SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 13, 1998
BE AEROSPACE, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-18348 06-1209796
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1400 Corporate Center Way, Wellington, Florida 33414
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 791-5000
This is page 1 of 44 pages. Exhibit Index appears on page 5.
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Item 2. Acquisition or Disposition of Assets
On April 13, 1998, BE Aerospace, Inc., a Delaware corporation (the
"Company"), consummated the purchase (the "Acquisition") of all of the issued
and outstanding capital stock of Puritan-Bennett Aero Systems Co., a
California corporation ("PBASCO"), from Puritan-Bennett Corporation, a
Delaware corporation ("Puritan-Bennett"), pursuant to a Stock Purchase
Agreement dated March 31, 1998 (the "Agreement") by and between
Puritan-Bennett and the Company. A copy of the Agreement is attached to this
report as Exhibit 2.1. Puritan-Bennett is a wholly-owned indirect subsidiary
of Mallinckrodt Inc., a New York corporation.
Included among the assets indirectly acquired by the Company pursuant to
the Acquisition (the "Acquired Assets") are the plant and equipment used by
PBASCO in its manufacturing business and certain real property in Fountain
Valley, California. PBASCO manufactures commercial aircraft oxygen delivery
systems and passenger service unit components and systems and is a supplier of
air valves, overhead lights and switches for both commercial and general
aviation aircraft. The Company currently intends that the Acquired Assets will
continue to be used by PBASCO in the operations described in the preceding
sentence.
The purchase price of $69.7 million, was all in cash; the Company used
its own funds to finance the Acquisition. A portion of the purchase price is
expected to be allocated to in-process research and development costs and
expensed at the date of acquisition in accordance with generally accepted
accounting principles.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The required financial statements will be filed by amendment within
60 days of the filing of this Current Report on Form 8-K.
(b) Pro Forma Financial Information.
The required Pro Forma Financial Information will be filed by amend-
ment within 60 days of the filing of this Current Report on Form 8-K.
(c) Exhibits
2.1. Stock Purchase Agreement dated as of March 31, 1998 by and between
BE Aerospace, Inc., a Delaware corporation, and Puritan-Bennett
Corporation, a Delaware corporation, including an index of the
Disclosure Schedule thereto (a copy of any omitted Disclosure Schedule
shall be furnished supplementally to the Securities and Exchange
Commission (the "Commission") upon the request of the Commission).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BE AEROSPACE, INC.
By:
Name:
Title:
Date: April 27, 1998
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EXHIBIT INDEX
Exhibit No. Description of Exhibits Page
2.1 Stock Purchase Agreement dated as of
March 31, 1998 by and between BE Aerospace, Inc.,
a Delaware corporation, and Puritan-Bennett
Corporation, a Delaware corporation, including
an index of the Disclosure Schedule thereto
(a copy of any omitted Disclosure Schedule shall
be furnished supplementally to the Securities
and Exchange Commission (the "Commission") upon
the request of the Commission).
<PAGE>
STOCK PURCHASE AGREEMENT
between
PURITAN-BENNETT CORPORATION,
a Delaware corporation
and
BE AEROSPACE, INC.,
a Delaware corporation
Dated: March 31, 1998
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TABLE OF CONTENTS
Page
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1. Purchase and Sale of Shares 1
1.1 Purchase and Sale 1
2. Purchase Price 1
2.1 Aggregate Purchase Price 1
2.2 Payments 1
2.3 Transfer Taxes 1
3. Representations and Warranties of Seller 2
3.1 Representations and Warranties 2
3.2. No Additional Representations 7
3.3 Construction of Certain Provisions 7
4. Representations and Warranties By Buyer 8
4.1 Representations and Warranties 8
5. Conduct of Business Pending Closing 9
5.1 Conduct of Business Pending Closing 9
5.2 Preserving Business Organization 10
5.3 Notice of Developments 10
6. Closing Date, Conditions and Transactions 10
6.1 Closing Date and Place 10
6.2 Conditions Precedent to the Obligations of Buyer to Close 11
6.3 Conditions Precedent to the Obligations of Seller to Close 12
6.4 Noncompliance with and Termination of this Agreement 13
6.5 Use of Seller Name 13
7. Closing Documents 13
7.1 Seller's Obligations 13
7.2 Buyer's Obligations 14
</TABLE>
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<TABLE>
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Page
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8. Indemnification 14
8.1 Indemnification by Seller 14
8.2 Indemnification by Buyer 15
8.3 Survival of Representations and Warranties; Threshold,
Deductible and Cap 15
8.4 Notice and Opportunity to Defend 25
8.5 Reduction for Insurance 17
8.6 Foreign Currencies 17
8.7 Exclusive Remedy 17
9. Covenants and Agreements 18
9.1 Employee Matters 18
9.2 Reasonable Efforts to Close 19
9.3 Disclosures 20
9.4 Books, Records and Information 20
9.5 Certain Debt and Other Obligation 21
9.6 Workers' Compensation 22
9.7 Insurance-Primary Casualty Program 22
9.8 Performance of Company Obligations 24
10. Tax Matters 24
10.1 Federal, State and Local Income and Franchise Taxes 24
10.2 Certain Contest Rights 26
10.3 Taxes 27
10.4 Timing Differences 27
10.5 Cooperation and Exchange of Information 28
10.6 Current Tax Information 29
10.7 Filing and Indemnification Procedures 29
10.8 Intercompany Tax Account 29
10.9 Article 10 Exclusivity 29
</TABLE>
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<TABLE>
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Page
<S> <C> <C>
11. Miscellaneous 30
11.1 Indemnification of Brokerage 30
11.2 Expenses 30
11.3 Notices 31
11.4 Integration 31
11.5 Assignment and Amendment of Agreement 31
11.6 Applicable Law 31
11.7 Reasonable Assurances 31
11.8 No Third Party Rights 32
11.9 Incorporation of Exhibits and Schedules 32
11.10 Severability 32
</TABLE>
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of the 31st
day of March, 1998, and is by and between Puritan-Bennett Corporation, a
Delaware corporation, ("Seller") and BE Aerospace, Inc., a Delaware
corporation ("Buyer"). Seller and Buyer are sometimes hereinafter referred to
collectively as the "Parties".
A. Mallinckrodt Inc., a New York corporation ("Mallinckrodt") indirectly
owns all of the outstanding capital stock of Seller, and Seller owns all of
the outstanding capital stock of Puritan-Bennett Aero Systems Co., a
California corporation ("Company").
B. Buyer desires to purchase from Seller all of the outstanding shares of
Company on the terms and conditions set forth below.
C. In order to induce Buyer to enter into this Agreement, Mallinckrodt
has agreed to guarantee the payment and performance of all of the obligations
of Seller hereunder, and Buyer would not be willing to enter into this
Agreement in the absence of such guarantee. Such guarantee shall be in the
form of the Guarantee Agreement attached hereto as Exhibit C (as executed and
delivered by Mallinckrodt, the "Guarantee Agreement"). In consideration of the
mutual covenants, agreements, representations and warranties herein contained,
the parties agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, Buyer on the Closing Date (as defined in Section 6.1 below) agrees
to purchase from Seller, and Seller, on the Closing Date, agrees to sell,
transfer and convey to Buyer all of the issued and outstanding capital stock
(the "Shares") of the Company and the Company Intellectual Property (as
defined in Section 3.1.11 below).
<PAGE>
2. PURCHASE PRICE
2.1 AGGREGATE PURCHASE PRICE. The purchase price for the Shares and the
Company Intellectual Property is Sixty Nine Million Seven Hundred Thousand
Dollars ($69,700,000) (the "Purchase Price") in cash payable by Buyer on the
Closing Date, subject to subsequent adjustment in accordance with Section 2.4
hereof.
2.2 PAYMENTS. The payment required to be made pursuant to this Article 2
shall be made in immediately available United States funds by wire transfer to
an account designated by the party to receive payment in writing to the party
making payment not later than two (2) business days prior to the date payment
is to be made.
2.3 TRANSFER TAXES. All transfer and similar Taxes assessed or payable in
connection with the transfer of the Shares to Buyer shall be shared equally by
Buyer and Seller.
2.4 ADJUSTMENT TO PURCHASE PRICE. The purchase price for the Shares shall
be decreased by the amount, if any, by which the Net Working Capital of the
Company as of the Closing Date is less than $20,734,178 (such amount being the
Net Working Capital as of January 31, 1998 shown on the Project Arrow
Consolidated Balance Sheet attached hereto as Exhibit 2.4 (the "January 31,
1998 Balance Sheet") and increased by the amount, if any by which the Net
Working Capital of the Company as of the Closing Date exceeds $20,734,178.
Such amount shall be referred to herein as the "Purchase Price Adjustment" and
shall be determined as set forth below. Within sixty (60) days following the
Closing Date, the accounting firm of Deloitte & Touche shall prepare and
deliver to Seller a closing statement that shall consist of (a) an audited
balance sheet of the Company as of the Closing Date (the "Closing Statement")
(i) prepared in accordance with generally accepted accounting principles
(GAAP) and (ii) setting forth the amount of Net Working Capital of the Company
as of the Closing Date and (b) the resulting Purchase Price Adjustment. Within
thirty (30) days following the delivery of the Closing Statement to Seller,
Seller may object to the Purchase Price Adjustment in writing. Buyer shall
cause Deloitte & Touche to cooperate with Seller to provide Seller and
Seller's certified public accountants information used to prepare the Closing
Statement and information relating thereto. If Seller objects to the Purchase
Price Adjustment within such thirty (30) day period, the Parties shall attempt
to resolve such dispute by negotiation. If the parties are unable to resolve
such dispute within thirty (30) days of any objection by Seller, the parties
shall appoint Coopers & Lybrand, certified public accountants or, if
unavailable, such firm which is one of the six largest independent certified
public accountants, as shall be mutually agreed upon who shall, at Seller's
and Buyer's joint expense, review the Purchase Price Adjustment and determine
the adjustment to the Purchase Price, if any, in accordance with the terms of
this Section 2.4. The finding of such accounting firm (the "Final Purchase
Price Adjustment") shall be binding on the parties hereto. Upon the
determination of the Final Purchase Price Adjustment, the Party owing the
Purchase Price Adjustment shall deliver the Purchase Price Adjustment to the
other Party no later than twenty (20) business days after such determination
in immediately available funds or in any other manner as reasonably requested
by the payee. Any amount that may become due and payable under the terms of
<PAGE>
this Section 2.4, but remains unpaid as of the 120th day following the Closing
Date, shall bear interest at a rate equal to eight percent (8%) per annum
beginning such 120th day following the Closing Date through and including the
date that payment of such amount is actually made as provided in the foregoing
sentence. As used herein, the term "Net Working Capital" means current assets
minus current liabilities.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 REPRESENTATIONS AND WARRANTIES. Seller represents and warrants to
Buyer that, except as set forth in the disclosure letter delivered to Buyer at
or prior to the execution of this Agreement (the "Disclosure Schedule"):
3.1.1 Organization and Standing of the Company and its Subsidiaries.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of California and has full power and authority to
carry on its business as now conducted and to own all of its properties and
assets. Mallinckrodt is a corporation duly organized, validly existing and in
good standing under the laws of New York and has full power and authority to
execute, deliver and perform the Guarantee Agreement. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware and has full power and authority to execute, deliver and perform this
Agreement. At the Closing Date, the Company will be duly qualified to do
business in good standing in each jurisdiction in which the ownership of its
property or the conduct of its business requires such qualification, if the
failure to so qualify would reasonably be likely to have a Material Adverse
Effect. The copies of the organizational documents of the Company, including
the Company's Certificate of Incorporation and the by-laws of the Company,
which have been made available to Buyer are true, accurate and complete, and
since the respective dates of such certifications, there have not been any
amendments thereto. The copies furnished to Buyer of the Company's minutes of
meetings of, and actions taken, by the Board of Directors and the stockholders
of the Company are true and accurate.
3.1.2 Authorization. All corporate and other proceedings required to
be taken by or on the part of Seller and Mallinckrodt, including, without
limitation, all action required to be taken by the directors or stockholders
of Seller and Mallinckrodt to authorize Seller to enter into and carry out
this Agreement and to sell, transfer and convey the Shares hereunder have
been, or prior to the Closing will be, duly and properly taken. This Agreement
has been duly executed and delivered by Seller and is the legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and the rules of law governing specific
performance, injunctive relief and other equitable remedies. The Guarantee
Agreement has been duly executed and delivered by Mallinckrodt and is the
legal, valid and binding obligation of Mallinckrodt, enforceable against
Mallinckrodt in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
the rules of law governing specific performance, injunctive relief and other
equitable remedies.
<PAGE>
3.1.3 Capitalization of the Company. The authorized capital stock of
the Company consists solely of 100,000 shares of common stock, no par
value per share, of which 77,500 shares are issued and outstanding, and 6,000
shares of preferred stock, $100 par value per share, of which 6,000 shares are
issued and outstanding; provided, however, that, as of the Closing Date, no
shares of preferred stock, $100 par value per share, will be issued and
outstanding as contemplated in Section 5.1.3 below. The Shares constitute, and
on the Closing Date will constitute, all of the issued and outstanding capital
stock of the Company. The Shares have been duly issued and are fully paid and
non-assessable and not subject to any lien, charge, pledge or other
encumbrance. The Company is not, and prior to the Closing Date will not
become, a party to or subject to any contract or obligation wherein any person
(i) has a right or option to purchase or acquire any rights in any additional
capital stock or other equity securities of the Company or (ii) except as set
forth on the Disclosure Schedule, is entitled to any payments based upon the
value, net worth, revenues, earnings or cash flow of the Company.
3.1.4 Subsidiaries, Affiliates And Investments. The Company
has no subsidiaries or investments in any business.
3.1.5 Contracts and Binding Commitments. Except as otherwise provided
in the last sentence of this Section 3.1.5, the Disclosure Schedule lists all
contracts, leases, agreements (other than intellectual property agreements),
plans, commitments or binding arrangements, express or implied, which are
material to the operation of the Company's business, taken as a whole
(collectively the "Agreements"), including, without limitation, any: (i)
contract for the employment of any employee which is not immediately
terminable on or at any time after the Closing Date; (ii) contract with or
commitment to any labor union or association representing any employee as of
the Closing Date; (iii) bonus, pension, profit-sharing, deferred compensation,
retirement, stock purchase, stock option, severance, hospitalization,
insurance or other plan or arrangement providing benefits to any employee as
of the Closing Date; (iv) contracts for capital expenditures at any of the
Company's facilities; (v) contract or commitment for the sale or purchase of
materials, supplies, equipment, merchandise or services not terminable in
sixty (60) days or less after the Closing Date; (vi) distributor, dealer,
sales agency, manufacturer's representative, advertising or public relations
contract; (vii) contract with, or permit issued by, any government or any
agency or instrumentality thereof; or (viii) other agreements, whether or not
made or entered into in the ordinary course of business. The Company is not in
material default under any of the Agreements and, to the Company's knowledge,
there has not been any material default under any of the Agreements by any
other party thereto. Seller is obligated to list on the Disclosure Schedule
any agreement, contract or commitment of the types described in clauses (iv),
(v), (vi) or (viii) of this Section 3.1.5 if (a) such agreement, contract or
commitment, if related to the sale or furnishing of materials, supplies,
equipment, merchandise or services by the Company, has an aggregate
consideration to be paid to the Company of more than One Hundred Thousand
Dollars ($100,000) or (b) such agreement, contract or commitment, if related
to the purchase or lease of materials, supplies, equipment, merchandise or
services by the Company, imposes an aggregate payment obligation on the
Company of more than Fifty Thousand Dollars ($50,000).
<PAGE>
3.1.6 Compliance. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby upon
satisfaction of the conditions set forth in Article 6 will not, in a manner
which could materially adversely affect the consummation of the transactions
contemplated hereby or which could reasonably be likely to have a Material
Adverse Effect:
(a) result in the breach of any of the terms or conditions of,
or constitute a default under, or violate, or result in the creation of a lien
or encumbrance on any of the Shares or any of the properties or assets of the
Company pursuant to, as the case may be, either of Seller's or the Company's
Certificates of Incorporation, by-laws or organizational documents or any
agreement, lease, mortgage, note, bond, indenture, license or other document
or undertaking, oral or written, to which the Company is a party or by which
it is bound or by which any of its properties or assets may be affected; or
(b) violate any rule, regulation, order, writ, injunction
or decree of any court, administrative agency or governmental body,
provided, however, that no representation or warranty is made hereunder in any
manner whatsoever with respect to any federal, state or foreign antitrust
laws.
3.1.7 Good Title. The Company has good and marketable title to all of
its owned property, free and clear of all liens, mortgages, pledges,
encumbrances and charges of all kinds (collectively referred to as
"Encumbrances"), other than (i) Encumbrances for current taxes not yet
payable, (ii) zoning and building statutes, ordinances, resolutions or
regulations none which interferes in any material respect with the current use
of such property by the Company, (iii) Encumbrances incurred in the ordinary
course of business and not securing the payment of indebtedness for borrowed
money, and (iv) Encumbrances which do not in the aggregate materially
adversely affect the ability of the Company, taken as a whole, to conduct its
business as it is now being conducted.
3.1.8 Litigation. There is no action, suit, proceeding, arbitration
or litigation pending or threatened against the Company or its business
or properties, which challenges the validity of, or seeks to enjoin, the
transactions contemplated by this Agreement or is reasonably likely to have a
Material Adverse Change. An action, suit, proceeding, arbitration or
litigation shall be considered "threatened" for purposes of this Section 3.1.8
if the Company has received a written notice indicating that an action, suit
or proceeding may be commenced.
3.1.9 Environment, Health, and Safety. Except as disclosed in the
Disclosure Schedule:
(a) the Company is in material compliance with all
applicable Environmental Laws and Safety Laws and has been in material
compliance with all applicable Environmental Laws since 1977 and, to the
Company's knowledge, prior to 1977, except for instances of noncompliance, if
any, which would not be reasonably likely to result in a Material Adverse
Change;
(b) the Company has obtained, and is and has been in material
compliance with the conditions of, all Environmental Permits required for the
continued conduct of the business of the Company in the manner now conducted
and presently proposed to be conducted, except for Environmental Permits,
which if not obtained, and instances of noncompliance, if any, which would not
be reasonably likely to result in a Material Adverse Change;
<PAGE>
(c) the Company has filed all required applications, notices and
other documents necessary to effect the timely renewal or issuance of all
Environmental Permits for the continued conduct of the business of the Company
in the manner now conducted and presently proposed to be conducted, except for
applications, notices and other documents which, if not timely filed, would
not be reasonably likely to result in a Material Adverse Change;
(d) there is no disposal or Release of a Chemical Substance
caused by the Company or its employees, agents, contractors or invitees
or otherwise originating at property currently owned or leased by the Company,
or to the actual knowledge of the Company, at property formerly owned or
leased by the Company, that may be likely to give rise to any Environmental
Liabilities and Costs or Safety Liability and Costs that reasonably may be
likely to result in a Material Adverse Change;
(e) the Company has not received any complaint, claim, citation
or written notice within the past three (3) years, and neither the
Company, nor the present assets, properties, businesses, leaseholds or
operations of the Company, nor to the Company's knowledge the past assets,
properties, businesses, leaseholds or operations of the Company, is subject
to, or within the past three years has been subject to, any outstanding order,
decree, judgment, agreement or any ongoing judicial or administrative
proceeding indicating that the Company is or may be: (A) in violation of any
Environmental Law; (B) in violation of any Safety Laws; (C) responsible for
the on-site or off-site Release of any Chemical Substance; or (D) liable for
any Environmental Liabilities and Costs or Safety Liabilities and Costs, that
in each case reasonably may be likely to result in a Material Adverse Change;
(f) no investigation or review with respect to a matter
identified in subsection (e) above is pending or, to the knowledge of the
Company, is threatened, provided that, for purposes of this subsection (f), an
investigation or review shall be considered "threatened" if the Company has
received written notice that an investigation or review may be commenced;
(g) the Disclosure Schedule lists all property presently
leased, owned or operated by the Company and all property leased, owned
or operated by the Company since 1977 and, to the knowledge of the Company's
senior management, prior to 1977;
(h) there is no Release from any off-site location, including,
without limitation, any commercial waste disposal facility or municipal
landfill, of any Chemical Substances sent by the Company for treatment,
storage, disposal, reuse or recycling in amounts that would require a waste
manifest under the Resource Conservation and Recovery Act of 1976 as now in
effect, except for Releases, if any, that would not be expected to give rise
to any Environmental Liabilities and Costs that would reasonably be likely to
result in a Material Adverse Change;
(i) no underground storage tank currently owned or operated by
the Company is leaking or has leaked at any time in the past, and there is no
pollution or contamination of the Environment caused by or contributed to or
threatened by a Release of a Chemical Substance from any such tank, and, to
the knowledge of the Company, no underground storage tank previously owned or
operated by the Company leaked during the Company's ownership or operation of
the tank, and there is no pollution or contamination of the Environment caused
<PAGE>
by or contributed to or threatened by a Release of a Chemical Substance from
any such tank during the Company's ownership or operation of the tank, except
for any leak or pollution or contamination that would not reasonably be likely
to result in a Material Adverse Change; and
(j) the Company has disclosed all environmental audits,
inspections, assessments, investigations or similar reports in the Company's
possession or of which the Company is aware relating to the business of the
Company or the compliance of the same with applicable Environmental Laws and
Safety Laws.
3.1.10 Material Changes. Since July 7, 1997, the business of the
Company has been conducted in the ordinary course in a manner consistent with
past practice and there has not been with respect to the Company or its
business or properties considered as a whole:
(a) any Material Adverse Change other than as a result of
general economic conditions or industry-wide developments affecting other
companies engaged in similar businesses or as except as disclosed to Buyer;
(b) any destruction, damage by fire, accident or other
casualty or Act of God, whether or not covered by insurance, materially
and adversely affecting the operation of the Company's business as conducted
prior to such event;
(c) any labor strike or to the knowledge of the Company
any other occurrence, event or condition of any similar character which is not
common knowledge in the relevant industry and which is reasonably likely to
have a Material Adverse Effect;
(d) any increase in the compensation payable or to become
payable by the Company to any of its senior management or employees or
any bonus payment or arrangement made to or with them, other than increases or
bonuses in the ordinary course consistent with past practices; or
(e) any declaration, or setting aside, or payment of any
dividend or other distribution in respect of any capital stock of the
Company, or any direct or indirect redemption, purchase, or other acquisition
of such capital stock.
3.1.11 INTELLECTUAL PROPERTY. Set forth in the Disclosure Schedule
is a list and brief identification of all (a) patents, patent
applications, patent disclosures and inventions owned or used by the Company;
(b) trademarks, service marks, trade names and corporate names owned or used
by the Company and any registrations or applications with respect to the
foregoing; (c) copyright registrations or applications; and (d) any licenses
or other intellectual property agreements of the Company, Seller or the
Seller's parent company, Nellcor Puritan Bennett Incorporated ("NPB") to or
from third parties with respect to any of the foregoing (collectively, the
"Company Intellectual Property"). Company Intellectual Property for purposes
of this Agreement shall also include, without limitation, trade secrets,
know-how, proprietary computer software and confidential business information
owned by the Company or owned by Seller or NPB and used in the business of the
Company.
<PAGE>
Each item constituting part of the Company Intellectual Property has
been, to the extent indicated in the Disclosure Schedule duly registered with,
filed and/or issued by, as the case may be, the United States Patent and
Trademark Office, or such other governmental entity, domestic or foreign, as
is indicated in the Disclosure Schedule, and, to the knowledge of Seller and
the Company, such registrations, filings and issuances remain in full force
and effect. The Company, Seller and NPB own and possess all right, title and
interest in and to the Company Intellectual Property free and clear of any
lien, license (except as provided by the licenses listed in the Disclosure
Schedule), royalty or other restriction, and, except as set forth in the
Disclosure Schedule, no claim by any third party contesting the validity,
enforceability, use or ownership of any of the Company Intellectual Property
has been made, is currently pending or, to the knowledge of the Company,
Seller or NPB, is threatened. No officer, director, stockholder or employee of
Seller, NPB or the Company has any ownership interest in any of the Company
Intellectual Property. Except as set forth in the Disclosure Schedule, neither
the Company nor Seller has received any notices of, nor is the Company or
Seller aware of any facts which indicate a likelihood of, any infringement or
misappropriation by or conflict with any third party with respect to any of
the Company Intellectual Property. Except as set forth in the Disclosure
Schedule, to the knowledge of the Company and Seller, the Company has not
infringed, misappropriated or otherwise been in conflict with any intellectual
property rights of any third party, nor is the Company or the Seller aware of
any infringement, misappropriation or conflict that will occur as a result of
the continued operation of the Company's business as now conducted or as
presently proposed to be conducted.
On or before the Closing, Seller and NPB shall assign to BE
Intellectual Property, Inc., a wholly-owned subsidiary of Buyer organized
under the laws of the state of Delaware, all of their respective rights, title
and interest in and to any and all of the Company Intellectual Property owned
by Seller or NPB free and clear of any lien, license (except as provided by
the licenses listed in the Disclosure Schedule), royalty or other restriction,
and all such Company Intellectual Property to be assigned from Seller or NPB
to BE Intellectual Property, Inc. on or before the Closing in furtherance of
the transactions contemplated by this Agreement will be properly assigned to
BE Intellectual Property, Inc. The transactions contemplated by this Agreement
will have no Material Adverse Effect on the Company's right, title and
interest in and to any of the Company Intellectual Property. The Company and
Seller have taken all necessary and desirable action to protect the Company
Intellectual Property and will continue to maintain the Company Intellectual
Property to Closing so as to have no Material Adverse Effect on the validity
or enforcement of the Company Intellectual Property.
3.1.12 UNDISCLOSED LIABILITIES. There are no liabilities or
obligations of the Company, either accrued or absolute, or to the
Company's knowledge contingent or otherwise, which are reasonably likely to
have a Material Adverse Effect, except (a) those reflected or otherwise
provided for in the Company's financial statements and (b) those reflected on
the Disclosure Schedule and the Environmental Disclosure Statement.
<PAGE>
3.1.13 FINANCIAL INFORMATION. The balance sheets of the Company for
the periods ending July 6, 1997 and January 31, 1998 present fairly, in
all material respects, the financial position of the Company as of such dates.
The income statement of the Company for the period ending July 6, 1997
presents fairly, in all material respects, the results of operations of the
Company for such period.
3.1.14 TAXES.
(a) For purposes of this Agreement, "Code" means the Internal Revenue
Code of 1986, as amended; "Tax" or "Taxes" means all taxes, fees, levies,
duties, tariffs, imposts, and governmental impositions or charges of any kind
in the nature of (or similar to) taxes, payable to any federal, state, local
or foreign taxing authority, as well as any obligation to contribute to the
payment of taxes determined on a consolidated, combined, or unitary basis with
respect to Mallinckrodt or any affiliate, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value
added, sales, use, service, real or personal property, special assessments,
capital stock, license, payroll, withholding, employment, social security (or
similar), workers' compensation, unemployment compensation, disability,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, environmental (including taxes under Code section 59A), customs
duties, registration, alternative and add-on minimum, estimated, transfer and
gains taxes, or other tax of any kind whatsoever and (ii) in all cases,
including interest, penalties, additional taxes and additions to tax imposed
with respect thereto whether disputed or not; and "Tax Returns" means returns,
reports, declarations, forms and information returns or statements relating to
Taxes including any schedule or attachment thereto required to be filed with
the Internal Revenue Service or any other federal, foreign, state, local or
provincial taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns, including any
amendments thereto.
(b) The Company and each affiliated, consolidated, combined or
unitary group which included or includes the Company (an "Affiliated
Group") has timely filed, in accordance with all applicable laws, all material
Tax Returns required to be filed by or on behalf of the Company. All such Tax
Returns were correct and complete in all material respects. The Company and
each Affiliated Group have paid all Taxes with respect to the Company due and
payable by them (whether or not shown on any Tax Return). No written claim has
been made within the last three (3) years by an authority in a jurisdiction
where the Company or an Affiliated Group does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction. There are no
liens with respect to Taxes upon any of the properties or assets of the
Company other than customary liens for current Taxes not yet due and payable.
(c) All Taxes with respect to the Company required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party
have been withheld and timely paid to the appropriate governmental authority.
(d) There is no dispute or claim concerning any Tax liability of the
Company either claimed or raised by an authority in writing or as to which any
director or officer of the Company or employee responsible for the Company's
<PAGE>
Tax matters has knowledge. Schedule 3.1.14 lists all federal, state, local and
foreign income Tax Returns filed with respect to the Company for taxable
periods ending on or after June 30, 1995, and indicates those Tax Returns that
have been audited and that currently are the subject of audit.
(e) There has been no waiver of any statute of limitations in respect
of Taxes of the Company nor any extension of time with respect to an assessment
or deficiency relating to Taxes of the Company, and there are no powers of
attorney (for example, IRS Form 2848 or other similar authority) with respect
to Taxes of the Company currently in force.
(f) No consent has been filed under Code section 341(f) with respect
to the Company. The Company has not made and is not obligated to make any
payments that would not be deductible under Code section 280G.
(g) The Company is not a party to any joint venture, partnership or
other arrangement that could be treated as a partnership for federal and
applicable state, local and, to the best of Seller's knowledge, foreign income
Tax purposes.
(h) If a Section 338(h)(10) Election is not made in accordance with
Section 10.9, Schedule 3.1.14 lists (A) the Company's Tax basis and its assets,
(B) the amount of any net operating loss, net capital loss, unused investment
or other credit, unused foreign Tax, excess charitable contribution, Code
Section 481 adjustment and other Tax attributes allocable to the Company, and
(C) the amount of any deferred gain or loss allocable to the Company arising
out of any deferred intercompany transaction and any excess loss account
attributable to the Company.
(i) The unpaid Taxes of the Company did not as of January 31, 1998
exceed the reserve for Taxes (other than deferred Taxes established to
reflect book-tax timing differences) set forth on the Company's financial
statements.
3.1.15 Inventories. Except as set forth in the Disclosure Schedule
or reserved for in the January 31, 1998 Balance Sheet, the inventory of the
Company is merchantable and fit or suitable to use in the ordinary course of
business and is not obsolete, damaged or defective or carried in excess of the
lower of cost or market.
3.1.16 Customers and Suppliers. Except as set forth in the Disclosure
Schedule, since July 6, 1997, (i) no customer (or group of customer) of the
Company has given the Company or Seller any notice that such customer (or
group of customers) will cease to purchase products or services or reduce the
amount or products or services purchased from the Company, and (ii) no
supplier or vendor (or group of suppliers or vendors) of the Company has given
the Company or Seller notice that such supplier or vendor (or group of
suppliers or vendors) will cease to supply or restrict the amount supplied or
change its price or terms to the Company of any products or services, in each
case in a manner or to a degree which could reasonably be expected to have a
Material Adverse Effect, it being understood that actual purchases and sales
are based upon annual budgets and forecasts and are subject to changes in the
ordinary course of business of the Company and it customers, suppliers and
vendors.
<PAGE>
3.1.17 Backlog. As of March 23, 1998, the Company had an aggregate
of $19,908,709 of open purchase orders from its customers. The Company has no
knowledge or reason to believe that any customer with an open purchase order
does not intend to purchase the full amount of products specified to be
purchased therein (except for such cancellations as may occur in the ordinary
course of business consistent with the Company's past experience) or of any
circumstance that poses a material risk of the Company being unable to fulfill
such purchase orders in the ordinary course of its business.
3.2 NO ADDITIONAL REPRESENTATIONS. NOTWITHSTANDING ANYTHING CONTAINED IN
THIS ARTICLE 3 OR ANY OTHER PROVISION OF THIS AGREEMENT, IT IS THE EXPLICIT
INTENT OF EACH PARTY HERETO THAT SELLER IS MAKING NO REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION
AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES OR
ASSETS OF THE COMPANY, IT BEING UNDERSTOOD THAT ANY COST ESTIMATES,
PROJECTIONS OR OTHER PREDICTIONS CONTAINED OR REFERRED TO IN THE EXHIBITS
HERETO OR THE ENVIRONMENTAL DISCLOSURE STATEMENT OR ANY STATEMENTS MADE IN THE
OFFERING MEMORANDUM OR RELATED DOCUMENTS ARE NOT, AND SHALL NOT BE DEEMED TO
BE, REPRESENTATIONS OR WARRANTIES OF SELLER.
3.3 CONSTRUCTION OF CERTAIN PROVISIONS. It is understood and agreed that
any dollar amount specified in the foregoing representations and warranties or
the inclusion of any specific items on the Disclosure Schedule or the
Environmental Disclosure Statement is not intended to imply that higher or
lower amounts, or that the items that have been so included, are or are not
material, and neither party shall use the fact of the setting of such amounts
or the fact of the inclusion of any such items on the Disclosure Schedule or
the Environmental Disclosure Statement in any dispute or controversy between
the parties on whether any obligation, item or matter not described herein or
included on the Disclosure Schedule or the Environmental Disclosure Statement
is or is not material for purposes of this Agreement.
4. REPRESENTATIONS AND WARRANTIES BY BUYER
4.1 REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants to
Seller as follows:
4.1.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power and authority to carry on its business as now conducted and
to own all of its properties and assets.
4.1.2 Authorization. All corporate and other proceedings required to be
taken on the part of Buyer, including, without limitation, all action required
to be taken by the directors or shareholders of Buyer to authorize it to enter
into and carry out this Agreement and to purchase the Shares hereunder have
been duly and properly taken. This Agreement has been duly executed and
delivered by Buyer and is valid and enforceable against Buyer in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and the rules of law governing specific
performance, injunctive relief and other equitable remedies.
<PAGE>
4.1.3 Compliance. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not, in a manner
which could materially adversely affect the consummation of the transactions
contemplated hereby:
(a) result in the breach of any of the terms or
conditions of, or constitute a default under or violate, as the case may be,
the Certificate of Incorporation or by-laws of Buyer, or any material
agreement, lease, mortgage, note, bond, indenture, license or other document
or undertaking, oral or written, to which Buyer or any of its subsidiaries or
affiliates is bound, or by which any of its or their properties or assets may
be affected; or
(b) violate any rule, regulation, writ, injunction, order or
decree of any court, administrative agency or governmental body.
4.1.4 Investment Only. Buyer has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of its purchase of the Shares. Buyer confirms
that Seller has made available to Buyer the opportunity to ask questions of
the senior management of Seller and the Company and to acquire such additional
information about the business and financial condition of the Company as the
Buyer has requested and all such information has been received. Buyer is
acquiring the Shares for its own account, for investment purposes only and not
with a view to the distribution or resale thereof. Buyer will not sell or
transfer the Shares in violation of applicable securities laws.
4.1.5 Financing. Buyer has funds of its own, or has binding
commitments from responsible banks or other financial institutions to
provide funds, which will be sufficient and available to pay the purchase
price on the Closing Date as set forth in Section 2.1.
5. CONDUCT OF BUSINESS PENDING CLOSING
5.1 CONDUCT OF BUSINESS PENDING CLOSING. Seller covenants that, pending
the Closing:
5.1.1 Conduct of Business in Ordinary Course. The business of the
Company will be conducted only in the ordinary course consistent with the
past practice of the Company.
5.1.2 No Changes to Organization Documents. No change will be made
to the organization documents of the Company, except as may be first
approved in writing by Buyer.
5.1.3 Changes to Capital Stock. No change will be made in the
authorized or issued capital stock of the Company, provided, however,
that Seller, Buyer and the Company hereby acknowledge and agree that the
Company and Seller shall take any and all such actions as shall result in
there being no shares of preferred stock of the Company, $100 par value per
share, issued and outstanding as of the Closing Date. Seller will not transfer
any interest in any of the Shares to any other Person.
<PAGE>
5.1.4 No Dividends. No dividend or other distribution or payment
will be declared or made in respect of the capital stock of the Company.
5.1.5 No Compensation Increases. Except for increases or
bonuses in the ordinary course and consistent with past practices, no
increase will be made in the compensation payable or to become payable by the
Company to any of its officers, employees, or agents, nor will any bonus
payment or arrangement be made by the Company to or with any officer,
employee, or agent thereof without the prior written consent of Buyer.
5.1.6 Notices and Consents. The Company and Seller will use all
reasonable efforts to obtain any third party consents required to consummate
the transactions contemplated by this Agreement and requested by Buyer.
5.2 PRESERVING BUSINESS ORGANIZATION. Until the Closing Date, Seller will
use reasonable efforts to preserve the business organization of the Company
intact, and to preserve for Buyer the present relationships between the
Company and its customers, employees, suppliers, principals and others having
business relations with them.
5.3 NOTICE OF DEVELOPMENTS. Seller may elect at any time to notify Buyer
of any development causing a breach of any of Seller's representations and
warranties herein. The written notices pursuant to this Section 5.3 will be
deemed to have amended the Disclosure Schedule, to have qualified the
representations and warranties, and to have cured any misrepresentation or
breach of warranty that otherwise might have existed hereunder by reason of
the development, provided, however, that Buyer shall have the right to
terminate this Agreement by reason of any such development which may
reasonably be likely to have a Material Adverse Effect within ten (10)
business days of receipt of written notice of the development from Seller. The
foregoing termination right is Buyer's exclusive remedy for any breach of
Seller's representations and warranties of which Buyer becomes aware pursuant
to this Section 5.3.
6. CLOSING DATE, CONDITIONS AND TRANSACTIONS
6.1 CLOSING DATE AND PLACE. The consummation of the purchases and sales
contemplated hereby (the "Closing") will take place at the conference center
of Ropes & Gray, 885 Third Avenue, New York, New York 10022 on such date and
time as may be mutually agreeable to the parties hereto (the "Closing Date").
If the Closing does not take place on or before June 30, 1998, 1998, the
obligations of the parties under this Agreement shall be null and void, except
for those rights and obligations under Section 6.4 hereof.
6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE. The
obligations of Buyer under this Agreement are subject to the fulfillment prior
to or at the Closing of each of the following conditions, any one or more of
which may be waived by Buyer:
6.2.1 No Injunctive Proceedings. No order or decree of any state or
federal court or other governmental agency which prevents the consummation of
the transactions which are the subject of this Agreement or prohibits Buyer's
ownership of the Shares shall have been issued and remain in effect (provided
that Buyer has acted in accordance with the requirements of Section 9.2
hereof).
<PAGE>
6.2.2 Compliance with Applicable Laws. All material requirements of
applicable foreign, federal, state and local law applicable to the
transactions contemplated by this Agreement, including without limitation and
to the extent applicable, the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended ("Hart-Scott"), Section 721 of Title VII of the Defense
Production Act of 1950, as amended, 50 U.S.C.A. App. 2170 ("Exon-Florio"),
and of any similar material requirements of any foreign jurisdiction that is
applicable to the transactions contemplated hereby ("Foreign Laws") shall have
been complied with, all necessary approvals and consents obtained, and any
waiting periods thereunder shall have expired or been terminated.
6.2.3 Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and
correct in all material respects as of the Closing Date, except (i) as may be
contemplated by this Agreement and (ii) that no representation or warranty of
Seller shall be deemed to be untrue or incorrect by reason of any transaction
that conforms to the requirements of Article 5.1 hereof.
6.2.4 Performance of Agreements; Instruments of Transfer. Seller
shall have performed in all material respects the obligations,
agreements, conditions and commitments to be fulfilled by Seller pursuant to
the terms hereof on or prior to the Closing Date and shall have tendered to
Buyer the Shares and other documents, instruments and certificates required by
Article 7.
6.2.5 Consents. Seller shall have obtained the consent of The Boeing
Company, Deutsche Airbus and Omniview, Inc. (d/b/a IPIX) to the transactions
contemplated by this Agreement.
6.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER TO CLOSE. The
obligations of Seller under this Agreement are subject to the fulfillment,
prior to the Closing, of each of the following conditions, any one or more of
which may be waived by Seller:
6.3.1 No Injunctive Proceedings. No order or decree of any state or
federal court or other governmental agency which prevents the consummation of
the transactions which are the subject of this Agreement or prohibits Buyer's
ownership of the Shares shall have been issued and remain in effect (provided
that Seller has acted in accordance with the requirements of Section 9.2
hereof).
6.3.2 Compliance with applicable laws. All material requirements of
applicable foreign, federal, state and local law applicable to the
transactions contemplated by this Agreement, including without limitation and
to the extent applicable, Hart-Scott, Exon-Florio, and Foreign Laws shall have
been complied with, all necessary approvals and/or consents obtained, and any
waiting periods thereunder shall have expired or been terminated.
6.3.3 Payment. Buyer shall have delivered to Seller the payment
provided for in Section 2.1 and all other payments required to be made by
Buyer on the Closing Date pursuant to the terms hereof.
<PAGE>
6.3.4 Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and correct
in all material respects as of the Closing Date.
6.3.5 Performance of Agreements; Instruments of Transfer. Buyer
shall have performed in all material respects the obligations,
agreements, conditions and commitments to be fulfilled by Buyer on or prior to
the Closing Date and shall have tendered to Seller the documents, instruments
and certificates required by Article 7.
6.4 NONCOMPLIANCE WITH AND TERMINATION OF THIS AGREEMENT. Each of the
parties hereto agrees to use its reasonable efforts to bring about the
satisfaction of the conditions required to be performed by it hereunder prior
to and at the Closing, including but not limited to compliance with the
requirements of Section 9.2. If any condition of Closing is not satisfied, the
party for whose benefit such condition is stated may proceed with the Closing
or may terminate this Agreement by notice in writing to the other as provided
in Section 11.3, provided, however, that such party may not terminate this
Agreement without first notifying the other party of the condition which has
not been satisfied and giving such party a reasonable opportunity to cure such
failure. Upon any such termination, this Agreement shall thereupon cease to
have any further force and effect and no party hereto shall have any liability
hereunder of any nature whatsoever, except as provided below and in Sections
11.2, 11.7, and the Confidentiality Agreement referenced in Section 11.4.
6.5 USE OF SELLER NAME. Following the Closing, no use by Buyer or the
Company of the Puritan Bennett Aero Systems name or any variants or
derivatives thereof shall include use of the names "Nellcor," "Puritan,"
"Bennett," "Puritan-Bennett" or "NPB," or any variations thereof, or any other
name, symbol, trademark, etc. owned by Seller or any of its affiliates except
that Buyer may use "Puritan-Bennett Aero Systems Co." for a period of 18
months solely to indicate the former name of the Company in conjunction with
its new name.
6.6 EXCLUSIVITY. Neither the Company nor the Seller nor any affiliate
thereof will (and neither the Company nor the Seller nor any affiliate thereof
will cause or permit any of its officers, directors, employees, agents
(including without limitation Cowen and Company) or affiliates to) (i)
solicit, initiate, or encourage the submission of any proposal or offer from
any Person relating or enter into or consummate any transaction relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Company (other than sales of
inventory for a fair value in the ordinary course of business) (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing.
<PAGE>
7. CLOSING DOCUMENTS
7.1 SELLER'S OBLIGATIONS. At the Closing, Seller shall deliver to Buyer
the following:
7.1.1 Resolutions. Copies of resolutions of Seller and Mallinckrodt
certified by a Secretary, Assistant Secretary or other appropriate officer of
Seller or Mallinckrodt, as the case may be, authorizing the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
7.1.2 Share Certificates. Certificates representing the Shares, duly
endorsed in blank or accompanied with appropriate stock powers.
7.1.3 Books and Records. All books and records of the Company,
including the corporate minute book, seal and stock ledger book.
7.1.4 Legal Opinion. A legal opinion from counsel to the Seller and
the Company, substantially in the form attached hereto as Exhibit 7.1.4.
7.1.5 Officer's Certificate. An officer's certificate to the effect
that the representations of the Seller are true and correct in all
material effects on and as of the Closing Date and the Seller has complied
with all of its obligations under this Agreement.
7.1.6 Parent Guarantee. A guarantee in form and substance reasonably
satisfactory to the Buyer pursuant to which Mallinckrodt guarantees all of the
obligations of the Seller under this Agreement.
7.1.7 Transitional Services Agreement. Mallinckrodt, Seller, the
Company and Buyer shall have entered into a Transitional Services
Agreement effectuating the transactions set forth in paragraph 12 of the
letter of intent dated March 4, 1998.
7.1.8 Company Intellectual Property Agreements. Such assignment
documents as may be necessary to assign Company Intellectual Property to
BE Intellectual Property, Inc., as contemplated by Section 3.1.11.
7.2 BUYER'S OBLIGATIONS. At the Closing, Buyer shall deliver to
Seller the following:
7.2.1 Resolutions. Copies of resolutions of the Buyer, certified by
the Secretary or Assistant Secretary of Buyer, authorizing the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
7.2.2 Payment. Funds in the amount and payable as set forth in
Article 2.1 hereof and all other payments required to be made by Buyer on
or prior to the Closing Date pursuant to the provisions hereof.
7.2.3 Legal Opinion. A legal opinion from counsel to Buyer,
substantially in the form attached hereto as Exhibit 7.2.3.
<PAGE>
7.2.4 Officer's Certificate. An officer's certificate to the effect
that the representations of the Buyer are true and correct in all
material effects on and as of the Closing Date and the Buyer has complied with
all of its obligations under this Agreement.
7.2.5 Transitional Services Agreement. Mallinckrodt, Seller, the
Company and Buyer shall have entered into a Transitional Services
Agreement effectuating the transactions set forth in paragraph 12 of the
letter of intent dated March 4, 1998.
8. INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLER. Subject to the limits set forth in this
Article 8, Seller agrees to indemnify, defend and hold Buyer and Company
harmless from and against any and all loss, liability, damage or deficiency
(including interest, penalties and reasonable attorney's fees) that Buyer or
the Company may suffer, sustain, incur or become subject to arising out of or
due to any inaccuracy of any representation or the breach of any warranty,
covenant, undertaking or other agreement of Seller contained in this Agreement
or in any other instrument delivered pursuant hereto.
8.2 INDEMNIFICATION BY BUYER. Subject to the limits set forth in this
Article 8, Buyer agrees to indemnify, defend and hold Seller harmless from and
against any and all loss, liability, damage or deficiency (including interest,
penalties and reasonable attorney's fees) that Seller may suffer, sustain,
incur or become subject to arising out of or due to any inaccuracy of any
representation or the breach of any warranty, covenant, undertaking or other
agreement of Buyer contained in this Agreement or in any other instrument
delivered pursuant hereto.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; THRESHOLD, DEDUCTIBLE AND
CAP. The warranties and representations contained in Sections 3.1.3
(Capitalization of the Company) and 3.1.7 (Good Title) and in the Guarantee
Agreement will survive the Closing Date and will remain in full force and
effect indefinitely. The warranties and representations contained in Section
3.1.9 (Environmental, Health and Safety) will survive the Closing Date and
will remain in full force and effect thereafter for a period of seven and
one-half (7 1/2) years. The warranties and representations contained in
Section 3.1.14 (Taxes) will survive the Closing Date and will remain in full
force and effect thereafter until six months after the applicable statute of
limitations period has expired. All other warranties and representations of
the parties contained in this Agreement or in any instrument delivered
pursuant hereto (the "Limited Representations") will survive the Closing Date
and will remain in full force and effect thereafter until April 30, 1999 and
shall be effective with respect to any inaccuracy therein or breach thereof,
notice of which shall have been duly given within such period, in accordance
with Section 8.4 hereof. Anything to the contrary contained herein
notwithstanding, (i) neither party shall assert any claim against the other
for indemnification hereunder with respect to any inaccuracy or breach of the
Limited Representations or the warranties and representations contained in
Section 3.1.9 (Environmental, Health and Safety) unless and until the amount
of such claim or claims with respect thereto shall exceed $300,000 calculated
on a cumulative basis and not a per item basis, and then only in respect to
<PAGE>
the excess over said $300,000; and (ii) neither party shall be entitled to
recover from the other more than an aggregate of $20,000,000 with respect to
all claims for indemnity or damages with respect to any inaccuracy or breach
of the Limited Representations and the warranties and representations
contained in Section 3.1.9 (Environmental, Health and Safety), whether such
claims are brought under this Article 8 or otherwise.
8.3A BOEING LATCH INDEMNITY. In addition to its other indemnity
obligations set forth in this Agreement, Seller agrees to indemnify, defend
and hold Buyer and the Company harmless from and against any and all loss,
liability, damage or deficiency (including interest, penalties and reasonable
attorney's fees) that Buyer or the Company may suffer, sustain, incur or
become subject to arising out of the dispute with The Boeing Company disclosed
in the Disclosure Schedule to Section 3.1.8 regarding the performance of
certain pneumatic latches. The provisions of Section 8.3 will not apply to
this separate indemnity. The parties agree to cooperate with each other to
minimize any liability to Boeing in respect of these latches.
8.3B ENVIRONMENTAL INDEMNITY. In addition to its other indemnity
obligations set forth in this Agreement and notwithstanding anything disclosed
to Buyer in the Disclosure Schedule, Seller agrees to indemnify, defend and
hold Buyer and the Company harmless from and against any and all loss,
liability, damage or deficiency (including interest, penalties and reasonable
attorney's fees) that Buyer or the Company may suffer, sustain, incur or
become subject to arising out of or due to any inaccuracy of any
representation or the breach of any warranty, covenant, undertaking or other
agreement of Seller contained in Section 3.1.9 of this Agreement (as such
Section would read if all references therein to Seller's knowledge and the
Disclosure Schedule and any matters disclosed to Buyer by or on behalf of
Seller were deemed deleted therefrom). The indemnity obligations set forth
herein shall be subject to the dollar limitations contained in Section 8.3
above.
8.4 NOTICE AND OPPORTUNITY TO DEFEND. If there occurs an event which
either party asserts is an indemnifiable event pursuant to Sections 8.1 or
8.2, the party seeking indemnification shall notify the other party obligated
to provide indemnification (the "Indemnifying Party") promptly. If such event
involves (a) any claim or (b) the commencement of any action or proceeding by
a third Person, the party seeking indemnification will give such Indemnifying
Party written notice of such claim or the commencement of such action or
proceeding. Such notice shall be a condition precedent to any liability of the
Indemnifying Party hereunder but only to the extent that the Indemnifying
Party is actually prejudiced by the lack of timely notice. Such Indemnifying
Party shall have a period of thirty (30) days within which to respond thereto.
If such Indemnifying Party accepts responsibility, such Indemnifying Party
shall be obligated to compromise or defend, at its own expense and by counsel
chosen by the Indemnifying Party and reasonably satisfactory to the party
seeking indemnity, such matter. If such Indemnifying Party does not respond
within such thirty (30) day period or rejects responsibility for such matter
in whole or in part, the party seeking indemnification shall be free to
pursue, without prejudice to any of its rights hereunder, such remedies as may
<PAGE>
be available to such party under applicable law. The party seeking
indemnification agrees to cooperate fully with the Indemnifying Party and its
counsel in the defense against any such asserted liability. In any event, the
party seeking indemnification shall have the right to participate at its own
expense in the defense of such asserted liability. Any compromise of such
asserted liability by the Indemnifying Party shall require the prior written
consent of the party seeking indemnification. If, however, the party seeking
indemnification refuses its consent to a bona fide offer of settlement which
the Indemnifying Party wishes to accept, the party seeking indemnification may
continue to pursue such matter, free of any participation by the Indemnifying
Party, at the sole expense of the party seeking indemnification. In such
event, the obligation of the Indemnifying Party to the party seeking
indemnification shall be equal to the lesser of (i) the amount of the offer of
settlement which the party seeking indemnification refused to accept plus the
costs and expenses of such party prior to the date the Indemnifying Party
notifies the party seeking indemnification of the offer of settlement and (ii)
the actual out-of-pocket amount the party seeking indemnification is obligated
to pay as a result of such party's continuing to pursue such matter.
Indemnifying Party shall be entitled to recover from the party seeking
indemnification any additional expenses incurred by such Indemnifying Party as
a result of the decision of the party seeking indemnification to pursue such
matter.
8.5 REDUCTION FOR INSURANCE. The amount which an Indemnifying Party is
required to pay to, for, or on behalf of any other party (hereinafter in this
Article 8, referred to as "Indemnitee") pursuant to this Article 8 shall be
reduced (including, without limitation, retroactively) by any insurance
proceeds actually recovered by or on behalf of such Indemnitee in reduction of
the related indemnifiable loss (the "Indemnifiable Loss"). Amounts required to
be paid, as so reduced, are hereafter sometimes called an "Indemnity Payment."
If an Indemnitee shall have received or shall have had paid on its behalf an
Indemnity Payment in respect of an Indemnifiable Loss and shall subsequently
receive directly or indirectly, insurance proceeds in respect of such
Indemnifiable Loss, then such Indemnitee shall pay to such Indemnifying Party
the amount of such insurance proceeds or, if lesser, the amount of the
Indemnity Payment.
8.6 FOREIGN CURRENCIES. In the event that an Indemnity Payment shall be
denominated in a currency other than United States dollars, the amount of such
payment shall be translated into United States dollars using the Foreign
Exchange Rate for such currency as of the date that notice of the claim with
respect to such Indemnifiable Loss shall have been given by the Indemnitee.
8.7 EXCLUSIVE REMEDY. Buyer and Seller acknowledge and agree that the
indemnification provisions in this Agreement shall be the exclusive remedy of
Buyer and Seller with respect to the Company and the transactions contemplated
hereby.
<PAGE>
9. COVENANTS AND AGREEMENTS
9.1 EMPLOYEE MATTERS.
9.1.1 Employment Status and Continuation of Employee Benefits.
(a) Scope of Section. This Section 9.1.1 contains the
covenants and agreements of the parties with respect to (1) the status of
employment of the employees of the Company upon the sale of the Shares to the
Buyer, (2) continuation upon the sale of the Shares to the Buyer of employee
benefit plans, policies and arrangement of both the employee welfare benefit
and employee pension benefit type, as those terms are commonly understood
based upon the definitions of such terms in ERISA, as well as those employee
benefits (such as relocation benefits) listed in the Disclosure Schedule which
might not fall within such a categorization (all of the foregoing, the
"Employee Benefits"), and (3) other obligations of Buyer in respect of such
Employee Benefits, applicable to current or former employees of the Company.
(b) Employment Status. The closing of the sale of the Shares
shall cause no change in the status of the employment (including but not
limited to the crediting of service for all purposes, as further detailed in
Section 9.1.1(c), in respect of the Employee Benefits) of all employees of the
Company (exempt and nonexempt) as the same existed immediately prior to the
Closing Date (it being understood that such employees shall include, without
limitation, those on medical, disability or other leave of absence).
(c) Continuation of Employee Benefits' Crediting of Service.
Buyer shall provide, or shall cause the Company to provide, for all
employees actively employed by the Company on the Closing Date and continued
in employment by the Buyer or the Company after the Closing Date, Employee
Benefits comparable to the Employee Benefits provided by Buyer to its own
similarly situated employees Buyer shall grant, or cause the Company to grant,
all employees of the Company all service with the Company credited to them in
respect of the Employee Benefits, for all purposes including, without
limitation, all such service credited to them for purposes of eligibility,
vesting and benefit accrual under all plans. Buyer shall assume liability for
or cause the Company to assume liability for, all such Employee Benefits
reflected on Schedule 9.1 in respect of all such employees and, as well,
former employees, including retirees of the Company incurred or earned, but
not paid, on or before the Closing Date, or incurred in connection with the
sale of the Company and not paid as of the Closing Date, including, without
limitation, all deferred compensation, supplemental and excess pension and
savings benefits, all bonus amounts, normal and enhanced severance benefits,
and relocation benefits (whether or not all such Employee Benefits are vested
on the Closing Date). Buyer agrees that any employee not actively employed on
the Closing Date will receive the benefits of this Section 9.1(c) upon
returning to active employment.
<PAGE>
(d) Severance. Buyer shall be obligated for any liability
cost or expense for severance arising from or relating to or claimed by
reason of the transactions described herein or contemplated hereby, under
Seller's or the Company's Employee Benefit plans; provided, however, that
Seller and Mallinckrodt shall remain obligated for any such liability, cost or
expense arising from or relating to or claimed by reason of any special
retention bonus program provided by the Company to selected Company employees
prior to the Closing.
(e) Continuation of Benefits During Transition Period -
Reimbursement by Buyer. Notwithstanding any provision herein to the
contrary, at the Buyer's election, employees of the Company and their eligible
dependents shall remain eligible during a transition period following the
Closing Date for coverage under the employee benefit plans of Mallinckrodt and
its affiliates (except the 401(k) plan and employee assistance plan) covering
employees of the Company immediately prior to the Closing Date. Such
transition period shall extend through June 30, 1998, unless earlier
terminated by the Buyer upon written notice to Seller. The Buyer ;shall be
responsible for reimbursing Seller for all insurance premiums due for
providing such continued coverage during such transition period. Seller shall
present Buyer with monthly invoices reflecting the monthly premium costs for
such continued coverage during the transition period, which invoices shall be
paid by the Buyer within thirty (30) days after Buyer's receipt thereof.
9.2 REASONABLE EFFORTS TO CLOSE. During the period commencing on the date
of the execution hereof and continuing until the Closing Date, Buyer and
Seller shall use their reasonable efforts to comply promptly with all requests
or requirements which applicable federal, state or foreign law or governmental
officials may impose on them with respect to the transactions which are the
subject of this Agreement, and to consummate such transactions as promptly as
practicable. The reasonable efforts of Buyer and Seller shall include, but
shall not be limited to, good faith response, in cooperation with each other,
to all requests for information, documentary or otherwise, by any governmental
agency pursuant to Hart-Scott or the Foreign Laws.
9.3 DISCLOSURE
9.3.1 Pre-Closing. Beginning the date of this Agreement, neither
Seller nor Buyer, without the prior written consent of the other, will
make any press release or any similar public announcement concerning the
transactions contemplated hereby prior to Closing; provided, however, that if
in the opinion of counsel to Buyer or Seller (which opinion shall be confirmed
in writing by such counsel) such disclosure is legally required, Buyer and
Seller will cooperate in preparing a press release or releases, and unless
both parties otherwise agree such disclosures shall be limited to the
disclosures so required in the opinion of counsel. No written or oral
announcements or private disclosure with respect to the transactions
contemplated hereby will be made to any person unrelated to Seller or Buyer
unless jointly approved by Seller and Buyer. Buyer and Seller may disclose
information with respect to the transactions contemplated hereby to their
employees, agents and consultants only to the extent such persons have a need
to know such information and agree to be bound by the terms hereof relative to
the disclosure of such information.
<PAGE>
9.3.2 Post-Closing. After the Closing, Seller will keep all
confidential and proprietary information ("Information") of Company
confidential and will not (except as required by applicable law, regulation or
legal process), without Buyer's prior written consent, disclose any
Information to any third party. "Information" shall not include information
(a) which is, or becomes, publicly available, (b) which is disclosed by Buyer
or Company to unaffiliated parties without similar restrictions, or (c) which
is disclosed to Seller by a third party which Seller does not know is under a
duty to Company to keep confidential. Notwithstanding the foregoing, Seller
may disclose Information to the extent it is required under applicable law.
9.4 BOOKS, RECORDS AND INFORMATION.
9.4.1 Buyer agrees that all documents delivered to Buyer by Seller
pursuant to this Agreement shall be open for inspection by representatives of
Seller at any time during regular business hours until such time as documents
are destroyed or possession thereof is given up to the other party as provided
for in Section 9.4.2 and that Seller may during such period at its expense
make such copies thereof as it may reasonably request. Seller agrees that all
documents that are retained by Seller after the Closing Date and that are
related to the Company (other than tax records of Seller) shall be open for
inspection by representatives of Buyer at any time during regular business
hours until such time as documents are destroyed or possession thereof is
given up to the other party as provided for in Section 9.4.2 and that Buyer
may during such period at its expense make such copies thereof as it may
reasonably request.
9.4.2 Without limiting the generality of Section 9.4.1, for a period
ending on the sixth anniversary of the Closing Date, neither Buyer nor Seller
shall destroy or give up possession of any item referred to in Section 9.4.1
without first offering to the other the opportunity, at such other's expense
(but without any other payment), to obtain the same. Thereafter each party
shall be free to dispose of them as it deems fit provided that nothing will be
destroyed without first offering the other side the opportunity to copy.
9.4.3 Buyer shall use reasonable efforts to afford Seller access to
employees who were previously employees of Seller or the Company and remain in
the employ of the Company, or Buyer or its affiliates, as Seller shall
reasonably request for its proper corporate purposes, including without
limitation, the defense of legal proceedings. Such access may include
interviews or attendance at depositions or legal proceedings; provided,
however, that in any event all out-of-pocket expenses (excluding wages and
salaries) reasonably incurred by Buyer in connection with this Section 9.4.3
shall be paid or promptly reimbursed by Seller.
9.5 [INTENTIONALLY OMITTED]
9.6 WORKERS' COMPENSATION; LIABILITY. Schedule 9.6 hereto sets forth (a)
state workers' compensation claims ("Workers' Compensation Claims") and (b)
automobile, premises, product and general liability claims (collectively,
"Liability Claims") relating to the Company which are now pending. Without
derogating in any manner from the obligation hereunder of Buyer to cause the
<PAGE>
Company to fulfill all obligations of the Company, including those obligations
relating to Workers' Compensation Claims and Liability Claims and to indemnify
Seller with respect thereto, Buyer, through the applicable insurance carrier
or claims administrator agrees to administer (including defending, settling
and paying awards) those Workers' Compensation Claims and Liability Claims
listed on Schedule 9.6 and any other Workers' Compensation Claims and
Liability Claims made against the Company or Seller arising from occurrences
which took place in whole or in part prior to the Closing Date. Buyer also has
the option to "buy-out" existing claims using an insurance carrier of its
choice. Buyer agrees to reimburse Seller within thirty (30) days of receipt of
an invoice therefor for any costs and expenses which may be incurred by Seller
in connection with any Workers' Compensation Claims and Liability Claims
listed on Schedule 9.6, including any amounts paid by Seller as a result of
any settlements or awards made for such claims. Seller shall provide to Buyer
with each invoice reasonable supporting documentation. Buyer, through the
insurance carriers or claims administrators, can settle or resolve any and all
claims. Seller and Buyer will cooperate in the administration of any such
claims.
9.7 INSURANCE-PRIMARY CASUALTY PROGRAM. Seller maintains at present a
series of insurance programs pursuant to which various insurance carriers have
provided and are providing insurance coverage in respect of the Company's
business, including automobile liability, general liability and employers
liability (the "Primary Casualty Program") and Seller and Buyer understand and
agree that Seller is not transferring to Buyer pursuant hereto any rights or
interests in such Primary Casualty Program, nor shall anything herein be
construed to require Seller to maintain any of such coverages or limit in any
manner Seller's right to change deductible levels or other terms or conditions
thereof. As between Buyer and Seller, however, it is agreed that the following
shall apply to claims with a date of occurrence prior to the Closing Date that
are covered by the Primary Casualty Program:
9.7.1 Uninsured Retentions. Buyer agrees that it shall be responsible
for and shall within thirty (30) days following receipt from Seller of an
invoice with supporting documentation reimburse Seller for the costs of all
Uninsured Retentions with respect to the Primary Casualty Program coverages.
For the purposes of this Section 9.7.1, the term Uninsured Retentions means
any and all amounts which, under the operation of the Primary Casualty
Program, the insured party is obligated to contribute (by means of application
of a deductible, payment under a reimbursement obligation or otherwise) to the
appropriate insurance carrier in respect of such claim. Seller shall suffer or
bear no costs, expenses or liability whatsoever with respect to any claims
related to the Company or its prior assets, business or operations.
9.7.2 Claims Responsibility and Procedures. Buyer shall promptly
notify in writing Seller of any claims against the Company, Buyer, Seller
or any of their affiliates arising from occurrences which took place prior to
the Closing Date relating to the Company or its prior assets, business or
operations, and Buyer shall be responsible for all such claims listed on
Schedule 9.7.2. To the extent coverage is available under the Primary Casualty
Program, Buyer shall handle such claims through the applicable insurance
carrier and to the limited extent required therefor is hereby appointed as
<PAGE>
Seller's agent in dealing with any such applicable insurance carrier, such
agency, however, being subject to revocation at any time if Buyer fails to
comply with the provisions of this Section 9.7. Buyer through the applicable
insurance carrier may settle any such claim on a basis which in its judgment
is reasonable provided, however, that Buyer agrees not to settle any such
claim for an amount in excess of $50,000 without prior consultation with
Seller. Seller and Buyer shall cooperate with each other in the defense of any
such claim and will keep each other informed of significant developments with
respect thereto. Neither Buyer nor Seller will knowingly take any action which
prejudices the other party in the collection of any applicable insurance
proceeds.
9.8 PERFORMANCE OF COMPANY OBLIGATIONS. Buyer agrees to cause the Company
to perform and fulfill all obligations and commitments of the Company existing
as of the Closing Date or thereafter incurred, all in accordance with this
Agreement.
9.9 NONCOMPETITION. (a) Seller agrees that, in consideration of the
purchase of the Company by Buyer hereunder, neither it nor any of its
affiliates (including without limitation Mallinckrodt or any of its
affiliates) shall, on or prior to the date which is five (5) years after the
Closing Date, directly or indirectly, run, own, manage, operate, control,
provide consulting services to, participate in, lend its name to, invest in or
be connected in any manner with the management, ownership, operation or
control of any business, venture or activity which competes with the business
(including parts and accessories therefor) being conducted or proposed to be
conducted at the Closing Date by the Company; provided, however, no Person
shall be considered to be in default of this Section 9.9 solely by virtue of
holding for portfolio purposes as a passive investor not more than five
percent (5%) of the issued and outstanding equity securities of a corporation,
the equity securities of which are listed or quoted on a stock exchange or an
over-the-counter market within the United States.
(b) Seller further agrees that for a period of five (5) years
after the Closing Date neither it nor any of its affiliates (including
without limitation Mallinckrodt or any of its affiliates) will directly or
indirectly without the prior written consent of Buyer, recruit, offer
employment, employ, engage as a consultant, lure or entice away or in any
other manner persuade or attempt to persuade any person who is then an active
employee of the Company to leave the employ of the Company.
9.10 INTELLIGENT VALVE TECHNOLOGY. Upon the request of Buyer, NPB agrees
to give Buyer the first opportunity to enter into a mutually acceptable
agreement with Buyer whereby Buyer and the Company are granted the right to
license, including the right to sublicense, for the use within the aerospace
industry of the oxygen on-demand technology currently owned by NPB.
<PAGE>
10. TAX MATTERS
10.1 FEDERAL, STATE AND LOCAL INCOME AND FRANCHISE TAXES. The applicable
income, deductions and credits with respect to the Company or its business for
all periods ending on or before the Closing Date will be included in the (a)
consolidated federal income Tax Returns of the "affiliated group" within the
meaning of Code Section 1504 (a), including the Company ("Mallinckrodt
Group"), (b) applicable combined or unitary state and local income or
franchise Tax Returns of the Mallinckrodt Group or (c) applicable separate
state or local income or franchise Tax Returns to be filed on behalf of the
Company by Seller. Seller and its affiliates will allow the Buyer an
opportunity to review and comment upon portions of such Tax Returns to the
extent they relate to the Company. Seller shall be solely responsible for and
shall indemnify and hold Buyer harmless with respect to all Taxes payable by
or allocable to the Company or its business for all taxable periods or
portions thereof ending on or before the Closing Date, but only to the extent
not reflected on the Company's financial statements on the Closing Date. Buyer
shall be solely responsible for and shall indemnify and hold harmless Seller
with respect to all Taxes for all taxable periods or portions thereof
beginning after the Closing Date and for Taxes accrued on the Company's
financial statements. Seller shall be entitled to all refunds of Taxes
(reduced by any Taxes that the Buyer or the Company is required to pay with
respect thereto that are not reflected on the Company's financial statements)
with respect to the operations of the Company for all taxable periods or
portions thereof ending on or before the Closing Date, but only to the extent
not reflected on the Company's financial statements on the Closing Date. Buyer
shall promptly pay over to Seller, but in no event later than ten (10)
business days after receipt thereof, any such refunds received by it.
Notwithstanding the foregoing, Buyer shall not be required to seek or cause
the Company to seek a refund if there would be, in Buyer's judgment, any
adverse effect on the Buyer or the Company after the Closing Date. Buyer shall
be entitled to all refunds of Taxes (or reductions in Tax liability) with
respect to operations of the Company for taxable periods or portions thereof
beginning after the Closing Date, and Seller shall promptly pay over to Buyer,
but in no event later than ten (10) business days after receipt thereof, any
such refunds (or reductions in Tax liability) received by it. The Seller shall
not be required to file, seek or otherwise cause to be filed or use its
reasonable best efforts to obtain the receipt of such refunds (or reductions
in Tax liability) including through the filing of amended Tax Returns or
refund claims to the extent there would be, in Seller's judgment, any adverse
effect on the Seller or Mallinckrodt. In the event a Section 338(h)(10)
Election is not made in accordance with Section 10.9 hereof, Seller will allow
Buyer an opportunity to review and comment upon amended Tax Returns with
respect to taxable periods ending on or prior to the Closing Date.
In the case of any taxable period that includes but does not end on the
Closing Date (a "Straddle Tax Period"), the Taxes accrued for the portion of
such taxable period which ends on the Closing Date shall be computed as if
such taxable period ended on the Closing Date. Allocations with respect to
Straddle Tax Periods shall be based upon Tax rates in effect as of the Closing
Date, adjusted for retroactive rate changes, if any. The taxable period of any
<PAGE>
partnership or other pass-through entity in which the Company holds a
beneficial interest shall be deemed to terminate on the Closing Date. Seller
shall be solely responsible for and shall indemnify and hold Buyer harmless
with respect to the Taxes accrued for that portion of a Straddle Tax Period
which ends on the Closing Date. Buyer shall be solely responsible for and
shall indemnify and hold Seller harmless with respect to any Taxes accrued or
relating to the portion of a Tax Straddle Period beginning after the Closing
Date. Seller shall pay to Buyer within thirty (30) days of the date the return
for the Straddle Tax Period is required to be filed (or if later, is actually
filed) an amount equal to the amount of Taxes for such portion of the Straddle
Tax Period as Seller is responsible for in accordance with this paragraph,
less any Taxes paid with respect to such portion of the Straddle Tax Period by
(1) Seller or any of its affiliates (other than the Company) at any time and
(2) the Company on or before the day before the Closing Date. If the amount of
such Taxes previously paid by Seller, any of its affiliates or the Company
exceeds the amount payable by Seller pursuant to this paragraph, Buyer shall
pay, or cause the Company to pay, to Seller the amount of such excess within
thirty (30) days of the date the return for the Straddle Tax Period is
required to be filed (or, if later, is actually filed). The payments to be
made pursuant to this paragraph by Seller or Buyer shall be appropriately
adjusted to reflect any final determination with respect to Taxes for the
Straddle Tax Period and payment shall be made within thirty (30) days after
such final determination.
10.2 CERTAIN CONTEST RIGHTS. Seller will use its best efforts to promptly
inform Buyer as to the commencement of any audit or proceeding with respect to
the Tax liability of the Company. Seller will use its best efforts to provide
Buyer with all notices, correspondence, returns and other documentation with a
direct and material bearing on any proposed adjustment attributable to the
Company or its business. In the case of an audit or proceeding that relates to
taxable periods ending on or before the Closing Date, the Buyer shall promptly
inform the Seller upon receiving notification of the commencement of any such
audit or proceeding and provide Seller with all notices, correspondence,
returns and other documentation with a direct and material bearing on any
proposed adjustment attributable to the Company or its business in such audit
or proceeding. The Seller will, at its expense, control such proceeding,
provided that the Seller will provide Buyer with notice of, and an opportunity
to attend (with Buyer's tax counsel), any meetings, conferences , telephone
calls or other communications with the relevant Tax authorities concerning any
proposed adjustment to the Company's pre-Closing Taxes if such proposed
adjustment could adversely affect the Company after the Closing Date. Seller
may pay, settle, compromise or concede any such proposed increases or
decreases. In the case of an audit or proceeding that relates to Straddle Tax
Periods, Buyer shall control such audit or proceeding, subject to the Seller's
right to participate at its own expense, provided that Buyer may not settle
such audit or proceeding without the consent of the Seller, which consent will
not be unreasonably withheld.
<PAGE>
10.3 [INTENTIONALLY OMITTED]
10.4 TIMING DIFFERENCES. If a Section 338(h)(10) Election is not made in
accordance with Section 10.9 hereof, in the event that, as the result of an
audit or other proceeding concerning the liability for Taxes with respect to
the Company or its business for any taxable period ending on or before the
Closing Date, there is an adjustment as a result of which there shall be
allowable to the Company for any taxable year ending after the Closing Date a
net increase in deductions or credits or other items of Tax benefit or a net
decrease in income or other items of tax detriment (collectively "Items of Tax
Benefit"), then within ten (10) business days after such Items of Tax Benefit
are actually used and realized (such as receipt of a Tax refund), Buyer shall
pay to Seller an amount equal to fifty percent (50%) of the actual reduction
in Taxes resulting from the adjustment to the extent such adjustment was not
reflected on the Company's financial statements on the Closing Date.
10.5 COOPERATION AND EXCHANGE OF INFORMATION. Seller and Buyer will
provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax Return, determining a
liability for Taxes or a right to refund of Taxes or in conducting any audit
or other proceeding in respect of Taxes. Such cooperation and information
shall include providing copies of all relevant Tax Returns or portions thereof
which relate to the Company, together with accompanying schedules and related
work papers, documents relating to rulings or other determinations by taxing
authorities and records concerning the ownership and Tax basis of property,
which either party may possess. Each party shall make its employees available
on a mutually convenient basis to provide explanation of any documents or
information provided hereunder. Except as otherwise provided in this
Agreement, the party requesting assistance hereunder shall reimburse the other
for any reasonable out-of-pocket costs incurred in providing any return,
document or other written information, and shall compensate the other for any
reasonable costs (excluding wages and salaries) of making employees available,
upon receipt of reasonable documentation of such costs. Each party will retain
all returns, schedules and work papers and all material records of other
documents relating thereto, until the expiration of the statute of limitations
(including extensions) of the taxable years to which such returns and other
documents relate and, unless such returns and other documents are offered to
the other party, until the final determination of any payments which may be
required in respect of such years under this Agreement. Any information
obtained under this Section shall be kept confidential, except as may be
otherwise necessary in connection with the filing of returns or claims for
refund or in conducting any audit or other proceeding.
10.6 CURRENT TAX INFORMATION. The Company shall at its own cost and
expense fully and accurately complete and submit any Tax data packages
reasonably required by Seller within the normal time period for submitting
said information by all subsidiaries of the Mallinckrodt Group.
10.7 [INTENTIONALLY OMITTED]
<PAGE>
10.8 INTERCOMPANY TAX ACCOUNT. All Tax sharing agreements, policies,
arrangements and practices between Mallinckrodt or any of its affiliates with
respect to or involving the Company shall be terminated as of the Closing Date
and shall have no further effect for any taxable year (whether the current
year, a future year, or a past year). Mallinckrodt and its affiliates on the
one hand and the Company on the other shall cancel all intercompany accounts
relating to Taxes without payment as of the Closing Date. Any powers of
attorney with respect to Taxes of the Company currently in force will be
terminated effective as of the Closing.
10.9. SECTION 338(H)(10) ELECTION. At Buyer's option, Mallinckrodt and
its affiliates will join with the Buyer in making an election under Code
section 338(h)(10) (and any corresponding elections under state, local, or
foreign Tax law) (collectively, a "Section 338(h)(10) Election") with respect
to the purchase and sale of the Company stock hereunder. Mallinckrodt and
Seller will pay any Income Tax arising out of or resulting from the making of
the Section 338(h)(10) Election and will indemnify the Buyer and the Company
against any losses arising out of any failure to pay such Income Tax. Seller
will also pay any state, local, or foreign Income Tax (and indemnify Buyer and
the Company against any losses arising out of any failure to pay such Income
Tax) attributable to an election under state, local or foreign law under Code
section 338(g) or any similar election with respect to the purchase and sale
of the Company stock hereunder where the state, local, or foreign jurisdiction
does not provide or recognize a Section 338(h)(10) Election. Mallinckrodt and
Seller will comply fully with all filing and other requirements necessary to
effect the Section 338(h)(10) Election and section 338(g) election described
above. For purposes of this Section 10.9, "Income Taxes means all Taxes based
upon or measured by income, including interest, penalties, additional taxes
and additions to tax imposed with respect thereto.
10.10. PURCHASE PRICE ALLOCATION. The Seller and the Buyer agree that the
Buyer and BE Intellectual Property, Inc., subject to Seller's consent, which
shall not be unreasonably withheld, will reasonably allocate the purchase
price to the assets of the Company in accordance with the provisions of Code
section 338 and the Treasury Regulations thereunder and the Company
Intellectual Property. The Buyer, the Company, the Seller and their affiliates
will file all Tax Returns (including claims for refund) in a manner consistent
with such allocation.
10.11. INDEMNIFICATION. Seller shall be liable for and shall pay Buyer
and the Company for all Taxes: (i) imposed on any person (other than the
Company) for any taxable year under Treas. Reg. 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise; or (ii) imposed on the Company, or for which the
Company may otherwise be liable, for any taxable year ending on or prior to
the Closing Date and, with respect to any taxable year or period beginning
before and ending after the Closing Date; in each case for the portions of
such taxable year or period ending on or prior to the Closing Date, and Income
Taxes described in Section 10.9 of this Agreement.
<PAGE>
10.12. SURVIVAL. The provisions in this Agreement relating to Taxes shall
survive the Closing and remain in full force and effect until 30 days after
the expiration of the applicable statutes of limitations (taking into account
any extensions or waivers thereof).
10.13. SUCCESSORS. For purposes of this Article 10, all references to the
Seller, the Buyer and the Company include successors.
11. MISCELLANEOUS
11.1 INDEMNIFICATION OF BROKERAGE. Seller agrees to indemnify and save
Buyer harmless from any claim or demand for commission or other compensation
by any broker, finder or similar agent, including, but not limited to Cowen &
Co., claiming to have been engaged by Seller or any of its affiliates in
connection with the transactions contemplated by this Agreement and to bear
the cost of the legal expenses incurred in defending against any such claim.
Buyer agrees to indemnify and save Seller harmless from any claim or demand
for commission or other compensation by any broker, finder or similar agent,
whether or not a current or former employee of Buyer, claiming to have been
engaged by Buyer or any of its affiliates in connection with the transactions
contemplated by this Agreement and to bear the cost of legal expenses incurred
in defending against any such claim.
11.2 EXPENSES. Except as specifically set forth elsewhere herein and
except that a party not in breach of this Agreement shall be entitled to
recover from a breaching party all expenses and costs incurred by the
non-breaching party by reason of such breach (including, without limitation
all legal expenses and costs), each of the parties hereto shall pay its own
expenses and costs incurred or to be incurred by it in negotiating, closing
and carrying out this Agreement. All expenses incurred by the Company related
to the sale of the Company by the Seller shall be borne exclusively by the
Seller.
11.3 NOTICES. Any notice or communication given pursuant hereto by any
party hereto to any other party shall be in writing and delivered by hand, by
prepaid overnight courier or mailed by registered or certified mail, postage
prepaid, return receipt requested (notices so mailed shall be deemed given
when mailed) with a copy also sent by facsimile, as follows:
<PAGE>
If to Mallinckrodt or Seller at:
Mallinckrodt, Inc.
675 McDonnell Blvd.
P.O. Box 5840
St. Louis, MO 63134
Attention: General Counsel
Facsimile: (314) 654-5366
Copy to: Morrison & Foerster
19900 MacArthur Boulevard, 12th Floor
Irvine, California 92612
Attention: Robert M. Mattson, Jr., Esq.
Facsimile: (714) 251-0900
If to Buyer:
1400 Corporate Center Way
Wellington, Florida 33414
Attention: Thomas P. McCaffrey
Facsimile: (561) 791-3966
Copy to: Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: David McKay
Facsimile: (617) 951-7050
11.4 INTEGRATION. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Except for that certain
Confidentiality Agreement dated August 25, 1997, and the other agreements
specifically contemplated by this Agreement, this Agreement is the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior communications, representations, agreements and
understandings between the parties hereto, whether oral or written, including,
without limitation, any financial or other projections or predictions
regarding the Company or its businesses. The headings contained in this
Agreement and the tables of contents, exhibits and schedules are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
<PAGE>
11.5 ASSIGNMENT AND AMENDMENT OF AGREEMENT. This Agreement shall be
binding on the successors and assigns of the parties hereto; provided,
however, that this Agreement shall not be assignable or transferable by either
party without the written consent of the other party. This Agreement may be
amended only by written agreement of the parties hereto.
11.6 APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the State of California applicable to contracts made and to be
performed entirely within said jurisdiction.
11.7 REASONABLE ASSURANCES. Each party agrees that it will execute and
deliver, or cause to be executed and delivered, on or after the date of this
Agreement, all such other instruments and will take all reasonable actions as
the other party may reasonably request from time to time in order to
effectuate the provisions and purposes of this Agreement.
11.8 NO THIRD PARTY RIGHTS. This Agreement is not intended and shall not
be construed to create any rights in any parties other than Seller and the
Buyer and no person shall assert any rights as third party beneficiary
hereunder, including without limitation, any rights with respect to the
provisions of Section 9.1 hereof.
11.9 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
(including the Disclosure Schedule) attached hereto and the Environmental
Disclosure Statement are incorporated into this Agreement and shall be deemed
a part hereof as if set forth herein in full. References herein to "this
Agreement" and the words "herein," "hereof" and words of similar import refer
to this Stock Purchase Agreement (including Exhibits, Schedules, the
Disclosure Schedule and the Environmental Disclosure Statements) as an
entirety. In the event of any conflict between the provisions of this
Agreement and any such Exhibit or Schedule or the Environmental Disclosure
Statement, the provisions of this Agreement shall control.
11.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and conditions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.11. DEFINITIONS. When used herein, the capitalized terms below shall
have the meanings set forth in this Section 11.11.
"Chemical Substance" means any (i) substance, material or waste that is
identified or regulated as hazardous, dangerous or toxic under any applicable
Environmental Law as now in effect; (ii) petroleum or any fraction thereof;
(iii) asbestos or asbestos-containing material; (iv) polychlorinated biphenyl;
and (v) chlorofluorocarbons.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins and wetlands), groundwater, water body sediments, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life and any other environmental medium or natural resource.
<PAGE>
"Environmental Laws" mean the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act,
and the Clean "Air Act, the Clean Water Act, each, as amended and in effect on
the Closing Date, and any other law or legal requirement, as now in effect,
relating to, including any such law or legal requirement regarding the
pollution, protection or clean up of the Environment: (a) the Release,
containment, removal, remediation, response, cleanup or abatement of any sort
of any Chemical Substance; (b) the manufacture, generation, formulation,
processing, labeling, distribution, introduction into commerce, use, treatment,
handling, sotrage, recycling, disposal or transportation of any Chemical
Substance; (c) exposure of persons, including employees to any Chemical
Substance; or (d) the physical structure, use or condition of a building,
facility, fixture or other structure, including, without limitation, those
relating to the management, use storage, disposal, cleanup or removal of
asbestos, asbestos-containing materials, polychlorianted biphenyls or any
other Chemical Substance.
"Environmental Liabilities and Costs" means all losses incurred: (i) to
comply with any Environmental Law; (ii) as a result of a Release of any
Chemical Substance; or (iii) as a result of any environmental conditions
present at, created by or arising out of the past or present operations of
Company through the Closing Date or of any prior owner or operator of a
facility or site at which Company now operate or have previously operated to
the extent such conditions constitute a violation of o require cleanup under
any Environmental Law.
"Environmental Permit" means any permit or authorization from any
governmental authority required under, issued pursuant to, or authorized by
any applicable Environmental Law.
"Material Adverse Effect" and "Material Adverse Change" shall mean any
effect on or change in the business, operations, assets, prospects or
condition, financial or otherwise, of the Company which is materially adverse
to the business, operations, assets, prospects or condition, financial or
otherwise, of the Company considered as a whole.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Release" means any actual spilling, leaking, pumping, pouring, emitting,
dispersing, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of any Chemical Substance into the Environment that may cause an
Environmental Liability and Cost (including the disposal or abandonment of
barrels, containers, tanks or other receptacles containing or previously
containing any Chemical Substance).
"Safety Laws" means the Occupational Safety and Health Act and any other
federal, state, local and foreign law, regulation or legal requirement
relating to health or safety, including any such law, regulation or legal
requirement relating to the (a) exposure of employees to any Chemical
Substance, air quality or working conditions or noise or (b) the physical
<PAGE>
structure, use or condition of a building, facility, fixture or other
structure, including, without limitation, those relating to equipment or
manufacturing processes, or the management, use, storage, disposal, cleanup or
removal of any Chemical Substances, air quality or working conditions.
"Safety Liabilities and Costs" means all Losses incurred to comply with
any Safety Law or as a result of any health or safety conditions present at,
created by or arising out of the past or present operations of the Company
through the Closing Date.
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have duly executed this Agreement as
of the day and year first above written.
Attest: PURITAN BENNETT CORPORATION
__________________________ By:_____________________________________
Attest: BE AEROSPACE, INC.
__________________________ By:_____________________________________
<PAGE>
INDEX OF SECTIONS OF DISCLOSURE SCHEDULE TO THE STOCK PURCHASE AGREEMENT
BY AND BETWEEN BE AEROSPACE, INC. AND PURITAN-BENNETT CORPORATION
<TABLE>
<CAPTION>
Section of
Disclosure
Schedule Contents of Section
<S> <C>
3.1.1 Organization and Standing.
3.1.3 Capitalization.
3.1.5 Contracts and Binding Commitments.
3.1.6 Compliance.
3.1.7 Good Title.
3.1.8 Litigation.
3.1.9 Environment, Health and Safety.
3.1.10 Material Changes.
3.1.11 Intellectual Property.
3.1.14 Taxes.
9.6 Workers' Compensation; Liability.
9.7 Insurance--Primary Casualty Program.
</TABLE>
A copy of any omitted Disclosure Schedule shall be furnished
supplementally to the Securities and Exchange Commission (the "Commission")
upon the request of the Commission.
