<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 26, 1997
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Central Garden & Pet Company
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(Exact name of registrant as specified in its charter)
Delaware 0-20242 68-0275553
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3697 Mt. Diablo Boulevard, Lafayette, California 94549
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 283-4573
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Inapplicable
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(Former name or former address if changed since last report)
Exhibit Index located on page 3
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On May 26, 1997, Central Garden & Pet Company ("Central") issued a
press release announcing the consummation of the acquisition of the
assets comprising the flea and tick protection business in the United
States and Canada of Sandoz, Ltd. ("Sandoz Flea and Tick") for $31
million in cash.
Item 7. Financial Statement and Exhibits
--------------------------------
(a)(1) Financial Statements relating to Sandoz Flea and Tick will
be filed by amendment to this Form 8-K not later than 60
days after this Report on Form 8-K must be filed.
(a)(2) Accountants' report will be filed by amendment to this Form
8-K not later than 60 days after this Report on Form 8-K
must be filed.
(b)(1) Pro Forma Condensed Financial Information will be filed by
amendment to this Form 8-K not later than 60 days after this
Report on Form 8-K must be filed.
(c) See attached Exhibit Index.
2
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EXHIBIT INDEX
Number Exhibit
- ------ -------
1.1 Press Release dated May 26, 1997.
1.2 Amended and Restated Asset Purchase Agreement, dated as of
February 3, 1997, as amended by Amendment No. 1 thereto, dated as
of April 22, 1997, and Amendment No. 2 thereto, dated as of May
23, 1997.
* The schedules and exhibits to this agreement, as amended, as set forth in the
Table of Contents on page (v), have not been filed herewith, pursuant to Item
601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a
copy of any omitted schedule or exhibit to the Commission upon request.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL GARDEN & PET COMPANY
By /s/ Robert B. Jones
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Robert B. Jones, Vice President
and Chief Financial Officer
Dated: May 29, 1997
4
<PAGE>
Exhibit 1.1
[LETTERHEAD OF CENTRAL GARDEN & PET]
FOR IMMEDIATE RELEASE
- ---------------------
Contact: Gregory Reams
Central Garden & Pet
510/283-4573
Paul Verbinnen/Debbie Miller
Sard Verbinnen & Co.
212/687-8080
CENTRAL GARDEN & PET COMPANY COMPLETES PREVIOUSLY ANNOUNCED
ACQUISITION OF SANDOZ AGRO FLEA AND TICK BUSINESS
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Modified Transaction Includes Additional Specialty Products
------------------------------
LAFAYETTE, CALIFORNIA, MAY 26, 1997 -- Central Garden & Pet Company
(NASDAQ:CENT) the nation's leading distributor of lawn and garden and pet
supplies, today announced that it has completed its previously announced
acquisition of the United States and Canada flea and tick business of Sandoz
Agro, Inc. The acquisition, which has since been modified to include all
methoprene-based products produced by Sandoz for use in the United States and
Canada, and certain other specialty products, was announced in October 1996.
The acquisition includes ownership in the United States and Canada of the
Zodiac(R) and Vet-Kem(R) trademarks as well as those for Ovitrol(R),
Siphotrol(R), Fleatrol(TM), vIGRen(R), Petcor(R), Precor(R), and Natural
Signature(R). These products -- which include on-animal sprays, shampoos and
powders, collars, indoor foggers, aerosols, concentrates and pump-sprays -- are
based on the active ingredient Methoprene to which Central has acquired
exclusive rights in the United States and Canada. Central has also acquired a
manufacturing, formulation, packaging and research facility in Dallas, Texas and
all existing inventory, along with a staff of highly trained technical
professionals who are focused on the development and registration of new
products. The trademark vIGRen is the trademark used for the sale of technical
Methoprene to
-more-
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-2-
S.C. Johnson, Hartz Mountain, Monsanto and others for their use in branded
products for the consumer mass market.
In a related development announced in March of this year, Central will now
proceed with its joint development, marketing and distribution agreement with
Hoechst Roussel Vet. Under the agreement, Central will license exclusive U.S.
and Canadian sales and marketing rights for the Vet-Kem(R) line of flea and tick
products. Hoechst Roussel Vet and Central have also agreed to certain joint
development efforts. Central will retain exclusive rights to market any new
products arising from these efforts to the mass market.
"This strategic acquisition is consistent with our goal of significantly
increasing our presence in branded pet and lawn and garden products," said
William Brown, Chairman and Chief Executive Officer of Central Garden & Pet. "We
anticipate opportunities to grow the business by leveraging our national
distribution and logistics capabilities and by expanding into new
methoprene-based products."
Central Garden & Pet Company is the leading national distributor of lawn,
garden and pet supply products, and a major national distributor of pool
supplies. Central offers customers a wide array of services designed to increase
the sales and profitability of both manufacturers and retailers, including
inventory management, advertising and promotional programs, in-store design and
display assistance and sales program development. Central also offers lines of
proprietary branded products which include Four Paws(R) pet products, Island(R)
aquariums, Matthews(R) redwood products and Grant's(R) ant control products.
"Safe Harbor" Statement under the Securities Litigation Reform Act of 1995:
The statements contained in this release which are not historical facts are
forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those set forth in or
implied by forward-looking statements. These risks are described in the
Company's Securities and Exchange Commission filings.
###
<PAGE>
EXHIBIT 1.2
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of February 3,
1997, among NOVARTIS INC., a company organized under the laws of Switzerland
(the "Seller"), as successor by merger to Sandoz Ltd., a company organized under
------
the laws of Switzerland ("Sandoz"), CENTRAL GARDEN & PET COMPANY, a Delaware
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corporation (the "Parent"), and CENTIC ACQUISITION CORP., a California
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corporation (the "Purchaser").
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W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Sandoz, through various subsidiaries (the "Subsidiaries"),
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including, without limitation, Sandoz Agro, Inc., a New York corporation
("Sandoz Agro"), has been engaged in, among other things, the business (the
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"Current Business") of manufacturing, packaging, marketing and distributing
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methoprene- and non-methoprene-based flea and tick protection products for the
consumer, veterinary and professional pest management markets as well as certain
other products manufactured at the Dallas Facility (as defined below), as more
fully described in Exhibit 1 (the "Additional Products") (all such products of
-------------------
the Business currently existing or in development, including systemic products
based on methoprene and the Additional Products, being the "Products");
--------
WHEREAS, the parties hereto are parties to an Asset Purchase Agreement,
dated as of October 11, 1996 (the "Original Agreement"), pursuant to which
------------------
Sandoz agreed to sell to the Purchaser, and the Purchaser agreed to purchase
from Sandoz, the portions of the Current Business comprising Sandoz's flea and
tick protection business in the United States and Canada (the "Flea and Tick
-------------
Business"), including, without limitation, all right, title and interest of
- --------
Sandoz and the Subsidiaries in and to certain properties and assets of the Flea
and Tick Business, and in connection therewith the Purchaser agreed to assume
the liabilities of Sandoz and the Subsidiaries relating thereto, all upon the
terms and subject to the conditions set forth therein;
WHEREAS, as a result of the merger of Sandoz and Ciba-Geigy Limited into
the Seller (the "Novartis Merger"), the Seller, through the Subsidiaries,
---------------
currently conducts the Current Business;
WHEREAS, in connection with the Novartis Merger, the Seller and Sandoz
entered into an Agreement Containing Consent Order, dated as of November 26,
1996 (the "FTC Agreement"), among the Bureau of Competition of the United States
-------------
Federal Trade Commission (the "FTC"), Ciba-Geigy Limited, Ciba-Geigy
---
Corporation, Chiron Corporation, Sandoz, Sandoz Corporation and the Seller,
which requires the Seller to sell, in addition to the Flea and Tick Business to
be sold pursuant to the Original Agreement, the portions of the Current Business
comprising the business of manufacturing, packaging,
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2
marketing and distributing the Additional Products in the United States and
Canada (together with the Flea and Tick Business, the "Business," it being
--------
understood that the Business shall expressly exclude any business conducted by
Ciba-Geigy Limited prior to the Novartis Merger and any properties and assets
related thereto);
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement solely to conform to the FTC Agreement;
WHEREAS, upon the terms and subject to the conditions set forth herein, and
in conformity with the FTC Agreement, the Seller desires to sell to the
Purchaser, and the Purchaser desires to purchase from the Seller, the portions
of the Current Business comprising the Business, including, without limitation,
all right, title and interest of the Seller and the Subsidiaries in and to
certain properties and assets of the Business, and in connection therewith the
Purchaser is willing to assume the liabilities of the Seller and the
Subsidiaries relating thereto;
WHEREAS, in connection with the purchase and sale of the Business, the
Seller has agreed to supply to the Purchaser its commercial requirements of
methoprene for a period of up to six years after the Closing Date (as defined
below) and to make available to the Purchaser the technology required for the
Purchaser to commence independent production of methoprene; and
WHEREAS, the Purchaser has agreed to manufacture certain products for the
Seller after the Closing Date if the Seller so requests;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Seller, the Parent and the Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings:
"Accounting Policies" means the accounting policies of Sandoz and the
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Subsidiaries for the Business, as described in Section 1.01(a) of the Disclosure
Schedule.
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3
"Affiliate" means, with respect to any specified Person, any other Person
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that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" means this Amended and Restated Asset Purchase Agreement, dated
---------
as of February 3, 1997, among the Seller, the Parent and the Purchaser.
"Ancillary Agreements" means (a) the Assumption Agreement, (b) the Bill of
--------------------
Sale, (c) the Toll Manufacturing Agreement, (d) the Deed, (e) the Methoprene
Supply Agreement and (f) the Technology License and Support Agreement.
"Assumption Agreement" means the Assumption Agreement to be executed by the
--------------------
Purchaser and the Seller on the Closing Date substantially in the form of
Exhibit 1.01(a).
"Bill of Sale" means the Bill of Sale and Assignment to be executed by the
------------
Seller and the Subsidiaries on the Closing Date substantially in the form of
Exhibit 1.01(b).
"Business Day" means any day that is not a Saturday, a Sunday or other day
------------
on which banks are required or authorized by law or executive order to be closed
in The City of New York.
"Code" means the Internal Revenue Code of 1986, as amended through the date
----
hereof.
"Dallas Facility" means Sandoz Agro's facility in Dallas, Texas; legally
---------------
described as Lot 1, City Block 6570 of Zoecon Addition, an addition to the City
of Dallas, Dallas County, Texas, according to the plat thereof recorded in
Volume 90088, Page 1598 Map Records, Dallas County, Texas.
"Deed" means the quitclaim deed to be executed by Sandoz Agro on the
----
Closing Date to convey to the Purchaser the Owned Real Property.
"Designated Amount" means $50,000.
-----------------
"Disclosure Schedule" means the Disclosure Schedule, dated as of the date
-------------------
hereof, delivered to the Purchaser by the Seller.
"Environmental Claims" means any and all actions, demand letters, liens,
--------------------
written notices of non-compliance or violation, consent orders or consent
agreements arising out of any violation or alleged violation of any
Environmental Law, including (a) any and all such claims by governmental
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and
<PAGE>
4
(b) any and all such claims by third parties seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Material or arising from alleged injury or threat of injury to health,
safety or property pursuant to any applicable Environmental Law.
"Environmental Laws" means all laws, regulations, ordinances, codes,
------------------
governmental orders and consent decrees, and any judicial interpretations
thereof, relating to pollution or protection of the environment, natural
resources and public health and safety, that are currently in existence or
enacted or promulgated within two years of the Closing Date.
"EPA" means the United States Environmental Protection Agency.
---
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"FDA" means the United States Food and Drug Administration.
---
"Hazardous Material" means any hazardous or toxic substances, materials and
------------------
wastes listed in the United States Department of Transportation Hazardous
Materials Table or by the Environmental Protection Agency as a hazardous
substance and amendments thereto, or such substances, materials and wastes which
are regulated under any Environmental Law, including, without limitation, any
material, waste or substance which is (i) petroleum, (ii) asbestos, (iii)
polychlorinated biphenyls, (iv) defined as a "hazardous waste," "extremely
hazardous waste" or "restricted hazardous waste" or "hazardous material" under
applicable state laws and regulations, (v) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, (vi) defined as a "hazardous
waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act,
or (vii) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act.
"IRS" means the United States Internal Revenue Service.
---
"Owned Real Property" means the real property located at 12200 Denton
-------------------
Drive, Dallas, Texas, to the extent owned by Sandoz Agro, together with all
buildings, fixtures and improvements thereon.
"Permitted Encumbrances" means (a) liens for Taxes and assessments not yet
----------------------
payable, (b) liens for Taxes, assessments and charges and other claims, the
validity of which are being contested in good faith, (c) imperfections of title,
liens, security interests and other encumbrances the existence of which,
individually and in the aggregate, do not have a material adverse effect on the
Assets or the Business, (d) inchoate mechanics' and
<PAGE>
5
materialmen's liens for construction in progress and (e) workmen's, repairmen's,
warehousemen's and carriers' liens arising in the ordinary course of the
Business.
"Person" means any individual, partnership, firm, corporation, limited
------
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Tax" or "Taxes" means any and all taxes of any kind whatsoever (together
--- -----
with any interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any governmental or taxing authority.
SECTION 1.02. Other Defined Terms. The following terms shall have the
-------------------
meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term: Section:
---- -------
<S> <C>
ABO Amount 6.02(b)
Additional Products Recitals
Assets 2.01(a)
Assumed Liabilities 2.02(a)
Business Recitals
Closing 2.04
Closing Date 2.04
Confidentiality Agreement 5.05(a)
Continuation Period 6.01(a)
Current Business Recitals
Employee Plans 3.13(a)
Environmental Loss 9.03(a)
Excluded Assets 2.01(b)
Excluded Liabilities 2.02(b)
FASB 87 6.02(b)
Financial Statements 3.04
Flea and Tick Business Recitals
FTC Recitals
FTC Agreement Recitals
Hoechst Agreement 5.06(a)
Intellectual Property 3.09
Losses 9.02(a)
Material Contracts 3.16(a)
Methoprene Supply Agreement 5.10(b)
New Defined Benefit Plan 6.02(a)
</TABLE>
<PAGE>
6
<TABLE>
<S> <C>
New Methoprene Agreement 5.06(a)
Novartis Merger Recitals
Original Agreement Recitals
Parent Preamble
PBO Amount 6.02(b)
Pension Plan 6.02(a)
Plan Assets Exhibit 2.01(a)
Plan Assets Amount 6.02(b)
Products Recitals
Purchase Price 2.03
Purchaser Preamble
Purchaser Indemnified Party 9.03(a)
Reference Statement of Net Assets 3.04
Returns 7.01
Sandoz Preamble
Sandoz Agro Recitals
Savings Plan 6.03
Seller Preamble
Seller Indemnified Party 9.02(a)
Subsidiaries Recitals
Technology License and
Support Agreement 5.10(c)
Toll Manufacturing Agreement 5.10(a)
Transferred Employees 6.01(a)
</TABLE>
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Assets to Be Sold. (a) On the terms and subject to
-----------------
the conditions of this Agreement, the Seller shall, and shall cause the
Subsidiaries to, on the Closing Date, sell, assign, transfer, convey and deliver
to the Purchaser, or cause to be sold, assigned, transferred, conveyed and
delivered to the Purchaser, and the Purchaser shall purchase from the Seller and
the Subsidiaries, on the Closing Date, all of the Seller's and the Subsidiaries'
right, title and interest in and to the assets, goodwill and business
constituting the Business listed on Exhibit 2.01(a), other than the Excluded
Assets (all such assets, other than the Excluded Assets, being the "Assets").
------
(b) The assets listed on Exhibit 2.01(b) (the "Excluded Assets") are
---------------
specifically excepted from the Assets to be transferred to the Purchaser
pursuant to Section 2.01(a).
<PAGE>
7
SECTION 2.02. Assumption of Liabilities. (a) On the terms and
-------------------------
subject to the conditions set forth in this Agreement, the Purchaser shall, by
executing and delivering, on the Closing Date, the Assumption Agreement, assume,
and agree to pay, perform and discharge when due, all of the following debts,
liabilities and obligations of the Seller and its Affiliates (whether fixed or
contingent, matured or unmatured, arising by law or by contract or otherwise, on
or prior to the Closing Date or thereafter), relating to or arising from the
operation of the Business or the Assets, other than the Excluded Liabilities
(the "Assumed Liabilities"):
-------------------
(i) all debts, liabilities and obligations reflected on the
Reference Statement of Net Assets;
(ii) all debts, liabilities and obligations arising after the date of
the Reference Statement of Net Assets in the ordinary course of the
Business;
(iii) all debts, liabilities and obligations arising after the Closing
under all contracts, leases, licenses, permits, purchase or customer
orders, commitments and other binding arrangements of the Seller and the
Subsidiaries which are assigned to the Purchaser pursuant to this
Agreement;
(iv) all debts, liabilities and obligations arising out of the
ownership, possession or use of the Assets or the operation of the Business
after the Closing Date; and
(v) all debts, liabilities and obligations to employees of the
Seller and the Subsidiaries assumed by the Purchaser pursuant to Article
VI.
(b) "Excluded Liabilities" means:
--------------------
(i) all Taxes resulting from the operation of the Business prior to
the Closing Date;
(ii) all debts, liabilities and obligations to employees and former
employees of the Seller and the Subsidiaries not assumed by the Purchaser
pursuant to Article VI;
(iii) all debts, liabilities and obligations for which the Purchaser
is entitled to receive indemnification pursuant to clause (iii) of the
first sentence of Section 9.03(a);
(iv) all debts, liabilities and obligations arising from the Excluded
Assets; and
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8
(v) all Losses arising from third party claims and actions by
governmental authorities arising out of or related to products manufactured
by the Seller and the Subsidiaries prior to the Closing.
SECTION 2.03. Purchase Price; Allocation of Purchase Price. (a) The
--------------------------------------------
aggregate purchase price for the Assets shall be $44,000,000.00 (the "Purchase
--------
Price"). No later than the close of business on the third Business Day
- -----
following the date hereof, the Purchaser shall pay to the Seller, by wire
transfer of immediately available funds, a deposit toward the Purchase Price in
the amount of $5,000,000.00 (the "Deposit"). In the event the Closing does not
-------
occur as a result of a breach of this Agreement by the Purchaser or the Parent,
the Deposit shall be non-refundable and shall be retained by the Seller. If the
Closing shall not occur for any other reason, the Seller shall promptly refund
the Deposit to the Purchaser.
(b) The Purchase Price shall be allocated among the Assets as of
the Closing Date in accordance with Exhibit 2.03(b). Any subsequent adjustments
to the Purchase Price shall be reflected in the allocation hereunder in a manner
consistent with Treasury Regulation (S) 1.1060-1T(f) and as agreed to by the
Purchaser and the Seller. For all Tax purposes, the Purchaser and the Seller
agree to report the transactions contemplated by this Agreement in a manner
consistent with the terms of this Agreement, including the allocation under
Exhibit 2.03(b) and Section 7.04, and that none of them will take any position
inconsistent therewith in any Tax return, in any refund claim, in any litigation
or otherwise.
SECTION 2.04. Closing. Subject to the terms and conditions of this
-------
Agreement, the sale and purchase of the Assets and the assumption of the Assumed
Liabilities contemplated by this Agreement shall take place at a closing (the
"Closing") to be held at the offices of Shearman & Sterling, 599 Lexington
-------
Avenue, New York, New York at 10:00 A.M. New York time on the fifth Business Day
following the satisfaction or waiver of all conditions to the obligations of the
parties set forth in Article VIII, or at such other place or at such other time
or on such other date as the Seller and the Purchaser may mutually agree upon in
writing (the day on which the Closing takes place being the "Closing Date").
------------
SECTION 2.05. Closing Deliveries by the Seller. At the Closing, the
--------------------------------
Seller shall deliver or cause to be delivered to the Purchaser:
(a) the Bill of Sale, the Deed and such other instruments as may be
reasonably requested by the Purchaser to transfer the Assets to the
Purchaser or evidence such transfer on the public records;
(b) executed counterparts of the Assumption Agreement, the Toll
Manufacturing Agreement, the Methoprene Supply Agreement and the Technology
License and Support Agreement;
(c) such consents and assignments as the Seller shall have obtained
pursuant to Section 5.06(d);
(d) a receipt for the Purchase Price; and
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9
(e) the certificates and other documents required to be delivered
pursuant to Section 8.02.
SECTION 2.06. Closing Deliveries by the Purchaser. At the Closing,
-----------------------------------
the Purchaser shall deliver to the Seller:
(a) the Purchase Price less the Deposit by wire transfer of
immediately available funds to the bank account or bank accounts specified
by the Seller at least two Business Days prior to the Closing Date;
(b) executed counterparts of the Assumption Agreement, the Toll
Manufacturing Agreement, the Methoprene Supply Agreement and the Technology
License and Support Agreement; and
(c) the certificates and other documents required to be delivered
pursuant to Section 8.01.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
SECTION 3.01. Incorporation and Authority of the Seller and the
-------------------------------------------------
Subsidiaries. The Seller and each Subsidiary is a corporation duly
- ------------
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is to be a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Seller and each Subsidiary of this Agreement and the Ancillary
Agreements to which it is to be a party, the performance by the Seller and each
Subsidiary of its obligations hereunder and thereunder and the consummation by
the Seller and each Subsidiary of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action on the part
of the Seller and each Subsidiary. This Agreement has been duly executed and
delivered by the Seller, and upon their execution the Ancillary Agreements will
be duly executed and delivered by the Seller and the Subsidiaries, as
appropriate, and (assuming due authorization, execution and delivery by the
Parent and the Purchaser) this Agreement constitutes, and upon their execution
the Ancillary Agreements will constitute, legal, valid and binding obligations
of the Seller and the Subsidiaries, as appropriate, enforceable against the
Seller and the Subsidiaries, as appropriate, in accordance with their respective
terms.
<PAGE>
10
SECTION 3.02. No Conflict. Assuming that all consents, approvals,
-----------
authorizations and other actions described in Section 3.03 have been obtained
and all filings and notifications described in Section 3.03 have been made, and
except as may result from any facts or circumstances relating solely to the
Purchaser, the execution, delivery and performance of this Agreement and the
Ancillary Agreements by the Seller and the Subsidiaries, as appropriate, do not
and will not (a) violate or conflict with the Certificate of Incorporation or
By-laws (or other similar organizational documents) of the Seller or any
Subsidiary, (b) conflict with or violate any law, rule, regulation, order, writ
or judgment applicable to the Seller, any Subsidiary or the Business or (c)
except as described in Section 3.02 of the Disclosure Schedule, result in any
breach of, or constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any lien or other encumbrance on any of the Assets pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument relating to or included in the Assets or
to which the Seller or any Subsidiary is a party or by which any of the Assets
is bound, except in any such case for any violations, conflicts, breaches,
defaults or other matters which would not have a material adverse effect on the
Assets or the Business or prevent or materially delay the consummation by the
Seller and the Subsidiaries of the transactions contemplated hereby.
SECTION 3.03. Consents and Approvals. The execution, delivery and
----------------------
performance of this Agreement and the Ancillary Agreements by the Seller and the
Subsidiaries, as appropriate, do not and will not require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority, except (a) as described in Section 3.03 of
the Disclosure Schedule, (b) the approval of the FTC, (c) the requirements of
applicable foreign antitrust or merger control laws and regulations, (d) where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent or materially delay the
consummation by the Seller and the Subsidiaries of the transactions contemplated
by this Agreement and would not have a material adverse effect on the Assets or
the Business and (e) as may be necessary as a result of any facts or
circumstances relating solely to the Parent or the Purchaser.
SECTION 3.04. Financial Information; Absence of Undisclosed
---------------------------------------------
Liabilities. (a) The Seller has delivered to the Purchaser true and complete
- -----------
copies of (i) the unaudited statements of net assets of the Business for each of
the two fiscal years ended as of December 31, 1995 and 1994, and the related
business contribution statements of the Business (collectively referred to
herein as the "Financial Statements"), and (ii) the unaudited statement of net
--------------------
assets of the Business as of September 30, 1996, a copy of which is attached as
Exhibit 3.04 (the "Reference Statement of Net Assets"). The Financial
---------------------------------
Statements and the Reference Statement of Net Assets (i) were prepared in
accordance with the books of account and other financial records of the
Business, (ii) except as disclosed in the notes thereto, have been prepared in
accordance with the Accounting Policies and (iii) fairly present in all
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11
material respects the Assets and the liabilities arising from the Business as of
the respective dates thereof.
(b) There are no debts, liabilities or obligations of the Business,
whether direct or indirect, matured or unmatured, absolute, contingent or
otherwise, except (i) debts, liabilities and obligations reflected on the
Reference Statement of Net Assets or referred to in the notes thereto, (ii)
debts, liabilities and obligations arising after the date of the Reference
Statement of Net Assets in the ordinary course of the Business, (iii) debts,
liabilities and obligations which do not have a material adverse effect on the
Assets or the Business and (iv) debts, liabilities and obligations referred to
in this Agreement or the Disclosure Schedule.
SECTION 3.05. Litigation. Except as set forth in Section 3.05 of the
----------
Disclosure Schedule, there are no claims, actions, proceedings or investigations
pending or, to the knowledge of the Seller, threatened against the Seller, any
Subsidiary or any of the Assets, before any court, arbitrator or administrative,
governmental or regulatory authority or body that, individually or in the
aggregate, are reasonably likely to have a material adverse effect on the Assets
or the Business or prevent or materially delay the consummation by the Seller of
the transactions contemplated by this Agreement. Except as set forth in Section
3.05 of the Disclosure Schedule, neither the Seller, any Subsidiary nor any of
the Assets is subject to any order, writ, judgment, injunction, decree,
determination or award having a material adverse effect on the Assets or the
Business.
SECTION 3.06. Compliance with Laws. Neither the Seller nor any
--------------------
Subsidiary is in violation of any law, rule, regulation, order, judgment,
injunction or decree having a material application to the Seller or any
Subsidiary relating to the Business or by which any of the Assets is bound or
subject, except (i) as set forth in Section 3.06 of the Disclosure Schedule and
(ii) for violations the existence of which would not have a material adverse
effect on the Assets or the Business.
SECTION 3.07. Environmental, Health and Safety Compliance. Except as
-------------------------------------------
set forth in Section 3.07 of the Disclosure Schedule or except as would not have
a material adverse effect on the Assets or the Business, (a) the Seller and the
Subsidiaries currently hold all the environmental and health and safety permits,
licenses and approvals of governmental authorities and agencies necessary for
the current use, occupancy or operation of the Business and are in material
compliance with all such permits, licenses and approvals, (b) the Seller and the
Subsidiaries are in material compliance with all applicable Environmental Laws
as in effect on the date hereof and (c) neither the Seller nor any Subsidiary
has received any written claim, demand, notice or complaint alleging material
violation of, or material liability under, any Environmental Laws.
SECTION 3.08. Licenses and Permits. Except as set forth in Sections
--------------------
3.07 and 3.08 of the Disclosure Schedule, the Seller and the Subsidiaries have
all material
<PAGE>
12
governmental licenses, permits, product registrations and authorizations
necessary to carry on the Business as it is now being conducted, except for such
governmental licenses, permits and authorizations the absence of which would not
have a material adverse effect on the Assets or the Business.
SECTION 3.09. Patents, Trademarks and Service Marks. The Seller or a
-------------------------------------
Subsidiary owns the patents, patent applications, trademarks, and service marks
set forth in Section 3.09 of the Disclosure Schedule (the "Intellectual
------------
Property"), which are all the patents, patent applications, trademarks and
- --------
service marks used in the conduct of the Business as it is now being conducted,
except for those patents, patent applications, trademarks and service marks the
lack of which would not have a material adverse effect on the Assets or the
Business. To the knowledge of the Seller and the Subsidiaries, the rights of
the Seller and the Subsidiaries in and to the Intellectual Property, and the use
of the Intellectual Property in the manner in which it is currently used in the
conduct of the Business by the Seller and its Subsidiaries, and the conduct of
the Business by the Seller and the Subsidiaries do not conflict with or infringe
on the rights of any other Person and, except as disclosed in Section 3.09 of
the Disclosure Schedule, neither the Seller nor any Subsidiary has received any
written notice or claim from any Person to such effect. To the knowledge of the
Seller, no Person is violating or otherwise infringing on any of the
Intellectual Property. Except as disclosed in Section 3.09 of the Disclosure
Schedule, neither the Seller nor any Subsidiary has granted any license to any
other Person with respect to the Intellectual Property.
SECTION 3.10. Assets. The Seller or a Subsidiary has good title to,
------
or, in the case of leased or subleased Assets, valid and subsisting leasehold
interests in, all the Assets, free and clear of liens, security interests and
encumbrances, except (a) as disclosed in Section 3.10 or 3.11 of the Disclosure
Schedule and (b) Permitted Encumbrances.
SECTION 3.11. Real Property. The Owned Real Property is owned free
-------------
and clear of all liens, security interests, restrictive covenants, easements and
other encumbrances, except (a) as disclosed in Section 3.11(a) of the Disclosure
Schedule and (b) Permitted Encumbrances.
SECTION 3.12. Insurance. All material properties and risks of the
---------
Seller and the Subsidiaries in respect of the Business are covered by valid and
currently effective insurance policies or binders of insurance or programs of
self-insurance in such types and amounts as are consistent with customary
practices and standards of companies engaged in businesses and operations
similar to the Business.
SECTION 3.13. Employee Benefit Matters. (a) Section 3.13 of the
------------------------
Disclosure Schedule or a separate letter provided by the Seller to the Purchaser
on the date hereof sets forth (i) all employee benefit plans (within the meaning
of Section 3(3) of ERISA)
<PAGE>
13
and all bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, with
respect to which the Seller or any Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Seller or any Subsidiary for the
benefit of any current employee, officer or director of the Seller or any
Subsidiary employed in the Business or any former employee of the Seller or any
Subsidiary who was previously employed in the Business regardless of whether
such plans, programs or arrangements are being assumed by the Purchaser and (ii)
all employment, termination, severance or other contracts or agreements pursuant
to which the Seller or any Subsidiary has any obligation with respect to any
current employee, officer or director of the Seller or any Subsidiary which are
being assumed by the Purchaser (the plans, programs, arrangements, contracts and
agreements described in clauses (i) and (ii) being the "Employee Plans").
--------------
Except as disclosed in Section 3.13 of the Disclosure Schedule, each Employee
Plan is in writing. The Seller shall, within seven days after written request
therefor by the Purchaser, provide the Purchaser with a true and complete copy
of each Employee Plan, each summary plan description with respect to each
Employee Plan and a summary description of any Employee Plan not otherwise in
writing. With respect to each Employee Plan, the Seller shall, within seven
days after written request therefor by the Purchaser, provide the Purchaser with
true and complete copies of the most recently filed Form 5500 annual report, and
if applicable, the latest determination letter or determination letter
application and/or actuarial report. Except as otherwise disclosed in Section
3.13 of the Disclosure Schedule, neither the Seller nor any Subsidiary has any
express or implied commitment to modify, change or terminate any Employee Plan,
other than a modification, change or termination required by ERISA or the Code.
(b) None of the Employee Plans is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single employer pension
plan (within the meaning of Section 4001(a)(15) of ERISA) for which the Seller
or any Subsidiary could incur liability under Section 4063 or 4064 of ERISA.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS
that it is so qualified, and each related trust which is intended to be exempt
from federal income tax pursuant to Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter that could reasonably be
expected to adversely affect such qualification or exemption, as the case may
be.
(d) With respect to each Employee Plan, neither the Seller nor any
Subsidiary is currently liable for any material tax arising under Section 4971,
4972, 4975, 4979, 4980 or 4980B of the Code, and no fact or event exists which
could reasonably give rise to any such liability. Neither the Seller nor any
Subsidiary has incurred any liability
<PAGE>
14
under or arising out of Title IV of ERISA (other than any liability for premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course) that
could have a material adverse effect on the Assets or the Business, and no fact
or event exists that could reasonably be expected to result in such a liability.
None of the Assets is the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code and neither the Seller nor any Subsidiary
has been required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code with respect to any Employee Plan, and no fact or event
exists which could reasonably give rise to any such lien or requirement to post
any such security.
(e) Each Employee Plan is now and has been operated in all material
respects in accordance with the requirements of all applicable laws, including,
without limitation, ERISA and the Code. The Reference Statement of Net Assets
reflects accruals of all amounts of employer contributions and premiums accrued
by the Seller and the Subsidiaries in respect of employees employed or persons
formerly employed in the Business but unpaid with respect to the Employee Plans
as of the date of the Reference Statement of Net Assets.
SECTION 3.14. Labor Matters. Except as set forth in Section 3.14 of
-------------
the Disclosure Schedule, there are no controversies pending or, to the knowledge
of the Seller, threatened, between the Seller or any Subsidiary and any of their
employees, which controversies have had or are reasonably likely to have a
material adverse effect on the Assets or the Business. Neither the Seller nor
any Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed in the Business and, to the
knowledge of the Seller, there has been no attempt to organize the employees of
the Business by any labor union or collective bargaining unit during the last
two years.
SECTION 3.15. Taxes. (a) The Seller or a Subsidiary has timely
-----
filed or caused to be filed all material Returns required to be filed with
respect to Taxes pertaining to the Assets or the Business. All Taxes shown
thereon as due have been paid.
(b) Except as disclosed in Section 3.15 of the Disclosure Schedule,
neither the Seller nor any Subsidiary has received from any governmental or
regulatory authority any written notice of a material proposed adjustment,
deficiency or underpayment of any Taxes pertaining to the Assets or the
Business, which notice has not been satisfied by payment or been withdrawn.
SECTION 3.16. Material Contracts. (a) Section 3.16(a) of the
------------------
Disclosure Schedule lists each of the following contracts and agreements of the
Seller and the Subsidiaries pertaining principally to the Business (the
"Material Contracts"):
------------------
<PAGE>
15
(i) all material supply, distribution, licensing, development and
research, toll manufacturing and manufacturer's representative agreements;
(ii) all joint venture and alliance agreements not disclosed pursuant
to clause (i) above;
(iii) all employment and consulting agreements;
(iv) all leases and subleases of real property;
(v) all licenses and sublicenses and any other agreements granting
or restricting rights to patents, trademarks, service marks, trade secrets
or know-how; and
(vi) all contracts and agreements with governmental authorities.
(b) Except as disclosed in Section 3.16(b) of the Disclosure Schedule,
each Material Contract is legal, valid, binding and enforceable and in full
force and effect, and will not cease to be legal, valid, binding and enforceable
and in full force and effect as a result of the consummation of the transactions
contemplated by this Agreement. To the knowledge of the Seller, no party to any
Material Contract is in material breach or default thereunder.
(c) Section 3.16(c) of the Disclosure Schedule lists each of the
following contracts and agreements of the Seller and the Subsidiaries pertaining
principally to the Business:
(i) all oral contracts material to the Business;
(ii) all contracts and agreements with The Hartz Mountain
Corporation; and
(iii) all contracts and agreements restricting the Seller's and the
Subsidiaries' ability to conduct the Business in any geographic area within
the United States and Canada.
SECTION 3.17. Absence of Changes or Events. Except as set forth in
----------------------------
Section 3.17 of the Disclosure Schedule, since July 31, 1996, the Seller has not
with respect to the Business:
(i) acquired or agreed to acquire any assets which are material,
individually or in the aggregate, to the Business, except in the ordinary
course of business consistent with prior practice;
<PAGE>
16
(ii) sold, leased or otherwise disposed of any of its assets, which
are material, individually or in the aggregate, to the Business, except in
the ordinary course of business consistent with prior practice;
(iii) adopted or amended in any material respect any agreement with
employees or any benefit plan, other than in the ordinary course of
business consistent with prior practice;
(iv) increased the compensation of any employee of the Business other
than in the ordinary course of business consistent with prior practice; or
(v) sustained any material loss or damage to the properties used in
the Business, whether or not insured, which in the aggregate had a material
adverse effect on the Assets or the Business.
SECTION 3.18. Customers. Section 3.18 of the Disclosure Schedule
---------
contains a true and correct list of the ten largest customers of the Business
for each of the last two years.
SECTION 3.19. Assets. Except for the Excluded Assets and assets
------
disposed of in the ordinary course of business, the Assets consist of all the
assets which have been used in the Business since the date of the Reference
Statement of Net Assets.
SECTION 3.20. Brokers. Except for Morgan Stanley & Co. Incorporated,
-------
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Seller or any
Subsidiary. The Seller is solely responsible for the fees and expenses of Morgan
Stanley & Co. Incorporated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
SECTION 4.01. Incorporation and Authority of the Purchaser. The
--------------------------------------------
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of California and has all necessary
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is to be a party, to carry out its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Purchaser of this Agreement and the
<PAGE>
17
Ancillary Agreements to which it is to be a party, the performance by the
Purchaser of its obligations hereunder and thereunder and the consummation by
the Purchaser of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of the Purchaser. This
Agreement has been, and upon their execution the Ancillary Agreements to which
the Purchaser is to be a party will be, duly executed and delivered by the
Purchaser, and (assuming due authorization, execution and delivery by the Seller
and the Subsidiaries, as appropriate) this Agreement constitutes, and upon their
execution the Ancillary Agreements to which the Purchaser is to be a party will
constitute, legal, valid and binding obligations of the Purchaser, enforceable
against the Purchaser in accordance with their respective terms.
SECTION 4.02. Incorporation and Authority of the Parent. The Parent
-----------------------------------------
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has all necessary corporate power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is to be a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Parent of this Agreement and the Ancillary Agreements to which
it is to be a party, the performance by the Parent of its obligations hereunder
and thereunder and the consummation by the Parent of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action on the part of the Parent. This Agreement has been, and upon
their execution the Ancillary Agreements to which the Parent is to be a party
will be, duly executed and delivered by the Parent, and (assuming due
authorization, execution and delivery by the Seller and the Subsidiaries, as
appropriate) this Agreement constitutes, and upon their execution the Ancillary
Agreements to which the Parent is to be a party will constitute, legal, valid
and binding obligations of the Parent, enforceable against the Parent in
accordance with their respective terms.
SECTION 4.03. No Conflict. Assuming that all consents, approvals,
-----------
authorizations and other actions described in Section 4.04 have been obtained
and all filings and notifications described in Section 4.04 have been made, and
except as may result from any facts or circumstances relating solely to the
Seller or a Subsidiary, the execution, delivery and performance by the Parent
and the Purchaser of this Agreement and the Ancillary Agreements to which the
Parent or the Purchaser is to be a party do not and will not (a) violate or
conflict with the Certificate of Incorporation or By-laws (or other similar
organizational documents) of the Parent or the Purchaser, (b) conflict with or
violate any law, rule, regulation, order, writ or judgment applicable to the
Parent or the Purchaser or (c) result in any breach of, or constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument to which the
Parent or the Purchaser or any of their respective subsidiaries is a party or by
which any
<PAGE>
18
of their respective assets or properties is bound, except in any such case for
any violations, conflicts, breaches, defaults or other matters which would not
prevent or materially delay the consummation by the Parent or the Purchaser of
the transactions contemplated hereby.
SECTION 4.04. Consents and Approvals. The execution, delivery and
----------------------
performance by the Parent and the Purchaser of this Agreement and the Ancillary
Agreements to which the Parent or the Purchaser is to be a party do not and will
not require any consent, approval, authorization or other action by, or filing
with or notification to, any governmental or regulatory authority, except (a)
the approval of the FTC, (b) the requirements of applicable foreign antitrust or
merger control laws and regulations, (c) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prevent or materially delay the consummation by the Parent or the Purchaser
of the transactions contemplated by this Agreement and (d) as may be necessary
as a result of any facts or circumstances relating solely to the Seller or a
Subsidiary.
SECTION 4.05. Litigation. There are no claims, actions, proceedings
----------
or investigations pending or, to the knowledge of the Parent and the Purchaser,
threatened against the Parent or the Purchaser, before any court, arbitrator or
administrative, governmental or regulatory authority or body that are
reasonably likely to prevent or materially delay the consummation by the Parent
or the Purchaser of the transactions contemplated by this Agreement.
SECTION 4.06. Financing. The Purchaser has available to it all funds
---------
necessary to consummate the transactions contemplated by this Agreement.
SECTION 4.07. Brokers. Except for Wasserstein Perella & Co., Inc.,
-------
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Parent or the
Purchaser. The Purchaser is solely responsible for the fees and expenses of
Wasserstein Perella & Co., Inc.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a) The
----------------------------------------
Seller covenants and agrees that, between the date hereof and the Closing Date,
the Seller and the Subsidiaries shall conduct the Business in the ordinary
course and consistent with their prior practice, except as described in Section
5.01(a) of the Disclosure Schedule or as otherwise contemplated by this
Agreement.
<PAGE>
19
(b) The Seller covenants and agrees that, without the prior written
consent of the Purchaser, it will not, and will not permit any Subsidiary to,
prior to the Closing, (i) materially change its accounting methods, principles
or practices used in respect of the Business, (ii) revalue any of the Assets,
including, without limitation, writing down the value of inventory, other than
in the ordinary course of business, (iii) establish or materially increase any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or otherwise increase
the compensation payable or to become payable to any officers or key employees
of the Seller or any Subsidiary whose services are substantially devoted to the
Business, except in the ordinary course of business or as may be required by law
or by existing contractual arrangements, (iv) enter into any employment or
severance agreement with any of its employees whose services are substantially
devoted to the Business or establish, adopt or enter into any collective
bargaining agreement covering employees whose services are substantially devoted
to the Business, (v) sell or fail to replenish in any material respect the
inventory of the Business other than in the ordinary course in a manner
consistent with past practice or (vi) materially change its policies or practice
of discharging trade payables in the ordinary course of business.
(c) The Seller covenants and agrees that, without the prior written
consent of the Purchaser (which timely consent shall not be unreasonably
withheld), it will not, and will not permit any Subsidiary to, prior to the
Closing, (i) change its purchasing or pricing policies in a manner material to
the Business, (ii) eliminate or introduce any product line of the Business or
(iii) enter into any new strategic relationships or alliances relating to the
Business with third parties, other than, in the case of any of clauses (i), (ii)
or (iii), as previously disclosed to the Purchaser.
SECTION 5.02. Investigation. (a) The Purchaser acknowledges and
-------------
agrees that it (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Business, the Assets
and the Assumed Liabilities, (ii) has been furnished with or given adequate
access to such information about the Business, the Assets and the Assumed
Liabilities as it has requested and (iii) will not assert any claim against the
Seller or any of its directors, officers, employees, agents, stockholders,
Affiliates, consultants, investment bankers or representatives, or hold the
Seller or any such persons liable, for any inaccuracies, misstatements or
omissions with respect to information (other than the representations and
warranties of the Seller contained in this Agreement as modified by the
Disclosure Schedule) furnished by the Seller or such persons concerning the
Seller, the Subsidiaries, the Business, the Assets or the Assumed Liabilities.
(b) In connection with the Purchaser's investigation of the Business,
the Assets and the Assumed Liabilities, the Purchaser has received from the
Seller certain estimates, projections and other forecasts for the Business, and
certain plan and budget
<PAGE>
20
information. The Purchaser acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections, forecasts, plans and budgets,
that the Purchaser is familiar with such uncertainties, that the Purchaser is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and budgets so
furnished to it, and that the Purchaser will not assert any claim against the
Seller or any of its affiliates or any of its directors, officers, employees,
agents, stockholders, Affiliates, consultants, investment bankers or
representatives, or hold the Seller or any such persons liable with respect
thereto. Accordingly, the Seller makes no representation or warranty with
respect to any estimates, projections, forecasts, plans or budgets referred to
in this Section 5.02.
SECTION 5.03. Access to Information. (a) From the date hereof until
---------------------
the Closing, upon reasonable notice, the Seller shall, and shall cause each of
the Subsidiaries and each of their respective officers, directors, employees,
auditors and agents to, (i) afford the officers, employees and authorized agents
and representatives of the Purchaser reasonable access, during normal business
hours, to the offices, properties, books and records of the Business and (ii)
furnish to the officers, employees and authorized agents and representatives of
the Purchaser such additional financial and operating data and other information
regarding the Business, the Assets and the Assumed Liabilities as the Purchaser
may from time to time reasonably request; provided, however, that such
-------- -------
investigation shall not unreasonably interfere with any of the businesses or
operations of the Seller or any of its Affiliates; and provided further,
-------- -------
however, that the auditors of the Seller shall not be obliged to make any work
- -------
papers available to any Person, except for those portions of such work papers
which relate directly and principally to the Business.
(b) In order to facilitate the resolution of any claims made by or
against or incurred by the Seller or any Subsidiary, after the Closing, upon
reasonable notice, the Purchaser shall (i) afford the officers, employees and
authorized agents and representatives of the Seller reasonable access, during
normal business hours, to the offices, properties, books and records of the
Purchaser in respect of the Business, the Assets and the Assumed Liabilities,
(ii) furnish to the officers, employees and authorized agents and
representatives of the Seller such additional financial and other information
regarding the Business, the Assets and the Assumed Liabilities as the Seller or
such officers, employees and authorized agents and representatives may from time
to time reasonably request and (iii) make available to the Seller the employees
of the Purchaser in respect of the Business whose assistance, testimony or
presence is necessary to assist the Seller in evaluating any such claims and in
defending such claims, including the presence of such persons as witnesses in
hearings or trials for such purposes; provided, however, that such investigation
-------- -------
shall not unreasonably interfere with the business or operations of the
Purchaser or any of its Affiliates.
(c) Notwithstanding the foregoing, the Seller shall not be required,
prior to the Closing, to disclose, or cause the disclosure of, to the officers,
employees or authorized
<PAGE>
21
agents or representatives of the Purchaser (or provide access to any offices,
properties, books or records of the Seller or any of its Affiliates that could
result in the disclosure to such persons or others of) any confidential
information relating to trade secrets, processes or patent or trademark
applications or product development, or pricing and marketing plans, nor shall
the Seller be required to permit or cause others to permit the officers,
employees or authorized agents or representatives of the Purchaser to copy or
remove from the offices or properties of the Seller or such Affiliate any
documents, drawings or other materials that might reveal any such confidential
information or to photograph or sketch any part of the assets or properties of
the Seller or of such Affiliate.
SECTION 5.04. Books and Records. (a) The Purchaser agrees that it
-----------------
shall preserve and keep all books and records in respect of the Business in the
Purchaser's possession for a period of at least eight years from the Closing
Date. After such eight-year period, before the Purchaser shall dispose of any of
such books and records, at least 90 calendar days' prior written notice to such
effect shall be given by the Purchaser to the Seller, and the Seller shall be
given an opportunity, at its cost and expense, to remove and retain all or any
part of such books and records as the Seller may select. During such eight-year
period, duly authorized representatives of the Seller shall, upon reasonable
notice, have access thereto during normal business hours to examine, inspect and
copy such books and records.
(b) If, in order properly to prepare documents required to be filed
with governmental authorities or its financial statements, it is necessary that
either party hereto or any successors be furnished with additional information
relating to the Business, the Assets or the Assumed Liabilities, and such
information is in the possession of the other party hereto or any of its
Affiliates, such party agrees to use its best efforts to furnish such
information to such other party, at the cost and expense of the party being
furnished such information.
SECTION 5.05. Confidentiality. (a) The terms of the letter agreement
---------------
dated as of September 5, 1996 (the "Confidentiality Agreement") between Sandoz
-------------------------
Agro and the Parent are incorporated by reference herein and shall continue in
full force and effect until the Closing, at which time the Confidentiality
Agreement and the obligations of the Purchaser under this Section 5.05 shall
terminate; provided, however, that the Confidentiality Agreement shall terminate
-------- -------
only in respect of that portion of the Information (as defined in the
Confidentiality Agreement) exclusively relating to the transactions contemplated
by this Agreement. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall continue in full force and effect
thereafter in accordance with its terms.
(b) The Seller agrees to, and will cause its agents, representatives,
Affiliates, employees, officers and directors to (i) treat and hold as
confidential (and not
<PAGE>
22
disclose or provide access to any Person to) all information relating to trade
secrets, processes, patent or trademark applications, product development,
price, customer and supplier lists, pricing and marketing plans, policies and
strategies, operations methods, product development techniques, business
acquisition plans, new personnel acquisition plans and any other confidential
information related solely to the Business, (ii) in the event that the Seller or
any such agent, representative, Affiliate, employee, officer or director becomes
legally compelled to disclose any such information, provide the Purchaser with
prompt written notice of such requirement so that the Purchaser may seek a
protective order or other remedy or waive compliance with this Section 5.05(b)
and (iii) in the event that such protective order or other remedy is not
obtained, or the Purchaser waives compliance with this Section 5.05(b), furnish
only that portion of such confidential information which is legally required to
be provided and exercise all reasonable efforts to obtain assurances that
confidential treatment will be accorded such information; provided, however,
-------- -------
that this sentence shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Section 5.05(b) by the Seller, its agents, representatives, Affiliates,
employees, officers or directors. Anything in this Section 5.05(b) to the
contrary notwithstanding, the Seller and its agents, representatives,
Affiliates, employees, officers and directors shall have the right to use and
disclose confidential information described in this Section 5.05(b) to the
extent such confidential information is necessary for the conduct of the
business of the Seller and its Affiliates.
(c) Notwithstanding anything to the contrary in this Section 5.05 and
without limiting other confidentiality obligations contained in this Agreement,
the Seller shall not, for a period of six years from the date the FTC Agreement
is placed on the public record for comment, provide, disclose or otherwise make
available to any Person or to any employee of the Seller, any non-public
information relating to any research and development project of Sandoz ongoing
as of March 1, 1996 relating to the development or improvement of methoprene or
any final or intermediate form of any other chemical compound used or intended
to be used alone or in combination with other chemical compounds to treat or
prevent ectoparasitic (flea) infestation in connection with canines or felines
or any Product of the Flea and Tick Business, except that such information may
be disclosed or made available (i) to any employee of the Seller who had prior
knowledge thereof and (ii) to comply with the terms of the FTC Agreement.
SECTION 5.06. Regulatory and Other Authorizations; Consents. (a)
---------------------------------------------
Each party hereto shall use its best efforts to obtain all authorizations,
consents, orders and approvals of all federal, state, local and foreign
regulatory bodies and officials that may be or become necessary for its and its
Affiliates' execution and delivery of, and the performance of their obligations
pursuant to, this Agreement and the Ancillary Agreements and shall cooperate
fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. The Seller and the Purchaser
shall use all reasonable efforts to obtain approval of this Agreement, the New
Methoprene Agreement and the Hoechst
<PAGE>
23
Agreement from the FTC pursuant to the FTC Agreement. Without limiting the
generality of the foregoing:
(i) the parties agree to submit to the FTC, as soon as practicable
after the execution of this Agreement, a fully executed copy of this
Agreement, with all Exhibits hereto;
(ii) the Parent agrees to submit to the FTC, as soon as practicable
after the execution thereof, fully executed copies of its agreement with
its designee for the production of methoprene (the "New Methoprene
--------------
Agreement") and its agreement with Hoechst Roussel Vet (the "Hoechst
--------- -------
Agreement") for the joint development, distribution and marketing of
---------
various products for use in small animals as contemplated by the Joint
Development, Distribution & Marketing Memorandum of Understanding between
the Purchaser and Hoechst Roussel Vet dated as of November 6, 1996;
(iii) the Parent agrees to submit to the FTC, in accordance with
Section V(D) of the FTC Agreement, (A) a certification of its good faith
intention to obtain, or cause its designee to obtain, in an expeditious
manner, all FDA, EPA and other governmental approvals required in the
United States and Canada to manufacture and sell methoprene and (B) a
strategic plan to obtain all FDA, EPA and other governmental approvals
required in the United States and Canada to manufacture or have
manufactured and sell methoprene; and
(iv) the Parent agrees to submit to the trustee appointed pursuant to
Section VIII(A) of the FTC Agreement, in accordance with Section VIII(B) of
the FTC Agreement, periodic written reports setting forth in detail its
efforts to obtain all FDA, EPA and other governmental approvals required in
the United States and Canada to continue the research, development,
manufacture and sale of the products and projects of the Business.
The parties hereto shall not take any action that will have the effect of
delaying, impairing or impeding the receipt of any required approvals.
(b) Without limiting the generality of the Purchaser's undertakings
pursuant to Section 5.06(a), the Purchaser shall:
(i) use all reasonable efforts to prevent the entry in a judicial or
administrative proceeding brought under any antitrust law by any
governmental authority with jurisdiction over the enforcement of any
applicable antitrust laws or any other party of any permanent or
preliminary injunction or other order that would make consummation of the
acquisition of the Business, the Assets or the Assumed
<PAGE>
24
Liabilities in accordance with the terms of this Agreement unlawful or that
would prevent or delay such consummation; and
(ii) take promptly, in the event that such an injunction or order has
been issued in such a proceeding, any and all reasonable steps, including,
without limitation, the appeal thereof, the posting of a bond or the steps
contemplated by Section 5.06(b)(i), necessary to vacate, modify or suspend
such injunction or order so as to permit such consummation on a schedule as
close as possible to that contemplated by this Agreement.
(c) The parties hereto acknowledge that the Parent intends to discuss
with the Staff of the FTC prior to the Closing whether the Seller and its
Affiliates may continue the technology support provided for in Section 4 of the
Technology License and Support Agreement for a period beyond the period
specified therein. The Seller agrees to participate in such discussions in good
faith and, if the FTC agrees to permit such continuation of technology support,
the parties hereto agree that the Technology License and Support Agreement shall
provide for the provision of such support for a period ending no later than the
date on which the Purchaser or its designee obtains the FDA's approval to
manufacture and sell methoprene in compliance with Good Manufacturing Practices
in the United States or Canada, or such shorter period as permitted by the FTC.
As provided in Section 5 of the Technology License and Support Agreement, the
Purchaser shall reimburse the Seller for all costs and expenses incurred by the
Seller in connection therewith during the period ending on the first anniversary
of the date the Purchaser or its designee obtains the EPA's approval to
manufacture and sell methoprene in the United States or Canada. Thereafter, the
Purchaser shall compensate the Seller for its services in an amount equal to the
costs and expenses incurred by the Seller in connection therewith plus 30%.
(d) The Seller shall give promptly such notices to third parties and
use its reasonable efforts to obtain such third party consents as may be
necessary in connection with the transfer of that part of the Assets described
in clause (iii) of Part I of Exhibit 2.01(a). The Purchaser shall cooperate and
use all reasonable efforts to assist the Seller in giving such notices and
obtaining such consents.
(e) The Seller and the Purchaser agree that, in the event any consent
necessary to preserve for the Business or the Purchaser any right or benefit
under any lease, license, commitment or other binding arrangement to which the
Seller or any Subsidiary is a party and which is included in the Assets is not
obtained prior to the Closing, the Seller and the Purchaser will, subsequent to
the Closing, cooperate in attempting to obtain such consent as promptly
thereafter as practicable. If such consent cannot be obtained, the Seller, in
concert with the Purchaser, will use its reasonable efforts to provide the
Purchaser with the rights and benefits of the affected contract, lease, license,
commitment or other binding arrangement for the term of such contract, lease,
license, commitment or other binding
<PAGE>
25
arrangement, and, if the Seller provides such rights and benefits on a basis
approved by the Purchaser (which approval will not be unreasonably withheld),
the Purchaser shall assume the obligations and burdens thereunder.
SECTION 5.07. Notification to Governmental Authorities. The
----------------------------------------
Purchaser shall, promptly after the Closing, and in any event not later than
sixty days after the Closing Date, notify each governmental and regulatory
authority which requires such notification (i) responsible for the regulatory
supervision and administration of the Business or (ii) that would have on record
the ownership of the Seller or any Subsidiary or the names of the officers and
directors (either current or former) of the Seller or any Subsidiary, with
respect to the Purchaser's ownership of the Assets and the Business and with
respect to the names of the then current officers and directors of the
Purchaser.
SECTION 5.08. No Solicitation. For a period of two years following
---------------
the Closing, (a) the Seller shall not, directly or indirectly, actively solicit
or induce any employee of the Purchaser whose services are substantially devoted
to the Business to leave such employment and become an employee of the Seller or
any of its Affiliates and (b) the Purchaser shall not, directly or indirectly,
(i) actively solicit or induce any employee of the Seller or any Affiliate of
the Seller to leave such employment and become an employee of the Purchaser or
any of its Affiliates or (ii) employ or agree to employ any person who was an
employee of the Seller or any Affiliate of the Seller on the date of this
Agreement and who is not identified within the categories designated on Exhibit
6.01; provided, however, that nothing in this Section 5.08 shall prohibit the
-------- -------
Seller or any of its Affiliates or the Purchaser or any of its Affiliates from
employing any person who contacts them on his or her own initiative and without
any direct or indirect solicitation by the Seller or any of its Affiliates or
the Purchaser or any of its Affiliates, as the case may be, other than a general
solicitation to the public; and provided further that the Seller and the
-------- -------
Subsidiaries shall have the right to solicit or induce those persons to whom the
Purchaser did not make an offer of employment pursuant to Section 6.01(a) or who
did not accept an offer of employment with the Purchaser. The Seller shall not
encourage any employee of the Seller or any Subsidiary whose services are
substantially devoted to the Business to refuse an offer of employment from the
Purchaser.
SECTION 5.09. Bulk Transfer Laws. The Purchaser hereby waives
------------------
compliance by the Seller and the Subsidiaries with the provisions of any so-
called bulk transfer laws of any jurisdiction in connection with the sale to the
Purchaser of the Assets. The Seller shall indemnify and hold harmless the
Purchaser against any and all liabilities (including Tax liabilities) that may
be asserted by third parties against the Purchaser as a result of noncompliance
by the Seller and the Subsidiaries with any such bulk transfer law (except for
those assumed by the Purchaser hereunder or in the Assumption Agreement),
without regard to any of the limitations set forth in Article IX.
<PAGE>
26
SECTION 5.10. Ancillary Agreements. On the Closing Date, the
--------------------
Purchaser shall, and the Seller shall and shall cause its Affiliates, as
appropriate, to, enter into (a) if the Seller so requests, a toll manufacturing
agreement, substantially in the form of Exhibit 5.10(a), with respect to the
production by the Purchaser for the Seller or its Affiliates of certain products
specified therein (the "Toll Manufacturing Agreement"), (b) a methoprene supply
----------------------------
agreement, substantially in the form of Exhibit 5.10(b), with respect to the
supply of methoprene by the Seller or its Affiliates to the Purchaser (the
"Methoprene Supply Agreement") and (c) a technology license and support
---------------------------
agreement, substantially in the form of Exhibit 5.10(c), with respect to certain
technology (the "Technology License and Support Agreement").
----------------------------------------
SECTION 5.11. Seller's Access to Registration and Product Efficacy
----------------------------------------------------
Data. (a) The Purchaser hereby agrees that it shall and shall cause its
- ----
Affiliates to provide the Seller and its Affiliates with absolute and
unrestricted access in perpetuity to the registration data for the Products any
rights to which are transferred by the Seller and the Subsidiaries to the
Purchaser pursuant to this Agreement, free of data compensation rights, whether
such data were generated before or after the date of this Agreement, to enable
the Seller and its Affiliates to register new products or new uses outside of
the United States and Canada permitted to be developed by the Seller and its
Affiliates based upon such registration data, to maintain existing registrations
or to obtain other required regulatory clearances outside of the United States
and Canada; provided, however, that the Seller and its Affiliates may have such
-------- -------
access for such purposes worldwide (including the United States and Canada) for
products other than the Products of the Business. Such access shall include, but
is not limited to: (a) acknowledging to regulatory agencies that the Seller and
its Affiliates have an unrestricted right to rely upon such registration data to
obtain registrations or other regulatory clearances; (b) providing copies of
studies to the Seller and its Affiliates for submission to regulatory agencies,
or for other purposes; and (c) responding, at the request of the Seller or an
Affiliate of the Seller, to requests from regulatory agencies for access to raw
data. The Purchaser further agrees that it (i) shall cooperate in good faith
with the Seller to develop a mutually acceptable program with respect to the
strategy, philosophy and approaches with respect to maintaining the registration
database (such as re-registrations, data call-ins, etc.); (ii) shall implement
in good faith the registration database maintenance program agreed to pursuant
to clause (i) above; and (iii) shall bear any and all responsibility for
compliance with the EPA and any state requirements related to the registration
data for the Products any rights to which are transferred by the Seller and the
Subsidiaries to the Purchaser pursuant to this Agreement. The Purchaser and the
Seller hereby agree that data for new end-use products, and data that pertain
exclusively to new uses, shall be developed by the Seller and the Purchaser
according to their respective needs and shall be owned independently by the
Seller and the Purchaser, respectively.
(b) The Purchaser hereby agrees that it shall and shall cause its
Affiliates to provide the Seller and its Affiliates with absolute and
unrestricted access in perpetuity to
<PAGE>
27
the product efficacy data relating to the operation of the Business, which
product efficacy data is transferred by the Seller to the Purchaser pursuant to
this Agreement. The Purchaser and the Seller hereby agree that new product
efficacy data shall be developed by the Seller and the Purchaser according to
their respective needs and shall be owned independently by the Seller and the
Purchaser, respectively.
SECTION 5.12. Use of Names. (a) The Purchaser acknowledges and
------------
agrees that, notwithstanding anything to the contrary in this Agreement, it has,
and following the Closing shall have, no interest in or to the name "Sandoz" or
"Novartis" or any trademark, service mark, trade dress, logo, trade name or
corporate name similar or related thereto, and shall not use any such name,
trademark, service mark, trade dress, logo, trade name or corporate name in any
capacity or for any purpose except as expressly provided for in this Agreement
and the Ancillary Agreements or as otherwise expressly permitted by the Seller
in writing; provided that the Purchaser shall have the right to use the
--------
packaging materials and supplies (including, without limitation, cartons and
labels) and to sell the existing prepackaged inventory transferred by the Seller
and the Subsidiaries to the Purchaser pursuant to this Agreement; provided,
--------
however, that the Purchaser shall use such packaging materials and supplies and
- -------
sell such inventories prior to introducing the Purchaser's own packaging
materials and supplies.
(b) Notwithstanding the foregoing, the Purchaser may use the name
"Sandoz" or "Novartis" or any trademark, service mark, trade dress, logo, trade
name or corporate name similar or related thereto, without the payment of
additional consideration, for purposes of advertising of a customary nature that
compares a product of the Purchaser following the Closing with a product of the
Seller or an Affiliate. The Purchaser agrees that in any such advertising, the
Purchaser shall use the appropriate trademark or service mark symbol in a
superscript following each such trademark and service mark. The Purchaser and
the Parent acknowledge and agree that they shall acquire no ownership interest
or license in such names, trademarks, service marks, trade dress, logos, trade
names and corporate names by virtue of this Section 5.12(b), which shall remain
the property of the Seller and its Affiliates.
SECTION 5.13. Excluded Liabilities. The Seller shall, or shall cause
--------------------
the Subsidiaries to, pay, perform and discharge the Excluded Liabilities.
SECTION 5.14. Insurance. Up to 12:01 a.m. on the day after the
---------
Closing Date, the Seller and the Subsidiaries will maintain insurance with
respect to the Assets generally comparable to the insurance in place on the date
of this Agreement. Effective 12:01 a.m. on the day after the Closing Date, the
Assets shall cease to be insured by the Seller's or the Subsidiaries' insurance
policies, such that (i) with respect to insurance coverage written on an
"occurrence basis," the issuers of such insurance policies will have no
liability for occurrences which take place on and after 12:01 a.m. on the day
after the
<PAGE>
28
Closing Date and (ii) with respect to insurance coverage written on a "claims
made basis," the issuers of such insurance policies will have no liability for
claims made after 12:01 a.m. on the day after the Closing Date.
SECTION 5.15. Non-Competition. The Seller agrees that, for a period
---------------
of six years after the Closing, it shall not, and shall cause its subsidiaries
not to, except as required to comply with the order contained in the FTC
Agreement, (a) engage, directly or indirectly, in the sale of methoprene or
methoprene-based products in the United States and Canada, (b) manufacture and
sell, or cause to be manufactured for sale, in the United States and Canada,
methoprene to any Person other than the Parent, the Purchaser or their designee,
or (c) without the prior written consent of the Purchaser, own an interest in,
operate, control or become a partner or stockholder in, any Person that engages,
directly or indirectly, in such sales or manufacture; provided, however, that
-------- -------
ownership of securities having no more than 10% of the outstanding voting power
of any Person shall not be deemed to violate this Section 5.15.
SECTION 5.16. Guaranty by Parent. The Parent hereby guarantees the
------------------
performance by the Purchaser of its obligations under this Agreement and the
Ancillary Agreements and agrees to cause the Purchaser to pay, perform and
discharge when due all of the Purchaser's covenants, agreements, liabilities and
obligations hereunder and thereunder.
SECTION 5.17. Audited Financial Statements. The Seller shall, and
----------------------------
shall cause the Subsidiaries and their respective directors, officers and
employees to, cooperate with the Purchaser, at the Purchaser's sole cost and
expense, in providing all financial information to the Purchaser relating to the
Business as the Purchaser may reasonably request in connection with the
preparation by the Parent of such audited financial statements as may be
required to be filed by the Parent with the Securities and Exchange Commission.
The Seller agrees to cause Sandoz Agro to provide to Deloitte & Touche LLP, the
Parent's independent public accountants, reasonable and customary
representations regarding the preparation of financial statements of the
Business. The Parent agrees to indemnify the Seller and its Affiliates,
officers, directors, employees, agents, successors and assigns against and hold
them harmless from all Losses actually incurred by them arising out of or in
connection with such representations. Such indemnification shall be governed by
the procedures set forth in Section 9.02(c) (it being understood and agreed that
the limitations set forth in Sections 9.02(b) and (d) shall not be applicable
thereto). The Parent and the Purchaser, on behalf of themselves and their
Affiliates, officers, directors, employees, agents, successors and assigns,
further hereby fully release and discharge the Seller and its Affiliates from
any and all claims, causes of action or similar rights any of them now or
hereafter may have arising out of or in connection with such representations or
the engagement of Deloitte & Touche LLP hereunder.
<PAGE>
29
SECTION 5.18. Limited License Back. After the Closing, to the extent
--------------------
required to satisfy any continuing contractual obligations of the Seller and the
Subsidiaries to third parties under any of the license or sublicense agreements
listed in Section 3.09 of the Disclosure Schedule, the Purchaser shall grant to
the Seller and the Subsidiaries under the relevant trademarks a limited license,
with the limited right to sublicense. The terms and conditions of such license
back to the Seller and the Subsidiaries shall be commensurate in scope to the
terms and conditions set forth in such license and sublicense agreements.
Further, to the extent the Seller or any of the Subsidiaries, after the Closing,
remains a party to any of the license or sublicense agreements listed in Section
3.09 of the Disclosure Schedule, the Seller shall not, and shall cause the
Subsidiaries not to, renew any such license or sublicense agreements upon their
termination.
SECTION 5.19. Transition Services. Prior to or at the Closing, the
-------------------
Purchaser and the Seller shall enter into a transition services agreement on
mutually acceptable terms providing, on a fairly allocated cost basis and for a
period of three months after the Closing Date, for the provision by Sandoz Agro
to the Purchaser of the following services: (a) management information systems
services, (b) customer service support services and (c) financial and other
administrative services (such as general ledger, accounts payable, accounts
receivable and payroll).
SECTION 5.20. Right of First Refusal. In the event the Purchaser
----------------------
intends to sell the Owned Real Property to any Person other than any of its
Affiliates, the Purchaser shall offer the Owned Real Property to the Seller on
the same terms and conditions as the proposed sale to such third party. The
Purchaser shall promptly provide to the Seller all information reasonably
requested by the Seller to enable the Seller to evaluate such offer. The Seller
shall have the right to accept or reject such offer in its sole discretion
within 60 days after receiving such offer and all such requested information. In
the event the Seller does not accept such offer, the Purchaser shall have the
right to sell the Owned Real Property to such third party, but only on terms no
less favorable to the Purchaser than those offered to the Seller.
SECTION 5.21. Title Matters. At or prior to the Closing, the Seller
-------------
agrees to: (i) execute and deliver to the company providing title insurance to
the Purchaser an affidavit and indemnity in reasonable and customary form as to
the absence of parties-in-possession and unpaid work or services relating to the
Dallas Facility; (ii) cause record title to the Dallas Facility to be vested in
the Seller or a Subsidiary so that the Seller or such Subsidiary will be the
grantor named in the Deed; and (iii) cause to be removed of record to the Dallas
Facility both the $200,000 Deed of Trust, dated July 26, 1962, made by Thurmond
A. Williamson et. al. in favor of Knox W. Sherrill, trustee, and the $400,000
-- --
Deed of Trust, dated April 4, 1969, made by Thuron Industries, Inc. in favor of
Knox W. Sherrill, trustee.
<PAGE>
30
SECTION 5.22. Further Action. Each of the parties hereto shall
--------------
execute and deliver such documents and other papers and take such further
actions as may be reasonably required to carry out the provisions hereof and
give effect to the transactions contemplated hereby. Without limiting the
generality of the foregoing, during the term of the Methoprene Supply Agreement,
the Seller shall use best efforts to facilitate the Purchaser's ability to
obtain adequate supplies of methoprene starter material, chemical name S-(3,7-
Dimethyl-7-methoxy-1-octanal) from Takasago Iwata.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Employees. (a) On the Closing Date, the Purchaser
---------
shall be obligated to offer employment to (i) not less than 70 persons employed
by the Seller and the Subsidiaries in respect of the Business at the Dallas
Facility immediately prior to the Closing and (ii) such number of other persons
described in Exhibit 6.01 (which describes by location, function and headcount
all other persons who are employed by the Seller or any Subsidiary principally
in respect of the Business) such that the total number of persons offered
employment by the Purchaser pursuant to clause (i) and this clause (ii) shall
equal not less than 130. All persons described in clauses (i) and (ii) of the
preceding sentence who accept employment with the Purchaser are referred to as
"Transferred Employees". For the one-year period commencing on the Closing Date
---------------------
(or such longer period as may be required by the terms of applicable law) (the
"Continuation Period"), the Purchaser agrees to provide the Transferred
-------------------
Employees with employee benefits that in the aggregate are substantially
equivalent to, and no less favorable than, those provided to such Transferred
Employees immediately prior to the Closing, provided that the Purchaser shall
establish or designate a severance plan which provides the Transferred Employees
with severance benefits no less favorable than those provided to the Transferred
Employees immediately prior to the Closing Date by the Sandoz Agro, Inc. U.S.
Novartis program without regard to management discretion to determine which
components of the program are available in certain instances (except that the
Voluntary Retirement Incentive Package which is a component of the Novartis
program shall not be offered to any person employed by the Seller and the
Subsidiaries in respect of the Business at the Dallas Facility immediately prior
to the Closing Date), and provided further that although such employee benefits
shall be effective as of the Closing Date, they may be implemented by the
Purchaser within a reasonable time (as determined by the Purchaser) thereafter.
Nothing in this Article VI shall prevent the Purchaser from terminating the
employment of any Transferred Employee, whether or not within the Continuation
Period.
(b) To the extent that service is relevant for purposes of
eligibility, vesting or benefit accrual under any employee benefit plan, program
or arrangement established or
<PAGE>
31
maintained by the Purchaser for the benefit of Transferred Employees, such plan,
program or arrangement shall credit such employees for service on or prior to
the Closing with the Seller and its Affiliates, unless such grant of past
service is prohibited by applicable law.
SECTION 6.02. Defined Benefit Plans. (a) Effective as of the
---------------------
Closing Date, the Transferred Employees shall no longer participate in the
Sandoz Agro, Inc. Pension Plan (the "Pension Plan"), and the Seller shall have
------------
taken all such action prior to the Closing Date as may be required to achieve
this result. Effective as of the Closing Date, the Purchaser shall establish a
replacement defined benefit pension plan (the "New Defined Benefit Plan")
------------------------
intended to be qualified under Section 401(a) of the Code, and a related trust
intended to be exempt from taxation under Section 501(a) of the Code, for the
benefit of the Transferred Employees, the terms of which plan and trust shall be
substantially identical to the terms of the Pension Plan. The Purchaser agrees
to apply for, and to take all actions necessary to secure, as soon as
practicable after the Closing Date, a determination letter from the IRS to the
effect that the New Defined Benefit Plan is qualified under the applicable
provisions of the Code. The Purchaser shall recognize the service of the
Transferred Employees with the Seller and its Affiliates prior to the Closing
Date for all purposes under the New Defined Benefit Plan.
(b) As soon as practicable following the date hereof, the Seller shall
cause its actuaries to determine, effective as of the Closing Date and in
accordance with the requirements of ERISA and Section 414(l) of the Code, an
amount of assets of the Pension Plan (the "Plan Assets Amount") equal to the
------------------
arithmetic average of (x) the ABO Amount (as defined below) and (y) the PBO
Amount (as defined below). Not later than 90 days after the Closing Date, the
Seller shall cause its actuary to deliver to the Purchaser's actuary a written
report, with the necessary supporting data, setting forth the calculations by
the Seller's actuary of the Plan Assets Amount and a determination as to whether
such amount complies with Section 414(l) of the Code. The Purchaser's actuary
shall have 30 days after the receipt of the Sellers' actuary's report in which
to dispute the results of the calculation of the Plan Assets Amount by the
Seller's actuary and notify the Seller's actuary of the reason for such dispute.
If the Purchaser's actuary does not respond within 30 days, the Plan Assets
Amount as calculated by the Seller's actuary shall be final, binding and
conclusive on the parties hereto. If the Purchaser's actuary notifies the
Seller's actuary that he does not agree with the Seller's actuary's calculation
of the Plan Assets Amount, the Seller and the Purchaser shall use all reasonable
efforts to cause their respective actuaries to negotiate with each other in good
faith with a view to agreeing with respect to those amounts. If the actuaries
fail to agree within 30 days of the Purchaser's actuary's notice to the Seller's
actuary, the matter may, at the option of either the Seller or the Purchaser, be
referred to a third actuary appointed by agreement of the Purchaser's and
Seller's actuaries. The decision of such third actuary shall, save in the event
of manifest error, be final and binding on the parties and his costs shall be
paid as he directs.
<PAGE>
32
The "ABO Amount" means the accumulated benefit obligation as defined
----------
in Financial Accounting Standards Board Statement No. 87 ("FASB 87") for all
-------
Transferred Employees as of the Closing Date. The ABO Amount shall be
determined using a 7 3/4% interest rate assumption and the other assumptions
used for purposes of disclosure in the Seller's financial statement as of
December 31, 1995 in accordance with FASB 87.
The "PBO Amount" means the projected benefit obligation as defined in
----------
FASB 87 for all Transferred Employees. The PBO Amount shall be determined using
a 7 3/4% interest rate assumption, an assumed salary growth rate of 4.5%, and
the other assumptions used for purposes of disclosure in the Seller's financial
statement as of December 31, 1995 in accordance with FASB 87.
(c) As soon as practicable after the determination of the Plan Assets
Amount in accordance with the procedures set forth in Section 6.02(b), the
Seller shall cause Sandoz Agro to cause the transfer of an amount equal to the
Plan Assets Amount from the Pension Plan to the New Defined Benefit Plan,
together with interest on such Plan Assets Amount from the Closing Date to the
date of transfer at a rate equal to the rate which Citibank N.A. announces from
time to time as its base rate.
(d) Notwithstanding anything else in this Section 6.02, in lieu of
establishing the New Defined Benefit Plan, the Purchaser may elect to create (or
designate) a defined contribution plan for the benefit of the Transferred
Employees pursuant to which the Purchaser will make an employer profit sharing
contribution each year in addition to any matching contribution provided for
under such plan equal to the amount the Purchaser would have contributed to the
New Defined Benefit Plan in compliance with the minimum funding requirements of
Section 412 of the Code had such plan been established by the Purchaser.
(e) The Purchaser shall indemnify the Seller and its Affiliates for,
and hold the Seller and its Affiliates harmless from, any and all Losses
incurred by the Seller and its Affiliates by reason of the Purchaser's failure
to qualify the New Defined Benefit Plan and related trust pursuant to the
relevant provisions of the Code.
SECTION 6.03. Defined Contribution Plan. Effective as of the Closing
-------------------------
Date, the Transferred Employees shall no longer participate in the Sandoz Agro,
Inc. Savings Plan (the "Savings Plan"), and the Seller shall cause Sandoz Agro
------------
to have taken all such action prior to the Closing Date as may be required to
achieve this result. As of the Closing Date, Sandoz Agro shall cause each
Transferred Employee to be 100% vested in his or her account balance. As soon
as practicable after the Closing Date, Sandoz Agro shall cause the transfer of
an amount representing the entire account balances of the Transferred Employees
who participated in the Savings Plan immediately prior to the Closing Date
determined as of the plan valuation date coinciding with or next preceding the
date of the account balance transfer, together with the actual return thereon
from such valuation date to the date of
<PAGE>
33
account balance transfer, to the trustee, designated by the Purchaser, of the
qualified trust established or maintained by the Purchaser in accordance with
the following sentence. After the Closing Date, the Purchaser shall establish or
provide the Transferred Employees with a new savings plan intended to be
qualified under Sections 401(a) and 401(k) of the Code, which shall provide (i)
for immediate eligibility for participation for each Transferred Employee who
participated in the Savings Plan immediately prior to the Closing Date, (ii)
each such Transferred Employee with an initial account balance equal to the
amount transferred to the Purchaser's savings plan in respect of such
Transferred Employee's interest in the Savings Plan, and (iii) vesting and
eligibility provisions that are no less favorable than those of the Savings Plan
as in effect immediately prior to the Closing Date, applied by aggregating
service with the Seller and its Affiliates prior to the Closing Date with
service with the Purchaser and its Affiliates on and after the Closing Date. The
Seller and the Purchaser agree to cooperate fully with respect to the actions
necessary to effect the transactions contemplated in this Section 6.03,
including, without limitation, the provision of records and information as each
may reasonably request from the other.
SECTION 6.04. Welfare Arrangements. Subject to Section 6.01, to the
--------------------
extent that any medical, dental, hospitalization, life or similar-type insurance
benefits are provided to Transferred Employees through one or more Plans of the
Seller or an Affiliate, the Purchaser agrees to designate or establish,
effective as of the Closing, one or more benefit plans, programs or arrangements
for the purpose of providing such benefits to Transferred Employees. Claims for
welfare benefits made by Transferred Employees, including, without limitation,
claims for medical, dental, hospitalization or disability benefits made or
incurred prior to the Closing Date, shall be the obligation of the Seller and
the Subsidiaries and claims incurred by Transferred Employees on or after the
Closing Date with respect to such benefits shall be the obligation of the
Purchaser.
SECTION 6.05. Indemnity. Anything in this Agreement to the contrary
---------
notwithstanding, the Purchaser hereby agrees to indemnify the Seller and its
Affiliates for and hold the Seller and its Affiliates harmless from any and all
Losses arising out of or otherwise in respect of (i) any claim by any
Transferred Employee arising on or after the Closing Date against the Seller or
any of its Affiliates for any severance or termination benefits pursuant to the
provisions of any plan, program or arrangement or any applicable Federal or
state law (provided, however, that no indemnity shall apply to any Transferred
-------- -------
Employee who has received severance benefits under the Purchaser's severance
plan as established in accordance with the terms of Section 6.01(a)), (ii) any
suit or claim of violation brought against the Seller or any of its Affiliates
under the Worker Adjustment and Retraining Notification Act of 1988 for any
actions taken by the Purchaser with respect to any facility, site of employment,
operating unit or Transferred Employee and (iii) any failure of the Purchaser to
discharge its obligations under this Article VI. The provisions of Sections
9.02(c) and 9.02(d) shall apply to the Purchaser's indemnification obligations
under this Section 6.05. For purposes of this Section 6.05, the number of
Transferred Employees
<PAGE>
34
shall be deemed to be the greater of the actual number of Transferred Employees
and 87; provided that, if less than 70 persons employed by the Seller and the
--------
Subsidiaries in respect of the Business at the Dallas Facility are included in
the Transferred Employees, then the number of Transferred Employees shall be
further increased by such difference.
SECTION 6.06. COBRA. With respect to any employee whose employment
-----
relates to the Business but who terminates employment with the Seller on or
before the Closing Date, the Seller will continue to provide for "continuation
coverage" to or for the benefit of each such employee and each "qualified
beneficiary" entitled thereto by applicable law (as such terms are defined in
Code Section 4980B) and shall otherwise comply in all respects with the
requirements (including notice requirements) of Code Section 4980B as to each
such employee and each such qualified beneficiary with respect to whom a
"qualifying event" (as defined in Code Section 4980B) has occurred (or will
occur) through the Closing Date, including any such qualifying event that may
occur as of the Closing Date or as a result of the consummation of the
transactions contemplated by this Agreement provided such employee is not a
Transferred Employee. The Purchaser shall, within 60 days after the Seller's
written request to furnish the Seller with copies of the Purchaser's health plan
and the summary plan description for the Seller's health plan, furnish such
copies to the Seller.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Sales, Use and Other Transfer Taxes. The Purchaser
-----------------------------------
shall provide the Seller with resale exemption certificates as is appropriate.
The Purchaser and the Seller shall each be responsible for 50% of any and all
excise, sales, value added, use, registration, stamp, franchise, property
transfer, transfer and similar Taxes, levies, charges and fees (including all
real estate transfer taxes) incurred in connection with the transactions
contemplated by this Agreement. The Purchaser and the Seller agree to cooperate
in the filing of all necessary documentation and all Tax returns, reports and
forms ("Returns") with respect to all such Taxes, including any available pre-
-------
sale filing procedure.
SECTION 7.02. Property Taxes. The Purchaser shall pay all real and
--------------
personal property Taxes attributable to the Assets that are due after the
Closing Date, whether accruing prior to or after the Closing Date.
SECTION 7.03. Treatment of Indemnity Payments. All payments made by
-------------------------------
the Seller or the Purchaser, as the case may be, to or for the benefit of the
other party pursuant to any indemnification obligations under this Agreement
shall be treated as adjustments to the purchase price for Tax purposes and such
agreed treatment shall govern for purposes of this Agreement.
<PAGE>
35
SECTION 7.04. Allocation of Purchase Price. Neither the Seller nor
----------------------------
the Purchaser shall, or permit any of its Affiliates to, file any Return, or
take a position with a Tax authority, that is inconsistent with the allocation
of the Purchase Price set forth in Section 2.03(b), or that treats the
transactions contemplated by this Agreement in a manner inconsistent with the
terms of this Agreement. Each of the Seller and the Purchaser agrees to
cooperate with the other party in preparing a Form 8594 for filing by each of
them and to furnish the other party with a copy of such Form 8594 within a
reasonable period before its filing due date. Neither the Seller nor the
Purchaser shall agree to any adjustment to the allocation as set forth in
Section 2.03(b) without the prior written consent of the other party, which
consent shall not be unreasonably withheld.
SECTION 7.05. Cooperation. The Purchaser and the Seller shall
-----------
cooperate with each other and with each other's respective agents, including
accounting firms and legal counsel, in connection with the preparation or audit
of any Return(s) and any Tax claim or litigation in respect of the Assets that
include whole or partial taxable periods, activities, operations or events on or
prior to the Closing Date, which cooperation shall include, but not be limited
to, making available employees, if any, for the purpose of providing testimony
and advice, or original documents, or either of them.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Seller. The
---------------------------------------
obligations of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties of the Purchaser contained in this Agreement shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are specifically made as of another date, the covenants and
agreements contained in this Agreement to be complied with by the Purchaser
at or before the Closing shall have been complied with in all material
respects, and the Seller shall have received a certificate of the Purchaser
to such effect signed by a duly authorized officer thereof;
(b) Merger Control. Any waiting period (and any extension thereof)
--------------
under any foreign antitrust or merger control law or regulation applicable
to the purchase of the Assets contemplated hereby shall have expired or
shall have been terminated;
<PAGE>
36
(c) FTC Approval. This Agreement and the transactions contemplated
------------
hereby shall have been approved by the FTC as required by Section III(B) of
the order contained in the FTC Agreement;
(d) No Order. No United States or state governmental authority or
--------
other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect
of making the transactions contemplated by this Agreement illegal or
otherwise restraining or prohibiting consummation of such transactions;
provided, however, that the parties hereto shall use all reasonable efforts
-------- -------
to have any such order or injunction vacated; and
(e) Ancillary Agreements. The Purchaser shall have duly executed and
--------------------
delivered to the Seller counterparts of each of the Ancillary Agreements to
which it is to be a party.
SECTION 8.02. Conditions to Obligations of the Purchaser. The
------------------------------------------
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties of the Seller contained in this Agreement shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are specifically made as of another date, the covenants and
agreements contained in this Agreement to be complied with by the Seller at
or before the Closing shall have been complied with in all material
respects, and the Purchaser shall have received a certificate of the Seller
to such effect signed by a duly authorized officer thereof;
(b) Merger Control. Any waiting period (and any extension thereof)
--------------
under any foreign antitrust or merger control law or regulation applicable
to the purchase of the Assets contemplated hereby shall have expired or
shall have been terminated;
(c) No Order. No United States or state governmental authority or
--------
other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect
of making the transactions contemplated by this Agreement illegal or
otherwise restraining or prohibiting consummation of such transactions;
<PAGE>
37
provided, however, that the parties hereto shall use all reasonable efforts
-------- -------
to have any such order or injunction vacated; and
(d) Ancillary Agreements. The Seller and the Subsidiaries, as
--------------------
appropriate, shall have duly executed and delivered to the Purchaser
counterparts of each of the Ancillary Agreements.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival. Subject to the limitations and other
--------
provisions of this Agreement, the representations and warranties of the parties
hereto contained herein shall survive the Closing and shall remain in full force
and effect for a period of two years after the Closing Date (including the
representation set forth in Section 3.11 notwithstanding any doctrine of
merger).
SECTION 9.02. Indemnification by the Purchaser. (a) The Purchaser
--------------------------------
agrees, subject to the other terms and conditions of this Agreement, to
indemnify the Seller and its Affiliates, officers, directors, employees, agents,
successors and assigns (as used in this Section 9.02, each a "Seller Indemnified
------------------
Party") against and hold them harmless from all liabilities, losses, damages,
- -----
claims, costs and expenses (including reasonable attorney's fees) (collectively,
"Losses") actually incurred by them arising out of (i) the breach of any
------
representation or warranty of the Purchaser herein, (ii) the breach of any
covenant or agreement of the Purchaser herein (other than Article VI, it being
understood that the sole remedy for breach thereof shall be pursuant to Article
(I) and (iii) the conduct of the Business by the Purchaser following the
Closing. Anything in Section 9.01 to the contrary notwithstanding, no claim may
be asserted nor may any action be commenced against the Purchaser for breach of
any representation or warranty contained herein, unless written notice of such
claim or action is received by the Purchaser describing in detail the facts and
circumstances with respect to the subject matter of such claim or action on or
prior to the date on which the representation or warranty on which such claim or
action is based ceases to survive as set forth in Section 9.01, irrespective of
whether the subject matter of such claim or action shall have occurred before or
after such date.
(b) No claim may be made against the Purchaser for indemnification
pursuant to clause (i) of the first sentence of Section 9.02(a) with respect to
any individual item of Loss, unless such item exceeds the Designated Amount and
unless the aggregate of all such Losses of the Seller Indemnified Parties with
respect to such clause (i) shall exceed an amount equal to $1.0 million, and the
Purchaser shall not be required to pay or be liable for the amount equal to the
first $1.0 million in aggregate amount of any such Losses. No
<PAGE>
38
Seller Indemnified Party shall be indemnified pursuant to clause (i) of the
first sentence of Section 9.02(a) with respect to any individual item of Loss if
the aggregate of all Losses of the Seller Indemnified Parties for which the
Seller Indemnified Parties have received indemnification pursuant to such clause
(i) shall have exceeded an amount equal to 25% of the Purchase Price.
Indemnification pursuant to clause (ii) or (iii) of the first sentence of
Section 9.02(a) shall not be limited by the two immediately preceding sentences.
(c) A Seller Indemnified Party shall give the Purchaser prompt written
notice of any claim, assertion, event or proceeding by or in respect of a third
party of which a Seller Indemnified Party has knowledge concerning any Loss as
to which a Seller Indemnified Party may request indemnification hereunder or any
Loss as to which the $1.0 million amount referred to in Section 9.02(b) may be
applied. The Purchaser shall have the right to direct, through counsel of its
own choosing, the defense or settlement of any such claim or proceeding at its
own expense. If the Purchaser elects to assume the defense of any such claim or
proceeding, the Seller Indemnified Party may participate in such defense, but in
such case the expenses of the Seller Indemnified Party shall be paid by the
Seller Indemnified Party. The Seller Indemnified Party shall provide the
Purchaser with access to its records and personnel relating to any such claim,
assertion, event or proceeding during normal business hours and shall otherwise
cooperate with the Purchaser in the defense or settlement thereof, and the
Purchaser shall reimburse the Seller Indemnified Party for all the reasonable
out-of-pocket expenses of such Seller Indemnified Party in connection therewith.
If the Purchaser elects to direct the defense of any such claim or proceeding,
the Seller Indemnified Party shall not pay, or permit to be paid, any part of
any claim or demand arising from such asserted liability, unless the Purchaser
consents in writing to such payment or unless the Purchaser, subject to the last
sentence of this Section 9.02(c), withdraws from the defense of such asserted
liability, or unless a final judgment from which no appeal may be taken by or on
behalf of the Purchaser is entered against the Seller Indemnified Party for such
liability. If the Purchaser shall fail to undertake any such defense, the
Seller Indemnified Party shall have the right to undertake the defense or
settlement thereof, at the Purchaser's expense. If the Seller Indemnified Party
assumes the defense of any such claim or proceeding pursuant to this Section
9.02(c) and proposes to settle such claim or proceeding prior to a final
judgment thereon or to forgo appeal with respect thereto, then the Seller
Indemnified Party shall give the Purchaser prompt written notice thereof and the
Purchaser shall have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding.
(d) Subject to Section 11.10, the Seller hereby acknowledges and
agrees that its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article IX. In furtherance of the
foregoing, the Seller hereby waives, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action it may have
against the Purchaser arising under or based upon any federal, state, local or
foreign statute,
<PAGE>
39
law, ordinance, rule or regulation (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or
otherwise).
(e) Except as expressly set forth in this Agreement, the Purchaser is
not making any representation, warranty, covenant or agreement with respect to
the matters contained herein. Anything herein to the contrary notwithstanding,
no breach of any representation, warranty, covenant or agreement contained
herein shall give rise to any right on the part of the Seller, after the
consummation of the purchase and sale of the Business contemplated by this
Agreement, to rescind this Agreement or any of the transactions contemplated
hereby.
SECTION 9.03. Indemnification by the Seller. (a) The Seller agrees,
-----------------------------
subject to the other terms and conditions of this Agreement, to indemnify the
Parent, the Purchaser and their respective Affiliates, officers, directors,
employees, agents, successors and assigns (as used in this Section 9.03, each a
"Purchaser Indemnified Party") against and hold them harmless from (i) all
---------------------------
Losses actually incurred by them arising out of the breach of any representation
or warranty of the Seller herein, (ii) all Losses actually incurred by them
arising out of the breach of any covenant or agreement of the Seller herein
(provided that the indemnity provided by clauses (i) and (ii) does not extend to
--------
the breach of any representation, warranty, covenant or agreement of the Seller
as it relates to any Environmental Law, irrespective of the date of enactment or
promulgation) and (iii) all Losses (each such Loss being an "Environmental
-------------
Loss") incurred by them arising out of (A) any Hazardous Material located in, on
- ----
or under, or emanating from, the Owned Real Property prior to the Closing, to
the extent such Losses are incurred by a Purchaser Indemnified Party after such
Purchaser Indemnified Party has provided to the Seller prompt written notice of
the presence of such Hazardous Material and has provided the Seller with the
opportunity and access to the Owned Real Property to conduct any investigation
or cleanup necessary to address such Hazardous Material, and (B) any
Environmental Claim based upon any activity conducted on the Owned Real Property
prior to the Closing. Anything in Section 9.01 to the contrary notwithstanding,
no claim may be asserted nor may any action be commenced against the Seller for
breach of any representation or warranty contained herein or any individual item
of Environmental Loss, unless written notice of such claim or action is received
by the Seller describing in detail the facts and circumstances with respect to
the subject matter of such claim or action (x) with respect to breach of any
representation or warranty contained herein, on or prior to the date on which
the representation or warranty on which such claim or action is based ceases to
survive as set forth in Section 9.01 and (y) with respect to any individual item
of Environmental Loss, on or prior to the earlier of (I) the twenty-fifth
anniversary of the Closing Date and (II) the date the Dallas Facility is
operated for purposes not substantially similar to those for which it is
currently operated (it being understood that abandonment of the Dallas Facility
shall not be deemed to be operation for purposes not substantially similar),
irrespective in any case of
<PAGE>
40
whether the subject matter of such claim or action shall have occurred before or
after such date.
(b) No claim may be made against the Seller for indemnification
pursuant to clause (i) of the first sentence of Section 9.03(a) with respect to
any individual item of Loss, unless such item exceeds the Designated Amount and
unless the aggregate of all such Losses of the Purchaser Indemnified Parties
with respect to clause (i) of the first sentence of Section 9.03(a) shall exceed
an amount equal to $1.0 million, and the Seller shall not be required to pay or
be liable for the amount equal to the first $1.0 million in aggregate amount of
any such Losses. No Purchaser Indemnified Party shall be indemnified pursuant to
clause (i) of the first sentence of Section 9.03(a) with respect to any
individual item of Loss if the aggregate of all such Losses of the Purchaser
Indemnified Parties for which the Purchaser Indemnified Parties have received
indemnification pursuant to clause (i) of the first sentence of Section 9.03(a)
shall have exceeded an amount equal to 25% of the Purchase Price.
Indemnification pursuant to clause (ii) or (iii) of the first sentence of
Section 9.03(a) shall not be limited by the two immediately preceding sentences.
For the purposes of this Section 9.03, in computing such individual or aggregate
amounts of claims, the amount of each claim shall be deemed to be an amount net
of any reserves provided for the item in question in the Reference Statement of
Net Assets and shall be calculated without regard to any materiality threshold
in the relevant representation or warranty.
(c) Payments by the Seller pursuant to Section 9.03(a) shall be
limited to the amount of any Loss that remains after deducting therefrom any
reserves provided for the item in question in the Reference Statement of Net
Assets.
(d) A Purchaser Indemnified Party shall give the Seller prompt written
notice of any claim, assertion, event or proceeding by or in respect of a third
party of which such Purchaser Indemnified Party has knowledge concerning any
Loss as to which such Purchaser Indemnified Party intends to request
indemnification hereunder (including, without limitation, any Environmental
Claim) or any Loss as to which the $1.0 million amount referred to in Section
9.03(b) may be applied. The Seller shall have the right to direct, through
counsel of its own choosing, the defense or settlement of any such claim or
proceeding at its own expense. If the Seller elects to assume the defense of any
such claim or proceeding, the Purchaser Indemnified Party may participate in
such defense, but in such case the expenses of the Purchaser Indemnified Party
shall be paid by the Purchaser Indemnified Party. The Purchaser Indemnified
Party shall provide the Seller with access to its records and personnel relating
to any such claim, assertion, event or proceeding during normal business hours
and shall otherwise cooperate with the Seller in the defense or settlement
thereof, and the Seller shall reimburse the Purchaser Indemnified Party for all
its reasonable out-of-pocket expenses in connection therewith. If the Seller
elects to direct the defense of any such claim or proceeding, the Purchaser
Indemnified Party shall not pay, or permit to be paid, any part of any claim or
demand arising from such asserted liability unless
<PAGE>
41
the Seller consents in writing to such payment or unless the Seller, subject to
the last sentence of this Section 9.03(d), withdraws from the defense of such
asserted liability or unless a final judgment from which no appeal may be taken
by or on behalf of the Seller is entered against the Purchaser Indemnified Party
for such liability. If the Seller shall fail to undertake any such defense, the
Purchaser Indemnified Party shall have the right to undertake the defense or
settlement thereof, at the Seller's expense. If the Purchaser Indemnified Party
assumes the defense of any such claim or proceeding pursuant to this Section
9.03(d) and proposes to settle such claim or proceeding prior to a final
judgment thereon or to forgo any appeal with respect thereto, then the Purchaser
Indemnified Party shall give the Seller prompt written notice thereof and the
Seller shall have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding.
(e) Subject to Section 11.10, the Purchaser hereby acknowledges and
agrees that its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article IX. In furtherance of the
foregoing, the Purchaser hereby waives, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action it may have
against the Seller arising under or based upon any federal, state, local or
foreign statute, law, ordinance, rule or regulation (including, without
limitation, any such rights, claims or causes of action arising under or based
upon common law or otherwise).
(f) Except as expressly set forth in this Agreement, the Seller is not
making any representation, warranty, covenant or agreement with respect to the
matters contained herein. Anything herein to the contrary notwithstanding, no
breach of any representation, warranty, covenant or agreement contained herein
shall give rise to any right on the part of the Purchaser, after the
consummation of the purchase and sale of the Business contemplated hereby, to
rescind this Agreement or any of the transactions contemplated hereby.
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated at any
-----------
time prior to the Closing:
(a) by the mutual written consent of the Seller and the Purchaser; or
(b) by either the Seller or the Purchaser, if the Closing shall not
have occurred prior to the earlier of (i) May 31, 1997 and (ii) the
thirtieth day after the order contained in the FTC Agreement becomes final
(but in no event prior to April
<PAGE>
42
18, 1997); provided, however, that the right to terminate this Agreement
-------- -------
under this Section 10.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to occur
prior to such date; or
(c) by the Seller in the event that an Assistant Director of the
Bureau of Competition of the FTC shall have indicated to the Seller in
writing that the purchase of the Assets by the Purchaser pursuant to this
Agreement will not be approved.
Time shall be of the essence in this Agreement.
SECTION 10.02. Effect of Termination. In the event of termination of
---------------------
this Agreement as provided in Section 10.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto (a)
except as set forth in Section 5.05 and Section 11.01 and (b) nothing herein
shall relieve either party from liability for any wilful breach hereof.
SECTION 10.03. Waiver. Either party hereto may (a) extend the time
------
for the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto or (c)
waive compliance with any of the agreements of the other party contained herein.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party to be bound thereby.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. All costs and expenses, including, without
--------
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 11.02. Notices. All notices, requests, demands, claims and
-------
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
<PAGE>
43
(a) if to the Seller:
Novartis Inc.
Schwarzwaldallee 215
CH-4002
Basel, Switzerland
Telecopy No.: 41-61-324-3040
Attention: Christoph Maeder, Esq.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy No.: (212) 848-7179
Attention: David W. Heleniak, Esq.
(b) if to the Parent or the Purchaser:
Central Garden & Pet Company
3697 Mt. Diablo Boulevard
Lafayette, California 94549
Telecopy No.: (510) 283-4984
Attention: William E. Brown
with a copy to:
Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, California 94111
Telecopy No.: (415) 773-5759
Attention: John F. Seegal, Esq.
SECTION 11.03. Public Announcements. Except as may be required by
--------------------
applicable law, no party to this Agreement shall make, or cause to be made, any
press release or public announcements in respect of this Agreement or the
transactions contemplated hereby or otherwise communicate with any news media
without prior approval of the other party, and the parties shall cooperate as to
the timing and contents of any such announcement.
SECTION 11.04. Headings. The headings contained in this Agreement
--------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
<PAGE>
44
SECTION 11.05. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
SECTION 11.06. Entire Agreement. This Agreement constitutes the
----------------
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral
(including, without limitation, the Original Agreement and the letter of intent,
dated as of December 6, 1996, among the Seller, the Parent and the Purchaser),
other than the Confidentiality Agreement, between the Seller and the Purchaser
or the Parent, with respect to the subject matter hereof.
SECTION 11.07. Assignment. This Agreement shall not be assigned
----------
without the express written consent of the Seller and the Purchaser (which
consent may be granted or withheld in the sole discretion of the Seller and the
Purchaser); provided, however, that (a) the Purchaser may assign this Agreement
-------- -------
to the Parent or to any wholly or majority-owned subsidiary of the Parent,
provided that any such assignment shall not relieve the Purchaser and the Parent
- --------
from any of their respective obligations under this Agreement, and (b) the
Parent or the Purchaser may (i) assign its rights to indemnification under
clause (iii) of the first sentence of Section 9.03(a) to a Person who purchases
or leases the Owned Real Property from the Purchaser, the Parent or any of their
Affiliates or (ii) grant a security interest in such rights to a Person who
provides financing to the Parent or the Purchaser secured by the Owned Real
Property.
SECTION 11.08. Successors and Assigns. This Agreement shall be
----------------------
binding on and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
SECTION 11.09. No Third-Party Beneficiaries. Except as provided in
----------------------------
Articles VI and IX, this Agreement is for the sole benefit of the parties hereto
and their successors and permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 11.10. Amendment. This Agreement may not be amended or
---------
modified except by an instrument in writing signed by the Seller and the
Purchaser.
<PAGE>
45
SECTION 11.11. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and the parties shall be
entitled to specific performance of the terms hereof.
SECTION 11.12. Governing Law. This Agreement shall be governed by
-------------
the laws of the State of New York. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in any New York
state or federal court sitting in The City of New York, and the parties hereto
hereby consent to the jurisdiction of such courts in any such action or
proceeding.
SECTION 11.13. Counterparts. This Agreement may be executed in one
------------
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE>
46
IN WITNESS WHEREOF, the Seller, the Parent and the Purchaser have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
NOVARTIS INC.
By /s/ Raymund Breu / Christolph Maeder
-------------------------------------
Name: Raymund Breu and
Christolph Maeder
Title: CFO
Sr. Corporate Counsel
CENTRAL GARDEN & PET COMPANY
By /s/ William E. Brown
---------------------
Name: William E. Brown
Title: C.E.O.
CENTIC ACQUISITION CORP.
By /s/ William E. Brown
---------------------
Name: William E. Brown
Title: C.E.O.
<PAGE>
================================================================================
------------------------
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
------------------------
dated as of February 3, 1997
among
NOVARTIS INC.
(successor by merger to Sandoz Ltd.),
CENTRAL GARDEN & PET COMPANY
and
CENTIC ACQUISITION CORP.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.01. Certain Defined Terms............................................................. 2
SECTION 1.02. Other Defined Terms............................................................... 5
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Assets to Be Sold................................................................. 6
SECTION 2.02. Assumption of Liabilities......................................................... 7
SECTION 2.03. Purchase Price; Allocation of Purchase Price...................................... 8
SECTION 2.04. Closing........................................................................... 8
SECTION 2.05. Closing Deliveries by the Seller.................................................. 8
SECTION 2.06. Closing Deliveries by the Purchaser............................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.01. Incorporation and Authority of the Seller and the Subsidiaries.................... 9
SECTION 3.02. No Conflict....................................................................... 10
SECTION 3.03. Consents and Approvals............................................................ 10
SECTION 3.04. Financial Information............................................................. 10
SECTION 3.05. Litigation........................................................................ 11
SECTION 3.06. Compliance with Laws.............................................................. 11
SECTION 3.07. Environmental, Health and Safety Compliance....................................... 11
SECTION 3.08. Licenses and Permits.............................................................. 11
SECTION 3.09. Patents, Trademarks and Service Marks............................................. 12
SECTION 3.10. Assets............................................................................ 12
SECTION 3.11. Real Property..................................................................... 12
SECTION 3.12. Insurance......................................................................... 12
SECTION 3.13. Employee Benefit Matters.......................................................... 12
SECTION 3.14. Labor Matters..................................................................... 14
SECTION 3.15. Taxes............................................................................. 14
SECTION 3.16. Material Contracts................................................................ 14
SECTION 3.17. Absence of Changes or Events...................................................... 15
SECTION 3.18. Customers......................................................................... 16
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 3.19. Assets............................................................................ 16
SECTION 3.20. Brokers........................................................................... 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Incorporation and Authority of the Purchaser...................................... 16
SECTION 4.02. Incorporation and Authority of the Parent......................................... 17
SECTION 4.03. No Conflict....................................................................... 17
SECTION 4.04. Consents and Approvals............................................................ 18
SECTION 4.05. Litigation........................................................................ 18
SECTION 4.06. Financing......................................................................... 18
SECTION 4.07. Brokers........................................................................... 18
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing.......................................... 18
SECTION 5.02. Investigation..................................................................... 19
SECTION 5.03. Access to Information............................................................. 20
SECTION 5.04. Books and Records................................................................. 21
SECTION 5.05. Confidentiality................................................................... 21
SECTION 5.06. Regulatory and Other Authorizations; Consents..................................... 22
SECTION 5.07. Notification to Governmental Authorities.......................................... 25
SECTION 5.08. No Solicitation................................................................... 25
SECTION 5.09. Bulk Transfer Laws................................................................ 25
SECTION 5.10. Ancillary Agreements.............................................................. 26
SECTION 5.11. Seller's Access to Registration and Product Efficacy Data......................... 26
SECTION 5.12. Use of Names...................................................................... 27
SECTION 5.13. Excluded Liabilities.............................................................. 27
SECTION 5.14. Insurance......................................................................... 27
SECTION 5.15. Non-Competition................................................................... 28
SECTION 5.16. Guaranty by Parent................................................................ 28
SECTION 5.17. Audited Financial Statements...................................................... 28
SECTION 5.18. Limited License Back.............................................................. 29
SECTION 5.19. Transition Services............................................................... 29
SECTION 5.20. Right of First Refusal............................................................ 29
SECTION 5.21. Title Matters..................................................................... 29
SECTION 5.22. Further Action.................................................................... 30
</TABLE>
ii
<PAGE>
<TABLE>
ARTICLE VI
EMPLOYEE MATTERS
<S> <C>
SECTION 6.01. Employees......................................................................... 30
SECTION 6.02. Defined Benefit Plans............................................................. 31
SECTION 6.03. Defined Contribution Plan......................................................... 32
SECTION 6.04. Welfare Arrangements.............................................................. 33
SECTION 6.05. Indemnity......................................................................... 33
SECTION 6.06. COBRA............................................................................. 34
ARTICLE VII
TAX MATTERS
SECTION 7.01. Sales, Use and Other Transfer Taxes............................................... 34
SECTION 7.02. Property Taxes.................................................................... 34
SECTION 7.03. Treatment of Indemnity Payments................................................... 34
SECTION 7.04. Allocation of Purchase Price...................................................... 35
SECTION 7.05. Cooperation....................................................................... 35
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Seller........................................... 35
SECTION 8.02. Conditions to Obligations of the Purchaser........................................ 36
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival.......................................................................... 37
SECTION 9.02. Indemnification by the Purchaser.................................................. 37
SECTION 9.03. Indemnification by the Seller..................................................... 39
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination...................................................................... 41
SECTION 10.02. Effect of Termination............................................................ 42
SECTION 10.03. Waiver........................................................................... 42
</TABLE>
iii
<PAGE>
<TABLE>
ARTICLE XI
GENERAL PROVISIONS
<S> <C>
SECTION 11.01. Expenses......................................................................... 42
SECTION 11.02. Notices.......................................................................... 42
SECTION 11.03. Public Announcements............................................................. 43
SECTION 11.04. Headings......................................................................... 43
SECTION 11.05. Severability..................................................................... 44
SECTION 11.06. Entire Agreement................................................................. 44
SECTION 11.07. Assignment....................................................................... 44
SECTION 11.08. Successors and Assigns........................................................... 44
SECTION 11.09. No Third-Party Beneficiaries..................................................... 44
SECTION 11.10. Amendment........................................................................ 44
SECTION 11.11. Specific Performance............................................................. 45
SECTION 11.12. Governing Law.................................................................... 45
SECTION 11.13. Counterparts..................................................................... 45
</TABLE>
iv
<PAGE>
EXHIBITS
- --------
1 List of Additional Products
1.01(a) Form of Assumption Agreement
1.01(b) Form of Bill of Sale and Assignment
2.01(a) List of Assets
2.01(b) List of Excluded Assets
2.03(b) Allocation of Purchase Price
3.04 Reference Statement of Net Assets
5.10(a) Toll Manufacturing Agreement
5.10(b) Methoprene Supply Agreement
5.10(c) Technology License and Support Agreement
6.01 List of Employees to Whom the Purchaser Intends to Offer Employment
v
<PAGE>
AMENDMENT NO. 1, dated as of April 22, 1997 (this "Amendment"), to the
---------
Amended and Restated Asset Purchase Agreement, dated as of February 3, 1997 (the
"Agreement"; capitalized terms used but not otherwise defined herein shall have
---------
the meanings ascribed to such terms in the Agreement), among NOVARTIS INC., a
company organized under the laws of Switzerland (the "Seller"), CENTRAL GARDEN
------
& PET COMPANY, a Delaware corporation (the "Parent"), and CENTIC ACQUISITION
------
CORP., a California corporation (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller, the Parent and the Purchaser have entered into the
Agreement;
WHEREAS, the Seller, the Parent and the Purchaser desire to amend the
Agreement to comply with the requirements of the Federal Trade Commission;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Seller, the Parent and the Purchaser
hereby agree as follows:
SECTION 1. Amendments to the Agreement. The Agreement is, effective as of
---------------------------
the date hereof, hereby amended as follows:
(a) Section 5.10 shall be amended by deleting the word "substantially"
wherever such word appears therein;
(b) Section 5.11(a) shall be amended by deleting the text thereof in
its entirety and replacing it with the following:
"(a) The Purchaser hereby agrees that it shall and shall cause its
Affiliates to provide the Seller and its Affiliates with absolute and
unrestricted access in perpetuity to the registration data currently
filed with the EPA and the appropriate Canadian federal and
provincial governmental authorities for current registrations in
existence at Closing any rights to which are transferred by the
Seller and the Subsidiaries to the Purchaser pursuant to this
Agreement, free of data compensation rights, to enable the Seller and
its Affiliates (a) to register new products or new uses outside of
the United States and Canada that are developed by the Seller and its
Affiliates based upon registration data in
<PAGE>
2
existence at Closing transferred by the Seller to the Purchaser
pursuant to this Agreement, (b) to maintain existing registrations
outside of the United States and Canada or (c) to obtain other
required regulatory clearances outside of the United States and
Canada; provided, however, that the Seller and its Affiliates may have
-------- -------
such access for such purposes worldwide (including the United States
and Canada) for products other than products which have the uses
specified in the EPA registrations for the Products of the Business
(and including such access for such purposes to the registration data
underlying the related active ingredient registrations for uses other
than the uses specified in the EPA registrations for the Products of
the Business). Such access shall include, but is not limited to: (a)
acknowledging to regulatory agencies that the Seller and its
Affiliates have an unrestricted right to rely upon such registration
data to obtain registrations or other regulatory clearances; (b)
providing copies of studies to the Seller and its Affiliates for
submission to regulatory agencies; and (c) responding, at the request
of the Seller or an Affiliate of the Seller, to requests from
regulatory agencies for access to raw data. The Purchaser further
agrees that it shall bear any and all responsibility for compliance
with the EPA and any state, Canadian federal, provincial and municipal
requirements related to the registration data any rights to which are
transferred by the Seller and the Subsidiaries to the Purchaser
pursuant to this Agreement. The Purchaser and the Seller hereby agree
that data generated to maintain active ingredient registrations, data
for new end-use products, and data that pertain exclusively to new
uses, shall be developed by the Seller and the Purchaser according to
their respective needs and shall be owned independently by the Seller
and the Purchaser, respectively.";
(c) Section 5.20 shall be amended by adding the parenthetical phrase
"(other than as part of a sale by the Purchaser of all or substantially all
of the Purchaser's assets relating to the Business)" after the phrase
"Owned Real Property" the first time such phrase appears in Section 5.20;
(d) Section 1(b)(iv) of the form of Bill of Sale and Assignment
attached to the Agreement as Exhibit 1.01(b) and Section II(iv) of the List
of Assets attached to the Agreement as Exhibit 2.01(a) shall be amended by
adding the following phrase after the word "Business" the first time such
word appears therein:
", including the active ingredient registrations for the United States
and Canada,"
(e) the form of the Toll Manufacturing Agreement attached to the
Agreement as Exhibit 5.10(a) shall be amended by inserting the following at
the end of Section 4(a):
<PAGE>
3
"Nothing in this Agreement shall affect or restrict the rights of the
Seller acquired pursuant to the Asset Purchase Agreement.";
(f) the form of the Methoprene Supply Agreement attached to the
Agreement as Exhibit 5.10(b) shall be amended as follows:
(i) by inserting the following parenthetical phrase after the
phrase "Contract Year" the second time such phrase appears
in the first paragraph of Section 4:
"(provided, however, that for the 1998 Contract Year, the
-------- -------
Buyer shall give such notice to the Supplier not later
than August 15, 1997)"
(ii) by deleting in its entirety the last sentence of the first
paragraph of Section 4;
(iii) by adding the following paragraph at the end of Section 9:
"Neither party hereto shall have the right to use the
information received from the other party pursuant to this
Section 9 in any comparative advertising.";
(iv) by deleting in its entirety the last sentence of the first
paragraph of Section 10 and replacing it with the following:
"All claims regarding delayed delivery or non-delivery shall
be deemed waived unless the Supplier receives written notice
within 30 (thirty) days of the date set for delivery.";
(v) by adding the phrase "and the trustee if a trustee is
appointed pursuant to the FTC Agreement" after the phrase
"notify the other" the first time such phrase appears in
Section 11;
(vi) by deleting subsection (b) of the fourth paragraph of
Section 12, redesignating subsection (c) as new subsection
(b), and adding at the end of such redesignated subsection
(b) the following parenthetical phrase:
"(other than as part of a sale by the Buyer of all or
substantially all of the Buyer's assets relating to the
Business (as defined in
<PAGE>
4
the Asset Purchase Agreement), which sale shall be subject
to Section 13 hereof)"; and
(g) the form of the Technology License and Support Agreement attached
to the Agreement as Exhibit 5.10(c) shall be amended as follows:
(i) by adding the following phrase at the end of the second
paragraph of Section 3:
"or (iii) assign this Agreement in accordance with Section
11 hereof";
(ii) by adding the following sentence at the end of the second
paragraph of Section 3, as amended by Section 1(j)(i)
hereof:
"Nothing in this Agreement shall restrict any rights that
the Licensee may have under the Licensor's undertaking
with the antitrust authorities of the European Union (the
"EU") regarding licensing of certain technologies for use
--
in the countries of the EU.";
(iii) by deleting the second sentence of Section 4 in its
entirety and replacing it with the following:
"Such information, assistance and advice shall be provided
for a period of one year from the date hereof, except that
with respect to the development of synthesis of
Methoprene, such information, assistance and advice shall
be available and provided upon Licensee's request for a
period ending on the date on which the Licensee or its
designee obtains approval of the United States Food and
Drug Administration to manufacture and sell Methoprene in
compliance with Good Manufacturing Practices in the United
States or Canada.";
(iv) by adding the phrase "or its designee" after the word
"Licensee" the first time such word appears in the second
paragraph of Section 4;
(v) by adding the following phrase after the word
"consultations" the first time such word appears in the
second paragraph of Section 4:
<PAGE>
5
", including consultations in Licensor's plant in Muttenz,
Switzerland,"
(vi) by deleting the first sentence of Section 5 in its
entirety and replacing it with the following:
"The Licensee shall reimburse the Licensor for all costs
and expenses, as shown by documentary evidence, incurred
by the Licensor in connection with the Licensor's
assistance, support and advice made available to the
Licensee under this Agreement during the period ending on
the first anniversary of the date on which the Licensee or
its designee obtains the EPA's approval to manufacture and
sell Methoprene in the United States and Canada.
Thereafter, the Licensee shall compensate the Licensor for
all assistance, support and advice made available to the
Licensee under this Agreement in the amount equal to the
costs and expenses incurred by the Licensor in connection
therewith plus 30%."; and
(vii) by adding the following sentence at the end of Section 9:
"Neither party hereto shall have the right to use the
information received from the other party pursuant to this
Section 9 in any comparative advertising."
SECTION 2. Effect of Amendment. Except as and to the extent
-------------------
expressly modified by this Amendment, the Agreement shall remain in full force
and effect in all respects.
SECTION 3. Governing Law. This Amendment shall be governed by the
-------------
laws of the State of New York.
SECTION 4. Counterparts. This Amendment may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE>
6
IN WITNESS WHEREOF, the Seller, the Parent and the Purchaser have
caused this Amendment to be executed as of the date first written above by their
respective officers thereunto duly authorized.
NOVARTIS INC.
By /s/ Raymund Breu / Christolph Maeder
------------------------------------
Name: Raymund Breu
Christolph Maeder
Title: CFO
Sr. Corporate Counsel
CENTRAL GARDEN & PET COMPANY
By /s/ William E. Brown
--------------------
Name: William E. Brown
Title: C.E.O.
WELLMARK INTERNATIONAL
By /s/ William E. Brown
--------------------
Name: William E. Brown
Title: C.E.O.
<PAGE>
AMENDMENT NO. 2, dated as of May 23, 1997 (this "Amendment"), to the
---------
Amended and Restated Asset Purchase Agreement, dated as of February 3, 1997, as
amended by Amendment No. 1 thereto, dated as of April 22, 1997 (the "Agreement";
---------
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement), among NOVARTIS INC., a company
organized under the laws of Switzerland (the "Seller"), CENTRAL GARDEN & PET
------
COMPANY, a Delaware corporation (the "Parent"), and WELLMARK INTERNATIONAL
------
(formerly known as Centic Acquisition Corp.), a California corporation (the
"Purchaser").
- ----------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller, the Parent and the Purchaser have entered into the
Agreement;
WHEREAS, on February 3, 1997, the Seller delivered to the Parent and the
Purchaser the Disclosure Schedule; and
WHEREAS, the Seller, the Parent and the Purchaser desire to amend the
Agreement and the Disclosure Schedule in certain respects;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Seller, the Parent and the Purchaser
hereby agree as follows:
SECTION 1. Amendments to the Agreement. The Agreement is, effective as of
---------------------------
the date hereof, hereby amended as follows:
(a) Section 2.03(a) shall be amended by deleting the first sentence
thereof in its entirety and replacing it with the following:
"The aggregate purchase price for the Assets shall be $31,000,000
(the "Purchase Price").
--------------
(b) The text of Section 7.01 of the Agreement shall be redesignated as
Section 7.01(a) and new Sections 7.01(b) and (c) shall be added to the
Agreement to read in their entirety as follows:
"(b) In addition to the Purchaser's obligations under
Section 7.01(a), where the Goods and Services Tax ("GST") imposed
---
under the Excise Tax Act (Canada) applies to the transfer of the
tangible personal property, the Purchaser shall, or shall cause
its Affiliate in Canada (the "Canadian Affiliate") to, be duly
------------------
registered under the provisions of the GST. The Purchaser shall
or shall cause any Affiliate acquiring any of the Assets to pay
to Sandoz Agro Canada, Inc. ("Sandoz Agro
-----------
<PAGE>
2
Canada") at the Closing GST calculated at the rate of 7% on the
------
consideration allocated to the Assets located in Canada at the
time of Closing and, notwithstanding anything to the contrary
contained in Section 7.01(a), the Purchaser shall be responsible
for such GST, except to the extent the Purchaser is not entitled
to receive a full credit for such GST, in which case the
provisions of Section 7.01(a) shall apply. The Seller certifies
that Sandoz Agro Canada is a registrant under the provisions of
the Excise Tax Act (Canada) (Business Number 1040712435).
(c) Sandoz Agro Canada is a registered vendor for purposes
of retail sales tax ("RST") under the Retail Sales Tax Act
---
(Ontario). The Purchaser represents and warrants that it is
purchasing the tangible personal property located in the Province
of Ontario, Canada that is inventory for purposes of resale. In
addition to the Seller's obligations under Section 7.01(a), the
Seller shall deliver to the Purchaser the duplicate copy of the
certificate issued pursuant to Section 6 of the Retail Sales Tax
Act (Ontario) confirming that all RST collectible or payable by
Sandoz Agro Canada has been paid or a satisfactory arrangement
has been entered into for the payment of such RST. In addition
to the Purchaser's obligations under Section 7.01(a), the
Purchaser shall issue to Sandoz Agro Canada, in a form
satisfactory to Sandoz Agro Canada's counsel, an Ontario Purchase
Exemption Certificate thus alleviating Sandoz Agro Canada of the
responsibility of having to collect and remit to the Minister of
Finance RST on such inventory. Any other Assets that are
tangible personal property shall be subject to RST at the rate of
8% calculated on the consideration allocated to such Assets, and
such amount of RST shall be remitted by the Purchaser to Sandoz
Agro Canada at the Closing.";
(c) Exhibit 1.01(b) to the Agreement shall be deleted in its entirety
and replaced with the new Exhibit 1.01(b) attached to this Amendment as
Exhibit 1;
(d) Exhibit 2.03(b) to the Agreement shall be deleted in its entirety
and replaced with the new Exhibit 2.03(b) attached to this Amendment as
Exhibit 2; and
(e) The form of the Methoprene Supply Agreement attached to the
Agreement as Exhibit 5.10(b) shall be amended by deleting in its entirety
the first sentence of Section 7 thereof and replacing it with the
following:
"The Supplier warrants that Methoprene shall, at the time of
delivery to the Buyer, meet (i) all applicable EPA, FDA and other
governmental
<PAGE>
3
requirements for the United States and Canada and (ii) the
specifications agreed upon by the Supplier and the Buyer, and
that such specifications are suitable for the manufacture of the
Supplier's Products in existence on the Closing Date."
SECTION 2. Amendment to the Disclosure Schedule. Section
------------------------------------
2.01(a)(II)(ii) of the Disclosure Schedule is, effective as of the date hereof,
hereby amended by adding the following trademarks to the U.S. trademarks listed
therein:
<TABLE>
<CAPTION>
TRADEMARK STATUS APPLICATION OR APPLICATION OR
REGISTRATION DATE REGISTRATION NUMBER
<S> <C> <C> <C>
Zoecon Reg May 23, 1978 1,091,662
Zoecon Reg Nov 14, 1972 947,075
(renewed Feb 16, 1993)
</TABLE>
SECTION 3. Effect of Amendment. Except as and to the extent
-------------------
expressly modified by this Amendment, the Agreement and the Disclosure Schedule
shall remain in full force and effect in all respects.
SECTION 4. Governing Law. This Amendment shall be governed by the
-------------
laws of the State of New York.
SECTION 5. Counterparts. This Amendment may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE>
4
IN WITNESS WHEREOF, the Seller, the Parent and the Purchaser have
caused this Amendment to be executed as of the date first written above by their
respective officers thereunto duly authorized.
NOVARTIS INC.
By /s/ Wayne P. Merkelson
----------------------
Name: Wayne P. Merkelson
Title: Authorized Representative
CENTRAL GARDEN & PET COMPANY
By /s/ Robert B. Jones
-------------------
Name: Robert B. Jones
Title: V.P. Finance
CENTIC ACQUISITION CORP.
By /s/ Robert B. Jones
-------------------
Name: Robert B. Jones
Title: V.P. Finance
