------------
to be for the benefit of and shall not be enforceable by any person or entity
who or which is not a party hereto (or a permitted assign or successor to such
party).
8.12 Severability. The provisions of this Agreement are severable,
-------------
and in the event that any one or more provisions are deemed illegal or
unenforceable, the remaining provisions shall remain in full force and effect,
and such illegal or unenforceable provision shall be interpreted in a manner
which accomplishes, to the extent possible, the original purpose of such
provision.
8.13 Litigation; Prevailing Party. In the event of any litigation
-----------------------------
with regard to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.
8.14 Headings. The section and other headings of this Agreement
--------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
In Witness Whereof, the parties hereto have executed this Agreement as
of the day and year first above written.
IVAX INDUSTRIES INC. ("Seller")
By: /s/ Gerald M. Saluti, Ph.D.
--------------------------------
Name: Gerald M. Saluti, Ph.D.
Title: President
SYBRON CHEMICALS INC. ("Buyer")
By: /s/ Richard M. Klein, Ph.D.
---------------------------------
Name: Richard M. Klein, Ph.D.
Title: President and Chief Executive
Officer
[Signatures continued on next page.]
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<PAGE>
[Signatures continued from previous page.]
IVAX CORPORATION ("IVAX")
By: /s/ James M. Millsap
--------------------------
Name: James M. Millsap
Title: Senior Vice-President
IVAX INDUSTRIES CANADA, INC.
("IVAX Canada")
By: /s/ Gerald M. Saluti, Ph.D.
---------------------------------
Name: Gerald M. Saluti, Ph.D.
Title: Vice-President
IVAX INDUSTRIES U.K., LTD.
("IVAX UK")
By: /s/ Gerald M. Saluti, Ph.D.
---------------------------------
Name: Gerald M. Saluti, Ph.D.
Title: Vice-President
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