<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
---------------------------
Date of Report (Date of earliest event reported) May 22, 1996
DADE INTERNATIONAL INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-90462 36-949533
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
- ------------------------------------------------------------------------------
1717 Deerfield Road
Deerfield, IL 60015-0778
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-5300
Not Applicable
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index on page 5
<PAGE>
Item 2. Acquisition of Assets.
As of May 7, 1996, Dade Chemistry Systems Inc. ("Dade Chemistry"), an
affiliate of Dade International Inc. (the "Company"), completed its acquisition
(the "Acquisition") of the in vitro diagnostics business ("DuPont IVD") of
E.I. du Pont de Nemours and Company and certain of its affiliates ("DuPont"). As
consideration for the Acquisition, Dade Chemistry paid approximately
$513.0 million in cash to DuPont at the closing of the Acquisition (the
"Closing"), which amount is subject to post-Closing adjustments that provide
that the purchase price will be (i) increased or decreased to the extent the
accounts receivable, inventories and other miscellaneous assets of DuPont IVD as
of the date of the Closing exceeds or was less than, respectively, the accounts
receivable, inventories and miscellaneous assets of DuPont IVD as of December
31, 1994, and (ii) decreased to the extent the amount of capital expenditures
made through the date of Closing was less than an agreed upon target.
Pursuant to the purchase agreement related to the Acquisition, DuPont
has agreed to retain, and/or indemnify Dade Chemistry from certain liabilities
and obligations relating to DuPont IVD, including liabilities and obligations
relating to pre-Closing accounts payable and accrued expenses, taxes, employee
compensation and other benefits (including post-retirement medical and life
insurance benefits), environmental matters and other matters as specified in
such purchase agreement.
In connection with the Acquisition, the Company refinanced (the
"Refinancing") its existing bank indebtedness by entering into a credit
agreement with certain banks (the "Bank Credit Agreement") to incur borrowing
thereunder and repurchased its then outstanding 13% Senior Subordinated Notes
due 2005 pursuant to a tender offer at a price of 118% of their principal amount
plus accrued interest up to, but not including, the date of purchase.
Funding for the Acquisition and the Refinancing consisted of:
(i) gross proceeds from a private placement of the Company's 11 1/8% Senior
Subordinated Notes due 2006 of $350.0 million; (ii) borrowings under the Bank
Credit Agreement of $510.0 million; and (iii) existing cash on hand. The Bank
Credit Agreement consists of $460.0 million of term loans and a $125.0 million
revolving credit facility, of which $50.0 million was drawn down at the Closing.
Facilities and Employees.
Following the Acquisition, Dade Chemistry will operate these two manufacturing
facilities:
<TABLE>
<CAPTION>
Floor Area No. of
Location No. Of Sites (Sq. Ft.) Owned/Leased Personnel(1)
-------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Glasgow, Delaware.... 1 447,000 Owned 620
Newtown, Connecticut. 1 22,000 Leased 118
--- ------- ----
Total.......... 2 469,000 738
=== ======= ====
</TABLE>
__________
(1) Personnel numbers include temporary employees but do not include personnel
associated with, but not housed at, the locations (e.g., sales
representatives and technical support specialists).
As of December 31, 1995, DuPont IVD had approximately 1,900 full-time
and part-time employees, 1,660 in the United States (including Puerto Rico), 160
in Europe, 30 in Japan and 50 in other locations around the world.
<PAGE>
Employment Agreement with Executive Officer.
In connection with the Acquisition, Dade Chemistry intends to enter into
an employment agreement with Robert W. Brightfelt. Since the Acquisition, Mr.
Brightfelt has served as an Executive Vice President, responsible for the
routine chemistry, speciality chemistry and point-of-care product lines, and a
Director of the Company.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired.
i) See "Index to Financial Statements and Schedules" on
page F-1 hereof for the historical financial information
of DuPont IVD for the fiscal years ended, and as of,
December 31, 1994 and 1995. Information needed to file
the required historical financial information of DuPont
IVD for the fiscal year ended December 31, 1993 is
currently unavailable. The Company intends to file the
required historical financial information as soon as
practical, but in any event, not later than August 31,
1996.
(b) Pro Forma Financial Information.
i) Information needed to file the required pro forma
financial information related to the Acquisition for the
first quarter of 1996 is currently unavailable. The
Company intends to file the required pro forma financial
information as soon as practicable but in any event, not
later than August 31, 1996.
(c) Exhibits.
2.1 Asset Purchase and Sale Agreement between E.I. du Pont de Nemours & Company
and Dade Chemistry Systems Inc. dated as of December 11, 1995 as amended
and restated on May 7, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dade International Inc.
By: /s/ Scott T. Garrett
-----------------------
Name: Scott T. Garrett
Title: President and Chief
Executive Officer
Dated: May 22, 1996
<PAGE>
INDEX TO FINANCIAL STATEMENTS
DUPONT IVD
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants........................................ F-2
Combined Statement of Operations for the years ended December 31, 1994
and 1995................................................................ F-3
Combined Statement of Net Assets to be Sold at December 31, 1994 and
1995.................................................................... F-4
Notes to Combined Financial Statements................................... F-5
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
E. I. du Pont de Nemours and Company
We have audited the accompanying combined statement of net assets to be sold
of In Vitro Diagnostics (the "Business"), a division of E. I. du Pont de
Nemours and Company (the "Company"), at December 31, 1995 and 1994, and the
related combined statement of operations of the Business for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.
The accompanying combined financial statements were prepared to comply with
the rules and regulations of the Securities and Exchange Commission and on the
basis of presentation as described in Note 1, to present the combined net assets
of the Business to be sold to Dade International Inc. ("Dade") and the related
combined results of operations of the Business and are not intended to be a
complete presentation of the Business' financial position or cash flows.
In our opinion, the combined financial statements present fairly, in all
material respects, the combined net assets of the Business to be sold to Dade
at December 31, 1995 and 1994, and the combined results of operations of the
Business for the years then ended, in conformity with generally accepted
accounting principles.
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
March 14, 1996
F-2
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
COMBINED STATEMENT OF OPERATIONS [SEE NOTE 1]
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-------------
SEE
NOTE 1995 1994
---- ------ ------
<C> <S> <C> <C>
3 Sales............................................... $341.8 $325.9
Other Income........................................ 2.9 3.7
------ ------
Total Revenues...................................... 344.7 329.6
6 Cost of Goods Sold and Other Operating Expenses..... 181.5 172.9
4 Selling, General and Administrative Expenses........ 108.8 102.6
Research and Development Expense.................... 33.7 33.6
5 Restructuring Charges............................... -- 13.3
------ ------
Income Before Interest Expense and Taxes............ 20.7 7.2
2 Interest Expense.................................... 7.6 6.8
------ ------
Income Before Income Taxes.......................... 13.1 0.4
2, 7 Provision for Income Taxes.......................... 3.7 (0.9)
------ ------
NET INCOME.......................................... $ 9.4 $ 1.3
====== ======
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-3
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
COMBINED STATEMENT OF NET ASSETS TO BE SOLD [SEE NOTE 1]
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31
-------------
SEE
NOTE 1995 1994
---- ------ ------
<C> <S> <C> <C>
ASSETS
3 Accounts Receivable Trade--Net $ 74.2 $ 65.0
8 Inventories 33.1 31.1
9 Property, Plant and Equipment 184.8 208.0
Less: Accumulated Depreciation 112.3 128.0
------ ------
Net Property, Plant and Equipment 72.5 80.0
------ ------
Other Assets 8.6 10.4
------ ------
TOTAL ASSETS TO BE SOLD $188.4 $186.5
====== ======
LIABILITIES
Product Warranty $ 3.1 $ 2.0
Deferred Service Revenue 11.8 16.2
------ ------
TOTAL LIABILITIES TO BE ASSUMED $ 14.9 $ 18.2
------ ------
NET ASSETS TO BE SOLD $173.5 $168.3
====== ======
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-4
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
NOTE 1. BASIS OF PRESENTATION
On December 11, 1995, E. I. du Pont de Nemours and Company ("DuPont")
entered into an Asset Purchase and Sale Agreement (the "Agreement") with Dade
International Inc. ("Dade") for the sale of DuPont's worldwide In Vitro
Diagnostics operations (the "Business"). The Business designs, manufactures
and markets clinical analyzers and reagents, and provides related equipment
service and customer support for hospitals and alternative care markets
worldwide.
Under the terms of the Agreement, on or about April 30, 1996 (the "Closing
Date"), DuPont will sell to Dade essentially all of the assets related to
DuPont's operation of the Business in the following countries:
NORTH AMERICA SOUTH AMERICA EUROPE ASIA PACIFIC
------------- ------------- ------ ------------
United States Venezuela Belgium Japan
Canada France Australia
Puerto Rico Germany
Italy
Netherlands
Spain
Switzerland
United Kingdom
The major manufacturing operations of the Business are conducted at Glasgow,
DE, and through October 1995, at Manati, Puerto Rico. Operations in Puerto
Rico were transferred to the U.S. during 1995 [See Note 5]. In addition, the
Business has other manufacturing operations at Newtown, CT and a warehouse
(World Parts Center) in Atlanta, GA.
Under the terms of the Agreement, Dade will assume the deferred service and
product warranty liabilities of the Business. Other liabilities, which will be
retained by DuPont, in general, are not specifically identifiable with the
Business. Accordingly, a Combined Statement of Net Assets to be Sold is
presented in lieu of a statement of financial position.
Throughout the periods covered by the Combined Financial Statements, the
Business' U.S. operations were conducted and accounted for as a division of
DuPont's Medical Products Strategic Business Unit ("Medical SBU"). Non-U.S.
operations of the Business were conducted in each country through DuPont
subsidiaries that included other DuPont businesses.
Historically, financial statements were not prepared for the Business. These
Combined Financial Statements have been derived from DuPont's historical
accounting records and are presented as if the operations of the Business in
each country had been conducted exclusively within a wholly-owned subsidiary
of the DuPont subsidiary in that country.
Under DuPont's centralized cash management system, cash requirements of the
Business were generally provided directly to the Business by DuPont, and cash
generated by the Business was generally remitted directly to DuPont.
Transaction systems (e.g., payroll, employee benefits, freight, and accounts
payable) used to record and account for cash disbursements were provided by
centralized DuPont organizations. Most of these corporate systems are not
designed to track liabilities and payments on a business specific basis.
Accordingly, it is not practical to determine liabilities associated with the
Business for the above items; therefore, such liabilities cannot be included
in the Combined Financial Statements. Given these constraints, a statement of
cash flows is not presented; thus, only certain supplemental cash flow
information is available as presented in Note 12.
F-5
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
The Combined Statement of Operations includes all revenues and costs
attributable to the Business, including 1) costs for facilities, functions and
services used by the Business at sites shared with other DuPont operations, 2)
costs for certain functions and services performed by centralized DuPont
organizations directly charged to the Business, 3) allocations of DuPont's
Medical Products SBU management expense and 4) allocations of interest expense
[See Notes 2 and 4].
All of the allocations and estimates in the Combined Financial Statements
are based on assumptions that DuPont management believes are reasonable under
the circumstances. However, these allocations and estimates are not
necessarily indicative of the costs that would have resulted if the Business
had been operated as a separate entity.
Transactions among the Business and other DuPont operations have been
identified in the Combined Financial Statements as transactions among related
parties to the extent practicable. [See Note 4.]
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Combination
The Combined Financial Statements include the accounts of the various units
comprising the Business. All material transactions and accounts among the
units have been eliminated in combination.
Revenue Recognition
Sales and related cost of goods sold are included in income when goods are
shipped to the customer. Service revenues are recognized ratably over the life
of the service agreement or as service is performed, if not under a service
agreement. Revenue on equipment leased to customers is recognized over the
term of the lease.
Inventories
U.S. inventories are valued at the lower of aggregate cost or market, with
cost being determined by the last-in, first-out (LIFO) method. Non-U.S.
inventories, as well as stores and supplies, are valued at the lower of
aggregate cost or market, with cost being determined by the average cost
method. Elements of cost in inventory include raw materials, direct labor and
manufacturing overhead.
Property, Plant and Equipment (PP&E)
PP&E is carried at cost and, for PP&E acquired subsequent to 1994, is
depreciated using the straight-line method. PP&E acquired prior to 1995 is
generally classified in depreciable groups and depreciated under the sum-of-
the-years' digits method. This change in depreciation method did not have a
material effect on 1995 results, and was made to conform with the common
industry practice, which management considers to be preferable.
Depreciation rates are based on estimated useful lives of 15 to 25 years for
buildings, 4 to 8 years for equipment leased to customers, and 5 to 25 years
for all other equipment.
Generally, for PP&E acquired prior to 1991 the gross carrying value of PP&E
surrendered, retired, sold or otherwise disposed of is charged to accumulated
depreciation and any salvage or other recovery therefrom is credited to
accumulated depreciation. For disposals of PP&E acquired after 1990, the gross
carrying value and related accumulated depreciation are removed from the
accounts and included in determining gain or loss on such disposals.
F-6
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Maintenance and repairs are charged to operations; replacements and
betterments are capitalized.
Research and Development Expenses
Research and development costs are charged to expense when incurred.
Interest Expense
Interest expense is determined by DuPont based on consolidated indebtedness
and, in these Combined Financial Statements, has been allocated to the
Business on the basis of the Business' proportionate share of the identifiable
operating assets of DuPont. DuPont management believes this allocation is
reasonable, but it is not necessarily indicative of the cost that would have
been incurred if the Business had been operated as a separate entity.
Income Taxes
The taxable income/loss of the various units comprising the Business was
included in the tax return of the DuPont entity of which it was a part. As
such, separate income tax returns were not prepared or filed for the Business.
Tax expense has been separately determined for the Business by applying the
asset and liability approach to the various units of the Business as if it
were a separate taxpayer.
Under the basis of presentation for these Combined Financial Statements, no
provision has been made for taxes on cash remittances from the various units
of the Business to the DuPont entity of which they are a part. Generally,
remittances from a wholly-owned subsidiary to its in-country parent are tax
free.
Foreign Currency Translation
DuPont has determined that the U.S. dollar is the functional currency of its
worldwide operations and that this functional currency determination is
appropriate to the economic environment in which the Business operated during
the periods covered by these Combined Financial Statements. Foreign currency
asset and liability amounts are translated into U.S. dollars at end-of-period
exchange rates, except for inventories, prepaid expenses and property, plant
and equipment, which are translated at historical rates. Income and expenses
are translated at average exchange rates in effect during the year, except for
expenses related to balance sheet amounts that are translated at historical
exchange rates. Gains and losses from the translation of monetary assets and
liabilities are included in income in the period they occurred and are
allocated to the Business based on its proportionate share of the beginning-
of-period and end-of-period balances of each monetary asset and liability of
the DuPont subsidiary of which it is a part.
Pensions
DuPont has noncontributory defined benefit plans covering substantially all
U.S. employees, including the employees of the Business. The benefits for
these plans are based primarily on employees' years of service and pay near
retirement. The cost of these plans for active employees was assigned to the
Business. Pension coverage for employees of DuPont's non-U.S. subsidiaries is
provided, to the extent deemed appropriate, through similar separate plans.
Obligations under such plans are systematically provided for by depositing
funds with trustees, under insurance policies or by book reserves. The cost of
these non-U.S. plans has been assigned to the Business using methods that
DuPont believes are appropriate.
Pension cost assigned to the Business is considered to be financed by DuPont
in the period the pension cost was incurred. Pension liabilities and assets
have been measured at December 31, 1995, 1994 and 1993.
F-7
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Accordingly, resulting gains or losses associated with actuarial changes and
with actual investment returns have been excluded from the pension costs
assigned to the Business. Such cost is not necessarily indicative of the
pension cost that would have been incurred if the Business had been operated
as a separate company. DuPont has assumed responsibility for pension payments
to Business retirees and will transfer assets to Dade, from the DuPont pension
fund, equal to the agreed-upon liabilities for transferred employees.
Accordingly, pension related assets and liabilities are not included in the
Combined Financial Statements [See Note 10].
Other Postretirement Benefits
DuPont and certain of its subsidiaries provide medical, dental, and life
insurance benefits to pensioners and their survivors. These benefits are
accounted for as they are earned by employees. Other postretirement
liabilities have been measured at December 31, 1995, 1994 and 1993.
Accordingly, resulting gains or losses associated with actuarial changes have
been excluded from the postretirement costs assigned to the Business. These
benefit costs are not necessarily indicative of the postretirement benefit
costs that would have been incurred if the Business had operated as a separate
entity. The cost of these benefits is considered to be financed by DuPont in
the period incurred. Other postretirement benefits liabilities will be
retained by DuPont and are not included in the Combined Financial Statements.
[See Note 11].
Compensation Plan
DuPont sponsors a Variable Compensation Plan where awards may be granted in
DuPont stock and/or cash to employees of the Business who have contributed
most in a general way to the Business' success, consideration being given to
ability to succeed to more important managerial responsibility.
Insurance
During the period covered by the Combined Financial Statements, DuPont did
not insure for property damage losses. Liability insurance was purchased with
large deductibles. Costs included in the Combined Statement of Operations
resulting from non-insured losses were not material; such costs are included
in income as incurred.
Environmental Remediation
Expenses for environmental matters are recorded as operating expenses when
it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. Where feasible, these costs are
assigned to the business unit responsible for the conditions being remediated.
During 1995 and 1994, no material environmental remediation costs were
assigned to the Business.
Product Warranty
The Business warrants its equipment products for a period of up to one year.
Anticipated costs related to product warranty are charged to Cost of Goods
Sold and Other Operating Expenses when sales occur.
NOTE 3. SALES AND ACCOUNTS RECEIVABLE TRADE
Substantially all of the Business' sales are to hospitals and alternative
health care markets.
Accounts Receivable Trade are net of allowance for doubtful accounts of $1.3
and $1.5 at December 31, 1995 and 1994, respectively.
F-8
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. RELATED PARTY TRANSACTIONS
The Combined Financial Statements include significant transactions with
other DuPont organizations involving functions and services (such as cash
management, tax administration, legal, and data processing) that were provided
to the Business. The costs of these functions and services have been directly
charged and/or allocated to the Business using methods that DuPont management
believes are reasonable. Such charges and allocations are not necessarily
indicative of the costs that would have been incurred if the Business had been
a separate entity. It is not feasible to segregate all of these charges from
costs incurred directly by the Business. However, Selling, General and
Administrative Expenses include $26.2 in 1995 and $26.1 in 1994 representing
allocations of general corporate expenses to the Business.
NOTE 5. RESTRUCTURING CHARGES
During 1994, the Business recorded $13.3 of restructuring charges directly
related to management's decision to downsize its U.S. work force and to cease
the manufacturing at a facility in Manati, Puerto Rico in order to improve
productivity and competitiveness. Employee separation costs totaling $3.3 were
incurred for the involuntary and voluntary termination of about 150 employees
based upon a plan which identified the number of employees to be terminated
and their functions. The remaining portion of the restructuring charge, $10.0,
is primarily attributable to the loss on the sale of the Manati facility.
The business' restructuring program was completed in 1995.
NOTE 6. COST OF GOODS SOLD AND OTHER OPERATING EXPENSES
In connection with implementation of the restructuring plan, additional
abnormal costs of $8.8 and $3.3 in 1995 and 1994, respectively, were expensed
as incurred and were primarily due to product transfer activities, and
employee training and relocation.
NOTE 7. PROVISION FOR INCOME TAXES
<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Current Tax Expense:
U.S. Federal.............................................. $ 2.0 $ 6.3
U.S. State and Local...................................... 0.6 --
Non U.S................................................... 0.5 2.1
----- -----
Total................................................... 3.1 8.4
----- -----
Deferred Tax Expense:
U.S. Federal.............................................. 0.8 (8.5)
U.S. State and Local...................................... (0.4) (0.8)
Non U.S................................................... 0.2 --
----- -----
Total................................................... 0.6 (9.3)
----- -----
Provision for Income Tax.................................... $ 3.7 $(0.9)
===== =====
</TABLE>
F-9
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Deferred income taxes result from temporary differences between the
financial and tax basis of the Company's assets and liabilities. The tax
effects of temporary differences and tax loss/tax credit carry forwards
included in the deferred income tax provision are as follows:
<TABLE>
<CAPTION>
1995 1994
----- ------
<S> <C> <C>
Depreciation.............................................. $ 2.0 $ (2.5)
Inventory................................................. 0.5 0.4
Accrued Liabilities....................................... (1.8) 5.7
Net Operating Loss Carry Forwards......................... (1.0) (14.0)
Change in Valuation Allowance............................. 0.7 1.1
Other..................................................... 0.2 --
----- ------
$ 0.6 $ (9.3)
===== ======
</TABLE>
An analysis of the income tax provision follows:
<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Income Before Income Taxes................................ $13.1 $ 0.4
----- -----
Tax at 35% statutory U.S. federal tax rate................ 4.6 0.1
Lower effective tax rate on operations within U.S. posses-
sions.................................................... (1.0) (1.8)
Change in valuation allowance............................. 0.7 1.1
Other--Net................................................ (0.6) (0.3)
----- -----
Provision for Income Taxes................................ $ 3.7 $(0.9)
===== =====
</TABLE>
NOTE 8. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1995 1994
------ ------
<S> <C> <C>
Raw materials............................................. $ 9.7 $ 12.1
Semi-finished product..................................... 12.5 11.2
Finished product.......................................... 22.6 22.1
Stores and supplies....................................... 2.4 1.4
------ ------
Total before LIFO....................................... 47.2 46.8
LIFO Reserve.............................................. (14.1) (15.7)
------ ------
Inventories............................................... $ 33.1 $ 31.1
====== ======
</TABLE>
DuPont's application of LIFO is not focused on individual business units.
Accordingly, the results of applying LIFO are allocated to the Business.
Management believes such allocations are reasonable, but may not necessarily
reflect the cost that would have been incurred if LIFO had been applied on a
business specific basis. The impact of the LIFO method was to decrease Cost of
Goods Sold and Other Operating Expenses by $1.6 during 1995 and $0.2 during
1994. Inventories valued at LIFO comprise approximately 80 percent of combined
inventories before LIFO adjustment for both years.
F-10
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1995 1994
------ ------
<S> <C> <C>
Land...................................................... $ 0.8 $ 1.0
Buildings and Equipment................................... 129.7 158.7
Equipment Leased to Customers............................. 49.1 41.3
Construction.............................................. 5.2 7.0
------ ------
Property, Plant and Equipment, at Cost.................... $184.8 $208.0
====== ======
</TABLE>
Depreciation expense for 1995 totaled $24.0; this represents $5.9 of
depreciation on equipment at domestic customers and demo equipment plus $18.1
of depreciation on all other worldwide assets. Depreciation expense for 1994
totaled $24.5; this represents $6.0 of depreciation on equipment at domestic
customers and demo equipment plus $18.5 of depreciation on all other worldwide
assets. In addition, amortization of capitalized software (reported as Other
Assets) was $1.6 in 1995 and $1.4 in 1994.
Capital expenditures were $23.4 for 1995. In the United States, capital
expenditures totaled $19.0; this includes $9.3 for capitalized instruments,
$2.2 for capitalized software, and $7.5 for all other capital expenditures.
Non-U.S. capital expenditures, principally capitalized instruments, totaled
$4.4 for 1995. Capital expenditures were $21.9 for 1994. In the United States,
capital expenditures totaled $18.2 for 1994; this included $8.0 for
capitalized instruments, $2.2 for capitalized software, and $8.0 for all other
capital expenditures. Non-U.S. capital expenditures, principally capitalized
instruments, totaled $3.7 for 1994.
NOTE 10. PENSION COST
For U.S. plans, the pension cost was determined using a discount rate of
9.00 percent and 7.25 percent for 1995 and 1994, respectively. A long-term
rate of compensation increase of 5 percent was used for both years. For non-
U.S. plans, no one of which was material, similar economic assumptions were
used.
The projected benefit obligation (PBO) used in determining the pension cost
was $61.9 and $88.6 at January 1, 1995 and 1994, respectively. For the U.S.
qualified plan, the PBO was assumed to be fully funded by pension plan assets
allocated from the DuPont plan, with an assumed long-term rate of return of 9
percent for both years.
The elements of pension costs assigned to the Business using the above
methods were:
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Service cost.............................................. $ 4.8 $ 6.7
Interest cost............................................. 5.7 6.3
Expected return on plan assets............................ (4.9) (7.1)
------ ------
Net Pension Cost.......................................... $ 5.6 $ 5.9
====== ======
</TABLE>
The year-end PBO was $97.4 for 1995. For the U.S. plans, the PBO was
determined using a discount rate of 7.25 percent and a long-term rate of
compensation increase of 5 percent. For the non-U.S. plans, similar economic
assumptions were used.
F-11
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11. OTHER POSTRETIREMENT BENEFITS
Other postretirement benefits cost includes the following components:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Service cost................................................... $1.4 $2.0
Interest cost.................................................. 1.9 2.2
---- ----
Other Postretirement Benefits Cost............................. $3.3 $4.2
==== ====
</TABLE>
The above costs were based on an accumulated postretirement benefit
obligation (APBO) of $20.6 and $30.9 at January 1, 1995 and 1994,
respectively. The health care trend used in determining the APBO was an
escalation rate of 8 percent decreasing to 5 percent over 8 years, and 10
percent decreasing to 5 percent over 10 years, respectively for January 1,
1995 and January 1, 1994. A 5 percent assumed long-term rate of compensation
increase was used for life insurance for both years. The discount rate was
9.00 percent and 7.25 percent for January 1, 1995 and 1994, respectively. A
one percentage-point increase in the health care cost escalation rate would
have increased the other postretirement benefits cost by $0.4 in 1995 and $0.7
in 1994.
NOTE 12. SUPPLEMENTAL CASH FLOW INFORMATION
As described in Note 1, DuPont's cash management system is not designed to
trace centralized cash and related financing transactions to the specific cash
requirements of the Business. In addition, DuPont's corporate transaction
systems are not designed to track liabilities and payments on a business
specific basis. Given these constraints, the following data are presented to
facilitate analysis of key components of cash flow activity.
<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Net Income................................................... $ 9.4 $ 1.3
Depreciation and Amortization................................ 25.6 25.9
Loss on Disposal of PP&E [See Note 5]........................ -- 10.0
Change in Accounts Receivable................................ (9.2) (0.2)
Change in Inventory.......................................... (2.0) 9.8
Change in Other Assets....................................... 2.4 0.3
Change in Product Warranty................................... 1.1 (0.3)
Change in Deferred Service Revenue........................... (4.4) (2.3)
----- -----
Cash Flow from Operating Activities, excluding DuPont Financ-
ing......................................................... $22.9 $44.5
----- -----
Investment Activities (Capital Expenditures)................. $23.4 $21.9
----- -----
Net Financing Provided to (by) DuPont*....................... $(0.5) $22.6
===== =====
</TABLE>
- --------
* The difference between Cash Flow from Operating Activities and Investment
Activities does not necessarily represent the cash flows of the Business, or
the timing of such cash flows, had it operated as a separate entity.
NOTE 13. COMMITMENTS AND CONTINGENCIES
The Business has various purchase commitments for materials, supplies, and
items of permanent investment incident to the ordinary conduct of business. In
the aggregate, such commitments are not at prices in excess of current market.
The Business does not have any material lease commitments.
F-12
<PAGE>
IN VITRO DIAGNOSTICS
(A DIVISION OF E. I. DU PONT DE NEMOURS AND COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
The Business is subject to various lawsuits and claims with respect to such
matters as product liabilities, governmental regulations and other actions
arising out of the normal course of business. While the effect on future
financial results is not subject to reasonable estimation because considerable
uncertainty exists, in the opinion of DuPont's counsel, the ultimate
liabilities resulting from such lawsuits and claims will not materially affect
the consolidated financial position of the Business.
NOTE 14. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
The Business operates within a single industry segment.
<TABLE>
<CAPTION>
UNITED STATES EUROPE OTHER ELIMINATIONS CONSOLIDATED
------------- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
1995
Sales to unaffiliated
customers (1).......... $258.7 $59.4 $23.7 $ -- $341.8
Transfers between geo-
graphic areas.......... 38.8 0.6 -- (39.4) --
------ ----- ----- ------ ------
Total................. $297.5 $60.0 $23.7 $(39.4) $341.8
====== ===== ===== ====== ======
Income before interest
expense and taxes...... $ 26.4 $ 2.1 $(2.8) $ (5.0) $ 20.7
====== ===== ===== ====== ======
Total assets to be
sold................... $134.2 $44.3 $14.9 $ (5.0) $188.4
====== ===== ===== ====== ======
1994
Sales to Unaffiliated
Customers (1).......... $257.5 $46.3 $22.1 $ -- $325.9
Transfers between geo-
graphic areas.......... 35.3 0.2 0.4 (35.9) --
------ ----- ----- ------ ------
Total................. $292.8 $46.5 $22.5 $(35.9) $325.9
====== ===== ===== ====== ======
Income before interest
expense and taxes...... $ 10.0 $(0.3) $(1.1) $ (1.4) $ 7.2
====== ===== ===== ====== ======
Total assets to be
sold................... $140.7 $35.3 $14.8 $ (4.3) $186.5
====== ===== ===== ====== ======
</TABLE>
- --------
(1) Sales outside the United States of products manufactured in, and exported
from, the United States totaled $6.9 in 1995 and $13.6 in 1994.
F-13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document Page
- --------------- --------------------------------------------- -------------
<S> <C> <C>
2.1 Asset Purchase and Sale Agreement between
E.I. duPont de Nemours & Company and Dade
Chemistry Systems Inc. dated December 11,
1995 as amended and restated on May 7, 1996.
</TABLE>
Page 5 of 5 pages
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN
E. I. DU PONT DE NEMOURS AND COMPANY
AND
DADE CHEMISTRY SYSTEMS INC.
FOR THE DIAGNOSTICS BUSINESS
DECEMBER 11, 1995
AS AMENDED AND RESTATED
ON MAY 7, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
DIAGNOSTICS BUSINESS
--------------------
Articles Page
- -------- ----
1. DEFINITIONS...................................................
2. BUSINESS ASSETS...............................................
3. INTELLECTUAL PROPERTY.........................................
4. EXCLUDED ASSETS...............................................
5. PURCHASE PRICE AND MISCELLANEOUS EXPENSES.....................
6. SELLER'S WARRANTIES...........................................
7. BUYER'S WARRANTIES............................................
8. BUYER'S INDEMNITY.............................................
9. SELLER'S INDEMNITY............................................
10. INTERIM PERIOD................................................
11. EMPLOYEE BENEFIT MATTERS......................................
12. GOVERNMENTAL CONSENTS.........................................
13. CLOSING.......................................................
14. POST CLOSING..................................................
15. BULK SALES ACT................................................
16. RIGHT OF TERMINATION; DISPUTE SETTLEMENT......................
17. SURVIVAL, REMEDIES AND PROCEDURE FOR
INDEMNIFICATION.............................................
18. MISCELLANEOUS.................................................
Exhibits:
Exhibit I - Intellectual Property Rights Agreement
Exhibit II - Undertaking of Assumption
Exhibit III - Transitional Services Agreement
Exhibit IV - Bill of Sale
-i-
<PAGE>
Articles Page
- -------- ----
Schedules:
Schedule 1.52 Sales Offices
Schedule 1.53 Seller's Business Affiliates
Schedule 2.01(a) Land
Schedule 2.01(b) Leased Premises
Schedule 2.04 Permits
Schedule 2.05 Contracts
Schedule 2.08(a) Exclusive Computer Software
Assets
Schedule 2.08(b) Non-exclusive Computer
Software Assets
Schedule 5.02 Known Environmental Matters
Schedule 5.03(b) Inventory Valuation
Procedure
Schedule 5.03(c) Receivables Valuation Procedure
Schedule 5.05 Allocation
Schedule 6.14 Data and Information Communications
Schedule 11.10(a)(1) Relocation Supplemental Living
Allowance
Schedule 11.10(a)(2) Relocation Policy
Schedule 11.10(b) Housing Purchase Assistance Loans
of Transferred Employees
Schedule 13.02(d) Additional Agreements Required by
Seller
Schedule 13.03(d) Additional Agreements Required by
Buyer
Disclosure Schedules:
Disclosure Schedule 6.04 Unusual Activity
Disclosure Schedule 6.05 Litigations and Investigations
Disclosure Schedule 6.06 Environmental Claims, Suits
and Proceedings
Disclosure Schedule 6.10 Exceptions to Intellectual
Property Rights
-ii-
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
DIAGNOSTICS BUSINESS
--------------------
THIS AGREEMENT, entered into as of December 11, 1995, as amended by
Amendment No. 1 dated as of May 3, 1996 and as amended and restated as of May 7,
1996 (and effective as of April 30, 1996), by and between E. I. DU PONT DE
NEMOURS AND COMPANY, a Delaware corporation, with its principal place of
business at 1007 Market Street, Wilmington, Delaware 19898 ("Seller"), and DADE
CHEMISTRY SYSTEMS INC., a Delaware corporation, with its principal place of
business at 1717 Deerfield Road, Deerfield, Illinois 60015, ("Buyer").
W I T N E S S E T H, That:
- - - - - - - - - -
WHEREAS, Seller and Seller's Business Affiliates own and operate a
business for researching, developing, commercially manufacturing, selling and
servicing In-Vitro Diagnostics clinical analyzers and associated reagents and
consumables; and
WHEREAS, Buyer desires to purchase certain assets, and acquire certain
rights of Seller relating to the Business and assume the Assumed Liabilities,
and Seller desires to sell such assets, and transfer such rights and the Assumed
Liabilities;
NOW, THEREFORE, subject to the terms, conditions, covenants and
provisions of this Agreement and in reliance on the warranties contained in this
Agreement, Seller and Buyer mutually covenant and agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
-----------
As used in this Agreement, the following terms have the following meanings:
1.01 "ABO" has the meaning ascribed in Section 11.06(b) of this Agreement.
1.02 "Acquisition Documents" has the meaning ascribed in Section
13.02(c)(ii) of this Agreement.
1.03 "Additional Agreements" are those agreements listed on Schedule
13.02(d) and Schedule 13.03(d).
1.04 "Affiliate" means with respect to a specified entity, an entity that
directly, or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with the entity specified; provided,
--------
that, without limiting the generality of the foregoing, the term "Affiliate"
shall not include (a) any entity in which a Party has a fifty percent or less
ownership interest or (b) DCV, Inc. or entities Controlled by DCV, Inc.
1.05 "Agreement" means this Asset Purchase and Sale Agreement together with
all its Schedules and Exhibits.
1.06 "Assumed Liabilities" has the meaning ascribed in Section 5.01 of this
Agreement.
1.07 "Buildings" has the meaning ascribed in Section 2.01(a) of this
Agreement.
1.08 "Business" means Seller's research, development, commercial
manufacture, sale and service of In-Vitro Diagnostics analyzers, reagents and
related consumables.
2
<PAGE>
1.09 "Business Assets" has the meaning ascribed in Article 2 of this
Agreement.
1.10 "Business Field" means the worldwide research, development, commercial
manufacture, sale and service of In-Vitro Diagnostics analyzers, reagents and
related consumables.
1.11 "Business Records" has the meaning ascribed in Section 2.06 of this
Agreement.
1.12 "Buyer's Pension Plan" has the meaning ascribed in Section 11.06 of
this Agreement.
1.13 "Buyer's Savings Plan" has the meaning ascribed in Section 11.08 of
this Agreement.
1.14 "Closing" has the meaning ascribed in Section 13.01 of this Agreement.
1.15 "Closing Date" means the date on which Closing occurs.
1.16 "Code" means the Internal Revenue Code of 1986, as amended, and
corresponding provisions of any subsequent federal revenue act.
1.17 "Computer Software Assets" has the meaning ascribed in Section 2.08 of
this Agreement.
1.18 "Contracts" has the meaning ascribed in Section 2.05 of this
Agreement.
1.19 "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and operating policies of the
entity in respect of which the determination is being made, through the
ownership of voting securities, contract, voting trust or otherwise.
3
<PAGE>
1.20 "Copyrights" means copyrights, whether or not registered, and
registrations and applications for registration thereof, and all rights therein
provided by law, multinational treaties or conventions.
1.21 "DuPont-Merck JV" means the DuPont Merck Pharmaceutical Company and
its affiliate, DuPont Merck Pharma.
1.22 "Effective Date" means the effective date of this Agreement and is
December 11, 1995.
1.23 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.24 "Excluded Assets" has the meaning ascribed in Article 4 of this
Agreement.
1.25 "Excluded Liabilities" has the meaning ascribed in Section 5.02 of
this Agreement.
1.26 "Foreign Purchase Agreements" means the separate purchase and sale
agreements entered into by Buyer's Affiliates and Seller's Business Affiliates
which govern the transfer of the Global Business (other than the Business).
1.27 "Foreign Transferred Employees" means all individuals who,
immediately prior the Closing Date, are employees of Seller or Seller's Business
Affiliates assigned to the Global Business outside of the United States and who
accept the offer of employment (without any rejection thereof as permitted under
law) made by Buyer or any of Buyer's Affiliates or, in case local law provides
for a transfer of employment, whose employment is so transferred to Buyer or any
of Buyer's Affiliates.
4
<PAGE>
1.28 "Global Business" means the worldwide research, development,
commercial manufacture, sale and service by Seller and Seller's Business
Affiliates of In-Vitro Diagnostic analyzers, reagents and related consumables.
1.29 "Global Business Assets" means the Business Assets and the assets to
be granted, sold, conveyed, assigned, transferred and delivered by Seller's
Business Affiliates to Buyer's Affiliates pursuant to the Foreign Purchase
Agreements.
1.30 "Government Antitrust Authority" has the meaning ascribed in Section
12.03 of this Agreement.
1.31 "HSR Act" means the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended.
1.32 "Indemnifier's Basket" has the meaning ascribed in Section 17.03 of
this Agreement.
1.33 "Intellectual Property" means Patents, Trademarks, Copyrights and
Technical Information as those terms are defined in this Agreement.
1.34 "Intellectual Property Rights" has the meaning ascribed in Section
2.09 of this Agreement.
1.35 "Intellectual Property Rights Agreement" means that agreement attached
to this Agreement as Exhibit I.
1.36 "Inventory" has the meaning ascribed in Section 2.07 of this
Agreement.
1.37 "In-Vitro Diagnostics" means the chemical and biological testing of
human and animal body fluids, cells, and tissue samples for use in the
healthcare of individual patients.
5
<PAGE>
1.38 "Land" has the meaning ascribed in Section 2.01(a) of this
Agreement.
1.39 "Leased Premises" has the meaning ascribed in Section 2.01(b) of this
Agreement.
1.40 "License Agreements" means those license agreements set forth on
Schedules 3.02 and 3.04 of the Intellectual Property Rights Agreement.
1.41 "Losses" has the meaning ascribed in Section 17.03 of this Agreement.
1.42 "Machinery and Equipment" has the meaning ascribed in Section 2.02 of
this Agreement.
1.43 "Material" means having an actual or potential economic impact on the
Global Business of at least $500,000.
1.44 "Miscellaneous Assets" has the meaning ascribed in Section 2.10 of
this Agreement.
1.45 "Office Equipment" has the meaning ascribed in Section 2.03 of this
Agreement.
1.46 "Party" means either Buyer or Seller.
1.47 "Parties" means both Buyer and Seller.
1.48 "Patents" means all national (including, but not limited to, the
United States) and multinational statutory invention registrations, patents,
patent registrations and patent applications (including, but not limited to, all
reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations) and all rights therein provided by law, multinational treaties
or conventions.
6
<PAGE>
1.49 "PBO" has the meaning ascribed in Section 11.06(a) of this
Agreement.
1.50 "Permits" has the meaning ascribed in Section 2.04 of this Agreement.
1.51 "Plants" has the meaning ascribed in Section 2.01(a) of this
Agreement.
1.52 "Purchase Price" has the meaning ascribed in Section 5.03 of this
Agreement.
1.53 "Receivables" means the trade accounts receivable arising from the
sale of products or the provision of services by the Business to its customers.
1.54 "Sales Offices" means the sales offices owned or leased by Seller at
the locations set forth on Schedule 1.54.
1.55 "Seller's Business Affiliates" means those Affiliates of Seller
listed on Schedule 1.55.
1.56 "Seller's Other Medical Products Businesses" means the three other
businesses which together with the Global Business comprised a strategic
business unit ("SBU") operated by Seller and Seller's Affiliates as the Medical
Products SBU, said three other businesses being (a) the Centrifuge business, (b)
the Diagnostic Imaging business, (c) the New England Nuclear business.
1.57 "Seller's Pension Plan" has the meaning ascribed in Section 11.06 of
this Agreement.
1.58 "Seller's Savings Plan" has the meaning ascribed in Section 11.07 of
this Agreement.
7
<PAGE>
1.59 "Tangible Property" has the meaning ascribed in Section 6.08 of
this Agreement.
1.60 "Technical Information" includes (a) inventions, whether or not
patentable, whether or not reduced to practice, and not yet made the subject of
a pending patent application or applications, (b) ideas and conceptions of
potentially patentable subject matter, including without limitation, any patent
disclosures, whether or not reduced to practice and not yet made the subject of
a patent application, (c) trade secrets and confidential, technical information
(including ideas, formulas, compositions, inventions, and conceptions of
inventions whether patentable or unpatentable and whether or not reduced to
practice), (d) technology (including without limitation know-how and show-how),
manufacturing and production processes and techniques, service and repair
manuals, research and development information, drawings, specifications,
designs, plans, proposals, technical data and copyrightable works, whether
secret or confidential or not, and (e) all rights to obtain and rights to apply
for Patents, and to register Trademarks and Copyrights.
1.61 "Trademarks" means trademarks, service marks, trade dress, logos and
trade names, including without limitation all of the good will associated
therewith, whether or not registered, including without limitation all common
law rights, and registrations and applications for registration thereof,
including but not limited to all marks registered in the United States Patent
and Trademark Office, the Trademark Offices of the States and Territories of the
United States of America, and the
8
<PAGE>
trademark offices of other nations throughout the world, and all rights therein
provided by multinational treaties or conventions.
1.62 "Transferred Employee(s)" has the meaning ascribed in Section 11.01.
1.63 "Transitional Services Agreement" means an agreement substantially in
the form of Exhibit III attached to this Agreement.
1.64 "Undertaking of Assumption" means that agreement attached as Exhibit
II to this Agreement.
1.65 "1996 Vacation Liability" has the meaning ascribed in Section 11.11 of
this Agreement.
1.66 All dollar amounts set forth herein are expressed in United States
currency.
ARTICLE 2
BUSINESS ASSETS
---------------
Seller agrees to grant, sell, convey, assign, transfer and deliver unto
Buyer, and Buyer agrees to purchase, accept and take delivery of the following
assets of Seller, including any such assets to which title is held by Seller but
the physical location of such assets is outside of the United States of America
(hereinafter collectively referred to as the "Business Assets") as of April 30,
1996 (as well as any Business Assets acquired between April 30, 1996 and the
Closing Date):
2.01 Real Property:
-------------
(a) Those parcels of land described in Schedule 2.01(a), together
with all the rights, interests and appurtenances therein or thereto (the
"Land"), and the buildings,
9
<PAGE>
structures, installations, fixtures and all other improvements thereon (the
"Buildings"). Land and Buildings are herein referred to as "Plants". Seller
either has furnished or will furnish Buyer within 15 days of the Effective Date
of this Agreement with a legal description of the Land, which reflects the
boundaries of the Land and the easements and agreements of record relating
thereto; and
(b) The leasehold interest and leasehold improvements created by the
lease of real property in the locations described in Schedule 2.01(b) (the
"Leased Premises"), other than the leasehold interest and leasehold improvements
located at the premises listed at items 4 and 5 on Schedule 2.01(b), which will
be retained by Seller.
2.02 Machinery and Equipment: The (a) machinery and equipment, including
-----------------------
laboratory equipment, and other manufacturing and research items located, as of
the Closing Date, at the Plants, the Leased Premises and the Sales Offices and
used in the conduct of the Business (the "Machinery and Equipment"); provided,
--------
that Machinery and Equipment leased by Seller shall be included in the Business
Assets only if the lease agreement relating thereto constitutes a Contract and
(b) finished product constituting machinery and equipment in the possession of
sales or service personnel for demonstration purposes or at customer locations
to which Seller has retained title as of the Closing Date.
2.03 Office Equipment: The office equipment, furniture, files, cabinets,
----------------
computer hardware (including software loaded on
10
<PAGE>
such hardware other than software listed in Schedule 2.08 or for which the
owner's consent to transfer is needed and not obtained) and related tangible
personal property situated, as of the Closing Date, at the Plants' and the
Leased Premises' administrative office locations and the Sales Offices (the
"Office Equipment"); provided, that Office Equipment leased by Seller shall be
--------
included in the Business Assets, only if the lease agreement relating thereto
constitutes a Contract.
2.04 Permits: To the extent transferable or assignable to Buyer, all
-------
rights in and to all permits, licenses, authorizations, and approvals listed in
Schedule 2.04, and specific to and used exclusively in the Business which are
required by any governmental entity in order for Seller to conduct the Business
as presently conducted (as distinct from general corporate and other similar
authorizations not specific to the Business, such as qualifications to transact
business) (the "Permits").
2.05 Contracts: All sales orders and contracts, purchase orders and
---------
contracts, distribution agreements, service agreements, development agreements,
consulting agreements, leases (including operating equipment leases and
automobile leases) and other contracts or agreements which relate exclusively to
the Business (other than those relating to Intellectual Property Rights),
including those described in Schedule 2.05, to the extent they shall not have
been terminated on or before the Closing Date (the "Contracts"). As set forth
in Section 6.09 below, it shall be Buyer's responsibility to obtain
11
<PAGE>
any necessary consents to the assignment of the Contracts. For purposes of this
Agreement, Receivables shall not constitute Contracts.
2.06 Business Records: All business records, confidential (subject to
----------------
third party confidentiality restrictions or legally required consents) and
otherwise, including laboratory notebooks, all prosecution files relating to the
owned Intellectual Property Rights to be assigned to Buyer pursuant to the
Intellectual Property Rights Agreement, market information, sales aids, customer
and supplier lists, written medical records and medical surveillance samples,
(a) located, as of the Closing Date, at the Plants, the Leased Premises and the
Sales Offices, and (b) which relate exclusively to the Business or to
Transferred Employees (the "Business Records").
2.07 Inventory: The inventories of raw materials, stores, tools, work in
---------
process, finished goods, spare parts, service parts, supplies and packaging
materials held for use or generated by the Business which are located at the
Plants, the Leased Premises, the Sales Offices, field warehouses and in the
trunks of service vehicles, which are to be purchased by Buyer pursuant to the
provisions of Section 5.03(b) and Schedule 5.03(b) (the "Inventory").
2.08 Computer Software Assets:
------------------------
(a) All computer software, data rights, documentation and associated
license, escrow, support and maintenance agreements, used exclusively in the
conduct of the Business and further described in Schedule 2.08(a) to the extent
they are
12
<PAGE>
transferable by Seller without the consent of any other party or for which
consent has been obtained; provided, however, that for any such software which
--------
is not so transferable by Seller, Seller shall arrange for Buyer to obtain the
right to use that software, and Buyer shall reasonably assist Seller's efforts
and Buyer and Seller shall be responsible, in accordance with Section 5.09(f),
for any fees or royalty payments required to obtain such right (the assets
described in this paragraph (a) together with the licenses and sublicenses
described in paragraph (b) of this Section, hereinafter collectively referred to
as the "Computer Software Assets").
(b) To the extent Seller has the right to grant such license or
sublicense without the consent of another party, a non-exclusive license or
sublicense to the computer software listed in Schedule 2.08(b) which computer
software is not exclusive to the Business but used by the Business and one or
more other businesses of Seller; provided, however, that for any software listed
--------
in Schedule 2.08(b) to which Seller may not grant a license or sublicense
without third party consent, Seller shall arrange for Buyer to obtain the right
to use that software, and Buyer shall reasonably assist Seller's efforts and
Buyer and Seller shall be responsible, in accordance with Section 5.09(f), for
any fees or royalty payments required to obtain such right.
2.09 Intellectual Property Rights: The rights, delineated in Article 3, to
----------------------------
the Intellectual Property used by Seller in the conduct of the Business
("Intellectual Property Rights").
13
<PAGE>
2.10 Miscellaneous Assets: The Receivables, promissory notes described
--------------------
in Section 11.10(b) and prepaid expenses, including prepaid royalties and
prepaid tax assessments, associated with the Business ("Miscellaneous Assets").
2.11 Other Assets: All other assets significant to or necessary for the
------------
Business that are used exclusively in the Business.
2.12 Water Rights: Without limitation upon Section 5.02(l) hereof, such
------------
non-exclusive water rights as Seller has a right to convey as are necessary to
enable Buyer to operate the Business through the continued production in
perpetuity of subsurface waters currently produced and provided through Glasgow
facility Well #4, as well as equivalent rights to other subsurface water
underlying the Land, along with such easements or access or other rights which
Seller has a right to convey which are necessary to secure and exercise such
water rights.
ARTICLE 3
INTELLECTUAL PROPERTY
---------------------
Intellectual Property Rights: Under the terms and conditions of the
Intellectual Property Rights Agreement (Exhibit I), Seller shall grant to Buyer
and Buyer shall grant to Seller on the Closing Date certain rights that are more
particularly defined in such Intellectual Property Rights Agreement.
14
<PAGE>
ARTICLE 4
EXCLUDED ASSETS
---------------
Notwithstanding anything, express or implied, to the contrary contained in
this Agreement, the following assets of Seller and Seller's Affiliates as of
April 30, 1996 are excluded from the purchase and sale described by this
Agreement and shall not constitute a portion of the Business Assets (the
"Excluded Assets"):
4.01 Promissory Notes: All promissory notes, other than associated with
----------------
trade account Receivables or housing assistance purchase loans described in
Section 11.10(b).
4.02 Cash and Investments: All cash on hand or in banks, including cash
--------------------
equivalents and investments.
4.03 Prepaid Taxes, Expenses and Advances: All prepaid taxes, expense and
------------------------------------
advances, as prorated to Seller in accordance with Article 5.
4.04 Tax Withholdings: All taxes withheld by Seller from its employees'
----------------
salaries and wages, and other taxes of Seller incurred by it as an employer or
as a vendor, which Seller is obligated to pay, and rights to claims for refunds
of taxes.
4.05 Seller's Name and Trademark: Except as expressly set forth in Section
---------------------------
14.09, all rights in the trade name "DuPont" and in the DuPont oval trademark,
or any other trademark or trade name of Seller not listed in Schedule 3.01 of
the Intellectual Property Rights Agreement.
4.06 Insurance Policies: All insurance policies.
------------------
4.07 Off-Site Records: All off-site records relating to the
----------------
15
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Business Assets (but not relating exclusively to the Business Assets); provided
--------
that Buyer shall be entitled to copies of all such records which may be
reasonably requested by Buyer (such copies to be made at reasonable times and at
Buyer's expense).
4.08 Corporate Computer Assets: All corporate computer systems and
-------------------------
licenses including, but not limited to, Seller's electronic and voice mail
systems, freight related systems and order entry system which are not provided
for in Section 2.03 or listed in Schedules 2.08(a) and (b).
4.09 Causes of Action: All causes of action or claims of Seller against
----------------
third parties (other than claims or causes of actions based on Intellectual
Property Rights), relating to the conduct of the Business by Seller prior to
April 30, 1996, whether known or unknown on April 30, 1996.
4.10 DuPont-Merck JV: Seller's ownership interest in the DuPont-Merck JV.
---------------
4.11 Other Medical Products Businesses: All assets and rights of Seller's
---------------------------------
Other Medical Products Businesses.
4.12 Other Assets: All other assets of Seller and Seller's Affiliates not
------------
specifically included in the Business Assets.
ARTICLE 5
PURCHASE PRICE AND MISCELLANEOUS EXPENSES
-----------------------------------------
Subject to the terms and conditions of this Agreement, in consideration of
the sale, conveyance, assignment, transfer and delivery by Seller of the
Business Assets, Buyer and Seller agree as follows:
16
<PAGE>
5.01 Assumption of Liabilities: Pursuant to the terms of the
-------------------------
Undertaking of Assumption, which terms will be identical to Section 5.01, Buyer
shall assume and agree to pay, discharge and perform when due all liabilities
and obligations (whether known or unknown, fixed or contingent) of Seller, to
the extent (but only to the extent) that they arise out of or relate to (i) any
warranty claims made after April 30, 1996 for products of the Business sold by
Seller on or prior to April 30, 1996 to the extent such claims are covered under
Seller's written product warranties in effect at the time such products were
sold (copies of which written warranties will be provided to Buyer prior to
Closing), (ii) on-going service obligations to be provided after the Closing
under service contracts entered into by Seller in the ordinary course of
business on or prior to Closing to the extent such contracts constitute a
Contract, and (iii) the ownership, use or operation of the Business or the
Business Assets after April 30, 1996, except, in the case of this clause (iii),
for any liability or obligation related to any employee of the Business which is
not for wages, salaries and benefits of the type described in Article 11
("Assumed Liabilities"). The Assumed Liabilities described in clause (iii)
include, but are not limited to:
(a) All obligations under the Contracts, including, but not limited
to, obligations to sell products and equipment, to develop products, on-going
warranty obligations under Contracts, and obligations to service equipment
purchased or
17
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leased from the Business, unless a Contract is terminated by the other party
thereto due to an improper assignment by Seller; and
(b) All obligations under all other contracts, licenses, permits and
other agreements (including, without limitation, agreements regarding Computer
Software Assets) assigned by Seller to Buyer in accordance with this Agreement.
5.02 Excluded Liabilities: Except as specifically provided in Section
--------------------
5.01, Buyer shall not assume the liabilities and obligations (whether known or
unknown, fixed or contingent) of Seller or any of its Affiliates to the extent
that they arise out of or relate to the ownership, use or operation of the
Business or the Business Assets or events which occurred or failed to occur or
facts, events, conditions, or circumstances occurring or in existence on or
prior to Closing ("Excluded Liabilities"). The Excluded Liabilities include the
following:
(a) Accounts payable and accrued expenses and liabilities prior to
Closing;
(b) Debt;
(c) Wages, salaries, bonuses and other compensation earned on or
prior to the Closing Date for which Seller is liable pursuant to Article 11;
(d) Unused vacation benefits earned on or prior to Closing for which
Seller is liable pursuant to Article 11;
(e) Retirement benefits and post-retirement welfare benefit
liabilities for which Seller is liable pursuant to Article 11;
18
<PAGE>
(f) all other employee benefit liabilities for which Seller is liable
pursuant to Article 11;
(g) Seller's failure to comply with any relevant federal, state or
local laws, rules, ordinances or regulations, or failure to obtain any relevant
governmental permit, license, consent or other authorization;
(h) Any breach of contract, tort, product liability, Intellectual
Property infringement or misappropriation, employment practice or other claim
arising from or with respect to Seller's business operations and asserted by any
employee, creditor, customer, distributor, claimant or other party;
(i) Any suit, action, arbitration, charge, governmental
investigation, claim, litigation or proceeding, pending or threatened, affecting
any of the Seller's properties or business or the Business Assets;
(j) Any underpayment or failure to pay any foreign, federal, state or
local taxes (including without limitation, income, sales, property,
unemployment, franchise or other taxes) and any fines, penalties or costs
arising therefrom for tax periods (or portions thereof) ending on or prior to
the Closing Date;
(k) All costs, expenses and liabilities (including severance and other
employment costs, expenses and liabilities) arising out of or related to any
restructuring activities of the Business, including, without limitation, the
shutdown of the Manati, Puerto Rico facility; or
19
<PAGE>
(l) Liabilities or obligations set forth in Schedule 5.02 (such
scheduled items being hereinafter referred to as "Known Environmental Matters")
and any other liabilities or obligations arising under Environmental
Requirements, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") and the
Solid Waste Disposal Act, as amended ("SWDA").
5.03 Purchase Price:
--------------
(a) The purchase price ("Purchase Price") for the Business Assets, for
the covenant not to compete provided in Section 14.07 and for all other rights
and obligations contemplated hereunder shall be Four Hundred Sixty-One Million
Nine Hundred Seventy-Five Thousand Dollars ($461,975,000), subject to adjustment
as set forth in Sections 10.03 and 10.10 and this Section 5.03, and the
assumption of the Assumed Liabilities, and shall be payable by Buyer to Seller
at the Closing in immediately available funds to an account specified by Seller
to Buyer prior to the Closing.
(b) Seller and Buyer agree that the "Estimated Specified Asset
Balance" shall be $73,700,000.
(c) If the Estimated Specified Asset Balance is:
(i) less than $73,700,000, the Purchase Price to be paid at
Closing shall be decreased by the amount of such deficiency; and
(ii) greater than $73,700,000, the Purchase Price to be paid at
Closing shall be increased by the amount of such excess.
20
<PAGE>
(d) Within 120 days after the Closing Date, Seller shall prepare (with
the assistance of Buyer's employees) and deliver a statement (the "Preliminary
Statement"), as of April 30, 1996, setting forth the balance of Inventory,
Receivables and other Miscellaneous Assets as of April 30, 1996, which
determinations shall be made in a manner consistent with (i) Schedule 5.03(b) in
the case of Inventory, (ii) Schedule 5.03(c) in the case of Receivables and
(iii) a schedule of the other Miscellaneous Assets in accordance with generally
accepted accounting principles. If Buyer has any objections to the Preliminary
Statement, Buyer must deliver to the Seller within 30 days after delivery of the
Preliminary Statement a detailed statement describing such objections thereto
("Buyer's Statement"). If a Buyer's Statement is not delivered to Seller within
such 30 days, the determination of the asset balances set forth in the
Preliminary Statement will be final, binding, and non-appealable by the Parties.
The Parties will negotiate in good faith and resolve any such objections, but if
they do not reach a final resolution within 30 days after Seller has received
the Buyer's Statement, such matter shall be resolved as provided in the next
paragraph.
(e) In the event any objections to the Buyer's Statement are not
resolved by Buyer and Seller within the 30 day period following Buyer's delivery
of the Buyer's Statement pursuant to Section 5.03(d), such unresolved objections
shall be submitted to an internationally recognized independent certified public
accountant, selected by the mutual agreement of Seller and
21
<PAGE>
Buyer within 20 days after the end of such 30 day period. If Seller and Buyer
are unable to mutually agree upon an internationally recognized certified public
accountant within such 20 day period, then Buyer and Seller shall each select an
internationally recognized certified public accountant and within five days of
their selection those two accountants shall select a third internationally
recognized certified public accountant, which third accountant shall settle the
claim in question. In such event, each party must select its accountant within
10 days after the end of the 20 day period described above, and if any party
shall fail to select an accountant within such 10 day period, the accountant
selected by the other party shall select another internationally recognized
certified public accountant, and such two accountants shall select the third
accountant. The accountant settling a dispute shall be required to submit its
decision within 30 days of appointment, which decision shall be final and
binding on both Buyer and Seller. The reasonable fees of all of the
accountant(s) shall be borne by the non-prevailing party.
(f) The sum of the balances of Receivables, Inventory and other
Miscellaneous Assets as finally determined in accordance with Section 5.03(d) or
(e) is referred to herein as the "Actual Specified Asset Balance."
(g) If the Actual Specified Asset Balance is:
(i) less than the Estimated Specified Asset Balance, Seller shall
deliver to Buyer in immediately available funds the amount of such
deficiency (together with
22
<PAGE>
interest thereon from the Closing Date through the date of payment)
computed at the prime rate as announced by Bankers Trust Company as of the
Closing Date within three business days after the date on which the Actual
Specified Asset Balance is finally determined pursuant to paragraphs
5.03(d) and (e) above; and
(ii) greater than the Estimated Specified Asset Balance, Buyer
shall deliver to Seller in immediately available funds the amount of such
excess (together with interest thereon from the Closing Date through the
date of payment) computed at the prime rate announced by Bankers Trust
Company as of the Closing Date within three business days after the date on
which the Actual Specified Asset Balance is finally determined pursuant to
paragraphs 5.03(d) and (e) above.
(h) Except as provided in this Section 5.03, Schedule 5.03(c) and
Section 14.01, Seller shall have no responsibility to refund the amount paid for
any Receivable purchased hereunder due solely to the uncollectibility of such
Receivable, and Buyer agrees that it shall bear the risk of collecting the
Receivables from and after April 30, 1996.
(i) Notwithstanding anything to the contrary contained herein or in
Schedule 5.03(b), attached hereto, neither Buyer nor any of its Affiliates shall
be entitled to any inventory adjustment (as defined in Schedule 5.03(b)) unless
the aggregate amount of all Inventory Adjustments for the Global Business
23
<PAGE>
exceeds $100,000, in which event Seller shall be responsible only for the excess
above $100,000.
5.04 Payment Terms: The Purchase Price shall be payable in immediately
-------------
available funds in United States Dollars by wire transfer to an account at a
bank or banks to be designated by Seller in writing to Buyer prior to the
Closing Date.
5.05 Allocation: The Parties have agreed on a schedule, attached hereto as
----------
Schedule 5.05, to allocate the Purchase Price among the various categories of
Business Assets and other rights to be transferred to or otherwise acquired by
Buyer pursuant to this Agreement. The allocation as provided in Schedule 5.05
shall be used by the Parties in reporting the transactions contemplated by this
Agreement for all tax purposes, including as required by Section 1060 of the
Code. Neither Party shall take any position on any of its tax returns that is
inconsistent with such allocation and each Party shall file U.S. Internal
Revenue Service Form 8594, and equivalent forms in other countries, if
necessary, in a manner consistent with this allocation.
5.06 Sales, Use, Transfer and Similar Taxes and Charges: As provided in
--------------------------------------------------
Section 5.09(f), Seller and Buyer shall be responsible for all sales or use
taxes and any transfer, transfer gain, documentation, gross receipts, custom
duties, value added and other taxes and charges, as well as all interest and
penalties thereon payable because of the action or inaction of Buyer or Buyer's
Affiliates, upon or with respect to the sale or transfer of the Global Business
Assets by Seller and Seller's Business Affiliates to Buyer and Buyer's
Affiliates pursuant to
24
<PAGE>
this Agreement and the Foreign Purchase Agreements (provided, however, that such
responsibility may be borne by an Affiliate). To the extent that any applicable
law or regulation imposes upon Seller or Seller's Business Affiliate the
obligation to report or to pay such taxes, charges, interest or penalties, Buyer
or its Affiliate shall promptly reimburse Seller or Seller's Business Affiliate
therefor upon receipt of Seller's invoice for the amount of such payments which
exceed Seller's share of such payments. If the sale or transfer of any or all
of the Global Business Assets is exempt from such taxes or charges, Buyer or its
Affiliate shall provide Seller or Seller's Business Affiliate with appropriate
exemption documents.
5.07 INTENTIONALLY OMITTED.
5.08 INTENTIONALLY OMITTED.
5.09 Miscellaneous Charges: Concurrent with or when otherwise determined
---------------------
after the Closing, the following charges with respect to the transactions
contemplated by this Agreement shall be paid, prorated or handled by the
Parties, as follows:
(a) INTENTIONALLY OMITTED.
(b) INTENTIONALLY OMITTED.
(c) INTENTIONALLY OMITTED.
(d) Premiums and other charges for the issuance of an Owner's Title
Insurance Policy on the Plants, if any is desired by Buyer, shall be paid by
Seller.
(e) The cost of making a new survey of the Plants and Sales Offices,
and preparing a plat thereof, if any is desired by Buyer, shall be paid by
Seller.
25
<PAGE>
(f) Notwithstanding any provision to the contrary in any Foreign
Purchase Agreement, Seller and Buyer shall share equally (i) any real property
transfer taxes, recording fees, sales and use taxes or similar transactional
taxes (other than value-added or similar taxes to the extent fully refundable to
Buyer) due upon or with respect to the sale or transfer of the Global Business
Assets, and (ii) any costs and expenses of obtaining consents and approvals of
governmental authorities or third parties for the sale or transfer of the Global
Business Assets (or otherwise for Buyer and its Affiliates to succeed to the
rights of Seller and Seller's Business Affiliates with respect thereto),
including without limitation, any consents required to be obtained for the
sublicenses described in Section 2.08 or any corresponding provision of any
Foreign Purchase Agreement. Seller shall not be required to reimburse Buyer or
Buyer's Affiliates for (x) any costs or expenses arising out of the failure to
obtain any such consents or approvals or (y) any increase in the amounts
otherwise payable pursuant to the existing terms of any contract or agreement
for which consent or approval is sought (including, for example, any increase in
rental or royalty rates, but excluding any one-time payment made to obtain any
such consent or approval) or (z) any costs or expenses paid by one of Seller's
Business Affiliates which are not previously reimbursed by Buyer's Affiliates.
To the extent practicable and except as otherwise provided in this Agreement,
Buyer or one of its Affiliates will make the payment of any such taxes, costs
and expenses and Seller, upon receipt from Buyer of
26
<PAGE>
reasonable documentation concerning the nature and amount of any such taxes,
costs and expenses, shall reimburse Buyer for one-half share of the amount of
such taxes, costs and expenses. Notwithstanding any provision to the contrary
contained in this Section 5.09 or in any corresponding provision in any Foreign
Purchase Agreement, Seller and Seller's Business Affiliates will not be
obligated to reimburse Buyer or any of Buyer's Affiliates pursuant to this
Section 5.09 for more than $3 million in the aggregate for the costs and
expenses of the taxes, fees, consents or approvals of the type described in this
Section 5.09 relating to the transfer of the Global Business Assets.
(g) Amounts payable to customers or customer groups after April 30,
1996, such as administrative fees to multi-hospital groups and banking and cash
rebate programs, shall be paid by Buyer. To the extent such amounts are based
on sales of products by the Business prior to April 30, 1996, Seller shall
reimburse Buyer for such allocated portion upon receipt of satisfactory
documentation as to the allocation and amount paid.
ARTICLE 6
SELLER'S WARRANTIES
-------------------
Except as otherwise provided in this Agreement, Seller warrants that as of
April 30, 1996 and the Closing Date.
6.01 Organization; Good Standing: Seller is a corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the State of Delaware
and has corporate power to carry on the Business as now being conducted. Each
of Seller's Business
27
<PAGE>
Affiliates that is a party to any of the Foreign Purchase Agreements is a
corporation duly organized, validly existing and in good standing under the laws
of the country of its formation and has the corporate power to carry on the part
of the Global Business as it is now being conducted by such Seller's Business
Affiliate.
6.02 No Conflict with Other Instruments or Agreements: Neither the
------------------------------------------------
execution, delivery or performance of this Agreement by Seller or the execution,
delivery or performance of any Foreign Purchase Agreement by any of Seller's
Business Affiliates, nor the consummation of the transactions contemplated by
this Agreement by Seller or the consummation of the transactions contemplated by
any Foreign Purchase Agreement by any of Seller's Business Affiliates will:
(a) violate any provision of the Certificate of Incorporation, Bylaws
or similar constitutional documents of Seller or Seller's Business Affiliates,
or any law, regulation, order, judgment or decree by which Seller or Seller's
Business Affiliates or any of the Global Business Assets may be bound; or
(b) conflict with, result in a breach of the terms and conditions of,
or result in the imposition of any lien or other encumbrance on or with respect
to any of the Global Business Assets as a result of the provision of, or
constitute a default under, any agreement (except with respect to any contract
under which a default is caused by the assignment thereof by Seller or Seller's
Business Affiliates) to which Seller or any of Seller's
28
<PAGE>
Business Affiliates is a party or by which it or any of the Global Business
Assets may be bound.
6.03 Authorization; Binding Effect; Seller and each of Seller's Business
-----------------------------
Affiliates has the corporate power, including all necessary authorization, to
execute, deliver and fulfill the provisions of this Agreement and the Foreign
Purchase Agreement, as the case may be. This Agreement constitutes a legal,
valid and binding agreement of Seller, and the Foreign Purchase Agreements
constitute the legal, valid and binding agreement of Seller's Business
Affiliates party thereto, enforceable against Seller and such of Seller's
Business Affiliates in accordance with their terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, or similar laws affecting the
enforcement of creditors' rights generally and rules and laws concerning
equitable remedies.
6.04 Conduct of Business Since December 31, 1994: Except as may be
-------------------------------------------
disclosed to Buyer in Disclosure Schedule 6.04, since December 31, 1994, neither
Seller nor any of its Affiliates has:
(a) (i) Except for non-Material transactions, mortgaged, pledged, or
subjected to any lien, charge, encumbrance, restriction or any other interest or
imperfection of title, any of the Global Business Assets, and (ii) at the
Closing none of the Global Business Assets will be subject to any lien, charge,
encumbrance, security interest, mortgage, restriction or any other interests or
imperfections of title except as provided in Section 6.07 and except for
statutory liens for taxes which
29
<PAGE>
taxes are not yet due and payable but will be prorated pursuant to Article 5;
(b) Sold, assigned, scrapped or otherwise disposed of any of the
Global Business Assets except in the ordinary course of business;
(c) Increased the salary or wage rates of Transferred Employees or
Foreign Transferred Employees, except increases in the ordinary course of
business, or paid any bonus or unusual compensation to Seller's or Seller's
Business Affiliates' agents or employees or made any agreements with respect
thereto, except in accordance with Seller's or Seller's Business Affiliates'
general employment practices or policies;
(d) Since August 31, 1995, reassigned or transferred to any other
business of Seller or its Affiliates any management, senior staff or research
and development personnel other than junior personnel who were utilized
exclusively in the Global Business;
(e) Entered into any compromise or settlement of any litigation,
proceeding or governmental investigation relating primarily to the Global
Business involving an actual or potential economic impact on Seller or Seller's
Business Affiliates in excess of $50,000 other than governmental audits for tax
purposes done in the ordinary course of business;
(f) Entered into any transaction in connection with or with respect
to the conduct of the Global Business except in the ordinary course of business.
30
<PAGE>
6.05 Litigation and Investigations: Except as may be disclosed to
-----------------------------
Buyer in Disclosure Schedule 6.05 or as may be set forth below in Section 6.06,
there is no Material litigation, action, investigation or proceeding pending
against Seller or any of Seller's Affiliates as a result of their ownership of
the Global Business Assets or operation of the Global Business or against the
Global Business Assets for any reason whatsoever; nor has Seller or any of its
Affiliates received any written notice from any person or Federal, state, or
municipal government, or governmental or regulatory agency threatening to
institute same; and the use or operation of the Global Business Assets is not
subject to any injunction, order, judgment, writ or decree.
6.06 Environmental Matters: Except as may be disclosed to Buyer in
---------------------
Disclosure Schedule 6.06 or Schedule 5.02, there are no pending, nor has Seller
or any of its Affiliates received any written notice of, claims, suits,
proceedings or investigations of a Material nature, affecting the Global
Business or the Global Business Assets arising out of or related to (a) property
damage, personal injury or other damage as a result of any environmental
pollution or (b) any actual or alleged noncompliance with, or liabilities
arising under, any administrative or judicial judgments or orders, all common
law, and all Federal, state, county or local and foreign environmental statutes,
related to air quality, water quality, solid waste management including solid
waste disposal, hazardous or toxic substances or protection of health or the
environment, including, but not limited to the Federal Insecticide, Fungicide
and Rodenticide Act (7 U.S.C. 136
31
<PAGE>
et seq. as amended), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq. as amended), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et
seq. as amended), the Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") (42 U.S.C. 9601 et seq. as amended), the Clean Air Act
(42 U.S.C. 7401 et seq. as amended), the Toxic Substances Control Act (15 U.S.C.
2601 et seq. as amended), and any similar state or local laws, rules and
regulations ("Environmental Requirements"). Except as so disclosed, Seller has
received all Material air, water, waste and other permits and approvals required
by Environmental Requirements for the operations at the Plants and is operating
in substantial conformance with such permits and approvals. To the best of
Seller's and Seller's Business Affiliates' knowledge and belief, Seller and
Seller's Business Affiliates kept all records and made all filings required by
Environmental Requirements with respect to emissions into the environment
(including solids, liquids and gases) and the proper disposal of such materials
(including solid waste materials).
6.07 Title to Real Property:
----------------------
(a) Seller has good, marketable title in fee simple to the Plants,
subject, however only to:
(i) all matters of record;
(ii) all matters which an inspection of the Plants would show;
(iii) all matters which a survey of the Plants would reveal; and
32
<PAGE>
(iv) all exceptions and reservations to Seller's title in the
Land as set forth in Schedule 2.01(a).
(b) Schedule 2.01(a) lists all owned real property of the Business.
None of Seller's Business Affiliates own any real property of the Global
Business. There is no physical condition affecting any buildings or
improvements located on each such parcel of real property that materially
interferes with access to or the continued use of such parcel for its current
business purposes. Other than the Business, there are no other businesses
operated at Plants located in Glasgow, Delaware except for approximately 50
persons engaged in Seller's Diagnostic Imaging Business.
(c) Schedule 2.01(b) lists all of the leased real property of the
Business and describes each lease with respect thereto. Each such lease is in
full force and effect and Seller holds a valid and existing leasehold interest
under such lease. Seller has not assigned, conveyed or encumbered any interest
in any such lease.
6.08 Title to Tangible Property: Seller or one of Seller's Business
--------------------------
Affiliates has good, clear and marketable title, to the machinery and equipment,
office equipment, inventory and other tangible property of the Global Business
Assets, excluding the Plants (the "Tangible Property"), free and clear of all
liens, mortgages, security interests, easements, restrictions, leases, charges,
and encumbrances of any nature; and
(a) No third party has any option or right of first refusal to
purchase all or any part of the Tangible Property; and
33
<PAGE>
(b) There are no security interests in, encumbrances on or rights,
uses, or privileges of others with respect to the Tangible Property except as
may be imposed by bulk sales and transfer laws.
6.09 Contracts and Other Agreements:
------------------------------
(a) Subject to confidentiality restrictions, true and correct copies
of the contracts and license agreements to be transferred pursuant to this
Agreement or any Foreign Purchase Agreement either have been or will be made
available to Buyer for review, at Seller's and Seller's Business Affiliates'
present repositories for the same. No other party to any such contract or
license agreement has notified Seller or Seller's Business Affiliates that it
considers Seller or Seller's Business Affiliates to be in breach thereof, and
neither Seller nor Seller's Business Affiliates has knowledge or belief that any
other party to any such contract or license agreement is in breach thereof or is
contemplating the breach thereof; the foregoing is subject to customer and
supplier matters arising in the ordinary course of business and to trade
practices generally applicable to the Global Business.
(b) Seller makes no warranty with regard to the assignability of
rights or delegation of duties under such contracts. Subject to confidentiality
restrictions, Buyer shall form its own opinion with regard to the enforceability
of the commitments by any party thereto therein contained, compliance by the
other parties thereto with their undertakings thereunder, assignability and
delegation thereof, and ongoing obligations of
34
<PAGE>
Buyer to such other parties after Buyer's assumption of such obligations as set
forth herein. For any such contracts that are not transferable by Seller
without the consent of another party, it shall be Buyer's responsibility to
obtain the necessary consent to succeed to Seller's or Seller's Business
Affiliates rights and duties thereunder, the cost of which is to be borne by the
parties in accordance with Section 5.09(f). Seller shall provide reasonable
assistance to Buyer in Buyer's efforts to obtain such consents.
(c) Seller makes no warranty with regard to the assignability of
rights or delegation of duties under such license agreements. Buyer either has
been or will be provided access to copies of such license agreements and shall
form its own opinion with regard to such assignability of rights and duties
thereunder. For any such license agreements that are not transferable by Seller
or Seller's Business Affiliates without the consent of the other party, Seller
shall provide reasonable assistance to Buyer in Buyer's effort to obtain the
right to use the licensed subject matter. Buyer and Seller shall be responsible
for any fees or royalty payments required to obtain such rights as provided in
Section 5.09(f).
(d) Seller makes no warranty with regard to the assignability of
rights or delegation of duties under any agreements or arrangements which relate
to the Global Business but are not exclusive to the Global Business (such as
agreements to provide transportation services to the Global Business). For any
services that will not be provided to Buyer under a separate
35
<PAGE>
agreement with Seller, Seller or Seller's Business Affiliates shall provide
reasonable assistance to Buyer or its Affiliates in their effort to obtain such
services from entities now providing the same to the Global Business. Buyer
shall be responsible for all costs associated with obtaining such services.
6.10 Intellectual Property:
---------------------
(a) Except as may be disclosed to Buyer in Disclosure Schedule 6.10
and as set forth in Section 6.09(c), Seller has good title to, free and clear of
all liens, security interests and encumbrances of any kind or nature and has the
right to convey all of the Intellectual Property Rights, and neither Seller nor
Seller's Business Affiliates has received any written notice of any claim, suit
or proceeding contesting the validity, enforceability, use or ownership of any
of the Intellectual Property Rights with Seller or Seller's Business Affiliates.
(b) Except as set forth in Disclosure Schedule 6.10, neither Seller
nor Seller's Business Affiliates has received any written notice of any claim,
suit or proceeding alleging that the operation or use of the Global Business
Assets infringes or misappropriates the Intellectual Property of another party.
To Seller's knowledge and the knowledge of Seller's Affiliates, the current
conduct of the Global Business does not infringe or otherwise conflict with the
Material Intellectual Property of any third party. Neither Seller nor Seller's
Business Affiliates has received any notice of infringement or misappropriation
by any third party with respect to any Material Intellectual Property Rights.
36
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6.11 Compliance with Government Regulations; Governmental Consents:
-------------------------------------------------------------
(a) Except as otherwise set forth herein or in the Foreign Purchase
Agreements, to the best knowledge of Seller and Seller's Business Affiliates,
the operations of the Business are in Material compliance with all material
applicable laws, regulations and codes of the Federal, state or municipal
governments, or other governmental or regulatory bodies having jurisdiction over
the Global Business, its facilities or its operations, and neither Seller nor
Seller's Business Affiliates has been notified in writing of any noncompliance
therewith. Seller or Seller's Business Affiliates have all Material licenses,
permits and authorizations necessary to own and operate the Global Business
Assets and to operate the Global Business as currently conducted or proposed to
be conducted.
(b) Except for filing and approval requirements under the HSR Act or
any other antitrust pre-merger or pre-acquisition requirements, no consent,
authorization, or approval of, or exemption by, or filing with, any court or
governmental, public, or self-regulatory body of authority, that is Material to
the operation of the Global Business, is required in connection with the
execution, delivery and performance by the Seller of this Agreement or of any of
the instruments or agreements herein referred to, or the taking of any action
herein contemplated or the execution, delivery and performance by Seller's
Business Affiliates of the Foreign Purchase Agreements or of any of the
37
<PAGE>
instruments or agreements therein referred to, or the taking of any action
therein contemplated.
6.12 Brokers or Finders: Except for using J.P. Morgan as a financial agent
------------------
with whom Buyer has been acquainted during the course of the transaction leading
up to this Agreement, neither Seller nor Seller's Business Affiliates have
incurred an obligation or liability, contingent or otherwise, for broker's or
finder's fees with respect to the matters provided for in this Agreement or the
Foreign Purchase Agreements.
6.13 Taxes:
-----
(a) No taxes related to the Global Business Assets are in arrears or
in Material dispute.
(b) Seller shall submit to Buyer at Closing, notices that withholding
under Section 1445 of the Code is not required and to file such other notices
required by Sections 1445 and 897 of the Code and regulations thereunder.
6.14 Information; Forecasts: Seller has communicated to Buyer certain data
----------------------
and information concerning the Global Business Assets and the Global Business
which are described in Schedule 6.14, and has provided Buyer access to certain
information collected in Seller's Data Room for the purpose of informing Buyer
as to the nature of the Global Business. To the best of Seller's knowledge and
belief, other than financial information (except for the financial information
in Section 6.19), the historical data and information contained in the
communications referenced in Schedule 6.14 are true and correct in all Material
respects as of the date issued, it being understood that
38
<PAGE>
financial information has been prepared by Seller in accordance with its usual
practices (except for the financial information in Section 6.19) and that no
warranty is made regarding any statements, forecasts or expectancies as to
future financial performance.
6.15 Labor Contracts: The Business has no labor contracts or collective
---------------
bargaining agreements relating to the Transferred Employees.
6.16 Receivables: The accounts receivables constituting Global Business
-----------
Assets represent transactions made by the Global Business for good and valuable
consideration resulting from the bona fide sale of products or performance of
services in the ordinary course of the conduct of the Global Business.
6.17 Inventory: Seller and Seller's Business Affiliates have and will
---------
follow their inventory procedures described in Schedule 5.03(b) in all material
respects in determining the quantity and value of the inventory of the type
described in Section 2.07.
6.18 Completeness of Certain Assets: The Global Business Assets
------------------------------
(including, without limitation, Plants, machinery and equipment, office
equipment, intellectual property rights and computer software assets being
transferred to, or the rights to which are being granted or made available to,
Buyer and Buyer's Affiliates as part of the Global Business Assets), include all
material items of those categories of the Global Business Assets used by Seller
and Seller's Business Affiliates in the operation of the Global Business,
subject to any necessary third party
39
<PAGE>
consents as described in this Agreement provided, that certain items of the
--------
machinery and equipment are utilized by the Global Business and other businesses
of Seller or Seller's Other Medical Products Businesses and may not be
transferred to Buyer or Buyer's Affiliates, in which event the services
associated with such items shall be made available to Buyer or Buyer's
Affiliates in accordance with the terms and conditions of the agreements
described in Section 13.03(d) below. Seller represents and warrants that (i)
the level and category of services to be provided to the Global Business
pursuant to each ancillary agreement are sufficient to operate the Global
Business as it is currently conducted in all material respects (taken as whole)
and (ii) the price or cost of each service to be provided to the Global Business
in such ancillary agreements (before giving effect to any price increases
permitted under such agreements) is based on the historical price or cost of
such service and (assuming the same levels of activity during the applicable
period) are reflected in all material respects in the December 31, 1994 audited
income statement and the eight-month period ended August 31, 1995 income
statement. The Intellectual Property Rights constitute all of the intellectual
property rights used by the Global Business.
6.19 Financial Statements: Seller has provided, or prior to Closing will
--------------------
provide, Buyer with the following financial statements (the "Financial
Statements"):
(i) the unaudited statement of income and the related disclosure
of depreciation and capital expenditures
40
<PAGE>
of the Global Business for the eight-month period ended August 31, 1995;
(ii) the audited balance sheet of the Global Business as of
December 31, 1994, and the related statement of income and Schedules of
capital expenditures and depreciation for the year then ended; and
(iii) the audited balance sheet of the Global Business as of
December 31, 1995, and the related statement of income and Schedules of
capital expenditures and depreciation for the year then ended.
Each of the foregoing Financial Statements (including in all cases the notes
thereto, if any) presents fairly (or, in the case of the December 31, 1995
audited financial statements, will, when delivered, present fairly) the
financial condition and results of operations of the Global Business in
accordance with generally accepted accounting principles, consistently applied
throughout the periods covered thereby.
6.20 No Other Representations or Warranties: Except as otherwise expressly
--------------------------------------
set forth in this Agreement or the Foreign Purchase Agreements, neither Seller
nor any Affiliates, agents or representatives of Seller, has made, or is liable
for or bound in any manner by, any warranties of merchantability or fitness for
a particular purpose, or any express or implied warranties, guarantees,
promises, statements, inducements, representations, or information pertaining to
the Global Business Assets, or the Global Business or any part thereof, and
without limiting the foregoing, except as expressly set forth in this Agreement
or the
41
<PAGE>
Foreign Purchase Agreement, neither Seller nor its Affiliates is liable for or
bound by (and neither Buyer nor its Affiliates have not relied upon) any verbal
or written statements, representations, or any other information respecting any
portion of the Global Business Assets furnished by Seller or any of Seller's
Business Affiliate, broker, employee, agent, consultant or other person
representing or purportedly representing Seller or its Affiliates.
6.21 No Warranty of Probable Success: Neither Seller nor its Affiliates
-------------------------------
makes any warranty regarding the probable success or profitability of the
ownership, use or operation of the Global Business Assets after the Closing.
6.22 All of the representations and warranties of Seller contained in this
Article 6 shall be true and correct on the Closing Date, except to the extent
that Seller or one of Seller's Business Affiliates has advised Buyer, or one of
its Affiliates, otherwise in writing prior to the Closing.
ARTICLE 7
BUYER'S WARRANTIES
------------------
Buyer warrants that as of April 30, 1996 and the Closing Date.
7.01 Organization; Good Standing: Buyer is a corporation duly organized,
----------------------------
validly existing and in good standing under the laws of the State of Delaware,
and has full corporate power to execute, deliver and perform this Agreement.
Each of Buyer's Affiliates that is a party to a Foreign Purchase Agreement is a
42
<PAGE>
corporation, duly organized, validly existing and in good standing under the
laws of the country of formation and has corporate power to carry on its
business as it is now being conducted and proposed to be conducted after the
Closing Date. The Buyer of Intellectual Property and Intellectual Property
Rights being sold by the Seller in the United States is a United States
corporation without any non-United States branches.
7.02 No Conflict with Other Instruments or Agreements: Neither the
------------------------------------------------
execution, delivery or performance of this Agreement by Buyer, nor the
consummation of transactions contemplated by this Agreement by Buyer will:
(a) violate any provision of the Certificate of Incorporation, Bylaws
or similar constitutional documents of Buyer or any of Buyer's Affiliates that
is a party to a Foreign Purchase Agreement, or any law, regulation, order,
judgment or decree by which the Buyer or any such Affiliate may be bound; or
(b) conflict with, result in a breach of the terms and conditions of,
or constitute a default under, any agreement to which Buyer or any of its
Affiliates that is a party to a Foreign Purchase Agreement is a party or by
which it may be bound.
7.03 Authorization; Binding Effect: Buyer and each of its Affiliates that
-----------------------------
is a party to a Foreign Purchase Agreement has the corporate power, including
all necessary authorization, to execute, deliver and fulfill the provisions of
this Agreement. This Agreement and the Foreign Purchase Agreements constitutes a
legal, valid and binding agreement of Buyer and each of Buyer's Affiliates that
is a party to a Foreign Purchase Agreement
43
<PAGE>
enforceable against Buyer or such Affiliate (as the case may be) in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, or similar laws affecting the enforcement of creditors' rights
generally and rules and laws concerning equitable remedies.
7.04 Brokers or Finders: Neither Buyer nor its Affiliates has incurred
------------------
obligation or liability, contingent or otherwise, for broker's or finder's fees
with respect to the matters provided for in this Agreement or the Foreign
Purchase Agreements.
7.05 No Instigation of Investigations: Buyer and its Affiliates shall not
--------------------------------
undertake environmental investigatory or remedial action for the sole purpose of
triggering Seller's indemnification obligations hereunder or Seller's Business
Affiliates indemnification obligations under the Foreign Purchase Agreements, in
each case with respect to environmental matters. Buyer and Seller acknowledge
that environmental investigations may, from time to time, be warranted in
connection with periodic environmental audits or otherwise for purposes of
prudent environmental management (consistent with prevailing industry standards)
in the course of facility ownership, operation and maintenance and that such
investigations may identify matters for which, subject to otherwise applicable
limitations, indemnification may be sought hereunder.
44
<PAGE>
ARTICLE 8
BUYER'S INDEMNITY
-----------------
Buyer shall indemnify and hold Seller harmless against and in respect from
all losses, expenses (including without limitation reasonable attorneys' fees),
fines, debts, liabilities and obligations of any nature whatsoever incurred by
Seller or Seller's Business Affiliates to the extent that they relate to or
arise out of:
8.01 Assumed Liabilities: The Assumed Liabilities assumed by Buyer as
-------------------
required by Section 5.01 or pursuant to the Undertaking of Assumption or any
liabilities expressly assumed by any of Buyer's Affiliate pursuant to any
Foreign Purchase Agreement.
8.02 Buyer's Ownership, Use or Operation of the Business Assets: Buyer's
----------------------------------------------------------
and Buyer's Affiliates ownership, use or operation of the Global Business Assets
on or after the Closing Date.
8.03 Breach of Warranty: Subject to the limitations of Article 17, any
------------------
breach of any of the warranties, covenants, guarantees, or nonfulfillment of any
agreement on the part of (a) Buyer under this Agreement, and (b) any of Buyer's
Affiliates under any Foreign Purchase Agreement.
ARTICLE 9
SELLER'S INDEMNITY
------------------
Subject to the items set forth in Section 5.01 hereof, Seller shall,
indemnify and hold Buyer harmless against and in respect from all losses,
expenses (including without limitation
45
<PAGE>
reasonable attorneys' fees), fines, debts, liabilities and obligations of any
nature whatsoever incurred by Buyer or Buyer's Affiliates to the extent they
relate to or arise out of:
9.01 Pre-Closing Ownership, Use or Operation of the Global Business Assets:
---------------------------------------------------------------------
Those events which occurred or failed to occur on or before the Closing Date, to
the extent (i) not expressly assumed by Buyer hereunder, including, but not
limited to, the Excluded Liabilities, and (ii) not expressly assumed by any of
Buyer's Affiliates under any Foreign Purchase Agreement.
9.02 Breach of Warranty: Subject to the limitations of Article 17, any
------------------
breach of any of the warranties, covenants, guarantees or nonfulfillment of any
agreement on the part of (a) Seller under this Agreement, and (b) any of
Seller's Business Affiliates under any Foreign Purchase Agreement.
9.03 No Consequential Damages: Notwithstanding anything to the contrary,
------------------------
Seller shall not be responsible for damages in the nature of Buyer's or any of
its Affiliates' loss of profits, business loss, or other special incidental or
consequential damages (a) arising out of any breach by Seller of the warranty
contained in Section 6.06 or (b) relating to or arising out of Seller's
obligations under Section 5.02(l).
ARTICLE 10
INTERIM PERIOD
--------------
Seller and Buyer covenant and agree that between the Effective Date of this
Agreement and the Closing Date and after
46
<PAGE>
the Closing Date in connection with Section 10.10, 10.13 or 10.14:
10.01 Due Diligence; Confidentiality: Buyer, its counsel, accountants and
------------------------------
other representatives shall be permitted reasonable access during normal
business hours to the Plants, the Leased Premises and Sales Offices and to
Seller's books, records, Contracts, commitments and other data at the Plants,
the Leased Premises and the Sales Offices directly related to the operation of
the Business Assets. It is expected that between the date of this Agreement and
either the Closing Date or termination of this Agreement, whichever is first to
occur, Seller may give Buyer information that Seller considers confidential. In
that event, Buyer shall require that all its representatives granted access to
such data shall treat such data and information as confidential in accordance
with the Confidentiality Agreement between the Parties, notwithstanding any
termination of this Agreement.
10.02 Operate Business Assets in Ordinary Course: Except as otherwise
------------------------------------------
provided in this Agreement, or otherwise consented to or requested by Buyer in
writing, the Global Business shall be operated solely in the ordinary course of
business (except as otherwise provided herein or for events beyond Seller's or
Seller's Business Affiliates' reasonable control).
10.03 No Material Change or Material Commitments to Business Assets:
-------------------------------------------------------------
Except in the ordinary course of business, Seller and Seller's Business
Affiliates shall not, without the prior written consent or at the written
request of Buyer:
47
<PAGE>
(a) demolish, remove, alter, enlarge or dispose of the Global
Business Assets other than removal of any of the Excluded Assets and assets
specifically excluded under the Foreign Purchase Agreements;
(b) make any capital expenditures or commitments exceeding $250,000
with respect to the Global Business Assets or products made therewith; provided
that notwithstanding the foregoing, capital expenditures and analyzer placements
will continue to be made in amounts equal to 23 million dollars and 22 million
dollars, respectively, for the periods ended December 31, 1995 and December 31,
1996 (and with respect to 1996, prorating such amount based on the number of
days elapsed from January 1, 1996 through the Closing) (it being understood that
if capital expenditures and analyzer placements of greater than 23 million
dollars are made by the Global Business for the period ended December 31, 1995
then Seller shall be entitled to a dollar-for-dollar carry over of such excess,
and to the extent that capital expenditures and analyzer placements made by the
Global Business prior to April 30, 1996 are less than 23 million dollars (in
1995) and 22 million dollars (for the period ending December 31, 1996, prorating
such amount based on the number of days elapsed from January 1, 1996, through
April 30, 1996), then Seller shall pay the shortfall to Buyer at Closing or as
soon thereafter as finally determined);
(c) make any Material change in the Plants, the Leased Premises or
the operation of the Global Business Assets;
48
<PAGE>
(d) transfer, reassign or terminate any of its employees working
primarily for the Global Business;
(e) transfer, sell, grant, encumber, license, assign, terminate or let
lapse any Material Intellectual Property rights or license agreements; or
(f) enter into service agreements or warranty agreements on terms
which vary materially from those service agreements or warranty agreements
entered into during the period from December 31, 1994 to the Effective Date.
10.04 Efforts to Preserve Relationships and Organization: Except as
--------------------------------------------------
otherwise provided herein, or consented to or requested by Buyer in writing,
Seller shall use its best reasonable efforts to preserve intact its business
organization relating to the Global Business Assets, and to preserve the
relationship of Material suppliers to the Global Business and Material customers
for products manufactured or services rendered by the Global Business; provided,
--------
that neither Buyer nor Buyer's Affiliates shall have contact or communication
with any suppliers or customers of the Global Business without Seller's prior
written consent. Seller reserves the right to collect aggressively any
Receivables due prior to the Closing Date.
10.05 INTENTIONALLY OMITTED.
10.06 INTENTIONALLY OMITTED.
10.07 Publicity: Prior to Closing, any press releases by either Buyer,
---------
Seller or an Affiliate of either which pertain to this Agreement or the
transaction contemplated hereunder shall be
49
<PAGE>
reviewed and approved in writing prior to release by both Parties. Such
approval shall not be unreasonably withheld.
10.08 Transitional Services Agreement: Under the terms and conditions of
-------------------------------
the Transitional Services Agreement, Seller and its Affiliates are willing to
provide, for the considerations stated therein, certain administrative and
support services to Buyer and its Affiliates with regard to the Global Business
for a transitional period after April 30, 1996. At least 30 days before
Closing, Buyer shall notify Seller as to which services Buyer and its Affiliates
elects to receive under the terms of the Transitional Services Agreement.
10.09 Work Diligently Towards Closing: Buyer and its Affiliates and
-------------------------------
Seller and its Business Affiliates shall each use best efforts to work
diligently, including obtaining all necessary governmental approvals and
filings, towards completing the transaction contemplated by this Agreement on
the scheduled Closing Date.
10.10 Financial Information: Seller shall furnish or shall cause Seller's
---------------------
independent accountants to furnish audited financial statements for the Global
Business for the years ended December 31, 1995, 1994 and 1993 in a form meeting
the requirements of Regulation S-X of the Securities Act of 1933 (exclusive of
cash flow statements) and the consent of Seller's independent accountants to the
inclusion of their reports on such financial statements in Buyer's Registration
statement and any amendments thereto). Seller shall provide (or cause its
independent accountants to provide) audited financial statements
50
<PAGE>
for the Global Business for the years ended December 31, 1995 and 1994 on or
prior to February 15, 1996; provided that Seller shall use reasonable best
efforts to promptly cause the delivery of such audited financial statements as
soon as practicable after the execution of this Agreement. Notwithstanding the
foregoing, if Seller fails to provide (or cause its independent accountants to
provide) audited financial statements for the Global Business for the year ended
December 31, 1995 on or prior to February 15, 1996, the Purchase Price hereunder
shall be immediately reduced by $5 million (without any other action required on
the part of any person) and Seller shall have until March 15, 1996 to deliver
such audited financial statements. Seller shall provide (or cause its
independent accountants to provide) such audited financial statements for the
Global Business for the year ended December 31, 1993 on or prior to August 10,
1996; provided that Seller shall use reasonable best efforts to promptly cause
the delivery of such audited financial statements as soon as practicable after
the Effective Date. The Parties acknowledge and agree that time is of the
essence in the performance of the provisions of this Section 10.10.
10.11 Leased Real Property. Seller shall obtain from the landlords under
--------------------
the leases for the Leased Premises in Newtown, Connecticut and Atlanta, Georgia
written agreements substantially to the effect that each such landlord:
(a) consents to the making of a leasehold mortgage of the tenant's
interest under each such lease and shall execute and
51
<PAGE>
deliver to the tenant a recordable memorandum of lease in form reasonably
acceptable to such landlord;
(b) waives any landlord's lien or security interest in tenant's
personal property in favor of the secured party under any such leasehold
mortgage;
(c) recognizes the rights of the secured party under any such
leasehold mortgage to enter upon the Leased Premises (subject to the terms of
the lease therefor) for the purpose of protecting or realizing upon the security
interest of such secured party in the personal property of such tenant; and
(d) shall give written notice of any default by the tenant under such
lease to the secured party identified in any such leasehold mortgage and provide
such secured party with a reasonable opportunity to cure any such default prior
to the termination of such lease by landlord.
In addition, Seller shall obtain estoppel letters and consents to
assignment, to the extent required under the leases, each in form and content
reasonably acceptable to Seller and Buyer, with respect to the Leased Premises
located in Newtown, Connecticut and Atlanta, Georgia, as more particularly
described on Schedule 2.01(b).
10.12 List of Key Employees: Seller shall cause Bob Brightfelt to prepare
---------------------
a list of key management, senior staff or research and development personnel who
were utilized primarily in the Global Business as of August 31, 1995.
10.13 Software License Payments: Seller will not, from and after April
-------------------------
30, 1996 (including during the period following the
52
<PAGE>
Closing Date), enter into any contractual arrangements regarding the use of the
computer software assets described in Section 2.08 that obligate Buyer or any
Affiliate to make payments for which Buyer is not permitted to seek
reimbursement from Seller under Section 5.09(f) of this Agreement (other than
due to the $3 million limitation set forth therein).
10.14 Cooperation Regarding Minimization of Costs. Buyer and Seller hereby
-------------------------------------------
agree to work cooperatively from and after April 30, 1996 (including during the
period following the Closing Date) to minimize the costs and expenses of the
type to be shared by Buyer and Seller pursuant to Section 5.09(f) that are
related to the transfer of computer software assets described in Section 2.08.
Furthermore, Buyer and Seller hereby agree to work cooperatively from and after
April 30, 1996 (including during the period following the Closing Date) to
minimize the costs and expenses that may result from the splitting apart of the
Newtown, Connecticut facility between the Business and Centrifuge business (as
presented to Seller by Buyer at the March 29, 1996 meeting at Seller's office)
in order to reduce or eliminate any adverse economic exposure to Buyer;
provided, however, that (x) Seller shall not be required to take any action that
would, in any material respect, adversely affect Seller, the Sorvall business or
any plans of any buyer of Seller's Sorvall business, and (y) if Buyer and Seller
are unable to reduce or eliminate such adverse economic exposure to Buyer on or
prior to the Closing Date, Buyer shall nonetheless enter into at the Closing the
Additional Agreements relating to the Sorvall business (it being
53
<PAGE>
understood that the Parties' execution of such agreements shall not affect the
Parties post-Closing obligations set forth in this sentence). Seller also
agrees to use reasonable efforts to provide Buyer with reasonable access to the
buyer of the Sorvall business (after the acquisition agreement relating to the
purchase of such business has been signed) for the purposes of discussing the
matters described in the previous sentence.
ARTICLE 11
EMPLOYEE BENEFIT MATTERS
------------------------
11.01 Offer of Employment: Buyer will offer employment to substantially
-------------------
all of the employees of Seller assigned to the Business who are employees on the
Closing Date. Seller shall provide a schedule to Buyer prior to the Closing
Date setting forth such employees, their status and their compensation. Seller
shall use all reasonable effort to cause such employees to accept Buyer's offers
of employment. For a period of one year after the Closing Date, neither Seller
nor its Affiliates shall continue to employ or hire or solicit to hire any
employees of the Global Business who were employees of the Global Business on
the Closing Date and who were employed by Seller or one of Seller's Business
Affiliates during the previous 12 month period in a managerial, senior staff or
research capacity. Those employees of Seller who accept such offers of
employment effective as of the Closing Date shall be referred to herein as
"Transferred Employees." Buyer shall also offer employment to all employees of
the Business who as of the Closing Date are on a disability leave or other leave
of absence and any employee who
54
<PAGE>
accepts such offer on or before the six month anniversary of the commencement of
the leave shall also be a Transferred Employee.
11.02 Compensation and Benefits: During the three (3) year period
-------------------------
following the Closing Date, Buyer shall offer compensation, benefits and
severance payments to the Transferred Employees substantially equivalent to or
greater in value to that each Transferred Employee had with Seller immediately
preceding the Closing Date; provided that no provision contained in this
Agreement shall limit Buyer's ability to terminate any Transferred Employee.
(Compensation shall include base salary or wage rate, variable compensation and
long term compensation.) From the Closing Date until no later than December 31,
1996, the Transferred Employees will continue to participate under the welfare
benefit plans and in the Savings and Investment Plan maintained by Seller in
which they participated immediately prior to the Closing Date. Buyer shall
reimburse Seller for costs associated with such participation in accordance with
the Transitional Services Agreement. Effective as of January 1, 1997 (or such
earlier date as the Transferred Employees begin to participate in Buyer's
welfare benefit plans and 401(k) plan), the Transferred Employees shall
participate in the welfare benefit plans and 401(k) plan maintained by Buyer
which plans shall be substantially equivalent to Seller's welfare plans and
Seller's Savings and Investment Plan. Buyer's welfare plans shall waive any
pre-existing condition restrictions to the extent necessary to provide immediate
coverage thereunder. In order to achieve substantial equivalency for the three
(3) year period
55
<PAGE>
following the Closing Date to the plans in which the Transferred Employees
participated immediately preceding the Closing Date, Buyer's pension, benefit
and severance plans shall be modified with respect to the Transferred Employees
as follows:
(a) Severance. During the three (3) year period, the Transferred
---------
Employees will be entitled to severance benefits in accordance with the terms
and conditions of Seller's severance plan.
(b) Pension. Buyer will amend its pension plan to add for the
-------
Transferred Employees the 1.2% of pay formula set forth in Section IV. A. (2)(b)
of Seller's pension plan.
(c) Medical and Dental. Buyer will implement a premium equalization
------------------
program whereby the cost to the Transferred Employees for medical and dental
coverage during the three (3) year period will be equivalent to that which would
be charged by Seller for similar coverage during such period and Seller will
promptly reimburse Buyer for the cost of the premium equalization program. The
cost of the premium equalization program shall equal the difference between the
cost charged by Buyer for such coverage with respect to other similarly situated
employees of Buyer and the amount paid by the Transferred Employees.
11.03 Accrued Wages, Salaries and 1996 Variable Compensation: Seller will
------------------------------------------------------
pay to all Transferred Employees wages and salaries and any other compensation
(including, without limitation, bonuses or retention bonuses, variable
compensation or long term compensation) earned on or prior to the Closing Date
56
<PAGE>
and any severance or change of control payments (whether payable prior to or
after the Closing) as a result of the transactions contemplated by this
Agreement. Seller will pay the Transferred Employees, in accordance with the
terms and conditions of its Variable Compensation Plan and Seller's other bonus
programs a proportional share of the 1996 Variable Compensation award and a
proportional share of the bonus award under such other bonus programs. Such
share shall be determined by multiplying the award by a fraction, the numerator
of which shall be the number of full months of employment in 1996 with Seller
and the denominator of which shall be twelve. Transferred Employees who are
entitled to receive an award will receive the prorated award when Seller pays
all other awards under such plans.
11.04 Employment Liabilities: Except as specifically described herein,
----------------------
Seller shall be responsible for all liabilities in connection with claims
incurred on or prior to the Closing Date by Transferred Employees under Seller's
employee welfare benefit plans (as defined in Section 3(1) of ERISA). Buyer
shall be responsible for all liabilities in connection with claims incurred on
and after the Closing Date by Transferred Employees under any of Buyer's
employee welfare benefit plans (as defined in Section 3(1) of ERISA). For
purpose of this Section, a claim shall be considered incurred on the date
treatment is rendered or a service performed. Worker's compensation claims of
any Transferred Employees shall be the responsibility and liability of Seller if
the event giving rise to such claims occurred prior to the Closing Date and
shall be the responsibility and liability
57
<PAGE>
of Buyer if the event giving rise to the claim occurs after the Closing Date.
11.05 Employee Benefit Plans - Back Service Credit: Buyer shall grant
--------------------------------------------
service credit under Buyer's employee benefit plans equal to the Seller's
credited service time for Transferred Employees. Subject to the asset transfer
described in Section 11.06, service prior to the Closing Date of a Transferred
Employee which is recognized by the Seller's Pension Plan for purposes of
participation, vesting, eligibility and benefit accruals shall be recognized by
the Buyer's Pension Plan; provided that where such Transferred Employee has
retired under the Seller's Pension Plan, the pre-Closing Date service of such
Transferred Employee shall not be credited for benefit accrual under the Buyer
Pension Plan but shall be counted for purposes of vesting and eligibility for
early retirement, or disability retirement benefit under the Buyer's Pension
Plan. Service prior to the Closing Date of a Transferred Employee which is
recognized by the Seller's Savings Plan shall be recognized as service with the
Buyer's Savings Plan. Any service prior to the Closing Date of a Transferred
Employee recognized under the medical plan of the Seller for purposes of retiree
medical or dental coverage shall be recognized by the corresponding Buyer Plan
described in Section 11.09. Service prior to the Closing Date recognized under
Seller's vacation policy shall be recognized by the Buyer. Transferred Employees
will receive service credit under Buyer's severance pay plan.
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11.06 Defined Benefit Pension Plan:
-----------------------------
(a) As soon as practicable, but effective as of the Closing Date,
Buyer shall extend coverage to Transferred Employees under a defined benefit
pension plan qualified under Section 401(a) of the Code ("Buyer's Pension Plan")
substantially equivalent in all material respects to Seller's Pension and
Retirement Plan ("Seller's Pension Plan"). Within forty-five (45) days after
the receipt of a copy of Buyer's Pension Plan and an opinion of counsel stating
that the Buyer's Pension Plan is qualified under Section 401(a) of the Code and
that the trust established under the Buyer's Pension Plan is exempt from
taxation under Section 501(a) of the Code and a certification from the Buyer
that the Plan has in all material respects been administered and operated in a
manner such as to preserve such qualification and such exempt status through the
date of transfer, or within ten (10) days after the expiration of the thirty
(30) days waiting period prescribed by Section 6058(b) of the Code, whichever is
later, Seller shall cause the Trustees of Seller's Pension Plan to transfer to
the Buyer's Pension Plan an amount in cash or property acceptable to Buyer equal
to the Projected Benefit Obligation ("PBO") as defined in Financial Accounting
Standard 87 (FAS 87) of the Transferred Employees determined using a discount
rate of seven and one-half percent (7.50%) and funding assumptions based on the
1993 Schedule B Form 5500 for the Seller's Pension Plan. Interest at such rate
from the Closing Date to the actual date of the transfer shall be included in
the transfer amount. Seller shall calculate the PBO
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and shall provide Buyer at least thirty (30) days prior to the proposed transfer
date with a schedule of the PBO amount and sufficient detail regarding such
calculations so as to allow Buyer to make an appropriate review. The PBO shall
be determined based on the terms and conditions of Seller's Pension Plan as of
the Closing Date, provided that the Company-Paid Survivor Benefit and the
incapability retirement benefit as defined in Seller's pension plan shall only
be included in determining the PBO to the extent that Buyer preserves such
benefits under Buyer's Pension Plan. Buyer shall notify Seller of its intent
with respect to these benefits prior to the proposed transfer date.
(b) In no event will the PBO of the Transferred Employees be less than
the amount necessary to satisfy Section 414(l) of the Code and, if necessary,
the asset transfer described in (a) will be adjusted upward to an amount which
satisfies Section 414(1) of the Code. For the purpose of Section 414(l) of the
Code, the liabilities shall be calculated on a termination basis and shall be
determined to equal the Accumulated Benefit Obligation ("ABO") using a discount
rate determined using a bond immunization strategy similar to the strategy used
by Seller in determining its FAS 87 discount rate for pensions. All other
assumptions for the purpose of Section 414(l) of the Code are the funding
assumptions based on the 1993 Schedule B Form 5500 for Seller's Pension Plan
ignoring increases in pay and Social Security.
(c) In no event shall any amount transferred to the Trustee of Buyer's
Pension Plan be used for any purpose other
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than to provide benefits to eligible employees and in no event shall any amount
transferred to the Trustee of Buyer's Pension Plan revert to the Buyer directly
or indirectly.
11.07 Savings Plans:
-------------
(a) Effective as of the Closing Date, Buyer shall become a
participating employer in Seller's Savings and Investment Plan ("Seller's Saving
Plan") and in accordance with Section 11.02 can remain a participating employer
until December 31, 1996. Upon cessation of participation in Seller's Savings
Plan, Buyer shall extend coverage under a defined contribution plan ("Buyer's
Saving Plan") substantially equivalent in all material respects to Seller's
Saving Plan and which is qualified under Section 401(a) of the Code.
(b) To the extent permitted by the Code, the Buyer's Savings Plan will
accept a direct transfer of account balances of the Transferred Employees who
elect a transfer from the Seller's Savings Plan. The transfers shall be in
cash; provided that the Buyer's Savings Plan will accept a transfer of
promissory notes or other documentation evidencing loans to Transferred
Employees under the Seller's Savings Plan. Upon the transfer of such notes and
other documentation, the Buyer's Saving Plan shall assume such loans.
11.08 Post Retirement Welfare Benefits: Buyer will provide or establish
--------------------------------
plans to provide post retirement medical, dental and life insurance benefits
substantially equivalent to the post retirement medical, dental and life
insurance benefits offered by Seller to those Transferred Employees who retire
from Buyer
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during the three (3) year period following the Closing Date. Seller will
reimburse Buyer for all costs and expenses associated with establishing,
administering and providing such benefits. Seller will indemnify Buyer for any
liabilities arising out of any claim by or through a Transferred Employee that
is based upon Buyer not extending post-retirement welfare benefits to any
Transferred Employee other than a Transferred Employee who retires from Buyer
during the three (3) year period following the Closing Date, unless the cause of
the claim is the willful misconduct or gross negligence of Buyer. The post
retirement welfare benefits for Transferred Employees who retire under the
Seller's Pension Plan shall be the responsibility of the Seller, to the extent
required under the Seller's plans, provided that Buyer shall provide primary
medical and dental coverage to the Transferred Employees while they are actively
employed by the Buyer.
11.09 Vacation: Buyer shall provide vacation entitlements to the
--------
Transferred Employees which are substantially equivalent to the vacation
entitlements of the Transferred Employees under the vacation policy of Seller.
Seller shall permit Transferred Employees to request either a cash out of the
unused portion of their 1996 vacation entitlement which is accrued under the
Seller's Plan as of the Closing Date ("the 1996 Vacation Liability") or a
transfer of the unused 1996 Vacation Liability to Buyer. Upon payment to Buyer
by Seller of an amount equal to the unused 1996 Vacation Liability attributable
to the Transferred Employees who elected to transfer their unused 1996
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Vacation Liability to Buyer, Buyer shall assume the liability for such vacation.
Seller shall discharge its liability to Transferred Employees for vacation
accrued prior to the Closing Date, by making payments directly to the
Transferred Employees.
11.10 Other Employee Benefits:
-----------------------
(a) Buyer shall pay and be responsible for the relocation supplemental
living allowance set forth in Schedule 11.10 (a)(1) to Transferred Employees who
are entitled to and are receiving such salary supplement at the Closing Date.
Such salary supplement shall be made in accordance with the Relocation Policy
described in Schedule 11.10(a)(2) and shall continue until such Transferred
Employee has received the supplement provided therein or the equivalent thereof.
(b) As soon as practicable following the Closing Date, Seller shall
transfer to Buyer promissory notes or other documents evidencing housing
purchase assistance loans of Transferred Employees listed in Schedule 11.10(b).
Upon the transfer of such notes, Buyer shall assume such loans.
11.11 Foreign PBO:
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(a) As soon as practical after the Closing Date, Seller shall make a
calculation, as of the Closing Date, of the PBO for the Foreign Transferred
Employees under each of the defined benefit pension plans in which the Foreign
Transferred Employees participate ("Foreign Pension Plans"). The PBO of the
Foreign Transferred Employees under each of the Foreign Pension Plans ("Foreign
PBO") shall be calculated in accordance with FAS 87 using the actuarial
assumptions and factors used to
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compute the PBO for such plans for purposes of Seller's financial statements (or
if no factors or assumptions exist, under factors and assumptions which are
reasonable for such country). Seller shall deliver to Buyer a detailed schedule
of the Foreign PBO calculation with respect to each Foreign Pension Plan.
(b) In the event the Foreign PBO amount for the Foreign Pension Plan
exceeds the value of the assets transferred, with respect to the Foreign Pension
Plan, to Buyer (or its Affiliate), or to a pension plan established by Buyer (or
its Affiliate), such excess shall be paid in cash by Seller to Buyer. Such
payment shall occur on a date that is mutually agreeable to Seller and Buyer,
which shall be no later than 90 days after the Closing Date. The Foreign PBO
shall include interest at the discount rate used in the determination of the
PBO, calculated from the Closing Date to the date such payment is made to Buyer.
With respect to the Foreign Pension Plan in the UK, the excess amount payable by
Seller shall be equal to the excess of (i) the PBO determined with respect to
the employees of the Global Business in the UK, over (ii) the transfer value of
the actual benefits accrued by such persons as of the Closing Date.
ARTICLE 12
GOVERNMENTAL CONSENTS
---------------------
12.01 Governmental Consents: The sale contemplated by this Agreement is
---------------------
conditional upon receipt prior to Closing of the approvals, consents,
authorizations and waivers from governmental and other regulatory agencies which
are required to consummate
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the sale contemplated by this Agreement (including the expiration of any
applicable premerger notification waiting period.)
12.02 Efforts: Each Party shall use its reasonable best efforts to obtain
--------
all authorizations, consents, orders and approvals of, and to give all notices
to and make all filings with, all governmental authorities and other third
parties that may be or become necessary for its execution and delivery of, and
the performance of its obligations pursuant to this Agreement, and each Party
will cooperate fully with the other Party in promptly seeking to obtain all such
authorizations, consents, orders and approvals, giving such notices, and making
such filings. Each Party agrees to make an appropriate filing of a notification
and report form pursuant to the HSR Act with respect to the transactions
contemplated hereby within five business days of the Effective Date and to
supply promptly any additional information and documentary material that may be
requested pursuant to the HSR Act. The Parties acknowledge that time shall be
of the essence in this Agreement and agree not to take any action that will have
the effect of unreasonably delaying, impairing or impeding the receipt of any
required authorizations, consents, orders or approvals.
12.03 Buyer's Undertakings: Without limiting the generality of Buyer's
--------------------
undertakings pursuant to Section 12.01, Buyer shall:
(a) use its reasonable best efforts to prevent the entry in a
judicial or administrative proceeding brought under any antitrust law by any
governmental authority with jurisdiction
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over the enforcement of any applicable antitrust laws ("Government Antitrust
Authority") or any other party of any permanent or preliminary injunction or
other order that would make consummation of the acquisition of the Business
Assets in accordance with the terms of this Agreement unlawful or that would
prevent or delay such consummation, including, without limitation, (i) defending
against any motion for a preliminary injunction (with the full participation and
cooperation of Seller pursuant to Section 12.02), and (ii) in the event that
such a preliminary injunction is initiated by a Government Antitrust Authority,
proposing, negotiating, and agreeing to accept arrangements for holding separate
particular assets or categories of assets among the Business Assets, or among
the assets of the Buyer or any of its Affiliates.
(b) take promptly, in the event that a preliminary injunction has
been issued in such a proceeding, any and all steps reasonably necessary to
vacate, modify or suspend such preliminary injunction so as to permit such
consummation on a schedule as close as reasonably possible to that contemplated
by this Agreement, including, without limitation, the posting of a bond or, in
the event that such a preliminary injunction is obtained by a Government
Antitrust Authority, proposing, negotiating, and agreeing to accept arrangements
for holding separate or disposing of particular assets or categories of assets
among the Business Assets or among the assets of the Buyer or any of its
Affiliates.
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12.04 Foreign Transfers.
-----------------
(a) In the event that any transfer of the non-U.S. Global Business
Assets cannot be consummated at or before the Closing as a result of the failure
to receive governmental consents, approvals, authorizations or waivers required
for the transfer of non-U.S. Global Business Assets (including any assets which
would have been non-U.S. Global Business Assets had any such consent, approval,
authorization or waiver been obtained), the non-U.S. Global Business Assets so
affected shall not be sold, assigned, transferred, conveyed or delivered at
Closing, but instead shall be covered by the provisions of this Section 12.04
and the corresponding provisions of the Foreign Purchase Agreements.
(b) From and after the Closing, except as set forth in this Section
12.04(b) and the corresponding provisions of the Foreign Purchase Agreements,
(i) Seller or Seller's Business Affiliates shall cause the non-U.S. Global
Business Assets which cannot be conveyed for any of the reasons described in
Section 12.04(a) and the corresponding provisions of the Foreign Purchase
Agreements, to be held as Buyer's or Buyer's Affiliates' nominee, and (ii) in
such capacity as Buyer's or Buyer's Affiliates' nominee, Seller or Seller's
Business Affiliates shall cause to be operated that portion of the Global
Business with respect to such non-U.S. Global Business Assets until such non-
U.S. Global Business Assets can be conveyed. Seller or Seller's Business
Affiliates shall hold such non-U.S. Global Business Assets for the benefit of
Buyer or Buyer's Affiliates and shall cause such
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properties to be managed and operated for the account and benefit of Buyer or
Buyer's Affiliates. Buyer and Seller shall promptly use all reasonable efforts
to resolve all impediments to transfer of the non-U.S. Global Business Assets,
and will cooperate for this purpose and, if the relevant impediment is common to
both Buyer and Seller, shall share all costs and expenses in connection
therewith in accordance with Section 5.09(f). Upon resolving the impediment to
transfer of such non-U.S. Global Business Assets, Seller or Seller's Business
Affiliates and Buyer or its Affiliates shall promptly consummate, the
transactions contemplated in this Agreement or the relevant Foreign Purchase
Agreement with respect to such non-U.S. Global Business Assets, without the
payment of any additional monies under this Agreement or any Foreign Purchase
Agreement.
ARTICLE 13
CLOSING
-----------
13.01 Place and Date of Closing: The closing of the transaction
-------------------------
contemplated by this Agreement (the "Closing") shall take place at the offices
of Kirkland & Ellis in New York, New York, at 10:00 am local time on May 7,
1996, or on the fifth business day following the fulfillment of the conditions
stated in Article 16 of this Agreement, whichever shall later occur.
13.02 Buyer Deliverables at Closing: At the Closing, Buyer shall:
-----------------------------
(a) Pay to Seller by wire transfer in immediately available funds in
Seller's favor the Purchase Price.
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(b) Deliver to Seller a certificate of a duly authorized officer of
Buyer confirming the accuracy on the Closing Date of the warranties of Buyer
contained herein.
(c) Deliver to Seller a legal opinion of Buyer's legal counsel in
form reasonably satisfactory to Seller's legal counsel.
(d) Execute and deliver (or Buyer's Affiliates will execute and
deliver, as appropriate) the Undertaking of Assumption, and the Grantback
License described in the Intellectual Property Rights Agreement and the
Additional Agreements listed in Schedule 13.02(d).
13.03 Seller Deliverables At Closing: At the Closing, Seller shall:
------------------------------
(a) Deliver to Buyer a certificate of a duly authorized officer of
Seller confirming the accuracy on the Closing Date of the warranties of Seller
contained herein.
(b) Deliver to Buyer a legal opinion of Seller's legal counsel in
form reasonably satisfactory to Buyer's legal counsel.
(c) Execute and deliver a mutually acceptable general corporate
warranty deed transferring fee simple marketable title in and to the Plants to
Buyer.
(d) Execute and deliver (or Seller's Business Affiliates will execute
and deliver, as appropriate) such assignments, bills of sale, endorsements,
notices, consents, assurances and such other instruments of conveyance and
transfer as counsel for Buyer shall reasonably request and as shall be effective
to vest in Buyer good and marketable title to all of
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the Global Business Assets including, without limitation, the Bill of Sale
containing the conveyance provisions identical to Article 2 hereof, the
Assignment of Patents, Trademarks and Copyrights, the Intellectual Property
License Agreement and associated licenses described therein, the Transitional
Services Agreement and the Additional Agreements listed on Schedule 13.03(d).
Simultaneously with the delivery of such Bill of Sale, Seller shall take all
such steps as may be necessary to put Buyer in actual possession and control of
the Business Assets.
13.04 Other Agreements: Completion of the process prior to Closing as to
----------------
the valuation of the Inventory and the Miscellaneous Assets shall not be a
condition precedent to either Party's obligation to Close. If the process on
either or both such matters is not completed by the Closing Date, the Closing
shall take place notwithstanding the failure to complete the process. The
consideration for such assets to the extent agreed upon shall be payable at
Closing in accordance with the provisions of Section 13.02(a) above.
ARTICLE 14
POST CLOSING
------------
Seller and Buyer agree that after the Closing Date:
14.01 Receivables: In the event a payment is made to Seller or any of
-----------
Seller's Business Affiliates of any accounts receivables constituting Global
Business Assets transferred to Buyer or an Affiliate arising out of any
transaction occurring on or before the Closing Date, Seller or such Business
Affiliate
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shall promptly forward to Buyer or Buyer's Affiliate the amount of such accounts
receivable constituting Global Business Assets. With respect to any accounts
receivables constituting Global Business Assets transferred to Buyer which have
been commingled with accounts receivable of any of Seller's or Seller's Business
Affiliates' other businesses (the "Commingled Receivables"), Buyer or its
Affiliates shall have the right to collect any such Commingled Receivables from
and after the Closing Date. Buyer or its Affiliate shall promptly account for
any portion of such Commingled Receivables which do not relate to the Global
Business and promptly remit any such amounts to the Seller or Seller's Business
Affiliates, or at Seller's written direction, to any purchaser of Seller's Other
Medical Products Businesses. At Buyer's request, Seller or Seller's Business
Affiliates shall use reasonable efforts to assist Buyer or its Affiliates in the
collection of any Commingled Receivables.
14.02 Delivery of Business Records: As soon after the Closing as is
----------------------------
reasonably practicable, Seller shall cause the Business Records to be delivered
to Buyer.
14.03 Delivery of Transferred Employee Records: Seller shall deliver to
----------------------------------------
Buyer all personnel records, including medical files deemed appropriate by
Seller, on the Transferred Employees who consent to such delivery in the event
such consent is necessary under applicable law, as evidenced by a consent form
delivered to Seller by Buyer in form reasonably satisfactory to Seller.
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14.04 Buyer Cooperation with Seller's Disposal of Product and Seller's
----------------------------------------------------------------
Warranty Obligations: After the Closing Date:
- --------------------
(a) Buyer shall cooperate on Seller's behalf to sell or resell any
rejected or returned finished products which have been sold, shipped or set
aside for a customer of the Business on or prior to the Closing Date.
14.05 Access to Records:
-----------------
(a) From time to time, upon request by Seller (subject to any applicable
confidentiality restrictions), Buyer shall permit Seller reasonable access to
the books and records delivered to Buyer in accordance with Section 14.02 for
Seller's business purposes, provided Buyer shall not be required to retain such
books and records for a period of more than seven years from the Closing Date or
such longer period as may be required by applicable law; provided, however, that
laboratory notebooks which relate to transferred Intellectual Property shall be
retained and made available to Seller upon request for a period of 20 years
following Closing.
(b) From time to time for a period of twenty (20) years following
Closing, upon request by Buyer (subject to any applicable confidentiality
restrictions), Seller shall permit Buyer reasonable access to laboratory
notebooks retained by Seller which relate to the licensed Intellectual Property
Rights.
14.06 Cooperation in Litigation: After Closing, each Party shall reasonably
-------------------------
cooperate with the other Party and the other Party's attorneys in the defense or
prosecution of any litigation or proceeding instituted against or by the other
Party or its
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Affiliates pertaining to the Global Business Assets or the Global Business,
excluding, however, any litigation between the Parties (including their
Affiliates). Such cooperation shall include (subject to any applicable
confidentiality restrictions), but not be limited to, conferring with the other
Party's attorneys or experts at their offices during normal business hours at
mutually convenient times and making available to the other Party's attorneys
documents or copies of documents specific to Global Business Assets or the
Global Business, and such cooperation shall include giving testimony
voluntarily. Such cooperation shall not require the cooperating party to be
joined as a party in any such litigation. Each Party further agrees that it
shall not voluntarily disclose to any third party without the other Party's
consent any information or documents received by it heretofore or hereafter from
the other Party's attorneys in connection with the defense or prosecution of any
litigation or proceedings. The other Party shall pay the out-of-pocket expenses
of the cooperating Party and its Affiliates and those expenses of the
cooperating Party's and its Affiliates employees and agents reasonably incurred
in connection with providing such cooperation (to the extent not otherwise
reimbursed under a Foreign Purchase Agreement) but shall not be responsible for
paying any fees or for reimbursing the cooperating Party and its Affiliates for
the salaries or costs of fringe benefits or other similar expenses of the
cooperating Party's and its Affiliates' employees and agents in connection with
time spent providing such cooperation to the other Party.
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14.07 Non Competition:
---------------
(a) For a period of three years from Closing, neither Seller nor any of
its Affiliates will directly or indirectly engage in the manufacture, sale or
service of In-Vitro Diagnostics analyzers, reagents or related consumables, in
any part of the world.
(b) The provisions of paragraph (a) above shall not prevent or exclude
Seller or its Affiliates from the manufacture, sale or service of such analyzers
and reagents for other than In-Vitro Diagnostics and in no event shall such
provisions prevent or exclude Seller or its Affiliates from the manufacture,
sale or service of products for or sale to:
(i) environmental detection, e.g. organisms, monitoring and
remediation;
(ii) the production, transformation, treatment or degradation of
chemicals and feedstocks by bioprocesses;
(iii) a third party if such third party (in all cases such
third party not being an Affiliate of Seller) utilizes such products as raw
materials or components in the manufacture of such analyzers which would
constitute a contravention of paragraph (a) above if such analyzers were
manufactured, sold or serviced by Seller;
(iv) food testing and industrial microbiology; or
(v) Seller or its Affiliates.
(c) The provisions of paragraph (a) above shall not apply to the
activities of Seller's Other Medical Products Businesses to the extent (but only
to such extent) they are
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engaged in such businesses as of the Effective Date of this Agreement; provided
that the provisions of paragraph (a) shall apply to Seller's Diagnostics Imaging
business, but solely as paragraph (a) relates to the provision of service to the
IVD market. Seller shall cause any purchaser, transferee or other successor to
Seller's and Seller's Affiliates' Diagnostics Imaging Business to be bound to
the noncompetition provisions of this Section 14.07.
(d) Seller acknowledges and agrees that the restrictions contained in
this Section 14.07 are fair and reasonable and necessary to accomplish the full
transfer of the technology and other intangible assets contemplated hereby and
the Foreign Purchase Agreements. If, at the time of enforcement of any
provision of this Section 14.07, a court or other tribunal shall hold that the
restrictions therein are unreasonable or unenforceable under circumstances then
existing, the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
(e) The Parties agree that in the event of any breach by Seller or
its Affiliates of any of the provisions of this Section 14.07, money damages
would be inadequate and Buyer would have no adequate remedy at law.
Accordingly, notwithstanding anything to the contrary contained in this
Agreement, the Parties agree that Buyer shall have the right, in addition to any
other rights and the obligations under this Section 14.07, to seek an adequate
remedy for such breach, not only by an action for
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damages but also by an action or actions for specific performance, injunction
and/or other equitable relief in order to enforce or prevent any violations
(whether anticipatory, continuing or future) of the provisions of this Section
14.07 without posting a bond.
14.08 Removal of Seller's Name from Real Property: Not later than 30
-------------------------------------------
days after the Closing Date, Buyer shall remove Seller's name from the exterior
of the Plants and the Leased Premises. In the event Buyer fails to remove
Seller's name within the 30 day period, Buyer hereby grants Seller the right of
access to said property, during normal business hours to remove Seller's name
from the exterior of the Plants and Leased Premises.
14.09 Use of Current Supplies: Buyer will have after the Closing in
-----------------------
Inventory a quantity of work-in-process, preprinted stationery, packaging
material and other supplies (including all Inventory acquired by Buyer) which
bear the DuPont name and logo. For a period of two years from the Closing Date
(provided that for any analyzers which constitute Inventory which are currently
placed or placed within six months of the Closing Date, such license shall be
for the life of such analyzer), and solely with respect to any Inventory
acquired by Buyer pursuant to this Agreement, Seller hereby grants to Buyer a
paid-up license, to remain in effect until the exhaustion of such Inventory in
the ordinary course of business (not to exceed two years, or, in the case of any
analyzer Inventory which is currently placed or placed within six months of the
Closing Date, for the life of
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such analyzer), to use any trademarks, trade names, trade dress, copyright or
other proprietary rights of Seller associated with such Inventory. Such license
shall be in addition to other licenses granted hereunder or under the other
documents in accordance with the terms of this Agreement. Buyer shall not be
entitled to use the DuPont name and/or logo except as provided in this Section
14.09 or elsewhere in the Acquisition Documents.
14.10 Disclosure of Information: It is understood that Seller and
-------------------------
its Affiliates may have confidential information concerning the Global Business
which, if known to competitors thereof, would damage the Global Business.
Seller agrees that for a period of five years after the Closing Date, neither
Seller nor its Affiliates will divulge or appropriate for its own use, or for
the use of any third party, any secret or confidential information or knowledge
obtained by Seller or its Affiliates concerning the Global Business, including,
but not limited to, information pertaining to methods, processes, designs,
equipment, catalogs, customer lists and operating procedures. This obligation
of secrecy shall not apply to information which:
(a) is or becomes part of the public domain other than through
breach of this Agreement or through fault of Seller (or any Affiliate of
Seller),
(b) is or becomes available to Seller or its Affiliates from an
unaffiliated source which source has no obligation of secrecy to Buyer or its
Affiliates,
(c) is required to be disclosed (but only to the extent so
required) by law or governmental order,
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(d) is used as of the Closing Date, in connection with another
business of Seller or its Affiliates (but only to the extent such information
continues to be used in such other business), or
(e) the Parties mutually agree to disclose.
14.11 Rights of First Offer:
---------------------
(a) Seller will use reasonable best efforts to notify Buyer in
writing of any proposed sale, assignment or licensing of IVD Rights by Seller or
any of its Affiliates for application in the Business Field. Seller shall
negotiate in good faith with Buyer for the acquisition or licensing of such
IVD Rights (as the case may be) on terms mutually agreeable to Buyer and Seller.
Excluded from the provisions of this section are IVD Rights subject to
obligations Seller has in effect with third parties in existence at the time
this Agreement is signed. As used in this Section 14.11, "IVD Rights" means
Patents and Technical Information possessed by Seller or its Affiliates,
whenever acquired, that are applicable to the Business Field.
(b) Nothing in this Section 14.11 shall be deemed to be a
limitation of the rights conveyed to Buyer pursuant to the terms of the
Intellectual Property Rights Agreement.
(c) The provisions of this Section 14.11 shall expire on the
third anniversary of the Closing.
14.12 Sorvall: Seller will use reasonable best efforts to sell the
-------
Sorvall business to a purchaser who is capable of performing Seller's
obligations under the proposed manufacturing agreement with the Sorvall business
(such determination to be
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made based upon, among other things, the purchaser's financial profile,
including capital structure, and commitment to the Sorvall business). Prior to
the consummation of any sale of all or substantially all of the assets of
Seller's Sorvall Centrifuge Business to a competitor of Buyer in the IVD market,
Seller shall provide Buyer with a written notice detailing the identity of the
proposed buyer and the terms of the proposed sale (including, without
limitation, a description of the price, assets to be acquired, any liabilities
to be assumed, any closing contingencies and any transition service
arrangements). Within 5 days following receipt of such written notice, Buyer
may deliver a written notice to Seller electing to purchase Seller's Sorvall
Centrifuge Business on the terms specified in Seller's written notice to Buyer.
14.13 Pre-Closing 1996 Financial Statements: The Parties will
-------------------------------------
cooperate in the production of unaudited financial statements for the Global
Business covering the period from January 1, 1996 through April 30, 1996 for
purposes of assisting Buyer with its planned registration statement.
14.14 Nonassignable Contracts, etc.: If any consent or waiver of a
-----------------------------
third party or governmental agency necessary for the transfer and assignment of
any contract, license, permit or other agreement to Buyer hereunder or to
Buyer's Affiliates under a Foreign Purchase Agreement is not obtained or if such
assignment is not permitted irrespective of consent and the Closing is
consummated, Seller and Seller's Business Affiliate shall continue to cooperate
with Buyer and its Affiliates to obtain
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such consents and waivers and shall cooperate with Buyer and its Affiliates (in
a mutually agreeable arrangement designed to provide Buyer with) the rights and
benefits (subject to the obligations) under such contracts, licenses, permits
and other agreements.
14.15 Certain Credits: Buyer shall have a $5 million credit as of the
---------------
Closing Date, which credit may be used by the Buyer and its Affiliates to offset
any amounts owed from time to time by any such persons to Seller or its
Affiliates under the Transitional Services Agreement for services to be provided
in the United States; provided, however, that such credit shall be applied
ratably (on a monthly basis) over the one-year period following the Closing Date
(it being understood that any portion of the credit not used during any month
shall be carried forward and may be used, in whole or part, in any of the
succeeding months including any months following the end of such one-year
period).
ARTICLE 15
BULK SALES ACT
--------------
Buyer hereby waives compliance by Seller with the requirements of any
and all laws relating to bulk sales and transfers; and as consideration for such
waiver by Buyer, Seller agrees to indemnify Buyer for any loss to Buyer
resulting from any claim by any creditors of Seller under any such law.
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ARTICLE 16
RIGHT OF TERMINATION; DISPUTE SETTLEMENT
----------------------------------------
16.01 Termination: The Parties recognize the potential damage to the
-----------
Business from a failure to Close or a delay in Closing. Therefore, the
conditions precedent to Closing are limited as follows:
(a) If the Closing does not occur on or before April 30, 1996,
because of either:
(i) a failure to obtain necessary governmental consents as
specified in Article 12 above, or
(ii) the transactions contemplated by this Agreement having
been enjoined by an administrative or judicial proceeding with proper
authority to issue such injunction,
then in such event either Party shall have the right to terminate this Agreement
without liability to the other, other than for any breach of the confidentiality
provisions of Section 10.01; provided, however, by giving five days' notice to
the Party delivering the notice of termination, such other Party may (so long as
such other Party has been complying with its obligations in Article 12) extend
the term of this Agreement for so long as such Party continues to comply with
its obligations in Article 12 but in no event shall the term of this Agreement
extend beyond June 30, 1996.
(b) If there has been a material breach of a representation or
warranty on the part of one Party (without
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taking into account, in the case of a breach by Seller, of any disclosures made
by Seller to Buyer pursuant to Section 6.22 hereof), or failure to comply in any
material respect with any covenant on the part of one Party, then in such event,
the other Party to this Agreement shall have the right to terminate this
Agreement without liability to the breaching Party, other than for any breach of
the confidentiality provisions of Section 10.01.
(c) If Buyer fails to obtain the financing set forth in the
commitment letters delivered to Seller prior to the date hereof, as the same may
be extended from time to time by the parties thereto (whether orally or in
writing), then in such event, Buyer shall have the right to terminate this
Agreement without liability to Seller, other than for any breach of the
confidentiality provisions of Section 10.01.
(d) A failure to satisfy the conditions of either Section 13.02 (other
than the payments required by Paragraph 13.02(a)) or 13.03 (other than the items
required by Paragraphs 13.03(c) and (d)) shall not be a condition precedent to
Closing; the Party adversely affected thereby shall retain all rights available
to it but shall otherwise be obligated to proceed with its obligations to Close.
If any item required to be delivered by a Party at Closing under this Agreement
is not delivered, the other Party shall be entitled to specific performance of
the obligation to deliver that item.
Notwithstanding anything in this Section 16.01 to the contrary, in the
event the purchase and sale of the Business as
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contemplated by this Agreement has not been consummated on or prior to May 31,
1996, Seller shall have the right to terminate this Agreement without liability
to Buyer other than for any breach of the confidentiality provisions of Section
10.01; provided, however, that Seller shall not be entitled to terminate this
Agreement pursuant to this sentence if Seller's breach of this Agreement has
prevented the consummation of such transactions at or prior to such date.
16.02 Dispute Settlement:
------------------
(a) The Parties shall attempt in good faith to promptly resolve
any dispute arising out of or relating to this Agreement or any Foreign Purchase
Agreement by negotiation between executives who have the authority to settle the
controversy and who are at a higher level of management than the persons with
direct responsibility for administration of this Agreement or any Foreign
Purchase Agreement. Either Party may give the other Party written notice of a
dispute not resolved by such executives in the normal course of business. If the
matter has not been resolved by these persons within two months of a disputing
Party's notice, the dispute shall be referred to a more senior executive of the
Parties. If the dispute is not resolved within two months from the referral to
the more senior executive, either party may initiate mediation or arbitration as
provided in the following paragraphs (b) and (c).
(b) If the dispute has not been resolved by negotiation as
provided in paragraph (a) above, the Parties shall endeavor to settle the
dispute by mediation under the Center for
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Public Resources ("CPR") Model Procedure for Mediation of Business Disputes in
effect on the date one Party gave notice of the dispute to the other Party. The
neutral third party mediator will be selected from the CPR Panels of Neutrals,
with the assistance of CPR, unless the Parties agree otherwise.
(c) If the dispute has not been resolved by negotiation or by
mediation, then upon the written request of either Party, such dispute shall be
resolved by binding arbitration conducted in accordance with the Rules of the
CPR Institute for Dispute Resolution by a sole arbitrator. To the extent not
governed by such rules, such arbitrator shall be directed by the Parties to set
a schedule for determination of such dispute that is reasonable under the
circumstances. The arbitration will be conducted in New York City. The
arbitration will be governed by the United States Arbitration Act, 9 U.S.C.
(S)(S) 1-16 and the Patent Arbitration Act, 35 U.S.C. (S) 294. Judgment upon the
award rendered by the arbitrator may be entered by any court having
jurisdiction.
(d) In the event the Parties have not resolved a dispute pursuant to
Sections 16.02(a) and (b) above, the Parties hereby acknowledge and agree that
the mediation shall be deemed in the nature of settlement discussions and that
neither the fact that the mediation took place nor any statement or conduct of
any participant in such mediation shall be admissible into evidence in any
subsequent arbitration or other dispute resolution proceeding involving the
Parties or their Affiliates, and any disclosure in any form, including oral, by
any person
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participating in such mediation shall not operate as a waiver of any privilege,
including attorney work product or attorney client privilege.
ARTICLE 17
SURVIVAL, REMEDIES AND PROCEDURE FOR INDEMNIFICATION
----------------------------------------------------
17.01 Period for Taking Action:
------------------------
(a) All obligations by Seller to indemnify and hold Buyer and
its Affiliates harmless for breach of the warranty set forth in Section 6.06
shall terminate five years after the Closing Date.
(b) No claim shall be brought or any other action instituted
against the other Party with respect to the representations, warranties,
covenants, agreements and indemnifications contained in this Agreement at any
time after the eighteen (18) month anniversary of the Closing Date other than
for the indemnifications and warranties specified in Section 17.01(a) and those
covenants and agreements for which a different time period is specifically
stipulated elsewhere in this Agreement or where the context clearly indicates
otherwise. In the event a time period other than said eighteen (18) months is
stipulated elsewhere in this Agreement or otherwise indicated in this Agreement,
no claim shall be brought or any other action instituted against the other Party
with respect to the relevant covenant or agreement or indemnification at any
time after the time period stipulated or indicated in this Agreement.
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(c) Any on-going claims, actions or demands commenced prior to
expiration of the claim period set forth in Sections 17.01(a) or (b) or
specifically stipulated elsewhere in this Agreement shall be pursued to
conclusion even if final disposition of such matter occurs after the claim
period has elapsed.
17.02 Notice: No claim for indemnification may be made with respect
------
to any of the indemnification provisions set forth in Articles 8 and 9 unless
notice of such claim for indemnification which satisfies the provisions of
Section 17.07 below or Section 17.08 below with regard to environmental matters
is given to the indemnifying party on or before the expiration date for such
indemnification provision as set forth in Section 17.01, but the actual costs or
expenses related thereto may be incurred or assessed after such expiration date.
For the purposes of determining whether an individual claim meets the minimum
thresholds for indemnification described in Section 17.02 and Section 17.05, an
individual claim for losses, expenses (including without limitation reasonable
attorneys' fees), fines, debts, liabilities and obligations specifically
described in Section 8.03, Section 9.02 or for Unknown Environmental Liabilities
shall include any claims which arise out of or relate to any related facts,
events, conditions or circumstances.
17.03 Claims: Subject to the limitations set forth in Section 17.04,
------
the indemnification by an indemnifying party under Section 8.03 or Section 9.02
shall be limited to such losses specifically described in such Sections (the
"Losses"), which
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exceed $100,000 on an individual claim for indemnification, and exceed $500,000
in the aggregate for all claims made for indemnification by the indemnified
party (the "Indemnifier's Basket"). If the Losses claimed exceed the $500,000
Indemnifier's Basket, the indemnified party shall be entitled to recover all the
Losses within the Indemnifier's Basket except for a $250,000 deductible,
together with any other Losses claimed thereafter other than individual claims
for Losses which do not exceed $100,000.
17.04 Limit: Buyer shall not be required to indemnify Seller and its
-----
Affiliates pursuant to Section 8.03 and Seller shall not be required to
indemnify Buyer and its Affiliates pursuant to Section 9.02 for Losses which
exceed $100,000,000, in the aggregate.
17.05 Not a Release of Other Obligations:
----------------------------------
(a) Notwithstanding the expiration of any of the indemnification
provisions set forth in Section 8.03 or Section 9.02 hereof or the limitations
in this Article 17 (other than as provided in Section 17.05(b)), such expiration
and limits are not intended to terminate or in any way modify or reduce the
obligation of Seller to be responsible for the payment and performance of its
obligations relating to Section 9.01 and the obligation of Buyer to be
responsible for the payment and performance of its obligations under Sections
8.01 and 8.02.
(b) Notwithstanding Section 17.05(a) above, Seller shall only be
required to indemnify Buyer and its Affiliates for Unknown Environmental
Liabilities (as defined below) to the
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extent (i) such liabilities exceed $100,000 on an individual basis, (ii) such
liabilities exceed $250,000 on an aggregate basis (up to an amount equal to $50
million on an aggregate basis), and (iii) Buyer delivers to Seller written
notice with respect to an indemnification claim with respect to such liabilities
on or prior to the 5th anniversary of the Closing. For purposes of this Section,
Unknown Environmental Liabilities shall mean Excluded Liabilities of the type
described in Section 5.02(l) but only to the extent such Excluded Liabilities
arise out of facts, events or circumstances not known to Seller or its
Affiliates on or prior to Closing. Unknown Environmental Liabilities do not
include, without limitation, any of the matters described in Schedules 5.02 or
6.06.
17.06 Affiliate Indemnification: No limitation on indemnification
-------------------------
set forth in a Foreign Purchase Agreement shall limit Buyer's and Seller's
indemnification rights otherwise provided for in this Agreement.
Notwithstanding anything to the contrary contained herein, no indemnity shall be
made by a Party hereunder to the extent that the indemnified party is
compensated by Affiliates of such indemnifying Party.
17.07 Procedure: Except with respect to indemnification of
---------
environmental matters, each Party to this Agreement shall give prompt written
notice to the other Party under each claim for indemnification hereunder
specifying that indemnification is sought pursuant to this Agreement, the amount
(to the extent known), nature of and event giving rise to the claim, and of any
matter which is likely to give rise to an indemnification claim.
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The indemnified Party has the right to control at the expense of the
indemnifying Party the defense of any such matter or its settlement, or the
indemnified Party may authorize the indemnifying Party to take over the defense
of such matter so long as such defense is expeditious. Failure to give timely
notice of a matter which may give rise to an indemnification claim shall not
affect the rights of the indemnified Party to collect such claims from the
indemnifying Party so long as such failure to so notify does not materially
adversely affect the indemnifying Party's ability to defend such claim against a
third party. No indemnifying Party, in the defense of any claim or litigation,
shall, except with the consent of an indemnified Party, which consent shall not
be unreasonably withheld or delayed, consent to entry of any judgment or enter
into any settlement by which such indemnified Party is to be bound and which
judgment or settlement does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified Party of a release from
all liability in respect to such claim or litigation. Without Buyer's prior
written approval, neither Seller nor any of its Affiliates will consent to entry
of any judgment or enter into settlement of any matter relating to Section 9.01
if such entry of judgment or settlement is reasonably likely to have an adverse
effect on the Business. Seller will not be required to seek Buyer's approval
with respect to matters which are immaterial.
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17.08 Environmental Procedure; Access and Use of Real Property:
--------------------------------------------------------
(a) Each Party shall give prompt written notice to the other
Party under each claim for indemnification for environmental matters specifying
that indemnification is sought pursuant to this Agreement and the legal and
factual basis therefor, the amount (to the extent known), nature of and event
giving rise to the claim, and of any matter which is likely to give rise to an
indemnification claim.
(b) With respect to any environmental matter for which Seller
acknowledges its responsibility to indemnify Buyer under this Agreement, Seller,
subject to Buyer's rights set forth below, shall have control over all
negotiations with governmental authorities concerning any environmental measures
for such environmental matters. Seller shall also have, subject to Buyer's
rights set forth below, control over the remediation of, and resolution of, such
environmental matter. Seller shall regularly consult with Buyer and keep Buyer
informed as to the status of such environmental matter and shall provide Buyer
with copies of all plans, reports, analytical results, letters, and other
documents related to such environmental matter (collectively "Environmental
Documents"). Seller shall provide Buyer with a reasonable opportunity to comment
on drafts of material Environmental Documents and Seller shall reasonably
address and incorporate Buyer's comments. Seller shall provide Buyer with
notices of material meetings related to such environmental matter, including
meetings with governmental
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authorities, and Buyer shall have the right to attend and participate in such
meetings. Seller and Seller's Business Affiliates shall manage such
environmental matter in good faith and any activities conducted in connection
therewith shall be undertaken promptly and concluded expeditiously using all
reasonable efforts, subject to the schedules and approvals required by the
applicable governmental authorities. Seller and Seller's Business Affiliates
shall comply with all Environmental Requirements, including without limitation
all requirements in environmental permits and all applicable financial assurance
requirements, with respect to the remediation of or resolution of such
environmental matter.
(c) After Closing, Seller shall have reasonable access to Plants and
Leased Premises for environmental remediation work:
(i) As provided in the real property deeds for the Plants and
leases for certain of the Leased Premises, Seller retains a right of access
to such property after the Closing for purposes of conducting environmental
remediation work. Seller shall, in implementing the work, not unreasonably
interfere with Buyer's operations at and use of the property in question.
Seller shall coordinate its need to access the Plants and Leased Premises
with Buyer's local management, including providing reasonable advance
notice. Buyer shall have the right to approve any action proposed by
Seller, which in Buyer's reasonable judgment, would have an adverse effect
on Buyer's operation of its business.
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(ii) At the conclusion of any environmental remediation project
by Seller at the Plants or Leased Premises, Seller shall promptly dispose
of and/or decontaminate all rubbish and debris caused by or otherwise
associated with such work, and shall promptly remove all equipment,
materials and supplies, and shall promptly restore the property in question
to its condition immediately prior to the initiation of the work and leave
the same ready for ordinary use, taking into account any necessary above-
ground fixtures necessary for the work such as ground water monitoring
equipment.
(iii) If Buyer shall take action with regard to portions of
the real property that Seller has identified prior to Closing as subject to
possible environmental remediation that will materially increase Seller's
cost of such remediation or materially constrict Seller's present access to
such property, then Buyer shall release Seller from any further obligations
for indemnity and remediation hereunder with respect to, and indemnify and
hold Seller harmless from, any additional cost and expense of future
remediation as a result of such action.
(d) With respect to Buyer's use of Plants and Leased Premises
after Closing:
(i) If Buyer disposes of real property that Seller has identified
prior to Closing as subject to possible environmental remediation, Buyer
shall either (1) impose deed restrictions that the site will continue to be
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used for industrial/commercial purposes, or (2) release Seller from any
further obligations for indemnity and remediation hereunder with respect
to, and indemnify and hold Seller harmless from, any additional cost and
expense of future remediation if such real property is later used for
residential purposes above and beyond those costs associated with
remediation of property used for industrial/commercial purposes.
(e) Buyer acknowledges and agrees that:
(i) the Land is currently used by Seller for industrial
purposes, and
(ii) Seller's obligations for any environmental measures
shall be limited to those measures applicable to property used for
industrial/commercial purposes.
(f) With respect to any environmental matter for which Seller is
required to indemnify Buyer under this Agreement, Seller shall have fulfilled
its indemnification obligations only if the remediation or resolution of such
matter complies with applicable Environmental Requirements, including without
limitation, all action levels, cleanup standards and governmental orders or has
been granted written "no further action" determinations by all appropriate
governmental authorities.
ARTICLE 18
MISCELLANEOUS
-------------
18.01 Press Release: Buyer and Seller shall each be at liberty to
-------------
issue a press release or public announcement following
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execution of this Agreement with respect to the transaction contemplated by this
Agreement with the prior written consent of the other Party, and the Parties
shall consult each other in advance on the form and content of such releases or
announcements.
18.02 Fees: Except as otherwise specifically provided herein, the
----
Parties and their respective Affiliates shall pay their own expenses including
attorney's fees, incident to the preparation and performance of this Agreement
and the Foreign Purchase Agreements, whether or not the transactions
contemplated herein are consummated.
18.03 Amendments: This Agreement shall not be amended or modified
----------
except in writing, signed by both Parties.
18.04 Successors: This Agreement shall be binding upon and inure to
----------
the benefit of the Parties hereto and their respective successors and assigns,
provided neither Party shall assign this Agreement or any rights herein without
the other Party's prior consent; provided that Buyer may assign this Agreement
or any rights hereunder (i) to any of its Affiliates and (ii) as collateral
security to any of Buyer's Financing sources.
18.05 Merger: All understandings and agreements heretofore existing
------
between the Parties and their Affiliates regarding the purchase and sale of the
Global Business Assets are merged into this Agreement, the Foreign Purchase
Agreements, the Acquisition Documents, the Additional Agreements and any other
written agreements between the Parties or their Affiliates and the Schedules and
Exhibits hereto and thereto, which fully and
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completely express the agreement of the Parties and their Affiliates with
respect to the subject matter covered thereby and were entered into after
adequate investigation, neither Party nor its Affiliates relying upon any
statement or representation not embodied in this Agreement, the Foreign Purchase
Agreements, the Acquisition Documents, the Additional Agreements or the
Schedules, or the Exhibits hereto and thereto, made by the other.
18.06 Non-waiver of Remedy: The failure of Seller or Buyer to
--------------------
insist, in any one or more instances, upon the strict performance of any of the
terms, conditions or covenants of this Agreement shall not be construed as a
waiver or relinquishment for the future of such term, condition or covenant. A
delivery or receipt by Seller or Buyer of any money with knowledge of the breach
of any term, condition or covenant of this Agreement, shall not be deemed a
waiver of such breach, and no waiver, change, modification or discharge by
either Party hereto of any provision in this Agreement shall be deemed to have
been made or shall be effective unless expressed in writing and signed by both
Seller and Buyer. In addition to the other remedies provided in this Agreement,
Seller and Buyer shall be entitled to the restraint by injunction of the
violation, or attempted or threatened violation of any of the terms, conditions
or covenants of this Agreement, or to a decree compelling performance of any of
such term, condition or covenant.
18.07 Notices: All notices, consents, requests and approvals, any
-------
notice of change in address for the purpose of this Article, and other
communications provided for or required
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herein, shall be deemed validly given, made or served, if in writing, and
delivered (a) on the day given if served personally, (b) two days following if
sent by telecopy to the facsimile number indicated below with a confirmatory
notice by delivery to a nationally-recognized express delivery service with
instructions and payment for overnight delivery to the address set forth below;
or (c) three days following if sent by U.S. Certified Mail, postage prepaid:
If to Seller, addressed to:
E. I. DU PONT DE NEMOURS AND COMPANY
1007 Market Street
Wilmington, Delaware 19898
Attention: Corporate Secretary
Facsimile Number: (302) 773-5176
And if to Buyer, addressed to:
DADE CHEMISTRY SYSTEMS INC.
1717 Deerfield Road
Deerfield, Illinois 60015
18.08 Governing Law: This Agreement and the Foreign Purchase
-------------
Agreements shall be governed by and construed according to the laws of the
United States of America and the State of New York.
18.09 Schedules and Exhibits: All Schedules and Exhibits referred to
----------------------
herein are hereby incorporated in this Agreement by reference and have been
initialed for identification purposes by representatives of the Parties hereto.
18.10 Headings: The various headings used in this Agreement are for
--------
convenience only and are not to be used in interpreting the text of the Article
in which they appear or to which they relate.
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18.11 Counterparts: This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
18.12 Third Party Beneficiaries: Nothing herein is intended to or
-------------------------
shall be construed as conferring any rights or benefits on any person or entity
which is not a party to this Agreement, including, without limitation, the
employees or creditors of Seller.
18.13 Inconsistencies: In the event of any inconsistency or
---------------
ambiguity between the provisions of this Agreement and any provision contained
in any of the Foreign Purchase Agreements, the provisions contained in this
Agreement shall control the resolution of any such inconsistency or ambiguity.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed the day and year first above written.
E. I. DU PONT DE NEMOURS AND COMPANY
By: /s/ Richard H. Heath
--------------------------------
Richard H. Heath
Attorney-in-Fact
DADE CHEMISTRY SYSTEMS INC.
By: /s/ John P. Connaughton
--------------------------------
John P. Connaughton
Vice President
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