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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES ACT OF 1934
Date of Report (date of earliest event reported): DECEMBER 21, 1993
TELEFLEX INCORPORATED
(Exact name of registrant as specified in its charter)
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DELAWARE 1-5353 23-1147939
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
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630 WEST GERMANTOWN PIKE, SUITE 450, PLYMOUTH MEETING, PA 19462
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 834-6301
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Item 2 - Acquisition or Disposition of Assets.
On December 21, 1993 Teleflex Incorporated (the "Company") completed
the acquisition of certain assets and certain related liabilities of Edward
Weck Incorporated, a subsidiary of Bristol-Myers Squibb Company ("BMS"). The
assets, which are used in the manufacture and sale of ligation clips and
appliers, general and specialty hand held surgical instruments, skin staplers
and electrosurgery products (the "Business"), are as follows:
(1) Inventories relating to the business.
(2) Property and equipment, including: land, buildings and
leaseholds, machinery and equipment, tooling and furniture and
fixtures.
(3) Intangibles, including patents, trademarks, trade names,
copyrights, and service marks.
The liabilities purchased are related to the Business.
The purchase price of the assets was $63,500,000 (subject to certain
adjustments) and was determined on the basis of negotiation with BMS.
Inventories at foreign locations will be purchased separately for their
approximate book values. No material relationship exists between BMS and the
Company or any affiliate of the Company, any director or officer of the Company
or any associate of any such director or officer. The Company financed the
acquisition by the issuance of $50,000,000 in Senior Notes payable to
affiliates of CIGNA Investments, Inc., Hartford, Connecticut, and with a
$15,000,000 term loan from Provident National Corp., Philadelphia,
Pennsylvania.
The facilities acquired by the Company, which are located in Research
Triangle Park, North Carolina will continue to be used in the operation of the
Business.
Item 7 - Financial Statements.
(a) and (b) Required financial information for the Business is not
currently available. The Company will file financial information on the
Business under cover of Form 8 within 60 days of the date of this report.
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(c) Exhibits:
Exhibit
Table Number Description
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2. Asset Purchase Agreement
dated as of November 15, 1993
4. Long-term agreements of the
Company are not filed pursunt to
item 601 (b) (4) iii (A) of
Regulation S-K, and the Company
agrees to furnish copies of such
agreements to the Securities and
Exchange Commission upon its
request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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TELEFLEX INCORPORATED
(Registrant)
Date: January 5, 1994 By: /s/ Steven K. Chance
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Steven K. Chance
Vice President and
General Counsel
By: /s/ Harold L. Zuber, Jr.
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Harold L. Zuber, Jr.
Vice President and
Chief Financial Officer
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ASSET PURCHASE AGREEMENT dated as of November
15, 1993, between EDWARD WECK INCORPORATED, a
Delaware corporation ("Seller"), and TELEFLEX
INCORPORATED, a Delaware corporation ("Buyer").
Seller and certain of its affiliates own certain assets and
properties which are associated with the conduct of (a) Seller's ligation clips
and appliers, hand-held surgical instruments, skin stapling, electrosurgery,
hemostatic agents, Dura/Rainey clips and hooks and sponge products businesses
as currently conducted and (b) Seller's Hem-O-Lok clips and appliers products
business (the "Hem-O-Lok Business") (such businesses referred to in clauses (a)
and (b), including Seller's current operations relating to such businesses on
the Real Property (as defined in Section 1(b)), taken as a whole, are
hereinafter referred to as the "Business"). Buyer desires to purchase
substantially all the assets and properties of the Business, and Seller desires
to sell such assets and properties, on the terms and subject to the conditions
set forth in this Agreement.
Accordingly, in consideration of the mutual covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Purchase and Sale of Assets; Certain Defined Terms;
Assumption of Liabilities; Taxes. (a) On the terms and subject to the
conditions of this Agreement, Seller will sell, convey, transfer and assign (or
cause to be sold, conveyed, transferred and assigned) to Buyer, and Buyer will
purchase from Seller, (i) the Assets (as defined below) (other than the Foreign
Inventory, as defined in Section 4(k)) for a purchase price (the "Purchase
Price") of Sixty-three million five hundred thousand Dollars ($63,500,000) in
cash (such cash portion of the Purchase Price is referred to herein as the
"Cash Purchase Price") and the contingent payments required to be paid to
Seller under Section 31 and (ii) the Foreign Inventory on the terms and
conditions set forth in Section 2(b). The Cash Purchase Price shall be payable
as set forth in Section 2(a), and shall be subject to adjustment as set forth
in Section 2(b). The parties agree to negotiate in good faith an allocation of
the Purchase Price, as adjusted pursuant to Section 2(b), prior to the Closing
Date. The purchase price for the Foreign Inventory shall be allocated to the
Foreign Inventory. Buyer and Seller agree to file all income,
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franchise and other tax returns, and execute such other documents or
instruments as may be required by any governmental authority, in a manner
consistent with such allocation or allocations, as the case may be, including,
without limitation, the preparation and filing of Form 8594 under Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code"). Neither Buyer
nor Seller shall take any position with any taxing authority inconsistent with
such allocation or allocations unless otherwise required by applicable law.
(b) The term "Assets" shall mean all right, title and
interest of Seller and the other Seller Entities (as defined in Section 1(g))
as of the Closing in the assets, properties and rights which are used
exclusively or primarily in connection with the Business, whether such assets,
properties and rights are real, personal or mixed, tangible or intangible,
wherever located and whether or not such assets, properties and rights have
value for accounting purposes or are reflected on the books of Seller, other
than the Excluded Assets (as defined in Section 1(c)), including, without
limitation, the following:
(i) all inventories of raw materials, work in process,
consigned goods and finished goods (including warehoused inventories
and inventories covered by purchase orders) (the "Inventory");
(ii) all supplies, furniture, fixtures, equipment, vehicles
and other tangible personal property listed on Schedule 1(b)(ii)
and/or located in the ordinary course on the Real Property (as defined
in Section 1(b)(iv)) (the "Equipment") and all ligation clip appliers
on loan to customers; Schedule 1(b)(ii) sets forth a list as of June
30, 1993, of all items of Equipment having an original purchase price
of more than $10,000;
(iii) all prepaid expenses (except for prepaid Taxes (as
defined in Section 1(f)));
(iv) all real property, leaseholds and other interests in real
property listed on Schedules 4(g)(1) and 4(g)(2) together with all
easements, rights, privileges and other appurtenances thereto
(collectively, the "Real Property");
(v) all contracts, leases, mortgages, indentures, agreements,
commitments, purchase orders and other
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legally binding arrangements, whether oral or written, to which the
Seller Entities are party or by which they are bound (including those
entered into in the ordinary course of business prior to the Closing
but excluding (A) those expiring or terminating prior to the Closing,
(B) those to which only Seller Entities are parties ("Intercompany
Contracts"), (C) those which relate both to the Business and to other
businesses of the Seller Entities (the "Shared Contracts") and (D)
subject to Section 5(h), confidentiality agreements relating to
information received by third parties regarding the Business
("Confidentiality Agreements")) (the "Contracts");
(vi) all patents, patent applications, trademarks (registered
or unregistered), trademark applications, trade names (including,
without limitation, the trade names "Weck", "Edward Weck Incorporated"
and any variations thereof), designs, logotypes, trade dress,
copyrights (registered or unregistered), copyright applications,
service marks, all together with the goodwill of the Business
associated with such marks, names, designs, logotypes and trade dress,
trade secrets, technology, inventions, know-how, processes,
confidential and proprietary information (including any being
developed), whether or not subject to statutory registration, patent
and trademark files (or copies thereof) on all such intellectual
property (but excluding the intellectual property listed or described
on Schedule 1(c)(viii)), all rights of action arising therefrom, all
claims by reason of infringement thereof, and the right to sue and
collect damages for such infringement (collectively, the "Intellectual
Property");
(vii) notes and other receivables of the type included in the
Balance Sheet (as defined in Section 4(d)) but not including accounts
receivable that constitute Excluded Assets;
(viii) to the extent transferable, any franchises, approvals,
permits, licenses, orders, registrations, certificates, variances, and
other similar permits or rights (including environmental permits,
certificates, licenses, approvals, registrations and authorizations
and 510(k) determinations and authorizations, medical device listings
and registrations and medical device facility or establishment
registrations with the
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U.S. Food and Drug Administration and similar registrations in foreign
countries) obtained from any federal, state, local or foreign
governmental or regulatory authority (or any department, agency,
authority or political subdivision thereof) (each, an "Authority") and
all pending applications therefor;
(ix) books, records, ledgers, files, documents (including, to
the extent available, originally executed copies of Contracts which
are not Nontransferred Contracts, as defined in Section 1(d)(i)),
correspondence, lists, plats, architectural plans, drawings,
specifications, creative materials, advertising and promotional
materials, studies, reports and other printed or written materials but
excluding all minute books, stock ledgers and similar corporate
records and Tax returns, reports, forms, documents and memoranda;
(x) to the extent transferable, any third party warranties and
guarantees with respect to any of the Assets;
(xi) all customer and supplier lists; and
(xii) notwithstanding the foregoing, the Assets shall not
include any assets relating exclusively or primarily to the Hem-O- Lok
Business other than Equipment referred to in paragraph (ii) above and
Intellectual Property referred to in paragraph (vi) above.
(c) The term "Excluded Assets" shall mean:
(i) all prepaid Taxes and all rights and claims to refunds or
credits of Taxes;
(ii) all cash on hand and bank accounts of the Seller Entities
and any bank account credit balances on the books of any of the Seller
Entities;
(iii) all capital stock of any corporation;
(iv) all trade accounts receivable owed to the Seller Entities;
(v) all accounts owing by and among the Seller Entities;
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(vi) the Shared Contracts, Intercompany Contracts,
Nontransferred Contracts and, except as provided in Section 5(h),
Confidentiality Agreements;
(vii) all assets relating exclusively or primarily to the
Hem-O-Lok Business other than the Assets referred to in Section
1(b)(xii), including, without limitation, inventories and 510(k)
determinations and authorizations; and
(viii) the assets listed or described on Schedule 1(c)(viii).
(d) Buyer shall assume on the Closing Date and shall pay,
perform and discharge when due the following obligations and liabilities,
primary or secondary, direct or indirect, absolute or contingent, known or
unknown, whether or not accrued, of the Seller Entities arising out of or
relating to the Business or the Assets, but specifically excluding the
obligations and liabilities described in clauses (i)- (vii) of Section 1(e)
(the "Assumed Liabilities"):
(i) all obligations and liabilities of the Seller Entities
under the Contracts other than Contracts which are not transferred to
Buyer because of the failure to obtain any third-party consent
necessary for the transfer or assignment of such Contract
("Nontransferred Contracts");
(ii) all accounts payable of the types reflected in the
Balance Sheet (as defined in Section 4(d)) which are accrued and
unpaid as of the Closing in accordance with Seller's accounting
policies and procedures used in the preparation of the Balance Sheet;
(iii) all obligations and liabilities for refunds,
adjustments, allowances, repairs, exchanges, returns, and warranty,
guarantee and merchantability claims (excluding all product liability
claims for injury to persons or property), in respect of any and all
products (including Inventories included in the Assets) sold,
manufactured or designed by the Seller Entities in connection with the
Business at any time before, on or after the Closing Date;
(iv) all obligations and liabilities for Transfer Taxes (as
defined in Section 8(f)) that may be imposed
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as a result of the sale and transfer of the Assets, including any such
Taxes or expenses payable under North Carolina or New Jersey law in
connection with the sale and transfer of any Real Property;
(v) all obligations and liabilities accrued and unpaid as of
the Closing Date in accordance with Seller's accounting policies and
procedures used in the preparation of the Balance Sheet with respect
to unused and accrued vacation pay and personal time/sick leave, but
excluding banked vacation, in each case for Transferred Employees (as
defined in Section 7(b));
(vi) the Other Environmental Liabilities (as defined in
Section 10(a)(vii));
(vii) all obligations and liabilities for Taxes incurred with
respect to a taxable period (or portion of a taxable period) which
period (or portion) begins after the Closing Date; and
(viii) all obligations and liabilities relating to or arising
from the conduct of the Business or ownership of the Assets from and
after the Closing Date (including, without limitation, any product
liability claim in respect of products of the Business sold by Buyer
and its affiliates from and after the Closing Date).
Buyer's obligations under this Section 1(d) will not be subject to offset or
reduction by reason of any actual or alleged breach of any representation,
warranty or covenant contained in this Agreement or any document delivered in
connection herewith or any right or alleged right to indemnification hereunder.
(e) Buyer shall not assume any liabilities or obligations of
the Seller Entities, whether primary or secondary, direct or indirect, absolute
or contingent, known or unknown, and whether or not accrued, other than the
Assumed Liabilities (the "Retained Liabilities"), including, without
limitation, the following:
(i) the RTP Liability and other environmental liabilities that
are the subject of Seller's obligations pursuant to subparagraphs (iv)
and (v) of Section 10(a);
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(ii) any product liability claim for injury to person or
property in respect of products of the Business sold by the Seller
Entities prior to the Closing Date;
(iii) any obligation arising under any Nontransferred Contract;
(iv) any liabilities or obligations of the Business to any
Seller Entity;
(v) any obligations for Taxes incurred with respect to a
taxable period (or portion of a taxable period) which period (or
portion) ends on or prior to the Closing Date;
(vi) any liabilities relating to accrued payroll, accrued
vacation, accrued pension benefits and health care benefits for
persons retired or terminated prior to the Closing Date; and
(vii) except as provided in Section 7(c), any liability or
obligation under any employment, severance, retention or termination
agreement with any employee of the Seller Entities.
(f) For purposes of this Agreement, "Taxes" shall mean all
income, franchise, excise, real and personal property, sales, use, payroll and
withholding and other taxes imposed by any Authority, whether in the form of
assessments which are in the nature of taxes or otherwise, together with all
interest, penalties and additions imposed with respect to such amounts. In the
case of any taxable period that includes (but does not end on) the Closing Date
(a "Straddle Period"), real, personal and intangible property Taxes ("property
Taxes") incurred with respect to (i) the portion of a Straddle Period ending on
or prior to the Closing Date shall constitute Retained Liabilities and shall be
equal to the amount of such property Taxes incurred with respect to the entire
Straddle Period multiplied by a fraction, the numerator of which is the number
of days in such portion and the denominator of which is the number of days in
the Straddle Period, and (ii) the portion of a Straddle Period beginning after
the Closing Date shall constitute Assumed Liabilities and shall be equal to the
amount of such property Taxes incurred with respect to the entire Straddle
Period multiplied by a fraction, the numerator of which is the number of days
in such portion and the denominator of
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which is the number of days in the Straddle Period. The parties shall
cooperate with each other to cause such property Taxes to be paid in accordance
with the foregoing allocation in a timely manner.
(g) For purposes of this Agreement, "Seller Entities" shall
mean Bristol-Myers Squibb Company and its direct and indirect majority owned
subsidiaries, including Seller.
(h) From time to time the Seller Entities have issued product
liability indemnity letters ("Indemnity Letters") to customers of the Business,
substantially in the form previously provided to Buyer. The parties agree
that, with respect to all Indemnity Letters outstanding on the Closing Date,
the obligations thereunder with respect to products of the Business sold by the
Seller Entities prior to the Closing Date constitute Retained Liabilities
included in Section 1(e)(ii) and the obligations thereunder with respect to
products of the Business sold by Buyer and its affiliates from and after the
Closing Date constitute Assumed Liabilities included in Section 1(d)(vii).
(i) Within 60 days after the Closing Date, Buyer will deliver
to Seller a statement setting forth in reasonable detail a calculation of the
amount of accounts payable assumed by Buyer under Section 1(d)(ii), calculated
in the same way as, and using the same accounting policies, practices, methods
and other procedures used by Seller in, the calculation of accounts payable as
reflected on the Balance Sheet (the "Assumed Accounts Payable"). Seller shall
within 60 days after receipt of such statement reimburse Buyer for the amount
(the "Excess Accounts Payable"), if any, by which the Assumed Accounts Payable
exceeds $2,000,000, provided that Seller shall not be obligated to reimburse
Buyer for any amounts of Excess Accounts Payable which Seller disputes until
the parties have resolved such dispute. The parties will cooperate with each
other and use best efforts to resolve any such disputes.
2. Closing; Foreign Inventory. (a) Closing.
(i) The closing (the "Closing") of the purchase and sale of
the Assets (other than the Foreign Inventory) and the assumption of
the Assumed Liabilities shall be held at the offices of Cravath,
Swaine & Moore, 825 Eighth Avenue, New York,
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New York 10019, at 10:00 a.m. on a date to be mutually agreed upon
between the parties, which shall be no later than the second business
day after satisfaction of the condition to Closing set forth in
Section 3(a)(ii), or, if the other conditions to Closing shall not
have been satisfied by such date, as soon thereafter as is practicable
once such conditions are satisfied (the date on which the Closing
shall occur being referred to herein as the "Closing Date").
(ii) At the Closing, Buyer shall deliver to Seller (A) by
wire transfer to a bank account designated by Seller immediately
available funds in an amount equal to the Cash Purchase Price; (B)
instruments of assumption in form and substance reasonably
satisfactory to Seller and its counsel evidencing and effecting the
assumption by Buyer of the Assumed Liabilities (including an
Assumption Agreement substantially in the form of Exhibit A); (C) the
certificates, opinions and other documents required to be delivered by
Buyer on the Closing Date pursuant to this Agreement; and (D) a
receipt for the Assets, duly executed by Buyer.
(iii) Subject to the terms of the International Transition
Agreement (as defined in Section 8(i)), at the Closing, Seller shall
deliver to Buyer such appropriately executed instruments of sale,
assignment, transfer and conveyance in form and substance reasonably
satisfactory to Buyer and its counsel evidencing and effecting the
sale and transfer of the Assets (other than the Foreign Inventory) to
Buyer (it being understood that (x) with respect to the Real Property,
such instruments shall consist solely of a deed or deeds in the form
of Exhibit B (the "Non-Warranty Deed") (it being understood that the
form of the Non-Warranty Deed shall not limit or otherwise affect
Seller's representations and warranties contained in this Agreement)
and an owner's affidavit in the form set forth in Exhibit C, which
shall be provided by Seller to the Title Company (as defined in
Section 3(b)), (y) with respect to the Intellectual Property, such
instruments to be delivered at the Closing shall consist of general
worldwide assignments of such Intellectual Property from the Seller
Entities (and Seller hereby agrees to execute after the Closing such
additional documents (provided that such documents are reasonably
satisfactory in form and substance to
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Seller) in form appropriate for recordation (with governmental
agencies or authorities responsible for intellectual property) in all
countries where such Intellectual Property is registered as Buyer may
prepare and request from time to time for the purpose of assigning to
Buyer and maintaining the enforceability of such Intellectual
Property, including but not limited to powers of attorney, deeds of
assignment, proofs of use, original certificates of registration (to
the extent available) or letters patent, affidavits or declarations,
it being understood that the cost of preparing and recording any such
documents shall be borne by Buyer) and (z) such instruments shall not
require the Seller Entities to make any additional representation,
warranty or covenant, express or implied, not contained in this
Agreement), including, without limitation, the following:
(A) a bill of sale and instrument of assignment to
the Assets, duly executed by Seller;
(B) assignments of all transferable or assignable
Contracts, Permits and warranties relating to the Assets, each
duly executed and, where necessary or desirable, in recordable
form (it being understood that the parties intend to assign
any Contract that is silent as to assignability unless the
parties determine that such Contract is not assignable);
(C) title certificates to any motor vehicles owned by
the Seller Entities and included in the Assets, duly executed
by Seller (together with any other transfer forms necessary to
transfer title to such vehicles);
(D) the Foreign Investment in Real Property Tax Act
Certification under Treasury Regulation Section 1.1445-2(b),
duly executed by Seller, substantially in the form of Exhibit
D hereto;
(E) the certificates, opinions and other documents
required to be delivered by Seller on the Closing Date
pursuant to this Agreement; and
(F) a receipt for the payment of the Purchase Price
duly executed by Seller.
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(b) Foreign Inventory. Subject to the terms of the
International Transition Agreement, as soon as practicable (but in no event
more than 60 days) after the Closing, Seller shall cause the Seller Entities
holding Foreign Inventory (including Foreign Inventory acquired after the date
hereof but excluding Foreign Inventory sold or otherwise disposed of after the
date hereof in the ordinary course of business consistent with past practice)
to deliver the Foreign Inventory and billing invoices relating thereto to Buyer
or its designees. Within 30 days after such delivery, Buyer shall, or shall
cause its designees to, pay to the Seller Entity that delivered such Foreign
Inventory the amount stated on such billing invoice (which amount shall be
equal to 105% of the book value of such Foreign Inventory on the Closing Date
as reflected on the books of the Seller Entity that transferred such Foreign
Inventory (the "Inventory Book Value"), plus an amount to cover all reasonable
freight, shipping or other similar charges incurred by such Seller Entity in
connection with the transfer of the Foreign Inventory to Buyer or its designee
("Buyer Freight Charges")) in the currency specified thereon. Buyer's
obligation to make such payments is absolute and is not subject to any setoff
or counterclaim. Within 15 days after the Seller Entities shall have received
the amounts set forth in all such billing invoices, Seller shall prepare and
deliver to Buyer a statement (the "Statement") setting forth (i) the amount of
each such invoice (excluding Buyer Freight Charges), converted into U.S.
Dollars at the prevailing commercial rate of exchange for purchasing U.S.
Dollars with the applicable foreign currency, as quoted by Citibank, N.A. in
New York City on the date on which payment was received (collectively, the
"Inventory Purchase Price"), and (ii) Seller's standard cost net of the
applicable obsolescence reserve with respect to the Foreign Inventory covered
by such invoices plus the amount of freight, shipping or other similar charges
related to the transfer of such Foreign Inventory by the applicable Seller
Entity in the United States to the location of such Foreign Inventory at the
Closing Date (the "Inventory Cost"). The Purchase Price shall be decreased by
the amount (the "Adjustment Amount") by which the Inventory Purchase Price
exceeds the Inventory Cost, and Seller shall remit to Buyer the Adjustment
Amount concurrently with delivery of the Statement.
(c) Adjustment to Contingent Payment Cap. (i) Within 60
days after the Closing Date, Seller shall prepare and deliver to Buyer a
statement (the "Statement")
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setting forth the International Sales Amount (as defined below) and the
calculation of any adjustment to the Contingent Payment Cap (as defined in
Section 31) pursuant to this Section 2(c), and accompanied by an agreed-upon
procedures report by Price Waterhouse with respect to the International Sales
Amount (the "Accountants Report"), substantially in the form of the
"Independent Accountants Agreed Upon Procedures Report" dated October 5, 1993,
which was attached to the Sales Schedules (as defined in Section 4(d)).
(ii) (A) If the International Sales Amount is less than
$2,610,000, the Contingent Payment Cap shall be decreased (but by not more than
$5,000,000) by an amount equal to the product of (x) 65% times (y) four times
(z) the difference between the International Sales Amount and $2,900,000; (B)
if the International Sales Amount is greater than $3,190,000, the Contingent
Payment Cap shall be increased by an amount equal to the product of (x) 65%
times (y) four times (z) the amount by which the International Sales Amount
exceeds $2,900,000; and (C) if the International Sales Amount is greater than
or equal to $2,610,000 and less than or equal to $3,190,000, the Contingent
Payment Cap shall not be adjusted.
(iii) The term "International Sales Amount" shall mean the
amount of total international sales by the Seller Entities (other than
ConvaTec) (or, with respect to sales on or after the Closing Date and prior to
January 1, 1994, if any, by Buyer and its affiliates) of products of the
Business from and including October 1, 1993, to and including December 31,
1993, calculated in the same way, using the same accounting policies,
practices, methods and other procedures used by Seller in preparing the Sales
Schedules.
(iv) For purposes of making the adjustment to the Contingent
Payment Cap contemplated by this Section 2(c), including the preparation of the
Statement, Buyer shall, from the Closing Date until such time as the Statement
shall have been delivered to Buyer, (A) maintain all accounting books and
records and all accounting policies, practices, methods and other procedures
relating to international sales of products of the Business (to the extent they
refer or relate to the period prior to the Closing) on the same basis as were
used by Seller in preparing the Sales Schedules (regardless of whether, in the
view of Buyer or Buyer's independent accountants or auditors, any such books,
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records, policies, practices, methods or other procedures were not in
conformity with Buyer's accounting policies and procedures or with generally
accepted accounting principles or were otherwise inappropriate), and refrain
from taking any action with respect to the accounting books and records
relating to international sales of products of the Business on which the
Statement is based that are not consistent with Seller's past practice, (B) at
the request of Seller, assist and cooperate with Seller in the preparation of
the Statement and Accountants Report and (C) afford to Seller and any
accountants, auditors, counsel and advisers retained by Seller in connection
with the determination of any adjustment to the Contingent Payment Cap
contemplated by this Section 2(c) reasonable access during normal business
hours to all properties, books, contracts, personnel and records of Buyer and
its affiliates and of the Business which may be relevant to the adjustment
contemplated by this Section 2(c), and provide Seller with photocopies thereof
as Seller may request. Buyer acknowledges that Seller shall have sole
responsibility and authority for preparing the Statement.
(v) Notwithstanding any other provision of this Agreement to the
contrary, Buyer's sole and exclusive remedy with respect to any fact relating
to international sales of the Business for any period after September 30, 1993,
shall be the adjustment, if any, to the Contingent Payment Cap contemplated by
this Section 2(c). Without limiting the generality of the foregoing, Buyer
further agrees that no representation, warranty or covenant of Seller contained
herein shall be breached or deemed breached, and no condition to Buyer's
obligations to close the transactions contemplated by this Agreement shall be
deemed not satisfied, as a result of any such fact. Notwithstanding the
foregoing, if the Contingent Payment Cap is reduced by $5,000,000 as a result
of the adjustment pursuant to this Section 2(c) and if, but for the $5,000,000
maximum reduction specified in subparagraph (ii)(A) above, the Contingent
Payment Cap would have been decreased by more than $5,000,000, then the portion
of the International Sales Amount that would have resulted in the Contingent
Payment Cap being reduced by more than $5,000,000 (but not the portion that
resulted in the Contingent Payment Cap being reduced by $5,000,000) may be
taken into account in determining whether any representation, warranty or
covenant of Seller contained herein shall have been breached or whether any
condition to Buyer's obligation to close the
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transactions contemplated by this Agreement shall not be satisfied.
3. Conditions to Closing. (a) Each Party's Obligations.
The respective obligations of each party to consummate the sale and purchase of
the Assets and the assumption of the Assumed Liabilities are subject to the
satisfaction (or waiver by such party) as of the Closing of the following
conditions:
(i) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing
which restrains or prohibits the consummation of the Closing.
(ii) The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), if applicable to the
purchase and sale of the Assets, shall have expired or been
terminated.
(b) Buyer's Obligations. The obligations of Buyer to
purchase and pay for the Assets and assume the Assumed Liabilities are subject
to the satisfaction (or waiver by Buyer) as of the Closing of the following
additional conditions:
(i) The representations and warranties of Seller made in this
Agreement that are qualified by materiality shall be true and correct,
and those representations not so qualified shall be true and correct
in all material respects, in each case as of the date hereof and on
and as of the Closing Date as though made on and as of the Closing
Date, except to the extent such representations and warranties
expressly relate to an earlier date (irrespective of any notice
delivered to Buyer after the date hereof except as specifically
provided herein), and Seller shall have performed or complied in all
material respects with the obligations, conditions and covenants
required by this Agreement to be performed or complied with by Seller
by the time of the Closing; and Seller shall have delivered to Buyer a
certificate dated the Closing Date and signed by a duly authorized
officer confirming the foregoing.
(ii) Buyer shall have received an opinion dated the Closing
Date of Cravath, Swaine & Moore, counsel for Seller, substantially in
the form set forth in
<PAGE> 15
15
Exhibit E, and an opinion dated the Closing Date of Rodolphe Hamel,
General Counsel of Bristol-Myers Squibb Company, substantially in the
form set forth in Exhibit F, provided that any changes to such forms
of opinions shall be reasonably satisfactory in form and substance to
Buyer.
(iii) The International Transition Agreement shall have been
duly executed and delivered by Seller.
(iv) Seller shall have transferred to Buyer such Permits (as
hereinafter defined) required for the conduct of the Business as are
possessed by Seller and are so transferrable, and Buyer shall have
received any other Permits required for the operation of the Business
or evidence reasonably satisfactory to Buyer that it will receive such
Permits in due course except, in each case, Permits the failure to
possess which would not result in a material adverse effect on the
business or financial condition of the Business, taken as a whole.
(v) First American Title Insurance Company (the "Title
Company") shall be willing to issue its standard form of ALTA owner's
title insurance policy to Buyer, at standard rates, with Standard
Exceptions for Owner's Policy deleted, insuring that upon delivery to
such title company for recording of the Non-Warranty Deed executed by
Seller in favor of Buyer, Buyer shall have acquired good and valid fee
title to the Owned Property subject only to (A) Permitted Liens (as
defined in Section 4(f)), (B) those matters listed in the title
commitment set forth in Exhibit G (the "Title Report"), and (C) any
other matters referred to in clauses (4) and (5) of Section 4(g)(ii).
(vi) Seller shall have delivered all of the certificates,
instruments, contracts and other documents specified to be delivered
by it hereunder, and any of such documents the form of which has not
been agreed to pursuant to this Agreement shall be in form and
substance reasonably satisfactory to Buyer.
(vii) There shall be no pending litigation, suit, action or
proceeding by any Authority which (A) could reasonably be expected to
materially limit or adversely affect Buyer's ownership of the Assets;
(B) seeks to restrain or prohibit the transactions contemplated by
<PAGE> 16
16
this Agreement; (C) challenges the legality or validity of the
transactions contemplated by this Agreement; or (D) seeks material
damages from Buyer as a result of the transactions contemplated by
this Agreement.
(viii) (A) Any required consents necessary to assign to
Buyer the Agreement dated as of February 29, 1988, between Rudolph
Peters, Ronald L. Peters and William Taylor and Seller (relating to
patent rights to improved 360LX skin stapler) (the "Patent Agreement")
as contemplated by this Agreement shall have been obtained or (B) if
such consents are not obtained, Seller shall have provided to Buyer an
alternative arrangement that provides to Buyer substantially the same
rights and obligations as are available to Seller under the Patent
Agreement.
(c) Seller's Obligations. The obligation of Seller to sell
the Assets to Buyer is subject to the satisfaction (or waiver by Seller) as of
the Closing of the following conditions:
(i) The representations and warranties of Buyer made in this
Agreement that are qualified by materiality shall be true and correct,
and those representations not so qualified shall be true and correct
in all material respects, in each case as of the date hereof and on
and as of the Closing Date as though made on and as of the Closing
Date, and Buyer shall have performed or complied in all material
respects with the obligations, conditions and covenants required by
this Agreement to be performed or complied with by Buyer by the time
of the Closing; and Buyer shall have delivered to Seller a certificate
dated the Closing Date and signed by a duly authorized officer of
Buyer confirming the foregoing.
(ii) Seller shall have received an opinion dated the Closing
Date of Dechert Price & Rhoads, counsel for Buyer, substantially in
the form set forth in Exhibit H, and an opinion dated the Closing Date
of Steven K. Chance, General Counsel of Buyer, substantially in the
form set forth in Exhibit I, provided that any changes to such forms
of opinions shall be reasonably satisfactory in form and substance to
Seller.
<PAGE> 17
17
(iii) The International Transition Agreement shall have been
duly executed and delivered by Buyer.
(iv) Buyer shall have duly executed and delivered the license
agreement referred to in Section 8(k) and the lease assumption
agreement referred to in Section 8(m).
(v) Buyer shall have delivered all the certificates,
instruments, contracts and other documents specified to be delivered
by it hereunder, and any of such documents the form of which has not
been agreed to pursuant to this Agreement shall be in form and
substance reasonably satisfactory to Seller.
(vi) There shall be no pending litigation, suit, action or
proceeding by any Authority which (A) seeks to restrain or prohibit
the transactions contemplated by this Agreement; (B) challenges the
legality or validity of the transactions contemplated by this
Agreement; or (C) seeks material damages from the Seller Entities as a
result of the transactions contemplated by this Agreement.
4. Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer as follows:
(a) Authority; No Conflicts. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has all requisite corporate power and authority to enter into
this Agreement, and the Seller Entities have all requisite corporate power and
authority to consummate the transactions contemplated hereby. All corporate
acts and other proceedings required to be taken by Seller and the other Seller
Entities to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
properly taken. This Agreement has been duly executed and delivered by Seller
and constitutes a valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
<PAGE> 18
18
result in the creation of any Lien (as defined below) upon any of the
properties or assets of Seller under, any provision of (i) the Certificate of
Incorporation or By-laws of Seller, (ii) except as disclosed on Schedule 4(a),
any material note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, agreement or arrangement to which Seller is a party or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Seller or the property or assets of Seller, other than, in the
case of clauses (ii) and (iii) above, any such conflicts, violations, defaults,
rights or Liens that in the aggregate would not have a material adverse effect
on the business or financial condition of the Business taken as a whole, and
other than, in the case of clause (iii) above, the matters referred to in
clauses (A) and (B) of the next sentence. No material consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or Authority, is required to be obtained or
made by or with respect to any of the Seller Entities in connection with the
execution and delivery of this Agreement or the consummation by the Seller
Entities of the transactions contemplated hereby, other than (A) compliance
with the HSR Act, if applicable, (B) those that may be required solely by
reason of Buyer's participation in the transaction contemplated hereby, (C)
compliance with and filings under applicable state environmental laws and (D)
compliance with bulk transfer laws. As used herein, "Lien" means any lien,
charge, claim, pledge, security interest, conditional sale agreement or other
title retention agreement, lease, mortgage, security agreement, license,
tenancy, restriction, covenant, right-of-way, option, encumbrance or any other
matter adversely affecting title of any kind (including without limitation the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code of any jurisdiction).
(b) Powers of Seller. (i) Except as disclosed on Schedule
4(b), the Seller Entities have full corporate power and authority and possess
all required domestic and foreign governmental franchises, licenses, permits,
authorizations and approvals (including, without limitation, 510K
determinations and authorizations, medical device listings and registrations
and medical device facility or establishment registrations with the U.S. Food
and Drug Administration and similar registrations in foreign countries)
(collectively, the "Permits") necessary to entitle them to own, lease or
otherwise hold the Assets and to carry on the Business as presently conducted,
except such
<PAGE> 19
19
Permits which if not possessed by the Seller Entities would not have a material
adverse effect on the business or financial condition of the Business, taken as
a whole. Except as disclosed on Schedule 4(b), all such Permits are in full
force and effect, except such Permits which if not in full force and effect
would not have a material adverse effect on the business or financial condition
of the Business, taken as a whole, and there are no proceedings pending or, to
Seller's knowledge, threatened in a written communication that seek the
revocation, cancelation, suspension or any other adverse modification of any
such Permit possessed by Seller which would have a material adverse effect on
the business or financial condition of the Business taken as a whole. Except
as disclosed on Schedule 4(b), as of the date hereof Seller has not received,
and as of the Closing Date, Seller shall not have received, any "warning
letter" or similar notice from the U.S. Food and Drug Administration relating
to the FDA Form 483 dated August 12, 1993, relating to Seller's medical device
facility located on the Owned Real Property (provided that any such letter or
notice received after the date hereof shall not constitute a breach of this
representation and warranty unless such letter or notice would have a material
adverse effect on the business or financial condition of the Business taken as
a whole).
(ii) Schedule 4(b) sets forth a list of all material Permits
held by the Seller Entities relating to the operation of the Business. Seller
is duly qualified to do business in, and in good standing under the laws of,
each state in which the ownership of the Assets or the conduct of the Business
requires such qualification, except such jurisdictions where failure to so
qualify would not have a material adverse effect on the business or financial
condition of the Business, taken as a whole. True and complete copies of the
Certificate of Incorporation, as amended to the date hereof, and the By-laws,
as in effect on the date hereof, of Seller have been delivered to Buyer.
(c) Compliance with Applicable Laws. (i) Except as
disclosed on Schedule 4(c), the Business is being conducted in compliance with
all applicable laws, orders, ordinances, rules and regulations of any
Authority, except to the extent noncompliance would not have a material adverse
effect on the business or financial condition of the Business taken as a whole.
This paragraph (i) does not relate to environmental matters, which are the
subject of paragraph (ii) below.
<PAGE> 20
20
(ii) (A) Seller has made available to Buyer all reports,
studies, written notices from, and correspondence with, government agencies,
test results, analyses and other documents listed on Schedule 4(c) (the
"Environmental Reports") that disclose all known material scientific
information relevant to environmental contamination or actual or potential
environmental responsibility or liability which could reasonably be expected to
result in a material adverse effect on the business or financial condition of
the Business taken as a whole (including without limitation those related to
the presence of underground storage tanks) at any facilities or locations now
or formerly owned, leased or operated by Seller and used in the Business.
There are no studies, tests, analyses, reports, notices from or correspondence
with any Authority, or other documents in the possession of the Seller which
contain any material information that is not contained in the Environmental
Reports and that is relevant to determining the extent of any environmental
responsibilities or liabilities with respect to the Business.
(B) Except as set forth on Schedule 4(c), Seller has not:
(1) received written notice of any violation, claim or allegation from any
Authority of any violation or alleged violation of any Environmental Law
related to or affecting in any material way the Business or the Assets; (2)
received any written request for information, demand or written notification
that it is or may be potentially responsible with respect to any investigation
or cleanup of any threatened or actual release of any hazardous or toxic
wastes, materials or substances or pollutants or contaminants ("Hazardous
Substances"), including without limitation pesticides, asbestos or
asbestos-containing materials in friable form, polychlorinated biphenyls in
concentrations in excess of 50 ppm ("PCBs") and petroleum products; or (3)
received any written notice of any responsibility under the Industrial Site
Recovery Act or any other statute or regulation which seeks to impose
environmental investigation, clean-up or notification obligations on a seller
of property.
(C) Except as set forth on Schedule 4(c), to Seller's
knowledge Seller has not violated and is not in violation of any Environmental
Law, including, without limitation, by any (1) use, generation, treatment,
storage, recycling, disposal of, transportation or arrangement for the
transportation, storage, treatment or disposal of any Hazardous Substances at
or to any location which is the
<PAGE> 21
21
subject of Federal, state, local or foreign governmental actions or other
investigations of which Seller has had written notice; (2) use, generation,
treatment, storage, recycling or release, spill, discharge, emission or
disposal of any Hazardous Substances at or on any property now or previously
owned, operated or leased by Seller and used in the Business; or (3)
maintenance of any asbestos-containing materials in friable condition, PCBs in
concentrations in excess of 50 ppm, or active or inactive underground storage
tanks at any property now or previously owned, operated or leased by Seller.
As used in this Agreement, the term "Environmental Laws" means any statute,
rule, regulation, order or judgment of the United States or any state thereof
or any foreign jurisdiction that is concerned with contamination of any part of
the natural environment, or remediation thereof, or with protecting the quality
of the natural environment, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Resource Conservation and Recovery Act, as amended, the Clean Water Act, as
amended, the Clean Air Act, as amended, and the Toxic Substances Control Act,
as amended.
(d) Financial Statements. Schedule 4(d) sets forth (i) the
audited statement entitled "Statement of Assets to be Acquired and Liabilities
to be Assumed of Edward Weck Incorporated" as of June 30, 1993, and December
31, 1992 (such statement as of June 30, 1993, including the notes thereto, is
referred to herein as the "Balance Sheet"), (ii) the audited statement entitled
"Statement of Revenues and Expenses Before Corporate Expenses, Interest and
Income Taxes of Edward Weck Incorporated" for the six-month periods ended June
30, 1992 and 1993, and the year ended December 31, 1992 (the financial
statements described in clauses (i) and (ii), together with the notes thereto,
are collectively referred to as the "Financial Statements"), and (iii) the
schedules entitled "Schedule of International Sales by Country and Product of
Certain Products of Edward Weck Incorporated" for the six-month period ended
June 30, 1993 and the year ended December 31, 1992 (together with the notes
thereto, collectively the "Sales Schedules"). The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the combined financial condition and
results of operations of the Business as of the respective dates thereof and
for the respective periods covered thereby, except as provided in the Financial
Statements and except
<PAGE> 22
22
that certain items relating to the conduct by the Seller Entities of the
Business outside the United States are not reflected in the Financial
Statements. The Sales Schedules have been derived from the accounting books
and records of the Seller Entities and fairly present the total international
sales of the Business for the respective periods covered thereby.
(e) Absence of Changes or Events. Except as disclosed in
Schedule 4(e), since the date of the Balance Sheet, the Business has been
conducted in all material respects in the ordinary course and there has not
been any material adverse change in the business or financial condition of the
Business taken as a whole, other than changes relating to the United States
economy or foreign economies in general or the Business's industry in general.
(f) Certain Assets. Seller has good and valid title to the
Assets, free and clear of all Liens except (i) such as are disclosed on
Schedule 4(f), (ii) mechanics', carriers', workmen's, repairmen's or other like
liens arising or incurred in the ordinary course of business, liens arising
under original purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business, liens for
taxes, assessments and other governmental charges which are not due and payable
and which may thereafter be paid without penalty and (iii) other imperfections
of title or encumbrances (other than encumbrances that secure payment
obligations) which do not individually or in the aggregate materially impair
the continued use and operation of the Assets to which they relate in the
operation of the Business as presently conducted (collectively, "Permitted
Liens"). This paragraph (f) does not relate to Real Property, Contracts,
Intellectual Property other than Patents (as defined in Section 4(j)) or
Foreign Inventory, which are the subjects of Sections 4(g), 4(h), 4(j) and
4(k), respectively.
(g) Real Property.
(i) Schedule 4(g)(1) sets forth a list of all the Real
Property owned by Seller (the "Owned Property") and Schedule 4(g)(2) sets forth
a list of all the Real Property leased by Seller (the "Leased Property"), in
each case, relating exclusively or primarily to the Business.
<PAGE> 23
23
(ii) Seller has (A) good and valid fee simple title to all
Owned Property and (B) good and valid title to the leasehold estates in all
Leased Property, in each case free and clear of all Liens, except (1) Permitted
Liens, (2) those matters listed in the Title Report, (3) easements, covenants,
rights-of-way, options, claims and other matters of record, if any, (4) any
conditions that may be shown by a current, accurate survey or physical
inspection of any Owned Property or Leased Property made prior to Closing and
(5) (x) zoning, building and other similar restrictions and covenants, (y)
mortgages, liens, security interests or encumbrances that have been placed by
any developer, landlord or other third party on property (other than the Owned
Property) over which Seller has easement rights or on any Leased Property and
subordination or similar agreements relating thereto and (z) unrecorded
easements, covenants, rights-of-way, options, claims or other matters (other
than encumbrances that secure payment obligations), if any, none of which items
set forth in this clause (5) individually or in the aggregate materially impair
the continued use and operation of the property to which they relate in the
operation of the Business as presently conducted.
(iii) There is no pending or, to the knowledge of Seller,
threatened condemnation, expropriation, eminent domain or similar proceeding
affecting all or any portion of any of the Real Property. To Seller's
knowledge, Seller is not in material default under the lease for the Leased
Property, and no event has occurred which, with the giving of notice, passage
of time or both, would give the landlord the right to terminate any such lease.
Seller has made available to Buyer true, correct and complete copies of all
leases and financing documents to which Seller is party affecting all or any
portion of the Real Property.
(iv) The consent of Maurice M. Weill ("Landlord") is not
required in order for Seller to assign to Buyer Seller's rights, title and
interest in the Lease Agreement dated May 20, 1987, as amended, between
Landlord and Seller.
(h) Contracts. (i) All Contracts as of the date hereof are
listed on Schedule 4(h)(1), except for the fol-
<PAGE> 24
24
lowing, which are not required to be set forth on such Schedule:
(A) any Contract that involves an aggregate commitment by the
Seller Entities of not more than $100,000, provided that Contracts
omitted from Schedule 4(h)(1) solely by reason of this paragraph (A)
shall not involve aggregate commitments by the Seller Entities of more
than $250,000;
(B) any purchase orders; and
(C) any Contract that is terminable by the Seller Entities by
notice of not more than 60 days for a cost of less than $50,000 or
that will terminate by its terms within 60 days after the Closing
Date.
Each Contract listed on Schedule 4(h)(1) is a valid and binding obligation of
the Seller Entity party thereto and is in full force and effect, except as
disclosed on Schedule 4(h)(1). Seller has made available a copy of each
written Contract listed on Schedule 4(h)(1) to Buyer prior to the date hereof,
except that with respect to pricing agreements with customers of the Business
in Canada, Seller has provided the information set forth in Schedule 4(h)(1).
(ii) Except as disclosed on Schedule 4(h)(1), the Seller
Entities have performed all obligations required to be performed by them to
date under the Contracts listed on Schedule 4(h)(1) and are not (with or
without the lapse of time or the giving of notice, or both) in breach or
default thereunder, except for breaches or defaults that would not in the
aggregate have a material adverse effect on the business or financial condition
of the Business taken as a whole.
(iii) Except as disclosed on Schedule 4(h)(1), to the
knowledge of Seller, the parties to the Contracts listed on Schedule 4(h)(1)
(other than the Seller Entities) have performed all obligations required to be
performed by them to date under such Contracts and are not (with or without the
lapse of time or the giving of notice, or both) in breach or default
thereunder, except for breaches or defaults which would not in the aggregate
have a material adverse effect on the business or financial condition of the
Business taken as a whole. Schedule 4(h)(2) sets forth a list of all written
Shared Contracts. All unwritten Contracts were entered into in the ordinary
course of
<PAGE> 25
25
business and such Contracts do not in the aggregate materially adverse affect
the business or financial condition of the Business taken as a whole. Seller
has made available a copy of each written Shared Contract listed on Schedule
4(h)(2) to the Buyer prior to the date hereof. Buyer acknowledges that Seller
makes no representation or warranty, express or implied, with respect to the
Shared Contracts, Intercompany Contracts or Confidentiality Agreements, that
the Assets shall not include the Shared Contracts, Intercompany Contracts and
Confidentiality Agreements and that Buyer shall have no rights with respect to
the Shared Contracts, Intercompany Contracts or Confidentiality Agreements
except as set forth in Sections 5(h) and 8(a) of this Agreement. Schedule
4(h)(3) lists all open purchase orders as of October 31, 1993.
(i) Litigation. Except as disclosed on Schedule 4(i), (i)
there are no outstanding judgments, orders, writs, injunctions or decrees of
any court, governmental agency or arbitration tribunal against any Seller
Entity which would have a material adverse effect on the business or financial
condition of the Business taken as a whole or on the ability of the Seller
Entities to consummate the transactions contemplated hereby and (ii) as of the
date of this Agreement, there are no actions, suits, claims or legal,
administrative or arbitration proceedings or investigations pending or, to the
knowledge of Seller, threatened in writing against any Seller Entity, which are
material or could reasonably be expected to have a material adverse effect on
the ability of the Seller Entities to consummate the transactions contemplated
hereby.
(j) Intellectual Property. (i) All material Patents (as
defined in paragraph (iii) below), registered Marks (as defined in paragraph
(ii) below) and applications for any of the foregoing, other than those
relating to computer software, included in the Intellectual Property are listed
on Schedule 4(j).
(ii) Except as disclosed in Schedule 4(j), the Assets include
all trademarks, trade names, service marks, designs, logotypes and trade dress
and copyrights owned or licensed from a third party by any Seller Entity that
are used exclusively or primarily in the conduct of the Business as currently
conducted by Seller. Except as disclosed in Schedule 4(h) or 4(j), none of the
trademarks, trade names, service marks, designs, logotypes and trade dress and
copyrights included in the Assets (collectively, the
<PAGE> 26
26
"Marks") is used pursuant to a license from a third party or licensed to a
third party. All of the registrations of Marks listed in Schedule 4(j) are
held of record in Seller's name, and to Seller's knowledge, the registrations
of Marks followed by an asterisk (*) on Schedule 4(j) (the "Significant Marks")
are in full force and effect except to any extent relating to use or non-use of
a Mark by the Seller Entities. Except as set forth in Schedule 4(j), there is
no agreement to which a Seller Entity is a party or by which a Seller Entity is
legally bound or, to Seller's knowledge, restriction which materially and
adversely affects the use by Seller of any of the Marks. Except as set forth
in Schedule 4(j), on the date hereof (x) there are no pending reexamination,
opposition, interference, cancelation or other administrative proceedings with
respect to any of the registered Marks and (y) no order, holding, decision or
judgment has been rendered by any court of law or Authority, and no agreement,
consent, stipulation or pending litigation in a court of law exists to which
any Seller Entity is a party, which would prevent Seller or, to Seller's
knowledge, Buyer from using any of the Marks as currently used by Seller in the
conduct of the Business. Except as set forth in Schedule 4(j), on the date
hereof, there is no pending or, to Seller's knowledge, threatened objection or
claim being asserted against Seller in any administrative or judicial
proceeding or by any person with respect to the ownership, validity,
enforceability or use of any of the Marks or challenging or questioning the
validity or effectiveness of any such ownership. Except as set forth in
Schedule 4(j), to the knowledge of Seller, (x) its use of the Marks does not
infringe or constitute misappropriation of any rights of any other person, firm
or corporation or other business association with respect to any United States
or foreign trademarks, trade names, service marks, copyrights or applications
therefor and (y) there is not any basis for a claim of such infringement or
misappropriation. Except as disclosed in Schedule 4(j), on the date hereof,
there is no pending claim of infringement or misappropriation of any of the
Marks asserted by any Seller Entity since January 1, 1992 and Seller is not
aware of any material infringement or misappropriation of any of the
Significant Marks by, and, to Seller's knowledge, there is no basis for a claim
of infringement or misappropriation with respect to the Significant Marks
against, any person, firm, corporation or other business association. Except
as set forth in Schedule 4(j), no person, firm or corporation or other business
association is presently authorized by Seller or any other Seller Entity to use
Seller's corporate
<PAGE> 27
27
name or any derivative thereof. Except as set forth in Schedule 4(j), as of
the date hereof Seller has not received any written notice that Seller's use of
its corporate name violates the rights of any other corporation, partnership or
other business entity with respect to such entity's corporate name or trade
name or written notice of any infringing use of the name "Weck" or "Edward Weck
Incorporated" by any person, firm, corporation or other business association as
its corporate or business name.
(iii) Except as disclosed in Schedule 4(j): the Assets
include all patents owned or licensed from a third party by any Seller Entity
that are used to conduct the Business as currently conducted by Seller, and, to
the knowledge of Seller, no patents other than the patents included in the
Assets (the "Patents") are required to conduct the Business as currently
conducted by Seller. Except as disclosed in Schedule 4(h) or 4(j), none of the
Patents is used pursuant to a license from a third party or licensed to a third
party. Seller is not aware of any reason why any of the Patents listed in
Schedule 4(j) should not be valid, enforceable and in full force and effect.
Except as disclosed in Schedule 4(j), and except for Patents licensed to Seller
pursuant to Contracts listed in Schedule 4(h), the Patents are held of record
in Seller's name. Except as set forth in Schedule 4(h) or 4(j), there is no
agreement to which any Seller Entity is a party or by which any Seller Entity
is legally bound or, to Seller's knowledge, restriction which materially and
adversely affects the manufacture, use or sale by Seller of any of the
inventions embodied in the Patents. Except as disclosed in Schedule 4(j), as
of the date hereof, (x) there is no pending reexamination, opposition,
interference, cancelation or other administrative proceedings or pending
litigation with respect to any of the Patents, and (y) no order, holding,
decision or judgment has been rendered by any court or Authority, and no
agreement, consent or stipulation exists to which Seller is a party or of which
Seller has knowledge, which would prevent Seller or, to Seller's knowledge,
Buyer from manufacturing, using or selling any of the inventions embodied in
the Patents. Except as set forth in Schedule 4(j), and except in connection
with patent prosecution procedures, as of the date hereof, there is no pending
or, to Seller's knowledge, threatened objection or claim being asserted against
Seller in any administrative or judicial proceedings or by any person with
respect to the ownership, validity, enforceability or use of any of the Patents
or challenging or questioning the validity,
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enforceability or use of any of the Patents or challenging or questioning the
validity or effectiveness of any such ownership or license. As of the date
hereof, except as disclosed on Schedule 4(j), there is no pending notice of
rejection, opposition, interference or refusal to register which has been
received by Seller with respect to any Patent or patent application included in
the Assets. Except as set forth in Schedule 4(j), to Seller's knowledge,
Seller has not infringed or misappropriated any rights of any other person,
firm or corporation or other business association with respect to any United
States or foreign patents or applications therefor, nor is Seller aware of any
such infringement or misappropriation which will occur as a result of the
continued operation of the Business as currently conducted. As of the date
hereof, there is no pending claim of infringement or misappropriation of any of
the Patents being asserted by any Seller Entity and Seller has not received
written notice of any infringement or misappropriation of any of the Patents or
any basis for a claim of infringement or misappropriation of any of the Patents
by any person, firm, corporation or other business association.
(vi) As of the Closing Date, Seller shall reaffirm the
representations and warranties set forth above in this Section 4(j), without
regard to the phrase "as of the date hereof", and shall update Schedule 4(j)
for such purpose, provided that no such changes to Schedule 4(j) shall
constitute a breach of this Section 4(j) unless such changes, individually or
in the aggregate, would have a material adverse effect on the business or
financial condition of the Business, taken as a whole.
(k) Foreign Inventory. (i) Various Seller Entities hold
title to Inventory located outside the United States (the "Foreign Inventory").
Schedule 4(k) fairly presents, in all material respects, the unaudited book
value of the Foreign Inventory as recorded on the books and records of the
applicable Seller Entities as of June 30, 1993. There has been no change in
the method of accounting for the Foreign Inventory since June 30, 1993.
(ii) Each of the Seller Entities that owns Foreign Inventory
has good and valid title to such Foreign Inventory free and clear of all Liens,
except for commitments to sell such Foreign Inventory arising in the ordinary
course of business.
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(l) Labor. On the date hereof (i) there is no labor strike,
dispute, slowdown or work stoppage or lockout actually pending or, to Seller's
knowledge, threatened against Seller or affecting the Business and, during the
past three years, there has not been any such action; (ii) Seller is not a
party to any collective bargaining agreement relating to the Business or the
Assets; and (iii) to Seller's knowledge, no union organizational campaign is in
progress with respect to the employees of Seller, and no question concerning
representation exists respecting such employees. Except as previously
disclosed in writing to Buyer, there are no retention, severance or termination
agreements between any Employee (as defined in Section 7(b)) and any Seller
Entity.
(m) Taxes. None of the Assets (i) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code or (ii) directly or
indirectly secures any debt the interest of which is tax-exempt under Section
103(a) of the Code. Seller is not a party to any lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954.
(n) Customer Deposits. The Seller Entities do not hold any
customer deposits with respect to the Business.
(o) Condition of Assets. The buildings, machinery,
equipment, tools, furniture, improvements and other tangible assets included in
the Assets are in good operating condition and repair, except to any extent
that would not in the aggregate have a material adverse effect on the business
or financial condition of the Business, taken as a whole.
(p) Hem-O-Lok. Notwithstanding any other provision of
this Agreement, Seller makes no representations or warranties or covenants
(other than the covenants set forth in Sections 1 and 5(f)) whatsoever with
respect to the Hem-O-Lok Business. In addition, Buyer acknowledges that Seller
has previously disclosed to Buyer in writing certain matters relating to the
Hem-O-Lok Business.
5. Covenants of Seller. Seller covenants and agrees as
follows:
(a) Access. Before the Closing, Seller will give Buyer and
its representatives, employees, counsel and accountants reasonable access,
during normal business hours and upon reasonable notice, to the properties,
books,
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records and contracts of Seller relating to the Business; provided that such
access does not unreasonably interfere with the normal operations of Seller or
the Business.
(b) Ordinary Conduct. Except as contemplated by this
Agreement, from the date hereof to the Closing, Seller will conduct the
Business in the ordinary course in substantially the same manner as presently
conducted and will make all reasonable efforts consistent with past practices
to preserve relationships with customers, suppliers and others with which
Seller deals in connection with the Business. From the date hereof to the
Closing, Seller will promptly inform Buyer in writing of any event or
circumstance that, to Seller's knowledge, has or could reasonably be expected
to have a material adverse effect on the business or financial condition of the
Business taken as a whole. From the date hereof to the Closing, Seller shall
incur, accrue and pay accounts payable relating to the Business in the ordinary
course of business consistent with past practice. Except as contemplated by
this Agreement, from and after the date of this Agreement and until the
Closing, without the prior written consent of Buyer, Seller will not:
(A) make any material change in the conduct of the Business;
(B) make any sale, assignment, transfer or other conveyance of
any of the Assets, except transactions pursuant to the Contracts,
Shared Contracts, Intercompany Contracts or agreements entered into in
the ordinary course of business or otherwise in the ordinary course of
business consistent with past practice;
(C) subject any of the Assets or any part thereof to any Lien
or suffer such to be imposed, except for Permitted Liens and other
Liens permitted under Sections 4(f), 4(g) and 4(k);
(D) enter into any new, or amend any existing, material
contracts, commitments or agreements relating to the Business other
than those in the ordinary course of business or necessary for the
maintenance of property relating to the Business;
(E) take any action that would cause the representations set
forth in Section 4(f) or 4(g) not
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to be true as of the Closing Date or that would cause the condition
set forth in Section 3(b)(vi) not to be satisfied as of the Closing
Date;
(F) except as provided in Section 7(c), (i) other than in the
ordinary course of business, increase the compensation payable or to
become payable to any Employee; (ii) grant any severance, retention or
termination pay to any Employee, except pursuant to agreements in
effect on the date hereof and that have been previously disclosed to
Buyer in writing; (iii) enter into any employment agreement with any
Employee; or (iv) other than in the ordinary course of business or as
required by law, establish, adopt, enter into or amend any bonus,
profit-sharing, thrift, compensation, pension, retirement, deferred
compensation, employment, termination, retention or other plan, trust,
agreement, fund, or policy which would materially increase the benefit
of any Employee; or
(G) other than in the ordinary course of business consistent
with past practice or as may be required to consummate the
transactions contemplated hereby, engage in any transaction of any
kind with any other Seller Entity or affiliate of Bristol-Myers Squibb
Company (as used above, "affiliate" means any entity directly or
indirectly controlling, controlled by or under common control with
Bristol-Myers Squibb Company);
(c) Monthly Financial Statements. Seller will deliver to
Buyer, promptly after they become available and in any event within 14 days
after the end of each calendar month, an unaudited income statement and an
unaudited statement of sales by product line for the Business, each in the form
currently prepared by Seller, which statements shall be accompanied by a
certificate of an officer of Seller who is responsible for financial or
accounting matters to the effect that such statements have been derived from
the accounting books and records of the Seller Entities and fairly present, in
accordance with Seller's accounting policies and practices used in the
preparation of such statements, the matters set forth therein for the
respective periods covered thereby.
(d) Foreign Inventory. From the date hereof to the Closing,
Seller will not change its method of accounting for the Foreign Inventory
except for such changes as are agreed to in writing by Buyer.
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(e) Negotiations. Neither Seller nor any of its employees,
officers, shareholders or agents, shall solicit, initiate, furnish information
relating to or participate in negotiations with respect to, any offer for any
purchase or sale of any material amount of the Business or Assets other than in
the ordinary course of business consistent with past practice.
(f) Covenant Not To Compete. (i) Seller, for and on behalf
of each of the Seller Entities, hereby expressly covenants and agrees that, for
a period of three years after the Closing Date (the "Restricted Period"), the
Seller Entities shall not, anywhere in the world, directly or indirectly in any
capacity enter into or engage in the following businesses (the "Restricted
Businesses"): (i) metal and polymer ligating clips that function in a manner
similar to the ligating clips currently sold by the Business; and (ii) external
metal skin stapling products that function in a manner similar to the external
metal skin stapling products currently sold by the Business; provided, however,
that notwithstanding the foregoing, any Seller Entity may (A) acquire and
operate any business, person or entity engaged in any Restricted Business or
any interest in any such business, person or entity and (B) engage in
transactions contemplated by the International Transition Agreement. The
covenant set forth in this clause (i) is referred to as the "Restrictive
Covenant".
(ii) The parties agree that if any court of competent
jurisdiction determines that the Restrictive Covenant or any part thereof is
invalid or unenforceable, the remainder of the Restrictive Covenant shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions. Furthermore, if any portion of the Restrictive Covenant or
the application of any portion of the Restrictive Covenant to any person or
circumstance shall be held invalid or unenforceable by any court of competent
jurisdiction, the remaining portion of the Restrictive Covenant or the
application of such portion of the Restrictive Covenant to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby. In either of the foregoing cases, the parties
agree that they will amend the terms of the Restrictive Covenant or portion
thereof so determined to be invalid or unenforceable, but only in the most
minimal manner necessary to make such terms comply with the determination of
such court.
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(g) Use of Names. Seller agrees that as soon as reasonably
practicable but in any event no later than two weeks after the Closing it shall
change its corporate name to eliminate the use of "Weck" and "Edward Weck
Incorporated" or any derivative thereof and agrees that such names shall be and
become the property of Buyer from and after the Closing Date. Except as
provided in this Section 5(g), Section 8(j) or the license agreement referred
to in Section 8(k), Seller agrees not to use such names at any time from and
after the Closing Date.
(h) Confidentiality Agreements. At the Closing Bristol-Myers
Squibb Company shall assign to Buyer all its rights under Confidentiality
Agreements with prospective bidders entered into in connection with the process
leading to the sale of the Business, to the extent such rights relate to
confidential information relating to the Business (it being understood that
Bristol-Myers Squibb Company shall retain all other rights under such
Confidentiality Agreements). In addition, Bristol-Myers Squibb Company will
not release any prospective bidders from their obligations under any such
Confidentiality Agreement and at Closing will provide Buyer a copy of each such
Confidentiality Agreement. Notwithstanding the foregoing Seller shall not
assign, or provide copies of, any such Confidentiality Agreement if doing so
would result in a breach thereof.
(i) Financial Statements. (i) As soon as practicable
after the date hereof but not later than the Closing Date, Seller shall prepare
and deliver to Buyer revisions of the Financial Statements (the "Revised
Financial Statements"), which shall reflect the addition of the international
sales of Seller and related expenses and the Foreign Inventory. The Revised
Financial Statements shall be audited, shall be prepared on the same basis as
the Financial Statements and shall cover the same periods as the Financial
Statements (except that an income statement for the year ended December 31,
1991, shall be added). Seller shall not make any representations or warranties
regarding the Revised Financial Statements. The Seller Entities and their
accountants shall have no responsibility or liability to Buyer, Buyer's
accountants or any other person with respect to the Revised Financial
Statements, except for Seller's specific obligations under this subparagraph
(i).
(ii) If Buyer is required by the Securities and Exchange
Commission to prepare and file revisions to the Revised Financial Statements,
then Seller shall cooperate
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34
reasonably with Buyer in order to permit Buyer to prepare such revised
financial statements. Such cooperation shall include giving Buyer and Buyer's
accountants reasonable access to personnel and all accounting books and records
of the Seller Entities that may be relevant to Buyer's preparation of such
revised financial statements including working papers of the Seller Entities'
accountants, and photocopies thereof as Buyer may request. Seller shall not
make any representations and warranties regarding such revised financial
statements. The Seller Entities and their accountants shall have no
responsibility or liability to Buyer, Buyer's accountants or any other person
with respect to such revised financial statements, except for Seller's
cooperation obligation pursuant to this subparagraph (ii). Buyer shall
reimburse Seller for all reasonable out-of-pocket costs and expenses
(including, without limitation, the reasonable fees and expenses of Seller's
accountants and counsel, if any) incurred by the Seller Entities in connection
with Seller's cooperation pursuant to this subparagraph (ii).
6. Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Seller as follows:
(a) Authority; No Conflicts. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. All
corporate acts and other proceedings required to be taken by Buyer to authorize
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly and properly taken.
This Agreement has been duly executed and delivered by Buyer and constitutes a
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with or result in any violation of (i) any
provision of the Certificate of Incorporation or By-laws of Buyer, (ii) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, agreement or arrangement to which Buyer is a party or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Buyer or its assets, other than, in the case of clauses (ii) and
(iii) above, any such conflicts or violations that in
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35
the aggregate would not have a material adverse effect on the business or
financial condition of Buyer taken as a whole or on the ability of Buyer to
consummate the transactions contemplated hereby. Except for compliance with
the HSR Act, if applicable to the purchase and sale of the Assets, no material
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other Authority
is required to be obtained or made by or with respect to Buyer in connection
with the execution and delivery of this Agreement or the consummation by Buyer
of the transactions contemplated hereby.
(b) Litigation. There are no (i) outstanding judgments,
orders, writs, injunctions or decrees of any court, governmental agency or
arbitration tribunal against Buyer which would have a material adverse effect
on the ability of Buyer to consummate the transactions contemplated hereby or
(ii) actions, suits, claims or legal, administrative or arbitration proceedings
or investigations pending or, to the best knowledge of Buyer, threatened
against Buyer, which could reasonably be expected to have a material adverse
effect on the ability of Buyer to consummate the transactions contemplated
hereby.
(c) Availability of Funds. Buyer has cash available or
existing borrowing facilities which, together with its available cash, are
sufficient to enable it to consummate the transactions contemplated by this
Agreement.
7. Covenants of Buyer. Buyer covenants (and Seller covenants
as applicable with respect to Section 7(c)) as follows:
(a) Confidentiality. Buyer acknowledges that all information
provided to it by Seller or the other Seller Entities or their respective
agents and representatives, in relation to the Business, the Excluded Assets or
the Seller Entities' other businesses (including, without limitation, any
information which may be provided pursuant to Section 5(i)), is subject to the
terms of a Confidentiality Agreement dated July 9, 1993, between Buyer and
Bristol-Myers Squibb Company (the "Buyer Confidentiality Agreement"), all terms
of which are incorporated herein by reference (except that this Agreement
constitutes a Sale Agreement, as defined therein). Effective upon, and only
upon the Closing, the Buyer Confidentiality Agreement shall terminate but only
with respect to information provided to
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36
Buyer or its affiliates that relates to the Business (it being understood that
all information so provided to Buyer with respect to the Excluded Assets, the
Seller Entities or their other businesses shall continue to be subject to the
Buyer Confidentiality Agreement, which agreement shall remain in full force and
effect with respect to such matters notwithstanding the Closing).
(b) Employees. Buyer shall offer employment, effective as of
the Closing Date, on substantially the same terms and conditions as provided by
Seller as of the Closing Date with respect to geographic location and
compensation, to all persons employed by Seller in the Business on the Closing
Date and to the persons employed by other Seller Entities who are identified on
Schedule 7(b), other than persons who are "totally disabled" within the meaning
of the Bristol-Myers Squibb Company Long Term Disability Income Plan (any such
person being an "Employee"). Any Employee who accepts employment with and
becomes an employee of Buyer on the Closing Date is herein referred to as a
"Transferred Employee". Buyer agrees that all Employees who on the Closing
Date are eligible to receive or are receiving short-term disability benefits or
are on an approved leave of absence, vacation, personal day or other approved
absence, shall be deemed to have accepted employment with the Buyer and are
included as Transferred Employees.
(c) Employee Benefit Matters. Effective as of the Closing
Date and for a period of at least three years after the Closing Date Buyer
shall establish and maintain compensation and benefit plans and arrangements
for Transferred Employees that, in the aggregate, shall be no less favorable
than those currently provided by Seller to such employees pursuant to the
compensation and benefit plans and arrangements identified on Schedule 7(c).
Except as provided in Section 7(c)(v), Buyer shall treat Transferred Employees
no less favorably than employees of Buyer who are in comparable positions and
at comparable locations, and shall give each Transferred Employee past service
credit under its compensation and benefit plans and arrangements and for all
employee benefits purposes for service with Seller or another Seller Entity
prior to the Closing Date as if such service had been with Buyer. Buyer and
Seller agree that benefits provided under Buyer's plans disclosed on Schedules
7(c)(v), (vi), (vii), (viii) and (ix) shall be deemed to be no less favorable
than the analogous benefits currently provided to Employees by Seller. Without
limiting
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37
the generality of the foregoing, Buyer and Seller agree as follows:
(i) Effective as of the Closing Date, Buyer shall adopt and
maintain in effect a severance policy for Transferred Employees (the
"Buyer Severance Policy") that is identical (except as provided below)
to the Bristol-Myers Squibb Company Severance Plan in effect as of the
Closing Date (the "BMS Severance Plan"), with the effect that any
Transferred Employee whose employment is terminated on or after the
Closing Date and until three years after the Closing Date will be
entitled to receive from Buyer the severance benefits, including the
"Rule of 70" provisions, that such Transferred Employee would have
received if he or she were covered by the BMS Severance Plan
(providing full credit for all years of service of such Transferred
Employee with Seller, any other Seller Entity and Buyer). Schedule
7(c) includes a copy of the BMS Severance Plan. Buyer shall be
responsible for the payment of severance benefits, if any, in
accordance with the terms and conditions of the BMS Severance Plan to
any Employee who does not become a Transferred Employee.
(ii) Buyer will permit Transferred Employees to schedule and
take unused and accrued vacation time off with pay in accordance with
the Bristol-Myers Squibb Company vacation policies to the extent such
vacation time exists as of the Closing Date.
(iii) Buyer will waive all waiting periods, limitations with
respect to pre-existing conditions and all other conditions applicable
to Transferred Employees under the benefit plans of Buyer.
(iv) Buyer shall offer outplacement services, the terms of
which are set forth on Schedule 7(c)(iv), to all Transferred Employees
whose employment is terminated during the three years following the
Closing Date and who are entitled to receive benefits under the
severance policy to be adopted by Buyer as provided herein.
(v) (A) As soon as practicable after the Closing Date, and
effective as of the Closing Date, Buyer shall adopt or designate a
defined benefit pension plan (the "Pension Plan"), the terms of which
are set forth on
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Schedule 7(c)(v), covering Transferred Employees. Except as provided
in sub-paragraph (B) hereof, the Pension Plan shall provide credit for
all service credited under the Bristol-Myers Squibb Company Retirement
Income Plan (the "Retirement Income Plan") as of the Closing Date with
respect to Transferred Employees.
(B) Buyer shall cause the Pension Plan to provide that each
Transferred Employee's benefit under the Pension Plan shall be a
future service benefit calculated by (x) applying the benefit formula
under the Pension Plan to the Transferred Employee's service and
compensation under the Pension Plan after the Closing Date, without
taking into account the Transferred Employee's service and
compensation credited under the Retirement Income Plan for purposes of
determining the amount of the benefit under the Pension Plan and (y)
taking into account the Transferred Employee's actual age and entire
period of service (including service credited under the Retirement
Income Plan at the Closing Date and service credited under the Pension
Plan after the Closing Date) for vesting and benefit eligibility
purposes, including any service requirements for the application of
any subsidies for early retirement or otherwise.
(vi) (A) As soon as practicable after the Closing Date, and
effective as of the Closing Date, Buyer shall adopt or designate a
profit-sharing plan with a salary reduction arrangement that covers
Transferred Employees and meets the requirements of Sections 401(a)
and 401(k) of the Code ("Section 401(k) Plan"), the terms of which are
set forth on Schedule 7(c)(vi). Seller and Buyer agree that on and
after the Closing Date the Section 401(k) Plan shall not permit
Transferred Employees to make additional employee after-tax
contributions or to invest any amounts under the Section 401(k) Plan
in additional BMS Stock (as defined in paragraph (B) below). Buyer
agrees that all service credited under the Bristol-Myers Squibb
Company Savings and Investment Program (the "Savings Plan") as of the
Closing Date with respect to Transferred Employees shall be credited
under the Section 401(k) Plan for all plan purposes, including
eligibility and vesting.
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(B) (1) Contingent on the Closing, Seller shall fully vest,
effective as of the Closing Date, Transferred Employees who are
participants in the Savings Plan in their account balances under the
Savings Plan. Within 60 days after the adoption or designation of the
Section 401(k) Plan by Buyer or as soon as practicable thereafter,
Seller shall cause an amount in cash (or property offered by Seller
and acceptable to Buyer, it being understood that shares of
Bristol-Myers Squibb Company common stock ("BMS Stock") and notes
executed by Transferred Employees under the Savings Plan will
constitute property acceptable to Buyer) equivalent to the account
balances of Transferred Employees under the Savings Plan as of the
date of transfer to be transferred from the trust maintained under the
Savings Plan to the trust maintained under the Section 401(k) Plan.
Buyer shall establish, effective as of the Closing Date, an investment
fund under the Section 401(k) Plan to which shall be transferred the
shares of BMS Stock which as of the date of transfer are credited
under the Savings Plan to accounts of Transferred Employees. Such
transfer of assets shall be made only after Buyer has supplied to
Seller either (A) a copy of an IRS determination letter finding the
Section 401(k) Plan as in effect as of the Closing Date to be a
qualified plan meeting the requirements of Sections 401(a) and 401(k)
of the Code or (B) an opinion of counsel that the Section 401(k) Plan
has been established in accordance with the Code and ERISA, and that
Buyer will request a determination letter from the IRS and make any
and all changes to the Section 401(k) Plan necessary to receive a
favorable determination letter. Buyer and Seller shall cooperate with
each other during the period beginning on the Closing Date and ending
on the date the assets are transferred to the trust maintained under
the Section 401(k) Plan to ensure the ongoing operation and
administration of the Section 401(k) Plan and the Savings Plan with
respect to Transferred Employees.
(2) (x) Buyer shall adopt, effective as of the Closing Date,
an excess benefit plan comparable to the Benefit Equalization Plan of
Bristol-Myers Squibb Company and its Subsidiary or Affiliated
Corporations Participating in the Bristol-Myers Squibb Company Savings
and Investment Program ("Savings BEP") which covers Transferred
Employees ("Buyer's Savings BEP")
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with respect to their participation in the Section 401(k) Plan.
Buyer's Savings BEP shall have no obligation (1) to provide for any
Transferred Employees to become participants in Buyer's Savings BEP
after the Closing Date who are not participants in the Savings BEP as
of the Closing Date, or (2) to accrue any additional amounts for
service of a participating Transferred Employee after the Closing
Date, but shall continue to provide for deemed earnings and
appreciation on amounts credited to such a Transferred Employee's
account under the Buyer's Savings BEP. Buyer shall cause Buyer's
Savings BEP to assume, effective as of the Closing Date, all Seller's
obligations and liabilities under the Savings BEP with respect to
Transferred Employees.
(y) Contingent on the Closing, Seller shall fully vest,
effective as of the Closing Date, all Transferred Employees in their
accrued benefits under the Savings BEP. Seller shall cause an amount
in cash (or property offered by Seller and acceptable to Buyer)
equivalent to the account balances of Transferred Employees under the
Savings BEP determined as of the date of transfer to be transferred to
the Buyer. Such transfer shall occur on the same date that assets are
transferred from the Savings Plan to the Section 401(k) Plan.
(vii) (A) Buyer agrees that Transferred Employees and their
eligible dependents shall be eligible to participate in the medical
and dental plans maintained or established by Buyer or its designee
("Buyer's Health Plans"), effective as of the Closing Date, the terms
of which are set forth on Schedule 7(c)(vii). Any and all waiting
periods, limitations with respect to pre-existing conditions and all
other conditions applicable to Transferred Employees (other than
deductibles and co-payment requirements) shall be waived under Buyer's
Health Plans with respect to Transferred Employees and their eligible
dependents. In addition, Buyer shall cause the Buyer's Health Plans
to recognize any out-of-pocket medical and dental expenses incurred by
Transferred Employees and their eligible dependents prior to the
Closing Date and during the calendar year in which such Closing Date
occurs for purposes of determining their deductibles and out-of-pocket
maximums under the Buyer's Health Plans. The cost to a Transferred
Employee under the Buyer's Health Plans for calendar year 1994 shall
be
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not more than the aggregate cost to such Transferred Employee under
Seller's High Comprehensive Medical Plan Option and under Seller's
Comprehensive Dental Plan Option for 1994. For the subsequent two
calendar years Buyer may increase such cost by an amount which is not
greater than the amount determined by multiplying the cost to such
Transferred Employees for the prior calendar year by 15 percent (15%).
Notwithstanding the above, the employee premiums for the US Healthcare
HMO in New Jersey for 1994 shall be no more than $56 per month for
employee only coverage, $104 per month for employee plus one
dependent, and $142 per month for employee plus two or more
dependents. Increases in employee premiums for the subsequent two
calendar years may increase by no more than 15% per year. Buyer
agrees that it shall use its best efforts to make available to
Transferred Employees the same health maintenance organizations that
were available to Transferred Employees prior to the Closing Date.
(B) Buyer agrees that claims relating to costs incurred by
Transferred Employees and their dependents after the Closing Date
shall be made under Buyer's Health Plans and paid in accordance with
the provisions of Buyer's Health Plans.
(C) Except as provided below, Buyer agrees to provide or
cause to be provided under Buyer's Health Plans to Transferred
Employees who retire after the Closing Date and their dependents, the
retiree health care benefits and coverage that are set forth on
Schedule 7(c)(vii). Seller agrees to retain responsibility under the
Seller's Health Plans for retiree medical and dental costs incurred
with respect to (x) Employees and their dependents who retire or
terminate on or prior to the Closing Date and (y) Transferred
Employees and their dependents who on the Closing Date are eligible to
retire under the Retirement Income Plan, it being understood that
health care benefits for Transferred Employees described in this
clause (y) as active employees of Buyer shall be provided under
Buyer's Health Plans pursuant to subparagraphs (A) and (B) above.
(viii) Buyer agrees to provide coverage effective as of the
Closing Date to Transferred Employees under Buyer's or its designee's
short-term and long-term disability plans, the terms of which are set
forth on
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Schedule 7(c)(viii), and be responsible for all such costs incurred
with respect to Transferred Employees after the Closing Date. Any and
all waiting periods, pre-existing conditions and all other conditions
applicable to Transferred Employees shall be waived under Buyer's
short-term and long-term disability plans with respect to Transferred
Employees. Seller agrees to retain responsibility for long-term
disability benefits to be paid to individuals eligible to receive or
receiving such benefits on or prior to the Closing Date.
(ix) Buyer agrees to provide to each Transferred Employee
life insurance coverage, effective as of the Closing Date, equal to
one and one-half times such employee's annual eligible compensation
(as determined in accordance with Buyer's current life insurance plan,
the terms of which are set forth on Schedule 7(c)(ix)). In addition,
Buyer agrees to make available to each Transferred Employee effective
as of the Closing Date, optional life insurance coverage, the terms of
which are set forth on Schedule 7(c)(ix). Any and all waiting periods
and proof of insurability clauses shall be waived with respect to
Transferred Employees and all other conditions applicable to
Transferred Employees with respect to amounts not in excess of the
guaranteed issue amounts under Buyer's life insurance plans or any
other life insurance plans made available to Transferred Employees.
Such guaranteed issue amounts are set forth on Schedule 7(c)(ix).
(x) Buyer agrees to make any and all payments to Transferred
Employees pursuant to the performance and incentive plans and related
administrative guidelines and procedures (the "Incentive Plans")
listed or described on Schedule 7(c)(x), which relate to the fiscal
year ending December 31, 1993 ("Incentive Payments"), and which shall
not have been paid to the Transferred Employees prior to the Closing
Date. Seller shall provide to Buyer a schedule listing the Incentive
Payment, if any, to be paid to each Transferred Employee in respect of
the fiscal year ending December 31, 1993 and the portion, if any, of
such Incentive Payment paid by Seller prior to the Closing Date. If
the Closing Date occurs in 1993, Seller shall reimburse Buyer in
respect of such Incentive Payments in an amount determined by (i)
multiplying the aggregate amount of such Incentive
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Payments by a fraction, the numerator of which is the number of days
beginning on January 1, 1993 and ending on the Closing Date and the
denominator of which is 365, and (ii) reducing such amount by an
amount equal to any Incentive Payment previously paid by Seller in
respect of 1993. If the Closing Date occurs in 1994 but prior to
Seller paying the full amount of Incentive Payments in respect of
fiscal year ending December 31, 1993, Seller shall reimburse Buyer in
respect of such Incentive Payments in an amount determined by reducing
the aggregate amount of such Incentive Payments by an amount equal to
any Incentive Payment previously paid by Seller in 1993. Buyer agrees
to make such payments pursuant to the terms and conditions of the
Incentive Plans and in a manner consistent with Seller's past
practices and procedures;provided, however, that, notwithstanding any
provision of the Incentive Plans to the contrary, all Transferred
Employees shall be entitled to receive payments pursuant to this
subparagraph 7(c)(x), regardless of whether any such Transferred
Employee's employment shall be terminated for any reason. Seller
shall reimburse Buyer for all accrued payroll, accrued bonus, accrued
commissions, accrued short-term disability, including employee
withholding, FICA, FUTA and other related payments, paid or made by
Buyer in respect of services performed by Transferred Employees prior
to the Closing Date. The amount of accrued Incentive Payments
included in the payment for accrued bonus shall be determined as set
forth in this Section 7(c)(x). Within 60 days after the Closing Date,
Seller shall pay, in cash, all banked vacation pay with respect to
Transferred Employees.
8. Mutual Covenants. Each of Seller and Buyer, as the case
may be, covenants and agrees as follows:
(a) Consents. (i) Buyer and Seller agree (A) to cooperate
with each other in determining whether filings are required to be made or
consents required to be obtained in any jurisdiction in connection with the
consummation of the transactions contemplated by this Agreement and in making
or causing to be made any such filings promptly and in seeking to obtain timely
any such consents, (B) to use all reasonable efforts to obtain promptly the
satisfaction (but not waiver) of the conditions to Closing set forth in Section
3 (each party hereto shall furnish to the other and to the other's counsel all
such information as may be
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44
reasonably required in order to effectuate the foregoing actions) and (C) to
advise the other party promptly if such party determines that any condition
precedent to its obligations hereunder will not be satisfied in a timely
manner.
(ii) Nothing in this Agreement shall be construed as an
attempt to assign any Contract, permit, franchise, or claim included in the
Assets which is by its terms or by law nonassignable without the consent of the
other party or parties thereto, unless such consent shall have been obtained,
or as to which all the remedies for the enforcement thereof enjoyed by Seller
would, as a matter of law, pass to Buyer as an incident of the assignments
provided for by this Agreement. In order, however, to provide Buyer the full
realization and value of every Contract, permit, franchise and claim of the
character described in the immediately preceding sentence (subject to the terms
of the International Transition Agreement), Seller agrees that for a period of
one year after the Closing, it will, at the request and under the direction of
Buyer, take all reasonable actions as shall in the reasonable opinion of Buyer
or its counsel be necessary or proper (i) to assure that the rights of Seller
under such contracts, leases, agreements, permits, franchises, and claims shall
be preserved for the benefit of Buyer and (ii) to facilitate receipt of the
consideration to be received by Seller in and under every such contract, lease,
agreement, permit, franchise, or claim, which consideration shall be held for
the benefit of, and shall be delivered to, Buyer; provided that Buyer shall
reimburse the Seller Entities for any and all costs, expenses, losses and
liabilities incurred by the Seller Entities in connection with taking any such
actions.
(iii) Buyer acknowledges that certain consents to the
transactions contemplated by this Agreement may be required from parties to the
Contracts and that such consents have not been obtained. Buyer agrees that
Seller shall not have any liability whatsoever arising out of or relating to
the failure to obtain any consents that may have been or may be required in
connection with the transactions contemplated by this Agreement or because of
the default under or acceleration or termination of any Contract as a result
thereof. Buyer further agrees that no representation, warranty or covenant of
Seller contained herein shall be breached or deemed breached, and no condition
to Buyer's obligations to close the transactions contemplated by this Agreement
shall be deemed not
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45
satisfied, as a result of (A) the failure to obtain any such consent or as a
result of any such default, acceleration or termination or (B) any lawsuit,
action, claim, proceeding or investigation commenced or threatened by or on
behalf of any persons arising out of or relating to the failure to obtain any
consent or any such default, acceleration or termination. Buyer and Seller
shall jointly cooperate in attempting to obtain any consents required in
connection with the transactions contemplated by this Agreement; provided,
however, that none of the Seller Entities shall be required to expend money,
commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party. The provisions of this Section 8(a)(iii) shall
not limit the closing condition set forth in Section 3(b)(viii).
(iv) Buyer acknowledges that the Shared Contracts shall not
constitute Assets and shall not be assigned by the Seller Entities to Buyer
and, except as set forth below or in the International Transition Agreement,
Buyer assumes no responsibility therefor. At Buyer's request, with respect to
any Shared Contract, the Seller Entities and Buyer shall cooperate with each
other in any reasonable manner and use reasonable efforts to obtain the
agreement of the other party or parties to any Shared Contract to enter into a
separate agreement with Buyer with respect to the matters covered by such
Shared Contract as they relate to the Business; provided, however, that such
cooperation shall not include any requirement of the Seller Entities or Buyer
to commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party. Buyer agrees that the Seller Entities shall not
have any liability whatsoever to Buyer arising out of or relating to the
failure to obtain any such separate agreement. Buyer further agrees that no
representation, warranty or covenant of Seller contained herein shall be
breached or deemed breached, and no condition shall be deemed not satisfied, as
a result of the failure to obtain any such separate agreement or as a result of
any facts relating to the Shared Contracts.
(v) Buyer shall cooperate with the Seller Entities in any
commercially reasonable manner requested by Seller to minimize any liability
the Seller Entities may have in connection with Shared Contracts and
Nontransferred Contracts as a result of the transactions contemplated under
this Agreement, including enabling the Seller Entities to perform their
obligations under such Shared Contracts and
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46
Nontransferred Contracts for a period of up to one year following the Closing
Date and including repurchasing products of the Business sold to distributors
that are parties to Nontransferred Contracts or Shared Contracts; provided,
however, that such cooperation shall not include any requirement of the Seller
Entities or Buyer to commence any litigation or offer or grant any
accommodation (financial or otherwise) to any third party.
(vi) Except as otherwise provided in the International
Transition Agreement, with respect to any Shared Contract with respect to which
Seller and Buyer are unable to obtain a separate agreement between Buyer and
the other party or parties, Buyer shall have the right to require that Seller
cause the Seller Entities to use reasonable efforts to perform any such Shared
Contract, to the extent it relates to the Business, as agent for and for the
account of Buyer, for a period of up to one year following the Closing Date;
provided that Buyer shall reimburse Seller for any and all reasonable
out-of-pocket costs, expenses, losses and liabilities incurred by the Seller
Entities in connection with taking such action. The Seller Entities shall take
all actions reasonably requested by Buyer, and shall assign to Buyer upon
request any assignable rights, to enforce any of the Confidentiality
Agreements, to the extent relating to the Business or the Assets; provided that
Buyer shall reimburse the Seller Entities for any and all reasonable
out-of-pocket costs, expenses, losses and liabilities incurred by the Seller
Entities in connection with such actions.
(b) Cooperation. Buyer and Seller shall cooperate with each
other and shall cause their officers, employees, agents and representatives to
cooperate with each other for a period of 60 days after the Closing to ensure
the orderly transition of the Business from Seller to Buyer and to minimize the
disruption to the respective businesses of the parties hereto resulting from
the transactions contemplated hereby. No party shall be required by this
Section 8(b) to take any action that would unreasonably interfere with the
conduct of its business.
(c) Best Efforts. Subject to the terms of this Agreement
(including the limitations set forth in Section 8(a)), each party will use its
best efforts to cause the Closing to occur. Without limiting the foregoing or
the provisions of Section 8(a), Buyer and Seller shall use their
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47
respective best efforts to cause the Closing to occur on or prior to December
15, 1993.
(d) Antitrust Notification. Each of Seller and Buyer will as
promptly as practicable, but in no event later than 10 business days following
the execution and delivery of this Agreement, file with the United States
Federal Trade Commission (the "FTC") and the United States Department of
Justice (the "DOJ") the notification and report form, if any, required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act. Any such notification and report
form and supplemental information will be in substantial compliance with the
requirements of the HSR Act. Each of Buyer and Seller shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. Seller and Buyer shall keep each other apprised
of the status of any communications with, and inquiries or requests for
additional information from, the FTC and the DOJ and shall comply promptly with
any such inquiry or request. Each of Seller and Buyer will use its best
efforts to obtain any clearance required under the HSR Act for the purchase and
sale of the Assets, including using such best efforts to defend any litigation
to which the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") is a party; provided
that either party may terminate its defense of any such litigation if, in the
opinion of such party or its counsel, a favorable resolution of such litigation
is not likely. Notwithstanding the foregoing, nothing contained in this
Agreement will require or obligate Buyer or its affiliates (i) to initiate any
litigation to which any Authority (including the Antitrust Division and the
FTC) is a party; (ii) to agree or otherwise become subject to any material
limitations on (A) the right of Buyer or its affiliates effectively to control
or operate the Business, (B) the right of Buyer or its affiliates to acquire or
hold the Business, or (C) the right of Buyer to exercise full rights of
ownership of the Business or the Assets; or (iii) to agree or otherwise be
required to sell or otherwise dispose of, hold separate (through the
establishment of a trust or otherwise), or divest itself of all or any portion
of the business, assets or operations of Pilling Co., a wholly owned subsidiary
of Buyer, or the Business, provided that, in the case of clause (iii) above,
Buyer agrees to use its
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best efforts to negotiate with the Antitrust Division or the FTC in order to
avoid such an agreement or requirement.
(e) Publicity. The parties hereto agree that no public
release or announcement concerning the transactions contemplated hereby shall
be issued by any party hereto without the prior written consent of the other
party hereto, except as such release or announcement may be required by law.
(f) Sales or Transfer Taxes. Buyer shall pay all sales,
transfer, recording, conveyancing, value-added or similar Taxes or expenses
("Transfer Taxes") that may be imposed as a result of the sale and transfer of
the Assets, including any such Taxes or expenses payable under North Carolina
or New Jersey law in connection with the sale and transfer of any Real
Property. Buyer shall deliver to Seller exemption certificates satisfactory in
form and substance to Seller with respect to Transfer Taxes if such delivery
would reduce the amount of Transfer Taxes that would otherwise be so imposed.
To the extent legally permissible, Buyer and Seller shall cooperate with each
other to qualify the sale and transfer of the Assets as a bulk sale or
occasional sale exempt in whole or in part from Transfer Taxes otherwise
payable under North Carolina or New Jersey law.
(g) Removal of Excluded Assets. From the date hereof through
and including the 90th day following the Closing Date, Seller, at its own
expense, may cause any Excluded Assets located at Seller's facilities in
Research Triangle Park, North Carolina to be removed from such facilities.
(h) Collection of Receivables. Twice during each month (on
the first and the 15th days thereof) Buyer shall deliver to Seller any cash or
other property received by it or its affiliates in payment of any accounts
receivable generated by Seller or any of its affiliates (such accounts
receivable, collectively, "Seller's Accounts Receivable"), and Seller shall
deliver to Buyer any cash or other property received by it or its affiliates in
payment of any accounts receivable generated by Buyer or its affiliates
("Buyer's Accounts Receivable"). If, with respect to any customer, invoices
issued by Buyer or any of its affiliates and invoices issued by Seller or any
other Seller Entities are outstanding, the "first-in, first-out" principle
shall be applied in determining the invoice (and, accordingly, the
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Seller's Account Receivable or the Buyer's Account Receivable) to which a
payment relates, unless the payment by its terms specifies or clearly indicates
the invoice to which it relates. Buyer agrees that it shall maintain the
Business's historical policies with respect to return of merchandise. Buyer
and Seller shall cooperate with each other in the collection of their
respective accounts receivable, and each agrees not to take any action that
would result in the hindrance or delay in the collection or payment of any
accounts receivable. Each party further agrees that until the later of (i) 180
days after the Closing and (ii) such time as the outstanding Seller's Accounts
Receivable, as the case may be, have been paid in full, such party shall allow
a representative of the other party to inspect periodically, but not more than
once a week, such party's books and records relating to the Buyer's Accounts
Receivable and Seller's Accounts Receivable for the purpose of verifying its
compliance with its obligations set forth above.
(i) International Transitional Distribution Services
Agreement. Buyer and Seller shall negotiate in good faith a definitive
International Transitional Distribution Services Agreement substantially on the
terms set forth in Exhibit K (the "International Transition Agreement"). Buyer
and Seller agree to execute the International Transition Agreement concurrently
with the Closing.
(j) Use of "Weck" name by Seller. (i) Buyer hereby grants
to the Seller Entities a royalty-free, non-exclusive worldwide license to
continue to use the trademarks and trade names "WECK" and "EDWARD WECK
INCORPORATED" (collectively, the "Names") in connection with the sale by the
Seller Entities of their existing inventories of endoscopy products bearing the
Names (the "Licensed Goods"). Such license shall commence upon the Closing and
is subject to the following conditions and limitations:
(A) The Seller Entities acknowledge that after the
Closing ownership of all right, title and interest in the Names is and
shall remain solely vested in Buyer, and the Seller Entities agree
that all goodwill attributed to their use of the Names after the
Closing shall inure to the exclusive benefit of Buyer for all
purposes.
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(B) The Seller Entities shall use the Names only in
connection with Licensed Goods and not in connection with any other
service, product or business, except as permitted under Section 5(g).
The Seller Entities shall conduct their businesses in a manner which
shall not bring discredit upon the Names or cause Buyer's ownership of
the Names to be impaired, reduced or otherwise adversely affected
(Buyer agrees that this provision shall not affect the Seller
Entities' right to set the prices at which the Licensed Goods are to
be sold). The Seller Entities shall use reasonable efforts to sell
Licensed Goods before selling comparable products which are not
Licensed Goods.
(C) The Seller Entities shall promptly notify Buyer
of (A) any unauthorized use or infringement by any third party of any
of the Names and (B) any assertion by any third party that the Seller
Entities' use of any of the Names constitutes trademark, service mark,
trade dress or trade name infringement, unfair competition or any
other tortious act. The Seller Entities may not prosecute or defend
any claim or action alleging infringement or unfair competition or any
other claim or action involving any of the Names; however, they shall
cooperate in any such prosecution, defense, claim or action undertaken
by Buyer, provided that Buyer shall reimburse the Seller Entities for
all reasonable out-of-pocket costs and expenses incurred by them in
connection with such cooperation.
(D) The license granted by this Section 8(j) shall
terminate two years after the Closing. Upon termination and subject
to the rights granted to Xomed-Treace, Inc. pursuant to the Trademark
License referred to in Section 8(k), (1) the license of the Names to
the Seller Entities and all of the Seller Entities' rights under this
Section 8(j) shall cease; and (2) the Seller Entities shall
immediately cease all use of the Names and all materials bearing the
Names.
(E) The Seller Entities may not assign or transfer
to any third party all or any part of its rights or duties under this
Section 8(j).
(k) Trademark License. At the Closing, Buyer shall execute
and deliver a license agreement between Buyer and Xomed-Treace, Inc. in the
form of Exhibit K.
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(l) Cooperation With Respect to Returns. The provisions of
this Section 8(l) apply to products sold by the Seller Entities prior to the
Closing Date in connection with the Business (a "Product") and returned by
customers within six months after the Closing Date.
(i) In the event a Product is returned, other than pursuant
to a Product warranty or guarantee (a "Returned Item"), to Buyer,
Buyer shall in accordance with Seller's return policies applicable to
such Returned Item:
(A) if any Seller Entity continues to maintain an
account receivable on the Returned Item, issue a credit
against such account receivable; or
(B) if the Seller Entities do not continue to maintain
an account receivable on the Returned Item, provide a refund
or a credit against such customer's account receivable
with Buyer.
Buyer shall reimburse Seller for the Seller's standard cost of any
Returned Item to which clause (A) applies. Seller shall reimburse
Buyer for the amount by which any refund or credit provided by Buyer
with respect to a Returned Item pursuant to clause (B) exceeds
Seller's standard cost with respect to such Returned Item. In either
case, Buyer shall be entitled to keep the Returned Item. Without
limiting the generality of Section 1(d), Buyer shall honor Seller's
return, warranty and guarantee policies during the term of this
Section 8(l).
(ii) Seller and Buyer shall cooperate with each other, and
provide access to all books and records and other documentation,
relating to the transactions contemplated by this Section 8(l).
(iii) Seller shall not have any reimbursement obligation for
Products which are returned pursuant to a Product warranty or
guarantee. Buyer shall provide a replacement, credit, repair or
refund with respect to such Products in accordance with the applicable
warranty or guarantee policies of Seller. If a Product returned
pursuant to a Product warranty or guarantee results in a credit
against an account receivable maintained by any Seller Entity, Buyer
shall reimburse
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Seller for the Seller's standard cost of such returned Product.
(iv) In the event Products are returned by a customer
directly to any Seller Entity, such Seller Entity shall refer the
customer to Buyer.
(v) The provisions of this Section 8(l) shall apply to
repurchases of inventory from distributors pursuant to Section 8(a)(v)
for a period of one year after the Closing Date.
(m) Company Cars. At the Closing, Buyer and Seller shall
execute and deliver a lease assumption agreement in the form of Exhibit M,
pursuant to which Seller shall assign to Buyer and Buyer shall assume the
leases relating to the leased vehicles listed on Schedule 1(b)(ii), it being
understood that the existing terms (including pricing) of such leases shall not
be modified in connection with such assignment.
9. Further Assurances. From time to time, as and when
requested by either party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further or other actions (subject to
the limitations set forth in Section 8(a)), as such other party may reasonably
deem necessary or desirable to consummate the transactions contemplated by this
Agreement, including without limitation Seller's providing of notice and taking
other applicable action, at Buyer's expense, with the U.S. Food and Drug
Administration and foreign authorities to facilitate Buyer's receipt of the
necessary approvals and permits to operate the Business.
10. Indemnification. (a) Environmental Indemnity. (i)
Seller has provided Buyer with a copy of the final Phase I assessment of the
Owned Property, dated August 1993, and the Phase II assessment of the Owned
Property, dated October 1993, both of which were prepared by TRC Environmental
Corporation ("TRC"), together with results of all related testing and
analytical work performed by, or on behalf of, TRC through the date hereof.
Seller will provide Buyer with any additional related testing or analytical
results performed by, or on behalf of, TRC through the Closing Date. (These
assessments and subsequent work, as well as all preparatory and preliminary
work
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performed by TRC and its subcontractors, shall be referred to collectively as
the "TRC Reports".)
(ii) Seller agrees that it shall bear the expense of, and
responsibility for, any monitoring or remediation of conditions identified in
the TRC Reports to the extent that such monitoring or remediation is required
by any Authority by virtue of any non-compliance with any Environmental Law in
effect at the Closing Date. Any such remediation shall be completed by Seller,
at Seller's expense, subject to the provisions of subparagraph (iv) below. All
such remediation shall be performed to the levels and requirements in effect at
the time of such monitoring or remediation as established by any Authority with
jurisdiction over the Owned Property. Subject to the limitations set forth in
subparagraph (iii) hereof, all such remediation shall be conducted under the
exclusive direction and control of Seller, and/or its agents and consultants,
and Seller, except as provided in subparagraph (iii) hereof, shall have the
sole right to negotiate with any Authority concerning the timing, scope and
levels of such remediation. (All monitoring and remediation activities
required to be performed by Seller pursuant to this subparagraph (ii) shall
collectively be referred to as the "RTP Remediation".)
(iii) Buyer agrees to use its best efforts to cooperate with
Seller with respect to any RTP Remediation. During the course of any RTP
Remediation, Buyer shall, and hereby does, grant to Seller, its agents,
employees, contractors and consultants, all access reasonably necessary to
perform such RTP Remediation at reasonable times and in compliance with any
health and safety requirements of Buyer. Such access shall include access to
employees, including those with relevant environmental, health and safety
knowledge or experience, as well as use of utilities at Seller's expense, and
shall also include reasonable parking and storage space. Buyer also hereby
agrees to allow Seller to install any remediation devices at, on or under the
Owned Property, including, but not limited to, monitoring wells or pump and
treat systems, that are required by any Authority or that Seller deems
reasonably necessary to perform the RTP Remediation, provided that such
remediation devices shall be located to minimize impact on Buyer's operations,
whenever technically and economically feasible. During the course of the RTP
Remediation, Seller shall use its best efforts to avoid or minimize
interference with the ongoing business of Buyer. Buyer may, at its own expense
(such expense to include costs of consultants' and attorneys' fees), monitor
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the RTP Remediation, obtain split samples of any samples taken by Seller and/or
its consultants, take samples from wells installed at any time by Seller on the
Owned Property, provided Seller has consented (which consent shall not
unreasonably be withheld), review all filings with any Authority prior to
submission to the Authority and recommend changes to minimize interference with
Buyer's operations. Further, Buyer shall be entitled, at its own expense, to
participate in any meetings with any Authority concerning the RTP Remediation.
Seller shall give Buyer reasonable access to information reasonably necessary
to allow Buyer to undertake such activities, including, but not limited to, any
TRC materials or data created after the Closing Date. If such access would
require Seller to reveal information that would otherwise be protected by the
attorney-client privilege, or any attorney work product doctrine or other
privilege pertaining to confidentiality, then Seller and Buyer shall enter into
a reasonable joint defense agreement, or similar agreement, governing the terms
and conditions of such access and preserving, to the greatest extent possible,
the confidentiality of the information provided.
(iv) Except for Buyer's monitoring expenses and Buyer's fees
set forth in subparagraph (iii) above, Seller shall indemnify and hold Buyer
harmless from all liabilities, costs and expenses, including reasonable
attorneys' fees and consultants' fees, (x) arising out of third party claims to
the extent based on conditions that require the RTP Remediation or the RTP
Remediation itself (collectively, "RTP Liability") or arising out of third
party claims to the extent based on conditions that require monitoring or
remediation by Seller pursuant to subparagraph (v) below or such monitoring or
remediation itself, (y) arising from the off-site transportation, treatment,
storage or disposal of Hazardous Substances at any time prior to the Closing
Date by Seller, or (z) arising from the release or threat of release, as
defined by CERCLA, of Hazardous Substances or any other environmental condition
including, without limitation, the presence of Hazardous Substances at, on, in
or under any real property now or previously owned, leased or operated by
Seller (excluding the Owned Property and the Leased Property) or the violation
of Environmental Law by Seller or the Business at any such property. This
indemnification obligation shall not include consequential damages, lost
profits or costs or expenses relating to any interruption of Buyer's business.
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(v) Seller agrees that it shall bear the expense of, and
responsibility for, any monitoring or remediation required by any Authority by
virtue of any non-compliance with any Environmental Law in effect at the
Closing Date arising out of any condition found by Buyer at the Owned Property
within six (6) months of the Closing Date (hereinafter referred to as the
"Buyer's Evaluation Period") as to which Buyer has notified Seller prior to the
expiration of the Buyer's Evaluation Period and which commenced or was in
existence at the Owned Property prior to the Closing Date. Any such condition
shall be presumed to have commenced or been in existence at the Owned Property
prior to the Closing Date unless Seller proves the contrary. Seller also
agrees that it shall bear the expense of and responsibility for any monitoring
or remediation required by any Authority, by virtue of any non-compliance with
any Environmental Law in effect at the Closing Date, arising out of any
condition found by Buyer at the Owned Property after the expiration of the
Buyer's Evaluation Period and before the second anniversary of the Closing Date
(hereinafter the "Additional Discovery Period") as to which it has notified
Seller and the appropriate Authority prior to the expiration of the Additional
Discovery Period, but only to the extent that Buyer can demonstrate that such
condition is not attributable to Buyer's operations. Seller's obligations
under this paragraph (v) with respect to any such condition found within the
Buyer's Evaluation Period or the Additional Discovery Period, as applicable,
shall terminate upon receipt of notice from any Authority with jurisdiction
over the Owned Property, either that it will not require, or that it will not
undertake, any further action with respect to that condition. Any such
monitoring or remediation of conditions discovered during the Buyer's
Evaluation Period or the Additional Discovery Period shall be subject to the
terms set forth in subparagraphs (ii) and (iii) of this Section 10(a).
(vi) Seller agrees that it shall bear the expense of, and
responsibility for, compliance with ISRA in connection with the consummation of
the sale of Assets contemplated by this Agreement.
(vii) Notwithstanding any other provision of this Agreement
to the contrary, Buyer shall assume all environmental liabilities, costs and
expenses, including reasonable attorneys' fees and consultants' fees, relating
to the Business or the Owned Property that do not constitute (A) RTP Liability,
(B) Seller's obligations under
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subparagraphs (iv) and (v) above with respect to conditions discovered during
the Buyer's Evaluation Period or the Additional Discovery Period, as
applicable, (C) Seller's obligations under subparagraph (vi) with respect to
compliance with ISRA, and (D) Seller's obligations with respect to formerly
owned or operated properties and off-site disposal activities pursuant to
clauses (y) and (z) of subparagraph (iv) above (collectively, the "Other
Environmental Liabilities"). Buyer shall indemnify and hold Seller harmless
from all liabilities, costs and expenses, including reasonable attorneys' fees
and consultants' fees, arising out of or relating to the Other Environmental
Liabilities.
(viii) Notwithstanding any other provisions of this Agreement
to the contrary, the rights, duties and responsibilities set forth in this
Section 10(a) shall not be assignable at any time by either Seller or Buyer and
any such assignment shall be void.
(b) Other Indemnification by Seller. Seller hereby agrees
to indemnify Buyer and its affiliates and each of their employees, directors and
stockholders (collectively referred to herein as "Buyer Indemnified Parties")
against and hold them harmless from any loss, liability, claim, damage or
expense (including without limitation reasonable legal fees and expenses)
(hereinafter collectively referred to as "Damages") suffered or incurred by
Buyer Indemnified Parties (other than any relating to the environmental matters
covered by Section 10(a)) for or on account of or arising from or in connection
with (i) any breach of any representation or warranty of Seller contained in
this Agreement, (ii) any breach of any covenant of Seller contained in this
Agreement or any agreement entered into by Seller pursuant to this Agreement
and (iii) the Retained Liabilities; provided, however, that Seller shall not
have any liability under clause (i) above unless the aggregate of all Damages
relating thereto for which Seller would, but for this proviso, be liable
exceeds an amount on a cumulative basis equal to $2,000,000 (the "Basket
Amount"), and then only to the extent of any such excess (provided that this
proviso shall not apply to any breach of the representations and warranties set
forth in Section 4(f), 4(g)(ii) and (iv) and 4(k)(ii)); provided further,
however, that for purposes of determining whether a representation and warranty
has been breached for purposes of this Section 10(b) and the amount of any
related indemnifiable Damages, any materiality (or correlative meaning)
qualifications included in the
<PAGE> 57
57
following representations and warranties shall be disregarded as though such
representations and warranties had been made without such materiality
qualifications: Section 4(b)(i) with respect to Permits, Section 4(c)(i) with
respect to compliance with non-environmental laws, the second sentence of
Section 4(g)(iii) with respect to lease breaches, Section 4(h)(ii) with respect
to Contract breaches and Section 4(i) with respect to litigation.
Buyer acknowledges and agrees that, from and after the
Closing, its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Section 10; provided, however,
that nothing contained in this Agreement shall in any manner limit Buyer's
right to seek injunctive and other equitable relief to enforce the obligations
of Seller under this Agreement. In furtherance of the foregoing, subject to
the proviso in the preceding sentence, Buyer hereby waives, from and after the
Closing, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it may have against Seller relating to the
subject matter of this Agreement arising under or based upon any Federal, state
or local statute, law, ordinance, rule or regulation.
Buyer further acknowledges and agrees that, (i) other than the
representations and warranties of Seller specifically contained in this
Agreement, there are no representations or warranties of the Seller Entities
either expressed or implied with respect to the Assets, the Assumed Liabilities
or the Business and (ii) it shall have a right to indemnification solely as
provided in this Section 10 and that it shall have no claim or right to
indemnification with respect to any information (whether written or oral),
documents or materials furnished by the Seller Entities or any of their
respective officers, directors, employees, agents or advisors to Buyer,
including, without limitation, the Confidential Fact Sheet, the Confidential
Memorandum prepared by Goldman, Sachs & Co. dated July 1993, and any
information, documents or material made available to Buyer in "data rooms",
management presentations or any other form in connection with the transactions
contemplated by this Agreement other than as to such documents or materials
which are specifically referenced in the representations and warranties in this
Agreement.
<PAGE> 58
58
(c) Indemnification by Buyer. Buyer hereby agrees to
indemnify Seller and its affiliates and each of their employees, directors and
stockholders (collectively referred to herein as "Seller's Indemnified
Parties") against and hold them harmless from any Damages suffered or incurred
by Seller's Indemnified Parties for or on account of or arising from or in
connection with (i) any breach of any representation or warranty of Buyer
contained in this Agreement, (ii) any breach of any covenant of Buyer contained
in this Agreement or any agreement entered into by Buyer pursuant to this
Agreement, (iii) the Assumed Liabilities and (iv) any guarantee or obligation
to assure performance given or made by Seller or any of its affiliates with
respect to any of the Assets or the Assumed Liabilities.
Seller acknowledges and agrees that, from and after the
Closing, its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Section 10; provided, however,
that nothing contained in this Agreement shall in any manner limit Seller's
right to seek injunctive and other equitable relief to enforce the obligations
of Buyer under this Agreement. In furtherance of the foregoing, subject to the
proviso in the preceding sentence, Seller hereby waives, from and after the
Closing, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it may have against Buyer relating to the
subject matter of this Agreement arising under or based upon any Federal, state
or local statute, law, ordinance, rule or regulation.
(d) Losses Net of Insurance, etc. The amount of any Damages
for which indemnification is provided under this Section 10 shall be net of any
amounts actually recovered by the indemnified party under insurance policies,
and each indemnified party shall use commercially reasonable efforts to enforce
its rights under insurance policies in order to recover such amounts. Any
indemnity payment under this Agreement (including any payment to or on behalf
of the Seller Entities under Section 8(f)) shall be treated as an adjustment to
the Purchase Price for Tax purposes, unless a final determination (which shall
include the execution of a Form 870-AD or successor form) with respect to the
indemnified party or any of its affiliates causes any such payment not to be
treated as an adjustment to the Purchase Price for United States Federal income
Tax purposes.
<PAGE> 59
59
(e) Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto, (x) pursuant to clauses (i) and
(ii) of Section 10(b) and clauses (i) and (ii) of Section 10(c) shall terminate
at the close of business on March 31, 1995 (provided that such indemnification
obligations with respect to covenants that require performance after the
Closing Date shall not terminate) and (y) pursuant to the other clauses of
Section 10(a) and (b) shall not terminate; provided, however, that as to clause
(x) above such obligations to indemnify and hold harmless shall not terminate
with respect to any item as to which the person to be indemnified shall have
previously made a claim by delivering a written notice (stating in reasonable
detail the basis of such claim) to the party to be providing the
indemnification.
(f) Procedures Relating to Indemnification. In order for a
party (the "indemnified party") to be entitled to any indemnification provided
under this Agreement in respect of, arising out of or involving a claim or
demand made by any person, firm, governmental authority or corporation against
the indemnified party (a "Third Party Claim"), such indemnified party must
notify the indemnifying party in writing of the Third Party Claim within 20
days after receipt by such indemnified party of written notice of the Third
Party Claim; provided, however, that failure to give such notification shall
not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure. Thereafter, the indemnified party shall deliver to the indemnifying
party, promptly after the indemnified party's receipt thereof, copies of all
notices and documents (including court papers) received by the indemnified
party relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified party,
the indemnifying party will be entitled to participate in the defense thereof
and, if it so chooses, at its sole cost and upon written notice to the
indemnified party to assume the defense thereof with counsel selected by the
indemnifying party and reasonably acceptable to the indemnified party if the
indemnifying party acknowledges in writing the obligation of the indemnifying
party to indemnify in accordance with the terms of this Agreement (including
Section 10) the indemnified party with respect to such Third Party Claim and
the Third Party Claim involved seeks (and continues to seek) primarily monetary
damages of which 50% or more would be paid by the indemnifying party
<PAGE> 60
60
(after giving effect to the limitation of Section 10(b)) if such damages were
paid in full. If the indemnifying party assumes such defense, the indemnified
party shall be entitled to participate in the defense at its own expense. If
the indemnifying party shall fail to defend a Third Party Claim with respect to
which it is obligated to indemnify the indemnified party under this Section 10,
or if after commencing or undertaking any such defense to such Third Party
Claim, fails to prosecute or withdraws from such defense, the indemnified party
shall have the right to undertake such defense at the expense of the
indemnifying party. Should the indemnifying party so elect to assume the
defense of a Third Party Claim, the indemnifying party will not be liable to
the indemnified party for any legal expense subsequently incurred by the
indemnified party in connection with the defense thereof. The indemnifying
party, if it shall have assumed the defense of any Third Party Claim as
provided in this Agreement, shall not consent to a settlement, compromise or
discharge of, or the entry of any judgment arising from, any Third Party Claim
without the written consent of the indemnified party (which consent shall not
be unreasonably withheld or delayed) unless the settlement, compromise,
discharge or judgment obligates the indemnifying party to pay the full amount
of the liability in connection with such Third Party Claim which releases the
indemnified party completely in connection with such Third Party Claim and
would not adversely affect the Business or its properties and prospects. The
indemnifying party, if it shall have assumed the defense of any Third Party
Claim as provided in this Agreement, shall not without the prior consent of the
indemnified party (which consent shall not be unreasonably withheld or
delayed), enter into any compromise or settlement of such Third Party Claim
which commits the indemnified party to take, or to forbear to take, any action.
The indemnified party shall have the sole and exclusive right to settle any
Third Party Claim on such terms and conditions as it deems reasonably
appropriate, to the extent such Third Party Claim involves equitable or other
non-monetary relief, and shall have the right to settle any such Third Party
Claim involving monetary damages, the defense of which shall not have been
assumed by the indemnifying party after notice thereof pursuant hereto, with
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed.
With respect to all Third Party Claims, the indemnified party
will cooperate in all reasonable respects with the indemnifying party in
connection with such claims
<PAGE> 61
61
and the defense and/or compromise thereof. Such cooperation shall include the
retention and (upon the indemnifying party's request) the provision to the
indemnifying party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. With respect to Third Party Claims that do not involve
equitable or non-monetary relief, whether or not the indemnifying party shall
have assumed the defense of a Third Party Claim, the indemnified party shall
not, without first waiving the indemnity as to such claim, admit any liability
with respect to, or settle, compromise or discharge, such Third Party Claim
without the indemnifying party's prior written consent, which consent shall not
be unreasonably withheld or delayed.
(g) Mitigation. Buyer and Seller shall cooperate with each
other with respect to resolving any claim or liability with respect to which
one party is obligated to indemnify the other party hereunder, including by
making commercially reasonable efforts to mitigate or resolve any such claim or
liability.
11. Assignment. This Agreement and the rights and
obligations hereunder shall not be assignable or transferable by either party
hereto without the prior written consent of the other party hereto, which
consent may be withheld for any reason except that Buyer may assign its rights
hereunder to any of its affiliates or designate an affiliate to take title to
the Assets without such consent provided that Buyer guarantees the obligations
of such affiliate, which guarantee shall be in form and substance satisfactory
to Seller and its counsel. In any event, no assignment of this Agreement shall
relieve the assigning party of its obligations hereunder. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, successors in interest and permitted assigns. Any
assignment in noncompliance with this Section 11 shall be null and void.
12. No Third-Party Beneficiaries. Except as provided in
Section 10, this Agreement is for the sole benefit of the parties hereto and
nothing herein expressed or implied shall give or be construed to give any
person or entity, other than the parties hereto, any legal or equitable rights
hereunder.
<PAGE> 62
62
13. Termination. (a) Anything contained herein to the
contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned:
(i) by mutual written consent of Seller and Buyer;
(ii) by Seller if any of the conditions set forth in Section
3(a) and (c) shall have become incapable of fulfillment and shall not
have been waived by Seller;
(iii) by Buyer if any of the conditions set forth in Section
3(a) and (b) shall have become incapable of fulfillment and shall not
have been waived by Buyer; and
(iv) by either party hereto, if the Closing does not occur on
or prior to March 31, 1994;
provided that the party seeking termination pursuant to clause (ii), (iii) or
(iv) shall not be in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement.
(b) In the event of termination by Seller or Buyer pursuant
to this Section 13, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated, without further action by either party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) Buyer shall immediately return to Seller all documents and
other material received from Seller relating to the transactions
contemplated hereby, whether obtained before or after the execution
hereof; and
(ii) all confidential information received by Buyer with
respect to Seller, the Business or Seller's other businesses shall be
treated in accordance with the Buyer Confidentiality Agreement, which
agreement shall remain in full force and effect notwithstanding the
termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 13, this
Agreement shall become void and of no further force and effect, except for the
provisions of
<PAGE> 63
63
Section 7(a) relating to the obligation of Buyer to keep confidential certain
information and data obtained by it from Seller, Section 8(e) relating to
publicity, Section 16 relating to certain expenses, Section 23 relating to
finder's fees and broker's fees, Section 29 relating to attorney's fees and
Section 30 relating to jurisdiction. Nothing in this Section 13 shall be
deemed to release either party from any liability for any breach by such party
of the terms and provisions of this Agreement.
14. Survival of Representations. The representations and
warranties in this Agreement shall survive the Closing and shall terminate on
March 31, 1995.
15. Access to Records. After the Closing, upon reasonable
notice, Buyer and Seller shall furnish, or cause to be furnished, to each other
and their officers, attorneys, accountants and other authorized representatives
access, during normal business hours, to such information (including books and
records pertinent to the Business, the Assets and the Assumed Liabilities) and
assistance relating to the Business, the Assets and the Assumed Liabilities as
is reasonably necessary in connection with the preparation of tax and financial
reporting matters and tax audits or for any other matter reasonably requested;
provided, however, that such access does not unreasonably disrupt the normal
operations of Buyer or the Seller Entities and provided further that the party
requesting cooperation shall pay the reasonable out-of- pocket costs incurred
by the party furnishing cooperation. Without limiting the generality of the
foregoing, Buyer shall cooperate with Seller in connection with the lawsuits
and claims included in the Retained Liabilities, including, without limitation,
by giving Seller reasonable access to records and employees of Buyer and by
making reasonably available to Seller any such employees that are necessary in
Seller's judgment to serve as witnesses in connection with such lawsuits and
claims (it being understood that Seller shall not be required to pay for such
employees' time). Notwithstanding anything herein to the contrary, Seller
shall not be required to provide access to any Tax returns, reports, forms,
documents or memoranda.
16. Expenses. Whether or not the transactions contemplated
hereby are consummated, Seller and Buyer shall each bear their own direct and
indirect expenses incurred in connection with the negotiation and preparation
of this Agreement, the performance of their respective obligations
<PAGE> 64
64
hereunder and the consummation of the transactions contemplated hereby, except
as expressly set forth in this Agreement.
17. Amendments. No amendment to this Agreement shall be
effective unless it is in writing and signed by the party against whom
enforcement is sought.
18. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally or sent
by prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail (return receipt requested) or reputable overnight
courier service and shall be deemed given when so delivered by hand, telexed,
cabled or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Buyer,
Teleflex Incorporated
630 West Germantown Pike
Suite 450
Plymouth Meeting, PA 19462
Attention: Steven K. Chance, Esq.
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell, Esq.
(ii) if to Seller,
Edward Weck Incorporated
In care of Bristol-Myers Squibb Company
345 Park Avenue
New York, NY 10154
Attention: General Counsel
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65
with copies to:
Bristol-Myers Squibb Company
345 Park Avenue
New York, NY 10154
Attention: Robert E. Ewers, Jr., Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: W. Clayton Johnson, Esq.
19. Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning of
interpretations of this Agreement. All references herein to numbered sections
are to sections of this Agreement.
20. Counterparts. This Agreement and the Schedules hereto
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the parties and delivered to the other
parties. Counterparts may be delivered by facsimile.
21. Entire Agreement. This Agreement contains the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
22. Waiver; Remedies. No delay on the part of any party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies which the parties hereto may otherwise have at law or in equity.
23. Fees. Each party hereto hereby represents and warrants
that (a) the only brokers or finders that have acted for such party in
connection with this Agreement or
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66
the transactions contemplated hereby or that may be entitled to any brokerage
fee, finder's fee or commission in respect thereof are Goldman, Sachs & Co.
with respect to Seller and (b) Seller will pay all fees or commissions which
may be payable to such firm.
24. Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstances shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
25. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law.
26. Buyer's Investigation. Buyer acknowledges that it has
conducted, to its satisfaction, an independent investigation and verification
of the Business, the Assets and the Assumed Liabilities and has relied solely
on such investigation and verification and the representations and warranties
of Seller expressly set forth in this Agreement (including the Schedules and
Exhibits hereto). Buyer further acknowledges that, except as expressly set
forth in this Agreement (including the Schedules and Exhibits hereto), there
are no representations or warranties of any kind, express or implied, with
respect to the Business, the Assets or the Assumed Liabilities, and that the
Buyer is purchasing the Assets "as is" and "with all faults". Without limiting
the generality of the foregoing, except as expressly set forth in this
Agreement, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
27. Exhibits and Schedules. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein.
28. Bulk Transfer Laws. Notwithstanding the provisions of
Section 8(a)(i)(A), Buyer hereby waives compliance by Seller with the
provisions of any so-called Bulk Transfer Law of any jurisdiction in connection
with the sale of the Assets to Buyer. Seller shall indemnify and hold harmless
Buyer against any and all liabilities which may be asserted by third parties
against Buyer as a result
<PAGE> 67
67
of noncompliance with any such Bulk Transfer Law, other than liabilities which
Buyer shall have expressly assumed pursuant to this Agreement.
29. Attorney Fees. Should any litigation be commenced
concerning this Agreement or any transaction contemplated hereby or the rights
and duties of any party with respect to this Agreement, the party prevailing
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum for such party's attorney fees and expenses determined by the
court in such litigation or in a separate action brought for the purpose.
30. Consent to Jurisdiction. Each of Buyer and Seller
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District
Court for the Southern District of New York, for purposes of any suit, action
or other proceeding arising out of this Agreement or any transaction
contemplated hereby, including the guarantee referred to in Section 3(b)(iv)
(and agrees not to commence any action, suit or proceeding relating hereto
except in such courts). Each of Buyer and Seller further agrees that service
of any process, summons, notice or document by U.S. registered mail to such
party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each of Buyer and Seller irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (a) the Supreme Court of the State of New York, New York County, or
(b) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
31. Contingent Payments. (a) Effective at the Closing Date,
Buyer shall pay to Seller an amount equal to 5% of worldwide Net Sales by Buyer
and its affiliates (or, with respect to sales on or after January 1, 1994, and
prior to the Closing Date, if any, by the Seller Entities) of Contingent
Payment Products during the Contingent Payment Period.
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68
(b) For purposes of this Section 31, the following
definitions shall apply:
(i) "Net Sales" means gross sales less (x) returns and
allowances (including trade and quantity discounts) actually credited
to customers, and (y) any collected tax or other governmental charge
on the sale, export, transportation, use or delivery of the Contingent
Payment Products, in each case determined in accordance with Buyer's
accounting policies and procedures (so long as such policies and
procedures comply with United States generally accepted accounting
principles).
(ii) "Contingent Payment Period" means the period beginning
on January 1, 1994 and ending on December 31, 2001; provided, howeve,
that the Contingent Payment Period shall terminate at such time as the
aggregate payments received by Seller from Buyer pursuant to this
Section 31 shall equal Five million Dollars ($5,000,000) (the
"Contingent Payment Cap"), as may be adjusted pursuant to Section
2(c).
(iii) "Contingent Payment Products" means all products sold
by Buyer and its affiliates during the Contingent Payment Period
within the following product lines reflected on page 26 of the Edward
Weck Incorporated Strategic Plan dated August 9, 1993 (attached hereto
for identification purposes only as Exhibit M), including all
modifications, improvements, adaptations and extensions of such
products:
(1) "Endo Ligation", "Reposable ECO" and "Appliers"
(a new ligation system currently referred to by Seller as the
"ECOSYSTEM", including reposable ligation appliers and
disposable clip cartridges for use in both endoscopic and open
surgical procedures, but excluding appliers that currently are
being sold by the Business);
(2) "Generic Clip" (a ligation clip product
currently referred to by Seller as the "EZ Load Manual
Ligation Clip Cartridge", a line extension to the existing
manual ligation cartridge); and
(3) "New Stapler" (a new stapler system currently
referred to by Seller as "Visistat
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69
R.H.", a newly designed disposable rotating head skin stapler
intended to replace the 360 LX skin stapler; and a new stapler
system currently referred to by Seller as "Visistat R.H.
ECOSYSTEM", a newly designed reusable handle and disposable
staple cartridge).
(c) Buyer shall deliver to Seller within 45 days following
the end of each calendar quarter in the Contingent Payment Period and within 45
days following the end of the Contingent Payment Period (x) the payments due
under this Section 31 with respect to Net Sales of Contingent Payment Products
during such calendar quarter or portion thereof payable in immediately
available funds by wire transfer to a bank account designated by Seller to
Buyer from time to time for such purpose and (y) a statement setting forth in
reasonable detail the calculation of such payments for such calendar quarter or
portion thereof, which statement shall be accompanied by a certificate of the
principal financial or accounting officer of Buyer to the effect that such
statement is derived from the accounting books and records of Buyer and its
affiliates and fairly presents the matters set forth therein in accordance with
this Section 31. All payments shall be paid to Seller in U.S. dollars. For
purposes of determining the amount of any payment due under this Section 31
with respect to Net Sales in foreign currencies, such Net Sales shall be
converted into U.S. dollars at the prevailing commercial rate of exchange for
purchasing U.S. dollars with the applicable foreign currency, as quoted by
Citibank, N.A. in New York City on the last business day of the calendar
quarter with respect to which the relevant payment is to be made.
(d) Upon reasonable notice, Buyer shall provide Seller and
Seller's accountants or other representatives with reasonable access during
normal business hours to all relevant books and records of Buyer and its
affiliates (including, without limitation, working papers of Buyer and Buyer's
accountants used in the preparation of the statements referred to in paragraph
(c) above) for the purpose of determining the accuracy of all payments and
statements delivered by Buyer under this Section 31; provided that Seller shall
not be provided such access more than once each calendar year. Buyer shall and
shall cause its affiliates to keep complete and accurate records of all such
books and records. Seller agrees to keep all such information confidential and
shall not use any such information except for the purpose of determining the
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70
accuracy of payments and statements by Buyer under this Section 31.
(e) Buyer's obligations under this Section 31 shall not be
subject to offset or reduction by reason of any actual or alleged breach of any
representation, warranty or covenant contained in this Agreement or any
document delivered in connection herewith or any right or alleged right to
indemnification hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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71
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
EDWARD WECK INCORPORATED,
by
Mervyn Weiner
----------------------------
Name: Mervyn Weiner
Title: Authorized Signatory
TELEFLEX INCORPORATED,
by
John J. Sickler
----------------------------
Name: John J. Sickler
Title: Senior Vice President
