EXHIBIT 2.1 PURCHASE AGREEMENT
BETWEEN:
- SANOFI-SYNTHELABO, a French societe anonyme with
a share capital of 1,461,174,016 Euros, having its principal
office at 000, xxxxxx xx Xxxxxx, 00000 Xxxxx ("Sanofi")
represented by Xx. Xxxxxxxxx Xxxxxx, duly authorized;
AND:
- INSTITUT PASTEUR, a public interest private foundation,
having its principal office at 00, xxx xx Xxxxxxx
Xxxx, 00000 Xxxxx ("IP" and, collectively with Sanofi, the
"Sellers"; each, a "Seller"), represented by Xx. Xxxx Xxxxxx,
duly authorized;
AND:
- BIO-RAD LABORATORIES INC., a company incorporated
under the laws of Delaware, having its principal office at 0000
Xxxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx, 00000, represented by
Mr. Xxxxx Xxxxxxxx, duly authorized (the "Purchaser", each of
the Purchaser and either Seller, a "Party" and, collectively,
the "Parties").
WHEREAS:
Pasteur Sanofi Diagnostics S.A. ("PSD" or the "Company")
is a French societe anonyme whose share capital is
held by Sanofi (73.66%) and IP (26.34%);
PSD and its controlled Affiliates (the "Subsidiaries"
and, collectively with the Company, the "Group Companies", as
the same are listed in Exhibit A) are engaged in studying,
researching, producing, selling, distributing in-vitro
diagnostics products, including as licensees, and providing
services in the field of in-vitro diagnostics (such activities,
collectively, the "IVD Activities");
Certain of Sanofi's Affiliates outside of France listed
in Exhibit B (the "Ancillary Asset Sellers") are also
engaged in the IVD Activities and hold and use certain assets in
connection therewith, together with the employment liabilities
relating thereto (described in Schedule 4.20(a) and in Exhibit
C) and are parties to certain contracts pertaining to the IVD
Activities (the "Ancillary Assets");
The Sellers wish to divest, and the Purchaser wishes
to acquire, on the terms and subject to the conditions set forth
in this Agreement, the IVD Activities with a view to the
development and future growth of the IVD Activities consistent
with appropriate social policies;
In furtherance thereof, Sanofi and IP wish to sell,
transfer, assign and deliver, and the Purchaser wishes to
purchase, acquire and assume, on the terms and conditions set
forth in this Agreement, (i) 2,321,153 shares of capital stock
(the "Shares") representing all of the outstanding share
capital of the Company except seven (7) shares held by directors
and employees of the Group Companies and (ii) the Ancillary
Assets;
2.
Accordingly, the Sellers have agreed to waive, in
connection with the transactions contemplated by this Agreement,
all their respective rights under the Shareholders' Agreement,
which will terminate upon the closing of the sale of the Shares
contemplated hereby.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and undertakings contained or
referred to in this Agreement, and subject to the satisfaction
or waiver of the conditions of this Agreement, the Parties
hereby agree as follows.
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement are used as
defined in this Article 1 or elsewhere in this Agreement.
References in this Agreement to numbered Articles, Sections,
Exhibits or Schedules are, unless otherwise specified,
respectively references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement.
"Accounting Group" means the Company, the Subsidiaries and
the Ancillary Assets;
"Accounting Principles" means (a) Sanofi's accounting
practices, conforming to accounting principles generally
accepted in France, as consistently applied by the Sanofi
Group during the 1997 and 1998 fiscal years and as further
described in Schedule 4.7(a)(ii) and (b) the accounting
practices specific to the IVD Activities as set forth in
Schedule 4.7(a)(iii);
"Affiliate" means, with respect to any Party, any
Entity controlling, controlled by, or under common control with
said Party, in all cases directly or indirectly; for purposes of
this definition "control" shall have the meaning set forth in
Article 355-1 of French law no. 66-537 of July 24, 1966 relating
to commercial companies;
"Ancillary Asset Employees" has the meaning set forth
in Section 7.1;
"Ancillary Asset Purchase Price" means, in the aggregate,
thirty four million two hundred nineteen thousand (34,219,000)
French Francs, i.e., US$ five million three hundred forty-two
thousand three hundred seventy-four (5,342,374), corresponding
to the aggregate net book value, as of December 31, 1998, of
the assets included in the Ancillary Assets, after deduction
of the Ancillary Asset Employees liabilities recorded in the
Ancillary Asset Sellers' books as of May 31, 1999 and
allocated among the Ancillary Assets as set forth in Exhibit C;
"Ancillary Asset Sellers" has the meaning ascribed to
such term in the preamble hereof;
"Ancillary Assets" has the meaning ascribed to such
term in the preamble hereof; it being specified that the net
book value of the assets included in the Ancillary Assets shall
exceed the amount (in absolute terms) of the employment
liabilities relating to the Ancillary Asset Employees;
"Business" has the meaning set forth in Section 5.7(a);
"Business Day" means any day other than a Saturday or
Sunday or other day that commercial banks generally are closed
in France and, for the purposes of Article 7 only, in France and
any other jurisdiction from or to or through which a payment is
to be made in connection with the transactions described in such
Article;
3.
"Calculation Method" means the method used for the
calculation of the Consolidated Reference Net Worth, as set
forth in Exhibit D;
"Change of Control Contracts" has the meaning set
forth in Section 5.2;
"Claim" has the meaning set forth in Section 8.2;
"Closing" has the meaning set forth in Section 9.1(a);
"Closing Date" has the meaning set forth in Section 9.1(a);
"Closing Date Amount" has the meaning set forth in Section 6.1(b);
"Closing Date Calculation" means the method used for
the calculation of the Consolidated Closing Date Net Worth, as
set forth in Exhibit E;
"Company" has the meaning ascribed to such term in
the preamble of this Agreement;
"Confidentiality Agreement" has the meaning set forth
in Section 10.2;
"Consolidated Financial Statements", in respect of
any fiscal year, means the consolidated financial statements
(i.e., the balance sheet and the income statement) of the Group
Companies, in respect of such fiscal year, prepared in
accordance with the Accounting Principles;
"Consolidated 1998 Financial Statements" means the
Consolidated Financial Statements, as of and for the fiscal year
ended, December 31, 1998; it being specified that such financial
statements were derived from the consolidated financial
statements of the Sanofi Group for 1998, audited by Ernst &
Young;
"Consolidated EBITDA" means the Earnings before
Interest, Taxes, Depreciation and Amortizations of the
Accounting Group, established in accordance with the Accounting
Principles, pursuant to the calculation method set forth in
Exhibit G;
"Consolidated Closing Date Financial Statements"
means the Consolidated Financial Statements prepared in
accordance with the provisions of Section 2.1.3(b), as of August
31, 1999 or September 30, 1999, as the case may be, and for the
eight-(8-) or nine-(9-) month period then ended, as applicable;
"Consolidated Closing Date Net Worth" means the
consolidated net worth of the Group Companies, as of August 31,
1999 or September 30, 1999, as the case may be, calculated by
applying the Accounting Principles and the Closing Date
Calculation on the basis of information contained in the
Consolidated Closing Date Financial Statements;
"Consolidated Reference Net Worth" means the amount
set forth in Exhibit D corresponding to an estimate of the
consolidated net worth of the Group Companies, as of August 31,
1999 or, if the Closing Date is not August 31, 1999, as of
September 30, 1999, calculated by applying the Calculation
Method and in accordance with the Accounting Principles;
"Contract" means any contract, agreement, commitment,
undertaking, lease, license, mortgage, bond, note or other
agreement, whether written or oral, creating rights or
obligations, including of a unilateral nature;
4.
"Cooperation Agreement" means the agreement entitled
Convention de Collaboration between IP and PSD, dated July 11,
1990;
"Entity" means any corporation, company, association,
group, partnership or other entity, incorporated or otherwise;
"Examination Period" has the meaning set forth in
Section 2.1.3(b)(ii)(aa);
"Group Companies" means the Company and the Subsidiaries;
"ICC" has the meaning set forth in Section 11.12;
"Independent Auditor" has the meaning set forth in
Section 2.1.3(b)(iii)(aa);
"Intellectual Property Rights" means (i) all software,
(ii) all patents, patent applications, registered
trademarks, trademark applications, tradenames, service marks,
service xxxx registrations, service xxxx applications, service
names, copyrights and copyright applications, (iii) all trade
secrets, processes, know-how and formulae and (iv) all
intellectual property rights to cell lines and monoclonal
antibodies owned by or licensed to the Group Companies, except
those covered by the Cooperation Agreement and the IP License
Agreement and further described in Section 4.10.2 hereof.
Intellectual Property Rights also include Sanofi IVD Patents.
"IP" has the meaning set forth in the second introductory
paragraph of this Agreement;
"IP Patents and Trademarks" has the meaning ascribed
to such term in Section 4.10.2;
"IP License Agreement" means the agreement dated June 30, 1999
and entered into between PSD and IP for clarification
purposes, setting forth a list of patents and know-how licensed
by IP to PSD pursuant to the Cooperation Agreement and the terms
of such licenses;
"IVD Activities" has the meaning set forth in the
preamble to this Agreement;
"Liens" means all liens, pledges, mortgages, charges,
security interests, claims, easements, burdens or other
encumbrances;
"Loss" has the meaning set forth in Section 8.1(a);
"Net Closing Date Financial Indebtedness" means the
sum, as of the Closing Date, as stated in the Consolidated
Closing Date Financial Statements, of all amounts (except trade
receivables) owed by the Group Companies to third party lenders
or to the Sellers or their Affiliates (other than the Group
Companies) under a loan or a line of credit after deduction of
(i) any amounts (except trade receivables) owed by such third
party lenders, the Sellers or their Affiliates to the Group
Companies under a loan or a line of credit and (ii) any cash
balance or cash equivalents on hand or on deposit;
"Net Preliminary Financial Indebtedness" means the
sum of all amounts (except trade receivables) owed by the Group
Companies to third party lenders or to the Sellers or their
Affiliates (other than the Group Companies) under a loan or a
line of credit, after deduction of (i) any amounts (except trade
receivables) owed by such third party lenders, the Sellers or
5.
their Affiliates to the Group Companies under a loan or a line
of credit and (ii) any cash balance or cash equivalents on hand
or on deposit, on the tenth Business Day preceding the Closing
Date and notified to the Purchaser no later than three (3)
Business Days prior to the Closing Date;
"Notice of Objection" has the meaning set forth in
Section 2.1.3(b)(ii)(bb);
"Permitted Encumbrances" shall mean any (i) non material
easements and security attachments on non material assets and
(ii) Liens that will be released before Closing;
"Preliminary Amount" has the meaning set forth in
Section 6.1(b); it being specified that this amount may not
exceed US$ two hundred and ten million (210,000,000);
"Proforma 1998 Financial Statements" means the balance sheet
and the income statement for the Accounting Group obtained
by combining (i) the consolidated financial statements
of the Group Companies prepared in accordance with the
Accounting Principles and (ii) the assets, liabilities, income
and expense relating to the Ancillary Assets, as of, and for the
fiscal year ended, December 31, 1998, as referred to in the
letters of Ernst & Young dated April 22, 1999, attached hereto
as Exhibit F; it being specified that such financial statements
were derived from the consolidated financial statements of the
Sanofi Group for 1998, audited by Ernst & Young.
"PSD" has the meaning ascribed to it in the preamble hereof;
"Purchaser" has the meaning set forth in the third
introductory paragraph hereof;
"Purchaser's Auditor" has the meaning set forth in
Section 2.1.3(b)(ii)(aa);
"Real Estate" has the meaning set forth in Section 4.8(a);
"Sanofi" has the meaning set forth in the first introductory
paragraph hereof;
"Sanofi Group" means, collectively, Sanofi and its Affiliates
(excluding the Group Companies);
"Sanofi IVD Patents" has the meaning set forth in Section 5.6;
"Sellers" has the meaning set forth in the second introductory
paragraph hereof;
"Sellers' Auditor" has the meaning set forth in Section 2.1.3(b)(i);
"Share Purchase Price" means US$ two hundred and ten
million (210,000,000) less the Ancillary Asset Purchase Price
and the Preliminary Net Financial Indebtedness; it being
specified that the Share Purchase Price may not be increased and
that the sum of the Share Purchase Price, as may be adjusted
pursuant hereto, the Ancillary Asset Purchase Price, as may be
adjusted pursuant hereto and the Closing Date Amount shall not
exceed US$ 210,000,000;
"Share Purchase Price Adjustment" has the meaning set
forth in Section 2.1.3(a);
"Shareholders' Agreement" means the agreement entered
into between Sanofi and IP with respect to the Company dated
July 11, 1990;
"Shares" has the meaning set forth in the preamble hereof;
6.
"Subsidiaries" means the companies controlled by the Company,
i.e., companies of which the Company holds, directly or
indirectly, more than 50% of the voting rights;
"12 Month EBITDA" has the meaning set forth in Section 4.7(c) hereof;
"Taxes" means all French and foreign taxes, assessments,
social charges, duties, fees or other governmental
charges, taxes imposed on or measured by income, taxes based on
employment (including amounts withheld from employees'
compensation, including but not limited to social security
contributions) and any other taxes imposed on or measured by
property, franchise, sales, customs, gross receipts, profits,
licenses, premium, withholding, capital, general corporate,
whether imposed by any national state, government or any
political subdivision or municipality thereof, including any
interest, penalty or addition thereto;
"US Subsidiaries" has the meaning ascribed to such term in
Section 4.12(a).
ARTICLE 2
SALE AND PURCHASE OF THE SHARES AND ANCILLARY ASSETS
2.1 The Shares
2.1.1 Sale and Purchase of the Shares
Subject to the terms and conditions of this Agreement,
each Seller agrees to sell, transfer, assign and deliver to the
Purchaser, and the Purchaser agrees to purchase and acquire (or
cause any Entity designated by it pursuant to Section 11.3 to
purchase and acquire) from each of the Sellers the Shares that
it holds, free and clear of all Liens of any nature whatsoever,
together with all rights attaching thereto.
2.1.2 Share Purchase Price
The Shares shall be sold in consideration for the
Share Purchase Price as such price may be adjusted pursuant to
the provisions of Section 2.1.3.
On the Closing Date, the Purchaser (or its designee)
shall pay and allocate the Share Purchase Price among the
Sellers prorata to the respective number of Shares sold by each
of them.
Such payment shall be made by means of wire transfer,
for value on the Closing Date.
2.1.3 Share Purchase Price Adjustment
(a) Definition
The Share Purchase Price shall be reduced, as the case
may be, in accordance with the following provisions (the "Share
Purchase Price Adjustment"):
(i) In the event that the amount of the Consolidated
Closing Date Net Worth is less than the
Consolidated Reference Net Worth, the Share
7.
Purchase Price shall be reduced by an amount
equal to the difference between these two
amounts;
(ii) In the event that the Net Preliminary Financial
Indebtedness is less than the Net Closing Date
Financial Indebtedness, the Share Purchase Price
shall be reduced by an amount equal to the
difference between these two amounts.
(b) Determination of the Share Purchase Price Adjustment
(i) Preparation of the Consolidated Closing Date
Financial Statements:
No later than sixty (60) days after the Closing
Date, Sanofi shall deliver to the Purchaser (x)
the audited Consolidated Closing Date Financial
Statements, (y) a report from Ernst & Young (the
"Sellers' Auditor") with respect thereto and
(z) an explanation of their calculation of the
Share Purchase Price Adjustment based on the
Consolidated Closing Date Financial Statements
and the Closing Date Calculation.
To that effect, the Purchaser shall ensure the
cooperation of the Group Companies with the
Sellers' Auditor and shall, in particular, cause
the Group Companies to provide the Sellers'
Auditor access to all documents, books, records,
data and other information of the Group Companies
necessary in the reasonable opinion of the
Sellers' Auditor.
(ii) Review of the Consolidated Closing Date Financial
Statements:
(aa) The Purchaser, assisted by PGA - Xxxxxx Xxxxxxxx
(the "Purchaser's Auditor"), shall have a
period of sixty (60) days from the date of
receipt of the documents referred to in Section
2.1.2(b)(i) (the "Examination Period") to
review such documents, conduct its own audit of
the Consolidated Closing Date Financial
Statements applying the Accounting Principles and
notify to Sanofi and to the Sellers' Auditor (the
"Notice of Objection") that it disagrees with
the Consolidated Closing Date Financial
Statements and the calculation of the Share
Purchase Price Adjustment by Sanofi and the
Sellers' Auditor, it being specified that (i) the
opinion of the Purchaser and the Purchaser's
Auditor on the Share Purchase Price Adjustment
shall be based on the Closing Date Calculation;
(ii) the amount of goodwill may not be challenged
by the Purchaser's Auditors; and (iii) each such
disagreement may not involve amounts of less than
five hundred thousand (500,000) French Francs per
line item of the Consolidated Closing Date
Financial Statements, and in the aggregate three
million (3,000,000) French Francs. If the
aggregate amount is reached, the adjustment will
be calculated for the entire amount thereof.
(bb) In the event of such a disagreement, the
Purchaser shall send a Notice of Objection to
Sanofi and the Sellers' Auditor, no later than on
the last day of the Examination Period. Any
failure by the Purchaser to send a Notice of
Objection to Sanofi by such date shall mean that
the Purchaser has definitively accepted, without
reservation, all of the terms of the Consolidated
Closing Date Financial Statements, the Closing
Date Calculation and the amount of the Share
Purchase Price Adjustment as calculated by Sanofi
8.
and the Sellers' Auditor, and such Consolidated
Closing Date Financial Statements and such amount
shall then become final and binding on the
Parties.
(cc) The Notice of Objection, if any, shall
specifically mention each of the proposed
corrections to be made to the Consolidated
Closing Date Financial Statements, the Closing
Date Calculation and the Share Purchase Price
Adjustment, and shall state the reasons therefor.
All items of the Consolidated Closing Date
Financial Statements and the Closing Date
Calculation not objected to by the Purchaser in
the Notice of Objection shall be deemed to have
been accepted by the Purchaser and shall be final
and binding on the Parties and the Independent
Auditor (as hereinafter defined).
(dd) In the event that a Notice of Objection is sent
to Sanofi, Sanofi and the Purchaser shall
promptly attempt to reach agreement on the
portion of the Consolidated Closing Date
Financial Statements objected to by the Purchaser
and the Share Purchase Price Adjustment
.
(iii) Independent Determination of the Share Purchase
Price Adjustment:
(aa) In the event that no agreement has been reached
between the Parties thirty (30) days after the
date of receipt by Sanofi of the Notice of
Objection, those points on which there is
disagreement shall, at the request of either of
the Parties, be submitted to Deloitte Touche
Tomatsu (the "Independent Auditor"), who shall
act as an expert in accordance with the
provisions of Article 1592 of the French Civil
Code.
Each Party hereby confirms that neither it nor
any of its Affiliates has, or, to its best
knowledge, expects to have in the near future,
any relationship with the Independent Auditor
(anywhere in the world) which could reasonably be
considered to cause a potential conflict of
interest.
If the Independent Auditor does not accept its
appointment or is prevented from carrying out its
duties, the Parties shall promptly meet to agree
on a replacement and each Party may, at any time,
pursuant to a refere proceeding, request the
President of the Commercial Court of Paris to
appoint the Paris office of another accounting
firm of international reputation meeting the
foregoing requirement of independence as
Independent Auditor, preferably chosen among
PriceWaterhouseCoopers or KPMG.
(bb) The Independent Auditor shall perform such
procedures as it considers appropriate to form an
independent opinion on the components of the
Consolidated Closing Date Financial Statements,
the Closing Date Calculation and the final
calculation of the Share Purchase Price
Adjustment which were not agreed upon between the
Parties. In making its determinations, the
Independent Auditor shall apply the Accounting
Principles and the Calculation Method.
The Parties shall use their best efforts to cause
the Independent Auditor to issue a report setting
forth the final calculation of the Share Purchase
9.
Price Adjustment in accordance with this Section
2.1.2 within thirty (30) days from the date of
the appointment of the Independent Auditor. The
Independent Auditor's calculation of the Share
Purchase Price Adjustment shall be final and
binding on the Parties.
(cc) Each of Sanofi and the Purchaser shall use its
respective best efforts to ensure that the
Sellers' Auditor and the Purchaser's Auditor
shall cooperate with the Independent Auditor,
including by granting access to all relevant
working papers and files. The Purchaser shall
further ensure the cooperation of the Group
Companies with the Independent Auditor and shall,
in particular, cause the Group Companies to give
the Independent Auditor access to all relevant
documents, books, records, data and other
information of the Group Companies.
(dd) The Independent Auditor's fees and disbursements
shall be borne equally by the Sellers on one hand
(and, among the Sellers, in proportion to the
respective number of Shares sold by each of them)
and the Purchaser on the other hand.
(c) Payment of the Share Purchase Price Adjustment
In the event of a Share Purchase Price Adjustment
resulting in a reduction of the Share Purchase Price, each
Seller shall pay to the Purchaser a portion of the Share
Purchase Price Adjustment, corresponding to the proportion of
the respective number of Shares sold by each of them.
Such payment shall be made:
- within fifteen (15) days after the Share Purchase
Price Adjustment is finally determined as
provided above;
- by transfer of immediately available funds in
French Francs, to an account designated by the
recipient(s) thereof.
2.2 Ancillary Assets
2.2.1 Sale and Purchase of the Ancillary Assets
Subject to the terms and conditions of this Agreement,
Sanofi undertakes to cause the Ancillary Asset Sellers to sell,
transfer, assign and deliver to the Purchaser and the Purchaser
agrees to purchase and acquire (or cause any Entity(ies)
designated by it and agreed by the Sellers to purchase and
acquire) from them and assume, the Ancillary Assets, free and
clear from all Liens of any nature whatsoever, except for
Permitted Encumbrances.
2.2.2 Ancillary Asset Purchase Price
Each of the Ancillary Assets shall be sold in consideration
for the relevant Ancillary Asset Purchase Price, as may be
adjusted pursuant to the provisions of Section 2.2.3.
On the Closing Date or, in respect of those Ancillary
Assets subject to prior reorganization as contemplated by
Section 7.3(b) or whose transfer shall not have received all
required regulatory approvals prior to the Closing Date, on the
10.
relevant subsequent date of transfer thereof, the Purchaser (or
its designee(s)) shall pay the Ancillary Asset Purchase Price in
respect of any transferred Ancillary Asset to the relevant
Ancillary Asset Seller or to Sanofi acting on behalf of the
relevant Ancillary Asset Seller.
All such payments shall be made by means of wire
transfer, for value on the Closing Date or, as the case may be,
on the relevant subsequent closing date to be agreed upon
between the Parties. Any such payments made in respect of
Ancillary Assets shall be made in French Francs or, if
applicable law so requires or if the Purchaser has designated an
Entity to purchase the relevant Ancillary Assets which is
located in the same country as the relevant Ancillary Asset
Seller, in the currency of the country in which the relevant
Ancillary Asset Seller is located. Amounts to be paid in a
currency other than French Francs, if applicable, shall be
calculated by applying (i) the applicable indicative exchange
rate published by the Bank of France for the tenth (10th)
Business Day preceding the relevant payment date, a copy of
which the Sellers shall communicate to the Purchaser and (ii)
the parity between French Francs and Euros.
2.2.3 Ancillary Asset Purchase Price Adjustment
The Ancillary Asset Purchase Price relating to each
Ancillary Asset shall be reduced or increased, as the case may
be, in accordance with the following provisions; provided,
however, that any increase in the Ancillary Asset Purchase Price
pursuant to this Section 2.2.3 shall be limited to the amount of
the Share Purchase Price Adjustment, if any, that may be finally
determined pursuant to Section 2.1.3 above. In the event that
such increase shall exceed the amount of the Share Purchase
Price Adjustment, such excess shall be deemed to reduce the
Share Purchase Price, for purposes of the allocation of the
Purchase Price among the Sellers and the Ancillary Asset
Sellers.
Within fifteen (15) days from the Closing Date or, as
the case may be, from the subsequent date of transfer of the
relevant Ancillary Asset agreed upon between the Parties, Sanofi
shall notify to the Purchaser (or its designee(s)) the net book
value of the relevant Ancillary Asset and the related Ancillary
Asset Employers' liabilities as stated in the relevant Ancillary
Asset Seller's books, as at the date of transfer of such
Ancillary Asset and Ancillary Asset Employers, converted, as the
case may be, into French Francs, at the exchange rate referred
to in Section 2.2.2, as applicable on such date.
If such net book value exceeds the relevant Ancillary
Asset Purchase Price, the Purchaser (or its designee(s)) shall
pay to the relevant Ancillary Asset Seller the amount of the
difference between these two amounts.
If such net book value is less than the relevant
Ancillary Asset Purchase Price, the relevant Ancillary Asset
Seller shall refund to the Purchaser (or its designee(s)) the
amount of the difference between these two amounts.
The adjustments contemplated by this Section 2.2.3
shall be calculated by Sanofi and, at the request of the
Purchaser, may be subject to a contradictory audit pursuant to
the procedure described in Section 2.1.3 above applied mutatis
mutandis; provided, however, that the review period available to
each Party's auditor shall be limited to thirty (30) days.
The payments provided in the two paragraphs above shall be made:
- within fifteen (15) days after the net book value
of the relevant Ancillary Asset has been notified
to the Purchaser (or its designee(s)) by Sanofi;
11.
- by transfer of immediately available funds in the
currency used for the payment of the relevant
Ancillary Asset Purchase Price, to an account
designated by the recipient thereof.
ARTICLE 3
REPRESENTATIONS OF THE PURCHASER
The Purchaser hereby makes and gives the following
representations and warranties for the benefit of the Sellers,
which shall be accurate in all material respects as of the date
hereof and (except as otherwise specifically provided therein)
as of the Closing Date, as though restated on such date.
3.1 Organization, Authority and Validity
(a) The Purchaser is (and its designee(s), if any, will be)
a corporation duly organized and validly existing under
the laws of Delaware (United States of America). The Purchaser
has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder.
(b) The execution of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized
by the competent corporate bodies of the Purchaser (and will
have been so authorized by the competent corporate body of
its designee(s)), and no other corporate action on the part
of the Purchaser (or any such designee(s)) is (or will be)
necessary to authorize the execution of this Agreement or
the consummation of any of the transactions contemplated hereby.
(c) This Agreement has been duly executed by the Purchaser and
constitutes a legal, valid and binding obligation of the
Purchaser, enforceable against it in accordance with its terms.
3.2 No Breach
Neither the execution of this Agreement, nor the performance by
the Purchaser of its obligations hereunder, nor the consummation
of the transactions contemplated hereby does or will:
(i) conflict with or violate any provision of the by-
laws of the Purchaser or any other corporate governance
document of the Purchaser;
(ii) violate, conflict with or result in the breach or
termination of, or constitute a default or an event of
default under, the terms of any Contract to which the
Purchaser is a party; or
(iii) constitute a violation by the Purchaser of any laws or
regulations.
3.3 Consents
The Purchaser is not required to obtain any consent in
connection with the consummation of any of the transactions
contemplated hereby.
12.
3.4 Brokers
All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried out without the intervention
of any person acting on behalf of the Purchaser in such manner as
to give rise to any valid claim against any of the Sellers or any
of their Affiliates for any broker's or finder's fee or similar
compensation in connection with the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS OF THE SELLERS
The Sellers hereby make and give the representations and warranties
contained in Sections 4.4.3, 4.5, 4.6 and 4.15 for the benefit of
the Purchaser. In addition, Sanofi hereby makes and gives, for the
benefit of the Purchaser, the representations and warranties contained
in Sections 4.1.1, 4.2.1, 4.3.1, 4.4.1, 4.7 through 4.14 and 4.16
through 4.26 (with the exception of those contained in Section 4.10.2),
and IP makes and gives, for the benefit of the Purchaser, the
representations and warranties contained in Sections 4.1.2, 4.2.2,
4.3.2, 4.4.2 and 4.10.2. The representations and warranties contained
in this Article 4 shall be accurate in all material respects as of
the date hereof and (except as otherwise specifically provided therein)
as of the Closing Date, as though restated on such date.
4.1 Organization, Authority and Validity
4.1.1 (a) Sanofi is a corporation duly organized and validly existing
under the laws of France. Sanofi has the power
and authority to enter into this Agreement and to carry out
its obligations hereunder.
(b) The execution of this Agreement and the consummation of
the transactions contemplated hereby have been duly
authorized by the competent corporate bodies of Sanofi, and
no other corporate action on the part of Sanofi is necessary
to authorize the execution of this Agreement or the
consummation of any of the transactions contemplated hereby.
(c) This Agreement has been duly executed by Sanofi and
constitutes a legal, valid and binding obligation of Sanofi,
enforceable against it in accordance with its terms.
4.1.2 (a) IP is a public interest private foundation duly organized
and validly existing under the laws of France. IP has
the power and authority to enter into this Agreement and to
carry out its obligations thereunder.
(b) The execution of this Agreement and the consummation of
the transactions contemplated hereby have been duly
authorized by the competent organizational bodies of IP,
and no other action on the part of IP is necessary to
authorize the execution of this Agreement or the
consummation of any of the transactions contemplated hereby.
(c) This Agreement has been duly executed by IP and constitutes
a legal, valid and binding obligation of IP, enforceable
against it in accordance with its terms.
13.
4.2 No Breach
4.2.1 Except as set forth in Schedule 4.2.1, neither the execution
of this Agreement nor the performance by Sanofi of its obligations
hereunder nor the consummation of the transactions contemplated
hereby does or will:
(i) conflict with or violate any provision of the by-laws
or any other corporate governance document of Sanofi
or of any Group Company; or
(ii) to Sanofi's best knowledge, violate, conflict with or
result in the breach of any Contract to which any Group
Company is a party; or
(iii) violate, conflict with or result in the breach of
any Contract to which Sanofi is a party; or
(iv) constitute a violation by Sanofi or any Group Company
of any laws or regulations;
except for any such matters that would not, either individually
or in the aggregate, have a material adverse effect on the
financial condition of the Group Companies or materially impair
the ability of Sanofi to perform its obligations under this
Agreement.
4.2.2 Except as set forth in Schedule 4.2.2, neither the execution
of this Agreement nor the performance by IP of its obligations
hereunder nor the consummation of the transactions contemplated
hereby does or will:
(i) conflict with or violate any provision of the by-laws
or any other corporate governance document of IP or of
any Group Company; or
(ii) to IP's best knowledge, violate, conflict with or
result in the breach of any Contract to which any
Group Company is a party; or
iii) violate, conflict with or result in the breach of
any Contract to which IP is a party; or
(iv) constitute a violation by IP or any Group Company
of any laws or regulations;
except for any such matters that would not, either individually
or in the aggregate, have a material adverse effect on the
financial condition of the Group Companies or materially impair
the ability of IP to perform its obligations under this
Agreement.
4.3 Consents
4.3.1 No consent is required to be obtained by Sanofi or any
Group Company other than those set forth in Schedule
4.3.1 for purposes of the execution of this Agreement or the
consummation of any of the transactions contemplated herein.
4.3.2 No consent is required to be obtained by IP or any Group
Company other than those set forth in Schedule 4.3.2
for purposes of the execution of this Agreement or the
consummation of any of the transactions contemplated herein.
14.
4.4 Incorporation, Existence and Authority of the Group Companies
4.4.1 Sanofi owns, either directly or indirectly, the number of
shares in the Company and its Subsidiaries set forth in Schedule 4.4.1.
4.4.2 IP owns, either directly or indirectly, the number of shares
in the Company and its Subsidiaries set forth in Schedule 4.4.2.
4.4.3 (a) Schedule 4.4.3(a) contains an accurate and complete list
of the Group Companies indicating the jurisdiction
of incorporation thereof.
(b) Each of the Group Companies, is duly organized,
and validly existing under the laws of its jurisdiction of
incorporation.
(c) Each of the Group Companies has full power and authority
to own, lease and operate the assets held or used by
it, and carry out its activities in the manner in which
they are currently carried out.
(d) Except as set forth in Schedule 4.4.3(d), none of the
Group Companies currently is the subject of any voluntary or
judicial reorganization proceedings, or similar proceedings
or is undergoing a liquidation.
4.5 Capital Structure
(a) All of the Shares and all of the shares and other equity
interests in the Group Companies are validly issued and
fully paid. Except as set forth in Schedule 4.5(a),
the Shares and all of the shares and other equity
interests in the Subsidiaries are free and clear of all Liens.
(b) The share capital of each of the Group Companies
is set forth in Schedule 4.4.3(a). Except as set forth in
Schedule 4.4.3(a), there are no warrants, subscription, option
or conversion rights or other agreements, securities, or other
commitments, of any nature whatsoever authorized or outstanding
pursuant to which any of the Group Companies is or may become
obligated to issue or sell any shares, warrants or other
securities of any nature whatsoever. Except as set forth in
Schedule 4.4.3(a), the Group Companies do not hold any interest
in any Entity.
4.6 Transferability of the Shares
The Shares represent 99,99% of the share capital of, and of the
voting rights in, the Company. The Shares are owned respectively
by Sanofi and IP, in the respective numbers and proportions as set
forth in Schedule 4.6. Each Seller represents and warrants with
respect to its respective Shares, that the Shares held by it may be
freely disposed by it without any restrictions whatsoever other
than those resulting from the clause d'agrement contained in
Article 10(a) of the by-laws of the Company and that it has agreed to
waive its right of first refusal over the Shares provided under
Section 2.3.1 of the Shareholders' Agreement.
4.7 Financial Statements
(a) The Proforma 1998 Financial Statements are attached hereto
as Schedule 4.7(a)(i). The Proforma 1998 Financial Statements
fairly present, in accordance with the Accounting Principles,
which are attached hereto as Schedule 4.7(a)(ii) and
15.
4.7(a)(iii), applied on a consistent basis, the financial
condition, assets and liabilities of the Accounting
Group as of December 31, 1998 and for the fiscal year then
ended. As of December 31, 1998, the Group Companies did not
have any material liabilities other than liabilities reflected
or reserved against in the Proforma 1998 Financial Statements
or disclosed in Schedule 4.7(a)(iv).
(b) Except as set forth in Schedule 4.7(b)(ii),the Group
Companies, since December 31, 1998, (i) have conducted
their businesses only in the ordinary course of business in a
manner consistent with past practice, have not changed the
senior management referred to in Schedule 4.7(b)(i) and
have not taken any of the actions described in Section 5.1
below and (ii) have not incurred any liability or financial
obligation except liabilities (aa) incurred in the ordinary
course of business consistent with past practice, or
(bb) individually amounting to no more than FRF. 500,000,
or (cc) specifically reserved against (whether in a general
reserve account or in a specific reserve account) or otherwise
reflected in the Consolidated 1998 Financial Statements.
All reserves made in the Proforma 1998 Financial Statements
are adequate in all material respects.
(c) The Consolidated EBITDA of the Accounting Group for the
12-month period ended as of June 30, 1999 (the "12-Month
EBITDA"), as calculated by Ernst & Young, shall be not
less than US$ 7,000,000 (once converted from French Francs
(until December 31, 1998) or Euros (from January 1, 1999)
at the weighted average exchange rate between FRF or Euros
and US$ for each monthly period included in such 12-month
period). For purposes of Article 8 hereof, any shortfall
between the 12-Month EBITDA and the above-referred amount
shall entitle the Purchaser to indemnification in the amount
of five (5) times such shortfall, subject to the provisions
of Article 8 hereof (including any limitations contained
therein).
4.8 Real Estate
(a) A complete list of all real estate owned or leased by the
Group Companies is attached hereto as Schedule 4.8(a),
including all land and buildings used for purposes of
carrying out the activities of the Group Companies (all such
real estate, the "Real Estate").
(b) Except as set forth in Schedule 4.8(b), the Real Estate
owned by the Group Companies is free and clear of all
Liens (other than Permitted Encumbrances) which may
significantly affect their value or use.
(c) Except as set forth in Schedule 4.8(c), the Real Estate
not owned by the Group Companies is leased pursuant to
valid lease agreements. None of the Group Companies have
been notified that they are in breach of any of these lease
agreements which permits the Group Companies to continue
to use the leased Real Estate in the same manner as is
currently being used.
4.9 Movable Property, Businesses ("Fonds de Commerce") and Inventory
(a) Except as set forth in Schedule 4.9(a), all movable
property, installations and equipment used by the Group
Companies to conduct their businesses are either (i) fully
owned by the Group Companies and are not the subject of
any Liens other than Permitted Encumbrances or (ii) are
used by the Group Companies under the terms of a valid lease,
operating lease (location financiere) or capital lease
(credit bail) agreement. Except as reflected in the Financial
Statements of the Group Companies (and particularly in the
reserves accounted for by the Group Companies), substantially
all movable property, installation and equipment used by the
Group Companies to conduct their businesses are in good
operating condition and repair, ordinary wear and tear
excepted, and are fit for the purposes for which they are
16.
currently being used in the Group Companies businesses.
There exists no restriction on the use or transfer of
the movable property, installations and equipment used
by the Group Companies, except for regulatory requirements
as well as third parties rights under lease or operating
lease agreements.
(b) Except as set forth in Schedule 4.9(b), the businesses
("fonds de commerce") of the Group Companies have in
all material respects been operated in accordance with
currently applicable laws and regulations. Except as set
forth in Schedule 4.9(b), the Group Companies have full
ownership of such businesses, which are not subject to
any Liens other than Permitted Encumbrances. The
businesses ("fonds de commerce") of the Group Companies
have sufficient assets to carry on their respective businesses
as presently conducted.
(c) Except as reflected in the Financial Statements of the
Group Companies (and particularly in the specific
reserves accounted for by the Group Companies (whether in a
general reserve account or in a specific reserve account)),
all product inventory held by the Group Companies is in good,
marketable and usable condition, free from all Liens, and
is in conformity with warranties customarily given to
purchasers of the relevant products. All inventory is managed
in a manner consistent with past practice.
4.10 Intellectual Property Rights
4.10.1 (a) Schedule 4.10.1(a) sets forth (i) a complete list of all
patents, patent applications, registered trademarks,
trademark applications owned by the Group Companies [and]
(ii) a complete list of all licenses granted to the Group
Companies in connection with patents, patent applications,
registered trademarks, trademark applications, know-how
and intellectual property rights to monoclonal antibodies,
except for those covered by the Cooperation Agreement and
the IP License Agreement, (iii), for information purposes
only, a list of certain cell lines and monoclonal antibodies
registered with ATCC or other similar scientific depositary
bodies, all of which are owned or validly used by the Group
Companies, and (iv) Schedule 5.6 sets forth all intellectual
property rights owned by Sanofi and used by the Group
Companies in their IVD Activities, and there is no other
intellectual property of Sanofi required by the Group
Companies for them to conduct the IVD Activities, as
currently being conducted.
(b) Except as set forth in Schedule 4.10.1(b) (and except for
the Sanofi IVD Patents), each of the Group Companies
(or Sanofi for the Sanofi IVD Patents) either owns or uses
pursuant to license agreements the Intellectual Property
Rights and none of the Intellectual Property Rights owned
by the Group Companies (or by Sanofi for Sanofi IVD Patents)
are subject to any Liens or have been revoked or held invalid
or unenforceable or have become abandoned as a result of
non-compliance with the formalities required to maintain them
in full force and effect or as the result of the failure to
use such Intellectual Property Rights;
(c) Except as set forth in Schedule 4.10.1(c) and except for
Sanofi IVD Patents, the Group Companies (or Sanofi
for Sanofi IVD Patents) have good and valid title to the
Intellectual Property Rights owned by them;
(d) Except as set forth in Schedule 4.10.1(d) (and except
for the Sanofi IVD Patents following transfer thereof to
the Group Companies), none of the Group Companies (or
Sanofi for the Sanofi IVD Patents, subject to the provisions
of Section 5.6 hereof) has granted, or agreed to grant, to
any third party any license or other right to use any of the
Intellectual Property Rights;
(e) Except as set forth in Schedule 4.10.1(e), all of the
Intellectual Property Rights used but not owned by the Group
Companies are used by the Group Companies pursuant to legally
17.
valid license agreements and none of the Group Companies are
in material breach under any of these agreements, no
proceeding or claim is currently outstanding or asserted
against any of the Group Companies (or Sanofi for the
Sanofi IVD Patents) in respect of the Intellectual Property
Rights and none of the Group Companies (or Sanofi for the
Sanofi IVD Patents) have received a notice from a third party
to the effect that any product that the Group Companies make,
use, sell or distribute, infringes any trademark, trade name,
copyright, patent, trade secret or similar legally protected
right of such third party. In the reasonable opinion of Sanofi,
based on specific studies having been conducted by the Group
Companies, the HIV and Hepatitis viruses products currently
manufactured and/or sold by the Group Companies do not
infringe any intellectual property right legally protected
of a third party.
(f) Except as set forth in Schedule 4.10.1(f), the Group Companies
are not required by Contract or otherwise to make any
payments in connection with the ownership or use of the
Intellectual Property Rights other than (aa) fees payable to
their intellectual property counsels and to competent
authorities to maintain their Intellectual Property Rights in
full force and effect and (bb) with respect to Intellectual
Property Rights not owned by them, the royalties and cash
payments provided in the license agreements listed in Schedule
4.10.1(a)(ii);
(g) Except as set forth in Schedule 4.10.1(g), the consummation
of the transactions contemplated hereby will not alter or
impair any of the Group Companies' rights under license
agreements pertaining to the Intellectual Property Rights,
except for such breaches, alterations or impairments that
would not, either individually or in the aggregate, have a
material adverse effect on the financial condition of the
Group Companies taken as a whole.
4.10.2 (a) Schedule 4.10.2(a)(i) sets forth a complete list of the
patents, patent applications, registered trademarks,
trademark applications and know-how owned in whole or in
part by IP and currently used by all or certain of the Group
Companies or that the Group Companies are entitled to use, in
each case in the field of IVD Activities, pursuant to the
Cooperation Agreement and the IP License Agreement (the
"IP Patents and Trademarks"); it is specified that those of
the IP Patents and Trademarks listed in Schedule 4.10.2(a)(ii)
are licensed to the Group Companies on a non-exclusive basis;
(b) Except as set forth in Schedule 4.10.2(b), IP owns and has
good and valid title to the IP Patents and Trademarks, or is
the valid co-owner of the IP Patents and Trademarks and is
entitled, pursuant to a management agreement relating thereto,
to grant licenses, including on an exclusive basis, to
third-parties with respect to such co-owned IP Patents and
Trademarks;
(c) Except as set forth in Schedule 4.10.2(c), none of the IP
Patents and Trademarks are subject to Liens or have been
revoked or held invalid or unenforceable or have become
abandoned as a result of non-compliance with the formalities
required to maintain them in full force and effect; it is
specified that Schedule 4.10.2.(c) may be amended with respect
to trademarks by the Sellers until the Closing Date;
(d) Except as set forth in Schedule 4.10.2(d), IP has not granted
or agreed to grant to any third party any license or
other right to use for the same applications those of the IP
Patents and Trademarks licensed to the Group Companies on an
exclusive basis nor have IP or other co-owners of IP Patents
and Trademarks retained the right to use, for commercial
purposes, such IP Patents and Trademarks;
(e) Except as otherwise set forth in Schedule 4.10.2(e), no
proceeding or claim is currently outstanding against IP
or the Group Companies in respect of the IP Patents
and Trademarks.
18.
4.10.3 Except as otherwise provided in Sections 4.10.1 and 4.10.2 and
as may result out of patent applications not published as of
the date of signing hereof, to the best of Sanofi's knowledge
after diligent inquiry, the Group Companies hold the Intellectual
Property Rights and the IP Patents and Trademarks necessary
to conduct the IVD Activities as currently being conducted.
4.11 Loans
(a) Except as set forth in Schedule 4.11(a), none of the Group
Companies have made any loans to any individual or to
any legal entity that are outstanding as of the date hereof,
with the exception of loans to employees or bodies responsible
for the collection of employers' construction fund
contributions and loans granted to other Group Companies.
(b) Except as set forth in Schedule 4.11(b), none of the Group
Companies is in default with respect to any material
term or condition of any indebtedness incurred vis-a-vis
third parties outstanding as of the date hereof.
4.12 Tax, Social Security and Customs
(a) For purposes of Sections 4.12, 4.18 and 4.20, the
term "Group Companies" shall be deemed to exclude Group
Companies organized under the laws of any State of the United
States of America, i.e., Sanofi Diagnostics Pasteur, Inc.,
Genetic Systems Corporation, Blood Virus Diagnostics, Inc.
and Respiratory Diagnostics, Inc., (the "US Subsidiaries") in
respect of which the representations and warranties set forth
in Schedule 4.12(a) are made and given.
(b) Except as set forth in Schedule 4.12(b), (i) the Group
Companies have filed on a timely basis with the competent
authorities any and all returns in respect of Taxes which
they were required to file and such returns were true and
accurate in all material respects when filed, (ii) all Taxes
required to be paid by the Group Companies that were due and
payable prior to the date hereof have been paid by the Group
Companies and (iii) the Group Companies have made adequate
provisions in the Proforma 1998 Financial Statements, in
accordance with the Accounting Principles, for the payment of
all Taxes that were not due and payable prior to January 1,
1999 but for which they may be liable in respect of periods
ending prior to January 1, 1999, regardless of whether the
liability for such Taxes is disputed.
(c) Except as set forth in Schedules 4.7(a)(iv) and 4.12(b),
there are no Liens for Taxes upon the assets of any of
the Group Companies;
(d) The Group Companies have never been members of any
partnerships, joint ventures or interest groupings
(groupements d'interet economique) under which any of
the Group Companies may be responsible for any tax
obligations of any other person or Entity;
(e) All tax credits, tax losses reported in the tax returns
are valid and may be taken advantage of by the Group
Companies under currently applicable tax law;
(f) Except as set forth in the schedules to Section 4.7,
the Group Companies have not incurred any Tax liabilities
for the period beginning January 1, 1999 and ending on the
Closing Date other than Tax liabilities incurred in the
ordinary course of their business; and
(g) Except as set forth in Schedule 4.12(c), none of the Group
Companies is the subject of a Tax audit or Tax investigation,
nor have any of the Group Companies received from any Tax
19.
authority any notice of such an audit or investigation.
No claims for unpaid Taxes, interest or penalties are being
asserted against the Group Companies. No express waiver of
any statute of limitations has been given and is currently
in effect with respect to the assessment of any Taxes against
the Group Companies.
4.13 Insurance
(a) The Group Companies are insured either through group
policies contracted by Sanofi-Synthelabo or policies directly
contracted by them in amounts and against those risks
normally insured against by persons operating similar
businesses of similar sizes in similar locations
(including product liability insurance, motor vehicle
and general liability insurance as well as fire insurance
and insurance of the properties of the Group Companies.
A list of such policies contracted by Sanofi-Synthelabo
is set forth in Schedule 4.13(a). Such insurance policies
are in full force and effect in accordance with their
respective terms and will remain in full force and effect
until the Closing Date.
(b) A list of all material pending claims or disputes in
connection with such insurance policies is attached hereto as
Schedule 4.13(b).
4.14 Contracts
(a) Schedule 4.14(a) contains an accurate and complete list of
all Contracts (except license agreements pertaining to
Intellectual Property Rights, a list of which is set forth
in Schedules 4.10.1(a) and 4.10.1(d)) to which any of the
Group Companies is a party that (i) involve the obligation
(including contingent obligations) by or to any of the Group
Companies to pay amounts in excess of one million (1,000,000)
French Francs in any year (on the basis of the Proforma 1998
Financial Statements) or (ii) were not entered into in the
ordinary course of business of the Group Companies.
All Contracts listed in Schedule 4.14(a) (except for those
entered into by Group Companies located in France or in the
United States of America), (i) in case of fixed term
Contracts, do not exceed two (2) years in duration, (ii) in
case of indefinite term Contracts, may be terminated with no
more than six (6) months of prior notice and (iii) in all
cases, with respect to Contracts involving payments by the
Group Companies, do not represent, individually, post Closing
Date commitments in excess of US$ 250,000 per year.
(b) Except as set forth in Schedule 4.14(b), all Contracts listed
in Schedule 4.14(a) to which a Group Company is a party are
valid, binding and enforceable by one or more of the Group
Companies in accordance with their respective terms and
are in full force and effect, and none of the Group Companies
is in default in any material respect under any of such
Contracts. To the best of Sanofi's knowledge, no other party
to any of such Contracts is in default in any material respect
thereunder. To the best of Sanofi's knowledge, no event has
occurred which, with the passage of time or the giving of
notice or both would constitute a default by the Group
Companies under any such Contracts.
(c) Except as set forth in Schedule 4.14(c), the sale of the
Shares to the Purchaser shall not entitle, pursuant to
any express provision of any Contract listed in Schedule
4.14(a), any other party to such Contracts to request that
they be terminated, modified or renegotiated, as a result
of such sale and, to the best of Sanofi's knowledge, as of
the date hereof, the Group Companies have not received notice
from any party to such Contracts to the effect that such
party has decided to cancel or terminate any such Contract
or exercise any option under any such Contract as a result of
the sale of the Shares.
20.
(d) The Group Companies have ordered at least U.S.$ five (5)
million of reagents and instrumentation applicable to
the 1999 commitment under the April 30, 1997 Exclusive Dealer
Agreement entered into between the Company and Xxxxxxx Xxxxxxx,
Inc. By December 31, 1999, the Group Companies will have met
their 1999 commitment under such agreement.
(e) Cumulatively, reagent rental agreements entered into by the
Group Companies are enforceable and have been generally
enforced by the Group Companies so as to maintain
profitability at historical levels.
4.15 Relations with the Sellers
Except as otherwise stated in Schedule 4.15, neither the Sellers,
nor any Affiliate of the Sellers (other than a Group Company), in all
cases either directly or indirectly:
(a) holds any property or rights whatsoever, which are necessary
for the Group Companies to carry out their activities
(other than the IP Patents and Trademarks and the Sanofi
IVD Patents);
(b) is party to any Contracts with any Group Companies nor has
any rights against the Group Companies (other than the
shareholders' rights of the Sellers vis-a-vis the Group
Companies, Sanofi's rights to the Sanofi IVD Patents and IP's
rights under the Cooperation Agreement and the licenses of the
IP Patents and Trademarks to the Group Companies); or
(c) has granted any guarantees or other security interests
to secure any of the Group Companies' undertakings, or
is the beneficiary of any guarantee granted by any of the
Group Companies to secure any of their obligations vis-a-vis
third parties.
4.16 Disputes
Except as set forth in Schedules 4.10.1(e), 4.10.2(g), 4.12(c), 4.13(b),
4.16 and 4.20(e), there are no judicial, administrative or arbitration
proceedings pending against any of the Group Companies, which, if
determined adversely with respect to the relevant Group Company, would
have a material adverse effect on its business condition or the economic
or financial prospects of the Group Companies taken as a whole. Except
as set forth in Schedule 4.16, none of the Group Companies is a
plaintiff in any litigation or proceeding where material counterclaims
have been asserted against a Group Company.
4.17 Compliance with Law
(a) Except as indicated in Schedule 4.17, (i) the Group Companies
possess all permits, certifications and other consents from
governmental or other authorities required to conduct their
respective operations as currently being conducted and (ii)
the Group Companies are currently conducting their respective
businesses in material compliance with these permits and
consents and with all laws, ordinances and regulations which
are currently applicable to them (except for instances of non-
compliance that would not reasonably be expected to have a
material adverse effect on the relevant Group Company),
including but not limited to national, state, local and
foreign environmental, work place safety and employee
benefits laws and regulation.
(b) No proceedings of any nature whatsoever have been undertaken
which may result in the withdrawal, suspension or modification
of any of the consents and permits held by the Group
21.
Companies and required to conduct the Group Companies'
operations as currently being conducted. Except as set forth
in Schedule 4.17(b), all such permits, certifications and
consents are valid and in full force and effect and will not
be terminated as a result of the sale of the Shares.
(c) Except as set forth in Schedule 4.17(c), none of the Group
Companies has received any notice from governmental or
other authorities alleging any violation of any laws,
ordinances or regulations currently pending, which, if
determined against the relevant Group Company, would have
a material adverse effect on its business condition or the
economic or financial prospects of the Group Companies taken
as a whole.
4.18 Environment
Except as indicated in Schedule 4.18, the Group Companies carry out
their activities in compliance in all material respects with
environmental laws and regulations currently applicable to them.
In particular, the Group Companies have obtained all environmental
authorizations and licenses required for the conduct of their operations
as currently conducted, and the Group Companies comply in all
material respects with said authorizations and licenses. There
have been no releases of hazardous substances (substances
dangereuses pour l'environnement) within the meaning of classes
no. 1170, 1171, 1172 and 1173 of the French decree of May 20,
1953 relating to installations classees from or on the premises
at which the Group Companies operate their business. Except as
indicated in Schedule 4.18, the Group Companies have not
received notice of potential liability, under applicable
environment laws and regulations, with respect to any sites and
the Group Companies are not aware of any present events, facts,
conditions or circumstances which violate environmental laws in
any material respect or which currently form the basis of an
environmental claim arising out of the release of such hazardous
substances with respect to any of the sites in which they
conduct their activities.
4.19 Ancillary Assets
(a) Except as set forth in Schedule 4.19(a) and except for
the transfer to the Purchaser (or its designee(s)) of
local product sanitary registration in respect of products sold
through the Ancillary Assets, the Ancillary Assets are wholly-
owned by the Ancillary Asset Sellers free and clear of all
Liens except for Permitted Encumbrances, and there exists no
restriction on the transfer of the Ancillary Assets.
(b) All of the Ancillary Assets are in a state of good maintenance
and repair and are usable for their intended purpose.
4.20 Labor Matters
(a) Schedule 4.20(a) is a list of employees (representing
approximately 90% of the headcount) of the Group
Companies (including, by way of exception to Section 4.12(a),
the US Subsidiaries) and of the Ancillary Asset Employees,
indicating the current rate of compensation for each such
employee as of May 31, 1999. The representation contained in
this paragraph 4.20(a) with respect to employees of Group
Companies other than those located in France, in the United
States and in Brazil is made for information purposes only and
may not result in indemnification of the Purchaser pursuant to
Article 8 hereof.
(b) Except as set forth in Schedule 4.20(b), the Group Companies
do not participate in or contribute to any retirement plans,
profit-sharing schemes or other optional employee incentive
plans other than those required by applicable laws,
regulations and/or collective bargaining agreements. As
22.
of the date hereof, the Group Companies have made all required
contributions payable under their respective plans and under
the applicable social security regime.
(c) Except as set forth in Schedule 4.20(c), none of the Group
Companies has concluded any Contracts with any of its
employees which provide, in the event of termination, for a
notice period or payment of an indemnity which exceeds those
provided for by applicable laws, regulations and/or collective
bargaining agreements.
(d) Schedule 4.20(d) sets forth all commitments and undertakings,
outstanding as of the date hereof, made by the Group
Companies (including, by way of exception to Section
4.12(a), the US Subsidiaries) vis-a-vis their former
employees.
(e) Except as set forth in Schedule 4.20(e), none of the Group
Companies has (i) given any undertakings or made any
commitments in connection with any restructuring plan (plan
social) that have not been entirely performed or fulfilled or
(ii) given any undertakings or made any commitments in
connection with a collective dismissal plan (licenciement
collectif).
(f) Except as set forth in Schedule 4.20(f), there is no current
labor litigation involving claims by employees of the
Group Companies. No collective labor disputes, strikes, work
stoppages or other interruption in service or performance due
to collective labor disputes have occurred over the last three
(3) years; and since then, all relationships between the Group
Companies and its employees are generally stable and
satisfactory.
(g) Schedule 4.20(g) describes the particular undertakings
given by the Group Companies (including, by way of
exception to Section 4.12(a), the US Subsidiaries) to their
employees in connection with the transactions contemplated by
this Agreement.
(h) Except as set forth in Schedule 4.20(h), the representations
provided by paragraphs (a), (b), (c), (e), (f) and (g)
of this Section 4.20 apply to the Ancillary Assets Employees.
4.21 Product Liability
(a) Except as set forth in Schedule 4.21(a) and for customary
and limited batch recalls (those related to the lack
of robustness of the biological products or defects in
workmanship and not to defects that would impair the
reliability of a diagnosis and may cause a public health
problem), none of the Group Companies has received any
order from any administrative or judicial authority, or
any request from any professional or consumer body, to
recall any of its products, or to inform its customers
of a defect in any of its products.
(b) Except as set forth in Schedule 4.21(b), no warranties
have been granted by any of the Group Companies with
respect to its products sold or services rendered under the
terms of which any of them would be liable beyond the limits
and periods provided for by law and/or the general conditions
of sale of the Group Companies, as applicable. There are no
outstanding warranty claims against the Group Companies by any
of its customers with respect to the products sold or the
services rendered by the Group Companies.
23.
4.22 Brokers
All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried out without the intervention
of any person acting on behalf of any of Sanofi or the Group Companies
in such manner as to give rise to any valid claim against any of the
Group Companies or Purchaser for any broker's or finder's fee or similar
compensation in connection with the transactions contemplated.
4.23 No material adverse change
Except for the consequences of termination, if any, of
Change of Control Contracts referred to in Section 5.2 hereof,
between the date hereof and the Closing Date, there shall not
have occurred any event effectively adversely affecting the
financial condition of the Group Companies, taken as a whole, by
more than Euro 39,058,686.
4.24 Year 2000 Compliance
As of the date hereof, the Group Companies have achieved and
performed all the objectives and actions contemplated to be
achieved and performed by them on or prior to the date hereof
pursuant to the Y2K Plans attached as Schedule 4.24 hereto
(except for instances of absence of achievement or performance
which do not have a material adverse effect on the Group
Companies).
4.25 Euro Compliance
As of the date hereof, the Group Companies have achieved and
performed all the objectives and actions contemplated to be
achieved and performed by them on or prior to the date hereof
pursuant to the Euro compliance plans attached as Schedule 4.25
hereto (except for instances of absence of achievement or
performance which do not have a material adverse effect on the
Group Companies).
4.26 Maintenance of Business
Neither of the ten major customers of the Group Companies,
respectively in France and in the United States of America,
nor the ten major suppliers of the Group Companies, respectively
in France and in the United States, have notified any of the Group
Companies within the six-month period immediately preceding the
date hereof of their intent to cease doing business with any of
such companies or to reduce substantially the amount of the business
that such customer is currently doing with any of the Group Companies;
without prejudice to termination, pursuant to their respective terms,
of agreements entered into between such Companies and customers or
suppliers (including Xxxxxxx Xxxxxxx, Inc.).
ARTICLE 5
COVENANTS OF THE SELLERS
5.1 Management of the Group Companies between the date hereof and
the Closing Date
Between the date hereof and the Closing Date, except as otherwise
provided for herein or as may be expressly agreed to by the Purchaser,
the Sellers shall cause:
24.
(a) each of the Group Companies to carry out its activities
solely within the normal and ordinary course of
business, including not permitting the sale, transfer or
disposition of any of the assets of the Group Companies, not
entering into any material contract or commitment, engaging in
any transaction, extending credit or incurring any obligation
with respect to the Group Companies, in each case, other than
in the usual and ordinary course of business and in a manner
consistent with past practice, and not making or instituting
any usual or novel methods of purchase, sale, management,
operation, or other business practice in the management of
the Group Companies, not modifying the compensation or
benefits payable or to become payable to employees or agents
of the Group Companies;
(b) the Company not to decide upon, or make, any distribution
of profit or reserves;
(c) each of the Group Companies not to be a party to any merger,
contribution or spin off; not to make any change to its
capital, or issue securities of any nature whatsoever or
warrants;
(d) the Group Companies not to make any modifications to the
respective articles of incorporation or by-laws of any of
Group Companies;
(e) the Group Companies not to incur any new loan granted by
parties other than their shareholders and their respective
Affiliates (except as may be directed by the Purchaser in
view of the Closing);
(f) the Group Companies not to agree to take any of the actions
set forth above;
(g) each of the Group Companies to refrain from making any change
in the accounting practices or procedures applied by the
Group Companies;
(h) each of the Group Companies not to enter into, issue or grant
to any third party any agreements, arrangements, warrants,
call options, convertible rights or other rights (vested
or contingent) to acquire any capital stock of the Group
Companies;
(i) the Group Companies to inform the Purchaser of the occurrence
of any event referred to in Section 4.23 above.
5.2 Consents / HCV License
Until the Closing Date, the Purchaser shall use reasonable efforts to
assist the Sellers and/or the Company, and from and after the Closing
Date the Sellers shall use reasonable efforts to assist the Purchaser
and/or the Company, in obtaining, prior to or after the Closing Date,
the undertaking of the counterparty(ies) to any of the Contracts listed
in Schedule 5.2 (the "Change of Control Contracts") not to terminate
such Contract in connection with, or as a result of, the change of
control of the Company hereby contemplated (the "Change of Control").
In addition to the foregoing, until the Closing Date, the Purchaser
shall cooperate with the Company and the Sellers, and from and after
the Closing Date, the Sellers shall cooperate with the Company and
the Purchaser in securing the consent of Ortho Diagnostics Systems,
Inc. and Chiron Corporation (the "O/C Parties") to the Change of
Control pursuant to Section 13.5 of the HCV License Agreement dated
November 22, 1993 between the Ortho/Chiron Parties and the Company
(the "HCV License"). To that effect, the Company shall, promptly
25.
following the execution hereof, notify the O/C Parties of the
Change of Control and attempt to secure the O/C Parties' consent
thereto as soon as possible. The Purchaser shall fully participate
in these efforts, including (i) by providing written assurances to the
O/C Parties that the Purchaser shall cause the Company to continue
implementing the HCV License in accordance with its terms and its
existing net economic effect on the O/C Parties and with the Company's
past practice, and (ii) by the Company providing to the O/C Parties
reasonable incentives as agreed with the Purchaser to secure the
necessary consent such as a non-exclusive license to the HIV probes
on terms comparable to existing HIV 2 licenses of the Group Companies.
In the event that, the O/C Parties having failed to consent to the
Change of Control and having terminated the HCV License pursuant to
Section 13.5 thereof, whether before or after the Closing, (i) the
O/C Parties should have initiated legal proceedings to enjoin the
Company from exploiting the HCV License or (ii) the Group Companies'
sales of HCV License products should have decreased by more than 10%
(compared to the sales of the same six-month period of the immediately
preceding year) within the six-month period following the O/C Parties'
notice to the Company of the termination of the HCV License pursuant to
Section 13.5 thereof (excluding, however, any loss of HCV business
resulting from a change in the regulatory requirements or social
security or private insurance reimbursement regimes), then, the Sellers
shall, promptly upon notice by the Purchaser, pay to the Purchaser
the amount of Euro 19,529,343 as provisional indemnity (the "Provisional
Indemnity") for the Loss suffered by the Company as a result of
the O/C Parties' termination.
In the circumstances described in the foregoing paragraph, the Purchaser
shall cooperate with the Sellers and the Company in pursuing legal
action against the O/C Parties for wrongful termination of the HCV
License and in seeking reinstatement thereof as well as recovery of any
damages suffered by the Company and the Sellers as a result of such
termination. If the dispute with the O/C Parties is finally
resolved within twelve (12) months from the Closing Date, the
Purchaser shall refund the Sellers with any fraction of the
Provisional Indemnity equal to the excess of such indemnity over
the Loss suffered by the Company as a result of the O/C Parties'
termination of the HCV License, and the Sellers shall conversely
indemnify the Purchaser of any excess of such effective Loss
over the Provisional Indemnity up to an additional Euro 9,764,671.
In the event that the dispute with the O/C Parties should not be
finally resolved within twelve (12) months from the Closing
Date, (A) the Purchaser shall be entitled to retain the
Provisional Indemnity, subject to the Company's assignment to
the Sellers of all of the Company's rights under the HCV License
to receive monetary compensation from the O/C Parties for wrongful
termination of the HCV License, and subject to the Purchaser's
undertaking to cooperate with the Sellers and to grant the Sellers
unrestricted access to the relevant information necessary to
document such Sellers' monetary compensation demands, and (B)
in addition, the Purchaser shall be entitled to claim additional
damages from the Sellers up to a maximum amount of Euro 9,764,671
in the event that the Purchaser can establish that the effective
Loss suffered by the Group Companies as a result of the termination
of the HCV License exceeds the Provisional Indemnity.
Any indemnification of the Purchaser pursuant to this Section 5.2
(including the payment of the Provisional Indemnity) shall be subject
to the provisions of Article 8 hereof (including any limitations
contained therein), provided, however, that the aggregate maximum
amount of indemnification stipulated in Section 8.6(d) hereof shall
be increased from Euro 39,058,686 to Euro 48,823,357 in the event
that the HCV License is finally lost to the Company following
the issuance of a final decision.
